Gary Reece v. Bank of New York Mellon
760 F.3d 771
8th Cir.2014Background
- Reece filed a state-court complaint (Oct. 15, 2010) seeking a TRO to stop Mellon’s non-judicial foreclosure; the state court granted a temporary injunction and later Reece amended to assert a class action (Jan. 18, 2012).
- Mellon removed to federal court on Feb. 10, 2012, invoking diversity and federal-question jurisdiction; Reece moved to remand arguing untimeliness and lack of federal-question jurisdiction.
- The district court denied remand on diversity grounds and granted Mellon’s Rule 12(b)(6) motion, dismissing Reece’s complaint based on controlling precedent about national banks’ foreclosure powers.
- After judgment, the district court awarded Mellon $836.82 in costs even though Mellon failed to file a verified affidavit as required by 28 U.S.C. § 1924; Reece appealed both the jurisdictional ruling/dismissal and the costs award.
- The Eighth Circuit reviewed jurisdiction de novo, concluded federal diversity jurisdiction existed, affirmed dismissal under controlling Eighth Circuit precedent, but reversed the costs award for failure to comply with statutory verification requirements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of removal under § 1446(c)(1) (one-year rule) | Reece: Mellon filed removal >1 year after commencement so removal is untimely. | Mellon: Removal timely because amended complaint made case removable; alternatively invoked federal-question jurisdiction. | The one-year limit would apply to diversity removals, but was inapplicable here because of the class-action removal statute (§ 1453(b)). Removal upheld. |
| Whether foreclosure claims are subject to federal-question jurisdiction (complete preemption) | Reece: Federal defenses/compliance by Mellon do not create federal-question jurisdiction. | Mellon: Foreclosure authority of nationally chartered banks implicates federal law supporting federal-question jurisdiction. | No complete preemption; federal-question jurisdiction did not exist. Diversity (not federal-question) was the correct basis. |
| Applicability of § 1453(b) (class-action one-year exception) | Reece: § 1453(b) should apply only to CAFA class actions (>$5M/minimal diversity). | Mellon: § 1453(b) applies to actions qualifying as a class action under § 1332(d)(1); thus the one-year limit does not apply. | Court: § 1453(b) unambiguously exempts class actions (as defined by § 1332(d)(1)) from § 1446(c)(1)’s one-year limit; Mellon could remove after one year. |
| Adequacy of diversity allegations (citizenship vs. residence) | Reece: Notice of removal improperly pleads only residency, not citizenship, so diversity not established. | Mellon: Notice sufficiently alleged diversity; later argued court should treat notice as amended or accepted Reece’s supplemental statement of citizenship. | The removal notice was defective for using "resident" not "citizen," but the court exercised discretion under § 1653 and deeming pleadings amended because Reece confirmed his Arkansas citizenship; diversity existed. |
| Dismissal on the merits under Rule 12(b)(6) | Reece: Mellon lacks authority to use Arkansas non-judicial foreclosure; claim states a viable state-law challenge. | Mellon: Controlling Eighth Circuit precedent establishes national banks may foreclose under state procedures; claims fail as a matter of law. | Dismissal affirmed: JPMorgan precedent foreclosed Reece’s claim; Rule 12(b)(6) dismissal proper. |
| Award of costs without verified affidavit (§ 1924) | Reece: District court improperly taxed costs where Mellon failed to file the § 1924 affidavit and did not verify AO-133 form. | Mellon: Submitted bill of costs and AO-133 but did not sign the statutory affidavit; argued for allowance or amendment. | Reversed: Section 1924 requires a verified affidavit; Mellon’s failure to file a signed verification precluded taxing costs. |
Key Cases Cited
- Steel Co. v. Citizens for a Better Env't, 523 U.S. 83 (jurisdiction is the first question on appeal)
- Knudson v. Sys. Painters, Inc., 634 F.3d 968 (8th Cir. 2011) (when amount in controversy not pled, 30‑day removal clock may not run)
- JPMorgan Chase Bank, N.A. v. Johnson, 719 F.3d 1010 (8th Cir. 2013) (national banks may avail themselves of state non-judicial foreclosure procedures)
- Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567 (diversity must exist at commencement and at removal)
- Phoenix Ins. Co. v. Pechner, 95 U.S. 183 (petition that states only residency is insufficient to establish citizenship for removal)
- Dubach v. Weitzel, 135 F.3d 590 (8th Cir. 1998) ("resident" is insufficient to plead citizenship)
- United States v. Hiland, 909 F.2d 1114 (8th Cir. 1990) (28 U.S.C. § 1924 requires verification of costs by affidavit)