Opinion
No. 14-cv-2065-STA-dkv
03-26-2014
FEDERAL NATIONAL MORTGAGE ASSOCIATION, Plaintiff, v. CHEREE JAA, Defendant.
REPORT AND RECOMMENDATION ON PLAINTIFF'S MOTION TO REMAND AND
FOR ATTORNEY FEES
Before the court is the motion of the plaintiff, Federal National Mortgage Association ("FNMA"), pursuant to 28 U.S.C. § 1447, seeking to remand this case to the General Sessions Court of Shelby County, Tennessee for lack of subject matter jurisdiction and to recover attorney fees, pursuant to 28 U.S.C. § 1447(c), incurred as a result of the removal of this case to federal court. (Pl.'s Mot. to Remand, D.E. 6.)
On January 27, 2014, the defendant, Cheree Jaa ("Jaa"), proceeding pro se, filed a notice of removal that purported to remove an action titled Federal National Mortgage Association v. Cheree Jaa or Current Occupants, No. 1665281, from the Shelby County Court of General Sessions. (Notice of Removal, D.E. 1.) Jaa filed a motion to proceed in forma pauperis, (D.E. 2), which was granted on January 29, 2014, (D.E. 4). On February 27, 2014, FNMA filed the present motion to remand and for attorney fees. Jaa filed a response in opposition on March 18, 2014. (D.E. 7.) This case has been referred to the United States Magistrate Judge for management and for all pretrial matters for determination and/or report and recommendation as appropriate. (Admin. Order 2013-05, Apr. 29, 2013.) For the reasons that follow, it is recommended that this case be dismissed for lack of subject matter jurisdiction, that this case be remanded to Shelby County Court of General Sessions pursuant to 28 U.S.C. § 1447, and that FNMA's motion for attorney fees be granted.
I. PROPOSED FINDINGS OF FACT
This action arises out of the foreclosure sale of a parcel of real property located at 4444 Princeton Road, Memphis, Tennessee ("the Princeton property") on November 27, 2013 due to default on a loan secured by a deed of trust on the Princeton property. The deed of trust named Holly Jeter and Cheree Jaa-Jeter, the named defendant in the underlying action, as the borrowers. (Deed of Trust, Shelby County Register, Instr. No. HY9507.) At the foreclosure sale, FNMA purchased the Princeton property. A trustee's deed conveying the Princeton property to FNMA was executed on December 3, 2013 and recorded in the Office of the Shelby County Register of Deeds on December 5, 2013 bearing Instrument No. 13144471.
On December 30, 2013, FNMA filed an unlawful detainer action, No. 1665281, in the Shelby County Court of General Sessions, seeking "$0-possession only" of the Princeton property and naming "Cheree Jaa or Current Occupants" as the defendants. (Detainer Warrant, Notice of Removal, D.E. 1.) On January 27, 2014, Jaa filed the Notice of Removal at issue in the present motion.
Jaa alleges in her Notice of Removal that she is a defendant in the Detainer Warrant and that removal is proper pursuant to 28 U.S.C. §§ 1332(a) based on diversity jurisdiction "as the amount of the subject property in controversy exceeds the sum of value of $75,000 exclusive of costs and interest, and the action is between citizens of different states." (Notice of Removal, D.E. 1 at 2.) In the Notice of Removal, Jaa lists her address as 191 Viking Drive, Cordova, Tennessee. ( Id. at 3.) She also states that venue is proper pursuant to 28 U.S.C. §§ 1441(a) and 1446(a). (Id.)
There was no Civil Cover Sheet filed by Jaa.
In support of remand, FNMA insists the court lacks subject matter jurisdiction. (Pl.'s Mem. in Supp. of Mot. to Remand, D.E. 6-1 at 1.) FNMA further insists that Jaa is not an occupant of the Princeton property and thus she is not a proper party to remove this action. (Id. at 2.)
I. PROPOSED CONCLUSIONS OF LAW
A. Subject-Matter Jurisdiction
As an initial matter, the court must determine whether it has subject-matter jurisdiction over this action. The court will assume for purposes of the jurisdictional analysis that Jaa is a proper party in this case. FNMA argues that none of the federal statutes cited by Jaa in the Notice of Removal support removal of this case.
"A party seeking to invoke the jurisdiction of the federal courts . . . bears the burden of establishing that such jurisdiction exists." Ohio ex rel. Skaggs v. Brunner, 549 F.3d 468, 474 (6th Cir. 2008)(per curiam). When considering a motion to remand, the court looks to "whether the action was properly removed in the first place." Ahearn v. Charter Twp. of Bloomfield, 100 F.3d 451, 453 (6th Cir. 1996). "Removing defendants bear the burden of establishing federal subject-matter jurisdiction." Id. at 453-54.
"Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree. It is to be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction." Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994); see also Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986)("Federal courts are not courts of general jurisdiction; they have only the power that is authorized by Article III of the Constitution and the statutes enacted by Congress pursuant thereto."); Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 701 (1982)("Federal courts are courts of limited jurisdiction. The character of the controversies over which federal judicial authority may extend are delineated in Art. III, § 2, cl. 1. Jurisdiction of the lower federal courts is further limited to those subjects encompassed within a statutory grant of jurisdiction."); Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978)("It is a fundamental precept that federal courts are courts of limited jurisdiction.").
1. Diversity Jurisdiction
In her Notice of Removal, Jaa relies on diversity of citizenship jurisdiction under 28 U.S.C. § 1332(a) as grounds for this court's jurisdiction. (Notice of Removal, D.E. 1 at 1.) Diversity of citizenship means that the action is between "citizens of different States." 28 U.S.C. § 1332(a). According to 28 U.S.C. § 1332, "[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of different States." A federal court has jurisdiction under § 1332 only if there is "complete diversity between all plaintiffs and all defendants." Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005)(citations omitted). "To establish diversity jurisdiction, one must plead the citizenship of the corporate and individual parties." Naartex Consulting Corp. v. Watt, 722 F.2d 779, 792 n.20 (D.C. Cir. 1983); see also Johnson v. New York, 315 F. App'x 394, 395 (3d Cir. 2009)(per curiam); Sanders v. Clemco Indus., 823 F.2d 214, 216 (8th Cir. 1987)(complaint did not properly allege diversity jurisdiction); Leys v. Lowe's Home Ctrs., Inc., 601 F. Supp. 2d 908, 912-13 (W.D. Mich. 2009)(complaint and notice of removal did not adequately establish diversity jurisdiction); Ellis v. Kaye-Kibbey, No. 1:07-cv-910, 2008 WL 2696891, at *2-3 (W.D. Mich. July 1, 2008)(dismissing complaint for failure to adequately allege facts establishing diversity of citizenship despite conclusory allegation that diversity exists); 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1208 (3d ed. 2004). Pursuant to 28 U.S.C. § 1332(c)(1), "a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business."
The Detainer Warrant does not indicate the citizenship of the parties. In her Notice of Removal, Jaa gives a Tennessee address and states that "Fannie Mae is a Delaware Corporation and its principle [sic] office is in Washington, D.C." (D.E. 1 at 2.) The court finds therefore that Jaa is a citizen of Tennessee and FNMA is a citizen of another state for purposes of diversity jurisdiction.
FNMA argues nevertheless that the amount-in-controversy requirement for diversity jurisdiction is not met because the Detainer Warrant sought possession only and "$0" in damages. In her response to the motion to remand, Jaa argues "the subject property exceeds the values of $75,000." (Def.'s Resp., D.E. 7 at 2.) In her Notice of Removal, Jaa does not state the fair market value of the Princeton property but alleges that "the amount of the subject property in controversy exceeds the sum or value of $75,000." (Notice of Removal, D.E. 7 at 2.) The Detainer Warrant does not indicate the fair market value of the Princeton property.
In the Sixth Circuit, it is generally agreed that the amount controversy is determined "from the perspective of the plaintiff, with a focus on the economic value of the rights he seeks to protect." Williamson v. Aetna Life Ins. Co., 481 F.3d 369, 376-7 (6th Cir. 2007). The amount in controversy is determined by the allegations in the complaint. Thornton v. Comerica Bank, 510 F. App'x 439, 440 (6th Cir. 2013)("Courts discern the amount in controversy by consulting the face of the complaint and accepting the plaintiff's good faith allegations."). "The determination of the value of the matter in controversy for purposes of federal jurisdiction is a federal question to be decided under federal standards, although the federal courts must . . . look to state law to determine the nature and extent of the right to be enforced in a diversity case." Horton v. Liberty Mut. Ins. Co., 367 U.S. 348, 352-53 (1961). The burden is on the removing party to show the amount in controversy meets the threshold requirement. Williamson, 481 F.3d at 376.
FNMA brought an unlawful detainer action for possession only of the Princeton property under Tennessee state law pursuant to Tenn. Code Ann. § 29-18-104. By statute, the general sessions judge trying the case is authorized to ascertain the arrearage of rent, interest, and damages, if any, and render a monetary judgment for the plaintiff. Tenn. Code Ann. § 29-18-125. Title to the Princeton property was effectively transferred to FNMA by trust deed on December 3, 2013, following FNMA's purchase of the property at the foreclosure sale. Accordingly, a landlord-tenant relationship arose between FNMA and the occupant of the Princeton property giving FNMA constructive possession of the property such that it could maintain an unlawful detainer action against the occupant. See Self Help Ventures Fund v. Robilio, No. W2009-00368-COA-R3-CV, 2010 WL 2176093, at *4 (Tenn. Ct. App. 2011), appeal denied, Jan. 13, 2011, cert. dismissed, 131 S.Ct. 1548 (2011).
Thus, title to the Princeton property was not an issue. The only damages that could have been awarded in the unlawful detainer action under state law were damages for back rent, interest, and attorney fees. If Jaa had occupied the property, she could have been liable for back rent for approximately two months from the time FNMA took possession of the property on December 3, 2013 up to Monday, January 27, 2014, the date of the General Sessions trial, but there is no indication that Jaa occupied the property. At the time she filed the Notice of Removal, she listed her current address at another location. If FNMA had obtained a writ of possession and the occupant appealed, FNMA would have been required to post a bond in double the amount of one year's rent of the premises pursuant to Tenn. Code Ann. § 29-18-130(b)(2), conditioned on paying all costs and damages accruing from wrongful enforcement of a writ of possession. The court concludes that state law values the interest to be protected as double the value of one year's rent. Jaa has made no showing of the rental value of the property. Thus, this court finds that Jaa has failed to establish the requisite jurisdictional amount necessary for the exercise of diversity jurisdiction.
In a similar case, another judge in this district concluded that even though a party seeks possession only in a dispute over real property, the amount-in-controversy requirement might still be satisfied if the fair market value of the property exceeds the $75,000 amount. See Wells Fargo Del. Trust v. Terry Lee, Civil Action No. 13-CV-2708-SHM-dkv, 2014 WL 28837, at *2 (W.D. Tenn. Jan. 2, 2014)(order adopting in part Report and Recommendation and remanding case to General Sessions Court but finding that detainer warrant seeking possession only of property worth $125,000 may satisfy the amount-in-controversy requirement). In reaching this conclusion, the judge relied on a case out of the Southern District of Texas, Morlock, L.L.C. v. JPMorgan Chase Bank, N.A., No. H-13-0734, 2013 WL 5781240, at *6 (S.D. Tex. Oct. 25, 2013)(incorrectly cited in the opinion as 2013 WL 4056180), which is distinguishable from the present case.
In addition, the Wells Fargo v. Lee decision is not binding on this court.
In Morlock, the plaintiff filed an action in Texas state court seeking a declaratory judgment as to the defendant Chase's interest in the real property and an injunction restraining Chase from selling the property at a foreclosure sale and from obtaining or enforcing a writ of possession. Morlock, 2013 WL 5781240, at *1. The defendant Chase removed the action to federal court on the basis of diversity jurisdiction, and the plaintiff Morlock filed a motion to remand, arguing that the requisite jurisdictional amount for diversity jurisdiction had not been met. Id. at *2. Because the right to be protected in the state court action was Morlock's ownership interest in the property, including his right of exclusive possession, the Morlock court denied remand, holding that the value of the right to be protected in an action seeking injunctive relief to prevent Chase from foreclosing on the property was the fair market value of the real property, which exceeded the jurisdictional threshold amount. Id. at *5-6. In the present case, Jaa's ownership interest in the property is not at issue, and under Tennessee state law, the value of possession is determined by the rental value of the property not the fair market value.
Regardless of whether the jurisdictional amount is satisfied, Jaa is barred from removing this action to federal court by 28 U.S.C. § 1441(b)(2) because Jaa is a citizen of Tennessee. That statute provides: "A civil action otherwise removable solely on the basis of the jurisdiction under section 1332(a) of this title may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." As a Tennessee citizen who was sued in a Tennessee state court, Jaa is barred from removing this action under 28 U.S.C. § 1441(b)(2). Thus, the court lacks subject matter jurisdiction based on diversity of citizenship.
2. Federal Question Jurisdiction
The court must also determine if it has federal question jurisdiction pursuant to 28 U.S.C. § 1331. Section 1331 states that a federal district court has federal question jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. "Whether a claim presents a federal question is determined by looking to the plaintiff's statement of his own claim." Lexington-Fayette Urban Cnty. Gov't Civil Serv. Comm'n v. Overstreet, 115 F. App'x 813, 816 (6th Cir. 2004)(internal quotation marks omitted). "[T]he principle governing removal is this: the right or immunity created by the Constitution, a treaty, or other federal law that is claimed to provide the basis for bringing the state court case into the federal system by way of removal be an essential element of the plaintiff's properly pleaded claim for relief." 14B Charles Alan Wright, Arthur R. Miller, Edward H. Cooper & Joan E. Steinman, Federal Practice and Procedure § 3722 (4th ed. 2009).
In determining whether a claim arises under federal law, we look only to the well-pleaded allegations of the complaint and ignore potential defenses that the defendant may raise. Even defenses that rely on the preclusive effect of a prior federal judgment or the pre-emptive effect of a federal statute, or that are anticipated in the plaintiff's complaint are irrelevant, as they do not form part of a plaintiff's properly pleaded statement of his or her claim. Although the well-pleaded-complaint rule focuses on what the plaintiff alleges, it allows a court to look past the words of a complaint to determine whether the allegations, no matter how the plaintiff casts them, ultimately involve a federal question. In addition to causes of action expressly created by federal law, federal-question removal thus also reaches ostensible state-law claims that (1) necessarily depend on a substantial and disputed federal issue, (2) are completely preempted by federal law or (3) are truly federal-law claims in disguise.Ohio ex rel. Skaggs v. Brunner, 549 F.3d 468, 474-75 (6th Cir. 2008)(internal quotation marks, alterations, & citations omitted).
In this case, no federal question appears on the face of FNMA's Detainer Warrant. As previously stated, the only claim in this case is FNMA's unlawful detainer action for possession of the Princeton property under Tennessee state law pursuant to Tenn. Code Ann. § 29-18-101 et seq. Jaa does not assert a basis for federal-question jurisdiction in her Notice of Removal, and the court can find none. Thus, there is no federal-question jurisdiction.
The court finds, therefore, that there is no basis for the exercise of federal subject-matter jurisdiction in this case, either through federal-question or diversity of citizenship. B. Attorney Fees
FNMA seeks an award of its attorney fees incurred as a result of Jaa's improper removal. Pursuant to 28 U.S.C. § 1447(c), "[a]n order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." Attorney fees are only appropriate "where the removing party lacked an objectively reasonable basis for seeking removal." Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). As noted by the Supreme Court in Martin, the district court retains discretion in the determination of whether to award attorney fees for improper removal:
The appropriate test for awarding fees under § 1447(c) should recognize the desire to deter removals sought for the purpose of prolonging litigation and imposing costs on the party, while not undermining Congress' basic decision to afford defendants a right to remove as a general matter, when the statutory criteria are satisfied.Id. at 140-41.
Jaa has not provided the court with any information demonstrating a possessory interest in the Princeton property or her basis for removing the action to federal court. Jaa merely indicated in her Notice of Removal that jurisdiction is based on diversity of citizenship.
Based on the lack of information, the court can find no objectively reasonable basis for Jaa's removal of this case to federal court. The court can only surmise that Jaa's removal is intended to delay the state court proceedings. Recognizing that such litigation-prolonging tactics should be deterred and counterbalancing the need to preserve a defendant's right to removal, the court recommends that FNMA's attorney fees incurred as a result of this removal be assessed against Jaa.
Attached to FNMA's motion for remand is the affidavit of Edward D. Russell, attorney for FNMA. The affidavit sets forth attorney fees and expenses in the amount of $1,290 incurred in preparing and filing the motion to remand. The court finds the services rendered, the rate charged, and the total attorney fees and expenses to be reasonable.
II. RECOMMENDATION
For the foregoing reasons, the court recommends that this case be dismissed for lack of subject matter jurisdiction and that the case be remanded to Shelby County Court of General Sessions.
The court further recommends that attorney fees be awarded to FNMA pursuant to 28 U.S.C. § 1447 in the amount of $1,290.
Respectfully submitted this 26th day of March, 2014.
__________
DIANE K. VESCOVO
UNITED STATES MAGISTRATE JUDGE
NOTICE
Within fourteen (14) days after being served with a copy of this report and recommended disposition, a party may serve and file written objections to the proposed findings and recommendations. A party may respond to another party's objections within fourteen (14) days after being served with a copy. FED. R. CIV. P. 72(b)(2). Failure to file objections within fourteen (14) days may constitute a waiver of objections, exceptions, and further appeal.