Manuel & Bertha Mendiola v. Shapiro & Schwartz, L.L.P., Substitute Trustee for Citibank, 5:17-cv-01252

Plaintiffs Manuel and Bertha Mendiola sued to stop foreclosure of their San Antonio home and sought TRO/injunction in Texas state court, alleging impediments to the foreclosure and that they were pursuing a loan modification.
Defendant CitiMortgage, Inc. (CMI) removed the case to federal court based on diversity jurisdiction, naming Shapiro & Schwartz, L.L.P. (substitute trustee) as a co-defendant.
CMI moved to dismiss under Rule 12(c), and argued Shapiro was improperly joined because Plaintiffs pleaded no viable claim against the law firm.
The district court ordered Plaintiffs to show cause why Shapiro should not be dismissed; Plaintiffs did not respond and did not oppose the motion to dismiss.
The court examined whether Plaintiffs plausibly alleged breach of contract or other claims against CMI or any actionable conduct by Shapiro, and whether diversity jurisdiction existed after dropping Shapiro.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Improper joinder of Shapiro	Shapiro is named as substitute trustee and co-defendant for foreclosure-related impediments	Shapiro is an attorney/agent acting for CMI; Plaintiffs plead no facts showing a viable claim against Shapiro	Shapiro was improperly joined and dismissed without prejudice; its citizenship does not defeat diversity
Sufficiency of breach-of-contract allegations against CMI	Plaintiffs allege they were in process of modification and foreclosure would breach contract	CMI: pleadings contain only conclusory allegations, no facts showing performance or a breach by CMI	Plaintiffs failed to plead facts sufficient to state breach of contract; claim dismissed with prejudice
Entitlement to injunctive relief	Plaintiffs sought injunction to stop foreclosure beyond prior TRO	Injunctive relief requires a viable underlying cause of action	Because no viable claim was pled, additional injunctive relief was denied

Getty Oil Corp. v. Insur. Co. of N. Am., 841 F.2d 1254 (5th Cir. 1988) (diversity requires complete diversity of citizens)
De Aguilar v. Boeing Co., 47 F.3d 1404 (5th Cir. 1995) (removing party bears burden of proving federal jurisdiction)
Smallwood v. Illinois Cent. R. Co., 385 F.3d 568 (5th Cir. 2004) (improper joinder doctrine and 12(b)(6)-type analysis for joinder challenges)
Travis v. Irby, 326 F.3d 644 (5th Cir. 2003) (threshold inability to establish a cause of action against non-diverse defendant)
B., Inc. v. Miller Brewing Co., 663 F.2d 545 (5th Cir. 1981) (resolve doubts about removal in favor of remand; test for reasonable basis to predict liability)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (complaint must state a plausible claim for relief)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must plead more than labels and conclusions)