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Tyler v. Nationstar Mortgage LLC

United States District Court, N.D. Georgia, Atlanta Division

January 25, 2018

MELANIE TYLER, Plaintiff,
v.
NATIONSTAR MORTGAGE LLC, et al., Defendants.

          MAGISTRATE JUDGE'S FINAL REPORT, RECOMMENDATION, AND ORDER

          RUSSELL G. VINEYARD, UNITED STATES MAGISTRATE JUDGE

         Defendant Nationstar Mortgage LLC (“Nationstar”) moves to dismiss the complaint filed by pro se plaintiff Melanie Tyler (“Tyler”). [Doc. 3].[1] Nationstar has also filed a motion to stay pretrial deadlines and discovery. [Doc. 4]. Tyler has not filed a response to the motion to dismiss or the motion to stay, so these motions, [Docs. 3 & 4], are deemed unopposed, see LR 7.1B, NDGa.[2] For the reasons that follow, Nationstar's motion to stay pretrial deadlines and discovery, [Doc. 4], is GRANTED, [3] and it is RECOMMENDED that Nationstar's unopposed motion to dismiss, [Doc. 3], be GRANTED as to Tyler's federal claim and that the Court decline to exercise supplemental jurisdiction over Tyler's state law claims against Nationstar and that Tyler's claims asserted against Shapiro Pendergast & Hasty (“Shapiro”) be DISMISSED WITHOUT PREJUDICE for failure to effect service of process upon it.[4]

         I. FACTUAL AND PROCEDURAL BACKGROUND[5]

         This action concerns the real property located at 7657 Green Glade Way, Lithonia, Georgia (the “property”). [Doc. 1-1 at 5 ¶ 3; Doc. 1-3; Doc. 3-2].[6] On March 24, 2008, Tyler obtained a mortgage loan in the original principal amount of $207, 435.00 from Countrywide Bank, FSB (“Countrywide”), and used the proceeds of the loan to purchase the property. [Doc. 1-1 at 5 ¶ 5; Doc. 1-3; Doc. 3-2]. The transaction was secured by the property pursuant to a security deed executed by Tyler, conveying the property to Mortgage Electronic Registration Systems, Inc., as grantee-nominee for Countrywide and its successors and assigns. [Doc. 3-2]. The security deed was recorded on March 28, 2008, at Deed Book 20715, Page 773, of the DeKalb County, Georgia, real estate records. See [id. at 2]. On December 18, 2012, the security deed was assigned to Nationstar by way of a Corporation Assignment of Mortgage, which was recorded on January 29, 2013, in Deed Book 23540, Page 771, of the DeKalb County, Georgia records. [Doc. 3-3]. On June 3, 2013, a Corrective Corporate Assignment of Security Deed was issued to Nationstar, which was recorded on July 16, 2013, in Deed Book 23896, Page 23, of the DeKalb County records. [Doc. 3-4]. Eventually, Tyler defaulted on her obligations, and a non-judicial foreclosure sale was scheduled for July 5, 2017. [Doc. 1-1 at 5 ¶ 6].

         On June 29, 2017, Tyler filed the instant action against defendants Nationstar and Shapiro in the Superior Court of Gwinnett County, Geogia. See [Doc. 1-1]. In her complaint, Tyler alleges that “[d]efendants are duly appointed agent and attorney in fact for [her]” and that they, “by conducting Foreclosing proceedings on [her] property without exhausting all loss mitigation remedies available and not following Federal or State Loss Mitigation regulations in order to avoid foreclosure on [her] property[, ] ha[ve] breached Fiduciary Duties per Georgia Code § 11-3-307.” [Id. at 6 ¶ 7]. Tyler seeks a declaration of rights and a declaratory judgment pursuant to O.C.G.A. § 9-4-1 that “[d]efendants have breached Fiduciary Duties per Georgia code § 11-3-307 because [they] are duly appointed agent and attorney in fact for [her] and by conducting foreclosure proceedings on [her] property without exhausting all loss mitigation remedies available and not following Federal or State Loss Mitigation regulations and not complying with Real Estate Settlement Procedures Act, 12 U.S.C. § 2605(e) [(‘RESPA')] and pursuant to Consumer Financial Protection Bureau (CFPB) mortgage servicing rules issued on January 17, 2013, with an effective date of January 10, 2014.” [Id. at 6 ¶ 12]. Tyler requests that the Court declare that “[d]efendants are required to evaluate [her] for available loss mitigation options”; “that [d]efendants are required to meet certain requirements prior to initiat[ing] any foreclosure action against [her]”; ”that any foreclosure proceedings are invalid”; and “that [d]efendants have breached Fiduciary Duties per Georgia Code § 11-3-307[.]” [Id. at 7 ¶ 13].

         On September 13, 2017, Nationstar, with the consent of Shapiro, removed Tyler's complaint to this Court, see [Doc. 1], [7] and subsequently filed a motion to dismiss Tyler's complaint for failure to state a plausible claim to relief, [Doc. 4].[8]Tyler has not filed a response to the pending motion to dismiss, and the time to do so has passed. Thus, the pending motion to dismiss is now ripe for ruling.

         II. DISCUSSION

         A. Subject Matter Jurisdiction

         “‘[A]ny action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant[s] . . . to the district court of the United States for the district and division embracing the place where such action is pending.'” PHH Mortg. Corp. v. Diamond, No. 1:06-CV-0673WSD, 2006 WL 839405, at *1 (N.D.Ga. Mar. 29, 2006) (first and third alterations in original) (quoting 28 U.S.C. § 1441(a)). Thus, “[o]nly state-court actions that originally could have been filed in federal court may be removed[.]” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987); see also Ehlen Floor Covering, Inc. v. Lamb, 660 F.3d 1283, 1287 (11th Cir. 2011) (citation omitted) (“The existence of federal jurisdiction is tested as of the time of removal.”); Leonard v. Enterprise Rent a Car, 279 F.3d 967, 972 (11th Cir. 2002). Federal courts have original jurisdiction over an acti on if “the f ac e of the complaint raises a federal question, ” or if “the parties are diverse and meet the statutory requirements for diversity jurisdiction[.]” Stegeman v. Wachovia Bank, Nat'l Ass'n, No. 1:06-CV-0247-WSD, 2006 WL 870420, at *1 (N.D.Ga. Apr. 4, 2006) (citing Lontz v. Tharp, 413 F.3d 435, 439-40 (4th Cir. 2005)).

         Under 28 U.S.C. § 1332, federal district courts have “original jurisdiction of all civil actions ‘between . . . citizens of different States' where the amount in controversy exceeds $75, 000.” Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005) (quoting 28 U.S.C. § 1332 (a)). “Complete diversity [under § 1332] requires that no defendant in a diversity action be a citizen of the same state as any plaintiff.” Hull v. Ga. Dep't of Human Res., Civil Action File No. 1:11-CV-3043-TWT, 2011 WL 5239218, at *2 (N.D.Ga. Sept. 27, 2011), adopted sub. nom., Hull v. La Neaysa Cumming Manager DHR, 2011 WL 5239726, at *1 (N.D.Ga. Oct. 28, 2011) (citation and internal marks omitted). The burden is on the removing party to show that the federal court has jurisdiction. Etowah Env't Grp., LLC v. Walsh, Civil Action No. 2:10-CV-180-RWS, 2011 WL 1060600, at *3 (N.D.Ga. Mar. 21, 2011) (citing Friedman v. N.Y. Life Ins. Co., 410 F.3d 1350, 1353 (11th Cir. 2005)). Additionally, “[d]efects in subject-matter jurisdiction require correction regardless of whether the error was raised in district court, ” and “[t]he lack of subject matter jurisdiction can never be waived by parties to litigation.” Allison v. Sec'y, DOC, No. 2:12-cv-11-FtM-29DNF, 2014 WL 2090865, at *3 (M.D. Fla. May 19, 2014) (citation and internal marks omitted) (citing United States v. Peter, 310 F.3d 709, 712 (11th Cir. 2002) (per curiam)); see also Simmerer v. United States, Nos. 6:07-cv-300-Orl-31KRS, 6:04-cr-007-Orl-31KRS, 2008 WL 897091, at *1 (M.D. Fla. Mar. 31, 2008) (citing United States v. Cotton, 535 U.S. 625, 630 (2002)) (“[S]ubject matter jurisdiction can never be forfeited or waived because it involves a court's power to hear a case.”).

         Nationstar premised removal on diversity jurisdiction under 28 U.S.C. § 1332, as well as federal question jurisdiction under 28 U.S.C. § 1331. See [Doc. 1 at 3-9]. Although not a model of clarity, Tyler's complaint, filed in the Superior Court of Gwinnett County, Georgia, appears to assert a claim arising under federal law for the purported violation of RESPA and therefore satisfies the requirements of federal question jurisdiction. See generally [Doc. 1-1 (alleging violations of RESPA)]; see also Buckley v. Bayrock Mortg. Corp., Civil Action File No. 1:09-CV-1387-TWT, 2010 WL 476673, at *4 (N.D.Ga. Feb. 5, 2010), adopted at *1; Bank of N.Y. v. Wilson, Civil Action File No. 1:08-CV-332-TWT, 2008 WL 544741, at *1 (N.D.Ga. Feb. 25, 2008), adopted at *1 (quoting Caterpillar, 482 U.S. at 392) (“‘[F]ederal jurisdiction exists []when a federal question is presented on the face of the plaintiff's properly pleaded complaint.'”). However, diversity jurisdiction is not available since Tyler also named Shapiro as a defendant in the action, see [Doc. 1-1 at 4 (naming Shapiro as a defendant and alleging that Shapiro's address is in Atlanta, Georgia)], and Nationstar acknowledged in its notice of removal that Shapiro, like Tyler, is a citizen of Georgia, see generally [Doc. 1]; see also Ullah v. BAC Home Loans Servicing LP, 538 Fed.Appx. 844, 847 (11th Cir. 2013) (per curiam) (unpublished) (“As McCalla . . . admit[s], the [plaintiffs] and McCalla are all residents of Georgia for purposes of diversity jurisdiction.”). Nevertheless, Nationstar maintains that removal was also proper on the basis of diversity jurisdiction, arguing that “Shapiro's citizenship must be disregarded under the doctrine of fraudulent joinder because the Complaint is completely devoid of claims for relief against it.” [Doc. 1 at 5 ¶ 14 (citation omitted)]; see also Harvey v. Geico Gen. Ins. Co., No. 14-80078-CIV, 2014 WL 3828434, at *2 (S.D. Fla. Aug. 4, 2014) (quoting Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998)) (noting that “‘[f]raudulent joinder is a judicially created doctrine that provides an exception to the requirement of complete diversity'”).

         “To establish fraudulent joinder, the removing defendant must show ‘by clear and convincing evidence' that ‘there is no possibility the plaintiff can establish a cause of action against the resident defendant.'” Brown v. Endo Pharm., Inc., 38 F.Supp.3d 1312, 1321 (S.D. Ala. 2014) (quoting Henderson v. Wash. Nat'l Ins. Co., 454 F.3d 1278, 1281 (11th Cir. 2006)). “‘This burden is a heavy one, '” id. (quoting Stillwell v. Allstate Ins. Co., 663 F.3d 1329, 1332 (11th Cir. 2011) (per curiam)), and the removing “defendant must meet its burden by actually proving that joinder is fraudulent, ” Phillips v. R.R. Dawson Bridge Co., No. 2:14-cv-00480-LSC, 2014 WL 3970176, at *5 (N.D. Ala. Aug. 12, 2014) (citation omitted).[9] By contrast, “[t]he standard for evaluating whether [] [Tyler] can establish a cause of action against the resident defendant is very lenient: ‘federal courts are not to weigh the merits of [Tyler's] claim beyond determining whether it is an arguable one under state law.'” Ullah, 538 Fed.Appx. at 846 (citation omitted). Indeed, “[i]f . . . there is ‘any possibility of recovery [under state law] against the party whose joinder is questioned, ' federal diversity jurisdiction will not attach, ” Dresser, Inc. v. Lowry, 320 F.Supp.2d 486, 491 (W.D. La. 2004) (last alteration in original) (citation omitted), and “‘the federal court must find that joinder was proper, '” Taylor Newman Cabinetry, Inc. v. Classic Soft Trim, Inc., 436 Fed.Appx. 888, 890 (11th Cir. 2011) (per curiam) (unpublished) (citation omitted); see also Johnson, 594 Fed.Appx. at 956; Stillwell, 663 F.3d at 1333.

         “‘The determination of whether a resident defendant has been fraudulently joined must be based upon the plaintiff's pleadings at the time of removal, supplemented by any affidavits and deposition transcripts submitted by the parties.'” Taylor Newman Cabinetry, Inc., 436 Fed.Appx. at 890 (quoting Pacheco de Perez v. AT&T Co., 139 F.3d 1368, 1380 (11th Cir. 1998)). Accordingly, the Court “necessarily look[s] to the pleading standards applicable in state court, not the plausibility pleading standards prevailing in federal court.” Ullah, 538 Fed.Appx. at 846 (citation and internal marks omitted). “The pleading standard in Georgia is lower than the standard applicable to a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6).” Id. at 848 (citation omitted); see also Stillwell, 663 F.3d at 1334 n.3 (citing Sherman v. Fulton Cty. Bd. of Assessors, 701 S.E.2d 472, 474 (Ga. 2010)) (noting that “Georgia has not chosen to adopt the heightened pleading requirements imposed on federal plaintiffs”). “Under Georgia law, fair notice of the nature of the claim is all that is required, and the elements of most claims can be pled in general terms.” Ullah, 538 Fed.Appx. at 846 (citing Bush v. Bank of N.Y. Mellon, 720 S.E.2d 370, 374 (Ga.Ct.App. 2011)). Thus, “[p]leading conclusions, rather than facts, may be sufficient to state a claim for relief.” Id. (citing Stillwell, 663 F.3d at 1334; Ledford v. Meyer, 290 S.E.2d 908, 909 (Ga. 1982)). Moreover, “even when [] plaintiff fails to conform to the[] requirements [of Georgia's pleading standards], the proper remedy is not a dismissal or judgment on the pleadings, but to allow the plaintiff to amend the complaint and provide a more definite statement unless the complaint's allegations ‘disclose with certainty that no set of facts consistent with the allegations could be proved that would entitle the plaintiff to the relief [she] seeks.'” Id. (quoting Bush, 720 S.E.2d at 374).

         In her complaint, Tyler seeks a declaration that “[d]efendants are required to meet certain requirements prior to initiat[ing] any foreclosure action” and that “any foreclosure proceedings are invalid, ” and she asserts a federal claim under RESPA. [Doc. 1-1 at 6 ¶ 12, 7 ¶ 13]. Nationstar contends “there is no independent basis for the imposition of liability on [] [Shapiro]” because Shapiro “was retained for the sole purpose of pursuing a non-judicial foreclosure against the Property on Nationstar's behalf as a result of [Tyler's] default on her mortgage loan” and that Shapiro was therefore “merely a local agent acting solely to advance Nationstar's interests through enforcement of the loan obligations owed by [Tyler] to Nationstar.” [Doc. 1 at 5-6 ¶ 15 (footnote omitted)]. However, Tyler seeks a declaration that the proposed foreclosure was wrongfully undertaken. [Doc. 1-1 at 6 ¶ 12]; see also [id. at 7 ¶ 13 (alleging that the proposed foreclosure sale was “invalid”)]. A cause action for wrongful foreclosure (or wrongful attempted foreclosure) plainly exists in Georgia, see Racette v. Bank of Am., N.A., 733 S.E.2d 457, 462 (Ga.Ct.App. 2012); Aetna Fin. Co. v. Culpepper, 320 S.E.2d 228, 232 (Ga.Ct.App. 1984), and it is undisputed that a law firm acting as foreclosure counsel may be properly named as a party in such an action, even where the law firm is not the foreclosing party, see Jackson v. Bank of Am., NA, 578 Fed.Appx. 856, 859-60 (11th Cir. 2014) (per curiam) (unpublished) (citing McCarter v. Bankers Tr. Co., 543 S.E.2d 755, 757-58 (Ga.Ct.App. 2000)).[10]

         Nationstar did not supplement its notice of removal with any affidavits, testimony, or other evidence proving that Tyler's joinder of Shapiro was fraudulent, see generally [Doc. 1]; see also Taylor Newman Cabinetry, Inc., 436 Fed.Appx. at 890 (citation omitted); Phillips, 2014 WL 3970176, at *5 (citation omitted), nor did it identify any allegations in the complaint which “‘disclose[d] with certainty that no set of facts consistent with the allegations could be proved that would entitle the plaintiff to the relief [she] [sought], '” Ullah, 538 Fed.Appx. at 846 (citation omitted). Indeed, even if Tyler's allegations against Shapiro in the complaint were not plausible under federal pleading standards, the standard for determining whether plaintiffs might have stated a claim against a resident defendant for purposes of fraudulent joinder is one of possibility, not plausibility, and the Court's “task is not to gauge the sufficiency of the pleadings.” See id. (citation and internal marks omitted). In other words, even Tyler's “‘conclusory statements can sufficiently state a cause of action” under Georgia law, id. at 848 (citation omitted) (citing Stillwell, 663 F.3d at 1334), and, so long as “there is any possibility that the state law might impose liability on a resident defendant under the circumstances alleged in the complaint, the [] [C]ourt cannot find that joinder of the resident defendant was fraudulent, ” Florence v. Crescent Res., LLC, 484 F.3d 1293, 1299 (11th Cir. 2007) (emphasis added) (footnote and citations omitted). Hence, “although the ‘patchy allegations' [of the complaint] might ultimately prove insufficient, [the Court is] ‘unable to say there is no possibility [Tyler] [] asserted a colorable claim'” against Shapiro. See Ullah, 538 Fed.Appx. at 846-47 (quoting Henderson, 454 F.3d at 1283); cf. Johnson, 594 Fed.Appx. at 956 (resident defendant was fraudulently joined where plaintiff's claims against it were barred by res judicata); Jackson, 578 Fed.Appx. at 860-61 (affirming district court's finding of fraudulent joinder where facts foreclosing the possibility of a cause of action under the relevant Georgia laws were “undisputed” by plaintiff).

         Given the allegations of Tyler's complaint, therefore, and in view of Georgia's relaxed pleading standards, the Court concludes that Nationstar has failed to carry its heavy burden of proving by clear and convincing evidence that Shapiro, whose Georgia residency is not disputed, was fraudulently joined. See Phillips, 2014 WL 3970176, at *5 (citation omitted); Brown, 38 F.Supp.3d at 1322-26 (citations and internal marks omitted). Accordingly, since it is undisputed that both Shapiro and Tyler were citizens of Georgia for purposes of diversity jurisdiction, and since Shapiro's citizenship may not be disregarded under the doctrine of fraudulent joinder, it follows that complete diversity among the parties was absent when the complaint was removed from the Superior Court of Gwinnett County, Georgia. See Stephens v. Wal-Mart Stores E., LP, Civil Action No. 5:09-cv-325 (CAR), 2010 WL 1487213, at *1 (M.D. Ga. Apr. 12, 2010) (“Where [p]laintiff and one of the [d]efendants are both from Georgia, there is not complete diversity.”). As a consequence, the removal of this action to federal court was not properly based on diversity jurisdiction, and federal question jurisdiction serves as the sole basis for the Court's subject matter jurisdiction.

         B. Failure to Serve Shapiro pursuant to Rule 4 of the ...


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