Wednesday, October 21, 2009

Moffit v. Baltimore American Mortgage; Ruble v. The Mortgage Consultants, Inc.; and Fulmore v. Premier Financial Corp. (Maryland U.S.D.C.)

Filed October 9, 2009
Opinion by Judge J. Frederick Motz

Held: Plaintiffs waived their right to seek a remand when they filed a Second Amended and Class Action Complaint in federal court following the removal from state court by the defendants.

Facts: Plaintiffs filed individual complaints in the Circuit Court of Maryland alleging violations of Maryland law. These complaints did not contain allegations with respect to any proposed class action. The Plaintiffs' claims were dismissed by the Circuit Court. The Maryland Court of Appeals reversed.

After remand, plaintiffs' counsel sent a draft amended complaint to defendants' counsel. This complaint contained class action allegations. Plaintiffs' counsel stated in the letter to defendants' counsel that the draft amended complaint containing the class action allegations would be filed unless a settlement were reached.

Defendants believed the draft complaint sent to their counsel met the requirements for the exercise of federal jurisdiction under the Class Action Fairness Act ("CAFA") and filed notices of removal. Thereafter, plaintiffs filed their amended complaint with the class action allegations in the United States District Court for the District of Maryland. Plaintiffs then filed motions to remand on the basis that the complaint that they had filed did not constitute "other papers" under the meaning of 28 U.S.C. §1446(b) (the federal class action removal statute).

Analysis: The Court relied on the proposition in Koehnen v. Herald Fire Ins. Co. 89 F.3d 525 (8th Cir. 1996) that "[a] party that engages in affirmative activity in federal court typically waives the right to seek a remand." Following this principle, the court held that the filing of a complaint setting forth class action claims in the District Court clearly constituted "affirmative activity" in federal court. The Court also relied on the interest of policy in preventing the plaintiffs from "manipulat[ing] the litigation process to deprive this court of jurisdiction it would otherwise have." The Court reasoned that had it ruled on and granted the plaintiffs' motion to remand and then the plaintiffs filed the class action complaint in state court the defendants would have an opportunity to file new notices of removal because the "other papers" issue on which the plaintiffs had based their current motions to remand would be eliminated.

The full opinion is available in PDF.

No comments:

Post a Comment