Wright v. Sampson

• Decision Date: 22 March 2011
• Docket Number: No. 10–2304.,10–2304.
• Citation: 782 F.Supp.2d 593
• Court: U.S. District Court — Western District of Tennessee
• Parties: Darrell L. WRIGHT, Sr. as the Administrator of the Estate of Lenora S. Wright, Deceased, on behalf of itself and all similarly situated persons and entities, Plaintiffs,v.LINEBARGER GOOGAN BLAIR & SAMPSON, LLP, a Texas limited liability partnership, Defendant.

782 F.Supp.2d 593

Darrell L. WRIGHT, Sr. as the Administrator of the Estate of Lenora S. Wright, Deceased, on behalf of itself and all similarly situated persons and entities, Plaintiffs,

v.LINEBARGER GOOGAN BLAIR & SAMPSON, LLP, a Texas limited liability partnership, Defendant.

No. 10–2304.

United States District Court,W.D. Tennessee,Western Division.

March 22, 2011.

Frank L. Watson, III, William F. Burns, Watson Burns, LLC, Bryce William Ashby, Donald A. Donati, William B. Ryan, Donati Law Firm, LLP, Memphis, TN, for Plaintiffs.David M. Cook, The Hardison Law Firm, Memphis, TN, for Defendant.

ORDER ON MOTIONS

SAMUEL H. MAYS, JR., District Judge.

Plaintiff Darrell L. Wright, Sr. (“Plaintiff”), administrator of the Estate of Lenora S. Wright (“Estate”), in his representative capacity and on behalf of all others similarly situated, alleges that Defendant Linebarger Googan Blair & Sampson, LLP (“Linebarger”) violated Tennessee law by charging unlawfully high attorney's fees for collecting delinquent property taxes owed to the City of Memphis (the “City”). (First Am. Compl. ¶ 9, ECF No. 5.) Five motions are now before the Court.

On May 14, 2010, Linebarger filed a motion to stay the case pending the resolution of a similar state court action. ( See Mot. to Stay Proceeding Pending Resolution of Parallel State Court Action, ECF No. 8.) Plaintiff responded in opposition on June 2, 2010. ( See Pl.'s Resp. in Opp'n to Def.'s Mot. to Stay Proceeding Pending Resolution of Parallel State Court Action, ECF No. 17 (“Pl.'s Resp. to Mot. to Stay”).) Linebarger replied on June 4, 2010, and Plaintiff filed a sur-reply on June 11, 2010. ( See Def.'s Reply to Pls.' Resp. in Opp'n to Def.'s Mot. to Stay Proceeding Pending Resolution of Parallel State Court Action, ECF No. 19; Pl.'s Surreply in Opp'n to Def.'s Mot. to Stay Proceeding Pending Resolution of Parallel State Court Action, ECF No. 20.)

On May 14, 2010, Linebarger filed a motion to dismiss. ( See Mot. to Dismiss, ECF No. 9.) After a Court-approved extension of time, Plaintiff responded on June 24, 2010. ( See Pl.'s Unopposed Mot. for Extension of Time and Mem. in Supp., ECF No. 23; Order Granting Pl.'s Unopposed Mot. for Extension of Time, ECF No. 24; Pl.'s Resp. in Opp'n to Def.'s Mot. to Dismiss, ECF No. 28.) Linebarger filed a supplemental motion to dismiss on July 23, 2010. ( See Supplemental Mot. to Dismiss, ECF No. 32.) Although Plaintiff has not responded, that motion is now before the Court.

On May 24, 2010, Linebarger filed a motion to dismiss for lack of standing. ( See Mot. to Dismiss for Lack of Standing, ECF No. 15.) On June 30, 2010, Plaintiff responded in opposition, and Darrell L. Wright, Sr., Brenda J. Wright Youngblood, Robert L. Wright, Jr., Christine L. Wright, Larry D. Wright, and Jacquelyn Wright Johnson (collectively, “Movants”) filed a motion for leave to substitute themselves as party plaintiffs. ( See Pl.'s Resp. in Opp'n to Def.'s Mot. to Dismiss for Lack of Standing, ECF No. 29; Mot. for Leave to Substitute as Party Pls., ECF No. 30.) Linebarger responded in opposition to Movants' motion to substitute. ( See Def.'s Resp. to Movant's [sic] Mot. for Leave to Substitute as Party Pls. and to Grant Def.'s Renewed Mot. to Dismiss, ECF No. 31.)

For the following reasons, the Court DENIES Linebarger's supplemental motion to dismiss, DENIES Linebarger's motion to stay, GRANTS IN PART and DENIES IN PART Linebarger's motion to dismiss, DENIES Linebarger's motion to dismiss for lack of standing, and GRANTS Movants' motion for leave to substitute as party plaintiffs.

I. Background ¹

Linebarger is a Texas-based law firm that specializes in collecting unpaid personal and property taxes for governmental entities. (First Am. Compl. ¶¶ 7, 9.) In March 2004, the City contracted with Linebarger to collect delinquent property taxes from individuals and entities whose real property was within the City's jurisdiction for taxation purposes. ( Id. ¶¶ 10, 17.) Based on its contract, Linebarger has calculated the back taxes owed by City property owners, informed the property owners of those back taxes, and, in some cases, sued them, earning more than $16.5 million in attorney's fees. ( Id.) In collecting taxes, however, Linebarger charged an attorney's fee equal to twenty percent of a person's back taxes, rather than the maximum ten percent permitted by Tennessee law. ( Id. ¶ 11.)

In 2009, Plaintiff received a Notice of Lawsuit and Delinquent Real Property Tax Statement (the “Notice”) from Linebarger about property located on Sun Valley Drive in Memphis that had been owned by Lenora S. Wright (“Wright”) before her death (the “Property”). ( Id. ¶ 18.) The Notice stated that Wright had been sued in Chancery Court by the City for $960.33 in back taxes and other charges for the year 2007. ( Id. ¶ 19.) Plaintiff paid the $960.33 requested in the Notice to have the Property removed from the Chancery Court suit and avoid any tax lien on the Property. ( Id. ¶¶ 20–23.)

Plaintiff alleges that the amount he paid to the City included an unlawful twenty-percent attorney's fee. ( Id. ¶ 22) The amount of back taxes on Wright's Property was only $537.87, which would have permitted Linebarger to recover an attorney's fee of approximately $53.98. ( Id. ¶ 22.) Before sending the Notice, however, Linebarger had informed the City that the Property was to be assessed a total of $203.96 in “Other Charges,” which included a twenty-percent attorney's fee equal to $107.97. ( Id. ¶ 22.) The City recorded that amount as owed on the Property. ( Id.) According to Plaintiff, after he had paid the City, the City remitted to Linebarger the full twenty-percent attorney's fee. ( Id. ¶¶ 23, 25.)

Based on the conduct alleged, Plaintiff filed this action on April 22, 2010. ² (See Compl., ECF No. 1.) Plaintiff alleges violation of the Tennessee Consumer Protection Act (“TPCA”), Tenn.Code Ann. §§ 47–18–104(a), 47–18–104(b); unjust enrichment; negligence; and conversion; and requests a constructive trust, compensatory damages, and punitive damages as relief. ( See id. ¶¶ 34–53, 56–57.) Plaintiff alleges that Linebarger's conduct injured not only the Estate, but thousands of others in Tennessee. ( Id. ¶ 26.) Under Federal Rule of Civil Procedure 23, he seeks to certify a class of individuals who, after March 25, 2005, received similar notices from Linebarger that included an unlawful attorney's fee and who paid that fee, “the amount of which was ultimately received by” Linebarger (“Class Members”). ( Id. ¶ 28.) According to Plaintiff, joinder is impracticable, common legal and factual issues predominate, his claims are typical of the Class Members' claims, and he adequately represents those Class Members. ( See id. ¶¶ 29–33.)

II. Jurisdiction and Choice of Law

Plaintiff asserts that the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d), provides this Court with original jurisdiction over his purported class action. (Comp. ¶¶ 2–3.) CAFA provides federal courts with original jurisdiction over certain class actions. See 28 U.S.C. § 1332(d)(2). Under CAFA, a “class action” is any civil action filed under Rule 23 of the Federal Rules of Civil Procedure. See id. § 1332(1)(B). Plaintiff alleges claims on behalf of various Class Members and specifically invokes Rule 23. ( See First Am. Compl. ¶ 28.) Therefore, this Court has original jurisdiction over his class action under 28 U.S.C. § 1332(d)(2) if the other requirements of that provision are satisfied.

CAFA alters the jurisdictional rules for actions that, if brought in federal court individually, would otherwise be based on the general grant of diversity jurisdiction provided by 28 U.S.C. § 1332. See 28 U.S.C. § 1332(d); Freeman v. Blue Ridge Paper Prods., Inc., 551 F.3d 405, 407–08 (6th Cir.2008) (explaining that CAFA was adopted to ensure that federal court jurisdiction could not be avoided by artful pleading or other strategic gamesmanship) (citations omitted). Although an unincorporated entity is generally a citizen of every state where its members are citizens, for purposes of a class action, an unincorporated entity is a citizen of the state of its principal place of business and under whose laws it is organized. See 28 U.S.C. § 1332(d)(10); Ferrell v. Express Check Advance of SC LLC, 591 F.3d 698, 705 (4th Cir.2010) (concluding “that the term ‘unincorporated association’ in § 1332(d)(10) refers to all non-corporate business entities”); cf. Abrego v. Dow Chemical Co., 443 F.3d 676, 684 (9th Cir.2006) (explaining that CAFA's minimal diversity requirement broadened federal court jurisdiction of class actions) (citations omitted). Because Linebarger is an unincorporated limited liability partnership organized under Texas law, with its principal place of business in Austin, Texas, it is a citizen of Texas. See 28 U.S.C. § 1332(d); (First Am. Compl. ¶ 2).

CAFA does not alter the general rule that a legal representative of a decedent's estate is a citizen of the same state as the decedent. See 28 U.S.C. § 1332(c)(2). Because Wright was a Tennessee citizen at the time of her death, Plaintiff is a Tennessee citizen for purposes of this action. See id.; (First Am. Compl. ¶ 2). Because Plaintiff and Linebarger are citizens of different states, CAFA's minimal diversity requirement is satisfied. See 28 U.S.C. § 1332(d)(2)(A).

CAFA provides federal jurisdiction in class actions where “the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs.” See 28 U.S.C. § 1332(d)(2); Everett v. Verizon Wireless, Inc., 460 F.3d 818, 822 (6th Cir.2006) (citations omitted). Plaintiff alleges that “the aggregate amount of the Class Members' claims substantially exceeds $5,000,000.” (First Am. Compl. ¶ 3.) Linebarger argues that Plaintiff has failed to meet CAFA's amount in controversy requirement for two reasons.

In its supplemental motion to dismiss, Linebarger argues that this Court lacks jurisdiction because Plaintiff...