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Dail v. Bank of America, N.A.

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

February 21, 2019




         Before the Court are Plaintiff Erin Howerton Dail's ("Dail") Motion to Remand and Defendant Bank of America, N.A.'s ("BANA") Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6). Based on the reasoning below, Dail's Motion to Remand is DENIED, BANA's Motion to Dismiss is GRANTED, and the matter is DISMISSED.


         Dail is a citizen of Virginia. ECF No. 1-3 at ¶ 1. BANA is a citizen of North Carolina. ECF No. 1 at 3. Co-Defendant Equity Trustees ("Equity") is a citizen of Virginia. Id. at 4. Dail owns the property located at 2601 Sterling Point Drive in Portsmouth, Virginia. ECF No. 1-3 at ¶ 1. On December 30, 2005, Dail entered into a mortgage loan contract as a borrower. Id. at ¶ 5. The loan was evidenced by a note and secured by a Deed of Trust. Id. The obligations of both parties under the Deed "are subject to any requirements and limitations of Applicable Law." Id. at 20. The Deed defines "Applicable Law" as "all controlling federal, state, and local statutes, regulations, ordinances, and administrative rules and orders." Id. at 11. "Applicable Law" includes the Real Estate Settlement Procedures Act ("RESPA"), Regulation X, as they may be amended, which the Deed defines as "all requirements and restrictions that are imposed in regard to a 'federally related mortgage loan' even if the Loan does not qualify as a 'federally related mortgage loan under RESPA.'" Id.

         In 2009, BAN A took over servicing Dail's mortgage. Id. at ¶ 9. BANA did not provide Dail with any mortgage servicing information at least five months after the transfer. Id. at ¶ 10. As a result, Dail did not pay her mortgage. Id. at ¶ 11. As a result, in October 2010, BANA sent Dail a unilateral loan modification. Id. at ¶ 12.

         In 2011, Dail fell on hard times; she became unemployed and began to pay increasingly higher medical expenses. Id. at ¶ 13. She therefore fell behind on her mortgage payments. Id. Dail and her husband, Thomas Dail ("Thomas"), attempted to obtain a loan modification but were denied. Id. at ¶ 15. In 2016, Thomas wrote to BANA and asked for an accurate payoff and reinstatement of the loan; that letter was never answered. Id. at ¶¶ 17-18. BANA planned to use Equity as its trustee to sell Dail's property at a foreclosure auction. See Id. at ¶ 19. Equity originally had originally set the foreclosure for September 25, 2018 but that was changed to November 6, 2018. Id. at ¶¶ 19, 30. However, the foreclosure sale never occurred and has not been rescheduled. ECF No. 6 at 2; ECF No. 8 at 3.

         On November 1, 2018, Dail filed her Complaint in the Circuit Court for the City of Portsmouth, Virginia. ECF No. 1-3 at 8. Dail alleges a breach of contract claim based on BANA's alleged violation of Regulation X; she also seeks an injunction to prevent BANA and Equity from executing the foreclosure sale. Id. at 5-7. Dail claims $423, 786.00 in compensatory damages. Id. at 7. Dail also seeks to recover fees from Equity related to the foreclosure sale that has not yet occurred. Id.

         On November 29, 2018, BANA removed the case to this Court on diversity jurisdiction grounds. ECF No. 1 at 1. In support, BANA alleges that Equity has been fraudulently joined or is a nominal party, so its citizenship should be disregarded for jurisdictional purposes. Id. at 4-6.

         On December 6, 2018, BANA filed its Motion to Dismiss and argues that Dail fails to state a claim as to both of her counts. ECF Nos. 5-6. Dail did not respond to this Motion. However, on December 20, 2018, Dail did file a Motion to Remand and argued that Equity is a legitimate defendant. ECF Nos. 7-8. On January 16, 2019, BANA filed its response in opposition to Dail's Motion. ECF No. 13. Dail did not file a reply.


         A. Motion to Remand

         I. General Standard

         Federal courts are courts of limited jurisdiction and may not exercise jurisdiction absent a statutory basis. Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005). "A court is to presume, therefore, that a case lies outside its limited jurisdiction unless and until jurisdiction has been shown to be proper." United States v. Poole, 531 F.3d 263, 274 (4th Cir. 2008) (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)).

         Unless a matter involves an area over which federal courts have exclusive jurisdiction, a district court has subject matter jurisdiction over a case only where the matter involves a federal question arising "under the Constitution, laws or treaties of the United States," 28 U.S.C. § 1331, or if "the matter in controversy exceeds the sum or value of $75, 000, exclusive of interests ...

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