Carey Crespo v. Coldwell Banker Mortgage

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
_________________________
No. 13-11325
Non-Argument Calendar
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D.C Docket No. 2:12-cv-00211-RWS
CAREY CRESPO, et. al.,
Plaintiffs-Appellants,
versus
COLDWELL BANKER MORTGAGE, et. al.,
Defendants-Appellees.
_________________________
Appeal from the United States District Court
for the Northern District of Georgia
_________________________
(December 23, 2014)
Before TJOFLAT, JORDAN, and FAY, Circuit Judges.
PER CURIAM:
Carey and Beverly Crespo, proceeding pro se, appeal the district court’s
dismissal of their complaint, which alleged that PHH Mortgage Corporation,
Coldwell Banker Mortgage, the Mortgage Electronic Registration Systems, Inc.,
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and McCalla Raymer LLC, engaged in mortgage and foreclosure fraud and lacked
standing to initiate foreclosure proceedings. After reviewing the record and the
parties’ briefs, we affirm.
I
In September of 2009, the Crespos obtained a loan in the amount of
$417,000 from Coldwell to purchase their home in Georgia. To secure the loan,
the Crepos executed a security deed in favor of MERS as grantee/nominee for
Coldwell. On November 21, 2011, MERS, on behalf of Coldwell, assigned the
security deed to PHH. Subsequently, the Crespos defaulted on the loan and the
defendants commenced non-judicial foreclosure proceedings against the property.
On July 26, 2012, the Crespos filed their complaint in the Superior Court of
Hall County, Georgia, seeking to temporarily and permanently enjoin the non-
judicial foreclosure sale that was scheduled for August 7, 2012. They alleged that
foreclosure was improper because the defendants could not produce the original
note or any other documents evidencing a legal interest in the property.
Additionally, the Crepos challenged the validity of the assignment of the security
deed from MERS to PHH. The Crespos were not successful in stopping the
foreclosure and PHH sold the property at foreclosure to Georgia United Credit
Union on August 7, 2012.
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On September 5, 2012, the defendants removed the state court action to the
District Court for the Northern District of Georgia on the basis of diversity, despite
the fact that one of the defendants, McCalla, was a citizen of Georgia. The
defendants urged the district court to ignore McCalla’s citizenship for purposes of
diversity, arguing that McCalla was improperly and fraudulently joined as a party
by the Crespos. The defendants then moved to dismiss the Crespos’ complaint for
failure to state a claim.
The Crespos did not respond to any of the defendants’ arguments. Instead,
they filed several motions and documents, including (1) a motion for the district
court to find the defendants’ motion to dismiss moot due to a proposed first
amended complaint; (2) a motion to add GUCU as an indispensable party; (3) a
proposed first amended complaint; and (4) a motion for leave to file a first
amended complaint and to add defendants.
The district court denied the Crespos’ motions and granted the defendants’
motion to dismiss, ruling that lenders are not required to produce a note to
commence foreclosure proceedings under Georgia law. The district court further
held that the Crespos lacked standing to challenge the validity of the assignment of
the security deed from MERS to PHH and dismissed the Crespos’ fraud claim
because the allegations in the complaint failed to satisfy the particularity
requirement of Rules 8 and 9 of the Federal Rules of Civil Procedure. Finally, the
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district court denied the Crespos’ requests for injunctive and declaratory relief and
release of a defective lien because the bases for such relief—lack of standing and
fraud—were insufficient to state a viable claim.
The Crespos timely appealed the district court’s order. In addition to
contesting the district court’s bases for dismissal, the Crespos challenge, for the
first time, the district court’s subject-matter jurisdiction and request that we
remand the case to the district court for a determination of subject-matter
jurisdiction.
II
A
We review the district court’s subject-matter jurisdiction de novo. See
Henson v. Ciba-Geigy Corp., 261 F.3d 1065, 1068 (11th Cir. 2001). “Even if no
party raises the issue, we are obligated to address the district court’s jurisdiction to
issue a ruling we are reviewing on appeal.” United States v. Diveroli, 729 F.3d
1339, 1341 (11th Cir. 2013) (quoting United States v. Dunham, 240 F.3d 1328,
1329 (11th Cir.2001)). We deny the Crespos’ motion to remand because, as we
explain, the district court had subject-matter jurisdiction.
B
The Crespos contend that removal to federal district court was improper
because both they and McCalla are citizens of Georgia, thereby destroying
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complete diversity. In support of their claim, the Crespos request that we take
judicial notice of McCalla’s corporate filings in Georgia, which they say prove
McCalla’s citizenship. The defendants contend that McCalla should be ignored for
purposes of diversity jurisdiction because it was fraudulently joined.
A state action may be removed to federal court based on diversity
jurisdiction if complete diversity exists between the parties and if none of the
defendants is a citizen of the state in which the suit is filed. See 28 U.S.C. § 1441;
Stillwell v. Allstate Ins. Co., 663 F.3d 1329, 1332 (11th Cir. 2011). If the plaintiff,
however, “names a non-diverse defendant solely in order to defeat diversity
jurisdiction [or, in other words, fraudulently joins a defendant], the district court
must ignore the presence of the non-diverse defendant . . . .” Id.
To establish fraudulent joinder, the removing party or parties must satisfy
the heavy burden of proving by clear and convincing evidence that either: “(1)
there is no possibility the plaintiff can establish a cause of action against the
defendant; or (2) the plaintiff has fraudulently pled jurisdictional facts to bring the
resident defendant into state court.” Id. (quoting Crowe v. Coleman, 113 F.3d
1536, 1538 (11th Cir.1997)). Plaintiffs like the Crespos “need not have a winning
case against the allegedly fraudulent defendant, [but only the] possibility of stating
a valid cause of action in order for the joinder to be legitimate.” Id. at 1333
(citation omitted).
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This Court may not take judicial notice of facts if the facts in question are
subject to reasonable dispute. See Shahar v. Bowers, 120 F.3d 211, 214 (11th Cir.
1997). McCalla’s citizenship cannot be readily ascertained from corporate filings
that show the state in which the law firm was formed because McCalla is a limited
liability company and, unlike a corporation, such an entity is a “citizen of any state
of which a member of the company is a citizen.” Rolling Greens MHP, L.P. v.
Comcast SCH Holdings LLC, 374 F.3d 1020, 1022 (11th Cir. 2004).
Even if we were to assume that McCalla is a Georgia citizen, as the Crespos
ask us to do, we agree with the defendants that McCalla was fraudulently joined.
Although McCalla is named as a party in the complaint, there are no allegations
specifically related to McCalla. Nevertheless, “[w]hen multiple defendants are
named in a complaint, the allegations can be and usually are to be read in such a
way that each defendant is having the allegation made about him individually.”
Crowe v. Coleman, 113 F.3d 1536, 1539 (11th Cir. 1997). Thus, we read the
Crepos’ complaint as challenging McCalla’s standing—as agent for Coldwell and
PHH—to foreclose on the property and alleging that the law firm engaged in
mortgage and foreclosure fraud. The complaint sought several forms of relief,
including (1) release of a defective lien (2) injunctive relief to prevent the
foreclosure sale; and (3) declaratory relief. Under Georgia law, none of the
Crespos’ allegations can establish a claim against McCalla.
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The complaint alleged that McCalla had “no legal or equitable rights in the
Note or Mortgage for purposes of foreclosure and that said Defendant[s] ha[d] no
legal standing to institute or maintain foreclosure on the property.” DE 1-1 at ¶ 13.
The Crespos claimed that McCalla was required to “produce the original signed
wet ink copy of the original Note or that Coldwell Banker Mortgage [must be]
named as a payee in the Note” in order to have authority to foreclose on the
property. DE 1-1 at ¶ 18.
As the district court correctly found, the Crespos’ “produce the note” theory
fails to state a claim under Georgia law. In Georgia, lenders are not required “to
produce the original promissory note, even when the lender is taking affirmative
actions such as commencing foreclosure proceedings.” Montoya v. Branch
Banking & Trust Co., No. 1:11-CV-01869-RWS, 2012 WL 826993, at *5 (N.D.
Ga. Mar. 9, 2012). Possession of a valid security deed is sufficient “to exercise the
power of sale in accordance with the terms of the deed even if [the lender] does not
hold the note or otherwise have any beneficial interest in the debt obligation
underlying the deed.” You v. JP Morgan Chase Bank, 743 S.E.2d 428, 433 (Ga.
2013). Hence, as long as McCalla, as the lenders’ agent, possessed a valid
security deed, it had full power to foreclose upon the property.
To further support their argument that McCalla lacked standing to seek
foreclosure, the Crespos asserted that McCalla “failed to demonstrate any valid
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assignment of either the Mortgage or the Note, and [is] thus legally precluded from
instituting or maintaining a foreclosure.” DE 1-1 at ¶ 18. McCalla, however,
produced an “Assignment of Mortgage/Deed of Trust,” which shows that MERS,
as nominee for Coldwell, conveyed the security deed to PHH. The Assignment
belies any claim that the security deed was not assigned to PHH. 1
To the extent that the Crespos challenge the validity of the assignment, they
are third parties to that contract and, therefore, lack standing to challenge it. See
Breus v. McGriff, 413 S.E.2d 538, 539 (Ga. Ct. App. 1991) (holding that a litigant
who was not a party to an assignment contract is a stranger to that contract and
lacks standing to challenge it.) Thus, the Crespos’ claim that McCalla lacked the
authority to commence foreclosure proceedings fails as a matter of law.
The Crespos’ second allegation is that McCalla engaged in fraud by using
“deceptive trade practices . . . as part of a banking scheme to dupe the petitioner
into an unconscionable contract without disclosure as to the true nature of the
transaction or to the true intentions of the Defendant.” DE 1-1 at ¶ 3. This claim,
1
Generally, in determining whether a plaintiff has pled a valid cause of action, we are
required to consider only the four corners of the complaint. “However, where the plaintiff refers
to certain documents in the complaint and those documents are central to the plaintiff's claim,
then the Court may consider the documents part of the pleadings for purposes of Rule 12(b)(6)
dismissal, and the defendant's attaching such documents to the motion to dismiss will not require
conversion of the motion into a motion for summary judgment.” Brooks v. Blue Cross & Blue
Shield of Florida, Inc., 116 F.3d 1364, 1369 (11th Cir. 1997). In determining whether the
Crespos could have possibly stated a claim against McCalla, we, therefore, may consider the
security deed.
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however, is insufficient to establish a cause of action for fraud. When alleging
fraud, “a party must state with particularity the circumstances constituting fraud.”
Fed. R. Civ. P. 9(b). We have held that this requirement may be satisfied when the
plaintiff sets forth:
(1) precisely what statements were made in what documents or oral
representations or what omissions were made, and, (2) the time and
place of each such statement and the person responsible for making
(or in the case of omissions, not making) same, and (3) the content of
each such statement and the manner in which they misled the plaintiff,
and (4) what the defendants obtained as a consequence of the fraud.
Brooks, 116 F.3d at 1371 (citation omitted). The Crespos’ complaint contains no
such allegations. As a result, their fraud claim necessarily fails. 2
Finally, in their complaint, the Crespos sought temporary and permanent
injunctions to prevent the foreclosure sale, declaratory relief based on their lack of
standing theory, and the release of a “defective lien.” To obtain a permanent or
preliminary injunction, the Crespos must show either a likelihood of, or actual,
success on the merits. See Siegle v. LePore, 234 F.3d 1163, 1213 (11th Cir. 2000)
(“The standard for a permanent injunction is essentially the same as for a
preliminary injunction except that the plaintiff must show actual success on the
merits instead of a likelihood of success.”). The Crespos had no chance of success
2
Although we apply state substantive law for purposes of the fraudulent joinder rule, we
must read the complaint through “Federal, not [Georgia], lenses.” Bobby Jones Garden
Apartments, Inc. v. Suleski, 391 F.2d 172, 177 (5th Cir. 1968).
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on the merits because the allegations in the complaint were insufficient to state a
valid claim.
Likewise, the Crespos could not obtain declaratory relief because the
allegations in the complaint do not reflect an actual controversy between the
parties. “For a controversy to exist, the facts alleged, under all the circumstances
must show there is a substantial controversy between the parties having adverse
legal interests of sufficient immediacy and reality to warrant the issue of a
declaratory judgment.” Atl. Gas Light Co. v. Aetna Cas. & Sur. Co., 68 F.3d 409,
414 (11th Cir. 1995). “Because we hold that … [the Crespos have no] valid cause
of action . . . , [they could not have] presented the court with a ‘case’ or
‘controversy’ . . . .” Ortega v. Bibb Cnty. Sch. v Dist., 397 F.3d 1321, 1325 (11th
Cir. 2005). Moreover, the Crespos’ request to enjoin the foreclosure sale is moot
because the property was sold at foreclosure on August 7, 2012. Therefore, an
injunction may not issue.
The Crespos’ request for release of a defective lien is based on McCalla’s
alleged failure to possess the mortgage note. As we noted earlier, however, this is
an invalid claim under Georgia law and cannot be the basis for relief.
The Crespos, in sum, could not possibly have established a valid cause of
action against McCalla on this record. Accordingly, we find that McCalla was
fraudulently joined and that the district court had subject-matter jurisdiction.
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III
We review de novo a district court’s ruling on a Rule 12(b)(6) motion to
dismiss for failure to state a claim. Hill v. White, 321 F.3d 1334, 1335 (11th Cir.
2003). We view the complaint in the light most favorable to the plaintiffs, and all
of the well-pled factual allegations are accepted as true. Am. United Life Ins. Co.
v. Martinez, 480F.3d 1043, 1057 (11th Cir. 2007). To survive a motion to dismiss
a plaintiff must provide “more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do . . . .” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). “Pro se pleadings are held to a less stringent
standard than pleadings drafted by attorneys and will, therefore, be liberally
construed.” Tannenbaum v. United States, 148 F.3d 1262, 1263 (11th Cir. 1998).
As with their fraudulent joinder argument, the defendants argue that the
Crespos’ complaint fails to sufficiently allege a valid cause of action. In response,
the Crepos largely repeat the allegations and claims set forth in their complaint.
For the same reasons the Crespos could not establish a cause of action against
McCalla under the fraudulent joinder rule, we hold that they fail to state a claim
against any of the defendants. As a result, the district court did not err in
dismissing the complaint.
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IV
The Crespos suggest that the district court incorrectly denied their motion
for leave to file an amended complaint and to add defendants, as well as their
motion to disqualify McCalla as the defendants’ counsel. We disagree.
With regards to the ruling on the Crespos’ motion for leave to amend, we
deem any argument abandoned because the Crespos failed to properly address the
issue in their brief. Although we liberally read briefs filed pro se, “issues not
briefed on appeal by a pro se litigant are deemed abandoned.” Timson v. Sampson,
518 F.3d 870, 874 (11th Cir. 2008). The Crespos only briefly referenced the
district court’s denial of their motion for leave to amend in their opening brief and
did not explain how or why the ruling was erroneous. See Appellants’ Br. at 1, 3-
4. This is insufficient. See Greenbriar, Ltd. v. City of Alabaster, 881 F.2d 1570,
1573 n.6 (11th Cir. 1989) (“Although [the plaintiff] refers to the district court’s
dismissal of its amendment in its Statement of the Case in its initial brief, it
elaborates no arguments on the merits as to this issue in its initial or reply brief.
Accordingly, the issue is deemed waived.”).
As for the motion to disqualify McCalla as counsel, the Crespos failed to
timely and properly file a notice of appeal from the district court’s order.
Generally, a “notice of appeal must be filed with the district court within 30 days
after entry of the judgment or order appealed from.” Fed. R. App. P. 4(a)(1)(A)
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(emphasis added). Although notices of appeal should be read expansively, “Rule
3(c) requires that a notice of appeal designate an existent judgment or order, not
one that is merely expected or that is, or should be, within the appellant’s
contemplation when the notice of appeal is filed.” Bogle v. Orange Cnty. Bd. of
Cnty. Comm'rs, 162 F.3d 653, 661 (11th Cir. 1998) (emphasis added). Here, the
Crespos filed their amended notice of appeal on March 26, 2013. The district court
entered its order denying the motion to disqualify McCalla as counsel on
September 11, 2013, more than five months after the notice of appeal was entered.
Because the Crespos did not file a notice of appeal after the district court denied
their motion to disqualify, we lack jurisdiction to address the merits of their
argument on appeal.
V
For the reasons set forth above, we conclude that the district court had
diversity jurisdiction because McCalla—the non-diverse defendant—was
fraudulent joined, and that the district court correctly dismissed the Crespos’
complaint.
AFFIRMED.
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