United States District Court, D. South Carolina, Columbia Division
D. Randolph Whitt, Plaintiff,
Seterus, Inc. and Federal National Mortgage Association, Defendants.
ORDER AND OPINION
MARGARET B. SEYMOUR SENIOR UNITED STATES DISTRICT JUDGE.
D. Randolph Whitt filed a lawsuit against his loan servicer,
Defendant Seterus, Inc. and mortgage loan company, Defendant
Federal National Mortgage Associate (“Fannie
Mae”) (hereinafter collectively referred to as
“Defendants”), in Lexington County, South
Carolina. Plaintiff alleges that during the pendency of a
loan modification Defendants pursued a foreclosure action
against Plaintiff's property. Plaintiff asserts causes of
action for a class action, Rule 23, South Carolina Rules of
Civil Procedure (First Cause of Action); Breach of Contract,
Covenant of Good Faith and Fair Dealing (Second Cause of
Action); Civil Conspiracy (Third Cause of Action); violation
of S.C. Code. Ann. § 29-3-630, which requires debt
secured must be established before sale by mortgagee (Fourth
Cause of Action); Dual Tracking (Fifth Cause of Action).
Plaintiff sues for compensatory and punitive damages. ECF No.
1. On July 5, 2017, Defendants removed this action to this
court pursuant to 28 U.S.C. § 1332 on the basis of
diversity jurisdiction. This matter is now before the court
on Defendants' motion to dismiss and motion to strike
class allegations pursuant to Fed.R.Civ.P. 12(b) and 12(f)
filed on July 13, 2017, ECF No. 7, and Plaintiff's motion
to remand filed on July 31, 2017. ECF No. 11.
RELEVANT FACTS AND PROCEDURAL HISTORY
about August 1, 2014, Defendant Fannie Mae brought a
foreclosure action in the Court of Common Pleas, Lexington
County, South Carolina, against Plaintiff based on nonpayment
of a Note. Case No. 2014-CP-32-02795 (hereinafter the
“Foreclosure Action”). Plaintiff subsequently
filed an amended answer and counterclaims in the Foreclosure
Action on or about March 27, 2015, asserting: (1) Breach of
Contract/Breach of the Duty of Good Faith and Fair Dealing;
and (2) Dual Tracking in violation of the Consumer Financial
Protection Bureau.Case No. 2014-CP-32-02795. On December 10,
2015, Defendant Fannie Mae filed a motion for summary
judgment in the Foreclosure Action that was granted on April
29, 2016 by Special Referee Lisa Lee Smith (hereinafter
“Special Referee”). Id.
1, 2016, Plaintiff filed a separate lawsuit against
Defendants in the Court of Common Pleas, Lexington County,
South Carolina. Case No. 2016-CP-32-01960. Defendants
removed the case to federal court on July 5, 2016. Whitt
v. Seterus, Inc., C/A No. 3:16-2422-MBS (hereinafter
“Whitt I”). Plaintiff alleged that Defendant
Seterus, Inc., acting as a loan servicer and agent for
Defendant Fannie Mae, offered a modification of the mortgage
loan on February 18, 2016, during the pendency of the
foreclosure suit. ECF No. 1-1 at 5. Plaintiff further alleged
that he was denied a loan modification on May 9, 2016, and
that between February 18, 2016 and May 9, 2016,
“Defendants (i) scheduled a foreclosure hearing, (ii)
attended a foreclosure hearing and presented evidence, (iii)
submitted a judgment of foreclosure, (iv) filed a judgment
for foreclosure after signature by the judge, and (v)
scheduled a foreclosure sale.” Id. Plaintiff
also alleged that Defendants held a foreclosure hearing
without proper notice to Plaintiff. Id.
to Plaintiff, “the pursuit of the foreclosure during
the pendency of the loan modification was prima
facie evidence of improper ‘dual tracking' by
Defendants.” Id. at 5. Plaintiff also argued
that Defendants participated in the conduct set forth in the
complaint with other residents in South Carolina.
Id. at 6. As a result, Plaintiff alleged that the
proposed class action would be composed of “all persons
(i) whose properties were foreclosed upon, during the
pendency of Defendants' sham Loan Modification offers,
while the defendants were pursuing a Foreclosure action, and
persons (ii) who received improper Notice of Foreclosure
March 16, 2017, this court issued an order dismissing
Plaintiff's complaint based on the Younger abstention
doctrine. Whitt I, ECF No. 33 at 5. The court found
that Plaintiff's Foreclosure Action was an ongoing state
proceeding and noted that foreclosure actions call into
question important state issues, where state courts serve as
the best venue for adjudication. Id. at 5-6. As a
result, Defendants' motion to dismiss was granted without
prejudice and Defendants' motion to strike class
allegations was denied as moot. Id.
Special Referee issued an order in the Foreclosure Action on
April 10, 2017, granting in part and denying in part Fannie
Mae's motion for summary judgment. 2014-CP-32-02795,
Order Regarding Motion for Summary Judgment. A hearing was
scheduled for June 6, 2017, as to the remaining issues in
dispute, but was adjourned by mutual consent for 60 days. The
instant action was commenced in state court on June 1, 2017
and was removed by Defendants to this court on July 5,
2017. Whitt v. Seterus, Inc., C/A No.
3:17-1753-MBS (hereinafter the “Whitt II”), ECF
13, 2017, Defendants filed a motion to dismiss for failure to
state a claim and a motion to strike class allegations. ECF
No. 7. Defendants argue that the court should again rely on
the abstention doctrine to dismiss Plaintiff's complaint.
ECF No. 7-1 at 4. Defendants assert that the Foreclosure
Action is still pending in state court and trial was
scheduled for August 2017. Id. With respect to the
class action, Defendants argue that Plaintiff's proposed
class does not meet the requirements of Fed.R.Civ.P. 23(a)
and further contend that the “proposed class is not
ascertainable under any circumstances, and must be
dismissed.” ECF No. 7-1 at 10. In response, Plaintiff
argues that Defendants' motions have been ruled on by the
court's prior order and therefore are barred by the
doctrine of res judicata. ECF No. 10. Defendants filed a
reply alleging that Plaintiff incorrectly applied the res
judicata doctrine to the removal process. ECF No. 12 at 2.
31, 2017, Plaintiff filed a motion to remand, contending that
Defendants are barred by the doctrine of res judicata and
cannot bring the action to federal court. ECF No. 11 at 2.
Plaintiff argues that the issue of federal jurisdiction has
been “conclusively and finally determined” and
thus the court cannot re-litigate this question. Id.
On August 14, 2017, Defendants filed a reply requesting that
the court reach the merits of Plaintiff's complaint and
dismiss with prejudice. ECF No. 14 at 8.
courts are courts of limited jurisdiction. Kokkonen v.
Guardian Life Ins. Co. of America, 511 U.S. 375, 377
(1994). A defendant is permitted to remove a case to federal
court if the court would have had original jurisdiction over
the matter. 28 U.S.C. § 1441(a). A federal court has
“original jurisdiction of all civil actions where the
matter in controversy exceeds the sum or the value of $75,
000 and is between citizens of different states.” 28
U.S.C. § 1332(a). In cases in which the district
court's jurisdiction is based on diversity of
citizenship, the burden of establishing federal jurisdiction
rests upon the party seeking removal. Strawn v. AT&T
Mobility LLC, 530 F.3d 293, 298 (4th Cir. 2008) (holding
that in removing cases based on diversity jurisdiction, the
party invoking federal jurisdiction must allege same in their
notice of removal and when challenged demonstrate basis for
jurisdiction); Mulcahey v. Columbia Organic Chem. Co.
Inc., 29 F.3d 148, 151 (4th Cir. 1994) (holding that the
burden is on the removing defendant to establish subject
matter jurisdiction). “Because courts are forums of
limited jurisdiction, any doubt as to whether a case belongs
in federal or state court should be resolved in favor of
state court.” Messex v. Quicken Loans, Inc.,
C/A No. 2:15-cv-04773-JMC, 2016 WL 3597597, at *2 (D.S.C.
July 5, 2016); See also Mulcahey, 29 F.3d at 151
(holding that “if federal jurisdiction is doubtful, a
remand is necessary”).