Case: 12-12557 Date Filed: 08/16/2013 Page: 1 of 9
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 12-12557
Non-Argument Calendar
________________________
D.C. Docket No. 1:11-cv-04382-TWT
MOHAMMED RAFIQUE ULLAH,
SHIRIN AKHTER,
Plaintiffs-Appellants,
versus
BAC HOME LOANS SERVICING LP,
f.k.a. Countrywide Home Loan Servicing, LP,
MERSCORP INC.,
MORTGAGE ELECTRONIC REGISTRATION
SYSTEMS, INC. (MERS),
BANK OF AMERICA, NA,
MCCALLA RAYMER, LLC,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(August 16, 2013)
Case: 12-12557 Date Filed: 08/16/2013 Page: 2 of 9
Before TJOFLAT, MARCUS and PRYOR, Circuit Judges.
PER CURIAM:
Mohammed Rafique Ullah and Shirin Akhter (the “Ullahs”), husband and
wife proceeding pro se, appeal the district court’s grant of motions to dismiss their
complaint. The Ullahs filed suit in Georgia state court against BAC Home Loan
Servicing, LP (“BAC”), Merscorp, Inc. and its wholly owned subsidiary Mortgage
Electronic Registration System, Inc. (“MERS”), Bank of America, N.A. (“BOA”),
and McCalla Raymer, LLC (“McCalla”), alleging breach of contract, breach of the
duty of good faith and fair dealing, fraud, fraudulent conspiracy, negligent
commencement of foreclosure proceedings, violation of the Georgia Fair Business
Practices Act (“GFBPA”), wrongful foreclosure, and conversion. On appeal, the
Ullahs argue that the district court lacked subject matter jurisdiction and should
have granted their motion to remand to state court because the defendants failed to
prove by clear and convincing evidence that McCalla, a non-diverse defendant,
was fraudulently joined. After careful review, we vacate and remand.
The background is this. The Ullahs obtained a residential mortgage loan by
executing a mortgage note and security deed. The security deed named MERS as
the grantor, and MERS assigned the deed to BOA. The Ullahs defaulted on their
mortgage, and BOA, through its wholly owned subsidiary BAC, commenced
foreclosure proceedings. BOA and BAC retained McCalla to serve as foreclosure
2
Case: 12-12557 Date Filed: 08/16/2013 Page: 3 of 9
counsel. McCalla sent the Ullahs a notice of foreclosure sale informing them of
their rights and notifying them of various fees which they could be required to pay.
Before the foreclosure sale could proceed, the Ullahs filed this action in state
court. Merscorp, MERS, BOA, and BAC (collectively, the “bank entities”), with
McCalla’s consent, removed the case to the U.S. District Court for the Northern
District of Georgia based on diversity jurisdiction. The bank entities and McCalla
admitted that the Ullahs and McCalla were all residents of Georgia for the
purposes of determining diversity jurisdiction, but they said that McCalla was
merely a nominal defendant whose presence did not count for diversity purposes.
In the district court, the bank entities and McCalla moved to dismiss the complaint
for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Instead
of responding to the motions to dismiss, the Ullahs filed a motion to remand the
case back to state court based on a lack of diversity jurisdiction. The district court
granted the bank entities’ and McCalla’s motions and dismissed the case without
addressing the Ullahs’s motion to remand. This timely appeal follows.
We review issues of federal subject matter jurisdiction de novo. Bender v.
Mazda Motor Corp., 657 F.3d 1200, 1202 (11th Cir. 2011). An appellate court
“must satisfy itself not only of its own jurisdiction, but also of that of the lower
courts in a cause under review.” Bochese v. Town of Ponce Inlet, 405 F.3d 964,
975 (11th Cir. 2005) (quotation omitted). “When a case is removed based on
3
Case: 12-12557 Date Filed: 08/16/2013 Page: 4 of 9
diversity jurisdiction, . . . the case must be remanded to state court if there is not
complete diversity between the parties.” Stillwell v. Allstate Ins. Co., 663 F.3d
1329, 1332 (11th Cir. 2011). “However, when a plaintiff names a non-diverse
defendant solely in order to defeat federal diversity jurisdiction, the district court
must ignore the presence of the non-diverse defendant and deny any motion to
remand the matter back to state court.” Id. (quotation and brackets omitted). Such
pleading constitutes “fraudulent joinder” of the non-diverse defendant. Id.
To establish fraudulent joinder of the non-diverse defendant, the removing
party must satisfy a “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 resident defendant; or (2) the plaintiff has fraudulently pled
jurisdictional facts to bring the resident defendant into state court.” Id. (quotation
omitted). The standard for evaluating whether the plaintiff can establish a cause of
action against the resident defendant is very lenient: “federal courts are not to
weigh the merits of a plaintiff’s claim beyond determining whether it is an
arguable one under state law.” Id. at 1333 (quotation omitted). “If there is even a
possibility that a state court would find that the complaint states a cause of action
against any one of the resident defendants, the federal court must find that the
joinder was proper and remand the case to the state court.” Id. (quotation omitted).
4
Case: 12-12557 Date Filed: 08/16/2013 Page: 5 of 9
“[W]e must necessarily look to the pleading standards applicable in state
court, not the plausibility pleading standards prevailing in federal court.” Id. at
1334. The pleading standard in Georgia is lower than the standard applicable to a
motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). See id. at 1334
n.3 (“Georgia has not chosen to adopt the heightened pleading requirements
imposed on federal plaintiffs . . . .”). Under Georgia law, fair notice of the nature
of the claim is all that is required, and the elements of most claims can be pled in
general terms. Bush v. Bank of N.Y. Mellon, 720 S.E.2d 370, 374 (Ga. App.
2011). Pleading conclusions, rather than facts, may be sufficient to state a claim
for relief. Stillwell, 663 F.3d at 1334; see Ledford v. Meyer, 290 S.E.2d 908, 909-
10 (Ga. 1982) (holding that under the notice theory of pleading adopted in Georgia
“it is immaterial whether a pleading states ‘conclusions’ or ‘facts’ as long as fair
notice is given”). Moreover, even when a plaintiff fails to conform to these
requirements, the proper remedy is not a dismissal or judgment on the pleadings,
but to allow the plaintiff to amend the complaint and provide a more definite
statement unless the complaint’s allegations “disclose with certainty that no set of
facts consistent with the allegations could be proved that would entitle the plaintiff
to the relief he seeks.” Bush, 720 S.E.2d at 374 (quotation omitted).
In Henderson v. Washington National Insurance Co., 454 F.3d 1278, 1283
(11th Cir. 2006), we considered a motion to remand to state court. The case turned
5
Case: 12-12557 Date Filed: 08/16/2013 Page: 6 of 9
on whether the defendants had shown by clear and convincing evidence that there
was no possibility the plaintiff could establish a cause of action for fraud against
the non-diverse defendant under Alabama law because the complaint failed to
establish that the plaintiff was entitled to tolling of the statute of limitations. We
stated that “the precise contours of the pleading requirements are not dispositive.”
Id. The plaintiff in Henderson alleged generally that the defendants engaged in
fraud by concealing the nature of a group insurance policy purchased by the
plaintiff and that “the fraud and other wrongs perpetrated upon Plaintiff were of a
continuing nature.” Id. at 1280, 1284. We noted that this general assertion fell
short of Alabama’s pleading requirements, but looked to other parts of the
complaint which contained a more detailed description of the events. Id. at 1284.
We stated that our “task is not to gauge the sufficiency of the pleadings in this
case.” Id. The “inquiry is more basic: we must decide whether the defendants
have proven by clear and convincing evidence that no Alabama court could find
this complaint sufficient.” Id. We held that statements in the complaint, although
not referring to the non-diverse defendant specifically, set forth allegations which
provided at least some notice of the claim such that, although the “patchy
allegations” might ultimately prove insufficient, we were “unable to say there is no
possibility [the plaintiff] has asserted a colorable claim.” Id.
6
Case: 12-12557 Date Filed: 08/16/2013 Page: 7 of 9
The Georgia Supreme Court’s recent decision in You v. JP Morgan Chase
Bank, N.A., No. S13Q0040, 2013 WL 2152562 (Ga. May 20, 2013), clarified two
issues certified to the Georgia Supreme Court by the U.S. District Court for the
Northern District of Georgia. Id. at *1. First, the holder of a security deed
possesses full authority to exercise the power of sale and foreclose after the
debtor’s default, regardless of whether the holder also possesses the mortgage note
or otherwise has a beneficial interest in the debt obligation underlying the security
deed. Id. at *6. Second, the notice provided to the debtor need only identify “the
individual or entity who shall have full authority to negotiate, amend, and modify
all terms of the mortgage with the debtor,” and, thus, the notice does not need to
identify the secured creditor unless the secured creditor happens to be the party
with such authority. Id. (quotation omitted). However, the Georgia Supreme
Court specifically declined to reach the issue of whether permitting both the holder
of the mortgage note and the holder of the security deed to foreclose would expose
the debtor to double liability. Id. at *5.
In this case, the district court lacked subject matter jurisdiction. As McCalla
and the bank entities admit, the Ullahs and McCalla are all residents of Georgia for
purposes of diversity jurisdiction. The bank entities bore the burden of proving
that McCalla was fraudulently joined by establishing there was no possibility a
Georgia state court would find that the complaint stated a cause of action against
7
Case: 12-12557 Date Filed: 08/16/2013 Page: 8 of 9
McCalla. The specific allegation against McCalla in the complaint provided that
McCalla aided and abetted the bank entities by communicating false
representations, and the bank entities argue that the Ullas failed to allege certain
elements of fraud. But in reviewing a claim of fraudulent joinder, the precise
pleading requirements of state law are not dispositive. See Henderson, 454 F.3d at
1284 (declining to reach the question of whether the plaintiff adequately pled state
law fraud because “the decision as to the sufficiency of the pleadings is for the
state courts”). Moreover, under Georgia law, the appropriate remedy for failure to
satisfy the pleading standards is not dismissal. See Bush, 720 S.E.2d at 374.
Although the complaint did not specifically refer to McCalla throughout,
more detailed allegations can be gleaned from other portions of the complaint. The
allegations are these. MERS arranged with law firms, like McCalla’s, for flat fees
to be charged as attorneys’ fees. MERS allowed its attorneys and loan servicers to
collect fees in excess of these flat rates. Other additional fees charged by MERS
also could not be verified but were likely to be in excess of expenses actually
incurred. MERS utilized the services of law firms like McCalla’s, acting as
MERS’s agents, to prosecute borrowers who fell behind on their payments, and
either the law firm or MERS would enter a demand for payment of fees and
expenses. The notice of sale, which was sent by McCalla, concealed the true
owner of the security deed in an attempt to collect fees from the Ullahs and stop
8
Case: 12-12557 Date Filed: 08/16/2013 Page: 9 of 9
them from preventing foreclosure. These proceedings caused them economic loss,
emotional distress, embarrassment, humiliation, and pain and suffering.
The bank entities and McCalla failed to meet their heavy burden to show by
clear and convincing evidence that based on these statements there was no
possibility that a Georgia state court could find that the Ullahs adequately pleaded
a cause of action for fraud against McCalla. The Ullahs alleged that the bank
entities, through McCalla, charged them attorneys’ fees and other fees above the
amounts permitted by the terms of the mortgage note. They alleged that they have
in fact paid these fees. They noted that they now face the possibility of double
liability should the owner of the mortgage note demand payment from them. The
Ullahs presented most of these allegations through conclusory statements, but,
under Georgia law, conclusory statements can sufficiently state a cause of action.
See Stillwell, 663 F.3d at 1334; Ledford, 290 S.E.2d at 909-10. Accordingly, the
district court lacked subject matter jurisdiction and, therefore, we vacate the district
court’s grant of the motions to dismiss and remand the case to the district court
with instructions to remand the case to the Gwinnett County Superior Court.
VACATED AND REMANDED.
9