Nasa Federal Credit Union v. W. Jenkins Plumbing & Heating Company

• Court: District Court, District of Columbia
• Decided: April 20, 2009
• Docket: Civil Action No. 2009-0404
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ______________________________ ) NASA FEDERAL CREDIT UNION, ) ) Plaintiff, ) ) v. ) Civil Action No. 09-404 (RWR) ) W. JENKINS PLUMBING ) & HEATING COMPANY et al., ) ) Defendants. ) ______________________________)

MEMORANDUM OPINION AND ORDER

Mortgagor Patricia Harvey sued her mortgagee NASA Federal

Credit Union (“NASA FCU”) in Maryland for compensation for fire

damage caused by a furnace boiler negligently installed by W.

Jenkins Plumbing & Heating Company (“Jenkins”). In turn, NASA

FCU filed this suit in the Superior Court of the District of

Columbia against Jenkins seeking indemnification for any damages

awarded to Harvey from NASA FCU, and against Harvey for breach of

contract claiming she caused the property to decrease in value

after the fire. Harvey removed this case from the Superior Court

alleging that this court had both diversity jurisdiction under

28 U.S.C. § 1332(a), and federal question jurisdiction based upon

the plaintiff’s status as federal credit union, under 12 U.S.C.

§ 1789(a)(2). - 2 -

NASA FCU moves to remand the case to the Superior Court of

the District of Columbia, arguing that 28 U.S.C. § 1441(b)1

barred Harvey from removing since Jenkins is a citizen of the

state in which the action was brought, and nothing in 12 U.S.C.

§ 1789(a)(2) or NASA FCU’s status as a federal credit union

confers federal question jurisdiction upon a district court.

Harvey, citing Filla v. Norfolk & Southern Ry., 336 F.3d 806 (8th

Cir. 2003), opposes the motion arguing that NASA FCU fraudulently

joined Jenkins by asserting claims against Jenkins that are

without merit, and that Jenkins’ presence in the case should not

destroy diversity jurisdiction. In addition, Harvey argues that

one of her counterclaims against NASA FCU creates federal

question jurisdiction because it is based upon a purported

violation of the Real Estate Settlement Procedures Act, 12 U.S.C.

§ 2605(g).

To show that a defendant has been joined fraudulently by a

plaintiff for the purpose of destroying diversity, a defendant is

required to demonstrate either that there is “no possibility that

the plaintiff would be able to establish a cause of action

against the in-state defendant in state court; or that there has

1 A civil action of which the district courts have original jurisdiction founded on diversity of citizenship “shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” 28 U.S.C. 1441(b). The District of Columbia is considered a state for the purposes of § 1441(b). 28 U.S.C. § 1451(2). - 3 -

been outright fraud in the plaintiff’s pleadings of

jurisdictional facts.” Brown v. Brown & Williamson Tobacco

Corp., 26 F. Supp. 2d 74, 76-77 (D.D.C. 1998) (quoting B., Inc.

v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir. 1981)). A

defendant claiming fraudulent joinder bears a heavy burden, and

courts are required to resolve disputed issues of fact and law in

favor of the plaintiff. Id. at 77.

Harvey does not show that Jenkins was fraudulently joined as

a party in this case. This case began in Superior Court as an

action filed by NASA FCU solely against Jenkins; it was Harvey,

not Jenkins, who was later added to the case as a defendant.

(See Superior Court Electronic Docket, NASA Federal Credit Union

v. W. Jenkins Plumbing & Heating Company, 2008 CA 008311 B, filed

November 24, 2008, docket entries for November 24, 2008,

November 25, 2008 and February 13, 2009.) Harvey has not shown

that Jenkins was added to ths case to destroy diversity

jurisdiction, and she has provided no authority to establish that

the fraudulent joinder doctrine can be applied to a defendant who

was the original party to the case. Nor has Harvey shown that

NASA FCU has no possibility of any recovery. While Harvey

alleges that the indemnification action against Jenkins is

premature, NASA FCU alleges that it has already suffered damages

of at least $78,000 for which Jenkins should indemnify it. (See

Am. Compl. ¶¶ 24-26.) And, although Harvey alleges that a - 4 -

decrease in the value of mortgaged property has never been

recognized as supporting a cause of action for the benefit of the

lender, she provides no authority to support the proposition that

a decrease in the value of mortgaged property cannot be the basis

for damages in this action. Thus, Harvey has failed to meet her

burden to show that Jenkins was fraudulently joined to this

action.

Harvey also argues that federal question jurisdiction exists

for this action based upon one of Harvey’s counterclaims against

NASA FCU that is ostensibly governed by federal law. However,

“[t]he presence or absence of federal-question jurisdiction is

governed by the ‘well-pleaded complaint rule,’ which provides

that federal jurisdiction exists only when a federal question is

presented on the face of the plaintiff’s properly pleaded

complaint.” Van Allen v. Bell Atlantic-Washington, D.C., 921 F.

Supp. 830, 831-32 (D.D.C. 1996) (quoting Caterpillar, Inc. v.

Williams, 482 U.S. 386, 392 (1987)). “The rule makes the

plaintiff the master of the claim. A plaintiff may avoid federal

jurisdiction by exclusive reliance on state law.” Id. at 832;

see also Quality Mgmt., LLC v. Time & Place World, LLC, 521 F.

Supp. 2d 83, 86-87 (D.D.C. 2007) (remanding case to the Superior

Court of the District of Columbia because plaintiff’s claim had

less than $75,000 in controversy, even though defendant’s

counterclaim alleged a greater amount in controversy). - 5 -

Therefore, Harvey has not shown that this court has federal

question jurisdiction in this case.

Accordingly, because the plaintiff has established that

removal from the Superior Court of the District of Columbia was

improper, it is hereby

ORDERED that the plaintiff’s motion [2] to remand this case

be, and hereby is, GRANTED. The Clerk shall REMAND this case to

the Superior Court of the District of Columbia. It is further

ORDERED that this court shall retain jurisdiction over NASA

FCU’s motion [6] for sanctions regarding the fees and costs

related to removal. See Yazdani v. ACCESS ATM, Civil Action

No. 06-639 (CKK), Order filed May 16, 2006. That motion is

hereby referred to a Magistrate Judge for a report and

recommendation under Local Civil Rule 72.3.

SIGNED this 20th day of April, 2009.

/s/ RICHARD W. ROBERTS United States District Judge