United States District Court, S.D. Mississippi, Northern Division
TINA L. HOUSDAN, Plaintiff,
JPMORGAN CHASE BANK, N.A.; TAMMY MICHELLE DORMAN; TERRY MONROE DORMAN; FRANCES M. GRAY; AND JOHN AND JANE DOES 1-100, Defendant.
CARLTON W. REEVES, District Judge.
Before the Court are a Motion to Dismiss by Defendant JPMorgan Chase Bank, Inc. ("Chase"), Docket No. 6; Plaintiff's Motion to Remand, Docket No. 8; a Motion to Dismiss by Tammy Michelle Dorman, Terry Monroe Dorman, and Frances M. Gray ("Individual Defendants"), Docket No. 10; Plaintiff's Motion to Stay Proceedings, Docket No. 13; Plaintiff's Motion to Strike Chase's memorandum in opposition to the motion to remand, Docket No. 18; and Chase's Motion to Strike Plaintiff's response in reply to the motion to remand, Docket No. 23. After careful consideration of the submissions of the parties and the applicable law, the Court finds that Motion to Remand will be granted and the Motions to Dismiss will be reserved for adjudication by the state court from which this case was removed.
This action arises out of Chase's foreclosure on the plaintiff's property and the subsequent conveyance of the property to the Individual Defendants.
Plaintiff Tina L. Housdan claims that she acquired a certain tract of real property in Brandon, Mississippi, on or about April 25, 2008. Complaint, Docket No.1, Ex. 1, at ¶ 13. She executed a deed of trust in connection with the purchase and secured an indebtedness of $207, 313.00. This deed of trust and indebtedness were then assigned to Chase Home Finance LLC. According to the Complaint, Housdan was employed as mortgage broker when she acquired the property in early 2008. Housdan alleges that she had difficulty submitting her mortgage payments starting in early 2009 because her income was significantly reduced due to the economic downturn. After falling behind on her payments, Housdan received notice that her property was scheduled to be sold at foreclosure.
Housdan states that she contacted Chase to begin the loan modification application process, and Chase advised her that the foreclosure had been stopped while the modification application was pending. Housdan alleges that she sent Chase all of the information that it requested for the loan modification process multiple times, and that a Chase representative told her that she was approved for a loan modification, the foreclosure sale had been cancelled, and that she would soon receive the necessary paperwork to complete and sign. According to Housdan, she never received the paperwork after waiting nearly two months. She frequently called about the status of the modification process and the paperwork, but she "received conflicting information from Chase" and "never spoke with the same person twice." Id. ¶ 24. During one such attempt, a Chase representative informed her that she did not qualify for the modification. When Housdan explained that another representative had told her that she had previously been approved and that she was waiting on the paperwork, the representative insisted that she did not qualify. Shortly thereafter, Housdan received a letter notifying her that her property would be sold at foreclosure and that she was required to leave the premises. She left before the stated date in her "eviction notice." Id. ¶ 26.
In August 2010, the property was sold at foreclosure at the Rankin County Courthouse to Chase Home Finance LLC for the amount of $226, 285.58. Chase sold the property to the Secretary of the U.S. Department of Housing and Urban Development ("HUD") by special warranty deed. HUD then sold the property by assignment of lease to the current owners, Tammy Michelle Dorman, Terry Monroe Dorman, and Frances M. Gray. On November 18, 2011, Housdan filed a Chapter 7 petition for bankruptcy in the U.S. District Court for the Southern District of Mississippi. The bankruptcy court granted Plaintiff a standard, no-asset discharge on March 28, 2012.
On August 2, 2013, Housdan filed this action in the Circuit Court of Rankin County, Mississippi, asserting state law causes of action in tort, fraud, breach of contract, breach of implied covenant of good faith and fair dealing, negligent infliction of emotional distress, negligence/gross negligence, wrongful foreclosure, and unjust enrichment. She also raised claims of trespass, fraudulent conveyance and ejectment against the Individual Defendants. The Individual Defendants are all Mississippi citizens and Chase is a non-Mississippi national association.
Chase removed the case to this Court, alleging that the Individual Defendants were improperly joined for the purpose of defeating diversity jurisdiction. It has also argued that this Court has subject matter jurisdiction based on federal question because Plaintiff's complaint raises Consent Orders between Chase and the U.S. Office of the Comptroller of the Currency ("OCC") and HUD regulations. Housdan then filed her Motion to Remand, in which she argued the Court does not have diversity jurisdiction and the case should be remanded to state court.
I. Diversity Jurisdiction
Title 28, Section 1332 of the United States Code confers federal diversity jurisdiction over civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and the civil action is between citizens of different states. It is undisputed that the amount in controversy is satisfied in this lawsuit, and that Chase, with its principal place of business in Ohio, and Plaintiff Housdan domiciled in Mississippi, are diverse from one another. The issue before the Court is whether the Individual Defendants, who are Mississippi residents, were improperly joined. If the Individual Defendants are proper parties to this action, diversity is defeated and the case should be remanded. If they were improperly joined, complete diversity exists and the case must remain in federal court.
Federal courts are courts of limited jurisdiction, and therefore, removal statutes are subject to strict construction. Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988). The party seeking removal bears the burden of establishing that federal jurisdiction exists and showing that removal is procedurally proper. Boone v. Citigroup, Inc., 416 F.3d 382, 388 (5th Cir. 2005); Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). Any doubt regarding whether federal jurisdiction exists following removal must be resolved against a finding of federal jurisdiction. Gash v. Hartford Acc. & Indem. Co., 491 F.3d 278, 281-82 (5th Cir. 2007); Acuna v. Brown & Root, Inc., 200 F.3d 335, 339 (5th Cir. 2000). Lack of diversity is a jurisdictional defect that cannot be waived. Freeman v. Northwest Acceptance Corp., 754 F.2d 553, 560 (5th Cir. 1985).
To establish improper or fraudulent joinder, the moving party must demonstrate either "(1) actual fraud in the pleading of jurisdiction facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court." Smallwood v. Illinois Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004). Under the second inquiry, this Court must determine "whether that party has any possibility of recovery against the party whose joinder is questioned. If there is arguably a reasonable basis for predicting that the state law might impose liability on the facts involved, then there is no [improper] joinder. This possibility, however, must be reasonable, not merely theoretical." Travis v. Irby, 326 F.3d 644, 648 (5th Cir. 2003). Defendants must demonstrate that there is "no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant.'" Kling Realty Co. v. Chevron USA, Inc., 575 F.3d 510, 513 (5th Cir. 2009) (quoting Smallwood, 385 F.3d at 573). "When conducting a fraudulent joinder analysis, a court must resolve all disputed questions of fact and ambiguities of law in favor of the non-removing party." Barahona Rodriguez v. Kivett's Inc., No. 3:05-CV-738-WHB-JCS, 3:06 CV 13, 2006 WL 2645190, at *3 (S.D.Miss. Sept. 12, 2006) (citing Dodson v. Spiliada Maritime Corp., 951 F.2d 40, 42 (5th Cir. 1992)).
To determine whether a plaintiff has a reasonable basis of recovery under state law, courts generally conduct a Rule 12(b)(6)-type analysis, "looking initially at the allegations of the complaint to determine whether the complaint states a claim under state law against the in-state defendant." Smallwood, 385 F.3d at 573. "Ordinarily, if a plaintiff can survive a Rule 12(b)(6) challenge, there is no improper joinder." Id. Chase, as the removing party, bears the heavy burden of demonstrating that there is no possibility of recovery against the Individual ...