E-Alert Case Updates

Advanced Courteous Copies of Filings Is Not Always a Good Idea

Mostofi v. Capital One, N.A.
Civil No., RWT-12-cv-2398 (D. Md. 2013)
by Kevin M. Cox, Associate
Semmes, Bowen & Semmes (www.semmes.com)

On October 24, 2011, Plaintiffs, Dean Mostofi and Yung Sun Kim (collectively, “Plaintiffs”), filed a pro se Bill of Complaint in the Circuit Court for Montgomery County, Maryland, against Defendants, Capital One, N.A. (“Capital One”) and Capital One employees, John Duckworth and Tina Register (collectively, “Defendants”). Plaintiffs asserted that Defendants took unlawful action with respect to Plaintiffs’ joint checking account, primarily by enforcing a withholding order issued by an out-of-state garnisher against Plaintiffs’ account in Maryland. On June 15, 2012, Plaintiffs filed an amended Bill of Complaint against Defendants in State court. Defendants conceded that the “case stated by the First Amended Complaint was not removable in that it did not meet diversity jurisdiction requirements and did not contain a federal question.” On August 2, 2012, Plaintiffs filed their Second Amended Complaint against Defendants in State court. Plaintiffs’ Second Amended Complaint included for the first time, an assertion in Count 10 that Defendants violated the Federal Electric Fund Transfer Act (“EFTA”), 15 U.S.C. §§ 1693-1693(r).

On August 13, 2012, Defendants removed Plaintiffs’ State court action to the United States District Court for the District of Maryland under 28 U.S.C. §§ 1441, 1446, claiming that Plaintiffs’ EFTA allegations in their Second Amended Complaint created a “federal question” such that the federal court had original jurisdiction under 28 U.S.C. § 1331, and supplemental jurisdiction over the remaining State law claims under 28 U.S.C. § 1367. Also on August 13, 2012, Plaintiffs filed in State court their Third Amended Complaint, which omitted Plaintiffs’ EFTA allegations and any other claims based on federal law. Plaintiffs purposely filed their Third Amended Complaint in State court because on Friday, August 10, 2012, defense counsel sent a courtesy email to Plaintiffs’ counsel notifying Plaintiffs’ counsel of the filing of the Notice of Filing Notice of Removal. Plaintiffs’ counsel then rushed to the courthouse on Monday morning, August 13, 2012, to file the Third Amended Complaint, just three (3) hours prior to Defendants’ filing their Notice of Removal in state court.

The race to the courthouse was due to the fact that Federal courts and Maryland courts have materially different rules with respect to amendment of pleadings. In Federal courts, “[a] party may amend its pleading once as a matter course within . . . twenty-one (21) days after serving,” but in “other cases, a party may amend its pleading only with the opposing party’s written consent or the Court’s leave.” FED. R. CIV. P. 15(a)(1)-(2). Thus, when leave is required, the amended pleading is not deemed filed until leave is granted.

In Maryland courts, however, “[a] party may file an amendment to a pleading without leave of Court by the date set forth in a scheduling order, or, if there is no scheduling order, no later than thirty (30) days before a scheduled trial date.” MD. RULE 2-341(a). Put simply, in Maryland courts amendment is liberal, while in the Federal system the court must grant permission to amend. In this case, had the case been timely removed to Federal court, then Plaintiffs would have required leave of court or defendants’ written consent to file their Third Amended Complaint. If, however, the Third Amended Complaint was timely filed in Maryland court prior to the removal of the case to Federal court, then leave of court to amend the complaint would not have been required, nor would the Defendants’ written consent have been required.

Plaintiffs’ Third Amended Complaint was clearly devoid of any Federal claim. The Court also cited law confirming that it considers a Complaint “at the time of removal to determine if removal was appropriate.” In this case, by a few precious hours, the Complaint used by the Court to determine whether removal was appropriate had to be Plaintiffs’ Third Amended Complaint. Unfortunately, had defense counsel not voluntarily advised Plaintiffs’ counsel that it had filed the Notice of Removal and Notice of Filing Notice of Removal on Friday, August 10, 2012, then Plaintiffs’ counsel would not have filed the Third Amended Complaint in State court on Monday, August 13, 2012, just slightly over three (3) hours prior to the filing of the removal papers. As a result, the Court concluded that it lacked subject matter jurisdiction over the claims in the case and granted Plaintiffs’ Motion to Remand. Defendants’ attempts to remove the case to Federal court were, therefore, thwarted; and Defendants were required to litigate the case in State court.