Butler v. Bank of America, N.A., No. 11–461 (DWF/TNL), 2011 WL 2728321 (D. Minn. July 13, 2011).
In this case, a District Court in Minnesota held that CAFA jurisdiction is adequate when it is based on an understanding of the putative class that is reasonable.
The plaintiffs, William B. Butler and Mary S. Butler, brought a class action alleging that the defendants, Bank of America, N.A. (“BOA”), BAC Homes Loans Servicing, LP (“BAC”), and Peterson, Fram & Bergman, P.A. (“PFB”), asserted an invalid and voidable mortgage against the Butlers’ Minnesota home. The Butlers alleged that the defendants asserted “securitized mortgage lien rights” by or through BOA and BOA-related and controlled entities. PFB acted as foreclosure counsel for the BOA and BAC and was specifically retained to commence foreclosure by advertisement proceedings against the Butlers.
The Butlers alleged that the defendants did not have actual physical possession of the Butler’s Original Note, that the defendants or their predecessors in interest securitized and sold the Original Note into a pooling and servicing agreement, and that in the process of securitizing the Original Note and Mortgage, the defendants’ predecessors in interest purported to transfer legal title to the Original Note and Mortgage to a separate and distinct legal entity. The Butlers alleged that because the defendants did not have valid, clear legal title to the Original Note, the defendants could not assert rights under the Mortgage and specifically could not remove the Butlers from their home. The Butlers also alleged that due to the defendants’ actions, the Original Note was not an unconditionally enforceable negotiable instrument and therefore the defendants could not assert the right to foreclose on the Mortgage.
The defendants removed this action to federal court pursuant to diversity jurisdiction under CAFA, 28 U.S.C. § 1332(a).
The Butlers filed a motion to remand to state court, which the District Court denied.
The Butlers contended that the defendants failed to offer any evidence that the amount in controversy exceeded $5 million and that the putative class contained at least 100 members.
In support of the notice of removal, the defendants offered the declaration of Lourdes Duarte, a litigation specialist for BAC, stating that there were more than 100 loans secured by property in the state of Minnesota that were acquired by Countrywide Bank, FSB, and subsequently acquired by BOA. Duarte also testified that the remaining outstanding principal amount owed on loans secured by property in the state of Minnesota, that were acquired by Countrywide Bank, FSB, and subsequently acquired by BOA exceeded $25 million.
The Butlers, however, asserted that this evidence was irrelevant to the class as defined by the complaint because the complaint defined the putative class as “all individuals who initiated loans with Countrywide and whose loans were subsequently acquired by BOA.” The Butlers contended, therefore, that the putative class did not include persons whose original loans were acquired by Countrywide, which was the group analyzed by Duarte.
The defendants responded that the proof in support of CAFA jurisdiction was adequate because it was based on an understanding of the putative class that was reasonable. In particular, the defendants asserted that the Butlers’ loan was initiated by M & I Bank, not Countrywide, and so the class as analyzed included the Butlers, whereas the class as defined in the complaint did not. The defendants also submitted a supplemental declaration from Duarte testifying that as of the date of complaint, BAC was servicing more than 100 loans secured by property in the state of Minnesota that had been made by Countrywide Home Loans, Inc., or Countrywide Bank, F.S.B., or Countrywide Bank, N.A., and that were subsequently acquired by BOA, and that the outstanding principal amount on those loans exceeded $25 million.
The Court found that the defendants offered sufficient evidence that the jurisdictional requirements were met under either definition of the putative class. Accordingly, the Court concluded that it had subject matter jurisdiction over this matter pursuant to CAFA, and denied the motion to remand.