Daimler Trust v. Prestige Annapolis, LLC

• Decision Date: 07 June 2016
• Docket Number: Civil Action No.: ELH-16-544
• Parties: DAIMLER TRUST, ET AL., Plaintiffs, v. PRESTIGE ANNAPOLIS, LLC, Defendant.
• Court: U.S. District Court — District of Maryland

DAIMLER TRUST, ET AL., Plaintiffs, v. PRESTIGE ANNAPOLIS, LLC, Defendant.

Civil Action No.: ELH-16-544

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

June 7, 2016

MEMORANDUM OPINION

Plaintiffs Daimler Trust and Daimler Title Company ("Daimler Title") filed suit on February 25, 2016, against defendant Prestige Annapolis, LLC ("Prestige"), to obtain possession of a 2016 Mercedes-Benz. ECF 1. The Complaint, which is supported by two exhibits (filed collectively as ECF 1-2), contains five counts: violation of plaintiffs' due process rights under the Fourteenth Amendment, pursuant to 42 U.S.C. § 1983 ("§ 1983") (Count I); replevin (Count II); deprivation of property without due process of law, in violation of Article 24 of the Maryland Declaration of Rights (Count III); conversion (Count IV); and Declaratory Relief (Count V). Id. ¶¶ 44-106. Plaintiffs also rely on 42 U.S.C. § 1988 ("§ 1988"). They allege that this Court has federal question jurisdiction under 28 U.S.C. § 1331 and diversity jurisdiction pursuant to 28 U.S.C. § 1332. Id. ¶¶ 3-4.¹

Pursuant to Fed. R. Civ. P. 12(b)(1), 12(b)(2), and 12(b)(6), Prestige has filed a "Motion to Dismiss and Incorporated Memorandum of Law" (ECF 13, the "Motion"), which challenges, inter alia, the Court's subject matter jurisdiction. Plaintiffs oppose the Motion. ECF 15("Opposition"). Prestige has not replied and the time to do so has expired. See Local Rule 105.2.

On March 16, 2016, plaintiffs filed a "Motion to Release Motor Vehicle Upon Court Approval of Bond and Request for Issuance of Show Cause Order." ECF 9. I issued the requested "Order to Show Cause" on March 28, 2016. ECF 12. Prestige responded on April 29, 2016 (ECF 22), seeking to dissolve the show cause order. By Order of May 9, 2016 (ECF 23), I postponed the show cause hearing and directed plaintiffs to submit further briefing as to the propriety of holding a show cause hearing in federal court under § 16-206 of the Commercial Law Article of the Maryland Code (2013 Repl. Vol., 2015 Supp.). Plaintiffs subsequently filed a "Reply Memorandum of Law in Further Support of Motion to Release Motor Vehicle Upon Court Approval of Bond" (ECF 24), which advances additional arguments in opposition to the Motion.

No hearing is necessary to resolve the Motion. See Local Rule 105.6. For the reasons that follow, I will grant the Motion as to Count I and Count III and deny it in all other respects.

I. Factual Background

On April 25, 2015, William Betteridge leased a silver, two-door 2016 Mercedes Benz AMG GT S (the "Vehicle") from an automobile dealership in Annapolis, Maryland, pursuant to a closed-end lease agreement (the "Lease Agreement"). ECF 1 ¶ 19; ECF 1-2 at 1-2. The lessee has failed to make monthly lease payments since September 18, 2015. ECF 1 ¶ 24. Plaintiffs maintain that the Vehicle is currently worth $137,576. ECF 1 ¶¶ 10, 43.²

Title to the Vehicle was issued on June 2, 2015, and is held by Daimler Trust as owner. ECF 1 ¶¶ 21, 22. Plaintiffs allege that "[t]he Lease Agreement was assigned to and became the property of Daimler Trust, and as part of the transaction Daimler Title Co. obtained a lien" on the Vehicle. Id. ¶ 20. Daimler Title has held the first priority lien on the Vehicle since June 2, 2015. Id. ¶ 23.

"Daimler Trust is a Delaware Trust, whose trustee, BNY Mellon Bank of Delaware, is a Delaware banking corporation. The sole beneficiary of Daimler Trust is Daimler Trust Holding LLC, whose sole member is Mercedes-Benz Financial Services USA LLC, whose sole member is Daimler Investments US Corporation, a Delaware Corporation." ECF 11 at 2; see also ECF 1 ¶ 7. Daimler Title is "a corporation organized and existing by virtue of the laws of the State of Delaware . . . ." ECF 1 ¶ 8.

Plaintiffs contend that Prestige is currently "in control" of the Vehicle. Id. ¶ 9. According to plaintiffs' supplemental briefing (ECF 11 at 2), Prestige "is a Limited Liability Company organized under the laws of Maryland, with a principal place of business in Maryland,and a registered agent in Maryland. Public records indicate Prestige's sole member is Omid Shaffaat, and public records indicate Mr. Shaffaat is a Maryland resident."

Plaintiffs maintain that Prestige made "modifications to make the vehicle a racing-type car." ECF 1 ¶ 32. According to plaintiffs, "Daimler Trust and Daimler Title Co. did not grant permission, consent or authority for any racing-type or any other modifications to be done" to the Vehicle. Id. ¶ 31. An invoice from Prestige in Betteridge's name, dated December 22, 2015, reflects a "TOTAL AMOUNT DUE" from Betteridge to Prestige of $11,730. ECF 1-2 at 1. According to plaintiffs, the "charges were not for repair" to the Vehicle, but rather for the modifications made to it. ECF 1 ¶ 32.

As noted, Betteridge, the lessee of the Vehicle, made no lease payments after September 18, 2015, and is in default of the Lease Agreement. Id. ¶ 24. On November 20, 2015, an individual identifying himself as Betteridge's father notified Daimler Trust that Betteridge could no longer pay the lease payments and would return the Vehicle. Id. ¶ 25. On December 1, 2015, the same individual notified Daimler Trust that the Vehicle was in Prestige's possession. Id. ¶ 26. On December 4, 2015, Betteridge "telephoned Daimler Trust's representative to advise that Prestige would return the vehicle . . . ." Id. ¶ 27.

Plaintiffs allege that they negotiated unsuccessfully with Prestige for the return of the Vehicle. See id. ¶¶ 28-35. Plaintiffs assert, id. ¶ 36: "On January 8, 2016, and without notice to Daimler Trust or Daimler Title Co., Prestige requested that a lien company named Nationwide Lien & Recovery, Inc. enforce a lien against [the Vehicle] in the amount of $49,084.00." Further, plaintiffs aver, ECF 1 ¶ 37: "Prestige's act of raising its lien demand from $11,730.00 to $49,084.00 was done without the knowledge, consent or authority" of the plaintiffs. Plaintiffsalso allege, id. ¶ 38: "Prestige then served a Notice of Sale on the Lessee asserting that [the Vehicle] would be auctioned on March 2, 2016 pursuant to state law in order to enforce a lien claim of $50,534.00." See ECF 1-2 at 2, "Notice of Sale of Motor Vehicle to Satisfy a Lien."³

According to plaintiffs, "Prestige invoked the power of the State of Maryland to impress a nonconsensual (supposed) lien for $50,534.00 in charges for unauthorized . . . modifications" to the Vehicle. ECF 1 ¶ 11. And, it did so without affording plaintiffs notice and a hearing to protect their interests by contesting the validity of Prestige's claims. Id. ¶ 15. Plaintiffs contend, id. ¶ 39: "Prior to impressing a purported lien for $11,730.00, and prior to increasing that lien claim to $49,084.00 and again to $50,534.00, Prestige had not provided any hearing before an impartial decisionmaker, with adequate notice . . . ." See also id. ¶ 15.

II. Standard of Review

As discussed, the Motion (ECF 13) is premised on Fed. R. Civ. P. 12(b)(1)and 12(b)(6).⁴

A. Fed. R. Civ. P. 12(b)(1)

Under Fed. R. Civ. P. 12(b)(1), a motion to dismiss for lack of subject matter jurisdiction raises the issue of "whether the court has the competence or authority to hear and decide the case." Davis v. Thompson, 367 F. Supp. 2d 792, 799 (D. Md. 2005). The question of subject matter jurisdiction may be raised by the parties or the court, sua sponte, at any stage of thelitigation. Arbaugh v. Y & H Corp., 546 U.S. 500, 506 (2006); see Ellenburg v. Spartan Motors Chassis, Inc., 519 F.3d 192, 197 (4th Cir. 2008). Upon a challenge to subject matter jurisdiction, the plaintiff bears the burden of proving, by a preponderance of evidence, the existence of jurisdiction. Robb Evans & Assocs., LLC v. Holibaugh, 609 F.3d 359, 362 (4th Cir. 2010); Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999); see also United States ex. rel. Vuyyuru v. Jadhau, 555 F.3d 337, 347 (4th Cir. 2009), cert. denied, 558 U.S. 875 (2009); cf. Zoroastrian Ctr. & Darb-E-Mehr of Metro. Washington, D.C. v. Rustam Guiv Found. of New York, ___ F.3d ___, 2016 WL 2343251, at *5 (4th Cir. May 4, 2016).

Federal courts are courts of limited jurisdiction and "may not exercise jurisdiction absent a statutory basis." Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005). They "have an independent obligation to determine whether subject-matter jurisdiction exists, even when no party challenges it." Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010).

A challenge to subject matter jurisdiction under Rule 12(b)(1) may proceed "in one of two ways": either a facial challenge, asserting that the allegations pleaded in the complaint are insufficient to establish subject matter jurisdiction, or a factual challenge, asserting "'that the jurisdictional allegations of the complaint [are] not true.'" Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009)(citation omitted); see also Buchanan v. Consol. Stores Corp., 125 F. Supp. 2d 730, 736 (D. Md. 2001). In a facial challenge, "the facts alleged in the complaint are taken as true, and the motion must be denied if the complaint alleges sufficient facts to invoke subject matter jurisdiction." Kerns, 585 F.3d at 192; see also Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997).

In a factual challenge, on the other hand, "the district court is entitled to decide disputed issues of fact with respect to subject matter jurisdiction." Kerns, 585 F.3d at 192. In that circumstance, the court "may regard the pleadings as mere evidence on the issue and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment. Velasco v. Gov't of Indonesia, 370 F.3d 392, 398 (4th Cir. 2004); Evans, 166 F.3d at 647. That is, "the court may look beyond the pleadings and 'the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists." Khoury v. Meserve, 268 F. Supp....