United States District Court, N.D. Texas, Dallas Division
SCHUTZE SIGNATURE HOMES, LLC, A TEXAS LIMITED LIABILITY COMPANY, Plaintiff,
FAIRVIEW INVESTMENT FUND III, LP, BECKHAM CAPITAL GROUP, LLC, AS TRUSTEE UNDER THE DEED OF TRUST, AND JASON KRAUS, AS SUBSTITUTE TRUSTEE, Defendants.
FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE
UNITED STATES MAGISTRATE JUDGE
L. HORAN UNITED STATES MAGISTRATE JUDGE.
Schutze Signature Homes, LLC has filed a Motion for Temporary
Restraining Order [Dkt. No. 8], which Senior United States
District Judge Sam R. Cummings has referred to the
undersigned United States Magistrate Judge for hearing and
entry of Findings, Conclusions, and Recommendation.
See Dkt. No. 10 at 1. The referral order also
provides that the undersigned “may elect to consider
Plaintiff's Motion for Leave to Amend [Dkt. No. 7], as
well as Plaintiff's Motion for Remand [Dkt. No. 9],
which, if granted, would effectively moot Plaintiff's
Motion for Temporary Restraining Order.” Id.
at 1 n.1.
reasons explained below, the Court should conclude that
Defendants Beckham Capital Group LLC as Trustee under the
Deed of Trust and Jason Kraus as Substitute Trustee were
improperly joined and that the Court has subject matter
jurisdiction over this removed action and the Court should
deny Plaintiff's Motion for Temporary Restraining Order
[Dkt. No. 8].
purchased real property located in Dallas County, Texas, on
February 28, 2018. See Dkt. No. 1 at 17-36. To
finance the purchase, Plaintiff and Fairview entered a Loan
and Security Agreement, which was secured by a Deed of Trust,
a Secured Promissory Note, a Collateral Assignment and
Security Agreement, and Personal Guarantees by Nolan Schutze
and Hope Schutze (the “Loan Documents”). See
Id. at 38-171.
September 4, 2019, Fairview noticed the property for
foreclosure. The foreclosure sale was scheduled for October
1, 2019. See Id. at 184-89.
September 30, 2019, Plaintiff filed suit in state court to
stop the foreclosure. Plaintiff sued the lender, Fairview;
the trustee under the deed of trust, Beckham Capital Group,
LLC; and the substitute trustee, Jason Kraus. See
Id. at 17- 36; see also Cause No. DC-19-15873
in the 192nd Judicial District Court of Dallas County, Texas.
Plaintiff alleged that it is a Texas limited liability
company; that Fairview is a foreign limited partnership
organized and existing under the laws of Delaware with its
home office in Seattle, Washington; that Beckham is a Texas
limited liability company; and that Krause is an individual
residing in Texas. See Id. at 18.
September 30, 2019, the state court entered an amended
temporary restraining order to prevent Defendants from
“[t]aking any action to foreclose on the
property.” See Id. at 267-69.
October 10, 2019, Defendants Kraus and Beckham filed verified
denials in state court, asserting that they were not liable
in the capacities in which they had been sued as substitute
trustee and trustee, respectively. See Id. at
also on October 10, 2019, Defendants removed the case to this
Court on the basis of diversity jurisdiction. See
Dkt. No. 1. According to the notice of removal, Plaintiff
“is a Texas limited liability company and upon
information and belief, its members are Texas residents,
” and Fairview “is a foreign limited partnership
organized and existing under the laws of the State of
Delaware, whose home office is located at...Seattle,
Washington.” See Id. at 4. Defendants contend
that diversity exists because the in-state defendants -
Beckham and Krause - were improperly joined.
October 14, 2019, Fairview again noticed the property for
foreclosure. The foreclosure sale was scheduled for November
5, 2019. See Dkt. No. 8-1 at 272-75.
November 1, 2019, Plaintiff filed a motion for temporary
restraining order to stop the scheduled November 5, 2019,
foreclosure sale. See Dkt. No. 8. Plaintiff also
filed a motion to remand, see Dkt. No. 9; a motion
to amend the original petition, see Dkt. No. 7; and
a motion for order to show cause concerning alleged
violations of the September 30, 2019 amended temporary
restraining order, see Dkt. No. 6.
November 4, 2019, Judge Cummings referred the motion for
temporary restraining order to the undersigned, see
Dkt. No. 10; Fairview filed a response, see Dkt. No.
11; and the undersigned heard oral argument, see
Dkt. No. 12.
oral argument, the undersigned directed the parties to file
supplements to Plaintiff's Motion to Remand and
Defendants' Notice of Removal to provide all necessary
information regarding the parties' citizenship as
required for diversity jurisdiction. See Dkt. No.
13. Plaintiff filed a Supplement to Plaintiff's Motion to
Remand that explained:
1. Plaintiff Schutze Signature Homes, LLC is a single member
Texas Limited Liability Company. It was formed in Texas, does
business in Texas, and has its principal office in Texas. The
single member is an individual, Nolan Schutze, who is a
resident and citizen of the State of Texas.
2. Defendant Jason Kraus is an individual, who is a resident
and citizen of the State of Texas. Mr. Kraus has admitted
before this Court, on November 4, 2019, that he is a citizen
of the State of Texas.
3. Defendant Beckham Capital Group, LLC is a Texas Limited
Liability Company, which was formed in Texas, does business
in Texas, and has its principal office in Texas. To the best
of Plaintiff's knowledge, it is a single member entity,
owned by Mr. Beck Beckham, who is a resident and citizen of
the State of Texas.
4. Defendant Fairview Investment Fund III, LP is a Delaware
Limited Partnership whose principal place of business is at
119 S. Main Street, Suite 410, Seattle WA 98140. To the best
of Plaintiff's knowledge, Defendant Fairview does not
have any filings on file with the Texas Secretary of State.
Other than the transaction forming the basis of this
transaction, Plaintiff does not know if Defendant Fairview
regularly conducts business in the State of Texas. Plaintiff
does not have any personal knowledge who the partners of
Defendant Fairview may be.
Dkt. No. 14 at 1-2.
filed a Response to Plaintiff's Motion to Remand,
see Dkt. No. 15, and attached an Unsworn Declaration
of Carson Rasmussen Regarding Citizenship of Membership ...