Federal National Mortgage Association v. Morris et al
MEMORANDUM OPINION. Signed by Magistrate Judge John E Ott on 7/31/2015. (KAM, )
2015 Jul-31 PM 03:39
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
FEDERAL NATIONAL MORTGAGE
PENNY LYNN MORRIS and TYLER
PENNY LYNN MORRIS,
WELLS FARGO BANK, N.A.,
This action originally filed in the Circuit Court of Jefferson County,
Alabama, Bessemer Division, was removed to this court pursuant to 28 U.S.C. §§
1441 and 1446 by Wells Fargo Bank, N.A. (“Wells Fargo”), which the parties
dispute to be either a “counter-defendant” or a “third-party defendant.” (Doc.1/ 1).
The case was assigned to the undersigned United States Magistrate Judge pursuant
to the court’s General Order of Reference dated January 1, 2015. The parties have
consented to an exercise of plenary jurisdiction pursuant to 28 U.S.C. § 636(c),
FED. R. CIV. P. 73, and LR 73.2. The cause now comes to be heard on a motion to
remand filed by Defendants Penny Lynn Morris (“Penny”) and Tyler Morris
(“Tyler”) (collectively the “Morrises”). (Doc. 7). Upon consideration, the court
concludes that the motion to remand is due to be granted.
This action was initiated on November 13, 2014, when Federal National
Mortgage Association (“Fannie Mae”) filed a complaint against Penny in the state
court. (Doc. 1-1 at 2-11). In its pleading, Fannie Mae pursued an ejectment cause
of action under Alabama law, asserting a right to take possession of certain real
property from the defaulting borrower, Penny, after Fannie Mae had purchased the
property on October 22, 2014, at a foreclosure sale from Wells Fargo, the owner of
the mortgage. (Id. at 2-3); see also generally ALA. CODE § 6-6-280. Fannie Mae
Citations herein to “Doc(s). ____” are to the document number of the pleadings, motions, and other
materials in the court file, as compiled by the clerk of the court and designated on the docket sheet
in the court’s Case Management/ Electronic Case Files (“CM/ECF”) system. Unless otherwise
noted, pinpoint citations are to the page of the electronically filed document, which may not
correspond to pagination on the original “hard copy.”
also sought damages for the wrongful retention of the property and an order
declaring that Penny had forfeited the right to redeem. (Id. at 3). Shortly
thereafter, Fannie Mae filed an amended complaint that named Tyler as an
additional defendant, alleging that he too was unlawfully occupying the premises.
(Doc. 1-1 at 13).
The Morrises, acting through counsel, filed an Answer. (Doc. 1-2 at 33-35).
Later, on May 10, 2015, the Morrises’ counsel filed a pleading styled as an
“Amended Answer and Counterclaim,” on behalf of either Penny alone or perhaps
both Morrises.2/ (Doc. 1-2 at 114-133). It was acknowledged therein that Penny
had executed a mortgage on the property in May 2004, but she claimed that at the
time of the foreclosure sale in October 2014, Fannie Mae was already the owner of
the mortgage and that Wells Fargo was merely the loan servicer. (See id. at 119,
¶¶ 5-7). Penny further claimed that the foreclosure proceedings were actually
initiated by Wells Fargo and that because it did not itself own the mortgage, Wells
Whether the “Amended Answer and Counterclaim” was filed by just Penny or by both Morrises is
a muddled question. The introductory paragraph of the pleading states that it is filed only by “Penny
Morris, by and through her attorney of record.” (Doc. 1-2 at 114). Penny is likewise identified in
the “Counterclaim” section of the pleading as the sole “Defendant/Counter-Plaintiff.” (Id. at 118,
¶ 2). However, some denials, admissions, and allegations in the “Answer” section of the pleading
are made on behalf of “Defendants” (see, e.g., id., at 114-115, ¶¶ 1, 2, 3, 4), while others reference
only a single “Defendant.” (See, e.g., id. at 116, ¶¶ 1-6). Ultimately, whether the “Amended Answer
and Counterclaim” was technically filed on behalf of Penny alone or on behalf of both Morrises is
immaterial to the resolution of the motion to remand.
lacked legal authority to foreclose, thereby rendering wrongful both the
foreclosure itself and any ostensible purchase of the property by Fannie Mae at the
foreclosure sale. (Id. at 119-20, ¶¶ 8-10, 13-16).
In the “Counterclaim” section of the pleading, under the heading of
“Parties,” Penny is identified as the sole “Defendant/Counter-Plaintiff.” (Id. at
118, ¶ 1). Also, while the pleading is styled as including a “Counterclaim,” it does
not formally name the plaintiff to the original suit, Fannie Mae, as a defendant to
any claim or counterclaim. Rather, the pleading identifies Wells Fargo as the only
“Plaintiff/Counter-Defendant” (id. at 118, ¶ 2), notwithstanding that Wells Fargo
was not previously a party to the litigation. (See also id. at 119, ¶ 10 (stating that
“Plaintiffs filed an ejectment suit against Morris,” apparently referencing both
Fannie Mae and Wells Fargo (emphasis added)); id. at 1-2, ¶ 3 (“Defendants plead
that any recovery that might be available to the plaintiff must be offset by any
recovery the Defendants might be entitled as a result of her counter-claim.”
As to the substance of her “Counterclaim,” Penny seeks to recover against
Wells Fargo under both Alabama law and federal law. Her state law claims raise a
host of theories: negligence, wantonness, unjust enrichment, wrongful foreclosure,
slander of title, breach of contract, fraud, false light, defamation, unfair and
deceptive trade practices, and breach of the covenant of good faith and fair
dealing. These claims are all based upon allegations that Wells Fargo engaged in
malfeasance in connection with its servicing the mortgage loan as it related to the
collection and application of payments and fees, the giving of required notices,
making misstatements regarding the status of the loan, declaring a default,
conducting the foreclosure, and disseminating false or misleading of information
to credit bureaus and others about the default and foreclosure. (See Doc. 1-2,
“Counterclaim” ¶¶ 19, 32, 38, 42-43, 46, 50-55, 58, 68, 74). Penny also raises
claims against Wells Fargo arising uder federal law for alleged violations of the
Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq.; the Truth
in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq.; and the Real Estate Settlement
Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq. Penny’s FDCPA count cites
15 U.S.C. §§ 1692e(2) and (8) and 1692f(1) as its statutory basis. (Doc. 1-2,
“Counterclaim” ¶¶ 62-64). While the shotgun nature of the pleading, see
generally Wagner v. First Horizon Pharm. Corp., 464 F.3d 1273, 1279 (11th Cir.
2006), makes it difficult to identify the specific theory underlying those claims,
they seem to be based upon incorporated allegations that Wells Fargo made
misstatements to Penny about the status of the loan, wrongfully foreclosed, and/or
wrongfully reported the foreclosure sale to national credit bureaus. (See id. ¶¶ 11,
19, 32, 58, 62). Her RESPA claim, by contrast, is based expressly upon an alleged
failure by Wells Fargo to acknowledge or respond to her “qualified written
request” regarding the status of her loan, sent by certified mail on October 15,
2014. (See Doc. 1-2, “Counterclaim” ¶¶ 91-92); see also 12 U.S.C. § 2605(e).
Finally, Penny claims that Wells Fargo is liable under TILA for violating 15
U.S.C. §§ 1632(a), 1632(b), 1638(a), and 1605, for allegedly failing to provide
proper notices and disclosures and for allegedly charging fees not authorized by
the mortgage contract. (Doc. 1-2 at 128-30). On her various state and federal
claims, Penny seeks compensatory and punitive damages; a declaratory judgment
setting aside the foreclosure sale, voiding the foreclosure deed, and declaring her
the rightful owner of the property; as well as an award of court costs and attorney
fees. (Id. at 131-32; see also id. at 118, ¶ 3).
On May 15, 2015, Wells Fargo removed the action to this court citing 28
U.S.C. §§ 1441(a) and (c), invoking this court’s jurisdiction under 28 U.S.C. §
1331 based on the federal claims Penny raised against Wells Fargo in her
“Counterclaim.” (Doc. 1). Fannie Mae consented to the removal. (Id. at 2; Doc.
1-3). On June 11, 2015, the Morrises filed their instant motion to remand pursuant
to 28 U.S.C. § 1447(c), arguing that Wells Fargo is not a “defendant” authorized
to remove under § 1441. (Doc. 7). Wells Fargo filed a response in opposition.
(Doc. 11). The Morrises then filed a reply. (Doc. 15). The motion to remand is
thus ripe for decision.3/
Federal courts are courts of limited jurisdiction, with the power to hear only
cases authorized by the Constitution or by statute. Kokkonen v. Guardian Life Ins.
Co. of Amer., 511 U.S. 375, 377 (1994). This case involves the court’s removal
jurisdiction, which is related to but technically distinct from subject-matter
jurisdiction. See Cogdell v. Wyeth, 366 F.3d 1245, 1247-48 (11th Cir. 2004).
Removal jurisdiction is purely statutory in nature. Finn v. American Fire & Cas.
Co., 207 F.2d 113, 115 (5th Cir. 1953)4/. The general removal statute, 28 U.S.C. §
Except as otherwise expressly provided by Act of Congress, any civil
action brought in a State court of which the district courts of the
After the Morrises moved to remand, Wells Fargo and Fannie Mae filed a joint motion seeking
dismissal of all claims in the “Amended Answer and Counterclaim” under FED. R. CIV. P. 12(b)(6).
(Docs. 17, 18). The court subsequently granted a motion by the Morrises to stay consideration of
that motion until after the court resolves the motion to remand. (Docs. 19, 20). See University of
S. Ala. v. American Tobacco Co., 168 F.3d 405, 411 (11th Cir. 1999) (“A federal court must remand
for lack of subject matter jurisdiction notwithstanding the presence of other motions pending before
the court.”); Horton v. United Food & Commercial Worker’s Union, 2012 WL 4815567, at *4 (N.D.
Ala. Oct. 5, 2012) (“When confronted with a plaintiff’s motion to remand and a defendant’s motion
to dismiss, the better practice is to rule first on the motion to remand and, if granted, to then remit
the motion to dismiss to the state court” (citing In re Bear River Drainage Dist., 267 F.2d 849, 851
(10th Cir. 1959)).
The decisions of the former Fifth Circuit handed down before October 1, 1981 are binding in the
Eleventh Circuit. Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc).
United States have original jurisdiction, may be removed by the
defendant or the defendants, to the district court of the United States
for the district and division embracing the place where such action is
28 U.S.C. § 1441(a). Wells Fargo has removed based, at least in part, upon that
statute (see Doc. 1 at 3) in conjunction with the “federal question” statute, 28
U.S.C. § 1331, under which the district courts “have original jurisdiction of all
civil actions arising under the Constitution, laws, or treaties of the United States.”
28 U.S.C. § 1331. On that score, it is well established that where a plaintiff’s
“well-pleaded complaint” filed in state court asserts a claim “arising under” a
federal statute, the defendant to that claim is generally entitled to remove the
action to federal court under § 1441(a). See Metropolitan Life Ins. Co. v. Taylor,
481 U.S. 58, 63 (1987).
Wells Fargo has also invoked 28 U.S.C. § 1441(c) as authorizing its
removal. (Doc. 1 at 6). That subsection, as amended effective January 6, 2012,
see Federal Courts Jurisdiction & Venue Clarification Act of 2011, Pub. L.
112–63, 125 Stat. 759, Title I, § 103(a) (2011), contains the following additional
provisions related to removal where federal-law claims are joined with state-law
(c) Joinder of Federal law claims and State law claims.-(1) If a civil action includes-(A)
a claim arising under the Constitution, laws, or
treaties of the United States (within the meaning of
section 1331 of this title), and
a claim not within the original or
supplemental jurisdiction of the district
court or a claim that has been made
nonremovable by statute, the entire action
may be removed if the action would be
removable without the inclusion of the
claim described in subparagraph (B).
(2) Upon removal of an action described in paragraph (1), the
district court shall sever from the action all claims described in
paragraph (1)(B) and shall remand the severed claims to the
State court from which the action was removed. Only
defendants against whom a claim described in paragraph (1)(A)
has been asserted are required to join in or consent to the
removal under paragraph (1).
28 U.S.C. § 1441(c).
Under this provision, where a claim arising under federal law is included in
a civil action with a claim that is made nonremovable by statute, see 28 U.S.C. §
1445, or that is not within the original or supplemental jurisdiction of the district
courts, § 1441(c) makes clear that the entire action is subject to removal but
further commands that the district court must sever and remand all claims that are
made non-removable or are outside of its original or supplemental jurisdiction.
See WGB, LLC v. Bowling, 18 F. Supp. 3d 1288, 1296 (N.D. Ala. 2014); also cf.
Wisconsin Dep’t of Corr. v. Schacht, 524 U.S. 381, 387 (1998) (holding that
presence of claim barred by the Eleventh Amendment did not prevent district court
from hearing other claims arising under 42 U.S.C. § 1983 that were otherwise
removable); Reed v. Heil Co., 206 F.3d 1055, 1058 (11th Cir. 2000) (holding that
claim arising under the Americans with Disabilities Act was properly before the
district court upon removal but claim arising under the Alabama Workers’
Compensation Act was nonremovable under § 1445(c) and should have been
remanded to state court). Under the doctrine of supplemental jurisdiction,
referenced in § 1441(c)(1)(B), federal district courts are authorized to hear claims
that are not themselves within their original jurisdiction but are “so related to
claims within such original jurisdiction that they form part of the same case or
controversy under Article III of the United States Constitution.” 28 U.S.C. §
1367(a). Finally, unlike removals authorized solely by § 1441(a), which require
unanimous consent of all defendants properly named and served, see 28 U.S.C. §
1446(b)(2)(A), removals authorized under § 1441(c) require joinder or consent
only from defendants to federal-law claims. 28 U.S.C. § 1441(c)(2); LaGrant v.
U.S. Bank Nat. Ass’n, 2015 WL 1208967, at *3 (E.D. Va. Mar. 16, 2015).
In support of their motion to remand, the Morrises argue that Wells Fargo
was not authorized to remove on the theory that it was not a “defendant” for
purposes of § 1441(a). Again, that statute provides in relevant part that a civil
action filed in state court may be removed to federal court “by the defendant or the
defendants.” See also 28 U.S.C. § 1446(a) (similarly providing that a removal is
effected when “a defendant or the defendants” file a notice of removal in the
appropriate federal district court). Federal law, not state rules or practice,
determines who is a “defendant” authorized to remove under § 1441(a). Chicago,
R.I. & P.R. Co. v. Stude, 346 U.S. 574, 580 (1954); City of Vestavia Hills v.
General Fidelity Ins. Co., 676 F.3d 1310, 1313 (11th Cir. 2012). “Because
removal jurisdiction raises significant federalism concerns, federal courts are
directed to construe removal statutes strictly. Indeed, all doubts about jurisdiction
should be resolved in favor of remand to state court.” City of Vestavia Hills, 676
F.3d at 1313 (quoting University of S. Ala. v. American Tobacco Co., 168 F.3d
405, 411 (11th Cir. 1999)). Consistent with that principle, it is long established
that the term “defendant” in § 1441(a) does not encompass a plaintiff who files in
state court and is later named in that action as a counter-defendant, i.e., a
defendant to a counterclaim raised by an original defendant. See Shamrock Oil &
Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); FDIC v. S & I 85-1, Ltd., 22
F.3d 1070, 1072 (11th Cir. 1994).
Wells Fargo emphasizes, though, that it was not a plaintiff to the state court
ejectment action, a fact the Morrises now acknowledge. (See Doc. 7 at 3). Rather,
Wells Fargo highlights that it was brought into this litigation only as a defendant
vis-á-vis claims asserted by Penny in the “Amended Answer and Counterclaim.”
As such, Wells Fargo maintains that it is a “newly added defendant” authorized to
remove under § 1441. (Doc. 11 at 4).
In support of this theory, Wells Fargo relies heavily upon a decision of the
former Fifth Circuit, Carl Heck Engineers, Inc. v. Lafourche Parish Police Jury,
622 F.2d 133 (5th Cir. 1980). In that case, one Louisiana citizen (“Heck”) sued
another, a local parish government (“parish”), in Louisiana state court on a statelaw claim for breach of contract. Id. at 134. The parish, in turn, asserted a thirdparty claim against a non-resident insurer (Maryland Casualty Company
(“Maryland”)) seeking a defense and indemnity on Heck’s claim. Id. at 135.
Based upon the existence of diversity jurisdiction over the third-party claim
against it, Maryland removed the action under a former version of § 1441(c),
which provided as follows:
Whenever a separate and independent claim or cause of action, which
would be removable if sued upon alone, is joined with one or more
otherwise non-removable claims or causes of action, the entire case
may be removed and the district court may determine all issues
therein, or, in its discretion, may remand all matters not otherwise
within its original jurisdiction.
Id. Following removal, the district court granted Maryland’s motion to sever and
remand to state court Heck’s claim against the parish (over which there was no
original jurisdiction due to a lack of diversity) and denied the parish’s motion
seeking remand as to the entire action. Id. After the district court granted
summary judgment for Maryland on the third-party claim, the parish appealed,
arguing, among other things, that because Maryland was a third-party defendant
the removal was improper, requiring remand of the entire case. 622 F.2d at 13435. The Fifth Circuit disagreed, holding that the district court’s resolution of the
removal and remand issues was authorized under § 1441(c). Id. at 135-36. In
particular, the court of appeals interpreted § 1441(c) to allow removal by a thirdparty defendant “if the third party complaint states a separate and independent
claim which if sued upon alone could have been brought properly in federal
court.” Id. at 136. The court found this the “more rational view” than the one that
admittedly had been espoused by some other courts and by Professor Moore’s
treatise, which would uniformly prohibit third-party defendants from removing
under § 1441(c). Id. at 135. The court then proceeded to find that the third-party
claim against Maryland for defense and indemnity, over which the district court
had diversity jurisdiction, was sufficiently “separate and independent” from
Heck’s original contract claim, over which no original jurisdiction existed because
of a lack of diversity, thereby allowing Maryland to remove under § 1441(c). Id.
at 136; see also Marsh Inv. Corp. v. Langford, 652 F.2d 583, 584 (5th Cir. Unit A
August 1981) (relying on Carl Heck in summarily upholding a § 1441(c) removal
by third-party defendant underwriters).
To the extent that it is on point and has not been abrogated, Carl Heck is
binding on this court.5/ Nonetheless, it is uncertain what role, if any, that decision
might play here. For starters, the removal statute upon which Carl Heck expressly
relied, § 1441(c), has been amended not once but twice, first in 1990 and then
again in 2011. See Judicial Improvements Act of 1990, Pub.L. No. 101-650 § 312,
104 Stat. 5089, 5114 (1990)6/; Federal Courts Jurisdiction & Venue Clarification
The Morrises state that “Carl Heck Engineers has been the subject of nearly universal criticism
from other federal courts.” (Doc. 15 at 5). Even if true, however, that is neither here nor there; this
court’s obligation to follow a decision of the former Fifth Circuit exists irrespective of what other
federal district or circuit courts (or even what the undersigned himself) might think of the decision’s
reasoning. See Bonner, 661 F.2d at 1207; Robinson v. Tyson Foods, Inc., 595 F.3d 1269, 1274 (11th
Cir. 2010); Smith v. GTE Corp., 236 F.3d 1292, 1303 (11th Cir. 2001); Sassy Doll Creations, Inc.
v. Watkins Motor Lines, Inc., 331 F.3d 834, 840 n.1 (11th Cir. 2003).
Following the 1990 amendment, § 1441(c) read:
Whenever a separate and independent claim or cause of action within the jurisdiction
conferred by section 1331 of this title is joined with one or more otherwise
non-removable claims or causes of action, the entire case may be removed and the
district court may determine all issues therein, or, in its discretion, may remand all
matters in which State law predominates.
28 U.S.C. § 1441(c) (1991); see also Poche v. Texas Air Corps, Inc., 549 F.3d 999, 1001 (5th Cir.
Act of 2011, Pub.L. 112–63, 125 Stat. 759, Title I, § 103(a) (2011). Where a prior
panel’s decision was based on legislation that has been materially amended or
repealed, such a change may justify a departure from the panel decision. See Sassy
Doll Creations, Inc. v. Watkins Motor Lines, 331 F.3d 834, 840 (11th Cir. 2003);
United States v. Gallo, 195 F.3d 1278, 1284 (11th Cir. 1999); United States v.
Romeo, 122 F.3d 941, 942 (11th Cir. 1997). To that end, Carl Heck has clearly
been abrogated by subsequent amendments in at least one respect: As it exists
today, as well as following the 1990 amendment, § 1441(c) only applies to
removals based on federal-question jurisdiction under § 1331, so it could no
longer authorize the particular removal in Carl Heck, which was founded upon
diversity jurisdiction under 28 U.S.C. § 1332(a). See Bowling, 18 F. Supp. 3d at
1294; The Mobile Washington (MOWA) Band of The Choctaw Indian Tribe v.
Sunbelt Res., Inc., 649 F. Supp. 2d 1325, 1330 (S.D. Ala. 2009). Nonetheless, that
does not necessarily preclude an application here of Carl Heck’s principle that a
third-party defendant may be authorized to remove, at least under § 1441(c),
insofar as Wells Fargo removed this action based upon federal-question
jurisdiction, not diversity. See Bowling, 18 F. Supp. 3d at 1294.
2008). That remained the text of § 1441(c) until the most recent amendment in 2011, which took
effect on January 6, 2012.
However, the 2011 amendment to § 1441(c) also omitted the language
conditioning its application on the presence of “a separate and independent claim
or cause of action” that would otherwise render the action subject to removal that
is “joined with one or more otherwise non-removable claims or causes of action.”
See Bowling, 18 F. Supp. 3d at 1297. In the seminal decision on the “separate and
independent” requirement, the Supreme Court ruled that “where there is a single
wrong to plaintiff, for which relief is sought, arising from an interlocked series of
transactions, there is no separate and independent claim or cause of action under §
1441(c).” American Fire & Cas. Co. v. Finn, 341 U.S. 6, 14 (1951). Now,
however, the statute authorizes removal when “a civil action includes” both a
removable federal claim and “a claim not within the original or supplemental
jurisdiction of the district court or a claim that has been made nonremovable by
statute.” 28 U.S.C. § 1441(c). Despite that change, both sides curiously proceed
as if § 1441(c) still contained the “separate and independent claim” language. (See
Doc. 7 at 11-12; Doc. 11 at 4-5). Indeed, some district courts have suggested that
the “separate and independent” standard still applies to assess removability under
§ 1441(c), on the theory that the current statutory language is merely a
repackaging of the same requirement. See FDIC ex rel. Colonial Bank v. Banc of
Am. Funding Corp., 2013 WL 3968017, at *2 & n.6 (M.D. Ala. Aug. 1, 2013). To
be sure, the language of the former statute requiring a “separate and independent”
removable claim or cause of action and the current version requiring a civil action
that includes both a removable federal claim and another “claim not within the
original or supplemental jurisdiction of the district court” both invoke notions of a
removable claim that is “unrelated” to another claim. See H.R. Rep. No. 112-10,
12, 2011 U.S.C.C.A.N. 576, 580 (House Report clarifying that amended § 1441(c)
applies to “the adjudication of separate Federal law claims that are joined with
unrelated state law claims”); 14B C. Wright, A. Miller, et al., Fed. Prac. & Proc. §
3722.3 (4th ed.) (hereinafter “Wright & Miller”) (recognizing that “there will be
considerable overlap” between cases removable under former § 1441(c)’s
“separate and independent” claim requirement and under the current version of the
statute). Likewise, the Supreme Court has also recognized that claims are not
“separate and independent” for purposes of former § 1441(c) if they fell within
what was then known as “pendent” jurisdiction, one of the doctrines later
subsumed within supplemental jurisdiction under § 1367, see City of Chicago v.
Int’l College of Surgeons, 522 U.S. 156, 165 (1997), which existed when claims
were “derived from a common nucleus of operative fact” and were against the
same party as another claim over which the district courts had original jurisdiction.
See Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 354 (1988); see also United
Mine Workers of Amer. v. Gibbs, 383 U.S. 715, 725 (1966).
Ultimately, however, given that the “separate and independent claim or
cause of action” language had appeared in the statute issue since 1948, see Finn,
341 U.S. at 9, and survived the 1990 revision, it stands to reason that Congress
intended the omission of the phrase in the 2011 amendment to alter or at least
clarify in some fashion the standard for removal under § 1441(c). See Bowling, 18
F. Supp. 3d at 1297. To that end, however the phrase “separate and independent
claim” might have been interpreted by the courts, the plain language of § 1441(c)
now calls for an examination of whether a civil action includes (1) a removable
federal claim, § 1441(c)(1)(A), and (2) another claim that either (a) is not within
the original or supplemental jurisdiction of the district court or (b) is made
nonremovable by statute, § 1441(c)(1)(B). Penny’s claims against Wells Fargo
based on the FDCPA, RESPA, and TILA arise under federal law and are not made
nonremovable by statute. See Hayes v. Bank of New York Mellon, 592 F. App’x
891, 892 (11th Cir. 2015); Boone v. JP Morgan Chase Bank, 447 F. App’x 961,
963 (11th Cir. 2011). Accordingly, for § 1441(c) potentially to apply, assuming
for the sake of argument that it could authorize a removal initiated by a “newly
added defendant” like Wells Fargo, the removed action must have included one or
more claims that are outside of this court’s supplemental jurisdiction.
Again, under the supplemental jurisdiction statute, district courts can
entertain claims that are not themselves within the court’s original jurisdiction but
are “so related to claims within such original jurisdiction that they form part of the
same case or controversy under Article III of the United States Constitution.” 28
U.S.C. § 1367(a). This language authorizes a court to hear supplemental claims to
the full extent allowed by the “case or controversy” standard of Article III, Parker
v. Scrap Metal Processors, Inc., 468 F.3d 733, 742-43 (11th Cir. 2006), and
confers jurisdiction “over all state claims which arise out of a common nucleus of
operative fact with a substantial federal claim.” Parker v. Scrap Metal
Processors, Inc., 468 F.3d 733, 743 (11th Cir. 2006); see also Int’l College of
Surgeons, 522 U.S. at 164-65. The statute further recognizes that supplemental
jurisdiction extends to “claims that involve the joinder or intervention of
additional parties.”7/ 28 U.S.C. § 1367(a); see also Exxon Mobil Corp. v.
Allapattah Servs., Inc., 545 U.S. 546, 558-59 (2005); Raygor v. Regents of Univ.
of Minn., 534 U.S. 533, 540 (2002) (indicating that § 1367(a) overruled Finley v.
United States, 490 U.S. 545 (1989), and authorizes “‘federal courts to hear any
Section 1367(b) limits the broad grant of supplemental jurisdiction under § 1367(a) as it relates to
claims by or against certain enumerated parties, but those limits expressly apply only to civil actions
over “which the district courts have original jurisdiction founded solely on” diversity under § 1332.
28 U.S.C. § 1367(b); see also Allapattah Servs., 545 U.S. at 560. Accordingly, § 1367(b) is
inapplicable here because the court’s original jurisdiction is based on a federal question under §
1331. See Palmer, 22 F.3d at 1566 n. 9.
claim arising out of the same “transaction or occurrence” as a claim within federal
jurisdiction, including claims, within federal question jurisdiction, that require the
joinder of additional parties’” (quoting Report of Federal Courts Study Committee
47 (Apr. 2, 1990))); Palmer v. Hospital Auth. of Randolph County, 22 F.3d 1559,
1566-67 (11th Cir. 1994). Finally, § 1367 “applies with equal force to cases
removed to federal court as to cases initially filed there.” Int’l College of
Surgeons, 522 U.S. at 165.
Thus, for § 1441(c) to apply, “[u]nder current understanding of the
case-or-controversy requirement, ... the joined claim typically must be one that
does not share a common nucleus of operative fact with the federal question claim
and that the plaintiff would not ordinarily be expected to assert together with the
federal question claim.” Wright & Miller § 3722.3. This broad test generally
renders the “utility” of § 1441(c) “limited,” because “[i]f a removable claim
presents a federal question, claims related to that claim will usually be removable
under § 1441(a),” with the federal claim providing a “foothold in the district court,
and supplemental jurisdiction will provide the basis for subject matter jurisdiction
over the state law claims.” 16 J. Moore et al., Moore’s Fed. Prac. (hereinafter
“Moore’s”) § 107.14[c] (3d ed. 2015). Rather, § 1441(c) will typically only
“come into play when liberal state joinder rules permit a state court plaintiff to file
unrelated state claims together with federal claims ....” Id.
While this civil action includes federal claims under FDCPA, RESPA, and
TILA, over which original jurisdiction exists, under the foregoing standards, it
does not include any claims that are beyond the court’s supplemental jurisdiction
under § 1367 or that are made nonremovable by statute. As it relates to
supplemental jurisdiction, Penny’s claims against Wells Fargo arising under both
federal and state law are sufficiently related given that they all arise out of
allegations that Wells Fargo engaged in wrongdoing in servicing Penny’s
mortgage loan, by declaring her in default, and foreclosing. See Hayes, 592 F.
App’x at 892; Boone, 447 F. App’x at 963. Wells Fargo does not specifically
dispute this. Wells Fargo insists, however, that the claims against it are so
unrelated to Fannie Mae’s original ejectment claims against the Morrises that
removal is authorized under § 1441(c). The court disagrees. Penny’s federal and
state-law claims against Wells Fargo are intertwined with Fannie Mae’s ejectment
action insofar as Penny’s federal and state claims against Wells Fargo and her
demands for declaratory relief are all designed to defeat Fannie Mae’s ejectment
action by undoing the foreclosure on the Morrises’ home and the ensuing sale.
Such allows the ejectment action to be deemed part of the same case or
controversy as the federal claims for purposes of § 1367. See Deutsche Bank
Trust Co. Americas v. Garst, 989 F. Supp. 2d 1194, 1199 & n. 2 (N.D. Ala. 2013)
(concluding that supplemental jurisdiction existed over original ejectment claims
and other state-law claims based on borrower’s FDCPA claims); Legacy
Community Fed. Credit Union v. Lyles, No. 2:13-cv-1339-AKK, Doc. 17 (N.D.
Ala. filed Sept. 27, 2013) (attached as Doc. 15-3 in the present case) (granting
motion to remand, holding that § 1447(c) did not authorize removal because
original ejectment claim was “necessarily intertwined” with borrower’s FDCPA
claim); see also Hayes v. Bank of New York Mellon, 2014 WL 3887922, at *2
(N.D. Ga. Aug. 6, 2014) (holding that all federal and state claims in action to set
aside foreclosure sale “relate[d] to alleged wrongdoing during the closing of
Plaintiffs’ home loan, in the assignment of Plaintiffs’ security deed, and in the
events leading up to and including the foreclosure of their home, and are therefore
part of the same case and controversy for the purposes of supplemental jurisdiction
under 28 U.S.C. § 1367(a)”), aff’d, 592 F. App’x 891 (11th Cir. 2015);
Dauenhauer v. Bank of New York Mellon, 562 F. App’x 473, 477 (6th Cir. 2014)
(district court had removal jurisdiction based on FDCPA claim and had
supplemental jurisdiction over state-law claims seeking damages and declaratory
relief to prevent impending foreclosure); Brown v. Morris, 243 F. App’x 31, 35-36
(5th Cir. 2007) (district court had supplemental jurisdiction over mortgagee’s
counterclaim for amount owed on note in borrower’s action against mortgagee and
its foreclosure attorney alleging violations of FDCPA and RESPA); cf. Dunavant
v. Sirote & Permutt, P.C., 603 F. App’x 737, 742-43 (11th Cir. 2015) (for
purposes of res judicata, FDCPA claim based on publication of foreclosure
notices arose out of same nucleus of operative fact as prior action seeking to
enjoin foreclosure sale). Because this civil action does not include any claims
lying beyond the court’s broad supplemental jurisdiction, § 1441(c) does not apply
and cannot authorize the removal by Wells Fargo.
Admittedly, this result conflicts with Bowling, supra, which sanctioned a §
1441(c) removal under very similar, if not almost identical, material facts. See 18
F. Supp. 3d at 1296-1300. As here, the Bowling action was originally filed in
Alabama state court as one for ejectment and was removed to this court after the
defendant borrowers, represented by the same attorney as the Morrises here,
asserted claims under FDCPA, RESPA, TILA, and state law against new parties
associated with the servicing of the mortgage loan and a later foreclosure sale of
the property. Ultimately, United States District Judge Madeline Haikala ruled
that, despite the amendments to § 1441(c) since Carl Heck, that subsection
authorized the removal on the theory that § 1441(c)(1)(B) allows “new defendants
[to] remove an entire action ‘if the action would have been removable without the
inclusion of the’ nonremovable claim.” 18 F. Supp. 3d at 1296 (quoting that
provision). In applying that formulation, the Bowling court allowed the removal
because it concluded that, had the borrowers sued only the new parties in a
separate state-court action, the new defendants could have removed that action to
federal court, based on original jurisdiction over FDCPA, TILA, and RESPA
claims, and supplemental jurisdiction over the state-law claims against them. See
While the undersigned agrees with much of Judge Haikala’s thoughtful
analysis in Bowling of these difficult and unsettled removal issues, her decision is,
of course, not binding, see Fox v. Acadia State Bank, 937 F.2d 1566, 1570 (11th
Cir. 1991), and the undersigned respectfully parts ways with her in the end as it
relates to the operation of the current § 1441(c). In particular, Bowling appears to
posit that, if an action is not subject to removal initially but an original defendant
later adds a federal claim against a new party, § 1441(c) broadly authorizes that
new party to remove so long as, “if [one] disregards” the original claims that were
not themselves initially removable, “the balance of the action is removable.” 18 F.
Supp. 3d at 1296. The difficulties with that approach are twofold. First, it would
appear to authorize removal under § 1441(c) without regard to whether the civil
action necessarily includes “a claim that is not within the original or supplemental
jurisdiction of the district courts or a claim that is made nonremovable by statute,”
as required by the plain language of § 1441(c)(1)(B). As here, Bowling clearly did
not involve “any claim that is made nonremovable by statute.” Nor does the
Bowling opinion expressly address whether, for purposes of § 1367, the state-law
ejectment claims were part of the “same case or controversy” or shared a “common
nucleus of operative fact” with the federal claims against the new parties. In fact,
the decision appears at least not to dispute specifically the recognition shared by
“all parties” there that the federal claims and the original ejectment claims were
“intertwined ... because the Bowlings’ claims against the new defendants are
designed to defeat WGB’s ejectment action by undoing the foreclosure on the
Bowlings’ home.” Bowling, 18 F. Supp. 3d at 1298.
Second, Bowling’s approach of conditioning removability under § 1441(c)
upon whether the “balance of the action is removable” without regard to
previously asserted claims not themselves removable imposes no real limitation at
all. That is so because § 1441(c) only applies to federal-question removals, and all
it generally ever takes to remove a civil action is the presence of a single claim
arising under federal law.8/ See Schacht, 524 U.S. at 386; In re City of Mobile, 75
There are exceptions to this principle, but they are limited. Most notably, as alluded to in §
1441(c)(1)(B) itself, claims arising under a few federal laws are made nonremovable by statute. See
28 U.S.C. §§ 1445(a), (b), and (d). Also, other federal claims, such as those under the Magnuson8/
F.3d 605, 607-08 (11th Cir. 1996). Thus, whenever an original defendant asserts a
federal claim against one or more new parties, that “balance” of the action would
virtually always be removable if it were filed as a separate action. As such, §
1441(c) would authorize removal nearly whenever an original defendant asserted a
federal claim against a new party, and it would require consent to removal only by
defendants to federal claims. In this regard, it would generally be easier for such
“new” defendants to remove than it would be for the original defendants
themselves, who must typically secure the unanimous consent of all defendants to
remove under § 1441(a), even when invoking federal-question jurisdiction. There
has long been disagreement over whether newly-added counter-defendants, thirdparty defendants, and cross-claimants have a right to remove under § 1441(c). See
generally Michael C. Massengale, Riotous Uncertainty: A Quarrel with the
“Commentators’ Rule” Against Section 1441(c) Removal for Counterclaim,
Cross-Claim, and Third-Party Defendants, 75 Tex. L. Rev. 659 (1997). However,
no one has thought that such parties have a broader right to remove than do
Moss Warranty Act, must meet an independent amount-in-controversy threshold to come within
original jurisdiction so as to be removable. See 15 U.S.C. § 2310(d)(3)(A); Ansari v. Bella
Automotive Group, Inc., 145 F.3d 1270, 1271-72 (11th Cir. 1998); Matthews v. Fleetwood Homes
of Ga., 92 F. Supp. 2d 1285, 1287-88 (S.D. Ala. 2000).
Although the court concludes that § 1441(c) does not apply, it is still
conceivable that § 1441(a) could authorize removal by Wells Fargo. However, the
text of § 1441(a) only authorizes removal by “the defendant or the defendants,”
and it is undisputed that Wells Fargo is at least not an original defendant in this
action. Rather, the Morrises are the original defendants. Wells Fargo, on the other
hand, is most appropriately aligned as a counter-defendant, on the same side of the
case with Fannie Mae. See Stude, 346 U.S. at 580; City of Vestavia Hills, 676
F.3d at 1313-14. That is, the primarily legal position and interest of both Wells
Fargo and Fannie Mae is to vindicate the foreclosure sale and to deny any claims
or arguments by the Morrises that would seek to derail it.
Wells Fargo points out that it was not a plaintiff in the state-court action, so
it intimates that it might be considered a third-party defendant. However, Wells
Fargo does not qualify as a proper “third-party defendant” under either federal law
or Alabama law. Under the Federal Rules of Civil Procedure, “a defendant party
may as third-party plaintiff” assert a claim against “a nonparty who is or may be
liable to [the third-party plaintiff] for all or part of the claim against [the thirdparty plaintiff].” FED. R. CIV. P. 14(a)(1). The relevant language of Alabama’s
corresponding rule is the same. See ALA. R. APP. P. 14(a). Under the federal rule,
“[i]mpleading, or third party practice, is only available when the third party
defendant’s liability is secondary to, or a derivative of, the original defendant’s
liability on the original plaintiff’s claim.” Faser v. Sears, Roebuck & Co., 674
F.2d 856, 860 (11th Cir. 1982); see also Southeast Mortgage Co. v. Mullins, 514
F.2d 747, 749 (5th Cir. 1975); Majors v. American Nat. Bank of Huntsville, 426
F.2d 566, 568 (5th Cir. 1970). Penny’s claims against Wells Fargo, unlike the
third-party claim in Carl Heck, are not in the nature of indemnity, contribution, or
subrogation, nor do they otherwise fit the mold of third-party claims permitted by
either Federal or Alabama Rule 14. Rather, Wells Fargo is more in the nature of a
newly-added counter-defendant under FED. R. CIV. P. 13(h) and FED. R. CIV. P.
20(a)(2).9/ See, e.g., Advanced Bodycare Solutions, LLC v. Thione Int’l, Inc., 615
F.3d 1352, 1358 n.11 (11th Cir. 2010).
Neither Carl Heck nor any other precedent binding in this circuit compels
allowing a counter-defendant, even a newly-added one, to remove under §
1441(a). Even as it relates to third-party defendants, Carl Heck itself does not so
much as cite § 1441(a). Instead, it addressed only former § 1441(c) and couched
its rule allowing a third-party defendant to remove only in circumstances where its
The court recognizes that the Morrises did not expressly identify Fannie Mae, the sole plaintiff in
the ejectment action, as a defendant to any of the counterclaims. However, those counterclaims do
demand, among other things, declaratory relief that would set aside the foreclosure sale, a claim to
which Fannie Mae, the purchaser of the property and already a party to the litigation, would
obviously be a necessary party. See FED. R. CIV. P. 19.
pleading “states a separate and independent claim.” 622 F.2d at 136. As
previously observed, the Supreme Court has specifically held that the term
“defendant” in § 1441 does not encompass a defendant to a counterclaim, at least
not where that party was also a plaintiff. Shamrock Oil & Gas, 313 U.S. at 10809. Likewise, both the Supreme Court and the Eleventh Circuit have frequently
recognized that removal jurisdiction based on a federal claim is generally subject
to the “well-pleaded complaint” rule, under which a claim “arising under” federal
law must appear on the face of the plaintiff’s complaint. See Holmes Group, Inc.
v. Vornado Air Circulation Sys., Inc., 535 U.S. 826, 831-32 (2002); Jefferson
County, Ala. v. Acker, 527 U.S. 423, 430-31 (1999); Rivet v. Regions Bank of La.,
522 U.S. 470, 476-77 (1998); Metropolitan Life, 481 U.S. at 63; Franchise Tax
Bd. of State of Cal. v. Construction Laborers Vacation Trust for S. Cal., 463 U.S.
1, 9 (1983); Ehlen Floor Covering, Inc. v. Lamb, 660 F.3d 1283, 1287 (11th Cir.
2011); Jones v. LMR Int’l, Inc., 457 F.3d 1174, 1178 (11th Cir. 2006); Kemp v.
IBM, Corp., 109 F.3d 708, 712 (11th Cir. 1997). Given those pronouncements and
that removal statues are to be narrowly construed, the court concludes that Wells
Fargo is not a “defendant” entitled to remove under § 1441(a). See Westwood
Apex v. Contreras, 644 F.3d 799, 805-06 (9th Cir. 2011); Palisades Collections
LLC v. Shorts, 552 F.3d 327, 332 (4th Cir. 2008); Deutsche Bank Nat. Trust Co. v.
Baxter, 969 F. Supp. 2d 1337, 1342 (N.D. Ala. 2013); Moss Land & Mineral
Corp. v. Fid. & Cas. Co. of N.Y., 2003 WL 21360803, at *3 (N.D. Ala. June 6,
Based on the foregoing, the court concludes that the removal in this case
was not authorized by either 28 U.S.C. § 1441(a) or (c). Accordingly, this court
lacks removal jurisdiction, and the Morrises’ motion to remand (Doc. 7) is due to
be GRANTED. A separate order of remand will be entered.
DONE, this 31st day of July, 2015.
JOHN E. OTT
Chief United States Magistrate Judge
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