Patterson v. Morris

• Decision Date: 25 January 2006
• Docket Number: Civ.A. No. 05-2177.,Civ.A. No. 05-2178.,Civ.A. No. 05-2189.,Civ.A. No. 05-2191.
• Citation: 337 B.R. 82
• Court: U.S. District Court — Eastern District of Louisiana
• Parties: Mary & Larry PATTERSON, et al. v. Dean MORRIS, et al. and Robert Bauer, et al. v. Dean Morris, et al.

337 B.R. 82

Mary & Larry PATTERSON, et al. v. Dean MORRIS, et al. and Robert Bauer, et al. v. Dean Morris, et al.

Civ.A. No. 05-2177.

Civ.A. No. 05-2189.

Civ.A. No. 05-2191.

Civ.A. No. 05-2178.

United States District Court, E.D. Louisiana.

January 25, 2006.

COPYRIGHT MATERIAL OMITTED

Jennifer N. Willis, Cater & Willis, David W. Bernberg, David W. Bernberg, LLC, Kyle D. Schonekas, Patrick S. McGoey, Schonekas, Winsberg, Evans & McGoey, LLC, Michael E. Enow, Enow & Associates, Peter Brooks Sloss, Murphy, Rogers, Sloss & Gambel, New Orleans, LA, Gary Joseph Gambel, Robert Hugh Murphy, Murphy, Rogers, Sloss & Gambel, Hammond, LA, for Mary & Larry Patterson.

Gustave A. Fritchie, III, Douglas J. Moore, Edward Winter Trapolin, Irwin Fritchie Urquhart & Moore LLC, James C. Klick, Sidney A. Cotlar, Stephen J. Herman, Herman, Herman, Katz & Cotlar, LLP, Gerard E. Wimberlym, Jr., Stephen Winthrop Rider, McGlinchey Stafford, PLLC, John M. Landis, Nicholas J. Wehlen, Stone Pigman Walther Wittmann, LLC, James Alcee Brown, Shannon Skelton Holtzman, Liskow & Lewis, Jeffrey A. Schwartz, Watkins Ludlam Winter & Stennis, PA, New Orleans, LA, Anthony Rollo, McGlinchey Stafford PLLC, Baton Rouge, LA, David B. Potter, Erin J. Minkler, Oppenheimer Wolff & Donnelly, Minneapolis, MN, Russell Weeks Rudolph, Seale & Ross, PLC, Hammond, LA, Scott B. Nardi, Thomas M. Hefferson, Goodwin, Procter & Hoar, LLP, Joseph F. Yenouskas, Joseph F. Yenouskas, Attorney at Law, Washington, DC, W. Whitaker Rayner, Watkins Ludlam Winters & Stennis, PA, Jackson, MS, Danielle J. Szukala, Leann Pedersen Pope, Burke Warren, Mackay & Serritella, PC, Chicago, IL, Charles Fenner Gay, Jr., Adams and Reese LLP, Nashville, TN, Brian M. Forbes, R. Bruce Allensworth, Kirkpatrick & Lockhart Nicholson Graham LLP, Boston, MA, for Dean Morris.

ORDER

DUVAL, District Judge.

Before the Court is plaintiffs' Mary and Larry Patterson, et al's Motion to Remand (Rec. Doc. Nos. 6, 9, 23), consolidated civil action number 05-2177, as well as plaintiffs' Robert Bauer, et al's Motion to Remand (Rec. Doc. No. 26), civil action number 05-2178. Having reviewed the facts, pleadings, and extensive memoranda, as well as having heard oral argument on August 24, 2005, the Court GRANTS each Motion for the following reasons:

I. Facts

The instant motions arise from two separate class action cases that were originally filed by various plaintiffs in Orleans Parish Civil District Court ("CDC"). There is no substantive difference in the claims and facts surrounding each lawsuit; rather only the membership of each respective class differs. The central defendant, Dean Morris, L.L.P., is the same in both cases. Plaintiffs in consolidated civil action number 05-2177¹ (the Patterson plaintiffs) represent only members of a putative class of persons "whose bankruptcy filing would or might [support] removal to federal court and/or federal jurisdiction for their claim." See Patterson Rec. Doc. No. 1, Pl. Comp., ¶ 1. Plaintiffs in civil action number 05-2178 (the Bauer plaintiffs) purport to represent all other Louisiana residents, specifically excluding any persons who are in bankruptcy.² See Bauer Rec. Doc. No. 1, Pl. Comp., ¶ 1. Due to the similarity of the claims asserted, as well as the dual Notices of Removal filed by all defendants and the dual Motions for Remand subsequently filed by plaintiffs' counsel on behalf of all plaintiffs (regardless of their membership in either the Patterson or the Bauer action), the Court will treat these Motions collectively. Thus, the following facts apply to both actions.

On February 17, 2005 (via fax filing) and on February 22, 2005, plaintiffs filed two class action lawsuits in Orleans Parish Civil District Court. On May 6, 2005, plaintiffs in both actions filed a First Supplemental and Amended Petition, each alleging fraud, misrepresentation, conversion, and unjust enrichment. Plaintiffs allege that defendant Dean Morris L.L.P. overstated court costs, sheriff's fees, attorney's fees, and other expenses in collection and foreclosure proceedings instituted by defendants against them. Plaintiffs further allege that lenders, collectively known as the "lender defendants," who used defendant Dean Morris as their attorney, agent, and/or employee with respect to collection or foreclosure activities, and for whom or during the representation of whom defendant Dean Morris collected excessive fees and/or charges from plaintiffs, are also liable. Plaintiffs allege that the lender defendants are liable for the knowing and negligent misrepresentations regarding these fees that were made by defendant Dean Morris on their behalf, and subsequently received by them from Dean Morris as a result of the foreclosures. See Patterson Rec. Doc. No. 1, Pl. Comp., ¶ 28. Plaintiffs allege that the misrepresentations made by or on behalf of all defendants constitute fraud, conversion, and unjust enrichment. See Patterson Rec. Doc. No. 1, Pl. Comp., paras. 28-29.

Plaintiffs' petition defines the putative Patterson class as "All Louisiana residents (or their heirs, successors, or assigns) who were charged excessive fees and/or charges by a member of the Defendant Class by or through Dean Morris, L.L.P." See Patterson Rec. Doc. No. 1, Pl. Comp., ¶ 1. "The Plaintiff Class includes only those persons whose bankruptcy filing would or might support removal to federal court and or federal jurisdiction for their claim." Id. Plaintiffs' Bauer petition defines the putative Bauer class as "all Louisiana residents . . . who were charged excessive fees and/or charges by a member of the Defendant Class directly or by or through . . . Dean Morris, L.L.P. No person who is in bankruptcy is a member of the Plaintiff Class." See Bauer Rec. Doc. No. 1, Pl. Comp., ¶ 1. On June 8, 2005 the lender defendants removed both cases to federal court based on federal bankruptcy jurisdiction and supplemental jurisdiction. See Patterson Rec. Doc. No. 1, Joint Notice of Removal, p. 4; Bauer Rec. Doc. No. 1, Joint Notice of Removal, pp. 4-6. On July 29, 2005 Patterson lender defendants Saxon Mortgage, Interbay Funding, L.L.C., Option One Mortgage Corporation, Countrywide Home Loans, Inc., Chase Home Finance, L.L.C., and Washington Mutual Bank, FA filed a Notice of Additional Grounds for Removal Under the Class Action Fairness Act of 2005 ("CAFA"). See Patterson Rec. Doc. No. 58. That same day, Bauer lender defendants Chase Home Finance, L.L.C., Washington Mutual Bank, FA, Deutsche Bank Trust Company Americas, Ocwen Federal Bank FSB, Countrywide Home Loans, Inc., and Bank One Corporation filed the same Notice of Additional Grounds for Removal Under the Class Action Fairness Act of 2005 ("CAFA") in Bauer. See Bauer Rec. Doc. No. 44. The Court held oral argument on the Motion to Remand on August 24, 2005, at which time both sides were given leave to file additional supplemental briefing on the CAFA issue. After delays due to Hurricane Katrina, briefs were subsequently submitted by both sides in October, 2005. See Patterson Rec. Docs. Nos. 157 and 165; Bauer Rec. Docs. Nos. 118 and 125.

At oral argument on August 24, 2005 plaintiffs reiterated that CAFA was inapplicable, but conceded subject matter jurisdiction based on bankruptcy laws. Despite this, plaintiffs aver that the Court must remand this matter under 28 U.S.C. § 142(b) on equitable grounds or alternatively, apply permissive abstention under 28 U.S.C. § 1332(c)(1), or apply mandatory abstention under 28 U.S.C. § 1334(c)(2). The Court now turns to the merits of plaintiffs' Motion and defendants' arguments in response.³

II. Subject Matter Jurisdiction and the Basis for Removal

A. Class Action Fairness Act of 2005 ("CAFA")

Defendants allege that in addition to bankruptcy jurisdiction, the instant cases were properly removed pursuant to the Class Action Fairness Act of 2005 ("CAFA"), Pub. L. No. 109-2, codified in 28 U.S.C. § 1332(d). CAFA states that any class action commenced on or after its February 18, 2005 enactment date may be removed where (a) any member of the putative class action is a citizen of a state different from any defendant, and (b) the amount in controversy exceeds the sum or value of $5 million. 28 U.S.C. § 1332(d)(2). Plaintiffs fax-filed both complaints on February 17, 2005, the day before CAFA came into effect. It is undisputed that had plaintiffs filed their complaint on or after February 18, 2005 CAFA would have applied and federal court jurisdiction would be uncontested with no possibility of remand.

Despite plaintiffs' February 17, 2005 fax filing date, defendants argue CAFA still applies. As to Patterson, defendants claim that plaintiffs failed to pay the required amount of filing fees due, pursuant to the applicable fax filing statute, on February 22, 2005. If true, this failure would render plaintiffs' attempt to fax file on February 17, 2005 unsuccessful such that their complaint would not be considered officially filed until either May 6, 2005 (the date that plaintiffs filed their First Supplemental and Amending Class Action Petition for Damages) or June 14, 2005 (the date that the balance of the fees owed by plaintiffs were deposited with the Clerk of Court). In Bauer defendants argue that, despite the stamp marked "FILED Feb 17 2005 Deputy Clerk Civil District Court" (Rec. Doc. No. 1, Part 2), plaintiffs' fax filing was incomplete and thus invalid because there too plaintiffs failed to pay the requisite amount of filing fees required. Defendants also point out that the plaintiffs failed to serve either petition on any defendants until May 2005.

Louisiana law allows for fax filing pursuant to La. R.S. 13:850. Defendants assert that plaintiffs failed to fully comply with the provision by failing to provide the Clerk of Court with the full amount of filing fees within 5 days as required under the statute. Defendants aver that on February 18, 2005, plaintiffs were notified via fax receipt from the Orleans Parish Clerk that...