United States District Court, S.D. Texas, Houston Division
ORDER AND OPINION
MELINDA HARMON UNITED STATES DISTRICT JUDGE
before the Court is Plaintiff's Motion to Remand.
(Document No. 9). Defendants Ocwen Loan Servicing, LLC
(“Ocwen”) and U.S. Bank National Association, as
Trustee for the Structured Asset Investment Loan Trust,
Mortgage Pass-Through Certificates, Series 2004-8
(“U.S. Bank”) (together “Removal
Defendants”) filed a Response (Document No. 10) and
Plaintiff filed a Reply. (Document No. 11). Having considered
these filings, the facts in the record, and the applicable
law, the Court concludes that the Notice of Removal in this
case is deficient. Removal Defendants will have 30 days to
amend the Notice of Removal. At that time the Court will
consider Plaintiff's Motion to Remand (Document No. 9).
August 26, 2016, Plaintiff filed her Original Petition and
Application for Ex-Parte Temporary Restraining Order and
Temporary Injunction (the “Petition”) in the
240th Judicial District Court of Fort Bend County, Texas, in
an action styled Shelia Briscoe v. CH Mortgage Company I,
Ltd.; Ocwen Loan Servicing, LLC; U.S. Bank National
Association, as Trustee for the Structured Asset Investment
Loan Trust, Mortgage PassThrough Certificates, Series 2004-8;
Structured Asset Securities Corporation; American Home
Mortgage Servicing Inc.; and Sand Canyon Corporation f/k/a
Option One Mortgage Corp., Case No. 16-DCV-234976 (the
“State Court Action”). (Document No. 1-3). The
Defendants include the following: (1) CH Mortgage Company I,
Ltd. (“CH Mortgage”); (2) U.S. Bank; (3)
Structured Asset Securities Corporation (“SASC”);
(4) Ocwen; (5) American Home Mortgage Servicing Inc.
(“AHMSI”); and (6) Sand Canyon Corporation f/k/a
Option One Mortgage Corp. (“Sand Canyon”).
Id. at 7-9.
September 19, 2016 Removal Defendants filed a Notice of
Removal, removing the case to federal court on the basis of
diversity jurisdiction. (Document No. 1). Removal Defendants
contend that the consent of CH Mortgage, SASC, AHMSI and Sand
Canyon are not required for removal, because they have not
been properly served, nor have they appeared. Id. at
2. It is undisputed that Plaintiff is a citizen of Texas.
(Document No. 1-3 at 7). It is also undisputed that Ocwen is
a citizen of the U.S. Virgin Islands, SASC is a citizen of
Delaware and New York, and Sand Canyon is a citizen of
California. (Document No. 1 at 4-5). Removal Defendants argue
that U.S. Bank should be considered a citizen of Ohio (the
location of its main office). Id. U.S. Bank is the
trustee for the Structured Asset Investment Loan Trust,
Mortgage Pass-Through Certificates, Series 2004-8, and
Removal Defendants argue that the “citizenship of a
trust, for diversity jurisdiction purposes, is determined by
the citizenship of its trustee.” Id. (citing
Wells Fargo Bank, N.A. v. Am. Gen. Life Ins. Co.,
670 F.Supp.2d 555, 561 (N.D. Tex. 2009); Navarro Savings
Assoc. v. Lee, 446 U.S. 458, 461 (1980); Bass v.
Int'l Brotherhood of Boilermakers, 630 F.2d 1058,
1067 n.17 (5th Cir. 1980)). Furthermore, Removal Defendants
argue that the citizenship of CH Mortgage and AHMSI can be
disregarded for diversity purposes, because they have been
fraudulently joined. Id. at 5. Specifically Removal
Defendants argue that Plaintiff has not alleged a reasonable
basis of recovery against CH Mortgage or AHMSI. Id.
response to the Notice of Removal, Plaintiff filed the
instant Motion to Remand, arguing that this Court does not
have diversity jurisdiction. (Document No. 9). Plaintiff
states that Removal Defendants have not proved the
citizenship of CH Mortgage and AHMSI, and that “the
2004-8 Trust must prove the citizenships of all of its
members/beneficiaries are diverse from Plaintiff in order to
be entitled to removal to federal court in light of the
United States Supreme Court's clarification of the law
regarding diversity jurisdiction and artificial business
trusts.” Id. at 3-4.
defendant may remove a case from state court if the plaintiff
could have originally initiated the suit in federal court.
Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804,
808 (1986) (citing 28 U.S.C. § 1441). The removing party
bears the burden of showing subject matter jurisdiction
exists and removal was proper. Manguno v. Prudential
Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir.
2002). Determination of such jurisdiction is made according
to the state court complaint at the time of removal,
construing all ambiguities in favor of remand. Id.
case, Removal Defendants claim diversity jurisdiction, which
applies 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.” 28
U.S.C.A. § 1332. Diversity jurisdiction requires
complete diversity: “all persons on one side of the
controversy [must] be citizens of different states than all
persons on the other side.” Harvey v. Grey Wolf
Drilling Co., 542 F.3d 1077, 1079 (5th Cir. 2008)
(citation omitted). An improperly joined party,
however, is disregarded in determining the court's
subject matter jurisdiction, and therefore cannot destroy
complete diversity. Smallwood v. Ill. Cent. R.R.
Co., 385 F.3d 568, 572 (5th Cir. 2004) (en banc).
“A defendant is improperly joined if the moving party
establishes that (1) the plaintiff has stated a claim against
a diverse defendant that he fraudulently alleges is
nondiverse, or (2) the plaintiff has not stated a claim
against a defendant that he properly alleges is
nondiverse.” Int'l Energy Ventures Mgmt.,
L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 199
(5th Cir. 2016) (citing Smallwood, 385 F.3d at 573).
Mortgage and AHMSI
argues that the “question of improper joinder does not
apply to these Defendants. Removal Defendants have not met
the threshold issue in an improper joinder defense,
non-diverse defendants.” (Document No. 9 at
12). This is because Removal Defendants state in the Notice
of Removal that the citizenship of CH Mortgage and AHMSI
should be disregarded for diversity purposes, but do not
specifically state that either defendant is a non-diverse
citizen of Texas. (Document No. 1 at 5). Plaintiff insists
that, due to this failure, the case should be remanded,
because Removal Defendants have not met their burden of
showing that they belong in federal court. (Document No. 11
response, Removal Defendants argue that this failure is not
cause for remand: “[t]he fact that Defendants made an
improper joinder argument in their Notice of Removal
indicates that CH Mortgage and AHMSI are non-diverse
defendants whose citizenship the Court need not consider.
Ultimately, as explained above and in the Notice of Removal,
the citizenship of CH Mortgage and AHMSI are irrelevant to
the Court's diversity calculus, as Plaintiff fails to
allege a colorable claim against them.” (Document No.
10 at 18). Removal Defendants also state that: “CH
Mortgage Company, Ltd. is an assumed name of DHI Mortgage
Company, Ltd., which is a Texas limited partnership. AHMSI is
now known as Homeward Residential, Inc., which is a Delaware
corporation with its principal place of business in
Texas.” Id. at 18 n.7. Furthermore, Removal
Defendants argue in the alternative that
“non-substantive, but defective jurisdictional
allegations, like those alleged by the Plaintiff, are
appropriately addressed through amended filings, rather than
remand, ” and ask the Court for leave to file an
amended Notice of Removal to “more clearly allege the
citizenship of CH Mortgage and AHMSI.” Id. at
is correct that Removal Defendants need to demonstrate that
CH Mortgage and AHMSI are non-diverse parties in order to
maintain a claim of improper joinder: “To establish a
claim for improper joinder, the party seeking removal must
demonstrate either ‘(1) actual fraud in the pleading of
jurisdictional facts, or (2) inability of the plaintiff to
establish a cause of action against the non-diverse
party in state court.'” McDonal v. Abbott
Labs., 408 F.3d 177, 183 (5th Cir. 2005) (quoting
Travis v. Irby, 326 F.3d 644, 647 (5th Cir. 2003))
(emphasis added); see also Smallwood, 385 F.3d at
574 (“A claim of improper joinder by definition is
directed toward the joinder of the in-state party.”);
Rivera v. Ditech Financial, LLC, No.
EP-16-CV-149-KC, at *8 (W.D. Tex. Aug. 10, 2016)
(“[I]mproper joinder inquiry presupposes the existence
of a ‘non-diverse party' or an ‘in-state
defendant.'”); Tipton v. Landen, No.
6:15-CV-02811, 2016 WL 919539, at *5 (W.D. La. Mar. 8, 2016)
(“[T]he improper joinder doctrine is not applicable to
a diverse defendant.”); Alford v. Chevron U.S.A.
Inc., No. CIV.A. 13-5457, 2014 WL 37600, at *5 (E.D. La.
Jan. 6, 2014) (Improper joinder “doctrine is implicated
when a plaintiff improperly joins an in-state party in an
effort to defeat diversity jurisdiction.”). Removal
Defendants failed to include any statements regarding the
citizenship of AHMSI and CH Mortgage in their Notice of
Removal. (Document No. 1). Without this information the Court
“cannot determine if improper joinder is the
appropriate inquiry in this case.” Rivera, No.
EP-16-CV-149-KC at *9. Similarly, the lack of information
regarding the ...