Dasma Investments v. Realty Associates Fund III

• Decision Date: 30 October 2006
• Docket Number: No. 05-23164CIV.,05-23164CIV.
• Citation: 459 F.Supp.2d 1294
• Parties: DASMA INVESTMENTS, LLC, a Florida limited liability company, Plaintiff v. The REALTY ASSOCIATES FUND III, L.P., a Delaware limited partnership et al., Defendants
• Court: U.S. District Court — Southern District of Florida

459 F.Supp.2d 1294

DASMA INVESTMENTS, LLC, a Florida limited liability company, Plaintiff v. The REALTY ASSOCIATES FUND III, L.P., a Delaware limited partnership et al., Defendants

No. 05-23164CIV.

United States District Court, S.D. Florida, Miami Division.

October 30, 2006.

COPYRIGHT MATERIAL OMITTED

Guy B. Bailey, Esq., Bailey & Dawes L.C., Coconut Grove, FL for Plaintiff.

Christopher S. Carver, Esq., and Scott B. Cosgrove, Esq., Miami, FL, for Defendants.

ORDER ON PENDING MOTIONS AND ORDER CLOSING CASE

JORDAN, District Judge.

This is the third federal case in a long legal saga over the 1995 sale by Padron Warehouse Corporation of its only substantial asset — a warehouse in Miami — to The Realty Associates Fund III. In the prior two cases, Mary Angel Padron — the former wife of Cecilio Padron, the majority owner of PWC — and PWC itself sued Realty, alleging that the sale of the warehouse should be set aside for various reasons. Both actions were unsuccessful. See Padron v. Realty Associates, Case No. 01-1919-Civ-Jordan; Padron Warehouse Corporation v. Realty Associates, 377 F.Supp.2d 1259 (S.D.Fla.2005). In this case, Dasma Investments, LLC — a company recently formed by Ms. Padron — alleges that it is the assignee of an unpaid promissory note and mortgage from PWC, and sues PWC, Mr. Padron, Realty and others to foreclose on the note and mortgage.

Currently pending are various motions. For the reasons set forth below, the motion to remand filed by Dasma [D.E. 9] is DENIED, Dasma's claims against Principal Mutual Life Ins. Co.-a nominal defendant — are dismissed as moot, Realty's motion for summary judgment on Dasma's amended complaint [D.E. 12] is GRANTED, and Dasma's claims against PWC are dismissed for lack of a justiciable case or controversy under Article III because both Dasma and PWC are controlled by the same person, Ms. Padron. A partial final judgment in favor of Realty will be issued separately. This case is closed.

1. BACKGROUND¹

Pursuant to a 1994 post-nuptial agreement, Cecilio Padron received 68% of the stock of PWC, while his wife, Mary Angel Padron, received 30% of the stock, and his brother, Felix Padron, received 2% of the stock. The agreement also provided that neither Mr. or Ms. Padron could alienate the warehouse without the other's consent.

In 1995, PWC, through Mr. Padron, sold the warehouse to Realty. According to Ms. Padron, Mr. Padron absconded to another country with all of the proceeds from the sale. The Padrons divorced in 1998.

In May of 2001, Ms. Padron sued Realty, alleging, among other things, conversion, civil theft, conspiracy, and unjust enrichment. She sought a constructive trust and an accounting, alleging that Mr. Padron had sold the warehouse without the required authorization, and that Realty had been aware of this fact. In October of 2001, I dismissed Ms. Padron's individual suit with prejudice on statute of limitations grounds. See Padron v. Realty Associates, Case No. 01-1919-Civ-Jordan. Ms. Padron did not appeal.

In January of 2002, PWC, now controlled by Ms. Padron, filed a second lawsuit against Realty. PWC, like Ms. Padron, alleged that the sale of the warehouse had not been properly authorized (in light of the post-nuptial agreement and an alleged PWC shareholder's agreement). PWC sought to quiet title in the warehouse, as well as a declaratory judgment that the sale of the warehouse was ineffective. In addition, PWC requested that Realty be ejected from the warehouse and asked for a constructive trust. In July of 2005, I granted summary judgment in favor of Realty on all of PWC's claims, and in favor of Realty on its claim for attorney's fees against PWC. See Padron Warehouse Corporation v Realty Associates, 377 F.Supp.2d 1259 (S.D.Fla.2005). PWC did not appeal.

II. DASMA'S CURRENT LAWSUIT AND REALTY'S REMOVAL

This current case was filed in state court in October of 2005 by Dasma Investments, LLC, a Florida limited liability company whose only member (and registered agent) is Ms. Padron. According to documents attached to the notice of removal, Dasma was registered with the Florida secretary of state in September of 2005.

The defendants named in Dasma's initial complaint were Realty, PWC, Principal Mutual Life Insurance Company, and Mr. Padron (who, according to the complaint, now lives in Panama). Dasma seeks to foreclose on a promissory note and mortgage, and alleges in the complaint as follows: (1) in September of 1992 PWC executed and delivered a promissory note in the amount of $1.4 million (the original promissory note) to Ribonnet Overseas Corporation, a Virgin Islands entity headquartered in Panama; (2) the original note, which was secured by a mortgage on PWC's warehouse, was due to be paid by September of 2002; (3) in December of 1992, through a purported modification (a one-page document titled "Addendums"), the amount of the original note and mortgage was increased to $2.4 million; (4) in September of 2005, Ribonnet assigned the note and mortgage, as modified, to Dasma; (5) Dasma "currently owns and holds the modified instrument [i.e., the "Addendums"] in due course;" (6) the defendants, including PWC and Realty, failed to pay the note as modified; (7) Dasma declared the full amount of the note, as modified, due and owing; (8) the warranty deed that Realty holds is forged; (9) Principal "may claim" an interest in the warehouse due to an assignment of leases and rents, but that interest has been satisfied; and (10) Mr. Padron guaranteed the obligation of the mortgage.

Realty, which was served with process on November 22, 2005, removed the case to federal court on December 7, 2005, alleging that federal jurisdiction existed under the diversity statute, 28 U.S.C. § 1332. In its notice of removal, Realty indicated that Principal's counsel had consented to removal and asserted that PWC was fraudulently joined to defeat diversity. Realty pointed out that, as reflected in my orders in the two prior cases, PWC does not have title to the warehouse and therefore there is nothing for Dasma to foreclose on with respect to PWC.

On January 4, 2006, Dasma filed an amended complaint, adding as defendants 27 tenants of the warehouse. Two days later, on January 6, 2006, Dasma moved to remand the case to state court. In its motion, which was not accompanied by a memorandum of law, Dasma made the following summary arguments in favor of remand: (1) complete diversity was lacking because PWC and the newly-added 27 defendants were, like, Dasma, citizens of Florida; (2) PWC was not fraudulently joined; and (3) the other defendants did not timely join Realty's removal.

The parties presented oral argument on the motion to remand, and filed supplemental memoranda of law on various issues I asked them to brief, including (1) whether Ms. Padron's control of both Dasma (the plaintiff) and PWC (a defendant) amounted to a type of collusive joinder that affected Article III jurisdiction; (2) whether Realty's statement in its notice of removal that Principal consented to removal was sufficient to satisfy 28 U.S.C. §§ 1441 and 1446; and (3) whether the modification of the original PWC promissory note (the so-called "Addendums") was independently actionable without the original note.

III. DASMA'S MOTION TO REMAND

"In a motion to remand, the removing party bears the burden of showing the existence of federal jurisdiction." Perez v. AT & T Co., 139 F.3d 1368, 1373 (11th Cir.1998) (citing Diaz v. Sheppard, 85 F.3d 1502, 1505 (11th Cir.1996)). Removal jurisdiction is "construed narrowly," and any doubts regarding the existence of federal jurisdiction are resolved in favor of the non-removing party, that is, in favor of remanding the matter back to the state court from whence it came. Perez, 139 F.3d at 1373.

A. PRINCIPAL'S FAILURE TO TIMELY CONSENT TO REMOVAL IN WRITING

In a case involving multiple defendants, all defendants who have been served must consent to the removal of a case to federal court. See Russell Corp. v. American Home Assurance Co., 264 F.3d 1040, 1049 (11th Cir.2001). The question presented by Dasma's motion to remand is what consent means. Dasma argues that under §§ 1441 and 1446, it is not enough for a removing defendant to simply allege in its notice of removal that the other served defendants consent to removal. According to Dasma, all other served defendants must file their own written consents within 30 days of removal, and remand is required here because Principal's written consent on February 16, 2006 [D.E. 24], was untimely. Realty asserts that its statement of consent in the notice of removal — that Principal's counsel had consented to removal — is enough. There is support in the case law for both positions, though there is no binding authority in the Eleventh Circuit. Compare, e.g., Local Union No. 172 v. P.J. Dick, Inc., 253 F.Supp.2d 1022, 1025-26 (S.D.Ohio 2003), with, e.g., Sicinski v. Reliance Funding Corp., 461 F.Supp. 649, 651 (S.D.N.Y. 1978).

It is unnecessary for me to take a position on this issue. The well-established rule is that a nominal defendant need not join in or consent to removal, see Tri-Cities Newspapers, Inc. v. Tri-Cities Printing & Assistants Local 349, 427 F.2d 325, 327 (5th Cir.1970), and Principal is a nominal defendant in this action. Principal is not a party to the original note, the modified note, or the mortgage, and was named as a defendant only because it might have an interest in the warehouse pursuant to an assignment of rents and leases. Dasma's own complaint, however, alleges that Principal's interest in the warehouse (based on this assignment) "has been satisfied," and Principal's answer confirms that Principal has no further interest in the assignment of rents and leases because its loan has been paid. In short, there is no claim that Dasma can make against Principal, and no effective relief that Dasma can obtain against Principal, thereby making Principal a nominal defendant whose consent to...