Breiding et al v. Wilson Appraisal Service, Inc. et al
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS' 62 MOTION TO REMAND, DENYING AS MOOT DEFENDANTS' 56 60 MOTIONS FOR SUMMARY JUDGMENT AND DENYING AS MOOT DEFENDANT PRIORITY MORTGAGE CORPORATION'S 65 66 67 68 69 MOTIO NS IN LIMINE. The Clerk is DIRECTED to transmit a copy of this memorandum opinion and order to counsel of record herein and to the Circuit Court of Ohio County, West Virginia. Pursuant to Federal Rule of Civil Procedure 58, the Clerk is DIRECTED to enter judgment on this matter. Signed by Senior Judge Frederick P. Stamp, Jr. on 3/23/16. (copy to counsel via CM/ECF; Clerk of Circuit Court of Ohio County via US Mail)(lmm) Modified on 3/23/2016 to edit docket text (lmm).
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
RYAN L. BREIDING and TRACY SISARCICK,
Civil Action No. 5:14CV124
WILSON APPRAISAL SERVICES, INC.,
PRIORITY MORTGAGE CORP.,
and PHH MORTGAGE CORPORATION,
RICHARD W. HYETT, an individual,
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND,
DENYING AS MOOT DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT
AND DENYING AS MOOT DEFENDANT
PRIORITY MORTGAGE CORPORATION’S MOTIONS IN LIMINE
The plaintiffs together purchased a home. Plaintiff Ryan
Breiding applied for a loan from defendant Priority Mortgage
Corporation (“Priority Mortgage”), and served as the only signatory
to the loan. At closing, the plaintiffs allegedly waived the right
to a home inspection.
After purchasing the house, the plaintiffs
claim that several issues arose, ranging from toilet leaks to
standing water in the basement.
The plaintiffs then filed a civil
action against the sellers and real estate agent based on those
issues and the alleged misrepresentations made to them at closing.
That case was filed in West Virginia state court.
Mortgage, Wilson Appraisal Service, Inc. (“Wilson Appraisal”), and
PHH Mortgage (“PHH”).
Later, the plaintiffs settled with the
sellers and the real estate agency.
The remaining defendants at
the time, PHH, Priority Mortgage, and Wilson Appraisal, removed the
state court action to this Court.
Priority Mortgage also filed a
third-party complaint against Richard Hyett, who is alleged to be
an employee or independent contractor of Wilson Appraisal.
The plaintiffs assert that the remaining defendants, which are
Wilson Appraisal and Priority Mortgage,1 violated professional
standards of care regarding the negotiation process, such as hiring
unbiased appraisers or intentionally misrepresenting defects in the
At issue now are the defendants’ motions for summary
judgment, the plaintiffs’ motion to remand, and defendant Priority
Mortgage’s motions in limine.
Motions for Summary Judgment
In its motion for summary judgment, Wilson Appraisal points
out that it is named in the complaint because Richard Hyett was
allegedly acting as Wilson Appraisal’s agent. ECF No. 56. Richard
Hyett appraised the property at issue, and the plaintiffs appear to
argue that he was an agent of Wilson Appraisal.
The parties stipulated to the dismissal without prejudice of
PHH Mortgage Corporation from this civil action. ECF No. 25.
Appraisal contends that Richard Hyett is only an independent
contractor, and thus, it cannot be liable for any of his actions.
In particular, Wilson Appraisal points out that it had no control
over Richard Hyett’s work hours, reporting requirements, work
schedule, training and licensing, or essentially any aspect of
Richard Hyett’s job duties.
Rather, Richard Hyett was selected
merely because of his geographic location.
contractor, and thus, Wilson Appraisal cannot be liable for his
Defendant Priority Mortgage also filed a motion for summary
ECF No. 60.
Priority Mortgage first asserts that
plaintiff Tracy Sisarcick has no claim because she was not a
signatory, co-signor, or co-borrower to the loan from Priority
Mortgage. Next, Priority Mortgage points to the opinions of expert
consultants in the banking and mortgage industry, who agree that it
has complied with all relevant guidelines and standards.
Mortgage also states that no duty exists for the “mortgage company
to obtain any additional inspections beyond the appraisal unless
the appraiser identifies a potential issue that should be further
investigated,” and here Richard Hyett did not do so.
Priority Mortgage asserts that no evidence exists to show that it
either fraudulently induced the plaintiffs to purchase the property
or had any agency relationship with Wilson Appraisal or Richard
The plaintiffs did not file a formal response to either motion
for summary judgment. However, the plaintiffs did file a motion to
remand, which is discussed below, and which this Court must first
decide in order to determine whether jurisdiction exists.
Motion to Remand
In their motion to remand, the plaintiffs assert that the
defendants mischaracterize their argument as alleging violations of
federal law, which served as the grounds for removal of this
In particular, the defendants believe that the plaintiffs
assert violations of the Financial Institutions Reform, Recovery,
and Enforcement Act (“FIRREA”) and the U.S. Department of Housing
and Urban Development (“HUD”) Handbook. ECF No. 62. Although such
violations are not asserted in the complaint, the defendants point
to the plaintiffs’ answer to their interrogatories.
In the answer
to the interrogatory, the plaintiffs cite “HUD Handbook 4150.1 and
4905.1” in reference to inspection and appraisal requirements for
ECF No. 63 Ex. 1.
Those sporadic references were part
questions concerning “professional standards” and “criteria and
guidelines” that the defendants may have violated.
plaintiffs argue that the HUD Handbook is only cited as a further
example of the defendants’ negligence.
The plaintiffs do not
specifically assert a claim under FIRREA in their complaint, and
moreover, FIRREA provides no private cause of action.
the plaintiffs believe that federal question jurisdiction does not
exist in this case, and thus, this Court lacks jurisdiction.
Accordingly, they request that this action be remanded.
Defendant Priority Mortgage filed a response in opposition to
the motion to remand.
ECF No. 63.
Priority Mortgage first argues
that the plaintiffs did assert claims under FIRREA.
notes that diversity jurisdiction allegedly exists in this case.
In support of that argument, Priority Mortgage points to the fact
that: (1) the plaintiffs are residents of Ohio; (2) the defendants
are out-of-state citizens; and (3) that the loan balance at issue
As to the amount in controversy, Priority
Mortgage states that it learned that the amount in controversy
requirement was satisfied during a deposition on August 25, 2015.
Even if federal question or diversity jurisdiction were absent,
Priority Mortgage believes that this Court has discretion to
maintain jurisdiction, and that judicial economy weighs against
remanding. For those reasons, Priority Mortgage requests that this
Court deny the motion to remand and grant the motion for summary
Defendant Wilson Appraisal filed a response, indicating
that it joins in Priority Mortgage’s response in opposition to the
motion to remand, and requests that its motion for summary judgment
The plaintiffs filed a reply to their motion to remand.2
plaintiffs first argue that diversity jurisdiction does not exist
because the defendants failed to assert such jurisdiction in their
notice of removal.
Further, the plaintiffs point out that the
amended complaint in this action, which was filed on July 8, 2013,
stated that the loan balance at issue was $119,700.00.
the defendants would have known well before the August 25, 2015,
If defendants attempted to remove the action under
diversity of citizenship, the plaintiffs assert that the defendants
should have done so within one year of the filing of the amended
complaint as required by the removal statute. Next, the plaintiffs
contend that federal question jurisdiction is absent.
neither federal question nor diversity jurisdiction exists, the
plaintiffs believe that this civil action should be remanded.
For the reasons set forth below, the plaintiffs’ motion to
remand (ECF No. 62) is GRANTED, the defendants’ motions for summary
judgment (ECF Nos. 56 and 60) are DENIED AS MOOT, and defendant
Priority Mortgage Corporation’s motions in limine (ECF Nos. 65, 66,
67, 68, and 69) are DENIED AS MOOT.
It should be noted that the plaintiffs’ reply was filed
approximately 21 days after the defendants’ response in opposition,
and thus, appears untimely. Nonetheless, even if the reply is not
considered, the plaintiffs’ motion to remand, as further discussed,
A defendant may remove a case from state court to federal
court in instances where the federal court is able to exercise
original jurisdiction over the matter.
28 U.S.C. § 1441.
courts have original jurisdiction over primarily two types of
cases: (1) those involving federal questions under 28 U.S.C.
§ 1331, and (2) those involving citizens of different states where
interests and costs pursuant to 28 U.S.C. § 1332(a).
federal jurisdiction arises only by virtue of the parties’ diverse
citizenship, such an action “shall be removable only if none of the
. . . defendants is a citizen of the State in which such action is
Commercialization, Inc., 5:07CV42, 2007 WL 1376030, at *1 (N.D. W.
Va. May 7, 2007).
The party seeking removal bears the burden of
establishing federal jurisdiction.
See In re Blackwater Security
Consulting, LLC, 460 F.3d 576, 583 (4th Cir. 2006); Mulcahey v.
Columbia Organic Chems. Co., Inc., 29 F.3d 148, 151 (4th Cir.
Removal jurisdiction is strictly construed, and if federal
jurisdiction is doubtful, the federal court must remand.
v. CSX Transp., Inc., 187 F.3d 422 (4th Cir. 1999); Mulcahey, 29
F.3d at 151.
Motion To Remand
As indicated earlier, the plaintiffs contend that neither
defendants, however, believe that the plaintiffs asserted claims
under FIRREA and a HUD Handbook by mentioning them in an answer to
Further, the defendants believe that they were
unaware that diversity jurisdiction existed until August 25, 2015,
during a deposition.
Therefore, the plaintiffs’ motion to remand
primarily concerns three issues.
Those three issues are the
following: (1) whether the reference to a federal statute or
regulation in an interrogatory is sufficient to raise federal
question jurisdiction; (2) whether a private cause of action under
FIRREA exists; and (3) whether diversity jurisdiction must first be
raised in the notice of removal. Those issues will be addressed in
the order presented.
1. Raising Federal Question Jurisdiction in an Interrogatory
Generally, removal under federal question jurisdiction “is
determined by reference to the well-pleaded complaint.”
Britton, 223 F. App’x 394, 396-97 (5th Cir. 2007) (per curiam); see
Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (“The
presence or absence of federal-question jurisdiction is governed by
the ‘well-pleaded complaint rule,’” which provides that federal
jurisdiction “exists only when a federal question is presented on
the face of the properly pleaded complaint.”).
Under 28 U.S.C.
§ 1446(b)(3), however, a timely notice of removal may be filed
after receipt by the defendant “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.” (emphasis
Courts have found that “other paper” includes discovery
responses, such as an interrogatory answer or deposition testimony.
Dougherty v. Cerra, 987 F. Supp. 2d 721, 726-27 (S.D. W. Va. 2013);
see Addo v. Globe Life & Accident Ins. Co., 230 F.3d 759, 762 (5th
Cir. 2000); Yarnevic v. Brink’s, Inc., 102 F.3d 753, 755 (4th Cir.
1996) (Noting that the “motion, order or other paper” requirement
defendant, “whether communicated in a formal or informal manner.”)
(internal citation omitted).
Although interrogatories or answers thereto may constitute
“other paper,” courts acknowledge that examining “other paper” is
generally used to clarify that “diversity jurisdiction has been
Blanding v. Bradley, 2014 WL 1514675, at *2 (D. Md.
April 15, 2014); see Eggert, 223 F. App’x at 397; see generally
Lovern v. Gen. Motors Corp., 121 F.3d 160, 162 (4th Cir. 1997).
Phrased more directly, “[e]xtrinsic documents will rarely, if ever,
affect a federal court’s subject matter jurisdiction in federal
question cases because the jurisdictional inquiry is normally
limited to the plaintiff’s well-pleaded complaint.” Dougherty, 987
F. Supp. 2d at 797 (emphasis added).
Those rare instances in the
federal question context refer to cases in which courts look to
“other paper” to “clarify that plaintiff’s state law claim is one
that would be preempted by federal law,” Eggert, 223 F. App’x at
397 (citing Peters v. Lincoln Elect. Co., 285 F.3d 456, 468-69 (6th
Cir. 2002)), or generally to “clarify the federal nature of an
existing claim” which has already been pleaded, Trotter v. Steadman
Motors, Inc., 47 F. Supp. 2d 791, 792 (S.D. Miss. 1999).
The defendants removed this civil action based on federal
See ECF No. 1.
More specifically, the
defendants claim that they removed the civil action upon receipt of
regulations and a HUD Handbook. The answer to the interrogatory is
likely considered “other paper.”
However, the case law discussed
above is clear that “other paper,” such as interrogatories or
answers thereto, are more applicable in the diversity context.
Further, the amended complaint does not assert a claim under either
jurisdiction exists based on the mention of federal law in an
answer to an interrogatory does not appear proper under the law
Therefore, federal question jurisdiction does not
exist based on the plaintiffs’ answer to the interrogatory.
2. Causes of Action under FIRREA
Defendants next assert that a private cause of action exists
under the Financial Institutions Reform, Recovery, and Enforcement
Because they claim the plaintiffs have asserted a
claim under FIRREA, federal question jurisdiction allegedly exists.
Alternatively, the defendants contend that this Court may maintain
jurisdiction based on a substantial federal interest, which they
claim is “the efficient processing and approval of federal loans.”
Several courts have found that no private cause of action,
either express or implied, exists under FIRREA.
create a private cause of action.”
“FIRREA does not
Conry v. Barker, 2015 WL
5636405, at *4 n.18 (D. Col. Aug. 11, 2015); see Dempsey v. United
States Bank Nat’l, 2012 WL 2036434, at *6 (E.D. Tex. June 6, 2012)
(finding no private cause of action under FIRREA for defaulting
borrowers seeking to stop foreclosure); Pen-Del Mortg. Assocs. v.
F.D.I.C., 1994 WL 675502, at *3 (E.D. Penn. Nov. 23, 1994) (“The
express language of . . . FIRREA . . . do[es] not create a private
cause of action” for bidders) (also noting that the legislative
history does not reference a private cause of action).
legislative history of FIRREA does not appear to reference a
private cause of action; and (2) the statute expressly states that
“[a] civil action to recover a civil penalty under this section
shall be commenced by the Attorney General.” 12 U.S.C. § 1833a(e).
As to whether an implied cause of action exists, a court must
assess the statute as provided under Cort v. Ash, 422 U.S. 66, 78
The holding of Cort sets forth a four-part test to
determine whether a private claim is implicit in a statute not
expressly providing one.
Those factors require a court to examine
the following: “(1) the statute, to determine if the plaintiffs are
in the class for whose benefit the statute was enacted; (2) the
legislative history, to see if the statute explicitly or implicitly
shows an intent to create or deny the cause of action”; (3) that
the proposed remedy is consistent with the purpose of the statutory
scheme so as to imply such remedy; and “(4) whether the cause of
inferring a federal remedy would be inappropriate.”
Bigos, 75 F. Supp. 2d 976, 978-79 (D. Minn. 1998) (citing Cort, 422
U.S. at 78).
Moreover, the plaintiffs have the burden of showing
that “Congress intended to make a private remedy available.” Suter
v. Artist M., 503 U.S. 347, 363 (1992).
Assessing the above factors, it does not appear that a private
cause of action may be implied under FIRREA.
It should be noted
that the plaintiffs do not assert a claim under FIRREA.
the Cort factors do not appear to favor a private cause of action.
First, the statute expressly states that the Attorney General is
the party who may bring a civil action to recover any civil
Moreover, 12 U.S.C. § 1833a(c) cites to “violations to
which a penalty is applicable” under FIRREA.
violations refer to sections involving statements made as to
defrauding banking institutions or federal agencies, primarily in
a criminal context.
The plaintiffs in this case are homeowners
Homeowners do not appear to be a class of individuals covered under
Therefore, the plaintiffs are not members of a class
to which FIRREA applies.
Further, the statute does not expressly
provide a private cause of action, and instead refers to the
Attorney General to bring such an action.
Thus, the first Cort
factor likely does not favor a private cause of action in this
Second, the legislative intent of the statute does not
specifically, the legislative history of the statute refers to no
such cause of action.
Third, it would be inconsistent with the
underlying purpose of the statute to provide a cause of action for
individuals like the plaintiffs.
FIRREA states that those who
violate its sections “shall be subject to a civil penalty in an
amount assessed by the court in a civil action under this section.”
12 U.S.C. § 1833a(a) (emphasis added).
“This section” refers to
§ 1833a, which expressly states that a civil action to recover a
civil penalty “shall be commenced by the Attorney General,” not
homeowners such as the plaintiffs.
Accordingly, the right to
recover a civil penalty likely does not lie with the plaintiffs in
The fourth factor under Cort also weighs against
finding a private cause of action, because the enforcement of
violations involving federal agencies or institutions traditionally
rests with the federal government, not the states.
Based on the holding of Cort, no implied private cause of
cause of action.
Further, the statute itself provides no express
Therefore, this Court finds no federal question
jurisdiction pursuant to FIRREA in this case.
3. Raising Diversity Jurisdiction
As a general rule, “[c]ourts have consistently interpreted
§ 1332 and its predecessors to require complete diversity such that
the state of citizenship of each plaintiff must be different from
that of each defendant.”
Athena Automotive, Inc. v. DiGregorio,
166 F.3d 288, 290 (4th Cir. 1999).
A corporation is “deemed to be
a citizen of every State and foreign state by which it has been
incorporated and of the State or foreign state where it has its
principal place of business.”
Id.; 28 U.S.C. § 1332(c)(1).
Finally, a corporation’s citizenship is examined at the “time the
action is commenced” for diversity purposes.
DiGregorio, 166 F.3d
For removal purposes, deposition testimony has been held
to constitute “other paper” as provided under the removal statute.
See, e.g., Scott, Hulse, Marshall, Feuille, Finger & Thurmond, P.C.
v. Integrated Health Services at Hanover House, Inc., 2008 WL
5683482, at *3 (W.D. Tex. Oct. 17, 2008); Parker v. Co. of Oxford,
224 F. Supp. 2d 292, 294 (D. Maine 2002); Smith v. Int’l Harvester,
621 F. Supp. 1005, 1008 (D. Nev. 1985); Brooks v. Solomon Co., 542
F. Supp. 1229, 1230 (N.D. Ala. 1982).
Although a defendant may
generally remove an action within 30 days of the action becoming
removable, a case under diversity jurisdiction may not be removed
“more than 1 year after commencement of the action,” absent a
finding of bad faith.
28 U.S.C. § 1446(c)(1).
In this case, diversity jurisdiction does not exist.
should be noted that the defendants removed this action based on
federal question jurisdiction, not diversity jurisdiction.
fact, diversity jurisdiction is raised for the first time by the
defendants in their response in opposition to the plaintiffs’
motion to remand.
In their response, the defendants assert that
diversity of citizenship exists based on the amount in controversy.
The defendants point to deposition testimony on August 25, 2015, at
which time the defendants allegedly first determined that diversity
may exist because of the amount in controversy.
arguments, however, are misguided for two reasons.
citizens of West Virginia and Ohio (respectively).
defendants, Priority Mortgage Corporation and Wilson Appraisal
Services, Inc., are both citizens of Ohio.
Thus, the parties do
not appear to be completely diverse.
Second, removal based on
diversity jurisdiction would be untimely.
In their response in
opposition to the motion to remand, the defendants argue that
diversity jurisdiction exists based on the amount in controversy
It should be emphasized that removal of this action
was based on federal question jurisdiction rather than diversity
jurisdiction. See ECF No. 1. Nonetheless, the defendants point to
deposition testimony from August 25, 2015, at which time the
defendants allegedly first determined that diversity may exist
because of the amount in controversy.
Such testimony is likely
Notwithstanding the apparent lack of diversity of
citizenship, 28 U.S.C. § 1446(c)(1) specifically limits removal
commencement of the action.
The amended complaint in this action
was filed on July 8, 2013.
In that amended complaint, it clearly
states that the loan balance at issue totaled $119,170.00.
means that the amount in controversy requirement was satisfied well
before the August 25, 2015, deposition.
Therefore, the defendants
untimely removed this action over one year after the plaintiffs
jurisdiction does not exist in this case because of a lack of
diversity of citizenship between the parties and the untimely
jurisdiction, under either diversity or federal question, the
plaintiffs’ motion to remand is GRANTED.4
Motions for Summary Judgment
As stated above, the plaintiffs’ motion to remand is GRANTED.
With that ruling in mind, this Court finds it unnecessary to
discuss the merits of the defendants’ motions for summary judgment.
Therefore, the pending motions for summary judgment (ECF Nos. 56
and 60) are hereby DENIED AS MOOT.
It should be noted that the citizenship of the third-party
defendant is of no consequence for diversity purposes regarding the
motions at issue. See, e.g., Nevada Eighty-Eight, Inc. v. Title
Ins. Co. of Minnesota, 753 F. Supp. 1516, 1522 (D. Nev. 1990)
(“Under normal circumstances, the presence of non-diverse thirdparty defendants does not destroy diversity.”); Leick v.
Schnellpressenfabrik AG Heidelberg, 128 F.R.D. 106, 108 (S.D. Iowa
1989) (“A defendant may implead a third-party defendant who is of
the same citizenship as of plaintiff without destroying diversity
if ancillary jurisdiction over the third-party claim is present.”)
(citing Curtis v. Radiation Dynamics, Inc., 515 F. Supp. 1176, 1177
(D. Md. 1981); Semler v. Psychiatric Inst. of Wash. D.C., 538 F. 2d
121, 127 (4th Cir. 1976); West v. United States, 592 F.2d 487, 492
(8th Cir. 1979)).
The defendants also argue that this Court has discretion to
maintain jurisdiction over the action by exercising supplemental
jurisdiction. However, supplemental jurisdiction is permitted only
where district courts first “have original jurisdiction.”
U.S.C. § 1367(a). The plaintiffs only asserted state law claims in
their complaint, and this Court has ruled that it does not have
original jurisdiction over this civil action. Without first having
original jurisdiction, exercising supplemental jurisdiction would
thus be improper. Accordingly, the defendants’ argument as to this
Court’s “discretionary” jurisdiction is incorrect.
Motions in Limine
Since the filing of the pending motions discussed above,
defendant Priority Mortgage has filed five motions in limine.
Nos. 65, 66, 67, 68, and 69.
Because this Court has granted the
plaintiffs’ motion to remand and denied the pending motions for
summary judgment, there is no need to address the merits of the
motions in limine.
Therefore, the motions in limine are hereby
DENIED AS MOOT.
For the reasons set forth above, the plaintiffs’ motion to
remand (ECF No. 62) is GRANTED, the defendants’ motions for summary
judgment (ECF No. 56 and 60) are DENIED, and defendant Priority
Mortgage Corporation’s motions in limine (ECF Nos. 65, 66, 67, 68,
and 69) are DENIED AS MOOT.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein and to the Circuit
Court of Ohio County, West Virginia.
Pursuant to Federal Rule of
Civil Procedure 58, the Clerk is DIRECTED to enter judgment on this
March 23, 2016
/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE
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