Farrell v. JP Morgan Chase Bank, N.A.

Background

James Farrell, acting through successor trustee Laura Kaufman, brought claims for financial elder abuse, negligence, and violations of California’s Unfair Competition Law. The claims arose from allegations that a woman identifying herself as Ann Johnson directed Farrell, who was eighty-six years old, to withdraw money from his JPMorgan Chase account for her. Farrell allegedly made more than 300 withdrawals totaling approximately $2,500,000. The opinion states that Fawn Periera and Kevin Prario, who worked at JPMorgan Chase, assisted Farrell with the withdrawals and allegedly knew he might be the victim of a “sweetheart scam.”

Farrell filed the action in state court on February 26, 2020. JPMorgan Chase, Periera, and Prario removed it to federal court based on diversity jurisdiction under 28 U.S.C. § 1332. Diversity jurisdiction generally requires that no plaintiff share state citizenship with any defendant and that the amount in controversy exceed $75,000. In the notice of removal, the defendants acknowledged that Johnson, Periera, and Prario were California citizens, but argued that Johnson’s citizenship could be disregarded because she had not been served and that Periera and Prario had been fraudulently joined.

Remand analysis

The court held that complete diversity did not exist when the complaint was filed and when the case was removed because Farrell, Johnson, Periera, and Prario were California citizens. That lack of complete diversity prevented removal under § 1332.

The court rejected the defendants’ argument that Johnson’s citizenship could be ignored because she had not been served. It explained that, when complete diversity is required, citizenship is determined from the citizenship of the named parties, not from whether each defendant has been served. The court distinguished the “local defendant” rule, which applies when complete diversity already exists but a properly joined and served defendant is a citizen of the state where the action was filed.

The court did not need to decide whether Periera and Prario had been fraudulently joined because Johnson’s citizenship alone was enough to require remand. The defendants also argued for the first time in opposition to remand that Johnson was a fictitious defendant whose citizenship could be disregarded. The court held that this new ground was procedurally barred because it was not included in the notice of removal and could not be added after the thirty-day removal period. The court further stated that, even if it could consider the argument, the defendants had not shown that Ann Johnson was a fictitious name. Farrell’s allegations and representations provided enough information about Johnson’s identity, citizenship, and connection to the case.

Rulings and effect

Judge Yvonne Gonzalez Rogers granted Farrell’s motion to remand the action to the Superior Court of the County of San Francisco. She denied the defendants’ motion to dismiss all claims as moot because the federal court was returning the action to state court rather than deciding the dismissal motion. The order also required the JPMorgan defendants to pay Farrell $9,520 for attorneys’ fees incurred in connection with the removal. The order terminated the identified motions and the federal action.