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O'Connor v. Sand Canyon Corporation

United States District Court, W.D. Virginia, Lynchburg Division

October 6, 2014

JANIS O'CONNOR, Plaintiff,


NORMAN K. MOON, District Judge.

This matter is before the Court on a Motion to Dismiss, filed by American Home Mortgage Servicing, Inc., ("AHMSI"), Deutsche Bank National Trust Company ("Deutsche Bank"), and Sand Canyon Corporation ("Sand Canyon") (collectively, "Defendants"). Also before the Court is a Motion to Remand, filed by pro se Plaintiff Janis O'Connor ("Plaintiff"). For the following reasons, Plaintiff's Motion to Remand is DENIED and Defendants' Motion to Dismiss is GRANTED. Plaintiff's case is hereby DISMISSED WITHOUT PREJUDICE, and Plaintiff is given leave to amend her complaint where appropriate.


Plaintiff entered into a loan agreement with Option One Mortgage Corporation ("Option One") in October of 2005 in the amount of $161, 000 (the "loan"). To secure Plaintiff's promise to repay the loan, Plaintiff executed a promissory note in favor of Option One which was secured by a Deed of Trust (the "Deed"). The Deed names David W. Draper as trustee and Option One as beneficiary. The property subject to the Deed of Trust is located in Appomattox County, Virginia (the "Appomattox property"). Plaintiff signed the Deed and it was promptly recorded in the Office of the Clerk of Circuit Court of Appomattox County in late October of 2005.

At some point between 2005 and 2009, AHMSI became successor in interest to Option One and the servicer of the loan. On August 4, 2009, AHMSI executed a Notice of Assignment of Deed of Trust (the "Assignment") in favor of Deutsche Bank, which was recorded in the Office of the Clerk of Circuit Court of Appomattox County. Deutsche Bank also executed a Deed of Appointment of Substitute Trustee (the "Substitution"), appointing Equity Trustees, LLC as substitute trustee. Plaintiff alleges the documents were executed by "robo-signers, " who lacked authority to authorize the Assignment and Substitution. She also alleges AHMSI and Deutsche Bank stole the promissory note secured by the Deed. Plaintiff claims Defendants engaged in these actions in order to foreclose on and steal her Appomattox property.

On July 28, 2009, AHMSI placed Plaintiff's property in foreclosure, "which action was subsequently withdrawn after [P]laintiff paid a very substantial sum... to satisfy demands by AHMSI, primarily for extortionate fees." She does not explain the nature of these fees, nor why she paid the fees despite their extortionate nature. On July 28, 2010, Plaintiff paid another "demand" to AHMSI, and sometime thereafter, AHMSI made a third "demand" which Plaintiff refused to pay, "as it was clear to [P]laintiff that the extortion would never cease." On March 31, 2011, Defendants foreclosed on Plaintiff's Appomattox property.


Plaintiff filed her complaint in Appomattox County Circuit Court on March 29, 2013, seeking to have the relevant foreclosure sale set aside or declared void. Plaintiff seeks this remedy on the grounds that: (1) Defendants failed to comply with certain notice requirements governing the foreclosure sale, and (2) Deutsche Bank's authority to conduct the sale was obtained through theft and forgery. On July 7, 2014, AHMSI and Deutsche Bank timely removed the case to this Court on the basis of diversity and federal question jurisdiction. On July 14, 2014, Defendants collectively moved to dismiss Plaintiff's complaint for failure to state a claim and insufficiency of service of process. On August 5, 2014, Plaintiff moved to remand the case back to state court.


"A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint... [I]t does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992). A court considering dismissal under Rule 12(b)(6) must take the facts in the light most favorable to the plaintiff. Schatz v. Rosenberg, 943 F.2d 485, 489 (4th Cir. 1991). Courts are not, however, "bound to accept as true a legal conclusion couched as a factual allegation." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Rather, to survive a motion to dismiss, a complaint must contain enough factual allegations to "state a claim for relief that is plausible on its face." Twombly, 550 U.S. at 570. In evaluating "plausibility, " the court may not rely on mere "labels and conclusions" or a plaintiff's "formulaic recitation of a cause of the elements of a cause of action." Id. at 555. Instead, the factual allegations must be enough to raise "a right to relief above the speculative level." Id. Thus, 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." Iqbal, 129 S.Ct. at 1949. Moreover, in order to allow for the development of a potentially meritorious claim, federal courts have an obligation to construe pro se pleadings liberally. See, e.g., Boag v. MacDougall, 454 U.S. 364, 365 (1982) (citation omitted). Nevertheless, "[p]rinciples requiring generous construction of pro se complaints are not... without limits." Beaudett v. City of Hampton, 775 F.2d 1274, 1278 (4th Cir. 1985).


Plaintiff seeks to have this case remanded to state court on the grounds that Defendants have either waived their right to removal by defending in state court or "failed to satisfy the grounds for removal based on [d]iversity and [f]ederal [q]uestion jurisdiction." Because Plaintiff's motion raises a question as to whether the requirements of subject matter jurisdiction have been met, I will first evaluate whether Plaintiff's motion should be granted.

A. Waiver

Plaintiff argues that Defendants waived their right to remove by filing a motion to dismiss in state court. She cites to Grubb v. Donegal Mut. Ins. Co., 935 F.2d 57, 59 (4th Cir. 1991) to bolster her position, arguing that Grubb stands for the proposition that remand should occur whenever it is justified by "the values of judicial economy, fairness, convenience and comity." The actual holding of the case, however, is much more limited. In Grubb, the United States Court of Appeals for the Fourth Circuit held that "although a defendant may yet waive its 30-day right to removal by demonstrating a clear and unequivocal' intent to remain in state court, such a waiver should only be found in extreme situations.'" Grubb, 935 F.2d at 59 (citing Rothner v. City of Chicago, 879 F.2d 1402, 1415 (7th Cir. 1989)).

In order for one's intent to be "clear and unequivocal, " a defendant must take "substantial defensive action" before filing a notice of removal. Sayre Enterprises, Inc. v. Allstate Ins. Co., 448 F.Supp.2d 733, 735 (W.D. Va. 2006) (citing Aqualon Co. v. MAC Equip. Inc., 149 F.3d 262, 264 (4th Cir. 1998)). Notably, the mere act of answering a complaint before removal does not constitute substantial defensive action. See Haak Motors LLC v. Arangio, 670 F.Supp.2d 430, 433 (D. Md. 2009). This is true even if the answer contains an affirmative defense. Sayre Enters., Inc., 448 F.Supp.2d at 736. What is most important is whether the defendant has engaged in some action in state court that has led to a decision on the merits of the case. Id. (citing Krasnow v. Texaco, Inc., 773 F.Supp. 806, 808-09 (E.D. Va. 1991)).

On June 25, 2014, Defendants made a special appearance in state court and filed a motion to dismiss pursuant to Va. Code ยง 8.01-277(B) for insufficient service of process. The state court made no ruling with respect to this motion, and as the state court did not make a ruling on the merits of Defendants' motion, Defendants have not taken any "substantial defensive action" necessary to show a clear and unequivocal intent to ...

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