Corbitt et al v. Federal National Mortgage Association

Filing 16

REPORT AND RECOMMENDATION re 8 MOTION to Remand to State Court: The Magistrate Judge RECOMMENDS that the Motion be DENIED. Objections to R&R due within fourteen days of the date of this Report. Signed by Magistrate Judge Norah McCann King on 8/7/2015. (er)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION

GENEVIEVE D. CORBITT, et al.,
Plaintiffs,
Civil Action 2:15-cv-1725
Judge Watson
Magistrate Judge King

vs.

FEDERAL NATIONAL MORTGAGE
ASSOCIATION,
Defendant.

REPORT AND RECOMMENDATION
This matter is now before the Court, upon a specific order of
reference pursuant to 28 U.S.C. § 636(b)(1)(B), see Order, ECF 12, for
consideration of Plaintiffs Genevieve Corbitt and Thomas Corbitt’s
Motion to Remand, ECF 8 (“Motion to Remand”).

For the reasons that

follow, it is RECOMMENDED that the Motion to Remand be DENIED.
I.

BACKGROUND
This action was originally filed in the Court of Common Pleas for

Delaware County, Ohio, on April 3, 2015, and was removed to this Court
on May 7, 2015, on the basis of diversity jurisdiction, 28 U.S.C. §
1332.

Notice of Removal, ECF 1.

Plaintiffs Genevieve and Thomas

Corbitt (collectively, “plaintiffs” or “the Corbitts”) are individuals
residing in Delaware County, Ohio.

Complaint, ECF 2, ¶ 1.

Defendant

Federal National Mortgage Association (“defendant” or “FNMA”) is a
Delaware corporation with pooling and servicing agreements with
various mortgage servicers, including Bank of America, N.A. (“Bank of
America”), and its predecessor entities, including BAC Home Loans
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Servicing LP (“BAC Home Loans”), as well as Green Tree Servicing LLC
(“Green Tree”).

Id. at ¶ 4.

The Complaint alleges that plaintiff

Genevieve Corbitt is the owner of real estate located at 101 W.
Cherokee Drive, Powell, Ohio (“the Property”), in which plaintiff
Thomas Corbitt, as her spouse, holds a dower interest.

Id. at ¶¶ 2-3.

On February 14, 2007, plaintiff Genevieve Corbitt executed a
promissory note in the amount of $336,000 (“the Note”) to Countrywide
Home Loans, which was secured by a mortgage on the Property on the
same date (“the Mortgage”).

Id. at ¶¶ 5-6.

See also Exhibit A (copy

of the Mortgage, identifying, inter alia, Parcel ID Number 600-341-02004-000, which reflects the address of 101 W. Cherokee Drive, Powell,
Ohio), attached to Defendant Fannie Mae’s Memorandum in Opposition to
Plaintiffs’ Motion to Remand, ECF 10 (“Memo. in Opp.”).

The Mortgage

was recorded with the Delaware County Recorder’s Office.

Complaint, ¶

7.
On October 14, 2011, plaintiffs filed a complaint in the Delaware
County Court of Common Pleas against BAC Home Loans and Bank of
America, asserting claims in connection with the servicing of the Note
and Mortgage.

Id. at ¶ 8 (citing Case No. 11 CVH 1257).

was removed to this Court on November 14, 2011.

That action

Id. at ¶ 9 (citing

Case No. 2:11-cv-1017) (“the earlier federal proceeding”).

The answer

of BAC Home Loans and Bank of America in the earlier federal
proceeding did not contain a counterclaim for foreclosure.
10.

Id. at ¶

On September 17, 2012, these defendants and plaintiffs entered

into a settlement, resulting in the voluntary dismissal of the earlier
federal proceeding action in October 2012.
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Id. at ¶ 11.

On February 14, 2013, FNMA filed a complaint for foreclosure
against the Corbitts in the Delaware County Court of Common Pleas
(“state court” and “the state court foreclosure action”).
(citing Case No. 13 CVE 020137).

Id. at ¶ 12

In later denying FNMA’s motion for

summary judgment, the state court first noted that the Mortgage had
granted Countrywide Home Loans a lien on the Property, which was first
assigned to Bank of America and was later assigned to FNMA.

Exhibit A

(state court Journal Entry dated February 6, 2014), p. 3 (“February 6,
2014 Journal Entry”), attached to the Complaint.

The state court also

found that Genevieve Corbitt had defaulted on the Note by failing to
make payments due on June 1, 2011, and that the balance due was
$319,350.27, plus interest.

Id.

The state court determined that

FNMA’s claims, based on the June 1, 2011 default, existed at the time
FNMA was served in the earlier federal court action and were therefore
compulsory counterclaims that should have been asserted in the earlier
federal action.

Id. at 3-6.

The state court concluded that the

doctrine of res judicata barred FNMA’s claims based on the June 1,
2011 default.

Id. at 6-8.

Thereafter, the state court granted the

Corbitts’ motion for summary judgment and motion to dismiss.
Complaint, ¶ 17; Exhibit B (copy of Judgment Entry dated August 13,
2014) (“August 13, 2014 Journal Entry”), attached thereto.

On

September 11, 2014, FNMA filed a notice of appeal with the Fifth
District Court of Appeals.

Complaint, ¶ 18.

After FNMA failed to

file an appellate brief, the Fifth District Court of Appeals dismissed
the appeal on January 23, 2015.

Id.; Exhibit C (copy of judgment

entry dated January 23, 2015) (“January 23, 2015 Judgment Entry”).
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On May 7, 2015, the Corbitts filed this action, seeking a
declaration that defendant has no legally enforceable interest in the
Property based on the prior proceedings.

See Complaint, ¶¶ 32-37.

Plaintiffs also assert a quiet title claim.

Id. at ¶¶ 38-42.

After

this action was removed to this Court on the basis of diversity
jurisdiction, 28 U.S.C. § 1332, see Notice of Removal, plaintiffs
filed the Motion to Remand.
in Opp.
II.

Defendant opposes this motion.

See Memo.

No reply has been filed.

STANDARD FOR REMOVAL
Under 28 U.S.C. § 1441(a), “‘[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 . . . defendants to the
district court of the United States for the district and division
embracing the place where such action is pending.’”

Ahearn v. Charter

Twp. of Bloomfield, 100 F.3d 451, 453 (6th Cir. 1996) (quoting 28
U.S.C. § 1441(a)).

Federal courts are vested with “original

‘diversity’ jurisdiction where the suit is between citizens of
different states and the amount in controversy exceeds $75,000,
exclusive of costs and interest.”

Rogers v. Wal-Mart Stores, Inc.,

230 F.3d 868, 871 (6th Cir. 2000) (citing 28 U.S.C. § 1332(a)).

The

removing party bears the burden of demonstrating federal jurisdiction
and all doubts should be resolved in favor of remand.

Eastman v.

Marine Mech. Corp., 438 F.3d 544, 549-50 (6th Cir. 2006).

This

standard requires the moving party to demonstrate by a preponderance
not only the diverse citizenship of the parties but also that the
jurisdictional amount has been met. Hayes v. Equitable Energy Res.
4

Co., 266 F.3d 560, 571-72 (6th Cir. 2001); Cleveland Hous. Renewal
Project v. Deutsche Bank Trust Co., 621 F.3d 554, 560 (6th Cir. 2010).
This standard, however, “‘does not place upon the defendant the
daunting burden of proving, to a legal certainty, that the plaintiff’s
damages are not less than the amount-in-controversy requirement.’”
Hayes, 266 F.3d at 572 (quoting Gafford v. Gen. Elec. Co., 997 F.2d
150, 158 (6th Cir. 1993), abrogated on other grounds in Hertz Corp. v.
Friend, 559 U.S. 77 (2010)).
III. DISCUSSION
Plaintiffs first argue that defendant “waived its right to resort
to the federal court system.”

Motion to Remand, p. 4.

Plaintiffs

contend that this case is based on the state court foreclosure action,
which defendant could have filed in this Court on the basis of
diversity jurisdiction.

Id.

Instead, defendant made the “clear and

conscious decision” to file that action in state court, thereby
effecting its “unambiguous relinquishment of a known right – resort to
federal court.”

Id. (citing In re Delta America Re Ins. Co., 900 F.2d

890, 892 (6th Cir. 1990)).
Defendant argues that plaintiffs’ reliance on In re Delta is
misplaced.

Memo. in Opp., p. 4-5.

Noting that the facts and issues

presented in In re Delta are different from those presented in this
case, defendant acknowledges that In re Delta reiterates the principle
that a waiver of the right to remove must be clear and unequivocal;
here, defendant argue, it has never clearly and unequivocally waived
its right to remove this proceeding.
This Court agrees.

Id. at 5.

“The right of removal of a suit from state
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court to federal court is a statutory right.

28 U.S.C. § 1441.”

In

re Delta, 900 F.2d at 892 (quoting Regis Assoc. v. Rank Hotels, Ltd.,
894 F.2d 193, 195 (6th Cir. 1990)).

“Although the right to remove can

be waived, the case law makes it clear that such waiver must be clear
and unequivocal.”

Id. (quoting Regis Assoc., 894 F.2d at 195)).

As

defendant highlights, plaintiffs have cited to no authority to support
the proposition that the prior filing of a foreclosure action in state
court constitutes a “clear and unequivocal” waiver of the right to
remove a subsequent, and separate, action.

Indeed, this Court

previously rejected a similar theory. Power Mktg. Direct, Inc. v.
Clark, No. 2:05-cv-767, 2006 U.S. Dist. LEXIS 21444 (S.D. Ohio Apr.
20, 2006).

In that case, the defendant first initiated an action

regarding a contract dispute against the plaintiff in a Texas state
court.

Id. at *2.

motion to dismiss.

The Texas court later granted the plaintiff’s
Id.

Thereafter, the plaintiff filed an action in

the Court of Common Pleas for Franklin County, Ohio, asserting a
breach of contract claim and seeking enforcement of a covenant not to
compete.

Id.

After removal of the case to this Court on the basis of

diversity jurisdiction, the plaintiff moved to remand the case,
contending, inter alia, that the defendant had waived his right to
remove the action because he had filed the earlier action in the Texas
state court.

Id. at *2-3.

This Court disagreed, finding no waiver of

the right to remove:
On April 13, 2005, [the defendant] Jimmie Clark filed a
claim against [the plaintiff] PMD challenging the
enforceability of the agreement in Texas state court.
Plaintiff contends that this conduct manifests defendant’s
intent to litigate in state court. However, PMD has not
cited to any authority supporting the proposition that a
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change in party status resulting from two separate lawsuits
in two different states constitutes forum shopping and a
waiver of the right to remove. Although Clark’s
counterclaim in this case resembles his cause of action in
Texas, this is not sufficient to derive an intent to
litigate only in state court. The Court, therefore, holds
that the previous action in Texas does not constitute
waiver of Defendant’s statutory right of removal to federal
district court.
Id. at *6-7.

This Court reaches a similar conclusion. Based on the

record presently before the Court, defendant’s earlier filing of the
state court foreclosure action does not constitute a “clear and
unequivocal” waiver of its right to remove the present action to this
Court.

Id.

The Court now turns to the merits of the Motion to Remand.
Defendant’s Notice of Removal, ECF 1, asserts that the parties are of
diverse citizenship and that the amount in controversy exceeds
$75,000.

Id. ¶¶ 5, 8. In regard to the jurisdictional amount, FNMA

specifically alleges that, should plaintiffs prevail on their claims,
the anticipated loss to defendant would exceed $319,000.00.

Id. at

¶8. Plaintiffs do not dispute that the parties are of diverse
citizenship; plaintiffs do, however, disagree that the jurisdictional
amount has been met.

Motion to Remand, pp. 2-4.

According to

plaintiffs, because this action is based on the state court
foreclosure action, which precludes defendant “from ever collecting on
the note and mortgage” and which is now final, the Rooker-Feldman
doctrine bars this Court from revisiting that decision. Id. at 4.
Defendant disagrees, contending that the amount in controversy in an
action seeking equitable or declaratory relief is measured by the
value of the object of the litigation.
7

Memo. in Opp., p. 2.

The

object of this litigation is the Property and, although federal courts
in Ohio may rely on various methods for determining the value of a
property in a quiet title action, the amount in controversy in this
case, by any method of valuation, exceeds $75,000.00.

Id. at 2-3

(explaining that the face value of the Note was for $336,000.00 and
that the assessed value of the Property exceeds $212,400.00).
Defendant also disagrees that it is precluded from ever collecting on
the Note, arguing that neither the Mortgage nor the Note was declared
invalid or unenforceable.

Id. at 3.

Rather, defendant argues,

although the state court determined that defendant could not foreclose
on the Property based on the June 1, 2011 default, the state court
also expressly found that defendant was the holder of the Note and the
Mortgage.

Id. at 3-4.

Defendant’s arguments are well-taken.

As noted supra, this

action seeks a declaration that defendant has, in light of the state
court foreclosure action, no legally enforceable interest in the
Property.

See Complaint, ¶¶ 32-37.

It is well-settled that, in

declaratory judgment actions, courts measure the amount in controversy
by “the value of the object of the litigation.”

Northup Props., Inc.

v. Chesapeake Appalachia, L.L.C., 567 F.3d 767, 770 (6th Cir. 2009)
(quoting Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333, 347
(1977)) (internal quotation marks omitted).

In the present case,

plaintiffs do not disagree that the object of this litigation is the
Property.

In determining the “value of the object of the litigation,”

federal court in Ohio have, as defendant observed, developed differing
methods of calculating the value of a property in a quiet title
8

proceeding.

For example, one court in this district has concluded

that it is the fair market value of the property, rather than damages
alleged by a plaintiff, speaks to the amount in controversy.

Johnson

v. Shank, No. 3:12-cv-241, 2014 U.S. Dist. LEXIS 25556, at *14-15
(S.D. Ohio Feb. 27, 2014) (taking judicial notice that the auditor’s
appraised value of the property at issue was $139,870.00, and
concluding that defendants satisfied the amount in controversy
requirement).

Another court in this district has determined that a

mortgage in excess of $284,000.00 sufficiently established the value
of the land at issue in a quiet title action
jurisdictional amount had been met.

and that the

Kalmanson v. Mortg. Elec.

Registration Sys., No. 1:11-cv-482, 2011 U.S. Dist. LEXIS 152727, at
*4-8 (S.D. Ohio Dec. 23, 2011), adopted and affirmed by 2012 U.S.
Dist. LEXIS 12651 (S.D. Ohio Feb. 2, 2012).

A district court in the

Northern District of Ohio concluded that the amount due on a
promissory note, $82,000.00, satisfied the jurisdictional requirement
even though the property at issue was appraised at only $42,000.00.
Alexander v. Deutsche Bank Nat’l Trust Co., No. 3:12-cv-02704, 2013
U.S. Dist. LEXIS 86148, at *3, 5-8 (N.D. Ohio June 19, 2013).
Regardless of which method this Court employs, defendant has
satisfied the amount in controversy requirement.

The record is

undisputed that plaintiff Genevieve Corbitt executed the Note in the
amount of $336,000, which was secured by the Mortgage on the Property.
See Complaint, ¶¶ 5-7; Exhibit A (copy of Mortgage), attached to Memo.
in Opp.

Defendants also present copies of records from the Delaware

County Auditor demonstrating that the assessed value of Parcel ID
9

Number 600-341-02-004-000 (101 W. Cherokee Drive, Powell, Ohio) is
$142,200.00 and that the remaining nine vacant parcels of land also
encumbered by the Mortgage each have an assessed value of $7,800.00,
for a total assessed value of $212,400.00.
Memo. in Opp.

Exhibit B, attached to

The authenticity of these records is uncontroverted.

In short, whether the Court considers the amount of the Note and the
Mortgage ($336,000.00) or the assessed value of the Property and the
vacant parcels encumbered by the Mortgage ($212,400.00), the amount in
controversy exceeds $75,000.00.
Finally, although the state court foreclosure action determined
that defendant could not foreclose on the Property based upon the
June 1, 2011 default, the state court also concluded that defendant
was the holder of the Note and the assignee of the Mortgage.
February 6, 2014 Journal Entry, p. 3.

See

Considering the present record

as a whole, the Court concludes that defendant has shown by a
preponderance of the evidence that it has satisfied the amount in
controversy requirement.

See, e.g., Hayes v. Equitable Energy Res.

Co., 266 F.3d 560, 571-72 (6th Cir. 2001).
WHEREUPON, it is RECOMMENDED that Plaintiffs Genevieve Corbitt
and Thomas Corbitt’s Motion to Remand, ECF 8, be DENIED.
If any party seeks review by the District Judge of this Report
and Recommendation, that party may, within fourteen (14) days, file
and serve on all parties objections to the Report and Recommendation,
specifically designating this Report and Recommendation, and the part
thereof in question, as well as the basis for objection thereto.
U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b).
10

Response to objections

28

must be filed within fourteen (14) days after being served with a copy
thereof.

Fed. R. Civ. P. 72(b).

The parties are specifically advised that failure to object to
the Report and Recommendation will result in a waiver of the right to
de novo review by the District Judge and of the right to appeal the
decision of the District Court adopting the Report and Recommendation.
See Thomas v. Arn, 474 U.S. 140 (1985); Smith v. Detroit Fed’n of
Teachers, Local 231 etc., 829 F.2d 1370 (6th Cir. 1987); United States
v. Walters, 638 F.2d 947 (6th Cir. 1981).

August 7, 2015

s/Norah McCann King
Norah McCann King
United States Magistrate Judge

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