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Mathes v. Burns

United States District Court, M.D. Tennessee, Nashville Division

October 22, 2019

PEGGY D. MATHES, Administrator, Plaintiff,



         Defendant Reverse Mortgage Funding, LLC (“RMF”) filed a Notice of Removal (Doc. No. 1), removing this action from the Seventh Circuit Court for Davidson County, Tennessee, Probate Division, to this court, on August 26, 2019. Now before the court is plaintiff Peggy Mathes' Motion to Dismiss Transfer to Federal Court and Remand (“remand motion”) (Doc. No. 6), to which RMF has filed a Response in opposition (Doc. No. 7). For the reasons set forth herein, the court will grant the motion and remand this matter to the state court from which it was transferred.


         Annie Burns filed a Petition to Admit Will to Probate in the Seventh Circuit Court for Davidson County, Tennessee on October 6, 2016, Case No. 16P1690 (“Probate Action”), seeking to be appointed as the executor of the Estate (“Estate”) of John Jefferson Waller, Jr. (“Decedent”) (Doc. No. 1, at 1), and to probate a will that purported to name her as the beneficiary.[2] Peggy Mathes was appointed administrator of the Decedent's Estate on November 15, 2016. (Id. at 2.) In that capacity, on January 27, 2017, Mathes filed her Petition to Recoup Assets of the Estate and Application for a Restraining Order (the “Petition” or “Recoupment Petition”), in the Probate Action, thus initiating the Recoupment Action that has now been removed to this court. The respondents named in the Recoupment Petition are Burns, RMF, and John Bucky Philip, Trustee. (Doc. No. 1-2, at 12-18.)[3]

         At the time of his death, the Decedent's assets included an account at Regions Bank and real property located at 2421 Meharry Blvd., Nashville, Tennessee (“Property”). The Petition asserts that Burns, a Nashville resident, obtained a power of attorney (“POA”) for the Decedent in July 2016 and, using the POA, placed her name on Decedent's Regions Bank account as having signature rights, enabling her to make deposits and withdrawals on behalf of the Decedent. (Petition ¶ 6.) Decedent at the time was 96 years old, blind, illiterate, incontinent, and in extremely poor health. According to the Petition, the Decedent was not capable of making informed, independent decisions. (Id. ¶ 8.) Around the same time, Burns completed an on-line application with RMF to obtain a reverse mortgage on the Property. (Id. ¶ 7.)

         Mathes alleges that Burns and RMF “fraudulently and knowingly caused Decedent to enter into a reverse mortgage contract for the sole benefit of [RMC and Burns], with no benefit to the Decedent. All contact with [RMF] was made with Annie Burns. Annie Burns and [RMF] colluded to defraud the Decedent in encumbering the[P]roperty, ” and RMF “engaged in unfair and deceptive actions” in connection with the transaction. (id. ¶ 9.) The Petition specifically asserts that RMF knew or should have known, by conducting any investigation, that the Decedent lacked the capacity to enter into a contract or to complete the mandatory independent HUD counseling. The Petition alleges that RMF violated Tenn. Code Ann. § 47-3-115; that RMF “conspired with Annie Burns to commit conversion of funds” belonging to the Decedent to Burns' use and benefit; and that RM “actively participated in the perpetration of the wrongful act and ratified the fraudulent misappropriation of funds belonging to” the Decedent. (Petition ¶ 11.) RMF wired funds in the amount of $48, 501 to the Decedent's bank account on September 12, 2016. (Id. ¶ 13.)

         Burns, using the POA, withdrew $700 from the Decedent's Regions Bank account for her own use prior to the wire transfer from RMF; made additional withdrawals in a sum of more than $17, 000 between September 12, 2016 and the Decedent's death on September 24, 2016; and withdrew an additional $29, 500 in the days after the Decedent's death, when her power of attorney and signature withdrawal rights were no longer valid for any purpose. (Id. ¶¶ 14-16.)

         The Petition asserts that Burns intentionally and fraudulently converted to her own use funds belonging to Decedent, to the detriment of the Estate (id. ¶ 19), and that Burns and RMF exploited the Decedent, an elderly person, causing the conversion of funds belonging to him by fraud and coercion, in violation of Tenn. Code Ann. § 71-6-120 (id. ¶ 20).

         The Petition seeks relief in the form of (1) a Temporary Restraining Order prohibiting RMF from foreclosing on the Property; (2) a judgment for damages against Burns and RMF for all funds converted to the detriment of the Estate, before and after the Decedent's death, in an amount not less than $48, 501; (3) an injunction setting aside the reverse mortgage; (4) an order requiring Burns to show cause why the $29, 500 taken from the Decedent's Regions Bank account after his death should not be immediately returned to the Estate; (5) an award of attorney's fees, costs, and punitive damages under Tenn. Code Ann. § 71-6-120; and (6) “such other further and general relief” to which the petitioner may be entitled. (Petition at 6-7, Doc. No. 1-2, at 17-18.) Following the filing of the Petition, Administrator Mathes promptly obtained a show-cause order and then an Agreed Judgment against Annie Burns in the amount of $29, 854.19, reflecting the amount of money she had removed from the Decedent's bank account after his death, plus an additional $354.19 charged on his credit card after his death. (Doc. No. 1-2, at 32, 50-51.)

         On June 14, 2019, Mathes, on behalf of the Estate, filed a Motion in the Probate Court seeking approval of a settlement agreement with Annie Burns, indicating that the proposed settlement “would allow the Administrator to set aside the remaining balance of the Judgment against Annie Waller Burns in exchange for Ms. Burns' dismissal of her petition to probate the Last Will and Testament of John Jefferson Waller dated August 23, 2016.” (Doc. No. 1-2, at 167.) The Probate Court entered an Order Approving Settlement on July 12, 2019. The Order, like the motion, indicates only that it approved a settlement agreement that entailed the setting aside of the remainder owed by Annie Burns on the Agreed Judgment entered on February 24, 2017 in exchange for Burns' voluntary dismissal of her will contest.

         RMF filed the Notice of Removal on August 26, 2019, asserting that removal is appropriate based on diversity jurisdiction and that removal was timely because it was filed within 30 days of RMF's receipt of a document from which it first ascertained that the case was removable. (Doc. No. 1 ¶ 5.) Administrator Mathes, on behalf of the Estate, filed the remand motion on September 4, 2019. (Doc. No. 6.) RMF filed a Response in opposition. (Doc. No. 7.)


         Removal from state court to federal court is proper for “any civil action brought in a [s]tate court of which the district courts of the United States have original jurisdiction.” 28 U.S.C. § 1441(a). Federal district courts have original jurisdiction over “federal question” cases, that is, cases that implicate questions “arising under the Constitution, laws, or treaties of the United States, ” 28 U.S.C. § 1331, and over “civil actions where the amount in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between . . . citizens of different states.” 28 U.S.C. § 1332(a).

         A court considers whether federal jurisdiction existed at the time of removal, and the removing party bears the burden of establishing that the jurisdictional requirements have been met. Smith v. Nationwide Prop. & Cas. Ins. Co., 505 F.3d 401, 404 (6th Cir. 2007) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)). It is well settled in the Sixth Circuit that, “because they implicate federalism concerns, removal statutes are to be narrowly construed.” Long v. Bando Mfg. of Am., Inc., 201 F.3d 754, 757 (6th Cir. 2000). Thus, when there is uncertainty as to whether remand is appropriate, “[a]ll doubts as to the propriety of removal are resolved in favor of remand.” Smith, 505 F.3d at 405 (citations omitted).

         Generally, a notice of removal must be filed “within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading.” 28 U.S.C. § 1446(b)(1). If an action is not removable on the basis of the initial pleading, “a notice of removal may be filed within 30 days after receipt by the defendant . . . of a copy of an amended pleading, motion, order or other paper from which it may be ascertained that the case is one which is or has become removable.” 28 U.S.C. § 1446(b)(3). If removal under § 1446(b)(3) is based on diversity of citizenship, however, it is subject to a one-year time limitation, which may be extended only upon a showing of bad faith on the part of the plaintiff:

A case may not be removed under subsection (b)(3) on the basis of jurisdiction conferred by section 1332 more than 1 year after commencement of the action, unless the district court finds that the plaintiff has acted in bad faith ...

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