United States District Court, D. Arizona
IN RE MORTGAGE ELECTRONIC REGISTRATION SYSTEMS (MERS) LITIGATION THIS DOCUMENT RELATES TO: Nicholas DeBaggis
A. TEILBORG SENIOR UNITED STATES DISTRICT JUDGE
before the Court is Defendant MERSCORP Inc. n/k/a MERSCORP
Holdings, Inc.’s and Defendant Mortgage Electronic
Registration Systems, Inc.’s (collectively,
“Defendants”) Motion to Dismiss Plaintiff
Nicholas DeBaggis’s (“DeBaggis”) claims for
lack of jurisdiction. (Doc. 1985 at 2, n.1). The Court rules
purposes of the resolution of the pending Motion, the Court
considers the relevant facts and background to be as follows.
stated in this Court’s December 21, 2015 Order,
“[t]his case originally began as a multi-district
litigation (“MDL”) centralizing civil actions
related to the formation and operation of Mortgage Electronic
Registration Systems, Inc. and MERSCORP, Inc.,  [the
Defendants]. (Doc. 1). After claims in twenty of the
associated cases were dismissed (Doc. 1170; Doc. 1247), the
remaining Plaintiffs filed a Consolidated Amended Complaint
(“CAC”) on June 4, 2011. (Doc. 1424).”
(Doc. 2005 at 1-2).
October 3, 2011, this Court dismissed the CAC with prejudice
(Doc. 1602) under Federal Rule of Civil Procedure 12(b)(6)
for “failure to state a claim upon which relief can be
granted.” Fed.R.Civ.P. 12(b)(6). This Order explicitly
mentioned DeBaggis in its discussion of Count I of the CAC,
stating “alleged Plaintiff DeBaggis is not a named
Plaintiff in any member case of this MDL. Accordingly,
Plaintiffs’ claim cannot rest on allegations relating
to Plaintiff DeBaggis.” (Doc. 1602 at 8). Plaintiffs
then appealed the dismissal of Counts I-VI of the CAC to the
Ninth Circuit Court of Appeals. (Doc. 2005 at 2). The Court
of Appeals affirmed the dismissal of Counts II-VI, but
reversed and remanded as to Count I. In re Mortgage Elec.
Registration Sys., Inc., 754 F.3d 772, 786 (9th Cir.
September 3, 2015, Defendant U.S. Bank National Association
(“U.S. Bank”) also pointed out that DeBaggis
“never filed a lawsuit that the Judicial Panel on
Multi-district Litigation transferred to this
Court.” (Doc. 1926 at 2). Shortly thereafter, on
November 6, 2015, the Court noted, “in amending the
complaint in this MDL, at some point, Plaintiffs’
counsel added Mr. DeBaggis as a Plaintiff. Further, the Ninth
Circuit Court of Appeals expressly referenced Mr. DeBaggis as
having stated a claim in its opinion on appeal.” (Doc.
1978 at 1). Accordingly, the Court ordered DeBaggis to
“show cause why his ‘case’ should not be
dismissed (unrelated to any claim he might have as a
potential class member in the motions for class
certification), because he is not properly before this Court
as a named Plaintiff.” (Id. at 2).
November 10, 2015, Defendants moved for summary judgment on
Count I in Plaintiffs’ CAC as to Plaintiff DeBaggis.
(Doc. 1985). In this Motion for Summary Judgment,
Defendants’ alternately moved to dismiss
DeBaggis never filed a lawsuit that the Judicial Panel on
Multi-District Litigation transferred to this Court. Rather,
DeBaggis was joined when Plaintiffs filed their Consolidated
Master Complaint-which is impermissible-and thus, this
Court’s jurisdiction has not been invoked. See,
e.g., In re Farmers Ins. Exch. Claims
Representatives’ Overtime Pay Litig., 2008 WL
4763029, at *5 (D. Or. Oct. 28, 2008) (dismissing four claims
because there is “no authority for this court, as an
MDL transferee court, to exercise subject matter jurisdiction
over state law claims not transferred by the MDL
Panel”); In re Packaged Ice Antitrust Litig.,
2011 WL 6178891, at *9 (E.D. Mich. Dec. 12, 2011) (attempt to
add new named plaintiffs to consolidated amended complaint
“ignored basic Article III principles and . . .
bypassed the appropriate MDL process for consolidation of
these plaintiffs’ claims”). The MERS Defendants
alternatively request that DeBaggis’s claims be
dismissed for lack of jurisdiction.
(Id. at 2, n.1).
November 12, 2015, Plaintiffs filed a Notice of Compliance
with Order to Show Cause Regarding Nicholas DeBaggis. (Doc.
1992). Although Plaintiff’s Notice of Compliance
“explained the reasons that Mr. DeBaggis stated a
claim, ” “[t]he Court had no doubt . . . that Mr.
DeBaggis stated a claim” pursuant to Rule 12(b)(6)
following the Ninth Circuit’s mandate in the matter of
In re Mortgage Elec. Registration Sys., Inc.. (Doc.
1996 at 1). “However, Plaintiff’s argument that
the Court of Appeals could confer jurisdiction on this Court
by negative implication is not well taken.”
(Id.). Accordingly, finding that Plaintiffs’
Notice of Compliance failed to answer the Court’s
question posed in its prior Order (Doc. 1978), the Court then
ordered Plaintiffs on November 17, 2015 to file a
supplemental brief answering two questions:
1. Does a transferee MDL court have the authority to join
‘new’ plaintiffs in an MDL when such Plaintiffs
never filed their own case (nor paid the filing fee) and
never had their cases transferred to this Court by the panel
on multidistrict litigation.
2. Who are the defendants to Mr. DeBaggis’s case and
what is the Court’s basis for federal subject matter
jurisdiction over Mr. DeBaggis’s case.
(Doc. 1996 at 1-2) (footnote omitted).
December 4, 2015, Plaintiffs filed the requested Supplemental
Brief Regarding Jurisdictional Issues. (Doc. 2001). In their
brief, Plaintiffs assert that the Court has subject-matter
jurisdiction over DeBaggis’s claims even though
DeBaggis “was added [as a Plaintiff] by amendment and
not as a result of his filing a separate member case.”
(Id. at 3-4). Plaintiffs allege that “[t]he
basis for this Court’s federal subject matter
jurisdiction over Mr. DeBaggis’ case is diversity of
citizenship.” (Id. at 6-7). Plaintiffs further
contend in its brief that DeBaggis has a claim against
Defendant Mortgage Electronic Registration Systems, Inc.
“based on its involvement in the recording of the false
documents related to Mr. DeBaggis’ property.”
(Id. at 6).
December 18, 2015, Defendants filed their Reply to
Plaintiffs’ Supplemental Brief. (Doc. 2004). This Reply
The jurisdictional issue relating to DeBaggis does not
involve whether there was diversity jurisdiction or federal
question jurisdiction relating to DeBaggis’s claims.
Rather, the issue is whether the Court’s jurisdiction
was sufficiently invoked because DeBaggis never filed a
lawsuit in this federal court or in any other federal court
that was then transferred to the MDL Court by the Judicial
Panel on Multi-District Litigation.
(Id. at 16, n.8).
February 1, 2016, Plaintiffs responded to Defendants’
Motion to Dismiss, incorporating by reference their
Supplemental Brief Regarding Jurisdictional Issues. (Doc.
2013 at 2). Defendants’ replied to Plaintiffs’
response on February 29, 2016, again stating that
“DeBaggis’s claims alternatively should be
dismissed for lack of jurisdiction.” (Doc. 2044 at 1,
for Lack of ...