Sherman v. Litton Loan Servicing, L.P.
2011 U.S. Dist. LEXIS 71756
E.D. Va.2011Background
- Plaintiff James R. Sherman obtained a $530,000 mortgage on 533 General Booth Blvd., Litton served the loan.
- Sherman requested a loan modification in September 2009; Litton denied after a Plan and trial payments.
- Glasser & Glasser, P.L.C. became substitute trustee and notified Sherman of a foreclosure date.
- Sherman filed state court action seeking to enjoin foreclosure; temporary injunction issued contingent on bond.
- Litton removed the case to federal court, asserting federal question and diversity jurisdiction; Glasser opposed federal claims.
- Court granted Glasser and Litton motions to dismiss, denied remand, and dismissed with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Glasser was improperly joined | Sherman asserts Glasser is proper defendant due to foreclosure actions. | Glasser is a nominal/formal party; no claims against it. | Glasser improperly joined; dismissed from case. |
| Whether Glasser is a nominal party for diversity purposes | Glasser should impact diversity because of its role in foreclosure. | Glasser is nominal; disregard citizenship for diversity. | Glasser deemed nominal; diversity preserved. |
| Whether Sherman's HAMP-based claims create federal question jurisdiction | Claims arise under HAMP, a federal program. | HAMP creates no private right of action. | HAMP claims dismissed; no private right of action. |
| Whether Litton violated a contract to modify the loan | Litton's solicitation created a contract to modify under HAMP. | Offer was merely to consider, not an actual modification contract. | No contract to modify existed; claim dismissed. |
| Whether Sherman-state claims survive against Litton | Litton breached the Plan, negligently processed, and engaged in fraud. | Plan not binding; no duty; no fraud. | |
| All state claims dismissed; no viable tort or contract claims. |
Key Cases Cited
- Verizon Md., Inc. v. Global Naps, Inc., 377 F.3d 355 (4th Cir. 2004) (no singular precise definition of arising under; various tests apply)
- Twombly, 550 U.S. 544 (S. Ct. 2007) (pleading must show plausible claims, not mere speculation)
- Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) (conclusory allegations fail to state a claim)
- Payne v. Bank of Am., N.A., 2010 WL 546770 (W.D. Va. 2010) (fraudulent/improper joinder analysis in diversity cases)
- Dempsey v. Transouth Mortg. Corp., 88 F. Supp. 2d 482 (W.D.N.C. 1999) (trustee's citizenship may be ignored when nominal; diversity precluded)