Karnatcheva v. JPMorgan Chase Bank, N.A.
871 F. Supp. 2d 834
D. Minnesota2012Background
- Plaintiffs challenge foreclosures on their homes after state-court actions were filed in Nov. 2011.
- Defendants removed to federal court on Nov. 28, 2011, asserting diversity and federal-question jurisdiction.
- Plaintiffs moved to remand on Feb. 10, 2012; the Magistrate allowed an Amended Complaint on Feb. 24, 2012.
- The court addressed remand and motions to dismiss, considering jurisdiction, fraudulently joined defendant Usset, and the sufficiency of the claims.
- The court denied remand and granted Defendants’ Rule 12(b)(6) dismissals, dismissing the action with prejudice.
- The court relied on the record at removal and analyzed the fraudulently joined Usset and the merits of the asserted claims in light of Minnesota and federal foreclosure law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Remand proper based on subject-matter jurisdiction? | Plaintiffs rely on prior exclusive jurisdiction. | Defendants argue removal is proper. | Remand denied; removal proper. |
| Fraudulent joinder of Usset defeats diversity? | Usset is a Minnesota resident improperly joined. | Usset is fraudulently joined to destroy diversity. | Usset fraudulently joined; complete diversity exists. |
| Sufficiency of Counts I–IV under Rule 12(b)(6)? | Plaintiffs allege voidable mortgages, misrecorded assignments, and invalid foreclosures. | Allegations are either conclusory or not supported by facts. | Counts I–IV dismissed; claims fail for lack of factual basis. |
| Standing to challenge PSAs and acceleration; declaratory relief viability? | Plaintiffs seek declarations about PSAs and acceleration rights. | Plaintiffs have no standing to challenge PSAs as non-parties; acceleration claims insufficient. | Declaratory relief claims dismissed for lack of standing and factual basis. |
Key Cases Cited
- In re Business Men’s Assurance Co. of America, 992 F.2d 181 (8th Cir.1983) (removal jurisdiction standards; burden of proof for federal jurisdiction)
- Hatridge v. Aetna Cas. & Surety Co., 415 F.2d 809 (8th Cir.1969) (removal based on record at time of removal; doubts resolved in favor of remand)
- Penn Gen. Casualty Co. v. Pennsylvania ex rel. Schnader, 294 U.S. 189 (1935) (prior exclusive jurisdiction doctrine (in rem/ quasi in rem))
- Farmers’ Loan & Trust Co. v. Lake St. Elevated R.R., 177 U.S. 51 (1900) (illustrates conflicts between courts of concurrent jurisdiction)
- Hill, In the Matter of the Trust Created by Louis W. Hill, 728 F.Supp. 564 (D.Minn.1990) (discusses continuing jurisdiction over property; relevant to prior exclusive jurisdiction)
- Jackson v. Mortgage Electronic Registration Systems, Inc., 770 N.W.2d 487 (Minn.2009) (mortgagee may foreclose without holding the note; notes and mortgage interests may be separated)
- Stein v. Chase Home Finance, LLC, 662 F.3d 976 (8th Cir.2011) (right to foreclose enforced by the legal holder; issues of note/mortgage separation)
- McDonald v. Stewart, 289 Minn. 35, 182 N.W.2d 437 (Minn.1970) (attorney immunity for actions within employment scope; limited liability to third parties)
- Welk v. GMAC Mortgage, LLC, 850 F.Supp.2d 976 (D.Minn.2012) (fraudulent joinder analysis against a law firm; standing to challenge operational foreclosure)
- Dunbar v. Wells Fargo Bank, N.A., 853 F.Supp.2d 839 (D.Minn.2012) (claims of improper foreclosure alleged; court rejects similar theories)