Elsner et al v. The Bank of New York Mellon FKA, etc. et al
Filing
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MEMORANDUM OPINION AND ORDER:...the court lacks subject matter jurisdictionover the action and is remanding it to the state court from which it was removed. See Order for further specifics. (Ordered by Judge John McBryde on 7/6/2011) (egb)
U.S. DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
IN THE UNITED STATES DISTRICC COUR,r--_F_IL---=E::::..D=----.
NORTHERN DISTRICT OF TE]P.S
JUL - 6 2011
FORT WORTH DIVISION
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CLERK, U.S. DISTRICT COURT
TODD M. ELSNER, ET AL.,
by
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Plaintiffs,
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VS.
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NO. 4:11-CV-370-A
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THE BANK OF NEW YORK MELLON;
F/K/A THE BANK OF NEW YORK,
AS TRUSTEE FOR THE CERTIFICATE
HOLDERS, CWALT, INC.,
ALTERNATIVE LOAl~ TRUST 200718CB MORTGAGE PASS THROUGH
CERTIFICATES, SERIES 2007-18CB
ET AL.,
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Defendants.
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MEMORANDUM OPINION
and
ORDER
The court has not been persuaded that it has subject matter
jurisdiction over the above-captioned action.
Therefore, the
court is ordering the action remanded to the state court from
which it was removed.
I.
Background
This action was initiated on May 3, 2011, in the 342nd
Judicial District Court of Tarrant County, Texas, by the filing
by plaintiffs, Todd M. Elsner and Sara Lynne Elsner, of their
Original Petition and Application for Temporary Restraining Order
and Temporary Injunction ("petition").
Defendants, The Bank of
New York Mellon, f/k/a The Bank of New York, as trustee for the
Certificate Holders, CWALT, Inc., Alternative Loan Trust 200718CB Mortgage Pass Through Certificates, Series 2007-18CBi BAC
Home Loans Servicing, LP; and Recontrust Company, removed the
action to this court by notice of removal filed June 6, 2011.
Defendants alleged that the court has subject matter jurisdiction
because of complete diversity of citizenship between plaintiffs
and defendants and an amount in controversy exceeding the sum or
value of $75,000.00, exclusive of interest and costs.
u.S.C.
§
1332(a).
See 28
Defendants acknowledged in the notice of
removal that plaintiffs' petition does not seek a specific amount
of monetary relief but contended that the amount in controversy
nonetheless exceeds the jurisdictional amount because plaintiffs
seek equitable and injunctive relief that would permanently void
the foreclosure of real property with an appraisal value of
$310,400.00.
Because of a concern that defendants had not provided
information in the notice of removal that would enable the court
to find that the amount in controversy exceeds the required
amount, the court, on June 10, 2011, ordered defendants to file
an amended notice of removal, together with supporting
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documentation, showing that the amount in controversy exceeds the
jurisdictional amount.
Defendants filed their amended notice of removal on June 17,
2011.
In addition to citing legal authority standing for the
proposition that the value of the property is the proper measure
of the amount in controversy in an action such as this one,
defendants made the following statement in support of their
position that the amount in controversy exceeds the required
amount:
B.
Even If the Fair Market Value of Plaintiffs'
Property Is Not the Measure of the Amount in
Controversy, the Amount in Controversy Still
Exceeds $75,000.00.
7.
On or about May 18, 2007, Plaintiffs
purchased the real property forming the basis of this
matter.
In connection with their purchase of the real
property, Plaintiff Todd Elsner executed a promissory
note in the amount of $232,000.00 and both plaintiffs
executed a deed of trust to secure Plaintiff Todd
Elsner's obligations under the promissory note.
8.
As of June 14, 2011, the current unpaid
principal balance on Plaintiffs' mortgage is
$227,560.69 and an escrow shortage of $25,070.01.
9.
Given that the fair market value of
Plaintiffs' property is $310,400.00, the unpaid
principal balance is $227,560.69 and the is an escrow
shortage of $25,070.01, even if the fair market value
of Plaintiffs' property is not the correct measure of
the amount-in controversy, this totals $107,909.32 in
controversy--clearly about the minimum amount required
for diversity jurisdiction.
Defs.' Am. Notice of Removal at 3-4.
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On June 27, 2011, defendants filed another document titled
"Defendants' Supplemental Notice of Removal."
In the
supplemental notice of removal, defendants stated, in support of
their position that the amount in controversy exceeds $75,000.00,
that plaintiffs had recently notified defendants that plaintiffs
are seeking "actual damages in the amount of $310,400.00, treble
damage[s] in an unspecified amount and attorneys' fees of at
least $20,000.00."
Defs.' Supp. Notice of Removal at 2.
As
proof of their assertion, defendants attached a copy of an email
exchange between their counsel and counsel for plaintiffs.
In
the exchange, defendants' counsel wrote to plaintiff's counsel:
"If you can provide me a written demand of the amount of damages
your clients are seeking, I can get the July foreclosure halted."
Id., Ex. A at unnumbered first page.
Plaintiffs' counsel
responded: "My clients seek economic damages in the amount of
$310,400.00, plus treble damages under the DTPA, plus attorney's
fees of at least $20,000.00."
Id., Ex. A. at unnumbered first
page.
Due to the unusual nature of the contents of the
supplemental notice of removal, the court held a telephone
conference/hearing on June 28, 2011, with counsel for plaintiffs
and counsel for defendants on the line.
After having evaluated
the pleadings and the information gained during the telephone
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conference/hearing, and, after reviewing applicable legal
authorities, the court remains unpersuaded that the amount in
controversy in this action exceeds the required amount.
II.
Basic Principles
The court starts with a statement of basic principles
announced by the Fifth Circuit:
Pursuant to 28 U.S.C.
§
1441(a), a defendant or defendants
may remove to federal court any state court action over which the
"The
federal district courts would have original jurisdiction.
removing party bears the burden of showing that federal subject
matter jurisdiction exists and that removal was proper."
v. Prudential Prop. Cas. Ins. Co., 276 F.3d 720, 723
2001) .
Manguno
(5th Cir.
"Moreover, because the effect of removal is to deprive
the state court of an action properly before it, removal raises
significant federalism concerns, which mandate strict
construction of the removal statute."
Carpenter v. Wichita Falls
Indep. Sch. Dist., 44 F.3d 362, 365-66 (5th Cir. 1995)
omitted).
(citation
Any doubts about whether removal jurisdiction is
proper must therefore be resolved against the exercise of federal
jurisdiction.
Acuna v. Brown & Root Inc., 200 F.3d 335, 339 (5th
Cir. 2000).
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To determine the amount in controversy for the purpose of
establishing diversity jurisdiction, the court ordinarily looks
to the plaintiff's state court petition.
723.
Manguno, 276 F.3d at
If it is not facially apparent from the petition that the
amount in controversy is greater than $75,000.00, the removing
party must set forth summary judgment-type evidence, either in
the notice of removal or in an affidavit, showing by a
preponderance of the evidence that the amount in controversy
exceeds that amount.
Id.; Allen v. R & H Oil & Gas Co., 63 F.3d
1326, 1335 (5th Cir. 1995).
The amount in controversy is measured from the perspective
of the plaintiff.
Vraney v. County of Pinellas, 250 F.2d 617,
618 (5th Cir. 1958)
(per curiam).
In an action for declaratory
or injunctive relief, the amount in controversy is the ·value of
the object of the litigation," or "the value of the right to be
protected or the extent of the injury to be prevented."
Leininger v. Leininger, 705 F.2d 727, 729 (5th Cir. 1983).
III.
The True Nature of Plaintiffs' Claims
Plaintiffs' petition does not specify a dollar amount of
recovery sought, nor does it define in any way the value of the
right sought to be protected or the extent of the injury sought
to be prevented.
As a result, the court has attempted to
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evaluate the true nature of plaintiffs' claims to determine the
amount actually in controversy between the parties.
The court has been aided by the following explanation given
by counsel for plaintiffs during the telephone
conference/hearing:
THE COURT:
Is your real goal, your client's real
goal, trying to figure out how to stay in the house as
long as they can?
MS. BURGOYNE: Not -- my clients have certain
issues with the mortgage company that we would like to
have addressed.
THE COURT: What kind of -MS. BURGOYNE: Apart from that, yes, he is
interested in making sure that the mortgage company has
crossed all their T's and dotted all their I's. And if
that were to occur, he is interested in entering into
some kind of long-term solution such as -- you know,
such as a loan modification or something like that.
If that is not a possibility, he does plan to
pursue this all the way to trial to address the issues
of the improper acts of the mortgage company.
THE COURT: What acts are those?
MS. BURGOYNE: Well, ultimately, Your Honor,
there's -- there's several problems. One is that they
have this loss mitigation department, and they are
advertising themselves to be trying to help homeowners
when, in fact, the reality is they are not.
When people submit a loan modification
application, the don't get a response.
They are
arbitrarily denied or the wrong numbers are used to
calculate. Basically, these loan modifications that
are being advertised do not actually exist, in my
opinion, so that's one, and I call that an
unconscionable act by the mortgage company, as well as
a deceptive trade practice.
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The other thing is that I believe under state law
that they are required to produce the original note, if
they are to prove that they are the holder of the note,
if the note has exchanged hands.
And in this situation, I believe the note has
exchanged hands. My client is making -- contesting who
is the actual holder of the note and so, therefore, we
would like defendant to produce the original so that
they can prove that they are the holder of the note.
And it's my contention if they can't produce the
original to prove that they are the holder of the note,
then they can't proceed and put any type of collection
activities on that note.
Tr. of June 28, 2011, conference/hr'g (draft) at 8-10.
In other words, plaintiffs' object in this litigation is to
(a) secure a long-term loan modification that will allow them to
continue living in the property,
(b) obtain a money judgment to
compensate them for damages they have suffered because defendants
purport to offer loan modification services but do not actually
provide them, and (c) make defendants produce the original note
prior to initiating any foreclosure proceedings.
The court has
not been provided with any information from which it can
determine that the value to plaintiffs of such relief is greater
than $75,000.00.
Defendants contend that the amount in controversy is equal
to the appraised value of the house because plaintiffs request a
permanent injunction preventing defendants from foreclosing or
otherwise disturbing plaintiffs' peaceable possession of the
property.
The allegations of the petition and the explanation
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provided by plaintiffs' counsel·at the telephone
conference/hearing make clear, however, that plaintiffs are not
requesting such injunction based on a claim that they are
entitled to outright ownership of the property.
Rather,
plaintiffs are merely requesting that defendants be prevented
from foreclosing unless defendants can prove that they are the
entities actually entitled to foreclose.
Even if defendants are
not allowed to foreclose, plaintiffs concede that their claim to
the property is subject to a note and deed of trust.
Thus, the
value to plaintiffs of an injunction preventing defendants from
foreclosing is, at most, the value of plaintiff's interest in the
property, not the value of the property itself.
Again, the court
does not have any information suggesting that plaintiffs'
interest in the property exceeds $75,000.00.
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Nor is the email exchange provided by defendants with their
supplemental notice of removal any more probative of the amount
in controversy.
In the telephone conference/hearing, counsel for
plaintiffs admitted that she arbitrarily chose $310,400.00 as the
amount of damages she told defense counsel plaintiffs are seeking
because that is the appraised value of the property.
Counsel for
'In the section oftheir amended notice of removal quoted in section I ofthis memorandum
opinion, defendants appear to possibly be suggesting that plaintiffs' interest in the property is
$107,909.32; however, the court does not find defendants' explanation of how they arrived at such a
number altogether coherent, and, in any event, counsel for plaintiffs stated during the telephone
conferenceihearing that her clients probably do not have any equity in the property.
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plaintiffs also stated that $310,400.00 does not represent that
amount of damages plaintiff's are seeking.
Thus, defendants have not proven by a preponderance of the
evidence that the amount actually in controversy in this action
exceeds the sum or value of $75,000, excluding interest and
costs.
Consequently, the court lacks subject matter jurisdiction
over the action and is remanding it to the state court from which
it was removed.
IV.
Order
For the reasons given above,
The court ORDERS that the above-captioned action be, and is
hereby, remanded to the state
SIGNED July
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2011.
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