Opinion
1:03CV00527.
July 14, 2003.
ORDER AND JUDGMENT
This case comes before the Court on Respondents, Haywood M. Clayton and Sylvia K. Clayton's ("Claytons") Petition for Removal (entitled "Removal of State Claim") filed on June 9, 2003 [Document #1], and a Motion to Intervene [Document #4], and a Motion to Remand by Ameriquest [Document #2], filed on behalf of Ameriquest Mortgage Company ("Ameriquest") by its counsel all arising out of the referenced foreclosure proceeding filed in the Superior Court of Orange County, North Carolina (03 SP 125) (the "Foreclosure Action"). Also before the Court at the scheduled June 24, 2003 hearing was a Motion by the Claytons in case number 1:02:CV00415 for a Temporary Restraining Order and Preliminary Injunction [Document #116] to enjoin Ameriquest from proceeding in the Foreclosure Action scheduled for June 25, 2003 in the Superior Court of Orange County, North Carolina in case number 03 SP 125. As will be noted in a separate Order, case number 1:02CV00415 is not directly related to the instant action in which the Claytons seek removal of the state foreclosure proceeding in case number 03 SP 125. The Court, however, chooses to address the matter here because it is clear that the Claytons, by filing the Motion for Temporary Restraining Order and Preliminary Injunction in case 1:02CV00415, were attempting to enjoin the state court foreclosure which is the subject of case number 1:03CV00527.
It is in case number 1:03CV00527 that the Claytons have attempted to bring this matter before this Court by way of removal. The Claytons' attempt at removal is also the subject of Ameriquest's Motion for Remand. Ameriquest also filed its Motion to Intervene in this matter because the caption in case number 1:03CV00527 lists as participants only the property which is the subject of the state court Foreclosure Action and Barden W. Cooke as the Substitute Trustee. Barden Cooke, however, as the Substitute Trustee, did not initially file a response to the Claytons' petition for removal. Subsequently, on June 13, 2003, the Substitute Trustee filed a Response to the Removal of State Claim [Document #6] in which he asserts that throughout the Foreclosure Action he is required to remain impartial with respect to the interests of the holder and the obligors, and that he is to refrain from taking any position that advances the cause of either party. The holder in this instance is Ameriquest. Since the Substitute Trustee could not act on its behalf, Ameriquest filed its Motion to Intervene because there was no other way for Ameriquest to protect its interest in the property that was the subject of the Foreclosure Action. Prior to the June 24, 2003 hearing, all parties were notified that the Court would consider all of the motions that were pending in the instant case, as well as the Motion for Temporary Restraining Order and Preliminary Injunction filed by the Claytons incorrectly in case number 1:02CV00415.
The Claytons, however, protested the Court's consideration of Ameriquest's Motion to Intervene because they did not have an adequate opportunity to respond to the Motion to Intervene. Given the unique right that only Ameriquest possessed to protect its interest in the property that was the subject of the Foreclosure Action, the Claytons were advised by the Court that any response that they could have made to the Motion to Intervene would not defeat the right of Ameriquest to intervene under the circumstances of this case. The Court, however, did provide the Claytons with an opportunity to make an oral response to the Motion to Intervene, but denied the Claytons' request to be allowed additional time to respond to the Motion. After hearing the arguments of both parties on this issue, the Court granted Ameriquest's Motion to Intervene.
In the same vein, the urgency of the matter, that is the impending foreclosure sale scheduled for June 25, 2003, caused the Court to preliminarily consider the Claytons' Motion for Temporary Restraining Order and Preliminary Injunction as if it were appropriately filed in case number 1:03CV00527, which had its origin in the very state court action which had authorized the June 25, 2003 foreclosure sale. Nevertheless, before proceeding to consider the Claytons' Motion for Temporary Restraining Order and Preliminary Injunction, the Court must first determine whether it has jurisdiction of the state court Foreclosure Action pursuant to the Claytons' Petition for Removal. Under 28 U.S.C. § 1441 "any civil action brought in the State Court of which the District Courts of the United States have original jurisdiction, may be removed by the Defendant." 28 U.S.C. § 1441(a). The statute only authorizes the removal of an action if the federal courts would be authorized to hear the case if initially brought in Federal Court. The question before the Court is whether the Foreclosure Action qualified for original jurisdiction in a federal court under either diversity or federal question jurisdiction.
The Court notes that the Claytons, on another occasion, attempted to remove a foreclosure proceeding previously filed against them on behalf of Ameriquest Mortgage Company by Lawrence S. Maitin. This Court's Order and Judgment in that action, Lawrence S. Maitin v. Haywood M. Clayton and Sylvia Clayton, case number 1:02CV00453, July 5, 2002, is instructive. This Court has determined that in the present case, as in case number 1:02CV00453, diversity between the parties to the Foreclosure Action does not exist. 28 U.S.C. § 1441(b) states that an action "shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen and resident of the state in which such action is brought." The Claytons are residents of North Carolina. The present Trustee, Barden W. Cooke, is a resident of North Carolina. Accordingly, under 28 U.S.C. § 1441(b) there is no diversity of citizenship and the action may not be removed from the state court on such grounds.
Similarly, as in the Order and Judgment by this Court inMaitin v. Clayton, because the state court action that the Claytons are attempting to remove is a foreclosure proceeding, there is no federal question jurisdiction that arises in the instant matter. The Claytons, nevertheless, allege that a federal question arises by virtue of the defense of federal preemption raised by Ameriquest in an action entitled Haywood M. Clayton and Sylvia K. Clayton v. Ameriquest Mortgage Company and Barden W. Cooke. Substitute Trustee, case number 03 CVS 760. In that case, which is not before this Court, the Claytons, as Plaintiffs, have sought injunctive relief, but the matter was filed in state court. Contrary to the Claytons' claim that this Court would have jurisdiction of the instant case because of a defense asserted by Ameriquest in a totally separate case, federal question jurisdiction must be supported by the plaintiff's Complaint and cannot be established based upon defendant's assertion of a defense or counterclaim that arises under federal law. City of Chicago v. Int'l College of Surgeons, 522 U.S. 156, 163, 118 S.Ct. 523, 529, 139 L.Ed.2d 525 (1997); Franchise Tax Bd. of State of California v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 14, 103 S.Ct. 2841, 2848, 77 L.Ed.2d 420 (1983); Cook v. Georgetown Steel Corp., 770 F.2d 1272, 1275 (4th Cir. 1985). Given that there is no federal question raised by the Claytons' instant Foreclosure Action that is the subject of the state court proceeding and the instant case before this Court in 1:03CV00527, the Court finds that it does not have original jurisdiction over this matter within the authority provided by 28 U.S.C. § 1331.
Although the Claytons have attempted to remove that case as well, that action remains in state court and cannot be removed because such action was filed originally in state court by the Claytons and pursuant to 28 U.S.C. § 1441(a), a Plaintiff may not remove a state court action. 28 U.S.C. § 1441(a).
Although it is not germane to the Court's consideration of whether diversity jurisdiction or federal question jurisdiction exists, the Court finds that even if this matter were properly removable by the Claytons, this Court, in considering the Claytons' Motion for Temporary Restraining Order and Preliminary Injunction, would be bound by the Order entered by North Carolina Superior Court Judge Wade Barber in the Foreclosure Action dated May 1, 2003. As it would affect the question of the Claytons' likelihood of success in their claim, Judge Barber found that the Claytons' indebtedness held by Ameriquest was a valid debt, that default has occurred in the payment of the Promissory Note secured by the Deed of Trust, that the Deed of Trust contained a power of sale and that proper Notice of Hearing was given to all persons entitled thereto by Barden W. Cooke, Substitute Trustee. Based upon this finding as shown in the pleadings the Claytons filed in the instant matter, Judge Barber issued an Order that authorized Barden W. Cooke, Substitute Trustee, to exercise the power of sale contained in the Deed of Trust and to proceed with foreclosure.
More importantly for this case, given that the Court finds that it does not have jurisdiction over the Foreclosure Action nor the Claytons' Motion for Temporary Restraining Order and Preliminary Injunction, even if properly filed in the instant case, the Court further finds that removal of this action was improper and this case should be remanded to Superior Court, Orange County, North Carolina for appropriate proceedings under state law.
In its Motion for Remand, Ameriquest asserted that it was entitled to recover its costs and attorneys' fees related to the Claytons' improper attempt at removing the Foreclosure Action to this Court as a means of staying the foreclosure sale scheduled for June 25, 2003. Ameriquest further states that the Claytons were fully aware that their earlier attempt to remove a foreclosure action in the case of Lawrence S. Maitin v. Haywood M. Clayton and Syvlia Clayton, case number 1:02CV00453, was rejected by this Court in an Order and Judgment issued on July 5, 2002. In view of these circumstances, the Court finds that an award of costs and attorneys' fees to Ameriquest is warranted pursuant to 28 U.S.C. § 1447(c).
IT IS THEREFORE ORDERED that Ameriquest's Motion to Intervene is GRANTED.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED, that Ameriquest's Motion to Remand is GRANTED and this matter is hereby remanded to the Superior Court of Orange County, North Carolina for further proceedings therein.
IT IS FURTHER ORDERED that pursuant to 28 U.S.C. § 1447(c), Ameriquest's Motion for costs and reasonable attorneys' fees is GRANTED. Ameriquest shall submit an invoice for fees incurred within fifteen days of the entry of this Order and Judgment.