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McGee v. Veterans Land Board of State

United States District Court, N.D. Texas, Dallas Division

March 29, 2018




         Before the Court is Plaintiffs' Motion to Remand. Doc. 7. For the reasons that follow, the Court GRANTS the motion.



         Pro se plaintiffs Harold and Rosetta McGee (the McGees) ask the Court to remand their case, claiming the Court does not have subject matter jurisdiction because they assert only state-law causes of action in their complaint. Doc. 7, Mot. to Remand, 1. The McGees filed suit in Texas state court claiming that Defendants the Veterans Land Board of the State of Texas (VLB) and Citimortgage, Inc. (Citimortgage) unlawfully accelerated the payments due under their mortgage and unlawfully scheduled a foreclosure sale of the McGees' home. Doc. 1-6, Compl., ¶ 13. When the McGees purchased their home they executed a promissory note and a deed of trust with non- defendant CTX Mortgage Company L.L.C. (CTX). Id., ¶ 19. CTX assigned the note and deed of trust to Citimortgage, which in turn assigned the note and deed of trust to VLB. Id. The deed of trust incorporates federal regulations promulgated by the Secretary of Housing and Urban Development (HUD) that dictate, in relevant part, the circumstances under which a lender may accelerate a note and initiate foreclosure proceedings. Id., ¶¶ 21-23. Specifically, paragraph 9(d) of the deed of trust incorporates 24 C.F.R. § 203.501 and 24 C.F.R. §§ 203.604-606. Id. The McGees claim that Defendants breached the deed of trust when they violated these provisions by failing to send a letter of default, conduct a face-to-face interview with them, and complete a loss mitigation evaluation before initiating a foreclosure sale. Id. The McGees claim also that Defendants breached the deed of trust by violating Texas Property Code § 51.002(d) and the duty of good faith and fair dealing imposed by Texas law. Id., ¶¶ 31-32. In addition to their breach of contract claim, the McGees seek to quiet title, a declaratory judgment that the notices of acceleration and foreclosure sale are invalid, specific performance of Defendants' duty to provide loss mitigation options under the deed of trust, and an accounting of all transactions relating to their mortgage pursuant to the Real Estate Settlement Procedures Act (RESPA). Id., ¶¶ 37, 40, 42, 44, prayer for relief.

         Citimortgage timely removed the case to this Court on the basis of federal question jurisdiction under 12 U.S.C. § 1331 and § 1441. Doc. 1, Notice of Removal, 1. The McGees then filed a motion to remand. Doc. 7, Mot. to Remand. The same day, the McGees voluntarily dismissed VLB from the case. Doc. 9, Notice. Citimortgage claims in its response to the motion to remand that not only does the Court have federal-question jurisdiction over the case, it now also has diversity jurisdiction since VLB, an in-state defendant and Texas citizen, was voluntarily dismissed. Doc. 10, Def.'s Resp., 5-7. The McGees did not file a reply, but the time has passed for them to do so. Thus, their motion to remand is ripe for review.



         Motions to remand are governed by 28 U.S.C. § 1447(c), which provides that “[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). When considering a motion to remand, “[t]he removing party bears the burden of showing that federal jurisdiction exists and that removal was proper.” Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). Furthermore, “any doubt about the propriety of removal must be resolved in favor of remand.” Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281-82 (5th Cir. 2007).

         The federal removal statute permits a defendant to remove any civil action that falls within the original jurisdiction of the district courts. 28 U.S.C. § 1441(a). Original jurisdiction lies when there is federal-question jurisdiction or diversity jurisdiction. In its notice of removal, Citimortgage claims only that the Court has federal-question jurisdiction. But it now claims the Court also has diversity jurisdiction. Thus, the Court will consider both standards.

         A. Federal-question Jurisdiction

         A 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. The most direct way a case arises under federal law is “when federal law creates the cause of action asserted.” Gunn v. Minton, 568 U.S. 251, 257 (2013). But there is a backdoor to federal court reserved for a “small and special” group of state-law claims. Empire Health choice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699 (2006). “That is, federal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.” Gunn, 568 U.S. at 258.

         B. Diversity Jurisdiction

         District courts also have original jurisdiction over “all civil actions where the matter in controversy exceeds the sum or value of $75, 000 . . . and is between . . . citizens of different States.” 28 U.S.C. § 1332(a)(1). Removal is only proper in such cases, however, if there is complete diversity of citizenship among the parties at the time the complaint is filed and at the time of removal. Mas v. Perry, 489 F.2d 1396, 1398-99 (5th Cir. 1974). Moreover, none of the parties properly joined and ...

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