R. DAVID PROCTOR, District Judge.
This case is before the court on Plaintiffs' Motion to Remand (Doc. # 9), filed October 25, 2011. On November 3, 2011, Defendants Bank of America, N.A. ("BANA"), Mortgage Electronic Registration Systems, Inc. ("MERS"), Full Spectrum Lending, Inc., an entity having been merged with and into Countrywide Home Loans, Inc. ("Full Spectrum"), and The Bank of New York Mellon, as Trustee for the Certificateholders of the CWABS, Inc., Asset-backed Certificates Series 2004-5 ("BONYM") (collectively, "Defendants") filed a response to Plaintiffs' Motion to Remand. (Doc. # 13). On November 16, 2011, Plaintiffs filed their reply. (Doc. # 21). Having considered the briefs and evidentiary submissions, the court finds that the Motion to Remand is due to be denied and the Ledyard Defendants due to be dismissed for the reasons set out below.
This lawsuit involves Plaintiffs' loan ("Loan"), which is secured by the mortgage on their real property and is currently in default. The mortgage was executed to MERS as nominee for Full Spectrum Lending, Inc., was allegedly transferred to BANA, and is now owned by BONYM. This action was originally filed in the Circuit Court of Jefferson County. Defendants removed this action to federal court, and the parties dispute whether removal was proper.
In Count One of their Complaint, Plaintiffs allege that MERS did not have authority to transfer its interest in the Loan, so none of the Defendants have the authority to foreclose on their Loan. (Doc. # 1-1 ¶¶ 6-8). In Count Two, Plaintiffs allege Defendants breached the loan agreement by refusing to modify the agreement to help Plaintiffs avoid foreclosure proceedings. (Id. ¶¶ 9-13). In Count Three, Plaintiffs assert that Defendants negligently serviced their mortgage. (Id. ¶¶ 14-15). In Count Four, Plaintiffs allege a claim for false and fraudulent representations for Defendants' servicing of their mortgage. (Id. ¶¶ 17-19). Plaintiffs seek permanent injunctive relief to prevent Defendants from foreclosing on their Loan and any other relief to which they are entitled. (Id. at 7-8). Plaintiffs also requested a temporary restraining order ("TRO") barring Defendants from foreclosing on Plaintiffs' mortgage, which the Circuit Court issued on September 13, 2011. (Id. at 18-19). The TRO was scheduled to expire on September 20, 2011, but on September 19, 2011, the parties agreed to and filed a Consent Agreement with the Circuit Court, committing to "maintain the status quo extending the injunctive relief pending resolution of claims and defenses asserted by the parties." (Id. at 19, 22-23). The Circuit Court incorporated the terms of the parties' Consent Agreement into its September 19, 2011 order. (Id. at 2-5).
Goodman G. Ledyard, of the law firm Pierce Ledyard, P.C. (collectively "the Ledyard Defendants"), the attorney responsible for executing the foreclosure of the Loan, sent Plaintiffs a "revised Mortgage Foreclosure Notice" on September 26, 2011 that rescheduled the foreclosure sale for October 19, 2011. (Id. at 45-47). In an Amendment to the Complaint on October 4, 2011, Plaintiffs alleged claims against the Ledyard Defendants. (Id. at 33-39). Plaintiffs asserted that the Ledyard Defendants breached the Consent Agreement and the Circuit Court Order's incorporating the Agreement by rescheduling the foreclosure, and allege the following claims against the Ledyard Defendants: invasion of privacy (Count Five); intentional infliction of emotional distress (Count Six); and negligence and wantonness (Count Seven). (Id. at 35-38). Plaintiffs seek damages for emotional distress and ensuing physical afflictions such as anxiety and loss of sleep, as a result of the Ledyard Defendants' conduct. (Id. at 35-38).
On October 13, 2011, Defendants removed this action to federal court pursuant to 28 U.S.C. § 1441(a), asserting that this court has diversity jurisdiction under 28 U.S.C. § 1332 because the amount in controversy is met and the parties are completely diverse. (Doc. # 1 ¶ 9). To determine the amount in controversy in an action to enjoin a foreclosure, Defendants assert that courts look to the value of the object of litigation from the plaintiff's perspective, and in that respect, the courts look to the current market value of the property and the amount currently owed on the loan. (Doc. # 13 at 9-10). Defendants argue that the tax assessment and affidavit that they attached to their Opposition to Plaintiffs' Motion to Remand show that the amount in controversy is satisfied. (Id. at 3, Exs. 2 and 3). The affidavit of Edward Hernandez, a BANA employee, provides that Plaintiffs owe $204,525.69 on their Loan, and the tax assessment shows that in 2011, Plaintiffs' property was valued at $232,600. (Docs. # 13-2, 13-3). Therefore, Defendants argue, the value of the object of the litigation — the remaining balance on their Loan and the value of their property — exceeds the $75,000 amount in controversy.
Defendants also contend that the parties are diverse because the Ledyard Defendants were fraudulently joined and thus the court should disregard their citizenships. (Doc. # 1 ¶ 11). Defendants present the following four arguments to establish fraudulent joinder. First, the Ledyard Defendants are immune from tort claims involving their representation of a client absent a showing of fraud, malice, or the intent to cause harm.
As noted already, Plaintiffs filed a Motion to Remand this case to the Circuit Court pursuant to 28 U.S.C. § 1447, asserting that this court does not have diversity jurisdiction because the parties are not diverse and the amount in controversy is not satisfied.
Plaintiffs also argue that the Ledyard Defendants were properly joined in this action, and their citizenships thwart diversity jurisdiction.
A federal district court has original jurisdiction over diversity cases. 28 U.S.C. § 1332(a). Diversity jurisdiction exists when (1) the amount in controversy exceeds $75,000 and (2) the adverse parties are completely diverse. Id. If a plaintiff could have originally filed a claim in federal court, a defendant may remove the action from state to federal court, 28 U.S.C. § 1441(a), pursuant to the procedures for removal under 28 U.S.C. § 1446(a). The party removing the case to federal court bears the burden of demonstrating diversity jurisdiction existed at the time of removal. Adventure Outdoors, Inc. v. Bloomberg, 552 F.3d 1290, 1294-1295 (11th Cir. 2008).
Where a plaintiff does not plead a specific amount of damages, the defendant removing the case based on diversity jurisdiction must prove by a preponderance of the evidence that the amount in controversy exceeds $75,000. Leonard v. Enter. Rent a Car, 279 F.3d 967, 972 (11th Cir. 2002) (citations omitted). When determining whether a defendant has satisfied that burden, courts assess whether "it is facially apparent from the complaint that the amount in controversy exceeds the jurisdictional requirement." Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 754 (11th Cir. 2010) (citations omitted). "If the jurisdictional amount is not facially apparent from the complaint, the court should look to the notice of removal and may require evidence relevant to the amount in controversy at the time the case was removed." Id. Removing defendants may submit their own evidence, such as affidavits, to show that the jurisdictional requirements of removal are satisfied. Id. at 755. The court may consider evidence submitted after the case is removed, such as attachments to the defendant's opposition to remand, when evaluating whether removal is proper. Id. at 772-774. A removing defendant satisfies his burden when he has made "specific factual allegations establishing jurisdiction and can support them . . . with evidence combined with reasonable deductions, reasonable inferences, or other reasonable extrapolations." Id. at 754.
In an action for injunctive relief, "the amount of controversy is the monetary value of the object of the litigation from the plaintiff's perspective." Cohen v. Office Depot, Inc., 204 F.3d 1069, 1077 (11th Cir. 2000). "In other words, the value of the requested injunctive relief is the monetary value of the benefit that would flow to the plaintiff if the injunction were granted." Id. In an action for a permanent injunction against foreclosure, the best measure of the value of relief is the value of the property at issue. See, e.g., Mapp v. Deutsche Bank Nat'l Trust Co., 2009 WL 3664118, at *4 (M.D. Ala. Oct. 28, 2009) (noting that the plaintiff seeking a permanent injunction against foreclosure would gain ownership, title, and possession of his home, and the measurement of these three objects is the value of the home itself); see also, Mustafa v. Mkt. St. Mortg. Corp., ___ F. Supp. 2d ___, 2012 WL 95375, at *3 (M.D. Ala. 2012) (noting that when a plaintiff seeks injunctive relief or questions the validity of his mortgage, he has put the value of his property in controversy); cf. Occidental Chem. Corp. v. Bullard, 995 F.2d 1046, 1047 (11th Cir. 1993) (where plaintiff seeks specific performance of a contract to purchase land, the amount in controversy is established by the value of the contract price); Waller v. Prof'l Ins. Corp., 296 F.2d 545, 547-548 (5th Cir. 1961) ("when the validity of a contract or a right to property is called into question in its entirety, the value of the property controls the amount in controversy").
In this matter, Plaintiffs did not plead a specific amount of damages in the Complaint. By seeking a permanent injunction against foreclosure of their property, however, Plaintiffs have placed the monetary value of the object of the litigation — their property — in controversy.
Plaintiffs argue, relying on (and as it turns out misinterpreting) Lowery v. Alabama Power Company, 483 F.3d 1184, 1213-1214 (11th Cir. 2007), that the three conditions that must be present to base removal on a document other than the initial complaint are not present in this case.
"[W]hen a plaintiff names a non-diverse defendant solely in order to defeat federal diversity jurisdiction, the district court must ignore the presence of the non-diverse defendant and deny any motion to remand the matter back to state court." Stillwell v. Allstate Ins. Co., 663 F.3d 1329,1332 (11th Cir. 2011) (citations omitted). The Eleventh Circuit has referred to this scenario as fraudulent joinder. Id. If the court finds that a non-diverse defendant has been fraudulently joined, the court must dismiss the defendant, and does not consider that defendant's citizenship in the diversity calculus. Florence v. Crescent Res., LLC, 484 F.3d 1293, 1297 (11th Cir. 2007).
To establish fraudulent joinder in a removal case, "the removing party has the burden of proving that either: (1) there is no possibility the plaintiff can establish a cause of action against the resident defendant; or (2) the plaintiff has fraudulently pled jurisdictional facts to bring the resident defendant into state court." Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997). This is a heavy burden. Id. (citations omitted). "To determine whether the case should be remanded, the district court must evaluate the factual allegations in the light most favorable to the plaintiff and must resolve any uncertainties about state substantive law in favor of the plaintiff." Crowe, 113 F.3d at 1538 (citations omitted). "[F]ederal courts are not to weigh the merits of a plaintiff's claim beyond determining whether it is an arguable one under state law." Id. "If there is even a possibility that a state court would find that the complaint states a cause of action against any one of the resident defendants, the federal court must find that joinder was proper and remand the case to state court." Id. (citations omitted). That is, "[t]he plaintiff need not have a winning case against the allegedly fraudulent defendant; he need only have a possibility of stating a valid cause of action in order for the joinder to be legitimate." Stillwell, 663 F.3d at 1333 (citing Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998)). Moreover, to defeat the accusation of fraudulent joinder, "there need only be a `reasonable basis for predicting that the state law might impose liability on the facts involved." Crowe, 113 F.3d at 1542 (citations omitted). When faced with a fraudulent joinder claim and a motion to remand, "the district court's authority to look into the ultimate merit of the plaintiff's claims must be limited to checking for obviously fraudulent or frivolous claims."
The claim for invasion of privacy in Alabama is defined as the "intentional wrongful intrusion into one's private activities in such a manner as to outrage or cause mental suffering, shame, or humiliation to a person of ordinary sensibilities." S.B. v. Saint James Sch., 959 So.2d 72, 90 (Ala. 2006) (citations and internal quotations omitted). The tort includes "four limited and distinct wrongs: (1) intruding into the plaintiff's physical solitude or seclusion; (2) giving publicity to private information about the plaintiff that violates ordinary decency; (3) putting the plaintiff in a false, but not necessarily defamatory, position in the public eye; or (4) appropriating some element of the plaintiff's personality for a commercial use." Id. (citations omitted). Each of these four categories in turn has distinct elements and constitutes a separate privacy interest that may be invaded.
In the Amendment to their Complaint, Plaintiffs assert that the Ledyard Defendants invaded their privacy by contacting them directly and sending the letter rescheduling the foreclosure sale, which violates the parties' Consent Agreement and Circuit Court's Order. (Doc. # 1-1 ¶¶ 6-7). Plaintiffs state that this conduct caused them "emotional distress, physical pain and suffering and injury, anxiety, worry, fear, fright, and humiliation." (Id. at ¶ 9). Additionally, Plaintiffs state in their Reply that they "are persons of ordinary sensibilities." (Doc. # 21 at 8). These statements are the extent to which Plaintiffs have asserted their invasion of privacy claim. They have not asserted that Defendants intentionally intruded on their private activities nor have they alleged that any particular privacy interest has been intruded upon by Defendants. See S.B., 959 So. 2d at 90. Similarly, Plaintiffs have not alleged that the elements of the invasion of privacy claim are satisfied nor alleged facts from which the court can infer that such conduct occurred. Considering the paucity of facts alleged by Plaintiffs on this claim, the court finds that Defendants have shown there is no possibility that Plaintiffs can establish an invasion of privacy claim against the Ledyard Defendants, and Plaintiffs have failed to defeat this showing. See Stilwell, 663 F.3d at 1333; Crowe, 113 F.3d at 1542.
The four elements of the tort of intentional infliction of emotional distress (which is sometimes referred to as the tort of outrage) are: "(1) the actor intended to inflict emotional distress, or knew or should have known that emotional distress was likely to result from his conduct; (2) the conduct was extreme and outrageous; (3) the defendant's action caused the plaintiff distress; and (4) that the distress was severe." Harris v. McDavid, 553 So.2d 567, 569-570 (Ala. 1989). Extreme and outrageous conduct is "so outrageous in character and so extreme in degree as to go beyond all possible bounds of decency, and be regarded as atrocious and utterly intolerable in a civilized society." Am. Road Serv. Co. v. Inmon, 394 So.2d 361, 365 (Ala. 1980). The Supreme Court of Alabama has recognized this tort in three areas: "(1) wrongful conduct within the context of family burials; (2) an insurance agent's coercing an insured into settling an insurance claim; and (3) egregious sexual harassment." Callens v. Jefferson Cnty. Nursing Home, 769 So.2d 273, 281 (Ala. 2000) (citations omitted). This tort is limited to egregious circumstances. Id.; see Am. Road Serv. Co., 394 So.2d at 364-365 ("mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities" are not extreme and outrageous); see also Stabler v. City of Mobile, 844 So.2d 555, 562 (Ala. 2002) (concluding that a supervisor's unauthorized letter providing a poor reference for an employee in applying for job, which was written with the purpose to attack and criticize, was not outrageous and extreme).
Plaintiffs assert that by sending Plaintiffs the letter postponing the foreclosure sale, the Ledyard Defendants intended to inflict mental and physical anguish, among other complications, on Plaintiffs, and that Plaintiffs suffered from emotional distress and ensuing physical ailments because of the Ledyard Defendants' conduct. Plaintiffs do not provide any further evidence or law supporting their intentional infliction of emotional distress claim. Defendants assert that mailing the letter to Plaintiffs did not intrude into Plaintiffs' private activities, nor would it cause mental suffering to a person of ordinary sensibilities. And, in any event, the conduct was not extreme and outrageous. The court agrees. Moreover, since the Alabama Supreme Court has only recognized this tort in three circumstances, none of which are present here, and has found that an aggressive letter is not extreme or outrageous conduct, the court concludes that there is no possibility Plaintiffs can state a claim for intentional infliction of emotional distress.
The four elements of a negligence claim are: "(1) existence of a duty on the part of the defendant; (2) a breach of that duty; (3) existence of a causal relationship between the defendant's conduct and the plaintiff's injury; and (4) a resulting injury to the plaintiff." Chatman v. City of Prichard, 431 So.2d 532, 533 (Ala. 1983). "To establish wantonness, the plaintiff must prove that the defendant, with reckless indifference to the consequences, consciously and intentionally did some wrongful act or omitted some known duty." Martin v. Arnold, 643 So.2d 564, 567 (Ala. 1994). Proximate cause is required for both negligence and wantonness claims. Gooden v. City of Talladega, 966 So.2d 232, 239 (Ala. 2007).
Plaintiffs argue that the Ledyard Defendants were negligent and wanton by communicating directly with Plaintiffs instead of their attorneys, resetting the foreclosure sale, and undertaking this conduct with the intention of causing Plaintiffs physical and mental anguish.
Plaintiffs' negligence and wantonness claim, and Plaintiffs' breach of contract claim (to the extent they have asserted one), hinge on an alleged breach of the Consent Agreement and the Circuit Court's Order by the Ledyard Defendants.
The TRO enjoined Defendants from foreclosing on Plaintiffs' mortgage (Doc. # 1-1 at 18), and the Consent Agreement provides "Plaintiffs' counsel and counsel for Defendants have reached an agreement to maintain the status quo extending the injunctive relief pending resolution of claims and defenses asserted by the parties" (Id. at 22). It is undisputed that the Ledyard Defendants have not foreclosed on or even attempted to foreclose on Plaintiffs' mortgage. Plaintiffs argue that Defendants' rescheduling of the foreclosure sale altered the status quo and thereby violated the Agreement and Order.
In response, Defendants assert that first, the Ledyard Defendants were not parties to the Agreement or Order, and even if they were, they did not breach either the Agreement or Order. Defendants argue that postponing a foreclosure sale to a later date in the face of a temporary bar against foreclosure preserves the status quo. Defendants cite several cases for this argument, all of which take place in the context of bankruptcy proceedings and involve the automatic stay provisions, 11 U.S.C. § 362. See, e.g., Matter of Roach, 660 F.2d 1316, 1319 (9th Cir. 1981). Plaintiffs have not provided any caselaw to the contrary; rather, they have merely repeated that setting a date for a foreclosure sale operated to change the status quo. The court is persuaded that merely postponing and rescheduling the date of a foreclosure sale maintains the status quo in the face of a bar against foreclosure. This is particularly the case in the non-bankruptcy context where, such as here, a mortgage holder temporarily barred from foreclosing on the mortgage sends a notice postponing the foreclosure sale. Further, by postponing the date of the foreclosure sale and never actually conducting the sale, the Ledyard Defendants never affected any of Plaintiffs' rights or violated the injunction barring them from conducting a foreclosure sale. Accordingly, the Ledyard Defendants did not breach the Consent Agreement or the Circuit Court's Order incorporating it, and there is no possibility that any of Plaintiffs' claims relying on these alleged breaches are valid.
Defendants contend that Plaintiffs' three claims against the Ledyard Defendants are more properly construed as a breach of contract claim. To the extent Plaintiffs' claims are veiled contract claims, Defendant asserts that because a valid contract claim must assert monetary damages, and as Plaintiffs only allege emotional distress and ensuing physical suffering, Plaintiffs' claims must be dismissed.
In general, a party asserting a breach of contract claim under Alabama law cannot recover for damages from mental anguish. Sanford v. W. Life Ins. Co., 368 So.2d 260, 264 (Ala. 1979). There are exceptions to this rule, such as "where the contractual duty or obligation is so coupled with matters of mental concern or solicitude, or with feelings of the party to whom the duty is owed, that a breach of that duty will necessarily or reasonably result in mental anguish or suffering. . . ." Id. (citations omitted). Alabama law prohibits recovery for "personal injury, inconvenience, annoyance or mental anguish and suffering" in an action for breach of an insurance contract. Vincent v. Blue Cross-Blue Shield, Inc., 373 So.2d 1054, 1056 (Ala. 1979). Most of the cases in which a plaintiff alleging breach of contract has recovered damages for mental anguish involved contract claims for the repair or construction of a house where the breach affected habitability. Ruiz de Molina v. Merritt & Furman Ins. Agency, Inc., 207 F.3d 1351, 1359 (11th Cir. 2000) (listing examples of exceptional cases).
The court is not aware of any cases in which a plaintiff was allowed to recover damages for mental anguish and consequent physical suffering for a breach of contract claim in a foreclosure action, nor have Plaintiffs provided the court with such a case. Moreover, Plaintiffs have not provided any evidence suggesting (or arguing) that this is an exceptional breach of contract case where damages for mental anguish are warranted. To the extent Plaintiffs have alleged a breach of contract claim, Defendants have met their burden in showing there is no possibility on the facts presented that Plaintiffs can succeed on this claim, and the court concludes that Plaintiffs have not stated a valid breach of contract claim.
The court has already concluded that Plaintiffs' Amended Complaint does not state any valid causes of action against the Ledyard Defendants, requiring dismissal of the Ledyard Defendants. Nevertheless, the court addresses Defendants' argument that the Ledyard Defendants are immune from suit against Plaintiffs for the sake of thoroughness.
Alabama law disfavors suits against attorneys for conduct arising from the representation of their clients, and to be sure, several courts have refused to allow cases to proceed that were filed against the opposing party's attorneys.
Defendants argue that the Ledyard Defendants are immune from suit against Plaintiffs for conduct arising from the representation of their clients, absent a showing of fraud, malice, or intent to cause harm. Defendants primarily rely on Patterson v. Powell, Goldstein, Frazer & Murphy, LLP, 332 B.R. 450, 453 (N.D. Ala. 2005), for the proposition that attorneys are not liable under Alabama law for conduct arising from their representation of their clients. Although Patterson is a favorable case for Defendants, it does not stand for the proposition argued by Defendants. In Patterson, the plaintiff sued the defendant, a law firm who advised the plaintiff's employer to fire plaintiff, for tortious interference with contract and conspiracy to commit this unlawful interference. Id. at 452. The plaintiff argued that the defendant acted outside the scope of its contract with the plaintiff's employer, to which the plaintiff was not a party. The court held that the defendant did not owe the plaintiff a duty arising out of the contract, and cited policy reasons for prohibiting a third party from suing an attorney who advised his client to act unfavorably towards the third party. Id. at 453. The court affirmed the bankruptcy court's dismissal of the plaintiff's tort claim against the defendant because the plaintiff had failed to allege a valid cause of action, not because attorneys are immune from all claims against non-clients. See id. at 453-454. In sum, even in light of the holding in Patterson, Plaintiffs are not prohibited from asserting any and all claims against the Ledyard Defendants for their conduct while representing their client in opposition to Plaintiffs.
For the reasons stated above, Plaintiffs' Motion to Remand (Doc. # 9) is due to be denied and the Ledyard Defendants are due to be dismissed from this case. The court will issue a separate order consistent with this Memorandum Opinion.