E-Alert Case Updates

Rooker-Feldman Doctrine Requires Remand of Part of Plaintiff’s Class Action Complaint, but Remaining Counts Will Remain in Federal Court

Murray v. Midland Funding, LLC
Civ. No. JKB-15-0532, United States District Court for the District of Maryland (June 23, 2015)
by Colleen K. O’Brien
Semmes, Bowen & Semmes (www.semmes.com)

Available at: https://cases.justia.com/federal/district-courts/maryland/mddce/1:2015cv00532/307500/51/0.pdf?ts=1435228201

Murray v. Midland Funding, LLC, Civ. No. JKB-15-0532 (June 23, 2015), was removed from State to Federal court under the Class Action Fairness Act (“CAFA”), codified at 28 U.S.C. § 1332(d) and § 1453. The Plaintiff filed a Motion to Remand, which was granted in part and denied in part by the Court. The Court determined that Defendant’s removal was timely under CAFA, but that the Rooker-Feldman doctrine required remand of Counts I and II to State court. The case proceeded in Federal court as to Counts III, IV, and V, since Burford abstention was not applicable.

Plaintiff filed a Class Action Complaint & Request for Jury Trial in Anne Arundel County Circuit Court. She asked that the Plaintiff Class be defined as the persons sued by Defendant in Maryland State courts from October 30, 2007 through January 14, 2010 for whom Defendant obtained a judgment for an alleged debt, interest or costs, including attorney’s fees in her favor in an attempt to collect a consumer debt. Plaintiff alleged that Defendant employed multiple entities and persons in thousands of collection actions for purposes of collecting debts on its behalf in Maryland. Plaintiff further alleged that Defendant did not have the collection agency license mandated by Maryland law during the relevant Class time period. Plaintiff alleged that the judgments obtained by Defendant before it received its license were void. The complaint sought declaratory and injunctive relief for the putative class members and a money judgment for the Plaintiff Class in excess of $75,000 based upon alleged violations of Maryland common law and statutory law. Plaintiff later amended her Complaint and added a new count for the common law causes of action “money had and received” and in the new count, claimed on behalf of the Plaintiff Class a money judgment of $10,000,000.

Plaintiff advanced two (2) bases for remanding this case to state court. First, she claimed removal was untimely, and second, she argued the Court lacked subject matter jurisdiction because of the Rooker-Feldman doctrine. Alternatively, Plaintiff requested that, if the Court determined removal was timely and Rooker-Feldman required remand of only Counts I and II, then the Court should remand Counts I and II but stay proceedings on Counts III, IV, and V pending state court resolution of Counts I and II pursuant to Burford abstention.

As a threshold issue, the Court rejected Plaintiff’s argument that removal was untimely. The basic diversity rule did not apply—the CAFA’s diversity rule applied, which meant that the Complaint only came within CAFA jurisdiction after its sum or value exceeded $5,000,000, if it was a class action in which “any member of a class of plaintiffs is a citizen of a State different from any defendant,” and the total number of members of the aggregated plaintiff classes is at least 100. 28 U.S.C. § 1332(d)(2)(A), (5)(B). Murray’s original Complaint did not meet these parameters because the amount in controversy fell short. The pleading did not become removable until it was amended and claimed a money judgment of $10,000,000, and it was timely removed by Defendant within thirty (30) days after that amendment.

The Rooker-Feldman doctrine derives its name from two (2) Supreme Court cases, Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923), and Dist. of Columbia Ct. of Appeals v. Feldman, 460 U.S. 462 (1983). The doctrine is confined to cases brought by state court losers complaining of injuries caused by state court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments. Such cases are not permitted because they would allow the federal district courts to exercise appellate jurisdiction, when only the Supreme Court may entertain a proceeding to reverse or modify a state-court judgment. The doctrine is narrowly construed, however; and so, if the federal plaintiff presents some independent claim, albeit one that denies a legal conclusion that a state court has reached in a case to which he was a party, then there is jurisdiction and state law determines whether the defendant prevails under principles of preclusion.

Based on the application of the doctrine, the Court determined that Counts I and II of the Complaint, which were predicated upon the requested declaration of void judgments, should be remanded. The Complaint’s remaining counts, however, did not invite review and rejection of the allegedly void judgments obtained by Defendant. Rather, they alleged violations of Maryland law by Defendant in seeking and enforcing the judgments. Thus, the injury in the remaining counts was not caused by the judgments themselves but by Defendant’s allegedly illegal actions. They were separable and collateral to the merits of the state court judgment. Ultimately, the Court remanded only the portion of the case that did not fall within the district court’s original jurisdiction (Counts I and II), and retained jurisdiction over the remaining counts of the Complaint (Counts III, IV, and V).

Finally, the Court addressed Plaintiff’s argument that if the Rooker-Feldman remand of the entire case was unwarranted, then the Court should stay proceedings on Counts III, IV, and V pending the outcome of Counts I and II in State court, under Burford abstention, citing Burford v. Sun Oil Co., 319 U.S. 315 (1943). The Court determined that a stay of the remaining counts was inappropriate. Burford abstention is limited to two (2) particular circumstances: (1) when there are difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case at bar; or (2) where the exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern. Neither circumstance was present in this case. Furthermore, Burford abstention largely applies only in the context of state administrative processes. Since the case did not involve any state administrative process or orders that could be jeopardized by proceeding to adjudication on the remaining counts, the doctrine was inapplicable.

In sum, Defendant’s removal was timely, but the Rooker-Feldman doctrine required remand of Counts I and II to State court, while Federal court retained jurisdiction over Counts III, IV, and V. No attorneys’ fees were awarded to Plaintiff in connection with the partial remand of the case either.