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Adams v. Bank of America, N.A.

United States District Court, W.D. Texas, Austin Division

November 6, 2017

STEVEN L. ADAMS ELLEN L. ADAMS, Plaintiffs,
v.
BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO BAC HOME LOANS SERVICING, LP FKA COUNTRYWIDE HOME LOANS SERVICING, LP, FOR THE BENEFIT OF WMALT 2007-OA1 TRUST, Defendant.

          ORDER

          SAM SPARKS UNITED STATES DISTRICT JUDGE.

         BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and specifically, Plaintiffs Steven and Ellen Adams's Motion to Remand [#9] and Defendant Bank of America, N.A. (BANA)'s Response [#16] in opposition, as well as BANA's Motion to Dismiss [#11], the Adamses' Response [#16] in opposition, and BANA's Reply [#20] in support. Having reviewed the documents, the relevant law, and the case file as a whole, the Court now enters the following opinion and orders.

         Background

         In July 2006, Steven and Ellen Adams purchased a subdivision lot in Cedar Park, Texas. Adams v. Bank of Am., N.A., No. A-12-CA-366-SS, 2013 WL 12094271, at *l-2 (W.D. Tex. June 7, 2013), aff'd, 570 Fed.App'x 375 (5th Cir. 2014) (per curiam). The Adamses paid for the property by taking out a loan from Countrywide Bank (the Loan). Id. The Loan was secured by a lien against the property (the Deed of Trust). Id. The Loan is owned by the WMALT 2007-OA1 Trust (the Trust); the Deed of Trust has been owned by BANA since 2011 "for the benefit of the [T]rust." Id.[1]BANA has serviced both the Loan and the Deed of Trust since 2006. Id. The trustee of the Trust, however, is U.S. Bank-not BANA. Id.

         The Adamses defaulted on the Loan in May 2009, and BANA served notice of a foreclosure sale in November 2011. Id. When the foreclosure sale took place in December 2011, BANA purchased the property "for the benefit of the [T]rust." Id. The Adamses brought suit in state court in April 2012 challenging BANA's authority to foreclose on the property. Id. BANA removed that prior lawsuit to this Court, and this Court dismissed the Adamses' claims with prejudice on July 7, 2013. Id. The Fifth Circuit affirmed. Adams, 570 Fed.App'x 375.

         Subsequently, in November 2016, BANA initiated a forcible detainer suit in state court asserting a right to immediate possession of the property. Am. Compl. [#8] at 3. Travis County Justice Court ruled in favor of the Adamses, but BANA appealed and prevailed in Travis County Court at Law. Id. The Adamses have appealed the decision of the Travis County Court at Law. Id.

         Despite the pendency of their appeal in the forcible detainer suit, the Adamses brought this second action in state court seeking a declaratory judgment that BANA is not the legal owner of the property. Notice Removal [#1-2] Ex. 1 (Petition). BANA removed the action to this Court on July 30, 2017. Following amendment of their complaint, the Adamses' sole claim for relief arises under the Declaratory Judgment Act, 28 U.S.C. § 2201. See Am. Compl. [#8] at 4-5.

         BANA now asks this Court to dismiss the Adamses' suit on the basis of res judicata. Mot. J. Pleadings [#11].[2] The Adamses request this Court remand to state court or, in the alternative, deny BANA's motion for judgment on the pleadings. Mot. Remand [#9]; Resp. Mot. Dismiss. [#16]. These pending motions are now ripe for review.

         Analysis

         First, the Court addresses the Adamses' contention the Court lacks diversity jurisdiction over this action. See Mot. Remand [#9]. Second, the Court considers whether it should exercise its discretion to stay or dismiss the Adamses' claim for declaratory relief under 28 U.S.C. § 2201. Because the Court in its discretion concludes the Adamses' claim for declaratory relief should be dismissed, the Court does not reach BANA's motion to dismiss. See Mot. Dismiss [#16].

         I. Motion to Remand

         A. Legal Standard

         "[T]he burden of establishing federal jurisdiction is placed upon the party seeking removal." Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988). Moreover, because removal jurisdiction raises significant federalism concerns, courts must strictly construe removal jurisdiction. Id. Any doubts or ambiguities regarding the propriety of removal are construed against removal and in favor of remand to the state court. Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). BANA has invoked federal court diversity jurisdiction under 28 U.S.C. § 1332(a).

         District courts have diversity jurisdiction over civil actions between citizens of different States when the amount in controversy exceeds $75, 000.00. 28 U.S.C. § 1332(a). Section 1332 requires "complete diversity"-that is, the citizenship of every plaintiff must be different from that of every defendant. Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). "Citizens upon whose diversity a plaintiff grounds jurisdiction must be real and substantial parties to the controversy." Navarro Sav. Ass'n v. Lee,446 U.S. 458, 460-461 (1980). Thus, the Court must "disregard nominal or formal parties and rest jurisdiction only ...


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