Williams v. Wells Fargo Home Mortgage, Inc. et al
ORDER denying 44 Motion to certify a question of law to the Alabama Supreme Court. Signed by Chief Judge William H. Steele on 10/7/2015. (tgw)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
WELLS FARGO HOME
MORTGAGE, INC., et al.,
) CIVIL ACTION 15-0164-WS-N
This matter is before the Court on the defendants’ motion to certify a
question of law to the Alabama Supreme Court. (Doc. 44). The plaintiff has filed
a response and the defendants a reply, (Docs. 46, 47), and the motion is ripe for
resolution. After careful consideration, the Court concludes the motion is due to
According to the amended complaint, (Doc. 17), Federal National
Mortgage Association (“Fannie Mae”) owned the mortgage loan on the plaintiff’s
residence. Defendant Wells Fargo Home Mortgage, Inc. (“Wells Fargo”) acted as
loan servicer. When the loan fell into default, the mortgage was assigned to Wells
Fargo, for the sole purpose of enabling Wells Fargo as servicer to conduct a
foreclosure sale on Fannie Mae’s behalf. Possession of the note was also
transferred to Wells Fargo for the same sole purpose. Fannie Mae purchased the
property at foreclosure, in an amount that just satisfied the indebtedness, and
received from Wells Fargo (acting on Fannie Mae’s behalf) a foreclosure deed.
Pursuant to the prior agreement of Fannie Mae and Wells Fargo, possession of the
note automatically reverted to Fannie Mae after the sale; despite temporarily
parting with possession, Fannie Mae at all times remained owner of the note.
The plaintiff timely vacated the property and at all relevant times retained
her statutory right of redemption. Within the redemption period, Fannie Mae sold
the property to a third party for approximately $122,000 more than the plaintiff’s
indebtedness. The plaintiff brought suit under Alabama law, seeking to recover
The defendants removed the action from state court on the basis of
diversity. (Doc. 1). They then moved to dismiss, raising as one ground that
Alabama law imposes no duty on a mortgagee to pay to its mortgagor any excess
over the indebtedness which the mortgagee receives on resale of the foreclosed
property within the redemption period. (Doc. 18 at 6-7). The Court denied the
motion to dismiss. (Doc. 34). Alabama law requires a mortgagee that purchases
mortgaged property at foreclosure, and that then resells the property to a third
party during the redemption period for more than it bid, to apply the excess to
reduce the mortgagor’s debt. Springer v. Baldwin County Federal Savings Bank,
562 So. 2d 138, 139 (Ala. 1089). Alabama law also requires a mortgagee that
receives more than the amount of indebtedness at a foreclosure sale to deliver the
excess to the mortgagor. Davis v. Huntsville Production Credit Association, 481
So. 2d 1103, 1106 (Ala. 1985). Especially because both results derive from the
mortgagee’s status as “trustee” for the mortgagor, Springer, 562 So. 2d at 139,
140, the Court concluded that the Alabama Supreme Court would overlay
Springer with Davis and require a mortgagee to deliver to its mortgagor the excess
over indebtedness received at a resale within the redemption period.
Alabama procedure permits a federal court to certify to the Alabama
Supreme Court questions of state law “which are determinative of said cause and
[as to which] there are no clear and controlling precedents” from the Supreme
Court. Ala. R. App. P. 18(a). The defendants, having lost their motion to dismiss,
now propose that the Court certify the following question: “Is a mortgagee, upon
a profitable sale to a third party within the statutory redemption period, required to
remit to the mortgagor amounts in excess of the mortgage debt?” (Doc. 44 at 3).
“The decision whether to certify a question of state law to a state supreme
court is committed to this court’s discretion ….” Smigiel v. Aetna Casualty &
Surety Co., 785 F.2d 922, 924 (11th Cir. 1986). “In determining whether to
exercise our discretion in favor of certification, we consider many factors.” State
of Florida ex rel. Shevin v. Exxon Corp., 526 F.2d 266, 274 (5th Cir. 1976). “The
most important are the closeness of the question and the existence of sufficient
sources of state law – statutes, judicial decisions, attorney general’s opinions – to
allow a principled rather than conjectural conclusion.” Id. at 275. “But also to be
considered is the degree to which considerations of comity are relevant in light of
the particular issue and case to be decided,” which includes “the likelihood of the
recurrence of the particular legal issue.” Id. & n.29. “And we must also take into
account practical limitations of the certification process: significant delay and
possible inability to frame the issue so as to produce a helpful response on the part
of the state court.” Id. at 275.1
Other factors merit consideration as well. Because Rule 18(a) limits
certification to questions that are “determinative of said cause,” certification is
inappropriate if the question “would not be dispositive.” Harrison v. Jones, 880
F.2d 1279, 1283 n.4 (11th Cir. 1989). It must also be remembered that “state
courts, like their federal counterparts, are busy institutions, with their own
caseloads to manage,” Escareno v. Noltina Crucible and Refractory Corp., 139
F.3d 1456, 1461 (11th Cir. 1998), and unnecessary certified questions – whether
accepted or declined by the state court – can burden an already heavily loaded
state system. Finally, “[i]n addition to the usual considerations,” a federal court
The Eleventh Circuit continues to employ these factors. Royal Capital
Development, LLC v. Maryland Casualty Co., 659 F.3d 1050, 1054 (11th Cir. 2014).
should consider “an amazing irony[:] [the defendants], which now pra[y] for an
opinion from a[n] [Alabama] court, … remove[d] the case from the jurisdiction of
the state courts.” Smigiel, 785 F.2d at 924.
The bottom line is that “federal litigants have no right to insist upon
certification,” even as to “difficult or uncertain questions of state law,” and the
federal courts “will continue to exercise discretion and restraint in deciding to
certify questions to state courts.” Escareno, 139 F.3d at 1461.
The defendants address none of these concerns. Instead, after having
chosen to abandon a state forum, and after having chosen to pursue a motion to
dismiss rather than a motion for certification, they now seek effectively to return
to state court in an effort to undo the unfavorable ruling they themselves solicited,
based on nothing more than the mere fact the certification procedure exists and,
they feel, could result in a more favorable ruling. (Doc. 44 at 1-2).
The threshold problem with certification is that the question the defendants
pose is not “determinative of the cause,” as required by Rule 18(a). The
defendants deny that Fannie Mae was the “mortgagee” for purposes of the rules
expressed in Springer and Davis, because it had assigned the mortgage to Wells
Fargo. (Doc. 18 at 7-11). The Court rejected this argument as unsupported, (Doc.
34 at 5), but the defendants insist they have “not abandon[ed]” it. (Doc. 44 at 2).
Thus, while the certified question would be determinative of the action were it
answered favorably to the defendants (i.e., the defendants would win the lawsuit),
it would not be determinative of the action were it answered favorably to the
plaintiff (i.e., the defendants could still win the lawsuit). When, as here, the
proposed certified question addresses only “one of two alternative theories of
defense,” it is not “determinative of the outcome of the case,” and certification is
properly denied. First Alabama Bank v. Aetna Insurance Co., 607 F.2d 676, 680
(5th Cir. 1979).
Nor is the Court persuaded that the question presented is so close, and the
existing sources of state law so unsatisfactory, as to render the Court’s ruling
“conjectural” rather than “principled.” Shevin, 526 F.2d at 275. Springer and
other cases point directly to the conclusion reached by the Court,2 and it is the
defendants’ vague reliance on “public policy” and a “clear balance” of rights and
duties, (Doc. 18 at 16-19), that appears conjectural – especially given that the
Alabama Supreme Court presumably has already taken such considerations into
account in saddling mortgagees with the duties of a “trustee” in connection with
excess receipts from foreclosure sales and post-foreclosure resales. As in Jennings
v. BIC Corp., 181 F.3d 1250 (11th Cir. 1999), “existing [Alabama] law provides
substantial confidence in how the [Alabama] Supreme Court would rule on the
question.” Id. at 1254 n.2. Thus, “[w]e do not consider certification appropriate
in this case.” Id.
The remaining factors are of lesser significance and do not appreciably
counsel in favor of certification in any event. The delay inherent in certification,
and the unnecessary imposition on a busy state court, of course weigh against
certification. No particular comity issue is evident; the factual scenario giving rise
to the request for certification could conceivably arise again, but the “likelihood of
recurrence” to which the Shevin Court referred focuses on “ordinary, repetitive”
questions “involving literally hundreds” of recurring instances. See Barnes v.
Atlantic & Pacific Life Insurance Co. of America, 514 F.2d 704, 706 (5th Cir.
1975) (cited by Shevin, 526 F.2d at 275 n.29). It appears the defendants have
framed the issue in a manner that would produce a helpful response, but that by
itself falls far short of justifying certification.
The defendants pounce upon the Court’s statement that “‘Springer leaves that
question open.’” (Doc. 47 at 2 (quoting Doc. 34 at 3)). This language does not, as the
defendants assume, mean the Court believes that “Springer does not provide a clear
answer to the question presented.” Doc. 47 at 2). All it means is that the holding of
Springer does not of itself answer the question; as discussed in the Court’s order,
however, Springer (reinforced by Davis and other cases) leads directly to the conclusion
reached by the Court.
For the reasons set forth above, the motion to certify is denied.3
DONE and ORDERED this 7th day of October, 2015.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE
The defendants suggest that this battle is not yet over and that they intend to reargue, on motion for summary judgment and at trial, that a mortgagee has no duty to
remit to its mortgagor the excess over indebtedness received upon resale within the
redemption period. (Doc. 47 at 1). The Court cannot prohibit the defendants from
beating this dead horse, but any such effort would in substance constitute a motion to
reconsider the Court’s ruling on motion to dismiss, and the legal grounds for entertaining
such an effort are exceedingly narrow. E.g., Dunavant v. Sirote and Permutt, P.C., 2014
WL 2885483 at *3 (S.D. Ala. 2014).
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