Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca4-10-01316/USCOURTS-ca4-10-01316-0/pdf.json

Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 

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PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

JUDITH J. MOFFITT, 

Plaintiff-Appellant,

v.  No. 10-1316 RESIDENTIAL FUNDING COMPANY,

LLC; JP MORGAN CHASE BANK,

N.A.,

Defendants-Appellees. 

LYNN A. FULMORE, 

Plaintiff-Appellant,

v.

PREMIER FINANCIAL CORPORATION,  No. 10-1319

on behalf of Maximus Financial

Corporation; SOVEREIGN BANK, a

U.S. Savings Bank,

Defendants-Appellees. 

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EDWIN RUBLE, 

Plaintiff-Appellant,

v.

THE MORTGAGE CONSULTANTS  No. 10-1321

INCORPORATED, a Maryland

Corporation; BANC ONE FINANCIAL

SERVICES, INCORPORATED,

Defendants-Appellees. 

Appeals from the United States District Court

for the District of Maryland, at Baltimore.

J. Frederick Motz, District Judge.

(1:09-cv-02029-JFM; 1:09-cv-02028-JFM;

1:09-cv-02056-JFM)

Argued: March 26, 2010

Decided: May 3, 2010

Before WILKINSON, NIEMEYER, and SHEDD,

Circuit Judges.

Affirmed by published opinion. Judge Wilkinson wrote the

opinion, in which Judge Niemeyer and Judge Shedd joined.

COUNSEL

ARGUED: Edwin David Hoskins, THE LAW OFFICES OF

E. DAVID HOSKINS, LLC, Baltimore, Maryland, for Appellants. James Christopher Martin, REED SMITH, LLP, Pitts2 MOFFITT v. RESIDENTIAL FUNDING CO.

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burgh, Pennsylvania, for Appellees. ON BRIEF: Thomas L.

Allen, John M. McIntyre, David J. de Jesus, REED SMITH

LLP, Pittsburgh, Pennsylvania, Gerard J. Gaeng, ROSENBERG, MARTIN, GREENBERG, LLP, Baltimore, Maryland, for Appellees Residential Funding Company, LLC, and

Sovereign Bank; LeAnn Pedersen Pope, Victoria R. Collado,

Andrew D. LeMar, BURKE, WARREN, MACKAY & SERRITELLA, PC, Chicago, Illinois, for Appellees JP Morgan

Chase Bank, N.A., and Banc One Financial Services, Incorporated; Philip M. Andrews, Katrina J. Dennis, KRAMON &

GRAHAM, P.A., Baltimore, Maryland, for Appellee Premier

Financial Corporation; Alexander Y. Thomas, Richard D.

Holzheimer, REED SMITH LLP, Falls Church, Virginia,

Andrew C. Bernasconi, REED SMITH LLP, Washington,

D.C., for Appellee Banc One Financial Services, Incorporated.

OPINION

WILKINSON, Circuit Judge:

In these three interlocutory appeals, the plaintiffs challenge

the district court’s denial of their motions to remand their

cases to state court. While the procedural history of these

cases is involved, the legal issue is straightforward. After their

cases were removed and prior to moving to remand, the plaintiffs filed amended complaints in federal court that alleged

facts giving rise to federal diversity jurisdiction under the

Class Action Fairness Act of 2005 ("CAFA"), Pub. L. No.

109-2, 119 Stat. 4 (codified in scattered sections of 28

U.S.C.). Given these circumstances, we need not decide

whether the cases were improperly removed. Even assuming

that they were, we conclude that the amended complaints provided an independent basis for the district court to retain jurisdiction. 

MOFFITT v. RESIDENTIAL FUNDING CO. 3

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I.

The relevant facts in these three cases are as follows. In

2003, Judith Moffitt, Lynn Fulmore, and Edwin Ruble (collectively, "plaintiffs") each filed individual complaints in

Maryland trial court alleging violations of the Maryland Secondary Mortgage Loan Law against various financial entities

(collectively, "defendants"). In 2006, the trial court dismissed

plaintiffs’ claims on the ground that they were barred by the

statute of limitations. But in 2009, the Maryland Court of

Appeals reversed, permitting the cases to go forward. Master

Fin., Inc. v. Crowder, 972 A.2d 864 (Md. 2009).

Following this decision, plaintiffs’ counsel sent defendants’

counsel a letter stating that plaintiffs intended to amend their

individual complaints into class actions. Enclosed with the

letter were draft copies of three amended class action complaints. According to these complaints, each putative class

consisted of "thousands of members." While the draft complaints did not specify the amounts in controversy, the letter

estimated that "the value of an individual claim will likely

range from $20,000 to $90,000." 

Upon receiving these documents, defendants believed that

plaintiffs were alleging facts giving rise to federal diversity

jurisdiction under CAFA. See 28 U.S.C. § 1332(d). They further believed that the draft complaints qualified as "other

paper[s]" under 28 U.S.C. § 1446(b), which provides that a

defendant may remove a case that was not initially removable

within thirty days of receiving "a copy of an amended pleading, motion, order or other paper from which it may first be

ascertained that the case is one which is or has become

removable." Fearing that the thirty-day deadline would expire

before plaintiffs actually filed the amended complaints, defendants went ahead and removed the cases to the United States

District Court for the District of Maryland. 

After removal, plaintiffs filed final versions of their

amended class action complaints in the federal court. As

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plaintiffs acknowledge, these complaints satisfied the requirements for federal diversity jurisdiction under CAFA. 28

U.S.C. § 1332(d). Each complaint named at least one defendant who was diverse in citizenship from at least one plaintiff,

§ 1332(d)(2)(A); sought aggregate damages in excess of

$5,000,000, exclusive of interests and costs, § 1332(d)(2), (6);

and alleged that there were at least one hundred class members, § 1332(d)(5)(B). After plaintiffs filed these complaints,

defendants filed motions for leave to amend their original

notices of removal in order to base removal on plaintiffs’

actual filing of the complaints. 

A few weeks after filing their amended class action complaints, plaintiffs moved to remand the cases to state court. In

their view, neither the letter nor the enclosed draft complaints

that they sent to defendants qualified as "other paper[s]"

within the meaning of 28 U.S.C. § 1446(b). Thus, they

argued, defendants had jumped the gun by removing the cases

before plaintiffs had actually filed the amended complaints. 

Without deciding whether removal had been improper, the

district court denied plaintiffs’ motions for remand. Moffitt v.

Balt. Am. Mortgage, 665 F. Supp. 2d 515 (D. Md. 2009). It

reasoned that by filing amended class action complaints alleging "facts that clearly give rise to federal jurisdiction," plaintiffs had waived their rights to seek remand. Id. at 517. In its

view, this ruling was supported by "considerations of sound

policy." Id. Had plaintiffs filed their amended complaints in

state court, it explained, "defendants could then have filed

renewed notices of removal, eliminating the ‘other paper’

issue upon which plaintiff[s’] current motions to remand are

based." Id. In the alternative, the district court granted defendants’ motions for leave to amend their notices of removal. Id.

at 517 n.2. 

Following the district court’s ruling, plaintiffs timely petitioned this court for permission to file interlocutory appeals

MOFFITT v. RESIDENTIAL FUNDING CO. 5

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under 28 U.S.C. § 1453(c)(1) of CAFA. We granted their

petitions on March 25, 2010. 

II.

On appeal, plaintiffs’ principal argument is that the district

court was required to remand these cases because federal subject matter jurisdiction did not exist at the time of removal. In

their view, the district court should have given no consideration to the fact that they filed amended complaints prior to

moving to remand. We review de novo the district court’s

denial of plaintiffs’ motions. Lontz v. Tharp, 413 F.3d 435,

439 (4th Cir. 2005). 

The removal statute, 28 U.S.C. § 1441(a), requires that a

case "be fit for federal adjudication at the time the removal

petition is filed." Caterpillar Inc. v. Lewis, 519 U.S. 61, 73

(1996). But the mere fact that a case does not meet this timing

requirement is not "fatal to federal-court adjudication" where

jurisdictional defects are subsequently cured. Id. at 64. Thus,

if a plaintiff voluntarily amends his complaint to allege a basis

for federal jurisdiction, a federal court may exercise jurisdiction even if the case was improperly removed. In Pegram v.

Herdrich, 530 U.S. 211 (2000), for instance, the Supreme

Court reasoned that because the plaintiff had amended her

complaint to add federal claims, "we therefore have jurisdiction regardless of the correctness of the removal." Id. at 215

n.2. Likewise, in Cades v. H & R Block, Inc., 43 F.3d 869 (4th

Cir. 1994), this court found no need to address the plaintiff’s

argument that diversity jurisdiction was lacking at the time of

removal because the plaintiff had subsequently amended her

complaint to add claims which "firmly established" federal

jurisdiction. Id. at 873. As we explained, "an initial lack of the

right to removal may be cured when the final posture of the

case does not wrongfully extend federal jurisdiction." Id. (citing American Fire & Casualty Co. v. Finn, 341 U.S. 6, 16

(1951)). 

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Other circuits have reached similar conclusions. See, e.g.,

Barbara v. N.Y. Stock Exch., Inc., 99 F.3d 49, 56 (2d Cir.

1996) ("[I]f a district court erroneously exercises removal

jurisdiction over an action, and the plaintiff voluntarily

amends the complaint to allege federal claims, we will not

remand for want of jurisdiction."); Bernstein v. Lind-Waldock

& Co., 738 F.2d 179, 185 (7th Cir. 1984) ("[O]nce [the plaintiff] decided to take advantage of his involuntary presence in

federal court to add a federal claim to his complaint he was

bound to remain there.").

Turning to the facts here, we assume without deciding that

these cases were removed at a time when they did not satisfy

federal subject matter jurisdiction. But even if they were,

plaintiffs independently conferred jurisdiction on the district

court by filing their amended class action complaints prior to

moving to remand. As plaintiffs acknowledge and the district

court stated, these complaints alleged "facts that clearly give

rise to federal jurisdiction" under CAFA. Moffitt, 665 F. Supp.

2d at 517. 

Plaintiffs contend, however, that this line of precedent,

which excuses jurisdictional defects at the time of removal

when they are later cured, does not apply here. In their view,

the cases above were concerned solely with preventing parties

from attacking final judgments on the basis of improper

removals and are therefore inapplicable where, as here, a case

is taken up on interlocutory appeal. We disagree. As we have

recognized, this line of precedent is grounded not only in the

interest of "finality" but also in larger considerations of "judicial economy." Able v. Upjohn Co., Inc., 829 F.2d 1330, 1334

(4th Cir. 1987), overruled on other grounds by Caterpillar,

519 U.S. at 74 n.11. In Caterpillar, for instance, the Court

emphasized that remanding the case after the jurisdictional

defect had been cured would "‘impose unnecessary and

wasteful burdens on the parties, judges, and other litigants.’"

519 U.S. at 76 (quoting Newman-Green, Inc. v. AlfonzoLarrain, 490 U.S. 826, 836 (1989)). While such concerns of

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judicial economy are often implicated after a case reaches

final judgment, they are not confined to that situation. Requiring pointless movement between state and federal court

before a case is tried on the merits can likewise impose significant costs on both courts and litigants. We thus see no need

to abandon this line of precedent simply because this case

happens to be before us on interlocutory appeal. 

Here, it would be a waste of judicial resources to remand

these cases on the basis of an antecedent violation of the

removal statute now that jurisdiction has been established.

Were we to do so, defendants would almost certainly remove

the cases back to federal court in light of plaintiffs’ amended

class action complaints. Plaintiffs have expressed no intent to

abandon their class action complaints, and defendants would

thus be able to file renewed notices of removal once the cases

landed back in state court.* Moreover, defendants would not

have to worry about the normal one-year limitation on removing diversity cases since it does not apply to class actions. See

28 U.S.C. § 1453(b). Thus, these cases would likely end up in

federal court regardless of whether we ordered remands at this

juncture. Like the district court, we think that considerations

of judicial economy weigh against requiring such a pointless

exercise and in favor of allowing this case to go forward in

a federal forum where jurisdiction has been perfected. 

Thus, we conclude that the district court did not err in

retaining jurisdiction after plaintiffs filed their amended class

action complaints. Having affirmed the district court’s ruling

on this basis, we need not address plaintiffs’ argument that the

*Plaintiffs contest this point. In their view, the thirty-day deadline for

removal started when they filed their amended class action complaints in

federal court and thus has long since expired. We, however, find it illogical to contend that a case becomes removable to federal court when it is

already in federal court. Thus, we think it plain that these cases would not

become removable until after they were remanded to state court, assuming

of course that defendants’ initial removal was improper. 

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district court erred in granting defendants leave to amend their

initial notices of removal. 

III.

Accordingly, the district court’s order is 

AFFIRMED.

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