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Davis v. Specialized Loan Servicing LLC

United States District Court, E.D. Virginia

July 9, 2018

DARLENE J. DAVIS, Plaintiff,


          Robert E. Payne, Senior United States District Judge.

         This matter is before the Court on Darlene Davis' ("Davis") letter requesting remand to Spotsylvania Circuit Court ("the Remand Request") (ECF No. 22); the MOTION TO DISMISS AMENDED COMPLAINT filed by Specialized Loan Servicing, LLC ("SLS") and The Bank of New York Mellon, f/k/a The Bank of New York PBNY Mellon") (ECF No. 3); the MOTION TO DISMISS filed by America's Servicing Company ("ASC") and Wells Fargo Bank, N.A. ("Wells Fargo") (ECF No. 13); and DEFENDANT EMC MORTGAGE LLC F/K/A EMC MORTGAGE CORPORATION'S MOTION TO DISMISS TO PLAINTIFF'S AMENDED COMPLAINT (ECF No. 20) . For the reasons set forth below, the Remand Request will be denied, and all three motions to dismiss will be granted, but with leave for Davis to file a Second Amended Complaint.


         A. Factual Background

         This case is essentially a title dispute between Davis and several entities regarding real property owned by Davis at 5910 Chadwick Court in Fredericksburg, Virginia ("the Property"). See Am. Compl. (ECF No. 1-2) at 1. On or around December 2, 2004, Davis obtained a purchase money mortgage loan from Union Federal Bank of Indianapolis. See id. at 2; Note (ECF No. 14-1) at 1. Her Note was secured by a deed of trust on the Property ("the Deed of Trust"). See Deed of Trust (ECF No. 14-2).[1] Then, on December 9, 2004, Union Federal assigned the Deed of Trust to EMC Mortgage, LLC ("EMC") and JPMorgan Chase Bank. ECF No. 4-2 at 1; ECF No. 14-3 at 1; see also ECF No. 4-3 at 2. At some point, Davis' loan was "assigned" to Waterfield Mortgage Company, to which Davis made monthly payments until April 2006.[2]Around that time, ASC notified Davis that it would become her loan servicer. Davis subsequently paid ASC on a monthly basis. Am. Compl. at 2.

         The chain of events after ASC began servicing the mortgage is murky. In December 2010, Davis filed a Chapter 13 bankruptcy petition. Id.; see generally In re Darlene Jarvis Davis, Docket No. 3:10-bk-38727. SLS and BNY Mellon assert that the Property was at that time encumbered by two deeds of trust. The second mortgage was later stripped off in an adversary proceeding because it was wholly unsecured, but the Deed of Trust was not implicated in that proceeding. SLS & BNY Mellon Mem. (ECF No. 4) at 3; see generally Davis v. U.S. Bank, N.A., et al., Docket No. 3:12-ap-3083. While the Chapter 13 proceedings were pending, ASC allegedly refused Davis' repeated requests to modify the loan and engaged in dual tracking, and both ASC and Wells Fargo committed some unidentified mortgage fraud against her.[3] In January 2012, Wells Fargo-which appears to control ASC-filed some document in the Chapter 13 action that "created a cloud on the title and cause[d] a fraud on the court." Am. Compl. at 2-3. Around that same time, EMC assigned the Deed of Trust to BNY Mellon. See ECF Nos. 4-3, 14-4.[4]

         In May 2016, BNY Mellon unsuccessfully sought to be added as a creditor in the Chapter 13 proceeding. See Am. Compl. at 4. Davis then obtained a Chapter 13 discharge. See id. at 2-3. Following that result, on or around September 19, 2016, ASC notified Davis that her loan servicing was being transferred to SLS. Id. at 3; see also ECF No. 14-5. Although SLS was initially unresponsive to Davis' communications, she soon began paying it. However, Davis continued to receive SLS' bills and, eventually, foreclosure letters. She has now run out of money and has ceased her payments. Am. Compl. at 4. Consequently, SLS is attempting to foreclose on the Property. See id. at 1-2.

         B. Procedural Background

         Davis filed a Complaint in Spotsylvania Circuit Court on September 29, 2017, see ECF No. 1-1, and filed an Amended Complaint on October 10. See Am. Compl. Neither spells out any particular claims, but the gravamen of the dispute appears to be the fraud committed by ASC, Wells Fargo, and SLS, which Davis alleges invalidates both the 2012 assignment of the Deed of Trust to BNY Mellon and the 2016 servicing transfer to SLS. See, e.g., id. at 4 ("The transfer is invalid as it was p[ro] cured under fraud by fraud."); id. ("[S]ince ASC and [W]ells were illegal, how where [sic] they transferring anything. This is fraudulent misrepresentation, unfair . . . practices, violations of FDCP[A] and bankruptcy laws, UCC code . . . ."); id. at 5 ("The assignment is improper . . . and creates a cloud on title and is invalid."); id. at 6 ("[T]here is no contract with SLS as it was a fraudulent transfer."). To address these harms, Davis requests that the Court do several things: (1) "remove [SLS'] invalid/fraudulent lien on title and any other liens if they are there"; (2) grant a declaratory judgment that Davis is the sole owner of the Property; (3) order that the Note be returned to Davis "or deemed void if necessary to clear title"; (4) enjoin Defendants from foreclosing or attempting to foreclose on the Property; (5) enjoin Defendants from inspecting the Property or "coming up onto [it] on a regular basis''; and (6) enjoin Defendants from violating the FDCPA or "billing for an invalid debt." Id. at 5, 7. She also seeks an undefined amount of damages for her payments to ASC. See id. at 7.

         Davis did not serve Defendants with a copy of the Complaint or Amended Complaint until November 1, 2017 at the earliest. See ECF No. 1-5. On November 28, SLS and BNY Mellon timely removed the case to this Court on diversity jurisdiction grounds. Notice of Removal (ECF No. 1) ¶ 5; see also 28 U.S.C. § 1446(b)(1). Davis then filed multiple letters on December 20 and 21, stating that the case had been improperly removed and objecting to the Court's exercise of diversity jurisdiction. See ECF Nos. 8, 10. However, she did not formalize her Remand Request until February 13, 2018. See ECF No. 22. Before that date or shortly thereafter, all defendants moved under Rule 12(b)(6) to dismiss the Amended Complaint with prejudice.


         I. Remand Request

         Defendants may remove "any civil action brought in a State court of which the district courts of the United States have original jurisdiction ... to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). If such jurisdiction exists, the defendant or defendants seeking removal must file a notice of removal in federal court within 30 days of being served with the complaint. Id. § 1446 (a) - (b) (1) . However, consistent with the so-called "rule of unanimity," "all defendants who have been properly joined and served must join in or consent to the removal of the action." Id. § 1446(b) (2) (A); see also Hartford Fire Ins. Co. v. Harleysville Mut. Ins. Co., 736 F.3d 255, 259 (4th Cir. 2013); Mayo v. Bd. of Educ. of Prince George's Cty., 713 F.3d 735, 741 (4th Cir. 2013). Once the action has been removed, any motion for remand to state court must be made within 30 days of the filing of the notice of removal if the basis of the motion is "any defect other than lack of subject matter jurisdiction," including failure to comply with the unanimity requirement. 28 U.S.C. § 1447(c); see also Payne ex rel. Estate of Calzada v. Brake, 439 F.3d 198, 203-04 (4th Cir. 2006).

         The Court clearly has subject matter jurisdiction over this dispute. Section 1332 gives this Court jurisdiction if the matter in controversy is greater than $75, 000 and the parties are completely diverse-"meaning a plaintiff cannot be a citizen of the same state as any defendant." Johnson v. Am. Towers, LLC, 781 F.3d 693, 704 (4th Cir. 2015); see also 28 U.S.C. § 1332(a). Davis is a resident of Virginia, and Defendants are corporations which reside in states other than Virginia. See Am. Compl. at 1; Notice of Removal ¶ 6. Davis claims that "this is not a complete diversity case," but she points to no evidence contradicting the allegations in her own Amended Complaint that establish complete diversity. ECF No. 22.

         In addition, the amount in controversy exceeds $75, 000. Davis does not seek any specific amount of damages. However, "[i]n actions seeking declaratory or injunctive relief, . . . the amount in controversy is measured by the value of the object of the litigation." Hunt v. Wash. State Apple Advert. Comm'n, 432 U.S. 333, 347 (1977); see also Dixon v. Edwards, 290 F.3d 699, 710 (4th Cir. 2002). Here, among other equitable remedies, Davis seeks to extinguish SLS and BNY Mellon's mortgage lien on the Property. The Deed of Trust originally secured a loan value of $196, 000, Deed of Trust at 1-2, and Davis still owes SLS and BNY Mellon a balance of $144, 219.53 on the Note, see ECF No. 11-2 at 2. Those entities would not be entitled to those funds if Davis obtained her requested relief. Thus, the amount in controversy is well above $75, 000, and both requirements for diversity jurisdiction are met here.[5]

         Nonetheless, SLS and BNY Mellon's removal may have been procedurally improper. As noted, in cases with multiple defendants, the rule of unanimity requires all defendants to join in or consent to removal. See Hartford Fire Ins., 736 F.3d at 259. The rule obligates each defendant to "register to the Court its official and unambiguous consent to a removal petition filed by a co-defendant." Creed v. Virginia, 596 F.Supp.2d 930, 934 (E.D. Va. 2009) (internal quotations omitted). Defendants typically satisfy this demand by filing a single notice of removal, signed by the attorney for one defendant, which states that the other defendants consent to removal. See Mayo, 713 F.3d at 742. SLS and BNY Mellon's Notice of Removal does not ...

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