HSBC BANK USA, N.A. v. RUFFOLO et al
Filing
17
MEMORANDUM OPINION filed. Signed by Judge Michael A. Shipp on 12/23/2015. (eaj)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
HSBC BANK USA, N.A.,
Plaintiff,
v.
ALFREDO FRANCESCO RUFFOLO, et al.,
Civil Action No. 15-2891 (MAS) (TJB)
MEMORANDUM OPINION
Defendants.
This matter comes before the Court on Plaintiff HSBC Bank USA, N .A.' s ("Plaintiff' or
"HSBC") Motion to Remand and for Counsel Fees. (ECF No. 3.) Defendants Alfredo Francesco
Ruffolo and Christine Ruffolo ("Defendants" or "Ruffolos") opposed the motion (ECF No. 7), and
Plaintiff replied (ECF No. 12). 1 Defendants also submitted separate correspondence to the Court
requesting recusal, a 90-day stay, a Rule 26 hearing, an extension of time to respond to Plaintiffs
Motion to Remand, and an order to show cause to order HSBC to produce the original promissory
note. 2 (ECF Nos. 5, 6.) Plaintiff filed an opposition to these requests (ECF No. 9), and Defendants
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On June 29, 2015, Defendants filed a sur-reply. (ECF No. 13.) Per Local Civil Rule 7.l(d)(6),
sur-replies are not permitted unless leave is granted by the Judge to whom the case is assigned.
Citing Rule 7.l(d)(6), Plaintiff objected to Defendants' sur-reply and asked the Court to disregard
it. (ECF No. 14.) Thereafter, Defendants submitted correspondence asking the Court to "allow
[their] sur-rebuttal to stand as if a more formal time-consuming motion were filed and granted in
the interest of conservation of judicial resources." (ECF No. 16.) Because Plaintiffs reply did not
raise new arguments or contain statements requiring correction, the Court will disregard
Defendants' sur-reply.
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Notwithstanding the requirement in the Federal Rules of Civil Procedure and the Local Civil
Rules for the District of New Jersey that any relief sought must be moved for via formal motion,
taking into account Defendants' pro se status, the Court considered the requests made in. their
"letter motion" dated May 14, 2015. The Court granted Defendants' request for an extension of
replied (ECF No. 11). The Court has carefully considered the parties' submissions and decides
the matter without oral argument pursuant to Local Civil Rule 78.1.
I.
Background and Procedural History3
On December 3, 2010, Plaintiff filed this foreclosure action in the Superior Court of New
Jersey, Warren County, under docket number F-58732-10. (Ex. A to Pl.'s Mot. to Remand, ECF
No. 3-3.) The property at issue in this foreclosure action is located in the State of New Jersey at
400 Warren Street, Stewartsville.
(Id. at Schedule A.)
Defendants filed an answer to the
Complaint on March 16, 2011. (Ex. B to Pl.'s Mot. to Remand, ECF No. 3-4.) Thereafter,
"[n]umerous conferences [took place in state court, and] discovery motions and dispositive
motions [were] filed in the state court." (Pl.'s Mot. to Remand if 7, ECF No. 3.) The dispositive
motions included Plaintiffs motion for summary judgment, which was scheduled for oral
argument in state court on January 17, 2014. (Id. if 8.)
On December 31, 2013, while Plaintiffs summary judgment motion was pending,
Defendants, acting pro se, abruptly removed the action to this Court, and the matter was assigned
docket number 3:13-cv-7926. (Dkt. No. 13-7926, ECF No. 1.) In their Notice of Removal,
Defendants asserted that there was federal jurisdiction on the basis of "a federal question, the
time to respond to Plaintiffs Motion to Remand. (ECF No. 8.) The Court, however, denies the
remaining requests for the following reasons. First, with respect to the request for recusal, the
Court denies this request because Defendants have not identified any "personal bias or prejudice
[by the Court] concerning a party, or personal knowledge of disputed evidentiary facts concerning
the proceeding." 28 U.S.C. § 455. Next, the Court denies as moot Defendants' request for a 90day stay. Finally, the Court denies Defendants' request for a Rule 26 hearing and for an order to
show cause to order HSBC to produce the original promissory note, because Defendants have
already had the opportunity to take discovery in state court, and this included an opportunity to
examine the original promissory note.
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The Court assumes familiarity with the facts of this case, which are set forth in the court's opinion
in Ruffolo v. HSBC Bank USA, NA., No. 14-638, 2014 WL 4979699 (D.N.J. Oct. 3, 2014). Thus,
the Court includes only the facts relevant to the pending motion.
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threatened actual taking of title and rights to deeded real property without due process." (Id.)
Thereafter, Plaintiff filed a motion for an order remanding this action to state court and requiring
Defendants to pay attorney's fees and expenses associated with removal under 28 U.S.C.
§ 1447(c). (Dkt. No. 13-7926, ECF No. 3.) In their motion to remand, HSBC's principal challenge
to the removal was that the notice of removal, which was filed nearly three years after the
Complaint was served, was untimely. (Id. at 2-4.) Defendants did not dispute this argument; rather
Defendants argued that the action should be consolidated with a "related" federal action that they
commenced in January 2014, Ruffolo v. HSBC Bank USA, N.A., No. 14-638 (D.N.J.). (Id. at 2.)
The Court rejected this argument noting that while "Rule 42 of the Federal Rules of Civil
Procedure provides for the consolidation of cases properly 'before the court,' it does not provide
an independent basis to remove an action from state court." (Dkt. No. 13-7926, Sept. 8, 2014
Mem. Order 2, ECF No. 9.) Thus, noting that the removal was untimely, the Court granted
Plaintiff's motion to remand by order dated September 8, 2014. (Id. at 3.)
Thereafter, this Court also dismissed the "related" federal action. (Dkt. No. 14-638, ECF
No. 24.) Finding that the federal complaint was effectively seeking appeal of decisions by the
state court and attempting to have the Court interfere with ongoing state court proceedings, the
Court abstained from exercising its jurisdiction. (Dkt. No. 14-638, Oct.3, 2014 Mem. Op. 4, ECF
No. 23.) Accordingly, pursuant to the Colorado River doctrine of abstention, the Court dismissed
the Ruffolos' federal complaint. (Id. at 8-9.)
Thereafter, the state court proceedings on the foreclosure action resumed, and Plaintiff
again filed a motion for summary judgment on April 9, 2015. (Ex. D to Pl.' s Mot. to Remand,
ECF No. 3-6.) While Plaintiffs motion for summary judgment was pending, on April 23, 2015,
Defendants filed a "Cross Complaint/Counterclaim and Motion for OSC [sic] re TRO and
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Preliminary Injunction and Stay [proposed] OSC [sic] and TRO." (Ex. 1 to Notice of Removal,
ECF No. 1-1.) On the same day, Defendants removed the action to this Court. (ECF No. 1.) With
the exception of the addition ofa "Constitutional Challenge to the New Jersey Law-Rule 4[:]64,"
which pertains to mortgage foreclosures, Defendants' "Cross Complaint/Counterclaim" is nearly
identical to its previous federal complaint, which the Court dismissed. On May 5, 2015, Plaintiff
filed the instant Motion to Remand and for Counsel Fees. (ECF No. 3.)
II.
Discussion
In their Notice of Removal, Defendants state that they have filed a "concurrently pending
civil action under the same state court case number" and "[t]he core matters within the cross action
involve the violation of defendant/cross-complainants [sic] rights as owners to their single family
residence and includes a Constitutional Challenge under the U.S. Constitution and statutes that
allege that the foreclosure proceedings that are currently pending in New Jersey pandemically [sic]
are performed illegally with wholesale disregard of the law, denying equal protection, due process
protections, disregarding evidentiary requirements and for violations under 42 U.S.C. [§] 1983, et
seq." (Notice of Removal 2.) Defendants additionally assert that "[t]he two actions are joined as
allowed by state law and there is no federal statute or FRCP that prohibits this honorable court
from considering and taking charge of these related cases in which there exists matters of great
public interest affecting the litigants and other citizens of New Jersey similar situated." (Id.) The
Court disagrees with Defendants.
A.
Removal was Untimely
Under 28 U.S.C. § 1446(b), a notice of removal "shall be filed within 30 days after the
receipt by the defendant, through service or otherwise, of a copy of the [complaint]." 28 U.S.C.
§ 1446(b); see also Galvanek v. AT&T, Inc., No. 07-2759, 2007 WL 3256701, at *2 (D.N.J. Nov.
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5, 2007) (noting "that the thirty day period for removal is mandatory and cannot be extended by
the court"). Here, the Complaint was filed nearly five years ago. Nonetheless, Defendants contend
that removal is timely, because it is based on claims made in the "Cross Complaint/Counterclaim"
that they filed on April 23, 2015.
As an initial matter, pursuant to New Jersey Court Rule 4:9-1, once responsive pleadings
are served, "a party may amend a pleading only by written consent of the adverse party or by leave
of court ...." N .J. Ct. R. 4 :9-1. Here, Defendants have not provided proof, or even alleged, that
they obtained either Plaintiffs consent or leave from the state court to amend their pleadings.
Moreover, the state court did not construe Defendants' "Cross Complaint/Counterclaim" as an
amended pleading. On the contrary, describing Defendants' April 23, 2015 filing, the state court
noted that "Defendant Alfred Ruffolo filed an Order to Show Cause, seeking Temporary Injunctive
Relief," and the state court denied this request. (Ex. to May 26, 2015 Letter ("April 27, 2015 Mem.
Op.") 1-4, ECF No. 9.) Thus, any new claims asserted in Defendants' April 23, 2015 "Cross
Complaint/Counter Claim" are not part of this action, and cannot provide a basis for removal.
Accordingly, Defendants' removal was untimely and Plaintiff is entitled to remand.
B.
Payment of Costs and Expenses
Next, the Court turns to Plaintiffs request for attorney fees and expenses pursuant to 28
U.S.C. § 1447(c). Section 1447(c) provides that an order remanding a removed case to state court
"may require payment of just costs and any actual expenses, including attorney fees, incurred as a
result of the removal." 28 U.S.C. § 1447(c). In Martin v. Franklin Capital Corp., the Supreme
Court discussed the rationale for awarding costs under this provision:
The process of removing a case to federal court and then having it
remanded back to state court delays resolution of the case, imposes
additional costs on both parties, and wastes judicial resources.
Assessing costs and fees on remand reduces the attractiveness of
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removal as a method for delaying litigation and imposing costs on
the plaintiff. The appropriate test for awarding fees under § 1447(c)
should recognize the desire to deter removals sought for the purpose
of prolonging litigation and imposing costs on the opposing party,
while not undermining Congress' basic decision to afford
defendants a right to remove as a general matter, when the statutory
criteria are satisfied.
546 U.S. 132, 140 (2005). Thus, the Supreme Court stated that "the standard for awarding fees
should tum on the reasonableness of the removal," and "courts may award attorney's fees ... only
where the removing party lacked an objectively reasonable basis for seeking removal." Id. at 141.
For the reasons discussed below, the Court finds that an award of fees is appropriate in this matter.
Here, Defendants' April 23, 2015 removal represents Defendants' third attempt to litigate
a state foreclosure action in federal court. As discussed above, Defendants' first attempt to litigate
their claims in federal court was made while a motion for summary judgment against Defendants
was pending. In its decision on Plaintiffs motion to remand in that action, the Court explained
that under 28 U.S.C. § 1446(b), a "notice ofremoval ... [must generally] be filed within 30 days
ofreceipt [of the Complaint] by defendant." (Dkt. No. 13-7926, Sept. 8, 2014 Mem. Order 2, ECF
No. 9.) In addition, the Court also explained that Defendants' attempt to consolidate a state action
with a federal action did not provide an independent basis to remove the action from state court.
(Id.)
Thereafter, Defendants tried again to litigate their foreclosure action in federal court by
pursuing a federal action.
(Dkt. No. 14-638, Compl., ECF No. 1.) Finding, however, that
Defendants' federal action would require the Court to interfere with state foreclosure proceedings
and relitigate claims that the state court already addressed, the Court abstained from exercising
jurisdiction over the action pursuant to the Colorado River doctrine of abstention. (Dkt. No. 14638, 10/3/14 Mem. Op. 4, 8-9, ECF No. 23.)
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After the dismissal of Defendants' federal action, Defendants continued to defend against
the foreclosure action in state court. When Plaintiff made a second motion for summary judgment,
however, Defendants once again tried to avoid adjudication of that motion by filing a notice of
removal. (ECF No. 1.) This time Defendants asserted that removal was proper based on a newly
asserted constitutional challenge to a New Jersey law, but, as discussed above, Defendants did not
properly file an amended pleading. Moreover, it is objectively unreasonable for Defendants to
contend that they could inject federal question jurisdiction into the state foreclosure action, without
leave of court, more than four years after the Complaint was served, and when a motion for
summary judgment was pending against them. See also Lott v. Duffy, 579 F. App'x 87, 90 (3d
Cir. 2014) ("[Defendant]'s second Notice of Removal was plainly unreasonable given the District
Court's disposition of his first Notice of Removal.").
Furthermore, Defendants have now removed this case twice, and on both occasions they
did so while Plaintiffs motion for summary judgment was pending. Having engaged in discovery
and motion practice in state court for nearly four years, the Court finds that Defendants acted in
bad faith to prolong this litigation by (again) filing an untimely notice of removal to prevent the
state court from adjudicating a dispositive motion. Defendants' bad faith in removing this case for
a second time also weighs in favor of awarding fees under§ 1447(c). See Hammer v. Scott, 137
F. App'x 472, 475 (3d Cir. 2005) ("A showing of bad faith is not a prerequisite for an award of
fees under 28 U.S.C. § 1447(c), although it maybe a consideration.").
Accordingly, pursuant to § 1447(c), Defendants shall pay Plaintiff "costs and any actual
expenses, including attorney fees, incurred as a result of the removal." 28 U.S.C. § 1447(c).
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III.
Conclusion
For the reasons set forth above, Plaintiffs Motion to Remand and for Counsel Fees is
granted. An order consistent with this Memorandum Opinion will be entered.
s/ Michael A. Shipp
MICHAEL A. SHIPP
UNITED STATES DISTRICT JUDGE
Dated: December 23, 2015
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