Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-01864/USCOURTS-azd-2_11-cv-01864-0/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1441 Petition for Removal- Fraud

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

John H. McLaughlin, 

Plaintiff, 

vs.

Mortgage Electronic Registration System

Inc. and First American Title Insurance

Company,

Defendants. 

)

)

)

)

)

)

)

)

)

)

)

)

)

)

No. CV-11-1864-PHX-JAT

ORDER

Currently pending before the Court are: Defendant Mortgage Electronic Registration

System’s (“MERS”) First Consolidated Motion to Strike Plaintiff’s Petition to Quiet Title

and Motion to Dismiss (Doc. 6) and Motion for Summary Disposition of Its First

Consolidated Motion to Strike (Doc. 7); Plaintiff’s Motion to Remand to State Court (Doc.

8); and Defendant First American Title Insurance Company’s (“First American”) Motion to

Dismiss (Doc. 9). The Court now rules on the motions.

BACKGROUND

Plaintiff purchased residential property at 2192 West Central Avenue, Coolidge,

Arizona 85228 (the “Property”) through financing from First Horizon Home Loan

Corporation. (Deed of Trust, Doc. 1-1.) Plaintiff filed a Petition to Quiet Title in state court

against MERS and First American, the Trustee named in the subject Deed of Trust, on

Case 2:11-cv-01864-JAT Document 12 Filed 05/01/12 Page 1 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 2 -

August 10, 2011. (Doc. 1-1.) 

Defendant MERS removed to this Court on September 22, 2011. (Doc. 1.) In its

Notice of Removal, MERS alleges that this Court has original jurisdiction over this case

pursuant to 28 U.S.C. §1332, and therefore can be removed pursuant to 28 U.S.C. §1446,

because the parties are diverse and the matter in controversy exceeds $75,000.

After removing, MERS moved to Strike/Dismiss the Petition to Quiet Title. (Doc. 6.)

In the Motion, MERS argues that the Petition does not meet the pleading requirements of

Federal Rule of Civil Procedure 8 and therefore does not constitute a “complaint” sufficient

to commence a civil action under Rule 3. MERS also argues that Plaintiff did not effect

service of process on it.

Plaintiff filed a Motion to Return Action to State Court for Lack of Jurisdiction (Doc.

8) after MERS filed its Motion to Strike/Dismiss, but Plaintiff never filed a Response to

MERS’s Motion. Plaintiff argues this Court should remand to state court because Defendant

MERS has not demonstrated that the amount in controversy exceeds $75,000.

Defendant First American filed a Motion to Dismiss pursuant to Rule 12(b)(6) on

November 30, 2011. First American argues, based on A.R.S. §33-807(E), that Plaintiff has

failed to state a claim against it because he has not alleged that First American breached any

of the duties it owed as Trustee.

MOTION TO REMAND

Pursuant to 28 U.S.C. § 1332, “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 interests and costs, and is between . . . citizens of different States[.]” 28 U.S.C. §

1332(a)(1). The removal statute, 28 U.S.C. § 1441, provides, in pertinent part: “[A]ny civil

action brought in a State court of which the district courts of the United States have original

jurisdiction, may be removed by the defendant . . . to the district court of the United States

for the district and division embracing the place where such action is pending.” 28 U.S.C.

§ 1441(a); see Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987) (“Only . . . actions that

originally could have been filed in federal court may be removed to federal court by the

Case 2:11-cv-01864-JAT Document 12 Filed 05/01/12 Page 2 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 -

defendant.”). 

Courts strictly construe the removal statute against removal jurisdiction. See, e.g.,

Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); Gaus v. Miles, Inc., 980

F.2d 564, 566 (9th Cir. 1992). There is a “strong presumption” against removal, and

“[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the

first instance.” Gaus, 980 F.2d at 566 (internal citations omitted). “The ‘strong

presumption’ against removal jurisdiction means that the defendant always has the burden

of establishing that removal is proper.” Id. If at any time it appears that the district court

lacks subject matter jurisdiction, the case must be remanded. 28 U.S.C. § 1447(c).

“In a removed case, . . . the plaintiff chose a state rather than federal forum. Because

the plaintiff instituted the case in state court, ‘there is a strong presumption that the plaintiff

has not claimed a large amount in order to confer jurisdiction on a federal court[.]’” Singer

v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 375 (9th Cir. 1997)(quoting St. Paul

Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 290 (1938)). “Where the complaint does

not demand a dollar amount, the removing defendant bears the burden of proving by a

preponderance of the evidence that the amount in controversy exceeds [$75,000].” Id. at 376

(citing Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). “Under this

burden, the defendant must provide evidence establishing that it is ‘more likely than not’ that

the amount in controversy exceeds [$75,000].” Sanchez, 102 F.3d at 404.

Plaintiff makes no claim for damages in his Petition. The Petition alleges only the

quiet title claim. In a suit to quiet title, the amount in controversy is the value of the subject

property. Chapman v. Deutsche Bank Nat. Trust Co., 651 F.3d 1039, 1045 n.2 (9th Cir.

2011)(holding that the District court properly concluded that the quiet title action satisfied

the amount in controversy requirements for diversity jurisdiction where the foreclosed home

was assessed at a value of more than $200,000). “In a suit to quiet title, or to remove a cloud

therefrom, it is not the value of the defendant’s claim which is the amount in controversy, but

it is the whole of the real estate to which the claim extends.” Woodside v. Ciceroni, 93 F.1,

4 (9th Cir. 1899). 

Case 2:11-cv-01864-JAT Document 12 Filed 05/01/12 Page 3 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 -

Plaintiff does not challenge the diversity of the parties, but claims that the amount in

controversy requirement is not met. Defendant MERS, as the removing party, has the

burden of demonstrating that the value of the Property, which is the subject of the Petition

to Quiet Title, exceeds $75,000. MERS makes no arguments regarding the value of the

Property, but instead points to the amount of the note – $150,000 – as satisfying the amount

in controversy requirement. Sadly for homeowners and the economy, one no longer

reasonably can presume that the amount of a mortgage loan equals or is less than the value

of the property securing it. The amount of the promissory note simply does not establish the

value of the underlying property.

The undersigned realizes that this Court previously has considered the amount of the

promissory note when determining the amount in controversy. See Schultz v. BAC Home

Loans Servicing, LP, 2011 WL 1771679 *2 (D. Ariz. May 10, 2011)(“[T]he Court is thus

persuaded that the value of the lawsuit is at least the value of the subject property [$128,800]

and, more likely, the value of the loan [$299,055.16].”); Frame v. Cal-Western

Reconveyance Corp., 2011 WL 1576712 *5 (D. Arizona April 27, 2011)(finding that an

action seeking unidentified compensatory, general, and punitive damages and also to quiet

title to a property secured by a promissory note in the amount of $181,900 satisfied the

amount in controversy requirement). But although the Plaintiff in this case seeks “a

judgment ordering the Recorder of Deeds for Pinal County to convey [the Property] to the

Petitioner . . .,” he does not seek rescission of his loan in the Petition. He does not dispute

that he owes someone money. And even if rescission of the note ultimately would be a

consequence of the litigation, the Court cannot consider monetary collateral effects that

follow adjudication when deciding whether the amount in controversy requirement has been

met. Rapoport v. Rapoport, 416 F.2d 41, 43 (9th Cir. 1969)(holding that the court could not

consider the value of the real estate that would be effected by setting aside the divorce decree

when determining the amount in controversy).

The Ninth Circuit Court of Appeals has held that in a suit to quiet title the amount in

controversy is the value of the subject property, and the Court could not find a Ninth Circuit

Case 2:11-cv-01864-JAT Document 12 Filed 05/01/12 Page 4 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 5 -

Court of Appeals case holding that the amount in controversy in a quite title case actually

is the amount of the loan secured by the property at issue. Because Defendant, the party with

the burden of proving the amount in controversy more probably than not exceeds $75,000,

has introduced no evidence – for instance, the publicly available assessed value of the home

– regarding the value of the home, and given the strong presumption against removal, the

Court finds that the amount in controvery requirement for diversity jurisdiction is not met

under the particular facts of the this case. The Court therefore will grant the Plaintiff’s

Motion to Remand and will not reach the Defendants’ Motions to Dismiss, which shall

remain pending before the state court.

Accordingly,

IT IS ORDERED Granting Plaintiff’s Motion to Remand (Doc. 8) to state court

pursuant to 28 U.S.C. §1447(c).

IT IS FURTHER ORDERED that Defendant MERS’s First Consolidated Motion

to Strike Plaintiff’s Petition to Quiet Title and Motion to Dismiss (Doc. 6) and Defendant

First American’s Motion to Dismiss (Doc. 9) remain pending for decision by the state court.

IT IS FURTHER ORDERED Denying as moot MERS’s Motion for Summary

Disposition of Its First Consolidated Motion to Strike (Doc. 7).

DATED this 1st day of May, 2012.

Case 2:11-cv-01864-JAT Document 12 Filed 05/01/12 Page 5 of 5