Fifth Circuit tells pro se foreclosure plaintiffs in 2nd appeal that their claims shall remain in federal court after removal from state court

Mr. and Mrs. Smith go to the Fifth Circuit once more. U.S. District Court's denial of their motion to remand the case to state court affirmed on finding that their less than lawyerly pro se pleadings invoked the FDCPA. 

 OWEN M. SMITH; DANA NORWOOD SMITH, Plaintiffs-Appellants,

v.
BARRETT DAFFIN FRAPPIER TURNER & ENGEL, L.L.P.; STEPHEN C. PORTER; G. TOMMY BASTIAN; NDEX TITLE SERVICES, L.L.C.; BANK OF AMERICA, N.A.; FEDERAL NATIONAL MORTGAGE ASSOCIATION; THE REGISTERED HOLDERS OF FANNIE MAE GUARANTEED REMIC PASS-THROUGH CERTIFICATES, Fannie Mae REMIC TRUST 2008-16; FNMA AA MSTR/SUB CW BANK; LAURIE MEDER; FANNIE MAE REMIC TRUST 2008-16, Defendants-Appellees.

No. 16-51010.

United States Court of Appeals, Fifth Circuit.

Filed June 12, 2018.

Mark D. Hopkins, for Defendant-Appellee.

David Andrew Rogers, for Plaintiff-Appellant.

Richard Dwayne Danner, for Defendant-Appellee.

Nathan Templeton Anderson, for Defendant-Appellee.

Thomas Mott Hanson, for Defendant-Appellee.

William D. Davis, for Plaintiff-Appellant.

Shelley Luan Hopkins, for Defendant-Appellee.

Appeal from the United States District Court for the Western District of Texas, USDC No. 1:13-CV-193.

Before: SMITH, WIENER, and WILLETT, Circuit Judges.

PER CURIAM.^[*]

The Smiths appeal the district court's denial of their motion to remand their case to state court. They claim the district court lacks subject-matter jurisdiction. We disagree.

I

This is the second time this case has come before our court. See Smith v. Bank of Am. Corp., 605 F. App'x 311 (5th Cir. 2015). A brief recap is in order.^[1]

In February 2013, the Smiths filed their original petition in Texas state court. Their allegations focused on an attempted non-judicial foreclosure on their property in Austin, Texas. See id. at 312. The Defendants were financial institutions and entities involved with processing the foreclosure. "The precise nature of the Smiths' claims was unclear." See id. at 312-13.

The Defendants removed the case to federal court.^[2] "The Smiths did not move to remand the case to state court." Id. at 313. Soon after, the district court granted the Defendants' respective motions to dismiss for failure to state a claim and entered final judgment. The Smiths timely appealed.

Our court declared that the district court failed to assess whether it possessed subject-matter jurisdiction over the Smiths' claims. See id. at 312. Accordingly, we vacated the district court's judgment and "remand[ed] the case with instructions to decide the threshold jurisdictional issue." Id.

Following our opinion, the Smiths filed a motion to remand their case to state court. The Defendants responded, asserting the district court could exercise federal-question jurisdiction or, in the alternative, diversity jurisdiction.

A magistrate judge concluded that "both diversity jurisdiction and federal-question jurisdiction existed at the time of removal" and recommended the district court assert subject-matter jurisdiction over the case.^[3] The district court agreed, concluding both federal-question and diversity jurisdiction existed.

Accordingly, the court denied the Smiths' motion for remand. The Smiths timely appealed.

II

Reviewing subject-matter jurisdiction de novo, Gasch v. Hartford Acc. & Indem. Co., 491 F.3d 278, 281 (5th Cir. 2007), we find the Smiths stated a federal cause of action on the face of their original complaint. Thus, the district court properly exercised subject-matter jurisdiction.^[4]

Before addressing the jurisdictional issue, we address an argument framing the Smiths' appeal: They ask for leeway in how we interpret their pro se pleadings.^[5] It is well-settled that our court holds pro se pleadings to "less stringent standards than formal pleadings drafted by lawyers." Taylor v. Books A Million, Inc., 296 F.3d 376, 378 (5th Cir. 2002)(quoting Miller v. Stanmore, 636 F.2d 986, 988 (5th Cir. Unit A Feb. 1981)). And we "liberally construe[] pro se briefs" in the interest of justice. Wiggins v. La. State Univ.-Health Care Servs. Div., 710 F. App'x 625, 628 (5th Cir. 2017) (citing Yohey v. Collins,985 F.2d 222, 225 (5th Cir. 1993)); Barksdale v. King, 699 F.2d 744, 746 (5th Cir. 1983)("[The plaintiff] is a pro se litigant. It is established that his pleadings, therefore, are to be liberally construed.").

Yet, there are limits on how far we will go to assist pro se plaintiffs. These litigants must still satisfy the plausibility pleading standard. See Taylor, 296 F.3d at 378 ("[R]egardless of whether the plaintiff is proceeding pro se or is represented by counsel, `conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss.'" (quoting S. Christian Leadership Conference v. Supreme Court of La., 252 F.3d 781, 786 (5th Cir. 2001))). And pro se litigants "must still brief the arguments in order to preserve them," otherwise, their arguments will be considered waived on appeal. See Wiggins, 710 F. App'x at 628 (citing Yohey, 985 F.2d at 225). We seek to balance access to justice for pro se litigants with fairness to defendants and the interests of judicial economy. With that in mind, we proceed to the jurisdictional determination.

A

District courts have "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States."^[6] To exercise this flavor of jurisdiction, a federal question must "appear[] on the face of the plaintiff's well-pleaded complaint." See Elam v. Kan. City S. Ry. Co., 635 F.3d 796, 803 (5th Cir. 2011) (citing Bernhard v. Whitney Nat'l Bank, 523 F.3d 546, 551 (5th Cir. 2008)).

This scheme empowers the plaintiff to decide whether her case ends up in federal court. The "plaintiff is the master of his complaint and may allege only state law causes of action, even when federal remedies might also exist." Elam, 635 F.3d at 803 (citing Bernhard, 523 F.3d at 551). And if she pleads only state-law claims, there is no basis for federal-question jurisdiction. See id. (citing Gutierrez v. Flores, 543 F.3d 248, 252 (5th Cir. 2008)).^[7]

If a district court can exercise original federal-question jurisdiction over an action, then a federal court may exercise removal jurisdiction over that action. Id. (citing 28 U.S.C. § 1441(a)). The complaint establishes the basis for removal. Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Tr. for S. Cal., 463 U.S. 1, 10-11 (1983). Courts determine whether removal is proper by evaluating "the complaint at the time the petition for removal is filed." Brown v. Sw. Bell Tel. Co., 901 F.2d 1250, 1254 (5th Cir. 1990) (citation omitted); see also Louisiana v. Am. Nat'l Prop. & Cas. Co., 746 F.3d 633, 636 (5th Cir. 2014) ("[J]urisdictional facts are determined at the time of removal, and consequently post-removal events do not affect that properly established jurisdiction." (citing Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567, 569-70 (2004))).

"The removing party bears the burden of showing that federal jurisdiction exists and that removal was proper." Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002) (citing De Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995)). "Any ambiguities are construed against removal because the removal statute should be strictly construed in favor of remand." Id. (citing Acuna v. Brown & Root, Inc., 200 F.3d 335, 339 (5th Cir. 2000)).

B

We look to the operative pleading when the Defendants moved for removal: the Smiths' original complaint. The Defendants direct us to specific portions of the original complaint that, according to them, substantiate their claim that the Smiths alleged^[8] a federal cause of action under the federal Fair Debt Collection Practices Act.^[9]

In the "Facts" section,^[10] the Smiths wrote:

17. In April, 2009 BANK OF AMERICA CORPORATION claimed to be the new mortgage servicer and payments were to be made to them. BANK OF AMERICA CORPORATION was not an "original party" to the "original negotiable instrument" which the "borrowers" negotiated. BANK OF AMERICA CORPORATION was a 3rd party debt collector, pretending to be the Lender. BANK OF AMERICA CORPORATION failed to adhere to the Fair Debt Collection Practice Act, as all 3rd party debt collectors are required to do.

In the next paragraph, after describing the conduct of Countrywide Financial Corporation—which later merged with Bank of America—they wrote: "The Supreme Court has warned people in Federal Crop Insurance Corp vs. Merrill and Title 15 Section 1692 that when people enter into any dealings with agents, the people better investigate the authority and limits of authority that the agents possess." The Smiths repeat this language in other paragraphs that describe the conduct of other Defendants, such as Barrett Daffin, MERS, BAC Home Loans Servicing, Bastian, NDEX Title Services, and Porter. The Smiths believe the conduct amounts to "a foreclosure mill style shell game preying on Texans by intimidation and lawyering."

In the "Conclusion" section, the Smiths stated: "When the Court takes into account the Statutes and Case Law and applies them to the facts of this case . . . it is clear why it is necessary for agency authorization from the principal [to] be proved by any mortgage servicer, lawyer, employee or assignee. No such evidence exists." And the Smiths criticized the "action by 3rd parties . . . [that] has rendered the security instrument a nullity, leaving only an unsecured indebtedness of the negotiable instrument that could only be enforced by the original Creditor through legal avenues."

Finally, in the "Prayer for Relief" section, the plaintiffs repeated their description of the Defendants' activities as a "type of predatory enterprise which involves fraud and relentless lawyering on unsuspecting Texans." This section did not allege a specific cause of action. Instead, after requesting "a hearing," "discovery," and an injunction to prevent foreclosure on the Smiths' property, the Smiths issued a broad prayer for monetary relief. Their prayer included, among other requests:

• "Damages in an amount not to exceed the jurisdictional limits of this Court";

• "Economic Damages";

• "Additional Treble Damages for all intentional and knowing violations"; and

• "All other relief to which [the Smiths] are entitled."

We find that it is apparent from the face of the complaint that the Smiths alleged a federal-law cause of action: a claim for relief under the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692. The Smiths alleged that Bank of America, a Defendant, "failed to adhere to the Fair Debt Collection Practice Act, as all 3rd party debt collectors are required to do." This may be read as an attempt to invoke a federal statute.^[11]

In response, the Smiths claim they intended to invoke only "the Texas Debt Collection Act." We agree that they alleged a violation of Texas law by asserting^[12] "[a]ll Defendants . . . carried out a collection action by way of the foreclosure and Substitute Trustee's Non-Judicial Foreclosure Sale in violation of the Texas Finance Code sections 392.301(8) and 392.304 and other various State laws."

But we do not agree that this reference to the Texas Finance Code demonstrates the Smiths did not also allege a free-standing federal Fair Debt Collection Practices Act claim.

After asserting that Bank of America "was a 3rd party debt collector" that "failed to adhere to the Fair Debt Collection Practice Act, as all 3rd party debt collectors are required to do," the Smiths explicitly referenced "Title 15 Section 1692" when discussing the Supreme Court's warning that "when people enter into any dealings with agents, the people better investigate the authority and limits of authority that the agents possess." And 15 U.S.C. § 1692 et seq. is known as the "Fair Debt Collection Practices Act." See, e.g., Midland Funding, LLC v. Johnson, 137 S. Ct. 1407, 1410 (2017) ("The Fair Debt Collection Practices Act, 91 Stat. 874, 15 U.S.C. § 1692 et seq., prohibits a debt collector from asserting any `false, deceptive, or misleading representation,' or using any `unfair or unconscionable means' to collect, or attempt to collect, a debt, §§ 1692e, 1692f."). The Smiths invoked the federal statute—by name and by number—and alleged conduct that may violate that act.

It bears emphasizing that factual allegations alone may state a claim for relief—even without referencing the precise legal theory (or statute) upon which the plaintiff seeks relief.^[13] We find such guidance in the Supreme Court's decision in Johnson v. City of Shelby, 135 S. Ct. 346 (2014).

According to the Court, "[f]ederal pleading rules call for `a short and plain statement of the claim showing that the pleader is entitled to relief,' FED. RULE CIV. PROC. 8(a)(2); they do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted." Id. at 346. A plaintiff "must plead facts sufficient to show that her claim has substantive plausibility." Id. at 347. Plaintiffs may accomplish this by "stat[ing] simply, concisely, and directly events that, they allege[], entitle[] them to damages." Id. As long as such pleadings inform defendants of the complaint's factual basis, plaintiffs need "do no more to stave off threshold dismissal for want of an adequate statement of their claim." Id. (citations omitted). Thus, plaintiffs may state a claim for relief by pleading facts that support the claim.

The Smiths did just that—and cited the legal theory underlying their claim. The Smiths' explicit reference to the "Fair Debt Collection Practice[s] Act" (and its position in the U.S. Code), coupled with a description of conduct that could subject the Defendants to liability under the Act, solidifies our conclusion.

Consequently, a district court could assert original jurisdiction over the complaint on the basis of 28 U.S.C. § 1331. And removal jurisdiction is proper under 28 U.S.C. § 1441(a). No ambiguity in the complaint gives us reason to construe the removal statute narrowly.

C

The Smiths offer two additional arguments for why we should find they pleaded only state-law claims: (1) their federal claim is time-barred; and (2) they requested treble damages, which the Texas Fair Debt Collection Practices Act provides for, but the federal Act does not. We are not persuaded by either argument.

The first argument misunderstands federal jurisdiction. If a complaint is time-barred, that speaks to the plaintiffs' ability to prevail in the suit—not our ability to assert jurisdiction. Indeed, federal courts routinely assert jurisdiction over time-barred claims. See, e.g., Taylor v. Bailey Tool Mfg. Co., 744 F.3d 944, 945-47 (5th Cir. 2014) (affirming that the plaintiff's federal-law claims were "barred by the applicable statutes of limitations" after the defendant removed the case to federal court on the basis of federal-question jurisdiction); Winters v. Diamond Shamrock Chem. Co., 149 F.3d 387, 390 (5th Cir. 1998)("[W]e do indeed have jurisdiction under the Federal Officer Removal Statute, and . . . we therefore may reach the merits of this appeal. In so doing, we affirm the judgment of the district court dismissing the complaint as barred by the Texas statute of limitations.").

Turning to the second argument, the Smiths did request treble damages—but that does not mean they alleged only a state-law claim.^[14] The Smiths believe that only a violation of the Texas Fair Debt Collection Practices Act provides for treble damages. They are incorrect. The Texas Fair Debt Collection Practices Act does not itself permit treble damages. See Tex. Fin. Code § 392.403 (1997). Treble damages result from a related statute: An intentional and knowing violation of the Texas Fair Debt Collection Practices Act "is a per se violation of the Texas Deceptive Trade Practices Act (DTPA) (Tex. [Fin. Code] § 392.404), which allows treble damages for knowing and intentional violations." HON. JAMES J. BROWN, JUDGMENT ENFORCEMENT § 14.01 (3d ed. 2018). And a knowing and intentional violation of the federal Fair Debt Collection Practices Act is also a violation of Texas's DTPA— meaning a plaintiff could seek treble damages under Texas law for an intentional violation of the federal Act. Id. Thus, the Smiths' reference to "Treble Damages" does not convince us that they stated only a state-law claim.

Also, the Smiths did not only request treble damages; they also requested "Economic Damages."

The federal Fair Debt Collection Practices Act allows plaintiffs to collect economic damages from malicious debt collectors. See 15 U.S.C. § 1692k (2011). Thus, requesting "Economic Damages" is consistent with raising a federal claim.

III

The Smiths give us no reason to believe they did not plead both state- and federal-law claims. They cite no case in which our court—or any court— found federal-question jurisdiction absent when a fair reading of a pro se plaintiff's complaint included an explicit allegation that the defendant violated a federal statute. Because we find the Smiths stated a federal cause of action on the face of their original complaint, we conclude the district court could exercise subject-matter jurisdiction. 

We AFFIRM the district court's decision to deny the Smiths' motion to remand the case to state court.

[*] Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

[1] Our previous opinion contains a more detailed description of the facts. See Smith, 605 F. App'x at 312-13.

[2] In their original motion to remove, the Defendants asserted that the Smiths stated a cause of action for a violation of the Federal Debt Collection Practices Act. The Defendants also asserted that the Smiths' wrongful foreclosure claim was preempted by the Home Owners' Loan Act, giving rise to federal question jurisdiction. They also claimed diversity jurisdiction existed, arguing that any non-diverse Defendants were improperly joined.

[3] In his report, the magistrate judge explained that federal question jurisdiction was apparent from the face of the original complaint, the Defendants' Home Owners' Loan Act preemption argument was "superfluous," and diversity jurisdiction existed because "fraudulent joinder was established at the time of removal." The district court agreed with the magistrate judge that the Smiths' "Original Petition clearly allege[d] a violation of federal law on its face."

[4] Given this finding, there is no need to address the Defendants-Appellees' claims regarding diversity jurisdiction (including the claims of improper joinder).

[5] The Smiths filed their original complaint pro se; they are now represented by counsel.

[6] 28 U.S.C. § 1331.

[7] One exception is the "less frequently encountered[] variety of federal `arising under' jurisdiction . . . [in which] in certain cases federal-question jurisdiction will lie over state-law claims that implicate significant federal issues." Grable & Sons Metal Prod., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 312 (2005). We do not find that "arising under" jurisdiction is an issue in this case.

[8] Of course, the Defendants do not claim these allegations state a plausible claim to relief. We do not address the plausibility of the allegations.

[9] 15 U.S.C. § 1692 et seq.

[10] The Smiths' original complaint does not neatly lay out their allegations. There is no section in which the Smiths consolidate the various claims they may have against the Defendants, nor is there a section listing the various counts. Instead, the Smiths sprinkle facts and legal authority throughout the complaint.

[11] Indeed, our jurisprudence regarding pro se pleadings gives us reason to liberally construe the Smiths' complaint in favor of finding they had stated a claim under the federal Fair Debt Collection Practices Act. See Wiggins, 710 F. App'x at 628.

[12] Notably, the Smiths did not refer to the Texas law by its colloquial name.

[13] Our Court previously recommended the district court consider "whether federal question jurisdiction" may exist because "[i]n the `facts' section of their original pro se complaint, for instance, the Smiths alleged that Bank of America was a `third party debt collector' that failed to adhere to the Fair Debt Collection Practices Act (e.g., by failing to provide documentation that the bank was the current mortgage servicer)." Smith, 605 F. App'x at 315 n.5.

[14] Specifically, the Smiths requested "Additional Treble Damages for all intentional and knowing violations."

Richards v NCSLT 2006-3 Private student loan collection suits not removable to federal court - It could cost you

Nat'l Collegiate Student Loan Trust 2006-3 v. Richards, No. 3:16-CV-1936-M, 2016 WL 4533216 (N.D. Tex. Aug. 30, 2016)

STATE COURT COLLECTION ACTION FILED BY NATIONAL COLLEGIATE STUDENT LOAN TRUST DID NOT INVOLVE A FEDERAL QUESTION 

Federal district court in Dallas sent case back to state district court after student loan defendant removed private student loan collection case from state court to federal court. No federal cause of action was involved in collection of student debt on breach of contract theory in Texas, and Texas resident sued in local court would not have been entitled to removal based on diversity jurisdiction even if amount had been above $75,000.00, which was not the case here. Damages less than $100,000.00 under the expedited action/case type pleading rules in Texas state courts doesn't necessarily mean anything for removal threshold purposes. Student loan defendant was ordered to pay attorney's fees to the Trust for causing the improper detour to federal court. 

REMOVAL LAW 

A party may remove to federal court "any civil action brought in a State court of which the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441 (2012). The party seeking removal bears the burden of establishing federal jurisdiction. Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988). This statutory right to removal is strictly construed because "removal jurisdiction raises significant federalism concerns." Id. (citations omitted). "[A]ny doubt about the propriety of removal must be resolved in favor of remand." Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281-82 (5th Cir. 2007). Ditech and Bank of NY claim that the court has removal jurisdiction based on diversity of citizenship. Dkt. 1 at 4-5. Subject matter jurisdiction premised on diversity requires (1) complete diversity of citizenship between the parties and (2) an amount in controversy in excess of $75,000. 28 U.S.C. § 1332 (2012).

NATIONAL COLLEGIATE STUDENT LOAN TRUST 2006-3, a Delaware Statutory Trust, Plaintiff,
v.
ERNEST RICHARDS, Defendent.

Civil Action No. 3:16-CV-1936-M.

United States District Court, N.D. Texas, Dallas Division.

August 30, 2016.

National Collegiate Student Loan Trust 2006-3, Plaintiff, represented by Michael J. Scott, Michael J Scott, P.C., Cynthia Lee Fulton, Fulton Friedman & Gullace, LLP, pro hac vice, Teri Stewart Mace, Emerson Law Firm & Timothy Wells, Scott & Associates. 

Ernest Richards, Defendant, Pro se.

MEMORANDUM OPINION AND ORDER

BARBARA M.G. LYNN, Chief District Judge. 

Before the Court is a Motion for Remand [Docket Entry #6], filed by Plaintiff National Collegiate Student Loan Trust 2006-3 ("NCSLT"). For the reasons explained below, the Motion is GRANTED.

Background

On August 10, 2015, NCSLT, a Delaware statutory trust, filed this lawsuit against Defendant Ernest Richards ("Richards"), a Texas citizen, in the 191st Judicial District Court of Dallas County, Texas, in which NCSLT asserts a single claim against Richards for breach of contract, arising out of Richards's alleged failure to repay a student loan. See Pl. Orig. Pet. (Def. Rem. Not., Ex. 3) at 2, 3. NCSLT alleges that, as of March 25, 2015, Richards owed a principal balance of $42,740.22, plus accrued and unpaid interest in the amount of $4,570.17. Id. at 3, ¶12. On September 28, 2015, Richards filed an Original Answer in state court, asserting a general denial and raising various affirmative defenses. Def. Orig. Ans. (Def. Rem. Not., Ex. 4). On July 1, 2016, Richards filed a Notice of Removal in federal court, asserting that the lawsuit involves a Federal Debt Collection Act claim, complete diversity, and the amount in controversy exceeds $75,000. Def. Rem. Not. at 2, ¶9. NCSLT filed a Motion to Remand on July 14, 2016. The issues have been fully briefed, and the Motion is ripe for determination.

Legal Standards and Analysis

A defendant may remove an action filed in state court to federal court if the action is one that could have originally been filed in federal court. See 28 U.S.C. § 1441(a). A federal court's jurisdiction is limited, and a federal court generally may only hear a case if it involves a question of federal law or where diversity of citizenship exists between the parties. See 28 U.S.C. §§ 1331, 1332. The removing party bears the burden of establishing jurisdiction. See Miller v. Diamond Shamrock Co., 275 F.3d 414, 417 (5th Cir. 2001). "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).

Richards contends the Court has jurisdiction over this matter on both diversity jurisdiction and federal question grounds. Def. Rem. Not. at 2, ¶9. Federal question jurisdiction, under 28 U.S.C. § 1331, "exists when `a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law.'" Borden v. Allstate Ins. Co., 589 F.3d 168, 172 (5th Cir. 2009) (quoting Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 27-28 (1983)). "A civil action filed in a state court may be removed to federal court if the claim is one `arising under' federal law," and, "[t]o determine whether the claim arises under federal law, we examine the `well pleaded' allegations of the complaint and ignore potential defenses: [A] suit arises under the Constitution and laws of the United States only when the plaintiff's statement of his own cause of action shows that it is based upon those laws or that Constitution." Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6 (2003) (citation and internal quotation marks omitted). Thus, "[a] federal question exists `if there appears on the face of the complaint some substantial, disputed question of federal law.'" In re Hot-Hed Inc., 477 F.3d 320, 323 (5th Cir. 2007) (quoting Carpenter, 44 F.3d at 366). "[T]here is generally no federal jurisdiction if the plaintiff properly pleads only a state law cause of action." MSOF Corp. v. Exxon Corp., 295 F.3d 485, 490 (5th Cir. 2002).

NCSLT's Original Petition asserts a single state law claim against Richards for breach of contract. See Pl. Orig. Pet. at 3. Although Richards conclusorily asserts that this lawsuit involves a federal question arising under the Federal Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq. ("FDCPA"), NCSLT's claim for breach of contract is not based on the FDCPA and does not depend on the resolution of a substantial question regarding that federal statute. Richards has thus failed to establish that removal is proper based on federal question jurisdiction.

In diversity cases, each plaintiff's citizenship must be different from each defendant's citizenship, and the amount in controversy must exceed $75,000. See 28 U.S.C. §§ 1332(a), (b). Where a plaintiff alleges a sum certain in its pleading, that amount controls, if made in good faith. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938); Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995). In this case, it is undisputed that NCSLT and Richards are diverse. However, the amount in controversy does not meet the jurisdictional threshold. NCSLT specifically alleges in its Original Petition that Richards owes a principal balance of $42,740.22, plus accrued and unpaid interest in the amount of $4,570.17. Pl. Orig. Pet. at 3, ¶12. The Court finds that NCSLT made its damages allegations in good faith, as it provided the Court with documentation showing its claim for only $47,310.39 represents the actual amount owing on the loan. See Pl. App. at 15, ¶10 & 45-58. NCSLT also requests an award of "reasonable and necessary attorney's fees of at least $5,000." Id. at 4. The amount in controversy, including attorney's fees, is thus well below the jurisdictional minimum. Id. at 3, ¶15.

Richards appears to rely on a statement on the first page of NCSLT's Original Petition that it "seeks only monetary relief of $100,000 or less, including damages of any kind, penalties, costs, expenses, and pre-judgment interest." Pl. Orig. Pet. at 1, ¶2. But, this statement merely conforms to Texas Rule of Civil Procedure 47, which requires plaintiffs to select one of five prescribed statements describing the damages sought. See Tex. R. Civ. P. 47(c)(1). It does not, in the absence of additional facts, establish that the amount in controversy satisfies the jurisdictional minimum. See, e.g., Payton v. Equifax Info. Servs., LLC, 2014 WL 7236066, at *3 (N.D. Tex. Dec. 18, 2014) (Boyle, J.). Richards fails to set forth any facts that support a finding of the requisite amount, either in his removal notice or in support of his response to the Motion to remand. In the absence of such facts, Richards has failed to establish by a preponderance of the evidence that the amount in controversy requirement is met.

Further, under the so-called "forum-defendant rule," an action may not be removed on the basis of diversity jurisdiction if any defendant, properly joined and served, is a citizen of the state where the plaintiff filed suit. See 28 U.S.C. § 1441(b)(2). Removal of a case in violation of the forum-defendant rule renders the removal procedurally defective and provides a basis for remand where the issue timely raised. See In re 1994 Exxon Chem. Fire, 558 F.3d 378, 391 (5th Cir. 2009). Here, Richards admits that he is a citizen of Texas—the same state in which NCSLT filed its original petition. Def. Rem. Not. at 1, ¶4. Although he asserts in his Notice of Removal that he was "never served," Richards filed an Original Answer in state court. Id., Ex. 4. Under Texas law, an answer constitutes an appearance by a defendant and dispenses with the necessity for the issuance or service of citation upon that defendant. Tex. R. Civ. P. 121. Richards is thus considered "properly served" for purposes of effecting removal. Davis v. Cash, 2001 WL 1149355, at *2 (N.D. Tex. Sept. 27, 2001) (Sanders, J.); see also Breitweiser v. Chesapeake Energy Corp.,2015 WL 6322625, at *4-5 (N.D. Tex. Oct. 20, 2015) (recognizing that defendant's answer filed in state court satisfies the requirement derived from the "properly joined and served" language that at least one defendant must be considered served prior to removal). Remand is therefore appropriate on the basis of the forum-defendant rule, which Plaintiff has timely raised.

Finally, NCSLT seeks its attorney fees incurred in connection with the removal.

The Court has discretion to order Richards to pay NCSLT "just costs and any actual expenses, including attorney fees, incurred as a result of" improper removal. 28 U.S.C. § 1447(c). To warrant such an award, Richards must have "lacked an objectively reasonable basis for seeking removal." See Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). Richards lacked an objectively reasonable basis to remove this case, because it does not involve a federal question or seek damages in excess of $75,000. Additionally, Richards is a citizen of Texas and not entitled to remove this case to a federal court in Texas. The Court therefore orders Richards to pay NCSLT the reasonable attorneys' fees and costs it incurred as a result of removal. NCSLT shall submit by affidavit documents establishing such fees within twenty-one days of the date of this Order. If Richards disputes the amount sought, he may respond within fourteen days thereafter.

Conclusion

Plaintiff's Motion for Remand is GRANTED, and this case is REMANDED to the 191st Judicial District Court of Dallas County, Texas. 

SO ORDERED.

MORE ON REMOVAL:

DIVERSITY JURISDICTION IN FORECLOSURE CONTEXT 

WILLIAM H. BERRY, JR., Plaintiff,
v.
SETERUS, INC., et al, Defendants.

Civil Action No. 2:17-CV-5.

United States District Court, S.D. Texas, Corpus Christi Division.

March 31, 2017.

ORDER DENYING MOTION TO REMAND

NELVA GONZALES RAMOS, District Judge.

Plaintiff William H. Berry, Jr. (Berry) filed this action on January 2, 2017, to prevent the foreclosure of a lien against his homestead property located at 13702 A La Entrada Calle, Corpus Christi, Nueces County, Texas. In the Nueces County Court at Law No. One, he sued Defendant Seterus, Inc. (Seterus) (the mortgage servicer for his note), the Trustees^[1] named on the Notice of Foreclosure Sale, and the Attorneys^[2] who represented Seterus in its collection efforts. 

He alleges causes of action for (1) negligence, (2) breach of contract, (3) breach of the covenant of good faith and fair dealing, (4) violations of the Texas Deceptive Trade Practices Act (DTPA), (5) wrongful notices of acceleration and trustee's sale, (6) violation of the Texas Fair Debt Collection Act (FDCA), (7) unreasonable debt collection, (8) negligent misrepresentation, (9) accord and satisfaction, (10) fraud, (11) gross negligence and malice, and (12) breach of fiduciary duty. Berry seeks declaratory and injunctive relief, in addition to an accounting and actual and punitive damages, attorney's fees and pre-and post-judgment interest. D.E. 1-1. He also alleges certain affirmative defenses to an anticipated counterclaim to collect on his note.

On January 4, 2017, the County Court issued a temporary restraining order enjoining the planned foreclosure sale. D.E. 1-1. Thereafter, on January 10, 2017, Defendant Seterus removed the case to this Court pursuant to diversity jurisdiction, 28 U.S.C. § 1332. Seterus asserts that the amount in controversy exceeds $75,000. It further asserts that its citizenship is diverse from that of Berry. It disregards the admittedly non-diverse citizenship of all of the other Defendants, arguing that they are improperly joined. More specifically, Seterus contends that the Trustees and Attorneys are merely agents of Seterus whose citizenship is disregarded and/or they should be dismissed from this case based upon immunity from liability for work done on behalf of their principal.

Before the Court is Berry's Motion to Remand (D.E. 16). 

He challenges this Court's diversity jurisdiction on the basis of both the amount in controversy and the argument that the Trustees and Attorneys are improperly joined. The Court agrees with Seterus that the non-diverse parties are improperly joined and that the amount in controversy is sufficient to sustain diversity jurisdiction. 

For the reasons set out below, the Court DENIES the motion to remand.

DISCUSSION

A. Standard of Review.

On a motion to remand, "[t]he removing party bears the burden of showing that federal jurisdiction exists and that removal was proper." Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). "Any ambiguities are construed against removal because the removal statute should be strictly construed in favor of remand." Id. The strict construction rule arises because of "significant federalism concerns." See generally, Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941).

"The party seeking removal bears a heavy burden of proving that the joinder of the in-state party was improper." Smallwood v. Illinois Cent. R.R. Co., 385 F.3d 568, 574 (5th Cir. 2004) (en banc). The removing party proves improper joinder by demonstrating: (1) actual fraud in the pleading of jurisdictional facts; or (2) the inability of the plaintiff to establish a cause of action against the non-diverse defendant in state court. See Crockett v. R.J. Reynolds Tobacco Co., 436 F.3d 529, 532 (5th Cir. 2006) (citing Travis v. Irby, 326 F.3d 644, 646-47 (5th Cir. 2003)); see also Boone v. Citigroup, Inc., 416 F.3d 382, 388 (5th Cir. 2005). Only the second method is at issue here. The motion to remand must be granted unless "there is absolutely no possibility that the plaintiff will be able to establish a cause of action against the non-diverse defendant in state court." Griggs v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir. 1999).

B. Amount in Controversy.

Berry contends that the amount in controversy is less than $75,000 because the amount Seterus demanded to pay off the balance owed on the note secured by his residence is only $47,127.40. That is the amount he is fighting in this lawsuit. He allows that his allegations could, at most, involve $55,294.69, if certain escrow funds in dispute were added to the principal amount due. D.E. 16, pp. 10-11. Berry challenges any attempt to use his denial of owing the original principal amount of the note ($183,250) as the amount in controversy because his allegations state that he has paid down the note and he clearly is fighting a lesser amount.

Berry's arguments disregard the two actual amount-in-controversy arguments made in Seterus's removal, echoed in its response to the motion to remand: (1) that Berry's request for declaratory or injunctive relief, affecting Seterus's right to foreclose, places the entire value of the property in controversy, which value greatly exceeds $75,000; and (2) that Berry's request for actual damages, together with additional, exemplary, or punitive damages and attorney's fees reasonably exceeds $75,000 on the face of the petition. The Court agrees with Seterus.

In his state court petition, Berry explains that he purchased the property in 1991, has made monthly payments toward principal and interest since that date, and made extensive improvements to the property, such that he refinanced his mortgage debt in 2003 in the total amount of $183,250. The land alone, he alleges, has a tax appraisal value of $140,000. D.E. 1-1, p. 13. Seterus has offered evidence that the property is worth $250,000: $140,000 for the land and $110,000 for the improvements. D.E. 1-1, p. 108. "`In 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.'" Farkas v. GMAC Mortg., L.L.C., 737 F.3d 338, 341 (5th Cir. 2013) (quoting Hunt v. Wash. StateApple Adver. Comm'n, 432 U.S. 333, 347 (1977) and applying the holding to a foreclosure action). Here, Berry's admission that the value of the property is $140,000 satisfies the $75,000 threshold.

Berry also seeks extensive damages which include actual and exemplary damages, under at least 12 causes of action that include fraud, gross negligence, DTPA, and FDCA claims. He prays for his pecuniary losses, mental anguish, his time and expense addressing this matter in the past and future, and attorney's fees. The number and kind of theories alleged make this case an expensive one to prosecute in terms of attorney's fees. At no time has Berry suggested that he seeks less than $75,000 when all of his categories of damages are aggregated. Thus, it is not a stretch to interpret these damages as totaling more than $75,000, exclusive of interest and costs, on the face of his complaint. E.g., St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998) (attorney's fees and punitive damages are included in the amount in controversy calculation).

Seterus has satisfied the amount in controversy requirement of diversity jurisdiction to support its removal of the case to this Court.

C. Diversity of Citizenship and Improper Joinder.

Berry's complaints, as detailed in the factual portion of his state court petition, focus on the lender's and servicer's acts: unauthorized force-placed insurance, duplicate payment of property taxes, maintenance of an unauthorized escrow account, improper administration of the escrow account, incorrectly addressing notices to him, assessment of inapplicable fees and penalties, improper application of payments, refusal to provide an accounting, and the unlawful acceleration of the indebtedness, resulting in the notice of foreclosure. All of the conduct complained of has to do with the lender-borrower relationship and the terms of the note and deed of trust.

Berry named the Trustees and Attorneys under the "Parties" section of his complaint. However, the subsequent allegations are made against Seterus or "Defendants," without identifying any wrongful acts of any particular Trustee or Attorney other than that they as a group worked on behalf of Seterus in collecting the alleged indebtedness against Berry. Seterus complained of this pleading defect (failing to state a claim upon which relief could be granted) in the notice of removal, reciting the federal fact pleading standards. D.E. 1, ¶ 10 (citing Iqbal v. Ashcroft, 556 U.S. 662 (2009) and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

Berry has failed to cure his pleading defects or identify additional facts that might support his claims in connection with his motion for remand. Instead, he repeats the conclusory and formulaic allegations of his complaint. Thus there is no indication that any particular Trustee or Attorney Defendant engaged in any specific wrongful conduct. This failure applies with respect to all legal theories under Federal Rule of Civil Procedure 8. But it is particularly acute with respect to fraud allegations, governed by Rule 9(b). "`At a minimum, Rule 9(b) requires allegations of the particulars of time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.' Put simply, Rule 9(b) requires `the who, what, when, where, and how' to be laid out." Benchmark Elecs., Inc. v. J.M. Huber Corp., 343 F.3d 719, 724 (5th Cir.), opinion modified on other grounds on denial of reh'g, 355 F.3d 356 (5th Cir. 2003).

• Because Berry fails to provide any factual basis for his claims against the Trustees and Attorneys, he has failed to meet the Twombly/Iqbal pleading standard as to any of his claims, most particularly those regarding fraud, malice, and misrepresentation.

• Because he complains of the Attorneys as adversaries trying to collect a debt against him, he has identified no factual basis for a relationship— certainly no relationship of trust or confidence—to support any negligence or breach of fiduciary duty theory. Nabors Drilling, U.S.A., Inc. v. Escoto,288 S.W.3d 401, 404 (Tex. 2009) (elements of negligence); Priddy v. Rawson, 282 S.W.3d 588, 599 (Tex. App.-Houston [14th Dist.] 2009, pet. denied) (relationship as element of breach of fiduciary duty theory).

• Because the lien against the property has not been foreclosed, none of Berry's complaints state a claim against the Trustees.

Although a trustee under a deed of trust owes neither a fiduciary duty nor a duty of good faith and fair dealing to the mortgagor, the trustee does have "a duty to `act with absolute impartiality and fairness to the grantor in performing the powers vested in him by the deed of trust.'" This duty is breached when the trustee fails to comply strictly with the terms of the deed of trust or the notice and sale provisions of § 51.002 of the Texas Property Code. Breach of the trustee's duty under a deed of trust is not itself an independent tort. Instead, "breach of this duty may be stated under Texas law as a claim for wrongful foreclosure." A claim for wrongful foreclosure requires that the property in question be sold at a foreclosure sale.

Marsh v. Wells Fargo Bank, N.A., 760 F. Supp. 2d 701, 708 (N.D. Tex. 2011) (citations omitted) (applying Texas law).

• Because Berry has failed to set out any specific factual reliance on any alleged misrepresentation, he has not stated a claim for negligent misrepresentation. E.g., McCamish, Martin, Brown & Loeffler v. F.E. Appling Interests, 991 S.W.2d 787, 791 (Tex. 1999).

• Because he has not alleged facts to show that the Trustees or Attorneys had actual, subjective awareness of an extreme degree of risk or a specific intent to cause harm to Berry, he has not stated a claim for gross negligence or malice to support exemplary damages. Tex. Civ. Prac. & Rem. Code §§ 41.001, 41.003.

• Because he has not supplied any factual allegation of any agreement with the Trustees or Attorneys, he has not laid the foundation for a breach of contract, breach of the covenant of good faith and fair dealing, wrongful act in accelerating the note or noticing the property for foreclosure, or accord and satisfaction theory. E.g., Davis v. Texas Farm Bureau Ins., 470 S.W.3d 97, 104 (Tex. App.-Houston [1st Dist.] 2015, no pet.) (breach of contract theory requires a contract); Solar Applications Eng'g v. T.A. Oper. Corp., 327 S.W.3d 104, 108 (Tex. 2010) (breach of covenant requires an agreement); Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 863 (Tex. 2000) (accord and satisfaction requires an agreement).

• Because he has not alleged facts to show that he sought goods or services from the Trustees or Attorneys, he has not pled that he is a consumer entitled to DTPA protections. Doe v. Boys Clubs, 907 S.W.2d 472, 478 (Tex. 1995).

• Because he complains only of the ordinary demands and notices^[3]associated with debt collection and foreclosure and does not factually address any specific Trustee or Attorney's wrongful conduct, he has not sufficiently pled a violation of the FDCA or an unreasonable debt collection practice. Tex. Fin. Code § 392.001, et seq.

Berry has failed to demonstrate a plausible claim against the Trustees and Attorneys both generally, with respect to pleading claims and specifically, with respect to at least one element of each liability theory. His claims for declaratory and injunctive relief address only remedies without underlying theories of liability. See generally, Proctor v. Andrews, 972 S.W.2d 729, 734 (Tex. 1998) (addressing a constitutional claim as providing standing to seek declaratory relief); Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002) (temporary injunctive relief requires showing an underlying cause of action); Frey v. DeCordova Bend Estates Owners Ass'n, 632 S.W.2d 877, 881 (Tex. App. 1982) (permanent injunction requires proof of wrongful act), aff'd, 647 S.W.2d 246 (Tex. 1983).

Seterus has satisfied its burden to show that Berry has not alleged a claim upon which relief may be granted against any of the Trustees or Attorneys. They are thus improperly joined.

CONCLUSION

For the reasons set out above, the Court holds that Defendants Vicki Hammonds; Leslye Evans; Arnold Mendoza; W.D. Larew; Michael W. Zientz; AVT Title Services, LLC; the Law Firm of Mackie Wolf Zientz & Mann, P.C.; Brandon Wolf; L. Keller Mackie; Lori Liane Long; Tracey Midkiff; and Joseph Modric are improperly joined because Plaintiff has failed to state a claim against them upon which relief may be granted. The Court ORDERS that all claims against these Defendants are DISMISSED and the motions to dismiss (D.E. 10 and 13) are terminated as moot. Plaintiff's motion to remand (D.E. 16) is DENIED.

[1] Defendants, Vicki Hammonds, Leslye Evans, Arnold Mendoza, W.D. Larew, Michael W. Zientz, and AVT Title Services, LLC (AVT).

[2] Law Firm of Mackie Wolf Zientz & Mann, P.C., Brandon Wolf, L. Keller Mackie, Lori Liane Long, Tracey Midkiff, and Joseph Modric.

[3] Under the Texas Fair Debt Collection Practices Act, the conduct prohibited must rise to the level of threats or coercion, harassment or abuse, unfair or unconscionable means, or fraudulent, deceptive, or misleading representations as to the debt collector's identity, the lender's identity, the collector's credentials, the amount of debt claimed by the lender and the like. See Tex. Fin. Code § 392.001, et seq.

NATIONAL COLLEGIATE STUDENT LOAN TRUST 2006-3, Plaintiff,
v.
ERNEST RICHARDS, Defendant.

Civil Action No. 3:16-CV-001936-M.

United States District Court, N.D. Texas, Dallas Division.

July 14, 2017.

National Collegiate Student Loan Trust 2006-3, Plaintiff, represented by Michael J. Scott, Michael J Scott, P.C..

National Collegiate Student Loan Trust 2006-3, Plaintiff, represented by Cynthia Lee Fulton, Fulton Friedman & Gullace, LLP, pro hac vice, Teri Stewart Mace, Emerson Law Firm & Timothy Wells, Scott & Associates.

Ernest Richards, Defendant, Pro Se.

ORDER ACCEPTING FINDINGS AND RECOMMENDATION 

OF THE UNITED STATES MAGISTRATE JUDGE

BARBARA M.G. LYNN, Chief District Judge.

After reviewing the Findings, Conclusions, and Recommendation of the United States Magistrate Judge for plain error, I am of the opinion that the Findings and Conclusions of the Magistrate Judge are correct and they are accepted as the Findings and Conclusions of the Court.

The defendant's motion to reconsider, if any, is DENIED, and the plaintiff is awarded $2,932.50 in attorneys' fees.

NATIONAL COLLEGIATE STUDENT LOAN TRUST 2006-3 v. Richards, Dist. Court, ND Texas 2017 

WestLaw cite: Nat'l Collegiate Student Loan Trust 2006-3 v. Richards, No. 3:16-CV-1936-M, 2016 WL 4533216 (N.D. Tex. Aug. 30, 2016) 

ANOTHER CAUTIONARY TALE:

REMOVAL NOT TIMELY IN CASE INVOLVING A FEDERAL ISSUE

(DISCHARGEABILITY OF STUDENT LOAN DEBT)

BUT NOT ARISING FROM FEDERAL LAW 

(CREDITOR'S BREACH OF NOTE CLAIM) 

(2006)

Access Group, Inc.
v.
Daniel C. Frederico.

Civil No. 06-cv-275-JD.

United States District Court, D. New Hampshire.

October 5, 2006.

ORDER

JOSEPH DiCLERICO JR., District Judge.

On February 24, 2006, Access Group, Inc., commenced an action against Daniel Frederico in Rochester, New Hampshire, district court by serving him with a summons alleging that he had defaulted on an Access Group student loan. In a subsequent petition to the state court, Access Group requested permission to attach $8,665.90 of Frederico's assets. Frederico filed a motion to dismiss, asserting that Access Group's lawsuit was time-barred and that the state court lacked jurisdiction to hear the case. Following a hearing on April 24, the state court denied the motion to dismiss and granted the petition to attach. On July 25, Frederico, acting pro se,^[1] filed a notice of removal asserting federal question jurisdiction. See 28 U.S.C. § 1331. Access Group now moves to remand to the state court, arguing that Frederico's notice of removal was untimely and fails to specify any "federal question" for this court. Access Group also moves to strike the answer and counterclaim Frederico filed with this court, and requests an award of the attorney fees and costs incurred as a result of the removal of this case.

A defendant may remove a state court civil action to a federal court, sitting in the district and division embracing the place where the state action is pending, so long as the federal court has original jurisdiction. 28 U.S.C. § 1441(a). In cases where diversity of citizenship jurisdiction is lacking, a defendant may remove if one of the plaintiff's claims arises under federal law. Id. § 1331 ("The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States."); id. § 1441(b) (providing that state cases involving a federal question may be removed to federal court). A case arises under federal law if the plaintiff's "well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law." Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 27-28 (1983); see also Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808 (1986); Roselló-Gonzáles v. Calderón-Serra, 398 F.3d 1, 10-11 (1st Cir.2004).

To remove such a proceeding, the defendant must file a notice of removal within 30 days of receiving the initial pleading setting forth the federal cause of action. 28 U.S.C. § 1446(b). If the initial pleading does not allege a removable cause of action, the defendant may file a notice of removal within 30 days of receiving "a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable." Id.; see also Caterpillar Inc. v. Lewis, 519 U.S. 61, 68-69 (1996) ("In a case not originally removable, a defendant who receives a pleading or other paper indicating the post commencement satisfaction of federal jurisdictional requirements ... may remove the case to federal court within 30 days of receiving such information.").

The obvious federal issue in this case is the question of whether Frederico's debt was discharged in bankruptcy proceedings. According to an affidavit filed by Frederico, a bankruptcy court in Chapter 7 proceedings granted him a full discharge of his debts in 2001. Access Group had anticipated this defense. In its state court summons, Access Group asserted that Frederico had failed to file a dischargeability complaint with the bankruptcy court with respect to the Access Group loan, and, in any event, that the Access Group loan is a non-dischargeable debt. See O'Brien v. First Marblehead Educ. Res., 419 F.3d 104, 106 (2d Cir.2005) (holding that student loan was non-dischargeable because it was funded in part by a governmental or non-profit institution). Had Frederico timely filed a notice of removal upon service of the summons, he could have argued that, although Access Group did not directly allege a cause of action "arising under" federal law, Access Group's right to relief turns on the resolution of a substantial question of federal law — the dischargeability of Frederico's debt under bankruptcy law. See Roselló-Gonzáles, 398 F.3d at 10-13; Templeton Bd. of Sewer Comm'rs v. Am. Tissue Mills of Mass., Inc., 352 F.3d 33, 36 (1st Cir.2003).^[2] But, because Frederico's notice of removal was filed five months after he received the summons, which explicitly put him on notice of the federal issue, that argument is no longer available.

Frederico attempts to maneuver around the lateness of his notice of removal by claiming that he was unaware of any federal question until he was served with the promissory note from which Access Group's lawsuit arises. He claims that the federal question springs, not from the bankruptcy issue, but from the terms of the promissory note itself, providing that "the provisions of this promissory note will be governed by federal laws and the laws of the state of Ohio." He claims that his notice of removal was timely because he was not served with the promissory note until June 25, 2006.

Frederico's argument is frivolous as a matter of both fact and law. As a factual matter, Frederico himself, at the April 24 hearing, cited the promissory note's choice-of-law provision in support of his argument that the state court lacked jurisdiction. Thus, Frederico possessed the promissory note, and was aware of its choice-of-law provision, well before June 25.

Frederico attempts to blunt the force of this logic by arguing that his possession of the promissory note at the April 24 hearing should not be considered a receipt of "other paper," triggering the 30-day removal clock. See 28 U.S.C. § 1446(b). He argues that, at that time, the promissory note was merely Access Group's unsworn exhibit. The case did not become removable, he contends, until he was formally served with Access Group's request for admissions and answers to interrogatories, both of which attached the promissory note.

Although federal courts have found a wide variety of material to constitute "other paper" for the purposes of § 1446(b), see Parker v. County of Oxford, 224 F. Supp. 2d 292, 294 (D. Me. 2002) (collecting examples, including, inter alia, affidavits, correspondence between parties, answers to interrogatories, and documents produced in discovery), the case law does not reveal a categorical bright-line rule. Compare, e.g., Huffman v. Saul Holdings Ltd. Partnership, 194 F.3d 1072, 1078-79 (10th Cir.1999) (plaintiff's "voluntary and unequivocal" deposition testimony constituted "other paper"), with Karambelas v. Hughes Aircraft Co., 992 F.2d 971, 974-75 (9th Cir.1993) (plaintiff's "speculative" deposition answers did not). See also 14C Charles Alan Wright, et al., Federal Practice and Procedure § 3732 at 300 (3d ed. 1998) ("[T]he courts are not always consistent in their treatment of Section 1446(b)."). But the critical question in any case is whether the material, voluntarily produced by the plaintiff, unequivocally establishes federal jurisdiction. See Huffman, 194 F.3d at 1078.

Here, if the court were to accept Frederico's legal premise for federal jurisdiction, which, as explained below, it does not, the promissory note itself would be conclusive. The aim of the removal statute is to make certain "that a defendant has an opportunity to assert the congressionally bestowed right to remove upon being given notice in the course of the case that the right exists." Id. (quoting Wright, supra at 306). The record here demonstrates that Frederico had "ascertained" his theory for federal jurisdiction no later than the April 24 hearing. 28 U.S.C. § 1446(b) (providing that the defendant's receipt can be accomplished "through service or otherwise"). Thus, his notice of removal was untimely.

Moreover, as a legal matter, while the promissory note's choice-of-law provision refers to federal law, neither the note, nor Frederico's opposition papers, point to any specific federal law or right that requires this court's consideration. See Templeton, 352 F.3d at 37 ("[A] right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action."). The right to a federal forum cannot be created contractually by a choice-of-law provision, cf. Chicago Typographical Union No. 16 v. Chicago Sun-Times, Inc., 935 F.2d 1501, 1504-05 (7th Cir.1991), and principles of federalism prevent this court from interfering in a state proceeding concerning a cause of action traditionally governed by state law. See Merrell Dow, 478 U.S. at 810-11. 

The defendant seeking removal bears the burden of establishing federal jurisdiction. See Danca v. Private Health Care Sys., Inc., 185 F.3d 1, 4 (1st Cir.1999). Frederico has failed to do so here.

Although Access Group styles its request for attorney fees and costs as a Rule 11 motion for sanctions, see Fed. R. Civ. P. 11, the removal statute also includes a fee-shifting provision. See 28 U.S.C. § 1447(c) ("An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal."); Martin v. Franklin Capital Corp., 126 S. Ct. 704, 711 (2005) ("[C]ourts may award attorney's fees under § 1447(c) ... where the removing party lacked an objectively reasonable basis for seeking removal."). 

In light of the court's finding that Frederico's notice of removal was frivolously filed, Access Group is entitled to collect the attorney fees and costs incurred as a result of the removal. See Martin, 126 S. Ct. at 711. To pursue those expenses, Access Group must file a request for costs and fees within twenty days of the date of this order in accordance with Local Rule 54.1. Frederico will then have an opportunity to object. See Local Rule 54.1(c).

Because we grant Access Group's motion to remand, the motion to strike is moot.

Conclusion

For the foregoing reasons, the plaintiff's motion to remand (document no. 5) is granted, and the plaintiff's motion to strike (document no. 9) is denied as moot. The plaintiff's motion for sanctions under Fed. R. Civ. P. 11 (document no. 16) is treated as a motion for attorney fees and costs under 28 U.S.C. § 1447(c), and is granted, provided that Access Group shall file a full accounting of its fees and costs within twenty days of the date of this order. Remand is stayed pending a resolution of the court's order on fees and costs.

SO ORDERED.

[1] Frederico is himself a lawyer practicing in Massachusetts. The student loan at issue in this case was obtained to finance Frederico's law school education.

[2] Because it is unnecessary to the resolution of this case, the court takes no position as to whether Frederico would ultimately have been entitled to a federal forum for consideration of the bankruptcy issue had the issue been raised in a timely notice of removal.