Tonelli v. Wells Fargo Bank, N.A.

• Court: District Court, N.D. California
• Decided: October 21, 2019
• Docket: 4:19-cv-04904
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 STEPHEN TONELLI, Case No. 19-cv-04904-KAW

8 Plaintiff, ORDER GRANTING MOTION TO 9 v. REMAND; DENYING MOTION TO DISMISS 10 WELLS FARGO BANK, N.A., et al., Re: Dkt. Nos. 8, 12 11 Defendants.

12 13 Plaintiff Stephen Tonelli filed the instant case against Defendants Wells Fargo Bank, N.A. 14 (“Wells Fargo Bank”), Wells Fargo Clearing Services LLC dba Wells Fargo Advisors, LLC 15 (“Wells Fargo Advisors”), and Shehzad Bhatti. (Compl., Dkt. No. 20-1.) On August 15, 2019, 16 Defendant Wells Fargo Bank removed the case to federal court, asserting diversity jurisdiction. 17 (Not. of Removal at 1, Dkt. No. 1.) While Defendants concede that Defendants Wells Fargo 18 Advisors and Bhatti are California citizens, they assert that both Defendants were fraudulently 19 joined. (Id. ¶¶ 13-15.) 20 Pending before the Court are: (1) Defendant Wells Fargo Bank’s motion to dismiss, and 21 (2) Plaintiff’s motion to remand. (Def.’s Mot. to Dismiss, Dkt. No. 8; Pl.’s Mot. to Remand, Dkt. 22 No. 12.) Having considered the parties’ filings, the relevant legal authorities, and the arguments 23 presented at the October 17, 2019 hearing, the Court GRANTS Plaintiff’s motion to remand and 24 DENIES Defendant Wells Fargo Bank’s motion to dismiss as moot. 25 I. BACKGROUND 26 On July 8, 2015, Plaintiff’s brother – Kevin Tonelli – executed the Tonelli Trust – 2005 27 (“Trust”). (Compl. ¶ 7.) In 2018, Mr. Tonelli executed a Second Amendment which identified 1 Trust. (Compl. ¶ 10.) 2 On December 18, 2017, Mr. Tonelli executed a special power of attorney giving Plaintiff 3 authority to conduct business with Defendant Wells Fargo Bank. (Compl. ¶ 12.) Using the 4 special power of attorney, Plaintiff deposited funds into the Bank Accounts. (Compl. ¶ 13.) As of 5 April 30, 2018, the balance in the Bank Accounts exceeded $497,000. (Compl. ¶ 14.) 6 In November 2018, Defendant Bank of America ceased sending any communications, 7 including bank statements, to Plaintiff or Mr. Tonelli. (Compl. ¶ 15.) On February 21, 2019, Mr. 8 Tonelli passed away, making Plaintiff the successor trustee of the Tonelli Trust – 2005. (Compl. 9 ¶¶ 16-17.) 10 On July 1, 2019, Plaintiff notified Defendant Bank of America that Mr. Tonelli had passed 11 away. (Compl. ¶ 18.) On July 1, 2019, Defendant Bhatti, allegedly acting on behalf of 12 Defendants, informed Plaintiff that he could not provide Plaintiff any information concerning the 13 Bank Accounts except that the balances in the Bank Accounts was sixty cents. (Compl. ¶ 19.) On 14 July 2, 2019, Plaintiff provided Defendants a “Certificate of the Trust.” (Compl. ¶ 20.) 15 Nevertheless, Defendants refused to provide Plaintiff any other information about the Bank 16 Accounts, and have continued to refuse to provide any further information or documentation about 17 the Bank Accounts. (Compl. ¶ 21.) 18 On July 12, 2019, Plaintiff filed the instant action against Defendants, asserting claims for: 19 (1) conversion, (2) accounting, and (3) violation of California’s Unfair Competition Law (“UCL”). 20 With respect to the conversion claim, Plaintiff alleged that “Defendants have failed and refused to 21 turn over funds from the Bank Accounts to Plaintiff,” and asserted that “Defendants withdrew 22 funds from the Bank Accounts without authorization, and converted these funds for their own 23 use.” (Compl. ¶¶ 26-27.) Plaintiff’s UCL claim is also based on Defendants’ alleged 24 “conver[sion of] funds from the Tonelli Trust – 2005.” (Compl. ¶ 37.) 25 On August 15, 2019, Defendant Wells Fargo Bank removed the instant case based on 26 diversity jurisdiction. (Not. of Removal at 1.) Defendant Wells Fargo Bank asserted that the 27 citizenship of Defendants Wells Fargo Advisors and Bhatti should be disregarded because 1 ¶ 18.) 2 Defendant also provided a declaration by Defendant Bhatti, who is a Personal Banker 2 at 3 Defendant Wells Fargo Bank and a Brokerage Associate for Defendant Wells Fargo Advisors. 4 (Bhatti Decl. ¶ 3, Dkt. No. 3.) Defendant Bhatti states that he has never interacted with anyone 5 regarding the Bank Accounts, except for his interactions with Plaintiff in early July 2019. (Bhatti 6 Decl. ¶ 7.) Specifically, on July 2, 2019, Defendant Bhatti informed Plaintiff that he was not in a 7 position to provide Mr. Tonelli’s personal account information to Plaintiff. (Bhatti Decl. ¶ 8.) On 8 July 5, 2019, Plaintiff provided documents relating to a trust in Mr. Tonelli’s name. (Bhatti Decl. 9 ¶ 9.) Defendant Bhatti informed Plaintiff that because the Bank Accounts were not set up as trust 10 accounts, he could not provide Mr. Tonelli’s personal account information to Plaintiff. (Bhatti 11 Decl. ¶ 10.) Defendant Bhatti states that he did not discuss Defendant Wells Fargo Advisors with 12 Plaintiff at any time, nor did he say or do anything on behalf of Defendant Wells Fargo Advisors 13 as to Plaintiff. (Decl. ¶ 6.) Defendant Bhatti further denies that he withdrew any funds from Mr. 14 Tonelli’s account for his personal use or any other purpose. (Decl. ¶ 11.) 15 On August 22, 2019, Defendant Wells Fargo Bank filed a motion to dismiss. Plaintiff filed 16 his opposition on September 16, 2019, and Defendant Wells Fargo Bank filed its reply on 17 September 23, 2019. (Pl.’s Opp’n, Dkt. No. 14; Def.’s Reply, Dkt. No. 16.) On September 6, 18 2019, Plaintiff filed a motion to remand. Defendant Wells Fargo Bank, N.A. filed its opposition 19 on September 19, 2019, and Plaintiff filed his reply on September 23, 2019. (Def.’s Opp’n, Dkt. 20 No. 15; Pl.’s Reply, Dkt. No. 17.) 21 II. LEGAL STANDARD 22 A. Motion to Remand 23 District courts have jurisdiction in civil actions where there is complete diversity of 24 citizenship among the parties and the amount in controversy exceeds $75,000, exclusive of interest 25 and costs. 28 U.S.C. § 1332(a). There is a “strong presumption against removal jurisdiction.” 26 Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). This principle dictates that the removal 27 statute be “strictly construed against removal jurisdiction.” Id. “The strong presumption against 1 is proper, and that the court resolves all ambiguity in favor of remand to state court. Hunter v. 2 Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009). 3 The Ninth Circuit has specified that “[j]oinder is fraudulent [i]f the plaintiff fails to state a 4 cause of action against a resident defendant, and the failure is obvious according to the settled 5 rules of the state.” Hunter, 582 F.3d at 1042 (internal quotation omitted); see also Dodson v. 6 Spiliada Maritime Corp., 951 F.2d 40, 42 (5th Cir. 1992) (“To prove their allegation of fraudulent 7 joinder [the defendants] must demonstrate that there is no possibility that [the plaintiff] would be 8 able to establish a cause of action against them in state court”). Or, as stated in the Moore’s 9 treatise, “[j]oinder will not be deemed fraudulent unless there clearly can be no recovery under 10 state law on the cause alleged or on the facts as they exist when the petition to remand is heard.” 11 15-102 Moore’s Fed. Practice – Civil §102.21; see also Plute v. Roadway Package Sys., Inc., 141 12 F. Supp. 2d 1005, 1008 (N.D. Cal. 2001) (“Courts have denied a claim of fraudulent joinder when 13 there is any possibility that a plaintiff may prevail on the cause of action against the in-state 14 defendant.”). 15 B. Motion to Dismiss 16 Under Federal Rule of Civil Procedure 12(b)(6), a party may file a motion to dismiss based 17 on the failure to state a claim upon which relief may be granted. A motion to dismiss under Rule 18 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. Navarro v. Block, 250 19 F.3d 729, 732 (9th Cir. 2001). 20 In considering such a motion, a court must “accept as true all of the factual allegations 21 contained in the complaint,” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam) (citation 22 omitted), and may dismiss the case or a claim “only where there is no cognizable legal theory” or 23 there is an absence of “sufficient factual matter to state a facially plausible claim to relief.” 24 Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010) (citing 25 Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009); Navarro, 250 F.3d at 732) (internal quotation 26 marks omitted). 27 A claim is plausible on its face when a plaintiff “pleads factual content that allows the 1 Iqbal, 556 U.S. at 678 (citation omitted). In other words, the facts alleged must demonstrate 2 “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action 3 will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). 4 “Threadbare recitals of the elements of a cause of action” and “conclusory statements” are 5 inadequate. Iqbal, 556 U.S. at 678; see also Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th 6 Cir. 1996) (“[C]onclusory allegations of law and unwarranted inferences are insufficient to defeat 7 a motion to dismiss for failure to state a claim.”). “The plausibility standard is not akin to a 8 probability requirement, but it asks for more than a sheer possibility that a defendant has acted 9 unlawfully . . . . When a complaint pleads facts that are merely consistent with a defendant's 10 liability, it stops short of the line between possibility and plausibility of entitlement to relief.” 11 Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557) (internal citations omitted). 12 If the court grants a motion to dismiss, it should grant leave to amend even if no request to 13 amend is made “unless it determines that the pleading could not possibly be cured by the 14 allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (citations omitted). 15 III. DISCUSSION 16 Plaintiff makes three arguments in support of remand: (1) all Defendants did not join or 17 consent to the removal, (2) the amount in controversy is not met, and (3) the parties are not 18 diverse. (Pl.’s Mot. to Remand at 9-11.) The first and third arguments are dependent on whether 19 Defendants Wells Fargo Advisors and Bhatti were fraudulently joined. If so, their citizenship and 20 consent are irrelevant. See Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998) (“It 21 is a commonplace that fraudulently joined defendants will not defeat removal on diversity 22 grounds.”). 23 The Court finds that Defendant Wells Fargo Bank has not demonstrated fraudulent joinder 24 because it has not met its high burden of “prov[ing] that individuals joined in the action cannot be 25 liable on any theory,” specifically the UCL claim. Ritchey, 139 F.3d at 1318 (emphasis added). 26 As an initial matter, to the extent Defendants Wells Fargo Bank argues that Plaintiff failed to 27 allege specific facts with respect to Defendants Bhatti or Wells Fargo Advisors, including their 1 bank statements, such arguments go to pleading standards, rather than whether Plaintiff could 2 state a claim under California law against those Defendants. Whether Plaintiff’s complaint can 3 survive a motion to dismiss is not relevant to fraudulent joinder; indeed, courts have found no 4 fraudulent joinder even where the plaintiff’s allegations failed to satisfy federal pleading standards 5 so long as the complaint could be amended to cure any such deficiency. E.g., Dahmen v. McNeil- 6 PPC, Inc., CV 12-10371-GW (CWx), 2013 U.S. Dist. LEXIS 199277, at *8 (C.D. Cal. Jan. 14, 7 2013) (finding no fraudulent joinder “even if [the plaintiffs’] allegations would be insufficient to 8 get them past the pleadings in their current form”); Burris v. AT&T Wireless, Inc., Case No. 06-cv- 9 2904-JSW, 2006 U.S. Dist. LEXIS 52437, at *4-5 (N.D. Cal. July 19, 2006) (“Although as 10 currently pled, Burris has not alleged conduct which may be considered extreme or outrageous, 11 Cingular has not demonstrated that, under California law, Burris would not be afforded leave to 12 amend his complaint to cure this purported deficiency.”). Even where the plaintiff failed to 13 explain the specific role of each defendant, courts in this Circuit have found that the defendant did 14 not establish that a cause of action was impossible because such pleading defects could be cured. 15 E.g., Smith v. Amylin Pharms., LLC, Civil No. 13cv1236 AJB (MDD), 2013 U.S. Dist. LEXIS 16 96612, at *13-14 (S.D. Cal. July 10, 2013) (finding no fraudulent joinder even where the plaintiff 17 “ma[de] no specific, independent allegations against McKesson”); Walnut Creek Estates Dev. Co., 18 L.L.P. v. Am. Land Mgmt., L.L.C., No. CIV. 05-530-PCT-MHM, 2005 U.S. Dist. LEXIS 21934, at 19 *3-6 (D. Ariz. Sept. 22, 2005) (“[A]lthough Defendant Bower’s specific role in the transaction or 20 various entities is not outlined in the Amended Complaint, a pleading defect that may be curable 21 under state law, and that could be cured in state court after remand does not equate to the total 22 inability to establish a cause of action in state court which is required by fraudulent joinder 23 jurisprudence.”). 24 In both the motion to remand and motion to dismiss, Defendant Wells Fargo Bank makes 25 persuasive arguments that Plaintiff’s conversion and accounting claims are defective against any 26 Defendant, such that they cannot be amended. For example, Plaintiff’s conversion claim fails to 27 identify a specific sum of money, as Plaintiff states that he does not know how much was in the 1 claim[s] where the plaintiff could not identify [a] specific sum but only approximately monetary 2 losses.” Voris v. Lampert, 7 Cal. 5th 1141, 1151 (2019); see also PCO, Inc. v. Christensen, 3 Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP, 150 Cal. App. 4th 384, 397 (2007) (affirming 4 the trial court’s grant of summary judgment on the plaintiffs’ conversion claim where the 5 “plaintiffs failed to present evidence of a definite, identifiable sum of money”).1 Likewise, 6 Plaintiff’s accounting claim fails to explain why the amounts in the Bank Accounts “can only be 7 ascertained by an accounting,” rather than by reviewing the bank statements. See Teselle v. 8 McLoughlin, 173 Cal. App. 4th 156, 179 (2009) (“An action for accounting is not available where 9 the plaintiff alleges the right to recover a sum certain or a sum that can be made certain by 10 calculation.”); Lewis v. Ben. Cal., Inc., Case No. 17-cv-3575-KAW, 2018 U.S. Dist. LEXIS 11 199771, at *15 (N.D. Cal. Nov. 26, 2018) (“Accounting actions are also only appropriate when the 12 accounts are so complicated that an ordinary legal action demanding a fixed sum is 13 impracticable.”). Any UCL claims based on these conversion and accounting claims are likewise 14 defective. 15 Defendant Wells Fargo Bank, however, has not shown that there may be no possible UCL 16 claim against Defendants Bhatti or Wells Fargo Advisors. In his opposition to the motion to 17 dismiss, Plaintiff argues that concealment of the bank records is itself a fraudulent business 18 practice supporting his UCL claim. (Pl.’s Opp’n at 14.) In reply, Defendant argues that Plaintiff 19 has failed to meet Federal Rule of Civil Procedure 9’s requirement to allege fraud with 20 particularity. (Def.’s Reply at 5.) As explained above, Plaintiff is not required to plead fraud with 21 particularity or describe the roles of each Defendant for purposes of determining fraudulent 22 joinder. Even if Plaintiff cannot survive a motion to dismiss, Defendant Wells Fargo Bank has not 23 demonstrated that Plaintiff would not be given leave to amend by the state court to cure any 24 purported deficiency. Compare with Burris, 2006 U.S. Dist. LEXIS 52437, at *4-5. 25 At the hearing, the parties specifically addressed the possibility of a UCL claim based on 26 the failure to provide documents. Defendant Wells Fargo Bank argued that Plaintiff would still 27 1 not have been entitled to the documents at the time of his July visit because it was not clear that 2 the Bank Accounts were trust funds. In response, Plaintiff represented to the Court that Plaintiff 3 was in fact a signatory on the Bank Accounts, as Mr. Tonelli had made him a signatory.2 As a 4 signatory, Plaintiff could have been entitled to such documents. Based on such representations, 5 the Court cannot find that Plaintiff’s UCL claim based on the failure to provide the documents is 6 futile, so long as Plaintiff is able to allege such facts while satisfying the requirements of 7 California Code of Civil Procedure § 128.7. 8 Accordingly, the Court finds that Defendant has failed to demonstrate that Defendants 9 Bhatti and Wells Fargo Advisors were fraudulently joined. Therefore, there is no diversity 10 jurisdiction and remand is appropriate. The Court notes, however, that if the claims against 11 Defendants Bhatti and Wells Fargo Advisor are dismissed, Defendant Wells Fargo Bank may be 12 able to remove the case again. 13 Plaintiff requests that the Court award Plaintiff’s attorney’s fees and costs associated with 14 the motion to remand. (Pl.’s Mot. to Remand at 14.) A court has “wide discretion” in deciding 15 whether to award attorney’s fees. Moore v. Permanente Med. Grp., 981 F.2d 443, 447 (9th Cir. 16 1992). As discussed above, there are persuasive arguments that Plaintiff’s conversion and 17 accounting claims would be subject to dismissal without leave to amend. Further, as pled, the 18 UCL claim appeared to be limited to the conversion claim; it was only in Plaintiff’s opposition to 19 the motion to dismiss that he clarified there was a UCL claim based on the concealment of the 20 bank records. (See Compl. ¶ 37.) Thus, Defendant Wells Fargo Bank’s removal was not 21 unreasonable or frivolous. Attorney’s fees are therefore not warranted in this case. Compare with 22 Burris, 2006 U.S. Dist. LEXIS 52437, at *5 (declining to award attorney’s fees because 23 “[a]lthough it was not ultimately persuaded by Cingular’s arguments, the Court does not find that 24 Cingular’s removal was frivolous or motivated by bad faith”); Capretto v. Stryker Corp., 2007 25 U.S. Dist. LEXIS 66061, at *10 (N.D. Cal. Aug. 29, 2007) (“Although this order grants plaintiff’s 26

27 2 The Court acknowledges Defendant Wells Fargo Bank’s point that Plaintiff appeared to have a 1 motion to remand, defendant’s arguments regarding the propriety of removal were not 2 unfounded.”). 3 IV. CONCLUSION 4 For the reasons stated above, the Court GRANTS Plaintiff's motion to remand and 5 || DENIES Defendant Wells Fargo’s motion to dismiss as moot. The case is remanded to Sonoma 6 || County Superior Court. 7 IT IS SO ORDERED. 8 Dated: October 21, 2019 □ ? hv A. lke Ad 10 United States Magistrate Judge 11 a 12

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