Daimler Trust et al v. Prestige Annapolis, LLC
Filing
25
MEMORANDUM OPINION. Signed by Judge Ellen L. Hollander on 6/7/2016. (jnls, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
DAIMLER TRUST, ET AL.,
Plaintiffs,
v.
Civil Action No.: ELH-16-544
PRESTIGE ANNAPOLIS, LLC,
Defendant.
MEMORANDUM OPINION
Plaintiffs Daimler Trust and Daimler Title Company (“Daimler Title”) filed suit on
February 25, 2016, against defendant Prestige Annapolis, LLC (“Prestige”), to obtain possession
of a 2016 Mercedes-Benz. ECF 1. The Complaint, which is supported by two exhibits (filed
collectively as ECF 1-2), contains five counts: violation of plaintiffs’ due process rights under
the Fourteenth Amendment, pursuant to 42 U.S.C. § 1983 (“§ 1983”) (Count I); replevin (Count
II); deprivation of property without due process of law, in violation of Article 24 of the Maryland
Declaration of Rights (Count III); conversion (Count IV); and Declaratory Relief (Count V). Id.
¶¶ 44-106. Plaintiffs also rely on 42 U.S.C. § 1988 (“§ 1988”). They allege that this Court has
federal question jurisdiction under 28 U.S.C. § 1331 and diversity jurisdiction pursuant to 28
U.S.C. § 1332. Id. ¶¶ 3-4.1
Pursuant to Fed. R. Civ. P. 12(b)(1), 12(b)(2), and 12(b)(6), Prestige has filed a “Motion
to Dismiss and Incorporated Memorandum of Law” (ECF 13, the “Motion”), which challenges,
inter alia, the Court’s subject matter jurisdiction.
1
Plaintiffs oppose the Motion.
ECF 15
By “Memorandum to Counsel” dated March 17, 2016 (ECF 10), I asked plaintiffs to
clarify the basis for this Court’s jurisdiction. Plaintiffs responded on March 24, 2016. ECF 11.
(“Opposition”). Prestige has not replied and the time to do so has expired. See Local Rule
105.2.
On March 16, 2016, plaintiffs filed a “Motion to Release Motor Vehicle Upon Court
Approval of Bond and Request for Issuance of Show Cause Order.” ECF 9. I issued the
requested “Order to Show Cause” on March 28, 2016. ECF 12. Prestige responded on April 29,
2016 (ECF 22), seeking to dissolve the show cause order. By Order of May 9, 2016 (ECF 23), I
postponed the show cause hearing and directed plaintiffs to submit further briefing as to the
propriety of holding a show cause hearing in federal court under § 16-206 of the Commercial
Law Article of the Maryland Code (2013 Repl. Vol., 2015 Supp.). Plaintiffs subsequently filed a
“Reply Memorandum of Law in Further Support of Motion to Release Motor Vehicle Upon
Court Approval of Bond” (ECF 24), which advances additional arguments in opposition to the
Motion.
No hearing is necessary to resolve the Motion. See Local Rule 105.6. For the reasons
that follow, I will grant the Motion as to Count I and Count III and deny it in all other respects.
I. Factual Background
On April 25, 2015, William Betteridge leased a silver, two-door 2016 Mercedes Benz
AMG GT S (the “Vehicle”) from an automobile dealership in Annapolis, Maryland, pursuant to
a closed-end lease agreement (the “Lease Agreement”). ECF 1 ¶ 19; ECF 1-2 at 1-2. The lessee
has failed to make monthly lease payments since September 18, 2015. ECF 1 ¶ 24. Plaintiffs
maintain that the Vehicle is currently worth $137,576. ECF 1 ¶¶ 10, 43.2
2
The starting Manufacturer Suggested Retail Price for a 2016 AMG GT S is $129,900.
AMG GT S, Mercedes-Benz (May 5, 2016), http://www.mbusa.com/mercedes/vehicles/model/
class-GTS/model-GTS. “[A] court may properly take judicial notice of ‘matters of public
record’ and other information that, under Federal Rule of Evidence 201, constitute ‘adjudicative
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Title to the Vehicle was issued on June 2, 2015, and is held by Daimler Trust as owner.
ECF 1 ¶¶ 21, 22. Plaintiffs allege that “[t]he Lease Agreement was assigned to and became the
property of Daimler Trust, and as part of the transaction Daimler Title Co. obtained a lien” on
the Vehicle. Id. ¶ 20. Daimler Title has held the first priority lien on the Vehicle since June 2,
2015. Id. ¶ 23.
“Daimler Trust is a Delaware Trust, whose trustee, BNY Mellon Bank of Delaware, is a
Delaware banking corporation. The sole beneficiary of Daimler Trust is Daimler Trust Holding
LLC, whose sole member is Mercedes-Benz Financial Services USA LLC, whose sole member
is Daimler Investments US Corporation, a Delaware Corporation.” ECF 11 at 2; see also ECF 1
¶ 7. Daimler Title is “a corporation organized and existing by virtue of the laws of the State of
Delaware . . . .” ECF 1 ¶ 8.
Plaintiffs contend that Prestige is currently “in control” of the Vehicle.
Id. ¶ 9.
According to plaintiffs’ supplemental briefing (ECF 11 at 2), Prestige “is a Limited Liability
Company organized under the laws of Maryland, with a principal place of business in Maryland,
facts.’” Goldfarb v. Mayor & City Council of Baltimore, 791 F.3d 500, 508 (4th Cir. 2015); see
Fed. R. Evid. 201(b) (stating that a “court may judicially notice a fact that is not subject to
reasonable dispute because it . . . can be accurately and readily determined from sources whose
accuracy cannot reasonably be questioned”); see also Tellabs, Inc. v. Makor Issues & Rights,
Ltd., 551 U.S. 308, 322 (2007); Katyle v. Penn Nat’l Gaming, Inc., 637 F.3d 462, 466 (4th Cir.
2011), cert. denied,____ U.S. ____, 132 S. Ct. 115 (2011); Philips v. Pitt County Mem’l Hosp.,
572 F.3d 176, 180 (4th Cir. 2009). And, “[i]t is not uncommon for courts to take judicial notice
of factual information found on the world wide web.” O’Toole v. Northrop Grumman Corp., 499
F.3d 1218, 1225 (10th Cir. 2007); cf. Jeandron v. Bd. of Regents of Univ. Sys. of Maryland, 510
F. App’x 223, 227 (4th Cir. 2013) (noting that the court may take judicial notice of information
on a website, “so long as the web site’s authenticity is not in dispute”). However, “these facts
[must be] construed in the light most favorable” to the non-movant. Clatterbuck v. City of
Charlottesville, 708 F.3d 549, 557 (4th Cir. 2013) (abrogated on other grounds by Reed v. Town
of Gilbert, Ariz., ____ U.S. ____, 135 S. Ct. 2218 (2015), as recognized in Cahaly v. Larosa, 796
F.3d 399 (4th Cir. 2015)).
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and a registered agent in Maryland. Public records indicate Prestige’s sole member is Omid
Shaffaat, and public records indicate Mr. Shaffaat is a Maryland resident.”
Plaintiffs maintain that Prestige made “modifications to make the vehicle a racing-type
car.” ECF 1 ¶ 32. According to plaintiffs, “Daimler Trust and Daimler Title Co. did not grant
permission, consent or authority for any racing-type or any other modifications to be done” to the
Vehicle. Id. ¶ 31. An invoice from Prestige in Betteridge’s name, dated December 22, 2015,
reflects a “TOTAL AMOUNT DUE” from Betteridge to Prestige of $11,730. ECF 1-2 at 1.
According to plaintiffs, the “charges were not for repair” to the Vehicle, but rather for the
modifications made to it. ECF 1 ¶ 32.
As noted, Betteridge, the lessee of the Vehicle, made no lease payments after September
18, 2015, and is in default of the Lease Agreement. Id. ¶ 24. On November 20, 2015, an
individual identifying himself as Betteridge’s father notified Daimler Trust that Betteridge could
no longer pay the lease payments and would return the Vehicle. Id. ¶ 25. On December 1, 2015,
the same individual notified Daimler Trust that the Vehicle was in Prestige’s possession. Id.
¶ 26. On December 4, 2015, Betteridge “telephoned Daimler Trust’s representative to advise
that Prestige would return the vehicle . . . .” Id. ¶ 27.
Plaintiffs allege that they negotiated unsuccessfully with Prestige for the return of the
Vehicle. See id. ¶¶ 28-35. Plaintiffs assert, id. ¶ 36: “On January 8, 2016, and without notice to
Daimler Trust or Daimler Title Co., Prestige requested that a lien company named Nationwide
Lien & Recovery, Inc. enforce a lien against [the Vehicle] in the amount of $49,084.00.”
Further, plaintiffs aver, ECF 1 ¶ 37: “Prestige’s act of raising its lien demand from $11,730.00 to
$49,084.00 was done without the knowledge, consent or authority” of the plaintiffs. Plaintiffs
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also allege, id. ¶ 38: “Prestige then served a Notice of Sale on the Lessee asserting that [the
Vehicle] would be auctioned on March 2, 2016 pursuant to state law in order to enforce a lien
claim of $50,534.00.” See ECF 1-2 at 2, “Notice of Sale of Motor Vehicle to Satisfy a Lien.”3
According to plaintiffs, “Prestige invoked the power of the State of Maryland to impress
a nonconsensual (supposed) lien for $50,534.00 in charges for unauthorized . . . modifications”
to the Vehicle. ECF 1 ¶ 11. And, it did so without affording plaintiffs notice and a hearing to
protect their interests by contesting the validity of Prestige’s claims. Id. ¶ 15. Plaintiffs contend,
id. ¶ 39: “Prior to impressing a purported lien for $11,730.00, and prior to increasing that lien
claim to $49,084.00 and again to $50,534.00, Prestige had not provided any hearing before an
impartial decisionmaker, with adequate notice . . . .” See also id. ¶ 15.
II. Standard of Review
As discussed, the Motion (ECF 13) is premised on Fed. R. Civ. P. 12(b)(1)and 12(b)(6).4
A. Fed. R. Civ. P. 12(b)(1)
Under Fed. R. Civ. P. 12(b)(1), a motion to dismiss for lack of subject matter jurisdiction
raises the issue of “whether the court has the competence or authority to hear and decide the
case.” Davis v. Thompson, 367 F. Supp. 2d 792, 799 (D. Md. 2005). The question of subject
matter jurisdiction may be raised by the parties or the court, sua sponte, at any stage of the
3
According to Prestige, ECF 22 at 1: “The March 2nd 2016 sale was cancelled by the
Defendant’s auctioneer, because of the chilling effect of this very law suit and the threat of the
Plaintiffs to bring the third party auctioneer into a federal court litigation. The auctioneer refused
to proceed with the scheduled sale to avoid being hauled into litigation.” Plaintiffs aver, ECF 15
at 7 n.3: “Prestige tried to reschedule the extra-judicial sale of the Vehicle with a different
auctioneer, once the original auctioneer canceled the original auction after being notified of this
lawsuit.”
4
As plaintiffs note, ECF 15 at 2 n.1: “Prestige’s motion purports to be brought under
Rules 12(b) (1), (2), and (6). However, no argument is made that this Court lacks personal
jurisdiction over Prestige pursuant to Rule 12(b)(2) . . . .”
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litigation. Arbaugh v. Y & H Corp., 546 U.S. 500, 506 (2006); see Ellenburg v. Spartan Motors
Chassis, Inc., 519 F.3d 192, 197 (4th Cir. 2008). Upon a challenge to subject matter jurisdiction,
the plaintiff bears the burden of proving, by a preponderance of evidence, the existence of
jurisdiction. Robb Evans & Assocs., LLC v. Holibaugh, 609 F.3d 359, 362 (4th Cir. 2010); Evans
v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999); see also United States ex. rel. Vuyyuru v.
Jadhau, 555 F.3d 337, 347 (4th Cir. 2009), cert. denied, 558 U.S. 875 (2009); cf. Zoroastrian
Ctr. & Darb-E-Mehr of Metro. Washington, D.C. v. Rustam Guiv Found. of New York, ___ F.3d
___, 2016 WL 2343251, at *5 (4th Cir. May 4, 2016).
Federal courts are courts of limited jurisdiction and “may not exercise jurisdiction absent
a statutory basis.” Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005). They
“have an independent obligation to determine whether subject-matter jurisdiction exists, even
when no party challenges it.” Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010).
A challenge to subject matter jurisdiction under Rule 12(b)(1) may proceed “in one of
two ways”: either a facial challenge, asserting that the allegations pleaded in the complaint are
insufficient to establish subject matter jurisdiction, or a factual challenge, asserting “‘that the
jurisdictional allegations of the complaint [are] not true.’” Kerns v. United States, 585 F.3d 187,
192 (4th Cir. 2009)(citation omitted); see also Buchanan v. Consol. Stores Corp., 125 F. Supp.
2d 730, 736 (D. Md. 2001). In a facial challenge, “the facts alleged in the complaint are taken as
true, and the motion must be denied if the complaint alleges sufficient facts to invoke subject
matter jurisdiction.” Kerns, 585 F.3d at 192; see also Ibarra v. United States, 120 F.3d 472, 474
(4th Cir. 1997).
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In a factual challenge, on the other hand, “the district court is entitled to decide disputed
issues of fact with respect to subject matter jurisdiction.” Kerns, 585 F.3d at 192. In that
circumstance, the court “may regard the pleadings as mere evidence on the issue and may
consider evidence outside the pleadings without converting the proceeding to one for summary
judgment. Velasco v. Gov’t of Indonesia, 370 F.3d 392, 398 (4th Cir. 2004); Evans, 166 F.3d at
647. That is, “the court may look beyond the pleadings and ‘the jurisdictional allegations of the
complaint and view whatever evidence has been submitted on the issue to determine whether in
fact subject matter jurisdiction exists.” Khoury v. Meserve, 268 F. Supp. 2d 600, 606 (D. Md.
2003) (citation omitted), aff’d, 85 Fed. Appx. 960 (4th Cir. 2004).
Here, Prestige raises a facial challenge in that it asserts that the allegations pleaded in the
Complaint are insufficient to establish subject matter jurisdiction. Under the “well-pleaded
complaint” rule, the facts showing the existence of subject matter jurisdiction “must be
affirmatively alleged in the complaint.” Pinkley, Inc. v. City of Frederick, 191 F.3d 394, 399
(4th Cir. 1999) (citing McNutt v. Gen’l Motors Acceptance Corp., 298 U.S. 178 (1936)). “A
court is to presume, therefore, that a case lies outside its limited jurisdiction unless and until
jurisdiction has been shown to be proper.” United States v. Poole, 531 F.3d 263, 274 (4th Cir.
2008) (citing Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994)).
B.
Fed. R. Civ. P. 12(b)(6)
A defendant may test the legal sufficiency of a complaint by way of a motion to dismiss
under Rule 12(b)(6). Goines v. Valley Cmty. Servs. Bd., ____ F.3d ____, 2016 WL 2621262, at
*3 (4th Cir. May 9, 2016); McBurney v. Cuccinelli, 616 F.3d 393, 408 (4th Cir. 2010), aff’d sub
nom. McBurney v. Young, ___ U.S. ___, 133 S.Ct. 1709 (2013); Edwards v. City of Goldsboro,
-7-
178 F.3d 231, 243 (4th Cir. 1999). A Rule 12(b)(6) motion constitutes an assertion by a
defendant that, even if the facts alleged by a plaintiff are true, the complaint fails as a matter of
law “to state a claim upon which relief can be granted.” Whether a complaint states a claim for
relief is assessed by reference to the pleading requirements of Fed. R. Civ. P. 8(a)(2). It provides
that a complaint must contain a “short and plain statement of the claim showing that the pleader
is entitled to relief.” The purpose of the rule is to provide the defendant with “fair notice” of the
claim and the “grounds” for entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 55556 (2007).
To survive a motion under Fed. R. Civ. P. 12(b)(6), a complaint must contain facts
sufficient to “state a claim to relief that is plausible on its face.” Id. at 570; see Ashcroft v. Iqbal,
556 U.S. 662, 684 (2009) (“Our decision in Twombly expounded the pleading standard for ‘all
civil actions’ . . . .” (citation omitted)); see also Simmons v. United Mortg. & Loan Inv., LLC,
634 F.3d 754, 768 (4th Cir. 2011). But, a plaintiff need not include “detailed factual allegations”
in order to satisfy Rule 8(a)(2). Twombly, 550 U.S. at 555. Moreover, federal pleading rules “do
not countenance dismissal of a complaint for imperfect statement of the legal theory supporting
the claim asserted.” Johnson v. City of Shelby, ___ U.S. ___, 135 S. Ct. 346, 346 (2014) (per
curiam).
Nevertheless,
the
rule
demands
more
than
bald
accusations
or
mere
speculation. Twombly, 550 U.S. at 555; see Painter’s Mill Grille, LLC v. Brown, 716 F.3d 342,
350 (4th Cir. 2013). A complaint is insufficient if it provides no more than “labels and
conclusions,” or “a formulaic recitation of the elements of a cause of action,” is
insufficient. Twombly, 550 U.S. at 555.
-8-
To satisfy the minimal requirements of Rule 8(a)(2), the complaint must set forth
“enough factual matter (taken as true) to suggest” a cognizable cause of action, “even if . . . [the]
actual proof of those facts is improbable and . . . recovery is very remote and
unlikely.” Twombly, 550 U.S. at 556 (internal quotations omitted). Put another way, in reviewing
a Rule 12(b)(6) motion, a court “‘must accept as true all of the factual allegations contained in
the complaint,’” and must “‘draw all reasonable inferences [from those facts] in favor of the
plaintiff.’” E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir.
2011) (citations omitted); see Houck v. Substitute Tr. Servs., Inc., 791 F.3d 473, 484 (4th Cir.
2015); Kendall v. Balcerzak, 650 F.3d 515, 522 (4th Cir. 2011), cert. denied, ___ U.S. ____, 132
S. Ct. 402 (2011); Monroe v. City of Charlottesville, 579 F.3d 380, 385-86 (4th Cir. 2009), cert.
denied, 559 U.S. 992 (2010). But, a court is not required to accept legal conclusions drawn from
the facts. See Papasan v. Allain, 478 U.S. 265, 286 (1986). “A court decides whether [the
pleading] standard is met by separating the legal conclusions from the factual allegations,
assuming the truth of only the factual allegations, and then determining whether those allegations
allow the court to reasonably infer” that the plaintiff is entitled to the legal remedy sought. A
Society Without A Name v. Virginia, 655 F.3d 342, 346 (4th Cir. 2011), cert. denied, ___ U.S.
___, 132 S. Ct. 1960 (2012).
A motion asserting failure to state a claim typically “does not resolve contests
surrounding the facts, the merits of a claim, or the applicability of defenses.” Edwards, 178 F.3d
at 243 (quotation marks omitted); see Houck, 791 F. 3d at 484; Tobey v. James, 706 F.3d 379,
387 (4th Cir. 2013). But, “if all facts necessary to the affirmative defense ‘clearly appear[] on the
face of the complaint,’” or in other material that is the proper subject of consideration under Rule
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12(b)(6), such a defense can be resolved on the basis of the facts alleged in the
complaint. Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007) (en banc) (citation
omitted) (emphasis in Goodman); see Houck, 791 F.3d at 484.
Ordinarily, in resolving a motion under Rule 12(b)(6), a court is “generally limited to a
review of the allegations of the complaint itself.” Goines, 2016 WL 2621262, at *3. See Bosiger
v. U.S. Airways, Inc., 510 F.3d 442, 450 (4th Cir. 2007); Clatterbuck v. City of Charlottesville,
708 F.3d 549, 557 (4th Cir. 2013) (abrogated on other grounds by Reed v. Town of Gilbert,
Ariz., ____ U.S. ____, 135 S. Ct. 2218 (2015), as recognized in Cahaly v. Larosa, 796 F.3d 399
(4th Cir. 2015)). Under certain limited exceptions, however, a court may consider documents
beyond the complaint without converting the motion to dismiss to one for summary judgment.
Goldfarb v. Mayor & City Council of Baltimore, 791 F.3d 500, 508 (4th Cir. 2015).
Of relevance here, a court may properly consider documents that are “explicitly
incorporated into the complaint by reference and those attached to the complaint as
exhibits . . . .” Goines, 2016 WL 2621262, at *3 (citations omitted); see U.S. ex rel. Oberg v.
Pennsylvania
Higher
Educ.
Assistance
Agency,
745
F.3d
131,
136
(4th
Cir.
2014) (quoting Philips v. Pitt Cty. Memorial Hosp., 572 F.3d 176, 180 (4th Cir.
2009)); see Anand v. Ocwen Loan Servicing, LLC, 754 F.3d 195, 198 (4th Cir. 2014); Am.
Chiropractic Ass’n v. Trigon Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004), cert.
denied, 543 U.S. 979 (2004); Phillips v. LCI Int’l Inc., 190 F.3d 609, 618 (4th Cir. 1999). A
court may also “consider a document submitted by the movant that was not attached to or
expressly incorporated in a complaint, so long as the document was integral to the complaint and
there is no dispute about the document’s authenticity.” Goines, 2016 WL 2621262, at *3
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(citations omitted). To be “integral,” a document must be one “that by its ‘very existence, and
not the mere information it contains, gives rise to the legal rights asserted.’” Chesapeake Bay
Found., Inc. v. Severstal Sparrows Point, LLC, 794 F. Supp. 2d 602, 611 (D. Md. 2011) (citation
omitted) (emphasis in original).
However, “before treating the contents of an attached or incorporated document as true,
the district court should consider the nature of the document and why the plaintiff attached it.”
Goines, 2016 WL 2621262, at *5 (citing N. Indiana Gun & Outdoor Shows, Inc. v. City of S.
Bend, 163 F.3d 449, 455 (7th Cir. 1998)). “When the plaintiff attaches or incorporates a
document upon which his claim is based, or when the complaint otherwise shows that the
plaintiff has adopted the contents of the document, crediting the document over conflicting
allegations in the complaint is proper.” Goines, 2016 WL 2621262, at *5. Conversely, “where
the plaintiff attaches or incorporates a document for purposes other than the truthfulness of the
document, it is inappropriate to treat the contents of that document as true.” Id.
On this basis, I have considered the exhibits that plaintiffs appended to their Complaint.
III. Discussion
The Motion advances two primary arguments. First, Prestige contends that plaintiffs fail
to state a claim under § 1983 and, accordingly, that this Court lacks federal question jurisdiction
pursuant to 28 U.S.C. § 1331. See ECF 13 at 5. Second, Prestige maintains that this Court lacks
diversity jurisdiction because “the amount in controversy between the diverse parties does not in
fact exceed $75,000 as required by 28 USC §1332 . . . .” Id. at 2. I shall address each argument
in turn.
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A. 28 U.S.C. § 1331; 42 U.S.C. § 1983; and 42 U.S.C. § 1988
1.
Section 1331 of Title 28 of the United States Code grants federal district courts “original
jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United
States.” As the Supreme Court has noted, “there is no serious debate that a federally created
claim for relief is generally a sufficient condition for federal question jurisdiction,” because in
that case “federal law creates the right of action and provides the rules of decision.” Mims v.
Arrow Fin. Servs., LLC, ___ U.S. ____, 132 S.Ct. 740, 748 (2012) (internal citations and
quotation marks omitted). The “‘presence or absence of federal-question jurisdiction is governed
by the ‘well-pleaded complaint rule,’ which provides that federal jurisdiction exists only when a
federal question is presented on the face of the plaintiff’s properly pleaded complaint.’” Rivet v.
Regions Bank of La., 522 U.S. 470, 475 (1998) (citation omitted).
Section 1983 of Title 42 of the United States Code states: “Every person who, under
color of any statute, ordinance, regulation, custom, or usage, of any State or Territory . . .
subjects, or causes to be subjected, any citizen of the United States or other person with the
jurisdiction thereof to the deprivation of any rights, privileges or immunities secured by the
Constitution and laws, shall be liable to the party injured . . . .” It provides a private cause of
action for constitutional violations committed by persons acting under color of state law.
However, it “‘is not itself a source of substantive rights,’ but merely provides ‘a method for
vindicating federal rights elsewhere conferred.’” Albright v. Oliver, 510 U.S. 266, 271
(1994) (quoting Baker v. McCollan, 443 U.S. 137, 144 n. 3 (1979)). Accordingly, a civil action
under § 1983 allows “a party who has been deprived of a federal right under the color of state
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law to seek relief.” City of Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S. 687, 707
(1999); see also West v. Adkins, 487 U.S. 42, 49 (1988); Lugar v. Edmondson Oil Co., 457 U.S.
922, 928-930 (1982).
To establish a claim under § 1983, a plaintiff must prove: (1) that the defendant, a person,
“deprived [the plaintiff] of a right secured by the Constitution and laws of the United States;”
and (2) that the defendant acted “under color of [State] statute, ordinance, regulation, custom, or
usage.” Mentavlos v. Anderson, 249 F.3d 301, 310 (4th Cir. 2001) (citation and internal
quotation marks omitted), cert. denied, 534 U.S. 952 (2001). Thus, in order successfully to
assert a claim of violation of constitutional rights under § 1983, the defendant must be a state
actor. In other words, “the under-color-of-state-law element of § 1983 excludes from its reach
‘merely private conduct, no matter how discriminatory or wrongful.’” American Mfrs. Mut. Ins.
Co. v. Sullivan, 526 U.S. 40, 50 (1999) (citation omitted).
In this regard, the Fourth Circuit has described the “Bill of Rights as a shield that protects
private citizens from the excesses of government, rather than a sword that they may use to
impose liability upon one another.” Holly v. Scott, 434 F.3d 287, 292 (4th Cir. 2006), cert.
denied, 547 U.S. 1168 (2006). Notably, the Fourth Circuit has said: “‘[P]rivate activity will
generally not be deemed ‘state action’ unless the state has so dominated such activity as to
convert it to state action: ‘Mere approval of or acquiescence in the initiatives of a private party’
is insufficient.’” Wahi v. Charleston Area Med. Ctr., Inc., 562 F.3d 599, 616 (4th Cir. 2009)
(quoting DeBauche v. Trani, 191 F.3d 499, 507 (4th Cir. 1999) (alterations in Wahi), cert.
denied, 558 U.S. 1158 (2010).
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However, “there are infrequently arising circumstances under which the actions of an
ostensibly private party will be deemed to satisfy the color-of-law requirement.” Philips, 572
F.3d at 181. As the Fourth Circuit has noted, “cases deciding when private action might be
deemed that of the state have not been a model of consistency . . . .” Mentavlos, 249 F.3d at 313
(citations and quotation marks omitted). But, “the critical inquiry has remained constant. After
examining the relevant facts and circumstances, the inquiry in each case is whether the conduct
is fairly attributable to the state.” Id. (citations and quotation marks omitted); see Philips, 572
F.3d at 182 (“In the end, however, ‘there is no specific formula’ for determining whether state
action is present . . . . ‘What is fairly attributable [to the state] is a matter of normative judgment,
and the criteria lack rigid simplicity.’”)(quoting Holly, 434 F.3d at 292 (4th Cir.
2006)(alterations in Philips)).
In Mentavlos, 249 F.3d at 313, the Fourth Circuit explained various tests that it has
employed to determine whether the conduct of a private party may be “‘fairly attributable’ to the
State.” The Court said, id. at 313-14:
[I]n Andrews v. Federal Home Loan Bank, 998 F.2d 214 (4th Cir. 1993), we
identified four circumstances under which the Supreme Court had held that a
private party may be deemed a state actor for purposes of § 1983 liability:
(1) when the state has coerced the private actor to commit an act
that would be unconstitutional if done by the state; (2) when the
state has sought to evade a clear constitutional duty through
delegation to a private actor; (3) when the state has delegated a
traditionally and exclusively public function to a private actor; or
(4) when the state has committed an unconstitutional act in the
course of enforcing a right of a private citizen.
Id. at 217; see also DeBauche v. Trani, 191 F.3d 499, 507 (4th Cir. 1999), cert.
denied, 529 U.S. 1033, 120 S.Ct. 1451, 146 L.Ed.2d 337 (2000).
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In Haavistola [v. Community Fire Co. of Rising Sun, 6 F.3d 211 (4th Cir.
1993)], another panel of this court summarized three situations in which conduct
by a private entity could be fairly attributable to the state: (1) when a sufficiently
close nexus exists between a regulated entity and a state such that the actions of
the former are fairly treated as those of the state; (2) when the state “has exercised
coercive power or has provided such significant encouragement that the action
must in law be deemed to be that of the state”; and (3) “when the private entity
has exercised powers that are traditionally the exclusive prerogative of the
state.” [Id.] at 215 (internal citations and quotation marks omitted).
Most recently, in Goldstein [v. Chestnut Ridge Volunteer Fire Co., 218
F.3d 337 (4th Cir. 2000)], we emphasized the fact-based nature of the state action
inquiry, reiterating that “the state action determination requires an examination of
all the relevant circumstances, in an attempt to evaluate the degree of the
Government’s participation in the private party’s activities.” [Id.] at 342 (internal
quotation marks omitted). There, we identified several considerations which are
pertinent to the inquiry: (1) “whether the injury caused is aggravated in a unique
way by the incidents of governmental authority”; (2) “the extent and nature of
public assistance and public benefits accorded the private entity”; (3) “the extent
and nature of governmental regulation over the institution”; and (4) “how the state
itself views the entity, i.e., whether the state itself regards the actor as a state
actor.” Id. at 343 (internal quotation marks omitted). Like its predecessors in this
circuit, however, the Goldstein decision summarized considerations already set
forth by precedent, and did not purport to overrule our prior precedents or
espouse new areas of inquiry. Indeed, Haavistola summarized the standard set
forth by the Supreme Court in Blum [v. Yaretsky, 457 U.S. 991, 1004-05
(1982)], see Haavistola, 6 F.3d at 215, which is still relied upon by the Court
today, see Brentwood [Acad. v. Tennessee Secondary Sch. Athletic Ass'n, 531 U.S.
288 (2001)].
The Fourth Circuit concluded by identifying “the ultimate inquiry”: “Is there a
sufficiently ‘close nexus’ between the challenged actions of [the defendants] and the State . . .
such that their actions ‘may be fairly treated as that of the State itself.’” Mentavlos, 249 F.3d at
314 (quoting Brentwood Acad., 531 U.S. at 295).
Plaintiffs also rely on Title 42 U.S.C. § 1988. It provides that in federal civil rights
actions “the court, in its discretion, may allow the prevailing party . . . a reasonable attorney’s fee
as part of the costs.”
- 15 -
“As a general matter, a litigant must pay its own attorneys’ fees in the absence of a
statutory or enforceable contractual provision allowing fees to be awarded to a prevailing
party.” E.E.O.C. v. Propak Logistics, Inc., 746 F.3d 145, 151 (4th Cir. 2014). The Civil Rights
Attorney’s Fees Award Act of 1976, 42 U.S.C. § 1988(b), is a general statute applicable to most
civil rights litigation in federal court, including actions brought under § 1983. As noted, it
provides that in federal civil rights actions “the court, in its discretion, may allow the prevailing
party . . . a reasonable attorney’s fee as part of the costs.” See generally Hensley v.
Eckerhart, 461 U.S. 424, 426 (1983).5 The term “prevailing party” is a statutory term of art. In
order to be a “prevailing party,” a plaintiff must achieve a “material alteration of the legal
relationship of the parties” and there must be “judicial imprimatur on the change.” Buckhannon
Bd. & Care Home, Inc. v. W. Virginia Dep’t of Health & Human Res., 532 U.S. 598, 604–05
(2001); see Grissom v. The Mills Corp., 549 F.3d 313, 318 (4th Cir. 2008). This requirement
protects against “an award of attorney’s fees when the merits of the plaintiff’s case remain
unresolved-when, for all one knows, the defendant only abandoned the fray because the cost of
litigation-either financial or in terms of public relations-would be too great.” Buckhannon, 532
U.S. at 617 (Scalia, J., concurring).
Applying this rule, the Buckhannon Court determined that the plaintiff was not entitled to
attorney’s fees because the state legislature enacted two bills that mooted his claims. Id. at 60002. The Buckhannon Court also observed that private settlements generally do not entitle a
plaintiff to attorney’s fees because they lack “the judicial approval and oversight involved in
5
In Whitehead v. Colvin, No. C15-5143RSM, 2016 WL 1464469, at *2 n.1 (W.D. Wash.
Apr. 14, 2016), the court noted that Hensley, 461 U.S. 424, has been superseded, in part, by the
Prison Litigation Reform Act. As this case does not involve prisoner litigation, this statutory
change is not relevant here.
- 16 -
consent decrees.” Id. at 604 n. 7; see Smyth ex rel. Smyth v. Rivero, 282 F.3d 268, 279 (4th Cir.
2002).
2.
As to Count I, the crux of plaintiffs’ argument is that “Prestige acted under color of state
law to deprive Daimler Trust and Daimler Title Co. of their property interests in [the vehicle] . . .
in violation of the rights secured by the Fourteenth Amendment to the United States
Constitution.” ECF 1 ¶ 10. In particular, plaintiffs allege that “Prestige has invoked the power
of the State of Maryland to schedule an extra-judicial sale of [the vehicle] to enforce its
purported lien . . . .” ECF 1 ¶ 14; see id. ¶ 45 (alleging that Prestige’s “actions in employing
state law” to conduct an “extra-judicial sale” violated § 1983). As clarified by plaintiffs’
subsequent briefing (ECF 11), plaintiffs contend, id. at 3-4: “A statutory scheme which results in
the state validating the involuntary transfer of a motor vehicle from one private party to another
necessarily involves overt and significant aid by state officials, thereby implicating due process
protections.”
Prestige maintains that, insofar as it was allegedly acting under color of Maryland law, it
has “the same affirmative defense [of good faith] that a state official would enjoy . . . .” 6 ECF 13
at 4. Plaintiffs counter, ECF 15 at 2:
It goes without saying that a potential affirmative defense cannot deprive this
Court of jurisdiction. Taking all facts pled in the complaint as true, it is far from
clear that Prestige acted in good faith. Prestige’s defense largely rests on their
own subjective state of mind, and any good-faith defense Prestige may have is
consequently not the proper basis of a motion to dismiss.
6
In its “Response to Order to Show Cause” (ECF 22), Prestige submits that “it acted
upon reasonable reliance that the [garagemen’s lien] statute is valid and constitutional, but not as
a state actor.” Id. at 4. However, Prestige does not explain why it should not be considered a
state actor for purposes of § 1983.
- 17 -
In my view, the parties gloss over the central defect in the Complaint: Prestige’s conduct
in seeking to establish and enforce a garageman’s lien pursuant to a Maryland statute is not state
action within the meaning of § 1983.
Although the parties do not provide a thorough overview of Maryland’s garagemen’s lien
statute, an understanding of that law is essential to determine whether state action is implicated
in the establishment and enforcement of a garagemen’s lien. In Allstate Lien & Recovery Corp.
v. Stansbury, 445 Md. 187, 200-03, 126 A.3d 40, 48-49 (2015), the Maryland Court of Appeals
explained the process by which a garageman’s lien is created and enforced in Maryland pursuant
to § 16-201 et seq. of the Commercial Law (“C.L.”) Article of the Maryland Code (2013 Repl.
Vol., 2015 Supp.).7 It said, id. (quoting Friendly Fin. Corp. v. Orbit Chrysler Plymouth Dodge
Truck, Inc., 378 Md. 337, 345-47, 835 A.2d 1197, 1202-03 (2003)):
The Maryland General Assembly, when it enacted the provisions relating to
garageman’s liens, envisioned that the statute would operate according to the
following sequence of events:
(1) The owner in possession of the motor vehicle takes it (or has it towed)
to the garage and requests that it be repaired. § 16–202(c)(1).[]
(2) The garage performs the requested repairs, creating a lien in favor of
[the] garage for the repair bill, and bills the owner. § 16–202(c)(2)(i).[]
(3) The owner fails to pay the bill.
7
Prestige asserts that “the clear holdings of Maryland’s state courts” is that the law
governing the garageman’s liens is constitutional. ECF 22 at 2. It relies on AMI Operating
Partners Ltd. P’ship v. JAD Enterprises, Inc., 77 Md. App. 654, 551, A.2d 888 (1989), cert.
denied, 315 Md. 307, 554 A.2d 393 (1989). Prestige’s reliance on AMI Operating Partners Ltd
P’ship is misplaced. In that case, the Maryland Court of Special Appeals upheld the
constitutionality of a statutory mechanic’s lien concerning real property. Id. at 660-63, 551 A.2d
at 891-92. The process for establishment of a mechanic’s lien concerning real property under
the statutory scheme discussed in AMI Operating Partners Ltd P’ship is different from that for a
garageman’s lien pursuant to C.L. § 16-201 et seq. Notably, as the Court of Special Appeals
explained, a mechanic’s lien concerning real property “can be created only by a court, and then
only after the owner has had an opportunity to contest both the claim itself and the claimant’s
entitlement to a lien.” AMI Operating Partners Ltd. P’ship, 77 Md. App. at 661, 551 A.2d at
891.
- 18 -
(4) The garage stores the vehicle, creating a lien in favor of the garage for
storage costs. § 16–202(c)(1)(ii).
(5) The garage retains possession of the vehicle until either the charges are
paid or the lien is otherwise discharged. § 16–203(a).[]
(6) The garage, within 30 days of the creation of the lien, sends notice of
the lien to all holders of perfected security interests. § 16–203(b)(1)(i).[]
(7) If the bill remains unpaid for 30 days, the garage, at its option, may
initiate a public sale of the vehicle. § 16–207(a).[]
(8) The garage sends notice, at least 10 days prior to sale, to the owner, all
holders of perfected security interests, and the Motor Vehicle Administration.
§ 16–207(b)(2).[]
(9) The garage publishes notice once a week for the two weeks
immediately preceding the sale in one or more newspapers of general circulation
in the county where the sale is to be held. § 16–207(b)(1).[]
(10) The garage sells the vehicle. § 16–207.
(11) Proceeds of sale are applied as follows: § 16–207(e)(1)(i).[]
i. Expenses of the sale. § 16–207(e)(1)(ii).
ii. Third-party storage fees. § 16–207(e)(1)(ii).
iii. The lien claim for garage repair and storage bills. § 16–207(e)(1)(iii).
iv. Any purchase money security interest. § 16–107(e)(1)(iv).
v. Any remaining secured parties of record. § 16–207(e)(1)(v).
vi. Any remaining balance to the owner. § 16–207(e)(4).[]
Following the sale, Maryland law requires the Motor Vehicle Administration (“MVA”) to
issue clear title to the vehicle if certain criteria are satisfied. C.L. § 16-207(d) provides, in
relevant part:
(1) Except as provided in § 13-110 of the Transportation Article,[8] the
Motor Vehicle Administration shall issue a title, free and clear of any lien, to the
8
§ 13-110 of the Transportation Article of the Maryland Code (2013 Repl. Vol., 2015
Supp.) provides:
The Administration shall refuse to issue a certificate of title of a vehicle if:
(1) The application contains any false or fraudulent statement;
(2) The applicant has failed to furnish information or documents required
by statute or regulations adopted by the Administration;
(3) Any required fee has not been paid;
(4) The applicant is not entitled to a certificate of title under the Maryland
Vehicle Law; or
(5) The Administration has reasonable grounds to believe:
(i) That the applicant is not the owner of the vehicle;
- 19 -
purchaser of any motor vehicle or mobile home sold under this section, if the
holder of the lien on the motor vehicle or mobile home submits to the Motor
Vehicle Administration a completed application for a certificate of title with:
(i) A copy of the newspaper publication required by subsection (b) of this
section;
(ii) A copy of the registered or certified letter required under subsection
(b) of this section to be sent to holders of perfected security interests in the motor
vehicle or mobile home and the Motor Vehicle Administration, and the return
card;
(iii) A copy of the registered or certified letters required by subsection (b)
of this section to be sent to the owner of the motor vehicle or mobile home, and
the return card;
(iv) If applicable, a written statement from the lienor that the lienor stored
the vehicle in accordance with an agreement with an insurer;
(v) An auctioneer’s receipt;
(vi) If applicable, certification by holders of perfected security interests;
(vii) In the case of mobile homes manufactured after 1976 and motor
vehicles, a pencil tracing of the vehicle identification number or a statement
certifying the vehicle identification number; and
(viii) Any other reasonable information required in accordance with
regulations adopted by the Administration.
As plaintiffs appear to concede (see ECF 11 at 4-5, ECF 24 at 20), issuing clear title to
the vehicle following its sale by a garageman is thus the sole function performed by the State of
Maryland.
As clarified by plaintiffs in their “Reply Memorandum of Law in Further Support of
Motion to Release Motor Vehicle Upon Court Approval of Bond” (ECF 24 at 19), they assert
that Prestige qualifies as a state actor under the third or fourth approach articulated by the Fourth
Circuit in DeBauche, 191 F.3d at 507: “(3) when the state has delegated a traditionally and
exclusively public function to a private actor; or (4) when the state has committed an
(ii) That the issuance of a certificate of title to the applicant would
be a fraud against another person; or
(iii) That the vehicle does not comply with Title 2, Subtitle 11 of
the Environment Article or any regulation adopted under that subtitle.
- 20 -
unconstitutional act in the course of enforcing a right of a private citizen.”9 They aver, ECF 24
at 19: “There is state action in this case based upon the third and fourth categories . . . .”
Plaintiffs argue that Prestige’s purported actions fall within the third circumstance
identified in DeBauche, 191 F.3d at 507, because “the garageman’s lien sale cannot be
accomplished without the affirmative acts of the . . . MVA . . . transferring vehicle ownership to
another party.” ECF 24 at 20.
As to the third circumstance identified in DeBauche, 191 F.3d at 507, it is notable that
Prestige purportedly established and then sought to enforce its garageman’s lien purely as a
consequence of a private commercial transaction with Betteridge to modify the Vehicle. There is
no allegation that Prestige was operating on behalf of the State or in conjunction with State
officials. See Goichman v. Rheuban Motors, Inc., 682 F.2d 1320, 1322 (9th Cir. 1982) (holding
that a tow truck operator who towed a vehicle “at the direction of a Los Angeles law
enforcement officer” was a state actor for purposes of § 1983); Huemmer v. Mayor & City
Council of Ocean City, 632 F.2d 371, 372 (4th Cir. 1980) (affirming the grant of summary
judgment as to a municipally authorized tow truck operator, who removed a vehicle pursuant to a
municipal ordinance concerning illegally parked vehicles on private property, where the district
court concluded that “while his activity may have been state action, it was limited to the towing,
which was constitutionally permissible, and unrelated to the failure to afford notice and a
hearing, the pertinent constitutional defect”).
Plaintiffs rely, in part, on Caesar v. Kiser, 387 F. Supp. 645 (M.D.N.C. 1975). ECF 24 at
19-20. In Caesar, 387 F. Supp. 645, the court granted partial summary judgment for plaintiff in
9
Plaintiffs appear to concede that the first two circumstances identified in DeBauche, 191
F.3d at 507, do not apply. See ECF 24 at 19.
- 21 -
a case concerning a § 1983 claim as to the sale of vehicle parts pursuant to a North Carolina
possessory lien statute. The court concluded, in relevant part, that the issuance of clear title to a
vehicle by the North Carolina Department of Motor Vehicles qualified as state action for
purposes of § 1983. It said, in pertinent part, id. at 647:
In the case before the Court, the sale of the property was not accomplished
by the actions of state officials or court process. However, this does not
necessarily preclude a determination of state action. The North Carolina
Department of Motor Vehicles plays an integral role in the sale of vehicles under
the North Carolina possessory lien statute, N.C.G.S. § 44A-4. The possessory lien
and the sale provision on vehicles are statutory creations and notice of the sale is
required to be given to the Commissioner of Motor Vehicles. N.C.G.S. § 44A4(f). The sale procedure is conducted by public or private auction and in order for
a purchaser to receive valid title from a sale it is necessary that the Department
record the transfer of title from the owner to the purchaser. Under North Carolina
law, the sale could not be accomplished without the affirmative acts of the
Department in transferring the indicia of ownership. Consequently, by statutorily
authorizing and empowering the lienor to sell the vehicle and by authorizing the
Department to record and recognize the transfer of title, the State has delegated to
lienors of motor vehicles the traditional governmental function of lien
enforcement and enabled the lienor to pass good title to motor vehicles which
they do not own—without a judicial determination of the validity of the
underlying debt.
The state is, therefore, actively involved in the creation and the
enforcement of the lien on motor vehicles and such must be held to constitute
‘state action’ as that term is used in 42 U.S.C. § 1983.
Plaintiff’s reliance on Caesar, 387 F. Supp. 645, is misplaced. As a preliminary matter,
the North Carolina Department of Motor Vehicles played a greater role in the sale than would the
MVA pursuant to C.L. § 16-207(d)(1). As the court explained in Caesar, 387 F. Supp. at 646, it
was only after “conferring with officials of the North Carolina Department of Motor Vehicles”
that the garageman “proposed to sell the motorcycle parts” pursuant to North Carolina statute.
The court also said, id.:
- 22 -
[T]he defendant, having been notified by the North Carolina Department of Motor
Vehicles that he had given them proper notice of the proposed sale and further
having been informed by the Department that notice of the impending sale was
being forwarded by the Department to the plaintiff and persons holding liens
against the plaintiff’s vehicle, conducted a sale of plaintiff’s motorcycle at the
defendant’s place of business.
By contrast, pursuant to C.L. § 16-207(d)(1), the MVA’s sole function is to issue clear
title to the vehicle following the sale if certain statutory criteria are satisfied. Moreover, Caesar,
387 F. Supp. 645, was decided more than forty years ago—well before the Supreme Court and
the Fourth Circuit offered crucial instruction as to when conduct by private actors may be fairly
attributed to the state. Accordingly, the court in Caesar, 387 F. Supp. 645, had no opportunity to
consider more recent guidance on when private conduct may be fairly attributed to the state for
purposes of § 1983.
Plaintiffs also rely on a footnote in Associates Commercial Corp. v. Wood, 22 F. Supp. 2d
502 (D. Md. 1998). In Wood, the court granted summary judgment in favor of plaintiff and
declared unconstitutional a portion of Maryland’s then-existing Abandoned Vehicle Statute.10 In
relevant part, Judge Messitte said, id. at 506 n.6:
Although Defendant does not press the point, it is appropriate to note that under
the Maryland statute there is sufficient participation by the State to constitute state
action and implicate due process. The statute not only authorizes the seizure of
eligible vehicles, but validates the transfer of ownership of the vehicle to the
seizing party. See Lugar v. (Edmondson) Oil Co., 457 U.S. 922, 102 S.Ct. 2744,
73 L.Ed.2d 482 (1982) (state officials’ joint participation with private party in
effecting prejudgment attachment of property implicates due process). See also
Huemmer, 474 F. Supp. at 711 (“[Ocean] City must be deemed to have been a
participant in the towing process because, through its ordinance, it authorized . . .
an impounding ordinance failing to comply with those due process standards
ordinarily required when personal property is to be confiscated.”).
10
Section 25-210 of the Transportation Article of the Maryland Code (2012 Repl. Vol.,
2015 Supp.) was repealed in 2012.
- 23 -
It is unclear how this footnote supports plaintiffs’ position. I note that Wood,
22
F.
Supp. 2d 502, did not concern a claim pursuant to § 1983. Rather, the plaintiff sought replevin,
detinue, and a declaration regarding the constitutionality of Maryland’s Abandoned Vehicle
Statute. Id. at 504. Moreover, the footnote concerning state action and due process appears in
the context of an analysis of the hearing and notice requirements that courts have required of
state actors (or at least those working on their behalf) before final deprivation of a property
interest in a vehicle. Id. at 505-06. Accordingly, I do not read the footnote in Wood, 22 F. Supp.
2d at 506 n.6, to stand for the proposition that garagemen acting pursuant to Maryland’s
garagemen’s lien statute are state actors for purposes of § 1983.
Plaintiffs also argue (ECF 24 at 21) that Prestige’s conduct falls within the fourth
circumstance that the Fourth Circuit identified in DeBauche, 191 F.3d at 507: “[W]hen the state
has committed an unconstitutional act in the course of enforcing a right of a private
citizen.” Plaintiffs rely on Barry Properties, Inc. v. Fick Bros. Roofing Co., 277 Md. 15, 353
A.2d 222 (1976). ECF 24 at 21.
In Barry Properties, 277 Md. 15, 353 A.2d 222, the Maryland Court of Appeals
considered whether Maryland’s then-existing mechanics’ lien statute “is compatible with the due
process clauses of Article 23 of the Maryland Declaration of Rights and the Fourteenth
Amendment of the United States Constitution.” Id. at 18, 353 A.2d at 225.11 In relevant part,
the court said, id. at 22-23, 353 A.2d at 227 (citations omitted):
11
The Maryland Court of Special Appeals explained in AMI Operating Partners Ltd.
P’ship, 77 Md. App. at 660-61, 551 A.2d at 891: “As a result of Barry Properties, the
Legislature, which was in session when the case was decided, promptly rewrote the law in a
manner ‘designed to avoid the procedural due process denial found in the former statute.’ Tyson
- 24 -
First, we note, in order for the due process clauses of Article 23 and the
Fourteenth Amendment to apply there must be ‘state action.’ We think it clear
that mechanics’ liens involve state action since they are created, regulated and
enforced by the State. It appears that the Supreme Court would agree considering
that it has voided on due process grounds state garnishment and replevin statutes
and in order to have done so the Court must have concluded that there was
sufficient state involvement with those prejudgment creditor remedies, which
were also created, regulated and enforced by the state, to activate the protections
of the Fourteenth Amendment.
As a preliminary matter, Barry Properties, 277 Md. 15, 353 A.2d 222, did not concern a
§ 1983 claim. Moreover, the statutory scheme for mechanics’ liens that the Maryland Court of
Appeals considered in Barry Properties was markedly different from the garagemen’s lien
statute at issue here. The Maryland Court of Appeals explained the then-existing mechanics’
lien statute, id. at 20-21, 353 A.2d at 226:
The statute . . . provides that if either a subcontractor (who gives the § 9-103(a)
notice) or a general contractor has not been fully paid and desires to retain his
mechanics’ lien, he must within the 180 days prescribed by § 9-105(e), file a
claim containing specified information concerning the claim, § 9-105(c), with the
clerk of the circuit court of the county where the property is located, at which time
the lien will be recorded on a special ‘Mechanics’ Lien Docket.’ § 9-105. Once
filed with the clerk the lien subsists for one year from the date of its filing unless
within that period the claimant commences a proceeding to enforce it, in which
case the lien is ‘stayed until the conclusion of the proceeding.’ § 9-106. During
that one-year period, however, ‘the owner of the property subject to the lien, or
any other person interested in it, may bring proceedings in equity to compel the
claimant to prove the validity of the lien or have it declared void,’ id.; see
Continental Steel Corp. v. Sugarman, 266 Md. 541, 548, 295 A.2d 493 (1972);
Rule BG75 a; or, with court approval, the owner may release his property from
the lien by substituting a bond.[] Rule BG75 b. An action to enforce a mechanics’
lien that has been recorded is an in rem equity proceeding of which all interested
parties are entitled to notice as in other equity actions. See Grinnell Co. v. City of
Crisfield, 264 Md. 552, 561, 287 A.2d 486 (1972); Rule BG71 a. If in such a
proceeding the claimant establishes that he is entitled to the lien, the court will
order a sale of the property to pay the claimant unless the amount found to be due
is paid on or before a specified date. Rule BG73.
v. Masten Lumber & Supply, 44 Md.App. 293, 295, 408 A.2d 1051 (1979), cert. denied 287 Md.
758 (1980).”
- 25 -
In short, the degree of State involvement in the mechanics’ lien statute that the Maryland
Court of Appeals considered in Barry Properties, 277 Md. 15, 353 A.2d 222, was greater than
the degree of State involvement here. That Prestige acted pursuant to a State statute does not
convert its action to those of the State for purposes of § 1983. The “degree of the Government’s
participation” is minimal. Goldstein, 218 F.3d at 342 (citation and quotation marks omitted).
The injury is not aggravated in any unique way by the incidents of governmental authority. See
id. at 343.
Aside from the mere existence of the garageman’s lien statute, which codified and
updated the common law, see Allstate Lien & Recovery Corp., 445 Md. at 203-05, 126 A.3d at
49-51, the sole way in which a Maryland garageman’s lien implicates state action is that,
pursuant to C.L. § 16-207(d)(1), the MVA must issue clear title to a vehicle after a sale if certain
statutory criteria are satisfied.
Issuance of clear title to a vehicle if certain statutory criteria are satisfied pursuant to C.L.
§ 16-207(d)(1) is precisely the type of “‘[m]ere approval of or acquiescence in the initiatives of a
private party’” that the Fourth Circuit has said does not constitute state action for purposes of §
1983. Wahi, 562 F.3d at 616 (quoting DeBauche, 191 F.3d at 507). Indeed, nearly forty years
ago, the Third Circuit rejected such an argument. See Parks v. "Mr. Ford", 556 F.2d 132, 141
(3d Cir. 1977) (en banc).12 It said, id. (citation omitted):
12
In Parks, 556 F.2d 132, the court found that the retention of vehicles pursuant to
Pennsylvania’s common law garageman’s lien did not constitute state action for purposes of
§ 1983, id. at 135, but concluded that “state action is present when a garageman sells a
customer’s vehicle” pursuant to Pennsylvania statute. Id. at 141. I note that Parks, 556 F.2d
132, was decided five years before Lugar, 457 U.S. 922. It applied a standard for identifying
state action under § 1983, Parks, 556 F.2d at 135, that differs from more recent guidance from
the Fourth Circuit. See, e.g., Mentavlos, 249 F.3d at 313-14. Nevertheless, I agree with the
- 26 -
If the role played by state employees in issuing new certificates of title to
garagemen who foreclose on their liens were enough to infuse those foreclosures
with state action, then obviously there would be state action as well whenever a
new or used car is purchased and a new certificate of title is issued. By the same
logic, the service which state employees perform in recording deeds and
mortgages would seem to inject state action into virtually every real estate
transaction. We do not believe that any of these essentially private transactions,
which number in the millions each year, may be said to constitute state action
simply because state employees participate in the negligible role of recordkeepers.
In light of the foregoing, plaintiffs fail to allege state action and thus they have not stated
a viable claim pursuant to § 1983. Therefore, plaintiffs are not entitled to relief under § 1988.
Accordingly, as to Count I, this Court lacks federal question jurisdiction pursuant to 28 U.S.C.
§ 1331. Count I must be dismissed.
Plaintiffs’ Opposition (ECF 15) also states, id. at 11: “Should the Court disagree with
Plaintiffs’ analysis, Plaintiffs request the dismissal be without prejudice so that they may
exercise their right to amend the complaint to cure any perceived deficiencies.” As to Court I, I
disagree.
Fed. R. Civ. P. 15(a)(2) states, in part: “The court should freely give leave [to amend]
when justice so requires.” See Foman v. Davis, 371 U.S. 178, 182 (1962); Laber v. Harvey, 438
F.3d 404, 426 (4th Cir. 2006) (en banc); Simmons v. United Mortgage & Loan Inv., LLC, 634
F.3d 754, 769 (4th Cir. 2011). However, “the grant or denial of an opportunity to amend is
within the discretion of the District Court . . . .” Foman, 371 U.S. at 182. “Delay [in the case’s
resolution] alone is an insufficient reason to deny leave to amend.” Edwards, 178 F.3d at 242
(citation omitted). “Rather, the delay must be accompanied by prejudice, bad faith, or futility.”
Third Circuit’s conclusion that the mere issuance of clear title to a vehicle following a sale
pursuant to a garageman’s lien does not constitute state action for purposes of § 1983.
- 27 -
Id. (citation omitted); see Simmons, LLC, 634 F.3d at 769; Equal Rights Center v. Niles Bolton
Assocs., 602 F.3d 597, 603 (4th Cir. 2010); Nourison Rug Corp. v. Parvizian, 535 F.3d 295, 298
(4th Cir. 2008); Steinburg v. Chesterfield Cnty. Planning Comm’n, 527 F.3d 377, 390 (4th Cir.
2008).
An amendment is futile “when the proposed amendment is clearly insufficient or
frivolous on its face.” Johnson v. Oroweat Foods Co., 785 F.2d 503, 510 (4th Cir. 1986). An
amendment is also futile if it would fail to withstand a motion to dismiss for failure to state a
claim pursuant to Fed. R. Civ. P. 12(b)(6). Perkins v. United States, 55 F.3d 910, 917 (4th Cir.
1995); see Katyle v. Penn Nat. Gaming, Inc., 637 F.3d 462, 471 (4th Cir. 2011); United States ex
rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir. 2008).
In my view, despite several opportunities to clarify how state action might be implicated
by Prestige’s conduct, plaintiffs fail to advance a viable allegation as to state action for purposes
of § 1983. Indeed, as noted, plaintiffs appear to concede (see ECF 11 at 4-5, ECF 24 at 20) that
issuing clear title to a vehicle following its sale by a garageman is the sole function that the State
of Maryland performs pursuant to Maryland’s garagemen’s lien statute.
Accordingly, an
amended complaint as to Count I would not survive a motion to dismiss and would thus be futile.
Therefore, leave to amend Count I is denied.
B.
Article 24 of the Maryland Declaration of Rights
Article 24 of the Maryland Declaration of Rights provides: “That no man ought to be
taken or imprisoned or disseized of his freehold, liberties or privileges, or outlawed, or exiled, or,
in any manner, destroyed, or deprived of his life, liberty or property, but by the judgment of his
peers, or by the Law of the land.”
- 28 -
Although the Motion (ECF 13) does not address Count III of the Complaint, deprivation
of property without due process of law, in violation of Article 24 of the Maryland Declaration of
Rights, I note that “Article 24 . . . is the state law equivalent of the Fourteenth Amendment of the
United States.” Hawkins v. Leggett, 955 F. Supp. 2d 474 (D. Md. 2013) (quotation marks
omitted). Article 24 “has been interpreted to apply ‘in like manner and to the same extent as the
Fourteenth Amendment of the Federal Constitution,’ so that ‘decisions of the Supreme Court on
the Fourteenth Amendment are practically direct authorities.’” Frey v. Comptroller of Treasury,
422 Md. 111, 176, 29 A.3d 475, 513 (2011) (quoting Attorney Gen. of Maryland v. Waldron, 289
Md. 683, 704, 426 A.2d 929, 941 (1981)). “Therefore, the analysis under Article 24 is, for all
intents
and
purposes,
duplicative
of
the
analysis
under
the
Fourteenth Amendment.” Hawkins, 955 F. Supp. 2d 474.
The district court may dismiss a complaint, sua sponte, for failure to state a
claim. See Eriline Co. S.A. v. Johnson, 440 F.3d 648, 655 n. 10 (4th Cir. 2006) (“[A] district
court may sua sponte dismiss a complaint for failure to state a claim . . . . Where the face of a
complaint plainly fails to state a claim for relief, a district court has ‘no discretion’ but to dismiss
it.”) (citing 5A WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE § 1357 (2d ed. 1990)); see
also Taylor v. Acxiom Corp., 612 F.3d 325, 340 (5th Cir. 2010) (“While the district court did
dismiss sua sponte some defendants who did not join the motion to dismiss, there is no prejudice
to the plaintiffs in affirming the judgment in its entirety because the plaintiffs make the same
allegations against all defendants.”); Clinton Cmty. Hosp. Corp. v. S. Md. Med. Ctr., 374 F.
Supp. 450, 453–54 (D. Md. 1974) (dismissing claim as to all defendants where arguments made
- 29 -
by one defendant for dismissal “apply equally to the [other] defendants . . . [and] have been
exhaustively discussed by the plaintiff”).
Notably, like § 1983, Article 24 “require[s] the defendant to be a state actor.” Anisimov
v. Hosp. Partners, LLC, CCB-09-2536, 2010 WL 723755, at *3 (D. Md. Feb. 24, 2010) (citing
Okwa v. Harper, 360 Md. 161, 201, 757 A.2d 118, 140 (2000) (“Constitutional provisions like
Articles 24 or 26 of the Maryland Declaration of Rights . . . are specifically designed to protect
citizens against certain types of unlawful acts by government officials.”)). Accordingly, for the
reasons that plaintiffs fail to state a claim pursuant to § 1983, Count III must also be dismissed.
In addition, for the same reasons that leave to amend Count I would be futile, leave to amend
Count III would also be futile. Therefore, leave to amend Count III is also denied.
C.
28 U.S.C. § 1332
Diversity jurisdiction is satisfied “where the matter in controversy exceeds the sum or
value of $75,000, exclusive of interest and costs,” and the litigation is between “citizens of
different States.” 28 U.S.C. § 1332(a)(1). As to diversity jurisdiction, the Motion challenges only
whether plaintiffs have satisfied the amount-in-controversy threshold of $75,000. See ECF 13 at
2. For the reasons explained below, I agree with plaintiffs that they have satisfied the amount-incontroversy requirement.13
13
As noted, one of the plaintiffs is a trust. Both the Supreme Court and the Fourth
Circuit have recently offered guidance as to how to determine the citizenship of a trust for
purposes of diversity jurisdiction.
In Americold Realty Trust v. Conagra Foods, Inc., ___ U.S. ___, 136 S. Ct. 1012 (2016),
the Supreme Court said, id. at 1014: “While humans and corporations can assert their own
citizenship, other entities take the citizenship of their members.” In particular, the Supreme
Court considered “how to determine the citizenship of a ‘real estate investment trust,’” id. at
1014, organized under Maryland law. Id. at 1015-16. It concluded that, under Maryland law, a
real estate investment trust’s “shareholders appear to be in the same position as the shareholders
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As noted, Prestige maintains that “the amount in controversy between the diverse parties
does not in fact exceed $75,000 as required by 28 USC §1332 . . . .” ECF 13 at 2. In particular,
Prestige avers, id.: “The amount in controversy is the amount of the retaining lien asserted by the
Defendant under Maryland Law: $50,534.00 plus any damages provable by the Plaintiffs for the
unlawful detainer of the personality.” Apparently in the alternative, Prestige submits, id. at 3
(capitalized in original):
The amount in controversy alleged at over $100,000 might be appropriate if the
Defendant had been alleged to have DESTROYED the subject vehicle. Instead,
the value of deprivation of the Plaintiff of the possession of the vehicle would be
easy to determine to calculate the actual amount in controversy, if the Plaintiffs
had pleaded the lease payment that they had been collecting from the lessor,
before his alleged default. That vehicle lease payment is the actual damage that
the Plaintiffs needed to plead to property [sic] apprise the Court of is [sic] alleged
damages and the appropriate amount in controversy for any §1332 analysis, but it
of a joint-stock company or the partners of a limited partnership . . . .” Id. at 1016. Accordingly,
the Supreme Court said that, “for purposes of diversity jurisdiction, [a real estate investment
trust’s] members include its shareholders.” Id. Notably, however, the Supreme Court also said,
id.: “For a traditional trust . . . there is no need to determine its membership, as would be true if
the trust, as an entity were sued.”
Recently, in Zoroastrian Ctr. & Darb-E-Mehr of Metro. Washington, D.C. v. Rustam
Guiv Found. of New York, ___ F.3d ___, 2016 WL 2343251(4th Cir. May 4, 2016), the Fourth
Circuit observed that the Supreme Court’s guidance in Americold Realty Trust, 136 S. Ct. 1012,
“may generate as many questions as it answers.” Zoroastrian Ctr. & Darb-E-Mehr of Metro.
Washington, D.C., 2016 WL 2343251, at *7. In particular, the Fourth Circuit said, id.: “Putting
aside the lack of a comprehensive definition of a ‘traditional trust’ the ‘as would be true if the
trust as an entity were sued’ phrase seems open to several interpretations.” Id. “[D]oes the
phrase mean that there is no need to determine entity membership for diversity purposes when a
‘traditional trust’ is sued as an entity? Or do we read the statement to mean that a trust sued as
an entity must prove entity membership because it is a separate legal person from the individual
trustees?” Id. The Fourth Circuit did not resolve these questions. Id.
At this juncture, however, in light of plaintiffs’ supplemental briefing, which alleges that
the citizenship of Daimler Trust’s trustee and beneficiary are diverse from that of Prestige (ECF
11 at 2), I am satisfied that plaintiffs have adequately alleged diversity of citizenship. In this
regard, I also note that Prestige does not appear to contest citizenship. See ECF 13 at 2
(questioning “the amount in controversy between the diverse parties . . .”).
- 31 -
is lacking since Plaintiffs know that it would reveal that there is not $75,000 in
controversy if properly pleaded.
Plaintiffs aver that “the Vehicle’s value is the proper measure of the amount in
controversy in this case.” ECF 15 at 9. They contend that “the Vehicle is worth $137,576.00, is
the ‘object of the litigation,’ and therefore exceeds the amount in controversy requirement.” Id.
In the alternative, plaintiffs submit, id. at 10: “Even if Prestige’s $50,534.00 lien were somehow
valid—which it is not—if Plaintiffs are able to prevent an extra-judicial sale extinguishing
Plaintiffs’ remaining property interest in the Vehicle, they would prevent a loss of approximately
$87,042.” See ECF 24 at 17.
“‘It is elementary that the burden is on the party asserting jurisdiction to demonstrate that
jurisdiction does, in fact, exist.’” Cuccinelli, 616 F.3d at 408 (citation omitted). As indicated,
“[t]he ‘burden of establishing subject matter jurisdiction is on . . . the party asserting
jurisdiction.” Robb Evans & Assocs., LLC, 609 F.3d at 362.
Accord Hertz, 599 U.S. at
95; Zoroastrian Ctr. & Darb-E-Mehr of Metro. Washington, D.C., 2016 WL 2343251, at *5.
Thus, when “a defendant challenges the existence of subject matter jurisdiction in fact, the
plaintiff bears the burden of proving the truth of such facts by a preponderance of the
evidence.” United States ex rel. Vuyyuru, 555 F.3d at 347.
With respect to the amount-in-controversy requirement of the diversity jurisdiction
statute, the Supreme Court has articulated two standards that are seemingly in tension. On the
one hand, in Saint Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283 (1938), the Court
said: “The rule governing dismissal for want of jurisdiction . . . is that . . . the sum claimed by the
plaintiff controls if the claim is apparently made in good faith. It must appear to a legal
certainty that the claim is really for less than the jurisdictional amount to justify dismissal.” Id. at
- 32 -
288–89 (emphasis added) (internal footnotes omitted). In other words, “if, from the face of the
pleadings, it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed
. . . , the suit will be dismissed.” Id. at 289 (emphasis added).
On the other hand, in McNutt v. General Motors Acceptance Corp. of Indiana, 298 U.S.
178 (1936), the Supreme Court considered a complaint that was “destitute of any appropriate
allegation as to jurisdictional amount save the general allegation that the matter in controversy
exceeds $3,000,” which was then the statutory amount-in-controversy threshold, and the
“particular allegations” of the complaint shed no further “light upon that subject.” Id. at 181. In
that circumstance, the Court said that the plaintiff “must allege in his pleading the facts essential
to show jurisdiction.” Id. at 189 (emphasis added). The Court continued: “The authority which
the statute vests in the court to enforce the limitations of its jurisdiction precludes the idea that
jurisdiction may be maintained by mere averment . . . . If [the plaintiff’s] allegations of
jurisdictional facts are challenged by his adversary in any appropriate manner, he must support
them by competent proof.” Id. (emphasis added).
In Momin v. Maggiemoo’s International, LLC, 205 F. Supp. 2d 506 (D. Md. 2002), Judge
Blake of this court observed that, “[i]n determining whether an amount in controversy is
sufficient to confer jurisdiction,” courts have applied “one of two legal standards depending on
whether the damages are specified or unspecified in the complaint,” id. at 509, thereby
harmonizing the teachings of McNutt and Saint Paul Mercury.14
14
Momin arose in the context of removal, and thus the burdens were reversed: the
defendant, as the party asserting diversity jurisdiction, bore the burden to establish jurisdiction,
and
so
the
defendant
sought
to
controvert
the
plaintiff’s
claim
that
the amount in controversy was lower than the jurisdictional threshold. However, there is no
reason to conclude that Judge Blake’s analysis is any less valid in a situation in which the
plaintiffs’ assertion of jurisdiction is challenged by the defendant.
- 33 -
Under the first standard, “[w]here a plaintiff claims a specific amount in damages,”
greater than the $75,000 threshold, the opponent of jurisdiction must controvert the plaintiff’s
assertion to a “‘legal certainty.’” Id. (emphasis added) (citation omitted). The Fourth Circuit
stated in JTH Tax, Inc. v. Frashier, 624 F.3d 635 (4th Cir. 2010): “If the plaintiff claims a
sum sufficient to satisfy the statutory requirement, a federal court may dismiss only if ‘it is
apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed.’” Id. at
638 (emphasis in JTH Tax) (citation omitted). In other words, a jurisdictional challenge to a
specifically alleged amount in controversy will fail if “a fact finder could legally conclude, from
the pleadings and proof adduced to the court before trial, that the damages that the plaintiff
suffered are greater than $75,000.” Kopp v. Kopp, 280 F.3d 883, 885 (8th Cir. 2002)(emphasis
added). In that circumstance, a defendant “seeking dismissal of [a] diversity action[ ] for lack of
a sufficient amount in controversy, must . . . shoulder a heavy burden”; the opponent of
jurisdiction “must show ‘the legal impossibility of recovery’ to be ‘so certain as virtually to
negative the plaintiff’s good faith in asserting the claim.’” JTH Tax, 624 F.3d at 638 (citation
omitted).
However, where “a plaintiff’s complaint does not allege a specific amount in damages,” a
different standard applies: the proponent of jurisdiction must “prove by a preponderance of the
evidence that the amount in controversy exceeds the jurisdictional minimum.” Momin, 205 F.
Supp. 2d at 509-10. As Judge Blake explained, “[i]n such cases, ‘[a] lower burden of proof is
warranted because there is simply no estimate of damages to which a court may defer.’” Id. at
510 (citation omitted). This is consistent with the “well-pleaded complaint” rule, under which the
facts showing the existence of subject matter jurisdiction “must be affirmatively alleged in the
- 34 -
complaint.”
Pinkley,
Inc.
v.
City
of
Frederick, 191
F.3d
394,
399
(4th
Cir.
1999) (citing McNutt); accord El v. AmeriCredit Fin. Servs., Inc., 710 F.3d 748, 752 (7th Cir.
2013) (“The fact that the plaintiff alleged an amount in controversy in excess of $75,000 . . .
does not establish that this is the amount in controversy.”) (emphasis in original).
Here, the first standard applies. The crux of the Complaint is that Prestige is in unlawful
possession of a vehicle that is owned by Daimler Trust and in which Daimler Title holds a lien.
See ECF 1 ¶¶ 10, 22-23. The Complaint alleges that the vehicle is worth $137,576. Id. ¶¶ 10,
43. Plaintiffs seek, inter alia, the return of the vehicle. Id. ¶ 114.
Prestige shoulders the burden of demonstrating that the amount in controversy is less than
$75,000. It has not met its burden.
To be sure, as Prestige suggests (see ECF 13 at 2-3), if the vehicle is returned and if the
vehicle’s alleged value has not been extinguished through the modifications that Prestige has
purportedly performed, it is conceivable that, if successful, plaintiffs may be entitled to recover
money damages of less than $75,000. Yet, prognostication about possible damages does little to
rebut the core allegation in the Complaint that Prestige is in possession of $137,576 worth of
plaintiffs’ property and will not give it back.
Accordingly, I am persuaded that the Complaint adequately alleges an amount in
controversy of more than $75,000 and that diversity jurisdiction exists, pursuant to 28 U.S.C.
§1332.
III. Conclusion
For the foregoing reasons, I will grant the Motion (ECF 13) in part and deny it in part.
Count I and Count III must be dismissed because plaintiffs fail to state a claim. Pursuant to 28
- 35 -
U.S.C. § 1332, however, the Court has subject matter jurisdiction as to Count II, Count IV, and
Count V, based on diversity.
A separate Order follows, consistent with this Memorandum.
Date: June 7, 2015
/s/
Ellen Lipton Hollander
United States District Judge
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