Pennymac Loan Servs., LLC v. Johnson
| Decision Date | 08 March 2021 |
| Docket Number | 1:20CV175 |
| Court | U.S. District Court — Middle District of North Carolina |
| Parties | PENNYMAC LOAN SERVICES, LLC, Plaintiff/Counterclaim Defendant, v. BRAD JOHNSON and ELCI WIJAYANINGSIH, Defendants/Counterclaim Plaintiff/Third-Party Plaintiff, v. STANDARD GUARANTY INSURANCE CO., ERIKA L. SANCHEZ, EFREN SALDIVAR, and ASSURANT, INC., Third-Party Defendants. |
Presently before this court is a Motion to Remand, (Doc. 10), filed by Plaintiff Pennymac Loan Services, LLC ("Pennymac" or "Plaintiff"). Plaintiff seeks to remand this case, including both Pennymac's original claim and Defendants' counterclaim, to the Forsyth County General Court of Justice, District Court Division. Pro se Defendants Brad Johnson ("Johnson") and Elci Wijayaningsih ("Wijayaningsih") (together "Defendants") oppose Plaintiff's motion. This court will grant Plaintiff's Motion to Remand. Other motions remain pending and will be dismissed as moot upon remand. (Docs. 26, 27, 29, 48, 49, 51, 52, 61, 63, 66.)
Pennymac is a Delaware company that conducts business in North Carolina. (Complaint ("Compl.") (Doc. 4) ¶ 1.) Defendant Brad Johnson is an individual who lives in Oak Island, Brunswick County, North Carolina. (Id. ¶ 2.) Johnson's domicile is in South Carolina. (Doc. 16 ¶ 3.) Defendant Elci Wijayaningsih is married to Johnson and lives in Oak Island. (Compl. (Doc. 4) ¶ 3; Doc. 16 ¶ 3.)
In 2008, Johnson received a Limited Warranty Deed, (Ex. A (Doc. 4) at 8)1, for property from AmTrust Bank. (Compl. (Doc. 4) ¶ 6.) In the public registry, that land was recorded as "all of Lots 16 and 18, Block 186, Section N-6, Long Beach (now Oak Island), NC as shown on map recorded in Map Book 11, Page 89, Brunswick County Registry." (Id.) Several years later, in 2012, Johnson received a General Warranty Deed from Homer E. Wright, Jr. (Id. ¶ 8; Ex. B at 10-11.) That deed was recorded ascovering "ALL OF LOTS 13, 15 AND 17, BLOCK 186, SECTION N-6, LONG BEACH (now Oak Island) as per map for National Development Corp." (Id.)
In 2013, Johnson applied for a loan via Weststar Mortgage ("Weststar"). (Id. ¶ 10.) Weststar ordered an appraisal of Johnson's property in order to settle what tract of land would be collateral for the loan. (Id. ¶ 11.) This appraisal covered the entire property, including the property conveyed to Johnson in both 2008 and 2012. (Id. ¶ 12.) Johnson executed an Instrument of Combination on June 12, 2013, in order to combine the two separately-conveyed lots into one parcel. (Id., Ex. C at 13.) Weststar extended Defendants a loan of $335,562.00. (Doc. 11 at 4.) As security, "Defendants, as Grantors, executed and delivered to Linear Title, as Trustee, and Mortgage Electronic Registration Systems, Inc. ("MERS") as nominee for the benefit of Lender, as Grantee, a Deed of Trust" for the land. This Deed of Trust ("the Deed"), however, describes only the second tract conveyed in 2012. (Compl. (Doc. 4), Ex. D at 15.) Pennymac now alleges this description was a result of "mutual mistake, inadvertence or mistake of the draftsman." (Compl. (Doc. 4) ¶ 28; Doc. 11 at 4.) In 2019, MERS subsequently assigned this Deed of Trust to Pennymac, the present holder of the Deed of Trust. (Compl. (Doc. 4) ¶ 22.)
Pennymac brought the original complaint in this action against Defendants seeking amendment of the Deed of Trust for the property on 14th Street in Oak Island. Pennymac alleges that a "mutual mistake, inadvertence or mistake of the draftsman" resulted in an incomplete and inaccurate legal description on the Deed of Trust conveyed to Pennymac. (Id. ¶ 28.) Pennymac requests that "the legal description attached to the Deed of Trust be reformed to reflect the true intentions of the parties." (Id. ¶ 30.)
Defendants Johnson and Wijayaningsih filed an Answer, (Docs. 1-2, 6), and Defendant Johnson2 brought a counterclaim against Pennymac and joined additional third-party defendants Standard Guaranty Insurance Company, Assurant Inc., Erika L. Sanchez, and Efren Saldivar. (Doc. 16.) Defendants' counterclaim brings counts under RICO, the Fair Debt Collection Practices Act of 1970, and common law breach of contract and fraud. (Id.)
Pennymac brought its claim in Forsyth County District Court on January 23, 2020. (Doc. 4.) Defendants Johnson and Wijayaningsih filed an answer and original counterclaim onFebruary 21, 2020, (Docs. 6, 16), then filed for removal to federal court in the Middle District of North Carolina on the same day, (Doc. 1). Pennymac filed its Motion to Remand, (Doc. 10), on March 19, 2020. On April 6, 2020, Johnson amended the counterclaim against Pennymac. (Doc. 16.) Defendants also filed motions for leave to file a Surreply. (Doc. 26.) Pennymac filed a Motion to Dismiss the First Amended Counterclaim on May 27, 2020. (Doc. 29.) Defendant Johnson filed a motion to amend the counterclaim again on September 21, 2020. (Doc. 51.)
Meanwhile, third-party Defendants Standard Guaranty Insurance Company and Assurant, Inc., filed a Motion to Dismiss Count I of the Counterclaim. (Doc. 27.)
Courts "should dismiss a complaint for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) if the complaint fails to allege facts upon which subject matter jurisdiction can be based or if jurisdictional allegations in the complaint are not true." McLaughlin v. Safway Servs., LLC, 429 F. App'x 347, 348 (4th Cir. 2011) (per curiam) (citation omitted); Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982) (). A challenged plaintiff "bears the burden of persuasion" in defending subject-matter jurisdiction. Williams v. United States, 50 F.3d 299, 304 (4th Cir. 1995).
"The burden of establishing federal jurisdiction is placed upon the party seeking removal." Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994). Ultimately, "[a]ny doubts about removal must be resolved in favor of remand." UMLIC Consol., Inc. v. Spectrum Fin. Servs. Corp., 665 F. Supp. 2d 528, 532 (W.D.N.C. 2009); see also Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09, (1941); Turner v. CTS Con-Way Transp. Services, No. 1:98CV00624, 1999 WL 1939243, at *1 (M.D.N.C. Apr. 28, 1999). Out of "[d]ue regard for the rightful independence of state governments . . . [federal courts must] scrupulously confine their own jurisdiction to the precise limits which the statute has defined." Healy v. Ratta, 292 U.S. 263, 270 (1934). Matters can be removed to federal court only when they could have been brought in federal court in the first instance. See 28 U.S.C. § 1441(a). For example, federal courts have jurisdiction over any case that implicates a question of federal law, and such a case can therefore generally be removed to federal court. See 28 U.S.C. § 1331.
Johnson and Wijayaningsih first argue that this court has federal question jurisdiction over the claim and counterclaim under 28 U.S.C. § 1331. (Doc. 1 at 2.) Federal-question jurisdiction exists when either (1) the right to relief arises directly under federal law, or (2) "the case's resolution depends on resolution of a federal question sufficiently substantial to arise under federal law within the meaning of 28 U.S.C. § 1331." Ormet Corp. v. Ohio Power Co., 98 F.3d 799, 806 (4th Cir. 1996). It must be apparent from the face of the complaint that the plaintiff's claims cannot be resolved without reference to federal law or to the U.S. Constitution. Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for So. Cal., 463 U.S. 1, 8-9 (1983).
However, the original well-pleaded complaint, as filed by Pennymac, does not contain a federal claim or issue. (Compl. (Doc. 4).) The complaint focuses only on a potential mistake in the Deed of Trust, (id. ¶ 30), and requests reformation of the deed of trust, (id. at 5-6). Defendants advocate for federal question jurisdiction on the federal issues raised in the counterclaim. However, the Supreme Court has made clear that a counterclaim may not be considered to establish federal questionjurisdiction. Vaden v. Discover Bank, 556 U.S. 49, 66 (2009) (); Holmes Grp., Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826, 832 (2002) (). Thus, this court does not have federal question jurisdiction over this claim or counterclaim.
Defendants' second jurisdictional basis for removal derives from 28 U.S.C. § 1332. In order to establish diversity jurisdiction under that statute, Defendants must show two elements: (1) complete diversity of citizenship between plaintiffs and defendants and (2) an amount in controversy in excess of $75,000. 28 U.S.C. § 1332. Prior to determining whether diversity jurisdiction exists, however, this court will address the dispositive forum-defendant rule. The forum-defendant rule determines whether diversity jurisdiction, even if it exists, could serve as a proper basis for removal to federal court.
The forum-defendant rule, contained in 28 U.S.C. § 1441(b)(2), provides that "[a] civil action otherwiseremovable solely on the basis of the jurisdiction under section 1332(a) of this title may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." This case qualifies as a civil action that is "otherwise removable solely on the basis of" diversity jurisdiction, and...
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