Tabaraz et al v. JP Morgan Chase Bank NA
Filing
9
OPINION AND ORDER denying 5 Motion to Remand.(Signed by Judge Melinda Harmon) Parties notified.(htippen, )
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
OSCAR TABARAZ AND CECILIA AYALA §
TABARAZ,
§
§
Plaintiffs,
§
§
VS.
§
§
JPMORGAN CHASE BANK, N.A.,
§
§
Defendant.
§
CIVIL ACTION H-12-1386
OPINION AND ORDER
Pending before the Court in the above referenced declaratory
judgment action, removed from state court on diversity jurisdiction
and seeking to stop foreclosure of a lien held by Defendant
JPMorgan Chase Bank on an undivided one-third (1/3) interest in a
residence owned in majority part by Plaintiffs Oscar Tabaraz and
Cecelia Ayala Tabaraz, is Plaintiffs’ motion to remand (instrument
#5) on the grounds that the amount in controversy does not exceed
the jurisdictional minimum of $75,000.00, exclusive of costs and
interest, as required under 28 U.S.C. § 1332(a).
Allegations of Plaintiffs’ Original Petition (#1-1)
On April 29, 2004, Plaintiffs became fee simple owners of the
real
property
at
8048
Elrod
Street,
Warranty deed, Ex. A to Petition, #1-1.
later,
they
conveyed
an
undivided
Houston,
Texas
770017.
Approximately two months
one-third
interest
in
property to their son, Oscar Tabaraz, Jr. (“Tabaraz, Jr.”).
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the
Ex. B
to Petition.
entered
Less than a month later, Tabaraz, Jr. and his wife
into
a
Homestead
Lien
Contract
and
Deed
of
Trust
arrangement with Bank One N.A., which in turn provided an extension
of credit to Tabaraz, Jr. in the amount of $74,368.00, evidenced by
a promissory note (Ex. C). To secure payment of the note, Tabaraz,
Jr. and his wife executed and delivered to Bank One a Homestead
Lien Contract and Deed of Trust (Ex. D).
Although Tabaraz, Jr.
owned only an undivided one-third interest in the property in
dispute, as reflected on the face of his deed, the unambiguous
language in the Homestead Lien Contract and Deed of Trust indicated
that it extended to and attached the entirety of the property.
On July 17, 2009 Tabaraz, Jr. filed for Chapter 7 bankruptcy.
On October 27, 2009 the Bankruptcy Court discharged the debts of
Tabaraz, Jr.
Nevertheless on February 8, 2012 Defendant, as
successor
by
merger
automatic
stay
to
regarding
Bank
One,
nonexempt
moved
for
property
relief
and
from
the
informed
the
Bankruptcy Court that it held a security interest in the property,
that it estimated the property’s value to be $93,620.00, that the
total amount owed to Defendant on the note was $78,877.77, and that
because Tabaraz, Jr. only claims a one-third interest in the
property, he did not appear to have any equity in it.
Defendant
therefore asked the Bankruptcy Judge to terminate the automatic
stay to permit it to foreclose on the property.
The Bankruptcy
Court granted that relief on March 2, 2010 to allow Defendant “to
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pursue its state law remedies, including foreclosure, repossession
and/or eviction . . . .”.
Exs. E and F.
Defendants sent Tabaraz,
Jr. a Notice of Intent to Foreclose (Ex. G) dated March 22, 2012,
stating that unless he paid within 35 days the past due sums on the
debt, from which he was discharged in bankruptcy, Defendant would
proceed to foreclosure.
The Petition states that the Homestead Lien Contract and Deed
of Trust (Ex. D) held by Defendant is void because it violates a
number of provisions of Article 16, § 50 of the Texas Constitution,
including the following:
“(a) the extension of credit by the
Homestead Lien Contract and Deed of Trust was not created under a
written agreement with the consent of each owner and each owner’s
spouse.
Specifically Plaintiffs, who are owners of an undivided
two-thirds (2/3) interest in the property, did not consent; (b) the
extension of credit was of a principal amount that far exceeded 80%
of the fair market value of Tabaraz, Jr.’s undivided interest in
the property on the date the extension of credit was made; and (c)
the extension of credit was secured by real property other than
Oscar Tabaraz, Jr.’s homestead interest.”
Plaintiffs claim that
Article 16, § 50(6)(Q)(X) and (XI) of the Texas Constitution
mandates that a “lender or holder of a home equity loan which is
not in compliance with the terms and provisions of Article 16, § 50
‘shall forfeit all principal and interest of the extension of
credit.’”
Moreover, the promissory note (Ex. C) at issue here
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states on page 2, “HOME EQUITY LOAN--THIS LOAN IS AN EXTENSION OF
CREDIT OF THE TYPE DEFINED BY SECTION 50(A)(16), ARTICLE XVI, TEXAS
CONSTITUTION.”
Thus under the Texas Constitution, Defendant must
forfeit all of the principal and interest of the underlying
obligation.
Substantive Law
Where a state court petition does not identify the amount of
monetary damages sought, the defendant must show that it is
apparent from the face of the petition that the claims are likely
to exceed $75,000.00 or by summary judgment evidence that it is
more likely than not that the amount in controversy exceeds
$75,000.00 to support removal on diversity grounds.
Manguno v.
Prudential Prop. and Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir.
2002), citing Simon v. Wal-Mart Stores, Inc., 193 F.3d 848, 850 (5th
Cir. 1995).
In an action seeking equitable relief, i.e., a
declaratory
judgment
controversy
is
litigation.”
or
measured
injunctive
by
the
relief,
value
of
the
“the
amount
object
of
in
the
Leininger v. Leininger, 705 F.2d 727, 729 (5th Cir.
1983). It is also the “value of the right to be protected or the
extent of the injury to be prevented.”
Id.
“When the validity of
a contract or a right to property is called into question in its
entirety,
the
value
of
the
property
controls
the
amount
in
controversy.” Nationstar Mortg. LLC v. Knox, 351 F. App’x 844, 848
(5th Cir. 2009), quoting Waller v. Prof’l Ins. Corp., 296 F.2d 545,
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547-48 (5th Cir. 1961).
The amount in controversy is measured from
the perspective of the plaintiff.
Vraney v. Cnty. of Pinellas,
250 F.2d 617, 618 (5th Cir. 1958)(per curiam); Leonard v. Mariners
Strategic Fund II, LLC, No. 4:12-CV-461-A, 2012 WL 3038172, *2
(N.D. Tex. July 25, 2012).
Plaintiffs’ Motion to Remand (#5)
Contending that this action must be remanded because the
amount
in
controversy
specifically
argue
that
is
less
because
than
$75,000.000,
Defendant’s
lien
Plaintiffs
is
only
on
Tabaraz, Jr.’s one-third interest in a house with an estimated fair
market value of $93,620.00, Defendant’s lien has a value of only
$31,206.67.1
Furthermore,
in
response
Plaintiffs
argue
that
Defendant incorrectly states that they seek a declaration that the
note payable in the amount of $74,368.00 and a deed of trust
securing the debt are void and that Plaintiffs are entitled to
forfeiture of all the principal and interest payments made under
the note.
because
of
Pointing out that § IX of their petition asserts that
its
noncompliance
with
provisions
of
the
Texas
Constitution Defendant has forfeited all principal and interest
under the note, Plaintiffs insist that they have no standing to
bring such a claim, they are strangers to the note, have made no
payments under it, and do not seek such relief, but that even if
1
Plaintiffs own the other two-thirds interest in the house
free and clear of any lien.
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Defendant were correct,2 a suit to declare a note payable in the
amount
of
$74,368.00
to
be
void
would
not
meet
jurisdictional amount for diversity jurisdiction.
valid
at
all,
it
attaches
only
to
Tabaraz,
the
minimum
If the lien is
Jr.’s
interest, which is worth no more than $32,000.00.
one-third
Plaintiffs
claim they seek only a temporary injunction to enjoin Defendant
from
foreclosing
on
the
property
and
a
declaratory
judgment
declaring the lien to be void and removing it as a cloud on
Plaintiffs’ title.
Defendant’s Response (#7)
Arguing that it is apparent from the face of the petition that
the claims are likely to exceed $75,000.00 even if Plaintiffs’
alleged two-thirds interest worth only $64,000.00 is considered,
Defendant
maintains
that
because
Plaintiffs
seek
to
prevent
foreclosure and to quiet title, the value of the property, plus
2
An examination of the Original Petition, #1-1 at VIII,
reveals that Defendant accurately reported Plaintiffs’ allegation:
Additionally, Plaintiffs bring this action under the
Uniform Declaratory Judgment Act, Tex. Civ. Proc. & Rem.
Code § 37.001 et seq., seeking a declaration from the
Court that Defendant holds no lien or other security
interest in the property, declaring that the purported
lien imposed on the property by the Homestead Lien
Contract and Deed of Trust executed by Oscar Tabaraz, Jr.
on July 10, 2004 (Exhibit “D”) is void and of no further
force or effect and issuing judgment quieting title to
Plaintiffs’ property.
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requested attorney’s fees,3 sets the amount in controversy.
If
Plaintiffs are not granted the relief they seek and if the property
is foreclosed, they will lose more than their alleged 2/3 interest
in the property; they will lose a collection of rights, including
right
to
ownership,
title,
and
possession
of
the
property.
Martinez v. BAC Home Loans Servicing LP, 777 F. Supp. 2d 1023,
1048-49 (W.D. Tex. 2010), citing Mapp v. Deutsche Bank Nat’l Trust
Co., No. 3:08-CV-695-WKW, 2009 WL 3664118 (MD. Ala. Oct. 28, 2009).
Accepting Plaintiffs’ contention that the value from their
viewpoint controls, the Court should consider that the value of
their interest in the property is at least $62,413.22 (2/3 of the
alleged property value Plaintiffs claim to own).
Defendant argues
that this amount plus the amount in attorney’s fees that Plaintiffs
are
likely
to
recover
if
they
prevail
will
exceed
the
jurisdictional limit.
Plaintiffs’ “Sur-Reply” (#8)
Plaintiffs insist, and point out that Defendant has not
alleged otherwise, that their 2/3 interest in the property is not
subject to the Homestead Lien Contract and Deed of Trust (Ex. D to
Original Petition) executed by Tabaraz, Jr. and his wife.
3
That
Attorney’s fees may be included in the amount in
controversy. Foret v. Southern Farm Bureau Life Ins. Co., 918 F.2d
534, 537 (5th Cir. 1990), citing 14A C. Wright & Miller, Federal
Practice & Proc. § 3712 at 176 (2d ed. 1985)(“The law is now quite
settled that attorney’s fees are a part of the matter in
controversy when they are provided for by contract or by state
statute.”).
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document specifically states, id. at p.1,, “Owner represents to
Lender that the Property is Owner’s homestead.
If a part of the
Property is not now, or at any time in the future is determined not
to be, Owner’s homestead, Lender hereby disclaims any lien on such
non-homestead property, it being Lender’s intention to obtain a
lien, as provided for by Section 50(a)(6), Texas Constitution, in
Owner’s homestead property only.”
The Court finds that this last argument goes to the merits of
the
dispute
rather
than
the
amount
in
controversy.
After
considering the briefs and the applicable law, the Court is
persuaded by Defendant that it is apparent from the face of the
petition
that
Plaintiffs’
jurisdictional minimum.
claims
are
likely
to
exceed
the
The fair market value of Plaintiffs’ two-
thirds interest in the property plus the attorney’s fees they seek
if they prevail appears to exceed the $75,000.00 jurisdictional
minimum.
Accordingly, the Court
ORDERS that Plaintiffs’ motion to remand is DENIED.
SIGNED at Houston, Texas, this
14th
day of
August , 2012.
___________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE
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