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Wittstadt v. Reyes

United States District Court, D. Maryland

July 13, 2015

MARK WITTSTADT, et al.
v.
ROSA MARIA REYES

For Mark Wittstadt, Plaintiff: Mark Hill Wittstadt, LEAD ATTORNEY, Morris Hardwick Schneider, LLC, Baltimore, MD.

For Rosa Maria Reyes, Defendant: Phillip R Robinson, LEAD ATTORNEY, Consumer Law Center LLC, Silver Spring, MD.

For Rosa Maria Reyes, On Her Behalf and on Behalf of a Class of Person Similarly Situated, Counter Claimant: Phillip R Robinson, LEAD ATTORNEY, Consumer Law Center LLC, Silver Spring, MD.

For Green Tree Servicing, LLC, Counter Defendant: Brian L Moffet, Zachary Schultz, Gordon Feinblatt LLC, Baltimore, MD.

Page 805

MEMORANDUM OPINION

DEBORAH K. CHASANOW, United States District Judge.

On April 30, 2015, Green Tree Servicing, LLC, filed a notice of removal from the Circuit Court for Montgomery County. (ECF No. 1). It styled the action as Rosa Maria Reyes v. Green Tree Servicing, LLC, and explained in a footnote that foreclosure proceedings were initiated against Ms. Reyes, in which a final order of ratification was entered. After entry of the final order, " Plaintiff attempted to file a 'Counter-Complaint' in the foreclosure case . . . . However, because the foreclosure case concluded more than one month earlier, Plaintiff's 'counter-complaint' was treated as a new complaint and was docketed as a separate action." (ECF No. 1, at 1 n.1). After the court issued an order to show cause, Ms. Reyes moved to remand the action to the Circuit Court. For the following reasons, the motion to remand will be granted.

The procedural history of this case is as follows. Mark Wittstadt, Gerald Wittstadt, and Deborah Holloway Hill, (" Substitute Trustees" ), filed an order to docket in the Circuit Court for Montgomery County on November 27, 2013, commencing a foreclosure action against Rosa Maria Reyes and her home, a residential property in Montgomery County. The case was assigned number 384504V. (ECF No. 18-2).

At some point, a foreclosure sale was held and a final order of ratification was entered on October 7, 2014. A motion to vacate was filed by the Substitute Trustees on March 13, 2015, but it was denied on March 19, 2015. On March 19, Ms. Reyes filed both a response to the motion to withdraw report of sale and vacate ratification and a counterclaim against Green Tree Servicing, LLC. In both, she asserted that Green Tree is the entity that acquired the servicing rights while Ms. Reyes' loan was in default, and thus was " Plaintiff's pseudo party" and had violated the Real Estate Settlement Procedures Act by conducting the sale. On April 2, 2015, Ms. Reyes filed a motion to alter or amend the order denying the motion to withdraw report of sale and vacate ratification, contending that Green Tree Servicing, LLC had conceded that the sale was conducted in error and had been rescinded. On May 11, 2015, the ratification was vacated.

In accordance with the Administrative Order that had been in place since August 20, 2012, the clerk in the Circuit Court opened a new case when the counter claim was filed. The Administrative Order provides that: (1) the clerk is to accept a counterclaim in a foreclosure proceeding and docket it in the foreclosure case along with a copy of the Administrative Order, (2) the counterclaim is " severed for the purpose of litigation," (3) the clerk is to assign a separate case number to the counterclaim and create a separate file, (4) the clerk is to mark the files as related in the case management system, (5) the clerk is to assign the counterclaim to a particular track, (6) " any such counterclaim file and the related foreclosure case shall be delivered together to that judge's chambers for the resolution of any preliminary motions and determination of the order in which

Page 806

the issues raised shall be heard[,]" and finally, (7) the foreclosures pending ratification continue to be screened under Maryland Rule 14-207.1 and presented to the Administrative Judge for ratification. (ECF No. 18-11) (emphasis added). Accordingly, on March 19, 2015, Case 402551V was opened with the counterclaim. ( Id. ). The counterclaim is associated with two related case numbers, 38450V and 402551V, but the notice of removal purports to remove only Case 402551V.

Under 28 U.S.C. § 1441(a), " a 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." The burden of demonstrating jurisdiction, and the propriety of removal, rests with the removing party. Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 815 (4th Cir. 2004). 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." Barbour v. Int'l. 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).

The original foreclosure proceeding was not removable, nor did it become removable when the federal defenses were asserted or the counterclaim filed. Cohn v. Charles, 857 F.Supp.2d 544, 548 (D.Md. 2012). A federally-based counterclaim by an original defendant is not eligible to serve as the basis for removal on federal question grounds. See UTrue, Inc. v. Page One Sci., Inc., 457 F.Supp.2d 688, 690 (E.D.Va. 2006) (" Moreover, were the well-pleaded complaint rule not to apply on removal, and were counterclaims permitted to become a basis for jurisdiction on removal, the result would be an unwarranted and nearly limitless expansion of removal jurisdiction." ). As held in Cohn v. Charles, 857 F.Supp.2d at 548, the filing of an order to docket a foreclosure commences an action in the ...


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