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Williams v. U.S. Bank National Association

United States District Court, S.D. Mississippi, Northern Division

March 4, 2014

U.S. BANK NATIONAL ASSOCIATION, as Trustee, Successor in Interest to Bank of America, N.A., as Trustee, as Successor by Merger to LaSalle Bank National Association, as Trustee for Certificate Holders of Bear Sterns Asset Backed Securities I LLC Asset-Backed Certificates, Series 2005-HE4, et al. Defendants.


DANIEL P. JORDAN, III, District Judge.

This removed case is before the Court on Plaintiff's Motion to Remand [8], Defendants U.S. Bank and EMC Mortgage's Motions to Refer [6] and to Dismiss [10], and Defendant Britt Barnes Realty Group's Motion to Dismiss [34]. Having fully considered the premises, the Court concludes that nondiverse defendant Britt Barnes Realty was improperly joined. Britt Barnes is therefore dismissed and Williams's motion to remand must be denied. The motion to refer is denied, and the motion to dismiss is granted in part but otherwise denied as set forth below.

I. Facts and Procedural History

This case concerns real property located at 1234 New Mount Calvary Road in Lake, Mississippi. Plaintiff Helen D. Williams and her husband, Marvin Williams, acquired the property in 1973. In 2004, the Williamses executed a deed of trust on the property to secure a $40, 000 loan made to Marvin Williams. Following Marvin Williams's death in 2007, Helen Williams asserts that she "was unable to make payments [on the loan] because the servicer refused to discuss any account matters with her." Compl. [1-1] ¶ 16. Specifically, Williams states that "she was advised by [Defendant] EMC Mortgage Corporation, ... the former loan servicer, that her payments would not be accepted due to the fact that she wasn't listed on the account.'" Id. ¶ 17.

"In order to save her home" from foreclosure, Williams filed a voluntary chapter 13 bankruptcy in January 2009. Id. ¶ 18. Although Williams was "under the impression that her mortgage had been included in the Petition, " the property was not listed as an asset of her estate in that proceeding. Id. The 2009 bankruptcy case was ultimately dismissed on November 10, 2011.

At some unspecified time, Williams "requested and applied for a loan modification from her servicer, " EMC. Id. ¶ 21. Williams says that EMC advised her that no foreclosure proceedings would occur during the modification-application process. Id. ¶ 65. When she contacted EMC to inquire as to the status of the modification application, EMC "denied having any information regarding a request for a modification." Id. ¶ 22.

In April 2012, the deed of trust securing Marvin Williams's loan was assigned to Defendant U.S. Bank, who named Nationwide Trustee Services, Inc., as substitute trustee. On May 1, 2012, Williams filed a voluntary petition for relief under chapter 7 of the bankruptcy code. In the chapter 7 case, Williams included the subject property and listed EMC as a creditor. On September 17, 2012, Williams received a no-asset discharge under 11 U.S.C. § 727(a).

At some point in late 2012 or early 2013, Williams received from U.S. Bank a notice of foreclosure sale to take place on January 16, 2013. Williams subsequently received a second notice of foreclosure sale, setting the sale for February 20, 2013. Williams's sons and her neighbor appeared at the Scott County Courthouse on the date of the scheduled foreclosure sale and, according to Williams, "[n]o public outcry' for the sale of th[e] property occurred." Compl. [1-1] ¶ 31. Nevertheless, a substitute trustee's deed was recorded on February 21, 2013, stating that U.S. Bank purchased the property at a public auction on February 20, 2013.

Thereafter, Britt Barnes Realty, a local real-estate agent, contacted Williams and, according the allegations in the Complaint, "threaten[ed] her that she had to leave her home." Id. ¶ 35. Williams asserts that "eviction proceedings were instituted against" her. Id.

On June 11, 2013, Williams filed her complaint in the Circuit Court of Scott County, Mississippi, against U.S. Bank, EMC, Britt Barnes Realty, and Shavonne Clark in her capacity as Assistance Vice President of Nationwide Trustee Services. EMC and U.S. Bank removed the case to this Court on July 11, 2013, asserting federal-question, diversity, and bankruptcy jurisdiction under 28 U.S.C. §§ 1331, 1332, and 1334. Defendants then moved to refer the case to bankruptcy court [6], Plaintiff moved to remand [8], and Defendants moved to dismiss [10, 34]. In the meantime, Defendants also filed a motion to reopen Williams's chapter 7 bankruptcy, and United States Bankruptcy Judge Neil P. Olack granted that motion on November 5, 2013. Judge Olack concluded that two of Williams's negligence-based claims are the property of her bankruptcy estate. In this case, the parties engaged in a protracted period of remand-related discovery. The matters raised in the pending motions have now been fully briefed, and the Court is prepared to rule.

II. Analysis

A. Motions to Remand and to Refer

"[D]efendants may remove a civil action if a federal court would have had original jurisdiction." DeAguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995). Defendants, as the removing party, "bear[] the burden of showing that federal jurisdiction exists and that removal was proper." Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002) (citation omitted).

In this case, Defendants premise federal jurisdiction on multiple alternative grounds. They assert that Williams's reliance on certain consent orders entered by the Office of the Comptroller of the Currency of the United States gives rise to federal-question jurisdiction. They argue that Britt Barnes Realty, the sole nondiverse defendant, was improperly joined to defeat diversity jurisdiction. And they allege that the claims asserted herein are the property of Williams's bankruptcy estate, giving the Court bankruptcy jurisdiction over the case. Because both diversity and bankruptcy jurisdiction exist, the Court will not address whether the consent orders created a federal question.

1. Diversity Jurisdiction

District courts have jurisdiction over civil actions between "citizens of different States." 28 U.S.C. § 1332(a)(1). The diversity statute requires complete diversity between all named plaintiffs and all named defendants. See Lincoln Prop. Co. v. Roche, 546 U.S. 81, 84 (2005). "[A] narrow exception to the rule" exists, however, where the nondiverse defendant was improperly joined. Smallwood v. Ill. Cent. R.R. Co., 352 F.3d 220, 222 (5th Cir. 2003). "The burden of demonstrating improper joinder is a heavy one and is placed upon the party seeking removal." Lorenz v. Tex. Workforce Comm'n, 211 F.Appx. 242, 245 (5th Cir. 2006) (citing McDonal v. Abbott Labs., 408 F.3d 177, 183 (5th Cir. 2005)). The test for improper joinder is "whether there is any reasonable basis for predicting the plaintiff[] might be able to recover against... the in-state defendant." Jones v. Gen. Motors Corp., No. 3:06cv608-DPJ-JCS, 2007 WL 1610478, at *1 (S.D.Miss. June 1, 2007) (quoting Love v. Ford Motor Co., 212 F.Appx. 292, 294 (5th Cir. 2006)).

A district court should ordinarily resolve an improper joinder claim by conducting a Rule 12(b)(6)-type analysis. Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004). The Court "must then evaluate all of the factual allegations in the light most favorable to the plaintiff, resolving all contested issues of substantive fact in favor of the plaintiff." B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir. 1981). Similarly, the Court must resolve all ambiguities in controlling state law in the plaintiff's favor. Travis v. Irby, 326 F.3d 644, 648 (5th Cir. 2003) (citations omitted). Finally, "there are cases, hopefully few in number, in which the plaintiff has stated a claim, but has misstated or omitted discrete facts that would determine the ...

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