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Andrews v. HSBC Bank USA, N.A.

United States District Court, D. Massachusetts

September 12, 2017

HARRY M. ANDREWS, Plaintiff,
v.
HSBC BANK USA, N.A., AS TRUSTEE FOR FREMONT HOME LOAN TRUST 2006-C, MORTGAGE BACKED CERTIFICATES, SERIES 2006-C Defendant.

          MEMORANDUM & ORDER

          Nathaniel M. Gorton United States District Judge

         This case arises from an attempted foreclosure of a residential mortgage in Beverly, Massachusetts. Harry Andrews (“Andrews” or “plaintiff”) brought this action in Massachusetts Superior Court against HSBC Bank USA, N.A., as Trustee for Fremont Home Loan Trust 206-C, Mortgage Backed Certificates, Series 2006-C (“HSBC”). Plaintiff challenges HSBC's standing to foreclose, contesting its ownership of the note and mortgage, whether the property is subject to a properly recorded lien and the adequacy of the notice given by HSBC. Defendant removed the case to this Court.

         Pending before this Court is plaintiff's motion to remand the action to Massachusetts Superior Court and HSBC's motion to dismiss. For the reasons that follow, the motion to remand will be denied and the motion to dismiss will be allowed.

         I. Background

         Plaintiff purchased the residential property located at 3 Hemlock Street, Beverly, Massachusetts (“the property”) in October, 1974. On June 27, 2006, plaintiff borrowed $506, 000 secured by a promissory note (“the note”) from Fremont Investment & Loan (“Fremont”). On the same day, to secure the note, plaintiff granted a mortgage lien (“the mortgage”) to Mortgage Electronic Registration Systems, Inc. (“MERS”), acting as nominee for Fremont. In May, 2012, MERS assigned the mortgage to HSBC as Trustee. The mortgage is serviced by Ocwen Loan Servicing, LLC (“Ocwen”).

         After the economic downturn of the past decade, plaintiff fell behind on his mortgage payments and HSBC initiated foreclosure proceedings on the property. On June 24, 2014, HSBC, through its servicer Ocwen, sent a right to cure notice to plaintiff, pursuant to M.G.L. c. 244 § 35A.

         On October 27, 2016, Andrews commenced this action by filing a complaint in the Massachusetts Superior Court for Essex County. HSBC removed the action to federal court on December 27, 2016. Plaintiff filed the pending motion to remand one month later and the following week, HSBC filed the pending motion to dismiss.

         II. Motion to Remand

         A. Legal Standard

         Federal diversity jurisdiction is available in cases arising between citizens of different states in which the amount in controversy exceeds $75, 000. 28 U.S.C. § 1332(a). The party seeking to invoke federal jurisdiction bears the burden of establishing subject-matter jurisdiction. Danca v. Private Health Care Sys., Inc., 185 F.3d 1, 4 (1st Cir. 1999). Removal of the action is proper if the court determines, “by a preponderance of the evidence, that the amount in controversy exceeds [$75, 000].” 28 U.S.C. § 1446(c)(2)(B).

         B. Application

         The parties are citizens of different states because the plaintiff is a Massachusetts resident while HSBC is a citizen of Delaware, the state where it is “located” under 28 U.S.C. § 1348. See Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303, 318 (holding that a national bank, for § 1348 purposes, is a citizen of “the State in which its main office, as set forth in its articles of association, is located”).

         The parties disagree as to whether the amount in controversy requirement under 28 U.S.C. § 1332 has been met. HSBC contends in its notice of removal that the amount in controversy exceeds $75, 000 because plaintiff seeks to prevent foreclosure on a $506, 000 mortgage. Andrews's complaint does not specify an amount of damages sought but he disputes HSBC's contention that the amount in controversy is determined by the value of the loan. Plaintiff does not suggest an alternative amount in controversy, arguing that he is merely seeking to enjoin foreclosure until HSBC complies with its obligations under Massachusetts law.

         Where the plaintiff seeks equitable relief, the amount in controversy is “measured by the value of the object of the litigation”. Hunt v. Wash State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977). The First Circuit has noted that many district courts have held that the amount in controversy in a foreclosure action is the value of the loan amount. McKenna v. Wells Fargo Bank, N.A., 693 F.3d 207, 212 (1st Cir. 2012). Although the court in McKenna did not need to reach the question, it expressed a preference for the “face-value-of-the-loan” rule, noting ...


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