Bolgner-Linna v. American Stock Transfer & Trust Company, LLC

• Court: District Court, S.D. California
• Decided: November 7, 2024
• Docket: 3:24-cv-00539
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 CARMEN BOLGER-LINNA, Case No.: 3:24-cv-00539-RBM-VET

12 ORDER: Plaintiff, 13 v. (1) GRANTING MOTION TO 14 REMAND; AMERICAN STOCK TRANSFER & 15 TRUST COMPANY, LLC; (2) DENYING DEFENDANTS’ 16 WINTRUST INVESTMENTS, LLC; MOTION TO DISMISS AS MOOT; WINTRUST FINANCIAL CORP.; 17 EQUINITI TRUST COMPANY, LLC; [Docs. 5, 6] 18 and DOES 1 through 10, inclusive,

19 Defendants. 20 21 22 Pending before the Court is Plaintiff Carmen Bolger-Linna’s (“Plaintiff”) Motion to 23 Remand (“Motion to Remand”). (Doc. 6.) Plaintiff argues that this case should be 24 remanded because removal was untimely based on the date of service, and diversity 25 jurisdiction does not exist. (See Doc. 6-1.) Defendants Wintrust Investments, LLC, 26 Wintrust Financial Corp., American Stock Transfer & Trust Company, LLC, and Equiniti 27 Trust Company LLC (collectively, the “Defendants”) filed an Opposition to the Motion to 28 Remand on May 6, 2024 (“Opposition”). (Doc. 8.) On May 13, 2024, Plaintiff filed a 1 reply (“Reply”). (Doc. 9.) Also pending before the Court is Defendants’ Motion to 2 Dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) (“Motion to 3 Dismiss”). (Doc. 5.)1 4 The Court finds this matter suitable for determination without oral argument 5 pursuant to Civil Local Rule 7.1(d)(1). For the reasons discussed below, the Court 6 GRANTS Plaintiff’s Motion to Remand, DENIES Defendants’ Motion to Dismiss as 7 moot, and REMANDS this action to the Superior Court of the State of California, County 8 of San Diego. 9 I. BACKGROUND 10 A. Factual Background2 11 Plaintiff’s husband, James Linna (“Decedent”), died on June 12, 2021. (Motion to 12 Remand [Doc. 6-1] at 2.)3 Prior to his death, Decedent purchased 128 publicly traded 13 shares of Wintrust Financial Corporation (the “Shares”). (Id.) After Decedent’s death, 14 Plaintiff claimed ownership of the Shares pursuant to California’s community property and 15 intestate succession laws. (Compl. [Doc. 1-2] ¶ 8.) Despite having provided the requisite 16 documentation to Defendants, Defendants have yet to reissue, replace, and/or transfer 17 ownership of the Shares to Plaintiff. (Id. ¶¶ 10–11.) 18 B. Procedural Background 19 On January 8, 2024, Plaintiff filed this action in the Superior Court of the State of 20 California, County of San Diego, Case No. 37-2024-00000604-CU-BT-CTL. (Doc. 1-2, 21

22 1 Plaintiff filed an Opposition to the Motion to Dismiss on May 6, 2024 (Doc. 7), and 23 Defendants filed their Reply on May 13, 2024. (Doc. 10.) In their Motion to Dismiss, Defendants argue that Plaintiff fails to establish sufficient facts in support of her claims for 24 breach of fiduciary duty, civil theft, conversion, fraud, and negligent misrepresentation. 25 (Doc. 5 at 4–10.)

26 2 The Court’s summary of Plaintiff’s Complaint below reflects Plaintiff’s factual and legal 27 allegations, not conclusions of fact or law by this Court.

28 3 1 Complaint [“Compl.”] at 8.) Plaintiff asserts six causes of action for breach of fiduciary 2 duty, theft, fraud, negligent misrepresentation, conversion, and accounting. (Id. at 10–14.) 3 1. Service of Process 4 On January 18, 2024, Plaintiff mailed the Summons and the Complaint via certified 5 mail to Defendants Wintrust Investments, LLC and Wintrust Financial Corporation 6 (collectively, the “Wintrust Defendants”), Equiniti Trust Company LLC (“Equiniti”), and 7 American Stock Transfer & Trust Company, LLC (“AST”). (Motion to Remand [Doc. 6- 8 1] at 4; Doc. 6-2, Declaration of Douglas Jaffe [“Jaffe Decl.”] ¶ 9.) Plaintiff addressed the 9 mailings to the “Person Authorized to Receive Service of Process” and requested return 10 receipts. (See Jaffe Decl. at 7–11, Ex. A; Doc. 8, Opposition [“Opp.”] at 5.) 11 According to Plaintiff, the Wintrust Defendants and Equiniti received the mailed 12 summons on January 18, 2024 and January 29, 2024, respectively. (Motion to Remand 13 [Doc. 6-1] at 4; Jaffe Decl. ¶ 8.) On February 2, 2024, the Wintrust Defendants’ counsel 14 informed Plaintiff’s counsel by telephone that the Wintrust Defendants had not been 15 properly served. (Doc. 8-2, Declaration of Christina Rea Snider (“Snider Decl.”) ¶ 3.) On 16 February 20, 2024, counsel for Plaintiff and counsel for the Wintrust Defendants fully 17 executed two Notice and Acknowledgment of Receipt forms pursuant to California Code 18 of Civil Procedure Section 415.30 (the “Notice Forms”). (See Doc. 1-5 at 2–3.) A Notice 19 and Acknowledgment of Receipt was not executed for the remaining Defendants. 20 2. Notice of Removal 21 On March 21, 2024, Defendants, collectively, removed this action to this Court 22 based on diversity jurisdiction (“Notice of Removal”).4 (Doc. 1.) In the Notice of 23 Removal, Defendants assert this Court has subject matter jurisdiction based on diversity 24 jurisdiction. (Id. ¶ 4.) For diversity of citizenship, Defendants contend that the Wintrust 25 Defendants are citizens of Illinois and Defendant Equiniti is a citizen of both New York 26 and Delaware. (Id. ¶¶ 11–13.) Defendants assert that Defendant AST recently changed its 27

28 4 1 name to Equiniti and therefore is not a separate party. (Id. ¶ 14.) Additionally, Defendants 2 argue that the amount-in-controversy in this case exceeds $75,000 because Plaintiff seeks 3 compensatory damages equal to the value of the Shares at the time of the alleged 4 conversion (est. $11,986)5, punitive damages, treble damages, and attorneys’ fees. (Id. ¶¶ 5 18–25.) 6 II. LEGAL STANDARD 7 A defendant may remove a civil action from state court to federal court. 28 U.S.C. 8 § 1441(a). The removing party “has the burden of establishing that removal was proper.” 9 Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). There is a strong presumption 10 against removal jurisdiction. Gaus, 980 F.2d at 566 (“The ‘strong presumption’ against 11 removal jurisdiction means that the defendant always has the burden of establishing that 12 removal is proper.”) (citing Nishimoto v. Federman–Bachrach & Assocs., 903 F.2d 709, 13 712 n.3 (9th Cir. 1990) and Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th 14 Cir.1988)). Thus, doubts as to whether the federal court has subject 15 matter jurisdiction must be resolved in favor of remand. See Duncan v. Stuetzle, 76 F.3d 16 1480, 1485 (9th Cir. 1996); Gaus, 980 F.2d at 566 (“Federal jurisdiction must be rejected 17 if there is any doubt as to the right of removal in the first instance.”). 18 III. DISCUSSION 19 On April 22, 2024, Plaintiff filed the instant Motion to Remand the case back to state 20 court, arguing that removal was untimely because Defendants were served through 21 certified mail over thirty days before Defendants filed their Notice of Removal and 22 Defendants failed to sufficiently establish a prima facie case of diversity jurisdiction. (See 23 Motion to Remand [Doc. 6-1].) In their Opposition, Defendants respond that the time for 24 25 5 Plaintiff also seeks to recover any profit Defendants may have derived by withholding 26 the Shares. (Compl. ¶¶ 44-47.) According to Defendants, Plaintiffs’ allegations support 27 using the Complaint’s filing date as the claim valuation date because “Defendants would have realized any alleged profit as of that date. (Doc. 1, Notice of Removal [“NOR”] ¶ 28 1 removal did not begin until Defendants were formally served through the execution of the 2 Notice Forms on February 20, 2024. (Opp. [Doc. 8] at 5.) In support of their position, 3 Defendants attach a declaration from attorney Christina Rea Snider explaining that she 4 informed Plaintiff’s counsel, Douglas Jaffe, that the Wintrust Defendants had not been 5 properly served and subsequently agreed to accept service through a Notice and 6 Acknowledgment of Receipt. (Snider Decl. ¶¶ 3–4.) Snider also explained that Defendant 7 AST is now Equiniti due to a merger between the two entities. (Id. ¶ 12.) The Court 8 addresses each argument in turn. 9 A. Timeliness of Removal 10 “The notice of removal of a civil action or proceeding shall be filed within 30 days 11 after the receipt by the defendant, through service or otherwise, of a copy of the initial 12 pleading setting forth the claim for relief upon which such action or proceeding is based.” 13 28 U.S.C. § 1446(b)(1). Failure to remove an action within thirty days waives a party’s 14 right to remove. Cantrell v. Great Republic, Inc., 873 F.2d 1249, 1256 (9th Cir. 1989). 15 Failure to timely file a notice of removal is a procedural defect mandating remand to state 16 court if a motion to remand is brought within 30 days of the notice of removal. See 28 17 U.S.C. § 1447(c); Fristoe v. Reynolds Metals Co., 615 F.2d 1209, 1212 (9th Cir.1980) 18 (“[T]he time limit is mandatory and a timely objection to a late petition will defeat 19 removal.”). 20 Here, the parties disagree over when the 30-day clock began to run. Plaintiff argues 21 that the 30-day clock started on January 23, 2024 and January 29, 2024, when the summons 22 and complaint were served via certified mail on the Wintrust Defendants and Defendant 23 Equiniti, respectively. (Motion to Remand [Doc. 6-1] at 7–8.) Defendants respond that 24 the 30-day period started on February 20, 2024, when the parties’ counsel executed the 25 Notice Forms, because Defendants had not been properly served by mail. (NOR [Doc. 1] 26 ¶¶ 6–7; Opp. [Doc. 8] at 5–6.) Therefore, the timeliness of Defendants’ Notice of Removal 27 hinges on whether Plaintiff properly served the Wintrust Defendants and Defendant 28 Equiniti in January 2024. 1 “The issue of the sufficiency of service of process prior to removal is strictly a state 2 law issue.” Lee v. City of Beaumont, 12 F.3d 933, 936-37 (9th Cir. 1993), overruled on 3 other grounds, California Dep’t of Water Resources v. Powerex Corp., 533 F.3d 1087, 4 1096 (9th Cir. 2008). Section 415.40 provides in relevant part: 5 A summons may be served on a person outside this state in any manner provided by this article or by sending a copy of the summons and of the 6 complaint to the person to be served by first-class mail, postage prepaid, 7 requiring a return receipt. Service of a summons by this form of mail is deemed complete on the 10th day after such mailing. 8 9 Cal. Civ. Proc. Code § 415.40. As Defendants are corporate entities, Plaintiff was also 10 required to comply with Section 416.10 of the California Code of Civil Procedure, which 11 states that a party can serve a corporation by delivering a copy of the summons and 12 complaint “[t]o the president, chief executive officer, or other head of the corporation, a 13 vice president, a secretary or assistant secretary, a treasurer or assistant treasurer, a 14 controller or chief financial officer, a general manager, or a person authorized by the 15 corporation to receive service of process.” Cal. Civ. Proc. Code § 416.10(b) (emphasis 16 added). 17 Once service is challenged, the plaintiff bears the burden of establishing that service 18 was valid under Section 415.40. See Victoriano v. Classic Residence Mgmt., LP, No. 14- 19 cv-2346-LAB (JLB), 2015 WL 3751984, at *2 (S.D. Cal. June 15, 2015) (citing Dill v. 20 Berquist Constr. Co., 24 Cal App. 4th 1426, 1439–40 (1994)). “[M]ere receipt of the 21 complaint unattended by any formal service” is insufficient to trigger a defendant’s time 22 for removal. Murphy Brothers, Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 347–48 23 (1999). “There is no dispute that state law determines when formal service of process is 24 effected.” HMG Benefit Servs., LLC v. Fringe Ins. Benefits, Inc., No. 07cv1704 DMS 25 (LSP), 2007 WL 3333115, at *2 (S.D. Cal. Nov. 7, 2007). The California Supreme Court 26 has also rejected the argument that service is effective upon receipt of the summons and 27 complaint pursuant to Section 415.40. See Johnson & Johnson v. Superior Court, 38 Cal. 28 3d 243, 249–50 (1985). Courts have determined that substantial compliance with Section 1 415.40 may be achieved if the summons was in fact received by one of the persons to be 2 served pursuant to Section 416.10. Dill, 24 Cal. App. 4th at 1436–37. 3 In Dill v. Berquist Construction Co., the court held that the plaintiff did not 4 substantially comply with California’s service of process statutes when he mailed the 5 summons and complaint directly to the defendant corporations without addressing it to an 6 individual to be served under Section 416.10. Id. at 1436. The return receipts for the 7 mailings were signed by individuals who were employees of the defendant corporations 8 but not necessarily agents. Id. at 1432. Although the plaintiff maintained that defendant’s 9 counsel had expressly acknowledged receipt of the summons, the court found there was no 10 evidence of such acknowledgment. Id. Even if counsel had expressly admitted receipt, the 11 court determined that “the mere fact that some employee of the corporation received the 12 summons does not necessarily establish substantial compliance.” Id. at 1438–39. “Rather, 13 there must be evidence ‘establishing actual delivery to the person to be served.’” Id. 14 (quoting Cal. Civ. Proc. Code § 417.20(a)). 15 Plaintiff attempts to distinguish this case from Dill. She argues that she substantially 16 complied with the statutory requirements by mailing the Summons and Complaint to 17 Defendants’ corporate addresses, directing the mailings to the “Person Authorized to 18 Receive Service of Process,” and receiving signed return receipts. (Motion to Remand 19 [Doc. 6-1] at 7; Reply [Doc. 9] at 2.) Plaintiff contends that the signed return receipts show 20 that the mailings were addressed, and therefore delivered to a “Person Authorized to 21 Receive Service of Process” on behalf of the corporate defendants. (Reply [Doc. 9] at 2.) 22 However, Plaintiff did not address the Summons to any specific person, does not identify 23 which authorized individual purportedly received the Summons, and does not assert that 24 the individuals who signed the return receipts were authorized to accept service on behalf 25 of the corporate defendants. See Dill, 24 Cal. App. 4th at 1438 (noting that there was no 26 evidence the recipient of the summons was defendant’s agent or authorized to accept 27 service of process); cf. Neadeau v. Foster, 129 Cal. App. 3d 234, 236 (1982) (finding 28 service was proper under Section 415.40 where the plaintiff’s employee attested to the fact 1 that the return receipt’s signatory was an employee authorized to sign and accept mail on 2 behalf of the defendant). Plaintiff merely assumes that the mail was at some point directed 3 and delivered to a person with authority to accept service on behalf of the corporations. 4 Plaintiff further contends that Defendants’ counsel expressly acknowledged service 5 through electronic and telephonic communications thereby demonstrating actual delivery 6 of the Summons to the corporate Defendants. (Jaffe Decl. [Doc. 6-2] ¶ 10.) The electronic 7 communication, however, does not reflect any express acknowledgment of receipt by 8 Defendants’ counsel. (See id. (Ex. B) at 14.). Instead, the messages from Defendants’ 9 counsel state that she represents Wintrust and requests a time to speak with Plaintiff’s 10 counsel. (Id.) In her declaration, Defendants’ counsel explains that she informed 11 Plaintiff’s counsel that the Wintrust Defendants had not been properly served and 12 subsequently agreed to accept service through the Notice Forms. (Snider Decl. ¶¶ 3–4.)6 13 This is supported by the subsequent execution of the Notice Forms by counsel for both 14 parties on February 20, 2024. (See Doc. 1-5; Snider Decl. ¶ 7.) Plaintiff therefore failed 15 to substantially comply with the service-by-mail statutory requirements. 16 Pursuant to California Code of Civil Procedure Section 415.30, service is deemed 17 complete once the Notice and Acknowledgment of Receipt has been executed and returned 18 to the sender. See Hillman v. PacifiCorp, No. 2:21-cv-00848-MCE (CKD), 2022 WL 19 597583, at *5 (E.D. Cal. Feb. 28, 2022) (holding that email service was effective “on the 20 date the ‘acknowledgment of receipt of summons [wa]s executed and returned’ ”) (citing 21 Cal. Civ. Proc. Code § 415.30(c)). Counsel’s execution of the Notice Form completed 22 Plaintiff’s formal service of process under Section 415.30 and triggered the Wintrust 23 Defendants’ thirty-day period to file the Notice of Removal. See 28 U.S.C. § 1446(b). 24 Accordingly, Defendants’ removal on March 21, 2024, was timely. 25 26 27 6 Defendants’ counsel states that Equiniti does not believe, upon information and belief, 28 1 B. Diversity Jurisdiction 2 District courts have diversity jurisdiction over civil actions between citizens of 3 different states when the amount in controversy exceeds $75,000, exclusive of interest and 4 costs. 28 U.S.C. § 1332(a). Plaintiff argues that Defendants have not sufficiently 5 established that complete diversity exists as between the parties and that the jurisdictional 6 threshold has not been met. (Motion to Remand [Doc. 6-1] at 5–6.) 7 1. Complete Diversity 8 Plaintiff contends that Defendants have not proven diversity of citizenship because 9 Defendants have not sufficiently established that Defendant AST is owned by Defendant 10 Equiniti and therefore share the same citizenship. (Id. at 5.) Defendants respond that 11 Plaintiff does not contest their claim that AST recently changed its name to Equiniti and 12 that AST’s citizenship for diversity purposes is identical to Defendant Equiniti’s 13 citizenship. (NOR [Doc. 1] ¶ 14; Opp. [Doc. 8] at 6.) 14 “A corporation is deemed to be a citizen of the state of incorporation and the state 15 of its principal place of business.” Muñoz v. Small Bus. Admin., 644 F.2d 1361, 1365 (9th 16 Cir. 1981) (citing 28 U.S.C. § 1332(c)). For purposes of diversity jurisdiction, a limited 17 liability company “is a citizen of every state of which its owners/members are citizens.” 18 Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). 19 “Individuals are citizens of their state of domicile.” Muñoz, 644 F.2d at 1365. “A person’s 20 domicile is her permanent home, where she resides with the intention to remain or to which 21 she intends to return.” See Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 22 2001). 23 “[A] removing defendant’s notice of removal ‘need not contain evidentiary 24 submissions’ but only plausible allegations of the jurisdictional elements.” Arias v. 25 Residence Inn by Marriott, 936 F.3d 920, 922 (9th Cir. 2019) (quoting Ibarra v. Manheim 26 Invs., Inc., 775 F.3d 1193, 1197 (9th Cir. 2015)). “If a defendant carries its burden of 27 presenting evidence that diversity of citizenship exists, the burden of production shifts to 28 the plaintiff to rebut the evidence of diversity of citizenship.” Canesco v. Ford Motor Co., 1 570 F. Supp. 3d 872, 885 (S.D. Cal. 2021). “[A] party with the burden of proving 2 citizenship may rely on the presumption of continuing domicile, which provides that, once 3 established, a person’s state of domicile continues unless rebutted with sufficient evidence 4 of change.” Adams v. W. Marine Prod., Inc., 958 F.3d 1216, 1221 (9th Cir. 2020) (internal 5 quotation marks and citations omitted). 6 Here, Plaintiff alleges Defendants AST and Equiniti are limited liability companies 7 doing business in California. (Compl. ¶¶ 2, 5.) However, in the Notice of Removal, 8 Defendants allege that Defendant Equiniti’s sole member is “Armor Holding II LLC, which 9 was organized under the laws of New York and is registered in New York. Armor Holding 10 II LLC’s sole member is Armor Intermediate Company, LLC, which was organized under 11 the laws of Delaware and is registered in Delaware. Armor Intermediate Company, LLC’s 12 sole member is Armor Holdco, Inc., which is incorporated in Delaware, and which has its 13 principal place of business in New York.” (NOR [Doc. 1] ¶ 13.) 14 Defendants also allege that Defendant AST recently changed its name to Equiniti 15 and therefore is not a separate party. (Id. ¶ 14.) Plaintiff does not contest Defendants’ 16 allegation that Defendant Equiniti is a citizen and resident of New York and Delaware. 17 Instead, Plaintiff argues Defendants have not met their burden in proving Defendant 18 Equiniti’s ownership of AST. (Motion to Remand [Doc. 6-1] at 5.) Plaintiff’s failure to 19 rebut Defendants’ allegation that Defendant Equiniti, and by relation Defendant AST, is 20 domiciled in New York and Delaware is fatal to her argument. See Ayala v. Ford Motor 21 Co., Case No. 20-cv-02383-BAS-KSC, 2021 WL 2644506, at *2 (S.D. Cal. June 28, 2021) 22 (finding complete diversity where plaintiff did not contest defendant’s allegations as to 23 plaintiff’s citizenship in California, but rather plaintiff only argued Defendant did not meet 24 its pleading requirement to prove plaintiff’s citizenship by the preponderance of the 25 evidence). Plaintiff cites no evidence to rebut Defendants’ evidence of Defendant Equiniti 26 and Defendant AST’s shared citizenship. (See Snider Decl. ¶ 12, Ex. B.) See Potts v. Ford 27 Motor Co., Case No. 3:21-cv-00256-BEN-BGS, 2021 WL 2014796, at *4 (S.D. Cal. May 28 20, 2021) (“Plaintiffs coyly evade addressing their own citizenship, instead arguing 1 Defendants carry the burden of proving diversity of citizenship … [but] [w]here the 2 unrebutted evidence shows Plaintiffs reside in California, the Court may treat it as ‘prima 3 facie evidence of domicile and citizenship.’”) (quoting Kalasho v. BMW of N. Am. LLC, 4 Case No. 20-CV-1423-CAB-AHG, 2020 WL 5652275, at *2 (S.D. Cal. Sept. 23, 2020)). 5 Thus, even if Plaintiff did contest Defendants’ allegation of Defendant Equiniti’s New 6 York and Delaware citizenship, Plaintiff failed to meet her burden to rebut Defendants’ 7 evidence of Defendant AST renaming itself to Equiniti. See Canesco, 570 F. Supp. 3d at 8 885–87 (finding defendant adequately established diversity of citizenship where plaintiff 9 failed to submit evidence combatting evidence from the sales contract of plaintiff’s 10 California residence and therefore defendant was entitled to the presumption of continued 11 domicile); Ha Nguyen v. BMW of N. Am., LLC, Case No. 3:20-cv-02432-JLS-BLM, 2021 12 WL 2411417, at *3 (S.D. Cal. June 14, 2021) (“Plaintiff has not presented any facts to 13 dispute that Plaintiff was domiciled at the address on the Purchase Agreement. … 14 Similarly, Plaintiff has not presented any facts to indicate Plaintiff no longer resides at that 15 address.”). Defendants have thereby met their burden in establishing that Defendants 16 Equiniti and AST share the same domicile in New York and Delaware. 17 Plaintiff also does not contest Defendants’ allegations in their Notice of Removal 18 that the Wintrust Defendants are citizens of Illinois. (See Motion to Remand [Doc. 6-1].) 19 See Canesco, 570 F. Supp. 3d at 885 (accepting defendant Ford Motor Company as citizen 20 of Delaware and Michigan where defendant’s notice of removal alleged as much and 21 plaintiff did not contest that assertion). The Court therefore finds the Wintrust Defendants 22 are domiciled in Illinois and concludes that complete diversity exists in this case. 23 2. Amount in Controversy 24 The amount in controversy is not clear from the face of the Complaint. Defendants 25 therefore bear the burden of showing by a preponderance of the evidence that it is “more 26 likely than not” that the amount in controversy exceeds $75,000. Sanchez v. Monumental 27 Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). 28 1 Plaintiff argues Defendants have not met their burden in establishing the amount in 2 controversy exceeds $75,000 because Defendants include speculative and duplicative 3 treble damages and punitive damages in the amount-in-controversy calculation. (Motion 4 to Remand [Doc. 6-1] at 5–8.) Defendants respond that the amount in controversy exceeds 5 the jurisdictional threshold because Plaintiff seeks, in aggregate, compensatory damages 6 in the amount of the actual value of the Shares, punitive damages, attorneys’ fees, and 7 treble damages under California Penal Code Section 496(c). (Opp. [Doc. 8] at 8.) 8 The amount in controversy is “not a prospective assessment of [a] defendant’s 9 liability.” Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395, 400 (9th Cir. 2010). Rather, it 10 is the “amount at stake in the underlying litigation.” Theis Rsch., Inc. v. Brown & Bain, 11 400 F.3d 659, 662 (9th Cir. 2005). In assessing the amount in controversy, a court must 12 “assume that the allegations of the complaint are true and assume that a jury will return a 13 verdict for the plaintiff on all claims made in the complaint.” Campbell v. Vitran Exp., 14 Inc., 471 F. App’x 646, 648 (9th Cir. 2012) (quoting Kenneth Rothschild Tr. v. Morgan 15 Stanley Dean Witter, 199 F. Supp. 2d 993, 1001 (C.D. Cal. 2002)). “In that sense, the 16 amount in controversy reflects the maximum recovery the plaintiff could reasonably 17 recover.” Arias, 936 F.3d at 927; see also Chavez v. JPMorgan Chase & Co., 888 F.3d 18 413, 417 (9th Cir. 2018) (explaining that the amount in controversy includes all amounts 19 “at stake” in the litigation at the time of removal, “whatever the likelihood that [the 20 plaintiff] will actually recover them”). 21 The parties do not dispute that Plaintiff’s compensatory damages equal the value of 22 the 128 shares of stock that Defendants allegedly failed to transfer to her, which amounts 23 to $11,968.7 (NOR [Doc. 1] ¶ 19.) To avoid remand, Defendants must therefore establish 24 that an additional $63,031 is in controversy. 25

26 7 In her Reply, Plaintiff argues that the value of the shares, and thus the amount of 27 compensatory damages, has decreased because Defendants have transferred 120 out of the 128 shares at issue to Plaintiff since the Notice of Removal was filed. (Reply [Doc. 9] at 28 1 a) Treble Damages and Punitive Damages 2 Plaintiff seeks treble damages under California Penal Code Section 496(c). (See 3 Compl., Prayer for Relief.) Section 496 prohibits the receipt of stolen property when the 4 property has been obtained in any manner constituting theft. Cal. Penal Code § 496(a). A 5 plaintiff who was injured by receipt of stolen property under this provision may recover 6 treble damages and attorneys’ fees. Id. § 496(c). As treble damages under Section 496(c) 7 are three times Plaintiff’s alleged actual damages ($11,968), approximately $35,904 may 8 be awarded in treble damages should Plaintiff prevail. 9 Because Plaintiffs have pled treble damages and punitive damages, Defendants 10 reason that both are available and should therefore be included in the amount in controversy 11 calculation. (Opp. [Doc. 8] at 8.) Although the amount of damages has been tripled under 12 Section 496(c), Defendants also posit a potential punitive damages figure of $11,968, 13 arguing that a “conservative” 1:1 ratio between compensatory and punitive damages 14 supports a punitive damage assessment for amount in controversy purposes. (NOR [Doc. 15 1] ¶ 24.) 16 When actual and punitive damages are recoverable under a complaint’s allegations, 17 each must be considered in determining the amount in controversy. See Gibson v. Chrysler 18 Corp., 261 F.3d 927, 945 (9th Cir. 2001) (citing Bell v. Preferred Life Assur. Soc’y, 320 19 U.S. 238, 240 (1943) and Goldberg v. CPC Int’l, Inc., 678 F.2d 1365, 1367 (9th Cir. 1982)). 20 Before they may be included, however, the party asserting jurisdiction must establish that 21 punitive damages would be permitted under the applicable state law based on the conduct 22 alleged. See Davenport v. Mut. Ben. Health & Accident Ass’n, 325 F.2d 785, 787 (9th Cir. 23 1963) (noting that punitive, or exemplary, damages should not be included in the amount 24 25

26 at stake from the time that the complaint was removed to federal court. Chavez, 888 F.3d 27 at 417–18 (“When we say that the amount in controversy is assessed at the time of removal, we mean that we consider damages that are claimed at the time the case is removed by the 28 1 in controversy “if under the applicable state law [they] would be legally impossible to 2 recover”). 3 “California courts have held that a plaintiff cannot recover punitive damages as an 4 additional recovery if a defendant is liable for a statutory penalty or multiple damages 5 under a statute, the award is punitive in nature, and the award penalizes essentially the same 6 conduct as an award of punitive damages.” Fassberg Constr. Co. v. Hous. Auth. of City of 7 Los Angeles, 152 Cal. App. 4th 720, 759–60 (2007), as modified on denial of reh’g (June 8 21, 2007) (citing cases). “To impose both a statutory penalty or multiple damages award 9 and punitive damages in those circumstances would be duplicative.” Id. (citing 10 Troensegaard v. Silvercrest Indus., Inc., 175 Cal.App.3d 218, 226–228 (1985) and 11 Marshall v. Brown, 141 Cal. App. 3d 408, 419 (1983)); see, e.g., McCrum v. Gen. Motors 12 LLC, No. 2:23cv06984-SVW (PVC), 2023 WL 8234640, at *4 (C.D. Cal. Nov. 27, 2023) 13 (“To the extent that Plaintiff has alleged both [a civil penalty and punitive damages], only 14 one should be included in the amount in controversy calculation.”). 15 Here, Defendants have not established that punitive damages and treble damages are 16 jointly permissible under state law based on the conduct alleged. In support of their 17 punitive damages estimate, Defendants cite to several jury verdicts involving similar 18 claims such as breach of fiduciary duty, fraud, and conversion. (NOR [Doc. 1] ¶ 24.) 19 Defendants, however, do not identify any comparable cases to show that punitive damages 20 in addition to treble damages are possible based on similar facts as those pleaded in the 21 Complaint. Greene v. Harley-Davidson, Inc., 965 F.3d 767, 773 (9th Cir. 2020) (holding 22 a defendant does not need to show that punitive damages are “more likely than not,” but 23 that they are merely “possible”). The Court therefore includes treble damages, but not 24 punitive damages, in the amount in controversy, as the higher amount is a better indicator 25 of the “amount in dispute.” 26 b) Attorneys’ Fees 27 Plaintiffs also request attorneys’ fees pursuant to Section 496(c) of the Penal Code. 28 (See Compl., Prayer for Relief.) The Ninth Circuit has recently reiterated that “when a 1 statute or contract provides for the recovery of attorneys’ fees, prospective attorneys’ fees 2 must be included in the assessment of the amount in controversy.” Arias, 936 F.3d at 922 3 (citing Fritsch v. Swift Transp. Co. of Ariz., LLC, 899 F.3d 785, 794 (9th Cir. 2018)); see 4 Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th Cir. 1998) (“[W]here an underlying 5 statute authorizes an award of attorneys’ fees, either with mandatory or discretionary 6 language, such fees may be included in the amount in controversy.”). Because Section 7 496(c) of the California Penal Code permits the plaintiff to recovery attorneys’ fees, the 8 Court must consider attorneys’ fees as an element of the amount in controversy in this case. 9 While courts “must include future attorneys’ fees recoverable by statute or contract 10 when assessing” the amount in controversy, a removing defendant must establish the 11 “amount in controversy (including attorneys’ fees) exceeds the jurisdictional threshold 12 with summary-judgment-type evidence[.]” Fritsch, 899 F.3d at 795 A “district court may 13 reject the defendant’s attempts to include future attorneys’ fees in the amount in 14 controversy if the defendant fails to satisfy this burden of proof.” Id. To determine the 15 amount of attorneys’ fees at stake, the removing party can provide an “estimate[] [of] the 16 amount of time that the case will require” and an estimate of “plaintiff’s counsel’s hourly 17 billing rate.” Surber v. Reliance Nat’l Indem. Co., 110 F. Supp. 2d 1227, 1232 (N.D. Cal. 18 2000). 19 Defendants fail to proffer any evidence suggesting the approximate cost of 20 Plaintiff’s attorneys’ fees. Defendants instead summarily state that “[i]f Plaintiff’s attorney 21 charges even $450 per hour, then he will incur over $27,129 after 61 hours of work.” (NOR 22 [Doc. 1] ¶ 25.) Defendants provide no basis, reasoning, or explanation for the estimated 23 amount of time the case will require, let alone summary-judgment-type evidence. Thus, 24 Defendants have not met their burden to show that any attorneys’ fees are in controversy. 25 Even if the Court were to consider Defendants’ estimated attorneys’ fees ($27,129) 26 in addition to the estimated treble damages ($11,968), the amount in controversy would 27 equal $63,033. Given the strong presumption against removal, the Court finds that 28 Defendants have not met their burden of showing by a preponderance of the evidence that 1 the amount in controversy exceeds $75,000. See Gaus, 980 F.2d 564 at 566 (“The ‘strong 2 presumption’ against removal jurisdiction means that the defendant always has the burden 3 of establishing that removal is proper.”) (citations omitted). 4 C. Request for Attorneys’ Fees 5 In the Motion to Remand, Plaintiff requests an award of attorneys’ fees pursuant to 6 28 U.S.C. § 1447(c), which provides that an order of remand “may require payment of just 7 costs and any actual expenses, including attorneys’ fees, incurred as a result of the 8 removal.” A court has “wide discretion” in deciding whether to award attorneys’ fees 9 under this provision, and “bad faith need not be demonstrated.” Moore v. Permanente 10 Med. Group, 981 F.2d 443, 447–48 (9th Cir.1992). “Absent unusual circumstances, 11 attorney’s fees should not be awarded when the removing party has an objectively 12 reasonable basis for removal.” Martin v. Franklin Cap. Corp., 546 U.S. 132, 136 (2005). 13 District courts retain discretion “to consider whether unusual circumstances warrant a 14 departure from the rule in a given case.” Id. at 141. “[R]emoval is not objectively 15 unreasonable solely because the removing party’s arguments lack merit, or else attorney’s 16 fees would always be awarded whenever remand is granted.” Lussier v. Dollar Tree Stores, 17 Inc., 518 F.3d 1062, 1065 (9th Cir. 2008). Instead, the objective reasonableness of removal 18 depends on the clarity of the applicable law and whether such law “clearly foreclosed” the 19 arguments in support of removal. Id. at 1066–67. 20 Plaintiff fails to specify why the Court should award her attorneys’ fees. (See 21 generally Doc. 6.) The Court finds that Defendants had multiple grounds where it could 22 have reasonably asserted removal was proper. Its removal to this Court therefore was not 23 objectively unreasonable. Accordingly, the Court declines to grant Plaintiff’s attorneys’ 24 fees. 25 IV. CONCLUSION 26 The Court GRANTS Plaintiff’s Motion to Remand, DENIES Defendants’ Motion 27 to Dismiss as moot, and REMANDS this action to the Superior Court of the State of 28 1 || California, County of San Diego. Additionally, the Court DENIES Plaintiffs request for 2 || attorneys’ fees and costs. 3 IT IS SO ORDERED. 4 DATE: November 7, 2024 : er Boorman Motaige? 6 HON. RUTH BERMUDEZ MONTENEGRO UNITED STATES DISTRICT JUDGE 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17