White v. Wells Fargo Home Mortgage

Filing 14

OPINION AND ORDER granting the 8 MOTION to Remand; remanding the case to the Circuit Court of Houston County, Alabama; directing the Clerk to effect the remand. Signed by Honorable Judge Myron H. Thompson on 8/22/2011. Copy of Opinion and certified copy of docket sheet mailed to Houston County Circuit Clerk (br, )

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
MIDDLE DISTRICT OF ALABAMA, SOUTHERN DIVISION

GAYLA J. WHITE,

)
)
Plaintiff,
)
) CIVIL ACTION NO.
v.
) 1:11-cv-408-MHT
)
(WO)
WELLS FARGO HOME MORTGAGE, )
d/b/a America’s Servicing )
Company,
)
)
Defendant.
)

OPINION AND ORDER
Plaintiff Gayla J. White brought this lawsuit in
Alabama state court claiming that defendant Wells Fargo
Home Mortgage breached the terms of her mortgage contract
and committed various state-law torts, including fraud,
negligence, and defamation.

Wells Fargo subsequently

removed the case to this court under 28 U.S.C. §§ 1331,
1332, 1441, & 1446.

The case is currently before the

court on White’s motion to remand.

For the reasons that

follow, that motion will be granted.

I.

BACKGROUND

This is one of the many state-law tort and contract
cases arising out of the recent mortgage crises.1

White,

a resident of Alabama, executed a mortgage on her home in
Dothan.

She now contends that Wells Fargo, along with

other unnamed companies responsible for servicing her
mortgage, routinely charged “unidentified, unauthorized,
and unearned fees,” including late fees for payments that
were timely submitted.

In addition, White claims that

Wells Fargo violated the terms of her mortgage by, among
other things, placing flood and property insurance on her
mortgage account.

1. See, e.g., Brown v. Ocwen Loan Servicing, LLC,
__ F. Supp. 2d __, 2011 WL 2650232 (M.D. Ala. July 6,
2011) (Thompson, J.); Warren v. Bank of Am., 2011 WL
2116407 (S.D. Ga. May 24, 2011) (Edenfield, J.); Ozoria
v. Deutsche Bank Trust Co. Ams., 2011 WL 1303270 (S.D.
Fla. Mar. 31, 2011) (Cooke, J.); Locke v. Wells Fargo
Home Mortg., 2010 WL 4941456 (S.D. Fla. Nov. 30, 2010)
(Cooke, J.); Macks v. U.S. Bank Nat’l Ass’n, 2010 WL
2976200 (M.D. Ala. July 23, 2010) (Thompson, J.).
2

White alleges that Wells Fargo’s actions “forced
[her] to seek a loan modification.”

To that end, she

contacted Wells Fargo in October 2010.

According to her,

Wells Fargo misrepresented the nature of and requirements
for such a modification.

For example, she alleges that

Wells Fargo unnecessarily encouraged her to permit her
account to become more than 90-days delinquent, asserting
such steps were necessarily for approval.

Moreover,

Wells Fargo allegedly told White that the modification
would be governed by the Home Affordable Modification
Program

(“HAMP”)

foreclosure
Nevertheless,

and

during
while

would
the

thus

be

protected

loan-modification

White’s

application

was

from

period.2
pending,

Wells Fargo commenced foreclosure proceedings.

2. Congress created HAMP as part of the Emergency
Economic Stabilization Act of 2008. Ozoria v. Deutsche
Bank Trust Co. Ams., 2011 WL 1303270, at *1 (S.D. Fla.
Mar. 31, 2011) (Cooke, J.). The program is designed to
reduce foreclosures by encouraging companies that service
home mortgages to provide eligible home owners with
permanent loan modifications. Id.
3

Faced with a possible foreclosure, White filed this
action in a state court on April 25, 2011.

Her complaint

alleged breach of contract and nearly a dozen state-law
torts,

including

fraud,

negligence,

emotional

distress,

intentional

infliction

of

trespass,

and

defamation.

As for relief, White requested compensatory

and punitive damages, but did not move for an injunction
against foreclosure or seek rescission of her mortgage.
Wells Fargo timely removed the case to this court,
asserting

subject-matter

jurisdiction

based

on

both

federal question, 28 U.S.C. § 1331, and diversity of
citizenship, 28 U.S.C. § 1332.

White subsequently moved

for remand, alleging that her claims do not raise a
significant issue of federal law and that Wells Fargo has
failed to show that the amount-in-controversy requirement
of diversity jurisdiction is satisfied.

4

II.

FEDERAL-QUESTION JURISDICTION

“[D]istrict courts shall have original jurisdiction
of all civil actions arising under the Constitution,
laws, or treaties of the United States.”
§ 1331.

28 U.S.C.

In general, a case “arises under” federal law if

the plaintiff pleads a cause of action created by federal
law or if a substantial disputed area of federal law is
a necessary element of a state-law claim.

Franchise Tax

Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 9-10
(1983).

However, the “mere presence of a federal issue

in a state cause of action does not automatically confer
federal-question jurisdiction.”

Merrell Dow Pharm. Inc.

v. Thompson, 478 U.S. 804, 813 (1986).

Nor are federal

issues “a password opening federal courts to any state
action embracing a point of federal law.”

Grable & Sons

Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308,
314 (2005).

Rather, federal-question jurisdiction based

on an embedded federal issue is permissible only when “a
state-law claim necessarily raise[s] a stated federal

5

issue, actually disputed and substantial, which a federal
forum

may

entertain

without

disturbing

any

congressionally approved balance of federal and state
judicial responsibilities.”

Id.

Wells Fargo submits that this court has subjectmatter jurisdiction over White’s ostensibly state-law
claims because adjudicating those claims would require a
court to resolve important federal issues related to
HAMP.

This is simply not the case.

First of all, the vast majority of White’s causes of
action have nothing to do with HAMP.

For example, it

appears from the complaint that a court could resolve
White’s state-law claims of trespass, defamation, breach
of contract, negligent hiring, negligent training, and
negligent supervision without ever mentioning HAMP or
otherwise

considering

the

program’s

application

to

White’s mortgage.
Second,

most

of

White’s

remaining

claims,

while

indirectly related to HAMP, would not require a court to

6

rule on any disputed issues of federal law.

For example,

White claims that, by participating in HAMP, Wells Fargo
is contractually obligated to apply the Home Affordable
Modification Program Guidelines (“HAMPG”) to its loan
modifications

and

that

those

waiver of unpaid late fees.

guidelines

require

the

However, whether Wells Fargo

actually complied with that requirement is irrelevant to
White’s allegation that Wells Fargo committed fraud when
it told White that her loan history could be “‘fixed’ or
‘cured’ with a ... loan modification.”
(Doc. No. 1).

Compl. ¶ 32(g)

In this instance, “HAMP appears to merely

form part of the backdrop of an otherwise purely state
law dispute.

As the Supreme Court has admonished ‘it

takes more than a federal element to open the arising
under door.’”

Melton v. Suntrust Bank, __ F. Supp. 2d.

__, 2011 WL 1630273, at *1 (E.D. Va. Apr. 21, 2011)
(Smith, J.) (quoting Empire Healthchoice Assurance, Inc.
v. McVeigh, 547 U.S. 677, 701 (2006)) (internal quotation
marks omitted).

7

Finally, a small number of White’s claims rely on her
assertion that the application of HAMPG to her particular
mortgage

precluded

Wells

foreclosure proceedings.

Fargo

from

initiating

However, whether Wells Fargo

complied with those guidelines “appears to be a factspecific inquiry--not a ‘nearly pure issue of law’ which
could

be

expected

to

govern

numerous

other

cases.”

Rathore v. Bank of Am., N.A., 2011 WL 2077538 (E.D. Va.
May 24, 2011) (Hudson, J.) (quoting Empire HealthChoice,
547 U.S. at 700 (internal quotation marks omitted)).
Moreover, the resolution of that issue likely rests, not
on an interpretation of HAMPG, but on the nature of the
contract between White and Wells Fargo.

It is therefore

state contract law (not federal law) that governs.

The

court can find no reason to disturb the traditional
balance between federal and state responsibilities by
treating
state-law

this
tort

case
and

(and

therefore

contract

substantial federal question.

8

countless

disputes)

as

similar

raising

a

See Bennett v. Bank of

Am., N.A., 2011 WL 1814963, at *2-3 (E.D. Va. May 11,
2011) (Spencer, J.) (determining that a similar dispute
was a creature of Virginia contract law and remanding it
to the state court).

III.

DIVERSITY JURISDICTION

For purposes of removal pursuant to diversity-ofcitizenship jurisdiction, where, as here, damages have
not been specified by the plaintiff, a removing defendant
has the burden of proving by a preponderance of the
evidence

that

the

requirement is met.

$

75,000

amount-in-controversy

Leonard v. Enterprise Rent a Car,

279 F.3d 967, 972 (11th Cir. 2002).

While the court may

use “deduction, inference, or other extrapolation” in
assessing the amount in controversy, it must do so based
on

“facts

record.

or

specific

allegations”

contained

in

the

Pretka v. Kolter City Plaza II, Inc., 608 F.3d

744, 753 (11th Cir. 2010).

Without “facts or specific

allegations, the amount in controversy c[an] be divined

9

only by looking at the stars--only through speculation-Id. at 753-54 (internal

and that is impermissible.”

quotation marks and alterations omitted). In considering
the

relevant

narrowly

evidence,

construe

this

removal

court’s
statutes

obligation
requires

uncertainties be “resolved in favor of remand.”

to
that

Burns v.

Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994).
White does not specify the amount of damages she
seeks, but it is difficult to imagine that her claims,
which rest primarily on allegedly excessive fees that
Wells Fargo charged during the five years it serviced her
$ 150,000 home mortgage, are worth more than half the
initial value of that mortgage.

Nevertheless, Wells

Fargo contends that this case belongs in federal court
based on (1) the “value of the property at issue,” (2)
the

loss

attributable

to

White’s

“decision

not

to

refinance her mortgage based on Wells Fargo’s promises to
modify

her

loan,”

and

(3)

White’s

failure

to

make payments on the mortgage during the pendency of this

10

litigation.

Def.’s Opp. to Pl.’s Mot. to Remand 5 (Doc.

No. 12); see 28 U.S.C. § 1332.

Those arguments do not

persuade the court.
As to jurisdiction predicated on the value of the
home, it is undisputed that the original principal of
White’s mortgage was $ 150,000 and that she continues to
owe a similar amount.

But neither the total value of the

property, nor White’s current debt, represents the amount
in

controversy

validity

of

because
the

White

mortgage

prohibiting foreclosure.

does
or

not

seek

challenge
an

the

injunction

See James v. U.S. Bank Nat’l

Ass’n, 2009 WL 2170045, at *2 (M.D. Ala. July 17, 2009)
(Thompson, J.).

As a result, title to the home is not in

dispute.
Instead, White seeks damages based on Wells Fargo’s
alleged practice of misrepresenting the nature of White’s
obligations and charging unjustified fees.

As White

explains, “The amount in controversy is [primarily] the
money collected by the Defendant not in accordance with

11

the

note,

mortgage,

representations.”
Mot.

to

Remand

loan

modification,

and

their

Pl.’s Resp. to Def.’s Opp. to Pl.’s
6

(Doc.

No.

13)

(emphasis

removed).

Neither party offers an estimate for that amount, but it
is difficult to imagine that more than $ 75,000 in
improper fees and related charges--an amount half the
initial size of White’s mortgage--accumulated in the five
years between the issuance of the mortgage and the date
White brought this action.
Next, Wells Fargo submits that White’s breach-ofcontract claim provides a separate and sufficient basis
for establishing the requisite amount in controversy.

In

support of this argument, Wells Fargo focuses on White’s
allegation

that

its

contractually

prohibited

actions

caused her to “[d]elay[] or fail[] to inquire into a
refinance.”

Compl. ¶¶ 34, 40, 42 (Doc. No. 1).

Wells

Fargo interprets this allegation as a contention that,
but for its “alleged promises that [White] would be
approved

for

a

HAMP

modification,”

12

White

would

have

“refinance[d] the loan.”

Notice of Removal 5 (Doc. No.

1).
Wells Fargo’s argument fails because it provides
absolutely no relevant evidence regarding any damages
that

might

have

resulted

from

White’s

delay.

To

calculate that figure, a court would have to compare the
value of any loan that White might have received in
October 2010 when, instead of seeking refinancing, she
applied for a loan modification with Wells Fargo, to the
value of any loan that she might have obtained at the
time she uncovered the alleged wrongdoing.

There is no

evidence before the court that would enable it to make
that comparison.
Instead of providing the relevant data, Wells Fargo
compares the value of White’s current mortgage to that of
an

imaginary

loan

that

she

might

have

obtained

by

refinancing on May 5, 2011, two weeks after she brought
this action.
White

does

That calculation is besides the point.
not

claim

that

13

Wells

Fargo

fraudulently

induced

her

to

take

out

the

mortgage

in

the

first

instance; therefore the value of her initial mortgage is
irrelevant.

Similarly, May 5, 2011, is not the date that

White is said to have uncovered the alleged wrongdoing,
but rather a seemingly random date during the pendency of
this action.
Moreover, even if Wells Fargo had identified the
appropriate comparison, its calculation is based on an
unsupported belief that White could have refinanced her
home loan at a low interest rate, despite having bad
credit,

few

payments.

assets,

and

a

history

of

late

mortgage

At this stage, the burden is on Wells Fargo to

demonstrate that White might have actually obtained such
refinancing.3 Leonard, 279 F.3d at 972. It has failed to
make such a showing and, in the absence of any “facts or
specific

allegations,”

speculation

about

White’s

3. White does not claim that she would have
refinanced, only that she would have inquired into that
possibility.
14

likelihood of success in the credit market would be
See Pretka, 608 F.3d at 753-54.

“impermissible.”

Finally, Wells Fargo argues that White’s failure to
make mortgage payments during the pendency of this action
should

be

controversy.
this

calculated

as

part

of

the

amount

in

Putting aside the fact that nothing about

litigation

either

precludes

White

from

making

mortgage payments or prevents Wells Fargo from using all
legal means at its disposal to obtain any payments that
it is owed, Wells Fargo estimates the value of this
“relief” at only $ 11,674.80 per year.
Pl.’s

Mot.

considered

to

Remand

along

9

with

(Doc.
the

No.

other

Def.’s Opp’n to

12).

Even

potential

when

relief

available in this case, that relatively small sum is
insufficient to carry Wells Fargo’s burden of proving by
a

preponderance

of

the

evidence

that

controversy is greater than $ 75.000.

the

amount

in

Because Wells

Fargo has failed to present any evidence that clearly
establishes that the amount in controversy in this case

15

exceeds the jurisdictional threshold, this court lacks
subject-matter jurisdiction under 28 U.S.C. § 1332 and
remand is required.

***

Accordingly, it is the ORDER, JUDGMENT, and DECREE of
the court that plaintiff Gayla J. White’s motion to
remand (Doc. No. 8) is granted and that, pursuant to 28
U.S.C. § 1447(c), this cause is remanded to the Circuit
Court

of

Houston

County,

Alabama

for

want

of

jurisdiction.
The

clerk

of

the

court

is

DIRECTED

to

appropriate steps to effect the remand.
DONE, this the 22nd day of August, 2011.

/s/ Myron H. Thompson
UNITED STATES DISTRICT JUDGE

take