Nolen et al v. JP Morgan Chase Bank, NA et al
MEMORANDUM OPINION AND ORDER that Plaintiff's 7 Motion to Remand is GRANTED, and that this case is REMANDED to the Circuit Court of Montgomery County, Alabama, pursuant to 28 U.S.C. § 1447. The Clerk of the Court is DIRECTED to take appropriate steps to effectuate the remand. Signed by Chief Judge William Keith Watkins on 9/25/2012. (Attachments: # 1 Civil Appeals Checklist)Copy mailed to Clerk, Circuit Court of Montgomery County, Alabama.(dmn, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
CAROL ANN NOLEN, et al.,
JP MORGAN CHASE BANK, NA,
) CASE NO. 2:12-CV-41-WKW [WO]
MEMORANDUM OPINION AND ORDER
Defendant JP Morgan Chase Bank, NA, individually and as the successor by
merger to Defendant Chase Home Finance, LLC (collectively referred to as
“Defendants”), timely removed this action from the Circuit Court of Montgomery
County, Alabama, pursuant to 28 U.S.C. §§ 1332(a), 1441 and 1446(b), asserting that
complete diversity and the jurisdictional amount are satisfied. Before the court is a
Motion to Remand, filed by Plaintiffs Carol Ann Nolen and Benny F. Nolen, who
challenge the removal on the basis that the jurisdictional amount in controversy is not
satisfied. (Docs. # 7, 8.) Defendants have responded, and Plaintiffs have replied.
(Docs. # 10, 11.) Based upon the arguments of counsel, the relevant law, and the
record as a whole, Plaintiffs’ motion is due to be granted.
I. STANDARD OF REVIEW
Federal courts have a strict duty to exercise the jurisdiction conferred on them
by Congress. Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996). At the
same time, “[f]ederal courts are courts of limited jurisdiction.” Burns v. Windsor Ins.
Co., 31 F.3d 1092, 1095 (11th Cir. 1994). In actions removed from state court to
federal court, federal courts strictly construe removal statutes, resolve all doubts in
favor of remand, and place the burden of establishing federal jurisdiction on the
defendant. Miedema v. Maytag Corp., 450 F.3d 1322, 1328–30 (11th Cir. 2006).
“[R]emoval statutes are construed narrowly; where plaintiff and defendant clash
about jurisdiction, uncertainties are resolved in favor of remand.” Burns, 31 F.3d
§ 1332(a) Removals Where Damages Are Unspecified
A federal district court may exercise subject matter jurisdiction over a civil
action in which only state law claims are alleged if the civil action arises under the
federal court’s diversity jurisdiction. See 28 U.S.C. § 1332(a). Section 1332(a)(1)
confers jurisdiction on the federal courts when the dispute is between “citizens of
1332(a) different States,” and the amount in controversy exceeds $75,000, exclusive
of interest and costs. Id. Where the complaint alleges unspecified damages, the
removing party bears the burden of establishing the amount in controversy by a
preponderance of the evidence. Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744,
752 (11th Cir. 2010). In some cases, the preponderance burden “requires the
removing defendant to provide additional evidence demonstrating that removal is
proper.” Roe v. Michelin N. Am., Inc., 613 F.3d 1058, 1061 (11th Cir. 2010) (citing
Pretka, 608 F.3d at 744). “In other cases, however, it may be ‘facially apparent’ from
the pleading itself that the amount in controversy exceeds the jurisdictional minimum,
even when ‘the complaint does not claim a specific amount of damages.’” Id.
(quoting Pretka, 608 F.3d at 754). Moreover, in considering the allegations and
evidence, the court may use “common sense” and make “reasonable deductions,
reasonable inferences, or other reasonable extrapolations.” Pretka, 608 F.3d at 754,
770; see also Roe, 613 F.3d at 1062 (“[C]ourts may use their judicial experience and
common sense in determining whether the case stated in a complaint meets federal
jurisdictional requirements.”). The amount in controversy must be measured as of the
time of removal, however, and not by events occurring afterward. See Pretka, 608
F.3d at 751.
This action involves a dispute over allegedly improper and fraudulent fees and
charges assessed against the mortgagees by their mortgage service provider in
connection with loan payments and modifications. In June 2003, Plaintiffs, who are
husband and wife, executed a promissory note and mortgage on their residence in
Montgomery, Alabama, with a non-party bank. In September 2008, Defendants
acquired Plaintiffs’ loan through a purchase and assumption agreement with the
Federal Deposit Insurance Corporation. At that time, the principal balance on
Plaintiffs’ loan was $207,555.77. When Defendants began servicing Plaintiffs’
mortgage, they represented to Plaintiffs both orally and in writing that they would
service Plaintiffs’ mortgage in accordance with the terms of Plaintiffs’ original note
In January 2011, Defendants declared that Plaintiffs were delinquent in their
mortgage obligations, but represented that Plaintiffs could avoid foreclosure and
default, without fees or other penalties, by entering into a loan modification
agreement with Defendants. Relying on these representations, Plaintiffs applied for
the loan modification, and Defendants sent correspondence dated February 1, 2011,
indicating that Plaintiffs’ loan modification application was under consideration and
that foreclosure proceedings on Plaintiffs’ home would not commence.
Some five weeks later and contrary to their representations, however,
Defendants informed Plaintiffs that their home was scheduled for a foreclosure sale
on April 12, 2011, and advertised the foreclosure in a local newspaper. Seeking to
avoid foreclosure, Plaintiffs requested and received from Defendants a reinstatement
amount but, notwithstanding that Plaintiffs paid the reinstatement amount,
Defendants denied their loan modification application.
For reasons that are not clear from the Complaint, the scheduled foreclosure
did not take place. Instead, on April 20, 2011, at Defendants’ direction, Plaintiffs
applied for a second loan modification and received notice that they had qualified for
a three-month trial loan modification plan. Defendants promised a permanent
modification of their loan if Plaintiffs timely made three monthly mortgage payments
at a reduced rate. Plaintiffs paid the first and second months’ payments on time. Yet,
Defendants rejected the second month’s payment, allegedly because the “funds were
insufficient to cure the default” (Compl. ¶ 36), and threatened to accelerate the note
and initiate foreclosure proceedings against Plaintiffs.
Plaintiffs allege that throughout the course of servicing Plaintiffs’ mortgage
loan, Defendants’ wrongdoing was legion. Defendants allegedly charged late fees for
payments that were timely received, misapplied payments, miscalculated the amounts
owed by Plaintiffs, and purposefully postponed posting timely payments until they
were past due. They also allegedly improperly charged Plaintiffs certain fees and
finance charges related to default proceedings and charged Plaintiffs late fees on
payments that Defendants lost.
The Complaint, which was originally filed in the Circuit Court of Montgomery
County, alleges claims under state law for fraudulent misrepresentation, fraudulent
suppression, negligence, wantonness, breach of contract, intentional infliction of
emotional distress, trespass, and defamation. The Complaint seeks unspecified
compensatory damages for economic loss, mental anguish, and emotional distress
(based on Defendants’ alleged mishandling of the mortgage, the threatened
foreclosure, aggravated trespass, and defamation), and further requests punitive
damages also in an unspecified amount. The Complaint does not seek injunctive
relief, declaratory relief, or other equitable relief.
Defendants timely removed this action pursuant to § 1441 and the first
paragraph of § 1446(b), seeking to invoke this court’s diversity jurisdiction under
§ 1332(a).1 Plaintiffs have moved to remand this action to state court on that basis
that the amount in controversy is not satisfied.
There is no dispute that Plaintiffs and Defendants are of diverse citizenship.2
The only issue is whether the Complaint, which seeks unspecified compensatory and
Sections 1441 and 1446 were amended in 2011, and those amendments became
effective on January 6, 2012. See Federal Courts Jurisdiction & Venue Clarification Act of 2011
(“Act”), Pub. L. No. 112–63, 125 Stat. 758. Because this action was commenced prior to the
Act’s effective date, the Act does not apply to this action. See id.
The citizenship of the fictitious parties is not considered. See § 1441.
punitive damages, sustains Defendants’ removal burden to prove that at the time of
removal, § 1332(a)’s amount in controversy was satisfied.
Defendants argue that they have met their burden on removal of demonstrating
that more than $75,000 is at stake. Defendants contend that the Complaint contests
the legitimacy of every payment Plaintiffs have made to Defendants since Defendants
acquired their loan, and submits evidence that those payments total $48,776.66.
Defendants’ rationale is that “since no specific payments or fees are referred to in the
Complaint, all of Plaintiffs’ payments to [Defendants] necessarily must [be] at issue
. . . .” (Doc. # 10, at 4.) Defendants contend, therefore, that $48,776.66 is the
“definitive starting point” for calculating damages. (Doc. # 10, at 11.) Add to that
the demand for mental anguish damages and punitive damages and, according to
Defendants, it is more likely than not that if Plaintiffs prevail, a jury would award
more than $75,000 in damages.3
In their Notice of Removal, Defendants relied upon the assessments for property tax to
argue that the “market value measure” of Plaintiffs’ home is $319,400, “which [Plaintiffs] claim
they feared losing by foreclosure.” (Not. of Removal ¶ 26; Ex. 5 to Not. of Removal.)
Defendants also submitted a copy of Plaintiffs’ mortgage. Defendants suggested, but did not
explicitly argue, that the amount in controversy is the value of Plaintiffs’ property or,
alternatively, the value of Plaintiffs’ mortgage note. In their response to the motion to remand,
Defendants have not relied on the property tax assessment information or on any argument that
the value of Plaintiffs’ home or mortgage note establishes the amount in controversy. It is
notable, however, that decisions in this district have rejected arguments made on substantially
similar facts. In Mustafa v. Market Street Mortg. Corp., 840 F. Supp. 2d 1287 (M.D. Ala. 2012)
(Fuller, J.), the court surveyed this district’s recent opinions and concluded that because the
plaintiff had not sought injunctive relief or questioned the mortgage’s validity, the value of his
home was not at issue and the defendants’ attempt to use that value as the baseline for calculating
Plaintiffs contend that a logical reading of the Complaint does not support
Defendants’ position. They argue that the Complaint does not challenge “every
charge and payment ever made by them” to Defendants. (Doc. # 8, at 4.) Rather,
Plaintiffs contend that the only payments at issue are “those collected not in
accordance with the note and mortgage,” and also those payments that were handled
contrary to Defendants’ representations regarding payments to be made on the loan
modifications. (Doc. # 8, at 5.) Plaintiffs further argue that the removal petition is
based upon conclusory allegations concerning Plaintiffs’ potential recovery of mental
anguish damages and punitive damages. Plaintiffs have the better arguments.
Defendants’ argument that the Complaint’s allegations place all of Plaintiffs’
payments to Defendants in controversy does not survive close scrutiny. There are no
allegations that challenge the legitimacy of the monthly principal and interest.
Rather, the allegations focus on charges added to the monthly principal and interest
that allegedly improperly inflated those payments.
Those charges encompass
the amount-in-controversy failed as a matter of law. Id. at 1291 (citing White v. Wells Fargo
Home Mortg., No. 1:11cv408, 2011 WL 3666613 (M.D. Ala. Aug. 22, 2011), and Parks v.
Countrywide Home Loans, 2:11cv852, 2011 WL 6223049 (M.D. Ala. Dec. 15, 2011)); see also
Peterson v. BAC Home Loan Servicing, LP, No. 3:11cv805, 2011 WL 6058273, at *1 (M.D. Ala.
Dec. 6, 2011) (“[When a mortgage’s validity is not at stake, the value of the property itself is not
the amount in controversy.”). In this case as well, Plaintiffs have asked for neither declaratory
relief nor injunctive relief or for a judgment that would void the mortgage.
allegedly unwarranted and excessive late fees (and some fees of unknown origin), as
well as penalties associated with allegedly improper default proceedings. These
factual allegations do not place the entirety of Plaintiffs’ monthly payments to
Defendants into issue.
Defendants complain, however, that Plaintiffs fail to allege basic facts from
which the contested payments and charges can be separated from the uncontested
ones. Defendants argue that Plaintiffs bear the burden of assigning a value, or at least
an estimate, to the allegedly improper charges, and that their failure to plead a
reasonable estimate places the total payments at issue for purposes of ruling on the
motion to remand. Defendants have not cited any authority in support of this
contention, but there is authority indicating otherwise.
In Peterson, the court observed that the request for unspecified compensatory
damages encompassed the allegedly overpaid mortgage fees, and, thus, those fees
“could properly count toward the amount-in-controversy requirement.” 2011 WL
6058273, at *2. Because the removing mortgagor had not provided a calculation of
the allegedly overpaid fees, however, leaving that estimate to speculation, the
mortgagor failed to prove the amount of compensatory damages by a preponderance
of the evidence. Id.
As in Peterson, the court finds here that Defendants bear the burden on
removal of demonstrating, based on either the Complaint’s allegations or their own
evidence, a reasonable estimate of the amount of improperly charged fees at issue.
Placing that burden on Defendants is consonant with well-established and
longstanding precedent that defendants bear the burden on removal to establish that
federal jurisdiction exists. See Pullman Co. v. Jenkins, 305 U.S. 534, 40 (1939); see
also Fowler v. Safeco Ins. Co. of Am., 915 F.2d 616, 617 (11th Cir. 1990) (“In a
removal action, the burden is on the defendant, not the plaintiff, to plead the basis for
jurisdiction.” (citing B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir. Unit
A 1981)). Defendants contend this conclusion will encourage manipulative tactics
by state-court plaintiffs to prevent removal by drafting pleadings that are devoid of
facts from which the value of their claims can be approximated. (Doc. # 10, at 2.)
The underlying source of authority for Defendants’ argument is Pretka. Pretka
shunned a predecessor court’s pronouncement that in removed diversity actions
seeking indeterminate damages, the source of the facts or evidence as to a claim’s
value had to come from the plaintiff. The defendant could not submit independent
facts or evidence of that value. Pretka, 608 F.3d at 763–66 (citing Lowery v. Ala.
Power Co., 483 F.3d 1184 (11th Cir. 2007)). The Pretka court relegated Lowery’s
pronouncement to dicta, at least in actions removed based upon the initial pleading,
as here. See id. The Pretka court opined that otherwise the defendant’s right to
remove would be subject “to the caprice of the plaintiff.” Id. at 766. The concerns
raised in Pretka regarding the potential for a plaintiff to engage in manipulative
tactics to avoid removal are not at issue here: To the extent that Defendants contend
that Plaintiffs are hiding the true nature of their case to avoid federal jurisdiction,
Defendants were not precluded from submitting their own objective evidence
valuating Plaintiffs’ claims. They simply chose not to do so.
Additionally, while Defendants are correct that a court may rely on “deduction,
inference, or other extrapolation” to determine the amount in controversy, that
assessment must be based upon “facts or specific allegations” contained in the record.
Pretka, 608 F.3d at 752. Both are missing here. In their Complaint, as stated,
Plaintiffs have not separated the legitimate payments from the allegedly illegitimate
payments, and Defendants have not submitted independent facts or evidence
providing a reasonable valuation of Plaintiffs’ claims to fill the Complaint’s void.
Notably also, similar to White, it is difficult to envision that the allegedly improper
charges that were assessed over a thirty-nine month period during which Defendants
serviced Plaintiffs’ $225,570 mortgage would put a substantial dent in the amount in
controversy requirement. See 2011 WL 3666613, at *3 (noting the difficulty in
imagining that the allegedly improper fees charged over the span of five years that the
defendant serviced her $150,000 home mortgage were “worth more than half the
initial value of that mortgage”). Absent “facts or specific allegations, the amount in
controversy c[an] be divined only by looking at the stars – only through speculation
– and that is impermissible.” Pretka, 608 F.3d at 753–54.
Mental Anguish Damages and Punitive Damages
Defendants further contend that common sense dictates that the amount in
controversy is satisfied based upon Plaintiffs’ request for mental anguish damages
and punitive damages. Defendants premise this argument on an assumption that the
unspecified mental anguish and punitive damages are to be added to baseline
economic losses of $48,776.66. As discussed in Part IV. A, that assumption is in
error. Defendants are in the same predicament, therefore, as the defendants in Dean,
Parks, and Peterson, see supra note 3. In those cases, the courts found that based
upon the absence of evidence estimating the amount of improperly charged fees, there
was an insufficient foundation from which to affix a value to the mental anguish
and/or punitive damages requests, and, thus, the defendants failed to demonstrate the
requisite jurisdictional minimum. See Dean, 2012 WL 353766, at *6; Parks, 2011
WL 6223049, at *3; Peterson, 2011 WL 6058273, at *2. The request for mental
anguish and punitive damages does not satisfy Defendants’ removal burden of
demonstrating that more than $75,000 is at stake.
For the foregoing reasons, subject matter jurisdiction is lacking over this
removed action for Defendants’ failure to establish the required minimum amount in
controversy by a preponderance of the evidence. Accordingly, it is ORDERED that
Plaintiffs’ Motion to Remand (Doc. # 7) is GRANTED, and that this case is
REMANDED to the Circuit Court of Montgomery County, Alabama, pursuant to 28
U.S.C. § 1447. The Clerk of the Court is DIRECTED to take appropriate steps to
effectuate the remand.
DONE this 25th day of September, 2012.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE
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