GMAC Mortgage LLC et al v. Damron et al

Filing 29

OPINION AND ORDER - granting 22 Supplemental MOTION for Attorney Fees and Costs Associated with Defendant and Counterclaim-Plaintiff Cynthia S. Damron's Petition for Removal filed by Green Tree Servicing LLC, and denying 23 MOTION for Reconsideration re 21 Motion Hearing filed by Cynthia S Damron. Green Tree Servicing LLC is awarded fees in the amount of $6,975.50 and expenses of $160.14. Signed by Judge Robert L Miller, Jr on 10/9/2013. (kds)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
GREEN TREE SERVICING, LLC,
Plaintiff
vs.
CYNTHIA S. DAMRON,
Defendant

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CAUSE NO. 3:13-CV-482 RLM

OPINION and ORDER
On June 23, 2013, the court held a hearing on the motion of Green Tree
Servicing, LLC to remand this action to the Elkhart Superior Court. Green Tree
argued that Cynthia Damson’s removal of the case to this court was improper
because (i) removal was untimely, (ii) the underlying state court foreclosure action
raised no federal question to support federal jurisdiction, (iii) no federal agency or
officer of the United States was a party to the action, and (iv) as an Indiana citizen
and state court defendant, Ms. Damron couldn’t rely on diversity jurisdiction as
a basis for removal. Based on its consideration of the parties’ written submissions
and arguments at the hearing, the court granted Green Tree’s motion for remand
and for an award of fees and costs and afforded Green Tree fourteen days to
submit a specific request for the fees and costs it incurred in connection with the
motion for remand. Green Tree filed its fee request, Ms. Damron filed her
objections, Green Tree filed its reply, and the motion is ripe for the court’s
consideration. Also before the court is Ms. Damron’s July 17 motion for

reconsideration pursuant to Federal Rules of Civil Procedure 54(b) and 59, in
which she claims the court’s grant of Green Tree’s remand motion contained
errors of fact that led to inescapable errors of law. That motion is ripe for review,
as well.

Motion for Reconsideration
Federal Rule of Civil Procedure 59(e) allows a court to alter or amend a
judgment based on newly discovered evidence or when the judgment reflects a
manifest error of law or fact. Smith v. Schwartz, No. 10-721, 2012 WL 1600559,
at *1 (S.D. Ill. May 7, 2012). Rule 59(e) motions aren’t vehicles to introduce
evidence or advance arguments that could or should have been presented before
the entry of judgment, Egonmwan v. Cook County Sheriff’s Dep’t, 602 F.3d 845,
852 (7th Cir. 2010), and a manifest error of law or fact under Rule 59(e) isn’t
shown by the losing party’s disappointment, but, instead, “is the wholesale
disregard, misapplication, or failure to recognize controlling precedent.” Oto v.
Metropolitan Life Ins. Co., 224 F.3d 601, 606 (7th Cir. 2000); Smith v. Schwartz,
2012 WL 1600559, at *1. To prevail, then, Ms. Damron must either present newly
discovered evidence or establish a manifest error of law or fact.
Ms. Damron claims the court committed errors of law and fact in finding
that Green Tree is a party plaintiff entitled to relief against her.1 Ms. Damron
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Ms. Damron argues in her motion to reconsider that GMAC Mortgage LLC continues as
a party and/or plaintiff in this case. The record shows that Green Tree was substituted for GMAC
as the plaintiff in the foreclosure action in April 2013, before removal to this court, see Removal

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maintains Fannie Mae is the real party in interest and a necessary party for just
adjudication; she says she didn’t learn that fact until April 22, 2013, so her May
22 removal notice was timely. According to Ms. Damron, Green Tree is “prohibited
by operation of law and preempted by federal law and Congressional Act from
possessing and controlling the disposition of an asset belonging to and owned by
Fannie Mae and from collecting monies owed to Fannie Mae.” Mot., at 7. She says
“only the FHFA as conservator of and for Fannie Mae can appear in any
proceedings involving the rights and interests of Fannie Mae, and Green Tree has,
by operation of law and as a matter of law, no authority to appear in these
proceedings and/or to possess and control the disposition of that which Congress
has entrusted to the FHFA as conservator for Fannie Mae.” Mot., at 12. Ms.
Damron concludes that because the issue of the “real party in interest” is still in
dispute, Green Tree isn’t entitled to any relief, including the granting of its motion
to remand.
Ms. Damon’s arguments aren’t new – she advanced the same arguments in
response to Green Tree’s motion to remand. As the court noted at the hearing, Ms.
Damron hasn’t provided any support for her claim that she has removed only the
claims of the complaint and not those of her counter/cross/third-party claims.
Her plan to ask the court, “once removal is complete,” to exercise supplemental
jurisdiction over her counterclaim under 28 U.S.C. § 1367 isn’t a solution to the

Notice, Exh. 3 [docket # 2], so the court views Green Tree as the only plaintiff in this action.

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prohibition against removing only a portion of the case from the state court. See
In re Mutual Fund Market-Timing Litigation, 468 F.3d 439, 444 (7th Cir. 2006)
(“Cases are removed, or not, as units.”); Stark-Romero v. National R.R. Passenger
Co., 763 F. Supp. 2d 1231, 1274 (D.N.M. 2011) (“The court also believes that the
removal process does not grant to a defendant the authority to rearrange litigation
to reflect its preferences by carving the litigation up into howsoever many separate
cases it prefers to have proceeding in different courts simultaneously.”); Gibson
v. City of Glendale Police Dep’t, 786 F. Supp. 1452, 1455 (E.D. Wis. 1992) (“For
purposes of [28 U.S.C. § 1441(a)], the term “civil action” has generally been
construed to include all claims and causes of action—not just a portion of them.”).
Ms. Damron hasn’t identified any federal issue that only became
ascertainable with the substitution of Green Tree as the plaintiff in the foreclosure
action and continues to argue that Green Tree’s “admission” that Fannie Mae
owns the loan here at issue created federal jurisdiction over the state court
mortgage foreclosure action. As the court noted at the hearing, the inclusion of
Fannie Mae in an action doesn’t confer federal jurisdiction on its own, see Carter
v. Watkins, No. WDQ-12-2813, 2013 WL 2139504, at *4 (D. Md. May 14, 2013)
(“Fannie Mae's charter does not provide a source of federal jurisdiction.”);
Hookano v. Washington Mut. Bank, Inc., No. CIV-S-08-751, 2010 WL 4623956,
at *2 (E.D. Cal. Nov. 4, 2010) (“Because Frannie Mae is a private corporation, it
cannot create federal law. Thus, plaintiff has not raised a federal question and the
court also declines to exercise subject matter jurisdiction on that ground.”), the
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appointment of the FHFA as conservator doesn’t transform Fannie Mae into a
government entity, see Herron v. Fannie Mae, 857 F. Supp. 2d 87, 96 (D.D.C.
2012) (“[A] conservator or receiver steps into the shoes of the private entity – it
assumes the private status of the entity. . . . Fannie Mae was a private entity;
when FHFA took over as conservator of Fannie Mae, it stepped into Fannie Mae’s
private role. In sum, FHFA as conservator of Fannie Mae is not a government
actor.”); Bernard v. Federal Nat’l Mortg. Ass’n, No. 12-14680, 2013 WL 1282016,
at *6 (E.D. Mich. Mar. 27, 2013) (concluding that the “FHFA’s conservatorship of
Fannie Mae does not and cannot transform a private corporation into a
government actor . . . because FHFA, as conservator, merely ‘steps into the shoes’
of Fannie Mae, a private corporation”), and “mortgage foreclosure [is] proper for
state court determination, not federal court.” Hilgeford v. Peoples Bank, 776 F.2d
176, 179 (7th Cir. 1985); see also Badgerland Farm Credit Servs. v. Williams, No.
10-cv-109, 2010 WL 2545784, at *1 (W.D. Wis. June 18, 2010) (“Mortgage
foreclosure cases are relegated traditionally to state law.”).
Ms. Damron insists that Fannie Mae is the real party in interest and Green
Tree has “an obligation” to add Fannie Mae as a party and “seek relief in the name
of the real party in interest.” Mot., at 3. Ms. Damron’s claim in this regard ignores
applicable Indiana law, which permits the holder of a negotiable instrument or a
nonholder in possession of the instrument who has the rights of a holder to
prosecute a foreclosure action. IND. CODE § 261-13.1-301; Lunsford v. Deutsche
Bank Trust Co. Americas as Trustee, No. 30A01-1302-MF-63, 2013 WL 5297254,
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at *5 (Ind. Ct. App. Sept. 20, 2013) (“[I]t is well-established that a promissory note
secured by a mortgage is a negotiable instrument.”). Green Tree has produced
evidence that Mortgage Electronic Registration Systems, Inc., as nominee for
GMAC Mortgage Corporation, assigned the mortgage and note executed by
Cynthia S. Damron to GMAC Mortgage, LLC, see Compl., Exh. C [docket # 1], and
that GMAC Mortgage, LLC assigned its rights in the note and mortgage to Green
Tree. See Mot. to Remand, Exh. C [docket # 9]. Thus, Green Tree, as the holder
of the note and mortgage, has the legal right to enforce the note and foreclose on
the mortgage.
Ms. Damron contends, too, that “[o]nly the FHFA as conservator of and for
Fannie Mae can appear in any proceedings involving the rights and interests of
Fannie Mae.” Mot., at 12. Her argument ignores the applicable statute – 12 U.S.C.
§ 4617(b), entitled “Powers and duties of the Agency as conservator or receiver” –
which provides that the Agency may “take over the assets of and operate the
regulated entity . . . and conduct all business of the regulated entity,” “collect all
obligations and money due the regulated entity,” and “preserve and conserve the
assets and property of the regulated entity.” 12 U.S.C. § 4617(b)(2)(B) (emphasis
added); see also Town of Babylon v. Federal Housing Fin. Agency, 699 F.3d 221,
225 (2d Cir. 2012) (“In 2008, the FHFA appointed itself as the conservator of
Fannie Mae and Freddie Mac pursuant to authority granted by 12 U.S.C. §
4617.”). Ms. Damron has cited no authority designating the FHFA as the sole

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entity permitted to appear in proceedings involving Fannie Mae’s rights and
interests.
Ms. Damron also asserts that Indiana law “requires that an action in equity
to foreclose on a home mortgage must be brought and maintained by the
‘mortgagee’.” Mot., at 4. Contrary to Ms. Damron’s claim, Indiana Code § 32-3010-3 provides that in the case of a default in the performance of any condition of
a mortgage, “the mortgagee or the mortgagee’s assigns may proceed in the circuit
court of the county where the real estate is located to foreclose the equity of
redemption contained in the mortgage.” Section 32-30-10-3 doesn’t limit pursuit
of a foreclosure action to the mortgagee.
Ms. Damron hasn’t carried her burden of presenting newly discovered
evidence, establishing that the court disregarded, misapplied, or failed to
recognize controlling precedent, or demonstrating that jurisdiction in this court
is proper under 28 U.S.C. § 1331 or 28 U.S.C. § 1332. Ms. Damron’s motion for
reconsideration must be denied.

Request for Fees and Costs
Green Tree has filed its request for fees and costs pursuant to 28 U.S.C. §
1447(c), which allows for recovery of “actual expenses, including attorney fees,
incurred as a result of the removal.” Under Section 1447(c), a party may be
awarded costs and fees “as soon as the process of removal is undertaken and until
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and including the process of remand.” Tenner v. Zurek, 168 F.3d 328, 330 (7th
Cir. 1999). “The purpose of a fee-shifting statute, such as § 1447(c) is to make the
victorious party whole, as opposed to punishing the party filing the losing action.
Section 1447(c) only allows recovery of actual fees incurred as a result of pleading
against removal.” Towne v. American Family Mut. Ins. Co., No. 1:09-cv-814, 2010
WL 680344, at *6 (S.D. Ind. Feb. 22, 2010); see also Wisconsin v. Hotline Indus.,
Inc., 236 F.3d 363, 367 (7th Cir. 2000) (likening Section 1447(c) to Federal Rule
of Civil Procedure 37(a)(4), “the fee-shifting rule requiring the loser in certain
discovery disputes to pay his opponent's legal expenses. Both rules contemplate
that the victor should recoup his full outlay.”); Garbie v. DaimlerChrysler Corp.,
211 F.3d 407, 411 (7th Cir. 2000) (“Unjustified removal complicates and extends
litigation; the American Rule requires parties to bear their expenses in one set of
courts, but when their adversary wrongfully drags them into a second judicial
system the loser must expect to cover the incremental costs.”).
Green Tree supports its fee request with the affidavit of James M. Boyers,
an attorney with the firm of Wooden & McLaughlin LLP of Indianapolis, Indiana,
who represents Green Tree in these proceedings. Mr. Boyers explains that his
hourly rate is $225.00 and the hourly rate of his associate, Leah B. Silverthorn
who also represents Green Tree in these proceedings, is $185.00. Mr. Boyers says
those rates “are well within the market range for this type of work.” Mr. Boyers
explains further that counsels’ summary of time doesn’t include all the time they
spent addressing the petition for removal, but, instead, “reflects a reduction in the
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amount of actual time spent.” Boyers Aff., ¶¶ 6, 7. Green Tree requests attorneys’
fees in the total amount of $6,975.50, plus costs for electronic research and
mileage totaling $160.41.
Ms. Damron objects to Green Tree’s fee request because, according to Ms.
Damron, Green Tree isn’t the real party in interest and so is precluded from
bringing a motion for relief in this court. Ms. Damron claims Green Tree has
“misrepresented itself to this court as being a party and plaintiff in these
proceedings when as a matter of law Green Tree is prohibited from representing
the rights and interests of Fannie Mae because Fannie Mae is under a federal
conservatorship.” Obj., ¶ 8. She also claims Green Tree has been “actively engaged
in unfair and deceptive mortgage servicing practices, unscrupulous and unfair
debt collection practices and impermissible self-dealing.” Obj., ¶ 9. Ms. Damron
asks that the affidavit of Green Tree’s counsel be stricken because, she says, he
and his firm don’t represent and aren’t authorized to represent Fannie Mae, the
true plaintiff in this matter. Obj., ¶ 12. Ms. Damron concludes that “Green Tree
is not entitled to recover its fees while engaged in misconduct, misrepresentation
and conducts prejudicial to the administration of justice.” Obj., ¶ 10.
The court granted Green Tree’s motion for remand and, as already
discussed, has determined that Ms. Damron isn’t entitled to the relief she seeks
in her reconsideration motion. The court rejects Ms. Damron’s argument that
Green Tree isn’t entitled to an award of fees because it isn’t the real party in
interest. In addition, Ms. Damron’s unsupported accusations that Green Tree has
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engaged in unspecified misconduct and “appear[s] to be actively engaged in unfair
and deceptive mortgage servicing practices, unscrupulous and unfair debt
collection practices and impermissible self-dealing,” Obj., ¶ 9, aren’t well-taken;
her scurrilous claims are without support in the record and have no relation to
the issue of the amount of attorneys’ fees to be awarded to Green Tree for
defending against an improper removal.
Alternatively, Ms. Damron challenges certain entries on Green Tree’s fee
request.
1. Ms. Damron says the amount of time claimed for two attorneys to
analyze, draft, revise, and finalize five or six documents, while incurring fees for
use of Lexis legal research, is “unreasonable and disproportionate to the level and
degree of professional competence necessary to complete the required tasks.” Obj.,
¶ 13.
Although Ms. Damron objects to the amount of time spent by Green Tree
attorneys to prepare filings, she offers nothing further – no suggestion of how
many hours should have been expended or how many hours would have been
reasonable – and, as a result, hasn’t demonstrated why those hours should be
discounted.
2. Ms. Damron claims the three telephone calls placed to counsel for
Reisenfeld & Associates, named as a defendant in Ms. Damron’s third-party
complaint, were unnecessary and beyond the scope of what was required of Green
Tree. Obj., ¶ 13.
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Reisenfeld & Associates is a named party in the foreclosure action that Ms.
Damron sought to remove to this court. Because case law doesn’t support Ms.
Damron’s effort to remove only the claims of the plaintiff’s complaint to this court
and not the claims of her counter/cross/third-party complaint(s), three telephone
calls – totaling a half-hour – between counsel for the various parties to coordinate
their efforts relating to the motion to remand hearing wasn’t unnecessary or
beyond the scope of what was required of counsel for Green Tree. Ms. Damron’s
objection to these charges is overruled.
3. Ms. Damron says Green Tree’s billing for three hours of hearing and prehearing preparation time by its counsel “is inordinate, unreasonable and
disproportionate to the level and degree of professional competence necessary.”
Obj., ¶ 14.
Ms. Damron claims that three hours of time for Green Tree’s counsel to
prepare for the hearing on its motion to remand isn’t within the “degree of
professional competence necessary,” but, again, she offers nothing further – she
hasn’t suggested how many hours should have been spent preparing for the
hearing or how much preparation time would have been reasonable. Because Ms.
Damron hasn’t demonstrated why those hours were unreasonable, her objection
is overruled.
4. Lastly, Ms. Damron argues that billing for “travel time” at counsel’s full
hourly rate, plus mileage, is unreasonable because, she asserts, “it is simply
incredulous to assert that being in transit to one’s next scheduled appointment
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is a professional service provided to a client,” especially when counsel could have
appeared telephonically as he had done in the state court proceedings. Obj., ¶ 15.
Ms. Damron’s argument that counsel could have mitigated his travel
expenses by appearing telephonically for the hearing is misplaced. This court
doesn’t conduct telephonic hearings on cases filed in (or removed to) the South
Bend Division of this court, so that option wasn’t available to counsel for Green
Tree. The hearing on Ms. Damron’s motion necessitated that Green Tree’s counsel
travel from his office in Indianapolis to South Bend and back again, spending six
hours on the road that, most likely, would have been better spent on other
matters. That counsel was required to appear in person renders his time “a
professional service provided to a client,” and Ms. Damron’s objection is overruled.

Green Tree has provided support for the fees and expenses it incurred in
preparation for and participation in the hearing on its motion to remand. The
court concludes that Green Tree’s request is reasonable and Green Tree is entitled
to recover the fees and expenses requested.

Conclusion
Based on the foregoing, the court DENIES Ms. Damon’s motion for
reconsideration [docket # 23] and GRANTS the motion of Green Tree Servicing,
LLC for an award of fees [docket # 22] in the amount of $6,975.50 and expenses
of $160.14.
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SO ORDERED.
ENTERED:

October 9, 2013

/s/ Robert L. Miller, Jr.
Judge, United States District Court

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