Case 4:15-cv-00536-RC-DDB Document 48 Filed 01/22/16 Page 1 of 13 PageID #: 369
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
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`
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`STEPHANIE WOODS AND SOUTHERN
`HOME SOLUTIONS, LLC,
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`Plaintiffs,
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`v.
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`U.S. BANK, N.A., AMERICAN HOME 4
`RENT PROPERTIES EIGHT, LLC, AND
`BARRETT, DAFFIN, FRAPPIER,
`TURNER & ENGEL, LLP,
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`
`Defendants.
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`§
`§
`§
`§
`§ CIVIL ACTION NO. 4:15-cv-00536
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`§
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`§
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`REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
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`Now before the Court is Plaintiffs‟ Motion to Remand (Dkt. 26) filed on September 28,
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`2015, which is opposed by all Defendants (Dkt. 27, Dkt. 28, and Dkt. 31). Having reviewed the
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`motion, the responses, the applicable authorities, and the record in this case, the Court finds that
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`Plaintiffs‟ motion (Dkt. 26) should be GRANTED.
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`Plaintiffs Stephanie Woods (“Woods”) and Southern Home Solutions, LLC (“Southern”)
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`filed their Original Petition in state court on July 6, 2015. Plaintiffs named the following as
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`Defendants: U.S. Bank, N.A. (“USB”), Barrett, Daffin, Frappier, Turner & Engle, LLP
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`(“BDFTE”), and American Homes 4 Rent Properties Eight, LLC (“American”). Dkt. 1-4 at ¶ 2.
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`In addition to seeking quiet title and challenging Defendants‟ authority and standing to foreclose,
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`Plaintiffs also bring claims for negligent misrepresentation, fraud, and violation of the Texas
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`Deceptive Trade Practices Act. Plaintiffs seek declaratory judgment and monetary damages.
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`See Dkt. 1-4 at ¶¶ 44-47
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`1
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`Case 4:15-cv-00536-RC-DDB Document 48 Filed 01/22/16 Page 2 of 13 PageID #: 370
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`Defendant USB filed a notice of removal on August 7, 2015 on the basis of diversity
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`jurisdiction (Dkt. 1). On September 9, 2015, Plaintiffs filed an “Emergency Motion for
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`Extension of Time to File Motion to Remand” (Dkt. 22), and on September 11, 2015, this Court
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`granted Plaintiffs an additional 15 days to file a motion to remand.1 See Dkt. 23. Plaintiffs
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`subsequently filed the motion to remand (Dkt. 26) on September 28, 2015.
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`BACKGROUND
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`This suit involves Plaintiffs‟ efforts to prevent a foreclosure sale on the property located
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`at 105 Cloudcroft Drive, Wylie, Texas 75098 (the “Property”). Woods purchased the Property
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`on March 2, 2009 and executed a Note and Deed of Trust with Leader One Financial
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`Corporation. Dkt. 1-4 at ¶ 9 (“Original Petition”). The Note was subsequently assigned to USB
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`on January 29, 2010. Id. at 15. According to Plaintiffs, the Property first went into foreclosure
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`on October 4, 2011 when “USB wrongfully sold the home at a foreclosure sale to itself…but the
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`sale was rescinded.” Id. at ¶ 18. Plaintiffs‟ Original Petition goes on to recite a series of events
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`from October 2012 to May 2015, during which time Woods was trying to work with USB to cure
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`her default on the loan. Id. at ¶¶ 19-27. Ultimately, USB issued a Notice of Sale through its
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`appointed Trustee, BDFTE. Id. at 23. The sale was scheduled for May 5, 2015 at 10:00 a.m. Id.
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`Plaintiffs allege that “title passed to Southern on May 1, 2015” when Woods agreed to sell the
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`property to Southern. Id. at ¶ 25. Plaintiffs further allege that on May 4, 2015, one day before
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`the scheduled foreclosure sale, “USB simultaneously approved the packet from Southern and
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`“sent a Stop Auction Sale request to the Trustee.” These efforts proved futile. The Property was
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`sold at auction on May 5, 2015, and, according to Plaintiffs, American was the successful
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`purchaser. Id. at ¶¶ 31-32.
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`1 In granting the motion, however, the Court noted that “any opposing Defendants are not precluded from
`later challenging, through any applicable authorities, whether the 30-day period can be extended by Court order.”
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`2
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`Case 4:15-cv-00536-RC-DDB Document 48 Filed 01/22/16 Page 3 of 13 PageID #: 371
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`STANDARD
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`Defendant USB removed this case on the basis of diversity jurisdiction. Suits are
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`removed on the basis of diversity jurisdiction when: (1) the suit involves a controversy between
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`citizens of different states and (2) the amount in controversy exceeds $75,000. 28 U.S.C. § 1332.
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`USB contends that Defendant BDFTE is a Texas citizen and was thus improperly joined in the
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`litigation. Suits are removed on the basis of diversity jurisdiction “only if none of the parties in
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`interest is properly joined and served as defendants is a citizen of the State in which such action
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`is brought.” 28 U.S.C. § 1441(b) (emphasis added).
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` “To establish that a non-diverse defendant has been improperly joined, the removing
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`party must prove (1) actual fraud in the pleading of jurisdictional facts, or (2) the plaintiffs‟
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`inability to establish a cause of action against the non-diverse party in state court.” Rico v.
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`Flores, 481 F.3d 234, 238-39 (5th Cir. 2007); Holder v. Abbott Labs., Inc., 444 F.3d 383, 387
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`(5th Cir. 2006). The second prong only is at issue here, and its test is “„whether the defendant
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`has demonstrated that there is no possibility of recovery by the plaintiff against an in-state
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`defendant, which stated differently means that there is no reasonable basis for the district court to
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`predict that the plaintiff might be able to recover against an in-state defendant.‟” Rico, 481 F.3d
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`at 239. This Court must decide whether “there is any reasonable basis for predicting that
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`[Plaintiffs] might be able to establish [Defendants‟] liability on the pleaded claims in state
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`court.” Griggs v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir. 1999). Since the purpose of
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`the improper joinder inquiry is to determine whether or not the in-state defendant was properly
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`joined, the focus of the inquiry must be on the joinder, not the merits of the plaintiff‟s case.
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`Smallwood v. Illinois Cent. R. Co., 385 F.3d 568, 573 (5th Cir. 2004). In making that
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`determination, the court may conduct a Rule 12(b)(6)-type analysis, looking initially at the
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`3
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`Case 4:15-cv-00536-RC-DDB Document 48 Filed 01/22/16 Page 4 of 13 PageID #: 372
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`allegations of the complaint to determine whether the complaint states a claim under state law
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`against the in-state defendant. Id. The court is also required to resolve any issues of material
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`fact or ambiguity in the state law in the plaintiffs‟ favor. Rico, 481 F.3d at 239.
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`As explained by the Fifth Circuit:
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`To determine such possibility of state-court recovery, a court may analyze the
`sufficiency of a plaintiff‟s pleadings alone; or, in its discretion, pierce the
`pleadings and conduct a summary inquiry. The focus is on plaintiff‟s
`pleadings at the time of removal; post-removal filings may be considered only
`to the extent they amplify or clarify facts alleged in the state-court complaint,
`with new claims or theories of recovery disregarded.
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`Akerblom v. Ezra Holdings Ltd., 509 Fed. App‟x 340, 344-45 (5th Cir. 2013) (internal
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`citations and quotations omitted). The petition as filed in state court controls a court‟s inquiry.
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`See Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 264 (5th Cir.1995); see also Griggs
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`v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir.1999) (stating that the court must determine if
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`there could possibly be liability “on the pleaded claims in state court.”).2 The party claiming
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`fraudulent joinder bears a “heavy burden” of persuasion. See Smallwood, 385 F.3d 568 at 574.
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`I. Timeliness of Motion to Remand
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`ANALYSIS
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`In opposing Plaintiffs‟ motion to remand, Defendants BDFTE and American argue that
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`the motion should be denied because it was filed fifty-two days after the case was removed, and,
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`therefore, was not timely filed. See Dkt. 27 at 3-4; Dkt. 28 at 2-3. Generally, a court may
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`remand a case on the basis of any valid defect identified in a motion to remand as long as it is
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`made within 30 days of removal, and a court is required to strictly construe the removal statute in
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`2 The Court notes that since filing the motion to remand, Plaintiffs have filed a motion for leave to amend
`the complaint and has sought other relief from the Court. The Court cannot address that request to amend until it
`addresses whether the case was properly removed and it has removal jurisdiction, and the petition as filed in state
`court controls the Court‟s inquiry. See Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 264 (5th Cir.1995);
`see also Griggs v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir.1999) (stating that the court must determine if
`there could possibly be liability “on the pleaded claims in state court.”).
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`4
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`Case 4:15-cv-00536-RC-DDB Document 48 Filed 01/22/16 Page 5 of 13 PageID #: 373
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`favor of remand and against removal. 28 U.S.C. §1447; In re Hot-Hed Inc., 477 F.3d 320, 323
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`(5th Cir. 2007). If, however, remand is based on jurisdictional grounds, the plaintiff can move
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`to remand at any time. See 28 U.S.C. § 1447(c); see also Gonzales v. Rio Grande Plumbing
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`Supply, Inc., No. CIV.A. M-04-409, 2005 WL 1653030, at *1 (S.D. Tex. July 11, 2005) (finding
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`that 28 U.S.C. § 1447(c) clearly allows a plaintiff to challenge subject matter jurisdiction well
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`beyond thirty days after a filing of a notice of removal); Carroll v. Gold Medal, Inc., 869 F.Supp.
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`745 (E.D.Mo.1994) (stating that diversity jurisdiction in removal cases goes to subject matter
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`jurisdiction and was not capable of being waived by tardiness). Since diversity jurisdiction in
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`removal cases goes to subject matter jurisdiction and is “not a mere procedural irregularity
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`capable of being waived,” the Court finds that Plaintiffs‟ motion to remand was timely filed.
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`Carroll, 869 F. Supp. 745, 747. Accordingly, the motion must be decided based on whether
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`there is any possibility of recovery by the Plaintiffs against BDFTE. Rico, 481 F.3d at 239.
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`II.
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`Improper Joinder
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`Diverse Defendant USB‟s notice of removal claims that although Defendant BDFTE is
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`“believed to be a Texas citizen,” it was improperly joined, and, therefore, its “citizenship should
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`be disregarded for purposes of diversity.” Dkt. 1 at ¶ 17. USB contends that Plaintiffs have not
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`asserted any viable causes of action against BDFTE. The Court thus reviews the state court
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`petition (Dkt. 1-4) for the claims made against BDFTE.
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`The only claims against BDFTE in the “Causes of Action” portion of Plaintiffs‟ petition
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`are for violations of the Texas Deceptive Trade Practice Act (the “DTPA”). Id. at ¶ 41.
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`Plaintiffs allege that USB and BDFTE violated the DTPA by “colluding to refuse to provide a
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`payoff amount after accepting the Workout package and issuing the right to make a prepayment”
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`in the amount of $200,000 “for the sole purpose of precluding Southern from meeting the price
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`5
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`Case 4:15-cv-00536-RC-DDB Document 48 Filed 01/22/16 Page 6 of 13 PageID #: 374
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`by issuing a payoff quote in excess” of the previously agreed amount of $200,000. Id. at ¶ 41.
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`The petition further alleges that BDFTE “wrongly sold [the Property] to American” when it did
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`not have the authority to do so “based on the stop sale order given by USB on May 4, 2015.” Id.
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`A. Claims Against Substitute Trustees
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`USB contends that “the Texas Property Code expressly states that a substitute trustee is
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`not a necessary party to a lawsuit…asserting claims only against the substitute trustee only in
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`their capacity as a substitute trustee.” Dkt. 1 at ¶ 20 (citing TEX. PROP. CODE § 51.007(a);
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`WAMCO XXVIII, Ltd. v. Casa Grande Cotton Fin. Co., 314 F. Supp. 2d 655, 657 (N.D. Tex.
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`2004)). The Court is not convinced. Rather than expressly barring claims against a substitute
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`trustee, § 51.007(a) of the Texas Property Code provides that a trustee may plead in the answer
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`that the trustee is not a necessary party. TEX. PROP. CODE § 51.007(a) (emphasis added). That
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`same section requires the denial to be verified and to state the basis for the trustee‟s reasonable
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`belief that he was named as a party solely in his capacity as a trustee. Id. Section 51.007 also
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`provides that a verified response to the trustee's verified denial is due within 30 days. See §
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`51.007(b). Should a party fail to make the verified response or objection within the 30–day time
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`frame, then the trustee shall be dismissed from the suit or proceeding without prejudice. See §
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`51.007(c).
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`In WAMCO, the substitute trustee was dismissed from the lawsuit without prejudice
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`because the substitute trustee filed a verified denial, and the plaintiff failed to timely file a
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`verified response. WAMCO, 314 F. Supp. 2d at 657. BDFTE‟s Original Answer (see Dkt. 1-8)
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`did not plead – as required by § 51.007(a) – that it is not a necessary party by a verified denial or
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`state a basis for its reasonable belief that it was named solely in its capacity as a trustee.
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`WAMCO has little bearing on the Court‟s analysis here.
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`6
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`Case 4:15-cv-00536-RC-DDB Document 48 Filed 01/22/16 Page 7 of 13 PageID #: 375
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`Although courts routinely hold in foreclosure cases that the mere inclusion of a non-
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`diverse trustee as a nominal party will not defeat diversity jurisdiction, in circumstances where a
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`plaintiff asserts misconduct on the part of the trustee, a court must assess whether such
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`allegations give rise to a reasonable basis for plaintiff to recover against the trustee in state court.
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`Mendez v. Wells Fargo Bank, N.A., 2014 WL 1923056, at *2 (W.D. Tex. 2014, reconsideration
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`denied); see also Ochoa v. U.S. Bank & Nat'l Ass’n, WL 2565366, at *2–3 (W.D.Tex.) (“Texas
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`Property Code establishes that a trustee may be joined as a party to a suit, and this Court and
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`other district courts in Texas have held that substitute trustees are proper parties.”) (internal
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`citations omitted); McIntosh v. U.S. Bank Nat. Ass’n., 2012 WL 75141, at *2-3 (S.D.Tex. 2012)
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`(“[S]ection 51.007 does not stand for the proposition that a substitute trustee cannot be sued ever
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`in that capacity or that she must automatically be dismissed simply because she is sued in her
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`capacity as substitute trustee.” (internal citations omitted).
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`“Under Texas law, a substitute trustee may be held liable for failing to comply with the
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`terms of the Deed of Trust or with the Property Code. McIntosh v. U.S. Bank Nat. Ass’n, 2012
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`WL 75141, at *2 (S.D. Tex. Jan. 10, 2012). A substitute trustee has the duty to “act with absolute
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`impartiality and fairness to the grantor in performing the powers vested in him by the deed of
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`trust.” Id. (citing Marsh v. Wells Fargo Bank, N.A., 760 F.Supp.2d 701, 708 (citations and
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`internal quotation marks omitted). “This duty is breached when the trustee fails to comply
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`strictly with the terms of the deed of trust or the notice and sale provisions of § 51 .002 of the
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`Texas Property Code.” Id. (citing Clauer v. Heritage Lakes Homeowners Ass’n, 726 F.Supp.2d
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`668, 673 (E.D.Tex.2010)).
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`Based on the foregoing, the Court is not convinced by USB‟s argument that § 51.007 of
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`the Texas Property Code bars Plaintiffs‟ recovery from a substitute trustee (Dkt. 1 at ¶ 20).
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`7
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`Case 4:15-cv-00536-RC-DDB Document 48 Filed 01/22/16 Page 8 of 13 PageID #: 376
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`Since Plaintiffs allege wrongful foreclosure resulting from misconduct on behalf of the trustee,
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`the Court is required to assess the potential viability of those claims in state court.
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`B. Failure to State a Claim under DTPA
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`Defendants USB and BDFTE argue that Plaintiffs‟ failed to allege sufficient facts to state
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`a DTPA claim. See Dkt. 28 at 5; Dkt. 31 at 10-13. A DTPA claim requires the claimant to
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`establish: (1) that he is “a consumer of the defendant's goods or services;” (2) that “the defendant
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`committed a false, misleading, or deceptive act in connection with the lease or sale of goods or
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`services, breached an express or implied warranty, or engaged in an unconscionable action or
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`course of action;” and (3) that “such actions were the producing cause of the ... actual damages.”
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`Perkins v. Bank of Am., 602 F. App'x 178, 182 (5th Cir. 2015) (citing Fix v. Flagstar Bank, FSB,
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`242 S.W.3d 147, 159 (Tex.App.2007, pet. denied). In order to qualify as a consumer under the
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`DTPA a person “must seek or acquire goods or services by lease or purchase” and “the goods or
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`services sought or acquired must form the basis of [that person's] compliant.” Id.
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`USB contends that Plaintiffs are not consumers under the DTPA because they “are not
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`able to show that they are consumers of Trustee‟s goods or services.” Dkt. 41 at 12. Although
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`Plaintiffs appear to concede that Woods is not a consumer, they contend that “Southern [is] a
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`consumer who purchased for use, the Woods property” (Dkt. 37 at 8) and allege that BDFTE
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`colluded with USB “to refuse to provide a payoff amount” and “wrongly sold the property” in
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`spite of the stop sale order given by USB (Dkt. 1-4 at ¶ 41). Plaintiffs allege further that BDFTE
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`“misrepresented to American that it had the authority of a salesman, representative or agent of
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`U.S. Bank” and that BDFTE‟s “conduct in carrying out a sale was a false, misleading or
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`deceptive act or practice in violation of TEX. BUS. & COM. CODE § 17.46(b)(14).” Dkt. 26 at 6.
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`8
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`Case 4:15-cv-00536-RC-DDB Document 48 Filed 01/22/16 Page 9 of 13 PageID #: 377
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`Generally, a person cannot qualify as a consumer under the DTPA if the claim is based
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`on a pure loan transaction or on a loan modification application. See Riverside Nat’l Bank v.
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`Lewis, 603 S.W.2d 169 (Tex.1980) (A person seeking a loan from a bank to refinance his car did
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`not qualify as a consumer under the DTPA because “money is neither a good nor service.”);
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`Walker v. F.D.I.C., 970 F.2d 114, 123 (5th Cir. 1992); see also Kennedy v. Wells Fargo, No. 11–
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`CV–957–FB, slip op. at 12 (W.D.Tex. Oct. 23, 2012) (“To the extent plaintiff bases her DTPA
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`claim, not on the lending of money, but on the review and subsequent denial of her loan
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`modification application, the Court finds plaintiff does not constitute a consumer under that
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`theory either.”); Owens v. BAC Home Loans Serv., L. P., No. H–11–2742, 2012 WL 1494231, at
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`*4 (S.D.Tex. Apr.27, 2012) (“Because the plaintiffs sought to modify their mortgage loan and
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`not to acquire, by purchase or lease, a „good‟ or „service,‟ they have not stated a viable DTPA
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`claim.”). However, goods or services sought by a borrower can form the basis for the DTPA
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`complaint. La Sara Grain Co. v. First Nat’l Bank of Mercedes, 673 S.W.2d 558, 566 (Tex.
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`1984). (citing Flenniken v. Longview Bank & Trust Co., 661 S.W.2d 705 (Tex.1983) (plaintiffs
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`who sought financing for a house were consumers since they “did not seek to borrow money;
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`they sought to acquire a house”); Knight v. Int’l Harvester Credit Corp., 627 S.W.2d 382
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`(Tex.1982) (plaintiff was a consumer since he sought a loan in order to purchase a dump truck));
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`see also Central Texas Hardware v. First City, 810 S.W.2d 234, 237 (Tex.App.1991, writ
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`denied) (plaintiff who intended to acquire seasonal inventory goods with the loan was not a
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`consumer because he did not allege any complaint regarding the goods intended to be purchased
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`with the loan).
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`Plaintiffs allege in their Original Petition that Southern sought to acquire the Property by
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`purchase and that a cloud on Southern‟s title arose from the alleged misconduct and bad faith of
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`9
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`Case 4:15-cv-00536-RC-DDB Document 48 Filed 01/22/16 Page 10 of 13 PageID #: 378
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`BDFTE. See Dkt. 1-4 ¶ 41. USB responds that Plaintiffs are not consumers because they did not
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`acquire goods or services from BDFTE. The Supreme Court of Texas has defined “services” as:
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`“action or use that furthers some end or purpose: conduct or performance that assists or benefits
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`someone or something: deeds useful or instrumental toward some object.” Riverside Nat’l Bank
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`v. Lewis, 603 S.W.2d 169 at 174 (citing Van Zandt v. Fort Worth Press, 359 S.W.2d 893, 895
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`(Tex.1962). More simply, the definition of services “includes an activity on behalf of one party
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`by another.” Id. In the instant case, BDFTE was performing an activity on behalf of USB. The
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`essence of Plaintiffs‟ claim is that in performing that activity, BDFTE wrongfully sold the
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`Property without authority causing the harm of which Plaintiffs complain. Because here the
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`conduct of BDFTE in performing “an activity on behalf of another,” is the basis for Plaintiffs‟
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`complaint, the Court is not persuaded that Plaintiffs‟ DTPA claim fails simply because they did
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`not seek or acquire goods or services directly from BDFTE. Moreover, a consumer suing under
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`the DTPA need not establish contractual privity with the defendant; he need only show that the
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`defendant has committed a deceptive act which is the cause of the consumer‟s damages. Home
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`Sav. Ass’n v. Guerra, 733 S.W.2d 134, 136 (Tex. 1987) (citing Weitzel v. Barnes, 691 S.W.2d
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`598, 600 (Tex.1985)).
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`The parties have not cited, nor has the Court located, any authoritative precedent
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`specifically addressing facts similar to those alleged herein. Plaintiffs provide factual statements
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`to support their conclusion that BDFTE did not act in good faith and that they qualify as
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`consumers under the DTPA. Defendant has cited no authority that would show such allegations
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`are insufficient under the DTPA. Although the question is a close one, this Court need not be the
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`final arbiter of the issue. In light of Defendants‟ heavy burden of proving that non-diverse
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`Defendants have been fraudulently joined to defeat diversity, the Court cannot say that Southern
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`10
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`Case 4:15-cv-00536-RC-DDB Document 48 Filed 01/22/16 Page 11 of 13 PageID #: 379
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`is not a consumer for purposes of the DTPA, or that Plaintiffs have no possibility of recovery
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`under state law against BDFTE.
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`USB also contends that Southern lacks standing under DTPA because “its alleged injuries
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`[] derive from its own dealings with Woods relating to the Property.” Dkt. 31 at 11-12.
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`However, Plaintiffs allege that title had already passed to Southern prior to the sale of the
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`Property by BDFTE. See Dkt. 1-4 at ¶ 26; Dkt. 37 at 3. Only the mortgagor or parties in privity
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`with the mortgagor may contest the validity of a sale under the mortgagor‟s deed of trust. See
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`Estelle v. Hart, 55 S.W.2d 510, 513 (Tex.Comm‟n App.1932, opinion adopted). Southern‟s
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`claims arguably arise in privity based on Plaintiffs‟ allegation that Woods conveyed the Property
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`to Southern on April 30, 2015. Dkt. 1-4 at ¶ 38(a). Given that this Court is required to resolve
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`issues of material fact and ambiguities in the state law in Plaintiffs‟ favor, the Court cannot
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`conclude that there is no basis for recovery against BDFTE under the DTPA. Rico, 481 F.3d at
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`239. It is a matter best reserved for the state court to resolve.
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`C. Immunity and “Qualified Immunity”
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`USB contends that BDFTE is entitled to immunity because it is a substitute trustee. Dkt.
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`31 at 6-7. BDFTE similarly argues that Plaintiffs‟ claims against it are barred by “qualified
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`immunity” (Dkt. 28 at 4-5) because BDFTE‟s “only involvement with the Property was as a law
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`firm representing its client, [USB]” in connection with a foreclosure proceeding. Id. The Court
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`finds both arguments unavailing.
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`As explained, a trustee has a separate capacity and is imposed with a particular legal
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`responsibility. Perry v. Long, 222 S.W.2d 460, 467 (Tex.Civ.App. 1949, writ ref‟d) (“trustees
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`are not agents”); see also McIntosh v. U.S. Bank, 2012 WL 75141, at *4 (“A trustee exercising
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`the authority to foreclose in accordance with the terms of a deed of trust does not act merely as
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`11
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`Case 4:15-cv-00536-RC-DDB Document 48 Filed 01/22/16 Page 12 of 13 PageID #: 380
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`an agent or employee of the lienholder but has a separate capacity with a particular legal
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`responsibility.”); Hammonds v. Holmes, 559 S.W.2d 345, 347 (“The trustee has a separate
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`capacity and is imposed with a particular legal responsibility.”); Beggs v. Brooker, 79 S.W.2d
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`642, 643 (Tex.Civ.App. 1934), aff‟d,130 Tex. 46, 106 S.W.2d 1039 (Tex.1937) (same). As also
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`explained, there is no basis to conclude that a substitute trustee cannot be sued ever in her
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`capacity as a substitute trustee or that she must automatically be dismissed simply because she is
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`sued in her capacity as substitute trustee. McIntosh, 2012 WL 75141, at *2-3. Because it is
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`alleged that BDFTE was the substitute trustee for USB, and not acting merely as an agent, the
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`Court cannot find that any doctrine of immunity bars recovery against it.
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`D. Statute of Frauds
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`Finally, USB argues that Plaintiffs‟ claims are barred by the statute of frauds. Because
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`that argument goes only to the validity of the stop sale order allegedly issued by USB, it does not
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`relate to the claims against the in-state defendant BDFTE, which is the issue before the Court for
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`the purpose of the improper joinder inquiry. The focus of this Court‟s inquiry must be the
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`joinder, not the overall merits of the Plaintiffs‟ case. Smallwood, 385 F.3d at 573. Therefore,
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`the Court need not address the merits of USB‟s statute of frauds argument for purposes of this
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`improper joinder analysis.
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`RECOMMENDATION
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`Taking Plaintiffs‟ allegations as true and viewing the facts in a light most favorable to
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`Plaintiffs, and considering the authorities and arguments cited by the parties, the Court finds that
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`Plaintiffs have sufficiently pleaded facts to establish a DTPA claim against BDFTE. “[W]hether
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`the plaintiff has stated a valid cause of action depends upon and is tied to the factual fit between
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`the plaintiffs‟ allegations and the pleaded theory of recovery.” Griggs, 181 F.3d at 701. Based
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`Case 4:15-cv-00536-RC-DDB Document 48 Filed 01/22/16 Page 13 of 13 PageID #: 381
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`on Plaintiff‟s allegations that Southern is a consumer and that BDFTE acted in bad faith and
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`“wrongly sold [the Property] to American” (Dkt. 1-4 at 9), the Court cannot find that there is no
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`possibility of recovery against it. Therefore, this Court does not have jurisdiction over the case.
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`See Willy v. Coastal Corp., 855 F.2d 1160, 1165 (5th Cir. 1988). The Court recommends that
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`Plaintiffs‟ Motion to Remand (Dkt. 26) be GRANTED.
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`Within fourteen (14) days after service of the magistrate judge‟s report, any party may
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`serve and file written objections to the findings and recommendations of the magistrate judge.
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`28 U.S.C.A. § 636(b)(1)(C).
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`A party is entitled to a de novo review by the district court of the findings and
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`conclusions contained in this report only if specific objections are made, and failure to timely file
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`written objections to any proposed findings, conclusions, and recommendations contained in this
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`report shall bar an aggrieved party from appellate review of those factual findings and legal
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`conclusions accepted by the district court, except on grounds of plain error, provided that the
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`party has been served with notice that such consequences will result from a failure to object. Id.;
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`Thomas v. Arn, 474 U.S. 140, 148 (1985); Douglass v. United Servs. Auto Ass’n, 79 F.3d 1415,
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`1417 (5th Cir. 1996) (en banc), superseded by statute on other grounds, 28 U.S.C. § 636(b)(1)
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`(extending the time to file objections from ten to fourteen days).
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