Green et al v. Jim Walter Homes et al

Filing 66

ORDER adopting in part 61 Report and Recommendations; granting 22 Motion to Dismiss for Lack of Jurisdiction. Signed by Honorable R Bryan Harwell on 5/30/2012.(hcic, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
Natasha L. Green and Shilon L.
Green,
Plaintiffs,
v.
Jim Walter Home Company, LLC,
Walter Mortgage Company, LLC,
and James Owen,
Defendants.

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Civil Action No.: 4:11-cv-02437-RBH

ORDER

This matter is before the Court after the issuance of the Report and Recommendation
(“R&R”) of United States Magistrate Judge Kaymani D. West.1 Defendants Jim Walter Home
Company, LLC and Walter Mortgage Company, LLC (collectively “the Walter entities”) filed a
motion for summary judgment, and Defendant James D. Owens II2 filed a motion to dismiss for
lack of subject matter jurisdiction. In the R&R, the Magistrate recommends that the Court grant the
motion for summary judgment, dismissing the Walter entities with prejudice, and grant the motion
to dismiss, dismissing Owens without prejudice.
Factual Background and Procedural History
Plaintiffs Natasha L. Green and Shilon L. Green, proceeding pro se,3 filed this action on
September 12, 2011. They asserted causes of action against the defendants for breach of contract,

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In accordance with 28 U.S.C. § 636(b)(1)(B) and Local Civil Rule 73.02 (D.S.C.), this matter was
referred to the Magistrate Judge for pretrial handling.
2
Owens indicated the Plaintiffs incorrectly referred to him as “James Owen” in their complaint. See
ECF No. 22.
3
The Court is mindful of its duty to liberally construe the pleadings of pro se litigants. See Gordon
v. Leeke, 574 F.2d 1147, 1151 (4th Cir. 1978); but see Beaudett v. City of Hampton, 775 F.2d 1274,
1278 (4th Cir. 1985).

fraud, and violations of the South Carolina Unfair Trade Practices Act. The claims arose from the
defendants’ alleged failure to cure construction defects in Plaintiffs’ home when the home failed to
pass a code inspection by Chesterfield County. The Plaintiffs’ failure to make payments on the
construction loan ultimately led to a foreclosure on the mortgage securing the loan. Compl. 2-5,
ECF No. 1.
Plaintiffs, in their complaint, alleged their address was McBee, South Carolina. They also
alleged the address of all defendants to be in Columbia, South Carolina. Compl. 2. The Walter
entities answered, neither admitting nor denying that their residence was in South Carolina. Answer,
ECF No. 25. Owens, who admitted he resides in South Carolina, filed a motion to dismiss for lack
of subject matter jurisdiction, arguing that, because Plaintiffs only raised state claims and because
he and Plaintiffs are residents of South Carolina, the Court lacks complete diversity jurisdiction.
Mem. in Supp. of Mot. to Dismiss 2-3, ECF No 22-1. Furthermore, the Walter entities filed a
motion for summary judgment, arguing Plaintiffs’ claims against them are barred by the doctrine of
res judicata because they were previously litigated to a final determination by an arbitrator. Mot.
for Summ. J. 5-6, ECF No. 26.

The Magistrate Judge issued her R&R on April 18, 2012,

recommending the Court grant both motions, R&R, ECF No. 61, and Plaintiffs filed timely
objections, Pl.’s Objs., ECF No. 64.
Standard of Review
The Magistrate Judge makes only a recommendation to the Court. The recommendation has
no presumptive weight. The responsibility to make a final determination remains with the Court.
Mathews v. Weber, 423 U.S. 261, 270-71 (1976). The Court is charged with making a de novo
determination of those portions of the R&R to which specific objection is made, and the Court may

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accept, reject, or modify, in whole or in part, the recommendation of the Magistrate Judge, or
recommit the matter to her with instructions. 28 U.S.C. § 636(b)(1).
The right to de novo review may be waived by the failure to file timely objections. Orpiano
v. Johnson, 687 F.2d 44, 47 (4th Cir. 1982). The Court need not conduct a de novo review when a
party makes only "general and conclusory objections that do not direct the [C]ourt to a specific error
in the [M]agistrate's proposed findings and recommendations." Id. Moreover, in the absence of
objections to the R&R, the Court is not required to give any explanation for adopting the
recommendation. Camby v. Davis, 718 F.2d 198, 199 (4th Cir. 1983). However, in the absence of
objections, the Court must “ ‘satisfy itself that there is no clear error on the face of the record in
order to accept the recommendation.’ ” Diamond v. Colonial Life & Accident Ins. Co., 416 F.3d
310, 315 (4th Cir. 2005) (quoting Fed. R. Civ. P. 72 advisory committee’s note).
Discussion
The Magistrate Judge recommends granting the Walter entities’ motion for summary
judgment, as well as Owens’s motion to dismiss. Specifically, the Magistrate Judge concludes that
the doctrine of res judicata bars Plaintiffs’ claims against the Walter entities. Moreover, she
concludes the Court lacks diversity jurisdiction to hear the state claims against Owens, because he,
like Plaintiffs, is a resident of South Carolina. R&R 9.
Plaintiffs raise the following objections to the R&R: (1) that the Magistrate Judge did not
review the evidence, hear testimony, or review depositions before making her recommendation; (2)
that the Walter entities made false representations to a special referee; (3) that the Walter entities
were involved in a class action in the past and have not changed the way they do business; (4) that
the Magistrate Judge misunderstood why Plaintiffs failed to post a bond in seeking to stay the
foreclosure sale; and (5) that the Magistrate Judge failed to see that a special referee did not allow

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them to present witnesses at the foreclosure hearing, in violation of a court order. Pl.’s Objs. 1-2.
None of these objections, however, address the Magistrate Judge’s findings that Plaintiffs’ claims
against the Walter entities are barred by the doctrine of res judicata or that the Court lacks subject
matter jurisdiction over Plaintiffs’ claims against Owens.
Most important, however, are the issues raised in Owen’s motion to dismiss for lack of
diversity jurisdiction. As noted above, the Court must review the Magistrate Judge’s R&R for plain
error, and subject matter jurisdiction may be raised sua sponte. See, e.g., Brickwood Contractors,
Inc. v. Datanet Eng’g, Inc., 369 F.3d 385, 390 (4th Cir. 2004) (“[Q]uestions of subject-matter
jurisdiction may be raised at any point during the proceedings (or, more precisely, must) be raised
sua sponte by the court.”). Owens argues that, because both he and Plaintiffs are South Carolina
residents, the Court lacks subject matter jurisdiction to hear Plaintiffs’ claims—all state causes of
action. Mem. in Supp. 2-3. Plaintiffs do not dispute this fact; indeed, they allege that South
Carolina is Owens’s residence in their complaint. Compl. 2.
Of course, it has long been held that, in order for a federal court to have subject matter
jurisdiction over state causes of action, the parties must be completely diverse. 28 U.S.C. §
1332(a)(1); see also Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806). Here, Plaintiffs alleged
in their complaint that all defendants are residents of South Carolina.4
The Court must have subject matter jurisdiction before it can rule on motions like a motion
for summary judgment. See, e.g., Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998) (“The
requirement that jurisdiction be established as a threshold matter spring[s] from the nature and
limits of the judicial power of the United States and is inflexible and without exception.” (alteration
in original) (internal quotation marks omitted)). Therefore, the Court finds error in the Magistrate
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Again, the Court notes the Plaintiffs allege the Walter entities are residents of South Carolina, an
allegation that is not disputed by the Walter entities in their answer.
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Judge’s recommendation to the extent that she recommends dismissing the claims against the
Walter entities on the basis that they are barred by the doctrine of res judicata. Without subject
matter jurisdiction, the Court simply lacks the authority to make that determination.
Conclusion
The Court has thoroughly reviewed the entire record, including the R&R, objections to the
R&R, and applicable law. For the reasons stated above, the Court hereby overrules Plaintiffs’
objections. The Court rejects the Magistrate Judge’s recommendation to grant the Walter entities’
motion for summary judgment; however, adopting the recommendation regarding Owens’s motion
to dismiss, the Court dismisses all claims against all defendants because there is no allegation of
complete diversity in the pleadings before the Court.
IT IS THEREFORE ORDERED that Plaintiffs’ case be DISMISSED without prejudice.
IT IS SO ORDERED.
s/ R. Bryan Harwell
R. Bryan Harwell
United States District Judge
May 30, 2012
Florence, SC

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