Opinion
Civ. No. JFM-98-1955.
September 15, 1998.
MEMORANDUM
Plaintiffs, Arizona Factory Shops Partnership and other partnerships involved in the ownership and operation of retail outlet malls, filed suit against defendant Accrued Financial Services, Inc. ("AFS") in the Circuit Court for Queen Anne's County, Maryland. AFS removed the action to this Court on June 17, 1998. Plaintiffs have filed a motion to remand the case to state court, and AFS has filed a motion to dismiss the case for lack of personal jurisdiction or, in the alternative, to transfer the action to the United States District Court for the Central District of California under 28 U.S.C. § 1404(a). Plaintiffs' motion for remand will be granted.
AFS contends that I should determine personal jurisdiction before ruling on whether I must remand the action for lack of subject matter jurisdiction. However, the "standard practice" is first to resolve subject matter jurisdiction issues,see Mixer v. M.K. Ferguson Co., 1998 WL 476193 (S.D.W. Va. Aug. 12, 1998), and I see no reason to depart from that practice in this case. I therefore need not address AFS's motion to dismiss for lack of personal jurisdiction.
I.
AFS provides real estate services, including financial audits, for commercial tenants who lease space in factory outlet malls throughout the United States. Some of the tenants have assigned to AFS their claims for relief against their landlords, the plaintiffs, stemming from allegedly improper or inaccurate charges and assessments. On May 13, 1998, AFS's attorneys sent a letter to two of the plaintiffs informing them that they had identified several claims for relief. The letter described the various claims that AFS or the tenants could assert, including those for "multiple breaches of express and implied covenants, included covenants of good faith and fair dealing, and for an accounting . . . [and for] tort claims . . . for fraudulent and unfair business practices . . . [and for] a pattern of `racketeering activity,' within the meaning of the federal Racketeer Influenced and Corrupt Organizations Act." The letter suggested that, in an effort to find a resolution outside litigation, "it may be prudent for representatives of the interested parties to meet before we proceed to file suits in California and elsewhere." The letter indicated that if plaintiffs did not respond by May 22, 1998, AFS would file suit.On May 21, 1998, plaintiffs filed a complaint in the Circuit Court for Queen Anne's County, Maryland, requesting a declaratory judgment that the lease agreements between plaintiffs and the tenants prohibit AFS from having rights as an assignee or agent of the tenants to bring suit under the lease agreements. AFS has removed the action to this Court.
II.
The burden of proving that removal is proper rests with AFS as the party seeking removal. See Mulcahey v. Columbia Organic Chemicals Co., Inc., 29 F.3d 148, 151 (4th Cir. 1994). Further, the Fourth Circuit requires that "doubts about the propriety of removal be resolved in favor of retained state court jurisdiction." Able v. Upjohn Co., Inc., 829 F.2d 1330, 1332 (4th Cir. 1987).
Plaintiffs' complaint, on its face, does not require the determination of any issue of federal law. The fact that interpretation of the lease and agency agreements may affect AFS's right to bring federal claims does not logically mean that the agreements are federalized or that a declaratory judgment action involving the agreements would present a federal issue. Cf.Textron Lycoming Reciprocating Engine Div., Avco Corp. v. United Auto., Aerospace and Agric. Implement Workers of America, Int'l. Union, 118 S.Ct. 1626, 1630 (1998) (concluding that no federal court has "explicitly upheld federal-question jurisdiction on the basis of the anticipated claim against which the declaratory-judgment plaintiff presents a nonfederal defense"). In addition, this is not an obvious case of "artful pleading" by the plaintiffs in order to conceal the true federal nature of their complaint. The plaintiffs' claims, involving the interpretation of contractual provisions and the state law issues of barratry and champtery, are not inherently federal in nature.Cf. Hunter Douglas, Inc. v. Sheet Metal Workers Int'l Ass'n, 714 F.2d 342, 345 (4th Cir. 1983) (deciding "the claim is necessarily federal in nature; a claim founded upon a labor contract violation is preemptively federal."). Furthermore, AFS's May 13, 1998 letter, referencing the potential RICO claims, does not transform the plaintiffs' action into one that is inevitably federal in nature. The letter lists several state common law contract and tort claims along with RICO claims as the "meritorious claims" that AFS could assert. The letter goes on to discuss details of plaintiffs' alleged misconduct. However, the fraudulent conduct in question would be relevant not only to a RICO claim, but also to the contract and tort claims. As a result, the action threatened by AFS was not necessarily or inevitably federal.
For similar reasons, the letter cannot serve as the "other paper" contemplated by 28 U.S.C. § 1446(b) for the purposes of establishing federal jurisdiction.
For the foregoing reasons, plaintiffs' motion to remand will be granted. A separate order to that effect is being entered herewith.
ORDER
For the reasons stated in the memorandum entered herewith, it is, this 15th day of September, 1998
ORDERED
1. Plaintiffs' motion for remand is granted; and
2. This action is remanded to the Circuit Court for Queen Anne's County.