Patrick v. Teays Valley Trs., LLC

Decision Date30 November 2012
Docket NumberCIVIL ACTION NO. 3:12-CV-39
CourtU.S. District Court — Northern District of West Virginia



On this day, the above-styled matters came before the Court for consideration. There are six motions pending before the Court.

First, the Defendant InstaMortgage filed its "Motion to Dismiss" [Doc. 5] on May 2, 2012. The Plaintiffs filed their "Response to Motion to Dismiss" [Doc. 7] on May 4, 2012.

Second, the Defendants MHS, TVT, and Scott Stewart filed a Motion to Dismiss Plaintiffs' Complaint [Doc. 9] pursuant to Rule 12(b)(6) on May 4, 2012. The Plaintiffs filed their "Response to Defendants Morris, Hardwick, Schneider, LLC, Teays Valley Trustees, LLC, and Scott Stewart's Motion to Dismiss to Plaintiffs' Complaint" [Doc. 14] on May 16, 2012. Then, the Plaintiffs filed their amended complaint [Doc. 13] on May 16, 2012 pursuant to Rule 15(a)(1)(B) of the Federal Rules of Civil Procedure.

Third, on June 4, 2012, the Defendants filed "Morris, Hardwick, Schneider, LLC, Teays Valley Trustees, LLC, and Scott Stewart's Motion to Dismiss Plaintiffs' Second Amended Complaint" [Doc. 16].

On June 4, 2012, the fourth motion to be considered in this case was filed, the Defendant PHH Mortgage Corporation's "Motion to Dismiss Certain Claims Asserted in Second Amended Complaint" [Doc. 17]. On June 14, 2012, Plaintiffs filed their Response to PHH Mortgage Corporation's Motion to Dismiss Certain Claims Asserted in Second Amended Complaint [Doc. 23] and their Response to Morris, Hardwick, Schneider, LLC, Teays Valley Trustees, LLC, and Scott Stewart's Motion to Dismiss Plaintiff's Second Amended Complaint [Doc. 22]. On June 22, 2012, PHH Mortgage Company filed its Reply to Plaintiffs' Response [Doc. 26].

The fifth motion was filed on August 14, 2012; the Defendant PHH Mortgage Corporation's moved to file a surreply [Doc. 39]. On August 15, 2012, the Plaintiffs filed a "Response in Opposition to Defendant PHH Mortgage Corporation's Motion to File Surreply" [Doc. No. 41]. On August 22, 2012, the Defendant PHH Mortgage filed a Reply to Plaintiffs' Response [Doc. 42].

Last, on September 20, 2012, the Plaintiffs filed a Motion to Amend their Second Amended Complaint [Doc. 43].

On October 4, 2012, the Plaintiffs and the Defendants, Teays Valley Trustees, LLC, Morris Hardwick Schneider, LLC, and Scott Stewart filed a joint stipulation stating that they agree that the Defendants' "Motion to Dismiss the Second Amended Complaint and the Response are still properly before this Court for adjudication as the Third Amended Complaint sought to be filed by the Plaintiffs, does not change or alter the claims againstthe Defendants TVT, MHS, and Stewart." [Doc. 44].


This Court begins its analysis by examining the basis for jurisdiction. The Defendants removed the case from the Circuit Court of Jefferson County, West Virginia to the United States District Court for the Northern District of West Virginia pursuant to 28 U.S.C. §§ 1441 and 1446. [Doc. 3]. The Defendants alleged that this Court had jurisdiction pursuant to diversity under 28 U.S.C. § 1332. In order for a court to exercise diversity jurisdiction, there must be complete diversity, which requires that no party shares common citizenship with any part on the other side. Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435 (1806). To determine an LLC's citizenship for diversity, an LLC's citizenship is that of its members. Gen. Tech. Applications, Inc. v. Extro Ltd., 388 F.3d 114, 120-22 (4th Cir. 2004). For an LLC to be completely diverse, all partners, members, or stockholders must be diverse. Id. To determine a corporation's citizenship for purposes of diversity, a corporation is a citizen of both its state of incorporation and its principal place of business. 28 U.S.C. § 1332(c)(1). See Hertz Corp. v. Friend, 130 S. Ct. 1181, 1192-95 (2010) (adopting the nerve center test for determining a corporation's principal place of business). In determining the nerve center, courts look to the nucleus of corporate administrative activity, such as the location of corporate headquarters where its officers direct, control, and coordinate cooperate activities. See Cent. W. Va. Energy Co. v. Mt. State Carbon, 636 F.3d 101 (4th Cir. 2011). In determining an individual's citizenship, it is determined by one's domicile. Steigleder v. McQuesten, 198 U.S. 141 (1905).

The Plaintiffs, Russell Patrick and Mona Patrick, are citizens and residents of Jefferson County, West Virginia. There are multiple Defendants. Morris, Hardwick, and Schneider, LLC's ("MHS") members are from Atlanta, Georgia. Therefore, MHS is diverse. Additionally, Scott Stewart ("Stewart"), the Assistant Vice President for TVT, has an address of 9409 Philadelphia Road, Baltimore, Maryland. Thus, as far as this Court can determine, he is domiciled in Maryland and is diverse from the Plaintiffs. Next, PHH Mortgage Corporation is also diverse. Here, PHH Mortgage is incorporated in New Jersey, and its corporate headquarters is located in New Jersey. Additionally, all of its corporate officers are located in New Jersey. Thus, PHH Mortgage is a citizen of New Jersey.

However, the Defendant, Teays Valley Trustees, LLC, is an LLC. Teays Valley Trustees, LLC ("TVT") has its principal office in Hurricane, West Virginia, and the members are citizens of Maryland and West Virginia. Thus, TVT is not diverse from the Plaintiffs. The Defendants argue that TVT was fraudulently joined because "there is no claim stated in the Amended Complaint upon which Plaintiffs can recover against Teays Valley." (Notice of Removal, p. 3) [Doc. 3]. For reasons explained later in this Order, there are claims that have been sufficiently alleged against TVT; thus, TVT was not fraudulently joined. As a result, TVT is a non-diverse Defendant, and this Court does not have diversity jurisdiction.

This Court does have federal question jurisdiction under 28 U.S.C. § 1331. Section 1331 confers federal question jurisdiction for all civil actions arising under the Constitution and laws or treaties of the United States. Under the well-pleaded complaint rule, the plaintiff's complaint is determinative of federal jurisdiction. Thus, the federalquestion jurisdiction must be clear from the face of the complaint and cannot be based on federal law defense or plaintiff's anticipation of such defense. See Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804, 808, 106 S. Ct. 3229, 3232 (1986).

Also, district courts "shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." Shanaghan v. Cahill, 58 F.3d 106, 109-110 (4th Cir. 1995) (quoting 28 U.S.C. § 1367(a)). Therefore, supplemental jurisdiction "allows parties to append state law claims over which federal courts would otherwise lack jurisdiction, so long as they form part of the same case or controversy." Id. (quoting United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 724-26, 86 S. Ct. 1130, 1138-39 (1966). In deciding whether the claims form part of the same case or controversy, the courts look to whether "[t]he state and federal claims . . . derive from a common nucleus of operative fact." Gibbs, 383 U.S. at 1138-39; see also White v. Cnty. of Newberry, S.C., 985 F.2d 168, 171 (4th Cir. 1993) (a district court may properly exercise supplemental jurisdiction over state claims if they arise out of a common nucleus of operative facts such that plaintiff would ordinarily be expected to try claims in one judicial proceeding). A court has discretion to exercise supplemental jurisdiction. Under 28 U.S.C. § 1367, a court may decline supplemental jurisdiction based on statutory factors and an analysis of judicial economy, convenience, and fairness to parties. Id. The section 1367(c) factors include whether: (1) the claim raises a novel or important issue of state law; (2) the claim substantially predominates over the claim or claims over which the district court hasoriginal jurisdiction; (3) all claims over which the court has original jurisdiction are dismissed; or (4) other compelling reasons exist for declining jurisdiction. 28 U.S.C. § 1367(c).

Here, the Plaintiff's Complaint alleges multiple violations of the Fair Debt Collection Practices Act. See Compl. ¶¶ 133-140. Thus, this is a civil action arising under federal law 15 U.S.C. § 1692 et seq, and the Court has federal question jurisdiction over these claims. Additionally, the Court concludes that it is proper to exercise supplemental jurisdiction over the Plaintiffs' state claims against the Defendants. The alleged state claims revolve around a central fact pattern involving an alleged disputed debt, illegal collection efforts by the Defendants, and the attempted foreclosure of the Plaintiffs' home. Because the Plaintiffs' state and federal claims both revolve around alleged illegal collection efforts, these claims "are so related . . . that they form part of the same case or controversy under Article III," 28 U.S.C. § 1367, and would "ordinarily be expected to be tried all in one judicial proceeding." Osborn v. Haley, 549 U.S. 225, 244, 127 S. Ct. 881, 896 (2007).


The Plaintiffs allege the Defendants violated the West Virginia Consumer Credit and Protection Act § 46A-2-101 et seq. ("WVCCPA") and the Fair Debt Collection Practice Act ("FDCPA"), 15 U.S.C. § 1692 et seq. Plaintiffs assert related common law claims for intentional infliction of emotional distress and fraud arising out of alleged illegal collection efforts.

According to the Third Amended Complaint [Doc. 45] ("Complaint"), the...

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