Perkins v. Barrett Daffin Frappier Turner & Engel, LLP et al
Filing
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MEMORANDUM AND ORDER DENYING 10 MOTION to Remand (Signed by Judge Keith P Ellison) Parties notified.(sloewe)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
NATHANIEL PERKINS,
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§ CIVIL ACTION NO. 12-CV-3049
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Plaintiff,
v.
BANK OF AMERICA AND BARRETT
DAFFIN, FRAPPIER, TURNER &
ENGEL, LLP,
Defendants.
MEMORANDUM AND ORDER
Pending before the Court is Plaintiff Nathaniel Perkins’s Motion for Remand.
(Doc. No. 10.) Upon considering the motion, all responses thereto, and the applicable
law, the Court concludes that the Motion to Remand should be DENIED.
I.
BACKGROUND
Plaintiff Nathaniel Perkins (“Plaintiff”) is a resident of Texas who brought this
suit against Defendant Bank of America (“Bank of America”) and Defendant Barrett
Daffin Frappier Turner & Engel, LLP (“Barrett Daffin”). Bank of America’s main office
is in North Carolina and Barrett Daffin is a Texas limited liability partnership. Barrett
Daffin was Bank of America’s counsel throughout the foreclosure sale at issue in this
suit.
Plaintiff had lived in the property at issue (“Property”) since 1995, which was
subject to a mortgage owned and serviced by Bank of America. (Doc. No. 1-5, Plaintiff’s
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Original Petition, ¶ 7.) Plaintiff made monthly payments on the mortgage until about
January 2010, at which time Plaintiff began to miss payments. (Id. at ¶ 8.) Barrett Daffin,
on behalf of Bank of America, sent Plaintiff an acceleration letter dated January 19, 2010
(Id. at ¶ 10), which gave notice of a March 2, 2010 foreclosure sale that did not take
place. (Id. at ¶ 12.) In June 2010, Bank of America executed an assignment of Note and
Deed of Trust to U.S. Bank National Association (“U.S. Bank”). (Id. at ¶ 13.) The
assignment was recorded in June 2010 (Id.) and retroactively effective on April 23, 2010.
(Id. at ¶ 14.)
The Property was sold in a foreclosure sale in September 2010. (Id. at ¶ 18.)
Plaintiff claims he never received any notice of the foreclosure sale and only became
aware of it when the third-party buyer gave him a notice to vacate. (Id.) Three months
after the foreclosure sale, Bank of America sent a letter to Plaintiff stating “that on
December 28, 2010 Bank of America requested that the foreclosure sale of your property
be rescinded,” but noted that it depended on the buyer. (Id. at ¶ 21.)
Plaintiff then brought this suit in state court against Bank of America and Barrett
Daffin for breach of contract, violation of the Texas Finance Code, a Texas Deceptive
Trade Practice claim, violation of the Civil Practices and Remedies Code relating to
fraudulent liens and a section asserting that Bank of America lacked standing to
foreclose. Bank of America removed to federal court in October 2012. (Doc. No. 1.) To
support removal, Bank of America claimed that the controversy was in excess of $75,000
and that Barrett Daffin, a non-diverse party, was improperly joined since it was acting
only as Bank of America’s attorney. Plaintiff then filed this Motion for Remand. (Doc.
No. 10.)
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II.
LEGAL STANDARD
The removal statute, 28 U.S.C. § 1441(a), provides:
[A]ny civil action brought in a State court of which the district courts of
the United States have original jurisdiction, may be removed by the
defendant or defendants, to the district court of the United States for the
district and division embracing the place where such action is pending.
Federal courts have original jurisdiction over any civil action “where the matter in
controversy exceeds . . . $75,000 . . . and is between citizens of a State and citizens or
subjects of a foreign state.” 28 U.S.C. § 1332(a)(2)(2005). The party that seeks removal
has the burden of establishing that federal jurisdiction exists and that removal was proper.
Manguno v. Prudential Property & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002)
(citation omitted). The court must strictly construe the removal statutes in favor of
remand and against removal. Bosky v. Kroger Tex., L.P., 288 F.3d 208, 211 (5th Cir.
2002).
Under the fraudulent joinder doctrine, “federal removal jurisdiction premised on
diversity cannot be defeated by the presence of an improperly joined non-diverse and/or
in-state defendant.” Salazar v. Allstate Texas Lloyd’s, Inc., 455 F.3d 571, 574 (5th Cir.
2006). To establish fraudulent joinder, the removing party must prove either that there
has been actual fraud in the pleading of jurisdictional facts, or that there is no reasonable
possibility that the plaintiff will be able to establish a cause of action against that party in
state court. Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en banc),
cert. denied, 544 U.S. 992 (2005). The defendant must demonstrate that there is no
possibility of recovery by the plaintiff against the non-diverse defendant, that is, that
there is no reasonable basis for the district court to predict that the plaintiff might be able
to recover against the non-diverse defendant. Id. at 573 (citations omitted). A court may
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resolve this issue in one of two ways: by conducting a Rule 12(b)(6)-type analysis,
looking at the allegations of the complaint to determine whether the it states a claim
under state law against the non-diverse defendant, or by piercing the pleadings and
conducting a summary judgment-type inquiry. Id. Ordinarily, if a plaintiff can survive a
12(b)(6)-type challenge, there is no improper joinder. Id. Thus, in order to defeat
Plaintiff’s Motion for Remand, Bank of America must show that this case was properly
removed to this Court under 28 U.S.C. § 1441, that is, that Barrett Daffin, a purportedly
non-diverse defendant, was improperly sued by Plaintiff.
III.
ANALYSIS
Plaintiff claims that the Court should remand this case because Bank of America
has not proved that the controversy is in excess of $75,000 and Barrett Daffin was not
improperly joined, thereby destroying diversity. Each issue will be discussed in turn.
A. Controversy in Excess of $75,000
Plaintiff’s Original Petition does not specify the amount of monetary relief. When
“the petition does not include a specific monetary demand, [the defendants] must
establish by a preponderance of the evidence that the amount in controversy exceeds
$75,000.” Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir.
2002). “This requirement is met if (1) it is apparent from the face of the petition that the
claims are likely to exceed $75,000, or, alternatively, (2) the defendant sets forth
‘summary judgment type evidence’ of facts in controversy that support a finding of the
requisite amount.” Id. “In 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.” Hunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977).
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To support removal, Bank of America suggests two ways that the amount in
controversy is in excess of $75,000. First, Bank of America claims that Plaintiff sought
declaratory judgment, and the amount in controversy is “measured by the value of the
object of the litigation.” Hunt, 432 U.S. at 347. In this instance, the Property was valued
at about $111,820. (Doc. No. 1 ¶ 15.) Second, Bank of America stated that Plaintiff’s
counsel conveyed an offer of settlement in the amount of $145,000. (Id. at ¶ 16.)
In claiming that Plaintiff seeks declaratory judgment, Bank of America cites to
Plaintiff’s Original Petition ¶ 33, which states that “[the Trust] did not have standing to
authorize [Bank of America] to foreclose and the sale was void.” Plaintiff claims that he
is not seeking declaratory relief, instead, his prayer requests only damages. While it is
true that the Plaintiff does not specifically request declaratory relief in his prayer,
Plaintiff contends three times in his Original Petition1 that the foreclosure sale should be
deemed void by the Court. Plaintiff seeks a determination by the Court that the
foreclosure was void and such a finding is integral to any finding in favor of Plaintiff’s
claims. Therefore Plaintiff does seek declaratory relief and in such a case, the amount in
controversy is “measured by the value of the object of the litigation,” Hunt, 432 U.S. at
347, which Bank of America has submitted evidence to be in the amount of $111,820.
This is above the jurisdictional limit and removal was proper.
The Court now turns to Bank of America’s second argument for amount in
controversy: the offer of settlement in the amount of $145,000, which is dated October 1,
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Under the breach of contract claim, Plaintiff stated that “[w]ithout that proper notice the
sale was void as a matter of law.” (Pl. Original Petition ¶ 23.) Under the “Standing
issues” section, Plaintiff asserts that the Trust did not have standing to authorize Bank of
America “to foreclose and the sale was void.” (Id. at ¶ 33.) Under the Civil Practice and
Remedies Code section, Plaintiff asserts that if Bank of America “did not have standing
to enforce the Note then the Substitute Trustee’s Deed is a false record….” (Id. at ¶ 43.)
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2012. This suit was filed September 7, 2012; thus, the offer of settlement was given after
the filing of the suit. The Fifth Circuit has held that a post-complaint letter offering to
settle is sufficient to qualify as “other paper” under 28 U.S.C. § 1446(b). Addo v. Globe
Life & Accident Ins. Co., 230 F.3d 759 (5th Cir. 2000). ““[O]ther paper” must result from
the voluntary act of a plaintiff which gives the defendant notice of the changed
circumstances which now support federal jurisdiction.” Addo, 230 F.3d at 762. The
period for filing a notice of removal, which is 30 days, runs only after the defendant
receives a document from which he can ascertain removability. Albright v. IBM Lender
Process Services Inc., CIV.A. H-11-1045, 2011 WL 5921379 (S.D. Tex. Nov. 28, 2011).
Since Plaintiff’s Original Petition did not specify the amount in controversy, the postcomplaint letter offering to settle can be considered “other paper.” The letter offers to
settle in the amount of $145,000, well over the jurisdictional limit. Before this letter and
solely based on the Original Petition, Bank of America did not know that the amount in
controversy exceeded the jurisdictional limit. Within 30 days of the letter, Bank of
America timely removed. Using either method of determining amount in controversy, the
amount is over the jurisdictional limit. Therefore, the jurisdictional threshold has been
satisfied.
B. Diversity
Bank of America also argues that removal is proper based on diversity. Bank of
America claims that Barrett Daffin was improperly joined, and therefore its citizenship
should not be considered for diversity purposes. In response, Plaintiff refers to a number
of other cases in which Barrett Daffin allegedly engaged in bad conduct, and was
allegedly sanctioned for bad acts. However, Plaintiff’s argument is irrelevant because
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those alleged bad acts are wholly unrelated to Plaintiff’s claims in this case. Barrett
Daffin was acting solely as counsel on behalf of Bank of America in connection with the
non-judicial foreclosure. That is insufficient to join Barrett Daffin as a defendant and
Plaintiff fails to allege other pertinent conduct in this case. See Henry v. Chase Home
Fin., LLC, CIV.A. H-11-0668, 2011 WL 6057505 (S.D. Tex. Dec. 6, 2011) (dismissing
Barrett Daffin from the case because it was acting only as a mortgagor’s counsel. “The
claims against [Barrett Daffin] are dismissed, without leave to amend because to do
would be futile.”).
The only claims of relief Plaintiff asserts against Barrett Daffin are a claim under
the Texas Finance Code and a derivative claim under the Texas Deceptive Trade
Practices Act. Plaintiff claims that Barrett Daffin “misrepresented the character, extend,
or amount of the debt when they foreclosed on the Plaintiff’s homestead without sending
a proper notice of the sale and while a HAMP application was still pending.” (Pl.
Original Petition ¶ 37.) However, even if this assertion is true, failing to send a notice of
the foreclosure sale does not constitute misrepresentation. It is lack of any representation,
and Plaintiff does not contend that Barrett Daffin omitted any information it was required
to include. The only fact directly related to any action taken by Barrett Daffin is that it
sent a notice of acceleration dated January 19, 2010 on behalf of Bank of America. (Id. at
¶ 10.) Plaintiff does not allege that the notice of acceleration sent by Barrett Daffin made
any misrepresentation regarding the character, extent or amount of the debt. Rather,
Plaintiff alleges that Bank of America was not authorized to accelerate the debt. Plaintiff
has not offered any other allegations to support its claims against Barrett Daffin. Bank of
America has shown that there is no reasonable possibility that Plaintiff will be able to
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establish a cause of action against that party in state court based on the Original Petition.
Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en banc), cert.
denied, 544 U.S. 992 (2005). Therefore, joinder was improper and Barrett Daffin’s
citizenship should not be considered for diversity purposes.
IV.
CONCLUSION
For the reasons discussed above, Bank of America’s removal was proper and
Plaintiff’s Motion for Remand (Doc. No. 10) is DENIED.
IT IS SO ORDERED.
SIGNED at Houston, Texas, on this the 2nd day of January, 2013.
KEITH P. ELLISON
UNITED STATES DISTRICT JUDGE
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