U.S. Bank Trust, N.A. v. Wild et al
MEMORANDUM OPINION AND ORDER entered. It is hereby ORDERED that the motion to remand (doc. 10) be GRANTED and that this matter be REMANDED to the Circuit Court of Conecuh County, Alabama. Signed by Magistrate Judge William E. Cassady on 9/9/2015. (eec)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
U.S. BANK TRUST, N.A., as trustee
for LSF8 Master Participation Trust,
Plaintiff and Counter-Defendant,
CHARLES LEE WILD, et al.,
BENEFICIAL FINANCIAL I INC., et al., :
MEMORANDUM OPINION AND ORDER
This matter is before the Court on the motion to remand this matter to state court
(doc. 10) filed by Defendants, Charles Lee Wild and his wife Valerie Griffin, (“the
Wilds”),2 the response briefs filed by Beneficial Financial I Inc., (“Beneficial”), and
Caliber Home Loans, Inc., (“Caliber”), (docs. 13 and 14), the reply brief filed by the
Wilds (doc. 16), and the issues discussed at the time of the hearing on this matter.
Beneficial also filed a motion to compel arbitration and to dismiss the claims asserted
Although Beneficial’s motion was filed before the motion to
The undersigned has adjusted the caption to reflect the proper characterization
of the parties as discussed herein.
Although U.S. Bank refers to Charles Wild’s wife as “Valerie Griffin Wild” in the
state court pleadings and in the notice of removal to this Court, (see docs. 1-1 and 1-2), she
asserts that her name is, in fact, “Valerie Griffin,” (see doc. 1, ¶ 2 n.3), and she refers to herself as
“Valerie Griffin” in her filings in this Court, (see, e.g., docs. 10 and 16). Nevertheless, for ease of
reference, the parties refer to the Defendants, collectively, as “the Wilds,” (doc. 1, ¶ 2 n.3; doc.
10 at 2), and, therefore, the undersigned also will refer to the Defendants as “the Wilds.”
remand, (see docs. 9 and 10), and remains pending,
[t]his Court’s analysis [must] begin with the threshold jurisdictional
question raised by [the] Motion to Remand. Absent federal jurisdiction,
this Court lacks the power to decide [the] pending Motion to Dismiss, and
must immediately remand this action to state court . . . . Thus, the Court
must first determine whether this action was properly removed from state
Wilks v. Callahan, Civil Action No. 08–638–CG–M, 2009 WL 2243702, at *3 (S.D. Ala. July
24, 2009) (citing Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1261 (11th Cir. 2000);
University of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 411 (11th Cir. 1999)); see also
Klempner v. Northwestern Mut. Life Ins. Co., 196 F. Supp. 2d 1233, 1242-43 (S.D. Fla. 2001)
(“Although a motion to dismiss is currently pending in this Court [ ], ‘a federal court
must remand for lack of subject matter jurisdiction notwithstanding the presence of
other motions pending before the court.’”) (quoting University of S. Ala., 168 F.3d at 411).
After careful consideration of the pleadings, the parties’ briefing and the
arguments presented at the time of the hearing on this matter, and for the reasons
discussed herein, the motion to remand (doc. 10) is GRANTED, and this matter is
REMANDED to the Circuit Court of Conecuh County.
Magistrate Judge Jurisdiction
This case, filed January 15, 2015, has been proceeding before the undersigned
United States Magistrate Judge with the implicit consent of the parties. (See Doc. 3,
notice of assignment to Magistrate Judge for all purposes, including trial, entered
January 15, 2015.) After this notice was filed, the motion to compel arbitration and
motion to remand were both referred to the undersigned for final resolution. Within
the order establishing a briefing schedule entered on February 9, 2015 (Doc. 12), the
parties were advised a second time that the case would be considered a consent case if a
request for reassignment was not submitted to the Clerk by February 20, 2015. (Id., n. 1).
A hearing was scheduled and held on May 27, 2015 without a request for reassignment
presented either before or during the hearing.
Thus, leading up to the hearing, the parties had “continual[ly] participat[ed] in
pretrial proceedings [for an extended period of time to] justif[y] the inference of consent
from [ ] litigant[s] aware of the need to consent.” Chambless v. Louisiana-Pacific Corp., 481
F.3d 1345, 1350-51 (11th Cir. 2007); see also Roell v. Withrow, 538 U.S. 580, 590 (2003)
(Inferring consent “where, as here, the litigant or counsel was made aware of the need
for consent and the right to refuse it, and still voluntarily appeared to try the case before
the Magistrate Judge . . . checks the risk of gamesmanship by depriving parties of the
luxury of waiting for the outcome before denying the magistrate judge’s authority.
Judicial efficiency is served; the Article III right is substantially honored.”)
Implicit consent notwithstanding, at the May 27, 2015 evidentiary hearing, the
undersigned discussed the jurisdictional issue with the parties and obtained the express
consent of all parties.
Accordingly, consent jurisdiction to proceed before the
Magistrate Judge for all proceedings in this Court is authorized by 28 U.S.C. § 636(c).
The Plaintiff, U.S. Bank Trust, N.A., (“U.S. Bank”), filed a complaint for ejectment
against Charles Lee Wild and Randi Wild in the Circuit Court of Conecuh County,
Alabama, on September 25, 2014. (See doc. 1, ¶ 1.) U.S. Bank subsequently amended its
complaint by substituting Valerie Griffin as a defendant for Randi Wild. (Doc. 1-2 at 1516; see doc. 1, ¶ 1.)3 U.S. Bank seeks the ejectment of the Wilds—Charles Wild and
Valerie Griffin—pursuant to Ala.Code § 6-6-280, from the property located at 314 Rural
Street, Evergreen, Alabama 36401, which U.S. Bank alleges is being unlawfully withheld
Apparently, Randi Wild is Charles Wild’s previous wife, and Valerie Griffin is
his current wife. (See doc. 1, ¶ 1 n.2; doc. 10 at 2.)
and detained by the Wilds. (Doc. 1-2 at 16.) U.S. Bank “demands judgment against [the
Wilds] for the immediate recovery of [said property], mesne profits for the use and
occupancy of the property, damages for waste and injury to the premises, and for a Writ
of Possession to issue instanter upon judgment in favor of [U.S. Bank].” (Id.)
The Wilds answered the ejectment claim and filed the following counterclaims
against U.S. Bank: Breach of Contract; Conversion of Escrowed Funds; Breach of
Implied Covenant of Good Faith and Fair Dealing; Violations of the Truth in Lending
Act, 15 U.S.C. 1601, et seq., (“TILA”); Breach of Fiduciary Duty; and Slander of Title
(Wrongful Foreclosure). (Doc. 1-2 at 39-50.) Additionally, within the same document in
which the Wilds answered the ejectment claim and asserted counterclaims against U.S.
Bank, the Wilds included a “Third-Party Complaint” asserting similar claims against
Beneficial and Caliber, the servicers of the mortgage at issue. (Id. at 50-77.) With
respect to Beneficial, the Wilds alleged the following claims: Breach of Contract;
Conversion of Escrowed Funds; Breach of Implied Covenant of Good Faith and Fair
Dealing; Violation of the TILA; Breach of Fiduciary Duty; Violation of the Real Estate
Settlement Procedures Act, 12 U.S.C. § 2601-2617, (“RESPA”); and Violation of the
Equal Credit Opportunity Act, 15 U.S.C. § 1691, (“ECOA”). (Doc. 1-2 at 50-77.) With
respect to Caliber, the Wilds alleged the following claims: Breach of Contract;
Conversion of Escrowed Funds; Breach of Implied Covenant of Good Faith and Fair
Dealing; Violation of the TILA; Breach of Fiduciary Duty; Violation of the Fair Debt
Collection Practices Act, 15 U.S.C. § 1692, (“FDCPA”); and Violation of the RESPA.
(Doc. 1-2 at 50-77.)
On January 15, 2015, Beneficial removed this matter to this Court, arguing that
this matter is removable pursuant to 28 U.S.C. § 1441(c)4 because the Court has federal
question jurisdiction over the Wilds’ TILA, RESPA, ECOA and FDCPA claims. (Doc. 1
at 4-5.) Furthermore, Beneficial contends that § 1441(c) also permits this Court to
exercise jurisdiction over the numerous state law claims in this matter. (Doc. 1 at 4-5.)
Alternatively, Beneficial argues that the supplemental jurisdiction statute, 28 U.S.C. §
1367(a), authorizes this Court to exercise jurisdiction over the state law claims. (Doc. 1
at 6-8.) Caliber joined in and consented to the removal of this matter to this Court. (Id.
at 2.) The Wilds subsequently moved to remand this entire case back to state court,
arguing, among other things, that Beneficial and Caliber do not have the right to
remove this case to federal court because they are not defendants within the meaning of
the removal statute. (Doc. 10.)
Section 1441(c) provides as follows:
(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
(B) 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).
“Any civil case filed in state court may be removed by the defendant to federal
court if the case could have been brought originally in federal court.” Tapscott v. MS
Dealer Serv. Corp., 77 F.3d 1353, 1356 (11th Cir. 1996) (citing 28 U.S.C. § 1441(a)),
abrogated on other grounds by Cohen v. Office Depot, Inc., 204 F.3d 1069 (11th Cir. 2000).
The defendant must establish the propriety of removal under section 1441 and, for that
reason, “bears the burden of establishing the existence of federal jurisdiction.” Brown v.
Kabco Builders, Inc., Civil Action 07-0099-WS-C, 2007 WL 841690, at *1 (S.D. Ala. Mar. 15,
2007) (citing Leonard v. Enterprise Rent a Car, 279 F.3d 967, 972 (11th Cir. 2002)).
Additionally, “[b]ecause 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.” Univ. of S. Ala.
v. Am. Tobacco Co., 168 F.3d 405, 411 (11th Cir. 1999); cf. D.M.C. Enters. Inc. v. Best
McAllister, LLC, Civil Action No. 10-00153-CB-N, 2010 WL 3039477, at *2 (S.D. Ala. Aug.
4, 2010) (“Because it is conferred by statute, the right of removal is strictly construed to
limit federal jurisdiction.”) (citing Diaz v. Sheppard, 85 F.3d 1502, 1505 (11th Cir. 1996)).
As further explained below, the undersigned finds that this matter is due to be
remanded for reasons previously discussed in detail by the undersigned in Karp v. Am.
Law Enforcement Network, LLC, No. CA 11-0449-CG-C, 2011 WL 6963254 (S.D. Ala. Nov.
18, 2011), report and recommendation adopted by 2012 WL 38161.
In Karp, the undersigned acknowledged that the decision of the former Fifth
Circuit in Carl Heck Engineers, Inc. v. LaFourche Parrish Policy Jury, 622 F.2d 133 (5th Cir.
1980),5 remains binding on this Court and, as such, “certain third-party defendants may
remove a case to federal court pursuant to 28 U.S.C. § 1441(c)[.]” Karp, 2011 WL
6963254, at *2. However, the undersigned also recognized that “’district courts in this
Circuit have repeatedly remanded cases that do not fit within the narrow confines of
Carl Heck and its progeny.’” Id. at *2 n.4 (quoting Southern Timber Co. v. Ellis, Civil
Action File No. 4:07-CV-0215-HLM, 2008 WL 2987198, at *16 (N.D. Ga. Aug. 1, 2008)).6
Ultimately, the undersigned determined that the removing parties were counterdefendants, rather than third-party defendants, and, consequently, Carl Heck was not
controlling, and the counter-defendants did not have authority under section 1441(c) to
remove the matter.
Id. at *5-6 (“Finding that the [the removing parties] lack the
authority to remove this action pursuant to 28 U.S.C. § 1441(c) because they are counterdefendants, and as such, the Court is not bound by Carl Heck[.]”).
Therefore, in light of this Court’s decision in Karp, the question of whether this
case was properly removed depends on whether the removing parties, Beneficial and
Carl Heck involved a contract dispute arising out of a construction project. Carl
Heck, 622 F.2d at 134. After the plaintiff filed a state court suit against the defendant for
liquidated damages based on project delays, the defendant filed a third-party claim against the
insurance company with which it had entered into an indemnity agreement. Id. at 134-35. The
defendant claimed that, pursuant to their agreement, the insurance company was required to
defend and hold it harmless from the plaintiff’s claims. Id. The insurance company then
removed the matter to federal court pursuant to 28 U.S.C. § 1441(c). Id. at 135. The district
court determined that the matter was properly removed; however, the court severed the
original claim from the third-party claim and remanded the original action to state court. Id.
On appeal, the Fifth Circuit held that the indemnity claim was properly removed to federal
court by the third-party defendant pursuant to section 1441(c). Id. at 135-36.
The undersigned also noted in Karp that the majority of federal courts disagree
with the Fifth Circuit’s holding in Carl Heck and have concluded that “’a third-party defendant
brought into the state action by the original defendant [cannot] exercise the right of removal.’”
Karp, 2011 WL 6963254, at *2 n.2 (quoting Memorial Hospice, Inc. v. Norris, Civil Action No. 2:08CV-48-SAA, 2009 WL 2425920, at *1 (N.D. Miss. Aug. 6, 2009)).
Caliber, are counter-defendants or third-party defendants. The Wilds refer to Beneficial
and Caliber as “third-party defendants.” (Doc. 1-2 at 51.) However,
the “[l]egal characterizations of a party’s status as stated in a complaint
are not controlling; rather the Court must look at the factual allegations . . .
to determine a party’s proper status. Furthermore, in determining the
removing parties’ proper characterization, federal law controls.” Palisades
Collections LLC v. Shorts, Civil Action No 5:07CV098, 2008 WL 249083, at *3
(N.D. W. Va. Jan. 29, 2008) (citations and internal quotations omitted;
alteration in original); see also Chicago, Rock Island & Pacific R.R. v. Stude,
346 U.S. 574, 579-80, 74 S. Ct. 290, 98 L. Ed. 317 (1954) (“For the purpose of
removal, the federal law determines who is plaintiff and who is
“Rule 14 of the Federal Rules of Civil Procedure governs thirdparty practice and establishes that ‘a defending party may, as third-party
plaintiff, serve a summons and complaint on a nonparty who is or may be
liable to it for all or part of the claim against it.’” Vision Bank v. Swindall,
Civil Action No. 09-0442-CG-M, 2009 WL 3158194, at *1 (S.D. Ala. Sep. 28,
2009) (quoting Fed. R. Civ. P. 14(a)(1)). A third-party claim for
indemnification such as the one asserted in Carl Heck, is the archetypal
basis for impleader pursuant to Rule 14. . . .
[Further, “r]ule 14(a) allows a defendant to assert a claim
against any person not a party to the main action only if that
third person’s liability on that claim is in some way
dependent upon the outcome of the main claim.” United
States v. Olavarrieta, 812 F.2d 640, 643 (11th Cir. 1987). “An
entirely separate claim, even one that arises out of the same
set of facts, does not allow a third-party defendant to be
impleaded.” Coates v. CTB, Inc., 173 F. Supp. 2d 1200, 1202
(M.D. Ala. 2001) (citing United States v. Joe Grasso & Sons,
Inc., 380 F.2d 749, 751 (5th Cir. 1967)).
Swindall, 2009 WL 3158194, at *1.
Conversely, “[a] counterclaim is any suit brought by a defendant
against the plaintiff, including claims properly joined against the
plaintiff.” Mace Sec. Int’l, [Inc. v. Odierna, No. 08-60778-CIV], 2008 WL
3851839, at *3 [(S.D. Fla. Aug. 14, 2008)] (citing Fed. R. Civ. P. 13(a)-(c))
(emphasis [in Karp]). As such, “[a] counterdefendant need not also be a
plaintiff.” Dartmouth Plan, Inc. v. Delgado, 736 F. Supp. 1489, 1491 (N.D. Ill.
1990) (citing Fed. R. Civ. P. 13(h)). . . .
Karp, 2011 WL 6963254, at *4-5 (citations and footnote omitted).
After reviewing the claims asserted by the Wilds against Beneficial and Caliber,
the undersigned finds that Beneficial and Caliber are properly characterized as counterdefendants rather than third-party defendants. The Plaintiff, U.S. Bank’s claim against
the Wilds is for ejectment. The Wilds’ claims against Beneficial and Caliber certainly
are not dependent on the ejectment action. Unlike the defendant in Carl Heck, the Wilds
did not assert indemnity claims arising from the Plaintiff’s suit. Compare Carl Heck, 622
F.2d at 134-35, with doc. 1-2 at 50-77. Rather, the Wilds’ claims against Beneficial and
Caliber are for statutory and contractual violations that occurred during the loan
servicing process and that purportedly stand on their own, regardless of whether U.S.
Bank had pursued the ejectment action. (See doc. 1-2 at 50-77.)
This matter involves similar claims addressed in Deutsche Bank Nat’l Trust Co. v.
Baxter, 969 F. Supp. 2d 1337 (N.D. Ala. 2013), and Dartmouth Plan, Inc. v. Delgado, 736 F.
Supp. 1489, 1491 (N.D. Ill. 1990). In Baxter, a bank filed a state court action to recover
possession of property from the individuals residing at the property. Baxter, 969 F.
Supp. 2d at 1339. The defendants subsequently filed several counterclaims against the
plaintiff, including unjust enrichment, negligence, wantonness, abuse of process,
wrongful foreclosure and violation of the TILA. Id. The defendants also joined two
new parties to the matter—two financial institutions, which apparently serviced the
mortgage at issue. Id. The defendants asserted numerous counterclaims against the
two new parties, including claims for unjust enrichment, negligence, wantonness,
breach of contract, violation of the TILA and violation of the RESPA. Id. One of the
newly joined parties referred to itself as a third-party defendant and removed the
matter to federal court pursuant to section 1441(c). Id. In determining whether the
matter was properly removed, the Northern District of Alabama considered whether
the removing party was a counter-defendant or a third-party defendant, and ultimately
found that it was a counter-defendant. Id. at 1341-42. Accordingly, the court concluded
that the removal was not authorized and remanded the case back to state court. Id. at
Similarly, in Delgado the defendant in a foreclosure action joined additional
financial institutions in the proceedings and asserted claims against those new parties
for breach of contract, violation of the TILA, and various state statutory violations.
Delgado, 736 F. Supp. at 1490. Some of the newly joined parties removed the matter to
federal court and the defendants moved to remand. Id. at 1491. Before remanding the
matter to state court, the Northern District of Illinois concluded that the removing
parties were properly classified as counter-defendants, rather than third-party
defendants. Id. (“The removing parties are not properly characterized as third-party
defendants. Third-party claims are those in which a defendant claims a third-party is
liable to the defendant for all or part of the plaintiff's claim against the defendant. . . .
Defendants are not seeking to hold any of the alleged counter[-]defendants liable to
defendants for any liability defendants may owe to plaintiff. Instead, defendants allege
counter[-]defendants are directly liable to them for injuries to defendants. . . . The
removing parties in this case are properly characterized as counter[-]defendants.”).
Like the removing parties in Baxter and Delgado, the removing parties in this
case—Beneficial and Caliber—are, in fact, counter-defendants. Accordingly, they were
not authorized to remove this matter to federal court. See Karp, 2011 WL 6963254, at *56.7 Therefore, the Wilds’ motion to remand is due to be and hereby is GRANTED.
The undersigned notes that in WGB, LLC v. Bowling, 18 F. Supp. 3d 1288 (N.D.
Ala. 2014), a case on which Beneficial and Caliber rely, (see doc. 1 at 4-5), the Northern District
of Alabama concluded that the right of removal extended to newly added counter-defendants.
Bowling, 18 F. Supp. 3d at 1296. Bowling, like the instant case, involved a state court ejectment
action and counterclaims by the defendants against newly added parties for violations of the
Keeping in mind the narrow construction afforded the removal statute, the
undersigned has concluded that this Court lacks jurisdiction over this case and that
removal was improper. Accordingly, after careful consideration of the parties’ briefing
and the pleadings, and for the reasons set forth above, it is hereby ORDERED that the
motion to remand (doc. 10) be GRANTED and that this matter be REMANDED to the
Circuit Court of Conecuh County, Alabama.
DONE and ORDERED this the 9th day of September 2015.
s/WILLIAM E. CASSADY
UNITED STATES MAGISTRATE JUDGE
TILA, the RESPA and the FDCPA. Id. at 1291. Without distinguishing between counterdefendants and third-party defendants, the Northern District concluded that, under Carl Heck
and section 1441(c), the newly added parties were permitted to remove the matter. Id. at 1296.
The court in Bowling also acknowledged that other cases in this Circuit, such as this Court’s
decision in Karp, reflect a disagreement regarding the reach of Carl Heck. Id. at 1300 n.11.
The undersigned declines to follow Bowling and depart from Karp. Instead, the
undersigned maintains the position articulated in Karp and reiterated in Baxter that the holding
in Carl Heck should not be extended to permit newly added counter-defendants to exercise the
right of removal. See Karp, 2011 WL 6963254, at *5-6; Baxter, 969 F. Supp. 2d at 1342-44.
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