Caranchini v. Kozeny & McCubbin, LC et al
Filing
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ORDER denying 8 Plaintiff's motion to remand. Signed on 11/28/11 by District Judge Greg Kays. (Francis, Alexandra)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
GWENDOLYN G. CARANCHINI
Plaintiff,
v.
KOZENY & McCUBBIN, LLC, et al.,
Defendants.
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Case No. 4:11-CV-0464-DGK
ORDER DENYING PLAINTIFF’S MOTION TO REMAND
This case arises out of a dispute over the mortgage on Plaintiff’s home. Plaintiff alleges
that after she received a mortgage on her home through Aegis Lending Corporation, the note was
sold to several different entities, none of whom correctly recorded their interest in the property or
properly communicated with her. As a result, Plaintiff contends, she is the sole lawful owner of
the property securing the mortgage.
This lawsuit is substantially similar to another lawsuit
Plaintiff has filed, Caranchini v. Bank of America, N.A., et al., 4:10-0672, in which she is also
proceeding pro se. In this lawsuit, however, Plaintiff has named as a defendant the law firm that
is the trustee on the deed of trust.
Now before the Court is Plaintiff’s Motion to Remand (doc. 8), Plaintiff’s Amendment to
Motion for Remand (doc. 9), Plaintiff’s Supplement to Her Motion to Remand (doc. 14), and
Plaintiff’s Motion for Leave to File Second Supplement to Her Motion to Remand With
Incorporated Supplement (doc. 18). The Court grants Plaintiff leave to file her amendment,
supplement, and second supplement. Finding no merit to any of Plaintiff’s arguments in support
of remand, however, the Motion to Remand (doc. 8) is DENIED.
Background
On February 29, 2010 Plaintiff filed her first lawsuit (“Lawsuit I”) in the Circuit Court of
Jackson County, Missouri against Defendants Bank of America, N.A. (“BOA”); BAC Home
Loans Servicing, LP (“BAC”); Aegis Lending Corporation; Wilshire Credit Corporation;
Mortgage Electronic Registration Systems, Inc. (“MERS”); Citibank, in its capacity as a trustee
for two mortgage trusts; Countrywide Lending; Todd Hamby, the initial trustee on the deed of
trust; Merrill Lynch; and John and Mary Does 1-1000. Defendants BOA and BAC removed the
case to federal court pursuant to diversity jurisdiction, and the Court denied Plaintiff’s
subsequent motions to remand.
On September 10, 2010 Plaintiff filed the present case (“Lawsuit II”) in the Circuit Court
of Jackson County, Missouri naming as the sole defendant the law firm Kozeny & McCubbin,
LLC (“Kozeny”), the successor trustee on the deed of trust for her home. On October 4, 2010,
Plaintiff amended the Petition to add claims against the other Defendants named in Lawsuit I.
Plaintiff also added claims against MERSCORP, Inc., the sole owner of MERS. Kozeny, like
Plaintiff, is a citizen of Missouri. The other defendants are not citizens of Missouri.
Count I of Lawsuits I and II are virtually identical. In both cases Count I seeks to quiet
title to Plaintiff’s property free and clear of the deed of trust and a declaration that Defendants
have no interest in the property. Lawsuit II also contains two new counts; a negligence claim
against BOA/BAC, Countrywide, and MERS, and a breach of fiduciary duty claim against
Hamby and Kozeny.
Plaintiff served Defendants MERS and MERSCORP with process and the Second
Amended Petition by certified mail on April 5, 2011. On May 4, 2011, MERS and MERSCORP
removed Lawsuit II to this Court with the consent of the other Defendants by invoking the
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Court’s diversity jurisdiction. In their Notice of Removal MERS and MERSCORP contend that
Kozeny’s citizenship should be disregarded for purposes of determining diversity, because (1)
Kozeny is not a real party in interest to the quite title claim, and/or is fraudulently joined in that
claim; and (2) Kozeny is fraudulently joined in the breach of fiduciary duty claim. Plaintiff
subsequently filed her various motions to remand.
Standard
An action may be removed by the defendant to federal district court if the case falls
within the original jurisdiction of the district court. 28 U.S.C. § 1441(a). If the case is not within
the original subject matter jurisdiction of the district court, the court must remand the case to the
state court from which it was removed. 28 U.S.C. § 1447(c). Even if the case is not initially
removable, it may subsequently become removable. “[A] notice of removal may be filed within
thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended
pleading, motion, order or other paper from which it may first be ascertained that the case is one
which is or has become removable,” except that a case may not be removed more than one year
after commencement of the action. 28 U.S.C. § 1446(b).
To invoke the district court’s original diversity jurisdiction the parties must be citizens of
different states and the amount in dispute must exceed $75,000. 28 U.S.C. § 1332(a). Complete
diversity between the parties is required; the presence of a single plaintiff from the same state as
a single defendant destroys diversity and extinguishes a federal court’s jurisdiction to hear the
matter. Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005).
Finally, the burden of establishing federal jurisdiction is on the party seeking removal, In
re Bus. Men’s Assurance Co. of Am., 992 F.2d 181, 183 (8th Cir. 1993), and all doubts are
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resolved in favor of remand. Transit Cas. Co. v. Certain Underwriters at Lloyd’s of London, 119
F.3d 619, 625 (8th Cir. 1997).
Discussion
A.
Defendants’ removal was timely and procedurally proper.
Plaintiff contends removal was untimely because it did not take place within thirty days
of service on the first-served defendant. Mot. at 52. But the “first-served defendant rule” is not
the rule in this circuit. This circuit follows the “last-served defendant rule,” which provides that
the later-served defendants have thirty days from service upon them to remove, with the
unanimous consent of co-defendants, even if the earlier served defendants did not remove.
Marano Ent. V. Z-Teca Rest., L.P., 254 F.3d 753, 756 (8th Cir. 2001). In the present case, both
MERS and MERSCORP were served with process and the Second Amended Petition on April 5,
2011, and filed their Notice of Removal within thirty days, on May 4, 2011, thus removal was
timely and procedurally proper.
B.
The Court disregards Kozeny’s citizenship for purposes of determining
diversity, thus there is complete diversity and the Court possesses original jurisdiction to
hear this dispute.
Plaintiff argues that there is not complete diversity between the parties here because
Kozeny is considered to be a citizen of Missouri. Defendants argue that Kozeny is a nominal
party to the quiet title claim (Count I) and is fraudulently joined to defeat diversity in the breach
of fiduciary duty claim (Count III).
1.
Kozeny is a nominal party to the quite title action.
In determining whether diversity exists, the court disregards the nominal parties and rests
jurisdiction upon the citizenship of the real parties in interest. Navarro Sav. Ass’n v. Lee, 446
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U.S. 458, 460-61 (1980). Nominal parties are generally those without a real interest in the result
of the suit or an ownership interest in the funds at issue, or those named merely as the holder of
the stakes between the plaintiff and the defendant. “The ‘real party in interest’ is the person
who, under governing substantive law, is entitled to enforce the right asserted, and in a diversity
case, the governing substantive law is ordinarily state law.” Iowa Pub. Serv. Co. v. Med. Box
Coal Co., 556 F.2d 400, 404 (8th Cir. 1977). A defendant’s citizenship may be disregarded
when it is clear that the defendant (1) is neither necessary nor indispensable, (2) has no stake in
the litigation, and (3) has no real, present claims for relief sought against it. Mundle v. Linde,
LLC, No. 4:10-cv-2116-DDN, 2011 WL 1526965, at *2 (E.D. Mo. 2011).
Here the governing substantive law is Missouri law, and under Missouri law a trustee is
not an indispensible party to an action affecting a deed of trust. Libby v. Uptegrove, 988 S.W.2d
131, 132 (Mo. App. 1999) (Stith, J.). This is because the deed of trust does not vest title in the
trustee, it simply creates a lien in favor of the mortgagee. Id. The grantor remains the owner of
the land until entry for breach of the condition of the deed of trust. State ex rel. State Hwy.
Comm. v. Thelnor, Inc., 485 S.W.2d 443, 445 (Mo. App. 1972). Since the trustee has no interest
in the property, the trustee is not an indispensable party even in proceedings that seek to cancel
the deed and take title to the underlying property. Id. (holding the trustee to a deed of trust is not
a necessary party in an action to condemn property subject to deed of trust). The trustee is also
not an indispensable party in a lawsuit affecting title to a mortgaged property. Casper v. Lee,
245 S.W.2d 132, 138-39 (Mo. banc 1952).
In the present case the trustee has no ownership interest in Plaintiff’s property and, as the
deed of trust makes clear, has no independent right to sell or dispose of the property. The trustee
can act under the deed of trust only if the lender, or the lender’s successors or assigns, invokes
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the power of sale. The lender’s successors and assigns have all been joined in this action, so that
if the Court grants Plaintiff the relief she seeks and cancels the deed of trust, the trustee would
have no further rights in the property, thus Kozeny is neither a necessary or indispensable party
to this litigation. Furthermore, there is no evidence or suggestion here that Kozeny has some
stake in the litigation, nor is there a real, present claim for relief against Kozeny. Consequently,
the Court ignores Kozeny’s citizenship for purposes of determining whether diversity
jurisdiction exists.
2.
Kozeny is fraudulently joined in the breach of fiduciary duty claim.
A plaintiff cannot attempt to prevent removal by fraudulent joinder. “Fraudulent joinder
occurs when a plaintiff files a frivolous or illegitimate claim against a nondiverse defendant
solely to prevent removal.” In re Prempro Prod. Liab. Litig., 591 F.3d 613, 620 (8th Cir. 2010)
(quoting Filla v. Norfolk S. Ry. Co., 336 F.3d 806, 809 (8th Cir. 2003)). The fraudulent joinder
exception prevents the plaintiff from blocking removal by adding nondiverse defendants who
should not be defendants. Crockett v. R.J. Reynolds Tobacco Co., 436 F.3d 529, 533 (5th Cir.
2006). When deciding if a plaintiff has fraudulently joined a nondiverse defendant, the court
determines if the claim supports any reasonable basis in fact or law against that defendant. In re
Prempro, 591 F.3d at 620. If there is no reasonable basis in fact or law for the claim, the court
ignores the citizenship of the fraudulently joined defendant for purposes of determining
diversity. See id.
Count III alleges that Hamby, the original trustee on the deed of trust, and Kozeny, the
successor trustee, breached a fiduciary duty to Plaintiff when they “signed and/or filed and had
recorded documents” on the property and when they allegedly failed to investigate the various
transfers of the promissory note and deed of trust to ascertain whether there were any breaks in
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the chain of title. Second Am. Compl. at ¶ 51. Paragraph 22 of the deed of trust defines the
trustee’s duties, which are limited to giving notice of a foreclosure sale, selling the property at a
public auction to the highest bidder, conveying the property by trustees’ deed, and applying the
proceeds of the sale. At the time the second amended petition was filed no foreclosure sale had
occurred or was pending against the property, thus Kozeny could not possibly have breached any
duty owed to the Plaintiff under the deed of trust. Consequently, there is no reasonable basis in
fact or law for Count III against Kozeny, thus complete diversity exists for purposes of
determining whether this Court possesses original jurisdiction to hear this dispute under 28
U.S.C. § 1332(a).
C.
This Court has subject matter jurisdiction over Plaintiff’s state law claims.
Plaintiff argues that this Court lacks subject matter jurisdiction to hear this dispute
because a Missouri state court has exclusive jurisdiction over her quiet title and declaratory
judgment claims. Plaintiff contends that Missouri’s venue statute for quiet title actions, §
508.030 R.S.Mo., vests jurisdiction for these actions exclusively in Missouri state court and bars
removal to federal court, and that the declaratory action pled by her under Missouri’s declaratory
judgment statute, § 527.100 R.S.Mo., cannot be brought in federal court. Neither claim is true.
Article III, Section 2 of the United States Constitution provides that the judicial power of
the federal courts “shall extend” to all cases arising under the laws of the United States and to
controversies between citizens of different states. Pursuant to this grant of authority Congress
enacted 28 U.S.C. § 1441(a), which states in relevant part that “any 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.” (Emphasis added.)
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Additionally the Supremacy Clause (Article VI) of the Constitution states that “[t]his
Constitution, and the laws of the United States which shall be made in pursuance thereof . . .
shall be the supreme law of the land . . . anything in the constitution or laws of any state to the
contrary notwithstanding.” The practical effect of this provision “is that state and local laws are
deemed pre-empted if they conflict with federal law.” Edwin Chemerinsky, Constitutional Law
Principles and Policies § 1.1 (3rd ed. 2006). Consequently, even if Missouri law sought to vest
Missouri state courts with the sole authority to hear quiet title actions or declaratory judgment
actions, the state law would be pre-empted by the federal removal statute. Thus this Court has
the power to adjudicate Plaintiff’s state law claims.
D.
Defendants have established a statutory right to removal.
Defendants have established that the parties are citizens of different states and the amount
in dispute here exceeds $75,000, thus Defendants have a statutory right to removal under 28
U.S.C. §§ 1441(a), 1446(b), and 1332(a).
E.
Abstention is not warranted here.
Plaintiff argues that this Court should abstain from hearing this dispute. Abstention is
appropriate only in exceptional circumstances. County of Allegheny v. Frank Mashuda Co., 360
U.S. 185, 188-89 (1959). Although Plaintiff has not identified any particular abstention doctrine
or theory for this Court to abstain under, she has cited the decision of a magistrate judge in Forde
v. First Horizon Home Loan Corp., Civ 10-01922, 2010 WL 5758614 (D. Ariz. Dec. 6, 2010).
In Forde a property owner filing suit in Arizona state court, bringing various claims for damages
as well as a quiet title claim and a claim to set aside an assignment of deed of trust and a notice
of trustee’s sale. After defendants removed, the court decided to abstain for several reasons,
including a desire not to interfere with the on-going state proceedings under the Younger doctrine
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and an inability to review the state court foreclosure judgment under the Rooker-Feldman
doctrine. The court also abstained under the Buford abstention doctrine out of concern that
adjudicating the dispute might interfere with Arizona’s complex regulatory scheme, which was
supervised by state courts and served important state interests, and because resolution of the
dispute required specialized knowledge and application of complicated state law. In the present
case, neither the Younger or Rooker-Feldman abstention doctrines could apply because there are
no pending state foreclosure proceedings or foreclosure judgments against Plaintiff’s property,
nor is Burford abstention appropriate because Missouri’s foreclosure process is not at issue here.
Accordingly, there are no exceptional circumstances that warrant abstention.
Conclusion
For the foregoing reasons, Plaintiff’s Motion to Remand (doc. 8) is DENIED.
IT IS SO ORDERED.
Date:
November 28, 2011
/s/ Greg Kays
GREG KAYS, JUDGE
UNITED STATES DISTRICT COURT
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