Opinion
CIVIL ACTION No. 02-2224-CM
April 22, 2003.
MEMORANDUM AND ORDER
Plaintiff Firstar Bank NA, by and through its counsel of record, filed suit in Kansas state court against defendants for foreclosure on a promissory note and a mortgage on which Plaintiff claims defendant Brenda West-Anderson, has defaulted. On May 15, 2002, defendant, who appears pro se, removed the case pursuant to 28 U.S.C. § 1441, claiming that this court has original diversity subject matter jurisdiction pursuant to 28 U.S.C. § 1331 and 1332. The matter is currently before the court on Plaintiff's Motion to Remand (Doc. 39). In addition to remand, the Plaintiff seeks attorney fees and costs incurred in seeking this order of remand. Defendant's response to the Motion to Remand is a Motion to Strike and Motion for More Definite Statement (Doc. 41). On April 8, 2003, the court denied defendant's Motion to Strike and for More Definite Statement and granted defendant ten (10) days, up to and including April 22, 2003, to file an appropriate response to plaintiff's Motion to Remand. Defendant filed her response on April 22, 2003 (Doc. 44). In that response, defendant incorporated all of her previous arguments and set forth new facts and arguments only pertaining to diversity jurisdiction. The court has considered all of defendant's arguments and allegations. For the reasons set forth below, plaintiff's Motion for Remand is granted, but its request for attorney fees and costs is denied.
In the caption of plaintiff's Motion to Remand, defendant Brenda West-Anderson is named as a corporation. Clearly, this was a mistake, as the defendant appears as a pro se individual.
I. Background
Plaintiff is a national banking association organized under federal law. In its state court Petition, plaintiff does not identify any state as its principal place of business. Defendant Brenda West-Anderson ("defendant") is an individual residing in Kansas. On April 26, 2002, plaintiff filed this action in the District Court of Wyandotte County, Kansas, seeking foreclosure on a promissory note and mortgage (the "Loan Documents"). Plaintiff alleges that it is the current holder of the Loan Documents, which were executed by defendant on November 25, 1998. Plaintiff also asserts that, under the terms of the Loan Documents, defendant is in default, and plaintiff is entitled to foreclose upon defendant's real estate interest secured by the Loan Documents. Plaintiff pled damages of $61,209.12, including the principal loan amount of $52,700.00.
On May 15, 2002, defendant filed her Notice of Removal, in which she asserts that this court has subject-matter jurisdiction under both 28 U.S.C. § 1331 and 1332. Defendant claims this court should assert federal-question jurisdiction because she has asserted affirmative defenses under the Truth in Lending Act (TILA), the Racketeer Influenced Corrupt Organizations Act (RICO), and the Real Estate Settlement Procedures Act (RESPA). Defendant also claims that the court may exercise diversity jurisdiction. Defendant states that plaintiff is organized under Ohio law. However, Defendant's Notice of Removal does not allege that the $75,000 amount in controversy requirement of 28 U.S.C. § 1332(a) has been met, nor does it set forth any facts regarding the amount in controversy that would support such a finding.
It appears that there are additional defendants to this action whose identities may be unknown to plaintiff. Defendant states in her Notice of Removal that neither she nor the other defendants have been properly served with process. Notice of Removal, ¶ 1. Kansas district courts have concluded that the removal statute requires all served defendants, except nominal defendants, join in or consent to the removal notice within thirty days of service. First Nat'l Bank Trust Co. v. Nicholas, 768 F. Supp. 788, 790 (D.Kan. 1991). The court assumes, for purposes of this motion, that no additional parties have been served, and that, therefore, no additional parties must join in the removal of this action.
Defendant also asserts that "Firstar Bank Milwaukee, N.A. is a national bank, organized under the laws of the State of Wisconsin, in the city of Milwaukee." Firstar Bank Milwaukee, N.A. is not a party to these proceedings, so its citizenship is not at issue. Even if it were a party, its citizenship would have no effect on the court's ruling.
II. Standard for Removal
A civil action is removable only if a plaintiff could have originally brought the action in federal court. 28 U.S.C. § 1441(a). The court is required to remand "if at any time before final judgment it appears that the district court lacks subject matter jurisdiction." 28 U.S.C. § 1447(c). Because federal courts are courts of limited jurisdiction, the law imposes a presumption against federal jurisdiction, Frederick Warinner v. Lundgren, 962 F. Supp. 1580, 1582 (D.Kan. 1997) (citing Basso v. Utah Power Light Co., 495 F.2d 906, 909 (10th Cir. 1974)), and requires a court to deny its jurisdiction in all cases where such jurisdiction does not affirmatively appear in the record. (Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauzites de Guinee, 456 U.S. 694 (1982). The burden is on the party requesting removal to demonstrate that the court has jurisdiction. Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir. 1995). The court must resolve any doubts concerning removability in favor of remand. J.S. Petroleum, Inc. v. Lange, 787 F. Supp. 975, 977 (D.Kan. 1992).
III. Analysis
Defendant asserts that federal jurisdiction is available under theories of federal-question and diversity jurisdiction. For the purposes of this analysis, the court will first address the issue of federal question jurisdiction.
A. Federal Question Jurisdiction
The well-pleaded complaint rule governs whether there is federal-question jurisdiction. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). This rule "provides that federal jurisdiction exists only when a federal question is present on the face of the plaintiff's properly pleaded complaint." Id. "The plaintiff, therefore, is the master of his or her complaint, free to sidestep federal jurisdiction by pleading only state claims even where federal claims are also available." In re Universal Serv. Fund Tele. Billing Practices Litig., Nos. Civ. A. 02-MD-1468, 02-CV-1583, 02-CV-4007, 02-CV-4032, 02-CV-2459, 02-CV-2458, 02-CV-5972, 02-CV-6642, 02-CV-1052, 2002 WL 31929179, at *5 (D.Kan. Dec. 19, 2002) (citing Caterpillar, 482 U.S. 386, 392). Consequently, cases brought in state court may not be removed to federal court even if a federal defense is anticipated in the plaintiff's complaint, and "even if both parties concede that the federal defense is the only question truly at issue." Caterpillar, 482 U.S. at 393.
Defendant does not allege that any of plaintiff's claims arise under federal law. Plaintiff is pursuing a foreclosure action governed entirely by Kansas state law. The cause of action is not based upon a federal statute or federal common law. Defendant's only basis for claiming that federal-question jurisdiction is appropriate is that she has asserted affirmative defenses that may be available under federal law. Under the well-pleaded complaint rule, these federal defenses are not sufficient to confer federal jurisdiction.
In addition, plaintiff's cause of action does not contain issues of federal law that are essential to the determination of its state law claims. While defendant points out that this case involves TILA, RICO and RESPA claims, the court concludes that these issues are peripheral to the plaintiff's foreclosure action and cannot, therefore, form the basis for federal jurisdiction.
Accordingly, the court finds that jurisdiction is not available under 28 U.S.C. § 1331.
B. Diversity Jurisdiction
The second basis for removal cited by defendant is original diversity jurisdiction under 28 U.S.C. § 1332, which requires complete diversity between the parties and an amount in controversy in excess of $75,000. Because defendant is the party alleging that federal jurisdiction exists, she has the burden of proving facts supporting jurisdiction by a preponderance of the evidence. Amundson Assoc. Art Studio, Ltd. v. Nat'l Council on Comp. Ins., Inc., 977 F. Supp. 1116, 1122 (D.Kan. 1997). Defendant must prove both elements of this claim — complete diversity of the parties and the requisite amount in controversy. Moreover, in establishing diversity jurisdiction, "[b]oth the requisite amount in controversy and the existence of diversity must be affirmatively established on the face of either the petition or the removal notice." Laughlin, 50 F.3d at 873. The court will address each of these elements in turn.
1. Diversity of the Parties
Plaintiff and defendant agree that defendant is a Kansas resident. The parties also agree that Plaintiff is a national banking association. However, while plaintiff states that it is organized and operating under the laws of the United States of America, defendant claims that plaintiff is organized under Ohio law.
28 U.S.C. § 1348 grants national banking associations limited access to federal courts. That statute provides, in pertinent part:
All national banking associations shall, for the purposes of all other actions by or against them, be deemed citizens of the States in which they are respectively located.28 U.S.C. § 1348. Under this statute, a national banking association with a branch office in one state is regarded as a citizen of that state for jurisdictional purposes, even if the association's principal place of business is in another state. See Silver v. Bank Midwest, N.A., No. Civ. A. 95-2579-EEO, 1996 WL 328737, at *2 (D.Kan. May 15, 1996) (adopting the reasoning in Bank of New York v. Bank of Am., 861 F. Supp. 225, 231 (S.D.N.Y. 1994) and Connecticut Nat'l Bank v. Iacono, 785 F. Supp. 30, 34 (D.R.I. 1992)). Since the parties agree that plaintiff is a national banking association, Silver applies to this case.
Neither party has alleged facts regarding whether Plaintiff maintains any branch offices in Kansas. Defendant, however, bears the burden of proving, by a preponderance of the evidence, that plaintiff maintains no branch offices in the state of Kansas. Laughlin, 50 F.3d at 873. Defendant has made no such showing and, therefore, has not met her burden of proof. Based upon the record before it, the court concludes that complete diversity does not exist.
In her Objection to Motion for Remand, defendant alleges additional facts regarding plaintiff's state of citizenship. Defendant mistakenly alleges that plaintiff is a citizen of Milwaukee, Wisconsin because it is the successor of Firstar Bank, Milwaukee, NA, and that the caption of this case is prima facie evidence that complete diversity exists. Plaintiff also states that a search of the Kansas Secretary of State records has shown no evidence that plaintiff is a citizen of Kansas. However, while defendant may found evidence tending to show that plaintiff is not incorporated in Kansas, the court determines that defendant has not met her burden of proving that plaintiff maintains no branches in Kansas. Moreover, as set forth more fully above, diversity of citizenship must be apparent from either the petition or the notice of removal. Defendant failed to allege sufficient facts in her Notice of Removal to support a finding that complete diversity exists.
2. Amount in Controversy
Even if defendant could prove that complete diversity exists, § 1332 would not be satisfied, because defendant has failed to prove that the amount in controversy in this matter exceeds $75,000. In the Tenth Circuit, "[t]he amount in controversy is ordinarily determined by the allegations of the complaint, or, where they are not dispositive, by the allegations in the notice of removal." Laughlin, 50 F.3d at 873 (citations omitted). "The burden is on the party requesting removal to set forth, in the notice of removal itself, the "underlying facts supporting [the] assertion that the amount in controversy exceeds [$75,000]." Id., (quoting Gaus v. Miles, Inc., 980 F.2d 564, 567 (9th Cir. 1992)).
Neither plaintiff's Petition nor defendant's Notice of Removal establishes the requisite jurisdictional amount in this case. Plaintiff's Petition seeks damages in the amount of $61,209.12. Defendant has not asserted that the amount in controversy exceeds $75,000, nor has she alleged any facts that would support such a conclusion. In fact, the Notice of Removal is completely silent on this issue. Because "jurisdiction is determined at the time of the notice of removal, the movant must meet its burden in the notice of removal." Coca-Cola Bottling of Emporia, Inc. v. South Beach Beverage Co., Inc., 198 F. Supp.2d 1280, 1283 (D.Kan. 2002). Therefore, in the notice of removal, defendant must prove the requisite amount in controversy by a preponderance of the evidence. See City of Atchison v. Maczuk Indus., Inc., No. Civ. A. 02-2245-GTV, 2002 WL 1900493, at *2 (D.Kan. Aug. 14, 2002). Since defendant has made no assertions or allegations that the amount in controversy exceeds $61,209.12, she has failed to carry her burden.
In her Objection to Motion for Remand, defendant asserts that nine different entities claim a $51,984.05 interest in the property at issue. On this basis, she claims the amount in controversy requirement has been met by the aggregate amount of $467,856.45. There is no information in the record that could educate the court on this matter. However, the only plaintiff in this particular case is Firstar Bank, N.A. No other parties' claims are relevant in determining the amount in controversy in this case. Because neither the Petition nor the Notice of Removal allege facts sufficient to establish that the plaintiff in this case seeks more than $75,000, defendant has not met her burden, and the amount in controversy requirement is not met.
More specifically, plaintiff does not distinguish between the amount of damages sought that arise from principal and the amount arising from interest. However, the face of the Petition is clear that the amount of principal sought is not more than $52,700.00, the alleged amount of the original note. Interest that accrues as a result of a delay in payment is not included when determining the amount in controversy. Frederick Warinner v. Lundgren, 962 F. Supp. 1580, 1584 (D.Kan. 1997). Rather, only when the prejudgment interest represents a contractually-agreed upon penalty or a statutory penalty will that interest apply toward the amount in controversy requirement. Id. Defendant has not asserted that the interest claimed by plaintiff represents anything other than accrued interest on the promissory note. Absent such an assertion, and facts in support thereof, the court cannot consider the interest in determining the amount in controversy. Id.
Plaintiff's Petition also seeks reasonable attorney fees. "[W]here a litigant has a right, based on contract, statute, or other legal authority, to an award of attorney's fees if he prevails in the litigation, a reasonable estimate of those fees may be included in determining whether the jurisdiction minimum is satisfied." Gerig v. Krause Publications, Inc., 58 F. Supp.2d 1261, 1264 (D.Kan. 1999) (quoting Sarnoff v. Am. Home Prod. Corp., 798 F.2d 1075, 1078 (7th Cir. 1986)). For purposes of this motion, the court assumes that plaintiff has a right to recover attorney fees if it prevails in this litigation.
Defendant has presented no evidence and alleged no facts regarding the projected amount of attorney fees plaintiff would incur in this litigation. In its Motion to Remand, plaintiff states that there is no scenario under which its attorney fees would increase the total claim to the $75,000 minimum. Defendant has failed to meet burden of proof on this issue. Therefore, the court finds that original diversity jurisdiction does not exist under 28 U.S.C. § 1332.
Moreover, because plaintiff specifically pled an amount in controversy under $75,000, defendant's burden of proving the requisite amount in controversy is raised to the "reasonable certainty" standard. Coca-Cola Bottling of Emporia, Inc., 198 F. Supp.2d at 1285. However, even under the more relaxed standard of proof by a preponderance of the evidence, plaintiff has failed to show that the amount in controversy exceeds $75,000.
Defendant also claims that she has not been properly served with process in this case. Since the court has determined that it does not have subject matter jurisdiction over this case, it will not address defendant's service of process claim.
IV. Attorney Fees and Costs
Finally, Plaintiff requests that the court award it the costs and attorney fees it expended in moving to remand this action to state court. 28 U.S.C. § 1447(c) permits the court to award "just costs and any actual expenses, including attorney fees, incurred as a result of the removal." The decision whether to award attorney fees is discretionary. Noel v. Pizza Hut, Inc., 1991 WL 192117, at *3 (D.Kan. Sep. 18, 1991) In these circumstances, and considering defendant appears pro se, the court does not believe that an award of attorney fees and costs is appropriate.
IT IS THEREFORE ORDERED that Plaintiff's Motion to Remand (Doc. 39) is granted. This case is hereby remanded to the District Court of Wyandotte County, Kansas.
IT IS FURTHER ORDERED that Plaintiff's request for recovery of its costs and attorney's fees associated with obtaining this remand order is denied.