O'Brien v. Quicken Loans Inc. et al
MEMORANDUM OPINION AND ORDER GRANTING 14 Motion to Remand; DENYING 13 Motion to correct docket entry; and DENYING WITHOUT PREJUDICE 15 Motion for Settlement to refiling in state court. This case is DISMISSED and STRICKEN from the active docket of this court. Clerk directed to enter judgment. Signed by Senior Judge Frederick P. Stamp, Jr on 6/27/11. (c to Circuit Court of Ohio County by mail)(cc)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
Civil Action No. 5:10CV110
QUICKEN LOANS, INC.,
TITLE SOURCE INC. d/b/a
TITLE SOURCE, INC. of WEST VIRGINIA,
APPRAISALS UNLIMITED, INCORPORATED,
DEWEY V. GUIDA and JOHN DOE NOTE HOLDER,
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFF’S MOTION TO REMAND;
DENYING DEFENDANTS’ MOTION TO CORRECT DOCKET ENTRY;
DENYING WITHOUT PREJUDICE DEFENDANTS’ MOTION FOR APPROVAL
OF SETTLEMENT AS BEING IN GOOD FAITH; AND
DENYING PLAINTIFF’S REQUEST FOR ATTORNEY’S FEES
complaint in the Circuit Court of Ohio County, West Virginia
alleging that she is the victim of a predatory lending scheme
following causes of action: (1) unconscionability; (2) breach of
the covenant of good faith and fair dealing; (3) fraud/intentional
misrepresentation; (4) negligent misrepresentation; (5) illegal
The complaint further alleges that the
plaintiff is entitled to compensatory and punitive damages.
(“Quicken”), and a local appraiser whereby real estate appraisals
were allegedly artificially inflated as part of a predatory lending
The plaintiff in this case, the appraiser, Dewey Guida,
and his company, Appraisals Unlimited Incorporated (“Appraisals
Unlimited”), were in the process of negotiating a settlement
agreement when Quicken filed its notice of removal.
negotiations, the settling defendants’ attorney, Heather Noel
(“Noel”), and the plaintiff’s attorney, Jason Causey (“Causey”),
exchanged a proposed settlement agreement.
edited portions of the draft agreement.
Both Noel and Causey
On October 28, 2010, Noel
sent an email to Causey raising a number of questions and concerns
regarding Causey’s rewrites, including how the settlement proceeds
would be distributed and why Causey had deleted certain language
from the proposed agreement.
The next day, October 29, 2010, at
approximately 7:17 p.m., Noel emailed a letter to Causey advising
him that her clients had agreed in full to the revisions of the
At that time, no effort had been made to
address the outstanding issues and questions raised in Noel’s
October 28, 2010 email.
Furthermore, the draft agreement had not
yet been finalized.
The other pending cases involve two unrelated individuals who
also claim to be victims of the same predatory scheme.
Only a few hours after Noel sent the letter to Causey, at
approximately 11:00 p.m. on October 29, 2010, the last day on which
this action could be removed, Quicken faxed a notice of removal to
the Clerk’s Office of this Court.
Attached to the notice of
removal was Noel’s October 29, 2010 letter.
Citing this letter,
Quicken alleged that a settlement had been reached with Guida and
Thus, they were no longer adverse parties
and their citizenship could be disregarded for removal purposes.
Importantly, Quicken could not file its notice of removal via
the CM/ECF system after hours on October 29, 2010 because the
Clerk’s Office was closed.
It was not until Monday, November 1,
2010, that Quicken was able to electronically file its notice of
removal after the Clerk’s Office opened it as a new case and
assigned a case number.
On November 1, 2010, Causey wrote to Noel indicating that he
was confused by the October 29, 2010 letter.
that the draft agreement was still incomplete.
Causey pointed out
draft agreement contained blanks for the amounts of the settlement
Therefore, in Causey’s opinion, as of October 29, 2010,
Causey wrote to Quicken and Title Source on November 10, 2010
requesting a voluntary remand.
The defendants did not respond to
this letter, but instead filed a motion to correct the docket entry
(Doc. 13), in which they request that this Court change the filing
date of their notice of removal to October 29, 2010 -- the date
that it was faxed to the Clerk’s Office.
The plaintiff then filed
a response to the motion to correct the docket entry, to which the
On November 24, 2010, the plaintiff filed a motion to remand
(Doc. 14) in which she argues that the defendants’ notice of
removal was untimely because it was filed more than one year after
the case was originally brought in state court.
plaintiff contends that Guida and Appraisals Unlimited were still
parties to the case at the time of removal, and their presence
Defendants Quicken and Title Source, Inc.
(“Title Source”) filed a response in opposition to the motion to
Subsequently, the plaintiff filed a reply brief.
One week later, on December 1, 2010, Appraisals Unlimited and
Guida filed a motion for approval of settlement as being in good
faith (Doc. 15) moving this Court to approve, ratify and confirm
the settlement agreement entered into by and between the plaintiff,
Appraisals Unlimited, and Guida.
According to these defendants,
the settlement was fair, reasonable, and made in good faith.
Quicken and Title Source filed a response to the motion for
approval of settlement as being in good faith stating that they do
not object to the settlement between Appraisals Unlimited, Guida,
and the plaintiff.
The plaintiff did not file a response to the
motion for approval of settlement as being in good faith.
All three motions are currently pending before this Court and
are ripe for review.
For the reasons set forth below, the
plaintiff’s motion to remand is granted, Quicken’s motion to
correct the docket entry is denied, and the motion for approval of
settlement as being in good faith is denied without prejudice.
The plaintiff, Barbara O’Brien, obtained at least two loans
from Quicken, the first of which closed on or about February 2006.
The second loan closed on November 15, 2007 and was a refinancing
of the first loan.
On or about November 15, 2007, the plaintiff
executed a promissory note in the principal sum of $175,050.00,
with an “interest only” feature.
This note was secured by a deed
The plaintiff contends that Quicken represented that by
paying points, she would be buying down, or reducing, her interest
According to the plaintiff, Quicken’s representations regarding the
reduction of her interest rate were false, deceptive, and unfair.
The plaintiff further alleges that Quicken and Title Source secured
Appraisals Unlimited and Guida. Specifically, Guida and Appraisals
For purposes of deciding this motion to remand, this Court
considers, for the most part, the facts as presented in the
Unlimited issued a report dated October 30, 2007 that assigned an
appraised value of $194,500.00 to the subject property.
value, according to the plaintiff, misrepresented the market value
of the home, which was approximately $117,000.00 at the time of the
By overvaluing the plaintiff’s home, this enabled
Quicken to make a loan for an amount in excess of the home’s market
The appraisal secured by Quicken and Title Source for the
February 2006 loan was likewise prepared by Guida and Appraisals
Unlimited and was allegedly inflated as well.
A defendant may remove a case from state court to federal
court in instances where the federal court is able to exercise
original jurisdiction over the matter.
28 U.S.C. § 1441.
courts have original jurisdiction over primarily two types of
cases: (1) those involving federal questions under 28 U.S.C.
§ 1331, and (2) those involving citizens of different states where
interests and costs pursuant to 28 U.S.C. § 1332(a).
See Mulcahey v. Columbia Organic Chems. Co., Inc.,
29 F.3d 148, 151 (4th Cir. 1994). Removal jurisdiction is strictly
construed, and if federal jurisdiction is doubtful, the federal
court must remand.
Further, the court is limited to a
consideration of facts on the record at the time of removal.
Lowrey v. Alabama Power Co., 483 F.3d 1184, 1213-15 (11th Cir.
2007) (stating that in assessing whether removal was proper, the
district court has before it only the limited universe of evidence
available when the motion to remand is filed); Marshall v. Kimble,
No. 5:10CV127, 2011 WL 43034, at *3 (N.D. W. Va. Jan. 6, 2011)
(“The defendant’s removal cannot be based on speculation; rather,
it must be based on facts as they exist at the time of removal.”).
In her motion to remand, the plaintiff contends that because
the defendants’ notice of removal was filed more than one year
after the case was commenced in state court, it is untimely and
this Court has no jurisdiction to entertain it.
further argues that because there was no settlement agreement in
place as of October 29, 2010, Guida and Appraisals Unlimited
Finally, the plaintiff asserts that an award of
attorney’s fees is appropriate under 28 U.S.C. § 1447(c) because
the defendants acted in bad faith in filing their notice of
In response, the defendants argue that the notice of removal
was timely filed by facsimile, in accordance with the local rules
of this Court.
The defendants also claim that the requirement for
complete diversity was satisfied because a meeting of the minds had
been reached between the plaintiff, Guida, and Appraisals Unlimited
and as a result, the settling defendants were no longer genuinely
adverse to the plaintiff. Finally, the defendants counter that the
plaintiff is not entitled to fees and costs because removal was
This Court addresses all three arguments in turn.
Timeliness of Removal
The procedure for removal is governed by 28 U.S.C. § 1446,
which provides, in relevant part:
(a) A defendant . . . desiring to remove any civil
action . . . from a State court shall file in the
district court . . . a notice of removal signed pursuant
to Rule 11 of the Federal Rules of Civil Procedure and
containing a short and plain statement of the grounds for
removal, together with a copy of all process, pleadings,
and orders served upon such defendant . . . in such
(b) . . . If the case stated by the initial pleading is
not removable, a notice of removal may be filed within
thirty days after receipt by the defendant, through
service or otherwise, of a copy of an amended pleading,
motion, order or other paper from which it may be first
ascertained that the case is one which is or has become
removable, except that a case may not be removed on the
basis of jurisdiction conferred by section 1332 of this
title more than 1 year after commencement of the action.
explicitly safeguards against . . . a strategic delay by erecting
an absolute bar to removal of cases in which jurisdiction is
premised on 28 U.S.C. § 1332 ‘more than 1 year after commencement
of the action.’” Lovern v. General Motors Corp., 121 F.3d 160, 163
(4th Cir. 1997) (quoting 28 U.S.C. § 1446(b)); see also Caterpillar
Inc. v. Lewis, 519 U.S. 61, 62 (1996) (stating that no case may be
removed based on diversity more than one year after commencement of
the action); Price v. Messer, 872 F. Supp. 317, 320 (S.D. W. Va.
1995) (recognizing that the one year cap of § 1446(b) is a
prevent removal of diversity cases pending in state court for more
than one year).
In this case, the defendants faxed their notice of removal to
the Clerk’s Office on October 29, 2010 -- the one-year removal
But the defendants did not electronically file the
notice of removal until November 1, 2010 -- one year and three days
after this case was first commenced in state court.
central issue with regard to timeliness is whether the notice of
removal can be considered filed as of October 29, 2010. This Court
finds that it cannot do so.
In support of their contention that the notice of removal was
timely filed by fax, the defendants rely on Rule 5.04(h) of the
Local Rules of General Procedure of this Court, which states:
A fax copy of a document shall be deemed filed when it
arrives in its entirety on a Clerk’s Office fax machine
without regard to the hours of operation of the Clerk’s
Office. Upon receiving a faxed filing, the Clerk of the
Court shall note the filing date on the fax copy in the
same manner as with other documents filed by mail or in
LR Gen P 5.04(h).
The defendants also highlight Rule 5.05(a) of
the Local Rules of General Procedure: “A party may file any
document in a civil action, other than a complaint or petition, by
The Clerk shall accept the document as filed if
the filing and the document comply with these and other applicable
rules and statutes.”
LR Gen P 5.05(a).
Because the document was
received in its entirety by fax on October 29, 2010, the defendants
argue that it should be deemed filed as of that date.
The plaintiff cites Rule 5.01 of the Local Rules of General
Procedure, as well as the United States District Court for the
(“Attorney Filing Manual”), in support of her position that the
notice of removal was not timely filed.
Rule 5.01 provides:
“Absent good cause, counsel shall file electronically using CM/ECF
in this Court.”
LR Gen P 5.01(a).
Section 8 of the Attorney
Filing Manual sets forth the rules for filing any “initiating
document,” including a notice of removal:
Filers must deliver a civil cover sheet and the
appropriate filing fee to the Clerk’s Office by mail,
personal delivery or other means to open new civil
Upon the civil cover sheet and filing fee, the
Clerk’s Office will open the case and assign a case
number. Once the case is open, the Clerk’s Office will
electronically notify the filer to file the civil
complaint, petition, notice of removal, or other
After receiving the electronic notice from the
clerk, the filer shall electronically file the complaint,
petition, notice of removal, or other initiating
Electronic delivery of the complaint,
petition, notice of removal, or other initiating document
to the Court’s CM/ECF System constitutes “filing.”
NOTE: Pursuant to Rule 3 of the Federal Rules of
Civil Procedure, the statute of limitations is not tolled
by this procedure until the complaint, petition, notice
of removal, or other initiating document is filed with
this Court and the filing fee is paid.
(Att’y Filing Manual § 8.)
According to the plaintiff, the
defendants’ delivery of the notice of removal by fax after regular
office hours had no legal effect.
It was not until November 1,
2010, when the Clerk’s Office opened the case, assigned a case
number, and enabled the defendants to electronically file their
notice, that the notice of removal was actually filed.
November 1, 2010 as the filing date of the notice of removal
because this is the date that the defendants complied with the
requirements of Section 8 of the Attorney Filing Manual.
While this Court acknowledges that the Local Rules provide for
filing by fax, this Court finds that in this case, the defendants’
transmission of the notice of removal by fax one hour before the
one-year deadline expired did not comply with the rules regarding
the commencement of a civil action.
Therefore, the notice of
removal cannot be considered timely.
As the defendants correctly note, “[t]o the extent [the]
Attorney Filing Manual conflicts with the Court’s existing Local
Rules, the Local Rules take precedence.”
(Att’y Filing Manual at
However, this clarification does not enable the defendants to
disregard the rules for commencing a civil action.
In fact, the
Local Rules specifically provide that parties may file certain
documents by fax, but that “[t]he Clerk shall accept the document
as filed if the filing and the document comply with these and other
applicable rules and statutes.” LR Gen P 5.05(a) (emphasis added).
Rather than complying with the rules for commencing a civil
action and Local Rule of General Procedure 5.01(a) requiring
electronic filing absent good cause, the defendants sent a latenight fax to the Clerk’s Office and assumed that they could
complete the other filing requirements at a later date.
defendants included a civil cover sheet with their fax, but they
had not yet paid the appropriate filing fee to the Clerk’s Office
(the filing fee was not paid until November 1, 2010).3
Clerk’s Office did not see the fax until November 1, 2010, a case
number could not be assigned and the case could not be opened until
Once the case was opened, the defendants were then able
to file the notice of removal electronically.
“[e]lectronic delivery of the . . . notice of removal . . . to the
Court’s CM/ECF System constitutes ‘filing.’”
(Att’y Filing Manual
Further, the Manual provides that “the statute of
limitations is not tolled . . until the . . . notice of removal .
. . is filed with this Court and the filing fee is paid.”
Although the docket sheet indicates that the civil cover
sheet and the filing fee were filed on October 29, 2010, this is
not the case. The cover sheet was faxed along with the notice of
removal on October 29, 2011 and was entered by the Clerk’s Office
on November 1, 2010. When the Clerk’s Office entered the civil
cover sheet, it was back-dated to October 29, 2010. The filing fee
was paid on November 1, 2010.
Filing Manual § 8(D).)
These rules for commencement of a civil
action that appear in the Attorney Filing Manual are the same as
those listed in the United States District Court for the Northern
District of West Virginia Administrative Procedures for Electronic
Case Filing (“Administrative Procedures”).
Procedures conflict with the Court’s existing Local Rules, these
Administrative Procedures take precedence.”
(Admin. Procedures at
Both the Administrative Procedures, which trump the Local
Rules, and the Attorney Filing Manual clearly set forth what
constitutes “filing” of an initiating document such as a notice of
removal, and the defendants’ fax does not meet these requirements.4
Because the defendants’ faxed notice of removal did not comply
with the applicable rules for commencing a civil action, the
Clerk’s Office could not accept it as filed on October 29, 2010.
See LR Gen P 5.05(a).
As of October 29, 2010, this case had not
been opened, a case number had not been assigned, and the filing
fee had not been paid.
These steps were not taken until November
1, 2010, after the time for filing a notice of removal had expired.
The preface to the Local Rules provides: “A district judge
may, in the interest of orderly, expeditious, and efficient
administration of justice, allow departures from these Local Rules
when warranted by particular facts and circumstances.” Thus, this
Court relies not only on the fact that the Administrative
Procedures take precedence over the Local Rules, but also on the
fact that a departure from the Local Rules is warranted in this
Therefore, the notice of removal is untimely and the motion to
remand must be granted.
Diversity of Citizenship
Even if this Court were to find that the defendants had timely
filed their notice of removal, remand must be granted because at
the time of removal, complete diversity of citizenship did not
See 28 U.S.C. § 1332(a).
The United States Court of
Appeals for the Fourth Circuit interprets 28 U.S.C. § 1446 to allow
removal after the voluntary discontinuance of an action against a
Higgins v. E.I. DuPont de Nemours & Co.,
863 F.2d 1162, 1166 (4th Cir. 1988). Further, a federal court must
disregard nominal or formal parties and rest jurisdiction upon the
citizenship of real parties to the controversy. Navarro Sav. Ass’n
v. Lee, 446 U.S. 458, 460-61 (1980).
“A party whose presence in
the action would destroy diversity must be dropped formally, as a
matter of record, to permit removal to federal court.”
Wright, A. Miller & E. Cooper, Federal Practice and Procedure §
3723, at 716 (2009); see King v. Kyak Mfg. Corp., 688 F. Supp. 227,
230 (N.D. W. Va. 1988) (holding that removal was appropriate
because the diversity-defeating defendant voluntarily settled with
the plaintiff and the state trial judge announced that he was not
longer a party to the case).
A written order of dismissal is not
necessarily required to determine whether a case is ripe for
See King, 688 F. Supp at 230.
But “for a case to become
removable as a consequence of a settlement between the plaintiff
establish with a reasonable degree of certainty that dismissal of
the nondiverse defendant is an inevitability.”
See Allison v.
Meadows No. 2:05-CV-00092, 2005 WL 2016815, at *3 (S.D. W. Va. Aug.
In this case, the only proof of settlement provided by the
defendants is the October 29, 2010 letter from Noel stating that
her clients have agreed in full to the revisions in the language of
the Release in Full of All Claims.
(Mot. to Remand Ex. B.)
reviewing the record, this Court finds no evidence proving that the
plaintiff, Guida, and Appraisals Unlimited had arrived at a final
settlement. The draft release provided to Noel on October 15, 2010
contained blanks instead of distribution amounts.
The October 28,
2010 email from Noel to Causey includes a question regarding the
distribution of the settlement and a request for clarification of
the exclusion of language regarding the Brown findings of fact and
conclusions of law. Although the correspondence traded between the
attorneys indicates that settlement discussions were progressing,
there is no indication that the parties had reached a meeting of
the minds regarding settlement.
Contrary to the defendants’
representations, this Court finds that the conduct of the parties
does not demonstrate that a settlement had been reached.
time of removal, multiple issues had yet to be decided regarding
settlement, including the amount of the distributions and the exact
wording of the release language.
These issues were not mere
“clerical details” or “minutiae”; they were central to the finality
Because this Court finds that Guida and Appraisals Unlimited’s
dismissal was not an inevitability at the time of removal, removal
is not appropriate.
See Allison, 2005 WL 2016815, at *3.
defendants’ letter indicating an intent to settle “is not a
sufficiently certain indication that the case is one which is or
has become removable.”
Thus, the defendants’ proof of
settlement fails the Allison reasonable certainty test, and remand
must be granted.
In addition to a remand, the plaintiff asks that this Court
award her the attorney’s fees and costs associated with pursuing
With respect to the award of attorney’s fees and
costs, the Fourth Circuit has found that 28 U.S.C. § 1447(c)
“provides the district court with discretion to award fees when
remanding a case” where it finds such awards appropriate.
Lowe, 102 F.3d 731, 733 n. 2 (4th Cir. 1996).
This Court finds
that such fees and costs are inappropriate in this matter because
the defendants asserted at least a colorable claim to removal
jurisdiction in this Court. Accordingly, this Court finds that the
plaintiff’s request for an award of attorney’s fees and costs
should be denied.
For the reasons stated above, the plaintiff’s motion to remand
(Doc. 14) is GRANTED. Accordingly, it is ORDERED that this case be
REMANDED to the Circuit Court of Ohio County, West Virginia.
defendants’ motion for approval of settlement as being in good
faith (Doc. 15) is hereby DENIED WITHOUT PREJUDICE to re-filing in
state court, and the defendants’ motion to correct docket entry
(Doc. 13) is DENIED.
It is further ORDERED that this case be
DISMISSED and STRICKEN from the active docket of this Court.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein and to the Clerk of
the Circuit Court of Ohio County, West Virginia.
Federal Rule of Civil Procedure 58, the Clerk is DIRECTED to enter
judgment on this matter.
June 27, 2011
/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE
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