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Molotky v. Capel

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

January 2, 2018

GRETCHEN MOLOTKY, Plaintiff,
v.
BRUCE CAPEL, et al., Defendants.

          REPORT AND RECOMMENDATION

          ELLEN S. CARMODY U.S. Magistrate Judge.

         This matter is before the Court on Defendant's Motion to Dismiss, (ECF No. 9), Defendant's Motion to Dismiss, (ECF No. 16), and Plaintiff's Motion for Default Judgment, (ECF No. 12). Pursuant to 28 U.S.C. § 636(b)(1)(B), the undersigned recommends that Plaintiff's motion be denied and Defendants' motions both be granted.

         BACKGROUND

         Plaintiff initiated this action in state court on April 20, 2017, against: (1) Bruce Capel; (2) Argent Mortgage Company, LLC (hereinafter Argent Mortgage); (3) Potestivo & Associates, P.C. (hereinafter Potestivo); (4) Argent Securities, Inc., Asset-Back Pass-Through Certificates, Series 2006-W1 (hereinafter Argent Securities); and (5) Deutsche Bank National Trust Company, as Trustee in Trust for the Benefit of the Certificateholders for Argent Securities, Inc., Asset-Back Pass-Through Certificates, Series 2006-W1 (hereinafter Deutsche Bank). In her complaint, Plaintiff has advanced several claims all with the same goal, to rescind the foreclosure and sale of her former residence.

         The following facts are not in dispute. In 2005, Plaintiff obtained a loan in the amount of $141, 100 in return for which Plaintiff executed a mortgage on her residence. (ECF No. 10, Exhibit 1). Plaintiff defaulted on her loan obligations in 2009 after which foreclosure proceedings were initiated. (ECF No. 18, Exhibit A). In February 2010, Plaintiff's residence was sold at auction. (ECF No. 10, Exhibit 7). In July 2010, prior to the expiration of the statutory redemption period, Plaintiff made payment in the amount of $17, 338.02, after which the sale of her residence was rescinded and the original mortgage reinstated. (ECF No. 10, Exhibit 7; ECF No. 18, Exhibit A). In 2014, Plaintiff again defaulted on her loan obligations after which foreclosure proceedings were again initiated. (ECF No. 18, Exhibit A). Plaintiff's residence was sold at auction in October 2016 to Deutsche Bank. (ECF No. 10, Exhibit 9). Plaintiff alleges that Deutsche Bank transferred the property to Bruce Capel in January 2017. (ECF No. 1, Exhibit A).

         In April 2017, Plaintiff initiated the present action seeking to rescind the foreclosure and sale of her residence. On June 9, 2017, Defendant Deutsche Bank removed the matter to this Court on the basis of diversity jurisdiction. Defendants Capel and Deutsche Bank subsequently moved to dismiss Plaintiff's claims. Plaintiff failed to respond to either motion. Plaintiff has, however, moved for the entry of default judgment against several Defendants.

         ANALYSIS

         I. Removal and Subject Matter Jurisdiction

         Before addressing the merits of the parties' motions, the Court must examine whether removal of this action was proper and, relatedly, whether jurisdiction is proper in this Court.

         A. Propriety of Removal

         Except where expressly foreclosed by federal statute, a civil action initiated in state court may be removed by the defendants to federal district court so long as the action is one over which the federal district court would have original jurisdiction. See 28 U.S.C. § 1441(a). When a civil action is removed pursuant to this authority, however, “all defendants who have been properly joined and served must join in or consent to the removal of the action.” 28 U.S.C. § 1446(b)(2)(A). Of the five defendants named in this action, only Deutsche Bank has consented to removal.[1] Thus, the question becomes whether the failure by the other four defendants to join in Deutsche Bank's act of removal requires that the matter be remanded to state court for improper removal.

         Because service has not yet been effected on Defendant Argent Mortgage, its consent is not required to properly effect removal. As for Defendant Argent Securities, Plaintiff asserts in her complaint that Argent Securities is a trust for which Deutsche Bank acts as trustee, a characterization which Deutsche Bank does not dispute. As Deutsche Bank notes, however, when pursuing legal action against a trust, the proper party defendant is the trustee because a trust is not a separate legal entity amenable to legal action. See, e.g., Meznarich v. Morgan Waldron Insurance Management, LLC, 2011 WL 4633915 at *3 (N.D. Ohio, Sept. 30, 2011); Trident Trust Co. (UK) Ltd. v. Anglo-American Credit Union, Inc., 2008 WL 2599891 at *2 (S.D. Ohio, June 26, 2008). Thus, because Argent Securities is not properly joined as a defendant, its consent is not necessary to properly effect removal.

         As for Defendants Capel and Potestivo, Plaintiff alleges that both are Michigan citizens. Because Plaintiff is also a Michigan citizen, Deutsche Bank's assertion of diversity jurisdiction would appear to be improper. However, because Defendants Capel and Potestivo have been fraudulently joined as defendants, their citizenship is not considered and their consent is not necessary to properly effect removal. See Casias v. Wal-Mart Stores, Inc., 695 F.3d 428, 432-33 (6th Cir. 2012) (fraudulent joinder of non-diverse defendants will not defeat removal on diversity grounds); Gipson v. State Farm Mutual Auto. Ins. Co., 2008 WL 11319733 at *2 (W.D. Tenn., Dec. 2, 2008) (defendant need not obtain consent of fraudulently joined defendants to properly effect removal).

         A defendant is fraudulently joined if it is “clear that there can be no recovery under the law of the state on the cause alleged or on the facts in view of the law.” Casias, 695 F.3d at 432-33. The relevant inquiry is whether there exists “a colorable basis for predicting that a plaintiff may recover against a defendant.” Id. At 433. The removing defendant bears the burden to make the requisite showing. Ibid. Because Plaintiff cannot prevail ...


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