Pacumio v. Wells Fargo Bank, N.A.
- Joseph Spero
- 3:20-cv-00251
- U.S. District Court · Northern District of California
- 6
In Pacumio v. Wells Fargo Bank, Judge Spero granted Pacumio’s remand motion and denied her attorney-fee request.
The ruling returned Pacumio’s foreclosure-related case against Wells Fargo and Clear Recon to California state court, while leaving Wells Fargo’s motion to dismiss unresolved and denying Pacumio’s request for attorney fees.
What happened
In Pacumio v. Wells Fargo Bank, Josefina Pacumio challenged a foreclosure sale in California state court. Wells Fargo moved the case to federal court, arguing that Clear Recon was improperly included to prevent federal jurisdiction. Clear Recon, like Pacumio, was a California citizen, and Pacumio had dismissed Catamount from the case.
The court ruled that Wells Fargo had not shown Clear Recon was fraudulently joined. California law allows certain claims against foreclosure trustees, and Pacumio would have been allowed to amend her complaint if it did not adequately state claims against Clear Recon. Because federal jurisdiction was lacking, the court did not decide Wells Fargo’s motion to dismiss.
Judge Spero granted Pacumio’s motion to remand and instructed the Clerk to return the case to the California Superior Court for the County of San Francisco and close the federal case. The court denied Pacumio’s request for attorney fees, finding that Wells Fargo’s removal was not unreasonable enough to justify such an award.
The detailed version
- Pacumio v. Wells Fargo Bank, N.A. · No. 3:20-cv-00251
- Joseph Spero
- Feb. 24, 2020
Background
Josefina Pacumio filed a state-court action against Wells Fargo Bank, N.A., Clear Recon Corp., and Catamount Properties 2018, LLC. The action challenged a foreclosure sale involving property Pacumio owned. After Pacumio voluntarily dismissed Catamount, Wells Fargo removed the case to federal court, claiming diversity jurisdiction. Diversity jurisdiction generally requires that no plaintiff share state citizenship with any defendant. Wells Fargo argued that Clear Recon, which was Pacumio’s fellow California citizen, had been fraudulently joined—that is, included in the case only in a way that should not prevent removal because there was no viable claim against it.
Analysis
The court applied a strong presumption against removal and placed the burden on Wells Fargo to show that removal was proper. The court explained that fraudulent joinder requires more than showing that a complaint may fail to state a claim. If there is a possibility that a state court could find a claim against the nondiverse defendant, or that the plaintiff could amend the complaint to cure a deficiency, the federal court should remand the case.
The court noted that California’s Homeowner Bill of Rights allows claims against trustees involved in certain nonjudicial foreclosure sales. Even assuming Pacumio’s original and amended complaints did not adequately state claims against Clear Recon, the court concluded that Pacumio would be entitled to amend. The same applied to Wells Fargo’s argument that Pacumio had not adequately alleged malice to overcome a trustee’s qualified privilege. The court therefore held that Wells Fargo had not established fraudulent joinder.
Ruling
The court granted Pacumio’s motion to remand. It instructed the Clerk to remand the case to the California Superior Court for the County of San Francisco and close the federal case. Because the court lacked jurisdiction, it did not reach Wells Fargo’s motion to dismiss. The court also denied Pacumio’s request for attorney fees under 28 U.S.C. § 1447(c), concluding that Wells Fargo’s removal was not so unreasonable as to warrant fees. Judge Joseph C. Spero vacated the scheduled hearing and ordered the case remanded.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.