Dupree v. Fay Servicing, LLC

• Decision Date: 09 August 2019
• Docket Number: Civil Action No. 4:19cv51
• Parties: Tonja DUPREE, Plaintiff, v. FAY SERVICING, LLC, and Equity Trustees, LLC, Defendants.
• Court: U.S. District Court — Eastern District of Virginia

392 F.Supp.3d 639

Tonja DUPREE, Plaintiff,

v.FAY SERVICING, LLC,andEquity Trustees, LLC, Defendants.

Civil Action No. 4:19cv51

United States District Court, E.D. Virginia, Newport News Division.

Signed August 9, 2019

Heath J. Thompson, Heath J. Thompson PC, Virginia Beach, VA, for Plaintiff.

Donald Richard Pocock, Nelson Mullins Riley & Scarborough LLP, Winston-Salem, NC, David Lance Ward, Sarah Craig Dickson, BWW Law Group LLC, Richmond, VA, for Defendants.

MEMORANDUM ORDER

REBECCA BEACH SMITH, UNITED STATES DISTRICT JUDGE

This matter comes before the court on Defendant Equity Trustees, LLC's ("Equity Trustees") Motion to Dismiss and accompanying Memorandum in Support, filed on May 24, 2019, ECF Nos. 5, 7; Defendant Fay Servicing, LLC's ("Fay Servicing") Motion to Dismiss and accompanying Memorandum in Support, filed on May 25, 2019, ECF Nos. 8, 9; and Plaintiff's Motion to Remand and accompanying Memorandum in Support, filed on June 7, 2019, ECF Nos. 10, 11. Plaintiff did not file a response to Equity Trustees' or Fay Servicing's Motion to Dismiss. Fay Servicing and Equity Trustees each filed a Notice, indicating that they did not seek oral argument on their respective Motions to Dismiss. ECF Nos. 12, 14. Fay Servicing filed a Memorandum in Opposition to Plaintiff's Motion to Remand on June 21, 2019. ECF No. 13. No additional briefing was provided on any of the three (3) Motions. For the reasons below, Plaintiff's Motion to Remand is DENIED , and Fay Servicing and Equity Trustees Motions to Dismiss are GRANTED .

I. BACKGROUND

The following facts are taken from Plaintiff's Complaint, ECF No. 1-1, and for the purposes of Fay Servicing and Equity Trustees Motions to Dismiss are accepted as true. See, e.g., Venkatraman v. REI Sys., Inc., 417 F.3d 418, 420 (4th Cir. 2005). On June 21, 2006, Plaintiff entered into a mortgage loan contract in order to borrow money to purchase a home in Hampton, Virginia. Compl. ¶ 5.¹ The loan was evidenced by a promissory note, and secured by a Deed of Trust on the home. Id. Plaintiff's husband, Mr. Jerry Dupree, was also a borrower for this mortgage loan contract. Id. ¶ 14. Plaintiff and Mr. Dupree are separated, and Mr. Dupree no longer lives in the Hampton, Virginia home or contributes to the household income. Id. ¶ 15.² Mr. Dupree has signed a Deed of Gift, giving his interest in the Hampton, Virginia home to Plaintiff. Id. ¶ 16.³

In August 2018, Plaintiff fell behind on her loan payments. Id. ¶ 8. In October 2018, Plaintiff's loan was transferred to Fay Servicing from Caliber Home Loans. Id. ¶ 9.⁴ After the transfer, Plaintiff did not receive any information from Fay Servicing about her loss mitigation options. Id. ¶ 10. In January 2019, Plaintiff submitted a partial payment to Fay Servicing, which payment was returned by Fay Servicing. Id. ¶ 11. In response, Plaintiff contacted Fay Servicing to inquire about her loss mitigation options. Id. ¶ 12. Fay Servicing advised Plaintiff about a loan modification option, and sent Plaintiff the necessary documents to apply for a loan modification. Id. ¶ 13.

In order to apply for a loan modification, however, Fay Servicing required Plaintiff to submit information about Mr. Dupree's income. Id. ¶ 17. Due to difficulties in communicating with her estranged husband, Plaintiff has had difficulty obtaining the requested documents. Id. ¶ 30. Fay Servicing's request for Mr. Dupree's income information, which was made in January 2019, remains outstanding. Id. Fay Servicing, in conjunction with Equity Trustees,⁵ set a foreclosure sale of Plaintiff's home for April 30, 2019. Id. ¶ 20.⁶

On April 24, 2019, Plaintiff filed her Complaint in the Circuit Court for the City of Hampton. Notice of Removal ¶ 1, ECF No. 1.⁷ In her Complaint, Plaintiff raises three (3) claims for relief. Compl. ¶¶ 21-46. For her first two claims, Plaintiff claims that Fay Servicing has breached the Deed of Trust. Id. ¶¶ 31, 38. Plaintiff's breach claims are based on her assertion that, as a term of the Deed of Trust, Fay Servicing agreed to comply with federal mortgage regulations. Id. ¶ 22. Plaintiff asserts that Fay Servicing failed to comply with three federal mortgage regulations, 12 C.F.R. § 1024.39,⁸ 12 C.F.R. § 1024.41,⁹ and 12 C.F.R. § 1026.36,¹⁰ and that such failure constitutes a breach of the Deed of Trust. Id. ¶¶ 31, 34-38. For her third claim, Plaintiff claims that Equity Trustees has breached the Deed of Trust by proceeding with a foreclosure sale of Plaintiff's home, when it knows that Fay Servicing has breached the Deed of Trust by failing to comply with the aforementioned federal mortgage regulations. Id. ¶¶ 44-46. Plaintiff claims that she is entitled to over $300,000 in damages, and that she is also entitled to a preliminary injunction to prevent the foreclosure sale of her home. Id. at p. 9 (Complaint's prayer for relief).

On May 20, 2019, Fay Servicing removed this case from the Circuit Court for the City of Hampton to this court. ECF No. 1. Fay Servicing asserts that this court has subject matter jurisdiction over this case because Plaintiff's claims are based on violations of federal mortgage regulations, raising this court's federal question jurisdiction. Id. ¶ 34. Fay Servicing also asserts that there is diversity jurisdiction, because Plaintiff has claimed over $300,000 in damages, id. ¶ 30, because there is complete diversity between Plaintiff and Fay Servicing, id. ¶¶ 14, 15, and because Equity Trustees' citizenship should not be considered for the purposes of determining complete diversity because it is a nominal party and/or has been fraudulently joined in this action, id. ¶ 17.

On May 24, 2019, Equity Trustees filed a Motion to Dismiss, arguing that Plaintiff's single claim against Equity Trustees should be dismissed pursuant to Federal Rule of Civil 12(b)(6). ECF No. 5. On May 25, 2019, Fay Servicing filed a Motion to Dismiss, similarly arguing that Plaintiff's two (2) claims against Fay Servicing should be dismissed pursuant to Rule 12(b)(6). ECF No. 8. On June 7, 2019, Plaintiff filed a Motion to Remand, arguing that Fay Servicing's removal was improper because this court lacks subject matter jurisdiction over this action. ECF No. 10.

II. LEGAL STANDARD

When the court has been presented with both a motion to remand and motions to dismiss, the court will first look to the motion to remand, as the court will only consider the motions to dismiss, if it first determines that it has subject matter jurisdiction over the action. McCoy v. Norfolk S. Ry. Co., 858 F. Supp. 2d 639, 642 (S.D.W. Va. 2012) ; see Burrell v. Bayer Corp., 918 F.3d 372, 379-80 (4th Cir. 2019) (If a case " ‘was not properly removed, because it was not within the original jurisdiction of the United States district courts,’ then the district court [is] without jurisdiction to rule on the merits and instead [is] required to remand the action to state court.") (quoting Franchise Tax Bd. v. Constr. Laborers Vacation Tr., 463 U.S. 1, 8, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983) ). The guiding principle of removal is that "[a] defendant may remove any action from a state court to a federal court if the case could have originally been brought in federal court." Yarnevic v. Brink's, Inc., 102 F.3d 753, 754 (4th Cir. 1996) (citing 28 U.S.C. § 1441 ). A defendant who removes an action to federal court bears the burden of establishing that the federal court has jurisdiction over the action, and that the removal is procedurally proper. Mulcahey v. Columbia Organic Chemicals Co., Inc., 29 F.3d 148, 151 (4th Cir. 1994). When the court is presented with a motion to remand based on lack of subject matter jurisdiction, "[i]f federal jurisdiction is doubtful, a remand is necessary." Id. (citations omitted).

If federal jurisdiction is established, the court will proceed to consider the motions the dismiss. Pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint must be dismissed when a plaintiff's allegations fail to state a claim upon which relief can be granted. Id. "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). To evaluate a Rule 12(b)(6) motion, the court accepts facts alleged in the complaint as true, and views those facts in the light most favorable to the plaintiff. See, e.g., Venkatraman, 417 F.3d at 420.

III. MOTION TO REMAND

In support of her Motion to Remand, Plaintiff argues that this court lacks subject matter jurisdiction because Plaintiff's claims for breach of the Deed of Trust are state law claims which do not invoke this court's federal question jurisdiction. ECF No. 11 at 4. Plaintiff also argues that Equity Trustees is not a nominal party, nor has it been fraudulently joined, and therefore this case does not invoke the court's diversity jurisdiction. Id. at 3.

Plaintiff is not entitled to relief on her Motion to Remand because the claims raised in Plaintiff's Complaint clearly invoke this court's federal question jurisdiction. "The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Where a plaintiff asserts a state law cause of action, the court's federal question jurisdiction is nonetheless invoked if (1) "the plaintiff's right to relief necessarily depends on a question of federal law," and (2) that "question of federal law is substantial."

Pinney v. Nokia, Inc., 402 F.3d 430, 442 (4th Cir. 2005) (citation omitted). In making such determination, the court looks only to the "plaintiff's statement of [her] own claim," as set forth in the complaint. Flying Pigs, LLC v. RRAJ Franchising, LLC, 757 F.3d 177, 181 (4th Cir. 2014) (citation omitted).

Plaintiff's claims for relief are...