White v. Newrez LLC

MARCELINE WHITE,On behalf of herself individually and similarly situated persons Plaintiff, v. NEWREZ LLC, d/b/a SHELLPOINT MORTGAGE SERVICING, et al., Defendants.

Civil Action No. RDB-20-1259

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

August 17, 2020

MEMORANDUM OPINION

Plaintiff Marceline White ("Plaintiff" or "White") brings this putative class action, on behalf of herself and similarly situated persons, against Defendants NewRez, LLC, doing business as Shellpoint Mortgage Servicing ("Shellpoint"), and Federal National Mortgage Association ("Fannie Mae") (collectively "Defendants"). (Am. Compl., ECF No. 7.) In her Amended Complaint,¹ White alleges that Defendants violated Maryland's Consumer Debt Collection Act, Md. Code Ann., Com. Law §§ 14-201 et seq. ("MCDCA") and Maryland's Consumer Protection Act, Md. Code Ann., Com. Law §§ 13-101 et seq ("MCPA"). (Id.)

Currently pending before this Court is Plaintiff's Motion to Remand (ECF No. 14). Also pending is Plaintiff's Motion to Certify a Class and Subclass, Appoint Class Representatives and Class Counsel Pursuant to MD Rule 2-231 (ECF No. 9). The parties' submissions have been reviewed, and no hearing is necessary. See Local Rule 105.6 (D. Md.2018). For the reasons stated below, Plaintiff's Motion to Remand (ECF No. 14) is GRANTED, and Plaintiff's Motion to Certify a Class and Subclass, Appoint Class Representatives and Class Counsel Pursuant to MD Rule 2-231 (ECF No. 9) is DENIED AS MOOT. This case will be remanded to the Circuit Court for Anne Arundel County, Maryland.

BACKGROUND

The facts contained herein are taken largely from Plaintiff's Amended Complaint (ECF No. 7) and are viewed in Plaintiff's favor in light of the Defendants' removal of this action from state court. Plaintiff White owns real property in Baltimore, Maryland for which she has a mortgage loan with Defendant Shellpoint, a mortgage lender and servicer. (Am. Compl. ¶¶ 8-10.) Defendant Fannie Mae is the owner of White's loan. (Id.)

On April 13, 2020, Plaintiff White filed the instant putative class action in the Circuit Court for Anne Arundel County, Maryland against Defendants Shellpoint and Fannie Mae, alleging violations of the federal Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (Count I), Maryland's Consumer Debt Collection Act and Consumer Protection Act (Count II), as well as seeking a declaratory judgment (Count III). (See Compl., ECF No. 2.) On May 11, 2020, White amended her Complaint to remove her claim under the federal Fair Debt Collection Practices Act. (See ECF No. 1-3; Am. Compl., ECF No. 7.) On May 20, 2020, Defendants removed White's suit to this Court on the basis of both diversity jurisdiction under 28 U.S.C. § 1332 and federal question jurisdiction under 28 U.S.C. § 1331. (Notice of Removal, ECF No. 1.)

In her Amended Complaint, White alleges that Shellpoint, as the loan servicer for Fannie May, charged unauthorized and unlawful "convenience" fees for accepting paymentsby telephone and/or by the Internet on the residential mortgage accounts of White and others similarly situated. (Id.) In Count One, White alleges violations of Maryland's Consumer Debt Collection Act and Maryland's Consumer Protection Act. As to that Count, White purports to represent a class of

All individuals in Maryland who since October 1, 2018 (i) paid a "convenience fee," (ii) collected in whole or in part by Shellpoint, (iii) in order to make a payment on a residential mortgage debt, and (iv) where the term "convenience fee" was not specifically enumerated in the original agreement creating such debt.

(Am. Compl. ¶ 38.) In Count Two, White seeks declaratory relief in her individual capacity only.

White now moves to remand this case to the Circuit Court for Anne Arundel County, Maryland, asserting that this Court does not have jurisdiction over her claims. (ECF No. 14.)

STANDARD OF REVIEW

A defendant in a state civil action may remove the case to federal court only if the federal court can exercise original jurisdiction over at least one of the asserted claims. 28 U.S.C. § 1441(a)-(c). Once an action is removed to federal court, the plaintiff may file a motion to remand the case to state court if there is a contention that jurisdiction is defective. 28 U.S.C. § 1447(c). The party seeking removal bears the burden of establishing jurisdiction in the federal court. Johnson v. Advance America, 549 F.3d 932, 935 (4th Cir. 2008). On a motion to remand, this Court must strictly construe the removal statute and resolve all doubts in favor of remanding the case to state court." Richardson v. Phillip Morris, Inc., 950 F. Supp. 700, 701-02 (D. Md. 1997) (citation omitted); see also Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 815-16 (4th Cir. 2004).

Federal courts have original jurisdiction over two kinds of civil actions: those which are founded on a claim or right arising under the Constitution, treaties or laws of the United States, and those where the matter in controversy exceeds $75,000 and is between citizens of different States. U.S. Const. art. III, § 2; 28 U.S.C. §§ 1331, 1332(a). If a civil action is not based on a question of federal law, then a federal court may only exercise original jurisdiction based on diversity of citizenship.

Finally, when a party brings a claim for declaratory judgment, "[i]t has long been settled that a federal court has a measure of discretion to decline to entertain a declaratory judgment action that is otherwise properly within its jurisdiction." Under Armour, Inc. v. Battle Fashions, Inc., 294 F. Supp. 3d 428, 435 (D. Md. 2018) (quoting LWRC Intern., LLC v. Mindlab Media, LLC, 838 F. Supp. 2d 330 (D. Md. 2011)). While the discretion is not absolute, a court may decline to exercise jurisdiction "for 'good reason.'" LWRC, 838 F. Supp. 2d 330 (quoting Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 321, 324 (4th Cir. 1937)). A district court should consider concerns of federalism, efficiency, and comity before exercising jurisdiction over a declaratory judgment action. See Mitcheson v. Harris, 955 F.2d 235 (4th Cir. 1992).

ANALYSIS

Defendants removed this case to federal court based on federal question and diversity jurisdiction. (See Notice of Removal, ECF No. 1.) However, as explained below, this case does not present a set of circumstances so substantial as to create federal question jurisdiction and choosing to exercise jurisdiction in this case would disrupt Congress's intended balance between the federal and state courts. In addition, while this Court has diversity jurisdiction over Count II's declaratory judgment action, the Court will exercise its discretion to declinejurisdiction over Count II and will exercise its discretion to decline supplemental jurisdiction over Count I. Therefore, this Court shall grant Plaintiff's request to remand this case to the Circuit Court for Anne Arundel County, Maryland.

I. Federal Question Jurisdiction

To determine whether a plaintiff's claims "arise under" the laws of the United States, this Court adheres to the "well-pleaded complaint rule," which requires an assessment of the allegations of the complaint. Caterpillar Inc v. Williams, 482 U.S. 386, 392 (1987). Under this rule, courts "ordinarily ... look no further than the plaintiff's [properly pleaded] complaint in determining whether a lawsuit raises issues of federal law capable of creating federal-question jurisdiction under 28 U.S.C. § 1331." Pinney v. Nokia, Inc., 402 F.3d 430, 442 (4th Cir. 2005) (quoting Custer v. Sweeney, 89 F.3d 1156, 1165 (4th Cir. 1996)). A case can "arise under" federal law in one of two ways. Virginia ex rel. Hunter Labs., LLC v. Virginia, 828 F.3d 281, 286 (4th Cir. 2016) (citing Gunn v. Minton, 568 U.S. 251, 257 (2013)). The more common reason is when a plaintiff's cause of action is itself created by federal law. Id. at 287. The second, narrower, way of establishing federal jurisdiction is when it is conferred over a "special and small category of claims that originate in state rather than federal law." Id. (citations omitted). In such situations, "jurisdiction will only exist over a state-law claim if a federal issue is (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress." Id. (referring to the Grable test provided by the United States Supreme Court in Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 314 (2005)).

In her Amended Complaint, Plaintiff alleges violations of Maryland's Consumer Debt Collection Act and Maryland's Consumer Protection Act and seeks a declaratory judgment. (Am. Compl., ECF No. 7.) Despite pleading in her original Complaint that Defendants violated federal Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq ("FDCPA"). (ECF No. 2), Plaintiff's Amended Complaint contains no allegations that Defendants violated any federal statutes.² Defendants nevertheless contend that Plaintiff's state law claims necessarily raise a federal issue because any violation of Maryland's Consumer Debt Collection Act ("MCDCA") or Maryland's Consumer Protection Act ("MCPA") would be entirely predicated on a violation of the federal FDCPA. They assert that both the MCDCA and MCPA claims turn on the question of whether there has been a violation of the FDCPA, which prohibits the collection of convenience fees "unless such amount is expressly authorized by the agreement creating the debt or permitted by law." (Def.'s Opp'n at 17, ECF No. 18 (quoting 15 U.S.C. § 1692f(1)).)

"A plaintiff's right to relief for a given claim necessarily depends on a question of federal law only when every legal theory supporting the claim requires the resolution of the federal issue." Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 817 (4th Cir. 2004) (emphasis in original); Flying Pigs, LLC v. RRAJ Franchising, LLC, 757 F.3d 177 (4th Cir. 2014) (en banc). "In other words, if the plaintiff can...