Orton v. First Horizon Nat'l Corp.
| Decision Date | 04 June 2012 |
| Docket Number | 3:11-cv-00 630-ECR-VPC |
| Parties | JASON AND KRISTY ORTON, Plaintiffs, v. FIRST HORIZON NATIONAL CORPORATION; FIRST TENNESSEE BANK; FIRST HORIZON HOME LOANS; METLIFE BANK, N.A.; METLIFE HOME LOANS; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; THE MORTGAGE LAW FIRM, PLC; IBM LENDER BUSINESS PROCESS SERVICES, INC. (LBPS); and DOES 1-25, Corporations; and ROES 1-25, Individuals or Partnerships, Defendants. |
| Court | U.S. District Court — District of Nevada |
Plaintiffs are homeowners alleging to be the victims of a predatory lending scheme perpetuated by Defendants. Now pending are two motions to dismiss, a motion to remand, and a motion to expunge lis pendens.
In August 2007, Plaintiffs purchased the real property located at 2225 Evergreen Park Drive, Reno, Nevada 89521 (the "Subject Property"). OnAugust 17, 2007, Plaintiffs obtained a loan from First Horizon National Corporation ("First Horizon" or "Lender") for $293,653.00 secured by a Deed of Trust secured by the Subject Property. (Deed of Trust, Ex. B (#22).) The Deed of Trust provided that Mortgage Electronic Registration Systems, Inc. ("MERS") "is a separate corporation that is acting solely as nominee of Lender and Lender's successors and assigns." (Id.) The Deed of Trust additionally states that the Lender has the right to appoint a substitute Trustee. (Id.) The Deed of Trust also provides that the "Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to the Borrower." (Id.)
On February 10, 2011, The Mortgage Law Firm PLC as the agent for the beneficiary recorded a Notice of Default and Election to Sell. (Notice of Default, Ex. C (#22).) On May 20, 2011, The Mortgage Law Firm PLC recorded a Notice of Rescission of Notice of Default and of Election to Sell Under Deed of Trust. (Notice of Rescission, Ex D (#22).) On July 6, 2011, a Corporate Assignment of Deed of Trust was recorded with the Washoe County Recorder as document #4020225, assigning the beneficial interest in the subject property to the Federal National Mortgage Association ("Fannie Mae"). (Corporate Assignment of Deed of Trust, Ex. E (#22).) On August 4, 2011, Seterus Inc. as attorney in fact for Fannie Mae substituted First American Title Company as Trustee under the Deedof Trust. (Substitution of Trustee, Ex. F (#22).) On August 4, 2011, a Notice of Default and Election to Sell Under Deed of Trust was recorded as document #4028457 with the Washoe County Recorder. (Second Notice of Default, Ex. G (#22).)
On July 22, 2011, Plaintiffs filed this action in state court. Plaintiffs also recorded a Notice of Lis Pendens regarding the Subject Property. (Notice of Pendency, Ex. 2 (#1).) On August 24, 2011, Plaintiffs filed an amended complaint. (Am. Compl. Ex. 4 (#1).) On August 31, 2011, Defendants removed the action to this Court. (Petition for Removal (#1).)
Now pending are a Motion to Remand (#6); a Motion to Dismiss (#14) filed by Defendants First Horizon Home Loans, First Horizon National Corporation, First Tennessee Bank, MetLife Bank, N.A., Metlife Home Loans, and joined by Defendants IBM Lender Business Process Services, Inc., and MERS; a Motion to Expunge Lis Pendens (#20), a Motion to Dismiss (#21) filed by IBM Lender Business Process Services, Inc. and MERS; and a Motion for Hearing (#31) re: Motion to Dismiss filed by Defendants.
A defendant may remove an action from state court to federal court if the federal court would have had original subject matter jurisdiction over the action. 28 U.S.C. § 1441(a). Original jurisdiction must be based either on a claim involving the Constitution, laws, or treaties of the United States, 28 U.S.C. § 1331, or on diversity of citizenship, which applies to suitstotaling more than $75,000 in controversy between citizens of different states, 28 U.S.C. § 1332(a). Federal jurisdiction under 28 U.S.C. § 1332(a) requires "complete diversity of citizenship between the parties opposed in interest." Kimtz v. Lamar Corp., 385 F.3d 1177, 1181 (9th Cir. 2004).
"In cases where entities rather than individuals are litigants, diversity jurisdiction depends on the form of the entity." Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). An unincorporated association such as a partnership or limited liability company has the citizenship of all of its members. Id. Thus, "the citizenship of unincorporated associations must be traced through however many layers of partners or members there may be." Hart v. Terminex Int'l, 336 F.3d 541, 543 (7th Cir. 2003) (citation omitted).
A motion to remand is the proper procedure for challenging removal. Babasa v. LensCrafters, Inc., 498 F.3d 972, 974 (9th Cir. 2007). The removal statute must be strictly construed to limit the federal court's authority to that expressly provided by Congress and to protect the states' judicial powers. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941). Any doubt about the right of removal is resolved in favor of remand. Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1252 (9th Cir. 2006). The party seeking removal bears the burden of establishing by a preponderance of the evidence that all removal requirements are met. Etheridge v. Harbor House Rests., 861 F.2d 1389, 1393 (9th Cir. 1988).
When an amended complaint has been filed after removal, propriety of removal is "determined according to the plaintiffs'pleading at the time of the petition for removal." Pullman Co. v. Jenkins, 305 U.S. 534, 537 (1939); Sparta Surgical Corp. v. Nat'l Ass'n of Sec. Dealers, Inc., 159 F.3d 1209, 1213 (9th Cir. 1998).
The party asserting jurisdiction in federal court bears the burden of proof, by a preponderance of the evidence, that the amount in controversy requirement has been met. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403 (9th Cir. 1996).
In their Motion to Remand (#6), Plaintiffs request that we remand the action to state court because the parties are not diverse. Specifically, Plaintiffs argue that Defendants Cindy Hutchins and Capital Title Company of Nevada ("Capital Title") are or have been residents of Nevada at all relevant times. These defendants were not initially named in the original complaint, but were included in an amended complaint filed before the removal of the action to this Court.
Defendant Cindy Hutchins is alleged to be an the escrow officer who marketed and sold the mortgage in question to the Plaintiffs as an employee of Capital Title. (Am. Compl. ¶ 11 (#1).) Because escrow agents are not liable for their employment-related conduct in these foreclosure cases, Defendant Hutchins must be dismissed and her citizenship cannot defeat diversity jurisdiction. See, e.g., Florio v. Sierra Pac. Mortg. Co., Inc., No. 3:10-cv-00524-RCJ-RAM, 2011 WL 221726, at *3 (D. Nev. Jan. 20, 2011). Defendant Hutchins is also alleged to be the employee of other defendants at points in the amended complaint, but Plaintiffs have not shown that they haveany legitimate claims against this individual, who acted merely as an agent-employee in allegedly selling the mortgage to Plaintiffs.
Allegations against Defendant Capital Title are similarly deficient. Capital Title is mentioned only twice in the amended complaint. First, it is alleged to have sold the mortgage loan to Plaintiffs in conjunction with First Horizon. (Am. Compl. ¶ 12 (#1).) Second, it is described as the original trustee on the Deed of Trust. (Id. ¶ 39.) Plaintiffs cannot establish that Capital Title as trustee breached any duties to Plaintiff because the trustee owed Plaintiff no duty as a matter of law. See Brown v. Fed. Home Loan Mortg. Corp., No. 2:11-CV-01228, 2011 WL 5877545, at *2 (D. Nev. Nov. 23, 2011) ( ).
None of the causes of action are properly brought against Capital Title. The only causes of action that are directed, even vaguely, at Capital Title, are the Unfair Lending Practices claim, the fraud claims, the conspiracy claim, unjust enrichment, and a claim for wrongful foreclosure. While each of these claims will be discussed in greater detail below, the insufficiency of the causes of action against Capital Title will briefly be discussed here.
The Unfair Lending Practices claim alleges that Capital Title as Trustee in the original mortgage agreement violated the Unfair Lending Practices Act. Other than alleging that Capital Title was the trustee, Plaintiffs do not include any other relevant allegations. The statute applies only to lenders, and furthermore,the statute of limitations is two years on such a claim. Plaintiffs obtained the original loan in August of 2007, and the lawsuit was not filed until 2011. Plaintiffs included no allegations showing that the statute of limitations should be tolled, and other than claiming that Capital Title was the original trustee, did not include any other specific allegations relating to Capital Title. Therefore, Capital Title was not a proper defendant to this claim.
Nor are there relevant allegations tying Capital Title to the other claims for unjust enrichment, conspiracy, fraud, or wrongful foreclosure. Indeed, Plaintiffs do not allege that Capital Title is a participant in the foreclosure proceeding. They are lumped in, presumably, for claims that are asserted against "Trustee Defendants," a term that was used in the original complaint, also without definition, before these two defendants were added in the amended complaint. While the burden of showing that diversity jurisdiction exists lies with Defendants, the amended complaint on its face shows that both Cindy Hutchins and Capital Title are not proper defendants to any of the claims...
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