Ward v. Citadel Servicing Corporation

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
GALVESTON DIVISION
PAUL WARD,
Plaintiff.
V.
CITADEL SERVICING
CORPORATION, et al.,
Defendants.
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CIVIL ACTION NO. 3:26-cv-00064
MEMORANDUM AND RECOMMENDATION
Pending before me is Plaintiff’s Motion to Remand. Dkt. 8. Intervening
Defendant ServiceMac, LLC has filed a response in opposition. See Dkt. 13. Having
considered 	the 	parties’ 	briefing 	and 	the 	applicable 	law, 	I 	recommend 	that
Plaintiff’s motion be denied.
BACKGROUND
This lawsuit concerns real property located at 2643 Cutter Court, Manvel,
Texas 	77578 	(the 	“Property”). 	On 	February 	3, 	2026, 	Plaintiff 	Paul 	Ward,
representing himself, filed suit in the 149th Judicial District Court of Brazoria
County, Texas, against Citadel Servicing Corporation d/b/a Acra Lending. Ward
sought to enjoin a non-judicial foreclosure sale scheduled that same day. 1
On March 2, 2026, ServiceMac, acting on behalf of Citibank, N.A., not in its
individual capacity but solely as owner trustee of Bravo Residential Funding Trust
2024-NQM6, filed a Plea in Intervention, asserting that it was the mortgage
servicer at the time of the foreclosure sale and the proper real party in interest.
That same day, ServiceMac removed the case to federal court based on diversity
jurisdiction. See Dkt. 1. On March 16, 2026, two weeks after removal, Ward filed a
motion to remand.
1 Ward filed the lawsuit after the foreclosure sale had already been completed.
United States District Court
Southern District of Texas
ENTERED
May 20, 2026
Nathan Ochsner, Clerk
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LEGAL STANDARD
The federal removal statute permits a defendant to remove any civil action
to federal court that falls within the original jurisdiction of the district courts. See
28 U.S.C. § 1441(a). One such grant of authority is diversity jurisdiction, in which
district courts have original jurisdiction over “all civil actions where the matter in
controversy exceeds the sum or value of $75,000 . . . and is between . . . citizens of
different States.” 28 U.S.C. § 1332(a)(1). Diversity jurisdiction requires that no
plaintiff be a citizen of the same state as any defendant. See Jernigan v. Ashland
Oil Inc., 989 F.2d 812, 814 (5th Cir. 1993). Diversity jurisdiction is assessed at the
time of removal. See Coury v. Prot, 85 F.3d 244, 248–49 (5th Cir. 1996).
“The party seeking to remove bears the burden of showing that federal
jurisdiction exists and that removal was proper.” Scarlott v. Nissan N. Am., Inc.,
771 F.3d 883, 887 (5th Cir. 2014) (quotation omitted). “Because removal raises
significant federalism concerns, the removal statute is strictly construed and any
doubt as to the propriety of removal should be resolved in favor of remand.”
Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008) (quotation omitted).
ANALYSIS
Before I address Ward’s arguments against removal, I must satisfy myself
that diversity jurisdiction exists. That means I must determine (1) whether the
amount in controversy exceeds $75,000; and (2) whether complete diversity of
citizenship exists.
The amount-in-controversy threshold is easily satisfied. Because Ward
sought injunctive relief to prevent a foreclosure sale, the amount in controversy is
measured by the value of the Property. See Hunt v. Wash. State Apple Advert.
Comm’n, 432 U.S. 333, 347 (1977) (“In actions seeking declaratory or injunctive
relief, it is well established that the amount in controversy is measured by the value
of the object of the litigation.”); Farkas v. GMAC Mortg., L.L.C., 737 F.3d 338, 341
(5th Cir. 2013) (“In actions enjoining a lender from transferring property and
preserving an individual's ownership interest, it is the property itself that is the
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object of the litigation; the value of that property represents the amount in
controversy.”). Because the Property “appraises for an estimated $375,000,” the
jurisdictional threshold is satisfied. Dkt. 1-4 at 7.
There is also complete diversity of citizenship. The Property is Ward’s
homestead. See Dkts. 1-4 at 7–8; 1-7 at 2. Thus, Ward is a Texas citizen. See Preston
v. Tenet Healthsystem Mem'l Med. Ctr., Inc., 485 F.3d 793, 797 (5th Cir. 2007)
(for purposes of diversity jurisdiction, an individual is a citizen of the state where
he establishes his domicile). As far as the Defendants are concerned, none are
citizens of the State of Texas. Citadel is a California corporation with its principal
place of business in California. Thus, Citadel is a citizen of California for diversity
purposes. See 28 U.S.C. § 1332(c)(1). ServiceMac’s sole member is First American
Financial Corporation, a Delaware corporation with its principal place of business
in Santa Ana, California. As such, ServiceMac is treated as a citizen of Delaware
and California for the diversity analysis. 2 See Harvey v. Grey Wolf Drilling Co.,
542 F.3d 1077, 1080 (5th Cir. 2008). Because Ward is a Texas citizen and none of
the defendants are Texas citizens, complete diversity of citizenship exists. I now
turn to Ward’s arguments as to why he believes remand is required.
First, Ward argues that the forum-defendant rule mandates remand. The
forum-defendant rule prevents defendants from removing an otherwise removable
action if any of the properly joined and served defendants is a citizen of the forum-
state. See 28 U.S.C. § 1441(b)(2) (“A civil action otherwise removable solely on the
basis of the jurisdiction under [28 U.S.C. § 1332(a)] may not be removed if any of
the parties in interest properly joined and served as defendants is a citizen of the
State in which such action is brought.”). This means that even if the federal district
2 Although ServiceMac is an intervenor, it had the right to remove this action because it
is properly aligned as a defendant since it took over servicing duties from Citadel for the
loan at issue. See Konecny v. Espinoza, No. SA-23-cv-00054, 2023 WL 2352940, at *3
(W.D. Tex. Mar. 2, 2023) (“If the intervenor is properly aligned as a defendant, most
courts agree that an Intervenor may file a notice of removal.”); 14C Charles A. Wright &
Arthur R. Miller, Federal Practice and Procedure § 3730 (Rev. 4th ed.) (“Intervenors may
file notices of removal if they are properly aligned as defendants.” (collecting cases)).
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court has subject-matter jurisdiction (there is complete diversity), the removal is
still procedurally improper if one of the properly joined and served defendants is
from the forum-state. See Texas Brine Co., L.L.C. v. Am. Arbitration Ass’n, Inc.,
955 F.3d 482, 485 (5th Cir. 2020) (recognizing that “the forum-defendant rule is a
procedural rule and not a jurisdictional one”). “The forum-defendant rule exists
because removal based on diversity jurisdiction is intended to protect out-of-state
defendants from possible prejudices in state court, but those concerns are absent
in cases where the defendant is a citizen of the state in which the case is brought.”
Turner v. Aerion Rental Servs., LLC, No. CV 23-1666, 2024 WL 5703920, at *3
(M.D. La. June 5, 2024). Because none of the defendants are citizens of the forum
state (Texas), the forum-defendant rule does not apply here. 3
Second, Ward contends that snap removals are improper. “A snap removal
is a term of art used to describe a defendant’s proper invocation of § 1441(b)(2) to
remove an action before a named co-defendant, who is a citizen of the forum, has
been served.” In re Levy, 52 F.4th 244, 247 (5th Cir. 2022). Ward’s argument fails
on multiple levels. To start, this case does not involve a snap removal because no
defendant is a Texas citizen. Even if this case did involve a snap removal, § 1441’s
“plain language allows snap removal.” Texas Brine Co., 955 F.3d at 486–87.
Third, Ward insists that “[t]he presence of an in-state defendant is a
procedural defect that warrants remand.” Dkt. 8 at 2. This is just a restatement of
Ward’s forum-defendant rule argument. This argument fails for the reasons
already discussed, most notably that there is not an in-state defendant.
Fourth, Ward claims that “Defendants lack standing as a lawful party, thus
depriving this Court of Subject Matter Jurisdiction.” Id. Although the contours of
Ward’s argument are not entirely clear, my impression is that Ward is trying to say
that ServiceMac should not have been permitted to remove the case because it is
3 Even if one of the defendants was a Texas citizen, the forum-defendant rule would still
not apply because none of the defendants had been “properly joined and served” prior to
removal. 28 U.S.C. § 1441(b)(2).
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not a proper party. This argument is without merit. In its Plea In Intervention,
ServiceMac explains that, although Ward named Citadel as the sole defendant in
the case, ServiceMac took over the mortgage servicing duties from Citadel with
respect to the loan in dispute. ServiceMac conducted the non-judicial foreclosure
sale and “[t]he Property was sold back to [ServiceMac] (as purchaser for the
Noteholder).” Dkt. 13 at 9. ServiceMac also seeks a declaratory judgment “that the
non-judicial foreclosure sale conducted on February 3, 2026, was valid and
effective, 	vesting 	fee 	simple 	title 	in 	[ServiceMac] 	(as 	purchaser 	for 	the
Noteholder).” Id. at 10. Because ServiceMac has a justiciable interest in this matter,
there was nothing improper about its removal of the case.
CONCLUSION
For the reasons explained, I recommend that Plaintiff’s Motion to Remand
(Dkt. 8) be denied. This case should proceed in federal court.
The 	parties 	have 	14 	days 	from 	service 	of 	this 	Memorandum 	and
Recommendation to file written objections. See 28 U.S.C. § 636(b)(1)(C); Fed. R.
Civ. P. 72(b)(2). Failure to file timely objections will preclude appellate review of
factual findings and legal conclusions, except for plain error.
SIGNED this 	day of May 2026.
______________________________
ANDREW M. EDISON
UNITED STATES MAGISTRATE JUDGE
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