Gibbs et al v. Bank of America, N.A. et al

Filing 84

MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 11/13/2017. (c/m 11/14/2017 - jf3s, Deputy Clerk)

FILED
IN THE UNITED STATES DISTRICT COVItt,
lc,
FOR THE DISTRICT OF MARYLANDSouthern Division
2E11 NOV 1 3

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P 4: 50

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BARBARA A. GIBBS, et al.,
Plaintiffs,
V

.

Case No.: GJH-16-2855

BANK OF AMERICA, N.A., et al.,
Defendants.

MEMORANDUM OPINION
This action consists of a counterclaim that Plaintiffs filed in response to Defendants' state
foreclosure action, in which Plaintiffs allege that Defendants are liable for unjust enrichment,
breach of contract, violations of the Racketeer Influenced and Corrupt Organizations Act, 18
U.S.C. § 1962(c) ("RICO"), civil conspiracy, and violations of the Maryland Consumer
Protection Act. ECF No. 2. Presently pending before the Court is Plaintiffs' Motion to
Reconsider the Court's March 31, 2017 opinion. ECF No. 75, which granted Defendants'
Motions to Dismiss, ECF No. 77, and Plaintiffs' I Motion to Reopen Case and Remand to State
Court, ECF No. 80. No hearing is necessary. See Loc. R. 105.6 (D. Md. 2016). For the following
reasons, Plaintiffs' motions are granted.
I. BACKGROUND
Between 2005 and 2006, Plaintiffs purchased two homes, one in Florence, South
Carolina and one in Gaithersburg, Maryland. ECF No. 2 1[ 50. Plaintiffs state that they "financed
the building of their South Carolina home with a one year construction loan[,] purchased with a
Plaintiffs' Motion to Reopen Case and Remand to State Court, ECF No. 80, is captioned incorrectly and refers to
Bank of America, et al., as Plaintiffs and the Gibbs as Defendants.

30-year fixed rate mortgage from [Bank of America.]." Id. Although not alleged by the Plaintiffs,
the judge in a prior, almost identical case that Plaintiffs brought in the District of Colorado stated
that "it is clear that both of the Plaintiffs' mortgages were with [Bank of America]." See GibbsSquires v. Urban Settlement Servs., No. 14-CV-00488-MSK-CBS, 2015 WL 196217, at *9 n.12
(D. Colo. Jan. 14, 2015),

d, 623 F. App'x 917 (10th Cir. 2015) (emphasis in original)

(hereinafter, "the Colorado Action").2
Beginning in May of 2008, Plaintiffs sought loan modifications from Bank of America.
ECF No. 2 ¶ 53. Bank of America initially approved Plaintiffs' request for loan modifications,
conditioned upon their payment of $30,000 in closing costs. Id. Plaintiffs declined the loan
modifications because any savings from a reduction in their monthly mortgage payments would
be erased by the new requirement to pay closing costs. Id. Plaintiffs continued, unsuccessfully, to
request alternative loan modifications from Bank of America until 2012. Id. ¶IJ 55-70. At that
point, they were informed by Bank of America that their mortgages had been sold to Nationstar.
Id. 11 70.
Plaintiffs complain about their treatment by Bank of America employees while they
sought loan modifications, stating that they were repeatedly misled about their qualifications for
a federal program known as the Home Affordable Modification Program ("HAMP"), which aims
to provide mortgage modifications to eligible borrowers facing foreclosure, and were often told
to resubmit documents that they had already submitted. Id. ¶4ff 5-6, 50-73. These allegations
serve as the basis for what Plaintiffs describe as a violation of the Racketeer Influenced and
Corrupt Organizations ("RICO") Act, 18 U.S.C. § 1962(c), in which Bank of America,

2 While Defendant Bank of America never affirmatively states that it owned both mortgages, it does not dispute this
contention.

2

Nationstar, and other defendants, conspired to defeat the purpose of the HAMP program by
misleading and deceiving borrowers. ECF No. 2

in 2, 5-6, 9-13; see also id. TT 77-98.

Plaintiffs also allege that Bank of America directed Defendants Nadel, Atlantic Law
Group and Montgomery Village Foundation, to file frivolous lawsuits against them, with the
goal of "stealing" their homes. Id. ¶ 24.3 They further allege that the Maryland Attorney General
entered into a consent agreement with Bank of America, agreeing to turn a "Blind Eye to [Bank
of America's] continued conspiracy and racketeering in defrauding HAMP" in return for
receiving money from the bank. Id. 1124. Finally, Plaintiffs claim that Defendants have "paid
bribes to South Carolina government employees to institute and maintain their illegal foreclosure
practices." Id. If 107.
Together with their RICO claim, Plaintiffs bring seven additional claims against the
Defendants, who they often refer to generally as "Defendants" or the "HAMP-less gang." Id. If
23. First, they allege state law claims of breach of contract, unjust enrichment, conspiracy and
violations of the Maryland Consumer Protection Act ("MCPA"), Md. Code Ann., Com. Law §
13-101, et seq. Id.

in 49-73, 99-109. Plaintiffs also allege violations of three federal civil rights

statutes, 42 U.S.C. §§ 1983, 1985 and 1986, claiming that Defendants' "illegal actions were
instituted against Plaintiffs based on their RACE: BLACK." Id. ¶ 108.
On March 26, 2015, Nadel, on behalf of Nationstar, instituted foreclosure proceedings
against Plaintiffs regarding the Maryland property in Maryland state court. See Nadel Action,

Plaintiffs do not provide any information regarding the roles of these Defendants. For the reader's convenience, the
Court makes the following observations of their roles based on the uncontested statements in Defendants' briefs.
Jeffrey Nadel was counsel for Nationstar in the foreclosure proceedings for the Maryland property. See ECF No. 13I at 5; see also Nadel v. Gibbs, Case No. 402900V (Mont. Co. Cir. Ct. 2015) (hereinafter, the "Nadel Action").
Atlantic Law Group was foreclosure counsel for Wells Fargo, who purchased the Maryland property at the
foreclosure sale. See Nadel Action, Case No. 402900V, at Dkt. No. 39; see also ECF No. 66-1 at 1-2. Montgomery
Village Foundation notes that their "limited interaction with the Gibbs has been to take legal action . . . to collect
unpaid assessments from [Plaintiff] Barbara Gibbs, owed to [Defendant] pursuant to a Declaration of Covenants
governing [the Maryland property]." ECF No. 25-1 at 2.

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Case No. 402900V, at Dkt. No. 1. On June 2, 2015, Plaintiffs filed a counter-claim in that case
asserting the claims discussed above, id., at Dkt. No.12, which was separated from the
foreclosure case and became the initial complaint in a new case. See Gibbs v. Bank of America,
NA., Case No. 405624V (Mont. Co. Cir. Ct. 2015), Dkt. No 1 (hereinafter, the "Gibbs Action").4
On August 12, 2016, Defendants Bank of America and Nationstar removed the Gibbs Action to
this Court. ECF No. 1.
After removal, each of the named Defendants filed a motion to dismiss, arguing that
Plaintiffs' claims were barred on multiple grounds including res judicata, lack of subject matter
jurisdiction, improper venue, lack of personal jurisdiction, and failure to state a claim upon
which relief may be granted. See ECF Nos. 10, 13, 17, 25, 31, 57, and 66. Plaintiffs also filed
their own motions, including a Motion for Summary Judgment on all claims, ECF No. 39.
On March 31, 2017, the Court granted Defendants' Motions to Dismiss, and denied
Plaintiffs' motions. ECF No. 75. In a footnote, the Court acknowledged that the parties disagreed
over whether the removal of this case from state court was proper, but concluded that the case
was "properly removed to this Court." Id. at 8 n.11. On April 10, 2017, Plaintiffs filed a Motion
for Reconsideration, ECF No. 77, which Defendants Opposed, ECF No. 78, and to which
Plaintiffs subsequently replied, ECF No. 79. On October 20, 2017, Plaintiffs filed a Motion to
Reopen the Case and Remand it to state court, ECF No. 80.
II.

STANDARD OF REVIEW
A motion for reconsideration filed within 28 days of the underlying order is governed by

Federal Rule of Civil Procedure 59(e). Courts have recognized three limited grounds for granting
a motion for reconsideration pursuant to Rule 59(e): (1) to accommodate an intervening change

" The

Maryland state court dockets for the Gibbs and Nadel Actions can be accessed at
http: icasesearch.courts.state.md.us (last visited March 28, 2017).

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in controlling law; (2) to account for new evidence; or (3) to correct clear error of law or prevent
manifest injustice. See United States ex rel. Becker v. Westinghouse Savannah River Co., 305
F.3d 284, 290 (4th Cir. 2002) (citing Pacific Ins. Co. v. Am. Nat'l Fire Ins. Co., 148 F.3d 396, 403
(4th Cir. 1998)), cert. denied, 538 U.S. 1012 (2003). A Rule 59(e) motion "may not be used to relitigate old matters, or to raise arguments or present evidence that could have been raised prior to
the entry of judgment." Pacific Ins. Co., 148 F.3d at 403 (quoting 11 Wright, etal., Federal
Practice and Procedure § 2810.1, at 127-28 (2d ed. 1995)). See also Sanders v. Prince George's
Public School System, No. RWT 08-cv-501, 2011 WL 4443441, at *1 (D. Md. Sept. 21, 2011) (a
motion for reconsideration is "not the proper place to relitigate a case after the court has ruled
against a party, as mere disagreement with a court's rulings will not support granting such a
request"). "In general, 'reconsideration of a judgment after its entry is an extraordinary remedy
which should be used sparingly.' Id. (quoting Wright, et al., supra, § 2810.1, at 124).
This Court has noted that Injeither Rule 59(e), nor Local Rule 105.10 (providing the
deadline for a motion for reconsideration), contains a standard for the application of Rule 59(e)
and the Fourth Circuit has not identified such a standard." Bey v. Shapiro Brown & Alt, LLP, 997
F. Supp. 2d 310, 320 (D. Md.), affd, 584 F. App'x 135 (4th Cir. 2014). Thus, this Court has
previously looked to the "widely cited case" of Above the Belt, Inc. v. Bohannan Roofing, Inc.,
99 F.R.D. 99 (E.D.Va.1983), for its reasoning that a "motion to reconsider would be appropriate
where, for example, the Court has patently misunderstood a party, or has made a decision outside
the adversarial issues presented to the Court by the parties, or has made an error not of reasoning
but of apprehension." Bey, 997 F. Supp. 2d. at 320.

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III. DISCUSSION
Plaintiffs, in both Motions, effectively ask the Court to reconsider its dismissal of this
case, reopen the case and remand it to state court. Federal courts are courts of "limited
jurisdiction," and "can only exercise the jurisdiction given by act of Congress," The Hine, 71
U.S. 555, 559 (1866), such as in diversity actions, 28 U.S.C. § 1332, or in cases involving a
federal question, 28 U.S.C. § 1331. It is well-established law that § 1331 federal question
jurisdiction "is limited to actions in which the plaintiffs well-pleaded complaint raises an issue
of federal law," In re Blackwater Sec. Consulting, LLC, 460 F.3d 576, 584 (4th Cir. 2006) (citing
Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149 (1908)); as such, a counterclaim based
on federal law does not "establish [federal question] jurisdiction," Holmes Group, Inc. v.
Vornado Air Circulation Systems, Inc., 535 U.S. 826, 831 (2002). As it is a jurisdictional issue, a
challenge to a federal court's subject-matter jurisdiction to hear a case may be made "at any
time," and cannot be waived by the parties. Tropical Winds Joint Venture v. Coker Builders, Inc.,
884 F.2d 1390 (4th Cir. 1989). Pursuant to 28 U.S.C. § 1447(c), "[i]f at any time before final
judgment it appears that the district court lacks subject matter jurisdiction, the case shall be
remanded." Although the Court is unaware of an instance in which the Fourth Circuit has opined
on the issue, some Circuits have held that even after a final judgment is issued, a district court is
still under an obligation to consider a challenge to its subject-matter jurisdiction. In re Carter,
618 F.2d 1093, 1098 (5th Cir. 1980) ("Even after entry of final judgment, the constitutional
balance of policies that underlies the Article III grant of judicial power impels the vacation of
that judgment and remand to the state court having jurisdiction when it is determined that the
federal court was without power to act because of a lack of subject matter jurisdiction over a

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removed case."); see also Woods v. Wal-Mart, 124 F.3d 219 (10th Cir. 1997); Mignogna v. Sair
Aviation, Inc., 937 F.2d 37, 40 (2d Cir. 1991).
In evaluating Plaintiffs' Motion to Reconsider, the Court first considers whether it
"patently misunderstood" the parties' arguments. Under 28 U.S.C. § 1441(a), "any civil action
brought in a State court of which the district courts of the United States have original
jurisdiction, may be removed by the defendant or the defendants, to the district court of the
United States for the district and division embracing the place where such action is pending."
"On a motion to remand, the court must 'strictly construe the removal statute and resolve all
doubts in favor of remanding the case to state court,' indicative of the reluctance of federal
courts 'to interfere with matters properly before a state court." Rizwan v. Lender Servs. Inc., 176
F. Supp. 3d 513, 515 (D. Md. 2016) (quoting Barbour v. Int7. Union, 640 F.3d 599, 615 (4th
Cir.2011) (en banc), abrogated by statute on other grounds by 28 U.S.C. § 1446(b)(2)(B)). In
their Opposition to Defendants' Motion to Dismiss, Plaintiffs argued that "Gibbs did not file this
law suit: it was filed by the [Defendants] in Maryland Circuit Court and removed to this Court by
the [Defendants]" and "Plaintiffs are not permitted to remove a state case to federal court." ECF
No. 62-1 at 2. At the time, the Court did not give weight to this argument, as it understood that
Defendants were the ones who removed the case to federal court, which is permissible. The
Court held that removal was proper as "this case originated in Montgomery County Circuit
Court, [and] it was properly removed to this Court." ECF No. 75 at 8.
In reviewing Plaintiffs' Motion for Reconsideration and the state court docket, however,
the Court became aware of the fact that Plaintiffs' claims were not filed as an independent suit in
state court, but were administratively separated "for litigation purposes" only pursuant to a
Montgomery County Circuit Court Administrative Order (the "Administrative Order"). Gibbs

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Action, Dkt. No. 2. The Court initially misunderstood this fact, which was not sufficiently
explained in the parties' briefings. The Court thus considers whether this fact changes its prior
ruling.
This Court has previously examined the effect of the Montgomery County Circuit Court's
Administrative Order on removed counter- or cross-complaints in foreclosure proceedings, and
found that removal is improper. In Wittstadt v. Reyes, 113 F. Supp. 3d 804 (D. Md. 2015)—
which was not cited by the parties—Judge Chasanow was confronted with the same issue
presented here. There, a foreclosure claim was filed in Montgomery County Circuit Court, and
the defendant filed a counter-claim against the plaintiff Id. at 805. Pursuant to the
Administrative Order, the court clerk opened a new case number for the counter-claim, and the
counter-claim was subsequently removed. Id. In holding that removal was improper, Judge
Chasanow explained that the Administrative Order did not actually convert the counter-claim
into a new case; rather, "the order merely effectuates a bifurcation of the case permitting the
court to try the foreclosure and counterclaim separately if necessary. . . ." Id. at 807. As such,
the "original foreclosure proceeding. . . did [not] become removable when. . . the counterclaim
[was] filed" because "[a] federally-based counterclaim by an original defendant is not eligible to
serve as the basis for removal on federal question grounds." Id. at 806. See also Kelly v. JP
Morgan Chase Bank, Nat'l Ass'n, No. CV TDC-15-1115, 2015 WL 9183428, at *2 (D. Md. Dec.
17, 2015) (Chuang, J., holding same).
This case is factually identical to Wittstadt, whose reasoning the Court finds persuasive.
Here, the court clerk filed Plaintiffs' counter-claims separately pursuant to the same
Administrative Order that was relied upon in Wittstadt, instructing that counterclaims should be
"severed for the purpose of litigation." Gibbs Action, Dkt. No. 2. Here too, the Administrative

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Order "merely effectuates a bifurcation of the case permitting the court to try the foreclosure and
counterclaim separately if necessary." As the original complaint was a state foreclosure action
and did not raise any federal questions, the filing of Plaintiffs' counter-claims did not make the
action removable.5 As such, the Court concludes that it misunderstood the parties' arguments as
to remand, and that the Court's misunderstanding impacted its prior ruling. The Court therefore
grants Plaintiffs' Motion for Reconsideration, finds that the Court does not have subject-matter
jurisdiction over Plaintiffs' claims, and remands the case to the Circuit Court for Montgomery
County.6
IV. CONCLUSION
For the foregoing reasons, Plaintiffs' Motion for Reconsideration, ECF No. 77, and
Motion to Reopen Case and Remand to State Court, ECF No. 80, are granted, and the case is
remanded to the Circuit Court for Montgomery County. A separate Order shall issue.

Date: November 2017
GEORGE J. HAZEL
United States District Judge

The Court notes that it also would not have had diversity jurisdiction over the original foreclosure action. From the
original foreclosure action's docket, it is apparent that Maryland citizens were both plaintiffs and defendants. See
Nadel Action; ECF No. 2 ("Barbara A. Gibbs is a resident of the state of Maryland"). See also 28 U.S.C. § 1332.
6 The Court notes that even if it did not grant Plaintiffs' Motion for Reconsideration, it would still be compelled to
remand the case upon concluding that it does not have subject-matter jurisdiction, even after issuing what is
undeniably a final judgment. See In re Carter, 618 F.2d 1093, 1097 (5th Cir. 1980) ("Even after entry of final
judgment, the constitutional balance of policies that underlies the Article 111 grant of judicial power impels the
vacation of that judgment and remand to the state court having jurisdiction when it is determined that the federal
court was without power to act because of a lack of subject matter jurisdiction over a removed case"); Woods v.
Wal-Mart, 124 F.3d 219 (10th Cir. 1997) ("Defendants contend the final judgment on the merits deprived the district
court of jurisdiction to consider any subsequent remand of the now-dismissed state claims. On the contrary, so long
as the remand motion was premised on the district court's lack of jurisdiction over the removed action, the assertedly
void judgment would present no obstacle to the relief requested.").

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