Powell v. Bank of Am., N.A.

• Decision Date: 02 February 2012
• Docket Number: Civil Action No. 2:11–00335.
• Court: U.S. District Court — Southern District of West Virginia
• Parties: Scotty POWELL and Rebecca Powell, Plaintiffs, v. BANK OF AMERICA, N.A. d/b/a Bank of America Home Loans f/k/a Countrywide Home Loans, Inc., Thomas A. Zamow, BAC Home Loans Servicing, LP and Bank of New York Mellon, N.A., Defendants.

842 F.Supp.2d 966

Scotty POWELL and Rebecca Powell, Plaintiffs,

v.BANK OF AMERICA, N.A. d/b/a Bank of America Home Loans f/k/a Countrywide Home Loans, Inc., Thomas A. Zamow, BAC Home Loans Servicing, LP and Bank of New York Mellon, N.A., Defendants.

Civil Action No. 2:11–00335.

United States District Court, S.D. West Virginia.

Feb. 2, 2012.

Daniel F. Hedges, Jacklyn A. Gonzales, Sarah K. Brown, Mountain State Justice, Inc., Charleston, WV, for Plaintiffs.

Jason E. Manning, John C. Lynch, Troutman Sanders, Virginia Beach, VA, Ancil G. Ramey, Peter J. Raupp, Steptoe & Johnson, Charleston, WV, for Defendants.

MEMORANDUM OPINION AND ORDER

JOHN T. COPENHAVER, JR., District Judge.

Pending is plaintiffs' motion to remand, filed May 31, 2011. Also pending are the motion of defendant Thomas A. Zamow (“nondiverse defendant”) to dismiss, filed September 8, 2011, and the motion of defendants Bank of America, N.A. (“Countrywide”), BAC Home Loans Servicing, LP (“BAC”), and The Bank of New York Mellon, N.A. (“Mellon”) (collectively, “diverse defendants”) to dismiss, filed September 14, 2011.

When, as here, a motion to remand and a Rule 12(b)(6) motion to dismiss are both made, it is ordinarily improper to resolve the Rule 12(b)(6) motion before deciding the motion to remand. The question arising on the motion to remand as to whether there has been a fraudulent joinder is a jurisdictional inquiry. See Batoff v. State Farm Ins. Co., 977 F.2d 848, 852 (3rd Cir.1992); cf. Mayes v. Rapoport, 198 F.3d 457, 460 (4th Cir.1999) (observing that the propriety of removal and fraudulent joinder are jurisdictional questions).

I. Background

This action arises out of a consumer credit transaction entered into by plaintiffs in connection with a deed of trust (sometimes, “mortgage”) loan on residential property located in Boone County, West Virginia. Plaintiffs Scotty and Rebecca Powell are residents of Boone County, West Virginia. Thomas A. Zamow is a resident of West Virginia. (Second Am. Compl. ¶ 3). Countrywide is a New York corporation with its principal place of business in California. (Def. Countrywide, BAC, and Mellon's Ans. to Second Am. Compl. ¶ 4). BAC is a Texas limited partnership with its principal place of business in Texas. ( Id. ¶ 5). Mellon is a national bank with corporate headquarters located at One Wall Street, New York, New York, 10286. ( Id. ¶ 6).¹

Around October 2006, plaintiffs sought financing for the purchase of a new residence, which they offered to buy for $59,000. (Second Am. Compl. ¶ 7). Following acceptance of this offer, plaintiffs were referred to defendant Countrywide for financing. ( Id. ¶ 8). Upon contacting Countrywide, plaintiffs applied for a loan over the phone and discussed its terms with a Countrywide agent. ( Id. ¶ 9). Countrywide's agent represented to plaintiffs that their monthly payments would be approximately $548, and that the interest rate would not thereafter increase. ( Id. ¶ 10). Countrywide further represented to plaintiffs that if payments on the deed of trust were made for a year, plaintiffs could refinance the loan at a lower interest rate. ( Id. ¶ 11). The plaintiffs received no disclosures prior to the closing of the loan. ( Id. ¶ 12).

To the extent that specific allegations are made as to the nondiverse defendant, Thomas Zamow, an attorney, they are confined to the closing of the loan. ( Id. ¶¶ 3, 13). The closing occurred on November 3, 2006, and was conducted by an employee of Zamow. ( Id. ¶¶ 12, 13(a)). The complaint does not describe the relationship between Zamow and plaintiffs other than to indicate that he was the closing attorney. At the closing, which lasted only 10 to 15 minutes, plaintiffs were instructed where to sign and initial and were given “no meaningful opportunity” to understand the terms of the transaction. ( Id. ¶ 13(a)-(b)). They state that the net purchase price was not accurately reflected on the closing documents, but do not describe the inaccuracy. ( Id. ¶ 13(d)). Plaintiffs allege that they agreed to proceed with the loan transaction based on “representations made prior to and at closing regarding the payments and interest rate,” but do not state what representations were made at closing. ( Id. ¶ 13(e)). They merely allege that “[a]t the closing, there was no mention of an adjustable rate mortgage [ARM] or a potentially higher payment.” ( Id. ¶ 13(c)). Plaintiffs' allegations with respect to closing conclude with the further allegation that, contrary to representations made at and prior to closing, the loan agreement called for an ARM loan with an interest rate ranging from 12.25% to over 19%; but the representations at closing are not stated. ( Id. ¶ 45(b)).

After a year, plaintiffs sought a reduction of the interest rate, but were refused. ( Id. ¶ 14). Around July 2008, the monthly loan service payments increased such that plaintiffs began to struggle to pay. ( Id. ¶¶ 15–16).

In June or July 2008, plaintiffs contacted defendant BAC to request assistance managing the increased monthly payments. ( Id. ¶ 17). After submitting an application for a loan modification, plaintiffs were informed by BAC that the plaintiffs would not go into default or foreclosure while the modification was being processed. ( Id. ¶ 18). Meanwhile, BAC allegedly refused any offers of payments from plaintiffs. ( Id. ¶ 18(b)). For several months thereafter, plaintiffs claim that they were given confusing and conflicting information regarding their obligations under the loan. ( Id. ¶ 18(c)).

During the period following their contact with BAC, plaintiffs received several telephone calls from various BAC agents. In a call in late summer 2009, plaintiffs told BAC they were not able to make increased payments. ( Id. ¶ 20(a)). In response, a BAC agent allegedly said, “West Virginians like to have yard sales, so why don't you have a yard sale to make up the difference?” ( Id. ¶ 20(b)). On a similar call during the same period, a BAC agent asked plaintiff Rebecca Powell, “Why did you buy the place if you can't make the payments?” ( Id. ¶ 21(b)). Plaintiffs state that they were extremely offended and upset by these remarks. ( Id. ¶¶ 20(c), 21(c)).

Around September 2009, BAC presented plaintiffs with a loan modification agreement. ( Id. ¶ 22). The modification capitalized a claimed past due amount of $10,419.06, and reduced the interest rate from 12.25% to 11.25%. ( Id. ¶ 23(a)). The modification provided for a “monthly payment of $628.11,” as well as interest-only payments for 10 years. ( Id. ¶ 23(b)). Plaintiffs agreed to the modification with the understanding that if they did not accept the agreement, plaintiffs' home would be foreclosed upon. ( Id. ¶ 23(c)). The modification went into effect on December 1, 2009. ( Id. ¶ 24(a)). Thereafter, plaintiffs began receiving statements demanding higher monthly payments of over $700. ( Id. ¶ 24(b)). Plaintiffs contacted BAC about the reason for the higher payments in March 2010, and “insisted upon sending in a $648.11 payment” as provided for by the loan modification. ( Id. ¶ 25(b)).² On at least two occasions, once in or around February 2010 and again in March, a BAC agent “visited plaintiff's home and presented them with a note stating that it was ‘Urgent! Urgent! Urgent! Urgent!’ ” that plaintiffs call BAC. ( Id. ¶ 26).

By letter dated February 18, 2010, plaintiffs requested a copy of their account history, information regarding the holder of the loan, and informed BAC that they were represented by counsel, to whom further communication was to be directed. ( Id. ¶ 27(a)). BAC received plaintiffs' letter on February 24, 2010. ( Id. ¶ 27(b)). In response to their letter, plaintiffs received an incomplete payment history and no information regarding the holder of the loan. ( Id. ¶ 27(c)-(d)). Despite being informed that plaintiffs were represented by counsel, BAC contacted plaintiffs on at least the following four occasions seeking to collect on the loan: on or about April 14, 2010, at approximately 8:45 p.m.; on or about April 24, 2010; on or about May 28, 2010, at approximately 8:02 p.m.; and on or about May 29, 2010. ( Id. ¶ 27(e)).³

On June 28, 2010, plaintiffs filed a complaint against defendants Countrywide and BAC, and against Hometown Real Estate, Inc., Rosanna Trent, and “John Doe Holder,” in the Circuit Court of Boone County, West Virginia. (Notice of Removal ¶ 1). On April 13, 2011, plaintiffs filed an amended complaint (“First Amended Complaint”) against defendants Countrywide, BAC, Zamow, and “John Doe Holder.” On May 12, 2011, Countrywide and BAC filed a timely notice of removal on diversity grounds. Zamow filed his consent to removal on May 31, 2011.⁴ Plaintiffs filed their motion to remand on the same day.

On August 24, 2011, the court granted plaintiff's motion to amend their First Amended Complaint in which Bank of New York Mellon, N.A., was substituted as a defendant for “John Doe Holder.” (“Second Amended Complaint”).

The Second Amended Complaint sets forth eight counts: Counts I and II allege fraud against all defendants; Count III alleges unconscionable contract against all defendants; Count IV alleges breach of contract against BAC; and Counts V through VIII allege illegal debt collection against BAC. Plaintiffs have moved to remand, asserting that the nondiverse defendant, Mr. Zamow, defeats complete diversity and that this court thus lacks subject matter jurisdiction. In opposition to remand, defendants claim that the nondiverse defendant was fraudulently joined solely for the purpose of defeating diversity jurisdiction. Nondiverse defendant Zamow moved to dismiss all counts against him, and the diverse defendants also moved to dismiss on several grounds discussed below.⁵

II. Motion to Remand

A. Governing Standard

“A defendant may remove any action from a state court to a federal court if the case could have originally been brought in federal court.” Yarnevic v. Brink's, Inc., 102 F.3d 753, 754 (4th Cir.1...