Charles v. Ocwen Loan Servicing, LLC et al
Filing
30
MEMORANDUM AND ORDER Plaintiffs Motion to Remand [Doc. # 11] is GRANTED. It is furtherORDERED that Defendants Motions to Dismiss [Docs. # 16 and # 28] are DENIED WITHOUT PREJUDICE to being reurged in state court.The Court will issue a separate Remand Order. (Signed by Judge Nancy F. Atlas) Parties notified.(sashabranner, )
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IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
MICHELLE CHARLES,
Plaintiff,
v.
OCWEN LOAN SERVICING, LLC,
et al.,
Defendants.
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CIVIL ACTION NO. H-11-4115
MEMORANDUM AND ORDER
This case is before the Court on Plaintiff Michelle Charles’s Motion to Remand
[Doc. # 11], to which Defendants Ocwen Loan Servicing, LLC (“Ocwen”) and
Deutsche Bank National Trust Company (“Deutsche Bank”) filed a Response [Doc.
# 27].1 Having considered the full record and the governing legal authorities, the
Court concludes that non-diverse Defendant Mackie, Wolf, Zientz & Mann, P.C.
(“Mackie”) was not improperly joined. As a result, the Court lacks subject matter
jurisdiction over this dispute, and the Court grants the Motion to Remand.
1
Also pending are the Motion for Dismissal [Doc. # 16] filed by Defendant Mackie,
Wolf, Zientz & Mann, P.C., and the Motion to Dismiss [Doc. # 28] filed by
Defendants Ocwen and Deutsche Bank. Because the Court lacks subject matter
jurisdiction, these motions are denied without prejudice to being reurged following
remand to state court.
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I.
BACKGROUND
Plaintiff filed this lawsuit in Texas state court alleging that Defendants
improperly foreclosed on her property. Plaintiff alleged specifically that Mackie is
a “debt collector” within the meaning of the Texas Finance Code’s Debt Collection
Practices Act (“DCPA”).
On November 28, 2011, Ocwen and Deutsche Bank removed this case alleging
federal subject matter jurisdiction on the basis of diversity of citizenship pursuant to
28 U.S.C. § 1332. Ocwen and Deutsche Bank argued that non-diverse Defendant
Mackie had been improperly joined and, as a result, its Texas citizenship should not
be considered for diversity jurisdiction purposes. Plaintiff filed a timely Motion to
Remand, which has been fully briefed and is now ripe for decision.
II.
LEGAL STANDARDS
“‘Federal courts are courts of limited jurisdiction.’” Rasul v. Bush, 542 U.S.
466, 489 (2004) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375,
377 (1994)); McKee v. Kansas City S. Ry. Co., 358 F.3d 329, 337 (5th Cir. 2004);
Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001). “‘They possess only
that power authorized by Constitution and statute, which is not to be expanded by
judicial decree.’” Rasul, 542 U.S. at 489 (quoting Kokkonen, 511 U.S. at 377
(citations omitted)). The court “must presume that a suit lies outside this limited
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jurisdiction, and the burden of establishing federal jurisdiction rests on the party
seeking the federal forum.” Howery, 243 F.3d at 916 (citing Kokkonen, 511 U.S. at
377); see also Boone v. Citigroup, Inc., 416 F.3d 382, 388 (5th Cir. 2005).
Defendants assert that Mackie was improperly joined and, as a result, the Court
should disregard its Texas citizenship for purposes of diversity jurisdiction. A nondiverse defendant may be found to be improperly joined if either there is “actual fraud
in the plaintiff’s pleading of jurisdictional facts” or if the removing defendant
demonstrates that the plaintiff cannot establish a cause of action against the nondiverse defendant. See Kling Realty Co., Inc. v. Chevron USA, Inc., 575 F.3d 510, 513
(5th Cir. 2009) (citing Campbell v. Stone Ins., Inc., 509 F.3d 665, 669 (5th Cir.
2007)).
There is no allegation of actual fraud in Plaintiff’s pleading of the
jurisdictional facts in this case.
The test under the second prong “is whether the defendant has demonstrated
that there is no possibility of recovery by the plaintiff against an in-state defendant,
which stated differently means that there is no reasonable basis for the district court
to predict that the plaintiff might be able to recover against an in-state defendant.” Id.
(quoting Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en
banc)). The party asserting improper joinder bears a heavy burden of persuasion. Id.
at 514. “[A]ny doubt about the propriety of removal must be resolved in favor of
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remand.” Gasch v. Hartford Acc. & Indem. Co., 491 F.3d 278, 281-82 (5th Cir.
2007).
III.
ANALYSIS
In response to Plaintiff’s Motion to Remand, Defendants argue that Mackie was
improperly joined because it was the substitute trustee against whom there is no
liability under Texas law. Plaintiff alleges however, that Mackie is a debt collector,
not the substitute trustee. In support of her position that Mackie served as a debt
collector in connection with her mortgage loan, and not as a substitute trustee, Plaintiff
alleges that Mackie identifies itself as a debt collector when answering telephone calls
to its office. Additionally, Plaintiff has submitted the Notice of Foreclosure Sale
which identifies “Jerel Twyman, Michael Zientz, Wes Webb, John Lynch or Emily
Stroope c/o AVT Title Services” as the substitute trustee.2 See Notice of Foreclosure
Sale, Exh. A to Motion to Remand. There is no evidence in the record that Mackie
served as substitute trustee in connection with Plaintiff’s mortgage loan and the
foreclosure of that loan. Consequently, Mackie’s argument that there is no possibility
that Plaintiff could recover against it in state court because it was the substitute trustee
is not supported by this record.
2
The original trustee under the Deed of Trust was Dennis P. Schwartz. See Deed of
Trust, Exh. A to Response to Motion to Remand.
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The DCPA provides that “a debt collector may not use a fraudulent, deceptive,
or misleading representation that . . . misrepresent[s] the character, extent, or amount
of a consumer debt.” See TEX. FIN. CODE § 392.304(a)(8). A debt collector is also
prohibited from “threatening to take an action prohibited by law.”
See id.,
§ 392.301(a)(8). Plaintiff alleges that Mackie, as a debt collector, violated the Texas
DCPA by improperly threatening to move forward with the foreclosure knowing it
could not legally do so, and by misrepresenting the extent and amount of the debt. See
Amended Complaint [Doc. # 10], ¶¶ 38, 40. These allegations could state a claim
against Mackie under Texas law for violation of the DCPA. See Harding v. Regent,
347 F. Supp. 2d 334, 337 (N.D. Tex. 2004). As a result, Defendants have not satisfied
their heavy burden to demonstrate that there is no possibility that Plaintiff could
recover against Mackie in state court.
IV.
CONCLUSION AND ORDER
Based on the foregoing, Defendants have failed to establish that there is no
possibility that Plaintiff could recover in state court against non-diverse Defendant
Mackie. As a result, Mackie was not improperly joined and the Court must consider
Mackie’s Texas citizenship. Because Plaintiff and Mackie are Texas citizens, the
Court concludes there is not complete diversity in this case. Accordingly, the Court
lacks subject matter jurisdiction, and it is hereby
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ORDERED that Plaintiff’s Motion to Remand [Doc. # 11] is GRANTED. It
is further
ORDERED that Defendants’ Motions to Dismiss [Docs. # 16 and # 28] are
DENIED WITHOUT PREJUDICE to being reurged in state court.
The Court will issue a separate Remand Order.
SIGNED at Houston, Texas, this 15th day of March, 2012.
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