WILLIAM H. STEELE, Chief District Judge.
This matter comes before the Court on the Motion for Remand (doc. 6) filed by defendant, Beau Robert Doolittle. The Motion has been briefed extensively and is now ripe for disposition.
The procedural circumstances presented here may be novel to the undersigned, but they have surfaced with some frequency of late in federal district courts elsewhere in Alabama. Plaintiff, Federal National Mortgage Association ("FNMA"), filed an ejectment suit against defendant, Beau Robert M. Doolittle, in the Circuit Court of Mobile County, Alabama on May 8, 2015. The Complaint alleged that FNMA had purchased Doolittle's residence in Theodore, Alabama, at a foreclosure sale on April 9, 2015, but that Doolittle had refused to surrender possession upon demand. (Doc. 1-1, at 2-3.)
On July 29, 2015, Doolittle filed an "Amended Answer and Counterclaim" in state court. In his Answer, Doolittle contended that the foreclosure was void for various reasons (as to alleged defects in both the foreclosure proceedings and the underlying servicing, assignment and default of the mortgage loan), such that FNMA had, in fact, never actually received valid title to Doolittle's property. (Doc. 1-1, at 62-65.) Doolittle also interposed a 15-count Counterclaim directed exclusively against Green Tree Servicing, LLC and Bank of America, N.A. No counterclaims are asserted against FNMA. By its terms, the Counterclaim was "brought to enforce the contractual remedies allowed in the mortgage document. The action seeks damages in contract and tort for the actions of the Counter-Defendants with respect to their servicing and foreclosure on the loan in question." (Id. at 66, ¶ 3.) Amidst a constellation of claims sounding in common-law theories such as negligence, wrongful foreclosure, slander of title, breach of contract and fraud, Doolittle also asserted certain federal statutory claims for violations of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq.; the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq., and Regulation Z; and the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601, et seq. The ad damnum clause of the Counterclaim reflects that Doolittle seeks compensatory and punitive damages from Green Tree and Bank of America, as well as equitable relief that the foreclosure sale be set aside, the foreclosure deed be deemed void, and FNMA's ejectment action be dismissed.
On August 28, 2015, Green Tree (with written consent from both FNMA and Bank of America (see doc. 1, Exh. 5)) filed a Notice of Removal (doc. 1), removing this action to federal court on grounds of federal question, supplemental and diversity jurisdiction. In particular, Green Tree reasoned that the FDCPA, TILA and RESPA claims set forth in the Counterclaim give rise to federal question jurisdiction under 28 U.S.C. § 1331; that federal jurisdiction could properly be exercised over all remaining state-law claims joined in this action via the supplemental jurisdiction provisions of 28 U.S.C. § 1367; and that there is both complete diversity of citizenship between Doolittle and Green Tree/Bank of America and the requisite amount in controversy to support diversity jurisdiction under 28 U.S.C. § 1332.
Doolittle now moves for this action to be remanded to Mobile County Circuit Court for want of removal jurisdiction, on the ground that Green Tree could not validly remove this action to federal court under 28 U.S.C. § 1441.
A removing defendant must establish the propriety of removal under 28 U.S.C. § 1441 and, therefore, must demonstrate the existence of federal jurisdiction. See City of Vestavia Hills v. General Fidelity Ins. Co., 676 F.3d 1310, 1313 n.1 (11
The heart of the parties' dispute — which has played out multiple times in analogous circumstances before other federal judges in Alabama in recent months — is whether removal jurisdiction is properly conferred here by operation of 28 U.S.C. § 1441(c).
For his part, Doolittle decries Green Tree's reliance on Carl Heck because, among other reasons, Green Tree is not a third-party defendant, but is instead a counterclaim defendant. The distinction matters because Carl Heck was framed in terms of removal based on a third-party claim, not a counterclaim. No binding precedent in the Eleventh Circuit has extended the Carl Heck rationale to the counterclaim context. On that basis, many district courts in Alabama have found the lack of settled circuit law authorizing removal by counterclaim defendants to be dispositive, and have remanded removal actions to state court on that basis. See, e.g., Baxter, 969 F. Supp.2d at 1344 ("in finding that Carl Heck should not be extended in this manner, the Court sides with the majority of other courts across the country that have found that Section 1441(c) does not permit removal for counterclaim defendants").
By all appearances, Green Tree is, indeed, properly classified as a counterclaim defendant, rather than a third-party defendant, in this action. After all, "third party practice ... is only available when the third party defendant's liability is secondary to, or a derivative of, the original defendant's liability on the original plaintiff's claim." Faser v. Sears, Roebuck & Co., 674 F.2d 856, 860 (11
This Court is not inclined to extend the rickety, oft-maligned reasoning of Carl Heck to the counterclaim defendant context. That conclusion alone would be dispositive of the Motion to Remand and warrant sending this case back to state court for lack of removal jurisdiction. However, the Court need not hang its hat on the third-party defendant/counterclaim defendant distinction. A more compelling justification for finding removal jurisdiction lacking may be found upon scrutiny of the pertinent statutory language. Again, Green Tree's Response (doc. 9) hinges the statutory authorization for removal exclusively on 28 U.S.C. § 1441(c). This provision has been amended multiple times, and in material respects, since Carl Heck was decided. Ultimately, the position of Green Tree is untenable because it does not properly take into consideration the plain language of the statute, in its present incarnation. And of course, the current text of § 1441(c), rather than a 35-year old appellate decision construing a markedly and materially different iteration of that statute, is what matters in evaluating whether removal was authorized under § 1441(c) in this case.
Green Tree's argument is that § 1441(c) authorizes removal whenever a federal question (as to which jurisdiction would be proper under 28 U.S.C. § 1331) is joined with claims that are not otherwise removable (i.e., run-of-the-mill state-law claims between non-diverse parties). In that scenario, Green Tree says, the entire case may be removed under § 1441(c), after which the federal court should sever and remand the state-law claims back to state court, creating parallel, multi-tracked litigation proceedings occurring simultaneously in two different fora. Leaving aside whether such a litigation-proliferating scheme would even make sense, a fair reading of the statute does not, and cannot, support such an outcome. The relevant portions of § 1441(c) provide as follows:
(1) If a civil action includes —
28 U.S.C. § 1441(c)(1) (emphasis added).
By the plain statutory language, then, a case is removable under § 1441(c) only if both of the following requirements are satisfied: (i) the presence of a federal question; and (ii) the existence of an additional claim that either is "not within the original or supplemental jurisdiction of the district court" or "has been made nonremovable by statute." Id.
Green Tree stops short of contending that FNMA's ejectment claims against Doolittle or Doolittle's state-law claims against Green Tree and Bank of America would not be subject to federal supplemental jurisdiction as prescribed by 28 U.S.C. § 1367. Rightfully so, particularly as Green Tree staked itself to precisely the opposite position in its removal papers.
Nonetheless, Green Tree posits in summary fashion that the "nonremovable by statute" prong of § 1441(c)(1)(B) is satisfied, reasoning that "[t]he original ejectment suit was not removable because it was a state law claim brought against a resident defendant, Doolittle. 28 U.S.C. § 1441(b)(2)." (Doc. 9, at 8.) This contention misapplies the statute. Section 1441(b)(2) does not demarcate any
The bottom line is that Green Tree, as the removing party, has not satisfied its burden of showing that § 1441(c) applies. In particular, it has not demonstrated that this action includes both (i) a federal question and (ii) "a claim not within the original or supplemental jurisdiction of the district court or a claim that has been made nonremovable by statute." 28 U.S.C. § 1441(c)(1)(B). To the contrary, both FNMA's ejectment claim and Doolittle's state-law counterclaims against Green Tree and Bank of America lie comfortably within the scope of federal supplemental jurisdiction, and no such claims have been made categorically nonremovable under a statute such as 28 U.S.C. § 1445. Because this civil action does not include any claims within the boundaries of § 1441(c)(1)(B), § 1441(c) does not apply and cannot authorize removal by Green Tree,
For all of the foregoing reasons, the Court finds that Green Tree's removal of this action was authorized by neither § 1441(a) nor § 1441(c). Because Green Tree has not satisfied its burden of proving adequate grounds for removal jurisdiction, Doolittle's Motion for Remand (doc. 6) is
DONE and ORDERED.