609 B.R. 324
Bankr. N.D. Ill.2019Background
- Jerome M. Davis filed Chapter 7 in 2011, converted to Chapter 13; plan confirmed in 2012 providing for cure/maintenance of mortgage debt to ABN Amro/CitiMortgage and vesting the property in the debtor.
- Under an Agreed Order, Davis agreed to payments to CitiMortgage; upon payment default in 2014 CitiMortgage filed for stay modification and withdrew its proof of claim, allowing foreclosure to proceed.
- Davis completed the plan and received a Chapter 13 discharge in 2018; the court repeatedly held CitiMortgage's claim was not subject to discharge (long‑term debt or not provided for by the plan).
- CitiMortgage filed a state‑court foreclosure in 2019; Jerome and Lynne‑Ternoir Davis removed the foreclosure to the bankruptcy court asserting federal question jurisdiction (enforcement of the discharge injunction and potential FDCPA issues).
- Davis failed to timely respond to CitiMortgage’s motion to remand and could not identify a federal question on the face of the foreclosure complaint when pressed at hearing.
- The bankruptcy court held it lacked subject‑matter jurisdiction, remanded the foreclosure to state court under 28 U.S.C. § 1447(c), and awarded CitiMortgage attorneys’ fees and costs for the improper removal.
Issues
| Issue | Plaintiff's Argument (CMI) | Defendant's Argument (Davis) | Held |
|---|---|---|---|
| Whether the removed foreclosure presents a federal‑question basis for bankruptcy‑court jurisdiction | Foreclosure is state law; no federal question on face of complaint | Removal proper under federal jurisdiction (§1331, §1452) to enforce Chapter 13 discharge and §524 injunction | Removal improper; no federal question on the complaint; remand ordered under §1447(c) |
| Whether a defense invoking the §524 discharge injunction creates federal‑question jurisdiction | A federal defense does not create removal jurisdiction | Violations of the discharge injunction give federal jurisdiction/enforcement authority | Defense under §524 is not on the face of the complaint and cannot furnish removal jurisdiction |
| Whether an FDCPA claim (or intended FDCPA claim) supports removal | FDCPA not pled in the state foreclosure complaint and so cannot be a basis for removal | Davis pointed to FDCPA as a federal basis (or potential claim) | FDCPA was not pled in state complaint; cannot be relied on for removal |
| Whether §1447(c) fees and costs should be awarded to plaintiff | Removal was objectively unreasonable; request for fees and costs is appropriate | Removal was justified (argued reasonableness) | Court awarded CitiMortgage reasonable attorneys’ fees and costs; CMI to file bill of costs; Davis may respond |
Key Cases Cited
- Betzner v. Boeing Co., 910 F.3d 1010 (7th Cir. 2018) (burden of establishing federal jurisdiction rests with the removing party)
- Studer v. Katherine Shaw Bethea Hosp., 867 F.3d 721 (7th Cir. 2017) (well‑pleaded complaint rule controls removal; federal defense does not create jurisdiction)
- Aetna Health Inc. v. Davila, 542 U.S. 200 (2004) (principles on federal‑question jurisdiction and well‑pleaded complaint rule)
- Caterpillar Inc. v. Williams, 482 U.S. 386 (1987) (federal defenses generally do not support removal jurisdiction)
- Jackson Cty. Bank v. DuSablon, 915 F.3d 422 (7th Cir. 2019) (standard for awarding fees when removal lacked an objectively reasonable basis)
- Martin v. Franklin Capital Corp., 546 U.S. 132 (2005) (policy and standard for awarding costs on remand)