Joy Family Ltd. P’ship v. United Fin. Banking Cos.
| Decision Date | 28 August 2013 |
| Docket Number | Civil Action No. ELH-12-3741 |
| Parties | JOY FAMILY LIMITED PARTNERSHIP, Plaintiff, v. UNITED FINANCIAL BANKING COMPANIES, INC., trading as THE BUSINESS BANK, Defendant. |
| Court | U.S. District Court — District of Maryland |
The Joy Family Limited Partnership (the "Partnership"), plaintiff, has sued United Financial Banking Companies, Inc. ("United Financial"), "trading as The Business Bank," defendant, for injurious falsehood (Count I); fraud (Count II); violation of the Maryland Consumer Debt Collection Act ("MCDCA"), Md. Code , §§ 14-201 et seq. of the Commercial Law Article ("C.L.") (Count III); violation of the Maryland Consumer Protection Act ("CPA"), C.L. §§ 13-201 et seq. (Count IV); and abuse of process (Count V). In sum, the Partnership accuses defendant of intentionally clouding the title to a condominium in Ocean City, Maryland, of which the Partnership is the equitable title holder, in order to coerce the Partnership to pay a debt owed by the holder of legal title to the property. Plaintiff seeks damages in an unspecified amount, along with attorneys' fees and costs, and asserts subject matter jurisdiction founded on diversity of citizenship. See 28 U.S.C. § 1332(a).
Two motions are now pending. United Financial has filed a Motion to Dismiss (ECF 12), asserting that plaintiff has sued the wrong defendant, that diversity jurisdiction is lacking, andthat plaintiff's complaint fails to state claims upon which relief can be granted. The Partnership has filed a Motion for Leave to File Amended Complaint ("Motion to Amend") (ECF 16), seeking to substitute the proper defendant. Both motions have been fully briefed and can be resolved without a hearing. See Local Rule 105.6.1 For the reasons that follow, I will grant the Motion to Amend. With the identity of the proper parties thereby established, I conclude that diversity jurisdiction is lacking. Accordingly, I will grant the Motion to Dismiss on jurisdictional grounds, and dismiss the suit for lack of subject matter jurisdiction, without reaching the merits.
The property at issue is a condominium located at 1203 Edgewater Avenue, Unit B, in Ocean City, Worcester County, Maryland ("Unit B"). Richard Joyeusaz, who is not a party to this case, purchased Unit B in 2004 for $211,800. Members of the Partnership own Unit A, which is adjacent to Unit B. Although the precise composition of the Partnership is not disclosed in the record, it is apparent that Richard Joyeusaz's father, Edward Joyeusaz, has a position of authority in the Partnership.2
Richard's friend, John Simmonds, contributed some money toward Richard's purchase of Unit B in 2004.3 Richard also procured financing for the purchase of Unit B through a mortgageloan in the amount of $158,850 from The Business Bank, a Virginia financial institution.4 He also incurred a second mortgage on Unit B, in the amount of $48,000, with another lending institution. Id. ¶ 8.
Three years later, in late spring 2007, Richard decided to sell Unit B. Id. ¶ 9. Because the members of the Partnership who own Unit A "desired to exercise some degree of control over the use" of Unit B, the Partnership offered to purchase Unit B from Richard. On June 1, 2007, Richard and the Partnership executed a Sales Contract for Unit B. See Sales Contract, Ex. A to Complaint (ECF 1-1). Edward signed the Sales Contract on behalf of the Partnership, purporting to act as its "General Partner." See Sales Contract at 5-6.5 The Sales Contract provided for a deposit of $35,000 and a total sales price of $225,000. According to "Addendum #1" to the Sales Contract, see Sales Contract at 6, the parties agreed that, although not listed on the title, Mr. Simmonds was an "equal Owner" of Unit B with Richard; that the Partnership would "take over" the monthly payments on The Business Bank mortgage and pay off the second mortgage; and that settlement of the Sales Contract would occur within five years of the date of ratification.
Edward had a longstanding business relationship with The Business Bank. Complaint ¶ 10. In June 2007, Edward visited The Business Bank's office in Tyson's Corner, Virginia to discuss with The Business Bank's management the Partnership's intended purchase of Unit B. Id. Edward met with the branch manager, Larry Baker, and his assistant, Danny Sisowath, andexplained that the Partnership "would not purchase the Condominium without the Bank's board of director's approval of the transaction." Id. ¶ 11. Edward sought assurances that the purchase would not result in a default of The Business Bank's loan to Richard. According to plaintiff, Baker and Sisowath confirmed that the sale would not trigger a default, and approved the transaction. Id.
Edward then directed The Business Bank to withdraw $100,000 from the Partnership's accounts at The Business Bank and to pay that amount toward The Business Bank mortgage on Unit B, reducing the outstanding $147,000 principal obligation on the mortgage to a balance of $47,000. Id. ¶ 12. In addition, the Partnership paid the $35,000 deposit due under the Sales Contract to Richard and Mr. Simmonds in two equal shares of $17,500, in the following manner: the Partnership paid Mr. Simmonds $15,200, after deducting $2,300 for repair costs from Simmonds' $17,500 share, and applied Richard's $17,500 share to other debts that Richard owed the Partnership. Id. ¶ 13. The Partnership fully paid off the second mortgage on Unit B on September 4, 2008, after Edward negotiated a reduced prepayment with the mortgage lender. Id. ¶ 15. And, the Partnership paid all of the successive monthly payments on the mortgage owed to The Business Bank, and paid off The Business Bank mortgage in September 2010. Id. ¶ 14. Thus, in total, the Partnership paid $221,850 to various entities in connection with its purchase of Unit B.
In the meantime, Richard and his wife had borrowed money from The Business Bank to establish a nail salon in Virginia (the "Virginia Loan"). Id. ¶ 17. Unit B was not collateral for the Virginia Loan. The Virginia Loan went into default at the end of 2009 or the beginning of 2010, and on February 4, 2010, The Business Bank obtained a judgment against Richard and hiswife in Loudoun County, Virginia, where they lived, in the outstanding amount on the Virginia Loan of $45,567.40, plus interest (the "Virginia Judgment"). See id. ¶ 18; Ex.A to Motion to Dismiss (ECF 10-2). The Business Bank tried and failed to collect on the Virginia Judgment, and Richard initiated a personal bankruptcy proceeding. Id. ¶ 19. Subsequently, on an occasion when Edward visited the Bank, either Mr. Baker or Mr. Sisowath, the bank officials, requested that Edward pay the Virginia Judgment. Edward refused on the ground that neither he nor the Partnership had incurred or benefited from the Virginia Loan. Id. ¶ 20.
Richard did not disclose Unit B as an asset in his bankruptcy proceeding. According to plaintiff, this was because Richard had sold Unit B to the Partnership in the transaction discussed above. Id. ¶ 21. However, plaintiff asserts, on information and belief, that The Business Bank learned during the bankruptcy proceeding that Richard also owed the Internal Revenue Service approximately $1 million, and that the IRS would likely file a notice of tax lien against Richard in Worcester County, Maryland, where Unit B is located. Id. ¶ 23. On March 24, 2010, The Business Bank recorded the Virginia Judgment against Richard in the Circuit Court for Worcester County, thereby placing a lien on Unit B. Id. ¶ 24.6 A month later, on April 26, 2010, the IRS filed a notice of tax lien against Richard in the Circuit Court for Worcester County in an amount in excess of $1 million. Id. ¶ 25.7
The Partnership claims that The Business Bank's lien should not attach to Unit B because the Partnership became the equitable owner of Unit B upon execution of the Sales Contract. Id. ¶ 26.8 It contends that The Business Bank recorded the Virginia Judgment in Worcester County and encumbered Unit B with the intent to pressure the Partnership or Edward to pay off Richard's obligation under the Virginia Loan and the Virginia Judgment. Plaintiff posits that this could be the only reason that The Business Bank recorded the Virginia Judgment in Worcester County. It reasons that The Business Bank knew that Richard had no property in Worcester County, other than bare legal title in Unit B, and knew that the Partnership was the equitable owner of Unit B. Id. ¶ 27. As the Partnership sees it, by recording the Virginia Judgment in Worcester County, The Business Bank hoped to "coerc[e] the Joy Family and/or [Edward] to pay the debt owed by [Richard] despite the Bank's actual knowledge that neither was in any way responsible for [Richard's] debt, or to attempt to sell the Condominium to collect [Richard's] debt to the bank." Id.
Additional facts are included in the Discussion.
The first ground for dismissal asserted in the Motion to Dismiss is intertwined with the Motion to Amend. In the Motion to Dismiss, United Financial claims that "The Business Bank"is a separate business entity in its own right, rather than a mere trade name for United Financial. Therefore, United Financial asserts that plaintiff has sued the wrong party, and that all of the Partnership's claims should be dismissed on that basis. Further, although United Financial did not file a separate motion for sanctions, it asked the Court to impose monetary sanctions on plaintiff's counsel, pursuant to Fed. R. Civ. P. 11, in the form of the reasonable attorneys' fees and costs incurred in defending the suit, because it sent a letter to plaintiff's counsel after suit was filed, asserting that plaintiff had sued the wrong defendant, and claimed "Plaintiff's attorney did not respond." Motion to Dismiss at 11; see Letter of Feb. 5, 2013, from Lash to Astrachan, Ex.B to Motion to...
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