Karnatcheva v. JPMorgan Chase Bank, N.A., Civil No. 11–3452.

Decision Date11 May 2012
Docket NumberCivil No. 11–3452.
Citation871 F.Supp.2d 834
PartiesNatalia KARNATCHEVA, Kevin R. Gurule, and Kyle D. Kuss, Plaintiffs, v. JPMORGAN CHASE BANK, N.A., Chase Home Finance LLC, Mortgage Electronic Registration Systems, Inc., Federal National Mortgage Association, MERSCORP, Inc. and Usset, Weingarden and Liebo, P.L.L.P., Defendants.
CourtU.S. District Court — District of Minnesota


William B. Butler, Butler Liberty Law, LLC, Counsel for Plaintiffs.

Bryant D. Tchida, Peter J. Schwingler and Benjamin P. Freedland, Leonard Street and Deinard, a Professional Association, Counsel for Defendants JPMorgan Chase Bank, N.A., Chase Home Finance LLC, Mortgage Electronic Registration Systems, Inc. and Federal National Mortgage Association, and Merscorp, Inc. (Bank Defendants).

Gerald G. Workinger, Jr., Usset, Weingarden & Liebo, P.L.L.P., Counsel for Defendant Usset, Weingarden & Liebo, P.L.L.P.


MICHAEL J. DAVIS, Chief Judge.

This matter is before the Court on Plaintiffs' Motion to Remand and Defendants' Motions to Dismiss.


This case involves a number of Plaintiffs whose homes have been foreclosed and who are challenging the foreclosure proceedings. Plaintiffs filed this action in state court in November 2011, and Defendants removed to this Court on November 28, 2011, asserting diversity jurisdiction and Federal question jurisdiction.

Plaintiffs moved to remand the action to state court on February 10, 2012. Subsequently, the Defendants agreed to allow Plaintiffs to amend their complaint. Based on the parties' stipulation, the Magistrate Judge allowed Plaintiffs to file an Amended Complaint on February 24, 2012. [Doc. No. 20].

Motion to RemandA. Standard

Remand to state court is proper if the district court lacks subject matter jurisdiction over the asserted claims. 28 U.S.C. § 1447(c). In reviewing a motion to remand, the court must resolve all doubts in favor of remand to state court, and the party opposing remand has the burden of establishing federal jurisdiction by a preponderance of the evidence. In re Business Men's Assurance Co. of America, 992 F.2d 181, 183 (8th Cir.1983) (citing Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d Cir.1987)). Whether removal is deemed proper will be determined based on the record as it stands at the time of removal. See Hatridge v. Aetna Cas. & Surety Co., 415 F.2d 809, 814 (8th Cir.1969).

B. Prior Exclusive Jurisdiction Doctrine

Plaintiffs argue that this Court does not have subject matter jurisdiction pursuant to the “prior exclusive jurisdiction” doctrine. This doctrine provides that [w]here one court has acquired jurisdiction over property, a second court may not exercise in rem or quasi in rem jurisdiction over the same property.” In the Matter of the Trust Created by Louis W. Hill, 728 F.Supp. 564, 566 (D.Minn.1990) (citing Penn Gen. Casualty Co. v. Pennsylvania ex rel. Schnader, 294 U.S. 189, 195, 55 S.Ct. 386, 79 L.Ed. 850 (1935); Farmers' Loan & Trust Co. v. Lake St. Elevated R.R., 177 U.S. 51, 61, 20 S.Ct. 564, 44 L.Ed. 667 (1900)). “The doctrine is necessary to avoid unseemly and unmanageable conflicts between courts of concurrent jurisdiction.” Id. This doctrine is triggered where parallel proceedings involving the same property are pending in state and federal court, or when one court has continuing jurisdiction over property. Id. at 567.

In this case, the state court obtained jurisdiction over Plaintiffs' claims when the action was filed in state court, but once the action was removed to federal court, the state no longer had jurisdiction over any part of this action, including the Plaintiffs' property. See Hill, 728 F.Supp. at 566. After the case had been removed, an eviction proceeding was commenced against Plaintiff Karnatcheva. (Decl. Benjamin Freedland ¶¶ 2–3, Ex. A (Eviction Complaint filed in Hennepin County by Fannie May dated December 6, 2011).) On January 30, 2012, the Housing Court granted Defendant's motion to stay pending the disposition of this action. ( Id. Ex. B.) Because the eviction action commenced after this action was filed and removed to federal court, it is not a basis for prior exclusive jurisdiction in the state courts.

Plaintiffs assert that the Hill decision supports application of the prior exclusive jurisdiction doctrine in this case. Hill involved trusts, over which the state courts often have continuing jurisdiction. Hill, 728 F.Supp. at 567. This case does not involve a trust, nor do Plaintiffs claim that their properties were subject to any state court supervision at the time this action was filed. Id.

The Court now joins other courts in this District and elsewhere that have rejected application of the prior exclusive jurisdiction in cases similar to this, in support of remand to state court. See, e.g., Cartier et al. v. Wells Fargo Bank, N.A. et al., Civil No. 11–2168 (JRT/AJB) (Doc. No. 38), 2012 WL 2499455 (D.Minn. Feb. 22, 2012) (Report and Recommendation); Welk et al. v. GMAC Mortgage, LLC et al., 850 F.Supp.2d 976, 995–96 (D.Minn.2012); Dunbar et al. v. Wells Fargo Bank, N.A. et al., 853 F.Supp.2d 839 (D.Minn.2012). See alsoGogert v. Regional Trustee Serv. Inc., No. C11–1578, 2012 WL 289205, at *2 (W.D.Wash. Jan. 31, 2012); Cotera v. BAC Home Loans Serv. LP, No. 3:11–1023, 2011 WL 6013834, at *2 (D.Or. Nov. 3, 2011); Karl v. Quality Loan Serv. Corp., 759 F.Supp.2d 1240 (D.Nev.2010).

C. Fraudulent Joinder

Plaintiffs argue that remand is warranted because there is not complete diversity amongst the parties, as Defendant Usset, Weingarden and Liebo, P.L.L.P. (Usset) is a Minnesota resident. In response, Defendants argue that Usset has been fraudulently joined in order to destroy diversity.

“Joinder is fraudulent and removal is proper when there exists no reasonable basis in fact and law supporting a claim against the resident defendant.” Wiles v. Capitol Indem. Corp., 280 F.3d 868, 870 (8th Cir.2002). “Fraudulent joinder does not exist where ‘there is arguably a reasonable basis for predicting that the state law might impose liability based upon the facts involved.’ Junk v. Terminix Int'l Co., 628 F.3d 439, 446 (8th Cir.2010) (quoting Filla v. Norfolk S. RR Co., 336 F.3d 806, 811 (8th Cir.2003)). On the other hand, “if it is clear under governing state law that the complaint does not state a cause of action against the non-diverse defendant, the joinder is fraudulent and federal jurisdiction of the case should be retained.” Knudson v. Sys. Painters, Inc., 634 F.3d 968, 980 (8th Cir.2011) (citations omitted). “The relevant inquiry in analyzing fraudulent joinder, however, focuses only on whether a plaintiff “might” have a “colorable” claim under state law against a fellow resident, not on the artfulness of the pleadings.” Wilkinson v. Shackelford, 478 F.3d 957, 964 (8th Cir.2007).

In considering whether a non-diverse defendant has been fraudulently joined, the Court can examine material beyond the complaint's allegations to “determine if there is any factual support” for the claims against the allegedly fraudulently joined defendant. Block v. Toyota Motor Corp., 665 F.3d 944, 948 (8th Cir.2011).

In the Complaint 1, Plaintiffs assert claims of slander of title, conversion, civil conspiracy, negligent misrepresentation, fraud and equitable estoppel against Usset. These claims are premised on the allegations that Defendants did not have legal title to the Original Notes and Mortgages, and that they therefore did not have the right to proceed with foreclosure. (Comp. ¶¶ 66, 70, 79, 100, 101, 106–08, 111–12.)

An “attorney acting within the scope of his employment as an attorney is immune from liability to third persons for actions arising out of that professional relationship.” McDonald v. Stewart, 289 Minn. 35, 182 N.W.2d 437, 440 (1970). Further, attorneys are generally not liable to the client's adversary, absent evidence of an affirmative misrepresentation. L & H Airco, Inc. v. Rapistan Corp., 446 N.W.2d 372, 380 (Minn.1989).

The claims against Usset arise through Usset's representation of certain Defendants in the foreclosure proceedings involving the Karnatcheva and Kuss properties. In addition, as will be discussed below, Plaintiffs fail to allege an actionable misrepresentation made by an attorney involved in the foreclosure proceedings. Accordingly, the Court finds that Usset was fraudulently joined as Plaintiffs have not asserted a “colorable” claim under state law against Usset. See, Welk, 850 F.Supp.2d at 995–96 (finding law firm was fraudulently joined because claims against it were frivolous); Jerde v. JPMorgan Chase Bank, N.A., No. 11–2666, 2012 WL 206271 at *2 (D.Minn. Jan. 24, 2012) (finding that law firms are generally immune from actions taken with the scope of their representation absent evidence the law firm took active steps to conceal a fraud, and that Plaintiffs had failed to state a claim against the law firm based on allegations that mortgagee failed to hold an interest in the promissory note); Murphy v. Aurora Loan Servs., LLC, No. 11–2750, 2012 WL 104543, at *4 (D.Minn. Jan. 12, 2012) (finding law firm was fraudulently joined as it was immune from suit and because claims were premised on a flawed legal theory); Dunbar, 853 F.Supp.2d at 844(same).

Plaintiffs' motion to remand must be denied as this Court has subject matter jurisdiction over this action based on complete diversity of the parties. 28 U.S.C. § 1332(a).

Motion to DismissA. Standard

Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a party may move the Court to dismiss a claim if, on the pleadings, a party has failed to state a claim upon which relief may be granted. In reviewing a motion to dismiss, the Court takes all facts alleged in the complaint to be true. Zutz v. Nelson, 601 F.3d 842, 848 (8th Cir.2010).

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...

To continue reading

Request your trial
18 cases
  • Gerhardt v. Mares
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • January 20, 2016
    ...at 1406. The Court's search for relevant cases revealed many that reached an opposite result. In Karnatcheva v. JPMorgan Chase Bank, N.A., 871 F.Supp.2d 834 (D.Minn.2012) (Davis, J.), for example, the United States District Court for the District of Minnesota explained:An “attorney acting w......
  • Brinkman v. Bank of Am., N.A.
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Minnesota
    • August 17, 2012
    ...deficiencies in a similar slander of title claim); see also Dunbar, 853 F.Supp.2d at 847–48;Karnatcheva v. JPMorgan Chase Bank, N.A., 871 F.Supp.2d 834, 840–41 (D.Minn.2012).9 Because all claims against Peterson have no reasonable basis in fact or law, the Court concludes that Peterson was ......
  • Alliance Energy Servs., LLC v. Kinder Morgan Cochin LLC
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Minnesota
    • January 21, 2015
    ...if there “exists no reasonable basis in fact and law supporting a claim against the ... defendant.” Karnatcheva v. JPMorgan Chase Bank, N.A., 871 F.Supp.2d 834, 838 (D.Minn.2012)aff'd, 704 F.3d 545 (8th Cir.2013). Applying this standard, Defendants claim that there “exists no reasonable bas......
  • Stilp v. HSBC Bank USA, N.A.
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Minnesota
    • March 20, 2013
    ...have rejected counsel's similar attempts to defeat diversity jurisdiction on multiple occasions. Karnatcheva v. JPMorgan Chase Bank, N.A., 871 F. Supp. 2d 834, 838-39 (D. Minn. 2012), aff'd, 704 F.3d 545 (8th Cir. 2013); Nelson v. Bank of N.Y. Mellon, No. 12-1096, 2012 U.S. Dist. LEXIS 1412......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT