Gilmore et al v. Wallace et al

Filing 15

ORDER granting 14 plaintiffs' Motion to Amend the Complaint and Remand, whereby plaintiffs have ten days from entry of this Order to file an amended complaint. As soon as Statewide Trustee and Ms. Burnette are added as defend ants, the Court will no longer have subject-matter jurisdiction under 28 U.S.C. § 1332. Once the amended complaint is filed, this action shall be REMANDED to the Chancery Court for Loudon County, Tennessee. Signed by District Judge Thomas W Phillips on April 18, 2011. (AYB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE

JOHN GILMORE AND SHENA GILMORE,
Plaintiffs,
v.
SHELLIE WALLACE, et al.,
Defendants.

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No. 3:10-CV-47
(Phillips)

ORDER TO REMAND
This matter is before the Court on Plaintiffs’ Motion to Amend the Complaint and Remand
[Doc. 14]. Plaintiffs request leave to file an amended complaint that would add two defendants:
Statewide Trustee Services (“Statewide Trustee”) of Little Rock, Arkansas, and Lisa Burnette (“Ms.
Burnette”) of Dandridge, Tennessee. [Id.]. If Ms. Burnette is added as a defendant, that will destroy
the Court’s subject-matter jurisdiction under 28 U.S.C. § 1332. [Id.]. The Defendants do not oppose
the motion. [Id.].
For the following reasons, Plaintiffs’ Motion to Amend the Complaint and Remand [Doc.
14] is GRANTED, whereby Plaintiffs have ten days from entry of this Order to file an amended
complaint. As soon as Statewide Trustee and Ms. Burnette are added as defendants, the Court will
no longer have subject-matter jurisdiction under 28 U.S.C. § 1332. Once the amended complaint
is filed, this action shall be REMANDED to the Chancery Court for Loudon County, Tennessee.
I.

BACKGROUND
On December 30, 2009, Plaintiffs filed suit in the Chancery Court for Loudon County,

Tennessee, in Case No. 11596. [Notice of Removal, Doc. 1, at 1]. Plaintiffs filed a wrongful
foreclosure action against Wells Fargo Bank, N.A. (“Wells Fargo”), the Federal Home Loan
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Mortgage Corporation (“Freddie Mac”), Wilson & Associates, PLLC (“Wilson & Associates”), and
Shellie Wallace (“Ms. Wallace”). On February 5, 2010, Defendants removed this action to federal
court pursuant to 28 U.S.C. § 1446(b). [Id.]. At the time this case was removed, there was complete
diversity between the parties, and the Court had subject-matter jurisdiction pursuant to 28 U.S.C.
§ 1332.
For purposes of this motion, the Court accepts the following facts as true. In their complaint,
Plaintiffs allege that they purchased property located at 4100 Davis Ferry Road in Loudon,
Tennessee (the “Property”). [Plaintiffs’ Original Complaint, Doc. 1-1, at 1]. The deed was recorded
on December 14, 2001. [Id.]. Plaintiffs mortgaged the Property to secure a note in the amount of
$89,182.09, payable to the Greene County Bank. [Id., at 1-2]. The loan was then sold to Wells
Fargo. [Id., at 2]. On August 17, 2009, an attempt was made to appoint Ms. Wallace as substitute
trustee. [Id.]. On August 31, 2009, Ms. Wallace executed a Trustee’s Deed to Freddie Mac. [Id.].
Plaintiffs argue that their Property was wrongfully foreclosed upon, and that the Trustee’s
Deed should be set aside. [Id.]. In support, Plaintiffs allege, inter alia, that Ms. Wallace was not
properly appointed as a substitute trustee, and that they were “never duly notified of the
foreclosure.” [Id.].
Plaintiffs now seek to add two defendants: Statewide Trustee and Ms. Burnette. [Plaintiffs’
Motion to Amend the Complaint and Motion to Remand, Doc. 14]. Plaintiffs allege that Statewide
Trustee and Ms. Burnette were employed to “cry the property at issue in this case.” [Id., at 1].
Plaintiffs allege that they did not learn about Statewide Trustee and Ms. Burnette until after
discovery commenced. [Id.]. Specifically, Plaintiffs allege that they did not learn this information
until Defendants submitted answers to interrogatories on December 1, 2010. [Id.].
II.

ANALYSIS
At the time this case was removed, there was complete diversity between the parties, and the
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Court had subject-matter jurisdiction pursuant to 28 U.S.C. § 1332. See, e.g., Jerome-Dunan, Inc.
v. Auto-By-Tel, L.L.C., 176 F.3d 904, 907 (6th Cir. 1999) (“In order for a defendant to remove a case
to federal court based upon diversity jurisdiction, there must be complete diversity of citizenship
both at the time that the case is commenced and at the time that the notice of removal is filed.”). On
December 14, 2010, Plaintiffs filed the Motion to Amend the Complaint and Remand [Doc. 14].
Plaintiffs request leave to amend their complaint to add two defendants: Statewide Trustee and Ms.
Burnette. [Id.]. This joinder would destroy the Court’s subject-matter jurisdiction under 28 U.S.C.
§ 1332.1
Under these circumstances, the Court must rely upon 28 U.S.C. § 1447(e).

That

section–which addresses the precise circumstances of this case– provides that “[i]f after removal the
plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction,
the court may deny joinder, or permit joinder and remand the action to the State court.” 28 U.S.C.
§ 1447(e). The Court of Appeals for the Sixth Circuit has held that “in a situation such as this where
an amended complaint is filed to include the identity of a previous unidentified defendant, diversity
must be determined at the time of the filing of the amended complaint.” Curry v. U.S. Bulk
Transport, Inc., 462 F.3d 536, 540 (6th Cir. 2006) (emphasis added). A leading civil procedure
treatise has also explained the rule:
Although jurisdiction will not be ousted by a subsequent change in

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Plaintiffs are citizens and residents of Tennessee. [Notice of Removal, Doc. 1, at 2]. Wells
Fargo is a national banking association with its principal place of business located in Iowa. [Id., at 3].
Freddie Mac is a United States corporation with its principal place of business in Virginia. [Id.]. Ms.
Wallace is a citizen and resident of Arkansas. [Id.]. Wilson &Associates is a professional limited
liability company, and its members are not residents of Tennessee. [Id.]. Thus, at the time of removal
there was complete diversity between the parties.
If Ms. Burnette is added as a party, there will no longer be complete diversity between the parties.
[Plaintiffs’ Motion to Amend the Complaint and Remand, Doc. 14]. Ms. Burnette–like the Plaintiffs–is a
resident of Tennessee. [Id.].

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parties who are ancillary to the suit and whose presence . . . is not
essential to an adjudication on the merits, a change in parties that
goes to the very essence of the district court’s ability to adjudicate the
merits of the dispute effectively–most notably the addition of
indispensable parties–may destroy it. The cases indicate that the
court will take account of whether the plaintiff has been dilatory or
is trying to destroy diversity, whether the plaintiff will be
significantly disadvantaged if the amendment is not allowed, and
whether remanding the action to the state court will prejudice the
defendant.
14B CHARLES ALAN WRIGHT, ARTHUR R. MILLER, & EDWARD H. COOPER, FEDERAL PRACTICE AND
PROCEDURE § 3723 (3d ed. 1998).
In Curry, the Court of Appeals held that the district court should have remanded the case
under similar facts. 462 F.3d at 538-43. Like the present case, the defendant in Curry removed the
case to federal court based upon diversity jurisdiction. Id. The plaintiff later filed a motion to
amend the complaint, seeking to add defendants that would destroy diversity jurisdiction. Id. The
Court of Appeals held that the district court should have remanded the case pursuant to 28 U.S.C.
1447(e). Id. Specifically, the Court of Appeals held that the plaintiff made good-faith efforts to
identify the previously unidentified defendants. Id.
Like Curry, the Plaintiffs in the present case made good-faith efforts to identify Statewide
Trustee and Ms. Burnette. The Plaintiffs were simply unable to identify those persons until later in
the discovery process. There is nothing that suggests Plaintiffs have acted in bad faith by filing this
motion, or that they knew about Statewide Trustee or Ms. Burnette prior to December 2010. In
addition, because Defendants do not oppose Plaintiffs’ Motion [Doc. 14], they will not be prejudiced
if the case is remanded to state court. In fact, their consent demonstrates the opposite.
III.

CONCLUSION
Based upon the foregoing, Plaintiffs’ Motion to Amend the Complaint and Remand [Doc.

14] is GRANTED, whereby Plaintiffs have ten days from entry of this Order to file an amended
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complaint. As soon as Statewide Trustee and Ms. Burnette are added as defendants, the Court will
no longer have subject-matter jurisdiction under 28 U.S.C. § 1332. Once the amended complaint
is filed, this action shall be REMANDED to the Chancery Court for Loudon County, Tennessee.

IT IS SO ORDERED.
ENTER:
s/ Thomas W. Phillips
United States District Judge

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