Hayward v. Chase Home Fin. LLC, 3:10-CV-2463-G
| Decision Date | 18 July 2011 |
| Docket Number | 3:10-CV-2463-G |
| Parties | MARK HAYWARD, ET AL., Plaintiffs, v. CHASE HOME FINANCE, LLC, ET AL., Defendants. |
| Court | U.S. District Court — Northern District of Texas |
CIVIL ACTION NO.
Before the court are (1) the motion of the plaintiffs, Mark Hayward ("Hayward") and Richard Galvan ("Galvan") (collectively, the "plaintiffs"), to remand this case to the state court from which it was previously removed, and (2) the motion of the defendants, Chase Home Finance ("Chase") and Federal National Mortgage Association ("Fannie Mae") (collectively "the defendants"), to dismiss the claims against them or, in the alternative, for a more definite statement. For the reasons set forth below, the motions to remand and to dismiss are denied, and the motion for a more definite statement is granted.
In December 2007, Hayward and Galvan executed a promissory note and a deed of trust in favor of Network Funding to secure financing to purchase a home ("the property") in Dallas County, Texas. Plaintiffs' Application for Temporary Restraining Order ("Application"), attached to Defendants' Notice of Removal ("Notice"), as Exhibit C-1 at 1-2 ¶¶ 1-2 (docket entry 1). Chase acted as servicer of the loan. Id. at 2 ¶ 4. Due to a financial hardship caused by Hayward losing his job in February 2009, Hayward and Galvan apparently fell behind on their mortgage. See id. at 2 () ¶¶ 1-2. In September 2009, Chase sent Hayward and Galvan a notice of intent to foreclose on the property. Plaintiffs' Original Petition ("Petition"), attached to Notice, as Exhibit C-1 at 3 ¶ 11. Hayward requested a loan modification from Chase. Id. Chase then offered Hayward and Galvan a Trial Payment Period Plan, but they could not afford to make the payments Chase requested under the plan. Id. In March 2010, Chase appointed a substitute trustee to conduct a foreclosure on the property. Application at 2 ¶ 3. On September 21, 2010, Hayward and Galvan received a letter from Chase stating that Chase would not foreclose on the property before their modification evaluation process was complete. Id. at 3 ¶ 5. Two weeks later, on October 5, 2010, the property was sold to Fannie Mae at a foreclosure sale. Id. at 3 ¶ 6. Three days later, on October 8, 2010, Hayward and Galvan received another letter from Chase stating that Chase would notforeclose on the property before their modification evaluation process was complete. Id. at 3 ¶ 7. The following week, Fannie Mae sent Hayward and Galvan a notice to vacate and a "Cash for Keys" agreement, giving them until November 7, 2010, to vacate the property. Id. at 3 ¶¶ 8-9.
On November 10, 2010, Hayward and Galvan filed suit against Chase and Fannie Mae in the 14th Judicial District Court of Dallas County, Texas. See Notice ¶ 1. Hayward and Galvan sought damages for wrongful foreclosure, slander of title, breach of the Texas Debt Collection Practices Act, and unreasonable debt collection practices under Texas common law. See generally Petition. In their application for a temporary restraining order, Hayward and Galvan seek injunctive relief preventing Fannie Mae from interfering with their quiet enjoyment of the property pending trial on the merits. See Application at 7 ¶ 31. Finally, Hayward and Galvan seek a judgment declaring (1) that their property was wrongfully foreclosed, (2) that neither Chase nor Fannie Mae is the proper holder of the promissory note, (3) who currently holds the note and how much is owed on it, and (4) that quiets title to the property in them. See id. ¶¶ 10-11.
On December 3, 2010, Chase and Fannie Mae timely removed the case to this court pursuant to 28 U.S.C. §§ 1441 and 1446 based upon diversity-of-citizenship jurisdiction. Notice at 1-2. Chase and Fannie Mae also filed a motion to dismiss under Rule 12(b)(6) for failure to state a claim on which relief can be granted or,alternatively, for a more definite statement under Rule 12(e). Chase Home Finance LLC and Federal National Mortgage Association's Motion to Dismiss for Failure to State a Claim or Alternatively, Motion for More Definite Statement ("Motion to Dismiss") at 1 ¶ 3 (docket entry 4).
On December 22, 2010, Hayward and Galvan filed a motion to remand, arguing that removal was improper because there is not complete diversity of citizenship between the parties and because the amount in controversy does not exceed the requisite $75,000 jurisdictional threshold. Plaintiffs' Motion for Remand and Incorporated Memorandum of Law ("Motion for Remand") at 2 (docket entry 5).
Federal law permits defendants to remove "any civil action brought in a State court of which the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a). Because removal deprives "the state court of an action properly before it, removal raises significant federalism concerns, which mandate strict construction of the removal statute." Carpenter v. Wichita Falls Independent School District, 44 F.3d 362, 365-66 (5th Cir. 1995). See also Matter of Crystal Power Company, 2011 U.S. App. LEXIS 5694, at *4 (5th Cir. Mar. 21, 2011); Texas Instruments Inc. v. Citigroup Global Markets, Inc., 266 F.R.D. 143, 146 (N.D. Tex.2010) (J. Fish). Therefore, "any doubts concerning removal must be resolved against removal and in favor of remanding the case back to state court." Cross v. Bankers Multiple Line Insurance Company, 810 F. Supp. 748, 750 (N.D. Tex. 1992) (J. Means). See also Acuna v. Brown & Root Inc., 200 F.3d 335, 339 (5th Cir.), cert. denied, 530 U.S. 1229 (2000). The party seeking removal bears the burden of establishing federal jurisdiction. See, e.g., Willy v. Coastal Corporation, 855 F.2d 1160, 1164 (5th Cir. 1988); Texas Instruments, 266 F.R.D. at 146.
There are two primary bases on which a district court may exercise jurisdiction after removal: the existence of a federal question, see 28 U.S.C. § 1331, and complete diversity of citizenship among the parties, see 28 U.S.C. § 1332. Here, Chase and Fannie Mae alleged only diversity of citizenship as a basis of this court's jurisdiction.
The court can exercise diversity jurisdiction after removal only if three requirements are met: (1) the parties are of completely diverse citizenship, see 28 U.S.C. § 1332(a); (2) none of the properly joined defendants is a citizen of the state in which the case is brought, see 28 U.S.C. § 1441(b); and (3) the amount in controversy is more than $75,000, excluding interest and costs, see 28 U.S.C. § 1332(a). See also Texas Instruments, 266 F.R.D. at 146.
Diversity of citizenship exists only when none of the defendants is a citizen of the same state as any of the plaintiffs. See 28 U.S.C. § 1332(a). Here, both plaintiffsare citizens of Texas. See Petition ¶ 1. Thus, if either Chase or Fannie Mae is a citizen of Texas, diversity of citizenship is defeated.
The citizenship of a limited liability company is determined by the citizenship of all of its members. See, e.g., Harvey v. Grey Wolf Drilling Company, 542 F.3d 1077, 1080 (5th Cir. 2008) (citations omitted); Greene v. Moody, 2010 U.S. Dist. LEXIS 59309, at *2 (N.D. Tex. June 14, 2010) (J. Fish). Chase is a limited liability company with only one member -- Chase Home Finance, Inc. ("Chase Corporation") -- which is a corporation. Notice at 4 ¶ 5(b)(ii). Thus, Chase's citizenship is determined by the citizenship of Chase Corporation. See id.; Harvey, 542 F.3d at 1080.
A corporation is a citizen of (1) the state where it was incorporated and (2) the state of its principal place of business. 28 U.S.C. § 1332(c)(1). Chase Corporation was incorporated in Delaware and its principal place of business is New Jersey. Notice at 4 ¶ 5(b)(ii). Thus, Chase Corporation is a citizen of both Delaware and New Jersey. See 28 U.S.C. § 1332(c)(1).
Fannie Mae is a federally chartered corporation. Notice at 4 ¶ 5(b)(iii). Because a federally chartered corporation is incorporated under acts of Congress, rather than under state laws, it generally has national citizenship but no state citizenship. See Bankers Trust Company v. Texas & Pacific Railroad Company, 241 U.S. 295, 309 (1916). In a suit where one of the defendants has only national citizenshipbut no state citizenship, diversity is impossible because the suit is not between citizens of different states. See id. at 309-10.
There are two exceptions to the general rule that a federally chartered corporation has only national citizenship. First, a federal corporation that limits its business activities to only one state is a citizen of that state for jurisdictional purposes. See, e.g., Engelmeyer v. Production Credit Association of Midlands, 652 F. Supp. 1235, 1236 (D.S.D. 1987); Burton v. United States Olympic Committee, 574 F. Supp. 517, 519 (C.D. Cal. 1983). The second is where Congress has passed legislation specifying that the corporation is a citizen of a particular state for jurisdictional purposes. See Engelmeyer, 652 F. Supp. at 1237; Burton, 574 F. Supp. at 519. Fannie Mae's charter states that it "shall maintain its principal office in the District of Columbia . . . and shall be deemed, for purposes of jurisdiction and venue in civil actions, to be a District of Columbia corporation." 12 U.S.C. § 1717(a)(2)(B). Thus, Fannie Mae is a citizen of the District of Columbia. See id.; Engelmeyer, 652 F. Supp. at 1237.
To support their argument that this court should remand the case, Hayward and Galvan contend that Chase and Fannie Mae had a continuing and substantial connection with Texas, sufficient to subject them to the general jurisdiction of Texas courts. See Motion for Remand at 2. Hayward and Galvan correctly conclude that, when a business's contacts with a state subject it to the general jurisdiction of thatstate, "specific jurisdiction analysis becomes moot." Id. The plaintiffs fail to realize, however, that specific and general jurisdiction analysis is only relevant when...
To continue reading
Request your trial