United States District Court, D. Maryland
CONSTRUCTURE MANAGEMENT, INC.
MUKESH MAJMUDAR, HOPKINS HOSPITALITY INVESTORS, LLC, HOPKINS INVESTORS, LLC, and STAR DEVELOPMENT GROUP, LLC
Richard D. Bennett, United States District Judge
Constructure Management, Inc. ("CMI") brings this
lawsuit against defendants Mukesh Majmudar
("Majmudar"), Hopkins Hospitality Investors, LLC,
Hopkins Investors, LLC, and Star Development Group, LLC
("Star") seeking damages for alleged fraud relating
to a construction project. Now pending is plaintiff CMLs
motion for voluntary dismissal without prejudice (ECF No.
60). For the reasons set forth below, CMLs motion is granted.
dispute concerns alleged fraud by Majmudar, the Hopkins
defendants, and Star in connection with the funding of a
construction project. CMI entered into a contract
("Contract") with Star on April 8, 2013 to serve as
the general contractor for the construction of a hotel in
Laurel, Maryland (the "Project"). (ECF No. 1,
¶ 9). Hopkins Hospitality Investors, LLC and Hopkins
Investors, LLC (collectively "Hopkins") owned the
Project, and Star is an affiliate of Hopkins. Id. at
¶¶ 12, 16. Majmudar was the managing member of
Flopkins and Star during the relevant times, and he served as
the primary point of contact in communicating with CMI about
the Project on behalf of Star and Hopkins. Id. at
and Star obtained funding for the Project through a loan in
the amount of $11, 556, 000 to cover construction costs and
contingency for change orders (the "Loan").
Id. at ¶ 24. To obtain payment for its work,
CMI submitted payment applications to Star each month.
Id. at ¶ 29. Upon approval of the payment
applications, Star and/or Hopkins would request the lender
release funding from the Loan to pay CMI and its
subcontractors. Id. at ¶ 32. After the lender
released the funds, Hopkins issued checks to CMI and its
subcontractors. Id. at ¶ 33. CMI submitted 26
payment applications in total for payment for its work.
Id. at ¶ 34.
connection with payment applications Nos. 22 and 23,
defendants required CMI include certain additional costs,
totaling $62, 838.86, incurred by Hopkins and Star so that
Hopkins and Star could receive reimbursement for these costs.
Id. at ¶¶ 35, 42, 53. When defendants
asked CMI to include the additional costs, defendants did not
inform CMI they had made additional withdrawals from the
Loan. Id. at ¶¶ 39, 47. CMI believed
Hopkins and Star had only withdrawn $62, 838.86 in total from
the Loan and therefore expected the balance of the Loan would
equal the contract balance at the end of the Project.
Id. at ¶ 51.
October 2015, however, CMI learned from Majmudar that Hopkins
and Star had withdrawn approximately $550, 000 from the Loan
to pay other expenses, including interest on the financing
obtained for the Project. Id. at ¶ 54. These
additional withdrawals left the balance of the Loan
significantly lower than the remaining contract balance.
Id. Based on these facts, CMI alleges Majmudar,
Star, and Hopkins committed fraud, claiming Majmudar knew,
but failed to disclose to CMI, that at the time of the
preparation of payment applications Nos. 22 and 23, Hopkins
and Star had already withdrawn $550, 000 from the Loan.
Id. at ¶ 57. According to CMI, Majmudar
intentionally concealed the additional withdrawals from CMI,
misleading CMI into believing sufficient funds would remain
to fulfill the Contract balance. Id. at ¶¶
filed a complaint against defendants in the District of
Maryland on June 22, 2016 alleging two counts: (1) fraudulent
misrepresentation and (2) fraudulent concealment. (ECF No.
1). A few months prior to that filing, Star and Hopkins filed
a complaint, which was removed to the District of Maryland,
against CMI and its surety, alleging breach of contract
arising from the same Project and Contract as this current
case. (Civil No. 16-1246, ECF Nos. I, 2). The breach of
contract case was stayed pending the parties' voluntary
participation in arbitration. (Civil No. 16-1246, ECF No.
On August 1, 2016, Majmudar, Hopkins, and Star moved to
consolidate the current fraud case, Civil No. 16-2309, with
the breach of contract case, Civil No. 16-1246. (ECF No. 16).
This court denied that motion in September of 2016, finding
there was "at best a limited overlap of the issues
presented" in the two cases. (ECF No. 22).
October and November of 2016, defendants filed two motions,
one by Star and one by Hopkins and Majmudar, to compel
arbitration and stay this case, seeking to have the fraud
claims joined in the parties' breach of contract
arbitration. (ECF Nos. 25, 32). This court denied both
motions, finding again "a limited overlap between the
issues presented in the arbitration proceedings and the
issues presented in this case." (ECF Nos. 36, 41). In
February 2017, defendants appealed that ruling to the Fourth
Circuit Court of Appeals, but voluntarily dismissed the
appeal in July of 2017. (ECF Nos. 42, 46). Following the
dismissal, the parties continued with discovery. On December
5, 2017, CMI filed a motion for voluntary dismissal without
prejudice, which is currently pending. (ECF No. 60).
Federal Rule of Civil of Procedure 41(a)(2), a plaintiff may
voluntarily dismiss an action without prejudice at any time
with the court's approval. This rule's purpose is to
freely "allow voluntary dismissals unless the parties
will be unfairly prejudiced." Davis v. USX
Corp., 819 F.2d 1270, 1273 (4th Cir. 1987). The district
court's primary focus in considering a Rule 41(a)(2)
motion must be "protecting the interests of the
defendant." Id. A plaintiffs motion for
voluntary dismissal should be granted unless there is
"plain legal prejudice to the defendant."
Elleti Bros. v. U.S. Fid. & Guar. Co., 275 F.3d
384, 388 (4th Cir. 2001). The prospect of a second lawsuit
does not constitute prejudice to the defendant.
Davis, 819 F.2d at 1274.
presence of plain legal prejudice to the defendant, a court
may dismiss an action with prejudice, but doing so is
considered "the most extreme sanction" and must be
reserved for "the most egregious cases." See
United States v. Shaffer Equip. Co., 11 F.3d 450, 462
(4th Cir. 1993) ("Mindful of the strong policy that
cases be decided on the merits, and that dismissal without
deciding the merits is the most extreme sanction, a court
must...exercise its inherent power to dismiss with
restraint....); Sadler v. Dimensions Health Corp.,
178 F.R.D. 56, 59 (D. Md. 1998) (citing Dove v.
Codesco, 569 F.2d 807, 810 (4th Cir. 1978))
("Dismissal with prejudice is ordinarily reserved for
the most egregious cases.").
assessing a Rule 41(a)(2) motion, district courts apply a
non-exclusive, four-factor test. These factors include:
"(1) the opposing party's effort and expense in
preparing for trial; (2) excessive delay or lack of diligence
on the part of the movant; (3) insufficient explanation of
the need for a dismissal; and (4) the present stage of
litigation, i.e., whether a motion for summary judgment is
pending." Wilson ...