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Parker v. Citimortgage, Inc.

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

May 20, 2015

CITIMORTGAGE, INC., et al., Defendant.


KEITH STARRETT, District Judge.

This matter is before the Court on the Plaintiffs Willie E. Parker, Jr. and Lee Ann Parker's Motion for Remand [5]. Having considered the submissions of the parties, the record, and the applicable law, the Court finds that the motion should be denied. The Court also finds that the Plaintiffs' First Amended Complaint [4] should be stricken. This pleading purports to add a non-diverse Defendant, Bradley P. Jones, to the proceeding, which would destroy subject matter jurisdiction under Title 28 U.S.C. § 1332. The Court exercises its discretion to deny joinder of Jones pursuant to 28 U.S.C. § 1447(e) and the balance of the factors set forth by the United States Court of Appeals for the Fifth Circuit in Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th Cir. 1987). In addition, Defendant CitiMortgage, Inc.'s Motion to Dismiss Plaintiffs' First Amended Complaint [8] will be denied as moot.


On August 8, 2014, Plaintiffs filed their "Complaint seeking relief from a wrongful foreclosure action" in the Chancery Court of Covington County, Mississippi. (Compl. [1-2 at ECF p. 5].) Plaintiffs name CitiMortgage, Inc. ("CitiMortgage") and ABN AMRO Mortgage Group, Inc. ("ABN") as Defendants, and claim that Defendants initiated foreclosure proceedings against certain residential property owned by the Plaintiffs in fee simple (the "Subject Property") in violation of law and equity. The Complaint asserts five counts in support of liability. Although the legal grounds asserted under each count are not entirely clear, it appears that the Complaint at least alleges wrongful foreclosure based on the Defendants' purported failure to provide proper notice in seeking foreclosure and lack of legal standing to foreclose on the Subject Property. Plaintiffs also claim that the Defendants' foreclosure efforts have placed a cloud on their title to the Subject Property. Plaintiffs seek a judgment voiding the Substituted Trustee's Deed, preliminary injunctive relief precluding any further foreclosure proceedings until the merits of the Plaintiffs' claims are resolved, compensatory damages, punitive damages, and attorneys' fees.

On October 22, 2014, CitiMortgage, individually and as successor in interest to ABN, removed the proceeding to this Court on the basis of diversity of citizenship jurisdiction under 28 U.S.C. § 1332. ( See Notice of Removal [1].) The Notice of Removal asserts that the Plaintiffs are citizens of Mississippi; that CitiMortgage was incorporated in New York and maintains its principal place of business in Missouri; and, that ABN was incorporated in Delaware and maintained its principal place of business in Michigan prior to its merger with CitiMortgage in 2007. The Notice of Removal further provides that the amount in controversy exceeds $75, 000 based on the nature of the damages sought by the Plaintiffs and the value of the Subject Property.

On November 12, 2014, Plaintiffs filed their First Amended Complaint [4] without leave of court. This pleading adds a count against Bradley P. Jones. Plaintiffs claim that "the Substituted Trustee [Jones] violated a duty owed to Parker in attempting to strike and sell the Real Property at public outcry to CitiMortgage, Inc. and then attempting to convey the Real Property to Federal Home Loan Mortgage Corporation by Substitute Trustee's Deed of December 22, 2011." (1st Am. Compl. [4] at ¶ 62.)

On November 21, 2014, Plaintiffs filed their Motion for Remand [5]. Plaintiffs primarily seek remand on the basis that Jones is a Mississippi resident and complete diversity of citizenship is lacking due to the presence of Jones in the lawsuit.

On November 26, 2014, CitiMortgage filed its Motion to Dismiss Plaintiffs' First Amended Complaint [8]. Proceedings on the dismissal motion have been stayed pending the Court's ruling on the Plaintiffs' Motion for Remand. ( See Order Imposing Stay of Proceedings [21].)


As a general rule, "jurisdictional facts are determined at the time of removal, and... post-removal events do not affect that properly established jurisdiction." Louisiana v. Am. Nat'l Prop. & Cas. Co., 746 F.3d 633, 636 (5th Cir. 2014) (citations omitted). The facts before the Court lead to the conclusion that diversity jurisdiction existed at the time of CitiMortgage's removal. An exercise of diversity jurisdiction under § 1332 depends upon two basic requirements: 1) the parties must be citizens of different states; and 2) the amount in controversy, exclusive of interest and costs, must exceed the sum or value of $75, 000. 28 U.S.C. § 1332. The first requirement is met since the Complaint, Notice of Removal, and records on file with the Mississippi Secretary of State's office[1] evidence that the Plaintiffs are citizens of Mississippi, while CitiMortgage is a corporate citizen of New York and Missouri and ABN was a corporate citizen of Delaware and Michigan prior to its merger with CitiMortgage.[2] Section 1332(a)'s amount in controversy requirement is met given: (i) Plaintiffs' plea for punitive damages;[3] (ii) Plaintiffs' assertion that they executed a Promissory Note in the amount of $301, 500, which was secured by a Deed of Trust encumbering the Subject Property; and (iii) the Covington County Tax Assessor's office appraising the value of the Subject Property in excess of $200, 000. See Farkas v. GMAC Mortgage, L.L.C., 737 F.3d 338, 341 (5th Cir. 2013) (considering the value of property in determining the amount in controversy in an action challenging the validity of foreclosure proceedings), cert. denied, 135 S.Ct. 281 (2014). In sum, "it is more likely than not that" CitiMortgage was authorized to remove this case to federal court based on the existence of diversity jurisdiction under § 1332. St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253 n.13 (5th Cir. 1998) (citation omitted).

A statutory exception to the above-referenced rule operates when a plaintiff seeks to add a non-diverse defendant following removal. "If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the State court." 28 U.S.C. § 1447(e). Plaintiffs' remand motion is primarily based on this exception. "The addition of Jones in the First Amended Complaint destroyed this Court's diversity jurisdiction." (Pls.' Rebuttal [23] at ¶ 6.) However, Plaintiffs initially look past the Court's discretion to permit or deny joinder under § 1447(e), and contend that the filing of their amended pleading as a matter of course pursuant to Federal Rule of Civil Procedure 15(a)(1) necessitates remand. Plaintiffs' reliance on Rule 15 is unavailing. When a plaintiff files an amended pleading that would destroy the court's jurisdiction, "§ 1447(e) requires the court to scrutinize the attempted amendment." Albritton v. W.S. Badcock Corp., No. 1:02cv378, 2003 WL 21018636, at *2 (N.D. Miss. Apr. 7, 2003) (citations omitted).[4] Courts within the Fifth Circuit scrutinize the joinder of non-diverse defendants following removal pursuant to the factors set forth in Hensgens v. Deere & Co., 833 F.2d 1179. See, e.g., Wein, 2015 WL 1275915, at *5; McKnight, 2009 WL 2367499, at *2. This Court's application of those factors to the Plaintiffs' attempted joinder of Jones leads to the conclusion that the First Amended Complaint [4] was improperly filed and should be stricken.

A. The Hensgens Factors

In Hensgens, the Fifth Circuit recognized that an amended pleading naming a non-diverse defendant in a removed action gives rise to competing interests. See 833 F.2d at 1182. On the one hand, permitting amendment would require remand and deprive the diverse defendant of its interest in maintaining the federal venue. See id. On the other, denying amendment would give rise to the risk of parallel federal/state litigation and potentially result in a waste of judicial resources. See id. The Fifth Circuit provided that a district court should balance the equities and determine whether amendment should be allowed pursuant to the following factors: "[T]he court should consider the extent to which the purpose of the amendment is to defeat federal jurisdiction, whether plaintiff has been dilatory in asking for amendment, whether plaintiff will be significantly injured if amendment is not allowed, and any other factors bearing on the equities." Id.

In analyzing the first Hensgens factor, district courts often consider whether the plaintiff knew or should have known of the identity of the non-diverse defendant when the original complaint was filed. See, e.g., Shelley v. Colo. State Univ., No. A-14-CA-516, 2015 WL 1004292, at *7 (W.D. Tex. Mar. 6, 2015); Anzures, 886 F.Supp.2d at 562; Weathersby v. Gen. Motors Corp., No. 4:04cv298, 2006 WL 1487025, at *3 (N.D. Miss. 2006). If the plaintiff knew about the non-diverse party when he filed suit but omitted "that party as an original defendant, courts have viewed any later attempt to add the nondiverse party as a defendant as nothing more than an attempt to destroy diversity." Wein, 2015 WL 1275915, at *5 (quoting In re Norplant Contraceptive Prods. Liab. Litig., 898 F.Supp. 433, 435 (E.D. Tex. 1995)). Plaintiffs clearly knew of the identity of Defendant Jones at the initiation of this ...

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