Nickels et al v. Nationstar Mortgage LLC et al

Filing 21

MEMORANDUM OPINION re 20 Order on Motion to Remand to State Court. Signed by Senior Judge Neal B. Biggers on 7/31/2017. (llw)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
OXFORD DIVISION
THOMAS G. NICKELS AND WHITNEY C. NICKELS
PLAINTIFFS
VS.
CIVIL CAUSE NO: 3:16-CV-183-NBB-JMV
NATIONSTAR MORTGAGE LLC;
BANK OF AMERICA CORPORATION;
SAFEGUARD PROPERTIES MANAGEMENT LLC;
SHAPIRO & MASSEY LLC;
AND JOHN DOES 1-5
DEFENDANTS

MEMORANDUM OPINION
Presently before the court is the plaintiffs’ motion to remand. Upon due
consideration of the motion, response, exhibits, and supporting and opposing authority,
the court is ready to rule.
Factual and Procedural Background
This action arises from a foreclosure that occurred on May 19, 2015, in Panola
County, Mississippi. The Plaintiffs owned real property and a residential dwelling house
located at 22059 Highway 315, Sardis, Mississippi. The note and deed of trust secured by
the plaintiffs were originally executed in favor of Franklin American Mortgage
Company. The deed of trust was subsequently assigned to Defendant Bank of America
Corporation (“BOA”). Plaintiffs later fell behind on payments due under the note.
Plaintiffs contacted BOA to make arrangements to cure the delinquent payments and
were informed by BOA about the possibility of a loan modification. BOA provided
Plaintiffs with a formal application to complete to receive loan assistance and/or

modification. BOA subsequently sold the rights to the loan to Defendant Nationstar.
Plaintiffs allege that they contacted Nationstar and inquired about the loan modification
but were told that there was no record of any application. Nationstar also took the
position that the loan in question must be brought current immediately or the Plaintiffs
would be subject to foreclosure. Plaintiffs were unable to pay off the note at the time. The
Plaintiffs began trying to sell the property to avoid a foreclosure and listed the property
for sale with a real estate agency. Plaintiffs allege, however, that on or about May 19,
2015, Defendants Nationstar, Safeguard Properties, and Shapiro & Massey (“Trustee”)
and/or their employees and/or agents intentionally, wrongfully, and without legal
authority trespassed upon the subject property and changed the locks to the residence,
removed the realtor’s “for sale” sign from the yard and wrongfully took possession of the
property. Defendant Nationstar claims that since the Plaintiffs defaulted on the loan they
had no right to exclusive possession.
On July 31, 2015, Defendant Nationstar executed and then recorded on August
10, 2015, at Book 2015 Page 7307 a “Substitution of Trustee” in favor of Defendant
Shapiro & Massey, LLC, in the Chancery Clerk’s Office for the Second Judicial District
of Panola County, Mississippi, which is not the judicial district where the subject
property is located. Defendants Nationstar and/or the Trustee caused to be published a
Substituted Trustee’s Notice of Sale in The Panolian, a newspaper located in and having
a general publication in the Second Judicial District of Panola County. On September 18,
2015, Defendants Nationstar and/or the Trustee conducted a foreclosure sale of the
subject property and executed and recorded a Substituted Trustees Deed at Book 2015
Page 1209 in the Chancery Clerk’s Office for the First Judicial District of Panola County,

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where the property is located, allegedly causing a cloud upon the title of the subject
property. On March 14, 2016, the Substitution of Trustee executed on July 31, 2015, was
re-recorded in the Chancery Clerk’s Office for the First Judicial District of Panola
County, at Book 2016 Page 8116. On April 25, 2016, the Trustee, acting for Defendant
Nationstar, recorded a “Notice to Public” in the same Chancery Clerk’s Office, stating
that on April 13, 2016, they learned that the first recorded Substitution of Trustee was
recorded in the wrong judicial district. The Plaintiffs filed their Verified Complaint in the
First Judicial District of Panola County, on July 7, 2016. Plaintiffs allege in the complaint
several causes of action including breach of contract, negligence, wantonness, unjust
enrichment, promissory estoppel, breach of fiduciary duty, wrongful foreclosure, abuse of
process, slander of title, accounting, trespass, intentional and/or negligent infliction of
emotional distress, libel, fraud, and outrage. Nationstar Mortgage, LLC, removed this
case based upon diversity of citizenship, alleging that Shapiro & Massey, LLC, was
improperly joined, and Safeguard Properties Management, LLC, was both diverse and
improperly joined.
Standard for Removal and Remand
“[A]ny civil action brought in a State court of which the district courts of the
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 pending.” 28 U.S.C. § 1441(a). A district court
has “original jurisdiction of all civil actions where the matter in controversy exceeds the
sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of
different States.” 28 U.S.C. § 1332(a)(1). “[R]emoval statutes are to be construed strictly

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against removal and for remand.” Eastus v. Blue Bell Creameries, L.P., 97 F.3d 100, 106
(5th Cir. 1996). “The intent of Congress drastically to restrict federal jurisdiction in
controversies between citizens of different states has always been rigorously enforced by
the courts.” Garcia v. Koch Oil Co. of Texas, Inc., 351 F.3d 636, 638 (5th Cir. 2003)
(quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938)). The
removing party bears the burden of establishing the basis for diversity jurisdiction. Id.
See also De Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995).
In diversity jurisdiction cases, “[t]he improper joinder doctrine constitutes a
narrow exception to the rule of complete diversity.” McDonal v. Abbott Laboratories,
408 F.3d 177, 183 (5th Cir. 2005). The “burden of demonstrating [improper] joinder is a
heavy one.” Griggs v. State Farm Lloyds, 181 F.3d 694, 701 (5th Cir. 1999). To establish
improper joinder, the party seeking removal must demonstrate either “(1) actual fraud in
the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of
action against the non-diverse party in state court.” Travis v. Irby, 326 F.3d 644, 647 (5th
Cir. 2003) (citing Griggs, 181 F.3d at 699). Under the second prong, the court must
examine “whether the defendant has demonstrated that there is no possibility of recovery
by the plaintiff against an in-state defendant, which stated differently means that there is
no reasonable basis for the district court to predict that the plaintiff might be able to
recover against an in-state defendant.” Smallwood v. Illinois Central R.R. Co., 385 F.3d
568, 573 (5th Cir. 2004). “If no reasonable basis of recovery exists, a conclusion can be
drawn that the plaintiff’s decision to join the local defendant was indeed fraudulent,
unless that showing compels dismissal of all defendants.” McDonal, 408 F.3d at 183. A

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district court normally examines a claim of improper joinder by conducting a Rule
12(b)(6)-type analysis. Smallwood, 385 F.3d at 573.
Analysis
Defendant Nationstar alleges in its Notice of Removal that Safeguard is not a
Mississippi LLC. The Defendants cite Safeguard’s application for registration as a
foreign limited liability company and Safeguard’s corporate disclosure statement. In its
disclosure statement, Safeguard notes the following: Safeguard Properties Management,
LLC, is a Delaware limited liability company whose sole member is Safeguard Holdings,
L.P. Safeguard Holdings, L.P. is a Delaware limited partnership whose general partner is
Safeguard Holdings, G.P., LLC. Safeguard Holdings, G.P., LLC, is a Delaware limited
liability company whose members are KJH Holdings Co., Inc., and four irrevocable
family trusts. KJH Holdings Co., Inc., is an Ohio Corporation with its principal place of
business in Ohio. The four family trusts are all Ohio trusts with all of their trustees,
grantors, and beneficiaries being domiciled in and residents of Ohio.
The Plaintiffs claim that Safeguard Properties is a Mississippi LLC and attached
copies of Safeguard’s 2013-2016 Mississippi Limited Liability Company Annual Reports
showing that for at least four years Safeguard has filed reports with the State of
Mississippi stating that its state of incorporation is Mississippi and that it is not a foreign
LLC.
This Court finds in favor of the Defendants on this issue noting that Safeguard
and Nationstar have shown that these annual reports were made in error, and that
Safeguard is an LLC incorporated in Delaware with its principal place of business in

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Ohio, with none of its members domiciled in Mississippi. Safeguard is thus, an Ohio
resident and a diverse party.
The same cannot be said for Shapiro & Massey LLC. It is not disputed that
Shapiro & Massey, LLC, is a Mississippi company. The Defendants claim that, in it’s
role as a substituted trustee, Shapiro & Massey is a nominal party whose citizenship is
irrelevant for diversity jurisdiction purposes, citing Brown v. Deutsche Bank Nat’l Trust
Co., 2015 U.S. Dist. LEXIS 84925, 12-13 (S.D. Miss June 30, 2015). According to
Brown, the nature of the allegations against a substituted trustee are irrelevant; if the
trustee is alleged to have taken the actions in its capacity as trustee, it is a nominal party
whose citizenship is disregarded. Brown, LEXIS 84925 at 12-13. The Plaintiffs claim that
Brown is distinguishable from the present case given the details of the trustee’s alleged
conduct. While the court agrees with the ruling in Brown, under a Rule 12(b)(6) analysis
the court must resolve disputed questions of fact and all ambiguities in the controlling
state law in favor of the non-removing party. Travis, 326 F.3d at 648. The Plaintiffs have
stated a number of claims against Shapiro & Massey upon which they could possibly
prevail in state court, including trespass and wrongful foreclosure. While substituted
trustees are considered nominal parties, a number of the allegations against Shapiro &
Massey occurred on May 19, 2015, and the Substitution of Trustee was not executed until
July 31, 2015. Thus, Shapiro & Massey would not have been a substituted trustee when
the allegations occurred. For this reason the court finds that Shapiro & Massey is not a
nominal party and has not been improperly joined.
To arrive at this determination the Court has conducted a Rule 12(b)(6) analysis.
Rule 12(b)(6) looks at the allegations of the complaint to determine whether the

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complaint states a claim under state law against the in-state defendant. Smallwood, 385
F.3d at, 573. “Ordinarily, if a plaintiff can survive a Rule 12(b)(6) challenge, there is no
improper joinder.” Id. Under 12(b)(6) analysis, courts resolve disputed questions of fact
and all ambiguities in the controlling state law in favor of the non-removing party. Travis,
326 F.3d at 648. As noted, the Plaintiffs have stated a number of claims against Shapiro
& Massey upon which relief may be granted in state court. The claims include wrongful
foreclosure, negligence, abuse of process, slander of title, trespass, libel, and fraud. Thus,
this court cannot say that Plaintiffs have no reasonable possibility of recovery against the
non-diverse defendant. The court finds no improper joinder, and complete diversity is
lacking among the parties.
Conclusion
For the foregoing reasons, the court finds that the plaintiffs’ motion to remand is
well-taken and shall be granted. A separate order in accord with this opinion shall issue
this day.
This, the 31st day of July, 2017.
/s/ Neal Biggers
NEAL B. BIGGERS, JR.
UNITED STATES DISTRICT JUDGE

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