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Carter v. Deutsche Bank National Trust Co.

United States District Court, D. Nebraska

April 14, 2016

JOHN M. CARTER, and KRISTINA M. CARTER, Plaintiffs,
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE FOR MORGAN STANLEY ABS CAPITAL I INC. TRUST 2004-HE4, MORTGAGE PASS THROUGH CERTIFICATES SERIES 2004-HE4, SELECT PORTFOLIO SERVICING, INC., J.P. MORGAN CHASE BANK, N.A., and DOES 1-10, INCLUSIVE, Defendants.

          FINDINGS AND RECOMMENDATION

          F.A. GOSSETT, Magistrate Judge.

         This matter is before the court on Plaintiffs' Motion to Remand (Filing No. 14) and the Defendants' Joint Motion for More Definite Statement (Filing No. 15). For the reasons explained below, the undersigned will recommend to Chief United States Judge Laurie Smith Camp that Plaintiffs' motion be denied and that Defendants' motion for more definite statement be granted as to Plaintiffs' allegations of fraud.

         BACKGROUND

         Plaintiffs filed this action in Nebraska state court on December 21, 2015, alleging that Defendants and their agents engaged in a pattern of unlawful, fraudulent, or predatory real estate lending practices, causing the Plaintiffs and other individuals to lose their homes through foreclosure. (Filing No. 1-1 at p. 2). Plaintiffs allege Defendants directed borrowers into adjustable rate and negative amortization loans with excessively high interest rates and fees, failed to make material disclosures at the time of the loan processing and closing, and failed to follow proper statutory procedures in the foreclosure process. (Filing No. 1-1 at p. 2).

         According to the Plaintiffs' complaint, on July 20, 2005, they executed and delivered a written promissory note in the amount of $220, 000 to "Long Beach Mortgage Corporation." Plaintiffs allege they "paid off" the promissory note, but defendants Morgan Stanley ABS Capital 1 Inc. ("Morgan Stanley") and/or Deutsche Bank National Trust Company ("Deutsche Bank") seek payment from Plaintiffs for amounts allegedly due under the promissory note. (Filing No. 1-1 at p. 2). Deutsche Bank and/or Morgan Stanley have initiated foreclosure proceedings against real property owned by Plaintiffs. (Filing No. 1-1 at pp. 3-4, ¶¶ 18-19). Plaintiffs allege Deutsche Bank and Morgan Stanley are not the holders of the note and therefore are improperly attempting to foreclose on Plaintiffs' real property. (Filing No. 1-1 at pp. 2-3). Plaintiffs allege foreclosure is also improper because Deutsche Bank and Morgan Stanley failed to provide proper debt validation after Plaintiffs' written requests pursuant to the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. (Filing No. 1-1 at p. 4 ¶ 19). Plaintiffs seek "statutory damages" of $1, 000 for failure to comply with the FDCPA. (Filing No. 1-1 at p. 7, ¶ 40). Plaintiffs also allege they "requested copies of their entire file" from the defendants pursuant to the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601 et seq., but the defendants failed to respond. Plaintiffs seek $1, 000 in statutory damages for the violation. (Filing No. 1-1 at pp. 4-5). Plaintiffs generally allege that the "actions" of Deutsche Bank, Chase Bank (not a named party), Portfolio Loan Servicing, Inc., and Morgan Stanley "are unlawful, deceitful, and unfair" and violate "state and federal fraud statutes." (Filing No. 1-1 at p. 7).

         Plaintiffs seek to rescind the promissory note due to fraud, breach of fiduciary duty, and "unfair and unlawful business practice[s]." (Filing No. 1-1 at pp. 5-6). Plaintiffs allege Deutsche Bank, Morgan Stanley, and Chase Bank have a "pattern and practice in the home loan industry" of using "deceit and misrepresentation to lull borrowers into real estate loans... that have low teaser rates and negative amortization rates with immediate provisions for interest rate adjustment that quickly raise the monthly payments to an amount higher than the borrower is able to pay." (Filing No. 1-1 at p. 5). Plaintiffs allege defendants "deceitfully and fraudulent[ly] placed plaintiffs in such a position as those thousands of borrowers for which Deutsche Bank..., Chase Bank and other loan entities are now being sued throughout the country." (Filing No. 1-1 at p. 5). Plaintiffs allege that they "had no reason to know of such fraud and deceitful acts and justifiably relied upon said defendants to comply with the law and to be fair with plaintiff[s]." (Filing No. 1-1 at p. 6).

         Plaintiffs' complaint sets forth seven "causes of action" generally arising out of the above facts: (1) declaratory determination of the rights of the parties, namely, the identity of the holder of the promissory note and whether defendants failed to meet statutory requirements for conducting a foreclosure sale; (2) injunctive relief preventing the foreclosure; (3) an accounting of the "true amount of money, if any, owed to defendants by plaintiff[s];" (4) "Rescission" of the promissory note due to fraud; (5) wrongful foreclosure; (6) "Unfair and Unlawful Business Practice[s];" and (7) quiet title.

         Defendants removed the case to this court on January 27, 2016, on the bases of diversity jurisdiction and federal question jurisdiction. Plaintiffs filed the instant motion to remand on February 27, 216. (Filing No. 14). Defendants filed a joint motion for more definite statement on March 4, 2016. (Filing No. 15).

         DISCUSSION

         I. Motion to Remand

         Defendants assert this court has both diversity jurisdiction and federal question jurisdiction. "A defendant may remove a state law claim to federal court only if the action originally could have been filed there." Baker v. Martin Marietta Materials, Inc., 745 F.3d 919, 923 (8th Cir. 2014). "The burden of establishing that a cause of action lies within the limited jurisdiction of the federal courts is on the party asserting jurisdiction." Arkansas Blue Cross & Blue Shield v. Little Rock Cardiology Clinic, P.A., 551 F.3d 812, 816 (8th Cir. 2009). Federal courts are to resolve all doubts as to the propriety of exercising federal jurisdiction in favor of remand. Dahl v. R.J. Reynolds Tobacco Co., 478 F.3d 965, 968 (8th Cir. 2007). The Eighth Circuit has admonished district courts "to be attentive to a satisfaction of jurisdictional requirements in all cases." Reece v. Bank of New York Mellon, 760 F.3d 771, 777 (8th Cir. 2014).

         Diversity jurisdiction exists when an action is between citizens of different states and the amount in controversy exceeds the sum of $75, 000. 28 U.S.C. § 1332(a)(1). To invoke the Court's jurisdiction under § 1332, there must be allegations of each party's place of citizenship, including allegations of any corporate party's state of incorporation and principal place of business. Dale v. Weller, 956 F.2d 813, 815 (8th Cir. 1992). Where the pleadings fail to state the place of incorporation or the principal place of business of a corporate party, the pleadings are inadequate to establish diversity. Id.; see Sanders v. Clemco Indus., 823 F.2d 214, 216 (8th Cir. 1987).

         The pleadings before the court at this time are insufficient to establish diversity jurisdiction because Defendants failed to plead or establish the corporate defendants' principal places of business. Defendants' notice of removal asserts Select Portfolio Servicing, Inc. "is an entity organized under the laws of the State of Utah and is a citizen of Utah for purposes of diversity jurisdiction" and Morgan Stanley "[t]o the extent it exists... is a citizen of the State of New York." (Filing No. 1 at p. 3). However, without allegations of the corporate defendants' principal places of business, this court is unable to determine whether complete diversity of citizenship exists. The court recommends granting Defendants seven days to file an amended notice of removal alleging the existence of the requisite diversity of citizenship of the parties. See 28 U.S.C. § 1653 (defective allegations of jurisdiction may be amended).

         Nevertheless, the court finds removal was proper based on federal question jurisdiction. "Removal based on federal question jurisdiction is usually governed by the well-pleaded complaint rule." Phipps v. F.D.I.C., 417 F.3d 1006, 1010 (8th Cir. 2005) (internal quotation omitted). The well-pleaded complaint rule "provides that federal jurisdiction may be invoked only where a federal question is presented on the face of the plaintiff's properly pleaded complaint." Id. This rule "makes the plaintiff the ...


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