IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 14-50256

OWEN M. SMITH; DANA NORWOOD SMITH, 

 Plaintiffs–Appellants

v.

BANK OF AMERICA CORPORATION; BARRETT DAFFIN FRAPPIER 

TURNER & ENGEL, L.L.P.; STEPHEN C. PORTER; G. TOMMY BASTIAN; 

NDEX TITLE SERVICES, L.L.C.; BANK OF AMERICA, N.A.; FEDERAL 

NATIONAL MORTGAGE ASSOCIATION; THE REGISTERED HOLDERS 

OF FANNIE MAE GUARANTEED REMIC PASS-THROUGH 

CERTIFICATES; Fannie Mae REMIC TRUST 2008-16; FNMA AA 

MSTR/SUB CW BANK; LAURIE MEDER; FANNIE MAE REMIC TRUST 

2008-16, 

 Defendants–Appellees

Appeal from the United States District Court

for the Western District of Texas

U.S.D.C. No. 1:13-CV-193

Before DENNIS, PRADO, and HIGGINSON, Circuit Judges.

PER CURIAM:*

Plaintiffs–Appellants Owen and Dana Smith filed suit pro se in Texas 

state court against Bank of America Corporation, the law firm Barrett Daffin 

Frappier Turner & Engel, L.L.P. (“BDFTE”), and several other parties involved 

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

February 11, 2015

Lyle W. Cayce

Clerk

 

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in proceedings to foreclose on the Smiths’ home in Austin. The Smiths asserted 

a state-law claim for wrongful foreclosure. Bank of America removed the case 

to federal court, invoking both federal question and diversity jurisdiction. The 

district court never assessed subject-matter jurisdiction, and we decline to 

determine on this record whether the defendants successfully bore their 

burden to invoke federal jurisdiction at the time of removal. Accordingly, we 

vacate the district court’s judgment and remand the case with instructions to

decide the threshold jurisdictional issue.

I. BACKGROUND

By a general warranty deed, the Smiths became the record owners of a 

parcel of land located at 3 Waterfall Drive, Austin, Texas 78738. In January 

2008, the Smiths executed a Texas Home Equity Note (“the Note”) and Texas 

Home Equity Security Instrument (“the Deed of Trust”) with Countrywide 

Bank, FSB. The Note was signed by Laurie Meder, Senior Vice President of 

Countrywide, apparently in the form of a stamp. The Deed of Trust listed 

Countrywide as the “lender,” Tommy Bastian as “trustee,” and Mortgage 

Electronic Registration Systems, Inc. (“MERS”) as “a nominee for Lender and 

Lender’s successors and assigns” and as “the beneficiary under this Security 

Instrument.” The Deed of Trust also provided that “MERS (as nominee for 

Lender and Lender’s successors and assigns) has the right . . . to exercise any 

or all of th[e] interests [granted in the Deed of Trust], including, but not limited 

to, the right to foreclose and sell the Property[] and to take any action required 

of Lender.”

In June 2009, MERS, “as nominee for Lender and Lender’s successors 

and assigns”—now Bank of America, due to a merger with Countrywide—

assigned the Note and Deed of Trust to BAC Home Loans Servicing, L.P.

(“BAC”), formerly known as Countrywide Home Loans Servicing, L.P. Bank of 

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America is the successor by merger to BAC. BDFTE prepared the assignment, 

and Stephen C. Porter, Assistant Secretary of MERS, signed it on behalf of 

MERS. A stamp on the assignment requested that the document be returned 

to BDFTE “Attn: NDEX Title Services, L.L.C.” The assignment, which is at the 

heart of the Smiths’ claims, was filed and recorded in the Travis County Clerk’s 

Office in July 2009.

The Smiths defaulted, and Bank of America initiated non-judicial 

foreclosure proceedings. On February 1, 2013, the Smiths, proceeding pro se,

filed suit in the 345th Judicial District Court of Travis County against Bank of 

America, MERS, BAC, BDFTE, NDEX, Porter, and Bastian. Although the

Smiths challenged Bank of America’s authority to foreclose on a number of 

different grounds, including fraud, loss of perfection of the security instrument,

and conflicts of interest between BAC, MERS, BDFTE, Bastian, and Porter, 

the precise nature of the Smiths’ claims was unclear. At a minimum, they 

asserted a state-law claim for wrongful foreclosure. They sought money

damages and an injunction to halt the sale of their property.

Bank of America and MERS timely removed the case to federal court, 

invoking federal question and diversity jurisdiction, alternatively. They 

averred that the Smiths’ wrongful-foreclosure claim was preempted by the 

federal Home Owners’ Loan Act, and that a single reference to the federal Fair 

Debt Collection Practices Act in the “facts” section of the Smiths’ complaint

stated a claim arising under federal law. In the alternative, they maintained 

that the non-diverse defendants BDFTE, NDEX, Bastian, and Porter did not 

need to consent to removal because they had been improperly joined. The 

Smiths did not move to remand the case to state court. Neither the district 

court nor the magistrate—to whom all subsequent dispositive motions were 

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referred—assessed the notice of removal or determined the basis of federal 

jurisdiction.

The defendants moved in succession to dismiss the claims against them 

under Federal Rule of Civil Procedure 12(b)(6). The district court adopted the 

magistrate’s recommendations over the Smiths’ objections and granted each

motion to dismiss.1 The district court entered final judgment, and the Smiths 

timely appealed.

II. DISCUSSION

We review questions of subject-matter jurisdiction de novo. Gasch v. 

Hartford Accident & Indem. Co., 491 F.3d 278, 281 (5th Cir. 2007). We may 

consider federal subject-matter jurisdiction sua sponte, as “subject-matter 

delineations must be policed by the courts on their own initiative even at the 

highest level,” Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999).

“Under 28 U.S.C. § 1441(a), any state court civil action over which the 

federal courts would have original jurisdiction may be removed from state to 

1 On September 2, 2013, after the district court dismissed the Smiths’ claims against 

BDFTE, Porter, and Bastian, the Smiths, now represented by counsel, filed an amended 

complaint. 

The amended complaint named as defendants Bank of America; the Federal National 

Mortgage Association (“Fannie Mae”); the Registered Holders of the Fannie Mae REMIC 

Pass-Through Trust Certificates, Fannie Mae REMIC Trust 2008-16 (“the Trust”); FNMA AA 

MSTR/SUB CW BANK; NDEX; and Meder, former Senior Vice President of Countrywide. 

The amended complaint asserted three causes of action: a declaratory judgment under the 

Texas Declaratory Judgment Act that “the ‘assignment of Note and Deed of [T]rust’ is void 

as it was executed, made, used and presented without authority or capacity”; the presentation 

and use of fraudulently created documents to make a claim on real property in violation of 

section 12.002 of the Texas Civil Practice and Remedies Code (TCPRC); and a suit to quiet 

title.

The Smiths initially failed to serve Fannie Mae, the Trust, FNMA, and Meder. On 

January 3, 2014, the magistrate ordered the Smiths to show cause why the claims against 

each of these defendants should not be dismissed for failure to timely effectuate service. Upon 

the Smiths’ request, summons issued to each of the previously unserved defendants on 

January 6, 2014. However, the Smiths never presented any evidence of service, and the 

magistrate recommended that the claims against these defendants be dismissed without 

prejudice. The district court adopted this recommendation over the Smiths’ objections. 

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federal court.” Gasch, 491 F.3d at 281. The removing party bears the burden 

of establishing both the existence of federal subject-matter jurisdiction and the 

propriety of removal. Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 

720, 723 (5th Cir. 2002). To make the jurisdictional determination, “we 

consider the claims in the state court petition as they existed at the time of 

removal.” Id. (emphasis added). Significantly, “[a]ny ambiguities are construed 

against removal because the removal statute should be strictly construed in 

favor of remand.” Id.

Here, Bank of America and MERS claimed two alternative grounds for

federal subject-matter jurisdiction: federal question jurisdiction and diversity 

jurisdiction.2

A. Federal Question Jurisdiction

Federal question jurisdiction extends to cases “arising under the 

Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. To 

ascertain whether a case “arises under” federal law, “we look to whether the 

‘plaintiff’s well-pleaded complaint raises issues of federal law.’” Howery v. 

Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001) (quoting City of Chi. v. Int’l 

Coll. of Surgeons, 522 U.S. 156, 163 (1997)). This rule is equally applicable to 

cases removed to federal court and to cases filed in federal court in the first 

instance: “[T]he plaintiff’s well-pleaded complaint, not the removal petition, 

must establish that the case arises under federal law.” Id. at 916 n.12 (quoting 

Willy v. Coastal Corp., 855 F.2d 1160, 1165 (5th Cir. 1988)). In its most famous 

formulation, the “general rule for determining whether a case raises a federal 

question,” id. at 917, provides that a suit typically “arises under the law that 

2 Although it listed federal question jurisdiction as a basis of jurisdiction in its notice 

of removal, Bank of America invoked only diversity jurisdiction in its supplemental briefing 

on subject-matter jurisdiction in this Court.

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creates the cause of action,” Am. Well Works Co. v. Layne & Bowler Co., 241 

U.S. 257, 260 (1916).

In their notice of removal, Bank of America and MERS declared that the 

Smiths’ pro se complaint contained both a federal claim and a state-law claim 

that was preempted by federal law. We disagree.

The federal claim identified by the defendants, a violation of the Fair 

Debt Collection Practices Act, traces to a single sentence in the “facts” section 

of the Smiths’ complaint: “[Bank of America] failed to adhere to the Fair Debt 

Collection Practice Act, as all 3rd party debt collectors are required to do.” The 

Smiths did not cite the United States Code section corresponding to the Act, 

nor did they reference the statute at any other point in their complaint—

including, critically, the subsections in which they alleged their causes of 

action. Further, as the Smiths point out in their supplemental brief, they 

originally sought “[a]dditional [t]reble [d]amages for all intentional and 

knowing violations”—a form of relief available under the Texas Debt Collection 

Act, as a “tie-in” to the Texas Deceptive Trade Practices Act, but not under the 

Fair Debt Collection Practices Act. Compare Tex. Fin. Code Ann. § 392.404(a)

(TDCA), and Tex. Bus. & Com. Code Ann. § 17.50(b)(1) (TDTPA), with 15 

U.S.C. § 1692k(a) (FDCPA). Even construing the Smiths’ pro se pleadings 

liberally, as we must, see Haines v. Kerner, 404 U.S. 519, 520 (1972) (per 

curiam), we cannot say that the Smiths’ well-pleaded complaint stated a claim 

under the Fair Debt Collection Practices Act.3

3 Cf. Howery, 243 F.3d at 917–18 (rejecting the defendant’s argument that “by 

mentioning the rules, regulations, and statutes of the FTC,” the plaintiff “stat[ed] a claim 

under the federal Fair Credit Reporting Act” because the plaintiff’s “mention of federal law 

merely served to describe types of conduct that violated [state law], not to allege a separate 

[federal] cause of action,” and citing the absence of any “explicit mention of any specific 

federal statute or regulation” in the complaint). Notably, the magistrate in this case also 

perceived no federal claim, characterizing the Smiths’ complaint as containing “a single cause 

of action for wrongful foreclosure.”

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As for preemption, Bank of America and MERS contended that the 

Smiths’ wrongful-foreclosure claim was preempted by the Home Owners’ Loan 

Act because “it purport[ed] to impose requirements on a federal savings bank 

regarding ‘[p]rocessing, origination, servicing, sale or purchase of, or 

investment or participation in, mortgages.’” However, it is well settled that 

only “complete preemption” can support federal question jurisdiction upon 

removal if the plaintiff’s well-pleaded complaint contains no federal claims. See 

Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 6–8 (2003). The defendants 

made no effort to argue that this onerous standard had been satisfied, either 

in their notice of removal or in their briefing to this Court.4 Accordingly, we 

find no basis for federal question jurisdiction.

B. Diversity Jurisdiction

The party invoking diversity jurisdiction bears the burden of proving 

that complete diversity exists. Getty Oil Corp. v. Ins. Co. of N. Am., 841 F.2d 

1254, 1259 (5th Cir. 1988). “We have stated repeatedly that when jurisdiction 

depends on citizenship, citizenship must be ‘distinctly and affirmatively 

alleged.’” Id. (quoting McGovern v. Am. Airlines, Inc., 511 F.2d 653, 654 (5th 

Cir. 1975)).

Where, as here, a party claims improper joinder, “[t]he party seeking 

removal bears a heavy burden,” Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 

574 (5th Cir. 2004) (en banc): it must show either “(1) actual fraud in the 

pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause 

of action against the non-diverse party in state court,” Travis v. Irby, 326 F.3d 

644, 647 (5th Cir. 2003). To satisfy the latter standard, the removing party must 

4 Indeed, in their notice of removal—the only filing in which they even attempted to 

argue the existence of federal question jurisdiction—the defendants made no mention of the 

complete-preemption doctrine, and they cited only three cases from district courts in Texas 

and California in support of their preemption argument.

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“demonstrate[] that there is no possibility of recovery by the plaintiff against 

[the] in-state defendant”—or, stated differently, that “there is no reasonable 

basis for the district court to predict that the plaintiff might be able to recover 

against” that defendant in state court. Smallwood, 385 F.3d at 573. In making 

this determination, the court “resolve[s] all contested factual issues and 

ambiguities of state law in favor of the plaintiff.” Gasch, 491 F.3d at 281.

Further, “[w]e do not determine whether the plaintiff will actually or even 

probably prevail on the merits of the claim, but look only for a possibility that 

the plaintiff might do so.” Guillory v. PPG Indus., Inc., 434 F.3d 303, 308–09 

(5th Cir. 2005) (emphases added). And we ultimately resolve “any doubt about 

the propriety of removal . . . in favor of remand.” Gasch, 491 F.3d at 281–82.

This is a threshold inquiry: when confronted with an allegation of 

improper joinder, the court must determine whether the removing party has 

discharged its substantial burden before proceeding to analyze the merits of 

the action. As we observed in Smallwood: 

When a defendant removes a case to federal court on a claim of 

improper joinder, the district court’s first inquiry is whether the 

removing party has carried its heavy burden of proving that the 

joinder was improper. Indeed, until the removing party does so, 

the court does not have the authority to do more; it lacks the 

jurisdiction to dismiss the case on its merits. It must remand to 

the state court.

385 F.3d at 576. This approach is consistent with “the well-established rule 

that a trial court must determine the existence of subject matter jurisdiction 

before reaching the merits of a case.” Getty Oil, 841 F.2d at 1261. 

Indeed, we have found error where district courts have failed to adhere 

to this strict order of operations, and we have declined to assume that a district 

court that has adjudicated the merits of a claim has necessarily made an 

implicit prior determination of its own jurisdiction. See Stafford v. Mobil Oil 

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Corp., 945 F.2d 803, 804–06 (5th Cir. 1991) (vacating an injunction for lack of 

subject-matter jurisdiction where the plaintiff inadequately pleaded diversity, 

the record did not establish complete diversity, and the district court made no 

express jurisdictional finding or ruling before issuing the injunction); Getty Oil, 

841 F.2d at 1258–61, 1264 (holding that the removing party did not discharge 

its burden to prove complete diversity and improper joinder, that “the district 

court erred by failing to address the important jurisdictional issues before 

reaching the merits of the case,” and that the district court’s failure to assess 

its own jurisdiction necessitated remand); cf. Gasch, 491 F.3d at 279–80, 284 

(vacating summary judgment for want of subject-matter jurisdiction where the 

removing defendants claimed improper joinder of the sole non-diverse 

defendant but the district court never dismissed that defendant, the plaintiffs 

never moved to remand, and the district court granted summary judgment to 

all defendants).

The Smiths did not affirmatively plead the citizenship of any of the 

defendants, either in their original complaint or in their amended complaint.5

In their notice of removal, the defendants identified Bank of America as a 

citizen of North Carolina and MERS as a citizen of Virginia,6 while they 

contended only “on information and belief” that the Smiths, BDFTE, NDEX, 

Porter, and Bastian were all citizens of Texas. Nevertheless, the defendants 

argued that removal was proper because each of the purported Texas-citizen 

defendants had been improperly joined and, moreover, each was a nominal 

defendant. However, neither the district court nor the magistrate ever ruled 

5 Significantly, only two defendants were common to both complaints: Bank of 

America and NDEX. The sole evidence in the record pertaining to NDEX’s citizenship 

appears in the defendants’ notice of removal, in which the defendants aver “on information 

and belief” that NDEX is a citizen of Texas—the same state of citizenship as the Smiths.

6 Contrary to this conclusion in the defendants’ notice of removal, MERS actually 

appears to be a citizen of both Virginia and Delaware. See 28 U.S.C. § 1332(c)(1).

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on the defendants’ claim of improper joinder—or, more fundamentally, 

ascertained the grounds for federal subject-matter jurisdiction.7 We decline to 

determine on this record whether the defendants successfully bore their “heavy 

burden” to prove improper joinder and thereby establish complete diversity, 

and we leave it to the district court to conduct this threshold analysis in the 

first instance.

III. CONCLUSION

For the foregoing reasons, we VACATE the district court’s judgment and 

REMAND with instructions to assess the basis of federal subject-matter 

jurisdiction.

7 Although the Smiths neither contested the allegations in the removal notice nor 

moved for remand, it is black-letter law that subject-matter jurisdiction cannot be waived or 

“conferred by consent, agreement, or other conduct of the parties,” Gasch, 491 F.3d at 284 

(internal quotation marks omitted).

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