Court Opinion

ID: 1037729
Source: CourtListenerOpinion
Date Created: 2013-08-16 13:05:53.931813+00
Date Added: 2024-06-11T12:46:47.540543
License: Public Domain

Case: 12-12557   Date Filed: 08/16/2013   Page: 1 of 9

                                                         [DO NOT PUBLISH]

             IN THE UNITED STATES COURT OF APPEALS

                     FOR THE ELEVENTH CIRCUIT
                       ________________________

                             No. 12-12557
                         Non-Argument Calendar
                       ________________________

                   D.C. Docket No. 1:11-cv-04382-TWT

MOHAMMED RAFIQUE ULLAH,
SHIRIN AKHTER,

                                                           Plaintiffs-Appellants,

                                   versus

BAC HOME LOANS SERVICING LP,
f.k.a. Countrywide Home Loan Servicing, LP,
MERSCORP INC.,
MORTGAGE ELECTRONIC REGISTRATION
SYSTEMS, INC. (MERS),
BANK OF AMERICA, NA,
MCCALLA RAYMER, LLC,

                                                         Defendants-Appellees.

                       ________________________

                Appeal from the United States District Court
                   for the Northern District of Georgia
                      ________________________

                             (August 16, 2013)
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Before TJOFLAT, MARCUS and PRYOR, Circuit Judges.

PER CURIAM:

      Mohammed Rafique Ullah and Shirin Akhter (the “Ullahs”), husband and

wife proceeding pro se, appeal the district court’s grant of motions to dismiss their

complaint. The Ullahs filed suit in Georgia state court against BAC Home Loan

Servicing, LP (“BAC”), Merscorp, Inc. and its wholly owned subsidiary Mortgage

Electronic Registration System, Inc. (“MERS”), Bank of America, N.A. (“BOA”),

and McCalla Raymer, LLC (“McCalla”), alleging breach of contract, breach of the

duty of good faith and fair dealing, fraud, fraudulent conspiracy, negligent

commencement of foreclosure proceedings, violation of the Georgia Fair Business

Practices Act (“GFBPA”), wrongful foreclosure, and conversion. On appeal, the

Ullahs argue that the district court lacked subject matter jurisdiction and should

have granted their motion to remand to state court because the defendants failed to

prove by clear and convincing evidence that McCalla, a non-diverse defendant,

was fraudulently joined. After careful review, we vacate and remand.

      The background is this. The Ullahs obtained a residential mortgage loan by

executing a mortgage note and security deed. The security deed named MERS as

the grantor, and MERS assigned the deed to BOA. The Ullahs defaulted on their

mortgage, and BOA, through its wholly owned subsidiary BAC, commenced

foreclosure proceedings. BOA and BAC retained McCalla to serve as foreclosure

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counsel. McCalla sent the Ullahs a notice of foreclosure sale informing them of

their rights and notifying them of various fees which they could be required to pay.

      Before the foreclosure sale could proceed, the Ullahs filed this action in state

court. Merscorp, MERS, BOA, and BAC (collectively, the “bank entities”), with

McCalla’s consent, removed the case to the U.S. District Court for the Northern

District of Georgia based on diversity jurisdiction. The bank entities and McCalla

admitted that the Ullahs and McCalla were all residents of Georgia for the

purposes of determining diversity jurisdiction, but they said that McCalla was

merely a nominal defendant whose presence did not count for diversity purposes.

In the district court, the bank entities and McCalla moved to dismiss the complaint

for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Instead

of responding to the motions to dismiss, the Ullahs filed a motion to remand the

case back to state court based on a lack of diversity jurisdiction. The district court

granted the bank entities’ and McCalla’s motions and dismissed the case without

addressing the Ullahs’s motion to remand. This timely appeal follows.

      We review issues of federal subject matter jurisdiction de novo. Bender v.

Mazda Motor Corp., 657 F.3d 1200, 1202 (11th Cir. 2011). An appellate court

“must satisfy itself not only of its own jurisdiction, but also of that of the lower

courts in a cause under review.” Bochese v. Town of Ponce Inlet, 405 F.3d 964,

975 (11th Cir. 2005) (quotation omitted). “When a case is removed based on

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diversity jurisdiction, . . . the case must be remanded to state court if there is not

complete diversity between the parties.” Stillwell v. Allstate Ins. Co., 663 F.3d

1329, 1332 (11th Cir. 2011). “However, when a plaintiff names a non-diverse

defendant solely in order to defeat federal diversity jurisdiction, the district court

must ignore the presence of the non-diverse defendant and deny any motion to

remand the matter back to state court.” Id. (quotation and brackets omitted). Such

pleading constitutes “fraudulent joinder” of the non-diverse defendant. Id.

      To establish fraudulent joinder of the non-diverse defendant, the removing

party must satisfy a “heavy” burden of proving by clear and convincing evidence

that either: “(1) there is no possibility the plaintiff can establish a cause of action

against the resident defendant; or (2) the plaintiff has fraudulently pled

jurisdictional facts to bring the resident defendant into state court.” Id. (quotation

omitted). The standard for evaluating whether the plaintiff can establish a cause of

action against the resident defendant is very lenient: “federal courts are not to

weigh the merits of a plaintiff’s claim beyond determining whether it is an

arguable one under state law.” Id. at 1333 (quotation omitted). “If there is even a

possibility that a state court would find that the complaint states a cause of action

against any one of the resident defendants, the federal court must find that the

joinder was proper and remand the case to the state court.” Id. (quotation omitted).

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      “[W]e must necessarily look to the pleading standards applicable in state

court, not the plausibility pleading standards prevailing in federal court.” Id. at

1334. The pleading standard in Georgia is lower than the standard applicable to a

motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). See id. at 1334

n.3 (“Georgia has not chosen to adopt the heightened pleading requirements

imposed on federal plaintiffs . . . .”). Under Georgia law, fair notice of the nature

of the claim is all that is required, and the elements of most claims can be pled in

general terms. Bush v. Bank of N.Y. Mellon, 720 S.E.2d 370, 374 (Ga. App.

2011). Pleading conclusions, rather than facts, may be sufficient to state a claim

for relief. Stillwell, 663 F.3d at 1334; see Ledford v. Meyer, 290 S.E.2d 908, 909-

10 (Ga. 1982) (holding that under the notice theory of pleading adopted in Georgia

“it is immaterial whether a pleading states ‘conclusions’ or ‘facts’ as long as fair

notice is given”). Moreover, even when a plaintiff fails to conform to these

requirements, the proper remedy is not a dismissal or judgment on the pleadings,

but to allow the plaintiff to amend the complaint and provide a more definite

statement unless the complaint’s allegations “disclose with certainty that no set of

facts consistent with the allegations could be proved that would entitle the plaintiff

to the relief he seeks.” Bush, 720 S.E.2d at 374 (quotation omitted).

      In Henderson v. Washington National Insurance Co., 454 F.3d 1278, 1283

(11th Cir. 2006), we considered a motion to remand to state court. The case turned

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on whether the defendants had shown by clear and convincing evidence that there

was no possibility the plaintiff could establish a cause of action for fraud against

the non-diverse defendant under Alabama law because the complaint failed to

establish that the plaintiff was entitled to tolling of the statute of limitations. We

stated that “the precise contours of the pleading requirements are not dispositive.”

Id. The plaintiff in Henderson alleged generally that the defendants engaged in

fraud by concealing the nature of a group insurance policy purchased by the

plaintiff and that “the fraud and other wrongs perpetrated upon Plaintiff were of a

continuing nature.” Id. at 1280, 1284. We noted that this general assertion fell

short of Alabama’s pleading requirements, but looked to other parts of the

complaint which contained a more detailed description of the events. Id. at 1284.

We stated that our “task is not to gauge the sufficiency of the pleadings in this

case.” Id. The “inquiry is more basic: we must decide whether the defendants

have proven by clear and convincing evidence that no Alabama court could find

this complaint sufficient.” Id. We held that statements in the complaint, although

not referring to the non-diverse defendant specifically, set forth allegations which

provided at least some notice of the claim such that, although the “patchy

allegations” might ultimately prove insufficient, we were “unable to say there is no

possibility [the plaintiff] has asserted a colorable claim.” Id.

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      The Georgia Supreme Court’s recent decision in You v. JP Morgan Chase

Bank, N.A., No. S13Q0040, 2013 WL 2152562 (Ga. May 20, 2013), clarified two

issues certified to the Georgia Supreme Court by the U.S. District Court for the

Northern District of Georgia. Id. at *1. First, the holder of a security deed

possesses full authority to exercise the power of sale and foreclose after the

debtor’s default, regardless of whether the holder also possesses the mortgage note

or otherwise has a beneficial interest in the debt obligation underlying the security

deed. Id. at *6. Second, the notice provided to the debtor need only identify “the

individual or entity who shall have full authority to negotiate, amend, and modify

all terms of the mortgage with the debtor,” and, thus, the notice does not need to

identify the secured creditor unless the secured creditor happens to be the party

with such authority. Id. (quotation omitted). However, the Georgia Supreme

Court specifically declined to reach the issue of whether permitting both the holder

of the mortgage note and the holder of the security deed to foreclose would expose

the debtor to double liability. Id. at *5.

      In this case, the district court lacked subject matter jurisdiction. As McCalla

and the bank entities admit, the Ullahs and McCalla are all residents of Georgia for

purposes of diversity jurisdiction. The bank entities bore the burden of proving

that McCalla was fraudulently joined by establishing there was no possibility a

Georgia state court would find that the complaint stated a cause of action against

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McCalla. The specific allegation against McCalla in the complaint provided that

McCalla aided and abetted the bank entities by communicating false

representations, and the bank entities argue that the Ullas failed to allege certain

elements of fraud. But in reviewing a claim of fraudulent joinder, the precise

pleading requirements of state law are not dispositive. See Henderson, 454 F.3d at

1284 (declining to reach the question of whether the plaintiff adequately pled state

law fraud because “the decision as to the sufficiency of the pleadings is for the

state courts”). Moreover, under Georgia law, the appropriate remedy for failure to

satisfy the pleading standards is not dismissal. See Bush, 720 S.E.2d at 374.

      Although the complaint did not specifically refer to McCalla throughout,

more detailed allegations can be gleaned from other portions of the complaint. The

allegations are these. MERS arranged with law firms, like McCalla’s, for flat fees

to be charged as attorneys’ fees. MERS allowed its attorneys and loan servicers to

collect fees in excess of these flat rates. Other additional fees charged by MERS

also could not be verified but were likely to be in excess of expenses actually

incurred.   MERS utilized the services of law firms like McCalla’s, acting as

MERS’s agents, to prosecute borrowers who fell behind on their payments, and

either the law firm or MERS would enter a demand for payment of fees and

expenses. The notice of sale, which was sent by McCalla, concealed the true

owner of the security deed in an attempt to collect fees from the Ullahs and stop

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them from preventing foreclosure. These proceedings caused them economic loss,

emotional distress, embarrassment, humiliation, and pain and suffering.

      The bank entities and McCalla failed to meet their heavy burden to show by

clear and convincing evidence that based on these statements there was no

possibility that a Georgia state court could find that the Ullahs adequately pleaded

a cause of action for fraud against McCalla. The Ullahs alleged that the bank

entities, through McCalla, charged them attorneys’ fees and other fees above the

amounts permitted by the terms of the mortgage note. They alleged that they have

in fact paid these fees. They noted that they now face the possibility of double

liability should the owner of the mortgage note demand payment from them. The

Ullahs presented most of these allegations through conclusory statements, but,

under Georgia law, conclusory statements can sufficiently state a cause of action.

See Stillwell, 663 F.3d at 1334; Ledford, 290 S.E.2d at 909-10. Accordingly, the

district court lacked subject matter jurisdiction and, therefore, we vacate the district

court’s grant of the motions to dismiss and remand the case to the district court

with instructions to remand the case to the Gwinnett County Superior Court.

      VACATED AND REMANDED.

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