Aurora Loan Servs., LLC v. Jefferson

• Citation: 177 F.Supp.3d 1400
• Decision Date: 14 April 2016
• Docket Number: Case No.: 2:16–CV–78–VEH
• Court: U.S. District Court — Northern District of Alabama
• Parties: Aurora Loan Services, LLC, Plaintiff, v. Carthenia W. Jefferson, Defendant. Federal National Mortgage Association, Sirote & Permutt, PC, Nationstar Mortgage, QBE First Insurance Agency, Inc., Balboa Insurance Company, and QBE Americas, Inc., Counter–Defendants

177 F.Supp.3d 1400

Aurora Loan Services, LLC, Plaintiff,

v.Carthenia W. Jefferson, Defendant.

Federal National Mortgage Association, Sirote & Permutt, PC, Nationstar Mortgage, QBE First Insurance Agency, Inc., Balboa Insurance Company, and QBE Americas, Inc., Counter–Defendants

Case No.: 2:16–CV–78–VEH

United States District Court, N.D. Alabama, Southern Division.

Signed April 14, 2016

Shaun K. Ramey, Sirote & Permutt PC, Birmingham, AL, for Plaintiff.

Kenneth J. Lay, Rhonda Steadman Hood, Hood & Lay LLC, Birmingham, AL, for Defendant.

Kevin A. Rogers, Kelly D. Simpkins, Wells Marble & Hurst, PLLC, Ridgeland, MS, Ginny Willcox Leavens, Gregory C. Cook, Michael Paul Taunton, Balch & Bingham LLP, Stephen B. Porterfield, Sirote And Permutt PC, Birmingham, AL, Amanda M. Beckett, Rubin Lublin, LLC, Oxford, MS, Brett Jacob Chaness, Rubin Lublin LLC, Peachtree Corners, GA, for Counter–Defendants.

ORDER REMANDING CASE

VIRGINIA EMERSON HOPKINS

, United States District Judge

I. INTRODUCTION AND PROCEDURAL HISTORY

This procedurally complex civil action was originally filed on December 14, 2011, in the Circuit Court of Jefferson County, Alabama, by the Plaintiff, Aurora Loan Services, LLC (“Aurora”), against the Defendant, Arthenia W. Jefferson. (Doc. 1–1 at 1). The Complaint alleged that Aurora, as holder of Jefferson's mortgage, foreclosed upon Jefferson when Jefferson defaulted on her payments. (Doc. 1–1 at 4, 5). As a result of the foreclosure sale, a foreclosure deed, vesting title in Aurora, was executed and recorded. (Doc. 1–1 at 5). According to the Complaint, “[a]fter the foreclosure sale, ... Jefferson made payments towards the ... [m]ortgage and [Aurora] accepted and applied [those] payments towards the loan under the terms of the ... [m]ortgage.” (Doc. 1–1 at 5). The Complaint asked the state court to declare that the foreclosure deed was , void, and of no legal effect (Count One), and to declare that the mortgage was an existing, valid, and enforceable lien (Count Two).

On May 11, 2012, Jefferson filed an Answer and Counterclaim. (Doc. 1–1 at 51). The Counterclaim not only asserted claims against Aurora, as the original Plaintiff/Counterclaim Defendant, but also joined as Counterclaim Defendants Federal National Mortgage Association (“Federal”), and Sirote & Permutt, PC (“Sirote”)–two entities which were not original parties to this action. According to the Counterclaim, Aurora “wrongfully foreclosed on [the] property,” Sirote “handled the foreclosure sale,” and Federal “bought the property at the foreclosure sale ... despite knowing that the ... sale was wrongful and invalid [and] filed an ejectment suit against Jefferson.” (Doc. 1–1 at 55). Sirote also “filed the [ejectment] lawsuit” for Federal. (Doc. 1–1 at 55).¹

On December 12, 2012, by consent order, the relief requested in the original Complaint was granted. (Doc. 1–2 at 116–117). On August 13, 2012, all counterclaims against Sirote were dismissed. (Doc. 1–2 at 65). On November 19, 2015, the Circuit Court entered an order which dismissed “[a]ll claims and counterclaims asserted between Aurora ... and ... Jefferson.” (Doc. 1–9 at 427, 453). At that point, the only remaining claims were the counterclaims asserted by Jefferson against Federal.

Thereafter, on December 11, 2015, Jefferson filed an Amended Counterclaim which added, as Counterclaim Defendants, Nationstar Mortgage (“Nationstar”), QBE First Insurance Agency, Inc. (“QBE First”), Balboa Insurance Company (“Balboa”), and QBE Americas, Inc. (“QBE Americas”).² In addition to the allegations contained in the original Counterclaim, the Amended Counterclaim alleges that, when Jefferson's property was originally foreclosed upon and sold, Jefferson's insurer, ALFA, “cancelled her homeowner's insurance policy ...because it said she had no insurable interest.” (Doc. 1–9 at 495). In June 2010, Aurora “force-placed insurance on the property ... with Balboa ... QBE First ... and QBE Americas.” (Doc. 1–9 at 495). Thereafter, Jefferson's home was burglarized, and she suffered storm damage from tornados. (Doc. 1–9 at 495). On August 1, 2012, Nationstar became the servicer of the loan. (Doc. 1–9 at 496). Jefferson has made claims on the insurance policies on the property. She alleges that some but not all of her claims were honored, but that the claim checks had to be paid to Nationstar. She claims to have never received any insurance proceeds, and insists that no repairs have been made.

In addition to various state law claims³ , Jefferson alleges that all Counterclaim Defendants violated: the federal Truth in Lending Act, 15 U.S.C. § 1601, et seq .,

and the regulations thereto (“TILA”) (Count Fourteen); and the Fair Credit Reporting Act, 15 U.S.C. § 1681 (“FCRA”) (Count Sixteen). The Amended Counterclaim also alleges that Nationstar violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (“FDCPA”) (Count Fifteen). Based on these counts, the Counterclaim Defendants removed the case to this Court on January 15, 2016, alleging federal question jurisdiction under 28 U.S.C. § 1331. (Doc. 1 at 1).

The case comes before the Court on Jefferson's motion to remand. (Doc. 17). For the reasons stated herein, the motion will be GRANTED.

II. STANDARD FOR REMAND

“Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994)

. For removal to be proper, the court must have subject-matter jurisdiction in the case. “Only state-court actions that originally could have been filed in federal court may be removed to federal court by the Defendant.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). In addition, the removal statute must be strictly construed against removal, and any doubts should be resolved in favor of remand. See,

City of Vestavia Hills v. Gen. Fid. Ins. Co., 676 F.3d 1310, 1313 (11th Cir.2012) (“[b]ecause removal jurisdiction raises significant federalism concerns, federal courts are directed to construe removal statutes strictly. Indeed, all doubts about jurisdiction should be resolved in favor of remand to state court.”) (citation omitted).

“In removal cases, the burden is on the party who sought removal to demonstrate that federal jurisdiction exists.” Friedman v. New York Life Ins. Co., 410 F.3d 1350, 1353 (11th Cir.2005)

(citation omitted); Williams v. Best Buy Co., 269 F.3d 1316, 1319 (11th Cir.2001).

That burden goes not only to the issue of federal jurisdiction, but also to questions of compliance with statutes governing the exercise of the right of removal. Albonetti v. GAF Corporation–Chemical Group, 520 F.Supp. 825, 827 (S.D.Texas 1981)

; Jennings Clothiers of Ft. Dodge, Inc. v. U.S. Fidelity & Guaranty Co., 496 F.Supp. 1254, 1255 (D.Iowa 1980) ; Fort v. Ralston Purina Company, 452 F.Supp. 241, 242 (E.D.Tenn.1978).

Parker v. Brown, 570 F.Supp. 640, 642 (D.C.Ohio 1983)

While it is undoubtedly best to include all relevant evidence in the petition for removal and motion to remand, there is no good reason to keep a district court from eliciting or reviewing evidence outside the removal petition. We align ourselves with our sister circuits in adopting a more flexible approach, allowing the district court when necessary to consider post-removal evidence in assessing removal jurisdiction. We emphasize, as did the court in Allen,

that “under any manner of proof, the jurisdictional facts that support removal must be judged at the time of the removal, and any post-petition affidavits are allowable only if relevant to that period of time.” Allen, 63 F.3d [1326,] at 1335 [ (5th Cir.1995) ].

Sierminski v. Transouth Financial Corp., 216 F.3d 945, 949 (11th Cir.2000)

.

III. ANALYSIS

The Counterclaim Defendants have removed this case pursuant to 28 U.S.C. § 1441(a)

and (c). The Court will address each section in turn.

A. The Counterclaim Defendants Are Not “Third Party Defendants” or “Defendants”

First, however, because the Counterclaim Defendants argue that they may actually be “third-party defendants,” or simply “defendants,” the Court must address the classification of the removing parties in this case.

It has been noted:

[T]he “ ‘[l]egal characterizations of a party's status as stated in a complaint are not controlling; rather the Court must look at the factual allegations ... to determine a party's proper status. Furthermore, in determining the removing parties' proper characterization, federal law controls.’ ” Karp v. Am. Law Enforcement Network, LLC, CA 11–0449–CG–C, 2011 WL 6963254 (S.D.Ala. Nov. 18, 2011)

report and recommendation adopted, CIV.A. 11–449–CG–C, 2012 WL 38161 (S.D.Ala. Jan. 6, 2012) (quoting Palisades Collections LLC v. Shorts, Civil Action No. 5:07CV098, 2008 WL 249083, at *3 (N.D.W.Va. Jan. 29, 2008) (citations and internal quotations omitted; alteration to original)); see also

Chicago, Rock Island & Pacific R.

Co

. v. Stude, 346 U.S. 574, 579–80, 74 S.Ct. 290, 98 L.Ed. 317 (1954) (“For the purpose of removal, the federal law determines who is plaintiff and who is defendant.”).

FED.R.CIV.P. 13(a) and (b) allows counterclaims against “any opposing party.” Even [when entities are] not “opposing parties” before the counterclaim was filed (since they were not parties to the case), the Federal Rules allow for the joinder of new parties under Rules 19 and 20 via a counterclaim. See FED.R.CIV.P. 13(h). By contrast, third-party defendants can only be joined if the claim is by the defendant (third-party plaintiff) against someone “who is or may be liable to it for all or part of the plaintiff's claim against [it].” FED.R.CIV.P. 14(a)(1). In United States v. Olavarrieta, 812 F.2d 640, 643 (11th Cir.1987), the Eleventh Circuit wrote:

Rule 14(a) allows a defendant to assert a claim against any person not a party to the main action only if that third person's liability on that claim is in some way dependent upon...