Wivell et al v. Wells Fargo Bank, N.A. et al - Document 39
ORDER denying 22 Plaintiff's motion to remand. The Court lifts the stay imposed by Judge Dorr's Order dated December 18, 2012 28 . Any response to Defendants' pending motions to dismiss 10 16 shall be due within fourteen (14) days from the date of this Order. Signed on 5/14/13 by District Judge Greg Kays. (Francis, Alexandra)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MISSOURI
KENNETH D. WIVELL and
TINA M. WIVELL,
WELLS FARGO BANK, N.A.
d/b/a WELLS FARGO HOME
MORTGAGE, et al.,
Case No. 12-3457-CV-S-DGK
ORDER DENYING MOTION TO REMAND
This cases arises out of the foreclosure of Plaintiffs Kenneth and Tina Wivell’s home.
Plaintiffs allege that when they contacted Defendant Wells Fargo Bank, N.A. (“Wells Fargo”) to
discuss a loan modification, Wells Fargo informed them that they must stop making loan payments
to be eligible for a modification but assured them that it would not foreclose upon them as a result.
Plaintiffs contend they stopped making payments, applied for a modification, and diligently
followed all of Wells Fargo’s other instructions. Wells Fargo informed Plaintiffs in June of 2010
that they were not eligible for a loan modification. A few days later, the trustee on the deed of
trust, Defendant Kozeny & McCubbin, L.C. (“Kozeny”), foreclosed. Plaintiffs are now suing
Wells Fargo and Kozeny for unlawful foreclosure and other claims.
Now before the Court is Plaintiffs’ Motion to Remand (Doc. 22). 1 The motion is
DENIED because Plaintiffs fraudulently joined Kozeny, the sole non-diverse defendant, to defeat
The Court has considered Plaintiffs’ suggestions in support (Doc. 23); Wells Fargo’s suggestions in opposition (Doc.
27); Plaintiffs’ reply suggestions (Doc. 29); Wells Fargo’s sur-reply (Doc. 32); and Plaintiffs’ response to the
sur-reply (Doc. 33). Defendant Kozeny did not file any briefs in connection with this motion but has filed a separate
motion to dismiss (Doc. 10).
Standard of Review
An action may be removed by the defendant to federal district court if the case falls within
the district court’s original jurisdiction. 28 U.S.C. § 1441(a). If the case is not within the court’s
original jurisdiction, the court must remand the case to the state court from which it was removed.
28 U.S.C. § 1447(c). To meet the requirements for diversity jurisdiction, the parties must be
citizens of different states and the amount in dispute must exceed $75,000. 28 U.S.C. § 1332(a).
Complete diversity between the parties is required; the presence of a single plaintiff who is from
the same state as a single defendant destroys diversity and extinguishes a federal court’s
jurisdiction to hear the matter. Exxon Mobil Corp. v Allapattah Servs., Inc., 545 U.S. 546, 553
(2005). The burden of establishing federal jurisdiction is on the party seeking removal, In re Bus.
Men’s Assurance Co. of Am., 992 F.2d 181, 183 (8th Cir. 1993), and all doubts are resolved in
favor of remand. Transit Cas. Co. v. Certain Underwriters at Lloyd’s of London, 119 F.3d 619,
625 (8th Cir. 1997).
On August 9, 2012 Plaintiffs, who are Missouri residents, filed this case in the Circuit
Court of Pulaski County, Missouri against both Defendants, one of which, Kozeny, is a Missouri
resident. Plaintiffs’ petition (“the Petition”) asserts claims against both Defendants for wrongful
foreclosure, fraudulent misrepresentation, violation of the Missouri Merchandising Practices Act,
civil conspiracy, negligence, and negligent misrepresentation. The Petition asserts two additional
claims, for breach of fiduciary duty and unjust enrichment, solely against Kozeny.
On October 17, 2012, Wells Fargo removed this case to federal court by invoking the
Court’s diversity jurisdiction. The notice of removal asserts diversity jurisdiction exists because
Kozeny was fraudulently joined, thus the Court should disregard Kozeny’s citizenship, which is
the same as Plaintiffs.2 The parties do not dispute that Kozeny is the only non-diverse defendant,
and, if Kozeny’s citizenship is disregarded, diversity jurisdiction exists.
“Fraudulent joinder occurs when a plaintiff files a frivolous or illegitimate claim against a
nondiverse defendant solely to prevent removal.” In re Prempro Prod. Liab. Litig., 591 F.3d 613,
620 (8th Cir. 2010) (quoting Filla v. Norfolk S. Ry. Co., 336 F.3d 806, 809 (8th Cir. 2003)). The
fraudulent joinder exception prevents the plaintiff from blocking removal by adding nondiverse
defendants. Crockett v. R.J. Reynolds Tobacco Co., 436 F.3d 529, 533 (5th Cir. 2006). Joinder
is fraudulent when there is no reasonable basis in fact or law for the plaintiff’s claims against that
defendant. In re Prempro, 591 F.3d at 620. For purposes of determining diversity, the court
ignores the citizenship of any fraudulently joined defendant. See id.
Kozeny’s citizenship should be ignored with respect to Plaintiffs’ wrongful
Count I of the Petition asserts a wrongful foreclosure claim against both Defendants and
seeks both damages and equitable relief. Pet. at ¶¶ 59-60. Although labeled as one count, read in
the light most favorable to the Plaintiffs, Count I asserts two separate causes of action: A tort for
The notice of removal states Kozeny consents to removal, but it is not signed by Kozeny’s attorney. In their reply
brief, Plaintiffs argue for the first time that the absence of an attorney’s signature is fatal to the notice and mandates
remand. As a threshold matter, the Court will not consider Plaintiff’s argument because it was raised for the first time
in their reply brief. Elam v. Denney, No. 4:09-CV-00308-DGK, 2010 WL 3526279, at *8 n.3 (W.D. Mo. Sept. 3,
2010). Even if the Court considered this argument, it would hold it meritless because a fraudulently joined party need
not consent to removal. Simpson v. Niagara Mach. and Tool Works, 05-1122-CV-W-FJG, 2006 WL 181954, at *3
n.1 (W.D. Mo. Jan. 24, 2006). Therefore, for purposes of deciding this motion to remand, the Court need only
determine whether Kozeny is fraudulently joined. Id.
wrongful foreclosure and a separate, equitable action for wrongful foreclosure. Missouri law
recognizes these related claims as distinct causes of action.
See Dobson v. Mortg. Elec.
Registration Sys, Inc./GMAC Mortg. Corp., 259 S.W.3d 19, 22 (Mo. Ct. App. 2008) (discussing
differences between the two actions). A plaintiff asserting a wrongful foreclosure claim for
damages must “plead and prove that when the foreclosure proceeding was begun, there was no
default on its part that would give rise to a right to foreclose.” Spence v. JPMorgan Chase Bank,
N.A., No. 11-3185-DV-S-RED, 2011 WL 4733445, at *1 (W.D. Mo. October 5, 2011) (quoting
Fields v. Milsap and Singer, P.C., 295 S.W.3d 567, 571 (Mo. Ct. App. 2009)). A plaintiff
asserting an equitable claim does not have to prove that he was not in default, only that the sale was
void or voidable.3 Dobson, 259 S.W.3d at 22.
Plaintiffs cannot maintain a tort claim against Kozeny because, as the Petition concedes,
around March 2009 Plaintiffs stopped making payments on their loan. Pet. at ¶¶ 15-17. Thus,
Plaintiffs were in default on the loan which gave Wells Fargo a right to foreclose. Plaintiffs
attempt to salvage their claim by asserting they “were not truly in default” because Defendants
“lulled and misled them.” Pet. at ¶¶ 51-52. This attempt is futile. Plaintiffs cite no authority,
nor can the Court find any, recognizing an exception to the “no default” rule for a party who has
allegedly been “lulled” or “mislead” into default by a lender. 4
Consequently, there is no
Typically, a sale is void if the sale did not comply with the procedures outlined in the deed of trust. For example, if
a homeowner is not given appropriate notice of a foreclosure sale, the sale may be void.
The Court also declines to create such an exception. Such an exception would quickly swallow the rule since any
unscrupulous debtor could claim that the lender did or said something that “lulled” the debtor into default. This
exception is also unnecessary, since a debtor who has been misled by a lender already has a remedy available, namely
an action for fraud. Peterson v. Kansas City Life Ins. Co., 98 S.W.2d 770, 773-74 (Mo. 1936). Finally, creating an
exception which facilitates debtors’ ability to litigate a non-judicial foreclosure involves policy choices that are the
province of the legislative branch of government.
reasonable basis in fact or law supporting this claim against Kozeny, so the Court ignores
Kozeny’s citizenship for purposes of determining diversity with respect to this claim.
The Court reaches the same conclusion with respect to Plaintiff’s equitable claim for
wrongful foreclosure. As a threshold matter, the Court notes Plaintiffs have failed to plead any
facts from which the Court could infer the foreclosure sale was void or voidable, thus they have not
established a colorable claim. But, even if they had pled such facts, the Court could not consider
Kozeny’s citizenship with respect to this claim. Under Missouri law, as a trustee of a deed of
trust, Kozeny is a nominal party in an equitable foreclosure claim, thus the court ignores its
citizenship in determining whether diversity jurisdiction exists.
Caranchini v. Kozeny &
McCubbin, LLC, No. 4:11-CV-0464-DGK, 2011 WL 5921364, at *3 (W.D. Mo. Nov. 28, 2011).
Nominal parties are those who lack a real interest in the result of the suit or an ownership interest in
the property at issue, such as a party that is merely the holder of the stakes between the plaintiff and
defendant. Id. Missouri law provides that in an action affecting a deed of trust, the trustee of the
deed of trust is a nominal party because it is a mere stake holder in the dispute between the real
parties in interest, the creditor and the debtor. Id. In determining whether diversity exists, a
federal court disregards the nominal parties and rests jurisdiction upon the citizenship of the real
parties in interest. Navarro Sav. Ass’n v. Lee, 446 U.S. 458, 460-61 (1980). In the present case,
as trustee on the deed of trust, Kozeny is a nominal party so the Court ignores its citizenship in
Plaintiffs have no colorable fraudulent misrepresentation claim against Kozeny.
Count II asserts a fraudulent misrepresentation claim against both defendants.
elements of fraudulent misrepresentation are:
(1) a false, material representation; (2) the speaker’s knowledge of
its falsity or his ignorance of the truth; (3) the speaker’s intent that it
should be acted upon by the hearer in the manner reasonably
contemplated; (4) the hearer’s ignorance of the falsity of the
representation; (5) the hearer’s reliance on its truth; (6) the hearer’s
right to rely thereon; and (7) the hearer’s consequent and
proximately caused injury.
Crossland Constr. Co., Inc. v. Alpine Elec. Constr. Inc., 232 S.W.3d 590, 592-93 (Mo. Ct. App.
2007). With respect to the first element, the Petition alleges that Kozeny made false, material
representations to Plaintiffs that it “worked for” Wells Fargo, that it had no information about
Plaintiffs’ situation, and that it could not help them stop the foreclosure process or keep their
home. Pet. at ¶ 63. With respect to the fifth element, however, the Petition alleges only that
“Plaintiffs did in fact rely on Defendants’ false and misleading representations.” Pet. at ¶ 51.
Wells Fargo argues, and Plaintiffs do not dispute, that this allegation fails to meet the basic
pleading standard of Rule 8 and the heightened pleading standard for fraud required by Rule 9(b)
because it does not explain how Plaintiffs relied on Kozeny’s statements. As a threshold matter,
Plaintiffs have conceded this point by failing to respond to it.
Hale v. Vilsack, No.
11-CV-0591-W-FJG, 2012 WL 6645654, at *4 n.1 (W.D. Mo. Dec. 20, 2012). But even if
Plaintiffs had disputed this point, the allegation would still be insufficient.
Rule 8 requires a petition include “enough facts to state a claim to relief that is plausible on
its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662,
As the Eighth Circuit has observed, Rule 8 “requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Benton v.
Merrill Lynch & Co., Inc., 524 F.3d 866, 870 (8th Cir. 2008). In the present case, the assertion
that “Plaintiffs did in fact rely on Defendants’ false and misleading representations” is too
conclusory to pass scrutiny under either Rule 8 or Rule 9(b). The assertion does not even mention
Kozeny, much less explain how Plaintiffs relied on Kozeny’s statement(s).
Accordingly, the Court finds Plaintiffs fraudulently joined Kozeny to Count II.
Plaintiffs have no colorable MMPA claim against Kozeny.
Count III alleges both Defendants violated the Missouri Merchandising Practices Act
(“MMPA”). In relevant part, the MMPA prohibits
[t]he act, use or employment by any person of any deception, fraud,
false pretense, false promise, misrepresentation, unfair practice or
the concealment, suppression, or omission of any material fact in
connection with the sale or advertisement of any merchandise in
trade or commerce . . . whether committed before, during or after
the sale, advertisement or solicitation.
Mo. Rev. Stat. 407.020.1 (emphasis added). The Petition alleges that Kozeny violated the
MMPA “with regard to the sale of Plaintiffs’ home.” Pet. at ¶ 77 (emphasis added). It claims
Kozeny employed unfair, deceptive and misleading practices by
providing false and misleading information regarding its
relationship with Wells Fargo, suggesting it had no access to
information about Plaintiffs’ loan, by categorically refusing to aid or
assist Plaintiffs in any way, and by failing to carry out its duties as
Pet. at ¶ 79.
Wells Fargo argues Kozeny cannot be liable under the MMPA because it was not a party to
the initial transaction here, which was Plaintiffs’ 2006 purchase of their home. But Wells Fargo
misreads the Petition. Read in the light most favorable to Plaintiffs, the Petition does not allege
that Kozeny violated the MMPA with respect to the purchase of Plaintiffs’ home in 2006; rather, it
alleges Kozeny violated the MMPA in connection with the foreclosure sale of Plaintiffs’ home in
Plaintiffs are arguably alleging two separate transactions and with separate MMPA
violations. Plaintiffs clearly do not have a claim against Kozeny in connection with the 2006
transaction.5 However, even assuming for the sake of argument that the 2010 foreclosure is a
separate transaction under the MMPA, 6 Plaintiffs do not have a colorable MMPA claim in
connection with the foreclosure.
To establish a prima facie MMPA claim, a plaintiff must allege that he (1) purchased or
leased merchandise; (2) primarily for personal, family or household purposes; and (3) thereby
suffered an ascertainable loss of money or property, real or personal; (4) as a result of the
defendant’s use of one of the methods or practices declared unlawful by Section 407.020. Mo.
It is firmly established that an MMPA claim cannot be brought against an entity that was not a party to the initial loan
transaction but subsequently forecloses on the loan. See, e.g., Ball v. Bank of New York, No. 4:12-CV-0144-NKL,
2012 WL 6645695, at *5-6 (W.D. Mo. Dec. 20, 2012) (holding defendants who were strangers to the initial loan
transaction, but subsequently foreclosed on the property, cannot be liable under the MMPA because their actions were
not sufficiently connected with any sale or advertisement); State ex. rel. Koster v. Portfolio Recovery Assocs., LLC,
351 S.W.3d 661 (Mo. Ct. App. 2011) (holding a debt collector who was not a party to the original loan transaction
could not be sued under the MMPA). As the Missouri Court of Appeals has noted, the MMPA’s “before, during or
after the sale” language applies to deceptive or unfair post-sale conduct only when such conduct directly relates to the
initial sale or advertisement of merchandise. Koster, 351 S.W.3d at 667.
In the present case, the Petition alleges Plaintiffs closed on their loan in February of 2006, but Kozeny was
not appointed a trustee until November 4, 2009 and did not have any contact with Plaintiffs until April of 2010. Pet.
at ¶¶ 11, 41, 109. Because Kozeny was not a party to the 2006 transaction, it cannot be liable under the MMPA for
any misstatements related to the 2006 transaction.
Several courts, including this one, have rejected similar attempts by plaintiffs to create an MMPA claim by arguing
that the relevant transaction is not the initial loan but a subsequent event, such as an effort by a loan servicer to collect
payments on a loan, or an attempt by a subsequent holder of the promissory note to foreclose. See, e.g., Barnes v.
Fed. Home Loan Mortg. Corp., No. 5:12-CV-06062-DGK, 2013 WL 1314200, at *7 (W.D. Mo. March 28, 2013);
Ball, 2012 WL 6645695, at *6. These courts reason that subsequent actions “cannot reasonably be viewed as separate
transactions under the [MMPA] because they are conditions bargained for in the Plaintiffs’ original creation of the
mortgage note—a transaction to which these Defendants were strangers.” Ball, 2012 WL 6645695, at *6. Similarly,
in the present case, the foreclosure proceeding is not a separate event; it is a foreseeable consequence of Plaintiffs’
default that was bargained for in 2006.
Rev. Stat. § 407.025.1; Owen v. Gen. Motors Corp., 533 F.3d 913, 922 (8th Cir. 2008). Plaintiffs
cannot satisfy the first element in connection with the 2010 foreclosure because they did not
purchase or lease anything. Being foreclosed upon is not purchasing or leasing merchandise; it is
not even analogous to purchasing or leasing merchandise. Foreclosure is a legal proceeding for
the termination of a mortgagor’s interest in property. Black’s Law Dictionary 674 (8th ed. 1999).
Consequently, Plaintiffs have no colorable MMPA claim against Kozeny.
There is no colorable conspiracy claim against Kozeny.
Count IV asserts a state law civil conspiracy claim against both defendants. To allege a
civil conspiracy claim under Missouri law, the plaintiff must plead facts from which the Court can
reasonably infer that: (1) two or more persons; (2) with an unlawful objective; (3) after a meeting
of the minds; (4) committed at least one act in furtherance of the conspiracy; and (5) which injured
the plaintiff. Moses.com Sec. Inc. v. Comprehensive Software Sys, Inc., 406 F.3d 1052, 1063 (8th
Cir. 2005) (citing Phelps v. Bross, 73 S.W.3d 651, 657 (Mo. Ct. App. 2002)). With respect to the
“meeting of the minds” element, Plaintiffs allege only that Kozeny and Wells Fargo “agreed to
pursue this unlawful purpose after a meeting of the minds, based on communications between the
two Defendants.” Pet. at ¶ 85. This assertion is patently conclusory and insufficient to state a
colorable civil conspiracy claim against Kozeny. Moses.com Sec. Inc., 406 F.3d at 1063-64 (8th
There is no colorable negligence claim against Kozeny.
Count V, Plaintiffs’ state law negligence claim brought against both Defendants, also fails
as a matter of law. The elements of a negligence claim are: “(1) the existence of a duty to conform
to a certain standard of conduct to protect others against unreasonable risks, (2) breach of the duty,
(3) proximate cause, and (4) actual damages.” Ivey v. Nicholson-McBride, 336 S.W.3d 155, 157
(Mo. Ct. App. 2011). With respect to the duty elements, Plaintiffs allege “Kozeny, acting as
trustee, had assumed a duty and responsibility for overseeing the servicing of Plaintiffs’ loan,” and
“Kozeny breached its duty of care by providing false and misleading information regarding its
relationship with Wells Fargo, [when it] suggest[ed] it had no access to information about
Plaintiffs' loan, and by categorically refusing to aid or assist Plaintiffs in any way.” Pet. at ¶¶ 93,
“The duties and powers of a trustee are fixed by the terms of the contract, namely, the deed
of trust.” Spires v. Edgar, 513 S.W.2d 372, 378 (Mo. banc 1974); see also Caranchini, 2011 WL
5921364, at *4 (noting the deed of trust defines a trustee’s duties). Accordingly, any duty Kozeny
owed to Plaintiffs must be set forth in the deed of trust. Paragraph 22 of the deed of trust defines
these duties as: (1) mailing notice of sale to the borrower; (2) advertising the sale; (3) selling the
property at auction to the highest bidder for cash; (4) delivering the trustee’s deed to the purchaser;
and (5) properly applying the proceeds of the sale. Pet. Exh. A at 13. The deed of trust contains
no language imposing a duty on Kozeny to oversee the servicing of Plaintiffs’ loan or access
information concerning Plaintiffs’ loan. Pet. Exh. A at 13. Since the Petition fails to identify
any duty Kozeny could have breached, it fails to state a claim for negligence against Kozeny.
Spires, 513 S.W.2d at 378, 380 (holding that plaintiffs failed to state a claim against the trustee on
the theory that “the trustee owed plaintiffs a duty, when directed to foreclose, to make an
affirmative investigation, presumably by inquiry from plaintiffs, and thus to find out whether
plaintiffs claimed that they were not delinquent and the factual reasons for their claim,” and noting
that no court had found a trustee “liable in damages for a failure to make an investigation of the
default before foreclosure”).
There is no colorable negligent misrepresentation claim against Kozeny.
Count VI asserts a claim for negligent misrepresentation against both Defendants. The
elements of a negligent misrepresentation claim are: (1) the speaker supplied information in the
course of his business or because of some other pecuniary interest; (2) due to the speaker’s failure
to exercise reasonable care or competence in obtaining or communicating this information, the
information was false; (3) the speaker intentionally provided the information for the guidance of a
limited group of persons in a particular business transaction; (4) the listener justifiably relied on
the information; and (5) as a result of the listener’s reliance on the statement, the listener suffered a
pecuniary loss. Harris v. Smith, 250 S.W.3d 804, 808 (Mo. Ct. App. 2008).
The Petition alleges Kozeny represented to “Plaintiffs that it ‘worked for’ Wells Fargo, that
it had no information about Plaintiffs’ loan, and that it could not aid or assist Plaintiffs in any way,
and failed to provide any information or assistance to Plaintiffs.” Pet. at ¶ 102. It also makes
conclusory allegations concerning several other elements. For example, it claims “Defendants
failed to exercise reasonable care in ensuring that the information it represented to Plaintiff was
true and accurate.” Pet. at ¶ 103. And that, “[a]s a result of Defendants’ failure to exercise
reasonable care, and the fact that Defendants were acting negligently, Defendants’ representations
as described in this Court were false and misleading.” Pet. at ¶ 104. With respect to the fourth
and fifth elements, Plaintiffs allege they “justifiably relied on Defendants’ false representations in
applying for loan modifications, making payments, and in deciding what actions to pursue (or not
pursue) in relation to the foreclosure process.” Pet. at ¶ 105.
Wells Fargo argues, and Plaintiffs do not dispute, that Plaintiffs failed to plead the requisite
connection between their reliance on any of Kozeny’s statements and their loss. There is no
allegation that by relying on any of Kozeny’s misrepresentations Plaintiffs were somehow
dissuaded from making mortgage payments they otherwise would have made and so defaulted on
their loan. While facts in the Petition might support an analogous claim against Wells Fargo, no
facts support this claim against Kozeny. Accordingly, Count VI fails to state a colorable claim
There is no colorable breach of fiduciary duty claim.
Count VII asserts a breach of fiduciary duty claim against Kozeny only. Under Missouri
law, the proponent of a breach of a fiduciary duty tort claim must establish four elements: (1) the
existence of a fiduciary relationship between the parties; (2) breach of that duty; (3) causation; and
(4) harm. Zakibe v. Ahrens & McCarron, Inc., 28 S.W.3d 373, 381 (Mo. Ct. App. 2000). The
law recognizes that a fiduciary relationship exists between the trustee of a deed of trust and both
the debtor and creditor. Killion v. Bank Midwest, N.A., 987 S.W.2d 801, 813 (Mo. Ct. App.
1998). The trustee is “the agent of both the debtor and creditor and should perform the duties of
the trust with impartiality and integrity.” Id. When requested by the creditor to foreclose, “the
trustee may proceed without making any affirmative investigation unless the trustee has actual
knowledge ‘of anything which should legally prevent the foreclosure.’” Id. (quoting Spires, 513
S.W.2d at 378).
The Petition alleges Kozeny breached its fiduciary duty to Plaintiffs by:
a. failing to investigate the questionable circumstances
surrounding the foreclosure despite having actual knowledge of
circumstances that would legally prevent foreclosure;
b. failing to consider evidence that would have prevented
c. representing that it ‘worked for’ Wells Fargo;
d. failing to disclose to Plaintiffs any information that prevented it
from serving as a neutral;
e. falsely representing that it had no information regarding
f. refusing to aid or assist Plaintiffs in any way;
g. selling Plaintiffs home despite the clear lack of legal right to do
h. accepting trustee’s fees in the foreclosure sale of Plaintiffs’
i. failing to obtain basic information justifying foreclosure,
the actual note holder is the party initiating foreclosure;
the note holder has authority to act pursuant to the deed of
iii. the party appointing a successor trustee had the authority to
do so; and
iv. the party initiating foreclosure is not known to provide
inaccurate or false information, either intentionally or
Pet. at ¶ 112.
These assertions fall into two categories: (1) allegations c, e, f, h, and i, which as a matter of
This allegation is unclear. Perhaps Plaintiffs meant to assert that the party being foreclosed upon is not known to
have provided inaccurate or false information.
law do not establish a breach of fiduciary duty; and (2) allegations a, b, d, g, and i, which assert
legal conclusions without sufficient factual support in the Petition to be colorable. The former are
not supported by any legal authority or persuasive reasoning. Although Plaintiffs have filed three
briefs, they have provided no caselaw or analysis explaining how Kozeny’s conduct here breached
its fiduciary duty as a trustee under Missouri law. The latter are not colorable claims under Rule 8
and Iqbal. For example, with respect to the claim that Kozeny failed to investigate despite having
“actual knowledge of circumstances that would legally prevent foreclosure,” the Petition does not
specify what information Kozeny allegedly possessed which legally prevented foreclosure. On
the contrary, the Petition acknowledges that Plaintiffs were in default on the loan. Thus, absent
some procedural defect in the sales process, Kozeny had a legal right to foreclose. See Killion,
987 S.W.2d at 813 (holding judgment for trustee was appropriate because plaintiffs failed to
“provide a legal basis for preventing the institution of the foreclosure proceedings, considering
that the [plaintiffs] were in default and [the defendants] had the right to foreclose under the deed of
Accordingly, there is no colorable claim here for breach of fiduciary duty against Kozeny.
VIII. Plaintiffs cannot maintain an equitable enrichment claim against Kozeny.
Finally, Count VIII8 of the Petition asserts a claim against Kozeny for unjust enrichment.
It contends that had Kozeny not acted illegally or improperly foreclosed on Plaintiffs, it would not
have received fees from them in connection with the foreclosure sale. Consequently, the viability
of Plaintiffs’ unjust enrichment claim rests upon them showing Kozeny acted unlawfully, that is,
they are liable on at least one other claim. Because the Court has held that Counts I – VII fail to
The Petition captions this claim “Count X.” This is obviously a typographical error.
state any colorable claims against Kozeny, Plaintiffs cannot show Kozeny acted unlawfully and
therefore have no colorable claim for unjust enrichment against Kozeny either.
For the above stated reasons, the Court finds Kozeny was fraudulently joined, therefore
Kozeny’s citizenship is irrelevant for purposes of determining whether diversity jurisdiction
exists. Accordingly, the Court DENIES Plaintiffs’ motion to remand (Doc. 22).
Additionally, the Court LIFTS THE STAY imposed by Judge Dorr’s Order dated
December 18, 2012 (Doc. 28). Any response to Defendants’ pending motions to dismiss (Docs.
10, 16) shall be due within fourteen (14) days from the date of this Order.
IT IS SO ORDERED.
May 14, 2013
/s/ Greg Kays
GREG KAYS, JUDGE
UNITED STATES DISTRICT COURT