Rice v. Green Tree Servicing, LLC

Filing 21

MEMORANDUM OPINION AND ORDER DENYING MOTION TO REMAND denying 6 Motion to Remand to State Court. The Court denies the Plaintiffs request for attorneys fees. Signed by Chief Judge Gina M. Groh on 3/31/2015. (cwm)

IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF WEST VIRGINIA
MARTINSBURG
CURT RICE,
Plaintiff,
v.

CIVIL ACTION NO.: 3:14-CV-93
(GROH)

GREEN TREE SERVICING, LLC,
Defendant.
MEMORANDUM OPINION AND ORDER DENYING MOTION TO REMAND
Currently pending before the Court is the Plaintiff’s Motion for Remand, [ECF 6], filed
on September 17, 2014. The Plaintiff avers that his original pro se complaint stated a
federal cause of action, that the Defendant failed to remove this matter within thirty days
of receipt of the original complaint, and therefore that the Defendant’s removal of the
Plaintiff’s amended complaint to federal court was untimely and improper. For the following
reasons, the Court DENIES the Plaintiff’s motion.
I. Background
The Plaintiff, while acting pro se, filed a complaint against the Defendant on January
21, 2014 in the Magistrate Court of Jefferson County, West Virginia. On a pre-printed civil
complaint form, the Plaintiff wrote the following two sentences in the space provided for a
clear and simple statement of his claim: “Defendant has billed and removed funds from
escrow account for Private Mortgage Insurance (PMI) after automatic termination date.
Account is for primary residence in Jefferson County, WV.” On February 26, 2014, the
Defendant filed a motion to dismiss the pro se complaint. In the motion to dismiss, the

Defendant argued the automatic termination date had not yet occurred. The Defendant
wrote, “The conditions and terms under which PMI may be terminated are regulated by
federal law,” and cited to 12 U.S.C. § 4902, a provision of the federal Homeowners
Protection Act (“HPA”). The Magistrate Court granted the Defendant’s motion to dismiss
on June 23, 2014.
On July 7, 2014, the Plaintiff obtained counsel and filed a notice of appeal of the
Magistrate Court’s order. On July 22, 2014, he moved for leave to file an amended
complaint in the Circuit Court of Jefferson County. The Circuit Court granted leave to file
an amended complaint on July 24, 2014. The Plaintiff’s amended complaint was filed the
same day. The Plaintiff’s amended complaint was approximately nine pages in length and
explicitly sought recovery under both the HPA and the West Virginia Consumer Credit and
Protection Act (“WVCCPA”). On August 18, 2014, the Defendant removed the case to this
Court, alleging federal question jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1441. On
September 17, 2014, the Plaintiff filed a motion to remand to state court. The Defendant
responded, and the Plaintiff replied.
The Plaintiff argues the Defendant’s removal was untimely because the original pro
se complaint was clearly brought pursuant to the federal HPA, and therefore the Defendant
was required to file its notice of removal within thirty days of receipt of the complaint. The
Defendant counters that the Plaintiff’s original pro se complaint was not removable under
the well-pleaded complaint rule, because it did not adequately present a federal question
on its face. The Defendant asserts that this matter first became removable upon the
Defendant’s receipt of the amended complaint on July 24, 2014, and that its notice of
removal was timely filed on August 18, 2014. The issue before this Court is whether the
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Plaintiff’s original pro se complaint was removable.
II. Applicable Law
Under 28 U.S.C. § 1441(b), a defendant may remove a civil action from state court
to federal court if the complaint states a claim “arising under” federal law. To do so, a
defendant must file a notice of removal with the appropriate district court, containing “a
short and plain statement of the grounds for removal, together with a copy of all process,
pleadings, and orders served upon such defendant or defendants in such action.” 28
U.S.C. § 1446(a). The notice of removal must be filed “within 30 days after the receipt by
the defendant, through service or otherwise, of a copy of the initial pleading setting forth
the claim for relief upon which such action or proceeding is based.” Id. § 1446(b)(1). If the
case stated by the initial pleading was not removable, “a notice of removal may be filed
within 30 days after receipt by the defendant, through service or otherwise, of a copy of an
amended pleading, motion, order or other paper from which it may first be ascertained that
the case is one which is or has become removable.” Id. § 1446(b)(3).
“The burden of demonstrating jurisdiction resides with ‘the party seeking removal.’”
Md. Stadium Auth. v. Ellerbe Becket Inc., 407 F.3d 255, 260 (4th Cir. 2005) (quoting
Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994)). “Federal
courts are courts of limited jurisdiction. They possess only that power authorized by
Constitution and statute, . . . which is not to be expanded by judicial decree.” Kokkonen
v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (internal citations omitted).
Because removal jurisdiction raises significant federalism concerns, federal courts must
strictly construe removal statutes. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100,
108-09 (1941).
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A federal controversy “must be disclosed upon the face of the complaint, unaided
by the answer or by the petition for removal.” Gully v. First Nat’l Bank, 299 U.S. 109, 113
(1936). If federal jurisdiction is doubtful, a remand to state court is required. Md. Stadium
Auth., 407 F.3d at 260. On the other hand, if this Court has jurisdiction, it must exercise
it. See Gum v. Gen. Elec. Co., 5 F. Supp. 2d 412, 415 (S.D.W. Va. 1998) (“It is wellestablished federal courts have a ‘virtually unflagging obligation . . . to exercise the
jurisdiction given them.’”).
Federal question jurisdiction exists for civil actions arising under the Constitution and
laws or treaties of the United States. 28 U.S.C. § 1331. Under the well-pleaded complaint
rule, the plaintiff’s complaint is determinative of federal jurisdiction. This longstanding rule
holds that “a suit ‘arises under’ federal law ‘only when the plaintiff’s statement of his own
cause of action shows that it is based upon [federal law].’” Vaden v. Discover Bank, 556
U.S. 49, 60 (2009) (alteration in original) (quoting Louisville & Nashville R.R. Co. v. Mottley,
211 U.S. 149, 152 (1908)). Thus, federal question jurisdiction should be clear from the face
of the complaint and cannot be based upon a federal law defense or a plaintiff’s anticipation
of such a defense. See Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804, 808 (1986).
Courts are not required “to inquire into the subjective knowledge of the defendant,” but
rather may rely on the initial pleading and the documents exchanged by the parties to
determine when a defendant had notice of the grounds for removal. Lovern v. Gen. Motors
Corp., 121 F.3d 160, 162 (4th Cir. 1997).
III. Discussion
The Plaintiff supports his argument that the pro se complaint was removable by
referencing two details from the parties’ initial pleadings. First, he argues it was apparent
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on the face of the complaint that his claim relied on a federal statute, because the pro se
complaint concerned PMI and included the term “automatic termination,” which is defined
in 12 U.S.C. § 4902(b). Second, he highlights that the Defendant, in its motion to dismiss
the pro se complaint, directly cited to § 4902 and stated, “The conditions and terms under
which PMI may be terminated are regulated by federal law.” The Plaintiff asserts it is
disingenuous for the Defendant to now claim the pro se complaint was not removable.
The Defendant states that the pro se complaint did not clearly reference any federal
law and did not give any indication of the Plaintiff’s intent to seek relief under a federal
statute.

The Defendant contends the mere mention of a term, such as “automatic

termination,” does not equate to an affirmative statement of a federal cause of action. The
Defendant maintains that, to the contrary, the Plaintiff’s pro se complaint could have been
susceptible to multiple interpretations as to what relief was sought, including interpretations
that would have required remand to state court had the Defendant sought removal.
After careful review, the Court finds the Plaintiff’s pro se complaint was insufficient
to establish federal question jurisdiction on its face, and therefore, the Defendant’s failure
to file a notice of removal within thirty days after receipt of the pro se complaint does not
require remand. While the Plaintiff argues the Defendant should have known the pro se
complaint was referencing a claim under federal law, courts are not required “to inquire into
the subjective knowledge of the defendant, an inquiry that could degenerate into a mini-trial
regarding who knew what and when.” Lovern, 121 F.3d at 162. For this reason, the thirtyday deadline to file for removal is not triggered when “only a guess by [a defendant] would
have indicated the case was removable.” Pack v. AC & S, Inc., 838 F. Supp. 1099, 1102
(D. Md. 1993).
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The Defendant avers the pro se complaint could have been interpreted as asserting
myriad non-federal claims. The Defendant argues that, for example, the Plaintiff could
have intended to allege the Defendant’s conduct in removing funds from the Plaintiff’s
account amounted to breach of contract, fraud, misrepresentation, unjust enrichment,
improper accounting, or a violation of the WVCCPA. Indeed, the Defendant cites to
multiple cases in which non-federal claims were asserted by plaintiffs alleging similar facts.
In Fellows v. CitiMortgage, Inc., 710 F. Supp. 2d 385, 389 (S.D.N.Y. 2010), a plaintiff
alleged that a mortgage servicer had wrongfully failed to cancel his PMI. The plaintiff
brought suit under the New York Deceptive Trade Practices Act, and also alleged breach
of contract and breach of the implied covenant of good faith and fair dealing under New
York law. Id. In Dwoskin v. Bank of Am., N.A., 850 F. Supp. 2d 557, 561 (D. Md. 2012),
the plaintiffs alleged that a bank falsely promised PMI would not be placed on their
property. When the plaintiffs discovered that PMI had been placed on their property
without their consent, they alleged not only violations of the HPA and the Maryland
Consumer Protection Act, but also that the bank’s conduct was fraudulent or constituted
negligent misrepresentation. Id. Here, the Plaintiff’s failure to state a cause of action
leaves the basis for his pro se complaint open to interpretation, and the possibility of nonfederal theories of liability weighs against finding removability. Cf. Mulcahey, 29 F.3d at
153 (“[I]f a claim is supported not only by a theory establishing federal subject matter
jurisdiction but also by an alternative theory which would not establish such jurisdiction,
then federal subject matter jurisdiction does not exist.”) (citing Christianson v. Colt Indus.
Operating Corp., 486 U.S. 800, 811 (1988)); Greer v. Crown Title Corp., 216 F. Supp. 2d
519, 523 (D. Md. 2002) (granting a motion to remand, despite the plaintiff’s complaint
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repeatedly referencing a federal real estate statute, when the complaint’s other allegations
left “room to find Defendants liable under other, non-federal theories”).
Here, as the Plaintiff failed to allege any specific cause of action, federal question
jurisdiction was not clearly shown on the face of the complaint. “A case is not removable
‘simply because the factual allegations of the complaint could have formed the basis for
reliance on federal law.’” Guzzi v. Clarksburg Water Bd., Civil Action No. 1:07-CV-60, 2008
WL 919541, at *2 (N.D.W. Va. Apr. 3, 2008) (quoting Spaulding v. Mingo Cnty. Bd. of
Educ., 897 F. Supp. 284, 287 (S.D.W. Va. 1995)). Accordingly, the Court finds the pro se
complaint was insufficient to establish federal question jurisdiction.
Requiring a defendant to guess at a plaintiff’s intended cause of action upon receipt
of such a vague complaint would pose a burden on parties and on the courts. In a 2012
case, the United States District Court for the Western District of Virginia considered a suit
filed by two homeowners, the Taylors, after Bank of America began foreclosure
proceedings on their home. Taylor v. Bank of America, Civil Action No. 7:12-CV-00010,
2012 WL 871049, at *1 (W.D. Va. Mar. 14, 2012). In their complaint, the Taylors alleged
that Bank of America had deceived, defrauded, misinformed, and humiliated them,
amongst other claims. Id. These state law claims were presented together with “several
interspersed references to the federal HAMP [Home Affordable Modification Program]
regulations.” Id. The defendants removed the case on the basis of federal question
jurisdiction, and the Taylors filed a motion to remand. Id. The district court granted the
motion to remand, finding that although the complaint referenced HAMP, the face of the
complaint offered “no sure basis” for concluding that the Taylors sought to enforce federal
guidelines or that they were asserting claims dependent upon a substantial question of
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federal law. Id. The Taylors’ complaint had “not asserted any coherent federal claim, much
less affirmatively alleged one.” Id. at *2. Because the Taylors’ complaint made “no
recognizable effort to assert a federal right to relief” on its face, it was “unclear whether the
Taylors’ claims would require a court to rely on federal law.” Id.
In the instant case, just as the Taylors’ complaint was insufficient despite references
to HAMP regulations, the Plaintiff’s pro se complaint did not affirmatively allege a federal
claim, despite its references to PMI and automatic termination. Unlike the complaint in
Taylor, which explicitly referenced federal regulations, the pro se complaint did not directly
cite the HPA or any other federal law. The pro se complaint utilized terminology integral
to provisions of the HPA, but this did not demonstrate the Plaintiff’s intent to pursue a
federal cause of action under the HPA. The Plaintiff’s pro se complaint could have been
intended to convey non-federal claims, like those asserted in Taylor, Dwoskin, and Fellows.
The United States District Court for the Eastern District of New York has addressed
“whether removal, in a non-diversity case, is required within 30 days of receipt of a
complaint that makes no specific statutory or other reference to state or federal law but
does allege a claim cognizable under federal law.” Soto v. Apple Towing, 111 F. Supp. 2d
222, 223 (E.D.N.Y. 2000). The plaintiff in Soto filed a complaint alleging he was fired
because of his Puerto Rican national origin. Id. at 224. Although his complaint was
cognizable under federal law, the plaintiff’s pleading referenced “no law, federal or state.”
Id. More than thirty days after receiving the complaint, the defendants removed the case
upon receiving a letter from the plaintiff’s counsel that stated the specific statutory basis for
the claim. Id. The plaintiff argued that removal was untimely because a federal claim was
evident from the face of his original complaint. Id. The court disagreed, finding that the
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defendants could not have ascertained removability from the face of the complaint alone.
Id. “Any other resolution of this question is undesirable,” the court stated, because
enforcing the thirty-day deadline to remove upon receipt of such a complaint would “give
rise to cases of unwarranted removal, resulting in unnecessary, wasteful litigation and
expense in . . . federal court.” Id. at 224-25 (quoting E.W. Howell Co. v. Underwriters Lab.,
Inc., 596 F. Supp. 1517, 1520 (E.D.N.Y. 1984)) (internal quotation marks omitted).
Additionally, the Soto court found it was not unreasonable for the defendants “to refrain
from filing a removal notice upon receipt of such an ambiguous complaint,” in part because
removal statutes are construed in favor remand. Id. at 224.
Here, although the pro se complaint inferentially alleged a claim cognizable under
federal law, it did not explicitly state a federal cause of action and was reasonably
susceptible to interpretations indicating a non-federal basis. Where grounds for removal
are “obscured or omitted, or indeed misstated, that circumstance makes the case ‘stated
by the initial pleading’ not removable, and the defendant will have 30 days from the
revelation of grounds for removal in an amended pleading, motion, order, or other paper
to file its notice of removal.” Lovern, 121 F.3d at 162. Accordingly, it was not improper for
the Defendant to attempt to dismiss the pro se complaint in Jefferson County, and to then
file for removal when federal question jurisdiction actually became apparent.
To support his argument that the pro se complaint made it sufficiently apparent the
case was removable, the Plaintiff relies on Graham v. W. Va. Div. of Highways, 245 F.
Supp. 2d 836 (S.D.W. Va. 2003). The plaintiffs in Graham argued for remand on the basis
of untimely filing of the notice of removal. Id. at 838. The defendants contended they were
unable to ascertain federal question jurisdiction from the face of the plaintiffs’ complaint.
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Id. The defendants argued the complaint was vague because it incorrectly identified a
federal statute by multiple different names, such as the “Uniform Relocation Assistant and
Land Acquisitions Act of 1970,” instead of properly calling it the “Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970.” Id. The court found that
the plaintiffs’ inaccurate references to the formal title of a federal statute were not so vague
as to obscure the federal question, and the defendants’ failure to file a notice of removal
within thirty days of receipt of the original complaint rendered their subsequent removal
untimely. Id. at 840.
The instant case is not directly analogous to Graham. The plaintiffs in Graham
specifically alleged a violation of a federal statute, although in an imprecise manner, and
their complaint repeatedly and expressly referenced their federal cause of action. Id. In
this case, the pro se complaint inferentially alleged a claim cognizable under federal law,
but under the circumstances that was insufficient to satisfy the well-pleaded complaint rule.
Without additional facts or specific reference to a federal cause of action, the one sentence
allegation contained in the pro se complaint could have represented a state law claim. See
Fellows, 710 F. Supp. 2d at 389.
In its motion to dismiss, the Defendant stated that “[t]he conditions and terms under
which PMI may be terminated are regulated by federal law.” The Plaintiff avers that,
because the Defendant referenced § 4902 in its motion to dismiss, the Defendant has
essentially conceded the presence of a federal question in the pro se complaint. The
Defendant calls this a mischaracterization of its argument. The Defendant asserts that it
cited to § 4902 not to classify the Plaintiff’s cause of action as arising under federal law, but
rather as a defense to the Plaintiff’s statement that the automatic termination date of his
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PMI had passed. Because the Plaintiff based his pro se complaint on an allegation that the
Defendant continued to bill his escrow account after his automatic termination date passed,
the Defendant responded by asserting that the automatic termination date, governed by §
4902, had not yet occurred.
It is “settled law that a case may not be removed to federal court on the basis of a
federal defense.” Caterpillar Inc. v. Williams, 482 U.S. 386, 393 (1987). While the Court
may look to the documents exchanged between the parties to determine when the
Defendant had notice of the grounds for removal, Lovern, 121 F.3d at 162, the Defendant’s
argument in its motion to dismiss does not serve as proof that a federal question existed
on the face of the pro se complaint.
The Defendant’s response to the Plaintiff’s motion to remand addresses the
complete preemption doctrine. The complete preemption doctrine provides that “if the
subject matter of a putative state law claim has been totally subsumed by federal
law—such that state law cannot even treat on the subject matter—then removal is
appropriate.” Lontz v. Tharp, 413 F.3d 435, 439-40 (4th Cir. 2005). In the instant case, if
the HPA served to completely preempt any state law claims raised by the Plaintiff, the pro
se complaint may well have established that federal jurisdiction was appropriate. The HPA
at § 4908, in a section titled “[e]ffect on other laws and agreements,” describes which laws
the statute supersedes and which so-called “protected” state laws are not superseded. A
handful of courts have analyzed whether certain state law causes of action were preempted
by the HPA. Some have found state law claims were not preempted. See Dwoskin, 850
F. Supp. 2d at 568 (holding plaintiffs’ fraud claims were not preempted and that allowing
such claims to proceed was not inconsistent with the HPA); Scott v. GMAC Mortg., LLC,
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Civil Action No. 3:10-CV-00024, 2010 WL 3340518, at *5 (W.D. Va. Aug. 25, 2010) (finding
a plaintiff’s fraud claims were not preempted, where allowing the claims to proceed would
not “confound Congress’s objective in passing the HPA”). Others have found state law
claims preempted. See Augustson v. Bank of Am., N.A., 864 F. Supp. 2d 422, 437
(E.D.N.C. 2012) (finding plaintiffs’ claims of fraud and negligent misrepresentation fell within
the heart of the HPA’s preemption clause). Given the nature of the pro se complaint, the
Court finds the complete preemption doctrine does not apply under these circumstances.
The Plaintiff’s references to PMI and automatic termination were insufficient to make
federal question jurisdiction apparent within the four corners of the pro se complaint. The
Defendant filed its notice of removal within thirty days of receipt of the Plaintiff’s amended
complaint, which established a federal cause of action on its face.

Therefore, the

Defendant’s removal of this matter was timely.
As a final matter, the Court denies the Plaintiff’s request for attorney’s fees.
Because removal was proper, the Defendant had “an objectively reasonable basis for
seeking removal.” Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005).
IV. Conclusion
Accordingly, the Court DENIES the Plaintiff’s Motion to Remand.
The Clerk is directed to transmit copies of this Order to all counsel of record herein.
DATED: March 31, 2015

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