Wells Fargo Bank v. Matts

Filing 10

MEMORANDUM OPINION AND ORDER denying as moot 8 Motion to Remand. The court lacks subject matter jurisdiction over this action and sua sponte remands the action to County Court at Law No. 1, Dallas County, Texas, from which it was removed. (Ordered by Judge Sam A Lindsay on 12/13/2012) (ctf)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
WELLS FARGO BANK,
Plaintiff,
v.
CHARLES MATTS AND
ALL OTHER OCCUPANTS OF 13138
RUSTIC CIRCLE, BALCH SPRINGS,
TEXAS 75180,
Defendants.

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Civil Action No. 3:12-CV-4565-L

MEMORANDUM OPINION AND ORDER
For the reasons herein explained, the court lacks subject matter jurisdiction over this action
and sua sponte remands the action to County Court at Law No. 1, Dallas County, Texas, from which
it was removed.
I.

Background
This action arises from a forcible detainer eviction proceeding initiated in Texas state court

by Wells Fargo Bank, N.A. (“Plaintiff”) against Defendants Charles Matts and All Other Occupants
of 13138 Rustic Circle, Balch Springs, Texas, 75180 (collectively, “Defendants”). Defendants, who
are proceeding pro se, removed the action to federal court. Defendants’ Notice of Removal
(“Notice”) contains inconsistent factual allegations regarding the timing of events that have occurred
in the case. For example, Defendants state in their Notice that the case was removed from County
Court at Law No. 1, Dallas County, Texas, on November 13, 2012, before Defendants were served
with Plaintiff’s Original Petition & Forcible Detainer on October 30, 2012, and before the action was

Memorandum Opinion and Order – Page 1

filed by Plaintiff on November 15, 2012, in County Court at Law No. 1. Additionally, Defendants’
“Index of Materials Attached to Notice of Removal” refers to a “Notice of Appeal” and an “Original
Petition” that, according to the Index, were both filed on October 30, 2012. No Notice of Appeal
was actually included in the materials submitted; however, a copy of Plaintiff’s Sworn Complaint
for Forcible Detainer (“Complaint”) was included. Plaintiff’s Complaint reflects that the forcible
detainer action was originally filed on September 27, 2012, in Justice Court, Precinct No. 1, Place
No. 2, Dallas County, Texas. Thus, the appeal to County Court at Law No. 1 was apparently taken
by Defendants from a final order or judgment entered against them by the Justice Court. Defendants
removed the action based on federal question and diversity jurisdiction. The court considers sua
sponte whether it has subject matter jurisdiction over this action.
II.

Standard for Subject Matter Jurisdiction
A.

General Standard

A federal court has subject matter jurisdiction over civil cases “arising under the
Constitution, laws, or treaties of the United States,” or over civil cases in which the amount in
controversy exceeds $75,000, exclusive of interest and costs, and in which diversity of citizenship
exists between the parties. 28 U.S.C. §§ 1331, 1332. Federal courts are courts of limited jurisdiction
and must have statutory or constitutional power to adjudicate a claim. See Home Builders Ass’n of
Miss., Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998). Absent jurisdiction conferred
by statute or the Constitution, they lack the power to adjudicate claims and must dismiss an action
if subject matter jurisdiction is lacking. Id.; Stockman v. Federal Election Comm’n, 138 F.3d 144,
151 (5th Cir. 1998) (citing Veldhoen v. United States Coast Guard, 35 F.3d 222, 225 (5th Cir.
1994)). “[S]ubject-matter jurisdiction cannot be created by waiver or consent.” Howery v. Allstate
Memorandum Opinion and Order – Page 2

Ins. Co., 243 F.3d 912, 919 (5th Cir. 2001). A federal court has an independent duty, at any level
of the proceedings, to determine whether it properly has subject matter jurisdiction over a case.
Ruhgras AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999) (“[S]ubject-matter delineations must
be policed by the courts on their own initiative even at the highest level.”); McDonal v. Abbott Labs.,
408 F.3d 177, 182 n.5 (5th Cir. 2005) (“federal court may raise subject matter jurisdiction sua
sponte”).
B.

Federal Question

A federal court has subject matter jurisdiction over cases arising under the Constitution, laws,
or treaties of the United States, which is commonly referred to as federal question jurisdiction. 28
U.S.C. § 1331. This provision for federal question jurisdiction is generally invoked by a plaintiff
pleading a cause of action created by federal law (such as claims brought pursuant to 42 U.S.C. §
1983, or by defendants removing to federal court because the plaintiff's claim arises under federal
law.) This, of course, is not the only manner in which federal question jurisdiction arises.
An action that asserts only state law claims may “arise under” federal law if “the vindication
of a right under state law necessarily turn[s] on some construction of federal law.” Franchise Tax
Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 9 (1983) (citations omitted). This means
that a federal district court has jurisdiction over a state claim that “necessarily raise[s] a stated federal
issue, actually disputed and substantial, which a federal forum may entertain without disturbing any
congressionally approved balance of federal and state judicial responsibilities.” Grable & Sons
Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 314 (2005). Otherwise stated, as “the
presence of a disputed federal issue and the ostensible importance of a federal forum are never
necessarily dispositive,” a federal court is to decline jurisdiction if the exercise of its jurisdiction is
Memorandum Opinion and Order – Page 3

inconsistent “with congressional judgment about the sound division of labor between state and
federal courts governing application of [28 U.S.C.] § 1331.” Id. at 313-14. Under Grable, federal
question jurisdiction exists only when “(1) resolving a federal issue is necessary to the resolution
of the state-law claim; (2) the federal issue is actually disputed; (3) the federal issue is substantial;
and (4) federal jurisdiction will not disturb the balance of federal and state judicial responsibilities.”
Singh v. Morris, LLP, 538 F.3d 334, 338 (5th Cir. 2008). In the final analysis, when a plaintiff’s
pleadings set forth only state law claims, a federal district court has federal question jurisdiction to
entertain the action only if “(1) the state law claims necessarily raise a federal issue or (2) the state
law claims are completely preempted by federal law.” Bernhard v. Whitney Nat’l Bank, 523 F.3d
546, 551 (5th Cir. 2008).
Whether an action “arises under” federal law and creates federal question jurisdiction over
a case removed from state to federal court, or one originally filed in such court, ordinarily “must be
determined by reference to the ‘well-pleaded complaint.’” Merrell Dow Pharms. Inc. v. Thompson,
478 U.S. 804, 808 (1986) (citation omitted). “[A] case may not be removed to federal court on the
basis of a federal defense . . . even if the defense is anticipated in the plaintiff’s complaint, and even
if both parties concede that the federal defense is the only question truly at issue.” Caterpillar Inc.
v. Williams, 482 U.S. 386, 393 (1987). “A defense that raises a federal question is inadequate to
confer federal jurisdiction.” Thompson, 478 U.S. at 808 (citation omitted). “Even an inevitable
federal defense does not provide a basis for removal jurisdiction.” Bernhard, 523 F.3d at 551
(citations omitted). In other words, the complaint must “raise[] issues of federal law sufficient to
support federal question jurisdiction.” Rodriguez v. Pacificare of Tex., Inc., 980 F.2d 1014, 1017
(5th Cir. 1993) (citation omitted).
Memorandum Opinion and Order – Page 4

A “corollary of the well-pleaded complaint rule developed in the case law, however, is that
Congress may so completely pre-empt a particular area, that any civil complaint raising this select
group of claims is necessarily federal in character.” Metropolitan Life Ins. Co. v. Taylor, 481 U.S.
58, 63-64 (1987); Arana v. Ochsner Health Plan, 338 F.3d 433, 437 (5th Cir. 2003) (en banc). In
other words, “[w]hen the federal statute completely pre-empts the state law cause of action, a claim
which comes within the scope of that cause of action, even if pleaded in terms of state law, is in
reality, based on federal law,” and such “claim is then removable under 28 U.S.C. § 1441(b).”
Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 8 (2003).
C.

Diversity and Amount in Controversy

Diversity of citizenship exists between the parties only if each plaintiff has a different
citizenship from each defendant. Getty Oil Corp. v. Insurance Co. of North America, 841 F.2d 1254,
1258 (5th Cir. 1988). Otherwise stated, 28 U.S.C. § 1332 requires complete diversity of citizenship;
that is, a district court cannot exercise jurisdiction if any plaintiff shares the same citizenship as any
defendant. See Corfield v. Dallas Glen Hills LP, 355 F.3d 853, 857 (5th Cir. 2003) (citation
omitted). “[T]he basis upon which jurisdiction depends must be alleged affirmatively and distinctly
and cannot be established argumentatively or by mere inference.” Getty, 841 F.2d at 1259 (citing
Illinois Cent. Gulf R.R. Co. v. Pargas, Inc., 706 F.2d 633, 636 n.2 (5th Cir. 1983)). Failure to allege
adequately the basis of diversity mandates remand or dismissal of the action. See Stafford v. Mobil
Oil Corp., 945 F.2d 803, 805 (5th Cir. 1991). A notice of removal “must allege diversity both at the
time of the filing of the suit in state court and at the time of removal.” In re Allstate Ins. Co., 8 F.3d
219, 221 (5th Cir. 1993) (quotation marks and citations omitted). Such failure, however, is a
procedural defect and may be cured by filing an amended notice. Id. n.4.
Memorandum Opinion and Order – Page 5

A natural person is considered a citizen of the state where that person is domiciled, that is,
where the person has a fixed residence with the intent to remain there indefinitely. See Freeman v.
Northwest Acceptance Corp., 754 F.2d 553, 555-56 (5th Cir. 1985). “‘Citizenship’ and ‘residency’
are not synonymous.” Parker v. Overman, 59 U.S. 137, 141 (1855). “For diversity purposes,
citizenship means domicile; mere residence in [a] [s]tate is not sufficient.” Preston v. Tenet
Healthsystem Mem’l Med. Ctr., Inc., 485 F.3d 793, 799 (5th Cir. 2007) (citation and quotation marks
omitted). “Domicile requires residence in [a] state and an intent to remain in the state.” Id. at 798
(citing Mississippi Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 48 (1989)). A national bank,
for diversity purposes, “is a citizen of the State in which its main office, as set forth in its articles of
association, is located.” Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303, 307 (2006).
For diversity purposes, the amount in controversy normally is determined by the amount
sought on the face of the plaintiff’s pleadings, so long as the plaintiff’s claim is made in good faith.
28 U.S.C. § 1446(c)(2); St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir.
1998); De Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995). Removal is thus proper if it
is “facially apparent” from the complaint that the claim or claims asserted exceed the jurisdictional
amount. Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir.), reh’g denied, 70 F.3d 26 (5th
Cir. 1995). In a removal case, when the complaint does not state a specific amount of damages, the
defendant must establish by a preponderance of the evidence that “the amount in controversy exceeds
the [$75,000] jurisdictional amount.” St. Paul Reinsurance, 134 F.3d at 1253. “The preponderance
burden forces the defendant to do more than point to a state law that might allow the plaintiff to
recover more than what is pled. The defendant must produce evidence that establishes that the actual
amount of the claim will exceed [the jurisdictional amount].” De Aguilar, 47 F.3d at 1412 (footnotes
Memorandum Opinion and Order – Page 6

omitted). The test to be used by the district court is “whether it is more likely than not that the
amount of the claim will exceed [the jurisdictional amount].” St. Paul Reinsurance, 134 F.3d at
1253 n.13. As the Fifth Circuit has stated, “[t]he district court must first examine the complaint to
determine whether it is ‘facially apparent’ that the claims exceed the jurisdictional amount. If it is
not thus apparent, the court may rely on ‘summary judgment-type’ evidence to ascertain the amount
in controversy.” Id. at 1253. If a defendant fails to establish the requisite jurisdictional amount, the
court must remand the case to state court. If a defendant establishes that the jurisdictional amount
has been met, remand is appropriate only if a plaintiff can establish “to a legal certainty” that his
recovery will not exceed the jurisdictional threshold. In re 1994 Exxon Chemical Fire, 558 F.3d
378, 388 (5th Cir. 2009).
Any doubts as to the propriety of the removal should be construed strictly in favor of remand.
Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). “The burden of
establishing subject matter jurisdiction in federal court rests on the party seeking to invoke it.” St.
Paul Reinsurance, 134 F.3d at 1253 (footnote omitted). Accordingly, if a case is removed to federal
court, the defendant has the burden of establishing subject matter jurisdiction; if a case is initially
filed in federal court, the burden rests with the plaintiff to establish that the case “arises under”
federal law, or that diversity exists and that the amount in controversy exceeds the jurisdictional
threshold.
III.

Discussion
A.

Federal Question Jurisdiction

In Stump v. Potts, 322 F. App’x 379, 380 (5th Cir. 2009), the Fifth Circuit held that a
defendant cannot remove a case to federal court and circumvent jurisdiction of a state county court
Memorandum Opinion and Order – Page 7

in a simple forcible detainer proceeding or suit to evict brought under the Texas Property Code by
asserting a possible federal question in an answer and counterclaim. The court in Stump reasoned,
consistent with the authority cited herein by this court, that “a federal court has original or removal
jurisdiction only ‘if the federal question appears on the face of the plaintiff's well-pleaded complaint
and there is generally no federal jurisdiction if the plaintiff pleads only a state law cause of action.’”
Stump, 322 F. App’x at 380 (quoting MSOF Corp. v. Exxon Corp., 295 F.3d 485, 490 (5th Cir.
2002)). The court went on to state, “It is not sufficient for the federal question to be raised in the
answer or in the petition for removal.” Stump, 322 F. App’x at 380 (citing MSOF Corp., 295 F.3d
at 490). Thus, although the plaintiff had raised potential federal question claims in her answer and
counterclaim, the court stated that it could not consider those claims in determining whether federal
question jurisdiction existed. Rather, the court could only consider the state court complaint, which
included only a simple claim for eviction under the Texas Property Code and provided no basis for
federal question jurisdiction. Id. The Stump court therefore held that the district court lacked subject
matter jurisdiction.
Like Stump, Plaintiff’s Complaint filed in the state court action includes only a simple
forcible detainer claim to evict Defendants from the property at issue, and the alleged federal issue
asserted by Defendants was raised for the first time in their Notice. Moreover, Defendants fail to
state the basis for the alleged federal claim or issue. Thus, the alleged federal issue relied on by
Defendants for federal question jurisdiction was not raised until they filed their Notice, and in
essence is nothing more than a defense to the forcible detainer action and judgment entered against
Defendants. As stated, a defense that raises a federal claim or issue is insufficient to confer
jurisdiction on a district court. Thompson, 478 U.S. at 808. Accordingly, the Complaint provides
Memorandum Opinion and Order – Page 8

no basis for federal question jurisdiction, and the federal constitutional issue raised in Defendants’
Notice and Opposition to Motion to Remand cannot be considered by the court in determining
whether removal was proper. Id. As no federal question exists, this court may not exercise subject
matter jurisdiction over this action on the basis of a federal question.
B.

Diversity Jurisdiction

Defendants’ Notice states that the amount in controversy is $76,000, which is the value of
the property at issue. As noted above, the case removed is a forcible detainer action. This and other
courts in the Northern District of Texas have consistently held that the amount in controversy in a
forcible detainer action is not the value of the property itself but instead the value of the right to
occupy or immediate possession of the property. See, e.g., Wells Fargo Bank NA v. Carson,
3:11-CV-00963-M(BF), 2012 WL 3454142, at *2 (N.D. Tex. July 23, 2012), report accepted by
2012 WL 3518029 (N.D. Tex. Aug. 15, 2012); Wells Fargo Bank, N.A. v. Santana, No. 3:10-CV923-B, 2010 WL 5313734, at *2 (N.D. Tex. Dec. 20, 2010); Federal Nat’l Mortg. Assoc. v. Elliot,
No. 3:10-CV-758-L, 2010 WL 3304240, at *5 (N.D. Tex. Aug. 19, 2010); BAC Home Loans
Servicing, LP v. Pace, No. 3:10-CV-1038 K, 2010 WL 3447153, at *3 (N.D. Tex. Aug. 31, 2010).
As Defendants are tenants in sufferance under Chapter 24 of the Texas Property Code, the only
question regarding jurisdiction is the value of the right to immediate possession or occupancy of the
property, not the property’s fair market value. Thus, Defendants’ allegations regarding the market
value of the property are insufficient for purposes of satisfying the amount in controversy.
Moreover, the court determines that it lacks jurisdiction over this case because Defendants
fail to allege or provide any information regarding the parties’ citizenship other than to state in
conclusory fashion that the civil action is “between citizens of different States.” Notice 3. Because
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there are no allegations setting forth the citizenship of the parties, Defendants have failed to establish
both requirements for a court to exercise diversity jurisdiction over this action. Because Defendants
have not met their burden in establishing diversity of citizenship, the court cannot exercise such
jurisdiction. The court therefore determines that Defendants have failed to meet their burden of
establishing subject matter jurisdiction, and that their failure to allege adequately the basis of
diversity mandates remand or dismissal of the action. See Stafford, 945 F.2d at 805.
IV.

Plaintiff’s Motion to Remand
As the court was concluding the draft of this order and opinion, it noticed that Plaintiff had

filed a motion to remand late in the day on December 12, 2012. At the time Plaintiff filed the
motion, the court had already determined that it lacked subject matter jurisdiction and was going to
remand the action for this reason. As this action is being remanded sua sponte, the court will deny
as moot Plaintiff’s Motion to Remand.
V.

Conclusion
For the reasons explained, the court lacks subject matter jurisdiction over this action and sua

sponte remands the action to County Court at Law No. 1, Dallas County, Texas, from which it was
removed. The court therefore denies as moot Plaintiff’s Motion to Remand. The clerk of the court
shall effect the remand in accordance with the usual procedure.
It is so ordered this 13th day of December, 2012.

_______________________________
Sam A. Lindsay
United States District Judge

Memorandum Opinion and Order – Page 10