Beasley v. Wells Fargo Bank, N.A. et al
MEMORANDUM OPINION OF THE COURT. Signed by District Judge Aleta A. Trauger on 6/21/17. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(af)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
TERRY JOE BEASLEY,
WELLS FARGO BANK, N.A., et al.,
Case No. 3:17-cv-00726
Judge Aleta A. Trauger
Before the court are the Motion for Judgment on the Pleadings (Doc. No. 8), filed by
defendants Wells Fargo Bank, N.A., as Trustee for the Certificate Holders of Park Place
Securities, Inc., asset-backed pass-through Certificates Series 2004-MCW (“Park Place”), Wells
Fargo Bank, N.A. (“Wells Fargo”) (collectively, the “Wells Fargo defendants”), and plaintiff
Terry Joe Beasley’s Motion to Remand (Doc. No. 11). The Motion to Remand has been fully
briefed and is ripe for review.
For the reasons set forth herein, the Motion to Remand (Doc. No. 11) will be denied.
Because the court may appropriately exercise jurisdiction over this action, the plaintiff will be
directed to file a response to the Wells Fargo defendants’ Motion for Judgment on the Pleadings.
FACTUAL AND PROCEDURAL BACKGROUND
Beasley filed the Complaint in this action on March 10, 2017 in the Chancery Court for
Rutherford County, Tennessee. (Doc. No. 6-1). He sues the Wells Fargo defendants and the
Small Business Administration (“SBA”).
According to the allegations in the Complaint, Beasley resides in Tennessee and owns
real property known as 2009 College View Drive, Murfreesboro, Tennessee 37130 (the
“Property”). Park Place and Wells Fargo are foreign corporations doing business in Tennessee.
(Compl. ¶¶ 1–3.) The SBA is a federal agency and is the beneficiary of a certain Deed of Trust to
the Property, recorded in the Office of the Rutherford County Register of Deeds. The plaintiff
alleges that the SBA is an “indispensable party to this action as it has an interest in any
foreclosure proceeds over $100,000.” (Compl. ¶ 4.)
The plaintiff previously filed suit against the Wells Fargo defendants; that action too was
removed to this court. (Compl. ¶ 7.) The undersigned granted the defendants’ Motion for
Judgment on the Pleadings and dismissed the action without prejudice, for failure to state a claim
for which relief could be granted. Beasley v. Wells Fargo Bank, N.A., 2017 WL 413856 (M.D.
Tenn. Jan. 31, 2017). According to the Complaint in that action, the plaintiff borrowed $189,000
from Ameriquest Mortgage Company (“Ameriquest”) to purchase the Property in 2004. At some
point, Ameriquest transferred and assigned the Deed of Trust and Note to Wells Fargo, as
Trustee for Park Place. Beasley eventually defaulted on his mortgage. In April 2016, Wells
Fargo initiated foreclosure proceedings. Those proceedings were apparently postponed while
Beasley pursued the previous action. Id. at *1.
Beasley alleges in his current Complaint that, while the prior action was pending and
without notice to the plaintiff, his attorney, or the SBA, the Wells Fargo defendants proceeded
with the non-judicial foreclosure sale of the Property, at which it sold the Property for $100,000.
(Compl. ¶¶ 4, 8–9.) The actual value of the Property is approximately $175,000. (Compl. ¶ 10.)
Wells Fargo, as Trustee, had previously entered into a Limited Subordination Agreement in
2009, which required any proceeds from a sale of the Property over the amount of $100,000 be
paid to the SBA. (See Compl. ¶ 10 and Ex. A.) At the time Beasley acquired the Property, he had
an SBA loan in place and secured by the Property. He has continued to make payments on the
SBA loan and remains current on that loan. (Compl. ¶ 11.)
Beasley alleges that, by proceeding with the non-judicial foreclosure sale without notice
to him or to the SBA and by selling the Property for substantially less than fair market value, the
Wells Fargo defendants interfered with the contract between the plaintiff and the SBA and
deprived both the plaintiff and the SBA of approximately $75,000. (Compl. ¶ 13.)
Based on these factual allegations, the plaintiff asserts a claim against the Wells Fargo
defendants for “Wrongful Foreclosure” in violation of Tennessee law, Tenn. Code Ann. § 35-5101 et seq., and the Tennessee Constitution. He asserts that the Wells Fargo defendants’ actions
have “caused damages to Plaintiff and to SBA not exceeding $75,000.” (Compl. ¶ 20.) He seeks
judgment in his favor and damages, as well as “an injunction . . . preventing Defendants or
[their] agents from further foreclosure and eviction actions against Plaintiff’s home.” (Compl. at
The Wells Fargo defendants were served with the Complaint on March 27, 2017 and
removed it to this court on April 20, 2017. (Notice of Removal ¶ 2, Doc. No. 1.) The asserted
basis for removal is diversity jurisdiction under 28 U.S.C. § 1332, because the controversy is
between citizens of different states and the amount in controversy exceeds $75,000.
The Wells Fargo defendants filed an Answer on April 27, 2017. (Doc. No. 7.) They filed
their Motion for Judgment on the Pleadings (Doc. No. 8) on May 5, 2017. Rather than
responding to that motion, the plaintiff, on May 9, 2017, filed his Motion to Remand (Doc. No.
11), arguing that this court lacks jurisdiction because (1) the SBA did not consent to removal;
and (2) the plaintiff alleges damages of less than $75,000, so the amount in controversy is not
MOTION TO REMAND
Generally, a civil case brought in state court may be removed by a defendant to federal
court only if the action is one over which the federal court could have exercised original
jurisdiction. 28 U.S.C. § 1441(a). A federal district court has original jurisdiction over civil
actions where the parties are completely diverse and the amount in controversy exceeds $75,000,
exclusive of interest and costs. 28 U.S.C. § 1332. Here, there is no dispute that the parties are
completely diverse. 1 The parties disagree, however, as to (1) whether Wells Fargo complied with
the procedural requirements for removal; and (2) whether the amount-in-controversy requirement
The statute governing the procedure for removal provides that, when an action is
removed under 28 U.S.C. § 1441(a), “all defendants who have been properly joined and served
must join in or consent to the removal of the action.” 28 U.S.C. § 1446(b)(2)(A). This rule,
referred to as the “rule of unanimity,” see, e.g., Harper v. AutoAlliance Int’l, Inc., 392 F.3d 195,
201 (6th Cir. 2004), has historically been strictly construed. Klein v. Manor Healthcare Corp., 19
F.3d 1433 (Table), 1994 WL 91786, at *3 n.8. However, exceptions to the general rule requiring
joinder or consent by all defendants exist when “(1) the non-joining defendant has not been
served with service of process at the time the removal petition is filed [and] (2) the non-joining
defendant is merely a nominal or formal party . . . .” Id. (citation omitted).
In his Motion to Remand, Beasley argues that remand is required because the Wells
Fargo defendants failed to obtain the SBA’s consent to removal. In response, the Wells Fargo
defendants argue that the SBA’s consent was not required, both because (1) it had not been
The parties also agree that the SBA, as a federal agency, would have the ability to
remove the action under 28 U.S.C. § 1442(a)(1).
served at the time of removal, and (2) it is a nominal defendant whose consent was not required.
The court concludes on the basis of the record before it that the Wells Fargo defendants
removed the case before the SBA had been served. The Wells Fargo defendants specifically
averred in their removal documents that the SBA, to the best of counsel’s knowledge, had not yet
been served, and they subsequently filed in this court a copy of all documents served upon them
in the state-court action, in accordance with 28 U.S.C. § 1446(a). Beasley, in his Motion and
Reply, does not contend that the SBA had already been served nor has he produced
documentation indicating that the SBA had, in fact, been served by the time of removal. To date,
the SBA has not entered an appearance or pleading in this court, so it remains unclear whether
the SBA has ever been served (or whether it has been made aware of these removal
proceedings). Regardless, because the plaintiff does not dispute the Wells Fargo defendants’
contention that the SBA had not been served at the time of removal, the SBA’s consent to
removal was not required. 28 U.S.C. § 1446(b)(2)(A).
In addition, as indicated above, “[n]ominal parties are excepted from the requirement that
all defendants join in or consent to removal to federal court.” Hartford Fire Ins. Co. v.
Harleysville Mut. Ins. Co., 736 F.3d 255, 257 (4th Cir. 2013). See also Charles Alan Wright et
al., 14C Fed. Prac. & Proc. Juris. § 3730 (4th ed.) (collecting cases). The Wells Fargo defendants
contend that the SBA’s consent to removal is not required because it is a nominal party. The
plaintiff insists, to the contrary, that the SBA is an indispensable party.
Although the Sixth Circuit does not appear to have precisely defined the term “nominal
party,” several other circuits have held that a defendant is nominal if “there is no real basis for
liability against that defendant or where that defendant’s interests are not genuinely adverse to
the plaintiff.” Geiman v. N. Ky. Water Dist., No. 2:13-cv-177, 2014 WL 12573717, at *5 (E.D.
Ky. Jan. 16, 2014). See, e.g., Hartford Fire Ins. Co., 736 F.3d at 260 (“Nominal means simply a
party having no immediately apparent stake in the litigation either prior or subsequent to the act
of removal.”); Thorn v. Amalgamated Transit Union, 305 F.3d 826, 833 (8th Cir. 2002) (defining
nominal defendants as “those against whom no real relief is sought” and holding that nominal
defendants need not join or consent to removal (citation omitted)); Shaw v. Dow Brands, Inc.,
994 F.2d 364, 369 (7th Cir. 1993) (“A defendant is nominal if there is no reasonable basis for
predicting that it will be held liable.”), abrograted in other part by Meridian Sec. Ins. Co. v.
Sadowski, 441 F.3d 536 (7th Cir. 2006); Farias v. Bexar Cnty. Bd. of Trustees, 925 F.2d 866,
871 (5th Cir. 1991) (“To establish that non-removing parties are nominal parties, the removing
party must show . . . that there is no possibility that the plaintiff would be able to establish a
cause of action against the non-removing defendants in state court.” (internal quotation marks
omitted)); Tri–Cities Newspapers, Inc. v. Tri–Cities Printing Pressmen & Assistants’ Local 349,
427 F.2d 325, 327 (5th Cir. 1970) (“The ultimate test of whether the . . . defendants are . . .
indispensable parties . . . is whether in the absence of the (defendant[s]), the Court can enter a
final judgment consistent with equity and good conscience which would not be in any way unfair
or inequitable to plaintiff.” (citation omitted)).
The plaintiff argues that the SBA is not merely a nominal party because the plaintiff is a
beneficiary of the 2009 Limited Subordination Agreement between Wells Fargo and the SBA
and that “[b]oth the SBA and Plaintiff have a real interest in having the property sold for the
actual fair market value.” (Doc. No. 14, at 3.) Beasley further insists that the “SBA’s interest is
real and any resolution of this case without SBA would not be ‘consistent with equity and good
conscience’ and would be unfair and inequitable to the SBA.” (Id. (quoting Tri-Cities
Newspapers, Inc., 427 F.2d at 327).)
These arguments are unavailing. First, to the extent the plaintiff may be deemed an
intended third-party beneficiary of the Limited Subordination Agreement, he may have the
ability to bring breach-of-contract claims on his own behalf, based on an alleged breach of that
agreement. See Owner-Operator Indep. Drivers Ass’n, Inc. v. Concord EFS, Inc., 59 S.W.3d 63,
68 (Tenn. 2001) (“[T]hird parties may enforce a contract if they are intended beneficiaries of the
contract.”). And the SBA itself may well have grounds to bring a breach of contract claim
against the Wells Fargo defendants. The plaintiff, however, does not have standing to assert
claims on behalf of the SBA. See Warth v. Seldin, 422 U.S. 490, 501 (1975) (“[T]his Court has
held that the plaintiff generally must assert his own legal rights and interests, and cannot rest his
claim to relief on the legal rights or interests of third parties.”). Likewise, to the extent the SBA
has an interest in the Property, it must assert such claims arising from such interest on its own
Moreover, the allegations in the Complaint make it clear that the plaintiff has no real
basis for liability against the SBA. Accord Geiman, 2014 WL 12573717, at *5. The Complaint
does not actually assert any claims against the SBA. It does not allege that the SBA took or
failed to take any action that interfered with the plaintiff’s legal interests or violated his legal
rights. It does not allege that the SBA itself was involved in the foreclosure proceedings. The
Complaint does not seek damages against the SBA. Rather, it specifically asserts that the Wells
Fargo defendants’ actions damaged the plaintiff and the SBA. (Compl. ¶ 20.)
In short, the plaintiff does not seek relief against the SBA, so there is no reasonable basis
for predicting that the SBA could be held liable to him. The court therefore concludes that the
SBA is a nominal defendant whose permission to remove was not required.
Amount in Controversy
The parties also dispute whether the plaintiff’s statement in his Complaint that Wells
Fargo has “caused damages to Plaintiff and to SBA not exceeding $75,000” (Compl. ¶20) is
sufficient to destroy diversity jurisdiction.
Normally, “the sum demanded in good faith in the initial pleading shall be deemed to be
the amount in controversy.” 28 U.S.C. § 1446(c)(2). That general rule does not apply, however,
if the initial pleading either seeks non-monetary relief, such as an injunction, or seeks “a money
judgment, but the State practice either does not permit a demand for a specific sum or permits
recovery of damages in excess of the amount demanded.” 28 U.S.C. § 1446(c)(2)(A). Both of
those conditions are met here. First, under Tennessee law, the plaintiff would be permitted to
recover damages in excess of the amount demanded. See Rogers v. Wal-Mart Stores, Inc., 230
F.3d 868, 871 (6th Cir. 2000) (noting that Rule 54.03 of the Tennessee Rule of Civil Procedures
is analogous to Rule 54(c) of the Federal Rules of Civil Procedure, both of which permit a party
“to recover damages in excess of what she prayed for”). And, indeed, in addition to damages of
$75,000, the plaintiff specifically demands “[s]uch other and further relief to which [he] may be
entitled.” (Compl. at 6.) Second, the plaintiff seeks an injunction “preventing Defendants or
[their] agents from further foreclosure and eviction actions against Plaintiff’s home” (Compl. at
Regarding the plaintiff’s requested injunction, the Sixth Circuit recognizes that, “[i]n
actions seeking declaratory or injunctive relief, it is well established that the amount in
controversy is measured by the value of the object of the litigation.” Cleveland Hous. Renewal
Project v. Deutsche Bank Trust Co., 621 F.3d 554, 560 (6th Cir. 2010) (quoting Hunt v. Wash.
State Apple Adver. Comm’n, 432 U.S. 333, 347 (1977)).
The plaintiff concedes that the Property subject to foreclosure is worth approximately
$175,000. (Compl. ¶ 10.) He nonetheless maintains that the value of the litigation is limited to
$75,000—the difference between the actual value of the Property and the foreclosure price
($100,000). In response, the Wells Fargo defendants argue that “the amount in controversy is
measured by the value of the object of the litigation,” which, in this case, is admittedly more than
$75,000. (Doc. No. 12, at 2 (quoting Moulds v. Bank of N.Y. Mellon, No. 1:11–CV–200, 2011
WL 4344439, *3 (E.D. Tenn. Sept. 14, 2011).
This court likewise concludes that the amount in controversy here consists of the value of
the Property in foreclosure, which is the subject of the plaintiff’s demand for an injunction.
Whether that figure is deemed to be $175,000 or $100,000, it still exceeds the jurisdictional
threshold. The court therefore finds that the Wells Fargo defendants have established, by a
preponderance of the evidence, that the amount in controversy exceeds $75,000.
Because the Wells Fargo defendants have established that they were not required to
obtain the consent of the SBA at the time they removed the case and that the amount in
controversy exceeds $75,000, the Motion to Remand will be denied. The plaintiff will be
directed to file a response to the Motion for Judgment on the Pleadings within fourteen days.
An appropriate Order is filed herewith.
ALETA A. TRAUGER
United States District Judge
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