Lexington Market, Inc. v. Desman Associates

• Citation: 598 F.Supp.2d 707
• Decision Date: 24 February 2009
• Docket Number: Case No. RDB 08-3171.
• Parties: LEXINGTON MARKET, INC., Plaintiff, v. DESMAN ASSOCIATES, Defendant.
• Court: U.S. District Court — District of Maryland

598 F.Supp.2d 707

LEXINGTON MARKET, INC., Plaintiff, v. DESMAN ASSOCIATES, Defendant.

Case No. RDB 08-3171.

United States District Court, D. Maryland.

February 24, 2009.

George A. Nilson, Suzanne Sangree, Baltimore City Law Department, Baltimore, MD, Justin J. King, Law Offices of Justin J. King, Towson, MD, for Plaintiff.

Robert Noon Kelly, Jackson and Campbell PC, Washington, DC, for Defendant.

MEMORANDUM OPINION

RICHARD D. BENNETT, District Judge.

Plaintiff Lexington Market originally filed this action in the Circuit Court for Baltimore City, alleging various state law claims related to inadequate garage repairs conducted by Defendants Desman Associates ("Desman") and Eastern Waterproofing & Restoration Company, Inc. ("Eastern"). The case was removed to this Court shortly after the nondiverse defendant, Eastern, settled with Lexington Market. Now pending is Lexington Market's Motion to Remand (Paper No. 11). The motion has been fully briefed and this Court conducted a hearing to address the pending motion on February 10, 2009. For the reasons stated herein, Lexington Market's motion is GRANTED.

BACKGROUND

Plaintiff Lexington Market, a Maryland corporation with its principal place of business in Baltimore, Maryland, and Defendant Desman, a Delaware corporation with its principal place of business in New York, New York, entered into two contracts, dated March 3, 2004 and April 1, 2004, in which Desman agreed to evaluate a parking garage operated by Lexington Market and provide for necessary repairs. (Compl. ¶ 4.) Lexington Market accepted Desman's third proposal in September 2004 pursuant to which Desman drew up bid documents to secure a contractor. (Id. ¶ 4.) Defendant Eastern, a Maryland corporation, secured the bid and entered into a contract with Lexington Market to perform the repairs. (Id.) Eastern commenced work on the garage on March 7, 2005. (Id. ¶ 10.) Although the repairs were completed in October 2006, there were continued problems with the garage that created sub-par conditions. (Id. ¶¶ 10, 11.)

On April 20, 2007, Lexington Market sent Desman written notice of its claims related to the inadequate repairs performed on the garage. (Pl.'s Mem. Supp. Remand 2.) Lexington Market filed a Complaint in the Circuit Court for Baltimore City on June 29, 2007, naming Desman and Eastern as Defendants. Notably, however, Desman was never served with the Complaint. (Def.'s Resp. 3.) Plaintiffs counsel represented at the February 10, 2009 hearing that the Complaint was filed on June 29, 2007 to preserve the asserted claims under the applicable statute of limitations, and that the failure to serve Desman was inadvertent oversight on her part. On March 18, 2008, Lexington Market proposed a settlement offer to both Defendants, which Eastern eventually accepted several months later on June 5, 2008. (Pl.'s Mem. Supp. Remand 2.)

On both June 6, 2008 and June 13, 2008, Lexington Market requested via letter that Desman participate in a one-day mediation session to resolve the ongoing claims against it. (Id. Ex. B, C.) Desman responded to the Lexington Market's letter on June 23, 2008, requesting additional time to contact an insurance carrier and consult with counsel. (Id. Ex. D.) In an email sent to Lexington Market's counsel on July 18, 2008, counsel for Desman¹ disclaimed any and all liability and asserted various defenses that it intended to pursue. (Id. Ex. I.) Plaintiff's counsel responded by sending counsel for Desman a courtesy copy of the initial Complaint. (Id.)

On July 31, 2008, Lexington Market filed its First Amended Complaint against only Desman, which reflected the fact that Eastern, the non-diverse defendant, had settled on June 5, 2008. On October 24, 2008, service was effectuated, representing the first time service was made upon Desman. On November 24, 2008, Desman removed the action to this Court and, on December 10, 2008, Lexington Market filed the pending Motion to Remand. (Paper No. 11.)

STANDARD OF REVIEW

As the removing party, the defendant bears the burden to prove that this Court has federal jurisdiction. Lloyd v. General Motors Corp., 560 F.Supp.2d 420, 422 (D.Md.2008). This includes establishing compliance with the removal statute requirements. See Marler v. Amoco Oil Co., 793 F.Supp. 656, 658-59 (E.D.N.C. 1992) ("Defendant bears the burden of establishing the right to removal, including compliance with the requirements of [28 U.S.C.] § 1446(b)."). Courts must narrowly interpret removal jurisdiction because of the significant federalism concerns that are raised by removing proceedings from state court. Id. Therefore, all doubts are resolved in favor of remand. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-109, 61 S.Ct. 868, 85 L.Ed. 1214 (1941).

DISCUSSION

A. One-Year Limitation On Removal In 28 U.S.C. § 1446(b)

The second paragraph of section 1446(b) provides as follows:

If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other papers from which it may be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action.

28 U.S.C. § 1446(b). In cases such as this where the initial pleading does not contain a jurisdictional basis for removal, section 1446(b) provides for two discrete time requirements. The first requirement, which is not implicated in this particular case, is that a notice of removal must be filed in federal district court within thirty days after it is first ascertained that the case is removable. The second requirement is that, in those cases in which removal is based on diversity of citizenship, see 28 U.S.C. § 1332, a notice of removal may not be filed more than one year "after commencement of the action." 28 U.S.C. § 1446(b).

It is this second requirement on which the parties have hinged their legal dispute in this case. Lexington Market filed this case on June 29, 2007, but never served Desman with the Complaint. After months of ongoing settlement discussions, Lexington Market reached an agreement with the nondiverse Defendant on June 6, 2008, before the one-year anniversary of the inception of the suit. Lexington Market filed an Amended Complaint naming only Desman, a diverse party, on July 31, 2008. Desman filed a Notice of Removal to this Court on November 24, 2008, thirty days after being served with the Amended Complaint on October 24, 2008.

The one-year time limitation for removal of diversity cases has been addressed on several occasions by this Court, most notably in Zumas v. Owens-Corning Fiberglas Corp., 907 F.Supp. 131 (D.Md. 1995) and Sledz v. Flintkote Co., 209 F.Supp.2d 559 (D.Md.2002). Based on these cases, it is clear that this Court looks to the law of the State of Maryland to determine when the action "commences" under 28 U.S.C. § 1446(b). Zumas, 907 F.Supp. at 132-33. It is well established that an action commences under Maryland law on the date that the initial complaint is filed. In Zumas, the initial complaint against thirty-one defendants was filed in the Circuit Court for Baltimore City on November 4, 1994. Zumas, 907 F.Supp. at 131-32. After the last non-diverse defendant settled on November 7, 1995, Owens-Corning promptly filed a notice of removal on November 8, 1995. Id. at 132. Judge Kaufman of this Court remanded the case, holding as follows:

Under Maryland law, a civil action "is commenced by filing a complaint with a court." [citing what is now Maryland Rule of Civil Procedure § 2-101(a) ]. That rule is consistent with the normal meaning of the word "commenced." Apparently, then, the Maryland state court action commenced on November 4, 1994, when plaintiffs filed suit. Defendant's notice of removal, filed with this Court on November 8, 1995, therefore, was filed more than a year after commencement of the action.

Id. at 133.²

This holding was explicitly relied upon in Sledz, in which Judge Davis of this Court was asked to determine whether the initial complaint commenced the action, as the plaintiff argued, or whether the fourth amended complaint commenced the action, as the defendant argued. The initial complaint was filed on March 28, 2001 against twenty-four defendants, some of which were not diverse. Sledz, 209 F.Supp.2d at 560. Flintoke was added as a defendant in a fourth amended complaint filed on January 11, 2002, and filed its notice of removal on June 17, 2002. Id. Judge Davis remanded the case back to state court after determining that the initial complaint commenced the action under 28 U.S.C. § 1446(b). He explained that "a civil action commences `by filing a complaint with a court'" under Maryland law. Sledz, 209 F.Supp.2d at 562 (citations omitted). Moreover, "under Maryland law, service of process, upon a defendant is not a requirement for the `commencement' of an action." Id.

The application of this well-established case law to the facts before this Court is straightforward. Maryland law still provides simply that "[a] civil action is commenced by filing a complaint with a court." Md. Rule § 2-101(a). Lexington Market filed its initial Complaint against Eastern and Desman in the Circuit Court for Baltimore City on June 29, 2007. Even though Eastern was not a diverse party, and despite the fact that Desman was not served with the initial complaint, the one-year time limitation under 28 U.S.C. § 1446(b) began to run on June 29, 2007, the date the Complaint was filed. This case did not commence when Lexington Market filed its Amended Complaint on July 31, 2008 against only Desman, the filing of which created complete diversity for the first time. Desman's Notice of Removal, filed on November 24, 2008, was consequently untimely as it occurred "more than [one] year...