and Submitted May 19, 2017 San Francisco, California
from the United States District Court for the Northern
District of California Edward M. Chen, District Judge,
Presiding D.C. No. 3:15-CV-01542-EMC
Anthony George Graham (argued), Graham & Martin LLP,
Santa Ana, California, for Plaintiffs-Appellants.
A. Woods (argued) and Bao M. Vu, Stoel Rives LLP, Sacramento,
California, for Defendants-Appellees.
Before: Kim McLane Wardlaw and Andrew J. Kleinfeld, Circuit
Judges, and Cathy Ann Bencivengo, District Judge. [*]
panel reversed the district court's denial of a motion to
remand, vacated the district court's order granting
Select Portfolio Servicing, Inc.'s motion to dismiss, and
directed that the case be remanded to state court, because
the district court was without subject matter jurisdiction
where the removing party, Select Portfolio, did not satisfy
its burden of establishing the amount in controversy exceeded
$75, 000 for purposes of diversity jurisdiction.
complaint sought only a temporary stay of foreclosure pending
review of a loan modification application pursuant to the
California Homeowners Bill of Rights. The panel held that the
value of the property or amount of indebtedness were not the
amounts in controversy in such a circumstance. Because Select
Portfolio only asserted these amounts in its notice of
removal, the panel concluded that it had not established the
requisite amount in controversy. The panel noted that parties
seeking to establish diversity jurisdiction over such cases
may still demonstrate that the amount in controversy
requirement was satisfied using other measures, such as the
transactional costs to the lender of delaying foreclosure or
a fair rental value of the property during the pendency of
the injunction; and possibly adding such amounts to any other
compensatory damages sought by the plaintiff.
Kleinfeld dissented, and would affirm the district court.
Judge Kleinfeld would hold that the district court correctly
followed the rule in Garfinkle v. Wells Fargo Bank,
483 F.2d 1074, 1076 (9th Cir. 1973), that in a suit to enjoin
foreclosure, the amount in controversy is the value of the
property sought to be foreclosed.
BENCIVENGO, DISTRICT JUDGE.
case requires us to decide how to measure the amount in
controversy for the purpose of determining diversity subject
matter jurisdiction when a complaint seeks only a temporary
stay of foreclosure pending review of a loan modification
application pursuant to the California Homeowners Bill of
Rights ("HBOR"). We hold that the value of the
property or amount of indebtedness are not the amounts in
controversy in such a circumstance.
March 15, 2013, Appellants Esperanza Corral and Diana Balgas
(together, "Corral") received a notice of default
on their mortgage on the residential property where Ms.
Balgas lives (the "Property"). They then applied
for a loan modification with the loan servicer, Appellee
Select Portfolio Servicing, Inc.
("SPS"). In April 2014, while the loan modification
application was pending, Corral received a Notice of Trustee
Sale of the Property. Thereafter, Corral filed a lawsuit in
the California Superior Court for Alameda County (the
"First Action") and successfully moved for a
temporary restraining order ("TRO") of the trustee
sale. In December 2014, the parties reached a settlement,
pursuant to which SPS agreed to wait thirty days following
the dismissal of the First Action to receive Corral's
submission of a completed application for a loan
modification. The settlement agreement also provided that if
SPS did not receive a completed application within thirty
days, SPS reserved the right to pursue non-judicial
foreclosure of the Property.
around February 25, 2015, SPS scheduled a trustee sale for
the Property for March 5, 2015. On March 3, 2015, Corral
filed this lawsuit in California Superior Court for Alameda
County, asserting claims for violation of HBOR and for
violation of California's unfair competition law,
California Business & Professions Code § 17200 et
seq. The Superior Court issued a TRO enjoining the trustee
sale, but it later denied Corral's motion for a
preliminary injunction of the foreclosure sale.
April 3, 2015, SPS removed this lawsuit to the United States
District Court for the Northern District of California. The
notice of removal stated that the district court had
diversity jurisdiction under 28 U.S.C. § 1332 because
the parties are diverse and more than $75, 000 is in
controversy. As for diversity, the notice stated that Corral
and Balgas are citizens of California and SPS is a Utah
corporation with its principal place of business in Utah. As
for the amount in controversy, the notice stated that the
amount in controversy requirement is satisfied because the
Deed of Trust on the Property secured a $680, 000.00
promissory note and the unpaid balance and other charges on
the promissory note at the time of the notice was $806,
district court denied Corral's motion to remand. In its
opinion, the district court relied exclusively on cases where
the plaintiffs sought an indefinite injunction against
foreclosure, to quiet title to the property in question, or
to rescind their loans, and concluded that Corral's gains
from the temporary injunction "would surely exceed $75,
000" in light of the value of the Property and amount of
also filed an amended complaint in the district court that
added claims for breach of contract and breach of the implied
covenant of good faith and fair dealing arising out of the
settlement of the First Action. The amended complaint
specified that the amount in controversy does not exceed $75,
000. On July 9, 2015, the district court granted SPS's
motion to dismiss the amended complaint for failure to state
a claim. Corral now timely appeals.