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Civil Procedure — frivolous actions — sanctions

By: WISCONSIN LAW JOURNAL STAFF//August 15, 2014//

Civil Procedure — frivolous actions — sanctions

By: WISCONSIN LAW JOURNAL STAFF//August 15, 2014//

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U.S. Court of Appeals for the 7th Circuit

Civil

Civil Procedure — frivolous actions — sanctions

Where the defendant frivolously removed a garden-variety foreclosure action to federal court, sanctions were proper, and the attorney is ordered to show cause why she shouldn’t be sanctioned as well.

“On the merits of Spencer’s appeal, Nora argues that it was reasonable to remove the case under 28 U.S.C. § 1349 because Freddie Mac was the ‘real party in interest,’ so the district court should not have awarded fees and costs. This argument is baseless. As the court correctly concluded, Freddie Mac is not a party, so § 1349 — which refers to actions ‘by or against’ a congressionally created corporation — does not create federal jurisdiction. Nora nonetheless insists that because Freddie Mac purchased the mortgage, it is the ‘real party in interest’ and PNC’s suing in its own name was fraudulent. She offers no legal authority supporting this proposition, which is wrong for several reasons. First, since PNC is the holder of the mortgage note, PNC is entitled to enforce it. See WIS. STAT. § 403.301; PNC Bank, N.A. v. Bierbrauer, 827 N.W.2d 124, 126–27 (Wis. Ct. App. 2012). Second, the Supreme Court has rejected the theory that the federal courts, when assessing their jurisdiction, should look beyond the pleadings to discover unnamed real parties in interest. See Lincoln Property Co. v. Roche, 546 U.S. 81, 92–93 (2005). Third, Nora effectively conceded that Freddie Mac could not have been a proper party when she acknowledged in the notice of removal that ‘Freddie Mac purchased the purported loan obligation [but] neither owns nor holds the note and mortgage.’ Because there was no objectively reasonable basis for federal jurisdiction or for removal, the district court did not abuse its discretion in awarding fees and costs to PNC. See 28 U.S.C. § 1447(c); Martin v. Franklin Capital Corp., 546 U.S. 132, 139–41 (2005); Tenner v. Zurek, 168 F.3d 328, 329–30 (7th Cir. 1999).”

Affirmed.

13-2676 PNC Bank, N.A., v. Spencer

Appeal from the United States District Court for the Western District of Wisconsin, Crabb, J., Per Curiam.

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