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Stern v. American Home Mortgage Servicing


April 28, 2009


The opinion of the court was delivered by: Milton I. Shadur Senior United States District Judge


Late last week American Home Mortgage Servicing, Inc. ("American Home") filed a timely Notice of Removal ("Notice") to bring this action from the Circuit Court of Cook County into this District Court. American Home invokes diversity jurisdiction, based on the Illinois citizenship of plaintiff Corey Stern ("Stern") (Notice ¶5) and its own dual citizenship in Delaware and Texas (Notice ¶6) under 28 U.S.C. §1332(c)(1),*fn1 coupled with Stern's stated ad damnum of damages "in excess of One-Hundred Thousand Dollars and 00/100 ($100,000.00), representing the amount that STERN would have saved by obtaining a mortgage with an interest rate of four and seventy-five percent (4.75%) per year in January, 2009, and all collection costs, including attorney's fees,*fn2 incurred by Plaintiffs" (Complaint ¶36).

That characterization by Stern has triggered the issuance of this sua sponte opinion because of this Court's independent obligation stated in such cases as Wernsing v. Thompson, 423 F.3d 732, 743 (7th Cir. 2005):

Jurisdiction is the power to declare law, and without it the federal courts cannot proceed. Accordingly, not only may the federal courts police subject matter jurisdiction sua sponte, they must.

In that regard Stern's assertion raises an issue comparable to the one stated in one of the many aphorisms attributable to Abraham Lincoln:

If you call a tail a leg, how many legs has a dog?

Five? No, calling a tail a leg don't make it a leg. According to the documents attached to Stern's Complaint, his existing mortgage is written at an annual 5.25% interest rate. Assuming the truth of his Complaint ¶36 allegation (as this Court must for current purposes) that he could have obtained a 4.75% mortgage but for American Home's asserted misconduct, the impact of his interest saving--1/2 of 1% on a mortgage now in the range of $284,000--would not even begin to approach what Stern alleges in Complaint ¶24: that he "would save at least Three-Hundred Dollars and 00/100 ($300.00) per month on his monthly Mortgage payment."

That allegation is advanced "[o]n information and belief"--but the source of any such "information" is highly suspect, for this Court's resort to two independent and readily available computer programs shows that number to be way out of line. Instead this Court's calculations would put the savings figure far lower--at some $70 to $80 monthly, payable over a period short of 25 years.*fn3 Moreover, any claimed damages would constitute only the present value--not the aggregate--of the future stream of reduction in monthly payments.*fn4

In short, there is no way in which Stern's asserted damages could even approach the over-$75,000 amount required for diversity jurisdiction under Section 1332, and that under-the-radar figure would not be pushed over the line even if one were to take account of Stern's Count I prayer that American Home should also "pay for an accountant to file an amended 2008 tax return." Both Stern's lawyer and American Home's counsel should have crunched the numbers more accurately--the former in drafting the Complaint and the latter in considering whether the case was removable.

This action is accordingly ordered remanded to the Circuit Court of Cook County under Section 1447(c) for lack of subject matter jurisdiction. To enable the parties to proceed with the litigation without further delay, the Clerk's Office is ordered to transmit the certified copy of the remand order forthwith.

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