Kessler v. Fay Servicing, LLC, CIVIL ACTION NO. 2:18-cv-00518

BRANDA M. KESSLER, Plaintiff, v. FAY SERVICING, LLC, Defendant.

CIVIL ACTION NO. 2:18-cv-00518

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA CHARLESTON DIVISION

September 27, 2018

MEMORANDUM OF OPINION AND ORDER

Before this Court is Plaintiff Branda M. Kessler's ("Plaintiff") Motion to Remand. (ECF No. 4.) For the reasons explained more fully herein, the motion is GRANTED.

I. BACKGROUND

Plaintiff filed this action against Defendant Fay Servicing, LLC ("Defendant") on February 23, 2018, in the Circuit Court of Kanawha County, West Virginia. (ECF No. 1-1.) She alleged state-law claims arising from Defendant's conduct as the servicer of her mortgage loan. (Id.) Defendant removed the case to this Court on April 2, 2018, asserting federal subject matter jurisdiction based on diversity of citizenship. (ECF No. 1 at 3.) On April 9, 2018, Plaintiff amended her complaint to add additional state-law claims. (ECF No. 3.)

Shortly thereafter, on April 18, 2018, Plaintiff filed a motion to remand the case to state court. (ECF No. 4.) Defendant timely responded to the motion on May 1, 2018. (ECF No. 7.) Plaintiff filed a timely reply on May 8, 2018. (ECF No. 9.) As such, Plaintiff's motion has been fully briefed and is ripe for adjudication.

II. LEGAL STANDARD

"[A]n action initiated in a state court can be removed to federal court only if it might have been brought in federal court originally." Sonoco Prods. Co. v. Physicians Health Plan, Inc., 338 F.3d 366, 370 (4th Cir. 2003) (alteration and internal quotation marks omitted); see 28 U.S.C. § 1441(a). As relevant here, this Court "ha[s] original jurisdiction of all civil actions where the matter in controversy exceeds . . . $75,000 . . . and is between . . . citizens of different States." 28 U.S.C. § 1332(a)(1); see Lontz v. Tharp, 413 F.3d 435, 439 (4th Cir. 2005) ("Since diversity always vests original jurisdiction in the district courts, diversity also generates removal jurisdiction.").¹ Defendant bears the burden to demonstrate the existence of subject matter jurisdiction. Scott v. Cricket Commc'ns, LLC, 865 F.3d 189, 194 (4th Cir. 2017) ("If the plaintiff challenges removal, . . . the defendant 'bears the burden of demonstrating that removal jurisdiction is proper.'" (emphasis deleted)); Sonoco Prods. Co., 338 F.3d at 370 ("The burden of demonstrating jurisdiction resides with 'the party seeking removal.'").

Generally, "[t]he removability of a case depends upon the state of the pleadings and the record at the time of the application for removal." Francis v. Allstate Ins. Co., 709 F.3d 362, 367 (4th Cir. 2013) (internal quotation marks omitted). This means that the case must "be fit for federal adjudication at the time the removal petition is filed." Moffitt v. Residential Funding Co., 604 F.3d 156, 159 (4th Cir. 2010) (quoting Caterpillar Inc. v. Lewis, 519 U.S. 61, 73 (1996)). "But the mere fact that a case does not meet this timing requirement is not 'fatal to federal-court adjudication' were jurisdictional defects are subsequently cured." Id. (quoting Lewis, 519 U.S. at 64). "Thus, if a plaintiff voluntarily amends his complaint to allege a basis for federal jurisdiction[prior to moving to remand], a federal court may exercise jurisdiction even if the case was improperly removed." Id.; see Cades v. H&R Block, Inc., 43 F.3d 869, 873 (4th Cir. 1994) ("[A]n initial lack of the right to removal may be cured when the final posture of the case does not wrongfully extend federal jurisdiction.").²

III. DISCUSSION

A. Amount in Controversy

In general, the "notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold." Dart Cherokee Basin Operating Co. v. Owens, 135 S. Ct. 547, 554 (2014). However, if "the plaintiff contests . . . the defendant's allegation," the defendant must establish the amount in controversy "by the preponderance of the evidence." Id. at 553-54; see 28 U.S.C. § 1446(c)(2)(B). That is, the defendant's evidence must "show[] it is more likely than not that a fact finder might legally conclude that damages will exceed the jurisdictional amount." Scott, 865 F.3d at 196. "When a plaintiff's complaint leaves the amount of damages unspecified, the defendant must provide evidence to 'show . . . what the stakes of litigation . . . are given the plaintiff's actual demands.'" Id. at 194. "The key inquiry in determining whether the amount-in-controversy requirement is met is not what the plaintiff will actually recover but 'an estimate of the amount that will be put at issue in the course of the litigation.'" Id. at 196.

Plaintiff's amended complaint seeks five types of relief: statutory penalties; actual damages, including emotional damages; punitive damages; attorney's fees; and declaratory relief. (ECF No. 3.) Plaintiff also seeks "[s]uch other relief as the Court deems equitable and just." (Id.) Each is addressed in turn.

1. Statutory Penalties

The parties agree that the complaint alleges nine violations of the West Virginia Consumer Credit and Protection Act ("WVCCPA"), W. Va. Code § 46A-1-101, et seq. The WVCCPA provides for statutory penalties in the amount of $1,000 per violation. Id. § 46A-5-101(1).³ Thus, the parties agree that the initial complaint alleges $9,000 in statutory penalties. (See ECF No. 7 at 3-4; ECF No. 9 at 1-2.) The amended complaint alleges five additional violations, for a total of $14,000 in statutory penalties. (See ECF No. 3 at 4.)

Defendant further asserts that the complaint alleges 30 violations based on the allegation that Defendant "held each payment made following the February 9, 2017 notice of right to cure in suspense, and Plaintiff made bi-weekly payments," and 17 violations based on the allegation that "Plaintiff's statements allegedly show a past due balance because Defendant . . . never deferred November 2016's payment." (ECF No. 7 at 3.) Plaintiff responds that "[e]ach of these assertions is an over-reading of the [complaint's] allegations." (ECF No. 9 at 2.) This Court agrees with Plaintiff.

The amended complaint alleges, "Plaintiff's statements show a past due balance because Defendant . . . never deferred November 2016's payment. Instead, it applied funds paid inDecember 2016 to the November 2016 payment." (ECF No. 3 at 2.) This Court does not read the complaint to allege distinct WVCCPA violations stemming from the fact that Plaintiff's statement showed a past-due balance each month. Rather, it alleges that Defendant failed to defer the November 2016 payment, which caused Plaintiff's statements to reflect a past-due balance. This is a single alleged violation, which has already been accounted for in the 14 violations mentioned above.

The amended complaint further alleges, "Defendant . . . then issued Plaintiff a right to cure default on February 9, 2017, and held her payments made after that time in a suspense account, including after sufficient funds accrued to make a full payment." (ECF No. 3 at 3.) Plaintiff argues that this allegation, insofar as it relates to "how debt collectors must treat partial payments and whether and when to apply payments made after a notice of right to cure has issued," does not correspond with any claim in the complaint. (ECF No. 9 at 2-3.) As Plaintiff points out, the WVCCPA includes provisions instructing creditors how to apply payments in such a situation. See W. Va. Code §§ 46A-2-115(c); 46A-3-111. None of Plaintiff's claims are based on violations of either of these statutes. (See ECF No. 3.) Therefore, this Court agrees with Plaintiff that no violation can be ascribed to this allegation.

In total, Plaintiff's amended complaint can fairly be read to allege 14 WVCCPA violations, for a total of $14,000 in statutory penalties that is counted toward the amount in controversy.

2. Actual and Punitive Damages

Plaintiff alleges that her actual damages stem from "stress, annoyance and inconvenience, harm to credit and ability to obtain credit, and fear of loss of home." (ECF No. 3 at 5.) Defendant, citing Weddington v. Ford Motor Credit Co., 59 F. Supp. 2d 578 (S.D.W. Va. 1999) (Hallanan, J.), asserts that these damages "could easily exceed the $75,000 amount in controversyrequirement." (ECF No. 1 at 7.) This Court in Weddington, "[u]sing common sense," concluded "that it would not be unreasonable for a damage judgment [based on allegations of "mental anxiety, suffering, annoyance, aggravation, inconvenience and humiliation"] to be entered . . . in excess of the jurisdictional requisite of $75,000." 59 F. Supp. 2d at 584. However, this Court declines to make such a leap in this case. It is Defendant's obligation to establish the amount in controversy "by the preponderance of the evidence." 28 U.S.C. § 1446(c)(2)(B). Absent a settlement demand, see Justice v. Branch Banking & Trust Co., No. 2:16-cv-03272, 2017 WL 55870, at *4 (S.D.W. Va. Jan. 4, 2017), evidence of actual monetary loss, see Judy v. J.K. Harris & Co., No. 2:10-cv-01276, 2011 WL 4499316, at *5 (S.D.W. Va. Sept. 27, 2011), or other evidence demonstrating that an award exceeding $75,000 is appropriate or likely under these circumstances, this Court will not rely on speculation masked as "common sense."

Plaintiff's request for punitive damages is limited to her common-law claim for breach of contract. (See ECF No. 3 at 8.) The WVCCPA, which is the basis for Plaintiff's other claims, "does not provide a statutory basis for an award of punitive damages." Quicken Loans, Inc. v. Brown, 777 S.E.2d 581, 598 n.20 (W. Va. 2014). More importantly, as with respect to Plaintiff's request for actual damages, Defendant asks this Court to assume that any award of punitive damages would be large enough to surpass the jurisdictional threshold. This Court refuses to make such an assumption in the absence of any evidence to support it. "To meet its burden, [Defendant] must provide enough facts to allow [this Court] to determine—not speculate—that it is more...