Reece ex rel. All Other Similarly Situated Ark. Residents v. Bank of N.Y. Mellon

• Decision Date: 15 September 2014
• Docket Number: Nos. 12–3526,13–1245.,s. 12–3526
• Citation: 760 F.3d 771
• Parties: Gary REECE, on behalf of himself and all other similarly situated Arkansas residents, Plaintiff–Appellant v. BANK OF NEW YORK MELLON, as Trustee for CIT Mortgage Loan Trust, 2007–1, Defendant–Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

760 F.3d 771

Gary REECE, on behalf of himself and all other similarly situated Arkansas residents, Plaintiff–Appellant

v.BANK OF NEW YORK MELLON, as Trustee for CIT Mortgage Loan Trust, 2007–1, Defendant–Appellee.

Nos. 12–3526, 13–1245.

United States Court of Appeals,

Eighth Circuit.

Submitted: Jan. 14, 2014.

Filed: July 23, 2014.

Rehearing and Rehearing En Banc Denied Sept. 15, 2014.

Corey D. McGaha, Little Rock, AR (Scott E. Poynter, Little Rock, AR, Kathy A. Cruz, Hot Springs, AR, Todd M. Turner, Arkadelphia, AR, Joel G. Hargis, Jonesboro, AR, on the brief) for Plaintiff–Appellant.

Gary D. Marts, Jr. (Judy Simmons Henry, Adrienne L. Jung, on the brief) Little Rock, AR, for Defendant–Appellee.

Before RILEY, Chief Judge, WOLLMAN and SHEPHERD, Circuit Judges.

RILEY, Chief Judge.

After Gary Reece received a non judicial foreclosure notice, he obtained a temporary restraining order (TRO) against Bank of New York, Mellon (Mellon) in Arkansas state court. Over a year later, he amended his TRO complaint, seeking to represent a class of Arkansas homeowners facing non judicial foreclosures by Mellon. Mellon filed a notice of removal in federal court within thirty days of the amended complaint's filing. Reece moved to remand. The district court denied Reece's motion to remand and then granted Mellon's motion to dismiss. After Reece timely appealed those orders, the district court awarded Mellon $836.82 in costs despite Mellon's failure to file a verified affidavit substantiating the costs. Reece again appealed. Considering Reece's consolidated appeals under 28 U.S.C. § 1291, we affirm in part and reverse in part.

I. BACKGROUND

After receiving notice that his home in Little Rock, Arkansas, would be auctioned off pursuant to a non judicial foreclosure, Reece filed a complaint in Arkansas state court on October 15, 2010. The complaint sought a TRO permitting Reece “to stay in the home” and asserted Reece “will likely succeed in having the sale cancelled.” The Arkansas state court granted Reece's request and “temporarily enjoined” Mellon “from conducting a sale of [Reece's] property.” A hearing on February 22, 2011, led the Arkansas state court in its February 25, 2011, order to “question[ ] whether [Mellon] has demonstrated a substantial likelihood of prevailing on the merits of the case,” and the court “stayed” the TRO “until the next hearing on the merits of this case.” The parties delayed two hearings by mutual agreement until January 18, 2012, when Reece filed an amended complaint converting his case into a class action.

On February 10, 2012, Mellon filed a notice of removal in the U.S. District Court for the Eastern District of Arkansas. The notice invoked diversity and federal question jurisdiction. Reece moved to remand, asserting (1) Mellon filed its removal notice too late to comply with 28 U.S.C. § 1446, and (2) the district court lacked original jurisdiction over Mellon's federal question defenses to Reece's state law claims. Cf. Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 53 L.Ed. 126 (1908) (holding a federal law defense to a state law claim does not confer federal question jurisdiction). Mellon moved for dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6).

On September 20, 2012, the district court filed a two-page order disposing of the case. Without mentioning 28 U.S.C. § 1446's one-year time limit or 28 U.S.C. § 1453(b)'s exemption of class actions from that limit, the district court denied Reece's motion to remand “because the class action complaint meets the requirements for federal diversity jurisdiction as specified in 28 U.S.C. § 1332.” Then the district court granted Mellon's motion to dismiss, relying on an earlier decision in Rivera v. JPMorgan Chase Bank, 470 B.R. 829 (E.D.Ark.2012), which “held that any national bank authorized by Congress to engage in the business of banking throughout the United States[ ] is authorized to do business, including foreclosures, in the state of Arkansas.”

After the district court entered judgment against Reece on September 20, 2012, Reece timely appealed to this court. On January 2, 2013, the district court awarded Mellon $836.82 from Reece without mentioning Mellon's failure to file an affidavit verifying the costs were necessary and reasonable. Cf. 28 U.S.C. § 1924. Reece also appeals the district court's grant of Mellon's motion for costs.

II. DISCUSSIONA. Jurisdiction

“ ‘On every writ of error or appeal, the first and fundamental question is that of jurisdiction, first, of this court, and then of the court from which the record comes.’ ” Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (quoting Great S. Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 453, 20 S.Ct. 690, 44 L.Ed. 842 (1900)). The jurisdictional question in this case is more complex than revealed by the district court's analysis.¹ We consider the question de novo, see Wallace v. Wallace, 736 F.3d 764, 766 (8th Cir.2013), and conclude federal diversity jurisdiction extends to this case.

1. One–Year Removal Limit

Reece commenced this case on October 15, 2010, by filing a complaint in Arkansas state court. Ordinarily, 28 U.S.C. § 1446(b) gives a defendant thirty days to remove a complaint to federal court, but Reece only sought equitable relief (an injunction prohibiting Mellon's non judicial foreclosure of his home), so Mellon was not obligated to remove to federal court within the thirty-day period. See, e.g., Knudson v. Sys. Painters, Inc., 634 F.3d 968, 974 (8th Cir.2011) (“[S]ince [the] complaint did not explicitly state the amount in controversy, [the] complaint did not trigger the running of § 1446(b)'s thirty-day deadline.” (emphasis added)).

As “the case stated by the initial pleading [was] not removable,” Mellon was permitted to remove “within 30 days after rec[eiving] ... a copy of an amended pleading, motion, order or other paper from which it [could] first be ascertained that the case is one which is or has become removable.” 28 U.S.C. § 1446(b)(3) (emphasis added). But, according to Reece, Mellon also faced a bright-line time limit for filing the notice of removal:

A case may not be removed under subsection (b)(3) on the basis of [diversity] jurisdiction ... more than 1 year after commencement of the action.²

28 U.S.C. § 1446(c)(1) (emphasis added).

Mellon did not file its notice of removal until February 10, 2012, almost four months past the one-year limit in § 1446(c)(1). Mellon first attempts to circumvent the limit, which only applies to diversity jurisdiction, by invoking federal question jurisdiction. This attempt—predicated on the theory that foreclosure proceedings have been “completely preempted” by federal law—is unpersuasive. That nationally chartered banks must, incident to their authorization to make mortgage loans, have the ability to foreclose when the mortgagor defaults, see JPMorgan Chase Bank, N.A. v. Johnson, 719 F.3d 1010, 1017–18 (8th Cir.2013), does not mean federal courts have original jurisdiction over foreclosures. To the contrary, federal regulations provide that “State laws on the ... subject[ ]” of “[r]ights to collect debts” “are not inconsistent with the real estate lending powers of national banks and apply to national banks.” ³12 C.F.R. § 34.4(b) (emphasis added). As the subject matter of Reece's suit was not completely preempted by federal law, the district court did not have federal question jurisdiction over Reece's exclusively state law claims. If § 1446(c)(1) applies to this case, the one-year limit would plainly preclude diversity removal.

2. Exception for Class Actions

Despite the district court not considering the issue, we conclude the § 1446(c)(1) one-year limit is inapplicable in this case based on 28 U.S.C. § 1453(b):

A class action may be removed to a district court of the United States in accordance with section 1446 ( except that the 1–year limitation under section 1446(c)(1) shall not apply ).

(Emphasis added).

Section 1453(a) defines the term “class action,” by reference to § 1332(d)(1), as “ any civil action filed under [Fed.R.Civ.P. 23] or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action,” 28 U.S.C. § 1332(d)(1) (emphasis added). Reece's case plainly qualifies as a “class action” under § 1332(d)(1), so § 1453(b) exempts this case from § 1446(c)(1)'s one-year limit.

Reece's best counterargument is his theory that § 1453(b) applies solely to class actions under the Class Action Fairness Act of 2005 (CAFA), Pub.L. No. 109–2, 119 Stat. 4 (codified as amended in scattered sections of 28 U.S.C.), exceeding a higher amount in controversy: $5,000,000 ⁴ rather than $75,000. See id. § 4, 119 Stat. at 9 (codified at 28 U.S.C. § 1332(d)(2)). Even if reading CAFA in isolation might support this theory, we are bound to consider the statutory text as a coherent whole. See, e.g., FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132–33, 120 S.Ct. 1291, 146 L.Ed.2d 121 (2000). Read in context, “the statutory language is unambiguous and ‘the statutory scheme is coherent and consistent.’ ” Robinson v. Shell Oil Co., 519 U.S. 337, 340, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997) (quoting United States v. Ron Pair Enters., Inc., 489 U.S. 235, 240, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989)).

CAFA jurisdiction with more than $5,000,000 in controversy requires only minimal diversity, meaning “ any member of a class of plaintiffs is a citizen of a State different from any defendant.” 28 U.S.C. § 1332(d)(2)(A) (emphasis added). By contrast, if the parties to a class action are completely diverse (meaning every plaintiff is a citizen of a state different from every defendant), there is federal jurisdiction so long as one plaintiff's amount in controversy exceeds $75,000:

The district courts shall have original jurisdiction of all civil actions where the matter in...