Miller et al v. LoanCare, LLC et al

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
KENNETH H. MILLER and NEENA M.
MILLER,
Plaintiffs,
v.
LOANCARE, LLC and LAKE VIEW LOAN
SERVICING, LLC,
Defendants.
Case No. 3:19-cv-00274-TMB
ORDER ON PLAINTIFFS’ MOTION
FOR REMAND (DKT. 11), PLAINTIFFS’
MOTION TO STAY (DKT. 13),
AND DEFENDANTS’ MOTION TO
DISMISS (DKT. 8)
I. 	INTRODUCTION
This matter comes before the Court on Plaintiffs Kenneth H. Miller and Neena M. Miller’s
Motion for Remand.1 Defendants LoanCare, LLC and Lakeview Loan Servicing, LLC filed an
Opposition and Plaintiffs filed a Reply.2 The Parties did not request oral argument and the Court
finds the matter suitable for disposition without oral argument. Based on the record before the
Court and for the reasons discussed below, the Motion for Remand is GRANTED. Because the
Court grants the Motion for Remand, Plaintiffs’ Motion to Stay and Defendants’ Motion to
Dismiss are both DENIED.3
1 Dkt. 11 (Motion for Remand).
2 Dkts. 14 (Opposition); 19 (Reply).
3 Dkts. 13 (Motion to Stay); 8 (Motion to Dismiss).
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II. 	BACKGROUND
On December 16, 2016, Plaintiffs obtained a home loan for their residence (the “Property”)
in the amount of $144,600.4 Defendants are servicers of the loan.5 The loan was guaranteed by the
United States Department of Veterans Affairs (“VA”), which subjected the loan to certain VA
regulations that require servicers to engage in loss mitigation efforts prior to foreclosure.6
On or about June 2018, Plaintiffs fell behind on their loan payments.7 Defendant LoanCare
(“LoanCare”) sent Plaintiffs a letter dated July 23, 2018 notifying them of the missed payment and
requiring payment in the amount of $771.87.8 Plaintiffs allege that they did not receive the
July 23, 2018 letter until October 2018.9 Plaintiffs further claim that, on October 11, 2018, they
submitted a check in the amount of $771.87 to LoanCare but LoanCare did not accept the payment
and returned the check.10 Plaintiffs also assert that they sought loss mitigation assistance but their
application was not approved.11 Ultimately, the Property was sold at a foreclosure sale on
May 15, 2019 for $119,351.12
4 Dkts. 1 at 6 (Notice of Removal); 1-1 at 2‒3 (Complaint).
5 Dkt. 1-1 at 2.
6 Id. at 3.
7 Id. at 5.
8 Id. at 6.
9 Id.
10 Id.
11 Id.
12 Dkt. 14-1 at 2 (Trustee’s Deed).
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On September 13, 2019, Plaintiffs filed a Complaint against Defendants in the Superior
Court for the State of Alaska, Third Judicial District at Anchorage.13 The Complaint seeks
declaratory relief, injunctive relief, and damages for the following claims: (1) wrongful
foreclosure; (2) violation of Alaska’s Unfair Trade Practices and Consumer Protection Act;
(3) breach 	of 	contract; 	(4) 	negligent 	misrepresentation; 	(5) 	intentional 	misrepresentation;
(6) ratification; and (7) quiet title.14 On October 17, 2019, Defendants removed the state action to
this Court based on diversity jurisdiction.15 Defendants then moved to dismiss the Complaint,
arguing that no relief can be granted under Federal Rule of Civil Procedure 12(b)(6) (“Motion to
Dismiss”).16
Rather than directly oppose Defendants’ Motion to Dismiss, Plaintiffs filed the Motion for
Remand and Memorandum in Support of Plaintiffs’ Motion for Remand (“Memorandum”).17
Plaintiffs also filed a motion to stay briefing on Defendants’ Motion to Dismiss (“Motion to Stay”)
pending the Court’s decision on the Motion for Remand.18 In the Memorandum, Plaintiffs
calculate that their equity in the Property is de minimis and their claims, if successful, would result
in damages less than $75,000.19 Plaintiff acknowledge that if they were to receive the house free
and clear of a mortgage, then the proper measure of the amount in controversy would be the value
13 Dkt. 1-1.
14 Id. at 7‒10.
15 Dkt. 1.
16 Dkt. 8 (Motion to Dismiss).
17 Dkts. 11; 12 (Memorandum).
18 Dkt. 13 (Motion to Stay).
19 Dkt. 12 at 4.
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of the property or the amount of the loan.20 However, Plaintiffs clarify that they “want to return to
the status quo ante where they take title to their home subject to defendants’ mortgage.”21
Therefore, Plaintiffs argue that the amount in controversy in this case is less than $75,000 and the
case should be remanded to the Alaska Superior Court because this Court lacks jurisdiction.22
In their Opposition to the Motion for Remand, Defendants argue that the Court must
consider the pecuniary result of a judgment to either party in determining the amount in
controversy.23 Defendants assert that here, because the Property sold for $119,351, the foreclosure
that Plaintiffs seek to void “has a value to Defendants of $119,351.00.”24 Therefore, from
Defendant’s viewpoint, the amount in controversy exceeds $75,000 and therefore establishes
diversity jurisdiction.25 Accordingly, Defendants oppose remanding to Alaska Superior Court.26
Plaintiffs’ Reply largely repeats their arguments in the Motion for Remand.27 Plaintiffs
emphasize that they are not seeking to permanently void the foreclosure sale.28 Furthermore,
Plaintiffs distinguish the caselaw Defendants rely on in favor of precedents from this District.29
20 Id. at 5.
21 Id. (emphasis in original).
22 Id. at 3‒6.
23 Dkt. 14 at 3.
24 Id. at 4.
25 Id. at 5.
26 Id. at 5‒6.
27 Dkt. 19.
28 Id. at 4.
29 Id. at 3‒5.
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Plaintiffs argue that where they seek to temporarily delay the foreclosure, the amount in
controversy does not equal the value of the Property or the loan.30 As a result, Plaintiffs assert the
amount in controversy does not meet the jurisdictional requirement and the case should be
remanded.31
III. 	LEGAL STANDARD
Under 28 U.S.C. §1441, a defendant may remove to federal court any civil action that could
have originally been brought in federal court. A plaintiff may then seek to remand the case to the
state court if, inter alia, the federal district court lacks subject matter jurisdiction.32 Court must
“strictly construe the removal statute against removal jurisdiction,” and “the defendant always has
the burden of establishing that removal is proper.”33 “Federal jurisdiction must be rejected if there
is any doubt as to the right of removal in the first instance.”34
IV. 	ANALYSIS
Defendants removed this action on the basis of diversity jurisdiction.35 “For a federal court
to exercise diversity jurisdiction under § 1332(a), the amount in controversy must exceed $75,000,
30 Id. at 5.
31 Id. at 2.
32 28 U.S.C. § 1447(c). See also Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th
Cir. 2009) (“A motion to remand is the proper procedure for challenging removal.”).
33 Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citing Boggs v. Lewis, 863 F.2d 662, 663
(9th Cir. 1988); Nishimoto v. Federman-Bachrach & Assocs., 903 F.2d 709, 712 n.3 (9th Cir.
1990); Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir.1988)).
34 Id. (citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979)).
35 Dkt. 1 at 1; 28 U.S.C. §§ 1332 and 1441(b).
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and the parties must be citizens of different states.”36 Here, the Parties do not dispute their diversity
of citizenship.37 However, the Parties do dispute whether the amount in controversy exceeds
$75,000.38
In cases—such as the case here—“[w]here it is not facially evident from the complaint that
more than $75,000 is in controversy, the removing party must prove, by a preponderance of the
evidence, that the amount in controversy meets the jurisdictional threshold.”39 The amount in
controversy may be determined from “either viewpoint,” meaning the threshold amount may be
established by “the pecuniary result to either party which the judgment would directly produce.”40
As a general rule, “[i]n actions seeking declaratory or injunctive relief, it is well established that
the amount in controversy is measured by the value of the object of the litigation.”41
In Corral v. Select Portfolio Servicing, Inc., the Ninth Circuit recognized that, when a case
litigates a temporary injunction of the foreclosure process, the temporary injunction serves as the
“object of the litigation,” not the amount of indebtedness.42 The Corral Court contemplated the
costs and benefits under the “either viewpoint” rule and found that the amount in controversy
36 Corral v. Select Portfolio Servicing, Inc., 878 F.3d 770, 774 (9th Cir. 2017) (quoting Rainero v.
Archon Corp., 844 F.3d 832, 839 (9th Cir. 2016).
37 Dkt. 1 at 3‒5.
38 See Dkts. 12; 14.
39 Corral, 878 F.3d at 774 (quoting Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089,
1090 (9th Cir.2003)).
40 Id. at 775 (quoting In re Ford Motor Co./Citibank (S. Dakota), N.A., 264 F.3d 952, 958 (9th Cir.
2001)).
41 Id. (quoting Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002)).
42 Id.
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related to a temporary delay in foreclosure would be minimal.43 The cost would be based on the
amount of time it takes the defendant to review a loan modification application while the benefit
to the plaintiff would be derived from temporarily retaining possession of the property.44 The
Corral Court also distinguished its holding from cases that litigate permanent injunctions of
foreclosure.45 In cases that litigate temporary injunctions, even if the plaintiff succeeds, “they
would not be able to retain possession and ownership of their Property without paying off their
debt.”46 Therefore, the Ninth Circuit expressly rejected the premise that the amount in controversy
over such cases equals the value of the property or the amount of indebtedness.47
The courts in this District have interpreted Corral to apply in situations nearly identical to
the case at hand, where the property has been sold at a foreclosure sale.48 In Dalby v. Ditech
Financial LLC, the plaintiff alleged that he lost title to his home when the defendant transferred
the property in an unauthorized foreclosure sale.49 The plaintiff commenced the action in state
court and the defendants removed the action to federal district court based on diversity jurisdiction.
The Dalby Court recognized that the plaintiff was “not asking that defendants be permanently
43 Id.
44 Id. at 775‒76.
45 Id. at 776. (“When a plaintiff seeks to quiet title to a property or permanently enjoin foreclosure,
the object of the litigation is the ownership of the property. Therefore, the value of the property or
the amount of indebtedness on the property is a proper measure of the amount in controversy.”).
46 Id.
47 Id. (acknowledging that parties seeking to establish diversity jurisdiction “may still demonstrate
that the amount in controversy requirement is satisfied using other measures.”).
48 See Dalby v. Ditech Financial LLC, 285 F. Supp. 3d 1092 (D. Alaska 2018); Naufahu v.
Robinson Tait, P.S., Case No. 3:17-cv-00212-TMB, 2018 WL 1870398 (D. Alaska Apr. 16, 2018).
49 Dalby, 285 F. Supp. 3d at 1093.
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enjoined from foreclosing on his home” and therefore applied the Corral holding to find that the
defendants failed to show that the amount in controversy had been met.50 There, the Dalby Court
also remanded the case to state court.51
Similarly, Naufahu v. Robinson Tait, P.S., the plaintiff received notice that he had defaulted
on his home loan and the defendants intended to sell the property at a non-judicial foreclosure
sale.52 The plaintiff then filed an action in state court.53 The defendants indeed sold the property
and subsequently removed the state action to this Court on the basis of diversity jurisdiction.54 The
defendants argued that value of the property constituted the amount in controversy but the Court
disagreed, finding that the plaintiff was not asking to permanently enjoin foreclosure on the
property and so the property’s value was not the proper measure of costs.55 The Court therefore
granted the plaintiff’s motion to remand.56
The Corral holding applies in this case, as well. The present Complaint is silent on the
amount in controversy, but Plaintiffs contend that the amount is less than $75,000.57 Defendants
argue that the amount in controversy equals the sale price of the Property at foreclosure.58 If
50 Id. at 1096‒97.
51 Id. at 1097.
52 Naufahu, 2018 WL 1870398, at *1.
53 Id.
54 Id. at *1‒2.
55 Id. at *3‒4.
56 Id. at *5.
57 See Dkts. 1-1; 12 at 3.
58 Dkt. 14 at 4.
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Plaintiffs were seeking to quiet title or permanently enjoin foreclosure, then according to Corral,
the value of the property would be the proper measure of the amount in controversy.59 However,
the Plaintiffs expressly and repeatedly assert that they are not seeking the house free and clear of
a mortgage or to permanently enjoin foreclosure.60 Rather, Plaintiffs seek title to the Property
subject to the mortgage.61 “This circumstance is unlike cases in which plaintiffs seek to enjoin
foreclosure indefinitely as part of an effort to quiet title to property or rescind their loan
agreements.”62
Therefore, under either viewpoint, the amount in controversy requirement has not been met
in this case. Given Plaintiffs’ de minimis equity in the Property and requested relief, their claimed
damages are far less than $75,000. If Plaintiffs succeed, they would still be obligated to repay their
debts.63 As such, the pecuniary harm that would be suffered by Defendants does not equal either
the full amount of indebtedness or full value of the property sold.64 Furthermore, Defendants have
not argued that any measure other than the property value satisfies the amount in controversy
requirement. Consequently, Defendants have not established that the amount in controversy
satisfies the threshold for diversity jurisdiction and so removal was not proper.
59 Corral, 878 F.3d at 776.
60 Dkts. 12 at 5; 19 at 2‒4.
61 Dkt. 12 at 2, 5.
62 Corral, 878 F.3d at 776.
63 See id.
64 See id. at 775‒76.
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V. CONCLUSION
Based on the foregoing reasons, Plaintiffs’ Motion for Remand at docket 11 is GRANTED.
As such, Plaintiffs’ Motion to Stay at docket 13 is DENIED AS MOOT and Defendants’ Motion
to Dismiss at docket 8 is DENIED WITHOUT PREJUDICE.
IT IS SO ORDERED.
Dated at Anchorage, Alaska, this 13th day of January, 2020.
/s/
TIMOTHY M. BURGESS
UNITED STATES DISTRICT JUDGE
Timothy M. Burgess
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