MacDula v. Specialized Loan Services LLC

Background

The plaintiffs brought claims concerning a loan-modification application and alleged a violation of the Homeowner Bill of Rights involving “dual tracking”—proceeding toward foreclosure while a loan-modification application is being considered. The defendants opposed the plaintiffs’ request to send the case back to San Francisco County Superior Court, arguing that the federal court had diversity jurisdiction.

Court’s Analysis

The court explained that the defendant had the burden to establish diversity jurisdiction by a preponderance of the evidence, meaning it had to show that the jurisdictional facts were more likely true than not. The court concluded that the defendant had not shown that the amount in controversy exceeded $75,000.

The court found that the value of the requested injunctive relief was minimal because the relief would be temporary and would last only long enough to allow the plaintiffs’ loan-modification application to be processed without interference from foreclosure actions. The court said that the complaint’s reference to a permanent injunction barring loan collection and sale of the property was essentially immaterial because that relief was not available for the Homeowner Bill of Rights claim at issue.

Although the complaint requested punitive damages, the defendant did not show that those damages would be large enough to raise the amount in controversy above $75,000. The court noted that the defendant relied on fraud cases involving amounts above $75,000, but the complaint contained no nonconclusory allegations suggesting fraud. The defendant also offered no indication that substantial punitive damages had been awarded in similar dual-tracking cases.

The court likewise found that the defendant had not presented concrete evidence that the claimed economic and noneconomic damages would be significant. It considered large emotional-distress damages unlikely because the property had not yet been sold. The court also stated that the case did not appear sufficiently complicated for attorney’s fees to bring the amount in controversy above $75,000. At the hearing, the plaintiffs expressly confirmed that they were not seeking more than $75,000 for any of the relief requested, including compensatory damages, punitive damages, injunctive relief, and attorney’s fees.

Disposition

The court granted the plaintiffs’ motion to remand. It ordered the Clerk to remand the case to San Francisco County Superior Court and close the federal case. The order disposed of Docket No. 12. Judge Edward M. Chen signed the order.