Burris et al v. Ocwen Loan Servicing LLC

Filing 10

ORDER denying 7 Motion to Remand, as more fully set out. Signed by Honorable David L. Russell on 5/6/16. (jw)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
ROY R. BURRIS AND JENNIFER
BURRIS,
Plaintiffs,
v.
OCWEN LOAN SERVICING, LLC,
Defendants.

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CIV-16-120-R

ORDER
This matter comes before the Court on the Motion to Remand (Doc. No. 9), filed
by Plaintiffs. Defendant Ocwen Loan Servicing responded in opposition to the motion.
Having considered the parties’ submissions, the Court finds as follows.
Defendant removed this action from the District Court of Oklahoma County on
February 11, 2016, asserting the existence of both federal question and diversity
jurisdiction. Plaintiffs filed the instant motion asserting that Defendant’s Notice of
Removal fails to establish the requisite amount in controversy so as to support the Court’s
exercise of jurisdiction under 28 U.S.C. § 1332 and that they are not pressing federal
claims, and therefore 28 U.S.C. § 1331 is not applicable. Accordingly, Plaintiffs request
remand of this matter.
Plaintiffs allege that they assumed a promissory note and mortgage in 1986, with a
principal of $74,650, to be paid back in monthly installments over a thirty-year period at
a rate of 10.5%. In 1992, the Note was assigned to HUD. In 1997, Plaintiff’s sought
protection under Chapter 7 of the United States Bankruptcy Code. During that same time

period, specifically in August 1997, their Note was assigned by HUD to Defendant’s
predecessor. In September 1997, Plaintiffs executed a reaffirmation agreement in
conjunction with their bankruptcy, agreeing to pay $740.00 per month until repayment
was complete, to be accomplished in April 2016. The reaffirmation agreement did not
include any provisions for repayment of late interest. Plaintiffs allege that upon
requesting payoff information in December 2014, they became aware that Defendant had
not been posting their payments in accordance with the terms of the Note. The payoff
statement indicated principal due in the amount of $41,313.86, including certain expenses
that Plaintiffs contend are not permissible, and an interest arrearage balance of $6,432.54.
A subsequently provided detailed statement, which included history from August 1, 1997,
indicated a starting principal of $72,094, with interest arrearage of $18,015.16. The
interest arrears were listed as $0.00 on September 1, 1997, but on January 1, 2001, the
arrearage was reflected as $9,007.53. Plaintiffs contend, however, no payments were
missed after execution of the forbearance agreement, which made no provision for
interest arrearage.1 Plaintiffs allege that in 2007 they were forced to sign a forbearance
agreement, facing threat of foreclosure by Defendant, for interest they contend they did
not owe. As a result, Plaintiffs alleges they were coerced into agreeing to pay $8,326.38
in addition to the remaining principal on the Note and to signing a forbearance
agreement. Plaintiffs are pursuing relief under theories of breach of contract, tortious
breach of contract, negligence, fraud, and unjust enrichment. They also seek rescission of

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Plaintiffs indicate no claim was filed by the Note holder at the time of their bankruptcy with regard to allegedly
past due interest.

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the forbearance agreement and an accounting. They seek rescission of the forbearance
agreement asserting that Defendant misapplied various mortgage payments to
erroneously assessed interest arrearages and fees not supported by their Note and
Mortgage, or their Reaffirmation Agreement. Plaintiffs seek punitive damages as well as
actual damages. They contend with regard to various claims that they seek in excess of
$10,000 in damages.2
A defendant in a state court civil action may remove it to federal court if the
plaintiffs originally could have filed the action in federal court. 28 U.S.C. § 1441(a); see
also Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (explaining that “[o]nly statecourt actions that originally could have been filed in federal court may be removed to
federal court by the defendant.”). This 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).
When removal is based on diversity jurisdiction, the federal statute requires:
(2) If removal of a civil action is sought on the basis of the jurisdiction
conferred by section 1332(a), the sum demanded in good faith in the initial
pleading shall be deemed to be the amount in controversy, except that—
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The Court notes that the Petition filed in this case did not comport with Oklahoma’s pleading code, which
provides, in relevant part:
Every pleading demanding relief for damages in money in excess of the amount required for
diversity jurisdiction pursuant to Section 1332 of Title 28 of the United States Code shall, without
demanding any specific amount of money, set forth only that the amount sought as damages is in
excess of the amount required for diversity jurisdiction pursuant to Section 1332 of Title 28 of the
United States Code, except in actions sounding in contract. Every pleading demanding relief for
damages in money in an amount that is required for diversity jurisdiction pursuant to Section 1332
of Title 28 of the United States Code or less shall specify the amount of such damages sought to
be recovered. Relief in the alternative or of several different types may be demanded.
Additionally, Okla. Stat. tit. 12 §2009(G). requires that “[i]n actions where exemplary or punitive damages are
sought, the petition shall not state a dollar amount for damages sought to be recovered but shall state whether the
amount of damages sought to be recovered is in excess or not in excess of the amount required for diversity
jurisdiction pursuant to Section 1332 of Title 28 of the United States Code.”

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(A) the notice of removal may assert the amount in controversy if the initial
pleading seeks— (i) nonmonetary relief; or (ii) a money judgment, but the
State practice either does not permit demand for a specific sum or permits
recovery of damages in excess of the amount demanded; and
(B) removal of the action is proper on the basis of an amount in controversy
asserted under subparagraph (A) if the district court finds, by the
preponderance of the evidence, that the amount in controversy exceeds the
amount specified in section 1332(a).
28 U.S.C. § 1446(c)(2). Where, as here, it is not apparent from the petition that the
amount in controversy is met, the removing party must show contested factual assertions
in the case that make it possible that at least $75,000 is at issue. McPhail v. Deere & Co.,
529 F.3d 947, 954-955 (2008). “A complaint that presents a combination of facts and
theories of recovery that may support a claim in excess of $75,000 can support removal.”
Id. at 955-956. A defendant who has filed a notice of removal asserting diversity
jurisdiction “is entitled to stay in federal court unless it is ‘legally certain’ that less than
$75,000 is at stake. If the amount is uncertain, then there is potential controversy, which
is to say that at least $75,000 is in controversy in the case.” Id. at 954. In addition to the
allegations in the complaint, a variety of additional means are available to a defendant to
meet this burden of proof. Id. at 954-956. Here, the notice of removal may assert the
amount in controversy, because the initial pleading both seeks nonmonetary relief,
rescission and an accounting, and furthermore, the Plaintiffs’ pleading damages in excess
of $10,000 does not limit their legal ability to recover to less than $75,000.00.
Furthermore, although Plaintiffs contend they seek less than $75,000, the
Defendant presents evidence that contradicts their assertions. Defendant asserts, via
declaration of Sandra Lyew, that it is the current servicer of the Loan which is held by
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U.S. Bank, that Plaintiffs entered into a forbearance agreement in 2004, agreeing to
submit payments of $750.40 each month from September 1, 2004 through August 1,
2005, in exchange for the then-servicing agent to forego foreclosure based on interest
arrearage, and that but for approximately two periods totaling twelve months, that
Plaintiffs have been making forbearance payments of not less than $700 per month since
September 1, 2004. The exhibits include a copy of a 2004 Forbearance Agreement and a
Payment Reconciliation History showing payments identified as “forbearance” for a
period of many years. Finally, Defendant encloses a letter sent by Plaintiff’s counsel to
Defendant prior to the filing of the instant litigation. Therein, after making certain factual
allegations, counsel stated:
Since October 1997, Mr. and Mrs. Burris have made payments to Ocwen
totaling approximately $172,152.48. Taking into account the application of
principal, interest and escrow for the payment of property taxes, this
amount is well in excess of the amount necessary to retire their obligation
to Ocwen pursuant to the Reaffirmation Agreement. Given the statements
in Ocwen’s September 2nd, 2015 letter, Mr. and Mrs. Burris maintain
serious concerns regarding the amounts which Ocwen claims remain due
and owing on their loan. Therefore, Mr. and Mrs. Burris must insist that
Ocwen, as the servicer of their loan, provided detailed documentation to
establish the proper application of all payments under the parties’
agreement. Further, this correspondence shall serve as a formal request to
Ocwen for the provision of all documents associated with this loan,
including, but not limited to, those documents which establish Ocwen’s
right to assess and collect an “interest arrearage” on the Burris’ loan.
Should Ocwen, upon review of this letter, the Burris’ loan history and
related documents determine that Mr. and Mrs. Burris have paid over and
above what they owe pursuant to the parties’ agreement we would request
that those monies be refunded to Mr. and Mrs. Burris forthwith.
Doc. No. 9-4. Finally, a file notation from Defendant dated October 23, 2015,
indicates “[t]he attorneys have now escalated the issue and are requesting that if
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we are not updating the reaffirmation details we would have to refund all
payments made since October 1997.” Doc. No. 9-5.
The Payment Reconciliation History indicates that Plaintiffs have paid far
in excess of $75,000 to the Defendant, most of which has been allocated as
“forbearance payments.” Plaintiff’s claim for rescission would, as asserted in the
Notice of Removal, render the agreement void ab initio and require refund of these
amounts. Finally, Plaintiffs seek punitive damages with regard to their claims,
which can be considered in assessing whether the amount in controversy
requirement has been established. See Burrell v. Burrell, 229 F.3d 1162, 2000 WL
11113702, at *2 (10th Cir.2000) (unpublished opinion) (“[w]here both actual and
punitive damages are recoverable under a complaint each must be considered to
the extent claimed in determining jurisdictional amount”) (citing Bell v. Preferred
Life Assurance Society, 320 U.S. 238, 240 (1943)). As a result of the above, the
Court concludes that Defendant has met its burden of establishing the amount in
controversy requirement is met, and accordingly, removal on this basis of diversity
was proper.
Because the Court concludes that it has jurisdiction on the basis of
diversity, it will not consider whether the Petition can be construed as stating a
claim under the Real Estate Settlement Procedures Act, thus giving rise to federal
question jurisdiction. For the reasons set forth herein, Plaintiffs’ Motion to remand
is hereby DENIED.

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IT IS SO ORDERED this 6th day of May, 2016.

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