United States District Court, N.D. Texas, Dallas Division
FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE
UNITED STATES MAGISTRATE JUDGE
L. HORAN UNITED STATES MAGISTRATE JUDGE.
case has been referred to the undersigned United States
magistrate judge for pretrial management under 28 U.S.C.
§ 636(b) and a standing order of reference from United
States District Judge Karen Gren Scholer.
Specialized Loan Servicing, LLC and Deutsche Bank National
Trust Company removed this action from the 193rd Judicial
District Court of Dallas County, Texas, to the United States
District Court for the Northern District of Texas, Dallas
Division, under 28 U.S.C. §§ 1332(a), 1441, and
1446 and assert that co-defendant Shapiro Schwartz, LLP's
citizenship should be disregarded for the purposes of
diversity because it is merely a nominal party that has been
Patricia Renee Gardner and Reginald Elam were ordered to file
a brief explaining whether, as Defendants argue in their
Notice of Removal [Dkt. No. 1], Shapiro Schwartz, LLP was
improperly joined and, if so, should be dismissed from this
lawsuit and whether subject matter jurisdiction otherwise
exists based on the complete diversity between any remaining,
properly joined parties. Dkt. No. 6. Plaintiffs have not
complied with that order.
undersigned concludes that, disregarding the citizenship of
the improperly joined Defendant, complete diversity of
citizenship exists between all properly-joined parties and
the amount in controversy in this action exceeds $75, 000
exclusive of costs and interest. Therefore, under 28 U.S.C.
§ 1332, the Court has subject matter jurisdiction over
about June 10, 2005, Plaintiffs executed a promissory note
and deed of trust to secure a lien on their home located at
222 River Birch Trail, Garland, Texas 75040. Dkt. No. 1.1 at
2. New Century Mortgage Corporation of Irvine, California was
Plaintiffs' original lender. Id. At some point
between 2005 and 2019, Plaintiffs' mortgage was assigned
to Deutsche Bank, a national banking association with its
principal place of business in the State of California. Dkt.
No. 1 at 4. Specialized Loan Servicing, LLC, a loan servicing
limited liability company with Australian citizenship, became
Plaintiffs' mortgage servicer. Id. at 3. At some
point after the assignment of the mortgage, Plaintiffs
defaulted on their loan.
allege that they never received a written notice of default
from their mortgage servicer. Dkt. No. 1.1. at 3. Plaintiffs
further allege that, during a phone call in March 2019, a
representative for Specialized Loan Servicing, LLC gave them
assurances that their loan would be modified and Plaintiffs
would be able to avoid a foreclosure sale until “all
available options [were] exhausted.” Id.
Plaintiffs also allege that the same representative advised
them that an assumption of the loan would be possible if a
loan modification was not successful. See id.
Despite these alleged assurances, on or about April 25, 2019,
Plaintiffs received a “Notice of Substitute
Trustee's Sale” providing notice that their home
would be publicly sold in foreclosure proceedings.
Id. Shapiro Schwartz, LLP, a law firm based out of
Houston, Texas, is the substitute trustee appointed to carry
out the foreclosure and related proceedings. The foreclosure
sale was scheduled for June 4, 2019. See id.
10, 2019, Plaintiffs filed their original petition in the
193rd Judicial District Court of Dallas County, Texas, styled
Patricia Renee Gardner and Reginald Elam v. Specialized
Loan Servicing LLC and Deutsche Bank National Trust Company
as Trustee for HIS Asset Corporation Trust 2006-HE1, Mortgage
Pass-Through Certificates, Series 2006-HE1, and Shapiro
Schwartz, LLP, Substitute Trustee(s), Cause No.
DC-19-06695. Plaintiffs' petition asserts state law
causes of action for breach of contract, promissory estoppel,
and breach of fiduciary duty based on the alleged wrongful
foreclosure and sale of their home. See Dkt. No. 1.1
at 3-5. Plaintiffs also claim that Defendants did not comply
with Texas State Property Code § 51.002(d), which
requires a mortgage servicer to provide a written notice of
default and at least 20 days to cure the default before
moving forward with foreclosure proceedings. See Id.
Loan Servicing, LLC's registered agent was served with a
citation and a copy of the original petition on May 17, 2019.
See Dkt. No. 1.3 at 2. Service was perfected on
Defendant Deutsche Bank by delivering a copy of the petition
and the citation to the office of the Secretary of State on
May 23, 2019. See Dkt. 1.4 at 2. Defendant Shapiro
Schwartz, LLP alleges that it was not properly served.
See Dkt. No. 1. Neither the citation nor the return
receipt for Shapiro Schwartz, LLP is addressed to either an
authorized agent for Shapiro Schwartz, LLP or the Secretary
of State. See Dkt. No. 1.5. at 2. The Officer's
Return for the citation shows that the document was delivered
to Shapiro Schwartz, LLP, on May 19, 2019, but the signature
on the return receipt is illegible. See id.
11, 2019 Defendants removed this case to federal court based
solely on diversity of citizenship under 28 U.S.C. §
1332(a). See Dkt. No. 1. They contend that complete
diversity exists because Plaintiffs are citizens of Texas,
Specialized Loan Servicing, LLC is a citizen of Australia,
Deutsche Bank is a citizen of California, and Shapiro
Schwartz, LLP “is a citizen of the State of Texas whose
citizenship should be disregarded for purposes of determining
diversity jurisdiction” because it is improperly joined
in this action. Id. at 4. Defendants also claim that
the amount in controversy requirement for diversity
jurisdiction is satisfied because the value of the property
that is the object of litigation exceeds $75, 000.
See Dkt. No. 1 at 6-7.
argue that Shapiro Schwartz, LLP is improperly joined because
Plaintiffs have no possibility of recovery against it, since
it is merely the substitute trustee assigned to carry out the
foreclosure proceedings. More specifically, Defendants
contend that Plaintiffs named “Shapiro Schwartz, LLP
[in this action] for the sole purpose of avoiding the
jurisdiction of the federal district court” and that
Plaintiffs have failed to plead any cause of action or
wrongdoing by the firm as substitute trustee. Id. at
4-5. Defendants also argue that Plaintiffs have failed to
properly effectuate service of process on Shapiro Schwartz,
LLP. See Id. at 5.
Subject Matter Jurisdiction Over Actions Removed from
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.”). Where subject
matter jurisdiction is based on diversity, the
“presence in the action of a single plaintiff from the
same State as a single defendant deprives the district court
of original diversity jurisdiction over the entire
action.” Intl. Energy Ventures Mgmt. v. United
Energy Grp. Ltd., 818 F.3d 193, 209 (5th Cir. 2016).
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). 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. Mississippi v. JP Morgan Chase & Co., 737
F.3d 78, 89 (5th Cir. 2013).
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) ...