Cuevas v. BAC Home Loans Servicing, LP
2011 U.S. App. LEXIS 15499
5th Cir.2011Background
- Cuevases, Texas residents, sued BAC Home Loans Servicing LP, Countrywide entities, and Countrywide Home Loans of Texas in Texas state court over mortgage issues and later added a TILA claim.
- Deeds of trust list First Magnus Corporation as lender; Countrywide Home Loans of Texas allegedly originated loans but did not service the Cuevas loan, which was serviced by Countrywide Home Loans Servicing LP (now BAC Home Loans Servicing, LP).
- Plaintiffs alleged default cure was denied, foreclosure occurred, and the property was sold, with alleged improper foreclosure conduct and post-sale profit motives.
- Defendants removed to federal court on January 5, 2010, asserting federal question (TILA) and diversity jurisdiction, arguing improper joinder of Countrywide Home Loans of Texas.
- District court held no diversity-based removal due to improper joinder, but found federal question and supplemental jurisdiction; it dismissed TILA and remanded state law claims to state court.
- Fifth Circuit reversed, holding improper joinder proven, diversity jurisdiction existed over state law claims at remand, and removal/remand decisions should have preserved jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was Countrywide Home Loans of Texas improperly joined? | Cuevases contended improper joinder was not shown and removal was proper. | Defendants argued Countrywide Home Loans of Texas could not be sued on the loan claims and was improperly joined. | Yes, improper joinder shown; diversity jurisdiction existed over state claims. |
| Does waiver of removal rights affect remand after proper removal? | Waiver due to not removing within 30 days should bar remand reliance on diversity. | Waiver is irrelevant once removal jurisdiction exists over properly removed claims. | Irrelevant; once properly removed, district court could retain/remand based on proper jurisdiction. |
| Did the district court abuse its discretion in remanding state law claims after dismissing the TILA claim? | Remand was proper if federal jurisdiction existed over the core claims. | Remand was improper because diversity jurisdiction over state claims existed and should have been exercised. | Reversed; the district court erred in remanding the state law claims. |
Key Cases Cited
- Adair v. Lease Partners, Inc., 587 F.3d 238 (5th Cir.2009) (jurisdictional review of remand decisions when discretion is exercised)
- Buchner v. Federal Deposit Insurance Corp., 981 F.2d 816 (5th Cir.1993) (distinction between removal ability and remand authority; waiver concepts)
- McDonal v. Abbott Labs., 408 F.3d 177 (5th Cir.2005) (improper joinder standard; burden on removing party)
- Smallwood v. Illinois Cent. R.R. Co., 385 F.3d 568 (5th Cir.2004) (test for improper joinder; focus on potential recovery against in-state defendant)
- Travis v. Irby, 326 F.3d 644 (5th Cir.2003) (state law issues resolved in joinder analysis)