Monday, August 05, 2013

Bankster Fails In Attempt To Have Suit Accusing It Of Mortgage Flipping Racket Heard In Federal Court; U.S. District Judge 'Abstains' From Hearing Suit, Boots Case Back To State Court, Saying There's No Pressing Federal Interest To Decide Matter Entirely Involving Unsettled Issues Of WV Law

In Martinsburg, West Virginia, The West Virginia Record reports:
  • A lawsuit accusing Huntington National Bank of “flipping” is being moved back to where it was originally filed in December 2011.

    U.S. District Judge Gina Groh, of the Northern District of West Virginia, remanded the case back to Kanawha County Circuit Court on July 26. Groh had to decide whether she would hear the case because the claim could be listed as an asset in the plaintiff’s bankruptcy proceeding.

    This matter involves claims arising entirely under state law causes of action and raising unsettled questions of West Virginia law,” she wrote.

    “This Court lacks diversity jurisdiction, but has jurisdiction due to Plaintiff’s bankruptcy proceeding, in which any recovery could potentially serve as an asset.

    “Abstention and remand would not be unduly burdensome, nor would it be inconvenient for a West Virginia court’s judgment to be enforced in the bankruptcy court.

    “At the heart of the doctrine of abstention lies the concept of comity, and, under present circumstances, no pressing federal interest requires this Court to determine unsettled state law issues.”

    Groh, therefore, decided to abstain from the case and remanded it to Kanawha Circuit Court, where it was first filed in December 2011.(1)

    Gary Miller sued Huntington Banks, its mortgage group and three other defendants.

    Miller accused them of “flipping,” or using inflated appraisals and other unlawful practices to induce “unsophisticated” consumers into a series of unwise and expensive loans.

    Flipping maximizes fee income to banks, but strips homeowners of equity in their homes, pushing them into default and, in some cases, foreclosure.

    Miller contends he was “flipped” repeatedly by Huntington Bank, resulting in indebtedness that, he says, “ballooned” from $120,000 to $273,500 over five years and has brought him to the brink of foreclosure.

    Prior to filing the lawsuit, Miller filed for Chapter 7 bankruptcy in federal court for the Northern District of West Virginia. He listed his property but not any possible claims against Huntington Banks.

    The bankruptcy proceeding was discharged more than a year before the lawsuit was filed.

    However, his bankruptcy estate has recently been re-opened to administer the case as a new asset. Special counsel has been hired to pursue the claim.

    The defendants removed the case to federal court for the Southern District of West Virginia on April 20, 2012, and it was transferred to the Northern District to aid in the coordination of the case and the bankruptcy proceedings to ensure jurisdictional issues are properly resolved.(2)

    On May 21, 2012, Miller requested the federal court abstain from hearing the case and remand it to Kanawha Circuit Court. Huntington Banks opposed the motion.
Source: ‘Flipping’ lawsuit sent back to Kanawha court.

For the ruling, see Miller v. Huntington National Bank, N.A., Civil Action No. 3:12-CV-114 (N.D.W.V. July 26, 2013).

(1) See, generally, Erroneous Removal As A Tool For Silent Tort Reform: An Empirical Analysis Of Fee Awards And Fraudulent Joinder for more on the 'cat-and-mouse' games played by state court plaintiffs and defendants jockeying around to either move or block moves of state court cases into federal court.

(2) From the court ruling:
  • Defendants in civil actions may remove a matter from state to federal court if the latter forum has original subject matter jurisdiction. The Defendants removed the instant matter based upon allegations of both diversity jurisdiction under 28 U.S.C. §1332 and bankruptcy-related jurisdiction under 28 U.S.C. §1334(a)-(b).

    The burden of demonstrating jurisdiction for removal generally resides with the defendant. Wilson v. Republic Iron & Steel Co., 257 U.S. 92 (1921).

    Likewise, the plaintiff's role in the context of disputes about removability is also clearly defined: the plaintiff is the master of his or her claim. See Oklahoma Tax Com'n v. Graham, 489 U.S. 838 (1989). This means that, "if [the plaintiff] chooses not to assert a federal claim .. . or properly joins a nondiverse party, defendants cannot remove the action to federal court on the ground that an alternative course of conduct available to the plaintiff would have permitted removal of the case." 14B Charles Wright, Federal Practice and Procedure, §3721, p. 59 (2009).

    Moreover, as the Fourth Circuit has indicated, if federal jurisdiction is doubtful, the case must be remanded. Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994).

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