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Taylor v. Ocwen Loan Servicing, LLC

United States District Court, Fifth Circuit

January 24, 2014

CHANDRA TAYLOR, Plaintiff,
v.
OCWEN LOAN SERVICING, LLC, ET AL., Defendants.

MEMORANDUM OPINION

SHARION AYCOCK, District Judge.

On June 19, 2012, Plaintiff Chandra Taylor, pro se, commenced this action against Defendants Ocwen Loan Servicing, LLC, Equifirst Corporation, Homeq Servicing Corporation, Realty Title & Escrow Co., Inc., Mortgage Electronic Registration System, MERS, INC., Lehman Brothers Holdings, Inc., and Shapiro & Massey, LLC. Plaintiff's Complaint seeks to "restrict and prohibit foreclosure and sale" of Plaintiff's home and seeks damages arising from the allegedly wrongful foreclosure activities engaged in by the Defendants.

On February 7, 2013, the Court granted in part a number of motions to dismiss [8, 14, 19] filed by Defendants. The Court dismissed Plaintiff's federal law claims with prejudice and, declining to exercise supplemental jurisdiction over her remaining state law claims, dismissed the same without prejudice [25]. The Court later granted in part and deferred in part a Motion to Alter Judgment [29] filed by Defendant Equifirst Corporation, vacating its prior ruling to the extent that Defendant Shapiro & Massey, LLC was deemed an in-state defendant, thereby destroying diversity. In that opinion, the Court declined to exercise supplemental jurisdiction over Plaintiff's state law claims.

In altering that judgment, the Court deferred ruling on the jurisdictional question in order to allow all parties the opportunity to offer briefing and evidence on the issue of whether the Court possesses diversity jurisdiction. Having considered all relevant motions, responses, rules, and authorities, the Court now finds diversity jurisdiction exists in this matter and the Court exercises jurisdiction. However, Plaintiff's state law claims are due to be dismissed with prejudice.

JURISDICTIONAL STANDARD

The first issue to be considered is whether the Court has subject-matter jurisdiction over this action. "Federal courts, both trial and appellate, have a continuing obligation to examine the basis for their jurisdiction. The issue may be raised by parties, or by the court sua sponte, at any time." MCG, Inc. v. Great Western Energy Corp. , 896 F.2d 170, 173 (5th Cir. 1990). Original federal diversity jurisdiction exists "where the matter in controversy exceeds the sum or value of $75, 000.00, exclusive of interest and costs, and is between... citizens of different States." 28 U.S.C. § 1332(a); Addo v. Globe Life & Acc. Ins. Co. , 230 F.3d 759, 761 (5th Cir. 2000). In their Motion to Dismiss [8], certain Defendants allege that the Court lacks subject-matter jurisdiction to hear this case because there is not complete diversity among the parties.[1]

Diversity

Diversity of citizenship means that the action is between "citizens of different States." 28 U.S.C. § 1332(a).[2] Although Plaintiff does not allege the domicile of Shapiro & Massey, LLC in her Complaint, the Court has previously taken judicial notice that Shapiro is a limited liability company organized under the laws of the state of Mississippi per the records of the Secretary of State's office. Shaw v. Rogers, 2007 WL 1295799, at *1 (S.D.Miss. May 1, 2007); FED. R. EVID. 201. However, whether Shapiro, as a limited liability company, was "organized under the laws of the State of Mississippi" is immaterial for diversity jurisdiction purposes. Rather, the citizenship of an LLC is determined by the citizenship of "all its members." Harvey v. Grey Wolf Drilling Co. , 542 F.3d 1077, 1080 (5th Cir. 2008). There is no evidence in the record before the Court regarding the citizenship of the members of Shapiro.

Instead, Equifirst argues Shapiro's citizenship, whatever it may be, should be disregarded for diversity purposes because it is not a real party in interest. As the Fifth Circuit has recognized, "[t]he citizens' upon whose diversity a plaintiff grounds jurisdiction must be real and substantial parties to the controversy." Corfield v. Dallas Glen Hills LP , 355 F.3d 853, 857 (5th Cir. 2003). With regard to Shapiro, Plaintiff's Complaint alleges

Defendant, SHAPIRO & MASSEY, LLC ("SHAPIRO & MASSEY") is Substitute Trustee for the benefit of MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., "MERS" acting solely as a nominee for "MERS" and it's successors and assigns. "SHAPIRO & MASSEY" is party to this action only in the capacity of Substitute Trustee of Plaintiff's Deed of Trust, and the relief sought against Defendant "SHAPIRO & MASSEY" is injunctive relief prohibiting foreclosure sale & decree for trial.

(emphasis added).

Equifirst directs the Court to several opinions wherein federal courts sitting in Mississippi have found substituted trustees to be nominal parties whose citizenship should be disregarded for purposes of determining diversity jurisdiction. See Jeanes-Kemp, LLC v. Johnson Controls, Inc., 2010 WL 502698, at *1 (S.D.Miss. Feb. 5, 2010) ("Under Mississippi law, a trustee under a deed of trust is merely a formal party, because he is little more than an agent, albeit for both parties, and the writing prescribes his duties.' Wansley v. First Nat'l Bank of Vicksburg , 566 So.2d 1218, 1223 (Miss. 1990). This Court has held that trustees joined as a party merely because they occupy the position pursuant to a deed of trust, are nominal parties.") (citations omitted); see also Fed. Nat'l Mortg. Ass'n v. Moser, 2011 WL 2489984, at *1 n.1 (S.D.Miss. June 22, 2011); Sones v. Simmons, 2006 WL 2805325, at *2 (S.D.Miss. Sept. 25, 2006); Hawkins v. Wells Fargo Bank, N.A., 2008 WL 216529, at *1 (S.D.Miss. Jan. 23, 2008). The Court agrees and finds Shapiro, as the substituted trustee, is a nominal and unnecessary party for the purposes of determining diversity jurisdiction. As no other Defendant is a resident of Mississippi, the Court finds complete diversity exists in this matter.

Amount in Controversy

Plaintiff's Complaint does not allege a specific amount of damages, instead demanding "exemplary and punitive damages." Plaintiff also seeks declarative and injunctive relief to prevent Defendants from enforcing a lien against or foreclosing on her property. Diversity jurisdiction exists "where the matter in controversy exceeds the sum or value of $75, 000.00, exclusive of interest and costs...." 28 U.S.C. § 1332(a). Equifirst argues that the amount in controversy requirement has been met based upon Plaintiff's demand for unspecified punitive damages as well as her claims for non-monetary relief. Indeed, "federal courts in Mississippi have consistently held that a claim for an unspecified amount of punitive ...


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