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DISMISSED: Illinois Judge Finds One Glitch (MERS NOMINEE), HSBC and Its Counsel Jointly Face A Fine

DISMISSED: Illinois Judge Finds One Glitch (MERS NOMINEE), HSBC and Its Counsel Jointly Face A Fine


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

HSBC BANK USA, N.A., as Trustee,
etc.,
Plaintiff,

v.

ROBERT GRAD, et al.,
Defendants.

MEMORANDUM OPINION AND ORDER

This action is part of the current cottage industry of
mortgage foreclosures that have been flooding this District Court
(like other courts around the country, no doubt). This Complaint
To Foreclose Mortgage adheres to the kind of pattern consistently
followed by the mortgagee’s counsel in the numerous cases filed
by that counsel’s office–but one glitch in the current filing
has triggered the sua sponte issuance of this memorandum opinion
and order.

As with all complaints that seek to invoke federal subject
matter jurisdiction on diversity of citizenship grounds,
Complaint ¶¶3 through 5 address the citizenship of the parties.
Those allegations are unexceptionable except as to the party
defendant referred to in this fashion in Complaint ¶5:

MORTGAGE ELECTRONIC REGISTRATION SYSTEM INC., AS A
NOMINEE FOR DHI MORTGAGE COMPANY, LTD.-is a limited
partnership organized under the laws of Texas and
having its principal place of business in Texas. The
listed partner for DHI Mortgage Company, Ltd. Is DHI
Mortgage Company GP, Inc. which is a corporation
incorporated in Texas and having its principal place of
business in Texas. MERS is its Nominee.

That clearly does not do the job, for it has been firmly
established for more than two decades (see Carden v. Arkoma
Assocs., 494 U.S. 185, 192-96 (1990)) that where a partnership
(even a limited partnership) is named as a “party” to a lawsuit,
the relevant citizenship for federal diversity purposes is that
of all partners and not merely the “listed partner” (whatever
that means). That principle has been reiterated time and again
(see such cases as Smart v. Local 702 Int’l Bhd. of Elec.
Workers, 562 F.3d 798, 803 (7th Cir. 2009), citing Carden and
Cosgrove v. Bartolotta, 150 F.3d 729, 731 (7th Cir. 1998)).

For a good many years this Court was content simply to
identify such failures to the lawyers representing plaintiffs in
pursuance of its mandated obligation to “police subject matter
jurisdiction sua sponte” (Wernsing v. Thompson, 423 F.3d 732, 743
(7 Cir. 2005)). But there is really no excuse for counsel’s
present lack of knowledge of such a long-established principle.
Hence it seems entirely appropriate to impose a reasonable cost
by reason of counsel’s failing.

Accordingly not only the current Complaint but also this
action are dismissed (cf. Held v. Held, 137 F.3d 998, 1000 (7th
Cir. 1998)), with plaintiff and its counsel jointly obligated to
pay a fine of $350 to the District Court Clerk if an appropriate
Fed. R. Civ. P. 59(e) motion were hereafter to provide the
missing information that leads to a vacatur of this judgment of
dismissal. Because this dismissal is attributable to the lack 1
of establishment of federal subject matter jurisdiction, by
definition it is a dismissal without prejudice.

 

___________________________
Milton I. Shadur
Senior United States District Judge

Date: September 28, 2011

Footnote
________________________________________
1 That fine is equivalent to the cost of a second filing
fee, because a new action would have to be brought if the defect
identified here turns out to be curable.

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