Julie Hughes v. Wells Fargo Bank, N.A. , 617 F. App'x 261 ( 2015 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-2400
JULIE BORDEN HUGHES,
Plaintiff - Appellant,
v.
WELLS FARGO BANK, N.A.; WELLS FARGO HOME MORTGAGE; SAMUEL I.
WHITE, P.C.; MERS, (Mortgage Electronic Registration System);
FEDERAL HOME LOAN MORTGAGE CORPORATION,
Defendants - Appellees.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Gerald Bruce Lee, District
Judge. (1:14-cv-00516-GBL-TRJ)
Submitted: June 30, 2015 Decided: July 24, 2015
Before WYNN and DIAZ, Circuit Judges, and DAVIS, Senior Circuit
Judge.
Affirmed by unpublished per curiam opinion.
Julie Borden Hughes, Appellant Pro Se. Terry Catherine Frank,
KAUFMAN & CANOLES, PC, Richmond, Virginia, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Julie Borden Hughes filed a civil action in Virginia circuit
court against Wells Fargo Bank, N.A. (“Wells Fargo”), Wells Fargo
Home Mortgage (“WFHM”), and Samuel I. White, P.C. (“SIWPC”),
collectively “Defendants,” asserting claims related to a
residential mortgage secured by a Deed of Trust on Hughes’ primary
residence. Defendants removed the action to federal district court
pursuant to 28 U.S.C. § 1441(a) (2012), citing both federal
question and diversity subject matter jurisdiction. The district
court dismissed Hughes’ complaint under Fed. R. Civ. P. 12(b)(6)
for failure to state a claim, but it granted Hughes leave to amend.
Hughes filed an amended complaint asserting five claims for
relief, including claims for quiet title and rescission of the
Deed of Trust. The amended complaint identified two additional
defendants—the Federal Home Loan Mortgage Corporation (“Freddie
Mac”) and the Mortgage Electronic Registration System, Inc.
(“MERS”). Hughes subsequently filed a motion for “further” leave
to amend her complaint to join Freddie Mac and MERS as parties.
Hughes moved to remand the case to state court pursuant to 28
U.S.C. § 1447(c) (2012), arguing that the district court lacked
subject matter jurisdiction because all federal questions had been
dismissed and the action lacked both diversity of citizenship and
an amount in controversy above $75,000. In opposing remand,
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Defendants argued that the amount in controversy far exceeded
$75,000, and the citizenship of nondiverse parties SIWPC and MERS
should be discounted for jurisdictional purposes because they were
nominal parties and fraudulently joined. After Defendants moved
to dismiss the amended complaint, the district court denied Hughes’
motion to remand, denied leave to add MERS and Freddie Mac as
parties, and dismissed the action for failure to state a claim.
Hughes appeals, challenging the court’s denial of her motion to
remand and its dismissal of her quiet title claim. For the reasons
that follow, we affirm.
“We review de novo questions of subject matter jurisdiction,
including those relating to the propriety of removal and fraudulent
joinder.” Mayes v. Rapoport, 198 F.3d 457, 460 (4th Cir. 1999)
(internal quotation marks omitted). The party seeking removal
bears the burden to establish federal subject matter jurisdiction.
Hoschar v. Appalachian Power Co., 739 F.3d 163, 169 (4th Cir.
2014). Removal must be strictly construed, and “if federal
jurisdiction is doubtful, a remand to state court is necessary.”
Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 816 (4th Cir. 2004)
(per curiam) (alterations and internal quotation marks omitted).
We also review de novo the district court’s dismissal of
Hughes’ claims pursuant to Rule 12(b)(6) for failure to state a
claim. Nemphos v. Nestle Waters N. Am., Inc., 775 F.3d 616, 617
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(4th Cir. 2015). “To survive a motion to dismiss, a complaint
must state a claim to relief that is plausible on its face.”
Summers v. Altarum Inst. Corp., 740 F.3d 325, 328 (4th Cir. 2014)
(internal quotation marks omitted). Although we will “construe
facts in the light most favorable to the plaintiff and draw all
reasonable inferences in [her] favor,” United States ex rel. Oberg
v. Pa. Higher Educ. Assistance Agency, 745 F.3d 131, 136 (4th Cir.
2014) (internal quotation marks and citations omitted), we need
not accept “legal conclusions drawn from the facts, . . .
unwarranted inferences, unreasonable conclusions, or arguments.”
Philips v. Pitt Cty. Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009)
(internal quotation marks omitted).
Federal subject matter jurisdiction exists if the plaintiff’s
civil action arises under federal law, see 28 U.S.C. § 1331 (2012),
or if the amount in controversy exceeds $75,000 and the suit is
between citizens of different states, see 28 U.S.C. § 1332(a)(1)
(2012). State court defendants are authorized to remove to federal
district court a civil action over which the district courts had
original subject matter jurisdiction. 28 U.S.C. § 1441(a) (2012).
If the district court determines at any time before final judgment
that it lacks subject matter jurisdiction over a removed action,
it must remand to state court. 28 U.S.C. § 1447(c) (2012). “A
motion to remand the case on the basis of any defect other than
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lack of subject matter jurisdiction must be made within 30 days
after the filing of the notice of removal under [28 U.S.C.
§ 1446(a) (2012)].” 28 U.S.C. § 1447(c).
Diversity jurisdiction requires that the parties be
completely diverse—that is, no defendant is a citizen of the same
state as any plaintiff. Lincoln Prop. Co. v. Roche, 546 U.S. 81,
89 (2005). However, in determining whether diversity exists, the
court must consider only “real and substantial parties to the
controversy” and must disregard the suit’s “nominal or formal
parties.” Navarro Sav. Ass’n v. Lee, 446 U.S. 458, 460-61 (1980).
The related “fraudulent joinder” doctrine also enables the court
“to disregard, for jurisdictional purposes, the citizenship of
certain nondiverse defendants, assume jurisdiction over a case,
dismiss the nondiverse defendants, and thereby retain
jurisdiction.” Mayes, 198 F.3d at 461.
On appeal, Hughes argues that remand to state court was
required because diversity jurisdiction was lacking, given that
both she and SIWPC, a necessary party to the action, are Virginia
citizens, * and the amount in controversy requirement was not
* Hughes asserts on appeal that the inclusion of MERS and
Freddie Mac in her amended complaint does not affect the
jurisdictional analysis, as the court denied leave to add them as
parties. We are not permitted to rely solely on Hughes’
concession, but are obliged to consider the issue sua sponte. See
United States v. Wilson, 699 F.3d 789, 793 (4th Cir. 2012) (“[A]
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satisfied. She also argues that the district court erred in
denying her motion to remand as untimely, as her request for a
remand relied solely on jurisdictional grounds.
While the district court did not expressly address SIWPC’s
citizenship or its effect on diversity jurisdiction when ruling on
Hughes’ motion to remand, we may “affirm on any ground appearing
in the record, including theories not relied upon or rejected by
the district court.” Scott v. United States, 328 F.3d 132, 137
(4th Cir. 2003). We find no error in the district court’s exercise
of jurisdiction over Hughes’ amended complaint.
Even if SIWPC was not merely a nominal party for
jurisdictional purposes, we conclude its citizenship was properly
disregarded when analyzing diversity of citizenship because it was
fraudulently joined. To establish fraudulent joinder, the
removing party must demonstrate either that the plaintiff
“committed outright fraud in pleading jurisdictional facts, or
lack of subject matter jurisdiction cannot be waived or forfeited,
and no other matter can be decided without subject matter
jurisdiction.”). The district court appears to have construed
Hughes’ pleadings as merely seeking leave to join these additional
parties, notwithstanding the fact that it authorized Hughes to
file the amended complaint in which they initially were named.
Even assuming, without deciding, that MERS and Freddie Mac were
parties to the action, their joinder did not defeat the court’s
jurisdiction. See 12 U.S.C. § 1452(f)(2) (2012) (“[A]ll civil
actions to which [Freddie Mac] is a party shall be deemed to arise
under the laws of the United States, and the district courts of
the United States shall have original jurisdiction of all such
actions, without regard to amount or value[.]”).
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that there is no possibility that the plaintiff would be able to
establish a cause of action against the in-state defendant in state
court.” Weidman v. Exxon Mobil Corp., 776 F.3d 214, 218 (4th Cir.)
(internal quotation marks omitted), cert. denied, __ S. Ct. __, 83
U.S.L.W. 3838 (June 22, 2015) (No. 14-1289). “The party alleging
fraudulent joinder bears a heavy burden—it must show that the
plaintiff cannot establish a claim even after resolving all issues
of law and fact in the plaintiff’s favor.” Johnson v. Am. Towers,
LLC, 781 F.3d 693, 704 (4th Cir. 2015) (internal quotation marks
omitted). “This standard is even more favorable to the plaintiff
than the standard for ruling on a motion to dismiss under Fed. R.
Civ. P. 12(b)(6).” Hartley v. CSX Transp., Inc., 187 F.3d 422,
424 (4th Cir. 1999). To defeat an allegation of fraudulent
joinder, the plaintiff need establish “only a slight possibility
of a right to relief.” Mayes, 198 F.3d at 464 (internal quotation
marks omitted).
Here, Hughes’s amended complaint did not allege any
misconduct by SIWPC or specifically seek any damages from it.
Because Hughes named SIWPC solely due to its status as Trustee, it
was a relevant party only to Hughes’ claims for quiet title and
rescission—those claims asserting that the Deed of Trust was void.
However, we conclude both of these claims were without legal
foundation, and Hughes therefore lacked even a “slight possibility
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of a right to relief” against SIWPC. See id. (internal quotation
marks omitted).
With respect to Hughes’ rescission claim, Hughes failed to
establish a colorable right to the equitable remedy of rescission,
whether construing her claim as proceeding under a theory of mutual
mistake or as asserting fraud. See Owens v. DRS Auto. Fantomworks,
Inc., 764 S.E.2d 256, 260 (Va. 2014) (elements of fraud); Jennings
v. Jennings, 409 S.E.2d 8, 12 (Va. Ct. App. 1991) (defining mutual
mistake of fact warranting rescission).
Hughes’ quiet title claim similarly lacks any valid legal
basis. “[A]n action to quiet title is based on the premise that
a person with good title to certain real or personal property
should not be subjected to various future claims against that
title.” Maine v. Adams, 672 S.E.2d 862, 866 (Va. 2009). The
plaintiff seeking to quiet title is required to establish her
“superior title over the adverse claimant. Thus, in order for a
claim for quiet title to survive . . . in the foreclosure context,
the former homeowner must plead that she has fully satisfied all
legal obligations to the real party in interest.” Squire v. Va.
Hous. Dev. Auth., 758 S.E.2d 55, 62 (Va. 2014).
Hughes asserts that she had superior title to the property
over Defendants because the Deed of Trust was void, as no trustee
was named at the time of execution, and Wells Fargo unilaterally
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named a trustee prior to recordation. While naming a trustee “is
essential to the nature and form of a deed of trust,” Bank of
Christiansburg v. Evans, 178 S.E. 1, 2 (Va. 1935), the parties
need not have named a trustee for a deed of trust to be valid.
N.Y. Life Ins. Co. v. Kennedy, 135 S.E. 882, 885 (Va. 1926).
Rather, “a deed of trust on real estate to secure creditors, in
which the name of the trustee is left blank, is an equitable
mortgage, and may be enforced as such upon the principle that
equity will treat that as done which, by agreement, is to be done.”
Evans, 178 S.E. at 2. Thus, Hughes’ core argument—that the Deed
of Trust was void from its inception for want of a Trustee–has no
arguable basis in Virginia law.
The district court properly concluded that Hughes failed to
plead quiet title against Defendants because she failed to
establish her superior claim to the property. Hughes’ quiet title
claim was therefore properly dismissed pursuant to Rule 12(b)(6),
and it failed to provide even “a slight possibility of a right to
relief” against SIWPC that would refute Defendants’ claim of
fraudulent joinder. See Mayes, 198 F.3d at 406 (internal quotation
marks omitted).
Finally, we find unpersuasive Hughes’ arguments that the
amount in controversy requirement was not satisfied. See 28 U.S.C.
§ 1446(c)(2) (providing that, in action removed for diversity
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jurisdiction, with limited exceptions, “the sum demanded in good
faith in the initial pleading shall be deemed to be the amount in
controversy”); Peterson v. Sucro, 93 F.2d 878, 882 (4th Cir. 1938)
(recognizing that in quiet title action, “the amount in controversy
is the value of the whole of the real estate to which the claim
extends” (internal quotation marks omitted)). Because the
district court did not lack subject matter jurisdiction, it
appropriately denied Hughes’ motion to remand on jurisdictional
grounds. Additionally, any nonjurisdictional argument Hughes’
motion to remand could have been construed to assert was properly
denied as untimely filed outside the 30-day window applicable to
motions seeking remand on nonjurisdictional grounds.
In summary, we find no error in the court’s denial of Hughes’
motion to remand or dismissal of her quiet title claim under Rule
12(b)(6). Accordingly, we affirm the district court’s judgment.
We dispense with oral argument because the facts and legal
contentions are adequately presented in the materials before this
court and argument would not aid the decisional process.
AFFIRMED
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