United States District Court, W.D. Missouri, Western Division
ORDER DISMISSING FRAUDULENTLY JOINED DEFENDANT AND GRANTING SUMMARY JUDGMENT FOR REMAINING DEFENDANTS
GREG KAYS, District Judge.
This case arises from the non-judicial foreclosure sale of Plaintiffs Richard and Billie Wyatt's residence in Blue Springs, Missouri. Prior to the foreclosure sale, Plaintiffs filed a pro se petition in the Circuit Court of Jackson County, Missouri against Defendants Liberty Mortgage Corporation ("Liberty"), Branch Banking and Trust Company ("BB&T"), and Millsap & Singer, P.C. ("Millsap") (collectively the "Defendants"). BB&T and Liberty removed here, and the Court denied Plaintiffs' motion to remand, finding that Millsap was fraudulently joined to defeat diversity jurisdiction (Doc. 17).
Plaintiffs then filed a three-count amended complaint (the "Amended Complaint") against Liberty, BB&T, and Millsap, alleging claims for quiet title (Count I), wrongful foreclosure (Count II), and conversion, unjust enrichment, and breach of a fiduciary duty (Count III). Now before the Court is Defendants' motion for summary judgment (Doc. 21).
Because Plaintiffs once again fraudulently joined Millsap in an attempt to defeat diversity jurisdiction, the claims against it are DISMISSED WITHOUT PREJUDICE. Having jurisdiction to entertain the summary judgment motion and finding that there is no dispute of material fact and that Liberty and BB&T are entitled to judgment as a matter of law, the Court GRANTS summary judgment in their favor.
Undisputed Material Facts
The Court treats the following facts as undisputed. On May 22, 2009, Plaintiffs borrowed $160, 459.00 from Liberty to finance the purchase of a home in Blue Springs, Missouri (the "Property"). On this same day, Plaintiffs executed a promissory note (the "Note") in this amount, and secured the loan with a deed of trust (the "Deed of Trust"), which was later recorded with the Jackson County Recorder's Office. The Deed of Trust: named Liberty as the lender; Mortgage Electronic Registration Systems, Inc. ("MERS") as nominee for Liberty, its successors, and its assigns; and Charterland Title, LLC ("Charterland") as trustee. It also contained several provisions governing foreclosure. Under the agreement, the lender or its nominee possessed the power to foreclose upon the Property in the event that Plaintiffs defaulted on the loan. Prior to any such sale, the trustee was required to give notice to Plaintiffs and the public, but no provision required the trustee or the lender to produce the Note prior to foreclosing. At the sale, the trustee was required to sell the Property to the highest bidder, and the lender was allowed to purchase it.
Shortly after the May 2009 loan origination, Liberty assigned the Note to its then-parent company BB&T via a specific endorsement. Around that same time, BB&T endorsed the Note in blank, but BB&T has retained it ever since. In 2011, Liberty was dissolved.
After routinely satisfying their payment obligations for several years, Plaintiffs missed several monthly installments in 2012. The loan eventually settled into default. This default was followed by BB&T initiating several transfers that culminated in foreclosure. On January 7, 2013, MERS assigned the Deed of Trust to BB&T, which was recorded three days later. BB&T then appointed Millsap as the successor trustee, which was recorded on January 22, 2013. BB&T subsequently ordered Millsap to foreclose. Millsap then scheduled the foreclosure sale for February 20, 2013, and disseminated notice of such to Plaintiffs and the public. At the foreclosure sale, Millsap sold the Property to BB&T via a credit bid in the amount of $172, 846.18. Millsap finalized the sale by recording a trustee's deed with the Jackson County Recorder's Office on February 27, 2013.
Prior to the foreclosure sale, Plaintiffs filed a three-count lawsuit in the Circuit Court of Jackson County, Missouri, alleging a variety of wrongs. After removal and remand denial, Plaintiffs filed the Amended Complaint. Defendants now seek summary judgment on all counts.
I. The Court has subject-matter jurisdiction over this dispute.
Although not raised by the parties, the Court must first determine whether it possesses subject-matter jurisdiction to entertain the summary judgment motion. See Fed.R.Civ.P. 12(h)(3). In particular, the Court has concerns that Millsap's continued presence in this lawsuit deprives it of jurisdiction. Previously, the Court found that it possessed subject-matter jurisdiction notwithstanding the fact that Millsap and Plaintiffs were all citizens of Missouri, because it determined that Plaintiffs fraudulently joined Millsap to defeat jurisdiction. See Wyatt v. Liberty Mortg. Corp., No. 4:13-CV-00317, 2013 WL 6730298, at *3-6 (W.D. Mo. Dec. 19, 2013). Because Plaintiffs once again joined Millsap under the Amended Complaint with similar allegations to the initial complaint, the Court again questions whether Millsap is fraudulently joined.
When a district court determines that a defendant is fraudulently joined, it should dismiss the claims against it for lack of subject-matter jurisdiction. Wivell v. Wells Fargo Bank, N.A., No. 13-2763, 2014 WL 6463030, at *5 (8th Cir. Nov. 19, 2014). A defendant is fraudulently joined "if it is clear under governing state law that the complaint does not state a cause of action against the non-diverse defendant, " here Millsap. Filla v. Norfolk & S. Ry., 336 F.3d 806, 810 (8th Cir. 2003) (internal quotations omitted). However, the joinder is not fraudulent "if there is a reasonable basis in fact and law supporting the claim, " even if that reasonable basis is speculative. Id. at 810 & n.10. In making this determination, the court typically confines its analysis to the facts alleged in the complaint, unless other record evidence clearly shows those allegations lack factual support. See Block v. Toyota Motor Corp., 665 F.3d 944, 945 (8th Cir. 2011) (noting that courts may look beyond the pleadings to determine whether there is factual support for a claim).
With this standard in mind, the Court now reviews the claims against Millsap. Liberally construing the Amended Complaint, Plaintiffs raise three distinct causes of action against Millsap: (1) a quiet title claim (Count I); (2) a wrongful foreclosure claim (Count II); and (3) a breach of ...