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Cruz v. NTFN, Inc.

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

April 16, 2019

ALMA CRUZ, Plaintiff,



         This case has been referred to the undersigned United States magistrate judge for pretrial management under 28 U.S.C. § 636(b).

         Defendant JPMorgan Chase Bank, N.A. (“Chase”) removed this action from County Court at Law Number Two, Dallas County, Texas, to the United States District Court for the Northern District of Texas, Dallas Division, under 28 U.S.C. §§ 1332, 1441 and 1446 and asserts that co-defendant NTNF, Inc.'s (“NTNF”) citizenship should be disregarded for purposes of diversity because it is merely a nominal party that has been improperly joined.

         At the Court's direction, see Dkt. No. 5, Plaintiff Alma Cruz filed a brief explaining whether, as Chase argues in its Notice of Removal, NTNF was improperly joined and, if so, should be dismissed from this lawsuit and whether subject matter jurisdiction therefore exists based on the complete diversity between any remaining, properly joined parties, see Dkt. No. 11. Chase did not file a reply and the time to do so has passed.

         The undersigned concludes that, disregarding the improperly joined defendant, complete diversity of citizenship exists between all properly-joined parties, and the Court has subject matter jurisdiction.


         On February 4, 2019, Plaintiff Alma Cruz filed her Original Petition and Application for Temporary Restraining Order (“the “Petition”) in County Court at Law No. 2 in Dallas County, Texas, styled Alma Cruz v. NTNF, Inc., Bank of America, N.A., and JPMorgan Chase Bank, N.A., Cause No. CC-19-00737-B (the “State Court Action). Plaintiff seeks to set aside the foreclosure of real property located at 4400 Flamingo Way, Mesquite, Texas 75150. She asserts claims for violations of the Texas Debt Collection Act and Texas Property Code and for breach of contract against Chase and Bank of America, N.A. (“BofA”). See Dkt. No. 1-1.

         Plaintiff also alleges a Breach of Fiduciary Duty Claim against NTFN. See Dkt. No. 1-1 at 16. She alleges that,

[a]s an entity steering the financing of its newly constructed homes to a mortgage banker, NTFN had a fiduciary duty to bring a mortgage banker in to finance the transaction (the Loan) who would obtain a mortgage loan for Plaintiff on the best possible price and terms, and to fully disclose all financial benefit to NTFN or other persons from such financing arrangement. On information and belief, Plaintiff would show that all such benefits to NTFN were not adequately disclosed to Plaintiff, and that the cost of credit to Plaintiff was higher than otherwise would have been necessary had Plaintiff not been steered to dealing with NTFN and its assignee(s) in regard to the Loan. As a mortgage banker, NTFN had an ongoing fiduciary duty to Plaintiff to obtain a mortgage loan on the best price and terms possible. If in fact there was an assignment of the Loan to Chase Manhattan Mortgage Corporation breached that duty, in part in the apparent selection of Chase and/or BofA as a mortgagee and/or mortgage servicer, and is liable to Plaintiff for the damages incurred by Plaintiff in the acts and omissions of Chase and/or BofA or other parties in relation to the Loan, including the failure of Chase and/or BofA and/or such other parties to deal in good faith in attempting to modify and collect the Loan. At the time of the origination of the Loan or within a reasonable time thereafter, NTFN was charged with knowledge of the pattern and practice of Chase and BofA's disregard (including their respective affiliate entities) of applicable law in the servicing of mortgage loans, and should not have attempted to assign ownership and/or servicing of the Loan to Chase Manhattan Mortgage corporation, thus jeopardizing Plaintiff's ownership and use of the Property.


         Chase removed the case to federal court based solely on diversity of citizenship under 28 U.S.C. § 1332(a). See Dkt. No. 1 at 2. It contends that complete diversity exists because Plaintiff is a citizen of Texas, Chase is a citizen of Ohio, BofA is a citizen of North Carolina, and NTFN “was improperly joined and, therefore, its citizenship should be disregarded for diversity jurisdiction purposes.” Id. at 4.

         Chase argues that NTFN was improperly joined to defeat jurisdiction because Plaintiff cannot establish a claim against it. The sole cause of action Plaintiff asserts against NTFN - the original lender on Plaintiff's mortgage loan - is for breach of fiduciary duty. Chase argues that Plaintiff cannot establish a breach of fiduciary duty claim against NTFN because, as a matter of law, there is no fiduciary duty between a mortgage lender and a borrower. Chase also contends that Plaintiff's claim against NTFN is barred by the statute of limitations. See Id. at 4-8.

         Plaintiff's response is almost verbatim the same as the plaintiffs' response quoted by this Court in Snowden v. Wells Fargo Bank, N.A., No. 3:18-cv-1797-K-BN, 2018 WL 441794 (N.D. Tex. Aug. 27, 2018). Compare Dkt. No. 11 at 1-7 to Snowden, 2018 WL 441794, at *3 - 6. In short, Plaintiff argues that she can establish a claim against NTFN and, relying on Kelly v. Gaines, 181 S.W.3d 394 (Tex. App. - Waco 2005), rev'd by Gaines v. Kelly, 235 S.W.3d 179 (Tex. 2007)), argues that there is a fiduciary duty between a mortgage lender and borrower. She also argues that her claim is not time barred because the statute of limitations should be tolled under the discovery rule. See Dkt. No. 11.

         Legal Standards

         Federal courts have an independent duty to examine their own subject matter jurisdiction. See Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583-84 (1999); McDonal v. Abbott Labs., 408 F.3d 177, 182 n.5 (5th Cir. 2005) (“[A]ny federal court may raise subject matter jurisdiction sua sponte.”).

         A defendant may remove an action filed in state court to federal court if the action is one that could have originally been filed in federal court. See 28 U.S.C. § 1441(a). And a defendant may remove a case that includes a claim arising under the Constitution, laws, or treaties of the United States (within the meaning of 28 U.S.C. § 1331) and a claim not within the Court's original or supplemental jurisdiction or that has been made nonremovable by statute, so long as the action would be removable without the inclusion of the nonremovable claim. See Id. § 1441(c)(1). Statutes that authorize removal are meant to be strictly construed, and any doubt as to the propriety of removal should be resolved in favor of remand. See Hood ex rel. Miss. v. JP Morgan Chase & Co., 737 F.3d 78, 89 (5th Cir. 2013); In re Hot-Hed Inc., 477 F.3d 320, 323 (5th Cir. 2007).

         The removing party bears the burden of establishing jurisdiction. See Miller v. Diamond Shamrock Co., 275 F.3d 414, 417 (5th Cir. 2001). A federal court's jurisdiction is limited, and federal courts generally may hear a case of this nature only if it involves a question of federal law or where diversity of citizenship exists between the parties. See 28 U.S.C. §§ 1331, 1332. “As a general rule, absent diversity jurisdiction, a case will not be removable if the complaint does not affirmatively allege a federal claim.” Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6 (2003). “[T]he basis upon which jurisdiction depends must be alleged affirmatively and distinctly and cannot be established argumentatively or by mere inference.” Ill. Cent. Gulf R. Co. v. Pargas, Inc., 706 F.2d 633, 636 (5th Cir. 1983) (citation and internal quotation marks omitted). “If 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).

         28 U.S.C. § 1332 creates federal subject matter jurisdiction where diversity of citizenship exists between the parties, where each plaintiff's citizenship is diverse from each defendant's citizenship, and the amount in controversy exceeds $75, 000. 28 U.S.C. §§ 1332(a), (b). Failure to allege adequately the basis of diversity requires remand. See Stafford v. Mobil Oil Corp., 945 F.2d 803, 805 (5th Cir. 1991). If no amount of damages has been alleged in the state court petition, the defendant must prove by a preponderance of the evidence that the amount in controversy exceeds the jurisdictional minimum. See 28 U.S.C. § 1446(c)(2); De Aguilar v. Boeing Co., 47 F.3d 1404, 1409 (5th Cir. 1995). And, where diversity jurisdiction requires that the parties be “citizens of different States, ” 28 U.S.C. § 1332(a)(1), the Court cannot exercise jurisdiction if any plaintiff shares the same citizenship as any defendant, se ...

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