Traber v. Bank of Am.

LAWRENCE J. TRABER and ELGE L. TRABER, Plaintiffs, v. BANK OF AMERICA and BANK OF AMERICA HOME LOANS, Defendants.

CIVIL CASE NO. 1:13-cv-00184-MR-DLH

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA ASHEVILLE DIVISION

Signed: March 7, 2014

MEMORANDUM OF

DECISION AND ORDER

THIS MATTER is before the Court on Plaintiffs' Motion to Remand. [Doc. 5] and the Defendant's Motion to Dismiss [Doc. 2].

I. FACTUAL AND PROCEDURAL BACKGROUND

On May 23, 2013, the Plaintiffs filed this proceeding pro se in the Polk County General Court of Justice, Superior Court Division, against the Defendants Bank of America and Bank of America Home Loans, asserting claims for breach of warranty of good faith, failure to comply with the National Housing Act, 12 U.S.C. § 1701 et seq., fraud, and conversion, arising from the Plaintiffs' attempts to obtain a mortgage modification through Bank of America Home Loan Services in 2008-2009. [Doc. 1-2].On July 1, 2013, the Defendant Bank of America, N.A. filed a Notice of Removal of this action to this Court. [Doc. 1]. On July 8, 2013, the Defendant Bank of America, N.A. moved to dismiss the Plaintiffs' Complaint. [Docs. 2, 2-1].

On July 17, 2013, the Plaintiffs moved to remand this action to state court, arguing: (1) that the removing Defendant failed to join all of the named Defendants in the removal; (2) that the federal statutes cited in the Complaint, including 12 U.S.C. § 1701 et seq. and the Home Affordable Modification Program (HAMP), 12 U.S.C. § 5201 et seq., provide no private right of action and thus provide no grounds for federal jurisdiction; and (3) that the accompanying state law claims should be severed and remanded to state court. [Doc. 5].

The Defendant Bank of America, N.A., the only party to have appeared in defense of this action,¹ opposes the Plaintiffs' motion to remand. [Doc. 7]. In arguing that removal was proper, the Defendant cites its Corporate Disclosure Statement, which notes that the other defendant named in this action, "Bank of America Home Loans," is not an existingentity. Assuming that the Plaintiffs intended to name Bank of America Home Loans Servicing, LP as a defendant, defense counsel further notes that Bank of America Home Loans Servicing, LP merged with and into Bank of America, N.A. on July 1, 2011. [Doc. 3]. The Defendant further argues that removal was proper on the basis of federal question jurisdiction because the Plaintiffs attempt to state a federal cause of action in their Complaint. Finally, the Defendant argues that given the existence of federal question jurisdiction, the Court should exercise supplemental jurisdiction over the Plaintiffs' state law claims. [Doc. 7].

Having been fully briefed, this matter is ripe for review.

II. DISCUSSION

A. Motion to Remand

A defendant may remove a civil action from state court where the action is one "of which the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a). Federal district courts have original jurisdiction of civil actions which "aris[e] under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Since removal jurisdiction is not favored, the Court must "construe it strictly in light of the federalism concerns inherent in that form of federal jurisdiction," "resolv[ing] all doubts in favor of remand." In re Blackwater Sec. Consulting, LLC, 460 F.3d 576,583 (4^th Cir. 2006); Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4^th Cir. 1994). The burden is on the party seeking removal to demonstrate that federal jurisdiction is proper. See Mulcahey, 29 F.3d at 151.

1. Joinder of Defendants

For a civil action to be removed pursuant to section 1441(a),² "all defendants who have been properly joined and served must join in or consent to the removal of the action." 28 U.S.C. § 1446(b)(2)(A).

In this case, the Plaintiffs assert that Bank of America, N.A. improperly removed this case because Bank of America Home Loans Servicing LP neither joined in nor consented to the removal. As established by Bank of America, N.A.'s Corporate Statement, however, Bank of America Home Loans was subsumed by Bank of America, N.A. and is therefore a non-existent entity. [Doc. 3]. As a non-existent entity, this defendant could not be properly joined or served in this case nor could it properly join or consent for removal. See Davis v. OneBeacon Ins. Group, 721 F. Supp. 2d 329, 337 (D.N.J. 2010) (citing Newson v. CaliberAuto Transfer of St. Louis, Inc., No. 09-954-GPM, 2009 WL 4506298, at *2 (S.D.Ill. Nov. 26, 2009) (noting that a non-existent business entity "is not required to join in or consent to the removal of a case . . .); see also Frith v. Blazon-Flexible Flyer, Inc., 512 F.2d 899, 900 (5^th Cir. 1975) (allowing motion to remand because non-joining defendant was a trade name rather than a legal entity).

Accordingly, Bank of America Home Loans was not required to join in or consent to the removal of this action.

2. Existence of Federal Question

The Court next addresses the issue regarding the presence of a federal question in this action. "The presence or absence of [a] federal question is governed by the 'well-pleaded complaint rule,' which provides that federal question jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (citing Gully v. First National Bank, 299 U.S. 109, 112-13 (1936)). Federal jurisdiction also exists over state law claims which "implicate significant federal issues," issues which are substantial and contested, for which federal jurisdiction will not upset the "balance between federal and state judicial responsibilities." Grable & Sons Metal Products, Inc. v. Darue Eng'g &Mfg., 545 U.S. 308, 308 (2005). It is well-established that generally a "suit arises under the law that creates the cause of action." Id. at 819 (quoting Justice Holmes in American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260 (1916)); see also Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Trust for S. California, 463 U.S. 1, 8-9 (1983).

The claims that give rise to the Defendants' removal of this action are the Plaintiffs' asserted claim for "Failure to Comply with 12 U.S.C. § 1701" and the references within such claim and in their state law claims to the Home Affordable Modification Program, 12 U.S.C. § 5201 et seq. (HAMP). [Doc. 1-2]. The absence of a private right of action is often "highly relevant" to issues about the Congressional intent for federal question jurisdiction and the balance between federal and state judicial responsibilities. McKnight v. Surgical Associates of Myrtle Beach LLC, No. 4:11-cv-02782-RBH, 2011 WL 5869800, at *6 (D.S.C. Nov. 18, 2011) (citing Grable, 545 U.S. at 318); see also Henry McMaster v. Janssen Pharm. Inc., No. 6:07-1452-HMH, 2007 WL 2022173, at *3 (D.S.C. July 10, 2007). As the Plaintiffs note in support of their Motion to Remand, neither the National Housing Act, 12 U.S.C. § 1701 et seq., nor HAMP create a private right of action. See National Housing Act, § 1, 12 U.S.C. § 1702 (stating that the National Housing Act does not operate as basis for private right of action);see also Mosley v. Wells Fargo Bank, N.A., 802 F. Supp. 2d. 695, 698-99 (E.D. Va. 2011) (citing Bourdelais v. J.P. Morgan Chase Bank, No. 3:10CV670-HEH, 2011 WL 1306311, at *3 (E.D. Va. Apr. 1, 2011) (holding that "[f]ederal courts have uniformly held that relief cannot be granted to private plaintiffs for HAMP claims because HAMP created no private cause of action for borrowers against lenders, but instead designated compliance authority to Freddie Mac . . .")).

The Plaintiffs' claim for alleged failure to comply with 12 U.S.C. § 1701 was not asserted as an element of a state law claim and was not disguised in any way by a state law claim, but rather was asserted by the Plaintiffs as a singular claim for relief. [Doc. 1-2]. In determining whether this Court has federal question jurisdiction, this Court "must look to the way the complaint is drawn to see if it claims a right to recover under the Constitution and laws of the United States, for to that extent the party who brings a suit is master to decide what law he will rely upon." Lee v. Hodges, 321 F. 2d 480, 483 (4^th Cir. 1963) (citing Bell v. Hood, 327 U.S. 678, 681 (1946) (holding that federal jurisdiction was proper where alleged violations of federal law were listed in the complaint even though no federal remedy existed under such federal law)). Even if the Plaintiffs' allegations are inadequate to state a valid legal claim since they have no private rightof action under 12 U.S.C. § 1701 et seq., federal question jurisdiction is "not defeated . . . by the possibility that the averments [of the complaint] might fail to state a cause of action on which plaintiffs could actually recover . . . [F]or it is well settled that the failure to state a proper cause of action calls for a judgment on the merits and not for a dismissal for want of jurisdiction." Bell, 327 U.S. at 682.

Only in cases "where the alleged claim under the Constitution or federal statutes clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such claim is wholly insubstantial and frivolous" can a court dismiss the suit for lack of jurisdiction. Lee, 321 F.2d at 483-84 (citing Bell, 327 U.S. at 681-83). The Plaintiffs in this case made allegations regarding their mortgage modification attempts, indicating that the Defendants failed to comply with 12 U.S.C. § 1701 et seq. by not following appropriate processes in their foreclosure action and particularly "[b]y conducting an intentional campaign of delays and falsehoods in order to falsely deny [the Plaintiffs'] a loan modification." [Doc. 1-2]. Analysis of the Plaintiffs' claim for relief for "Failure to Comply with 12 U.S.C. § 1701" through the "well-pleaded complaint" rule thus...