Moore v. Svehlak
| Decision Date | 11 July 2013 |
| Docket Number | Civil Action No. ELH-12-2727 |
| Parties | CHARLES E. MOORE, et ux., Plaintiffs, v. ROBERT S. SVEHLAK, et al., Defendants. |
| Court | U.S. District Court — District of Maryland |
This case concerns removal procedure from state to federal court following the enactment of the Federal Courts Jurisdiction and Venue Clarification Act of 2011 (the "JVCA"), Pub. L. No. 112-63, 125 Stat. 758 (Dec. 7, 2011).
On or about May 30, 2012, Charles and Felicia Moore, plaintiffs, filed suit in the Circuit Court for Baltimore City against twenty-eight defendants, asserting a variety of claims in connection with an alleged "hard money lending scam" involving "fraudulent real estate and debt collection practices." Complaint ¶ 1 (ECF 2). The thirty-count Complaint includes federal claims under 42 U.S.C. § 1983 and the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961 et seq., as well as various Maryland statutory and common law causes of action, including claims of fraud and claims to quiet title to four parcels of real property. The defendants are Imagine Capital, Inc. ("Imagine Capital"); Robert Svehlak; Beverly Svehlak; Neil Roseman; Lead Probe, Inc. ("Lead Probe"); and Boomerang Properties, LLC ("Boomerang") (collectively, the "Imagine Defendants"); the King Title Company and David Pierce (collectively, the "King Defendants"); Stonegate Title Company; Robert Brendel; Cynthia Brendel; Robert C. Brendel, P.A.; Ronald Katz; and Ronald B. Katz, P.A. (collectively, the "Stonegate Defendants"); Holderness, Menchel & Alter, LLC; Holderness & Associates,LLC; and James Holderness (collectively, the "Holdness Defendants"); Granite Finance, LLC; Granite Partners, LLC; Granite Development, LLC; and Michael Walsh (collectively, the "Granite Defendants"); E & W Realty, LLC and Katheryn Jewell (collectively, "E&W Defendants"); Cardinal Financial Company L.P. ("Cardinal"); Stephanie Mballa; B. Sean Radin; Wells Fargo Bank, N.A. ("Wells Fargo"); and ETS Maryland, LLC ("ETS Maryland").
On September 12, 2012, the Imagine Defendants and the King Defendants (collectively, the "Removing Defendants") jointly filed a Notice of Removal (ECF 1), by which they removed the action to federal court on the basis of federal question jurisdiction, see 28 U.S.C. §§ 1331, 1441, and federal civil rights removal jurisdiction, see 28 U.S.C. § 1443. The Removing Defendants represented that seven other defendants who had been served "expressed their consent . . . to removal." Notice of Removal ¶ 3. They also asserted: "Upon information and belief there are no other served defendants necessary for removal." Id. Most, but not all, of the other defendants subsequently filed notices in this Court purporting to consent to removal.
On October 12, 2012, plaintiffs filed a timely Motion to Remand ("Motion") (ECF 78), which has been fully briefed by the parties.1 See 28 U.S.C. § 1447(c) (). No hearing is necessary toresolve the matters at issue. See Local Rule 105.6. For the reasons that follow, I conclude that removal was improper. Accordingly, I will grant the Motion and remand the suit to the Circuit Court for Baltimore City.
For purposes of this Memorandum Opinion, it is unnecessary to recount fully the allegations of plaintiffs' Complaint. In summary, their claims arise out of a $200,000 loan from Imagine Capital to Mr. Moore, for the purpose of rehabilitating two residential properties in Baltimore City owned by Mr. Moore. See Complaint ¶¶ 2-3. Mr. and Ms. Moore both executed personal guaranties of the loan obligation. See id. ¶¶ 3-4. According to plaintiffs, the terms of the loan agreement required Imagine Capital to place $145,000 of the total $200,000 in a "Construction Trust Escrow Account," but Imagine Capital failed to do so. Id. ¶¶ 4-5. As a result, Mr. Moore was unable to complete the rehabilitation projects and incurred substantial losses. Id. ¶ 7. Moreover, despite Imagine Capital's noncompliance with its obligations under the loan agreement, Imagine Capital allegedly utilized confessed judgment provisions, or "cognovits," contained in the loan instruments and guaranties to obtain fraudulent judgments against the Moores. See id. ¶¶ 8-10. Through its "misuse" of the "fraudulently-obtained confessed judgments," Imagine Capital allegedly "leverag[ed] [Mr. Moore] to convey a secured property to a related firm of Imagine Capital," and damaged the Moores' credit, resulting in the foreclosure of the Moores' principal residence. Id. ¶¶ 9-11. Plaintiffs charge that each of the defendants, other than Wells Fargo and ETS Maryland, played some role in Imagine Capital's alleged fraudulent scheme. As to Wells Fargo and ETS Maryland, plaintiffs have sued them "only for the purposes of quieting title in real property." Id. ¶ 1.
As noted, plaintiffs filed suit in State court on or about May 30, 2012, and the Removing Defendants removed the case to this Court on September 12, 2012. In the Notice of Removal, they asserted that, as of the date of removal, the state court's records reflected that all of the Imagine Defendants (other than Lead Probe and Mr. Roseman) had been served with a summons and a copy of the Complaint, as had all of the Stonegate Defendants, Cardinal, Ms. Mballa, Wells Fargo, and ETS Maryland. Notice of Removal ¶ 1. However, they did not indicate the specific dates of service. The Removing Defendants represented that Cardinal and the Stonegate Defendants consented to removal and asserted that there were "no other served defendants necessary for removal." Notice of Removal ¶ 3.
The day after the case was removed, this Court issued its Standing Order Concerning Removal (ECF 14), which directs a party removing an action to this Court to provide certain information regarding the removal, including the "date(s) on which each defendant was served with a copy of the summons and complaint"; the "reasons why removal has taken place at this time" if "removal takes place more than thirty (30) days after any defendant was first served with a copy of the summons and complaint"; and "[i]dentification of any defendant who was served in the state court action prior to the time of removal who did not formally join in the notice of removal and the reasons why such defendant did not join." Id. ¶¶ 1, 3, 5. On September 20, 2012, I issued an Order (ECF 43) directing the Removing Defendants to address two additional matters in their response to the Standing Order: (1) whether all of plaintiffs' state law claims came within the Court's supplemental jurisdiction under 28 U.S.C. § 1367; and (2) clarification of the basis for the removing defendants' "apparent assertion that the consent of all served defendants is not 'necessary for removal.'"
In the meantime, plaintiffs voluntarily dismissed their claims against Mr. Radin. See ECF 50 & ECF 81. With the exception of ETS Maryland, all other defendants filed notices of consent to removal. See ECF 13 (Stonegate Defendants); ECF 15 (E & W Defendants); ECF 24 (Cardinal); ECF 49 (Wells Fargo); ECF 52 (Ms. Mballa); ECF 54 & ECF 61 (Granite Defendants); ECF 64 (Holderness Defendants).2 ETS Maryland has never filed a consent.
On September 27, 2012, the Removing Defendants filed their Response to the Standing Order (ECF 65), in which they provided a chart setting out the dates, as applicable, that each defendant had been served and had consented to removal. The chart stated that all of the Imagine Defendants (other than Lead Probe and Mr. Roseman) were served on August 13, 2012. The Stonegate Defendants, Wells Fargo, and the Granite Defendants (other than Mr. Walsh) were each served sometime before August 13, 2012. The King Defendants, Cardinal, Ms. Mballa, and ETS Maryland were each served at some point between August 13, 2012, and September 12, 2012, the date that the action was removed to federal court.3 Mr. Walsh was not served until September 27, 2012, i.e., after removal; he filed his consent one day later. And, defendants asserted that Lead Probe, Mr. Roseman, the E & W Defendants, and the Holderness Defendants were never served.4
The Removing Defendants also summarized the dates on which each applicable defendant had filed a consent to removal. Of import here, the Stonegate Defendants, WellsFargo, Ms. Mballa, and the Granite Defendants (other than Mr. Walsh) each filed notice of consent to removal more than thirty days after being served. The Holderness Defendants were the last defendants to consent to removal; on September 27, 2012, they filed a "Notice Joining in the Petition for Removal" (ECF 64), in which they "incorporated by reference" the Removing Defendants' Notice of Removal and stated: "Upon information and belief, all parties to the case have formally consented to removal, with the exception of ETS Maryland LLC, which is not a party required to consent pursuant to 28 U.S.C. § 1441(c)(2) and which is not a proper party in this action."
In addition, the Removing Defendants asserted that all of plaintiffs' state law claims come within the Court's supplemental jurisdiction under 28 U.S.C. § 1367(a). With some exceptions, § 1367(a) provides that "the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within [the district courts'] original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." Here, the Removing Defendants' assertion of original jurisdiction was based on federal question jurisdiction as to plaintiffs' federal law claims, pursuant to 28 U.S.C. § 1331, removal of which is authorized by 28 U.S.C. § 1441. Because § 1331 would not provide original jurisdiction with respect to plaintiffs' state law claims, the state law claims would need...
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