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City of Detroit v. CitiMortgage, Inc.

United States District Court, E.D. Michigan, Southern Division

December 12, 2016

CITY OF DETROIT, a Michigan Municipal Corporation, Plaintiff,



         Pending before the court is Defendant's “Motion to Dismiss Plaintiff's Complaint.” (Dkt. #3.) Defendant CitiMortgage, Inc., removed this case from Wayne County Circuit Court, (Dkt. #1), and has not filed an Answer. Plaintiff City of Detroit has filed a response to the motion, (Dkt. #5), and Defendant has filed a reply, (Dkt. #6). The court also issued an order for Defendant to show cause for why the case should not be remanded to state court for lack of subject matter jurisdiction, (Dkt. #8), and Defendant has filed a response, (Dkt. #10). After reviewing the briefs, the court concludes that a hearing is unnecessary. See E.D. Mich. LR 7.1(f)(2). For the following reasons, the court will not remand to state court and will not dismiss Plaintiff's Complaint.

         I. BACKGROUND

         Plaintiff filed a collection action in Wayne County court to recover what it alleges are delinquent property taxes owed for the years 2010, 2011, and 2012 across ten separate properties. Its complaint alleges that Defendant's name appears either on property tax bills or somewhere within the chain of title for each property, which allowed it to assess related property taxes against the Defendant. The properties were then allegedly sold at foreclosure in 2013 for a price below the outstanding tax debt, so Plaintiff now seeks to collect from Defendant the remaining debt of $67, 154.01, plus interest, penalties, and administrative fees. Within its brief, but not in its complaint, Plaintiff alleges that Defendant ignored mailed notices that taxes were due for several years before the foreclosure.

         Defendant argues that Plaintiff's claims are deficient because it has not adequately alleged that the property tax assessments were lawful. Plaintiff has not claimed that Defendant actually owned an interest in the property during the relevant years, which Defendant argues is prerequisite to a valid assessment comporting with due process. Plaintiff responds that to the extent that these arguments have merit, they were waived when Defendant failed to appear and lodge them before the Michigan Tax Tribunal, which enjoys exclusive jurisdiction over such questions. It argues further that the Tax Injunction Act (“TIA”), 28 U.S.C. § 1341, prohibits this court from enjoining, suspending, or restraining the collection of these state taxes. In reply, Defendant argues that it could not have waived any argument before the Michigan Tax Tribunal because it lacked a sufficient property interest to have standing to challenge an assessment in that forum, that the collection of an unlawfully assessed tax is contrary to the statutory scheme, and that the TIA does not apply in collection actions such as this.

         The court has also raised the issue of subject matter jurisdiction. It is immaterial that Plaintiff has not challenged the subject matter jurisdiction of this court. “Not only may a court raise subject-matter jurisdiction sua sponte, it must.” CMS North America, Inc., v. De Lorenzo marble & Tile, Inc., 521 F.Supp.2d 619, 632 (W.D. Mich. 2007) (citing Clarke v. Mindis Metals, Inc., No. 95-5517, 99 F.3d 1138, 1996 WL 616677, at *3 (6th Cir. 1996)). Defendant removed this case on the basis of diversity jurisdiction. The court will thus address the presence of diversity jurisdiction in this case.

         II. STANDARD

         A. Subject Matter Jurisdiction

         “Federal courts are not courts of general jurisdiction and have only the power that is authorized by Article III of the Constitution and the statutes enacted by Congress pursuant thereto.” Marine Equip. Mgmt. v. United States, 4 F.3d 643, 646 (8th Cir. 1993). “It is to be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).

         The U.S. District Court has jurisdiction over claims based on a federal question and claims with complete diversity of citizenship between parties. Title 28 U.S.C. § 1332 defines diversity jurisdiction. It provides, in pertinent part, that “[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between . . . citizens of different states.” 28 U.S.C. § 1332(a)(1) (2006). Under 28 U.S.C. § 1332(a), therefore, the two requirements for diversity jurisdiction are (1) that the matter in controversy exceed $75, 000.00, and (2) that complete diversity exist between the disputing parties.

         B. Motion to Dismiss

         Federal Rule of Civil Procedure 12(b)(6) provides for dismissal for failure to state a claim upon which relief may be granted. Under the Rule, the court construes the complaint in the light most favorable to the plaintiff and accepts all well-pleaded factual allegations as true. League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007). This standard requires more than bare assertions of legal conclusions. Bovee v. Coopers & Lybrand C.P.A., 272 F.3d 356, 361 (6th Cir. 2001). “[A] formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Any claim for relief must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Erickson v. Pardus, 551 U.S. 89, 93 (2007). “Specific facts are not necessary; the statement need only ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests'” Id. (quoting Twombly, 550 U.S. at 555).

         However, to survive a motion to dismiss, a complaint must provide sufficient facts to “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555). Additionally, on a motion to dismiss, a court is usually limited to the complaint and attached exhibits, but it may also consider “public records, items appearing in the record of the case, and exhibits attached to the defendant's motion to dismiss so long as they are referred to in the complaint and are central to the claims contained therein.” Erie County v. Morton Salt, Inc., 702 F.3d 860, 863 (6th Cir. 2012) (quoting Bassett v. Nat'l Coll. Athletic Ass'n., 528 F.3d 426, 430 (6th Cir. 2008)).

         III. ...

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