United States District Court, N.D. Texas, Dallas Division
J'MEI R. WALKER, Plaintiff,
WILLOW BEND MORTGAGE COMPANY, LLC, et al., Defendants.
MEMORANDUM OPINION AND ORDER
A. FITZWATER SENIOR JUDGE
action challenging an attempted foreclosure, defendant Wells
Fargo Bank, N.A. (“Wells Fargo”) removed this
case to this court based on diversity jurisdiction,
contending that defendant Willow Bend Mortgage Company, LLC
(“Willow Bend”) was improperly joined. Plaintiff
J'Mei R. Walker (“Walker”) did not move to
remand. Several months after the case was removed, Wells
Fargo moved for summary judgment, but the court ordered the
parties to brief the issue of improper joinder before it
would consider the motion. The parties' jurisdictional
briefing is now complete. For the reasons that follow, the
court sua sponte dismisses defendant Willow
Bend on the ground that it was improperly joined, and grants
Wells Fargo's motion for summary judgment.
2013 plaintiff Walker took out a mortgage loan from defendant
Willow Bend in the amount of $269, 706.00. The loan was
secured by a deed of trust against Walker's property
located on E. Oates Road in Garland, Texas. The deed of trust
named Mortgage Electronic Registration Systems, Inc.
(“MERS”) as beneficiary. According to Wells
Fargo's evidence, MERS assigned the note and deed of
trust to Wells Fargo in June 2014. The assignment appears to
have been duly recorded in the official Dallas County land
has since defaulted on the loan. Wells Fargo's
foreclosure counsel sent a notice of default to Walker on
August 8, 2016, informing him that the debt had been
accelerated and the full amount was due within 30 days. On
January 11, 2018 Wells Fargo's foreclosure counsel sent
an additional notice to Walker informing him that a
foreclosure sale would take place on March 6, 2018.
March 5, 2018-the day before the scheduled foreclosure
sale-Walker filed the instant lawsuit in Texas county court.
His original petition and application for temporary
restraining order alleges that the Dallas County land records
do not reflect any assignment of his mortgage from Willow
Bend to Wells Fargo; that his note does not bear an
indorsement or allonge; that Wells Fargo did not send him the
pre-foreclosure notices required by Texas law; that Wells
Fargo failed to credit him for payments he made through some
unspecified date in 2017; and that Wells Fargo failed to respond
to a request for a loan modification. Walker asserts that
Wells Fargo violated the Texas Debt Collection Practices Act
(“TDCPA”), Tex. Fin. Code Ann. §§
392.001-404 (West 2016); that it failed to comply
with Tex. Prop. Code Ann. § 51.002 (West 2014); and that
it breached the contractual terms of the note and deed of
trust. Walker also asserts that Willow Bend breached its
fiduciary duty to him when it assigned his loan to Wells
Fargo, because it knew about Wells Fargo's “pattern
and practice of . . . disregard of applicable law in the
servicing of mortgage loans.” Pet. ¶ 8. He seeks
injunctive and declaratory relief, compensatory and exemplary
damages, and attorney's fees and costs.
Fargo removed this case to this court based on diversity of
citizenship, arguing that defendant Willow Bend, the only
non-diverse defendant, was improperly joined. Wells Fargo now
moves for summary judgment on all claims against it. Walker
opposes the motion. At the court's request, the parties
have also briefed the question whether the court has subject
Fargo contends that Willow Bend is improperly joined, and
that the court therefore may exercise diversity jurisdiction
over this case. The court agrees.
case to be removed based on diversity jurisdiction,
“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) (quoting McLaughlin v.
Miss. Power Co., 376 F.3d 344, 353 (5th Cir. 2004)).
“The jurisdictional facts that support removal must be
judged at the time of the removal.” Gebbia v.
Wal-Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir. 2000)
(citations omitted). Moreover, under 28 U.S.C. §
1441(b), a case cannot be removed based on diversity
jurisdiction if any properly joined defendant is a citizen of
the state in which the action is brought (here, Texas).
doctrine of improper joinder is a narrow exception to the
rule of complete diversity, and it “entitle[s] a
defendant to remove to a federal forum unless an in-state
defendant has been ‘properly joined.'”
Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573
(5th Cir. 2004) (en banc); see also Meritt Buffalo Events
Ctr. LLC v. Cent. Mut. Ins. Co., 2016 WL 931217, at *2
(N.D. Tex. Mar. 11, 2016) (Fitzwater, J.). The doctrine
allows federal courts to defend against attempts to
manipulate their jurisdiction, such as by joining nondiverse
parties solely to deprive federal courts of diversity
jurisdiction. See Smallwood, 385 F.3d at 576.
Because “the effect of removal is to deprive the state
court of an action properly before it, removal raises
significant federalism concerns.” Gasch v.
Hartford Accident & Indem. Co., 491 F.3d
278, 281 (5th Cir. 2007) (quoting Carpenter v. Wichita
Falls Indep. Sch. Dist., 44 F.3d 362, 365-66 (5th Cir.
1995)). Therefore, the removal statute is strictly construed,
with “any doubt about the propriety of removal [being]
resolved in favor of remand.” Id. at 281-82.
In determining whether a party was improperly joined, the
court “resolve[s] all contested factual issues and
ambiguities of state law in favor of the plaintiff.”
Id. at 281. The party seeking removal bears a heavy
burden to prove improper joinder. Smallwood, 385
F.3d at 574.
joinder is established by showing that there was either
actual fraud in the pleading of jurisdictional facts or that
the plaintiff is unable to establish a cause of action
against the nondiverse defendant in state court. Parsons
v. Baylor Health Care Sys., 2012 WL 5844188, at *2 (N.D.
Tex. Nov. 19, 2012) (Fitzwater, C.J.) (citing
Smallwood, 385 F.3d at 573). Under the second
alternative-the one at issue in this case-the test for
improper joinder is “whether the defendant has
demonstrated that there is no possibility of recovery by the
plaintiff against an in-state defendant, which stated
differently means that there is no reasonable basis for the
district court to predict that the plaintiff might be able to
recover against an in-state defendant.”
Smallwood, 385 F.3d at 573; see also Travis v.
Irby, 326 F.3d 644, 648 (5th Cir. 2003) (explaining that
terms “no possibility” of recovery and
“reasonable basis” for recovery have essentially
identical meaning, and holding that pleadings must show more
than “any mere theoretical possibility of
recovery”). To assess “whether a plaintiff has a
reasonable basis of recovery under state law, ”
[t]he court may conduct a [Fed. R. Civ. P.] 12(b)(6)-type
analysis, looking initially at the allegations of the
complaint to determine whether the complaint states a claim
under state law against the in-state defendant. Ordinarily,
if a plaintiff can survive a Rule 12(b)(6) challenge, there
is no improper joinder. That said, there are cases, hopefully
few in number, in which a plaintiff has stated a claim, but
has misstated or omitted discrete facts that would determine
the propriety of joinder. In such cases, the district court
may, in its discretion, pierce the pleadings and conduct a
Smallwood, 385 F.3d at 573 (footnotes omitted).
analysis does not end with the conclusion that there is no
possibility of recovery against the non-diverse defendant.
“When the only proffered justification for improper
joinder is that there is no reasonable basis for predicting
recovery against the in-state defendant, and that showing is
equally dispositive of all defendants rather than to the
in-state defendants alone, ” the removing party has
failed to show improper joinder. Id. at 575. This
principle is sometimes called the “common defense
rule.” See 14C Charles Alan Wright &
Arthur R. Miller, Federal Practice & Procedure
§ 3723.1, at 362-63 (4th ed. 2018). Under the common
defense rule, the court must remand the case “[i]f, but
only if, the showing which forecloses
[plaintiff's] claims against the non-diverse defendants
necessarily and equally compels foreclosure
of all their claims against all the diverse
defendants.” Boone v. Citigroup, Inc., 416
F.3d 382, 391 (5th Cir. 2005).
deciding whether a defendant has been improperly joined, a
federal district court must apply the federal pleading
standard. See Int'l Energy Ventures Mgmt., L.L.C. v.
United Energy Grp. Ltd., 818 F.3d 193, 207-08 (5th Cir.
2016) (on rehearing). This standard requires the plaintiff to
plead enough facts “to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). “A claim has
facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
“The plausibility standard is not akin to a
‘probability requirement,' but it asks for more
than a sheer possibility that a defendant has acted
unlawfully.” Id.; see also Twombly,
550 U.S. at 555 (“Factual allegations must be enough to
raise a right to relief above the speculative
level[.]”). “[W]here the well-pleaded facts do
not permit the court to infer more than the mere possibility
of misconduct, the complaint has alleged-but it has not
‘shown'-‘that the pleader is entitled to
relief.'” Iqbal, 566 U.S. at 679
(alteration omitted) (quoting Rule 8(a)(2)). Furthermore,
under Rule 8(a)(2), a pleading must contain “a short
and plain statement of the claim showing that the pleader is
entitled to relief.” Although “the pleading
standard Rule 8 announces does not require ‘detailed
factual allegations, '” it demands more than
“labels and conclusions.” Iqbal, 566
U.S. at 678 (quoting Twombly, 550 U.S. at 555). And
“a formulaic recitation of the elements of a cause of
action will not do.” Id. (quoting
Twombly, 550 U.S. at 555).
the controlling standard, Wells Fargo has met its heavy
burden of proving that Willow Bend has been improperly
joined. The only claim that Walker brings against Willow Bend
is for breach of fiduciary duty. Walker's petition
appears, however, to contradict itself as to the nature of
the relationship between Walker and Willow Bend. At some
points, the petition seems to allege that Willow Bend was
itself a mortgagee. See, e.g., Pet. ¶ 4
(“Plaintiff executed a Note . . . and a Deed of Trust .
. . for the benefit of Willow Bend covering the
Property.”). At others, the petition suggests that
Willow Bend was a mortgage broker, whose task was to secure
financing on Walker's behalf. See, e.g., Id.
¶ 8 (“As an entity steering the financing of its
newly constructed homes to a mortgage banker, Willow Bend had
a fiduciary duty to bring a mortgage banker in to finance the
transaction . . . on the best possible price and
terms[.]”). Walker cites authority suggesting that a
mortgage broker owes a fiduciary duty to its client. See
Kelly v. Gaines, 181 S.W.3d 394, 413-15 (Tex. App.
2005), rev'd on other grounds, 235 S.W.3d 179
(Tex. 2007). But this authority is inapposite.
limited, summary assessment of the evidence submitted by the
parties in relation to Wells Fargo's motion for summary
judgment reveals that Willow Bend was a mortgage
lender, not a mortgage broker. See
Smallwood, 385 F.3d at 573-74 (recognizing district
court's discretion to pierce the pleadings where
plaintiff has omitted or misstated discrete facts that would
determine propriety of joinder). Wells Fargo has submitted a
note and deed of trust executed by Walker in favor of Willow
Bend, as lender and mortgagee. The note and deed of
trust are admissible evidence that the court may consider.
See infra § IV. This evidence makes it clear
that Willow Bend was not Walker's mortgage broker, but
rather his lender.
Willow Bend was Walker's mortgage lender, Walker's
breach of fiduciary duty claim fails as a matter of law. In
Texas, there generally is no fiduciary relationship between a
mortgagor and mortgagee. See Wakefield v. Bank of Am.,
N.A., 2018 WL 456721, at *5 (Tex. App. 2018, no pet.)
(citing Lovell v. W. Nat'l Life Ins. Co., 754
S.W.2d 298, 303 (Tex. App. 1988, writ denied)). Nor is there
such a relationship between a loan servicer and its client.
Williams v. Fed. Nat'l Mortg. Ass'n, 2012 WL
443986, at *3 (N.D. Tex. Feb. 13, 2012) (Robinson, J.). Texas
courts have found fiduciary relationships between borrowers
and lenders before, but only based on “extraneous facts
and conduct, such as excessive lender control or influence in
the borrower's business activities.”
Wakefield, 2018 WL 456721, at *5 (quoting Bank
One, Tex., N.A. v. Stewart, 967 S.W.2d 419, 442 (Tex.
App. 1998, pet. denied)). Walker's petition ...