Chambers v. HSBC Bank USA, N.A., No. 14–1606.

• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)
• Writing for the Court: BERNICE BOUIE DONALD, Circuit Judge.
• Citation: 796 F.3d 560
• Parties: Viola CHAMBERS, Plaintiff–Appellant, v. HSBC BANK USA, N.A., et al., Defendants–Appellees.
• Decision Date: 17 July 2015
• Docket Number: No. 14–1606.

796 F.3d 560

Viola CHAMBERS, Plaintiff–Appellant
v.
HSBC BANK USA, N.A., et al., Defendants–Appellees.

No. 14–1606.

United States Court of Appeals, Sixth Circuit.

July 17, 2015.
Rehearing En Banc Denied Sept. 10, 2015.

796 F.3d 562

ON BRIEF:Herman J. Anderson, Herman J. Anderson, PLLC, Detroit, Michigan, for Appellant. Ari Charlip, James A. Martone, Dickinson Wright PLLC, Troy, Michigan for HSBC Bank Appellees. David A. Breuch, Jonathan R. Schulz, Clark Hill PLC, Birmingham, Michigan, for Signature Group Appellees.

Before: MERRITT, MOORE, and DONALD, Circuit Judges.

OPINION

BERNICE BOUIE DONALD, Circuit Judge.

Plaintiff–Appellant Viola Chambers (“Chambers”) appeals from a district court

796 F.3d 563

order dismissing her claims of fraud against HSBC Bank, USA, and numerous other defendants.¹ Chambers also asserts that the district court erred when it dismissed her motion for remand as moot. For the reasons that follow, we AFFIRM the judgment of the district court.

I.

On April 5, 2006, Chambers and her son purchased a residential condominium in Novi, Michigan. The total cost of the condo was $608,294.00. They financed the purchase with $25,000.00 from Chambers' personal funds and obtained a mortgage loan from Fremont Investment and Loan (“FILC”) in the amount of $583,294.00 (the “first mortgage”). Chambers and her son also took a second mortgage loan on the property from FILC in the amount of $166,635.00 (the “second mortgage”). On April 8, 2006, Chambers' son transferred his interest in the condo to Chambers by quitclaim deed. In the following years, the mortgages were collectively assigned to defendant HSBC.²

Chambers defaulted on the first mortgage, making her last payment on June 10, 2008. The second mortgage was discharged on January 5, 2009. On December 19, 2012, HSBC, through its agent Miller Law, began non-judicial foreclosure proceedings against the condo by publishing a notice in the Oakland County News. On January 22, 2013, the Oakland County Deputy Sheriff sold Chambers' condo to HSBC for $744,734.33.

In September 2013,³ Chambers filed suit in Oakland County Circuit Court, demanding that the sheriff's sale be voided on multiple bases. Chambers claimed, inter alia, (1) that HSBC did not comply with Michigan law governing foreclosure by advertisement because it failed to mail her “written notices containing the information specified in [Mich. Comp. Laws (“MCL”) ] § 600.3205a(1) [,]” including notification of her right to request a loan modification; (2) that all defendants—HSBC, its agents, and others—“acting in concert together and with each other, willfully, knowingly and purposefully failed to comply with the mandatory notice provisions” of Michigan law, and committed fraud in doing so; and (3) that multiple conveyances of the mortgage were flawed, rendering HSBC legally incapable of foreclosing on the property. Chambers included as defendants not only HSBC and its agents, but numerous other companies and individuals whose name or signature appear in the chain of title.⁴ In Counts 1 through 4, Chambers asked the court to declare void the foreclosure and sheriff's sale; in Count 5, she requested conversion damages under MCL § 600.2919a.⁵

796 F.3d 564

HSBC, MERS, Ocwen, and Litton (collectively, the “Removing Defendants”) filed a motion to remove the case to federal court. In response, Chambers filed a motion for remand to state court. A plethora of other motions followed. Of relevance to the appeal at bar, the Removing Defendants moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6) ; defendants SGH, Inc., SGH LLC, and Van Patten moved for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c) ; and Chambers moved for sanctions against defendants and to strike Removing Defendants' motion to dismiss. The district court granted defendants' motions to dismiss and for judgment on the pleadings, denied Chambers' motions for sanctions and to strike, and denied Chambers' outstanding motion for remand as moot. Chambers now appeals.

II.

Chambers asserts a number of arguments on appeal regarding both the district court's decision not to remand the case to state court and its dismissal of her claims on the merits. We find none of these arguments persuasive.

A.

Chambers claims that the district court committed reversible error when it failed to remand the case to state court for several reasons: (1) the Removing Defendants failed to obtain consent from all necessary defendants; (2) the non-diverse defendants, including Koronowski, were properly joined, and therefore remain subject to the unanimity rule; and (3) the motion for remand cannot be mooted because “a challenge to subject matter jurisdiction is never moot in a removed case.” Chambers' arguments are unavailing.

Most of Chambers' jurisdictional claims address various aspects of the same issue: that a defendant seeking removal to federal court must obtain the consent of all other “properly joined and served” defendants to ensure the motion is unanimous. 28 U.S.C. § 1446(b)(2)(A). This requirement, otherwise known as the “rule of unanimity,” ensures that all defendants have a say before a case involving their interests is removed from state court. See, e.g., Farnsworth v. Nationstar Mortgage, LLC, 569 Fed.Appx. 421, 424 (6th Cir.2014) (“The rule of unanimity requires that in order for a notice of removal to be properly before the court, all defendants who have been served or otherwise properly joined in the action must either join in the removal, or file a written consent to the removal.”) (quoting Brierly v. Alusuisse Flexible Packaging, Inc., 184 F.3d 527, 533 n. 3 (6th Cir.1999) ) (internal quotation marks omitted).

By its terms, however, § 1446(b)(2) only requires the consent of properly joined defendants; the consent of a defendant that has been fraudulently joined is not necessary. Walker v. Philip Morris USA, Inc., 443 Fed.Appx. 946, 951 (6th Cir.2011) (“[A] party who removes a case involving non-diverse parties to federal court on diversity grounds will defeat a motion to remand if it can show that the non-diverse parties were fraudulently joined.”) (quoting Saginaw Hous. Comm'n v. Bannum, Inc., 576 F.3d 620, 624 (6th Cir.2009) ). To show that a party was fraudulently joined, and therefore consent from that party is not required for unanimity, the removing defendants must show that there is no colorable cause of action against that party. Id. (“Fraudulent joinder occurs when the non-removing party joins a party against whom there is no colorable cause of action.”). In other words, “[t]o prove fraudulent joinder, the removing party must present sufficient evidence that a plaintiff could not have established a cause of action against non-diverse

796 F.3d 565

defendants under state law.” Coyne v. Am. Tobacco Co., 183 F.3d 488, 493 (6th Cir.1999).

In this case, the Removing Defendants filed a motion to remove the case to federal court, and in a related memorandum,⁶ asserted that the non-diverse defendants—Orleans Associates, P.C., Miller Law, and individuals Miller, Trudgeon, and Koronowski—had been fraudulently joined, making their consent for removal unnecessary. On November 25, 2013, Chambers responded with a motion for remand to state court. Chambers argued that she had presented a colorable claim in particular against Koronowski, and that Koronowski was therefore a properly-joined, non-diverse defendant requiring remand. However, rather than ruling on the motion for remand directly, the district court found the non-diverse defendants were fraudulently joined, dismissed them from the case, and declared the motion for remand moot.

On appeal, Chambers argues the district court committed reversible error by failing to rule on the motion for remand. The Removing Defendants respond that Chambers' motion was time-barred, because it was filed more than 30 days after the notice of removal. But Chambers contends that her motion cannot be time-barred because it contained an objection to subject matter jurisdiction, which may be raised at any time. We find they are both partially correct.

Chambers is correct that a challenge to subject matter jurisdiction over a removed case may be raised at any time before final judgment. See Page v. City of Southfield, 45 F.3d 128, 133 (6th Cir.1995) (“[L]ack of subject matter jurisdiction ... requires the court to remand at any time prior to final judgment.”). But we have held that a breach of the rule of unanimity is a procedural issue, not a substantive one. Loftis v. United Parcel Serv., Inc., 342 F.3d 509, 516–17 (6th Cir.2003) (discussing “technical defects in the removal procedure, such as a breach of the rule of unanimity”) (citing 28 U.S.C. § 1447(c) and Page, 45 F.3d at 133 ). Violation of the rule of unanimity was the sole grounds of Chambers' motion for remand regarding all the non-diverse defendants, save one: Koronowski. Accordingly, we must decide on the merits whether Koronowski was properly or fraudulently joined, but we need not...