Bank of Am., N.A. v. Barnard
| Decision Date | 11 December 2018 |
| Docket Number | Case No. 18-CV-0431-CVE-FHM |
| Parties | BANK OF AMERICA, N.A., Plaintiff, v. THOMAS EDWARD BARNARD, SPOUSE OF THOMAS EDWARD BARNARD, IF MARRIED, JANE DOE, AS OCCUPANT OF THE PREMISES, JOHN DOE, AS OCCUPANT OF THE PREMISES, KEYBANK, N.A., THE BANK OF NEW YORK MELLON, LVNV FUNDING, LLC, SIMMONS FIRST NATIONAL BANK, Successors by Merger to Security Savings Bank, FSB, Defendants. THOMAS EDWARD BARNARD, Third-Party Plaintiff, v. SETERUS INC and BAER TIMBERLAKE P.C., Third-Party Defendants. |
| Court | U.S. District Court — Northern District of Oklahoma |
Now before the Court are Bank of America, N.A.'s motion to dismiss amended counterclaim and third-party petition (Dkt. # 13) and Thomas Barnard's objection to removal and motion to remand to state court (Dkt. # 18). Bank of America, N.A. (Bank of America) filed this foreclosure action against Thomas Edward Barnard and others in Tulsa County District Court. On August 3, 2018, Barnard filed amended counterclaims and a third-party petition adding Seterus Inc. (Seterus) and Baer Timberlake P.C. (Baer Timberlake) as third-party defendants, and third-party defendant Seterus filed a notice of removal seeking to remove Barnard's counterclaims and third-party claims to this Court. Dkt. # 2. Barnard asks the Court to remand this case to state court for lack of subject matter jurisdiction.
On June 8, 2015, Bank of America filed this foreclosure action against Barnard alleging that he had defaulted on his mortgage. Dkt. # 2-1. Bank of America was represented by the law firm of Baer Timberlake. Dkt. # 31-1, at 11. Barnard filed an answer and also asserted counterclaims against Bank of America. Dkt. # 2-1, at 46. Although the counterclaims are not separated by count, it appears that Barnard was asserting counterclaims of breach of contract and unjust enrichment under state law, and a counterclaim alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (FDCPA). The notice of removal does not contain a state court docket sheet or a complete record of the filings in the foreclosure action, but Barnard has filed a copy of the state court docket sheet (Dkt. # 31-1, at 7-22).1
On May 31, 2018, Bank of America dismissed the foreclosure action and the state court closed the entire case. Dkt. # 31-1, at 18. Barnard filed a motion to vacate the order of dismissal as to his counterclaims against Bank of America. Id. The state court granted Barnard's motion and reinstated his counterclaims. Id. at 20. Barnard filed a motion seeking to file amended counterclaims and a third-party petition, and he also asked the state court to amend the case caption to reflect that he was the plaintiff. Id. at 19-20. The state court granted Barnard's motion to file amended counterclaims and a third-party petition, but his request to re-align the parties to reflect that he is the plaintiff was denied. Id. at 21.
On August 3, 2018, Barnard filed amended counterclaims (Dkt. # 8) against Bank of America, and Barnard also added Seterus and Baer Timberlake as third-party defendants. Barnard alleges state law counterclaims of breach of contract, bad faith, and abuse of process, and a federal law FDCPA counterclaim against Bank of America. Barnard, in his capacity as third-party plaintiff, alleges third-party claims against Seterus for breach of contract, bad faith, abuse of process, and a federal law third-party claim under the FDCPA. Barnard also alleges third-party claims of abuse of process and slander of title under state law and a federal law FDCPA claim against Baer Timberlake. Dkt. # 8. Barnard states that he has not served the amended counterclaims on Seterus or Baer Timberlake. Dkt. # 18, at 2. In his amended counterclaims, Barnard states that he is a resident of Tulsa County, Oklahoma, and he alleges that Bank of America and Seterus are foreign corporations. Dkt. # 8, at 2. Barnard does not make any allegations concerning the citizenship of Baer Timberlake but, in response to the motion to remand, Barnard states that Baer Timberlake is an Oklahoma professional corporation. Dkt. # 8, at 2; Dkt. # 18, at 2.
On August 21, 2018, Seterus filed a notice of removal (Dkt. # 2) stating that this Court has federal question and diversity jurisdiction over this case. Seterus refers to Barnard as the "plaintiff" and Bank of America, Seterus, and Baer Timberlake as the "defendants." Barnard has alleged a counterclaim against Bank of America and third-party claims against Seterus and Baer Timberlake under the FDCPA, and Seterus asserts that the Court has original jurisdiction over Barnard's FDCPA claims. Seterus also argues that Baer Timberlake was fraudulently joined as a party and, if the Court disregards Baer Timberlake as a party, the Court will have diversity jurisdiction over Barnard's state law claims. Barnard has filed a notice of dismissal (Dkt. # 29) of his FDCPA claims against Bank of America, Seterus, and Baer Timberlake.
Barnard asks the Court to remand the case to state court because he has dismissed his federal law claims and the Court lacks diversity jurisdiction over this case. Dkt. # 18. Seterus objects to Barnard's motion to remand, and Baer Timberlake joins in Seterus' objection. Dkt. # 28, at 8. Seterus argues that Barnard's dismissal of his FDCPA claims has no effect on the Court's jurisdiction because the Court had jurisdiction when the case was removed. Dkt. # 28, at 10-12. As to Barnard's state law claims, Seterus argues that Baer Timberlake was fraudulently joined as a party, because there is no possibility that Barnard can recover against Baer Timberlake for slander of title or abuse of process as a matter of Oklahoma law. Id. at 16-26. Even if Baer Timberlake were properly joined as a party, Seterus asks the Court to exercise supplemental jurisdiction over this case. Id. at 13-15.
Before reaching the issues raised by the parties, the Court finds that there is another issue potentially going to the jurisdiction of the Court that must be addressed. The notice of removal incorrectly identifies Barnard as the "plaintiff" and Bank of America, Seterus, and Baer Timberlake as "defendants." The Court has reviewed the petition filed by Bank of America and the amended counterclaims filed by Barnard, and Bank of America is clearly the plaintiff that filed the foreclosure action. Seterus and Baer Timberlake were sued as third-party defendants by Barnard, and it is Barnard who was named as a defendant in Bank of America's petition. Under 28 U.S.C. § 1441(a), a case may be removed by "defendant or defendants" only, and the removal statutes do not expressly permit removal by a third-party defendant.
The Tenth Circuit has not considered whether removal by a third-party defendant is permissible, but Tenth Circuit precedent is clear that removal statutes are to be construed narrowly and any ambiguity in the removal statutes should be interpreted in light of the limited nature of federal jurisdiction. Pritchett v. Office Depot, Inc., 420 F.3d 1090, 1094-95 (10th Cir. 2005). The "propriety of removal is judged on the complaint as it stands at the time of removal." Salzer v. SSM Health Care of Oklahoma Inc., 762 F.3d 1130, 1133 (10th Cir. 2014). It must be clear on the face of the complaint that the district court has original jurisdiction over the case, and "a case may not be removed to federal court solely because of a defense or counterclaim arising under federal law." Topeka Housing Authority v. Johnson, 404 F.3d 1245, 1247 (10th Cir. 2005).
Under 28 U.S.C. § 1441(a), a case may be removed to federal district court by "the defendant or the defendants," and the statute does not expressly permit removal by a third-party defendant. Several circuit courts of appeals have considered this issue and have concluded that third-partydefendants are not permitted to remove a case from state court to federal district court. See Westwood Apex v. Contreras, 644 F.3d 799 (9th Cir. 2011); First Nat'l Bank of Pulaski v. Curry, 301 F.3d 456 (6th Cir. 2002); Thomas v. Shelton, 740 F.2d 478 (7th Cir. 1984). Federal district courts in the Tenth Circuit have consistently interpreted the removal statutes to prohibit the removal of a case by a third-party defendant. Foltz v. Columbia Casualty Co., 2016 WL 3829144 (W.D. Okla. July 12, 2016); Federal Nat'l Mortgage Ass'n v. Milasinovich, 161 F. Supp. 3d 981 (D.N.M. 2016); NCO Fin. Sys., Inc. v. Yari, 422 F. Supp. 2d 1237 (D. Colo. 2006). On two occasions, this Court has found that a third-party defendant may not remove a case to federal court. Oklahoma v. 1983 Porsche, 2008 WL 4570315 (N.D. Okla. Oct. 10, 2008); Stillwater Nat'l Bank & Trust Co. v. Perryman Family Revocable Trust Dated November 1, 1997 ex rel. Perryman, 2006 WL 3716894 (N.D. Okla. Dec. 14, 2006).
The case was removed by Seterus, a third-party defendant. It is unclear if this would constitute a procedural or jurisdictional defect of removal, and the Tenth Circuit has held that a district court may not sua sponte remand a case to state court based on a procedural defect. City of Albuquerque v. Soto Enterprises, Inc., 864 F.3d 1089, 1093 (10th Cir. 2017). However, the procedural and jurisdictional issues overlap in this case because the Court would not have had jurisdiction over the foreclosure action filed by Bank of America, and the Court still lacks jurisdiction over the claims asserted in Bank of America's petition. Tenth Circuit precedent is clear that, under the well-pleaded complaint rule, a court may consider only the claims alleged in the plaintiff's complaint to determine whether a case can be removed. Hansen v. Harper Excavating, Inc., 641 F.3d 1216 (10th Cir. 2011). A case cannot be removed to federal court based solely on a federal defense or counterclaim asserted by a defendant. Topeka Housing Authority, 404 F.3d at1247. In this case, Bank of America filed a petition in state court seeking to foreclose on a mortgage, and there is no federal...
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