In what is clearly a case which should be remanded, the duo team of Senior and Unconstitutional judge David Hittner and Magistrate Judge Peter Bray have abused their powers. There’s a motion to remand percolating since October and in December a scheduling conference has been attended and a schedule published by Magistrate Judge Peter Bray, who has also failed in his duty to recognize and address the clear facts in the motion to remand, or ask his supervisor, Hittner to rule on the motion. It’s now proceeding with discovery which is to be completed by May 2021. Kafi Inc is incurring unnecessary fees during this time.
DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF16, ASSET-BACKED CERTIFICATES, SERIES 2006-FF16; AND SPECIALIZED LOAN SERVICING LLC,
DEFENDANTS’ NOTICE OF REMOVAL
TO THE JUDGES AND THE CLERK OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS:
PLEASE TAKE NOTICE that, pursuant to 28 U.S.C. §§1441, 1446, and 1331, Defendants DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF16, ASSET-BACKED CERTIFICATES, SERIES 2006-FF16 (“DB”) AND SPECIALIZED LOAN SERVICING LLC (“SLS” and
together with Deutsche “Defendants”) hereby removes the above-captioned action from the 189th Judicial District Court of Harris County, Texas to the United States District Court for the Southern District of Texas, Houston Division.
THE REMOVED CASE
1. The removed case is a civil action filed on August 19, 2020, in the 189th Judicial District Court of Harris County, Texas, styled Kafi, Inc. v. Deutsche Bank National Trust Company, As Trustee for First Franklin Mortgage Loan Trust 2006-FF16, Asset-Backed Certificates, Series 2006-FF16;and Specialized Loan Servicing, LLC. The case received cause number 2019-60907 in the state court.
2. Plaintiff’s Original Petition (“Petition”) seeks injunctive relief and declaratory judgment to stop the foreclosure of real property located at 2707 Shenandoah Drive, Pasadena, Texas 77502 (the “Property”), and alleges causes of action for violation of the statute of limitations, quiet title, and violation of §12.002 of The Texas Civil Practice and Remedies Code. See Petition ¶¶ 10-68.
3. Venue in the Southern District of Texas, Houston Division is proper under 28 U.S.C. §1441(a), because this Court is the United States District Court for the district and division embracing the place where the state court action is pending.
4. In accordance with 28 U.S.C. § 1446(a), Defendants attaches hereto true and correct copies of all process, pleadings, and orders in the state court action to date, in addition to an Affidavit regarding the appraised value of the Property regarding the fair market value of the Property, as Exhibits 1 through 6.
5. On August 19, 2020, Plaintiff filed suit in state court. On August 26, 2020, Plaintiff served Defendant with citation and a copy of Plaintiff’s Petition. Accordingly, removal is timely pursuant to 28 U.S.C. § 1446(b).
6. Pursuant to 28 U.S.C. § 1446(d), a Notice of Filing Notice of Removal to Federal Court is being filed with the 189th Judicial District Court of Harris County, Texas. Defendants will promptly give all parties written notice of the filing of this Notice of Removal as required by 28 U.S.C. § 1446(d).
THIS COURT HAS DIVERSITY JURISDICTION UNDER 28 U.S.C. § 1332
7. Under 28 U.S.C. §1332, “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…” 28 U.S.C. §1332(a)(1). This case falls within this Court’s original jurisdiction under Section 1332 because there is diversity of citizenship between Plaintiff and Defendants, and the amount in controversy exceeds $75,000.
A. Removal is proper because there is Diversity of Citizenship between all defendants.
8. According to Plaintiff’s Petition, Plaintiff owns the Property located in Harris County, Texas. See Pettion ¶ 1.
9. Specialized Loan Servicing LLC is a mortgage servicer organized and existing under the laws of the United States. SLS is a Delaware limited liability company. SLS is wholly-owned by Specialized Loan Servicing Holdings LLC, a company whose ultimate parent is Computershare Limited, a publicly traded company on the Australian stock exchange. The citizenship of SLS’s member(s) is Colorado. Further, none of SLS’s members are citizens of Texas or members of the member. There is, therefore, complete diversity of citizenship. Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1080 (5th Cir. 2008).
10. DB is a foreign entity doing business under the laws of the United States and Texas.
Its principal place of business is located in Frankfurt, Germany. DB is thus a citizen of Germany for purposes of determining diversity.
See 28 U.S.C. §1348; Wachovia Bank v. Schmidt, 546 U.S. 303, 307, 126 S. Ct. 941, 945 (2006).
11. There is complete diversity of citizenship in this case because Plaintiff is not a citizen of the same state as Defendants. 28 U.S.C. §1332; Carden v. Arkoma Assocs., 494 U.S. 185, 187 (1990).
B. This Court has jurisdiction because the Amount in Controversy substantially exceeds $75,000.
12. Removal is proper where a defendant can show, by a preponderance of the evidence, that the amount in controversy more likely than not exceeds the jurisdictional minimum. White v. FCI U.S.A., Inc., 319 F.3d 672, 675-76 (5th Cir. 2003).
This burden is met if it is apparent from the face of the petition that the claims are likely to exceed $75,000, or if the defendant introduces other evidence to show that the amount in controversy more likely than not exceeds $75,000. See Berry v. Chase Home Fin., LLC, No. C-09-116, 2009 WL 2868224, at *2 (S.D. Tex. Aug. 27, 2009). In this case, the Court may look at
(1) the current fair market value of the object of requested declaratory and injunctive relief; and
(2) alleged actual damages, punitive damages, and attorneys’ fees.
13. In actions seeking injunctive relief, it is well established that the amount in controversy is measured by the value of the object of the litigation. Farkas v. GMAC Mortg., L.L.C., 737 F.3d 338, 341 (5th Cir. 2013); Webb v. Investacorp, Inc., 89 F.3d 252 (5th Cir. 1996); Dreyer v. Jalet, 349 F.Supp. 452 (S.D. Tex. 1972), affirmed 479 F.2d 1044.
The plaintiff in Farkas sought damages “not to exceed $60,000,” a temporary restraining order, declaratory judgment, and a permanent injunction on the defendants’ foreclosure of real property. Farkas at 341.
The Court held that in actions seeking such declaratory and injunctive relief, the property is the object of the litigation. Id. “In actions enjoining a lender from transferring property and preserving an individual’s ownership interest…the value of the property represents the amount in controversy.” Id.
14. In this case, Plaintiff seeks to preserve alleged ownership rights and equity, if any, in the Property. According to the Harris County Appraisal District, the 2020 appraised value of the Property is $194,057 (the “CAD Value”) (Exhibit 7). At a minimum, the CAD Value establishes the amount in controversy. See King v. HSBC Bank USA, N.A., 2012 WL 3204190, *2 (W.D. Tex. 2012) (remand denied because value of Property exceeds $75,000); see also Kew v. Bank of America, N.A., 2012 WL 1414978, *3 (S.D. Tex. 2012); McDonald v. Deutsche Bank Nat. Trust Co., 2011 WL 6396628, *2 (N.D. Tex. 2011). In this case, Plaintiff seeks injunctive and declaratory relief to preserve their alleged ownership rights and equity, if any, in the Property. Plaintiffs do not allege a value to the Property, but according to the Fort Bend County Appraisal District, the 2019 appraised value of the Property is $194,057 (the “CAD Value”) (Exhibit 6).1 It is apparent from the face of the Petition that the amount in controversy in this case exceeds the minimum amount in controversy for diversity jurisdiction.
15. Plaintiff seeks to retain possession of the Property and enjoin a foreclosure sale. At a minimum, the CAD Value establishes the amount in controversy. Kew v. Bank of America, N.A., 2012 WL 1414978, *3 (S.D. Tex. 2012); King v. HSBC Bank USA, N.A., 2012 WL 3204190, *2 (W.D. Tex. 2012) (Remand denied because value of Property exceeds $75,000).
16. Other United States Courts in the Fifth Circuit make similar findings of fact and conclusions of law. See also King v. HSBC Bank USA, N.A., 2012 WL 3204190, *2 (W.D. Tex. 2012) (Remand denied because value of Property exceeds $75,000.00); Kew v. Bank of America, N.A., 2012 WL 1414978, *3 (S. D. Tex 2012).
17. In Kew, Judge Rosenthal denied remand and found that “case law makes clear that the value of the Kews’ home…is the amount in controversy in this litigation. The Kews seek a permanent injunction preventing the defendants from ‘taking any action to foreclose, remove, evict, or deprive [their] peaceful enjoyment of their home.’” Id. at *3. “Because the entire Property is the object of the litigation, the value of the Property—which is greater than
1 The Fort Bend County Appraisal District Records are also available online at https://fbcad.org.
$75,000—is the amount in controversy.” See Buttelman v. Wells Fargo Bank, N.A., No. 5:11– CV–00654–XR, 2011 WL 5155919, at *4 (W. D. Tex. Oct. 28, 2011) (holding that because the plaintiff sought to enjoin foreclosure of the Property, the value of the Property was the amount in controversy); Berry v. Chase Home Fin., LLC, No. C–09–116, 2009 WL 2868224, at *3 (S. D. Tex. Aug. 27, 2009) (holding that because “[a]bsent judicial relief, Plaintiff could be divested of all right, title, and interest to the Property,” and that “the value of the declaratory and injunctive relief to Plaintiff” was “the current appraised fair market value of the Property”). Because these various opinions are well-reasoned and directly on point, there is no question that the amount in controversy exceeds the minimum threshold requirement for this Court.
18. Further, the Court may also consider alleged damages, as well as attorneys’ fees. White, 319 F.3d at 675. Plaintiff “seeks monetary relief of over $100,000 but not more than $200,000.” Petition ¶ 81. It is apparent from the face of the Petition that the amount in controversy in this case exceeds the minimum amount in controversy for diversity jurisdiction. These alleged damages, combined with the aforementioned value of the Property at issue, are therefore sufficient to meet Defendant’s burden as to amount in controversy. Further, the Court may also consider actual and punitive damages, as well as attorneys’ fees. White, 319 F.3d at 675. Plaintiff seeks non-specific amounts of actual damages; and, where applicable, statutory, and exemplary damages, in addition to attorneys’ fees. See Petition at Prayer for Relief. These alleged damages, combined with the aforementioned value of the Property at issue, is sufficient to meet Defendants’ burden as to amount in controversy.
19. For the foregoing reasons, this Court has original jurisdiction over this action under 28 U.S.C. §1332, and thus removal to this Court by Defendant is proper. Accordingly,
Defendant hereby removes this action from the 189th Judicial District Court of Harris County, Texas, to the United States District Court for the Southern District of Texas, Houston Division.
By: //s// Branch M. Sheppard BRANCH M. SHEPPARD
Texas State Bar No. 24033057 firstname.lastname@example.org
GALLOWAY JOHNSON TOMPKINS BURR & SMITH
A Professional Law Corporation
SARA A. MORTON
Texas State Bar No. 24051090 email@example.com 1301 McKinney, Suite 1400
Houston, Texas 77010
(713) 599-0700 (Telephone)
(713) 599-0777 (Facsimile)
ATTORNEYS FOR DEFENDANTS
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing pleading was delivered via Electronic Filing to the following on this 18th day of September, 2020.
JEFFREY C. JACKSON
JEFFREY JACKSON & ASSOCIATES, PLLC 2200 N. LOOP WEST, STE. 108
HOUSTON, TX 77018 COUNSEL FOR PLAINTIFF
//s// Branch M. Sheppard Branch M. Sheppard
PLAINTIFF’S MOTION TO REMAND
COMES NOW, Plaintiff, Kafi, Inc. (“Plaintiff”), and files this Motion to Remand this case back to the 189th Judicial District Court of Harris County, Texas, and would respectfully show the Court as follows:
I. Nature and Stage of the Proceeding
1. There are two defendants in this case: Deutsche Bank National Trust Company, as Trustee for First Franklin Mortgage Loan Trust 2006-FF16, Asset-Backed Certificates, Series 2006-FF16 (“2006-FF16 Trust”) and Specialized Loan Servicing LLC (“SLS”) (together the “Defendants” or “removing parties”).
2. Logue filed her original state court petition in Harris County on August 19, 2020. On September 18, 2020, Defendants removed the case to this court on diversity jurisdiction grounds. DKT #1. There are no pending motions.
II. Issues Presented
1. Did Defendants properly allege their own citizenship in their notice of removal? Answer: NO
III. Argument and Authorities
A. Standard of Review
1. Diversity Jurisdiction Generally
3. “Federal courts are courts of limited jurisdiction.”1 Federal courts have subject matter jurisdiction and are authorized to entertain causes of action only where a question of federal law is involved or where there is diversity of citizenship between the parties and the amount in controversy exceeds $75,000.00.2
4. In a removed action, a district court is required to remand a case to state court if, at any time before final judgment, it determines that it lacks subject matter jurisdiction.3 The removing party bears the burden of showing that federal jurisdiction exists and that removal was proper.4 The existence of federal subject matter jurisdiction is determined at the time of removal from state court.5 Any ambiguities are construed against removal because the removal statute is strictly construed in favor of remand.6
2. Necessity of Alleging and Establishing Citizenship of all Defendants in Notice of Removal
5. If removal is based on diversity jurisdiction, the notice of removal must state facts asserting citizenship of the parties. Booty v. Shoney’s, Inc. 872 F.Supp 1524, 1528 (E.D.La. 1995); see also Dart Cherokee Basin Oper. Co. v. Owens, 574 U.S. 81, 83-84, 135 S.Ct. 547, 551 (2014). If the defendant did not establish the citizenship of the parties at the time of removal, the plaintiff may file a motion to remand arguing jurisdiction has not been established. See Doe #1 v. Blair, 819 F.3d 64, 67-68 (4th Cir. 2016); Heinen v. Northrop Grumman Corp., 671 F.3d 669, 670 (7th Cir. 2012). “District courts have no power to overlook procedural errors relating to the notice of removal; instead, a district court must remand a case which was removed pursuant to a procedurally defective notice.” Spoon v. Fannin Cty. Cmty. Supervision and Corr. Dep’t, 794 F.Supp.2d 703, 705-06 (E.D. Tex. 2011) (quoting Harden v. Field Mem. Cmty. Hosp., 516 F.Supp.2d 600, 606 (S.D. Miss. 2007)).
B. SLS Fails to Properly Allege and Establish Its Own Citizenship
6. The citizenship of a limited-liability company is determined by the citizenship of each member of the entity. Greenwich Ins. Co. v. Capsco Indus., Inc., 934 F.3d 419, 422 (5th Cir. 2019); Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1080 (5th Cir. 2008). “[C]itizenship of an unincorporated association must be traced through each layer of the association, however many there may be.” Deep Marine Tech., Inc. v. Conmaco/Rector, L.P., 515 F.Supp.2d 760, 766 (S.D. Tex. 2007).
7. In their notice of removal, the removing parties do not properly allege SLS’s citizenship.
SLS alleges its citizenship as follows:
Specialized Loan Servicing LLC is a mortgage servicer organized and existing under the laws of the United States. SLS is a Delaware limited liability company. SLS is wholly-owned by Specialized Loan Servicing Holdings LLC, a company
whose ultimate parent is Computershare Limited, a publicly traded company on the Australian stock exchange. The citizenship of SLS’s member(s) is Colorado. Further, none of SLS’s members are citizens of Texas or members of the member. There is, therefore, complete diversity of citizenship.
DKT #1 at 3.
8. SLS states that it is wholly owned by another LLC, Specialized Loan Servicing Holdings LLC (“SLS Holdings”). SLS states that SLS Holdings’ “ultimate parent company” is Computershare Limited, an Australian company. However, SLS does not specifically state that Computershare Limited is the only member of SLS Holdings, nor does SLS state how many members SLS Holdings has. Also, SLS does nothing to clarify what is meant by the phrase “ultimate parent company.” The phrase “ultimate parent company” implies there could be other entities in between SLS Holdings and Computershare Limited.
9. Compounding the problem, SLS specifically states that the citizenship of its “member(s)” is Colorado. This seems to contradict SLS’ other statements, particularly SLS’s statement that Computershare Limited, the supposed “ultimate parent company,” is an Australian company. SLS does not state which members of SLS or SLS Holdings are citizens of Colorado. For the foregoing reasons, the removing parties have failed to properly allege and establish SLS’s citizenship.
C. Deutsche Failed to Properly Allege and Establish Its Own Citizenship
10. In the notice of removal, the removing parties do not properly allege the 2006-FF16 Trust’s citizenship. The removing parties allege the 2006-FF16 Trust is a citizen of Germany since the Trustee, Deutsche Bank National Trust Company (“Deutsche Bank”), is supposedly a citizen of Germany. Dkt. #1 at 3.
11. The test for determining the citizenship of a trust depends on whether or not the trust is a business trust or traditional trust. See Americold Realty Tr. v. Conagra Foods, Inc., —-U.S , 136 S. Ct. 1012, 1015 (2016).
A business trust is a form of business organization that is similar to a corporation that is created for profit and is managed by compensated trustees for the benefit of those who hold transferable interests. See id.
A traditional trust is an entity commonly used for gift and estate planning purposes that involves a fiduciary relationship between multiple people. Id.
When a trustee is sued it its own name, the only preliminary question to be answered is whether the party is an “active trustee[ ] whose control over the assets held in [its] name[ ] is real and substantial.” Carden v. Arkoma Assocs., 494 U.S. 185, 191 (1990); Bynane v. Bank of New York Mellon for CWMBS Inc. Asset-Backed Certificates Series 2006-24, 866 F.3d 351, 357 (5th Cir. 2017).
If the answer is in the affirmative, the citizenship of the trustee controls, and if the answer is in the negative, the citizenship of the shareholders controls. Id.
A trustee’s control is ‘real and substantial’ when [it] possesses certain customary powers to hold, manage, and dispose of assets for the benefit of others.” Navarro Sav. Ass’n v. Lee, 446 U.S. 458, 464 (1980).
Generally, “[i]f the trustee ha[s] exclusive authority over the property (i.e., the declaration of the trust ‘authorizes the trustees to take legal title to trust assets, to invest those assets for the benefit of the shareholders, and to sue and be sued in their capacity as trustees’), … court[s] will look to the citizenship of the trustee alone to determine jurisdiction.” See Ouzenne v. Deutsche Bank Nat’l Tr. Co. for Soundview Home Loan Tr. 2006-3, Asset-Backed Certificates, Series 2006-3, No. H-16-CV-2563, 2017 WL 1437297, at *2 (S.D. Tex. 2017).
12. The removing parties completely fail to allege any specific facts which would support the traditional nature of the 2006-FF16 Trust. The removing parties fail to allege any facts to answer the “preliminary question” of whether the trustee is an “active trustee[ ] whose control over the assets held in [its] name[ ] is real and substantial.” Carden, 494 U.S. at 191; Bynane, 866 F.3d at 357.7
The removing parties skipped this vital step in the citizenship analysis and simply asserted, without any specific factual basis, that the 2006-FF16 Trust is a traditional trust which has the citizenship of its trustee.
D. Even if Deutsche Bank’s Citizenship Controls, Evidence Strongly Suggests Deutsche Bank is not a Citizen of Germany
13. Business activities of national banks are controlled by the National Bank Act (“NBA”), 12 U.S.C. § 1 et seq., and regulations promulgated thereunder by the OCC. See §§ 24, 93a, 371(a).
As the agency charged by Congress with supervision of the NBA, the OCC oversees the operations of national banks and their interactions with customers. See NationsBank of N. C., N.A. v. Variable Annuity Life Ins. Co., 513 U.S. 251, 254, 256, 115 S.Ct. 810, 130 L.Ed.2d 740 (1995).
The test for the citizenship of a national bank is the location designated in its articles of association as the main office. Wachovia Bank v. Schmidt, 546 U.S. 303, 307, 126 S. Ct. 941, 945 (2006).
14. The Office of the Comptroller of the Currency (“OCC”) maintains a list of active national banks on their website. According to the OCC, “Deutsche Bank National Trust Company” is a National Bank based in Los Angeles, California:
Exhibit 1 – OCC PDF; Exhibit 2 – Declaration of Jeffrey C. Jackson
15. The removing parties claim the “Deutsche Bank National Trust Company” is a German bank – but this is implausible since “Deutsche Bank National Trust Company” is a national bank formed under US law. See id. Notably, all of the national banks from the OCC’s list have US locations listed.
IV. Request for Relief
WHEREFORE, Plaintiff, Kafi, Inc. and respectfully requests this case be remanded back to the 189th Judicial District Court of Harris County, Texas, and for such other relief as it may be justly entitled.
JEFFREY JACKSON & ASSOCIATES, PLLC
/s/ Jeffrey C. Jackson
JEFFREY C. JACKSON
Texas State Bar No. 24065485 Southern District No. 1024221 2200 North Loop West, Suite 108
Houston, Texas 77018
ATTORNEY FOR PLAINTIFF KAFI, INC.
CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the foregoing document was served upon all counsel of record via Certified Mail, Return Receipt Requested, Facsimile and/or the Court’s CM/ECF system on October 19, 2020.
Branch M. Sheppard firstname.lastname@example.org Sara A. Morton email@example.com
GALLOWAY JOHNSON TOMPKINS BURR & SMITH
1301 McKinney Street, Suite 1400
Houston, Texas 77010
Attorneys for Defendants Deutsche Bank National Trust Company, as Trustee for First Franklin Mortgage Loan Trust 2006-FF16, Asset-Backed Certificates, Series 2006-FF16 and Specialized Loan Servicing LLC
/s/ Jeffrey C. Jackson
RULE 16 SCHEDULING ORDER
The following schedule shall be followed. All communications concerning the case shall be directed in writing to Ellen Alexander, Case Manager for United States District Judge David Hittner, P.O. Box 61010, Houston, TX 77208.
1. December 31, 2020 NEW PARTIES shall be joined, with leave of court, by this date.
The attorney causing such joinder shall provide copies of this ORDER to the new parties.
2A. January 29, 2021 PLAINTIFF shall designate EXPERT WITNESSES. Designation shall be in writing to opponent. Expert reports shall be served within 60 days of the designation.
B. February 26, 2021 DEFENDANT shall designate EXPERT WITNESSES. Designation shall be in writing to opponent. Expert reports shall be served within 60 days of the designation.
3. December 31, 2020 AMENDMENTS to pleadings, with leave of court, shall be made by
4. May 28, 2021 DISCOVERY shall be completed by this date.
5. June 30, 2021 MOTION CUT-OFF. No motion, including motions to exclude or
limit expert testimony under Fed. R. Evid. 702, shall be filed after this date except for good cause shown. See LR 7.
6. October 29, 2021 The JOINT PRETRIAL ORDER shall be filed on or before this date
notwithstanding that a motion for continuance may be pending. Parties shall exchange all trial exhibits on or before this date notwithstanding that a motion for continuance may be pending. NO LATE EXCHANGES OF EXHIBITS WILL BE PERMITTED. All motions in
limine shall be submitted with the pretrial order. Failure to file timely a joint pretrial order, motions in limine, or exchange all trial exhibits may result in this case being dismissed or other sanctions imposed, in accordance with all applicable rules.
7. November/December 2021 TRIAL TERM. Cases will be set for trial at a docket call,
conducted prior to the trial term or by order of the Court. Your position on the docket will be announced at that time.
Jury/Non-Jury ETT: 2 days
All documents filed must be 14 point font, double spaced with not less than one inch margins.
SIGNED on December 1, 2020