Court Opinion

ID: 2820175
Source: CourtListenerOpinion
Date Created: 2015-07-24 19:01:23.73088+00
Date Added: 2024-06-11T11:28:28.835075
License: Public Domain

UNPUBLISHED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Affirmed by unpublished per curiam opinion.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Unpublished opinions are not binding precedent in this circuit.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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