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Bluebell Business Limited v. Jones

United States District Court, D. Maryland

August 7, 2018

BLUEBELL BUSINESS LIMITED, Plaintiff,
v.
MICHAEL JONES, Defendant.

          MEMORANDUM OPINION

          Richard D. Bennett United States District Judge.

         This case arises from a jet leasing contract between the Plaintiff Bluebell Business Limited (“Plaintiff” or “Bluebell”) and Defendant Michael Jones. Bluebell is an Isle of Man company, and the leasing contract with Jones, a U.S. citizen, stipulates that the agreement shall be governed by English law. On January 25, 2017, Bluebell obtained a default judgment in its favor in the United Kingdom's High Court of Justice, Queen's Bench Division, No. HQ16X03208 (the “U.K. Action”). The foreign default judgement (“U.K. Judgment”) was entered in favor of Bluebell in the amount of $430, 371.56 plus interest. (ECF No. 1-2.) On July 31, 2017, Plaintiff filed a Complaint (ECF No. 1) in this Court seeking recognition and enforcement of the U.K. Judgment pursuant to the Maryland Uniform Foreign Money-Judgment Recognition Act, Md. Code Ann., Courts & Judicial Proceedings §§ 10-701 et seq., and the Maryland Uniform Enforcement of Foreign Judgment Act, Md. Code Ann., Courts & Judicial Proceedings, §§ 11-801 et seq. On November 11, 2017, pro se Defendant Michael Jones filed an Answer generally denying the Plaintiff's claims, asserting a number of defenses under the Maryland Uniform Foreign Money-Judgment Recognition Act, §§ 10-701 et seq., and raising various counterclaims related to the lease agreement. (ECF No. 9.)[1]

         Pending now are Plaintiff's Motion to Bifurcate Complaint from Counterclaim (ECF No. 14), Plaintiff's Motion to Amend/Correct Complaint (ECF No. 21), Defendant's Motion to Dismiss (ECF No. 25), and Defendant's two Motions for Joinder of Parties (ECF Nos. 31-32). The parties' submissions have been reviewed and no hearing is necessary. See Local Rule 105.6 (D. Md. 2016). For the reasons set forth below, Defendant's Motion to Dismiss (ECF No. 25) is DENIED; Plaintiff's Motion to Amend/Correct Complaint (ECF No. 21) is GRANTED; Plaintiff's Motion to Bifurcate Counterclaims (ECF No. 14) is GRANTED; and Plaintiff's own breach of contract claim (Count III in Plaintiff's Amended Complaint) will also be bifurcated. In addition, Defendant's Motions for Joinder of Parties (ECF Nos. 31-32) are DENIED WITH PREJUDICE IN PART and DENIED WITHOUT PREJUDICE IN PART. Specifically, the Motions for Joinder (ECF Nos. 31, 32) are DENIED WITH PREJUDICE as to Susan Kopacz, Johan Eliasch, and the N198GS Inc., Trust. The Motions for Joinder (ECF Nos. 31, 32) are DENIED WITHOUT PREJUDICE as to Justin Jenkins and Jet Evolutions, LLC. The Parties shall jointly submit a proposed briefing schedule, to address personal jurisdiction, on a renewed Motion for Joinder as to Justin Jenkins and Jet Evolutions, LCC. Finally, Plaintiff has 14 days to update its Corporate Disclosure Statement in accordance with this Memorandum Opinion.

         BACKGROUND

         On June 11, 2015, Bluebell and IBX Jets, LLC (“IBX”) entered into a written agreement regarding a Gulfstream Aviation model G-IV aircraft (“the aircraft”), FAA Registration No. NI98GS, Airframe Serial No. 1098 (G-IV), pursuant to which Bluebell agreed to lease the aircraft to IBX. (Aircraft Lease Agreement, ECF No. 1-1 at 20-45.) Bluebell alleges that the Defendant Michael Jones was an owner of IBX and a guarantor of its obligations to the Plaintiff. (ECF No. 1 at ¶ 8; ECF No. 1-1 at 59.) The lease at issue in this case was to commence on July 1, 2015 and last for a period of 41 months. (Id. at 20.) According to the Plaintiff, the parties agreed to an amendment on September 18, 2015 whereby the lease's commencement and expiration dates would be extended. (U.K. Particulars of Claim, ECF No. 1-1 at 12.) Defendant contends that he did not voluntarily agree to this amendment. (ECF No. 9 at 3.) The aircraft was delivered to Jones on September 18, 2015, at which time he paid Plaintiff in the amount of two monthly installments. (ECF No. 1-1 at 7.)

         According to the Plaintiff, Defendant failed to pay monthly invoices, late fees, supplemental invoices for additional usage, and an invoice for costs incurred during a four-day stay at Landmark Aviation IAD at Washington Dulles International Airport. (Id. at 14.) As a result, Bluebell retook possession of the aircraft in March 2016 under the default provision of the lease. (Id.)

         On September 14, 2016, Plaintiff initiated an action in the United Kingdom's High Court of Justice, Queen's Bench Division seeking monetary damages of £333, 587.64, or $430, 371.56. (ECF No. 1 at 3; ECF No. 1-1 at 1.) Plaintiff alleges that on October 23, 2017 papers initiating the U.K. Action were served at 2808 Deerfield Court, Ellicott City, Maryland 21043 on Christopher Jones, Defendant's brother, who reportedly told the courier that Defendant Michael Jones also resided at the Ellicott City address. (ECF No. 1 at 3; Certificate of Service, ECF No. 1-1 at 60-62; Affidavit of Service, ECF No. 1-1 at 63-67.) On January 25, 2017, the U.K. court entered a default judgment against Defendant in the amount of $430, 371.56, with interest at a rate of 5% above the U.S. Dollar 30-day Libor, which was 0.53% at the date of issuance of the judgment. (ECF No. 1 at 3.)

         On July 31, 2017, Plaintiff filed a Complaint in this Court seeking recognition and enforcement of the foreign judgment pursuant to the Maryland Uniform Foreign Money-Judgment Recognition Act, Md. Code Ann., Courts and Judicial Proceedings §§ 10-701 et seq. (“Recognition Act”), and Maryland Uniform Enforcement of Foreign Judgement Act, Md. Code Ann., Courts and Judicial Proceedings, §§ 11-801 et seq.

         On November, 15, 2017, Jones - as a pro se Defendant - filed an Answer to the Complaint. (ECF No. 9.) In his Answer, he generally denied the Plaintiff's claims, asserted a number of defenses under the Recognition Act, and raised various counterclaims related to the underlying transaction. (Id.) On November 29, 2017, Plaintiff filed a Motion to Bifurcate Plaintiff's Claim for Recognition of Foreign Judgment from Defendant's Counterclaims (ECF No. 14), and this motion has been fully briefed. (See ECF Nos. 18, 19.)

         Defendant filed an Amended Answer (ECF No. 20) on December 27, 2017 pursuant to Rule 15(a)(1)(B) of the Federal Rules of Civil Procedure. This Amended Answer differs from the original Answer in numerous respects. First, the Amended Answer includes a “request for joinder” of (a) N198GS Inc., Trust, (b) Justin Jenkins individually, and (c) Jet Evolutions, LLC. (Id. at ¶¶ 2-3.) Second, Mr. Jones “objects to the Plaintiff's Corporate Disclosure Statement (ECF No. 3) as it falsely presents the Plaintiff as a sole entity without a parent corporation or other relevant corporate affiliations” as required by Local Rule 103.3. (ECF No. 20 at ¶ 4.) Third, Defendant asserts additional defenses under the Recognition Act. (See Id. at ¶¶ 11-45.) Fourth, while some of the purported “defenses” appear to overlap with his original counterclaims and while the Amended Answer requests “consideration of the Defendant's counterclaims, ” the Amended Answer does not itself contain a “Counterclaims” section. (Id. at 17.)[2]

         On January 2, 2018, Plaintiff filed a Motion to Amend/Correct Complaint (ECF No. 21), which has been fully briefed. (See ECF Nos. 23, 24.) On March 19, 2018, Defendant filed a Motion to Dismiss (ECF No. 25), which has been fully briefed. (See ECF Nos. 27, 28.) On June 20, 2018, Defendant filed two Motions for Joinder of Parties. (ECF Nos. 31-32.) Plaintiff filed a consolidated response on July 3, 2018 (EFC No. 38), and Defendant replied on July 18, 2018. (ECF No. 39.)[3]

         Pending now are Plaintiff's Motion to Bifurcate Counterclaims (ECF No. 14), Plaintiff's Motion to Amend/Correct Complaint (ECF No. 21), Defendant's Motion to Dismiss (ECF No. 25), and Defendant's Motions for Joinder of Parties (ECF Nos. 31-32).

         STANDARDS OF REVIEW

         As a general matter, when a litigant proceeds pro se, their filings should be “liberally construed” and “held to less stringent standards than formal pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citation omitted).

         I. Motion to Dismiss

         Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 12(b)(6) authorizes the dismissal of a complaint if it “fail[s] to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). The purpose of Rule 12(b)(6) is “to test the sufficiency of a complaint and not to resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006); see also Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 165-66 (4th Cir. 2016). Generally, to withstand a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949 (2009) (internal quotations and citation omitted). In reviewing a motion to dismiss under Rule 12(b)(6), the Court may consider “documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007).

         II. Motion to Amend Complaint

         Under Rule 15 of the Federal Rules of Civil Procedure, a party may amend a pleading once as a matter of course within “21 days after service of a responsive pleading, ” if such a response is required. Fed. R. Cvi. P. 15(a)(1). After this initial window has passed, “a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires.” Fed.R.Civ.P. 15(a)(2). The court's discretion in this area should be guided “by the general policy embodied in the Federal Rules favoring resolution of cases on their merits, ” Island Creek Coal Co. v. Lake Shore, Inc., 832 F.2d 274, 279 (4th Cir. 1987), and therefore “focus ‘on prejudice or futility or bad faith, '” id. (quoting Davis v. Piper Aircraft Corp., 615 F.2d 606, 613 (4th Cir. 1980)). Delay alone is an insufficient reason to deny leave to amend. Edwards v. City of Goldsborough, 178 F.3d 231, 242 (4th Cir. 1999) (citing Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th Cir. 1986)).

         III. Bifurcation

         Under Rule 42(b) of the Federal Rules of Civil Procedure, a court may bifurcate one or more claims “[f]or convenience, to avoid prejudice, or to expedite and economize.” The moving party has the burden to convince the court that a claim should be bifurcated. Morgan v. Prince George's Co., 2010 WL 64405 at *2 (D. Md. 2010). Because district courts are optimally situated to determine the correct procedure for dealing with multiple claims, see White v. Bloomberg, 501 F.2d 1379, 1385 (4th Cir. 1974), courts have broad discretion when determining if a trial should be bifurcated. Dixon v. CSX Transp., Inc., 990 F.2d 1440, 1443 (4th Cir. 1993), cert. denied, 510 U.S. 915 (1993).

         While a district court's discretion to bifurcate claims is broad, there are limits to its scope. See, e.g., Dixon, 990 F.2d at 1443 (finding an abuse of discretion when district court denied bifurcation and permitted testimony regarding one claim that was irrelevant and highly prejudicial to another claim). Additionally, while convenience and economy should be considered, the overriding consideration is a fair trial for both parties. Arnold v. Eastern Air Lines, Inc., 712 F.2d 899, 906 (4th Cir. 1982) (en banc), cert. denied, 464 U.S. 1040 (1984).

         IV. Joinder

         Rule 19 of the Federal Rules of Civil Procedure governs when a party must be joined, while Rule 20 of the Feral Rules of Civil Procedure governs when a party may be joined. Under Rule 19(a)(1), “[a] person who is subject to service of process and whose joinder will not deprive the court of subject-matter jurisdiction must be joined” if:

(A) in that person's absence, the court cannot accord complete relief among existing parties; or
(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may:
(i) as a practical matter impair or impede the person's ability to protect the interest; or
(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.

Fed. R. Civ. P. 19. If a required party cannot be joined, Rule 19(b) authorizes the court to dismiss an action if the court determines that “in equity and good conscience” the case cannot proceed without prejudicing the absent party or the plaintiff. Id.

         Rule 20(a)(2) allows a person to be joined as a [counter-]defendant if “any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences” and “any question of law or fact common to all defendants will arise in the action.” Fed.R.Civ.P. 20(a)(2). “Neither a plaintiff nor a defendant need be interested in obtaining or defending against all the relief demanded” because a district court may tailor any judgment to each party's rights and liabilities. Fed R. Civ. P. 20(a)(3).

         Under Rule 13(h), “Rules 19 and 20 govern the addition of a person as a party to a counterclaim or crossclaim.” Fed.R.Civ.P. 13.

         DISCUSSION

         I. Motion to Dismiss

         To recognize a foreign judgment under Maryland's Recognition Act, Plaintiff must establish that a foreign judgment is “final, conclusive, and enforceable where rendered.” Md. Code Ann., Cts. & Jud. Proc. §§ 10-702, 10-703. A foreign judgment is “conclusive between the parties to the extent that it grants or denies recovery of a sum of money.”

         A foreign judgment is not “conclusive” if, inter alia, “[t]he foreign court did not have personal jurisdiction over the defendant” or “[t]he judgment was obtained by fraud.” Id. § 10-704. The Recognition Act goes on to provide that the “personal jurisdiction” requirement is satisfied where “[t]he defendant prior to the commencement of the proceedings had agreed to submit to the jurisdiction of the foreign court with respect to the subject matter involved.” Id. § 10-705(a)(3). The term “fraud” in the Recognition Act is limited to “extrinsic fraud” that “‘goes to the question of jurisdiction' or involves circumstances preventing ‘the defeated party from fully and fairly presenting his case.'” Iraq Middle Market Development Foundation v. Harmoosh, 175 F.Supp.3d 567, 577 (D. Md. 2016) (quoting Mueller v. Payn, 30 Md.App. 377, 352 A.2d 895, 902 (Md. Ct. Spec. App. 1976)), vacated and remanded on other grounds, 848 F.3d 235 (4th Cir. 2017). For example, “prevent[ing] the defendant from being informed of the suit” would constitute extrinsic fraud. Id.

         Maryland law also provides discretionary bases for nonrecognition, including inter alia, “[t]he defendant in the proceedings in the foreign court did not receive notice of the proceedings in sufficient time to enable him to defend; . . . the cause of action on which the judgment is based is repugnant to the public policy of the State; . . . or [i]n the case of jurisdiction based only on personal service, the foreign court was a seriously inconvenient forum for the trial of the action.” Id. § 10-704. Provided that none of the grounds for nonrecognition have been established, a default judgment in a foreign country may be recognized and enforced in Maryland. Syncrude Canada Ltd. v. Highland Consulting Grp., Inc., 916 F.Supp.2d 620, 628 (D. Md. 2013).

         The Recognition Act is silent as to the allocation of burdens of proof, and Maryland Courts have not directly addressed the issue. Some states require the party seeking to enforce the foreign judgment to establish only that “the judgment is final, conclusive, and enforceable where rendered.” See e.g., Clientron Corp. v. Devon IT, Inc., 125 F.Supp.3d 521, 527 (E.D. Pa. 2015) (applying Pennsylvania's recognition statute); Osorio v. Dole Food Co., 665 F.Supp.2d 1307, 1324 (S.D. Fla. 2009), aff'd, 635 F.3d 1277 (11th Cir. 2011); The Courage Co. LLC v. The ChemShare Corp., 93 S.W.3d 323, 331 (Tex. App. 2002) (party seeking to avoid recognition has burden to prove ground for nonrecognition). Other states require the moving party to also make prima facie showings of subject matter jurisdiction, personal jurisdiction, and impartial foreign tribunals with procedures compatible with due process. See, e.g., Bridgeway Corp. v. Citibank, 45 F.Supp.2d 276, 285 (S.D.N.Y. 1999).[4] In those states, once the moving party makes a prima facie case for recognition, the opposing party bears the burden to establish defenses such as fraud, public policy, and other discretionary bases for nonrecognition. Id.

         While Maryland Courts have not directly addressed the question with respect to the Recognition Act, the Court of Appeals of Maryland has held that, under the Maryland Uniform Enforcement of Foreign Judgment Act, Md. Code Ann., Courts & Judicial Proceedings, §§ 11-801 et seq., the burden to establish the personal jurisdiction defense rests with the party opposing enforcement of the foreign judgment. Legum v. Brown, 395 Md. 135, 146-47, 909 A.2d 672, 679 (2006) (“Nor is there any reason, if there is to be a contest as to the personal jurisdiction of the foreign court, whether because the defendant . . . even if subject to suit there, was not properly served, not to place the burden on the defendant to raise that defense.”) This Court sees no reason why Maryland courts would not apply the same rule to the Recognition Act, but even if Maryland requires a plaintiff to make out a prima facie showing of personal jurisdiction, the Complaint in this case is sufficient. (See infra.)

         In his Motion to Dismiss (ECF No. 25), the pro se Defendant advances two forms of arguments, labeled “issues, ” for dismissing the Complaint. First, he argues that the UK Judgment does not comply with various provisions of the Recognition Act, primarily centered on personal jurisdiction. Second, he contends that Plaintiff committed fraud during the underlying transaction and in ...


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