The Harry and Jeanette Weinberg Foundation, Inc. v. St. Marks Avenue, LLC et al

Filing 159

MEMORANDUM AND ORDER denying 132 Smith's Motion to Stay; granting in part and denying in part 134 Smith's Motion for leave to file second amended counterclaim; The St. Marks Defendants shall file a responsive pleading to Smiths Second Amended Counterclaim within fourteen days. Signed by Judge George Levi Russell, III on 7/27/2017 (c/m 7/27/17 cags, Deputy Clerk)

UNITED STATES DISTRICT COURT
DISTRICT OF MARYLAND
Chambers of
GEORGE L. RUSSELL, III
United States District Judge

101 West Lombard Street
Baltimore, Maryland 21201
410-962-4055

July 27, 2017
MEMORANDUM TO PARTIES RE:

The Harry and Jeanette Weinberg Foundation, Inc.
v. St. Marks Avenue, LLC, et al.
Civil Action No. GLR-15-3525

Dear Parties:
Pending before the Court are Defendant Stacy Smith’s Motion for Stay of Proceedings (ECF
No. 132) and Motion for Leave to File Second Amended Counterclaim1 (ECF No. 134). The
Motions are ripe for disposition, and no hearing is necessary. See Local Rule 105.6 (D.Md. 2016).
For the reasons outlined below, the Court will deny the Motion for Stay, and the Court will grant in
part and deny in part the Motion for Leave.2
This action originally arose from an agreement the Foundation entered into with Defendant
Communities Organized to Improve Life, Inc. (“COIL”) to develop property located at 1200 West
Baltimore Street, Baltimore, Maryland 21223 (the “Property”), COIL’s principal address, and
COIL’s subsequent sale of the Property to St. Marks Avenue, LLC (“St. Marks”). The Foundation is
a not-for-profit Maryland organization. (2d Am. Countercl. ¶ 2, ECF No. 134-1). Smith is a
Baltimore, Maryland resident. (See, e.g., Resp. Notice Vol. Dism. at 32, ECF No. 152) (signing her
most recent filing with the Court with an address located in Baltimore, MD).
On November 19, 2015, the Foundation sued St. Marks, Spivey (collectively, the “St. Marks
Defendants”), and Smith alleging claims under the Lanham Act and Maryland law. (Compl., ECF
No. 1). On February 3, 2017, Smith, without her then-counsel, filed a Counterclaim/Crossclaim
against the Foundation and the St. Marks Defendants alleging various claims under the U.S.
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Smith refers to her Motion as a Motion for Leave to File “Amended Cross Complaint.”
(ECF No. 134). Because Smith alleges claims against the Foundation, it is a counterclaim, but
because she also alleges claims against the St. Marks Defendants, it is a crossclaim as well. And
because she already filed an Amended Counterclaim/Crossclaim, this is her Second Amended
Counterclaim/Crossclaim. For ease of reference, the Court will refer to this pleading as the “Second
Amended Counterclaim.”
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Also pending before the Court is The Harry and Jeanette Weinberg Foundation, Inc.’s (the
“Foundation”) Motion for Civil Contempt (ECF No. 122) and Smith’s Motion for Leave to File
Surreply (ECF No. 131). The Motion for Civil Contempt and the Motion for Leave to File Surreply
relate to the Foundation’s claims against St. Marks and Defendant William Spivey, which the Court
dismissed without prejudice on July 7, 2017. (ECF No. 150). Thus, the Motions are DENIED AS
MOOT WITHOUT PREJUDICE.

Constitution, the Sherman Anti-Trust Act, and Maryland law. (Countercl., ECF No. 73). On March
13, 2017, Smith, proceeding pro se, filed an Amended Counterclaim/Crossclaim against the
Foundation and the St. Marks Defendants alleging claims under Maryland law. (Am. Countercl.,
ECF No. 103).
On April 21, 2017, the Court dismissed Smith’s Amended Counterclaim/Crossclaim but gave
Smith ten days to move for leave to file a second amended counterclaim/crossclaim. On May 1,
2017, Smith filed a Motion for Leave to File Second Amended Counterclaim against the Foundation
and the St. Marks Defendants alleging Civil Conspiracy (Count I), Tortious Inference (Count II),
Abuse of Process (Count III), Defamation of Character (Count IV), and Intentional and Negligent
Infliction of Emotional Distress (Count V) under Maryland law.3 (2d Am. Countercl., ECF No. 1341). On May 9, 2017, the Foundation opposed Smith’s Motion. (ECF No. 138). Smith did not file a
Reply. The Motion remains unopposed by the St. Marks Defendants.
On April 25, 2017, Smith filed a Motion for Stay of Proceedings seeking a stay of all
proceedings in this case. (ECF No. 132). On July 6, 2017, the Foundation filed a Notice of
Voluntary Dismissal of all the Foundation’s claims against the St. Marks Defendants. (ECF No.
149). On July 7, 2017, the Court issued an Order of Dismissal dismissing the Foundation’s claims
without prejudice. (ECF No. 150). On July 11, 2017, the Foundation supplemented its Opposition.
(ECF No. 154).
Motion for Stay of Proceedings
Smith is seeking a stay of all proceedings in this case on the grounds that her former lawyer,
William Sherwood, Esq., failed to provide her with her case files in a “clear cohesive manner.”
(Mem. Supp. Mot. Stay Procs. at 1, ECF No. 132-1). She asserts that she needs additional time to
secure counsel for COIL and herself. Since the filing of the Motion, Smith has been self-represented
and has failed to secure counsel for COIL. Indeed, as indicated above, the litigation landscape has
changed significantly. The Court concludes that Smith has had ample opportunity to secure counsel
but has failed to do so. To the extent that Smith seeks redress against her former counsel, she may
seek relief in an appropriate forum—including the Attorney Grievance Commission of Maryland.
The Court will not, however, entertain or intervene in a dispute with her former attorney. Thus, the
Court will deny the Motion for Stay of Proceedings.
Motion for Leave to File Second Amended Counterclaim
In its supplement to the Opposition, the Foundation argues that because the Court dismissed
the Foundation’s Lanham Act claim and because there is no diversity of citizenship between the
Foundation and Smith, the Court should deny Smith’s Motion to the extent Smith brings claims
against the Foundation for lack of subject matter jurisdiction. The Court agrees.
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Smith did not number her Abuse of Process claim. Thus, the Court numbers it Count III
and changes the remaining counts accordingly.
2

Under Federal Rule of Civil Procedure 12(h)(3), “[i]f the court determines at any time that it
lacks subject-matter jurisdiction, the court must dismiss the action.” (Emphasis added.) Indeed,
“questions of subject-matter jurisdiction may be raised at any point during the proceedings and may
(or, more precisely, must) be raised sua sponte by the court.” Brickwood Contractors, Inc. v. Datanet
Eng’g, Inc., 369 F.3d 385, 390 (4th Cir. 2004) (emphasis added).
“Federal courts are courts of limited jurisdiction.” Home Buyers Warranty Corp. v. Hanna,
750 F.3d 427, 432 (4th Cir. 2014) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.
375, 377 (1994)). There are three principal bases for subject-matter jurisdiction in federal court: (1)
federal-question jurisdiction4; (2) diversity jurisdiction; (3) and supplemental jurisdiction. Typically,
federal courts retain jurisdiction over state claims based on diversity jurisdiction, which exists when
there is an amount in controversy exceeding $75,000, exclusive of interests and costs, and complete
diversity of citizenship. See 28 U.S.C. § 1332(a) (2012). District courts may also retain jurisdiction
over state claims based on the doctrine of supplemental jurisdiction. Under this doctrine, when a
district court has original jurisdiction, it will also have jurisdiction “over all other claims that are so
related to claims in the action within such original jurisdiction that they form part of the same case or
controversy.” 28 U.S.C. § 1367(a) (2012). District courts have the discretion to decline exercising
supplemental jurisdiction over a state claim if “the district court has dismissed all claims over which
it has original jurisdiction.” 28 U.S.C. § 1367(c)(3).
Here, the Court originally had jurisdiction over this case based on federal-question
jurisdiction. The Foundation brought a Lanham Act claim, a claim arising under federal law, against
the St. Marks Defendants. (See Am. Compl. ¶ 37, ECF No. 57). But the Court dismissed that claim,
and the remainder of the Foundation’s claims, without prejudice. (ECF No. 150). Because the Court
“dismissed all claims over which it has original jurisdiction,” in order for the Court to retain
jurisdiction over the Second Amended Counterclaim, either (1) the Court must exercise
supplemental jurisdiction under its discretion, see 28 U.S.C. § 1367(c)(3), or (2) the Second
Amended Counterclaim must have an independent basis for jurisdiction.
District courts “enjoy wide latitude” in determining whether to exercise supplemental
jurisdiction under its discretion. Shanaghan v. Cahill, 58 F.3d 106, 110 (4th Cir. 1995). In
exercising their discretion, district courts consider the following factors: “convenience and fairness
to the parties, the existence of any underlying issues of federal policy, comity, and considerations of
judicial economy.” Id. (citing Carnegie–Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988)).
Considering those factors here, the Court will decline to exercise supplemental jurisdiction. Judicial
economy would not be served by retaining jurisdiction because the Court has not had an occasion to
analyze Smith’s allegations or the relevant authorities. The Court has only considered motions to
dismiss related to Smith’s previous amended counterclaim, and the Court granted them only because
the first amended counterclaim/crossclaim violated Rule 8. (See ECF No. 129). What is more, the
Court is not aware of any discovery that has been completed related to Smith’s claims. Finally, there
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See 28 U.S.C. § 1331 (2012).
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are no matters of federal policy likely to emerge from her claims. Thus, the Court declines to
exercise supplemental jurisdiction over the Second Amended Counterclaim to the extent Smith
asserts claims against the Foundation. Smith is free to pursue her claims against the Foundation in
state court.
Nor does the Second Amended Counterclaim have an independent basis for jurisdiction.
There is no federal-question jurisdiction because Smith only asserts claims under Maryland law:
Civil Conspiracy, Tortious Inference, Abuse of Process, Defamation of Character, and Intentional
and Negligent Infliction of Emotional Distress. (2d Am. Countercl. ¶¶ 59–92). In addition, there is
no diversity jurisdiction because Smith and the Foundation are Maryland residents. (2d Am.
Countercl. ¶ 2; see e.g., Resp. Notice Vol. Dism. at 32). Thus, the Court concludes that there is no
jurisdiction over the Second Amended Counterclaim to the extent that Smith brings claims against
the Foundation. Accordingly, the Court will deny Smith’s Motion in part and dismiss the
Foundation from this case.
The Court next considers whether to grant Smith’s Motion to the extent Smith brings claims
against the St. Marks Defendants. The Court concludes that Smith may amend the Amended
Counterclaim for her claims against the St. Marks Defendants.
There is a “federal policy in favor of resolving cases on the merits instead of disposing of
them on technicalities.” Mayfield v. Nat’l Ass’n for Stock Car Auto Racing, Inc., 674 F.3d 369, 379
(4th Cir. 2012) (quoting Matrix Capital Mgmt. Fund, LP v. BearingPoint, Inc., 576 F.3d 172, 193
(4th Cir. 2009)). To satisfy this policy, the court gives a plaintiff “every opportunity to cure formal
defects in his pleading. This is true even though the court doubts that plaintiff will be able to
overcome the defects in his initial pleading.” Ostrzenski v. Seigel, 177 F.3d 245, 253 (4th Cir. 1999)
(citation omitted). The court only denies leave to amend a complaint when “it appears to a certainty
that plaintiff cannot state a claim.” Id. (citation omitted). Indeed, “[t]he better practice is to allow at
least one amendment regardless of how unpromising the initial pleading appears because except in
unusual circumstances it is unlikely that the court will be able to determine conclusively on the face
of a defective pleading whether plaintiff actually can state a claim.” Id. (internal quotation marks
omitted).
Consonant with the federal policy in favor of resolving cases on their merits, Rule 15(a)(2)
provides that “[t]he court should freely give leave [to amend a complaint] when justice so requires.”
Justice does not require permitting leave to amend when amendment would prejudice the opposing
party, the moving party has exhibited bad faith, or amendment would be futile. See Edell & Assocs.,
P.C. v. Law Offices of Peter G. Angelos, 264 F.3d 424, 446 (4th Cir. 2001) (citing Edwards v. City
of Goldsboro, 178 F.3d 231, 242 (4th Cir. 1999)). “Leave to amend, however, should only be denied
on the ground of futility when the proposed amendment is clearly insufficient or frivolous on its
face.” Johnson, 785 F.2d at 510 (citing Davis v. Piper Aircraft Corp., 615 F.2d 606, 613 (4th Cir.
1980)).
Here, the St. Marks Defendants do not oppose Smith’s Motion. There is no assertion before
the Court, therefore, that the Second Amended Counterclaim would prejudice the St. Marks
4

Defendants or that Smith has exhibited bad faith. See Edell, 264 F.3d at 446. And after reviewing
the Second Amended Counterclaim, the Court concludes that Smith’s allegations are not clearly
insufficient or frivolous on their face. See Johnson, 785 F.2d at 510 (citing Davis, 615 F.2d at 613).
Similarly, it does not appear “to a certainty that plaintiff cannot state a claim.” Ostrzenski, 177 F.3d
at 253. Thus, the Court will grant the Motion to the extent Smith brings claims against the St. Marks
Defendants.
For the foregoing reasons, Smith’s Motion for Stay of Proceedings (ECF No. 132) is
DENIED and Smith’s Motion for Leave to File Second Amended Counterclaim (ECF No. 134) is
GRANTED in part and DENIED in part. The Motion is denied to the extent Smith brings claims
against the Foundation. The Motion is granted to the extent Smith brings claims against the St.
Marks Defendants. The Foundation is TERMINATED as a Plaintiff in this case. The St. Marks
Defendants shall file a responsive pleading to Smith’s Second Amended Counterclaim within
fourteen days.
Despite the informal nature of this memorandum, it shall constitute an Order of this Court,
and the Clerk is directed to docket the Order accordingly and mail a copy to Smith at her address of
record.
Very truly yours,
/s/
George L. Russell, III
United States District Judge

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