1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *
7 BANK OF AMERICA, N.A., Case No. 2:21-CV-893 JCM (VCF)
8 Plaintiff(s), ORDER
9 v.
10 FIDELITY NATIONAL TITLE GROUP, INC., et al., 11 Defendant(s). 12
13 Presently before the court is plaintiff Bank of America, N.A. (“BANA”)’s motion to 14 remand to state court. (ECF No. 6). Defendant Chicago Title Insurance Company (“Chicago 15 Title”) filed a response (ECF No. 21), to which BANA replied (ECF No. 23). 16 Also before the court is Chicago Title’s request for judicial notice.1 (ECF No. 22). 17 I. Background 18 The instant action is one of the many title insurance suits currently pending in Nevada 19 courts. BANA is the beneficiary of deeds of trust encumbering two properties in Nevada: 10728 20 Knickerbocker Ave., Las Vegas, Nevada 89166 (the “Muro deed”) and 7902 Muldrow Street, 21 Las Vegas, Nevada 89139 (the “Faris deed”). (ECF No. 6 at 3–4). Both properties were subject 22 to foreclosure sales. (Id.) As part of loan origination for the purchase of each property, Chicago 23 Title and Chicago Title Agency of Nevada (“Chicago Nevada”)—the Nevada agent of Chicago 24 Title—entered into insurance contracts that guaranteed the superiority of the deeds over 25 competing liens, including any liens that homeowners’ associations might have in foreclosure. 26 27 28 1 Chicago Title’s request is GRANTED. The court takes judicial notice of the offered record as a matter of public record. 1 (Id.) After the foreclosure sales, BANA submitted claims under those title insurance contracts, 2 which were denied. (Id.) 3 BANA then filed the instant litigation in Nevada state court on May 6, 2021. (ECF No. 4 1-1). Chicago Title removed the action to this court the same day before any defendant was 5 served. (ECF No. 1). 6 II. Legal Standard 7 A defendant can remove any civil action over which the district court has original 8 jurisdiction. 28 U.S.C. § 1441(a). Yet federal courts are courts of limited jurisdiction. Owen 9 Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). That is why there is a strong 10 presumption against removal jurisdiction. Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 11 (9th Cir. 2009). The “burden of establishing federal jurisdiction is on the party seeking removal, 12 and the removal statute is strictly construed against removal jurisdiction.” Prize Frize, Inc. v. 13 Matrix Inc., 167 F.3d 1261, 1265 (9th Cir. 1999). 14 A plaintiff can challenge removal with a motion to remand. 28 U.S.C. § 1447(c). To 15 avoid remand, the removing defendant must show by a preponderance of the evidence that there 16 is complete diversity and that the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a). 17 The court will resolve all ambiguities in favor of remand. Gaus v. Miles, Inc., 980 F.2d 564, 566 18 (9th Cir. 1992); Hunter, 582 F.3d at 1042. 19 But even if the diversity jurisdiction requirements are met, a diversity case nonetheless 20 cannot be removed if “any of the parties in interest properly joined and served as defendants is a 21 citizen of the [s]tate in which such action is brought.” 28 U.S.C. § 1441(b)(2) (emphasis added). 22 This is the forum defendant rule, a waivable procedural rule yet still one of the “more substantive 23 removal defects.” Lively v. Wild Oats Mkts., Inc., 456 F.3d 933, 936 (9th Cir. 2006). 24 III. Discussion 25 A. Fraudulent Joinder 26 The court disregards fraudulently joined defendants when determining if there is 27 complete diversity. Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). A 28 joinder is fraudulent if “the plaintiff fails to state a cause of action against a resident defendant, 1 and the failure is obvious according to the settled rules of the state.” Id. (quoting McCabe v. 2 General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987)). If there is even a possibility that a 3 Nevada state court could find that the complaint states a claim for relief against the allegedly 4 fraudulently joined defendant, the court must remand the case. Hunter, 582 F.3d at 1044–46. 5 “Fraudulent joinder must be proven by clear and convincing evidence.” Hamilton Materials, 6 Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007). 7 Federal Rule of Civil Procedure 20 allows the permissive joinder of multiple defendants 8 in a single lawsuit when (1) a right to relief is asserted against each defendant that relates to or 9 arises out of the same transaction or occurrence or series of transactions or occurrences; and (2) 10 some question of law or fact common to all parties arises in the action. FED. R. CIV. P. 20(a)(2). 11 The rule “is to be construed liberally in order to promote trial convenience and to expedite the 12 final determination of disputes, thereby preventing multiple lawsuits.” League to Save Lake 13 Tahoe v. Tahoe Reg’l Planning Agency, 558 F.2d 914, 917 (9th Cir. 1977). “[T]he impulse is 14 toward entertaining the broadest possible scope of action consistent with fairness to the parties; 15 joinder of claims, parties and remedies is strongly encouraged.” United Mine Workers of Am. v. 16 Gibbs, 383 U.S. 715, 724 (1966). 17 BANA properly joined Chicago Title in this suit. The claims against all defendants arise 18 out of the same series of transactions or occurrences and there are common questions of law or 19 fact. 20 The “same transaction prong” of Rule 20 “refers to the similarity in the factual 21 background of” the claims at issue. Coughlin v. Rogers, 130 F.3d 1348, 1350 (9th Cir. 1997). 22 Claims are part of the same transaction or occurrence if they “arise out of a systematic pattern of 23 events.” Id. at 7. 24 BANA’s relevant claims for bad faith and deceptive trade practices assert that all 25 defendants acted in concert to deny coverage under the title insurance policy. Specifically, the 26 claims posit that Chicago Nevada, under the direction of Chicago Title—itself at the direction of 27 Fidelity—denied coverage under the policy contravening the parties’ expectations. See (ECF 28 No. 1-1 at 22–23). Even if there were separate policies at issue, the allegation is that denial of 1 claims under those separate policies was pursuant to the same directive from the parent 2 company, Fidelity. Thus, the “same transaction” prong of permissive joinder is met. See 3 Coughlin, 130 F.3d at 1350. 4 Further, there are common questions of law or fact.
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1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *
7 BANK OF AMERICA, N.A., Case No. 2:21-CV-893 JCM (VCF)
8 Plaintiff(s), ORDER
9 v.
10 FIDELITY NATIONAL TITLE GROUP, INC., et al., 11 Defendant(s). 12
13 Presently before the court is plaintiff Bank of America, N.A. (“BANA”)’s motion to 14 remand to state court. (ECF No. 6). Defendant Chicago Title Insurance Company (“Chicago 15 Title”) filed a response (ECF No. 21), to which BANA replied (ECF No. 23). 16 Also before the court is Chicago Title’s request for judicial notice.1 (ECF No. 22). 17 I. Background 18 The instant action is one of the many title insurance suits currently pending in Nevada 19 courts. BANA is the beneficiary of deeds of trust encumbering two properties in Nevada: 10728 20 Knickerbocker Ave., Las Vegas, Nevada 89166 (the “Muro deed”) and 7902 Muldrow Street, 21 Las Vegas, Nevada 89139 (the “Faris deed”). (ECF No. 6 at 3–4). Both properties were subject 22 to foreclosure sales. (Id.) As part of loan origination for the purchase of each property, Chicago 23 Title and Chicago Title Agency of Nevada (“Chicago Nevada”)—the Nevada agent of Chicago 24 Title—entered into insurance contracts that guaranteed the superiority of the deeds over 25 competing liens, including any liens that homeowners’ associations might have in foreclosure. 26 27 28 1 Chicago Title’s request is GRANTED. The court takes judicial notice of the offered record as a matter of public record. 1 (Id.) After the foreclosure sales, BANA submitted claims under those title insurance contracts, 2 which were denied. (Id.) 3 BANA then filed the instant litigation in Nevada state court on May 6, 2021. (ECF No. 4 1-1). Chicago Title removed the action to this court the same day before any defendant was 5 served. (ECF No. 1). 6 II. Legal Standard 7 A defendant can remove any civil action over which the district court has original 8 jurisdiction. 28 U.S.C. § 1441(a). Yet federal courts are courts of limited jurisdiction. Owen 9 Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). That is why there is a strong 10 presumption against removal jurisdiction. Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 11 (9th Cir. 2009). The “burden of establishing federal jurisdiction is on the party seeking removal, 12 and the removal statute is strictly construed against removal jurisdiction.” Prize Frize, Inc. v. 13 Matrix Inc., 167 F.3d 1261, 1265 (9th Cir. 1999). 14 A plaintiff can challenge removal with a motion to remand. 28 U.S.C. § 1447(c). To 15 avoid remand, the removing defendant must show by a preponderance of the evidence that there 16 is complete diversity and that the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a). 17 The court will resolve all ambiguities in favor of remand. Gaus v. Miles, Inc., 980 F.2d 564, 566 18 (9th Cir. 1992); Hunter, 582 F.3d at 1042. 19 But even if the diversity jurisdiction requirements are met, a diversity case nonetheless 20 cannot be removed if “any of the parties in interest properly joined and served as defendants is a 21 citizen of the [s]tate in which such action is brought.” 28 U.S.C. § 1441(b)(2) (emphasis added). 22 This is the forum defendant rule, a waivable procedural rule yet still one of the “more substantive 23 removal defects.” Lively v. Wild Oats Mkts., Inc., 456 F.3d 933, 936 (9th Cir. 2006). 24 III. Discussion 25 A. Fraudulent Joinder 26 The court disregards fraudulently joined defendants when determining if there is 27 complete diversity. Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). A 28 joinder is fraudulent if “the plaintiff fails to state a cause of action against a resident defendant, 1 and the failure is obvious according to the settled rules of the state.” Id. (quoting McCabe v. 2 General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987)). If there is even a possibility that a 3 Nevada state court could find that the complaint states a claim for relief against the allegedly 4 fraudulently joined defendant, the court must remand the case. Hunter, 582 F.3d at 1044–46. 5 “Fraudulent joinder must be proven by clear and convincing evidence.” Hamilton Materials, 6 Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007). 7 Federal Rule of Civil Procedure 20 allows the permissive joinder of multiple defendants 8 in a single lawsuit when (1) a right to relief is asserted against each defendant that relates to or 9 arises out of the same transaction or occurrence or series of transactions or occurrences; and (2) 10 some question of law or fact common to all parties arises in the action. FED. R. CIV. P. 20(a)(2). 11 The rule “is to be construed liberally in order to promote trial convenience and to expedite the 12 final determination of disputes, thereby preventing multiple lawsuits.” League to Save Lake 13 Tahoe v. Tahoe Reg’l Planning Agency, 558 F.2d 914, 917 (9th Cir. 1977). “[T]he impulse is 14 toward entertaining the broadest possible scope of action consistent with fairness to the parties; 15 joinder of claims, parties and remedies is strongly encouraged.” United Mine Workers of Am. v. 16 Gibbs, 383 U.S. 715, 724 (1966). 17 BANA properly joined Chicago Title in this suit. The claims against all defendants arise 18 out of the same series of transactions or occurrences and there are common questions of law or 19 fact. 20 The “same transaction prong” of Rule 20 “refers to the similarity in the factual 21 background of” the claims at issue. Coughlin v. Rogers, 130 F.3d 1348, 1350 (9th Cir. 1997). 22 Claims are part of the same transaction or occurrence if they “arise out of a systematic pattern of 23 events.” Id. at 7. 24 BANA’s relevant claims for bad faith and deceptive trade practices assert that all 25 defendants acted in concert to deny coverage under the title insurance policy. Specifically, the 26 claims posit that Chicago Nevada, under the direction of Chicago Title—itself at the direction of 27 Fidelity—denied coverage under the policy contravening the parties’ expectations. See (ECF 28 No. 1-1 at 22–23). Even if there were separate policies at issue, the allegation is that denial of 1 claims under those separate policies was pursuant to the same directive from the parent 2 company, Fidelity. Thus, the “same transaction” prong of permissive joinder is met. See 3 Coughlin, 130 F.3d at 1350. 4 Further, there are common questions of law or fact. BANA claims present questions as 5 to whether specific insurance forms provided coverage, whether Fidelity instructed the other 6 defendants as to those forms, and Chicago Title and Chicago Nevada wrongfully denied claims 7 arising from the HOA sales, amongst others. These questions present more than the “single 8 question of law or fact” necessary to permit joinder. See Bank of Am. V. Fidelity Nat’t Title 9 Grp., Inc., No. 2:21-cv-00348-CDS-BNW, 2022 WL 2819847, at *6 (D. Nev. July 18, 2022). 10 B. Snap Removal 11 Because Chicago Nevada is a properly joined forum defendant, the forum defendant rule 12 in section 1441(b)(2) applies. The court must now consider if Chicago Title’s snap removal was 13 proper. 14 Snap removal is the tactic of removing a diversity case before a forum defendant has 15 been served. The Second, Third, Fifth, and Sixth circuits endorse the tactic,2 but the Ninth has 16 not squarely addressed it. Snap removal is performed against the backdrop of the forum 17 defendant rule, which “is a procedural, or non-jurisdictional, rule.” Lively v. Wild Oats Mkts., 18 Inc., 456 F.3d 933, 936. Unlike jurisdictional rules, procedural rules may not be addressed sua 19 sponte by the court. Skranak v. Castenada, 425 F.3d 1213, 1216 (9th Cir. 2005). The forum 20 defendant rule’s characterization as a procedural, rather than jurisdictional, rule has led to this 21 new form of jurisdictional gamesmanship in litigation.3 22 Chicago Title relies on circuit cases outside the Ninth Circuit for its position, see supra 23 n.2, and mentions Judge Navarro’s position in this district allowing snap removal under a “plain
24 2 See Gibbons v. Bristol-Myers Squibb Co., 919 F.3d 699, 701 (2d Cir. 2019); Encompass 25 Ins. Co. v. Stone Mansion Rest. Inc., 902 F.3d 147 (3d Cir. 2018); Texas Brine Co., L.L.C. v. Am. Arb. Ass’n, Inc., 955 F.3d 482 (5th Cir. 2020); and McCall v. Scott, 239 F.3d 808 (6th Cir. 2001). 26 3 The ubiquity of electronic docketing has also contributed to the rise in snap removals. 27 See, e.g., Perez v. Forest Labs., Inc., 902 F. Supp. 2d 1238, 1243 (E.D. Mo. 2012) (“Pre-service removal by means of monitoring the electronic docket smacks more of forum shopping by a 28 defendant, than it does of protecting the defendant from the improper joinder of a forum defendant that plaintiff has no intention of serving.”) (emphasis added). 1 reading” of § 1441(b)(2). See MetLife Home Loans, LLC v. Fid. Nat’l Title Grp., Inc., Case No. 2 2:20-cv-017980-GMN-VCF, 2021 WL 4096540 at *4 (D. Nev. Sept. 8, 2021). (ECF No. 21 at 3 2, 6). BANA contends that the Ninth Circuit has “explicitly rejected the argument that 4 1441(b)…expanded removal jurisdiction to permit removal, despite want of diversity, if a 5 resident defendant whose presence would defeat diversity had not been served.” Preaseau v. 6 Prudential Ins. Co. of Am., 591 F.2d 74, 79 (9th Cir. 1979) (citing Clarence E. Morris, Inc. v. 7 Vitek, 412 F.2d 1174, 1176 n.1 (9th Cir. 1969).4 8 This is not the court’s first say on snap removal. The court adopts its prior reasoning 9 from U.S. Bank Trustee, Wells Fargo Bank, and Carrington.5 See U.S. Bank Trustee, 2020 WL 10 7360680, Wells Fargo Bank, 2020 WL 5898779; Carrington, 2020 WL 3892786. In short, the 11 word “any” in “any parties in interest properly joined and served” necessarily means “that the 12 [removal] statute assumes at least one party has been served.” Carrington, 2020 WL 3892786, 13 at *3 (emphasis added) (citing Gentile v. Biogen Idec, Inc., 934 F. Supp. 2d 313, 316 (D. Mass. 14 2013)). And snap removal contravenes the removal statute’s purpose of preserving a plaintiff’s 15 choice of a state court forum when suing a proper forum defendant. Accord Wells Fargo Bank, 16 2020 WL 7388621, at *4 (“The purposes underlying § 1441(b)(2) are better served by 17 disallowing removal before any defendant is served.”). 18 Chicago Title forcefully asserts that this court errantly relied on Gentile to remand recent 19 “snap” removed cases because Gentile is inconsistent with a First Circuit ruling. (ECF No. 23 at 20 2). Even assuming arguendo that this is true, the First Circuit’s decisions are not binding on this 21 court. 22 The court reiterates its prior reasoning that “Congress would not have wanted to stop 23 gamesmanship by plaintiffs by allowing gamesmanship by defendants.” U.S. Bank Trustee, 24 2020 WL 7360680, at *4. To the extent there is ambiguity here—including uncertainty and 25
26 4 While Preaseau did not explicitly consider “snap removal,” its interpretation of § 27 1441(b) is instructive. 28 5 The court’s reasoning has been endorsed by Judges Dorsey and Gordon. HSBC Bank USA, Nat’l Ass’n, 2020 WL 7625233; Wells Fargo Bank, 2020 WL 7388621. 1 | unsettled law in the Ninth Circuit—the court resolves the ambiguity in favor of remand. Gaus, 2| 980 F.2d at 566; Hunter 582 F.3d 1039. 3 Accordingly, because no defendant had been served prior to Chicago Title’s removal, this case must be remanded. 5| IV. Conclusion 6 Accordingly, 7 IT IS HEREBY ORDERED, ADJUDGED, and DECREED that BANA’s motion to 8 | remand (ECF No. 6) be, and the same hereby is, GRANTED. 9 IT IS FURTHER ORDERED that the clerk shall REMAND this case back to the Eighth 10 | Judicial District Court for Clark County, Nevada, Case No. A-21-834244-C, and CLOSE this 11 | case. 12 DATED September 29, 2022. 13 Mbt Atoltan 14 UNITED, STATES DISTRICT JUDGE 15 16 17 18 19 20 21 22 23 24 25 26 27 28
es C. Mahan District Judge -6-