Satchell v. Ocwen Loan Servicing, LLC et al
Filing
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MEMORANDUM OPINION. Signed by District Judge James R. Spencer on 7/21/2011. (cgar)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
RICHMOND DIVISION
YOLANDA SATCHELL,
Plaintiff,
Action No. 3:11‐CV‐00144
v.
OCWEN LOAN SERVICING, LLC, et al.,
Defendants.
MEMORANDUM OPINION
THIS MATTER is before the Court on Plaintiff’s Motion to Remand. (Doc. No. 13.)
Plaintiff moves the Court to remand this case to the Circuit Court of Prince George County
and award reasonable attorney fees and costs. For the reasons stated below, the Court
GRANTS the Motion, but denies the request for fees.
I.
BACKGROUND
Plaintiff Yolanda Satchell (“Satchell”) filed a Bill of Complaint and Petition for
Injunction against Defendants in the Circuit Court of Prince George County alleging Ocwen
Loan Servicing, LLC (“Ocwen”): (1) breached the parties’ contract when it failed to modify
Satchell’s mortgage; (2) negligently processed the modification application, causing
Satchell severe harm; and (3) should be estopped from claiming the parties did not have a
contract. Satchell also alleges Nectar Projects, Inc. (“Nectar”), the substitute trustee,
breached the contract to modify Satchell’s mortgage.
Satchell purchased a tract of land at 10018 Golf Course Drive in Disputanta, Virginia.
She took out a first lien mortgage in the amount of $ 180,000.00 on July 27, 2006. Ocwen
services the loan. Satchell retained counsel January 26, 2011, in an effort to obtain a loan
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modification and avoid foreclosure. Satchell’s counsel spoke with an Ocwen representative
January 27, 2011. The representative told counsel to visit Ocwen’s website to obtain an
application and send the application to Ocwen via fax and email. Counsel sent the
documents that day. Counsel spoke with a different Ocwen representative January 31,
2011. The representative told counsel Ocwen had received the application for modification
but could not postpone the sale of Satchell’s home until the loan modification was
approved. Plaintiff’s home was scheduled to be sold at a February 8, 2011, foreclosure sale.
II.
LEGAL STANDARD
“Federal courts are courts of limited jurisdiction. They possess only that power
authorized by Constitution and statute[.]” Kokkonen v. Guardian Life Ins. Co. of Am., 511
U.S. 375, 377 (1994). Title 28 of the United States Code, section 1331, provides district
courts “have original jurisdiction of all civil actions arising under the Constitution, laws, or
treaties of the United States.”
A case originating in state court may be removed to federal court if the district court
has original federal question or diversity jurisdiction. 28 U.S.C. § 1441(a), (b). If at any time
before final judgment it appears the district court lacks subject matter jurisdiction,
however, the court must remand the case. 28 U.S.C. § 1447(c). A district court that remands
a case may require the removing party to pay costs and expenses, including attorney fees,
incurred as a result of the removal. Id.
III.
DISCUSSION
a. The Court Lacks Subject Matter Jurisdiction
The issue before the Court is whether Satchell’s claims arise under the Department
of the Treasury’s Home Affordable Modification Program (“HAMP”) guidelines, thereby
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conferring federal question jurisdiction on this Court. Satchell urges the Court to remand
because the Court does not have subject matter jurisdiction. Satchell argues her claims do
not arise under HAMP and, consequently, do not arise under the laws of the United States.
Thus, the Court does not have federal question jurisdiction. Satchell contends Ocwen’s
theory of federal question jurisdiction is predicated on an alternative theory of liability
Satchell chose not to plead and is not present on the face of the Complaint. Satchell states
she could have sought judicial enforcement of HAMP directly or could have asserted her
rights as an intended third‐party beneficiary of the contract between Ocwen and the United
States Department of the Treasury. In that case, she concedes this Court would have federal
question jurisdiction. Because she chose to rely on state law theories of contract and tort,
however, she believes this Court does not have jurisdiction.
Satchell further argues “the mere presence of a federal issue in a state cause of
action does not confer federal‐question jurisdiction.” Merrell Dow Pharm., Inc. v.
Thompson, 478 U.S. 804, 813 (1986). That a court has to examine or interpret a federal law
or regulation to resolve a matter does not mean a district court has federal question
jurisdiction. Satchell argues none of her claims are created by federal law and none of her
claims depend on the resolution of a substantial question of federal law. Instead, the HAMP
guidelines provide a template for offering loan modifications and Ocwen made affirmative
promises to Satchell to adhere to the terms in the HAMP guidelines. That Satchell’s claims
are predicated upon the existence of HAMP does not confer federal question jurisdiction.
Ocwen argues this Court has subject matter jurisdiction, as a federal question must
be resolved. Ocwen maintains Satchell is attempting to mask a private right of action under
HAMP, which is impermissible, as a state law claim. Ocwen contends this Court permitting
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Satchell’s disguised HAMP claim to be remanded to state court essentially permits her to
pursue a private right of action under HAMP in direct contravention of the prohibition on
such claims. Moreover, Ocwen argues, if there is a prohibition on private causes of action
under HAMP, there can be no private cause of action for acts or omissions made in
connection with a HAMP modification. Finally, Ocwen argues it is unreasonable for Satchell
to argue her claims do not arise out of HAMP, as without HAMP guidelines, there would be
nothing requiring a lender or servicer to modify Satchell’s written mortgage loan.
Ocwen compares the instant case to Sheriff v. Deutsche Bank National Trust
Company et al., No. CV 10‐1328‐PHX‐JAT, 2011 WL 1496152 (D. Ariz. Apr. 20, 2011). The
plaintiffs in Sheriff requested and submitted a HAMP application, but did not receive a loan
modification. Id. at *1. The plaintiffs sued the defendants and asserted they were not
attempting to state a private cause of action under HAMP. Id. at *3. The district court
disagreed, because “[t]he majority of their complaint [dealt] with the purposes behind
HAMP, HAMP guidelines issued by the United States Treasury, and Defendants’ alleged
violations of those guidelines.” Id. (internal citations omitted).
Ocwen believes the instant matter is analogous. Ocwen argues Satchell pursued a
HAMP modification after learning about the program on Ocwen’s website. When Ocwen
failed to modify her loan, Satchell brought this action. While Satchell claims she does not
state a private cause of action under HAMP, the majority of her Complaint deals with the
purposes of the HAMP guidelines and Ocwen’s purported violations of those guidelines.
Ocwen argues Satchell’s action necessarily depends on whether HAMP was intended to
require lenders and servicers to engage in certain acts and refrain from certain omissions
with respect to requested loan modifications or be exposed to liability in tort or for breach
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of contract. Thus, Ocwen believes Satchell’s Complaint raises a substantial federal question
and turns on the construction of federal law.
To determine if a complaint presents a federal question, a district court should “first
discern whether federal or state law creates the cause of action.” Mulcahey v. Columbia
Organic Chems. Co. Inc., 29 F.3d 148, 151 (4th Cir. 1994). If federal law creates the cause of
action, the district court has subject matter jurisdiction. Id. If, however, state law creates
the cause of action, “federal question jurisdiction depends on whether the plaintiff’s
demand ‘necessarily depends on resolution of a substantial question of federal law.’” Id.
(quoting Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 28 (1983)).
There is only a “small class of cases where, even though the cause of action is not created
by federal law, the case’s resolution depends on resolution of a federal question sufficiently
substantial to arise under federal law[.]” Ormet Corp. v. Ohio Power Co., 98 F.3d 799, 806
(4th Cir. 1996).
This Court lacks subject matter jurisdiction, as Satchell’s Complaint “does not
demonstrate that [her] state law claims ‘necessarily turn[ ] on some construction of federal
law.’” Melton v. SunTrust Bank, No. 2:11‐CV‐204, 2011 WL 1630273, at *1 (E.D. Va. Apr. 21,
2011) (quoting Thompson, 478 U.S. at 808). Satchell simply alleges breach of contract and
negligence and seeks to have Ocwen estopped from claiming the parties did not have a
contract. Her claims thus arise under Virginia contract and tort law. There is no substantial
federal question and the case does not turn on the construction of a federal law. To the
contrary, “HAMP appears to merely form part of the backdrop of an otherwise purely state
law dispute.” Id. It should, thus, be left to the state court to determine if Defendants
breached the contract or committed an act of negligence. To hold otherwise “would
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drastically upset the balance between federal and state judicial responsibilities.” Bennett v.
Bank of Am., No. 3:11‐CV‐3, 2011 WL 1814963, at *2 (E.D. Va. May 11, 2011). Accordingly,
the Court grants the Motion to Remand.
b. The Court Will Not Award Attorney Fees or Costs
Satchell requests that the Court award attorney fees and costs incurred as a result of
Ocwen’s improper removal. Ocwen argues Satchell is not entitled to attorney fees because
its Notice of Removal was in accordance with the law that existed when it was filed.
Ocwen further argues Satchell did not move to remand this case when it was first
removed. Instead, she waited more than two months to request the remand. Moreover,
prior to filing the instant Motion, Satchell actively engaged in litigation by filing a brief in
opposition to Ocwen’s Motion to Strike and Motion to Dismiss. Ocwen believes this proves
Satchell also thought the Court had subject matter jurisdiction when it was removed.
Finally, Ocwen contends a fee in the amount Satchell requests, $ 4,500.00, is not
reasonable. Satchell did not submit an affidavit detailing the fees, thereby preventing
Ocwen from assessing and formulating a detailed response as to the reasonableness of the
amount requested. Thus, Ocwen believes the Court should deny the request.
A district court has discretion to award the party prevailing on a motion to remand
attorney fees. See 28 U.S.C. § 1447(c); Martin v. Franklin Capital Corp., 546 U.S. 132, 136
(2005). When determining whether to award fees, the court
[s]hould recognize the desire to deter removals sought for the purpose of
prolonging litigation and imposing costs on the opposing party, while not
undermining Congress’ basic decision to afford defendants a right to remove
as a general matter, when the statutory criteria are satisfied.
Id. at 140.
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An award of fees is appropriate only if “the removing party lacked an objectively
reasonable basis for seeking removal.” Id. at 141.
The argument that this Court has federal question jurisdiction is not altogether
unreasonable. Ocwen removed this matter March 3, 2011. As Ocwen points out, the
jurisprudence underlying the remand is very recent and did not exist when Ocwen filed its
Notice of Removal on March 3, 2011. See Rathore v. Bank of Am., N.A., No. 3:11‐CV‐136,
2011 WL 2077538 (E.D. Va. May 24, 2011); Bennett v. Bank of Am., No. 3:11‐CV‐3, 2011 WL
1814963 (E.D. Va. May 11, 2011); Melton v. SunTrust Bank, No. 2:11‐CV‐204, 2011 WL
1630273 (E.D. Va. Apr. 21, 2011). Thus, Ocwen’s position is not unreasonable or frivolous
and attorney fees are not appropriate.
IV.
CONCLUSION
For the reasons stated above, the Court GRANTS Plaintiff’s Motion to Remand, but
will not award attorney fees or costs.
Let the Clerk send a copy of this Memorandum Opinion to all counsel of record.
An appropriate Order shall issue.
ENTERED this 21st day of July 2011
________________________/s/_____________________
James R. Spencer
Chief United States District Judge
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