McJunkins Development LLC et al v. JPMorgan Chase Bank, N.A.
Filing
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Memorandum Opinion and Order granting Plaintiffs' Motion to remand case. Case is remanded to the Cuyahoga County Court of Common Pleas. Signed by Judge Donald C. Nugent on 8/21/2013.(Related Doc # 8 )(B,B)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
McJunkins Development LLC, et al.,
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Plaintiffs,
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v.
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JP Morgan Chase Bank, National Association, )
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Defendant.
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CASE NO. 1:13 CV 1251
JUDGE DONALD C. NUGENT
MEMORANDUM OPINION
AND ORDER
This matter is before the Court on the Plaintiffs’ Motion to Remand (ECF #8). For the
reasons that follow, Plaintiffs’ Motion to Remand is granted.
Factual and Procedural History
Defendant JPMorgan Chase Bank (“JP Morgan”) removed this action to this Court on
June 5, 2013. In its Notice of Removal Defendant asserts that it removed this action from the
Court of Common Pleas for Cuyahoga County, Ohio pursuant to 28 U.S.C. §§ 1441 and 1453 on
the grounds that federal diversity jurisdiction exists under the Class Action Fairness Act of 2005
(“CAFA”), 28 U.S.C. § 1332(d)(2). Plaintiff McJunkins Development LLC (“McJunkins”) filed
this class action lawsuit on March 14, 2013, on behalf of all real property owners since January
1, 2000, who took possession of property after [Defendant] initiated the foreclosure action with
ownership of the mortgage and note. (ECF #1, Ex. B, Doc. 1 at 14) Plaintiff’s lawsuit followed
the Ohio Supreme Court’s decision in Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio
St.3d 13 (2012) which found that the failure of an “assignee” or note holder to secure an interest
in the note and mortgage before filing a complaint causes the foreclosure plaintiff to lack
standing and renders any foreclosure judgment null and void. The Complaint alleges that these
“null and void” judgments have created a host of problems. “The wrongly foreclosed
homeowners have claims derived from unlawful loss of their property. The subsequent
purchasers of the foreclosed property have claims derived from the cloud on the title that the
wrongful foreclosures created.”(ECF 31, Ex. B Doc. 1 at 2-3)
McJunkins filed an Amended Complaint on May 6, 2013, adding Samantha Newman as a
class representative. The Amended Complaint is an action against Defendant on behalf of all
owners of Ohio real property who, since January 1, 2000: a) “took possession of property” or b)
“lost possession of property after Defendant initiated a foreclosure action without standing.”
(ECF #1 at ¶7, citing Am. Comp. ¶¶66,67) Defendant asserts that the action became removable
on May 6, 2013, upon the filing of the Amended Complaint because the addition of the Borrower
Subgroup removed the action from CAFA’s Local Controversy Exception. Under the Local
Controversy Exception, a case is not removable unless, among other things, “during the three
year period preceding the filing of that class action, no other class action has been filed asserting
the same or similar factual allegations against any of the defendants on behalf of the same or
other persons.” See 28 U.S.C. § 1332(d)(4). Defendant asserts that it has been sued in the last
three years for class action relief involving the same or similar claims as those asserted by the
Borrower Subgroup in the Amended Complaint.
Plaintiffs now move to remand this action to State court, arguing that the removal was
untimely, that Defendant fails to meet its burden to establish the elements of federal jurisdiction,
and that the Local Controversy Exception to CAFA mandates against federal jurisdiction.1
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Plaintiff also argues that judicial comity further supports remand in that this action it
exclusively involves Ohio property, Ohio foreclosure proceedings, Ohio law and an Ohio
Defendant.
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Plaintiffs further request pursuant to 28 U.S.C. § 1447(c) that the Court award Plaintiffs their
fees and costs incurred as a result of removal. Defendant has filed a brief in opposition to
Plaintiffs’ Motion to Remand along with affidavits in support. Plaintiffs have filed a reply brief
in support. The Motion is now ready for decision.
Discussion
CAFA gives federal courts diversity jurisdiction over putative class actions where at least
one defendant is diverse from at least one plaintiff (“minimal diversity”), the putative class
consists of over 100 members, and the amount-in-controversy with respect to the entire putative
class exceeds $5 million. 28 U.S.C. § 1332(d)(2). CAFA also creates an exception to the “one
year rule” of 28 U.S.C. § 1446(b), and permits removal in a diversity action even if it occurs
more than one year after the complaint was filed. 28 U.S.C. § 1453(b); Smith v. Nationwide
Prop. & Cas. Ins., 505 F.3d 401, 406–07 (6th Cir.2007). While CAFA allows removal during the
pendency of the state court litigation, the defendant must initiate removal within thirty days of
the case becoming removable. Id. at 407. Furthermore, CAFA, effective in 2005, does not apply
retroactively—removal is only proper if amendments to the existing class action create a “new”
cause of action post-dating CAFA. See Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S.
546, 571, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005). The removing defendant has the burden of
establishing all jurisdictional prerequisites by a preponderance of the evidence. Smith, 505 F.3d
at 404; Miller v. Volkswagen of America, Inc., 889 F.Supp.2d 980, 983-84 (N.D. Ohio, 2012).
Morgan v. Gay, 471 F.3d 469, 473 (3d Cir.2006) (CAFA does not shift the burden to the
plaintiffs in removal cases) Moreover, “[a]ll doubts as to the propriety of removal are resolved in
favor of remand.” Jacada, Ltd. v. Int'l Mktg. Strategies, Inc., 401 F.3d 701, 704 (6th Cir.2005)
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(quotations and cites omitted.)
Plaintiffs assert that the Amended Complaint did not create a “new action” sufficient to
trigger a renewed opportunity to remove under CAFA. Plaintiffs state that the Amended
Complaint mirrors the factual allegations and claims of the March 14, 2013 Complaint. Both
complaints are based upon the Ohio Supreme Court’s 2012 Scwartzwald decision. The Amended
Complaint simply adds Samantha Newman as a Plaintiff and class representative to represent the
class of property owners victimized by Defendant’s practice of initiating foreclosures without
proper standing. While the “borrower’s class” as Defendant refers to them were not part of the
original complaint, that complaint clearly noted that both the “borrower’s” and the subsequent
purchasers of Ohio real property were victimized by the same conduct undertaken by Defendant.
In Miller v. Volkswagen of America, Inc., 889 F.Supp.2d 980, 983-84 (N.D. Ohio, 2012), Judge
Zouhary noted
While the Sixth Circuit has not decided whether an amendment to
a class definition commences a “new action” for CAFA purposes,
the Seventh Circuit in Schorsch v. Hewlett–Packard Co., is
persuasive on this point. 417 F.3d 748, 749 (7th Cir.2005). In
Schorsch, the court held “amendments to class definitions do not
commence new suits.” Id. at 751. The court drew a distinction
between amendments that “kick off wholly distinct claims,” and
those tantamount to a “workday change”—that is, those that do not
alter the substance of the original allegations in any way. Id.
Schorsch was reinforced in a subsequent Seventh Circuit opinion
emphasizing “the expansion of a proposed class does not change
the parties to the litigation nor does it add new claims.” Schillinger
v. Union Pacific R. Co., 425 F.3d 330, 334 (7th Cir.2005); see also
Powers v. Hamilton County Public Defender Com'n, 501 F.3d 592,
619 (6th Cir.2007) (“[D]istrict courts have broad discretion to
modify class definitions.”).
Miller at 984. Miller involved a class action of vehicle purchasers alleging breach of warranties
in relation to alleged design defects of a front bumper assembly. The original class covered
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vehicle years 1999-2002. Five years after the start of the state court litigation, the plaintiffs
amended the complaint to add another vehicle year to the certified class and add causes of action
for violations of the Ohio Consumer Sales Practices Act (“OCSPA”) and for fraud by
concealment on behalf of the already certified class. Defendant removed the action under CAFA
asserting that the amendments constituted a new action triggering a 30 day window to remove.
The Court determined that the addition of the 2003 model year to plaintiff’s breach of warranty
claims of the existing class did not create a new cause of action because the amendment did not
alter the substance of the original allegations against the Defendant, did not change the theory of
liability, and does not expand allegations to reach new and unrelated misconduct. Id. at 984. In
the instant action, the allegations pertaining to the “borrower” class do not reach “new and
unrelated misconduct.” The same conduct by Defendant is alleged to have caused injury to the
new class. Further, Defendant was on notice based upon the allegations in the original complaint
that the same conduct that impacted the original class would similarly impact a borrower class.
As such, Defendant is not prejudiced by the addition of a “borrower” plaintiff.
Moreover, the addition of new causes of action do not create a new cause of action for
purposes of removal under CAFA if they relate back to the original complaint. Miller, 889 F.
Supp.2d at 985 ( “The addition of new claims for relief commences a “new action” under CAFA
only when those claims do not relate back to the original pleading.”)(Citations omitted). The
Court must determine under the applicable state law whether the plaintiffs’ new claims relate
back to the original pleading. Ohio Rule 15(C), the applicable relation back rule in this case,
provides in relevant part:
Whenever the claim or defense asserted in the amended pleading
ar[ises] out of the conduct, transaction, or occurrence set forth or
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attempted to be set forth in the original pleading, the amendment
relates back to the date of the original pleading.
All of the claims at issue in this action, both for the “purchaser” and “borrower” class derive
from Defendant’s alleged conduct in filing foreclosure actions without proper standing resulting
in void foreclosure judgments. The new class just adds people who were injured by the same
conduct that allegedly injured the initial class. Thus, under Rule 15, the claims of the
“borrower” class would relate back to the original complaint and not constitute a trigger for
removal under CAFA. Accordingly, the filing of the Amended Complaint in this action did not
trigger a 30 day removal period under CAFA, thus the removal in this instance was untimely and
Plaintiffs’ Motion to Remand will be granted.2
Plaintiffs seek an award of fees and expenses incurred in pursuing this remand motion.
While Section 1447(c) provides that an order remanding a removed case to state court may
require payment of attorney fees incurred as a result of the removal, it does not require a grant of
attorney fees on remand as a matter of course. See 28 U.S.C.A. § 1447(c). The Supreme Court
determined that “the standard for awarding fees should turn on the reasonableness of the
removal. Absent unusual circumstances, courts may award attorney's fees under § 1447(c) only
where the removing party lacked an objectively reasonable basis for seeking removal.
Conversely, when an objectively reasonable basis exists, fees should be denied. Martin v.
Franklin Capital Corporation, 546 U.S. 132, 141 (2005). Based upon the filings in this action,
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In addition, even if the removal was timely, the Court finds persuasive Plaintiffs’
argument that Defendant failed to prove by a preponderance of the evidence that it met
the necessary jurisdictional requirements of CAFA. Specifically, Defendant has not
shown that any potential members of either class has citizenship that is diverse from
Defendant. As such, removal would be improper for that reason.
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the Court finds that Defendant did not act unreasonably in removing the action and that it had an
objectively reasonable basis for seeking removal. As such, Plaintiffs’ request for fees and costs
are denied.
Conclusion
For the reasons set forth above, Plaintiffs’ Motion to Remand (ECF #8) is granted. The
Clerk of Court is instructed to remand this action to the Court of Common Pleas for Cuyahoga
County, Ohio. IT IS SO ORDERED.
__/s/Donald C. Nugent________
Donald C. Nugent
United States District Judge
DATED:__August 21, 2013_____
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