State law claims improperly removed to federal court

Where a plaintiff whose original claims were based on state law used a mechanism created by state law to aid in its enforcement of a state court judgment of less than $10,000, the defendant, who was a citizen of the same state as the plaintiff when the action was commenced, could not remove the action to federal court.

Background

In 2014, Twin Trees LLC executed a three-year lease on a building in Mount Jackson.  Defendant Elizabeth Haring and her then-husband, Charles R. Coomes, signed on behalf of tenants Hughes Insurance and Old Town Insurance. The tenants stopped paying rent after September 2015, and Coomes and Haring vacated the property approximately two months later.

In October 2015, Twin Trees filed an unlawful detainer action in the General District Court for Shenandoah County, naming Old Town Insurance & Financial Services Inc., a company wholly owned by Haring, as the sole defendant. On Dec. 28, 2015, Judge Houff entered a default judgment against Old Town and awarded Twin Trees $6,877.34 in unpaid rent, late fees and damages, possession of the property and $61 in court fees.

On March 3, 2016, Haring filed for Chapter 13 bankruptcy in the Western District of Virginia. On May 9, 2016, the court imposed a stay of Haring’s creditors’ collection efforts on the condition that she timely pay her mortgage and achieve a confirmed Chapter 13 plan by July 6, 2016. On Aug. 3, 2016, the court dismissed Haring’s petition for failure to make the required payments and present a confirmable plan.

Meanwhile, in April 2016, Twin Trees asked the Shenandoah court to issue a summons to answer interrogatories in connection with the judgment against Old Town in the unlawful detainer action. Haring was personally served with the summons in Warrenton on April 27, 2016. A hearing was scheduled for May 23, 2016, but was canceled as a result of the bankruptcy stay.

On Oct. 2, 2017, a hearing was scheduled on Twin Trees’s motion to require Old Town to produce documents regarding its financial assets. Haring was unable to attend the hearing and Judge Houff entered an order directing her to produce records evidencing Old Town’s income by Oct. 17, 2017.

A hearing was scheduled for March 26, 2018, to determine whether Haring had complied with the Oct. 2, 2017, order. That morning, Haring informed the court that morning that she would not attend because she had filed a Chapter 11 bankruptcy petition on behalf of Old Town in the Eastern District of Virginia. The hearing was canceled, and all post-judgement proceedings were stayed. The bankruptcy petition was subsequently dismissed on May 31, 2018.

In July 2018, Judge Houff rescheduled a hearing on the Oct. 2, 2017 order for Aug. 20, 2018. On the day of the hearing, Haring notified the court that she would not appear because she had filed for bankruptcy on behalf of Old Town. Once again, the hearing was canceled. On Sept. 10, 2018, the bankruptcy court dismissed the new petition with prejudice.

Judge Houff scheduled a status conference on Oct. 15, 2018, but Haring was unable to attend because she had been hospitalized that same morning. A new hearing was scheduled for Jan. 7, 2019. That morning, Haring filed a notice of removal and informed the court that she would not attend the hearing. Twin Trees now moves to remand this matter to state court.

Analysis

Twin Trees initial pleading does not present a federal question. The summons to answer interrogatories is merely a mechanism, created by state law, to aid in the enforcement of a money judgment entered against Old Town on Twin Trees’s pure state-law claim for unlawful detainer.

Haring nevertheless argues that the case implicates significant federal issues because the summons was filed while Haring was protected by an automatic stay under federal bankruptcy law and the judge failed to make a reasonable accommodation for her in violation of the Americans with Disabilities Act and failed to give her adequate notice of hearings and court orders in violation of her federal due process rights. Contrary to Haring’s contentions, no automatic stay had been imposed when the summons was filed, and her other arguments similarly lack any basis in fact.

Moreover, the fact that questions of federal law happened to come up in state-court litigation is not enough to confer original jurisdiction over the action. The issues raised by Haring have no bearing on the necessary elements of Twin Trees’s state law claim.

In addition, the state court judgment demanded in Twin Tress’s initial pleadings is less than $10,000 and falls well short of the $75,000 required for purposes of diversity jurisdiction. Haring also concedes that the parties were not diverse when Twin Trees initiated the proceedings.

Under these circumstances, Twin Trees could not have brought this action in federal court on the basis of subject matter or diversity jurisdiction and removal is inappropriate.

Motion granted.

Twin Trees LLC v.  Haring., Case No. 5:18-cv-46, April 1, 2019. WDVA at Harrisonburg (Hoppe). VLW 019-3-167. 16 pp.