United States District Court, W.D. Missouri, Western Division
STEPHEN R. BOUGH UNITED STATES DISTRICT JUDGE
the Court are 1) Defendant Martin Leigh PC's Motion to
Dismiss (Doc. #5) and 2) Plaintiff's Motion for Remand
(Doc. #12). Defendants Ocean 18, LLC and Nationwide Servicing
Center, Inc. filed a notice joining, in part, Defendant
Martin Leigh's motion to dismiss. (Doc. #9).
Plaintiff's Motion for Remand (Doc. #12) is GRANTED. This
case is remanded to the Circuit Court of Jackson County,
Missouri. Defendant Martin Leigh PC's Motion to Dismiss
(Doc. #5) will remain pending for the state court's
Yvette Baker filed this action in the Circuit Court of
Jackson County, Missouri on December 11, 2018.
Plaintiff's claims arise from the purported, attempted,
wrongful non-judicial foreclosure of her property.
Plaintiff's original verified petition included claims
against Ocean 18, Nationwide, and Martin Leigh (collectively
“Defendants”) for violations of the Missouri
Merchandising Practices Act (“MMPA”) and a
request for injunctive relief to prevent the foreclosure of
Plaintiff's property. A preliminary injunction was issued
on December 21, 2018. Defendants filed a motion to dismiss on
December 17, 2018, and Plaintiff filed a motion for leave to
file an amended petition on January 11, 2019. On February 5,
2019, and before the state court ruled on the pending motion
for leave to file an amended petition, Defendants removed the
case to this Court on the basis of diversity jurisdiction.
Given that the operative, original petition did not satisfy
the amount-in-controversy requirement, this Court remanded
the case to state court on April 23, 2019.
remand, the state court granted Plaintiff leave to file an
amended petition, which was filed on July 2, 2019. On August
1, 2019, Defendants again removed the case to this Court. The
now operative, first-amended petition includes three counts
against the same Defendants. Counts I and II are MMPA claims
against all Defendants, and Count III is a state-wide,
class-action claim against only Defendant Martin Leigh for
violation of the MMPA. The first-amended petition defines the
All Missouri citizens who received a debt collection letter
from Martin Leigh between 2007 and the present where Martin
Leigh was acting on behalf of a debt purchaser.
(Doc. #1-1, ¶ 73).
Martin Leigh's Notice of Removal states this Court has
subject-matter jurisdiction under the Class Action Fairness
Act, 28 U.S.C. §§ 1332(d)(2) and 1453.
Alternatively, Defendant Martin Leigh states traditional
diversity jurisdiction exists because Defendant Martin Leigh
has been fraudulently joined in this case in that a successor
trustee under a deed of trust cannot be found liable for MMPA
violations as a matter of law. The parties' citizenship
is undisputed. Plaintiff is a Missouri citizen, and Defendant
Martin Leigh is also a Missouri citizen. For purposes of
CAFA, Ocean 18 is a citizen of California and Delaware, and
Nationwide is a California citizen.
original petition identified Defendant Martin Leigh as a
successor trustee under a deed of trust. The first-amended
petition does not use the term “successor
trustee” but characterizes Defendant Martin Leigh as a
debt collector. More important for this Court's analysis,
however, are the allegations of actual misconduct by
Defendant Martin Leigh, some of which fall inside the
successor-trustee role and some of which fall outside the
Court will summarize Plaintiff's allegations in the
first-amended petition. On September 30, 2005, Plaintiff
signed two Promissory Notes and two Deeds of Trust granting a
first and second mortgage to EquiFirst Corporation. The
second mortgage was in the amount of $26, 600.00. The
mortgages and/or servicing of the mortgages were thereafter
transferred to other entities. On or around July 1, 2009,
Plaintiff began making all mortgage payments to the then loan
servicer, GMAC Mortgage, LLC. On August 8, 2012, GMAC sent
Plaintiff a letter approving a modification of
Plaintiff's mortgages. Plaintiff thereafter paid the
modified payments. Plaintiff did not receive any notice that
her second mortgage or the servicing of her second mortgage
was transferred to Ocean 18 or Nationwide. Plaintiff did not
receive any notice of default until August 3, 2018, when
Plaintiff received a 45-day Notice of Demand - Intent to
Foreclose and Right to Cure from Mortgage Default Services,
LLC for the amount of $29, 123.90. Plaintiff alleges she was
not in default on the second mortgage.
October 15, 2018, Defendant Martin Leigh recorded a Request
for Notice of Sale dated October 12, 2018. Defendant Martin
Leigh published notice in a newspaper of the foreclosure sale
scheduled for December 13, 2018. On or about November 14,
2018, Plaintiff received fifteen certified-mail letters from
Defendant Martin Leigh notifying Plaintiff of the
trustee's sale scheduled for December 6, 2018, at 12:30
p.m. On December 4, 2018, Plaintiff sent Defendant Martin
Leigh a letter requesting validation of the debt. On December
7, 2018, Plaintiff received from Defendant Martin Leigh a
packet of documents that included a copy of the second note.
The second note indicated there were three allonges
containing alleged endorsements of the second note. The third
allonge was not affixed to the second note. The packet
included a letter from Defendant Martin Leigh on the bottom
of which was a statement in all capital letters,
“MARTIN LEIGH PC IS ATTEMPTING TO COLLECT A DEBT AND
ANY INFORMATION OBTAINED WILL BE USED FOR THAT
PURPOSE.” (Doc. #1-1, p. 23).
December 11, 2018, Plaintiff's counsel inspected the
second note at Defendant Martin Leigh's office, and
Plaintiff's counsel requested a scanned copy of the
second note. The December 11 scanned copy “was
substantially different” than the December 7 copy in
that the December 11 copy had a third allonge affixed to the
second note. (Doc. #1-1, p. 7). Plaintiff alleges,
“Upon information and belief, the second note was
altered in order to argue that it was in compliance with the
applicable laws of Missouri requiring all allonges to be
firmly fixed to the note to be enforceable, and Ocean 18,
Nationwide, and Martin Leigh were the only parties who had
access to the second note to make alterations.” (Doc.
#1-1, p. 14).
December 14, 2018, Defendant Martin Leigh proposed a
“workout arrangement” that would allow Plaintiff
to make payments over time. On February 28, 2019, Defendant
Martin Leigh proposed Plaintiff make a $38, 000 payment to
Ocean 18 to satisfy the debt. In connection with the
state-wide class-action claim, Plaintiff alleges,
“Martin Leigh's business involves the collection of
debts and its collection activities were carried out to
attempt to complete the sale transactions on behalf of the
servicer's collection process.” (Doc. #1-1, p. 11).
Martin Leigh filed its motion to dismiss on August 7, 2019.
In the motion to dismiss, Defendant Martin Leigh argues
Plaintiff failed to state a claim against Defendant Martin
Leigh because the MMPA does not apply to successor trustees
under a deed of trust. Defendant Martin Leigh also argues,
and Defendants Ocean 18 and Nationwide join in this portion
of the motion, that Plaintiff's MMPA claims fail because
Plaintiff does not allege an ascertainable loss. On August
16, 2019, Plaintiff filed her motion for remand. Though the
motion to dismiss was filed first, the Court must find it has
subject-matter jurisdiction over this matter before it can
consider any merits arguments under Federal Rule of Civil
Procedure 12(b)(6). See 28 U.S.C. § 1447(c)
(“If at any time before final judgment it appears that
the district court lacks subject matter jurisdiction, the
case shall be remanded.).
may remove to federal court “any civil action brought
in a State court of which the district courts of the United
States have original jurisdiction[.]” 28 U.S.C. §
1441(a). The party seeking removal bears the burden of
establishing subject-matter jurisdiction. In re Bus.
Men's Assurance Co. of Am., 992 F.2d 181, 183 (8th
Cir. 1993). “[A] district court is required to resolve
all doubts about federal jurisdiction in favor of
remand.” Transit Cas. Co. v. Certain Underwriters
at Lloyd's of London, 119 F.3d 619, 625 (8th Cir.
1997) (citation omitted).
to 28 U.S.C. § 1332(a)(1), “The district courts
shall have original jurisdiction of all civil actions where
the matter in controversy exceeds the sum or value of $75,
000, exclusive of interest and costs, and is between-(1)
citizens of different states[.]” Section 1332(a)(1)
requires complete diversity, which means “each
defendant is a citizen of a different State from
each plaintiff.” Owen Equip. &
Erection Co. v. Kroger, 437 U.S. 365, 373 (1978)
(emphasis in original). Removal based on CAFA, however,
requires only minimal diversity. Pursuant to §
1332(d)(2)(A), “The district courts shall have original
jurisdiction of any civil action in which the matter in
controversy exceeds the sum or value of $5, 000, 000,
exclusive of interest and costs, and is a class action in
which-(A) any member of a class of plaintiffs is a citizen of
a State different from any defendant[.]” Two mandatory
exceptions to CAFA jurisdiction are codified at §
1332(d)(4)(A) and (B), the local-controversy exception and
the home-state exception, respectively.
doctrine of fraudulent joinder allows a district court to
assume jurisdiction over a facially nondiverse case
temporarily and, if there is no reasonable basis for the
imposition of liability under state law, dismiss the
nondiverse party from the case and retain subject matter
jurisdiction over the remaining claims.” Murphy v.
Aurora Loan Svcs., LLC, 699 F.3d 1027, 1031 (8th Cir.
2012). The Eighth Circuit has articulated the fraudulent
Where applicable state precedent precludes the existence of a
cause of action against a defendant, joinder is fraudulent.
“[I]t is well established that if it is clear
under governing state law that the complaint does not state a
cause of action against the non-diverse defendant, the
joinder is fraudulent and federal jurisdiction of the case
should be retained.” Iowa Pub. Serv. Co. v. Med.
Bow Coal Co., 556 F.2d 400, 406 (8th Cir. 1977).
However, if there is a “colorable” cause of
action-that is, if the state law might impose
liability on the resident defendant under the facts
alleged-then there is no fraudulent joinder. See Foslip
Pharm., Inc. v. Metabolife Int'l, Inc., 92 F.Supp.2d
891, 903 (N.D. Iowa 2000). As we recently stated in
[Wiles v. Capitol Indem. Corp., 280 F.3d 868, 871
(8th Cir. 2002)], “. . . joinder is fraudulent when