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Johnson v. Deutsche Bank National Trust Co.

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

January 12, 2015

L. V. JOHNSON AND CORA J. JOHNSON, Plaintiffs,
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR NOVASTAR MORTGAGE FUNDING TRUST SERIES 2007-1; DEUTSCHE BANK TRUST CORPORATION; DEUTSCHE BANK AG; MORGAN STANLEY; MORRIS & ASSOCIATES; JAMES Q. BACCHUS AND CECELIA BACCHUS; and JOHN AND JANE DOES 1-100, Defendants.

MEMORANDUM OPINION AND ORDER

KEITH STARRETT, District Judge.

This matter is before the Court on the Plaintiffs L. V. Johnson and Cora J. Johnson's Motion to Remand [19]. Having considered the submissions of the parties, the record, and the applicable law, the Court finds that the motion is well taken and this action will be remanded to the Circuit Court of Forrest County, Mississippi.

I. RELEVANT FACTUAL AND PROCEDURAL HISTORY

Plaintiffs L. V. Johnson and Cora J. Johnson (collectively referred to as the "Johnsons" or "Plaintiffs") assert numerous state law claims relating to a loan secured by a Note [31-1] and a Deed of Trust [31-2] encumbering certain real property located at 867 North Main Street, Hattiesburg, Mississippi (the "Subject Property"). On or about March 20, 2002, the Johnsons obtained title to the Subject Property via a Warranty Deed. ( See Doc. No. [1-2 at ECF p. 31].) On or about November 28, 2006, the Johnsons executed the aforementioned Note [31-1] and Deed of Trust [31-2] in connection with a mortgage loan in the amount of $160, 000.00. Primekey Mortgage ("Primekey") is listed as the "Lender" under the Note and Deed of Trust. Mortgage Electronic Registration Systems, Inc. ("MERS"), acting solely as a nominee for Primekey and its successors and assigns, is identified as the beneficiary under the Deed of Trust.

Effective November 1, 2007, servicing of the Johnsons' loan was assigned to Saxon Mortgage Services, Inc. ("Saxon").[1] ( See Doc. No. [1-2 at ECF p. 48].) The Johnsons allege that due to financial difficulties, they reached out to Saxon to discuss modifying their loan payments. On or about June 1, 2009, the Johnsons were approved to participate in a Trial Period Plan ("TPP") under the Home Affordable Modification Program ("HAMP"), which required monthly payments in the amount of $866.44 for June, July, and August of 2009. ( See Doc. No. [31-4].) The Johnsons contend that they made the required TPP payments and submitted all the documentation requested of them in order to be approved for a permanent modification of their mortgage loan. Furthermore, Saxon purportedly provided the Johnsons with conflicting information regarding their eligibility to receive a modification under HAMP after they made the TPP payments. In March of 2010, the Johnsons were advised that Saxon could not provide them with a modification because they failed to make all of the required TPP payments by the end of the trial period. ( See Doc. No. [31-5].)

On June 18, 2010, MERS assigned the Deed of Trust encumbering the Subject Property to Deutsche Bank National Trust Company, as trustee for Novastar Mortgage Funding Trust Series 2007-1 ("DBNTC").[2] ( See Doc. No. [31-3].) Saxon, as attorney-in-fact for DBNTC, subsequently executed a Substitution of Trustee [31-6], appointing Emily Kaye Courteau as substitute trustee and authorizing Courteau to conduct a foreclosure sale on the Subject Property.[3] On November 23, 2010, Courteau executed a Substitute Trustee's Deed [31-7], indicating that the Subject Property sold to DBNTC in exchange for a bid of $111, 200.00. On October 13, 2011, DBNTC sold the Subject Property to Defendants James Q. Bacchus and Cecelia Bacchus (the "Bacchuses"). ( See Special Warranty Deed [11-10].)

On November 18, 2013, Plaintiffs filed suit against DBNTC, Deutsche Bank, Deutsche Bank AG, Morgan Stanley, Morris & Associates, and the Bacchuses in the Circuit Court of Forrest County, Mississippi. ( See Complaint [31-8].) Plaintiffs assert that "[t]his is an action for tortious conduct, negligence and/or gross negligence, breach of contract, wrongful, illegal, and/or fraudulent foreclosure, ejectment, for monetary damages, to set aside the substitute trustee's deed and subsequent conveyances, and for other relief...." (Compl. [31-8] at ¶ 1.) It appears that the Bacchuses are the only Defendants who are citizens of Mississippi. The counts in the Complaint for trespass, cancellation of void conveyances, and ejectment specifically pertain to the Bacchuses. Plaintiffs allege that the Bacchuses are in illegal possession of the Subject Property because the underlying foreclosure sale to DBNTC in November of 2010 is void due to it being conducted without statutory or contractual authority. Plaintiffs seek compensatory damages, punitive damages, attorneys' fees, and a judgment ejecting the Bacchuses from the Subject Property and adjudicating the Plaintiffs to be the legal owners.

On April 9, 2014, DBNTC, Deutsche Bank, Deutsche Bank AG, and Morgan Stanley removed the proceeding to this Court. ( See Notice of Removal [1].) On this same date, Morris & Associates and the Bacchuses joined in and consented to the removal. ( See Doc. Nos. [2], [3].) Defendants assert that the Court has original jurisdiction over this action pursuant to Title 28 U.S.C. §§ 1331 (federal question), 1332 (diversity of citizenship), and 1334 (bankruptcy jurisdiction). Defendants rely upon HAMP and the Edge Act, 12 U.S.C. § 632, as bases for the existence of federal question jurisdiction. As to § 1332, the Notice of Removal posits that complete diversity of citizenship exists between the Plaintiffs and all properly joined Defendants. The Notice of Removal further asserts that the Mississippi citizenship of the Bacchuses is immaterial because they have been improperly joined as Defendants. Bankruptcy jurisdiction is invoked in connection with "Plaintiff Cora J. Johnson fil[ing] a Chapter 13 petition in the United States Bankruptcy Court for the Southern District of Mississippi on July 20, 2010...." (Notice of Removal [1] at ¶ 7.)

On May 9, 2014, Plaintiffs filed their Motion to Remand [19]. Plaintiffs argue that the Court should remand this case to the Circuit Court of Forrest County, Mississippi due to the absence of subject matter jurisdiction. On June 9, DBNTC, Deutsche Bank, Deutsche Bank AG, and Morgan Stanley filed their Response in Opposition [31] to the remand motion.[4] Also on June 9, Morris & Associates filed their Joinder [33] in the Response in Opposition [31]. The Bacchuses have not responded to the Motion to Remand [19] via a joinder or a separate response. DBNTC, Deutsche Bank, Deutsche Bank AG, Morgan Stanley, and Morris & Associates will hereinafter be collectively referred to as "Defendants" given the uniformity of their positions regarding subject matter jurisdiction.

II. DISCUSSION

A. General Removal Standards

"A district court has removal jurisdiction in any case where it has original jurisdiction." Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008) (citing 28 U.S.C. § 1441(a)). "The removing party bears the burden of establishing that federal jurisdiction exists." De Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995) (citing Gaitor v. Peninsular & Occidental S.S. Co., 287 F.2d 252, 253-54 (5th Cir. 1961)). A motion to remand alleging a procedural defect in removal must be brought within thirty (30) days of the filing of the notice of removal, but "the case shall be remanded" at any time before final judgment if it appears that subject matter jurisdiction is lacking. 28 U.S.C. § 1447(c). Since federal courts are of limited jurisdiction and removal raises significant federalism concerns, the "removal statutes are to be construed strictly against removal and for remand." Eastus v. Blue Bell Creameries, L.P., 97 F.3d 100, 106 (5th Cir. 1996) (citations omitted). Courts are to consider "jurisdictional facts as they existed at the time of removal" in ruling on a motion to remand. Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 265 (5th Cir. 1995).

B. Bankruptcy Jurisdiction

The Johnsons argue that Cora J. Johnson does not have a bankruptcy estate and that the bankruptcy petition cited in the Notice of Removal was filed by an individual with the same name. Defendants concede this point in response to the Motion to Remand [19]. "Defendants have subsequently determined that the Cora Johnson' who filed bankruptcy is not the Plaintiff in this action." (Defs.' Mem. of Auths. in Opp. to Mot. to Remand [32] at p. 4. n.2.) The Court lacks original jurisdiction over this ...


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