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Wingate v. Ocwen Loan Servicing LLC

United States District Court, E.D. Virginia, Norfolk Division

July 6, 2018




         This matter is before the Court on a Motion to Remand filed by Plaintiffs Ricky Wingate ("Mr. Wingate") and LaSandra Wingate ("Mrs. Wingate") (collectively "Plaintiffs") pursuant 28 U.S.C. § 1447(c), ECF No. 6, as well as Plaintiffs' Motion to File Out of Time and for Defendant's Motion to Dismiss to be Held in Abeyance Until the Court Determines Jurisdiction ("Motion to File Out of Time"), ECF No. 9. For the reasons stated below, Plaintiffs' Motion to Remand is DENIED, and Plaintiffs' Motion to File Out of Time is GRANTED in part and DENIED in part.


         Plaintiffs are residents of Chesapeake, Virginia, and citizens of the Commonwealth of Virginia. Compl. ¶ 1, ECF No. 1-1. Defendant Ocwen Loan Servicing, LLC ("Defendant" or "Ocwen") is a limited liability company organized under the laws of Delaware and for purposes of federal diversity jurisdiction is a citizen of the U.S. Virgin Islands. See Pis.' Remand Br. 4, ECF No. 7. Defendant Equity Trustees, LLC ("Equity") is a citizen of the Commonwealth of Virginia. Id.

         In September 2004, Plaintiffs entered into a mortgage loan contract to purchase property in Chesapeake, Virginia. Compl. ¶¶ 4-5. The loan was evidenced by a note and secured by a deed of trust. Id. ¶ 5. The deed of trust contains the following provision:

This Security Instrument shall be governed by federal law and the law of the jurisdiction in which the Property is located. All rights and obligations contained in this Security Instrument are subject to any requirements and limitations of Applicable Law.

Id. ¶ 6. The deed of trust defines "Applicable Law" as "all controlling applicable federal, state and local statutes, regulations, ordinances and administrative rules and orders (that have the effect of law) as well as all applicable final, non-appealable judicial opinions." Id. ¶ 7.

         After Mr. Wingate was laid off from his job in January 2017, Plaintiffs kept current in their mortgage payments until June 2017. Id. ¶ 8-11. Mr. Wingate then contacted Ocwen to inform his lender that, despite having fallen behind in payments, he would soon be able to make a lump sum payment after the sale of his father's home. Id. ¶ 12. During this conversation, Ocwen's representative did not discuss any loss mitigation options with Mr. Wingate. Id. ¶ 13. At some point after June 2017, Ocwen informed Mr. Wingate that his property was scheduled for a foreclosure sale in March 2018. Id. ¶ 19-21. Mr. Wingate was "shocked" by this news, as he was under the impression that Ocwen was still waiting on a lump sum payment to bring the loan current. Id. ¶ 19. As of March 2018, the sale of Mr. Wingate's father's home had not yet gone through. Id. ¶ 18.

         In February 2018, Plaintiffs filed suit in the Circuit Court for the City of Chesapeake. Id. With respect to Ocwen, Plaintiffs assert breach of contract, breach of the covenant of good faith and fair dealing, and violations of the Virginia Consumer Protection Act. Id. ¶¶ 22-36, 44-47. Plaintiffs claim that various provisions of the Real Estate Settlement and Procedures Act ("RESPA") are incorporated into the mortgage contract so that a violation of RESPA constitutes a breach of contract. Id. ¶¶ 22-32. Plaintiffs do not, however, include a count directly asserting a violation of RESPA. With respect to Equity, Ocwen's substitute trustee, Plaintiffs state only that Equity "has not gained the- authority to foreclose." Id. ¶¶ 37-43. In their prayer for relief, Plaintiffs seek an injunction to prevent Defendants from instituting foreclosure proceedings and an award of $70, 000 in compensatory damages. Id. at 12.

         In March 2018, Ocwen removed this case to federal court pursuant to 28 U.S.C. § 1441. Not. Removal, ECF No. 1. Importantly, Ocwen was the only defendant to consent to the removal. See id. at 9. In its notice of removal, Ocwen argues first that jurisdiction is proper based on federal question jurisdiction because Plaintiffs assert a violation of federal law under RESPA. Id. ¶¶ 11-18. Second, Ocwen claims that there is diversity jurisdiction under 28 U.S.C. § 1332(a) because (1) there is complete diversity between Plaintiffs and Ocwen; (2) Equity is the trustee for the foreclosure and has been fraudulently joined; and (3) the amount in controversy exceeds $75, 000.00 because Plaintiffs request equitable relief. Id. ¶¶ 19-34.

         In April 2018, Plaintiffs filed their Motion to Remand. ECF No. 6. Therein, Plaintiffs make three arguments in favor of remand. First, Plaintiffs note that Ocwen failed to obtain the consent to removal of Equity. See Mem. Supp. Mot. Remand 3, ECF No. 7. Because removal normally requires the unanimous consent of all defendants, Plaintiffs claim removal here is defective. Id. Second, Plaintiffs argue that diversity jurisdiction is improper because of the lack of an amount in controversy exceeding $75, 000 and because there is a lack of complete diversity between the parties in that Equity and Plaintiffs are citizens of Virginia. Id. at 4. Third, Plaintiffs claim that there is no federal question jurisdiction because they claim that they are merely advancing state law theories of contract. Id. at 5-6. Lastly, in addition to claiming that removal is improper, Plaintiffs seek an award of attorney's fees and costs related to the improper removal pursuant to 28 U.S.C. § 1447(c). Mem. Supp. Mot. Remand 7.

         On April 3, 2018, Ocwen filed its Motion to Dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(6), ECF No. 6. Ocwen then filed its opposition to the Motion to Remand on April 18, 2018. ECF No. 8. On April 19, 2018, Plaintiffs filed their Motion to File Out of Time, ECF No. 9, and on April 26, 2018, Ocwen filed its opposition to the Motion to File Out of Time, ECF No. 13. Having been fully briefed, the instant motions are ripe for review.


         Federal district courts are courts of limited subject matter jurisdiction. United States ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 347 (4th Cir. 2009) (citing Exxon Mobile Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005)). They may-exercise "only the jurisdiction authorized them by the United States Constitution and by federal statute." Id. (citing Bowles v. Russell, 551 U.S. 205 (2007)). District courts have diversity jurisdiction in civil actions between "citizens of different states" and "where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs." 28 U.S.C. § 1332(a). If a case based on diversity jurisdiction is not initially filed in federal court, a court may exercise jurisdiction over the case upon proper removal to federal court. 28 U.S.C. §§ 1441, 1446. District courts have federal question jurisdiction in "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. ...

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