Cohn v. Charles, Civil No. PJM 11–2013.

• Citation: 857 F.Supp.2d 544
• Decision Date: 30 January 2012
• Docket Number: Civil No. PJM 11–2013.
• Parties: Edward S. COHN, et al. Substitute Trustees, Plaintiffs/Counter–Defendants v. Yanel CHARLES, Defendant/Counter–Plaintiff. Yanel Charles, Defendant/Third–Party Plaintiff v. Nationstar Mortgage, LLC, Third–Party Defendant.
• Court: U.S. District Court — District of Maryland

857 F.Supp.2d 544

Edward S. COHN, et al. Substitute Trustees, Plaintiffs/Counter–Defendants

v.Yanel CHARLES, Defendant/Counter–Plaintiff.

Yanel Charles, Defendant/Third–Party Plaintiff

v.Nationstar Mortgage, LLC, Third–Party Defendant.

Civil No. PJM 11–2013.

United States District Court, D. Maryland.

Jan. 30, 2012.

Mark David Meyer, Stephanie R. Montgomery, Rosenberg and associates, LLC, Bethesda, MD, Michael Joseph McKeefery, Cohn Goldberg and Deutsch, LLC, Towson, MD, for Plaintiffs.

Seann Patrick Malloy, Malloy Law Offices LLC, Bethesda, MD, for Defendant.

Mark David Meyer, Rosenberg and Associates, LLC, Bethesda, MD, Edward Hutchinson Robbins, Jr., Katherine B. Hill, Miles and Stockbridge PC, Baltimore, MD, for Third–Party Defendant.

MEMORANDUM OPINION

PETER J. MESSITTE, District Judge.

On September 10, 2009, Substitute Trustees Edward S. Cohn, Stephen Goldberg, Richard Solomon, and Richard Rogers (collectively the “Trustees”) filed an Order to Docket a foreclosure in the Circuit Court for Prince George's County, Maryland, against Yanel Charles's real property in Mount Rainier, Maryland. On June 3, 2011, also in Circuit Court, Charles filed a Counterclaim against the Trustees and a Third Party Complaint against the successor mortgagee of the property, Nationstar Mortgage, LLC (“Nationstar”), alleging violations of the Truth in Lending Act and the Real Estate Settlement Procedures Act—both Federal statutes. On July 21, 2011, the Trustees and Nationstar removed the Counterclaim and Third Party Complaint to this Court.

Charles has filed a Motion to Remand to State Court [Docket No. 16] on the basis of the well-pleaded complaint rule. At the Court's instruction, Charles has also filed a Motion for Attorneys' Fees [Docket No. 26]. Also pending before the Court are Nationstar's Motion to Dismiss [Docket No. 10] and the Trustees' Motion to Dismiss [Docket No. 17].

For the reasons stated below, Charles's Motion to Remand to State Court [Docket No. 16] is GRANTED, his Motion for Attorneys' Fees [Docket No. 26] is DENIED, Nationstar's Motion to Dismiss [Docket No. 10] is MOOT, the Trustees' Motion to Dismiss [Docket No. 17] is MOOT, and this case shall be REMANDED to the Circuit Court for Prince George's County, Maryland.

I.

A.

Federal district courts have “original jurisdiction” over all “civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. A “defendant” may remove to federal court “any civil action brought in a State court of which the district courts of the United States have original jurisdiction” unless expressly prohibited. Id. § 1441(a). Removal is also proper where “separate and independent” claims that arise under federal law are joined to otherwise non-removal claims. Id. § 1441(c).¹In any event, “[r]emoval statutes ... must be strictly construed, inasmuch as the removal of cases from state to federal court raises significant federalism concerns.” Barbour v. Int'l Union, 640 F.3d 599, 605 (4th Cir.2011). Doubts about the propriety of removal are to be resolved in favor of remanding the case to state court. See Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 816 (4th Cir.2004) (en banc) ( citing Mulcahey v. Columbia Organic Chems. Co., Inc., 29 F.3d 148, 151 (4th Cir.1994)).

Only a defendant to an action—neither a counter-defendant nor a third-party defendant—may remove a case under § 1441(a). See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 107–09, 61 S.Ct. 868, 85 L.Ed. 1214 (1941) (strictly construing § 1441 and finding that the term “defendant” precludes a plaintiff/counter-defendant from removing to federal court); Palisades Collections LLC v. Shorts, 552 F.3d 327, 332 (4th Cir.2008) (“For more than fifty years, courts applying Shamrock Oil have consistently refused to grant removal power under § 1441(a) to third-party defendants.”).

In determining whether an action “arises under federal law,” courts must look at “the face of the plaintiff's properly pleaded complaint.” Verizon Md., Inc. v. Global NAPS, Inc., 377 F.3d 355, 363 (4th Cir.2004) ( citing Caterpillar v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987)). Under this “well pleaded complaint rule,” a case does not become removable simply because the defendant in the state proceeding raises a federal counterclaim or federal defense. See Holmes Group, Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826, 831, 122 S.Ct. 1889, 153 L.Ed.2d 13 (2002) (“[A] counterclaim—which appears as part of the defendant's answer, not as part of the plaintiff's complaint—cannot serve as the basis for ‘arising under’ jurisdiction.”); In re Blackwater Sec. Consulting, LLC, 460 F.3d 576, 584 (4th Cir.2006) (“Under what has become known as the well-pleaded complaint rule, § 1331 federal question jurisdiction is limited to actions in which the plaintiff's well-pleaded complaint raises an issue of federal law; actions in which defendants merely claim a substantive federal defense to a state-law claim do not raise a federal question.”).

B.

To determine whether the present action was properly removed, the Court must first identify which party “brought” the case in state court. 28 U.S.C. § 1441(a). See Haun v. Retail Credit Co., 420 F.Supp. 859, 862 (W.D.Pa.1976) (“Congress intended the word ‘brought’ to mean no more than its usual connotation of ‘commenced’ when it provided in Section 1441(a) for removal of cases ‘brought in a State court.’ ”). This will determine which party was the “defendant” in that court, hence able to initiate removal, and what constituted the “complaint” for the purposes of the well-pleaded complaint rule. Charles argues that it was the Trustees who brought the case when they filed the Order to Docket to initiate the foreclosure proceeding in the Circuit Court for Prince George's County, Maryland. SeeMd. Rule 14–207; Md.Code Ann., Real Prop. § 7–105.1(d). The Trustees and Nationstar counter that under Maryland law, an order to docket a foreclosure is not a “pleading,” and, therefore, it was Charles who initiated the action when he filed the Counterclaim and Third Party Complaint. See Saunders v. Stradley, 25 Md.App. 85, 333 A.2d 604, 610 (Md.Ct.Spec.App.1975).

The Court agrees with Charles.

To review the procedural history: The Trustees commenced a foreclosure action in state court on behalf of Nationstar; Charles then filed a Counterclaim and Third Party Complaint within the foreclosure proceeding, as permitted by Maryland law. See Fairfax Sav., F.S.B. v. Kris Jen Ltd. P'ship, 338 Md. 1, 655 A.2d 1265, 1275 (1995) (holding that a mortgagor could have asserted lender liability claims as a counterclaim within the foreclosure proceeding).

The Counterclaim and Third Party Complaint were filed within an existing state proceeding and, therefore, did not create a removable “civil action brought in a State court” to which the Trustees or Nationstar are defendants.²28 U.S.C. § 1441(a). Accordingly, the Trustees are plaintiffs/counter-defendants and Nationstar is a third-party defendant within the foreclosure proceeding, and they have no authority to remove under § 1441(a). See Palisades Collections, 552 F.3d at 333 (“[W]e easily conclude that an additional counter-defendant is not a “defendant” for purposes of § 1441(a).”).

Even if the Trustees and Nationstar were “defendants” in the state proceeding, inasmuch as the federal question arises only from the Counterclaim and Third Party Complaint—not from the Order to Docket—the Court lacks jurisdiction under the well-pleaded complaint rule. See Holmes Group, 535 U.S. at 831, 122 S.Ct. 1889;Jacob v. Hinds, No. 10–2103, 2010 WL 3782008, at *2 (D.Md. Sept. 23, 2010) (“Here, there is no federal question presented by the Order to Docket Foreclosure of Residential Property or the accompanying papers filed by Plaintiffs in state court .... Thus, the removal cannot be sustained in this court on the basis of federal question jurisdiction.”).

The argument of the Trustees and Nationstar that under Maryland law, “an ‘order to docket’ is not a pleading,” Saunders, 333 A.2d at 610, and that therefore removal is proper, fails for two reasons. First, Saunders may very well not reflect the current state of Maryland foreclosure law, which has undergone numerous revisions since it was decided. The most recent amendments, enacted in 2009, “provided additional protections to the mortgagor and changed the Order to Docket, endowing it with several characteristics of a complaint,” and at least one Maryland court has explicitly disavowed Saunders, finding that “the Maryland Order to Docket is a pleading” under current law. Azzam v. Echehoyen, No. 10–C–09–003965, 2010 Md. Cir. Ct. LEXIS 2, at *12 (Md.Cir.Ct. March 15, 2010) (emphasis added); see also MacFadyen v. Smith, No. 10–2802, 2011 WL 1740583, at *3 (D.Md. May 3, 2011) (remanding to state court under the well-pleaded complaint rule because the order to docket a foreclosure did not invoke federal law); Jacob v. Hinds, 2010 WL 3782008, at *2 (same).

Second, whether or not an order to docket a foreclosure is a complaint, the Trustees and Nationstar had no authority to unilaterally sever the Counterclaim and Third Party Complaint from the foreclosure proceeding and remove just that portion of the case to federal court. Matters relating to the administration of the state court proceeding, including whether to sever the federal claims from the foreclosure, lie within the Maryland Circuit Court's discretion. See Fairfax Sav., 655 A.2d at 1275 n. 9 (“Although there is no theoretical obstacle to docketing a counterclaim by the mortgagor in a mortgage foreclosure proceeding, there are innumerable practical difficulties.... If the counterclaim is filed before sale, the court may be required to exercise its discretion as to which aspect of the single action on the docket is to proceed first.... If exceptions to the ratification of the sale are filed, a circuit court may also have to consider issues of...