Dempsey v. Deutsche Bank National Trust Company et al
Filing
10
OPINION AND ORDER denying 5 Plaintiff's Motion to Remand.(Signed by Judge Fernando Rodriguez, Jr) Parties notified.(mperez, 1)
Case 1:20-cv-00203 Document 10 Filed on 12/16/20 in TXSD Page 1 of 6
United States District Court
Southern District of Texas
ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
BROWNSVILLE DIVISION
STEVEN E. DEMPSEY,
Plaintiff,
VS.
DEUTSCHE BANK NATIONAL TRUST
COMPANY, et al.,
Defendants.
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December 16, 2020
David J. Bradley, Clerk
CIVIL ACTION NO. 1:20-CV-203
OPINION AND ORDER
In October 2020, Plaintiff Steven E. Dempsey filed his Original Petition and Request for
Temporary Restraining Order in Texas state court. (Petition, Doc. 1-1, 8) Defendant Deutsche
Bank National Trust Company removed to federal court (Notice of Removal, Doc. 1), and Dempsey
now moves to remand. (Motion, Doc. 5) Having considered the Motion, the parties’ briefing, and
the applicable law, the Court concludes that diversity jurisdiction exists in this matter and that
remand would be improper.
I. Allegations and Procedural History1
In 2004, Dempsey executed a promissory note for $95,000 for his home in Laguna Vista,
Texas. (Petition, Doc. 1-1, 9—10) The current holder of the note is Deutsche Bank. (Id. at 10)
After years of making regular payments, Dempsey experienced financial difficulties and received
a loan modification. (Id.) Dempsey remained behind on a few payments, and he alleges that
Deutsche Bank refused to take late payments, did not respond to a hardship letter, did not provide
a payoff amount for a potential sale, refused to negotiate on a cure, and failed to follow the Texas
When considering a motion to remand, the court accepts all relevant allegations contained in the complaint
as true and construes all factual ambiguities in favor of the plaintiff. Willy v. Coastal Corp., 855 F.2d 1160, 1163—64
(5th Cir. 1988).
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Property Code in the foreclosure on the home. (Id. at 10—11)
In October 2020, Dempsey filed his Original Petition and Request for Temporary
Restraining Order in Texas state court. (Id. at 8) He brought suit against Defendant Deutsche
Bank National Trust Company and against Julie Martin, as substitute trustee. (Id. at 8—9)
However, his allegations are entirely focused on Deutsche Bank; Dempsey fails to allege any
wrongful act by Martin. (Id. at 9—11)
Deutsche Bank removed the matter to federal court, contending that it is a national
banking association that maintains its main office in California. (Notice of Removal, Doc. 1, 3)
Dempsey requests remand to state court, arguing that diversity jurisdiction under 28
U.S.C. § 1332 does not exist because “several Defendants are citizens of Texas” and the amount in
controversy is less than $75,000. (Motion to Remand, Doc. 5, 2) He also contends that the
presence of a Texas defendant prohibits removal under 28 U.S.C. § 1441(b)(2). (Id.)
II. Analysis
A. Legal Standard
A defendant may remove a case to federal district court only if that court would have had
original jurisdiction. 28 U.S.C. § 1441(a). “[D]istrict courts shall have original jurisdiction of all
civil actions where the matter in controversy exceeds . . . $75,000, exclusive of interest and costs,
and is between . . . citizens of different states”. 28 U.S.C. § 1332(a)—(a)(1). Complete diversity
must exist, which “requires that all persons on one side of the controversy be citizens of different
states than all persons on the other side.” Vaillancourt v. PNC Bank, Nat’l Assoc., 771 F.3d 843,
847 (5th Cir. 2014) (quoting Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1079 (5th Cir.
2008)). In addition, a case otherwise removable solely based on diversity jurisdiction “may not
be removed if any of the parties in interest properly joined and served as defendants is a citizen
of the State in which such action is brought.” 28 U.S.C. § 1441(b)(2). The removal statute is
construed narrowly, with any doubt construed against removal and in favor of remand. See
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Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 107–09 (1941); In re Hot-Hed Inc., 477 F.3d
320, 323 (5th Cir. 2007).
Dempsey argues that “[s]everal Defendants are citizens of Texas”, destroying complete
diversity and forbidding removal as Texas is the state where the suit was filed. (Motion to
Remand, Doc. 5, 2) He also argues that the requisite amount in controversy does not exist in this
lawsuit.
B. Diversity
It is undisputed that Dempsey is a citizen of Texas for purpose of the jurisdictional
analysis. Thus, the dispositive question is whether a properly served defendant is also a citizen of
this state. Based on the submitted evidence, the Court concludes that no properly joined
Defendant is a citizen of Texas.
First, Dempsey does not refute Deutsche Bank’s position that it is a national banking
association with its main office in California. As a national banking association, Deutsche Bank’s
citizenship is determined solely by the location of its main office, as designated in its articles of
association. 28 USC § 1348; Bynane v. Bank of New York Mellon for CWMBS, Inc. Asset-Backed
Certificates Series 2006-24, 866 F.3d 351, 357–58 (5th Cir. 2017) (citing Wachovia Bank v.
Schmidt, 546 U.S. 303, 307 (2006)). As a result, Deutsche Bank is a citizen of California for
purposes of diversity jurisdiction.
Second, the citizenship of substitute trustee Martin can be disregarded for purposes of
determining citizenship for jurisdictional purposes. A court “must disregard nominal or formal
parties and rest jurisdiction only upon the citizenship of real parties to the controversy”. Corfield
v. Dallas Glen Hills LP, 355 F.3d 853, 857 (5th Cir. 2003); see also Navarro Sav. Ass’n v. Lee,
446 U.S. 458, 461 (1980). Parties are nominal for removal purposes if “in the absence of the
[defendant], the Court can enter a final judgment consistent with equity and good conscience
which would not be in any way unfair or inequitable to the plaintiff.” Acosta v. Master Maint. &
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Constr., Inc., 452 F.3d 373, 379 (5th Cir. 2006) (quoting Tri-Cities Newspapers, Inc. v. Tri-Cities
P.P. & A. Local 349, 427 F.2d 325, 327 (5th Cir. 1970)). To show 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.’”
Farias v. Bexar Cty. Bd. of Trs., 925 F.2d 866, 871 (5th Cir. 1991) (quoting B, Inc. v. Miller
Brewing Co., 663 F.2d 545, 549–50 (5th Cir. Unit A Dec. 1981)).
Similarly, a “narrow exception” to the rule for complete diversity allows courts to disregard
the citizenship of improperly joined parties. Vaillancourt, 771 F.3d at 847. To establish that a
plaintiff improperly joined a party, the removing defendant must demonstrate “that there is no
possibility of recovery by the plaintiff against an in-state defendant.” Id. (quoting McDonal v.
Abbott Labs., 408 F.3d 177, 183 (5th Cir. 2005)). A court performs a 12(b)(6)-type analysis to
determine whether the plaintiff can establish a cause of action against the non-diverse party in
state court. Rojas v. Wells Fargo Bank, N.A., 571 Fed. App’x 274, 277 (5th Cir. 2014). If so, then
the non-diverse party is properly joined. But if the claims against the non-diverse party would be
subject to summary dismissal, the court can disregard the non-diverse party’s citizenship. See,
e.g., Cervantes v. Ocwen Loan Servicing, L.L.C., 749 Fed. App’x 242, 245 (5th Cir. 2018) (“[The
Plaintiff] failed to state a claim against [the substitute trustee], so the district court was correct to
conclude he was improperly joined.”); Vaillancourt, 771 F.3d at 848 (concluding that a substitute
trustee was improperly joined); Rojas, 571 Fed. App’x at 277 (“[The Plaintiff] does not provide any
allegations that [the substitute trustee] was acting in bad faith, and therefore has no reasonable
basis for recovery.”).
Under either the nominal-party or the improper-joinder analysis, the crux of the review is
whether Dempsey’s allegations establish a viable cause of action against Martin. They do not.
Dempsey does not allege that Martin has any claim or interest to the promissory note or the
property at issue, or that she committed any act or omission that could give rise to a claim for
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damages against her, whether under the Texas Property Code or any of the relevant contracts.
Dempsey’s allegations make clear that he included Martin as a defendant solely because Martin
is the substitute trustee, and not because of any alleged wrongful conduct by Martin. Dempsey’s
allegations demonstrate that he has not alleged a cognizable cause of action against Martin.
Because Martin is merely a nominal party or, alternatively, is improperly joined, her
citizenship can be disregarded for the jurisdictional analysis. As Dempsey is a Texas resident, and
Deutsche Bank’s citizenship lies in California, complete diversity exists among the real parties to
this lawsuit. In addition, 28 U.S.C. § 1441(b)(2) does not preclude removal as Deutsche Bank is
not a citizen of the state where this suit was filed.
C. Amount in Controversy
For the purpose of the jurisdictional review, “unless the law gives a different rule, the sum
claimed by the plaintiff controls if the claim is apparently made in good faith.” St. Paul Mercury
Indemnity Co. v. Red Cab. Co., 303 U.S. 283, 288 (1938); De Aguilar v. Boeing Co., 47 F.3d 1404,
1410 (5th Cir. 1995). When the plaintiff does not specify any amount of alleged damages, as in the
present case, the defendant—here, Deutsche Bank—bears the burden to establish “by a
preponderance of the evidence that the amount in controversy exceeds $75,000.” Manguno v.
Prudential Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). In addition, when a lawsuit primarily
seeks injunctive relief, “the amount in controversy is measured by the value of the object of the
litigation.” Leninger v. Leninger, 705 F.2d 727, 729 (5th Cir. 1983). More specifically, if a plaintiff
seeks to prevent or rescind the foreclosure of property, the amount in controversy is the value of
the property that is the object of the litigation. See Farkas v. GMAC Mortg., L.L.C., 737 F.3d 338,
341 (5th Cir. 2013) (stating that in declaratory or injunctive actions seeking to stop a foreclosure
sale of property, “it is well established that the amount in controversy is measured by the value of
the object of the litigation”) (quoting Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333,
347 (1977)).
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The promissory note that Dempsey signed, and which was secured by the property at issue,
was for $95,000. (Petition, Doc. 1-1, 9—10) Dempsey alleges that he had two buyers willing to
purchase the property for $165,00. (Id. at 10) Deutsche Bank submits evidence demonstrating
that the property appraises at $167,002. (Appraisal, Doc. 1-1, 31) Based on this record, the Court
finds that the preponderance of the evidence establishes that the value of the property and, as a
result, the amount in controversy, exceeds $75,000 and satisfies the amount-in-controversy
requirement for diversity jurisdiction.
III.
Conclusion
For these reasons, it is:
ORDERED that the Plaintiff’s Motion to Remand (Doc. 5) is DENIED.
SIGNED this 16th day of December, 2020.
____________________________
Fernando Rodriguez, Jr.
United States District Judge
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