Hanley et al v. OneWest, FSB
Filing
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OPINION AND ORDER denying 6 Motion to Remand; dismissing as moot 12 Motion to Strike. Signed by District Judge Sean F. Cox. (JHer)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Thomas Hanley and Faith Hanley
Plaintiffs,
v.
Honorable Sean F. Cox
OneWest Bank, FSB,
Case No. 11-11355
Defendant.
____________________________________/
OPINION & ORDER
In this action, Plaintiffs allege twelve state claims against Defendant relating to a
residential loan secured by property located at 16860 Edmore Drive Detroit, Michigan (“the
Property”). The matters are currently before the Court on Plaintiffs’ Motion for Remand (Doc.
No. 6), Defendant’s Motion to Strike Plaintiffs’ Statement of Damages (Doc. No. 12), and
Plaintiffs’ Ex-Parte Motion for Temporary Restraining Order (Notice of Removal, Ex. 1)1. The
parties have fully briefed the issues and the Court heard oral argument on September 1, 2011.
For the reasons below, the Court shall DENY Plaintiffs’ Motion for Remand, and DISMISS AS
MOOT Defendant’s Motion to Strike Plaintiffs’ Statement of Damages and Plaintiffs’ Ex-Parte
Motion for Temporary Restraining Order.
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Defendant filed a motion to dismiss, or in the alternative, for summary judgment (Doc.
No. 3) on April 6, 2011. The Court heard oral argument on Defendant’s motion to dismiss on
September 1, 2011, and ordered Defendant to submit to the Court an affidavit and supplemental
documentation establishing that Defendant was the servicer of Plaintiffs’ note at the time of the
foreclosure by advertisement. After failing to submit the supplemental documentation by the
Court’s September 15, 2011 deadline, Defendant withdrew its motion to dismiss on September
16, 2011.
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BACKGROUND
On or about March 4, 2011, Plaintiffs Thomas and Faith Hanley (“Plaintiffs”) filed this
action against OneWest Bank F.S.B. (“OneWest”) in state court. In addition to their Complaint
filed in state Court, Plaintiffs filed an “Ex-Parte Motion for Temporary Restraining Order and
Order to Show Cause Why a Permanent Injunction Should not be Entered.” (Notice of Removal,
Ex. 1). OneWest removed the action to this Court on April 1, 2011, based upon diversity
jurisdiction.
Plaintiffs’ complaint asserts the following twelve counts against OneWest: “Injunctive
Relief – Order Enjoining Collection and Repossession Activities During Pendency of this
Action” (Count I), “Respondeat Superior” (Count II), Negligence (Count III),2 “Michigan
Consumer Protection Act” (Count IV), “Mortgage Brokers, Lenders and Servicers Licensing
Act” (Count V), “Fraud in the Inducement” (Count VI), “Fraudulent Misrepresentation” (Count
VII), “Negligent Misrepresentation” (Count VIII), “Negligence Per Se” (Count IX), “Breach of
Contract” (Count X), “Unjust Enrichment” (Count XI), “Promissory Estoppel” (Count XII).
On April 6, 2011, OneWest filed a Motion to Dismiss, or Alternatively, for Summary
Judgment, pursuant to FED. R. CIV. P. 12(b)(6) and FED. R. CIV. P. 56. On April 7, 2011,
Plaintiffs filed a Motion to Remand. Finally, on April 29, 2011, OneWest filed a Motion to
Strike Plaintiffs’ Statement of Damages Sought Pursuant to Local Rule 81.1(d).
Plaintiffs concur with the facts as discussed in OneWest’s Motion to Dismiss, or
Alternatively, for Summary Judgment. The facts are as follows.
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Plaintiffs incorrectly title Count III as “Count IV.” As a result, all counts alleged after
Cont III are also misnumbered.
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On September 12, 2005, Plaintiffs executed a note in the amount of $265,500.00 and a
mortgage on the Property. The mortgage is attached as Exhibit 2 to OneWest’s brief in support
of its motion to dismiss (Def’s Br., Ex.2) and attached as Exhibit 1 to Plaintiffs’ brief in response
to OneWest’s motion to dismiss (Plf’s Br., Ex. 1). The Mortgage provides for rights of
foreclosure of the Property by the mortgagee in the event of a default on the loan. The lender,
though named as the lender in the Mortgage, was not designated therein as the mortgagee.
Instead, the Mortgage stated that Mortgage Electronic Registration Systems, Inc. (“MERS”) is
“the mortgagee under this Security Instrument” and it contains a provision stating, “‘MERS’ is
Mortgage Electronic Registration Systems, Inc. MERS is a separate corporation that is acting
solely as nominee for Lender and Lender’s successors and assigns. MERS is the mortgagee
under this Security Instrument.” (Id.). Neither party has submitted the note to the Court.
On or about February 13, 2008, MERS assigned the mortgage to IndyMac Bank F.S.B.
(“IndyMac”). It is unclear exactly when Plaintiffs defaulted on their loan, but IndyMac
subsequently initiated foreclosure by advertisement proceedings. Attached to OneWest’s reply
brief is an affidavit from the legal representative of the Macomb Daily, a newspaper circulated in
Macomb County, Michigan, which indicates that Plaintiffs were given the notice of intent to start
the foreclosure proceedings on May 13th, May 20th, May 27th, and June 3rd of 2009. A notice of
foreclosure was also posted on the Property on May 15, 2009. (Def’s. Br, Ex. 3).
Although not explained by either party, apparently, OneWest acquired IndyMac on
March 19, 2009.
The sheriff’s sale was originally scheduled for June 12, 2009, but was adjourned until
September 3, 2010. (Def’s Br., Ex. 3). According to Plaintiffs, over the course of the next year,
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Plaintiffs and OneWest engaged in negotiations relating to a loan modification pursuant to
certain federal programs, including the Home Affordable Modification Program (“HAMP”).
Finally, a sheriff’s sale was held on September 3, 2010, and Fannie Mae was the highest
bidder. Id. A “Sheriff’s Deed on Mortgage Sale,” dated September 3, 2010, conveyed the
Property to Fannie Mae. Id. Plaintiffs did not redeem the Property before the redemption period
expired on March 3, 2011.
ANALYSIS
I.
Plaintiffs’ Motion for Remand:
As stated above, OneWest removed this action from state court on the basis of diversity
jurisdiction. On April 7, 2011, Plaintiffs filed a motion to remand this case to state court.
Plaintiffs contend that this action should be remanded because the amount in controversy does
not exceed the requisite $75,000 amount. (Plf’s Remand Br. at 1). This assertion is founded on
the fact that the home currently has a negative equity. Id.
In response, OneWest asserts that the amount in controversy does exceed the $75,000
requirement and is properly in federal court through diversity jurisdiction. (Def. Resp. Br. at 7).
OneWest’s assertion is based on the value of the mortgage loan and the price that the Property
sold for at the sheriff’s sale, both of which exceed $75,000 . Id.
Any party may invoke federal jurisdiction, but “[t]he burden of persuasion for
establishing diversity jurisdiction. . . remains on the party asserting it.” Hertz Corp. v. Friend,
559 U.S. ___, 130 S.Ct. 1181 (2010) (citing Kokkonen v. Guardian Life Ins. Co. of America, 511
U.S. 375, 377 (1994)). Diversity jurisdiction exists in civil matters where the amount in
controversy exceeds $75,000 and there is diversity among the parties. 28 U.S.C. § 1332. In a
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removal case, the amount in controversy is assessed when the removal notice is filed. White v.
Loomis Armored US, Inc., 729 F. Supp. 2d 897, 900 (E.D. Mich. 2010) (Lawson, J.) (citing
Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, 871 (6th Cir. 2000)). For determining the
amount, “the general rule is that the amount claimed by a plaintiff in his complaint determines
the amount in controversy, unless it appears to a legal certainty that the claim is for less than the
jurisdictional amount.” Rosen v. Chrysler Corp., 205 F.3d 918, 920-21 (6th Cir. 2000) (citing
Saint Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938)).
Federal courts have primarily used two different approaches to determine the relevant
amount in controversy. “The majority of courts addressing the valuation issue in the context of
wrongful foreclosure have held that the relevant amount for amount-in-controversy purposes is
determined by the fair market value of the property.” Meriedeth v. Mae, 2011 WL 2456630 at
*1 (E.D. Mich. June 13, 2011) (Steeh, J.). The fair market value may be determined by the price
at which the property is sold at the sheriff’s sale. Bobel v. Met Life Home Loans, Inc., 2011 WL
1831741 at *2 (E.D. Mich. May 13, 2011) (Goldsmith, J). The second approach is to consider
the amount owed on the mortgage loan. Bobel, 2010 WL 4286331 at *3.
Here, Plaintiffs are essentially claiming that OneWest wrongfully foreclosed on their
property. Among their requests for relief, Plaintiffs seek recision of the sheriff’s sale,
enforcement of an alleged promise to modify Plaintiffs’ mortgage loan, and conversion of the
foreclosure by advertisement to a judicial foreclosure.
The property in question was sold at a sheriff’s sale for $305,537.61, which is well in
excess of the $75,000 requirement. Additionally, the mortgage loan is valued at $265,000,
which is also in excess of the required amount. Several jurisdictions, including the Eastern
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District of Michigan, have declined to determine which approach is more appropriate where both
approaches have satisfied the amount in controversy. See Bobel, 2010 WL 4286331 at * 3. In
this case, it is unnecessary to determine which approach should be used because both the market
value and the amount owed on the mortgage loan exceed $75,000. Accordingly, the Court finds
that OneWest has met its burden of persuasion for establishing diversity jurisdiction.
II.
OneWest’s Motion To Strike Plaintiffs’ Statement Of Damages Sought And Plaintiffs’
Ex Parte Motion For A Temporary Restraining Order Are Moot.
On April 27, 2011, in an attempt to supplement their motion for remand, Plaintiffs filed a
Statement of Damages Sought Pursuant to Local Rule 81.1(d). OneWest subsequently filed a
Motion to Strike Plaintiff’ Statement of Damages Sought on April 29, 2009, because Plaintiffs
filed their statement of damages after OneWest responded to Plaintiffs’ motion for remand.
Because the Court shall deny Plaintiffs’ motion for remand, the Court finds that OneWest’s
Motion to Strike Plaintiffs’ Statement of Damages is moot.
Additionally, at the September 1, 2011 hearing on this matter, Plaintiffs’ counsel stated to
the Court that Plaintiffs are no longer pursuing the temporary restraining order requested in
Plaintiffs’ complaint. Accordingly, the Court finds that Plaintiffs’ Ex Parte Motion For A
Temporary Restraining Order is also moot.
CONCLUSION
For the reasons stated above, IT IS ORDERED that Plaintiffs’ motion for remand (Doc.
No. 6) is DENIED.
IT IS FURTHER ORDERED that Defendant’s motion to strike Plaintiffs’ statement of
damages (Doc. No. 12) is DISMISSED AS MOOT.
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IT IS FURTHER ORDERED that Plaintiffs’ motion for a temporary restraining order
is DISMISSED AS MOOT.
IT IS SO ORDERED.
S/Sean F. Cox
Sean F. Cox
United States District Judge
Dated: October 14, 2011
I hereby certify that a copy of the foregoing document was served upon counsel of record on
October 14, 2011, by electronic and/or ordinary mail.
S/Jennifer Hernandez
Case Manager
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