Quicken Loans, Inc. v. Walters (In re Walters)
| Decision Date | 01 October 2013 |
| Docket Number | CIVIL ACTION NO. 5:12-cv-01174 |
| Court | U.S. District Court — Southern District of West Virginia |
| Parties | IN RE: SUE ELLEN WALTERS, Debtor. QUICKEN LOANS, INC., et al., Appellants, v. SUE ELLEN WALTERS, Appellee; QUICKEN LOANS INC., Cross Claimant, v. KIRK RIFFE, Cross Defendant. |
This is an appeal from a decision of the United States Bankruptcy Court for the Southern District of West Virginia granting Plaintiff, Sue Ellen Walters' Motion to Remand. The Court disposes with oral argument because the facts and legal arguments are adequately presented in the briefs and in the record, and the decisional process would not be significantly aided by oral argument. See Fed.R.Bankr.P. 8012. For the reasons stated herein, the decision of the Bankruptcy Court is affirmed.
On September 24, 2009, Plaintiff/Appellee, Sue Ellen Walters ("Ms. Walters"), filed a voluntary Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the Southern District of West Virginia. In re: Sue Ellen Walters, Civil Action No. 5:09-bk-50313. On February 2, 2010, the Bankruptcy Court entered an order granting Ms. Walters a discharge under 11 U.S.C. § 727. (Id.) On March 9, 2010, the Court entered a "Final Decree Closing Case" finding that Ms. Walters' estate has been fully administered and ordering that her Chapter 7 case be closed. (Id.)
On July 19, 2011, July 22, 2011, and September 1, 2011, Ms. Walters filed "Motion[s] to Reopen Case to Amend the Value of Scheduled Real Property, to Amend Exemptions and to Include Predatory Lending Lawsuit as an Asset." (Id. at Documents 18, 19, and 26.) In support, Ms. Walters stated that she discovered that the value of her real estate at the time of the filing of her Chapter 7 bankruptcy was "incorrectly overstated" at $136,000 and that she had retained counsel "to file a predatory lending case against Quicken Loans, Countrywide Mortgage and Bank of America." (Id.) She contends that the claim existed when she filed for bankruptcy and "could produce assets for the estate." (Id.) On September 7, 2011, the Bankruptcy Court granted her motion to reopen and permitted her to file amended schedules. (Id. at Document 27.)
On September 20, 2011, Ms. Walters filed amended schedules (Amended Schedule B-Personal Property and Amended Schedule C- Property Claimed as Exempt) which included real property valued at $65,000 (previously valued at $136,000), a "predatory lending claim against Bank of America" with an "unknown" value and an exemption of $22,500.00 pursuant to W.Va. Code § 38-10-4(e). (Id. at Document 29.)
On October 24, 2011, Ms. Walters filed an adversary proceeding in Bankruptcy Court against Quicken Loans and BAC Homes Loans Servicing, LP n/k/a Bank of America, N.A. ("Bank of America"). Walters v. Quicken Loans Inc., et al., Civil Action No. 5:11-ap-5025; (Id. at Document 30.) In her Complaint, Ms. Walters alleges that in 2007, Quicken Loans offered her a home mortgage loan based upon an inflated appraisal which it arranged for and relied upon. (Id.) Based upon the foregoing, Ms. Walters asserted claims of (I) unconscionable inducement; (II) illegal loan; (III) fraud; and (IV) illegal debt collection - misrepresentation. (Id.) She also requested various forms of relief, including actual and punitive damages and attorney's fees, and she sought declaratory judgment that the practices engaged in by Quicken Loans are unconscionable and illegal and that the loan is unconscionable. (Id.)
On November 29, 2011, Robert L. Johns, Chapter 7 Trustee of Ms. Walters' bankruptcy estate, filed an Objection to her Claim of Exempt Property. (Id. at Document 31.) The Trustee stated that he believes the action would exceed Ms. Walters' available exemptions, and thus, objected to her valuation of the property and any claim that the action is fully exempted. (Id.) He further objected to any claim above the exemption provided by W.Va. Code § 38-10-4. (Id.) The objection was subsequently resolved when the Trustee and Ms. Walters reached an agreement that any monetary damages from the lawsuit in excess of the amount of her exemptions, $22,500, would become property of the bankruptcy estate. (Id. at Document 37.)1
On December 13, 2011, Ms. Walters voluntarily dismissed the adversary proceeding against Quicken Loans and Bank of America that was pending in the Bankruptcy Court. The case was then closed on December 28, 2011.
On December 21, 2011, Ms. Walters filed a Complaint in the Circuit Court of Raleigh County, West Virginia, against Quicken Loans, Bank of America, and Kirk Riffe, the appraiser who valued Ms. Walters' home at an allegedly inflated price in connection with the 2007 loan. Walters v. Quicken Loans Inc, et al., Civil Action No. 11-C-1123-K. Ms. Walters alleges six counts: (I) unconscionable inducement against Quicken Loans; (II) illegal loan in violation of West Virginia Code § 31-17-8(m)(8) against Quicken Loans; (III) fraud against Quicken Loans; and (IV) negligence against Kirk Riffe; (V) acceptance of fee contingent on predetermined conclusion in violation of West Virginia Code § 30-38-12(8) against Kirk Riffe; and (VI) illegal debt collection - misrepresentation in violation of West Virginia Code §46A-2-127(d) against Bank of America. ("Compl.") (Document 1-1.) Ms. Walters' requested relief includes: declaratory judgment that the loan is unconscionable and unenforceable, actual damages, reasonable attorney's fees and other such relief that the Court may deem equitable and just. (Id.)
On January 27, 2012, Appellant/Defendant, Quicken Loans, Inc. ("Quicken Loans"), removed Ms. Walters' case from the Circuit Court of Raleigh County, West Virginia, to the United States Bankruptcy Court for the Southern District of West Virginia pursuant to 28 U.S.C. §§ 157, 1334, 1446, and 1452, as well as Federal Rule of Bankruptcy Procedure 9027, Southern District of West Virginia Local Rule of Civil Procedure 83.13, and Local Rule 9027-1. ("Notice of Removal") (Document 4-2.)2 In support, Quicken Loans asserts that this civil action arises in andis related to Ms. Walters' bankruptcy case and is a core bankruptcy proceeding. (Id. at 1.) Quicken Loans contends that Ms. Walters' state court action "arises in" her Bankruptcy Case and is a core bankruptcy proceeding because it seeks to have the Court invalidate her home mortgage loan "which was listed [as] a secure claim held by Bank of America in Plaintiff's bankruptcy schedules." (Id. at 5-7.) Quicken Loan also asserts that Ms. Walters' state court action is "related to" her bankruptcy case because she seeks to recover monetary damages which may increase the assets available to the Trustee of her bankruptcy estate. (Id. at 7.)
On February 3, 2012, Ms. Walters filed a Motion to Remand the case to the Circuit Court of Raleigh County pursuant to 28 U.S.C. §1452(b).3 (Document 4-3.) In support, Ms. Walters asserts that the outcome of her Chapter 7 bankruptcy is not dependent on the outcome of the state court action concerning her home loan. (Id. at 2-3.) She explains that she has already filed amendments to her bankruptcy schedules and has agreed that any damages she receives as a result of her predatory lending claim, in excess of her exemption, will be part of her bankruptcy estate. (Id. at 3.) Ms. Walters also states that "[she] desires to proceed in her claims in state court and exercise her right to a jury in that court." (Id.) Ms. Walters notes that pursuant to 28 U.S.C. § 1452(b), the Court may remand this case on any equitable ground. (Id.)
On February 16, 2012, Quicken Loans filed its Response in Opposition to the Motion to Remand. (Document 4-4.) First, Quicken Loans argues that the motion should be denied becauseMs. Walters has failed to satisfy her burden to establish that remand is warranted. (Id.) Quicken Loans explains that Mr. Walters did not discuss any of the factors for equitable remand under 28 U.S.C. § 1452(b), did not cite to a single case in support of the motion nor dispute that the adversary proceeding is a core bankruptcy proceeding. (Id. at 1.) Next, Quicken Loans addresses the twelve factors cited in Appatek Indust. Inc. v. Biolab, Inc., 2010 U.S. Dist. LEXIS 17154, at *6-7 (M.D.N.C. 2010) adopted by Appatek Ind. Inc., v. Biolab, Inc., Civil Case No. 1:09-cv-00645, and argues that application of those factors demonstrates that the Court should retain jurisdiction.4 (Document 4-4 at 7-13.) Quicken Loans argues that none of the relevant factors favor Plaintiff's motion because: (1) this Court has jurisdiction and removal was proper; (2) although the claims arise under West Virginia law, they were brought by the debtor and this Court has construed West Virginia law on numerous occasions; (3) there are no economical or efficiency interests which warrant remand because the adversary proceeding has not progressed beyond the pleading stage; (4) "the outcome of Plaintiff's bankruptcy proceeding essentially is entirely dependent on the outcome of the adversary proceeding;" (5) the adversary proceeding is related to the bankruptcy case; (6) this court regularly hears and resolves claims similar to Plaintiff's; (7) Quicken Loans removed the adversary proceeding early in the litigation; (8) Plaintiff will not be unfairly prejudiced by proceeding in this Court; (9) this forum is not inconvenient because this Court and the applicable state court are located in the same city; (10) although there may not be a possibility of inconsistent results, Plaintiff's bankruptcy proceedingand adversary proceeding are "very much related;" (11) the state court has no particular or unique relevant expertise in resolving these claims; and (12) the adversary proceeding could be referred to the District Court for a jury trial. (Id.) Based on the foregoing, Quicken Loans argues that Plaintiff's motion to remand should be denied.
On March 12, 2012, Ms. Walters...
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