Mandley Excavating LLC v. Lund et al

Filing 28

MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 5/29/13. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
MANDLEY EXCAVATING, LLC,
:
v.

:

Civil Action No. DKC 13-0840

:
ARTHUR H. LUND, JR., et al.
:
MEMORANDUM OPINION
Presently pending and ready for review in this mechanic’s
lien case are the motions to remand (ECF No. 17) and for an
emergency hearing and order prohibiting the transfer of real
property (ECF No. 22) filed by Plaintiff Mandley Excavating,
LLC.

The issues have been fully briefed, and the court now

rules, no hearing being deemed necessary.

Local Rule 105.6.

For the following reasons, the motion to remand will be granted,
but the fee request will be denied.
I.

Background
A.

Factual Background

Defendants Arthur Lund, James Pailthorp, and the estate of
Sharon

Pailthorp

(“in-state

Defendants”),

all

Maryland

residents, own real property at 7035 Indian Head Highway in
Charles

County,

Maryland.

(ECF

No.

2,

at

2-3).

The

property is composed of two parcels, totaling 20.34 acres.

real
On

September 23, 2010, Defendant Maryland CVS Pharmacy, LLC (“CVS”)1
signed a lease for a 1.84 acre portion of the property.
No. 2-2).

(ECF

The lease between the in-state Defendants and CVS

provided for the construction of a 13,225 square foot retail
pharmacy, roads, sewers, and infrastructure improvements, both
inside and outside of the bounds of the portion of real property
described

in

the

lease.

The

lease

contract

included

specifications for this construction, reserved a non-exclusive
right for the in-state Defendants to use these infrastructure
improvements, and specified that the in-state Defendants will
retain ownership of the new construction and improvements.

(ECF

No. 17-1).
After

signing

the

lease,

Construction

Services

for

infrastructure

improvements.

the
TVC

CVS

contracted

road
then

with

construction

contracted

with

TVC
and
Kane

Builders, S&D, Inc., which, in turn, contracted with Plaintiff
Mandley Excavating for a portion of this project.
8).

(ECF No. 2-

Plaintiff provided labor and materials for the construction

of the pharmacy and the paving of streets and access roads on
and around the portion of the parcel leased by CVS.

1

Plaintiff

CVS avers that it is a single-member Maryland LLC, wholly
owned by CVS Pharmacy, Inc., which is incorporated in Rhode
Island and has its principal place of business in Rhode Island.
(ECF No. 1, at 4).
Therefore, it argues, for diversity
purposes, it is a citizen of that state.
2

also

provided

labor

and

materials

for

the

construction

of

waterlines, sewers, storm drains, and utilities on and around
the

land

leased

by

CVS.

Plaintiff’s

September 8, 2011 and October 26, 2011.

work

occurred

between

Plaintiff avers that it

was not paid the $276,926.45 that it was due for that work.
On

October

12,

2011,

the

in-state

Defendants

filed

a

declaration of easements with the clerk of Charles County to
establish easement rights for themselves across portions of the
real property, including land covered by the lease with CVS.
This

declaration

granted

access,

parking,

utility,

and

sign

easements over Plaintiff’s road work for the benefit of the instate Defendants.
B.

(ECF No. 2-10).

Procedural Background

On February 26, 2013, Plaintiff filed a petition against
Defendants in the Circuit Court for Charles County, requesting a
mechanic’s lien against the real property and CVS’s leasehold
interest

in

the

property,

enrichment and quantum meruit.

and

asserting

(ECF No. 2).

claims

of

unjust

Defendants removed

the case to this court on March 19, asserting that the in-state
Defendants

were

fraudulently

joined

basis of diversity jurisdiction.

to

avoid

(ECF No. 1).

removal

the

On April 18,

Plaintiff moved to remand the case to state court.

3

on

(ECF No.

17).2

Defendants opposed this motion (ECF No. 23), and Plaintiff

replied (ECF No. 27).

Plaintiff has also filed a number of

papers requesting an emergency hearing, because it believes that
the in-state Defendants are going to sell the property to the
State Highway Administration.
motion has been denied.3

(ECF Nos. 18 & 22).

(ECF No. 20).

Defendants have filed a

motion to strike the remaining emergency motion.
II.

One such

(ECF No. 25).

Standard of Review
This case was removed from Maryland state court on the

basis of diversity jurisdiction, pursuant to 28 U.S.C. § 1332,
but, as will be seen, the parties are not completely diverse.
Defendants
“fraudulently

contend
joined”

that
and

the
need

in-state
not

be

defendants
considered

were
for

jurisdiction purposes.
The doctrine of fraudulent joinder is an exception to the
complete diversity rule that is normally required for a federal
court to exercise diversity jurisdiction.

See Bendy v. C.B.

Fleet Co., No. CCB-10-3385, 2011 WL 1161733, *3 (D.Md. Mar. 28,
2011).

This doctrine allows a federal court to “disregard, for

2

Defendants have also moved to consolidate this case with a
related case, Kane Builders S&D, Inc. v. MD CVS Pharmacy, LLC,
12-3775. (ECF No. 11). Because this case will be remanded to
state court, that motion will be denied as moot.
3

Because this court lacks jurisdiction over this dispute,
Plaintiff’s remaining motions will not be addressed. (ECF Nos.
12, 13, 22 & 25).
4

jurisdictional purposes, the citizenship of certain [in-state]
defendants,

assume

defendants,

and

jurisdiction
thereby

over

retain

a

case,

dismiss

jurisdiction.”

th[ose]

Mayes

v.

Rapoport, 198 F.3d 457, 464 (4th Cir. 1999).
When removal is based on a theory of fraudulent joinder,
the defendant opposing remand carries a very heavy burden.
defendant must show either that:
fraud

in

the

plaintiff’s

The

(1) there has been outright

pleading,

or

(2)

“there

is

no

possibility that the plaintiff would be able to establish a
cause of action against the in-state defendant in state court.”
Id. (quoting Marshall v. Manville Sales Corp., 6 F.3d 229, 232
(4th Cir. 1993)).
Judges in this court and others around the country have
affirmed

that

possibility.”

“‘no

possibility’

does

actually

mean

no

Barlow v. John Crane Houdaille, Inc., WMN-12-

1780, 2012 WL 5388883, at *2 n. 1 (D.Md. Nov. 1, 2012) (citing
Hartley v. CSX Transp., Inc., 187 F.3d 422, 426 (4th Cir. 1999)
(noting that a plaintiff is only required to show “a slight
possibility of a right to relief” or that he has a “glimmer of
hope” of success); Green v. Amerada Hess Corp., 707 F.2d 201,
205 (5th Cir. 1983) (“The removing party must prove that there is
absolutely no possibility that the plaintiff will be able to
establish a cause of action against the in-state defendant in
state court.”)).
5

In deciding whether a party has been fraudulently joined, a
court may consider not only the allegations contained in the
complaint, but the entire record.

AIDS Counseling & Testing

Ctrs. v. Group W Television, Inc., 903 F.2d 1000, 1004 (4th Cir.
1990).
of

The court must “resolve all doubts about the propriety

removal

Hartley,

in

187

favor

F.3d

at

of

retained

425

state

(internal

court

quotation

jurisdiction.”
marks

omitted)

(also noting that the standard is more favorable than the Rule
12(b)(6) standard).
III. Analysis
In their notice of removal, Defendants argue that Plaintiff
has

no

chance

of

Defendants because:

establishing

a

claim

against

the

in-state

(1) the in-state Defendants’ interest in

the land is not lienable; (2) an easement is not lienable; (3)
Plaintiff’s petition for a mechanic’s lien is untimely because
the petition misstates the last day that Plaintiff performed
work; and (4) Plaintiff cannot recover on theories of unjust
enrichment and quantum meruit.
In

response,

Plaintiff

outlines

a

number

of

reasons

it

believes that its claims against the in-state Defendants will
survive, and the case should be remanded to state court:

(1)

the Circuit Court has already found reasonable grounds for the

6

lien to attach against the in-state Defendants;4 (2) because the
in-state

Defendants

have

not

controverted

the

factual

allegations of the petition, they are deemed to have admitted
those facts pursuant to Md. Code Ann. Real Prop. § 9-106; (3)
Maryland lien law permits a mechanic’s lien to attach to the
property; (4) the in-state Defendants are not insulated from a
mechanic’s

lien

because

CVS

never

entered

into

a

separate

downstream construction contract; (5) a mechanic’s lien should
attach because Plaintiff performed work on land owned by the instate Defendants outside of the leasehold premises; (6) CVS was
acting

as

the

commissioned

agent

of

Plaintiff’s

the

in-state
and

work;

Defendants
questions

(7)

when
about

it
the

definition and construction of terms in the Notice of Mechanic’s
Lien cannot be resolved at the removal stage.

(ECF No. 17-2, at

7-8).
Defendants supplement the arguments of their removal papers
and oppose Plaintiff’s motion to remand by arguing that:
remand

cannot

order;

(2)

Plaintiff’s

be

they

based

upon

have

not

petition

because

the

Circuit

Court’s

admitted

the

their

motions

4

facts
to

show

(1)
cause

alleged
dismiss

in
are

This argument is unavailing.
The show cause order does
demonstrate that the state court judge found a reasonable basis
for a mechanic’s lien to attach to the property. It is silent,
however, as to whether a reasonable basis exists to find that a
mechanic’s lien should attach specifically to the in-state
Defendants and their interest in the property.
7

responsive pleadings (ECF No. 12 & 13); (3) CVS controlled every
aspect of the construction project; and (4) an easement is not
lienable as a matter of law.

(ECF No. 23).

All of the parties’ arguments will not be addressed here,
because

at

minimum,

two

of

Plaintiff’s

arguments

demonstrate

that it holds a “glimmer of hope” that it will prevail against
the in-state Defendants.

Therefore, this case will be remanded

to the Circuit Court for Charles County.
1.
Potential Agency Relationship between the In-State
Defendants and CVS
With respect to the merits of the case, Plaintiff argues
that the terms of the lease contract, which compel CVS to erect
construction and make improvements on the land, establish an
agency relationship between the in-state Defendants and CVS that
could render Defendants liable under a mechanic’s lien theory.
Plaintiff points to York Roofing, Inc. v. Adcock, 333 Md. 158
(1993), in which

the Maryland Court of Appeals suggested in

dicta that a third party may be liable on a mechanic’s lien
where the party that contracted with the subcontractor for the
improvements was acting as the agent for that third party.
at 168-69.
CVS

was

Id.

Plaintiff argues that there is evidence here that

acting

as

the

agent

of

the

in-state

Defendants.

Specifically, it points to the lease contract and emails that
Plaintiff

avers

demonstrate

the

8

in-state

Defendants’

control

over CVS, and the parties’ mutual consent for the same.

See

Ins. Co. of N. Am. v. Miller, 362 Md. 361, 373 (2001) (“Agency
is the fiduciary relation which results from the manifestation
of consent by one person (the principal) to another (the agent)
that

the

other

shall

act

on

his

behalf

and

subject

to

his

control and consent by the other so to act”) (quotations and
citations omitted).
Defendants cite North Carolina, Oklahoma, and Virginia law
to support their position that an agency relationship cannot be
created by a lease that requires improvements to the leasehold
property.

(ECF No. 23, at 14 n. 8).

They do not point to any

Maryland law supporting this categorical position.

Rather, in

Maryland, “[t]he determination of the existence of a principalagent relationship is, generally, a question of fact.”
362 Md. at 372.

Miller,

Construing the contract and emails in the light

most favorable to Plaintiff, these documents could demonstrate
an agency relationship that could give rise to the in-state
Defendants’
property.

liability

on

a

mechanic’s

lien

on

the

leasehold

Accordingly, at this stage it is inappropriate to

conclude that “there is no possibility that the plaintiff would
be able to establish a cause of action [based on an agency
theory]

against

the

in-state

[Defendants]

Mayes, 198 F.3d at 464.

9

in

state

court.”

2.
Question of whether Lien is Appropriate on Easement is
Issue for Maryland Courts
Defendants also argue that a mechanic’s lien cannot attach
to the property adjacent to the leasehold and on which the instate

Defendants

argue

they

hold

an

easement,

because

the

language of the mechanic’s lien statute seems to preclude it.
As

Defendants

easement

is

[c]ourts.”

concede,

lienable

however,

has

“the

never

issue

been

(ECF No. 1, at 21).

of

addressed

whether
by

an

Maryland

Principles of comity support

remand.

It is not clear that the in-state Defendants’ interest

in

property

the

Nevertheless,

is

even

rightly
assuming

considered
Defendant’s

to

be

an

easement.

characterization

is

correct, because this would be a matter of first impression of
“unique questions of state law to which the Maryland courts have
a greater interest,” this issue will not be addressed by this
court.

Sherman v. Sigma Alpha Mu Fraternity, 128 F.Supp.2d 842,

847 (D.Md. 2001) (remanding case where no evidence of fraudulent
joinder exists, and complaint raised novel issues of state law).
In

sum,

Defendants

cannot

meet

their

heavy

burden

of

showing that there is no possibility for Plaintiff to recover
against

the

in-state

Defendants.

Assuming

the

truth

of

Plaintiff’s allegations, the in-state Defendants’ interest in
the land both inside and outside of the leasehold property could

10

potentially

lienable.5

be

Accordingly,

joinder

of

those

Defendants was not fraudulent, and the case must be remanded to
state court.
B.

Attorneys’ Fees

Attorneys’ fees, costs, and expenses may be awarded when a
case

is

remanded

1447(c).

to

state

court,

pursuant

to

28

U.S.C.

§

Whether to award attorney fees under this section is

left to the sound discretion of the court.
Capital Corp., 546 U.S. 132, 136 (2005).

Martin v. Franklin
The court’s limited

authority “to award fees as a sanction for a removal taken in
bad

faith

Durango

is

widely

Crushers,

recognized.”

Inc.,

832

F.2d

ITT
307,

Indus.
308

Credit

(4th

Co.

Cir.

v.

1987).

Plaintiff argues that Defendants have exhibited bad faith in
their attempt to remove the case to federal court.
arguments

as

to

the

merits

of

the

mechanic’s

The parties’
lien

petition

demonstrate that the question of whether the in-state defendants
are proper parties is a difficult issue.

Defendants’ basis for

removal was neither unreasonable nor frivolous.

See In re Lowe,

102 F.3d 731, 733 (4th Cir. 1996) (holding that awarding attorney
fees and costs was appropriate under § 1447(c) where “‘a cursory
examination

.

.

.

would

have

5

revealed’

a

lack

of

federal

Because Plaintiff’s claims will be remanded to state court
for the reasons stated above, the viability of its unjust
enrichment and quantum meruit claims as against the in-state
Defendants need not be reached.
11

jurisdiction”) (citations omitted).

Accordingly, this portion

of Plaintiff’s motion will be denied.
IV.

Conclusion
For the foregoing reasons, the motion to remand filed by

Plaintiff Mandley Excavating, LLC will be granted.

A separate

Order will follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

12