Nicewarner v. Quicken Loans Inc. et al

Filing 27

MEMORANDUM OPINION AND ORDER granting plaintiff's 10 MOTION to Remand case. Signed by Judge John T. Copenhaver, Jr. on 9/3/2013. (cc: attys) (taq)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON

RUTH E. NICEWARNER,
Plaintiff,
v.

Civil Action No. 2:13-cv-2806

QUICKEN LOANS INC. and
DELMAR BARRETT and
BANK OF AMERICA, NA,
Defendants.

MEMORANDUM OPINION AND ORDER

Pending is the motion by plaintiff Ruth E. Nicewarner
to remand, filed March 14, 2013.

For the reasons below, the

court finds that the nondiverse defendant was properly joined,
grants the motion, and remands the case.

I. Background – According to the Complaint

Ms. Nicewarner resides with her husband at her home in
West Virginia and works in part time, low wage jobs.
¶ 2.

Compl.

Quicken Loans Inc. (“Quicken”) is the corporate lender who

provided her with successive loans and has a principal place of
business in Detroit, Michigan.

Id. ¶ 3.

Delmar Barrett was the

closing agent for the subject transactions and resides in
Martinsburg, West Virginia.

Id. ¶ 4.

Bank of America, NA, is

the servicing agent for the loans and has a principal place of
business in Charlotte, North Carolina.

Id. ¶ 5.

The

allegations of fact, as set forth in the amended complaint (“the
complaint”), are as follows.
Ms. Nicewarner purchased her home in 1984 for
approximately $48,000.

Id. ¶ 6.

In 2007, she had a home loan

from an unnamed lender for approximately $60,000.

Id. ¶ 7.

In around 2007, Ms. Nicewarner responded to a
solicitation by Quicken to refinance her home loan.

Id. ¶ 8.

On September 29, 2007, Quicken originated a loan secured by her
home in the amount of $91,000.

Id. ¶ 9.

The loan included

significant settlement charges including thousands of dollars of
fees paid to Quicken.

Id. ¶ 10.

Quicken immediately

transferred servicing of the loan to Countrywide, Bank of
America’s predecessor.

Id. ¶ 11.

Less than a year after the 2007 loan, Quicken again
solicited Ms. Nicewarner to refinance her home.

Id. ¶ 12.

In

May of 2008, an out of state appraiser came to her home and
conducted an appraisal in approximately fifteen minutes without
entering the home.

Id. ¶ 14.

Quicken informed her that the

home had appraised for $125,000.

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Mr. Barrett conducted the closing at the Lion’s Club
on August 18, 2008.

Id. ¶ 16.

He is not a licensed attorney,

and the complaint alleges that he “did not have the ability to
explain the transaction” and did not provide Ms. Nicewarner with
a “meaningful opportunity to understand the terms and impact.”
Id. ¶ 17.

On the same day, Quicken originated a loan with an

initial principal balance of $119,262 and settlement charges of
over $7,500.

Id. ¶ 18.

Around June 2009, Quicken again solicited Ms.
Nicewarner to refinance her loan.

Id. ¶ 20.

It did not arrange

for an appraisal, instead providing her with the $125,000 figure
from May 2008.

Id. ¶¶ 21-22.

Point Raceway and was rushed.

The loan was closed at Summit
Id. ¶ 23.

Mr. Barrett again

conducted the closing and was again unable to explain the
transaction.

Id. ¶ 24.

Quicken closed the loan on July 2, 2009

with an initial principal balance of $120,988, additional fees
of $3,254.96, and a requirement that Ms. Nicewarner pay Quicken
$324.17 of her own funds to close the loan.

Id. ¶ 25.

Directly

after the origination of the 2009 loan, Quicken transferred
servicing to Bank of America.

Id. ¶ 27.

As a result of these transactions, Ms. Nicewarner paid
over $11,000 in settlement charges in eleven months.

Id. ¶ 26.

Also, each transaction included the prior transaction’s finance

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charges and costs in the principal balance of the new loan, such
that interest would be charged on prior points and fees.

Id.

In September 2012, Ms. Nicewarner learned that the
market value of her property in August 2008 was approximately
$102,000, and that the market value of her property in July 2009
was approximately $70,000.

Id. ¶ 52.

The complaint states that

she would not have refinanced or increased her loan amount if
she had known the true value of her home.

Id. ¶ 53.

On

November 7, 2012, Quicken again solicited her to refinance her
home with Quicken.

Id. ¶ 54.

Ms. Nicewarner makes additional allegations regarding
the servicing of her loan against Bank of America.
27-51.

See id. ¶¶

The servicing allegations have no bearing on the issues

underlying the pending motion to remand.
Ms. Nicewarner commenced this action in the Circuit
Court of Kanawha County, West Virginia on January 17, 2013.

Her

complaint sets forth ten counts: five relating to loan
origination and five relating to loan servicing.

The

origination counts are alleged against all defendants and
include Count I, Unconscionable Contracts; Count II, Illegal
Loan; Count III, Fraud; Count IV, Joint Venture & Agency; and
Count V, Unauthorized Practice of Law.

The servicing counts are

alleged against Bank of America and include Count VI, Breach of
Contract; Count VII, Misrepresentations & Unconscionable Conduct
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in Debt Collection; Count VIII, Refusal to Apply Payments; Count
IX, Illegal Fees; and Count X, Illegal Debt Collection.
On February 15, 2013, Quicken removed the case to
federal court, asserting fraudulent joinder of Mr. Barrett and
invoking this court’s diversity jurisdiction.
§ 1332(a)(1).

See 28 U.S.C.

On March 1, 2013, following a stipulation of

consent, Ms. Nicewarner filed the amended complaint.

On March

14, 2013, she moved to remand on the ground that the defendants
failed to establish fraudulent joinder.

II. The Governing Standard
“Except as federal law may otherwise provide, when a
defendant removes a state civil action to federal district
court, federal removal jurisdiction exists if the action is one
‘of which the district courts of the United States have original
jurisdiction.’”

In re Blackwater Sec. Consulting, LLC, 460 F.3d

576, 583 (4th Cir. 2006) (quoting 28 U.S.C. § 1441(a)).

Federal

district courts possess original jurisdiction over all actions
“where the matter in controversy exceeds the sum or value of
$75,000, exclusive of interest and costs, and is between
citizens of different States.”
The doctrine of fraudulent joinder permits a district
court to “disregard, for jurisdictional purposes, the
citizenship of certain nondiverse defendants, assume
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jurisdiction over a case, dismiss the nondiverse defendants, and
thereby retain jurisdiction.”
461 (4th Cir. 1999).

Mayes v. Rapoport, 198 F.3d 457,

Our court of appeals lays a “heavy burden”

upon a defendant claiming fraudulent joinder:
In order to establish that a nondiverse defendant has
been fraudulently joined, the removing party must
establish either: [t]hat there is no possibility that
the plaintiff would be able to establish a cause of
action against the in-state defendant in state court;
or [t]hat there has been outright fraud in the
plaintiff’s pleading of jurisdictional facts.
Id. at 464 (emphasis in original) (quoting Marshall v. Manville
Sales Corp., 6 F.3d 229, 232 (4th Cir. 1993)).

The applicable

standard “is even more favorable to the plaintiff than the
standard for ruling on a motion to dismiss.”

Hartley v. CSX

Transp., Inc., 187 F.3d 422, 424 (4th Cir. 1999).

Indeed, “‘the

defendant must show that the plaintiff cannot establish a claim
against the nondiverse defendant even after resolving all issues
of fact and law in the plaintiffs favor.’”

Mayes, 198 F.3d at

464 (quoting Marshall, 6 F.3d at 232–33).
As Hartley illustrates, fraudulent joinder claims are
subject to a rather black-and-white analysis in this circuit.
Any shades of gray are resolved in favor of remand.
Hartley, 187 F.3d at 425.

See

At bottom, a plaintiff need only

demonstrate a “glimmer of hope” in order to have his claims
remanded:

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[A] jurisdictional inquiry is not the appropriate
stage of litigation to resolve . . . uncertain
questions of law and fact. . . . Jurisdictional rules
direct judicial traffic. They function to steer
litigation to the proper forum with a minimum of
preliminary fuss. The best way to advance this
objective is to accept the parties joined on the face
of the complaint unless joinder is clearly improper.
To permit extensive litigation of the merits of a case
while determining jurisdiction thwarts the purpose of
jurisdictional rules. . . .
We cannot predict with certainty how a state court and
state jury would resolve the legal issues and weigh
the factual evidence in this case. [Plaintiff’s]
claims may not succeed ultimately, but ultimate
success is not required to defeat removal. Rather,
there need be only a slight possibility of a right to
relief. Once the court identifies this glimmer of
hope for the plaintiff, the jurisdictional inquiry
ends.
Id. at 425–26 (citations omitted).
In determining “whether an attempted joinder is
fraudulent, the court is not bound by the allegations of the
pleadings, but may instead consider the entire record, and
determine the basis of joinder by any means available.”

Mayes,

198 F.3d at 464 (internal quotations omitted).

III. Discussion
Ms. Nicewarner does not dispute that the amount in
controversy eclipses the $75,000 jurisdictional threshold.

She

contests only that Quicken has established complete diversity of
citizenship by meeting the standard for fraudulent joinder.
Since Quicken does not allege any fraud in the pleading, the
only question for fraudulent joinder purposes is whether Ms.
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Nicewarner has any possibility of recovery in state court
against the nondiverse defendant, Delmar Barrett.
The complaint appears to assert each of the five
origination claims against Mr. Barrett, noting parenthetically
that they apply to “All Defendants.”

Compl. 9.

The fraudulent

joinder analysis begins, and ends, with Count III, inasmuch as
Ms. Nicewarner has some hope of recovery from Mr. Barrett on
that claim.
In order to establish a claim for fraud, a plaintiff
must allege
“(1) that the act claimed to be fraudulent was the act
of the defendant or induced by him; (2) that it was
material and false; that plaintiff relied upon it and
was justified under the circumstances in relying upon
it; and (3) that he was damaged because he relied upon
it.”
Syl. Pt. 2, Jennings v. Farmers Mut. Ins. Co., 687 S.E.2d 574,
575 (W. Va. 2009) (quoting Syl. Pt. 1, Lengyel v. Lint, 280
S.E.2d 66 (W. Va. 1981)).

The fraudulent representation only

has to “contribute[] to the formation of the conclusion in the
plaintiff’s mind” and need not “be the sole consideration or
inducement moving the plaintiff.”

Syl. Pt. 3, id. at 576

(quoting Syl. Pt. 3, Horton v. Tyree, 139 S.E. 737 (W. Va.
1927)).
Ms. Nicewarner asserts that Mr. Barrett, the closing
agent, misrepresented to her that her home “has a value of
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$125,000 and that Defendant Quicken was following responsible
and prudent lending practices.”

Compl. ¶ 65.

She alleges that

the representation was false -- that the real market value of
the loan was $70,000 -- and that she reasonably relied on the
representations.

Id. ¶ 66, 69.

Quicken asserts in its notice

of removal that the complaint limits fraud allegations to
“Defendant Quicken” and “make[s] no mention of Mr. Barrett.”
Not. Removal 6 n.2.

The complaint, however, states that

“Defendant Quicken’s employees” made the misrepresentations as
to home value and lending practices “over the telephone and
again through the closing agent.”

Compl. ¶ 65.

Inasmuch as Mr.

Barrett is described in the complaint as the closing agent, his
role is sufficiently alleged.
The relative positions of the parties and
representation as to “responsible and prudent lending practices”
support Ms. Nicewarner’s assertion of reliance.

She alleges

that she would not have refinanced her loan or increased her
loan amount if she had known the true value of her home.
53.

Id. ¶

Consequently, her asserted damages arise from the alleged

misrepresentation.

The allegations adequately set forth a fraud

claim against Mr. Barrett.
Quicken asserts that the fraud claim is nonetheless
time-barred under West Virginia’s two-year limitations period.
See W. Va. Code § 55-2-12.

It contends that Ms. Nicewarner
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“cannot avail herself of the discovery rule because had she
exercised reasonable diligence, she would have discovered the
allegedly true market value of her home well before September
2012.”

Opp’n 14.

Whether Ms. Nicewarner exercised reasonable

diligence, however, is an issue of fact.

The court, at this

juncture, cannot resolve the issue to find that there is “no
possibility” of recovery.
The court concludes that Ms. Nicewarner’s Count III
fraud claim gives rise to a possibility of relief against the
nondiverse defendant Mr. Barrett.

Having so determined, the

court need not consider the parties’ arguments respecting the
remaining counts.

IV.
Based upon the foregoing discussion, it is,
accordingly, ORDERED that Ms. Nicewarner’s motion to remand be,
and it hereby is, granted.
The Clerk is directed to forward copies of this
written opinion and order to all counsel of record.
ENTER: September 3, 2013

John T. Copenhaver, Jr.
United States District Judge

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