United States District Court, D. Colorado
PHILIP A. BRIMMER, District Judge.
This matter is before the Court on the Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(6) and Request for Leave to Seek Sanctions Under C.R.S. XX-XX-XXX [Docket No. 9] filed by defendant Citibank, N.A. ("Citibank"); Plaintiff's Combined Motion to Remand and Objection to Defendant's Motion to Dismiss [Docket No. 13] filed by interested party Peggy Williams; and Plaintiff's Motion for Intervention of Parties Pursuant to Rule 24(a) [Docket No. 14] filed by interested party Peggy Williams. This matter arises out of Citibank's foreclosure and sale of the property located at 16134 6900 Road in Montrose County, Colorado (the "Property"), formerly owned by Gary and Peggy Williams and currently owned by plaintiff 6900 Rd 16134 Trust (the "Trust").
On November 24, 2010, Gary and Peggy Williams filed a complaint against Citibank and Chase Home Finance, LLC in the Combined Court for Montrose County, Colorado. See Williams v. Citibank, Case No. 10-cv-03167-DME-MJW, Docket No. 2. On December 29, 2010, defendants removed the case to another court in this district. See id., Docket No. 1. The complaint stated that the "point at issue is whether or not the Defendant has valid proof of claim and therefore Standing to enforce the instrument." Id., Docket No. 2 at 6. The complaint alleged, inter alia, that the deed of trust was unenforceable because it was not properly assigned to Citibank and because it had been separated from the promissory note. Id. at 12-13. It further alleged that Citibank lacked standing to enforce the note or deed of trust because it was not a creditor. Id. at 13-15. The complaint requested that plaintiffs be released from all claims related to the promissory note and deed of trust-including foreclosure, trustee sale, quiet title actions, or other debt collection actions-and that the court declare the promissory note "Settled in Full." Id. at 17. Before Citibank filed an answer, plaintiffs filed a motion to withdraw their complaint. Id., Docket No. 14. Judge David M. Ebel acknowledged plaintiffs' notice of voluntary dismissal on March 8, 2011, dismissing the case without prejudice pursuant to Rule 41(a)(1)(B). Id., Docket No. 17.
On March 3, 2011, the Williamses filed a complaint against Citibank and Chase Home Finance, LLC in state court in Montrose County. See Williams v. Citibank, Case No. 11-cv-00921-CMA-MEH, Docket No. 2 at 1. On April 6, 2011, Citibank removed the case to another court in this district. Docket No. 1. The complaint stated that the "point at issue of this controversy is the right of enforcement of the Promissory Note by the Defendant." Id., Docket No. 2 at 2; see also id. at 6 ("The point at issue is whether or not the Defendant has valid proof of claim and therefore Standing to enforce the instrument."). The complaint alleged that Citibank lacked standing to enforce the promissory note, that it was never validly assigned the promissory note, and that it was not a real party in interest. See id., Docket No. 2. On May 26, 2011, the plaintiffs filed a motion to dismiss the case without prejudice. Id., Docket No. 21. On May 27, 2011, Judge Christine M. Arguello granted the plaintiffs' motion. Id., Docket No. 23.
On November 27, 2013, the Trust filed a complaint against Citibank, Chase Home Mortgage, LLC/Chase, the Montrose County Trustee, and Long Beach Mortgage Company in state court in Montrose County. 6900 Rd 16134 Trust v. Citibank, N.A., Case No. 14-cv-00085-PAB-KLM, Docket No. 3. On January 10, 2014, Citibank removed the case to this Court. Id., Docket No. 1. The amended complaint alleged that there was no evidence that the original lender, Long Beach Mortgage Company, had transferred ownership of the Williamses' promissory note to Citibank and thus that Citibank was not a real party in interest. Id., Docket No. 3 at 4, ¶¶ 18-19. It further alleged that the deed of trust was unenforceable because it had been separated from the promissory note. Id. at 4, ¶¶ 20-21. The complaint requested that the Court declare that the deed of trust was "null and void, " the promissory note was "fully discharged, " and the Property belonged to the Trust. Id. at 7, ¶¶ 59-64.
On January 15, 2014, Magistrate Judge Kristen L. Mix ordered plaintiff to obtain counsel on or before February 17, 2014 pursuant to Local Rule 11.1 or face dismissal of the case without prejudice. Id., Docket No. 13. On February 14, 2014, plaintiff moved to dismiss the case without prejudice because the Williamses were unable to obtain an attorney. Id., Docket Nos. 18 and 19. On February 20, 2014, the Court issued a Minute Order stating that the "case was dismissed without prejudice as of the entry of the Motion to Dismiss. No order of dismissal is necessary." Id., Docket No. 21 (citation omitted).
On March 25, 2014, the Trust filed a complaint against Citibank and the Montrose County Trustee in state court in Montrose County. Docket No. 3. On April 22, 2014, Citibank removed the case to this Court. Docket No. 1. The complaint alleges that there is no valid evidence of a transfer of ownership of the mortgage loan from the lender to Citibank, Citibank is not a real party in interest, and the deed of trust is unenforceable because the promissory note has been securitized. Docket No. 3. The complaint requests that the Court (1) declare that the deed of trust is null and void and that the Property rightfully belongs to the Trust and (2) enjoin Citibank from claiming any right in the Property. Id. at 6.
On April 24, 2014, Citibank filed a motion to dismiss based, in part, on the contention that the dismissals in Case Nos. 11-cv-00921-CMA-MEH and 14-cv-00085-PAB-KLM operate as adjudications on the merits pursuant to Rule 41(a)(1)(B). Docket No. 9. On May 8, 2014, Ms. Williams filed a motion requesting that the Williamses be permitted to intervene as plaintiffs as a matter of right pursuant to Federal Rule of Civil Procedure 24(a). Docket No. 14. The same day, Ms. Williams filed a Combined Motion to Remand and Objection to Defendant's Motion to Dismiss, arguing that the Court lacks subject matter jurisdiction over this case. Docket No. 13.
A. Motion to Remand
It is well established that "[t]he party invoking federal jurisdiction bears the burden of establishing such jurisdiction as a threshold matter." Radil v. Sanborn W. Camps, Inc., 384 F.3d 1220, 1224 (10th Cir. 2004). Defendant invokes 28 U.S.C. § 1332(a) as the basis for this Court's subject matter jurisdiction. Docket No. 1 at 1, ¶ 2. Section 1332(a)(1) states: "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... citizens of different States."
The Court is required to remand a case to state court "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction." 28 U.S.C. § 1447(c); see Miller v. Lambeth, 443 F.3d 757, 759 (10th Cir. 2006) ("[t]he two categories of remand within § 1447(c)... are remands for lack of subject matter jurisdiction and for defects in removal procedure"). Diversity jurisdiction exists when the case involves a dispute between citizens of different states and the amount in controversy exceeds $75, 000. 28 U.S.C. § 1332(a)(1). To meet the diversity requirement, there must be complete diversity between plaintiff and all defendants, meaning that no defendant can be from the same state as any plaintiff. Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005).
Here, plaintiff is a citizen of Colorado. Docket No. 3 at 2, ¶ 1. Citibank is a citizen of South Dakota. Docket No. 1 at 2, ¶ 4. Ms. Williams argues that complete diversity is destroyed by the inclusion of the Montrose County Trustee, who Ms. Williams contends is also a citizen of Colorado. Docket No. 13 at 2 ("defendant Montrose County Trustee operates and is registered within the State of Colorado"). The complaint contains a sole allegation concerning the Trustee: "Rosemary Murphy, Montrose County Treasurer appears on title of the plaintiff as a substitute trustee which is invalid and unenforceable." Docket No. 3 at 4, ¶ 27. The complaint does not otherwise mention the Montrose County Trustee. See generally Docket No. 3.
The Court "must disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy." Navarro Savings Ass'n v. Lee, 446 U.S. 458, 461 (1980); Walden v. Skinner, 101 U.S. 577, 589 (1879) (a party does not "defeat the jurisdiction in a case where he is a mere nominal party, and is merely joined to perform the ministerial act of conveying the title if adjudged to the complainant.... Where the real and only controversy is between citizens of different States, ... and the plaintiff is by some positive rule of law compelled to use the name of another to perform merely a ministerial act, ... the courts of the United States will not consider any others as parties to the suit than the persons between whom the litigation before then exists."); Charles Alan Wright et al., 13E Fed. Prac. & Proc. Juris. § 3606 (3d ed. 2014) ("it has long been established by innumerable precedents from all quadrants of the federal judicial system that the citizenship of nominal or formal parties who have no interest in the action will be ignored; if the real controversy is between citizens of different states, the court has subject matter jurisdiction.").
The allegations in the complaint disclose that the Montrose County Trustee is not a real party to the controversy, but has been named solely because her name appears-in her formal capacity-on the deed of trust that plaintiff contends is unenforceable. The Court must disregard the Trustee's citizenship in determining whether there is federal subject matter jurisdiction over this matter. See Navarro, 446 U.S. at 461; Walden, 101 U.S. at 589. The Court finds that complete diversity exists between the real parties in interest, the Trust and Citibank.
"[W]hen a defendant seeks federal-court adjudication, the defendant's amount-in-controversy allegation should be accepted when not contested by the plaintiff or questioned by the court." Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.Ct. 547, 553 (2014). If the plaintiff contests the defendant's amount-in-controversy allegation, "removal... is proper on the basis of an amount in controversy... if the district court finds, by the preponderance of the evidence, that the amount in controversy exceeds [$75, 000]." 28 U.S.C. § 1446(c)(2)(B). The Tenth Circuit has held that:
a proponent of federal jurisdiction must, if material factual allegations are contested, prove those jurisdictional facts by a preponderance of the evidence. Once the facts have been established, uncertainty about whether the plaintiff can prove its substantive claim, and whether damages (if the plaintiff prevails on the merits) will exceed the threshold, does not justify dismissal. Only if it is legally certain' that the recovery (from plaintiff's perspective) or cost of complying with the judgment (from defendant's) will be less than the jurisdictional floor may the case be dismissed.
McPhail v. Deere & Co., 529 F.3d 947, 955 (10th Cir. 2008) (quoting Meridian Security Ins. Co. v. Sadowski, 441 F.3d 536, 540-43 (7th Cir. 2006)). A defendant need only "affirmatively establish jurisdiction by proving jurisdictional facts that ma[k]e it possible that $75, 000 [is] in play" at the time of removal. 529 F.3d at 955 (emphasis in original); see also Emland Builders, Inc. v. Shea, 359 F.2d 927, 929 (10th Cir. 1966) (amount in controversy is determined at the time the case is removed to federal court). "In actions seeking declaratory or injunctive relief, it is well established that the amount in controversy is measured by the value of the object of the litigation." Hunt v. Washington State Apple Advertising Comm'n, 432 U.S. 333, 347 (1977); Lovell v. State Farm Mut. Auto. Ins. Co., 466 F.3d 893, 897 (10th Cir. 2006).
Here, plaintiff seeks the following relief, ...