Marsh v. Wells Fargo Bank, N.A.
760 F. Supp. 2d 701
N.D. Tex.2011Background
- Marshs sued in state court seeking declaratory relief, injunctive relief, and claims for breach, usury, and fraud related to a loan modification and foreclosure process.
- Wells Fargo Bank, N.A. and U.S. Bank National Association removed the case to federal district court, arguing improper joinder of in-state defendants (Law Firm and Substitute Trustees).
- Law Firm and Substitute Trustees answered; the Substitute Trustees asserted a verified denial claiming they were named solely in their trustee capacity under a deed of trust; the Law Firm argued it was not a trustee.
- Plaintiffs sought TRO in state court which was in place; foreclosure sale was scheduled but not completed; removal occurred on June 30, 2010.
- Court addressed Texas Property Code § 51.007 and whether the non-diverse defendants were properly joined, and discussed whether plaintiffs can state claims against the non-diverse defendants.
- Court DENIED the Motion to Remand, finding no reasonable basis to predict relief against non-diverse defendants and thus proper jurisdiction in federal court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether improper joinder defeats diversity here | Marshs contend non-diverse defendants are properly joined | Defendants argue improper joinder; non-diverse defendants should be ignored for diversity | Remand denied; court finds no reasonable basis that plaintiffs can prevail against non-diverse defendants |
| Whether § 51.007 requires a basis for trustee’s belief to trigger responses | § 51.007(a) requires basis for belief that trustee was named only in capacity | Substitute Trustees claimed capacity as trustees but did not state basis for belief | Substitute Trustees not dismissed under § 51.007(c); line of reasoning on basis stated by § 51.007(a) valid for non-dismissal |
| Whether claims against Substitute Trustees support injunctive relief | Impartiality/fairness duty by trustees supports injunction | No wrongful foreclosure without a foreclosure sale; duty is not standalone claim | No reasonable basis for injunctive relief against Substitute Trustees; no wrongful foreclosure action thus not actionable |
| Whether declaratory judgment claims against non-diverse defendants are proper | Declarations affect rights related to non-diverse defendants | Declarations primarily concern Wells Fargo/U.S. Bank; joinder not defeat diversity | Declarations do not create a viable claim against non-diverse defendants; diversity remains intact; removal proper |
Key Cases Cited
- Bosky v. Kroger Tex., LP, 288 F.3d 208 (5th Cir. 2002) (removal jurisdiction and improper joinder framework)
- Acuna v. Brown & Root Inc., 200 F.3d 335 (5th Cir. 2000) (resolve doubts in plaintiff’s favor in remand analysis)
- Shearer v. Sw. Serv. Life. Ins. Co., 516 F.3d 276 (5th Cir. 2008) (burden on removing party for improper joinder; standard for removal)
- Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568 (5th Cir. 2004) (en banc; standard for determining improper joinder; ‘reasonable basis’ test)
- Cantor v. Wachovia Mortg. Corp., 641 F. Supp. 2d 602 (N.D. Tex. 2009) (determinative standard for improper joinder; need reasonable basis for liability against in-state defendants)
- FDIC v. Myers, 955 F.2d 348 (5th Cir. 1992) (trustee duties and equivalent fiduciary-like obligations under Texas law)
- Clauer v. Heritage Lakes Homeowners Ass'n, 726 F. Supp. 2d 668 (E.D. Tex. 2010) (trustee duties and wrongful foreclosure analysis; pre-sale context)