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Varner v. Caliber Home Loans

United States District Court, M.D. Alabama, Southern Division

June 18, 2018





         Before the court is the Recommendation of the Magistrate Judge (Doc. # 13) that this pro se wrongful-foreclosure action be dismissed for lack of subject-matter jurisdiction. The Magistrate Judge reasons that subject-matter jurisdiction is lacking because Plaintiffs have not demonstrated that the amount in controversy exceeds the requisite $75, 000 as required by 28 U.S.C. § 1332(a) or that the Complaint presents a federal question as required by 28 U.S.C. § 1331. Alternatively, the Magistrate Judge recommends that, if this court finds that subject-matter jurisdiction exists, it should dismiss the state-law claims for wrongful foreclosure and fraud for failure of Plaintiffs to state a claim upon which relief can be granted. See Fed. R. Civ. P. 12(b)(6). The first recommendation would result in dismissal of this action without prejudice; the alternative recommendation would result in a dismissal with prejudice.

         Plaintiffs filed no objection, and otherwise voiced no objection to the Magistrate Judge's Recommendation.[1] In a seemingly odd turning of the tables, Defendant objects to the Magistrate Judge's Recommendation that subject-matter jurisdiction is lacking. But Defendant objects only on that point and urges this court to adopt the Recommendation's alternative recommendation that Plaintiffs' claims cannot survive scrutiny under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Hence, Defendant seeks dismissal of this action on the merits and with prejudice. (Doc. # 14.) For the reasons to follow, Defendant's objection is due to be overruled, and this action is due to be dismissed for lack of subject-matter jurisdiction.


         Pursuant to 28 U.S.C. § 636, the court conducts a de novo review of those portions of the Recommendation to which Defendant objects. The court “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” § 636(b)(1).


         The sole issue is whether the amount in controversy is sufficient to establish diversity jurisdiction. Plaintiffs, as the parties invoking federal subject-matter jurisdiction on state-law claims for relief of unspecified value, “bear[] the burden of proving by a preponderance of the evidence that the claim[s] on which [they are] basing jurisdiction meet[] the jurisdictional minimum.” Federated Mut. Ins. Co. v. McKinnon Motors, LLC, 329 F.3d 805, 807 (11th Cir. 2003).

         In his Recommendation, the Magistrate Judge liberally construes the Complaint as containing two claims - one for wrongful foreclosure and one possibly for fraud. (Doc. # 13, at 4-5, 11.) He then finds that the Complaint “request[s] injunctive relief in the form of prohibiting the foreclosure sale of the property.” (Doc. # 13, at 5.)

         “[W]hen declaratory or injunctive relief is sought, ‘it is well established that the amount in controversy is measured by the value of the object of the litigation.'” Mapp v. Deutsche Bank Nat'l Trust Co., No. 3:08-cv-695, No. 2009 WL 3664118, at *2 (M.D. Ala. Oct. 28, 2009) (quoting Ericsson GE Mobile Commc'ns, Inc. v. Motorola Commc'ns & Elecs., Inc., 120 F.3d 216, 218 (11th Cir. 1997)). In Mapp, the court reasoned that the value of an injunction enjoining a wrongful foreclosure includes the “right to retain ownership of and title to [the plaintiff's] home, as well as the right to occupy the home.” Id. at *4. The court found that, “[i]n monetary terms, these benefits, objects and rights are best measured by the value of the home itself, ” id., and that, therefore, the amount in controversy was, at least, “the value of the real estate . . . as established unambiguously by the note and mortgage, ” id. at *1. Here, adhering to the Eleventh Circuit's holding in Ericsson, the Magistrate Judge calculates the amount in controversy as $74, 793.71, which is the amount Plaintiffs mortgaged on their home. (Doc. # 13, at 5-6 (citing Ericsson, 120 F.3d at 218).) Because that dollar figure does not exceed the $75, 000 jurisdictional threshold, the Magistrate Judge finds that subject-matter jurisdiction is lacking. (Doc. # 15, at 5-6.)

         Defendant does not object to the Magistrate Judge's finding that the measure of the value of the injunctive relief is the amount of the mortgage. Rather, it contends that the Recommendation errs by failing to factor punitive damages into the jurisdictional equation. Citing Holley Equipment Co. v. Credit Allstate Corp., 821 F.2d 1531, 1535 (11th Cir. 1987), Defendant argues that “the value of the mortgage, ” combined with the “potential for an award of punitive damages” on the fraud claim, easily hurdles the amount-in-controversy threshold. (Doc. # 14, at 3); see Holley Equip. Co., 821 F.3d at 1535 (“When determining the jurisdictional amount in controversy in diversity cases, punitive damages must be considered.”).

         Defendant's argument would have curb appeal if the Complaint, in fact, contained a request for punitive damages. But Defendant has not shown that it does. Four points illustrate why.

         First, nowhere in the Complaint is there a request for punitive damages. The specific relief sought in the Complaint is for quiet title, injunctive relief, “Cancellation of Deed under Power, ” and “postponement of Foreclosure due to fraud.” (Doc. # 1, at 1, 6-7.) While the Magistrate Judge liberally construed an ambiguity in the Complaint to find a fraud claim, thus making Defendant's push for punitive damages understandable, it would strain the outer limits of the mandate for liberal construction of pro se pleadings to also find that the Complaint requests punitive damages. (See Doc. # 13, at 11 (concluding that “Plaintiffs' claim for fraud-to the extent that such a claim may be construed from the complaint-is due to be dismissed” (emphasis added)); see also Waldman v. Conway, 871 F.3d 1283, 1289 (11th Cir. 2017) (“A pro se pleading is held to a less stringent standard than a pleading drafted by an attorney and is liberally construed.” (citation and internal quotation marks omitted)). Such an interpretation finds no support in the allegations, which are devoid of any mention of punitive damages and which predominantly rely on fraud as the basis for requesting equitable, not monetary, relief. (See, e.g., Doc. # 1, at 7 (“request[ing]” that the court grant “postponement of foreclosure due to fraud” (emphasis added)).) It also is inconsistent with Plaintiffs' lack of opposition to the Magistrate Judge's valuation of the amount in controversy, a valuation that did not include punitive damages. Plaintiffs' failure to object to a jurisdictional finding upon which they bear the burden of demonstrating, although not dispositive, is suggestive of how much they believe their case is worth.

         Second, although a fraud claim, in an appropriate case, can support a punitive damages award, Defendant does not explain how there can be a potential for an award of punitive damages when the pleading does not ask for that form of relief. The cause of action alleged and the type of relief requested are two distinct pleading matters. Compare Fed. R. Civ. P. 8(a)(2) (requiring that the pleading contain “a short and plain statement of the claim”) with Fed. R. Civ. P. 8(a)(3) (requiring that the pleading contain “a demand for relief sought”). ...

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