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Defendant’s Removal Is Frustrated by Plaintiff’s Multiple Amendments to Complaint and an Action that Was Proceeding in Three (3) Courts Simultaneously

Johnson v. Citibank, N.A.
No. PWG-14-3024 (U.S. District Court for Maryland, December 5, 2014)

by Colleen K. O’Brien, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www.mdd.uscourts.gov/Opinions/Opinions/Johnson%20v%20Citibank
%20Mem%20Op%20on%20Remand.pdf

In Johnson v. Citibank, N.A., No. PWG-14-3024 (U.S. District Court of Maryland, December 5, 2014), the Court examined a complicated case of unsuccessful federal removal. After initially filing a case pro se in Maryland State District Court setting forth, inter alia, violation of the Fair Credit Billing Act (“FCBA”), Plaintiff prayed a jury trial and amended his claimed damages, and so the case was transferred to the Maryland State Circuit Court, where the complaint was thereafter amended several additional times.

Defendant sought to remove the case to the Maryland Federal Court on the basis of federal question jurisdiction based on the FCBA. Defendant filed a notice of removal and provided notice to Plaintiff and the State District Court—but not to the State Circuit Court. While the docket reflected that the case had been transferred from the State District Court to the State Circuit Court after the jury demand was prayed, the Defendant’s attorney was advised by the State Court Clerk that the case file remained with the State District Court, and therefore, the Defendant filed the notice of removal with the State District Court instead of the State Circuit Court. After the notice of removal was filed, Plaintiff again amended the Complaint and stripped the Complaint of its federal claims. Plaintiff moved to remand the case back to State Court on the grounds that there was no case pending in the State District Court to remove after the jury demand was filed.

In ruling on the motion to remand, the Court disagreed with the Plaintiff’s argument, and found that although jurisdiction transferred from State District Court to State Circuit Court with the filing of the jury demand, the case remained pending and was removable to this court. However, because Defendant did not provide notice to the State Circuit Court (in which the case was pending) until after Plaintiff amended his complaint to remove all of his federal claims, there was no basis for federal jurisdiction at the time that the removal was effected.

Specifically, the Federal Court held that jurisdiction of the case was immediately transferred from the State District Court to the State Circuit Court upon the filing of the jury demand, and so the Notice of Removal ought to have been filed in the State Circuit Court. The Court sympathized with Defendant who was left in a “state of limbo” in which the State Circuit Court had jurisdiction over the case but the State District Court retained custody of the physical case file. Although Defendant timely filed its Notice of Removal in the Maryland Federal Court within thirty (30) days of being served with process, and immediately served a copy of the Notice of Removal on Plaintiff, the removal was not effective unless and until Defendant “[p]romptly . . . file[d] a copy of the notice with the clerk of such State court” as required by 28 U.S.C. § 1446(d). Defendant did not strictly comply with 28 U.S.C. § 1446(d), but the Court noted that failure of notice to the state court is a procedural defect that does not defeat federal jurisdiction, and that several courts have found substantial compliance with 28 U.S.C. § 1446(d) where a state court has actual notice of the removal notwithstanding a defendant’s failure properly to file a notice of removal.

Although Defendant promptly provided notice of removal to the State District Court, it did so after jurisdiction transferred to the State Circuit Court. The State Circuit Court was not made aware of the removal until Defendant filed its Motion to Stay State Proceedings over a month after the Notice of Removal was filed in this Court and over two (2) weeks after Plaintiff filed his Fifth Amended Complaint which eliminated his federal law claims. Removal was effected on the date that the Motion to Stay State Proceedings was filed in State Circuit Court, and not before.

The delay between filing the Notice of Removal in the Federal Court and providing notice to the State Circuit Court was crucial because the validity of a removal must “be determined according to the plaintiffs’ pleading at the time of the petition for removal.” Were removal complete on the day the Notice of Removal was filed in Federal Court, there is no question that Plaintiff’s FCBA claim would provide a basis for federal jurisdiction. But, Plaintiff filed three amended complaints in State Circuit Court since that date, which eliminated the federal claims. The Court did recognize that Plaintiff likely manipulated the Complaint to avoid federal jurisdiction, however, such liberal amendments are permitted in State Court, and so in this case, the amendments removing the federal claims were able to defeat removal based on the procedural irregularity with the filing of the Notice of Removal in the wrong Maryland State Court. Accordingly, the case was remanded back to State Court.


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