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Roles v. Bank of America, N.A.

United States District Court, W.D. Arkansas, Fayetteville Division

August 29, 2017

RYAN ROLES PLAINTIFF
v.
BANK OF AMERICA, N.A.; MACKIE WOLF ZIENTZ & MANN, P.C.; TEAVAN STAMATIS; and JOHN DOE DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          TIMOTHY L. BROOKS, UNITED STATES DISTRICT JUDGE.

         On August 22, 2017, the Court held a hearing on two pending motions, followed by an initial case management conference. The parties presented oral argument on a Motion to Dismiss (Doc. 6) jointly filed by Defendant Teavan Stamatis and Defendant Mackie Wolf Zientz & Mann, P.C. ("Mackie Wolf), and a Motion to Dismiss (Doc. 20) filed by Defendant Bank of America, N.A. ("BANA"). The Court ruled on both Motions from the bench, but now issues the following Order to clarify its decision. To the extent anything in this Order differs from what was stated from the bench, this Order will control.

         I. BACKGROUND

         Plaintiff Ryan Roles originally filed this case in the Circuit Court of Washington County, Arkansas, and Defendants removed it to this Court on May 17, 2017. The case concerns a non-judicial foreclosure and public sale of real property formerly owned by Jimmie Lee Roles ("Jimmie"), now deceased. In 2003, before Jimmie passed away, he secured a mortgage on his real property with BANA. After his death, the property passed to his sons, Plaintiff Ryan Roles and non-party Casey Roles. Plaintiff now contends that BANA's foreclosure and sale were unlawful.

         BANA first attempted to foreclose on the mortgage in 2009, prior to Jimmie's death; however, it appears that the foreclosure and sale were never fully consummated. It remains a mystery, for now, as to exactly why the 2009 foreclosure proceedings were halted, but the Complaint suggests it was because Jimmie and BANA negotiated a release of the mortgage. A document entitled "Release of Mortgage" was discovered among Jimmie's personal effects after his death. The Release, which was attached to the Complaint, was dated March 23, 2010, and contained the notarized signature of a BANA officer. See Doc. 3, pp. 53-54. The parties agree, however, that the Release was never filed of record with the County Clerk's Office.

         Several years passed after Jimmie's death, during which time no payments were made on the mortgage. Then, on October 20, 2016, BANA filed with the County a document titled "Amended Mortgagee's Notice of Default and Intention to Sell." Id. at 58-60. This document states that the real property in question was subject to a mortgage held by BANA, and that a default occurred that was never cured. Accordingly, "the indebtedness was accelerated" and rendered "wholly due." Id. at 58. On December 1, 2016, a document titled "Mortgagee's Deed" was filed with the County. See Id. at 73-77. The Mortgagee's Deed indicates that the property was sold at public auction at the front door of the Washington County Courthouse on November 30, 2016. See Id. at 75.

         The Complaint asks the Court to declare invalid the non-judicial sale of the property and find that valid title resides in Ryan and Casey Roles. The Complaint also purports to bring an unspecified cause of action against: (1) the attorney for BANA, Teavan Stamatis, who communicated with Plaintiff's attorney several times regarding the 2016 foreclosure and ultimately filed the foreclosure and sale papers with the Circuit Court on BANA's behalf; and (2) Mackie Wolf, the law firm that employs Stamatis. Interpreting the Complaint as liberally as possible, it attempts to state a claim against Stamatis and Mackie Wolf for the negligent pursuit of this foreclosure action on behalf of BANA, since Plaintiff contends that BANA either released the mortgage in 2010, or, if the release was not valid, waited too long to attempt to collect the debt, and the applicable statute of limitations on debt collection expired prior to the 2016 foreclosure. Finally, the Complaint names one more Defendant in the style, "JOHN DOE (Name unknown of person acting as auctioneer for Non-Judicial Sale of Real Property)." However, the body of the Complaint fails to mention John Doe at all.

         Defendants1 Notice of Removal (Doc. 1) identifies the citizenship of the parties.[1]Both Plaintiff Roles and Defendant Stamatis are citizens of Arkansas; Defendant Mackie Wolf is a citizen of Texas; and Defendant BANA is a citizen of North Carolina. Defendants contend that this Court should make a finding that Stamatis was fraudulently joined in this action, and that his citizenship should be disregarded for purposes of evaluating federal diversity jurisdiction. Defendants further argue that once Stamatis is dismissed and his citizenship disregarded, the Court may exert federal jurisdiction over the claims under 28 U.S.C§ 1332(a).

         Plaintiff did not file a motion to remand to state court, and also did not discuss the issue of fraudulent joinder in any of his briefs. However, Stamatis and Mackie Wolf filed a joint Motion to Dismiss under Rule 12(b)(6), maintaining that no plausible cause of action was stated against them in the Complaint. In reviewing this Motion (Doc. 6) and Brief in Support (Doc. 7), Defendants explain why the claims against them meet the legal standard for dismissal under Rule 12(b)(6), and do not discuss further the issue of Stamatis's fraudulent joinder and the Court's jurisdiction over the case. According to the Motion, the Complaint fails to state a valid cause of action against Stamatis because he is not, and never was, in privity of contract with Plaintiff or the Roles Estate, and he pursued the foreclosure action and sale of the property as part of his duties as counsel for BANA. Stamatis believes that Arkansas law immunizes him from civil liability for performing these professional functions. As for Mackie Wolf, the Motion explains that this Defendant is the employer of Stamatis. As no separate facts are listed in the Complaint as to Mackie Wolfs legal liability, the law firm assumes that it was sued under the doctrine of respondeat superior, to answer for Stamatis's alleged acts of negligence.

         Plaintiff's Response to the Motion to Dismiss (Doc. 22) also fails to mention the issue of fraudulent joinder, but instead addresses Defendants'argument that the Complaint fails to state claims against them under Rule 12(b)(6). Plaintiff believes that Stamatis's actions were not merely negligent, but amount to an intentional tort of some kind that would remove the matter from the ambit of the attorney-immunity statute codified at Ark. Code Ann. 16-22-310(a). The Court questioned Plaintiff's counsel during the hearing as to what facts in the Complaint state a claim for fraud, and counsel's response may be fairly summarized as follows: Because Stamatis pursued the foreclosure action on BANA's behalf, while ignoring Plaintiff's counsel's repeated warnings that the foreclosure was unlawful, Stamatis committed fraud against the Plaintiff.

         BANA also filed a separate Motion to Dismiss (Doc. 20), arguing that Plaintiff should have objected to the foreclosure sale prior to the sale. Now, it is too late to object. The Court tested BANA's argument by posing some questions to BANA's counsel, and in the course of that discussion, counsel admitted that he was not entirely certain whether Plaintiff received actual notice of the 2016 foreclosure, as was required by state law. See Ark. Code Ann. § 18-50-104. Furthermore, BANA admits in its briefing that if "the mortgagor establishes ... a failure to strictly comply with the requirements applicable to statutory foreclosures, " his post-sale objections to the foreclosure may be considered by the Court. (Doc. 21, p. 4). Belowthe Court will address whether Stamatis was fraudulently joined, and then will address Defendants' Motions to Dismiss.

         II. LEGAL STANDARD

         A. Fraudulent Joinder

         "While fraudulent joinder-the filing of a frivolous or otherwise illegitimate claim against a non-diverse defendant solely to prevent removal-is rather easily defined, it is much more difficulty [sic] applied." Filla v. Norfolk S. Ry. Co.,336 F.3d 806, 809 (8th Cir. 2003). District courts have employed varying standards to evaluate whether valid claims exist against a defendant or defendants at the removal stage, including "something close to a dismissal standard." Id. at 810. However, the Eighth Circuit in Filla clarified that the general ...


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