United States District Court, M.D. Tennessee, Cookeville Division
WAVERLY D. CRENSHAW, JR. CHIEF UNITED STATES DISTRICT JUDGE
action arises out of a home equity conversion mortgage
transaction, commonly called a reverse mortgage. Jessica
Yvonne Matthews (“Mrs. Matthews”) alleges that
Bank of America (“BOA”) engaged in prohibited
acts under Tennessee's Home Equity Conversion Mortgage
Act (“HECMA”), Tenn. Code Ann. § 47-30-101,
et seq., and committed fraud or constructive fraud.
Pending is Mrs. Matthews' Motion to Remand (Doc. No. 8)
and BOA's Motion to Dismiss (Doc. No. 6). For the reasons
that follow, the motions will be denied.
Matthews and her husband Gayle Ceron Matthews (“Mr.
Matthews”) resided at 190 Turkey Creek Highway,
Carthage, Tennessee (the “Property”). Mr.
Matthews sought a reverse mortgage from BOA. He executed a
Fixed Rate Note (the “Note”) providing that BOA
would advance him “up to a maximum principal amount of
$177, 000.00, ” and that he “promise[d] to pay to
[BOA] a principal amount equal to the sum of all Loan
Advances made under the Loan Agreement with Interest . . at
the rate of . . . 5.49% per year until the full amount of
principal has been paid.” (Doc. No. 6-2.) Paragraph
6(A) of the Note, entitled “IMMEDIATE PAYMENT-IN-FULL .
. . Death or Sale, ” provides that “Lender may
require immediate payment-in-full of all outstanding
principal and accrued interest if: (i) [a] Borrower dies and
the Property is not the principal residence of at least one
surviving Borrower.” (Id. at ¶ 6.) Mrs.
Matthews did not sign the Note and is not listed as a
Borrower. (Id. at ¶ 1 (definition of Borrower)
and p. 5 (signatures)).
Note was secured by a Fixed Rate Home Equity Conversion Deed
of Trust (“Deed of Trust”). (Doc. No. 1-1.) Under
the Deed of Trust, BOA “may require immediate
payment-in-full of all sums secured by [the Deed of Trust] if
. . . A Borrower dies and the Property is not the principal
residence of at least one surviving Borrower.” (Doc.
No. 10-1 at 15, ¶ 9(a)(1)). The Deed of Trust further
provides that after the lender requires payment-in-full, it
“may invoke the power of sale.” (Id. at
¶ 20.) In such event, any person holding possession of
the Property through the Borrower must immediately surrender
possession of the Property to the purchaser at the sale.
(Id.) Although the “Borrower” is
identified as Mr. Matthews in the Deed of Trust (Doc. No. 6-3
at 1), it was executed by both Mr. and Mrs. Matthews as
“Borrowers” (id. at 10).
of the transaction, BOA required Mrs. Matthews to execute a
Quitclaim Deed transferring all of her rights, title, and
interest in the Property to Mr. Matthews. (Doc. Nos. 10-1 at
¶¶ 5, 8-10; 10-1 at Ex. A; 6-3 at 2.) According to
Mrs. Matthews, BOA assured her this would not affect her
right to continue living in the Property if she was
predeceased by Mr. Matthews. (Doc. No. 10-1 at ¶ 9.)
Mrs. Matthews avers that she believed she was executing the
Quitclaim Deed to obtain the reverse mortgage and to remain
in the Property regardless of what might happen.
(Id. at ¶ 16.) She alleges that she would not
have executed the Quitclaim Deed or Deed of Trust if she had
known she could lose the Property upon Mr. Matthews'
death. (Id. at ¶ 9, 11.)
Matthews passed away in June 2013. He left all property to
Mrs. Matthews. (Doc. No. 1-1 at 8.) In February 2018, Mrs.
Matthews filed a Petition to probate his will in the Probate
Court for Smith County, Tennessee. (Id. at 2-5.) The
Petition asserted that Mr. Matthews' estate, which
included the Property, passed to Mrs. Matthews according to
the terms of Mr. Matthews' will. (Id.) The
Probate Court admitted Mr. Matthews' will to probate and
issued Letters Testamentary to Mrs. Matthews as Executrix.
(Id. at 6-7.) There is no allegation that BOA made a
claim on the Property in probate.
BOA notified Mrs. Matthews that it intended to foreclose on
the Property due to “a default having occurred.”
(Doc. No. 10-1 at ¶ 18.) Mrs. Matthews was surprised by
this turn of events. (Id. at ¶ 19.) Mrs.
Matthews believed that the Deed of Trust gave her the right
of possession to the Property. To protect her possessory
interest, Mrs. Matthews filed an action in the Chancery Court
of Smith County seeking an injunction to prohibit the
foreclosure. (Doc. No. 1-1 at 18-21.) The Chancery Court
granted a temporary injunction. (Id. at 16-17.) BOA
then filed a motion to dismiss the petition for injunctive
relief (id. at 29-30), which was granted
(id. at 54).
Matthews filed an Amended Petition in the Chancery Court
against BOA in March 2019. (Doc. No. 10-1.) She described it as an
action under the “laws and statutes governing Fixed
Rate Home Equity Conversion Mortgages in the State of
Tennessee.” (Doc. No. 10-1 at 3.) The Amended Petition
restated the initial allegations and added allegations that
BOA misrepresented material facts, made false promises, and
took unfair and deceptive actions related to the reverse
mortgage. (Id. at 4-5.) Based upon these claims,
Mrs. Matthews alleges that BOA violated HECMA and committed
fraud or constructive fraud. (Id. at 6-7.) She seeks
injunctive relief against foreclosure and money damages.
(Id. at 7-8.)
Motion to Remand
eleven months, BOA removed the Chancery Court action to this
Court on the basis of diversity jurisdiction. (See
Doc. Nos. 1, 1-1.) Mrs. Matthews agrees diversity
jurisdiction exists, but contends that remand is proper under
the probate exception.
probation exception is narrow. This reflects the general rule
that “when one court is exercising in rem
jurisdiction over a res, a second court will not
assume in rem jurisdiction over the same
res.” Marshall v. Marshall, 547 U.S.
293, 312 (2006). Federal courts are able to handle suits
related to a decedent's estate as long as the federal
court does not interfere with the probate proceedings or take
jurisdiction over probate itself or of property that is in
the custody of a state probate court. Cartwright v.
Estate of Peterson, No. 3:17-cv-01464, 2018 WL 4945232,
at * 2 (M.D. Tenn. July 2, 2018).
Sixth Circuit explains that the probate exception applies in
three circumstances: (1) if the plaintiff seeks to probate a
will; (2) if the plaintiff seeks to annul a will; or (3) if
the plaintiff seeks to reach a res over which a
state court has custody. Chevalier v. Estate of
Barnhart, 803 F.3d 789, 801 (6th Cir. 2015) (quoting
Wisecarver, 489 F.3d at 750); Wildasin v.
Mathes, No. 3:14-cv-02036, 2019 WL 2269878, at *4 (M.D.
Tenn. May 28, 2019). The first two circumstances are not at
issue here. So, the question is whether the Chancery Court
action seeks to reach a res over which the Probate
Court has jurisdiction. Id. at 801-804. Determining
if the probate exception applies is a two-step process.
First, the Court must identify whether the causes of action
are in personam or in rem.
Chevalier, 803 F.3d at 801-802. Second, the Court
must determine whether the plaintiff has asked a federal
court to “elbow its way into” an ongoing
“fight[ ] over a property or a person in [another]
court's control.” Id. The latter question
cannot be answered in the affirmative “unless a probate
court is already exercising in rem
jurisdiction over the property” at the time the case
arrives in federal court. Id. at 804 (emphasis
the Chancery Court action seeks to resolve the dispute
between Mrs. Matthews and BOA arising from her execution of
the Deed of Trust and the Quitclaim Deed. She challenges the
validity of both documents and thus BOA's right to
foreclosure. Mrs. Matthews' statutory and tort claims are
in personam claims against BOA that challenge only
BOA's actions regarding the reverse mortgage process. Her
claims do not require the Court to assume jurisdiction over
the Property. See Chevalier, 803 F.3d at 801-02
(claims for breach of contract, default, unjust enrichment,
fraud, and constructive trust were in personam and
did not trigger the probate exception). The Court is capable