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Burch v. JPMorgan Chase Bank, N.A.

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

September 3, 2019

WILLIAM PAUL BURCH, Plaintiff,
v.
JPMORGAN CHASE BANK, N.A., Defendant.

         Referred to U.S. Magistrate Judge [1]

          FINDINGS, CONCLUSIONS, AND RECOMMENDATION

          IRMA CARRILLO RAMIREZ UNITED STATES MAGISTRATE JUDGE

         Before the Court are Defendant JPMorgan Chase Bank, N.A.'s Motion to Dismiss Plaintiff's Complaint, filed March 22, 2019 (doc. 5), and Plaintiff's Motion for Remand, filed April 1, 2019 (doc. 9). Based upon the relevant filings and applicable law, the plaintiff's motion for remand and motion for default judgment should be DENIED, and the defendant's motion to dismiss should be GRANTED.

         I. BACKGROUND

         On February 14, 2019, William Paul Burch (Plaintiff) filed this lawsuit concerning title to the property located at 2531 Gerry Way, Lancaster, Texas 75134 (the Property), against JP Morgan Chase Bank, N.A. (Defendant). (doc. 1-1 at 8-13.)[2]

         On or about January 19, 2007, Plaintiff and his wife executed a promissory note (the Note) in favor of Freedom Mortgage Corporation (Lender) in the amount of $66, 000.00 plus interest, as well as a deed of trust (the Deed of Trust) securing payment of the Note. (doc. 7-1 at 2-21.) The Deed of Trust designated Mortgage Electronic Registration Systems, Inc. (MERS) as “the beneficiary” and nominee for Lender and its successors and assigns. (Id. at 3.) On or about July 4, 2008, MERS assigned the Note and Deed of Trust to Deutsche Bank National Trust Company as Trustee for GSAA Home Equity Trust 2007-5, Asset-Backed Certificates, Series 2007-5 c/o Litton Loan Servicing, LP (Litton). (Id. at 23-25.)

         On December 1, 2008, Plaintiff and his wife filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. See In re William Burch and Juanita Burch, No. 08-45761-rfn11 (Bankr. N.D. Tex.) (the Bankruptcy). On December 9, 2009, the bankruptcy court entered an order confirming their Third Amended Plan of Reorganization, which reaffirmed Litton's status as the mortgage holder on the Property and required Plaintiff to enter into a new note in the original principal amount of $33, 000 (Bankruptcy Plan). (Id., doc. 246 at 14; doc. 1-1 at 10-11.) The Bankruptcy was closed on September 11, 2012.

         On February 14, 2019, Plaintiff filed his original petition in state court, asserting quiet title and trespass to try title claims. (See doc. 1-1 at 8-13.) He sought to have the lien on the Property be immediately released in his favor, and judgment against Defendant “for all damages described [t]herein, including actual damages, punitive damages, attorney's fees, cost of suit, interest as allowable by law and for such other relief, in law and inequity, to which Plaintiff may be justly entitled.” (Id. at 12-13.)

         On March 15, 2019, Defendant removed the suit on grounds of diversity jurisdiction under 28 U.S.C. § 1332, and it moved to dismiss Plaintiff's claims on March 22, 2019. (See docs. 1, 5.) Plaintiff responded on April 12, 2019 (doc. 10), and Defendant replied on April 23, 2019 (doc. 12). On April 11, 2019, Plaintiff moved to remand the case to state court. (doc. 9.) Defendant filed its response on May 1, 2019 (doc. 13), but Plaintiff did not file a reply.

         II. MOTION TO REMAND

         Plaintiff moves to remand on grounds that federal jurisdiction is lacking. (doc. 9 at 2.)

         Any civil action brought in state court may be removed to federal court if the district court has original jurisdiction over that action. 28 U.S.C. § 1441(a). A district court's original jurisdiction is of two types: federal question jurisdiction and diversity jurisdiction. 28 U.S.C. §§ 1331, 1332. Federal question jurisdiction exists in all civil actions arising under the Constitution, laws, or treaties of the United States. Id. § 1331. Diversity jurisdiction exists in all civil actions where the amount in controversy exceeds $75, 000.00, exclusive of interests and costs, and there is diversity of citizenship. Id. § 1332(a). “Section 1447(c) provides two grounds for remand: (1) a defect in removal procedure and (2) lack of subject matter jurisdiction.” Burks v. Amerada Hess Corp., 8 F.3d 301, 303 (5th Cir. 1993).

         To determine whether it has federal jurisdiction over the removed case, the court must “consider the claims in the state court petition as they existed at the time of removal.” Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002) (citing Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 264 (5th Cir. 1995)). “The removing party bears the burden of showing that federal jurisdiction exists and that removal was proper.” Id. “This burden extends not only to demonstrating a jurisdictional basis for removal, but also necessary compliance with the requirements of the removal statute.” Fraire v. Budget Rent-A-Car of El Paso, Inc., No. EP-10-CV-338-PRM, 2011 WL 3678584, at *2 (W.D. Tex. Mar. 31, 2011) (citing Burks, 8 F.3d at 303). If there is “any doubt about the propriety of removal, [it] must be resolved in favor of remand.” Gasch v. Hartford Acc. & Indem. Co., 491 F.3d 278, 281-82 (5th Cir. 2007).

         “[W]hen a court performs its duty to verify that it has jurisdiction, it may be required to survey the entire record, including the defendant's pleadings, and base its ruling on the complaint, on undisputed facts, and on its resolution of disputed facts.” Aquafaith Shipping, Ltd. v. Jarillas, 963 F.2d 806, 808 (5th Cir. 1992) (citation omitted); see also Smith v. Estate of Wagner, No. CIV A H 06-02629, 2006 WL 2729282, at *3 (S.D. Tex. Sept. 25, 2006) (explaining that a “court . . . [may] consider the defendant's notice of removal, other pleadings, and the record as of the time of removal if necessary to shed light on the plaintiff's pleadings”). “The purpose of this careful survey, however, is to shed light on the plaintiff's pleadings. The court's focus is on the plaintiff's pleadings, not the defendant's.” Aquafaith, 963 F.2d at 808.

         A. Timeliness

         Plaintiff initially contends that Defendant's answer to his state court petition was due by March 12, 2019, but Defendant failed to respond by that date, and instead removed this action on March 15, 2019. (See doc. 9 at 2.) His claim could liberally be construed as a challenge to the timeliness of the removal, i.e., a defect in the removal procedure.

         Removal of a civil action or proceeding from a state court must occur within thirty days after a defendant receives a pleading, motion, or other paper that suggests the existence of federal jurisdiction. 28 U.S.C. § 1446(b); see also Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344 (1999) (holding that the thirty-day deadline for removal commences on the date that the summons or citation is officially served). The Fifth Circuit has interpreted § 1446 to mean that “a defendant's right to removal runs from the date on which it is formally served with process.” Thompson v. Deutsche Bank Nat. Tr. Co., 775 F.3d 298, 303 (5th Cir. 2014). Until formally served with process, a defendant has no obligation to appear in court or defend an action before it, and the thirty-day removal period does not begin to run until that time. Id. (citing Michetti Pipe, 526 U.S. at 350).

         Here, Plaintiff contends that Defendant was formally served the state court petition on February 19, 2019. It had thirty days, until March 21, 2019, to remove the state case to federal court. Defendant filed its notice of removal in federal court on March 15, 2019, which complied with the requirements of § 1446(a). (See doc. 1.) Because Defendant's notice of removal was filed before March 21, 2019, removal was timely. To the extent that Plaintiff's motion to remand is premised on the alleged untimeliness of the removal, it should be denied.

         B. Pending Motion

         Plaintiff also argues that because he filed an application for entry of default in state court on the same day the case was removed based on Defendant's failure to timely answer, the case needs to be remanded “back to the proper jurisdiction of Dallas County Court so that the defendant can properly respond to the Default Judgment.” (See doc. 9 at 2.)

         Removal divests the state court of its jurisdiction, and the federal court acquires full and exclusive jurisdiction over the case as though it had been originally commenced in the federal court. See Moore v. Interstate Fire Ins. Co., 717 F.Supp. 1193, 1195 (S.D.Miss. 1989). By operation of law, all motions pending in state court at the time of removal remain pending as if they had been filed in federal court. See Murray v. Ford Motor Co., 770 F.2d 461, 464 (5th Cir. 1985) (holding that a motion to set aside a default judgment that was pending in state court prior to removal was a motion that could be considered by the district court). If federal jurisdiction exists and the defendant complies with the necessary requirements of the removal statute, there is no obligation to file an answer or response in the state court proceeding. See 28 U.S.C. § 1441. In fact, a defendant that learns of the litigation has the right to remove the state action even before it is formally served. See Thompson v. Deutsche Bank Nat'l Trust Co., 775 F.3d 298, 303 (5th Cir. 2014). A pending state court motion will not defeat removal. See Hundall v. Univ. of Texas at El Paso (UTEP), No. EP-13-CV-00365-DCG, 2013 WL 12090353, at *3 (W.D. Tex. Dec. 10, 2013) (“It is irrelevant when Plaintiff's state court motions were filed because pending motions do not bar removal.”).

         Even if Plaintiff's motions for entry of default and default judgment were pending at the time of removal, he has not demonstrated either a defect in the removal procedure or a lack of jurisdiction on this basis, and his motion for remand should be denied.

         III. MOTION FOR DEFAULT JUDGMENT

         As noted, Plaintiff moved for entry of default in state court on March 15, 2019, and for default ...


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