Spirakis et al v. United States of America et al

Filing 8

ORDER granting 4 the United States' Motion to Dismiss for Lack of Jurisdiction for any claims, or third-party claims asserted against the United States Department of the Treasury or the Board of Governors of the Federal Reserve System. The co urt retains jurisdiction over the remaining claims in this action. Additionally, Plaintiffs counsel, David C. Haar, is ORDERED to, within seven days of the filing date of this order, either (1) file a notice of appearance in accordance with Local Ci vil Rule 5.2, or (2) file a motion to withdraw as attorney of record for plaintiffs. Because Mr. Haar currently is not registered as an electronic filer, any notice of appearance or motion to withdraw must be accompanied by a motion for leave to file in paper form, per Local Civil Rule 5.l(d). Furthermore, Mr. Haar is DIRECTED to register as an electronic filer with this district on or before August 1, 2014. Signed by Senior Judge James C. Fox on 6/23/2014. Copy sent to Mr. Haar via US Mail. (Edwards, S.)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NORTH CAROLINA
SOUTHERN DIVISION
No. 7:14-CV-19-F

NICOLAOS P. SPIRAKIS, et al.,
Plaintiffs,
v.
IN THE MATTER OF THE
FORECLOSURE ofDeeds of Trust of
Bank ofNorth Carolina to BNC Credit
Corp, Trustee dated September 3, 2010
and recorded on September 9, 2010 in
Book 5509, Page 1179 and Book 5509,
Page 1239, New Hanover County
Registry,
Defendant.
V.

UNITED STATES DEPARTMENT OF
THE TREASURY AND THE BOARD
OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM aka FEDERAL
RESERVE BOARD,
Third Party Defendants.

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ORDER

This matter is before the court on the Motion to Dismiss [DE-5] filed by the United States.
For the reasons stated below, the motion is ALLOWED and the claims against the United States are
DISMISSED. The court retains jurisdiction over the remaining claims in this action.
I. PROCEDURALBACKGROUND
On January 23, 2014, the United States, on behalf of the United States Department of the
Treasury and the Board of Governors of the Federal Reserve System, filed a Notice ofRemoval [DE-

1] in this court pursuant to 28 U.S.C. § 1442(a)(l). Attached to the Notice of Removal was a
pleading filed in the North Carolina General Court ofJustice, Superior Court Division, New Hanover
County [DE-1-1 ]. The pleading is denominated "Complaint and Third Party Complaint (Referenced
Foreclosure 13-SP-722)", and its title suggests it was filed in response to a foreclosure proceeding
in state court. In the pleading, Plaintiffs "submit[] their Injunction, Complaint to the Foreclosure of
the Defendants herein, and responding further by asserting a claim against Third Party Defendants
United States Department of The Treasury and The Board of Governors of The Federal Reserve
System aka Federal Reserve Board, as well as Counterclaims against the Defendants." Compl. [DE1-1] at 1-2. With regard to the Third Party Defendants, Plaintiffs appear to assert a claim for
violation "of Plaintiffs' rights under the Due Process and Equal Protection Clause of the United
States Constitution." Compl. [DE-1-1] ,-r 104. It appears the pleading was filed on or about October
30, 2013.
Despite allegedly improper service, the United States Attorney's Office received a copy of
this pleading on January 15, 2014, and promptly filed the Notice of Removal. Therein, the
Government asserted that the removal only applied to the Third-Party Complaint against the United
States Department ofthe Treasury and the Board of Governors ofthe Federal Reserve System.' On
the same day that the Government filed theN otice ofRemoval, it filed a motion to dismiss Plaintiffs'
Third Party Complaint pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction.
Also on that same day, the Clerk of Court issued a Notice [DE-3] to counsel for Plaintiffs,
notifying him that he would need to be able to file as an electronic filer in the Eastern District of

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The Government does not cite to any authority for the proposition that part of an action may be

removed.
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North Carolina. To date, Plaintiffs' counsel has not complied with the Clerk's Notice, nor have
Plaintiffs filed a response to the Government's Motion to Dismiss.
On June 4, 2014, Defendant Bank ofNorth Carolina to BNC Credit Corp., Trustee (In the
Matter ofthe Foreclosure ofDeeds of Trust dated September 3, 2010, and recorded on September
9, 2010, in Book 5509, Page 1179 and Book 5509, Page 1239, New Hanover County Registry),
caused its counsel to file a Notice of Appearance [DE-6], and also filed a notice of the Answer it
filed to the pleading in state court, prior to removal [DE-7].
II. ANALYSIS
Under the doctrine of derivative jurisdiction, a federal court's jurisdiction over a removed
case derives from the jurisdiction of the state court where the case originated. Palmer v. City
National Bank of W Va., 498 F.3d 236, 244 (4th Cir.2007) (citing Lambert Run Coal Co. v.
Baltimore & Ohio Railroad Co., 258 U.S. 377,382 (1922)). "Ifthe state court lacks jurisdiction of
the subject-matter or of the parties, the federal court acquires none, although it might in a like suit
originally brought there have had jurisdiction." Lambert Run Coal Co., 258 U.S. at 382.
Although the general removal statute, 28 U.S.C. § 1441, has been amended to preclude
application of the derivative jurisdiction doctrine, the doctrine still applies to removal pursuant to
§ 1442. See Palmer, 498 F.3d at 244-46 ("[B]ecause the plain language of§ 1441(£) limits the
abrogation of derivative jurisdiction to removals under§ 1441 and because our precedent holds that
the doctrine is viable under § 1442, the doctrine applies to the removal in this case."); Kasi v.
Angelone, 300 F.3d 487, 504 n. 6 (4th Cir.2002) ("[A] federal court's jurisdiction upon removal
under§ 1442(a)(l) is derivative ofthe state court's jurisdiction."); United States v. Williams, 170
F.3d 431, 433 (4th Cir.1999) (same); Boron Oil Co. v. Downie, 873 F.2d 67, 70 (4th Cir.1989)

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(same). Accordingly, when faced with an action removed pursuant to 28 U.S.C. § 1442, a district
court must determine whether the state court in which the case originated had subject matter
jurisdiction; and if it did not, the claim must be dismissed. See Bell v. Shinseki, 1: 1OCV4 75, 201 0
WL 4683626, at *1 (M.D.N.C. Nov. 10, 2010).
As a sovereign, the United States '"is immune from suit save as it consents to be sued ...
, and the terms of its consent to be sued in any court define that court's jurisdiction to entertain the
suit."' United States v. Mitchell, 445 U.S. 535, 538 (1980) (quoting United States v. Sherwood, 312
U.S. 584, 586 (1941 )). This sovereign immunity extends to both the United States and its agencies.
FDIC v. Meyer, 510 U.S. 471, 475 (1994). A court cannot infer a waiver of sovereign immunity;

rather, it "'must be unequivocally expressed."' /d. (quoting United States v. King, 395 U.S. 1, 4
(1969)). Absent an express statutory provision, the federal government's sovereign immunity
precludes suit against the federal government in state court. See Bullock v. Napolitano, 666 F.3d 281,
284-85 (4th Cir. 2012).
Here, the United States, and in tum its agencies the Department of the Treasury and the
Board of Governors of the Federal Reserve System, enjoy sovereign immunity from suit in state
court unless otherwise waived. The United States asserts that it "has not waived its sovereign
immunity so as to consent to be sued for plaintiffs' claims in state court." Mem. in Support of Mot.
to Dismiss [DE-5] p. 3. Plaintiffs, having failed to respond, have not pointed to any authority
showing that the United States has waived its sovereign immunity in state court. Accordingly, the
court will accept the United States' contention that it enjoys immunity from suit for Plaintiffs claims
in state court, and that therefore the New Hanover County court lacked jurisdiction over Plaintiffs'
"third party" claims.

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Having done so, and in recognition that this action was removed to this court pursuant to §
1442, the court concludes that the doctrine of derivative jurisdiction precludes this court from
exercising jurisdiction over the United States as well. Accordingly, the Plaintiffs' claims against
United States Department ofthe Treasury and the Board of Governors ofthe Federal Reserve System
are DISMISSED.
The remaining claims in this action, asserted against Defendant Bank of North Carolina to
BNC Credit Corp., Trustee (In the Matter ofthe Foreclosure ofDeeds ofTrust dated September 3,
2010, and recorded on September 9, 2010, in Book 5509, Page 1179 and Book 5509, Page 1239,
New Hanover County Registry), appear to include at least one claim arising under federal law, and
thus, the court appears to have jurisdiction over those claims. See Compl.

[DE-l-]~~ 81-93.

Should

Defendant Bank ofNorth Carolina to BNC Credit Corp., Trustee (In the Matter ofthe Foreclosure
ofDeeds ofTrust dated September 3, 2010, and recorded on September 9, 2010, in Book 55 09, Page
1179 and Book 5509, Page 1239, New Hanover County Registry) disagree with this assessment, it
is free to file an appropriate motion.
Finally, Plaintiffs counsel, David C. Haar, has failed to register as an electronic filer, despite
the Clerk providing explicit notice ofhis need to do so. Additionally, Plaintiffs counsel has failed
to file a notice of appearance, in violation of Local Civil Rule 5.2(a). Accordingly, Mr. Haar is
ORDERED to, within seven days of the filing date ofthis order, either (1) file a notice of appearance
in accordance with Local Civil Rule 5.2, or (2) file a motion to withdraw as attorney of record for
plaintiffs. Because Mr. Haar currently is not registered as an electronic filer, any notice of appearance
or motion to withdraw must be accompanied by a motion for leave to file in paper form, per Local

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Civil Rule 5.l(d). Furthermore, Mr. Haar is DIRECTED to register as an electronic filer with this
district on or before August 1, 2014.
Plaintiffs and their counsel are warned that the failure to comply with this order may result
in the imposition of sanctions, including the dismissal of this action without prejudice.

III. CONCLUSION
For the foregoing reasons, the United States' Motion to Dismiss [DE-4] is ALLOWED, and
any claims, or third-party claims, asserted against the United States Department of the Treasury or
the Board of Governors of the Federal Reserve System are DISMISSED.
Plaintiffs counsel, David C. Haar, is ORDERED to, within seven days of the filing date of
this order, either (1) file a notice of appearance in accordance with Local Civil Rule 5.2, or (2) file
a motion to withdraw as attorney of record for plaintiffs. Because Mr. Haar currently is not registered
as an electronic filer, any notice of appearance or motion to withdraw must be accompanied by a
motion for leave to file in paper form, per Local Civil Rule 5.l(d). Furthermore, Mr. Haar is
DIRECTED to register as an electronic filer with this district on or before August 1, 2014.
Plaintiffs and their counsel are warned that the failure to comply with this order may result
in the imposition of sanctions, including the dismissal of this action without prejudice
SO ORDERED.
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This the 1:..!__ day of June, 2014.

enior United States District Judge

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