Magers v. Bank of Am., N.A.
| Decision Date | 26 February 2013 |
| Docket Number | EP-12-CV-00368-DCG |
| Parties | KAREN MAGERS Plaintiff, v. BANK OF AMERICA, N.A.; and BEVERLY MITRISIN, as Trustee; Defendants. |
| Court | U.S. District Court — Western District of Texas |
Before the Court for consideration is Plaintiff Karen Magers's ("Magers") "Response to Orders to Show Cause Regarding Pro Hac Vice and Motion to Dismiss" (ECF No. 20) (construed as a motion to remand) filed on January 23, 2013, in the above-captioned removed case. Therein, Magers requests the Court to remand the case back to the state court. Also before the Court for consideration is Defendant Bank of America, N.A.'s ("Bank of America") "Response to Plaintiff's Motion to Remand and Brief in Support" (ECF No. 22) filed on February 4. After carefully considering Magers's state court petition, Bank of America's response, and the applicable law, the Court is of the view that the case should be REMANDED.
On or about June 16, 2008, Magers executed a promissory note for $75,047.00 payable to Countrywide Bank, FSB ("Countrywide") as the lender on a purchase money (or a home equity) loan. Concurrently with the execution of the note, Magers executed a deed of trust granting a lien on the real property located at 9443 Gschwind, El Paso, Texas (the "property") to secure payment of the note. According to Magers's complaint, on May 19, 2011, an assignment of interest was made to Bank of America. Subsequently, Magers alleges, Bank of America instructed Beverly Mitrisin ("Mitrisin"), the substituted trustee, to sell the property at a foreclosure sale, which was set for August 7, 2012. On the day of the sale, Magers brought this action against Bank of America and Mitrisin, and filed her "Original Petition for Declaratory Judgment, Requests for Disclosure" (ECF No. 1-2) in the 327th Judicial District Court of El Paso County, Texas, in Cause No. 2012DCV05154. On August 14, Magers filed her "First Amended Original Petition for Declaratory Judgment, Requests for Disclosure" (ECF No. 1-4). Therein, Magers alleges that she was never provided notice of default and notice of sale as required under the deed of trust and by the Texas Property Code. She asserts a cause of action for breach of contract and seeks damages, injunctive relief, and declaratory relief.
On September 14, 2012, Defendant Bank of America removed the case to this Court, based on diversity of citizenship, 28 U.S.C. §§ 1332(a), 1441(a)-(b), claiming that Defendant Mitrisin was joined improperly and therefore that her presence should be disregarded for purposes of determining diversity. Notice of Removal 3, ECF No. 1. On September 20, Bank of America filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), which is currently pending before the Court. Def.'s Mot. to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6) & Br. in Support, ECF No. 3. Because Magers did not respond to that motion, on January 9, 2013, the Court issued an Order instructing her to show cause why Bank of America's motionshould not be granted as unopposed.1 Order to Show Cause Regarding Mot. to Dismiss, ECF No. 17. Magers responded by filing her "Response to Orders to Show Cause Regarding Pro Hac Vice and Motion to Dismiss" (ECF No. 20), on January 23. Therein, Magers urges the Court not to dismiss the case, but to remand the case because the Court lacks subject matter jurisdiction. Resp. to Orders to Show Cause 1, ECF No. 20. Specifically, Magers contends that there is not complete diversity because she and Mitrisin are Texas citizens. Id. at 1-2. Bank of America followed by filing its response. Resp. to Pl.'s Mot. to Remand & Br. in Support [hereinafter BOA's Resp.], ECF No. 22.
Because in her "Response to Orders to Show Cause Regarding Pro Hac Vice and Motion to Dismiss," Magers urges the Court to remand the case to the state court, the Court construes that filing as a motion to remand. The Court now turns to the merits of the parties' contentions.
To remove a civil action from a state court to a federal court on the basis of diversity jurisdiction, the removing defendants must show, inter alia, that there is complete diversity of citizenship among the parties and that no defendant properly joined is an in-state defendant, i.e., a citizen of the state in which the action is brought. 28 U.S.C. §§ 1332, 1441(a)-(b); Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 572-73 (5th Cir. 2004) (en banc). That requisite showing is subject to a narrow exception—the doctrine of fraudulent joinder, or more accurately, improper joinder.2 Smallwood, 385 F.3d at 573; McDonal v. Abbott Labs., 408 F.3d 177, 183 (5th Cir.2005). The doctrine "ensures that the presence of an improperly joined, non-diverse defendant does not defeat federal removal jurisdiction premised on diversity." Borden v. Allstate Ins. Co., 589 F.3d 168, 171 (5th Cir. 2009). The removing defendants carry the heavy burden of proving improper joinder, Griggs v. State Farm Lloyds, 181 F.3d 694, 701 (5th Cir. 1999), and if that burden is not met, the defendants are "not entitled to remove, and remand is mandated," Smallwood, 385 F.3d at 575. Improper joinder may be established by showing: "(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court." Id. at 573. Only the second method of establishing improper joinder is alleged by Bank of America.
Under the second method, the test is "whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state defendant, which stated differently means that there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant." Id. In making this determination, the court must evaluate any ambiguity or uncertainty in the controlling state law and all of the factual allegations in the light most favorable to the plaintiff, resolving all contested issues of material fact in favor of the plaintiff. Griggs, 181 F.3d at 699; Guillory v. PPG Indus., Inc., 434 F.3d 303, 308 (5th Cir. 2005). The court does not determine "whether the plaintiff will actually or even probably prevail on the merits of the claim, but look only for a possibility that the plaintiff might do so." Guillory, 434 F.3d at 309 (citations omitted). "'This possibility, however, must be reasonable, not merely theoretical.'" Travis v. Irby, 326 F.3d 644, 648 (5th Cir. 2003) (emphasis in original) (quoting Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312 (5th Cir. 2002)).
To determine whether a plaintiff has a reasonable basis of recovery against an in-state defendant, a court conducts a "Rule 12(b)(6)-type analysis, looking initially at the allegations ofthe complaint to determine whether the complaint states a claim under state law against the instate defendant." Smallwood, 385 F.3d at 573. Ordinarily, if a plaintiff survives a "hypothetical" Rule 12(b)(6) challenge, there is no improper joinder. Id.; Hawthorne Land Co. v. Occidental Chem. Corp., 431 F.3d 221, 224 (5th Cir. 2005). However, even if the plaintiff states a valid claim, a court in its discretion may "pierce the pleadings" and conduct a "summary inquiry," Smallwood, 385 F.3d at 573, which is appropriate "'only to identify the presence of discrete and undisputed facts that would preclude plaintiff's recovery against the in-state defendant,'" Guillory, 434 F.3d at 310 (quoting Smallwood, 385 F.3d at 574).
Finally, "as 'the effect of removal is to deprive the state court of an action properly before it, removal raises significant federalism concerns.'" Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, (5th Cir. 2007) (quoting Carpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d 362, 365-66 (5th Cir. 1995)). The federal courts "must not trespass upon the judicial 'turf of the state courts." B., Inc. v. Miller Brewing Co., 663 F.2d 545, 546 (5th Cir. 1981). Accordingly, courts must strictly and narrowly interpret the removal statutes, resolving any doubt about the propriety of removal in favor of remand. Gasch, 491 F.3d at 281-82 (citation omitted).
As an initial matter, the Court notes that Magers did not challenge this Court's subject matter jurisdiction until approximately four months after the removal. It is, of course, axiomatic that "a challenge to the court's subject matter jurisdiction over a case may be raised at any time because it goes to the court's very power to hear the case." United States v. Scruggs, 691 F.3d 660, 666 (5th Cir. 2012). The thrust of Magers's challenge is that although she and DefendantBank of America are diverse citizens, Defendant Mitrisin, the substitute trustee,3 like her, is a Texas citizen, and therefore complete diversity of citizenship is lacking. Resp. to Orders to Show Cause 1-2, ECF No. 20. Bank of America, which, as the removing party, has the burden to establish that federal jurisdiction existed at the time of removal, see Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001), concedes that Magers and Mitrisin are not diverse, but contends that Mitrisin should be disregarded for the purpose of removal jurisdiction. BOA's Resp. 3. To so disregard, this Court must find that the joinder of Mitrisin was improper. See Smallwood, 385 F.3d at 572. To that end, the Court's "Rule 12(b)(6)-type analysis" must begin with Magers's state court petition at the time of removal, i.e., her "First Amended Original Petition for Declaratory Judgment, Requests for Disclosure" [hereinafter referred to as the "amended complaint" or simply the "complaint"] (ECF No. 1-4). See Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 264 (5th Cir. 1995) ().
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