719 F.3d 46
1st Cir.
2013

Frаnk MACERA, Jr., Plaintiff, Appellee, v. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., et al., Defendants, Pawtucket Credit Union, Defendant, Appellant.

Nos. 12-1778, 12-1795

United States Court of Appeals, First Circuit

June 14, 2013

719 F.3d 46

would be chaos. If the issues resolved here had been addressed by the district court when the volumе of cases was at the trickle stage, correction of the errors would have been fairly simple. As the docket now stands, however, nearly 150 cases are consolidated in this appeal, and we are told that at the time of briefing another 550 or so were governed by the orders reviewed here and subject to being affected by this court‘s action and by the district court‘s ensuing proceedings on remand. We therefore think the prudent course is to tolerate the status quo long enough to give the parties time to plan for contingencies. Accordingly, we remand with instructions to take steps expeditiously to correct the errors.

The district court will schedule a hearing at the earliest reasonable datе to determine whether the existing injunction against foreclosure and possessory action should be continued. The burden of demonstrating entitlement to any injunctive relief will rest on the mortgagors as it would have if a timely hearing had been held in compliance with Rule 65, and the district court‘s conclusions must be stated as Rule 52 requires. Although this court has not held that a jurisdictional issue must always be resolved before issuing a mediation ordеr, see , the jurisdictional standing objection raised by the mortgagees here is (as we have said) necessarily implicated in the mortgagors’ burden to show probable success as a condition of continuing the injunction. If we are correct in our understanding that the same issue is the subject of the magistrate judge‘s recommended disposition in the specific case remaining before the district court, that recommendation should be acted upon no later than the order continuing or lifting the injunction.

If the district court determines that the currently consolidated cases, or some of them, are to remain on the docket, a second hearing should then be scheduled promptly to decide whether the mediation order shоuld be continued and, if so, what time and cost limits should be set and what the allocation formula should be. Given the extent of the current docket, it will doubtless be difficult to confine time and cost with assurance, but at the very least such limits as the court does set (though not immune to revision, see ibid.), will require formal, periodic reconsideration if any further mediation is not concluded within them. The amicus brief has called our attention to a Special Master‘s estimate that all current cases will have been treated with to some degree ‍‌‌​​​‌​‌​​​‌​​​‌‌​‌​​‌​‌​​‌​‌‌​​​​​​‌‌​‌‌‌​​​​​‌‍by Autumn of 2013, an estimate that may be considered in presently setting a time limit, though of course we do not mean to rule out augmenting the Special Master‘s personnel and acting faster if that can reаsonably be done at this point.

The consolidated cases under appeal are remanded for further proceedings consistent with this opinion. The parties will bear their оwn respective costs.

It is so ordered.

Joel J. Votolato, with whom Joel T. Gannon was on brief, for appellant.

George E. Babcock for appellee.

Before HOWARD, Circuit Judge, SOUTER,* Associate Justice, and LIPEZ, Circuit Judge.

SOUTER, Associate Justice.

This is one of the cases on the District Court‘s Master Foreclosure docket described in In re: Mortgage Foreclosure, decided today.1 The appeal calls into question both the injunction held in that case to have been issued in error and to be addressed on remand, and the district court‘s subject-matter jurisdiсtion owing to allegedly incomplete diversity of parties required under 28 U.S.C. § 1332. A motion to dismiss on that latter ground was “refused and returned,” by an erroneous order of the district court, and we remand this case for prompt adjudication of the motion, if appropriate after the court has taken the remedial action required by In re: Mortgage Foreclosure.

Although the case implicates a host of issues deferred or refused consideration by the district court on the ground of “Case Management,” the facts and procedural history necessary for our determination аt this point can be stated briefly. The plaintiff-appellee, Frank Macera, Jr., was lent money by Nation One Mortgage Company, Inc., secured by a first mortgage of Rhode Island real estate naming Mortgage Electronic Registration Systems, Inc. (MERS) as mortgagee. MERS ostensibly assigned its interest to Federal National Mortgage Association (FNMA) for foreclosure upоn Macera‘s default. The intervenor defendant-appellant, Pawtucket Credit ‍‌‌​​​‌​‌​​​‌​​​‌‌​‌​​‌​‌​​‌​‌‌​​​​​​‌‌​‌‌‌​​​​​‌‍Union, purchased the property at foreclosure, presumably to protect its interest as second mortgagee.

When Pawtucket took steps to evict Macera, he invoked the district court‘s diversity jurisdiction to entertain a “Complaint For Declaratory Judgment And Injunctive Relief,” to the effect that the foreclosure proceedings were ineffective, the foreclosure title void, and Macera still the owner of the mortgaged proрerty. The complaint named as defendants Nation One, MERS and FNMA. Macera was described as a Rhode Island resident; the defendants were shown as having addresses outside the state.

Pawtucket moved to intervene as a defendant under Federal Rule of Civil Procedure 24(a)(2), as a party claiming an interest that might be impaired by the litigation. Once the motion was granted, Pawtucket moved to dismiss the action for want of complete diversity of parties requirеd under 28 U.S.C. § 1332, since Pawtucket was a Rhode Island resident corporation. See (“Incomplete diversity destroys original jurisdiction with respect to all claims....” (quoting )). As mentioned before, instеad of ruling on the motion, the district court ordered the motion document itself to be returned to Pawtucket on the ground that “[t]his case is stayed pursuant to the Case Management order,” described in In re Mortgage Foreclosure. Pawtucket then brought this appeal, objecting to the stay as being an injunction issued in denial of its due process right to notice and hearing, and challenging the court‘s refusal even to docket the motion to dismiss for lack of the complete diversity of parties required for subject-matter jurisdiction.

Although Macera claims that this court lacks appellate ‍‌‌​​​‌​‌​​​‌​​​‌‌​‌​​‌​‌​​‌​‌‌​​​​​​‌‌​‌‌‌​​​​​‌‍jurisdiction, the answer is set out in In re Mortgage Foreclosure: the “stay” from which Pawtucket appeals is an injunction subject to interlocutory appellate jurisdiction under 28 U.S.C. § 1292(a)(1), and Pawtucket is an enjoined party entitled to be heard promptly on its objection, in belated compliance with Fed. R.Civ.P. 65(a)(1), regardless of any due process consideration. As explained in In re Mortgage Foreclosure, it is unnecessary to go beyond saying that Pawtucket‘s particular objection to jurisdiction, like the global claims described in that companion case, will require adjudication, at the latest, in determining Macera‘s likelihood of success on the merits necessary to support any continued injunction.

Ultimately, of course, a claim of incomplete diversity goes to jurisdictiоn at any federal level, and in theory we would be free to examine the issue now under a court‘s authority and obligation to review its subject-matter jurisdiction even sua sponte, if a quеstion about it shows up. See, e.g., (“When a requirement goes to subject-matter jurisdiction, courts are obligated to consider sua sponte issues that the parties have disclaimed or have not presented.“). We think it better, however, to remit the issue to the district court.

This is not to deny that some of the arguments presented to us could readily be addressed here. Maсera responds to the incomplete diversity claim, for example, by saying that Pawtucket ‍‌‌​​​‌​‌​​​‌​​​‌‌​‌​​‌​‌​​‌​‌‌​​​​​​‌‌​‌‌‌​​​​​‌‍“by voluntarily submitting a motion to intervene self-subjected themselves [sic] to the jurisdiction and pоwer of the Federal District Court.” Appellee‘s Br. 8. The argument is oblivious of the distinction between personal and subject-matter jurisdiction, the former being susceptible to voluntary submission, thе latter being beyond the parties’ power to stipulate or confer by waiver of objection if asleep. See (comparing the two doctrines and explaining that objections to personal jurisdiction, unlike objections to subject-matter jurisdiction, may be waived). And, as noted, a court is not free to wink at a subject-matter defect.

But not all issues may be so obviously resolved. Because we sit as a court of review without benefit in this instance of any trial court findings or formal stipulation of the parties, we think it prudent to leave the challenges to subject-matter jurisdiction and ultimate legitimacy of the injunction to the district court, which will be in a position to make any fact determination that may turn out to be necessary. Pawtucket‘s request for a hearing on the injunction will be expeditiously addressed there in accordance with the In re Mortgage Foreclosure remand, and its motion to dismiss for want of subject-matter jurisdiction will be taken up, if need be, after the court has ruled on the jurisdictional standing issues described in our opinion in that case. The partiеs will bear their own respective costs.

It is so ordered.

SOUTER

ASSOCIATE JUSTICE

Notes

1
For ease of exposition, we will refer to the opinion in Nos. ‍‌‌​​​‌​‌​​​‌​​​‌‌​‌​​‌​‌​​‌​‌‌​​​​​​‌‌​‌‌‌​​​​​‌‍12-1526, 12-1563, 12-1720, 12-1721, 12-1768, and 12-1839 as .
*
Hon. David H. Souter, Associate Justice (Ret.) of the Supreme Court of the United States, sitting by designation.
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