OCWEN LOAN SERVICING LLC v. PAMPANIN et al

Filing 31

REPORT AND RECOMMENDATIONS re 9 MOTION to Remand filed by OCWEN LOAN SERVICING LLC Objections, if any, to R&R due by 8/16/2016. Signed by Magistrate Judge Mark Falk on 8/2/16. (jr)

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

OWCEN LOAN SERVICING LLC,

Civil Action No. 15-8699 (CCC)

Plaintiff,
v.
REPORT & RECOMMENDATION
CAROLYN MASINO (f/k/a CAROLYN
PAMPANIN); NICHOLAS PAMPANIN;
AND USAA FEDERAL SAVINGS
BANK,
Defendants.

FALK, U.S.M.J.
Before the Court is Plaintiff’s motion to remand this case to state court. [CM/ECF
No. 9.] The motion is opposed. No argument was heard. Fed. R. Civ. P. 78(b). Based
upon the following, it is respectfully recommended that the motion to remand be
GRANTED and the request for fees and costs be DENIED.
BACKGROUND1
This is a convoluted state foreclosure action. In 2005, Defendants Carolyn Masino
(formerly Pampanin) and Nicholas Pampanin, then married, executed a Fixed/Adjustable
Rate Note in favor of Defendant USAA Federal Savings Bank in the amount of

1

This section is limited to the facts necessary to decide the present motion. Some
facts are disputed and nothing herein purports to resolve any fact disputes. The section is
drawn from the papers submitted; some citations and quotations are omitted.

$159,654.00. (Certification of Bhaveen R. Jani, Esq. (“Jani Cert.”), Ex. A.) To secure
the note, Masino and Pampanin executed a mortgage against a property located at 32
Hicks Avenue, Newton, New Jersey. (Jani Cert., Ex. B.) Beginning in 2010, payments
were allegedly not made on the Note, and the mortgage was ultimately assigned to
Plaintiff in 2013.
As a result of the default on the Note, on October 18, 2013, Plaintiff filed a
foreclosure complaint in the Superior Court of New Jersey, Chancery Division, Sussex
County. (Jani Cert., Ex. C.) Plaintiff alleges that all three Defendants were served with
the Complaint. (Jani Cert., Exs. D-F.)2 None of the Defendants appeared, and default
was entered on October 24, 2014. (Jani Cert., Ex. G.) Plaintiff later filed an amended
complaint, which it contends was served. (Pl.’s Reply Br. 2.)
On December 17, 2015, despite the state court default which was not vacated,
Masino removed the case to this Court alleging the presence of federal diversity
jurisdiction. Specifically, the Notice of Removal alleges that Plaintiff is a LLC that is a
citizen of the United States Virgin Islands (Notice of Removal ¶ 3(i)(A)); Masino is a
citizen of Florida (id. ¶ 3(i)(B)); Pampanin is a citizen of New Jersey (id. ¶ 3(i)(C)); and
USAA is a citizen of Texas (id. ¶ 3(i)(D).) Neither Pampanin nor USAA Federal Savings
Bank joined in the removal. And, in fact, Pampanin specifically objected to removal.
(Jani Cert., Ex. L.) Masino filed an answer in this Court alleging 17 counterclaims and/or
cross-claims, also adding to the case third-party Defendants RAS Citron, and Johnna
Rockwell, who allegedly also lives at the Newton property.
On January 19, 2016, Plaintiff filed the present motion to remand, contending that
removal was improper because it violates the “forum defendant rule” and the “rule of
unanimity” (both discussed below), which are procedural requirements for proper
removal. Plaintiff also contends that the removal violates the abstention doctrine set forth
in Younger v. Harris, 401 U.S. 37 (1971).
Masino opposes remand, appearing to argue that the forum defendant rule is not
violated because Pampanin, the New Jersey Defendant, was in default and would not be
prejudiced, and that the rule of unanimity is not violated because Pampanin and USAA
are “nominal or dispensible” parties.3

2

As an example of the fact disputes in the case (and despite the State Court
entering default), Masino appears to dispute that she was effectively served with the
Complaint.
3

Neither Pampanin nor USAA have submitted any briefs on the issue.
2

DECISION
The federal removal statute provides that “[e]xcept as otherwise provided by
Congress, any civil action brought in a State court of which the district courts of the
United States have original jurisdiction, may be removed . . . 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). The removing party bears the burden of demonstrating
that the removal was proper. See Boyer v. Snap-On Tools, Inc., 913 F.2d 108, 111 (3d
Cir. 1990). A district court “must resolve all contested issues of substantive fact in favor
of the plaintiff and must resolve any uncertainties about the current state of controlling
substantive law in favor of the plaintiff.” Thompson v. Novartis Pharm. Co., 2007 WL
1521138, at *2 (D.N.J. May 22, 2007) (quotations omitted). Removal is strictly construed
and all doubts are resolved in favor of remand. See Samuel-Bassett v. Kia Motors Am.,
Inc., 357 F.3d 392, 396 (3d Cir. 2004).
1.

Remand is Appropriate
Remand is clearly required in this case for the following reasons.

First, Masino’s removal violates the forum defendant rule. Where the federal
court’s jurisdiction is based on diversity, Section 1441(b) imposes an additional condition
known as the forum defendant rule. The statute provides:
A civil action otherwise removable solely on the basis of the
jurisdiction under § 1332(a) of this title may not be removed
if any of the parties in interest properly joined and served as
defendants is a citizen of the State of in which such an action
is brought.
28 U.S.C. § 1441(b).
Here, Pampanin is a citizen of New Jersey and is alleged to have been served at the
time of the removal. Indeed, Plaintiff has attached proof of service, and the New Jersey
Superior Court entered default against Pampanin based on that service. (Jani Cert., Ex.
G.) That ends the inquiry: Pampanin is a citizen of New Jersey served at the time of the
removal; therefore, Masino’s removal of the action violates the forum defendant rule.
Masino attempts to avoid this obvious conclusion by disputing whether service on
Pampanin was effective and by contending, without support, that Pampanin has been
fraudulently joined. These arguments have no support in the record. The Superior Court
apparently was satisfied service was effective because default was entered against
Pampanin. This Court is not in a position to “second guess” the Superior Court’s entry of
default. Similarly, there is no basis whatsoever for the passing reference to “fraudulent
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joinder.” Pampanin executed the note and the mortgage at issue, which are the focus of
the case; on those facts, a fraudulent joinder argument is meritless. The removal clearly
violates the forum defendant rule.4
Second, the removal violates the rule of unanimity. It is well-established that all
defendants must join in the notice of removal—often referred to as “the rule of
unanimity.” Balazik v. County of Dauphin, 44 F.3d 209, 213 (3d Cir. 1995). There are
three exceptions: (1) when the non-joining defendant or defendants are unknown or
nominal parties; (2) where a defendant has been fraudulently joined; or (3) when a nonresident defendant has not been served at the time of removal. See id. at 213 n.4. The
rule of unanimity requires that all defendants “join in the notice of removal or give their
consent within the thirty day period for the removal to be proper.” New York Reg’l Rail
Corp. v. Bridges, No. 06-44, 2006 WL 1722631, at *3 (D.N.J. June 30, 2006).
Here, Masino’s removal of the Complaint without the consent of Pampanin and
USAA violates the rule of unanimity. See Step Plan Services v. Koresko, 219 Fed. Appx.
249, 250 (3d Cir. 2007) (“[Defendant] failed to obtain the unanimous consent of all
defendants before seeking to remove the case to federal court. Therefore, his removal
was procedurally defective.”). The record establishes that both Pampanin and USAA
were served and that neither consented to the removal. Indeed, Pampanin objected to
removal. (See Jani Cert., Ex. L.)5 Finally, none of the exceptions to the rule of unanimity
apply: the non-joining parties are clearly not unknown or nominal and fraudulent joinder
is not a legitimate issue. 6
2.

Attorney’s Fees And Costs Are Denied

Plaintiff requests attorney’s fees and costs for alleged improvident removal. 28
U.S.C. § 1447(c) provides that an “order remanding the case may require the payment of
just costs and any actual expenses, including attorneys’ fees, incurred as a result of the
4

The Court acknowledges that case law is not uniform on application of the forum
defendant rule when the forum defendant has not been served with the Complaint. See,
e.g., Williams v. Daiichi Sankyo, 13 F. Supp. 3d 426 (D.N.J. 2014). However, on the
facts presented, it is not necessary to address the issue.
5

Masino questions whether Pampanin’s objection to removal was informed. But
that is rank hearsay. And putting that aside, whether the objection was informed or not,
Pampanin clearly did not join in the removal.
6

Since remand is appropriate on both (or either) of the first two grounds, there is
no reason to address the Younger argument in detail. However, if forced to decide the
issue, the Undersigned would likely find interference with the Superior Court’s
foreclosure action improper based on the facts that have developed.
4

removal.” The decision whether to award fees and costs, however, lies firmly within the
sound discretion of the court. See Siebert v. Norwest Bank Mn., 166 Fed. Appx. 603,
606-07 (3d Cir. 2006). And an award is generally improper unless “the removing party
lacked an objectively reasonable basis for seeking removal.” Martin v. Franklin Capital
Corp., 546 U.S. 132, 141 (2005).
Although the Court ultimately agrees that remand is required, the circumstances do
not warrant an award of costs. Defendant’s arguments based on procedural history of the
case are sufficient to constitute a “reasonable basis” for seeking removal. Likewise,
procedural mistakes, like those present here, will rarely warrant an award of costs. See
Bauer v. Glatzer, 2007 WL 4440213, at *3 (D.N.J. Dec. 17, 2007) (“The basis for
Defendant[’s] . . . removal to the Court is not rendered unreasonable simply because
Defendant . . . did not comply with the procedural requirements of 28 U.S.C. §
1446(b).”). As such, the Court declines to recommend an award of costs and fees.

CONCLUSION
For the reasons stated above, it is respectfully recommended that Plaintiff’s motion
to remand [ECF No. 9] be GRANTED and that Plaintiff’s request for attorney’s fees and
costs be DENIED.

s/Mark Falk
MARK FALK
United States Magistrate Judge

DATED: August 2, 2016

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