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U.S. Bank National Association v. Collins-Fuller T.

United States District Court, N.D. Illinois, Eastern Division

March 9, 2015

U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE RELATING TO J.P. MORGAN MORTGAGE ACQUISITION CORP. 2005-FRE1 ASSET BACKED PASS-THROUGH CERTIFICATES, SERIES 2005-FRE1, Plaintiff,
v.
CHERYLE A. COLLINS-FULLER T., HEYWOOD FULLER T., KEYBANK NATIONAL ASSOCIATION, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. AS NOMINEE FOR FREMONT INVESTMENT AND LOAN, Defendants.

MEMORANDUM OPINION AND ORDER

MARVIN E. ASPEN, District Judge.

Presently before us is a motion for voluntary dismissal filed by Plaintiff U.S. Bank National Association pursuant to Federal Rule of Civil Procedure 41(a)(2). (Dkt. No. 149.) As set forth below, we lack subject matter jurisdiction and thus dismiss Plaintiff's complaint. We also order Defendants to submit an additional brief addressing their failure to serve process on non-party Litton Loan Servicing, on or by March 25, 2015.

BACKGROUND

Plaintiff filed this foreclosure action on June 26, 2012, claiming diversity jurisdiction. (Compl. ¶¶ 3-5.) Plaintiff alleged that it is a national association chartered under the laws of Ohio, with its principal place of business located there. ( Id. ¶ 3.) Plaintiff stated that the homeowners/debtors, Cheryle Collins-Fuller T. and Heywood Fuller T. ("Defendants"), are citizens of Illinois. ( Id. ¶ 4.) Plaintiff further alleged that defendant KeyBank National Association ("Keybank") is a North Carolina citizen, while defendant Mortgage Electronic Registration Systems, Inc. ("MERS") is a California citizen.[1] ( Id. ¶ 5.) Plaintiffs also asserted that the amount in controversy exceeds $75, 000, thus fulfilling the requirements for diversity jurisdiction. ( Id. ¶¶ 2, 10(j).) See 28 U.S.C. § 1332(a).

Plaintiff has alleged that it "is the legal holder of the indebtedness and the owner of the mortgage given as security" by Defendants and, as such, is entitled to foreclose on the residential property at issue because of their default. ( Id. ¶ 10(n), (p), (s).) Plaintiff also alleged that Keybank has been joined as a party because it holds a junior lien on the property pursuant to a separate mortgage entered into between Defendants and Keybank. ( Id. ¶ 10(l).)

According to Plaintiff, recent investigation revealed that Keybank is not a citizen of North Carolina as previously pled. Plaintiff contends that Keybank is, in fact, a fellow citizen of Ohio. In the present motion, Plaintiff seeks to voluntarily dismiss this action under Rule 41(a)(2) due to the lack of diversity jurisdiction.

Defendants oppose the motion on several grounds. Defendants decry Plaintiff's lack of due diligence in failing to investigate Keybank's citizenship at the outset. (Resp. at 1-3.) They argue that Keybank is a dispensable party and should be dismissed under Rule 21, thus reviving diversity of the parties and our jurisdiction over the case. ( Id. at 1, 6.) Defendants also contend that they have raised federal questions in their counterclaims and other filings, entitling them to stay here in federal court. ( Id. at 1-2, 4-6.)

STANDARD OF REVIEW

Rule 41(a)(2) provides that "an action may be dismissed at the plaintiff's request only by court order, on terms that the court considers proper." Fed.R.Civ.P. 41(a)(2). For cases involving counterclaims, the rule further provides that dismissal may occur "over the defendant's objection only if the counterclaim can remain pending for independent adjudication." Id. Permitting a plaintiff to voluntarily dismiss an action without prejudice, under Rule 41(a)(2), is within our sound discretion. Tolle v. Carroll Touch, Inc., 23 F.3d 174, 177 (7th Cir. 1994). In evaluating such a motion, we consider four factors to ensure that the defendant is not prejudiced: "[t]he defendant's effort and expense of preparation for trial, excessive delay and lack of diligence on the part of the plaintiff in prosecuting the action, insufficient explanation for the need to take a dismissal, and the fact that a motion for summary judgment has been filed by the defendant." Kunz v. DeFelice, 538 F.3d 667, 677-78 (7th Cir. 2008) (quoting Pace v. S. Express Co., 409 F.2d 331, 334 (7th Cir. 1969)). Additionally, we are free to impose such terms and conditions as necessary, including dismissal with prejudice. Ratkovich v. Smith Kline, 951 F.2d 155, 157-58 (7th Cir. 1991); McCall-Bey v. Franzen, 777 F.2d 1178, 1184 (7th Cir. 1985) (noting that a district court's terms and conditions of dismissal are the "quid pro quo of allowing the plaintiff to dismiss his suit").

The particular Rule 41(a)(2) motion before us raises a jurisdictional question. "Jurisdiction is the power to declare law, ' and without it the federal courts cannot proceed." Hay v. Ind. State Bd. of Tax Comm'rs, 312 F.3d 876, 879 (7th Cir. 2002) (quoting Ruhrgas v. Marathon Oil Co., 526 U.S. 574, 577, 583, 119 S.Ct. 1563, 1567 (1999)); see also Wernsing v. Thompson, 423 F.3d 732, 743 (7th Cir. 2005) (further explaining that we have an independent and unwavering duty to confirm the existence of subject matter jurisdiction). Thus, while we keep in mind the guiding principles about voluntary dismissals, resolution of the motion ultimately turns on whether or not we have jurisdiction.

ANALYSIS

We begin with the diversity jurisdiction question posed by Plaintiff, which is quite straightforward. Defendants raise additional arguments as to why we might continue to have jurisdiction over this case, however, and we shall address each issue briefly.

A. Diversity Jurisdiction

Federal courts have original jurisdiction over a case if: (1) the amount in controversy exceeds $75, 000; and (2) all parties are of completely diverse citizenship. See 28 U.S.C. § 1332(a). Complete diversity of citizenship exists when "no plaintiff is a citizen of the same state as any defendant." LM Ins. Corp. v. Spaulding Enters. Inc., 533 F.3d 542, 547 (7th Cir. 2008); see also Krueger v. Cartwright, 996 F.2d 928, 931 (7th Cir. ...


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