Opinion
CASE NO. 3:08-CV-695-WKW [WO].
October 28, 2009
MEMORANDUM OPINION AND ORDER
Plaintiff Benjamin K. Mapp ("Mapp") has filed a motion (Doc. # 20) asking the court to reconsider its opinion (Doc. # 12) denying his motion to remand this case to state court or, in the alternative, to certify the denial of remand for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). A response in opposition was filed by Defendant Deutsche Bank National Trust Company ("Deutsche Bank") (Doc. # 23), to which Mapp filed a reply (Doc. # 24). For the reasons to follow, the motion for reconsideration is due to be denied, and the motion for certification is due to be granted.
Mapp also has requested oral argument. (Doc. # 20.) Because the court finds that the briefs are adequate and that oral argument will not materially aid in the resolution of the motion to reconsider, the request for oral argument is denied.
I. STANDARD OF REVIEW
A district court has broad discretion to reconsider an interlocutory order. See Toole v. Baxter Healthcare Corp., 235 F.3d 1307, 1315 (11th Cir. 2000); see also United States v. Acosta, 669 F.2d 292, 293 (5th Cir. Unit B 1982) ("[T]he district court has broad power to reconsider the correctness of its interlocutory rulings.") It may reconsider an interlocutory ruling "for any reason it deems sufficient." Canaday v. Household Retail Servs., Inc., 119 F. Supp. 2d 1258, 1260 (M.D. Ala. 2000), aff'd sub nom. Perry v. Household Retail, 268 F.3d 1067 (11th Cir. 2001).
Decisions of Unit B of the former Fifth Circuit are binding precedent in this circuit. See Stein v. Reynolds Sec., Inc., 667 F.2d 33, 34 (11th Cir. 1982).
II. BACKGROUND
Mapp originally filed this lawsuit in the Circuit Court of Chambers County, Alabama, against Deutsche Bank and GSPRM Loan Trust 2006-1 (collectively "Defendants"). In his complaint, Mapp claims that Defendants negligently, wantonly, and otherwise wrongfully attempted to foreclose on the mortgage on his home. He seeks unspecified compensatory and punitive damages, as well as injunctive relief preventing foreclosure. Deutsche Bank timely removed the action on the basis of diversity jurisdiction. Mapp moved to remand the case to state court. That motion was denied.
III. DISCUSSION
The sole issue presently is the amount in controversy. Mapp insists that the amount in controversy is his equity in the real estate. From Mapp's perspective, after subtracting the mortgage debt and other liens (about $113,500) from the value of the real estate (about $125,700), the value of the equity in his home is approximately $12,000, an amount well below the jurisdictional amount. (Doc. # 20, at 4.) However, in previously denying the motion to remand, this court found that the amount in controversy was the value of the real estate, at least $120,500, as established unambiguously by the note and mortgage, copies of which were included in the removal documents. (Doc. # 12, at 7.)
Other federal courts in Alabama, including three judges in this district, have taken one of four approaches to establish the amount in controversy in claims involving wrongful foreclosures: either (1) the value of the property; (2) the amount of the mortgage ( i.e., the balance due on the promissory note secured by the mortgage); (3) the value of a temporary delay of a foreclosure; or (4) a plaintiff's equity in the real estate subject to foreclosure. See Wood v. Option One Mortgage Corp., 580 F. Supp. 2d 1248, 1252 (N.D. Ala. 2008) (Hopkins, J.) (finding that allegation in complaint referencing the amount of the mortgage in a wrongful foreclosure case is not sufficient to establish jurisdictional amount); Horace v. Lasalle Bank Nat'l Ass'n, No. 08-1019, 2009 WL 426467, at *1-2 (M.D. Ala. Feb. 17, 2009) (Thompson, J.) (same); James v. U.S. Bank Nat'l Assoc., No. 09-247, 2009 WL 2170045, at *2 (M.D. Ala. July 17, 2009) (Thompson, J.) (finding that the amount in controversy is not the value of the property but rather the value of a temporary delay of a foreclosure); Carstarphen v. Deutsche Bank Nat'l Trust Co., No. 08-0511, 2009 WL 1537861, at *4-5 (S.D. Ala. June 1, 2009) (Steele, J.) (same); Sanders v. Homecomings Fin. LLC, No. 08-369, 2009 WL 1151868, at *3 (M.D. Ala. April 29, 2009) (Fuller, C.J.) (finding that the plaintiff's interest is not the value of the mortgage but rather his equity in the home); Ingram v. Countrywide Home Loans, No. 08-251 (M.D. Ala. July 14, 2008) (Walker, J.) (same).
In view of the diversity of opinion, this court ought to have rendered a more thorough analysis than the issue has been given thus far by any of the referenced courts, including this one in its first opinion. Although Mapp's motion for reconsideration has been carefully considered, the initial ruling has not changed for the reasons stated below.
A. Calculating the Amount in Controversy 1. The Value of Declaratory and Injunctive Relief
As the parties are aware, when declaratory or injunctive relief is sought, "`it is well established that the amount in controversy is measured by the value of the object of the litigation.'" Ericsson GE Mobile Commc'ns, Inc. v. Motorola Commc'ns Elecs., Inc., 120 F.3d 216, 218 (11th Cir. 1997) (quoting Hunt v. Wash. State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977)). The Eleventh Circuit has paraphrased Ericsson's holding this way: "In other words, the value of the requested injunctive relief is the monetary value of the benefit that would flow to the plaintiff if the injunction were granted." Cohen v. Office Depot, Inc., 204 F.3d 1069, 1077 (11th Cir. 2000). In the Eleventh Circuit, the value of the object of the litigation is measured solely from the plaintiff's perspective; the value to the defendant is irrelevant. See Ericsson, 120 F.3d at 219-20. The plaintiff's viewpoint rule, however, does not permit a plaintiff to set subjectively the value of the object of the litigation. Rather, the cases upon which the Ericsson court relied emphasized that the relevant "value" is the value of the right that the plaintiff is seeking to enforce. See id. (citing Vraney v. County of Pinellas, 250 F.2d 617 (5th Cir. 1958); Alfonso v. Hillsborough County Aviation Auth., 308 F.2d 724 (5th Cir. 1962)). Nor can the value include benefits that are "speculative and immeasurable." Id. at 221-22.
The sole claim for relief in Ericsson was injunctive relief.
2. Alabama Mortgage and Foreclosure Law
A mortgage is at bottom a contract. It is a contract that secures payment of another contract, a promissory note. In Alabama, a mortgage conveys fee simple title subject to a condition subsequent that, if the debt created by the promissory note is paid according to its terms, title will revert to the mortgagor. See Trauner v. Lowrey, 369 So. 2d 531, 534 (Ala. 1979). Although it is commonly referred to as a mortgage lien, technically, a mortgage in Alabama does not create a lien. Id. The mortgagor, having conveyed fee simple title to the mortgagee subject to a condition subsequent, retains an equity of redemption. Bailey Mortgage Co. v. Gobble-Fite Lumber Co., 565 So. 2d 138, 143 (Ala. 1990).
The complaint affirms the contractual nature of some of the claims: "The underlying action is based on a contract. . . . The action is brought to enforce the contractual remedies allowed in paragraph 22 of the mortgage document." (Compl. ¶ 4.) Paragraphs 13 and 21 reference conditions precedent and paragraph 10 refers to the "security agreement that underlies [the] foreclosure action." Id.
Like many other states, including Georgia, but not Florida, Alabama allows nonjudicial foreclosure under a power of sale in the mortgage instrument. Ala. Code §§ 35-10-1, et seq. A foreclosure sale in Alabama is basically a public sale conducted by the agreement of the parties, that agreement being the power of sale contained in the mortgage instrument. Nonjudicial foreclosure is the usual method of foreclosing on mortgages in Alabama. See David E. Hudgens, An Advanced Look at Alabama Real Estate Law (2004 National Business Institute). A foreclosure sale terminates the mortgagor's equity of redemption and entitles the mortgagor to a statutory right of redemption. Ala. Code §§ 6-5-247 et seq.; 35-10-1, 5, 11h; Dominex, Inc. v. Key, 456 So. 2d 1047, 1052-53 (Ala. 1984). The purchaser at a foreclosure sale obtains fee simple determinable title, and the condition determinable on the title is the mortgagor's statutory right of redemption. Dominex, 456 So. 2d at 1057.
Florida is a judicial foreclosure jurisdiction. See Fla. Stat. §§ 702.01-.10.
At a foreclosure sale, the property is always sold to the highest bidder for cash. "Because any excess must be paid to junior lien holders or the mortgagor, determining the appropriate bid price is important. . . ." Hudgens, supra, at 7. To protect its financial interests, a mortgagee will typically bid the lower of the mortgage debt or the appraised fair market value of the property. William L. Longshore III, Real Property Foreclosure Procedures, at 9 (National Business Institute 2004). If there are third-party bidders, the opening bid price will be made by the mortgagee. Id. The mortgagee owes the mortgagor the duty of conducting the sale in good faith and in a fair manner. See Springer v. Baldwin County Fed. Sav. Bank, 562 So. 2d 138, 139 (Ala. 1989). The sale price must not be so shockingly low or inadequate as to be unconscionable. Mt. Carmel Estates, Inc. v. Regions Bank, 853 So. 2d 160, 168 (Ala. 2002). The sale price is closely tied to fair market value to protect the mortgagor, junior mortgagees, and other lien holders. See Austin Apparel, Inc. v. Bank of Prattville, 872 So. 2d 158 (Ala. Civ. App. 2003). If the value of the property is less than the mortgage balance, the recommended course is to bid the fair market value, not the mortgage balance, as the former allows recovery of the deficiency from the mortgagor after the foreclosure sale. Longshore, supra, at 9. In sum, it is the value of the property that feeds the foreclosure formula.
In a foreclosure sale, the condition subsequent is extinguished and title to the real estate is formally transferred. The sale results in a foreclosure deed to the purchaser which is normally recorded in the probate office like any other deed. The property sells at fair market value, not the "equity" claimed by the mortgagor. The fair market value (such as it is in the foreclosure market) is paid for the property, and cash generated by the sale is transferred to the mortgagee to settle the promissory note debt and expenses of sale. While this is frequently a transaction "on the books" of the mortgagee, the financial aspect of a foreclosure sale is essentially like any other sale of real estate in that the proceeds are divided among various claimants. The primary benefit flowing to the mortgagor is cancellation of the debt, at least up to the value of the real estate. The only way the "equity" of the mortgagor is ever a factor is if the property sells for more than the accumulated debts and expenses associated with the mortgage, junior mortgagees and other lien holders. Even then, the full purchase price changes hands after the sale, and the funds are allocated among the interested parties according to the contracts and law, with any "equity" going to the mortgagor. Therefore, the enjoinder of a foreclosure sale prohibits a transaction involving the whole value of the property.
In most cases, the mortgagee will be buying the property at the foreclosure sale. Longshore, supra, at 9.
Stated differently, ownership of property is often referred to as a "bundle of rights," NCNB Texas Nat'l Bank, N.A. v. West, 631 So. 2d 212, 223 (Ala. 1993), and at least one of those rights, the right of peaceful possession and enjoyment of the property at stake, is implicated in actions alleging wrongful foreclosure. See Gatter v. Cleland, 87 F.R.D. 66, 69 (E.D. Pa. 1980) ("In this action, plaintiffs seek to enjoin the private lenders from foreclosing their mortgages. Thus, the property right sought to be protected is the right to peaceful possession and enjoyment of the homes, not merely the right to the equity owned therein.").
"The most appropriate way to measure the value of th[e rights at stake when a foreclosure is at issue] is the value of the property itself." Garland v. Mortgage Elec. Registration Sys., Inc., Nos. 09-71, 09-72, 09-342, 09-430, 2009 WL 1684424, at *2 (D. Minn. June 16, 2009); see id. at *4 (finding that, in an action on the validity of a foreclosure, the "fundamental dispute . . . is about who owns the property"). This circuit has long recognized this principle. See Frontera Transp. Co. v. Abauza, 271 F. 199, 201 (5th Cir. 1921) (holding, in a suit to cancel a mortgage and remove the mortgage as a cloud on title, that "the value of the lands, not the amount required to redeem, is the amount in controversy"). Similarly, the Eleventh Circuit more recently held that, in an action for specific performance of a contract to purchase land, the fair market value of the property, and not the contract price, established the amount in controversy. Occidental Chem. Corp. v. Bullard, 995 F.2d 1046, 1048 (11th Cir. 1993). 3. Application
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) ( en banc), the Eleventh Circuit Court of Appeals adopted as binding precedent all of the decisions of the former Fifth Circuit Court of Appeals that were handed down prior to the close of business on September 30, 1981. Frontera was cited in the prior opinion, but neither party has addressed it. (Doc. # 12, at 7.)
The same analysis holds for other areas of real estate law. Frontera cited Greenfield v. United States Mortgage Co. of Scotland, Ltd., 133 F. 784 (E.D. Ark. 1904), a case in which the court considered a motion to remand for a lack of the jurisdictional amount in controversy in an action to redeem after foreclosure. The court held that the law of quieting title, proceedings to collect rent on premises that were the subject of a failed purchase agreement, and proceedings to set aside fraudulent conveyances were informative in the foreclosure arena when considering the amount in controversy:
But the equitable as well as the legal considerations involved in the cause are to be considered. The effect of the judgment is to adjust the legal and equitable claims of the parties to the subject of the suit. The subject of the suit is not merely the amount of rent claimed, but the title of the respective parties to the land under the contract.
. . .
For the purpose of determining the jurisdictional amount in a bill to quiet title, the whole value of the property, the possession or enjoyment of which is threatened by Defendant, is the measure of the value of the matters in controversy.
. . . .
In a proceeding to set aside certain conveyances as fraudulent and a cloud upon the plaintiff's title, the matter in dispute is the value of the land in controversy.Id. at 788 (internal quotation marks and citations omitted). Greenfield summed up the unifying principle: "This being an action involving the title to lands, and their value being in excess of the [jurisdictional amount], the necessary diversity of citizenship existing, it was properly removed, and the motion to remand must be overruled." Id.
In the instant case, Mapp seeks, among other requested relief including damages, to enjoin Defendants from foreclosing on his property. (Compl. ¶ 4.) Notwithstanding the fact that Alabama is a title theory state, Bailey Mortgage Co. v. Gobble-Fite Lumber, 565 So. 2d 138, 143 (Ala. 1990), and that the mortgagee therefore holds legal title to the property, the mortgagor, for all equitable and practical purposes, is deemed the "owner" of the property. Thus, Mapp's ownership interest in the real property — and the value thereof — is at stake in this litigation.
At least one of the bundle of property rights that Mapp is seeking to enforce or protect through this litigation is his right to peacefully possess and enjoy his home. See Gatter, 87 F.R.D. at 69. He is not seeking merely to delay Defendants' foreclosure action or to obtain the value of the equity in his home. Foreclosure will require him to vacate his home and will cost him its title. From Mapp's perspective, then, it is the whole title and its "bundle of rights" at issue. NCNB Texas Nat'l Bank, 631 So. 2d at 222.
To employ Cohen's phraseology, if the injunction were permanently granted, the benefits obtained by Mapp would be the right to retain ownership of and title to his home, as well as the right to occupy the home. See 204 F.3d at 1077. Ownership, title and possession, thus, are not only the objects of this lawsuit, see Hunt, 432 U.S. at 347, but similarly represent the value of the rights sought to be protected by an injunction enjoining the foreclosure, see Ericsson, 120 F.3d at 347. In monetary terms, these benefits, objects and rights are best measured by the value of the home itself.
To determine whether the value of Mapp's property meets the jurisdictional amount, the court is limited to examining Defendants' removal documents. Lowery v. Ala. Power Co., 483 F.3d 1184, 1213-14 (11th Cir. 2007). Removal documents include contracts underlying the causes of action. Id. at 1214 n. 66. If the initial complaint and the notice of removal do not "unambiguously establish federal jurisdiction," id. at 1213, "neither the defendants nor the court may speculate in an attempt to make up for the notice's failings," id. at 1214-15 (citation omitted). Therefore, the determination is a rather simple process: "If the jurisdictional amount is either stated clearly on the face of the documents before the court, or readily deducible from them, then the court has jurisdiction. If not, the court must remand." Id. at 1211.
The removal documents consist of the Notice of Removal, the state court complaint, and the note and mortgage at issue between the parties. The latter two documents are contracts that establish the fair market value of Mapp's property interest, which undisputedly exceeds the jurisdictional amount. Because jurisdiction was evident from the removal documents, the motion to remand was denied.
Ordinarily, important state law issues should be decided by state courts. Neither party specifically briefed this point. On balance, the law of amount in controversy with respect to title to real estate and contracts is sufficiently clear to satisfy the removal standard and to overcome abstention concerns.
Therefore, in sum, the case is removable when viewed from a real property perspective or a contract perspective. And not to be overlooked here is that there is more freight on the dock that just an injunction. Mapp repeatedly alleges that Defendants lack standing to foreclose (Compl. ¶¶ 10, 23, 50) and that the assignment between non-party Bank of America and Deutsche Bank is "defective, void, or otherwise unenforceable" (Compl. ¶ 12), or "void, voidable, illegal, without legal effect and is otherwise invalid and unenforceable as a matter of law." (Compl. ¶ 24). Moreover, Mapp claims in a separate paragraph of the complaint that "the foreclosing entity lacks standing to pursue foreclosure . . . and that to allow it to foreclose could cause the petitioner to lose his home without being relieved of his contractual obligation on the debt." (Compl. ¶ 50.) Obviously, Mapp has pled the whole debt into issue, and he cannot now complain that the action is freighted with his own load of allegations. Injunctive relief hardly establishes the amount in controversy when so many substantive issues are in play. Accordingly, the court finds that Mapp's motion for reconsideration is due to be denied.
B. Interlocutory Appeal
Nevertheless, this case meets the requirements of 28 U.S.C. § 1292(b). Because federal courts in Alabama, indeed within this district, disagree on how to measure the value of the object of the litigation when foreclosure is involved, the court finds that this "order involves a controlling question of law as to which there is a substantial ground for difference of opinion" on how to view the amount in controversy. § 1292(b). The court further finds that "an immediate appeal from th[is] order may materially advance the ultimate termination of the litigation[.]" Id. The court, therefore, finds that Mapp's motion for certification is due to be granted.
IV. CONCLUSION
Accordingly, it is ORDERED that Mapp's motion for reconsideration (Doc. # 20) is DENIED.
It is further ORDERED that Mapp's motion for certification of this interlocutory order as appealable (Doc. # 20) is GRANTED.
A copy of this checklist is available at the website for the USCA, 11th Circuit at www.ca11.uscourts.gov Effective on April 9, 2006, the new fee to file an appeal will increase from $255.00 to $455.00. CIVIL APPEALS JURISDICTION CHECKLISTAppealable Orders 28 U.S.C. § 1291 28 U.S.C. § 158Pitney Bowes, Inc. v. Mestre 701 F.2d 1 365 1 28 U.S.C. § 636 In cases involving multiple parties or multiple claims, 54Williams v. Bishop 732 F.2d 885 885-86 Budinich v. Becton Dickinson Co. 108 S.Ct. 1717 1721-22 100 L.Ed.2d 178LaChance v. Duffy's Draft House, Inc. 146 F.3d 832 837 Appeals pursuant to 28 U.S.C. § 1292(a): Appeals pursuant to 28 U.S.C. § 1292(b) and Fed.R.App.P. 5: 28 U.S.C. § 1292 Appeals pursuant to judicially created exceptions to the finality rule: Cohen v. Beneficial Indus. Loan Corp. 337 U.S. 541 546 93 L.Ed. 1528Atlantic Fed. Sav. Loan Ass'n v. Blythe Eastman Paine Webber, Inc. Gillespie v. United States Steel Corp. 379 U.S. 148 157 85 S.Ct. 308 312 13 L.Ed.2d 199 Time for Filing Rinaldo v. Corbett 256 F.3d 1276 1278 4 Fed.R.App.P. 4(a)(1): 3 THE NOTICE MUST BE RECEIVED AND FILED IN THE DISTRICT COURT NO LATER THAN THE LAST DAY OF THE APPEAL PERIOD — no additional days are provided for mailing. Fed.R.App.P. 4(a)(3): Fed.R.App.P. 4(a)(4): Fed.R.App.P. 4(a)(5) and 4(a)(6): Fed.R.App.P. 4(c): 28 U.S.C. § 1746 Format of the notice of appeal See also 3 Effect of a notice of appeal 4
1. : Courts of Appeals have jurisdiction conferred and strictly limited by statute: (a) Appeals from final orders pursuant to : Only final orders and judgments of district courts, or final orders of bankruptcy courts which have been appealed to and fully resolved by a district court under , generally are appealable. A final decision is one that "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." , , 368 (11th Ci r. 1 983). A magistrate judge's report and recommendation is not final and appealable until judgment thereon is entered by a district court judge. (c). (b) a judgment as to fewer than all parties or all claims is not a final, appealable decision unless the district court has certified the judgment for immediate review under Fed.R.Civ.P. (b). , , (11th Cir. 1984). A judg ment which resolves all issues except matters, such as attorneys' fees and costs, that are collateral to the merits, is immediately appealable. , 486 U.S. 196, 201, , , (1988); , , (11th Cir. 1998). (c) Appeals are permitted from orders "granting, continuing, modifying, refusing or dissolving injunctions or refusing to dissolve or modify injunctions . . ." and from "[i]nterlocutory decrees . . . determining the rights and liabilities of parties to admiralty cases in which appeals from final decrees are allowed." Interlocutory appeals from orders denying temporary restraining orders are not permitted. (d) The certification specified in (b) must be obtained before a petition for permission to appeal is filed in the Court of Appeals. The district court's denial of a motion for certification is not itself appealable. (e) Limited exceptions are discussed in cases including, but not limited to: , , , 69S.Ct. 1221, 1225-26, (1949); , 890 F.2d 371, 376 (11th Cir. 1989); , , , , , (1964). 2. : The timely filing of a notice of appeal is mandatory and jurisdictional. , , (11th Cir. 2001). In civil cases, Fed.R.App.P. (a) and (c) set the following time limits: (a) A notice of appeal in compliance with the requirements set forth in Fed.R.App.P. must be filed in the district court within 30 days after the entry of the order or judgment appealed from. However, if the United States or an officer or agency thereof is a party, the notice of appeal must be filed in the district court within 60 days after such entry. Special filing provisions for inmates are discussed below. (b) "If one party timely files a notice of appeal, any other party may file a notice of appeal within 14 days after the date when the first notice was filed, or within the time otherwise prescribed by this Rule 4(a), whichever period ends later." (c) If any party makes a timely motion in the district court under the Federal Rules of Civil Procedure of a type specified in this rule, the time for appeal for all parties runs from the date of entry of the order disposing of the last such timely filed motion. (d) Under certain limited circumstances, the district court may extend the time to file a notice of appeal. Under Rule 4(a)(5), the time may be extended if a motion for an extension is filed within 30 days after expiration of the time otherwise provided to file a notice of appeal, upon a showing of excusable neglect or good cause. Under Rule 4(a)(6), the time may be extended if the district court finds upon motion that a party did not timely receive notice of the entry of the judgment or order, and that no party would be prejudiced by an extension. (e) If an inmate confined to an institution files a notice of appeal in either a civil case or a criminal case, the notice of appeal is timely if it is deposited in the institution's internal mail system on or before the last day for filing. Timely filing may be shown by a declaration in compliance with or a notarized statement, either of which must set forth the date of deposit and state that first-class postage has been prepaid. 3. : Form 1, Appendix of Forms to the Federal Rules of Appellate Procedure, is a suitable format. Fed.R.App.P. (c). A pro se notice of appeal must be signed by the appellant. 4. : A district court loses jurisdiction (authority) to act after the filing of a timely notice of appeal, except for actions in aid of appellate jurisdiction or to rule on a timely motion of the type specified in Fed.R.App.P. (a)(4).