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Anderson v. Select Portfolio Servicing, Inc.

United States District Court, S.D. Georgia, Augusta Division

June 29, 2017

JAMES T. ANDERSON, JR. & MARY H. ANDERSON, Plaintiffs,
v.
SELECT PORTFOLIO SERVICING, INC. & U.S. BANK N.A., as Trustee for Certain Mortgage-Related Assets, Defendants.

          ORDER

          HON. LISA GODBEY WOOD, UNITED STATES DISTRICT JUDGE.

         Before the Court is Plaintiffs James T. and Mary H. Anderson's ("the Andersons") motion for remand, dkt. no. 8. As explained more fully below, the motion will be GRANTED as to remand, but DENIED as to attorneys' fees. Defendants Select Portfolio Servicing, Inc. ("SPS") and U.S. Bank N.A. are correct that no document prior to the amended complaint justified removability, so their removal is not per se untimely. But the amended complaint does not establish the requisite amount in controversy. The Court must disregard supplementary evidence submitted by Defendants. And even if it considered that evidence, it could not find removability.

         Background

         The Andersons Have an Adjustable Rate Mortgage

         For purposes of this overview, the Court assumes the truth of the facts alleged in the Andersons' currently operative complaint. The Andersons took on an adjustable rate note to buy a home on September 19, 2003. Dkt. No. 1-1 at 105 ¶ 5. That note is in an asset pool of which U.S. Bank N.A. is trustee, and SPS is its servicing agent. Id. at 106 ¶¶ 12-13. The note was bought by Thornburg Mortgage Home Loans, Inc. ("Thornburg"), which entered a loan modification agreement with the Andersons on December 1, 2005. Id. at 105 ¶¶ 7-9.

         Under it, the initial interest rate would be 6.25% annually for the first ten years, until December 1, 2015. Id. at 122 § 3(a). That day, and every December 1 thereafter, the rate would be recalculated based on the London Interbank Offered Rate ("LIBOR"), "a benchmark rate that some of the world's leading banks charge each other for short-term loans." Id. § 3(b); LIBOR, Investopedia, http://www.investopedia.com/ terms/1/libor.asp (accessed Mar. 17, 2017). The rate would be "1.875% in excess of [LIBOR] . . . rounded to the nearest one-eighth of one percent." Dkt. No. 1-1 at 122 § 3(c). On December 1, 2015, this was 2.75%.[1]

         The agreement also limited rate fluctuation. On December 1, 2015, the rate would "not increase by more than 5% of the interest rate previously in effect." Dkt. No. 1-1 at 122 § 3(e). Each following year, it would "not increase or decrease by more than 2% of the interest rate previously in effect." Id. Additionally, the interest rate would "never be greater than 11.25% or less than 1.875%." Id.

         The parties dispute these terms' meanings. On December 1, 2016, Defendants raised the Andersons' rate to 3.5%, which the Andersons claim to be excessive as "27% of the interest rate previously in effect." Id. at 108 ¶ 27.

         The Parties Began Litigating in State Court

         The Andersons filed a class-action suit in Richmond County Superior Court on January 14, 2016, on behalf of

[a] 11 persons who entered into a loan modification agreement with Thornburg whereby their interest rate was " fixed" for a given period of time and thereafter converted to an "adjustable rate" subject to a "Limits on Interest Rate Changes" provision substantially identical to Section 3(e) of the Loan Modification Agreement, and to whose loan Defendants applied a maximum limit on the amount of allowable interest rate decrease occurring on the First Change Date.

Id. at 5, 12 ¶ 43 (emphasis added) . They alleged that this class contained "many hundreds, or perhaps thousands, of homeowners." Id. 9-10 ¶¶ 27-30.

         But SPS's Curtis Pulsipher testified in a March 21, 2016 affidavit ("Pulsipher I") that there was "only one additional loan in the group of Thornburg loans where the interest rate at the first change date was not calculated correctly under the loan modification agreement, " and that it was changed before there was any wrongful payment. Dkt. No. 1-2 at 4 ¶¶ 12-13. He also testified that there were 228 Thornburg-SPS loans "that were originated as adjustable interest rate loans and subsequently modified by Thornburg to remain adjustable rate loans." Id. ¶ ll.[2]

         The Andersons added a second putative class of plaintiffs on January 10, 2017:

All persons who entered into a loan modification agreement with Thornburg whereby their interest rate was "fixed" for a given period of time and thereafter converted to an "adjustable rate" subject to a "Limits on Interest Rate Changes" provision substantially identical to Section 3(e) of the Loan Modification Agreement, and to whose loan Defendants have attempted to apply, on any Change Date subsequent to the First Change Date, an interest rate increase of greater than 2% of the interest rate previously in effect.

Dkt. No. 1-1 at 112-13 ¶ 46(b).

         The next morning, the Superior Court limited the Andersons' interest-rate changes and enjoined Defendants making from negative credit references or starting foreclosure ...


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