Petition for Writ of Certiorari — Johnson D. Koola, Petitioner v. Bank of America, N.A.
Supreme Court briefDec 11, 2017
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No.
IN THE
SUPREME COURT OF THE UNITED STATES
JOHNSON D. KOOLA
PETITIONER
-
VS.
BANK OF AMERICA, N.A. et al.
RESPONDENT(S)
-
ON PETITION FOR A WRIT OF CERTIORARI TO
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
(NAME OF THE COURT THAT LAST RULED ON MERITS OF YOUR CASE)
APPENDIX
JOHNSON D. KOOLA
(Name)
1587 Cambridge Lakes Drive
(Address)
Mount Pleasant, South Carolina, SC 29464
(City, State, Zip, Code)
(843) 849-9241
(Phone Number)
INDEX TO APPENDICES
APPENDIX A
Decision of the Court of Appeals for the Fourth Circuit............001
APPENDIX B
Order of the District Judge granting Motion to Remand.............005
APPENDIX C
August 12, 2016 Text Order of the District Judge.....................012
APPENDIX D
Magistrate Judge's October 19, 2016 R and R.....................013
APPENDIX E
Magistrate Judge's July 29, 2016 R and R.............................031
APPENDIX F
Court of Appeals' Order denying the Petition for Rehearing.......040
APPENDIX G
July 13, 2009 Order closing the Bankruptcy case....................041
APPENDIX H
Order reopening the Bankruptcy case and Notice of Hearing.....042
APPENDIX I
November 6, 2013 Order closing the Bankruptcy case.............044
APPENDIX J
Order of the State Court of Appeals......................................045
APPENDIX K
Order of the State Master in Equity.......................................048
APPENDIX L
Order of the Court of Appeals denying Petition for Rehearing... .053
APPENDIX M
Master in Equity's Order dismissing the action for non-suit ........ 055
APPENDIX N
Master in Equity's Order reinstating the action........................056
APPENDIX 0
Notice of Removal .......................................... .................. 057
APPENDIX P
Motion to Remand ................................................. . .......... 074
APPENDIX Q
Responses to Motion to Remand.........................................078
APPENDIX R
Objections to Magistrate Judge's July and Sep. 2016 R and R . . 093
APPENDIX S
Respondent's Motion to Dismiss appeal................................121
APPENDIX T
Motion for Summary Judgment in the State foreclosure action ... 135
APPENDIX U
Respondent's Complaint in the foreclosure action...................139
APPENDIX V
Respondent's Amended Complaint in the foreclosure action......144
.
It
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 17-1013
BANK OF AMERICANA,
Plaintiff Appellee,
V.
JOHNSON D. KOOLA,
Defendant Appellant.
-
Appeal from the United States District Court for the District of South Carolina, at
Charleston, Richard M. Gergel, District Judge. (2: 16-cv-01634-RMG)
Decided: June 6, 2017
Submitted: May 30, 2017
Before WILKINSON, NIEMEYER, and MOTZ, Circuit Judges.
Dismissed by unpublished per curiam opinion.
Johnson D. Koola, Appellant Pro Se. Theodore von Keller, CRAWFORD & VON
KELLER, LLC, Columbia, South Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
APPENDIX A
001
i
I
•
.,
PER CURIAM:
Johnson D. Koola seeks to appeal the district court's order adopting the
recommendation of the magistrate judge and remanding this case to the South Carolina
Court of Appeals, from which it was removed. Bank of America has moved to dismiss
the appeal.
Generally, "{a]n order remanding a case to the State court from which it was
removed is not reviewable on appeal or otherwise." 28 U.S.C. § 1447(d) (2012). The
Supreme Court has instructed that
"
1447(d) must be read in pari materia with [28
U.S.C.] § 1447(c), so that only remands based on grounds specified in § 1447(c) are
immune from review under § 1447(d)." Things Remembered, Inc. v. Petrarca, 516 U.S.
124, 127 (1995). Thus, § 1447(d)
is tightly circumscribed to cover only remand orders within the scope of
§ 1447(c), based on (1) a district court's lack of subject matter
jurisdiction or (2) a defect in removal other than lack of subject matter
jurisdiction that was raised by the motion of a party within 30 days after the
notice of removal was filed.
•
..
Doe v. Blair, 819 F.3d 64, 66 (4th Cir. 2016) (internal quotation marks omitted).
"Whether a district court's remand order is reviewable under § 1447(d) is not determined
by whether the order explicitly cites § 1447(c) or not." Borneman v. United States, 213
F.3d 819, E24 (4th Cir. 2000).
Bank of America moved to remand within 30 days of Koola's notice of removal,
and the district court remanded on the basis that removal was untimely. The district court
also concluded that it lacked subject matter jurisdiction. Under the cited authorities, we
are without jurisdiction to review the remand order. We therefore grant Bank of
2
002
America's motion to dismiss and dismiss the appeal. We dispense with oral argument
because the facts and legal contentions are adequately presented in the materials before
the court and argument would not aid the decisional process.
DISMISSED
003
FILED: June 6, 2017
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 17-1013
(2: 16-cv-01634-RMG)
BANK OF AMERICA NA
Plaintiff Appellee
-
V.
JOHNSON D. KOOLA
Defendant Appellant
-
JUDGMENT
In accordance with the decision of this court, this appeal is dismissed.
This judgment shall take effect upon issuance of this court's mandate in
accordance with Fed. R. App. P. 41.
Is! PATRICIA S. CONNOR, CLERK
004
2:16-cv-01634-RMG Date Filed 12128/16 Entry Number 45 Page 1 of 7
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
Bank of America NA,
Civil Action No. 2:16-1634-RMG
Plaintiff,
V.
ORDER
Johnson D. Koola,
Defendant.
This matter is before the Court on the Report and Recommendation of the Magistrate
Judge, recommending that Plaintiffs motion to remand be granted. For the reasons set forth
below, the Court adopts the Report and Recommendation and remands this matter to the South
Carolina Court of Appeals.
I.
Background
Plaintiff Bank of America, N.A. ("BOA") originally filed this mortgage foreclosure action
in July 2010 in the South Carolina Court of Common Pleas, Charleston County. An amended
complaint was filed in state court in September 2010. Defendant Johnson D. Koola filed an
amended answer and counterclaims against BOA on March 24, 2011. The Master-in-Equity for
Charleston County granted BOA's motion for summary judgment regarding Defendant's
counterclaims on April 25, 2014, and Defendant's motion to reconsider was denied in May 2014.
Defendant appealed to the South Carolina Court of Appeals, which affirmed on February 17, 2016.
Defendant's petition for rehearing was denied on April 21, 2016. On May 20, 2016, Defendant,
proceeding pro Se, removed the action to this Court. On June 15, 2016, BOA moved to remand.
BOA's motion was originally docketed as an "answer." BOA filed a motion to correct the docket
III
APPENDiX B
005
JI
2:16-cv-01634-RMG Date Filed 12/28/16 Entry Number 45 Page 2 of 7
entry on July 18, 2016.' On July 29, 2016, the Court granted BOA's motion to correct and, on
that same day, the Magistrate Judge issued a Report and Recommendation recommending that this
case be remanded to state court. The matter was recommitted to allow Defendant an opportunity
to respond to the motion to remand. On October 19,2016, the Magistrate Judge issued the present
Report and Recommendation, recommending this case be remanded to state court. Defendant filed
objections on November 7, 2016.
II.
Leaal Standard
A.
Report and Recommendation of the Magistrate Judge
The Magistrate Judge makes only a recommendation to this Court. The recommendation
has no presumptive weight, and the responsibility to make a final determination remains with the
Court. Mathews v. Weber, 423 U.S. 261 (1976). The Court is charged with making a de novo
determination of those portions of the Report and Recommendation to which specific objection is
made. The Court may accept, reject, or modify, in whole or in part, the recommendation of the
Magistrate Judge. 28 U.S.C. § 636(b)(1).
When a proper objection is made to a particular issue, "a district court is required to
consider all arguments directed to that issue, regardless of whether they were raised before the
magistrate." United States v, George, 971 F.2d 1113, 1118 (4th Cir. 1992). However, "[t]he
district court's decision whether to consider additional evidence is committed to its discretion, and
any refusal will be reviewed for abuse." Doe v. Chao, 306 F.3d 170, 183 & n.9 (4th Cir. 2002).
"[A]ttempts to introduce new evidence after the magistrate judge has acted are disfavored," though
Confusingly, BOA styled its motion to remand as a "memorandum in opposition to Defendant's
motion to remove." (Dkt. No. 18.) A "motion to remove" to federal court a case already in federal
court is a logical impossibility. Removal is noticed. Remand is ordered, usually on motion. BOA
later moved the Court to consider its filing as a "motion to remand" (Dkt. No. 20), which the Court
granted (Did. No. 25).
-2-
006
2:16-cv-01634-RMG Date Filed 12/28/16 Entry Number 45 Page 3 of 7
the district court may allow it "when a party offers sufficient reasons for so doing." Caldwell v.
Jackson, 831 F. Supp. 2d 911, 914 (M.D.N.C. 2010) (listing cases).
B.
Removal
"Federal courts are presumptively without jurisdiction over civil actions, and the burden of
establishing the contrary rests firmly on the party asserting jurisdiction. Kokkonen v. Guardian
Life Ins. Co. of Am., 511 U.S. 375,377 (1994). Federal removal jurisdiction exists if the action is
one "of which the district courts of the United States have original jurisdiction." 28 U.S.C.
§ 1441(a). The removing party has the burden of establishing that removal jurisdiction is proper.
In re Blackwater Sec. Consulting, LLC, 460 F.3d 576, 583 (4th Cir. 2006). The removal statute is
strictly construed against removal jurisdiction, and any doubts as to jurisdiction weigh in favor of
remand. Id
Ill.
Discussion
Defendant's notice of removal asserts three grounds for removal: (1) federal question
jurisdiction, (2) diversity jurisdiction, and (3) jurisdiction under 28 U.S.C. §§ 1334 and 1452,
which permit removal of cases related to bankruptcy proceedings. (Dkt. No. 1.) BOA's motion
to remand asserts that the removal is untimely and that this action is not related to any bankruptcy
proceeding. (Dkt. No. 18.) The Court agrees with the Magistrate Judge's recommendation that
BOA's motion to remand should be granted, because removal was untimely and because this action
is unrelated to bankruptcy proceedings.
Title 28 U.S.C. § 1446(b) provides:
The notice of removal of a civil action or proceeding shall be filed within 30 days
after the receipt by the defendant, through service or otherwise, of a copy of the
initial pleading setting forth the claim for relief upon which such action or
proceeding is based, or within 30 days after the service of summons upon the
defendant if such initial pleading has then been filed in court and is not required to
be served on the defendant, whichever period is shorter.
-3-
007
2:16-cv-01634-RMG Date Filed 12/28/16 Entry Number 45 Page 4 of 7
Defendant was served with the Amended Summons and Complaint on September 13, 2010, nearly
six years before removal of this action. Defendant does dispute that removal was untimely under
§ 1446(b); instead, he argues the removal was timely under 28 U.S.C. § 1446(b)(3). (See Dkt. No.
38 at 2-7.) Section 1446(b)(3) provides:
Except as provided in subsection (c), if the case stated by the initial pleading is not
removable, a notice of removal may be filed within 30 days after receipt by the
defendant, through service or otherwise, of 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.
In his Notice of Removal, Defendant states that he first learned that there were federal
claims involved in this case in April 2012, when BOA filed its motion for summary judgment
regarding his counterclaims. (Dkt. No. 1 at 6.) The Magistrate Judge determined that even if that
highly dubious argument were accepted,2 arguendo , the notice of removal would still be untimely.
The Court agrees. If, for some reason, the time for removal did not accrue until BOA filed its
motion for summary judgment in state court, this action was nonetheless removed four years after
that, well beyond the 30-day period provided in 28 U.S.C. § 1446(b)(3).
Section 1446(b)(3) provides the exception "[e]xcept as provided in subsection (c)."
Subsection (c), applicable to diversity jurisdiction, provides:
A case may not be removed under subsection (b)(3) on the basis of jurisdiction
conferred by section 1332 more than 1 year after commencement of the action,
unless the district court finds that the plaintiff has acted in bad faith in order to
prevent a defendant from removing the action,
Defendant removed this action almost six years after it commenced.' He argues the one-year
limitation should not apply because BOA acted in bad faith. Confusingly, he also argues
2 As noted by the Magistrate Judge, it is well established that federal defenses to counterclaims do
not create federal jurisdiction. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987).
3 Defendant is a South Carolina resident. BOA, however, did not assert the resident defendant rule
in its motion to remand.
-4-
008
2:16-cv-01634-RMG Date Filed 12/28/16 Entry Number 45 Page 5 of 7
(correctly) that the statutory bad-faith provision is inapplicable to this action because it
commenced in 2010. (Dkt. No. 43 at 24.) The bad-faith provision of § 1446(c) applies only to
actions commenced on or after January 6, 2012. See Federal Courts Jurisdiction and Venue
Clarification Act of 2011, Pub. L. 112-63, Title I, § 105, 125 Stat 758, 762. For the instant case,
there is no statutory bad-faith exception to the one-year limitations period for removal based on
diversity. Further, "Fourth Circuit district courts routinely evaluate bad faith under § 1446(c)(1)
by determining whether plaintiffs engaged in forum manipulation specifically to prevent removal,"
but Defendant's allegations of bad faith have nothing to do with diversity. See Shorraw v. Bell,
No. 4:15-CV-03998-JMC, 2016 WL 3586675, at *5 (D.S.C. July 5, 2016).
Although the removal notice contains no allegation forum manipulation to destroy
diversity, Defendant's objections to the Report and Recommendation do—belatedly--allege
fraudulent joinder." (Dkt. No. 43 at 13.) Before a bad-faith exception was codified, courts applied
equitable exceptions to the one-year limitations period in cases of fraudulent joinder. See Mayes
v. Rapoport, 198 F.3d 457, 461 (4th Cir. 1999). But even if, arguendo, BOA added defendants
from whom it had no hope of recovery merely to defeat diversity, equity still would not excuse the
untimeliness of the removal of this case. BOA added the additional defendants in the state court
action in September 2010. Defendant offers no explanation about why he then waited nearly six
years to remove. But the reason is obvious—Defendant thinks removal will allow him to re-litigate
the adverse result he received in the South Carolina Court of Appeals. But whatever his subjective
It does not appear that complete diversity exists in this case. Cambridge Lakes Condominium
Homeowners Association, Inc., a South Carolina corporation, was, at the time of removal (and still
is) a defendant in the state court action. BOA, however, did not assert lack of diversity in its
motion to remand. Defendant argues the HOA and First Citizens Bank and Trust Company, Inc.,
were fraudulently joined because BOA purportedly can recover nothing from them. The Court
does not reach that argument.
5.2
009
2:16-cv-01634-RMG Date Filed 12/28/16 Entry Number 45 Page 6 of 7
motivation may be, Defendant slept on his right of removal—if this case ever was removable—
and equity does not favor those who sleep on their rights. Cf Tedford v. Warner-Lambert Co.,
327 F.3d 423,427(5th Cir. 2003) ("Section 1446(b) is not inflexible, and the conduct of the parties
may affect whether it is equitable to strictly apply the one-year limit.... [I]f Barnes's sleeping on
his rights justified application of an equitable exception in the form of waiver, Tedford's forum
manipulation justifies application of an equitable exception in the form of estoppel.").
Finally, Defendant argues this case is related to his Title 11 bankruptcy proceeding. (Dkt.
No. 43 at 25-26.) Title 28 U.S.C. § 1334 allows removal of civil cases related to Title 11
bankruptcy proceedings. A civil case filed in a district court is related to a case in bankruptcy if
"the outcome in the civil case could conceivably have any effect on the estate being administered
in bankruptcy." Celotex Corp. v. Edwards, 514 U.S. 300, 308, n.6 (1995) (internal quotations and
italics omitted). This foreclosure action is not related to any bankruptcy proceeding because the
outcome of this action could not conceivably affect any estate in bankruptcy. Defendant admits
that his Title 11 bankruptcy case was closed in November 2013, when the bankruptcy court "closed
the case after the trustee certified that the bankruptcy estate ha[d] been fully administered." (Dkt.
No. 1 at 5.) Moreover, this case could not be removed under § 1334 even if it were related to
Defendant's closed Title 11 bankruptcy case. If a party makes a timely motion for remand and the
proceeding is related to a case under Title 11, but does not arise under or arise in Title Ii, and is
"based upon a [s]tate law claim or [s]tate law cause of action" that "could not have been
commenced in a court of the United States absent jurisdiction under [§ 1334]" and "can be timely
adjudicated.
. .
in a [s]tate forum," then the district court must abstain from hearing the case. 28
U.S.C. § 1334(c)(2). BOA timely moved to remand this mortgage foreclosure action, which could
C2
010
2:16-cv-01634-RMG Date Filed 12/28/16 Entry Number 45 Page 7 of 7
not have been removed for any other reason (see above), and which can be timely adjudicated—
and which indeed was timely adjudicated—in state court.
IV.
Conclusion
For the foregoing reasons, the Court ADOPTS the Report and Recommendation of the
Magistrate Judge (Dkt. No. 41) as the Order of the Court, GRANTS Defendant's motion to remand
(Dkt. No. 18), and REMANDS this case to the South Carolina Court of Appeals.
AND IT IS SO ORDERED.
~&, V
-
Richard Mark Gergel
United States District Court Judge
December.?, 2016
Charleston, South Carolina
-7-
011
• Other Orders/Judgments
2:16-cv-01634-RMG Bank of
America NA v. Koola
PROSE
U.S. District Court
District of South Carolina
Notice of Electronic Filing
The following transaction was entered on 8/17/2016 at 3:24 PM EDT and filed on 8/17/2016
Case Name:
Bank of America NA v. Koola
Case Number:
2:16-cv-01634-RMG-BM
Filer:
Document Number: 30(No document attached)
Docket Text:
TEXT ORDER Before the Court is the Report and Recommendation of the
Magistrate Judge (Dkt. No. 27). Plaintiff previously moved to correct docket
entry number 18, to reflect that it is a motion to remand and not an answer.
The Court granted that motion on July 29, 2016. (Dkt. Nos. 25, 26.) The Court
notes that the docket has not yet been corrected, so there is a pending
motion to remand that is not reflected on the docket, briefed by Defendant, or
addressed in the Report and Recommendation. The Court therefore ORDERS
the Clerk to correct docket entry number 18 per the Court's order of July 29,
2016 (Dkt. Nos. 25, 26) and RECOMMITS this matter to the Magistrate Judge
for further proceedings regarding the motion to remand. AND IT IS SO
ORDERED. Entered at the Direction of Honorable Richard M Gergel on
8117/2016. (sshe,)
2: 16-cv-01634-RMG-BM Notice has been electronically mailed to:
Theodore von Keller ted@crawfordvk.com, april@crawfordvk.com, lindsay@crawfordvk.com,
sara@crawfordvk.com
Dean Anthony Hayes (Terminated) dhayes@kornlawfirm.com
2:16-cv-01634-RMG-BM Notice will not be electronically mailed to:
Johnson D Koola
1587 Cambridge Lakes Dr.
Mt Pleasant, SC 29464
8/17/2016 4:04 P1
APPENDIX C
012
2:16-cv-01634-RMG Date Filed 10/19/16 Entry Number 41 Page 1 of 19
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
Bank of America, N.A.,
C/A: 2:16-1 634-RMG-BM
Plaintiff,
vs.
REPORT AND RECOMMENDATION
Johnson D. Koola; First Citizens Bank and Trust
Company, Inc., filcla First Citizens Bank and
Trust Company of South Carolina; and
Cambridge Lakes Condominium Homeowners
Association, Inc., f/k/a Cambridge Lakes
Horizontal Property Regime,
Defendants
This action was originally filed by the Plaintiff, Bank ofAmerica, N.A. (BOA), in July
2010 in the South Carolina Court of Common Pleas, Charleston County. Attachments to Notice of
Removal, ECF No. 1-1 at 224-228. This is an action for foreclosure of a mortgage. An Amended
Summons and Complaint, which added Defendants First Citizens Bank and Trust Company, Inc.
(First Citizens) and Cambridge Lakes Condominium Homeowners Association, Inc. (the HOA), was
filed in state court on September 2010. ECF No. 1-1 at 231-236.
Defendant Johnson D. Koola (Koola) filed an amended answer and counterclaims
against BOA on March 24, 2011. ECF No. 1-1 at 240-245. The Honorable Mikell R. Scarborough,
Master in Equity for Charleston County, granted BOA's motion for summaryjudgment as to Koola's
counterclaims in an order entered April 25, 2014, and Koola's motion to reconsider was denied in
APPENDIX I)
013
2:16-cv-01634-RMG Date Filed 10/19/16 Entry Number 41 Page 2 of 19
May 2014. ECF No. 1-1 at 149-154. Koola appealed Judge Scarborough's decision to the South
Carolina Court of Appeals, which affirmed on February 17,2016. Koola's petition for rehearing was
denied on April 21, 2016. ECF No. 1-1 at 5-8.
Thereafter, on May 20, 2016, Koola, proceeding pro Se, removed the action to this
United States District Court.' On June 15, 2016, Plaintiff Bank of America, N. A. (BOA) filed a
motion to remand. ECF No. 18. BOA's filing of June 15, 2016 was originally docketed as an
"answer." Afterthe entry was modified on June 20, 2016, BOA filed a motion to correct docket entry
on July 18, 2016, asserting that this filing had been inadvertently docketed as an answer rather than
a motion to remand. In an order entered July 29, 2016, the undersigned granted BOA's motion to
correct and directed the Clerk of Court to correct the docket to indicate that BOA's filing was a
motion to remand. ECF Nos. 25, 26. That same date, the undersigned issued a Report and
Recommendation recommending that this case be remanded to state court. As this recommendation
was based on lack ofjurisdiction, the issues raised in the separately filed motion for remand were not
addressed. Ellenburg v. Spartan Motors Chassis, Inc., 519 F.3d 192, 196 (4th Cir. 2008) [Remand
order may be entered sua sponte where the court lacks subject matter jurisdiction].
1 frj his Notice of Removal, Koola asserts that First Citizens and the HOA are no longer parties
to the case. However, although it appears that First Citizens and the HOA have dismissed their crossclaims against Koola, there is no indication that they have been dismissed as Defendants to this
action. See Charleston County Public Index,
httP://icmsweb.charlestoncounty.or/PublicJndexJCaseDetailsaspx?County= 10&CourtAgency= 1
0002&Casenum==2O1OCP 1006060&CaseType=V (last visited October 3, 2016). This Court "may
properly take judicial notice of matters of public record." See Philips v. Pitt Cnty. Mem. Hosp., 572
F.3d 176, 180 (4th Cir. 2009); see also Colonial Penn Ins. Co. v. Coil, 887 F.2d 1236, 1239 (4th Cir.
1989) ["We note that '[t]he most frequent use of judicial notice is in noticing the content of court
records."]. While Koola disputes this, whether or not First Citizens and or Cambridge Lakes are still
Defendants in this action does not affect the motion to remand as discussed below.
&
1~1
014
2:16-cv-01634-RMG Date Filed 10/19/16 Entry Number 41 Page 3 of 19
Subsequently, however, in an order dated August 17,2016, the Honorable Richard M.
Gergel, United States District Judge, noted that the docket had not yet been corrected, ordered the
Clerk to correct docket entry number 18 per the Court's order of July 29, 2016, and recommitted the
matter to the undersigned for consideration of the motion to remand. ECF No. 30. Both parties were
then allowed to supplement their filings. ECF No. 32. See also ECF Nos. 35-38. BOA's motion to
remand is now before the Court for disposition.
Background
Koola states in his filings that in January of 2004, he applied for a mortgage loan from
Countrywide Home Loan Servicing, L.P.,2 to buy a condominium, which had been converted from
apartments to condominiums (condo conversion), in the Cambridge Lakes subdivision of Mount
Pleasant, South Carolina. He asserts that the developer/seller certified in the master deed that the
condo conversion complied with the South Carolina Horizontal Property Act (HPA), S.C. Code Ann.
§ 27-31-10etseq. Koola also states that the developer/seller issued a "Builder's Certification" to
Koola and the lender. The purchase of the condominium by Koola was completed on February 24,
2004. ECF No. I at 2.
In June2008, the HOA filed a construction defects lawsuit against the developer/seller
and others alleging construction defects, negligence, and unfair trade practices. Koola asserts that
because of the HOA lawsuit he could not sell his condominium when he tried to do so in 2008. In
March 2009 he filed a Chapter 7 bankruptcy petition, and in July 2009 the bankruptcy estate was
closed. ECF No. l *at 3, ECF No. 1-1 at 160, 162-168.
'BOA is the successor to Countrywide.
3
015
2:16-Cv-01634-RMG Date Filed 10/19/16 Entry Number 41 Page 4 of 19
Also in July of 2009, Koola allegedly applied to BOA for a mortgage loan
modification under the HOPE for Homeowners Program, 12 U.S.C. § 1715z-23. He asserts that he
and BOA signed a Forebearance Agreement or Trial Period Plan agreement in August 2009, whereby
Koola was required to pay $243 per month for September, October, and November 2009, and that
at the end of that three-month Trial Period Plan, BOA would allegedly decide whether to offer him
a loan modification. Koola claims that BOA did not reciprocate its part of the agreement at the end
of the Trial Period Plan, so he continued to pay the Trial Period Plan payment amount. In February
2010, BOA allegedly offered Koola a loan modification reducing the monthly payment from $838.69
as of January 2009 to $797.14 after the loan modification, with no reduction in the interest rate and
principal balance and no change in the original maturity date. ECF No. 1 at 3. Koola did not accept
this offer, and after March 2010, Koola failed to make his full mortgage payments. Koola contends
that he applied for mortgage loan modifications on four other occasions, all of which were allegedly
denied or unsuccessful. ECF No. 1 at 3-4.
In April or May2010, Koola listed his property for short sale. However, Koola alleges
the HOA would not allow him to short sell his condominium, and also filed an action against him to
collect unpaid condominium dues. ECF No. 1 at 4. BOA then filed the present foreclosure action
against Koola in July 2010. Koola alleges that in September 2010 he learned that in June and July
2010, the HOA had filed second and third amended complaints in its lawsuit against the
developer/seller, in which the HOA alleged that the developer/seller violated the South Carolina FIPA
by failing to provide a "Disclosure of the Physical Condition of the Building Report" to Koola. Koola
4
IW
016
2:16-cv-01634-RMG Date Filed 10/19/16 Entry Number 41 Page 5 of 19
claims that this led him to the realization that the Builder's Certification was allegedly falsified. ECF
No.1 at 4.
Koola asserts that after he learned in February or March 2011 that his lender allegedly
did not appraise the converted condominium in compliance with regulations and guidelines adopted
pursuant to Title XI of the Financial Federal Institutions Reform, Recovery, and Enforcement Act of
1989 (FIRREA), failed to verify the truthfulness of the statements in the Builder's Certification,
allegedly violated its own loan policy in completing the property appraisal, allegedly financed a
fraudulent mortgage loan transaction, and allegedly was negligent or grossly negligent in violatiOn
of FIRREA federal appraisal regulations, he amended his answer and counterclaim against BOA in
this action to assert claims for negligence and fraud. ECF No. 1 at 5.
In April 2012, BOA filed a motion for summary judgment as to Koola's
counterclaims. Koola petitioned for reopening of his Chapter 7 bankruptcy case, and in May 2012
the Bankruptcy Court reopened the case to allow Koola to amend the schedules in the original
petition and to include new causes of action against BOA in Schedule B pursuant to 11 U.S.C.
§ 350(b). ECF No. 1 at 5. In August 2012, Koola filed a "Motion to Sanction" BOA fonts allegedly
repeated bad faith denial of his applications for loan modification. ECF No. I at 4. Koola states that
the bankruptcy court closed his case in November 2013 after the trustee certified that the bankruptcy
estate had been fully administered. ECF No. 1 at 5.
As earlier noted, on April 24, 2014, the Master in Equity granted BOA's motion for
summary judgment as to Koola's counterclaims and denied Koola's motion for sanctions. ECF No.
1 at 5; ECF No. 1-1 at 149-153. In that order, the Master in Equity specifically found that Koola
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could not establish that BOA owed him a duty of care, alternatively that the claims were barred by
the applicable statute of limitations, (as the alleged actions occurred in February 2004 and Koola did
not assert them until March 2011), and that Koola had received a discharge of his Chapter 7
bankruptcy estate that rendered his claims moot. ECF No. 1-1 at 151-152. The Court of Appeals of
South Carolina affirmed in an unpublished decision filed February 17,2016, and Koola' s motion for
a rehearing was denied on April 21, 2016. ECF No 1-1 at 5-7.
Koola then filed his pro se Notice of Removal of the state court case to this federal
court on May 20, 2016.
Motion to Remand
Federal courts are courts of limited jurisdiction, see Kokkonen v. Guardian Life Ins.
Co. of America, 511 U.S. 375, 377 (1994), and a district court is charged with ensuring that all cases
before it are properly subject to such jurisdiction. In re Bulldog Trucking, Inc., 147 F.3d 347, 352
(4th Cir. 1998). Generally a case can be filed in a federal district court only if there is diversity of
citizenship under 28 U.S.C. § 1332, or if there is federal question jurisdiction under 28 U.S.C.
§ 1331.
The removal statute, 28 U.S.C. § 1441, allows a state court defendant to remove a case
to a federal district court if the state court action could have originally been filed there. See
Darcangelo v. Verizon Commc'ns, Inc., 292 F.3d 181, 186 (4th Cu. 2002). When considering the
propriety of a removal under the removal statute, federal courts must "scrupulously confine their own
jurisdiction to theprecise limits which the statute has defined." Shamrock Oil & Gas Corp. v. Sheets,
313 U.S. 100, 109 (1941)(internal quotation marks and citation omitted). "[R]emoval statues [are]
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strictly construed against removal;" Scott v. Greiner, 858 F.Supp. 607, 610 (S.D.W.Va. 1994); the
burden is on the removing defendant to establish subject matter jurisdiction; Mulcahey v. Columbia
Organic Chemicals Co., Inc., 29 F.3d 148, 151 (4th Cir. 1994); and a federal court must "resolve all
doubts about the propriety of removal in favor of retained state court jurisdiction." Marshall v.
Manville Sales Corp., 6 F.3d 229,232 (4th Cir. 1993); see also Palisades Collections LLCv. Shorts,
552 F.3d 327, 333-34 (4th Cir. 2008); Mulcahey, 29 F.3d at 151 ["If federal jurisdiction is doubtful,
a remand is necessary."]. Here, BOA contends that this action should be remanded to state court
because: (1) removal is untimelyunder 28 U.S.C. § 1446(b); (2) removal is untimely under 28 U.S.C.
§ 1446(b)(3); (3) removal based upon diversity of citizenship is untimely under 28 U.S.C. § 1446(c);
and (4) this action is not removable pursuant to 28 U.S.C. §§ 1334 or 1452. ECF No. 18 at 2-4.
In considering Plaintiff's arguments and Koola' s asserted grounds for removal, the
Court is mindful that "[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 plaintiffs properly pleaded complaint. The rule makes the
plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on
state law." Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (internal citation omitted); aee
Harless v. CSX Hotels, Inc., 389 F.3d 444,450(4th Cir. 2004)[discussing the well-pleaded complaint
rule]. Here, a careful review of the pleadings is in this case shows that this is a state law foreclosure
action; see ECF No. 101, at 231-236; and no federal jurisdiction exists over a complaint which
"merely states a cause of action for enforcement of a promissory note and foreclosure of the
associated security interest in real property." Burbage v. Richburg, 417 F. Supp.2d 746, 749 (D.S.C.
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2006); see also Pettis v. Law Office of Hutchens, Senter, Kellam and Pettit, C/A No. 3:13- 147-FDW,
2014 WL 526105, at *2 (W.D.N.C. Feb. 7, 2014)(collecting cases); Deutsche Bank Nat'l Trust Co.
v. Lovett, C/A No. 3:12-1819-JFA, 2013 WI.. 528759, at *2 (DS.C. Feb. 11, 2013). Further, in
determining this issue, potential defenses and counterclaims involving the Constitution or laws of the
United States are not determinative. Vaden v. Discover Bank, 556 U.S. 49,60 (2009) ["Federal
jurisdiction cannot be predicated on an actual or anticipated defense"].
Koola argues that this Court has jurisdiction pursuant to 28 U.S.C. § 1331 (Federal
question) because BOA, in its motion for summary judgment as to Koola's counterclaims, cited
bankruptcy codes in arguing that Koola had no standing to raise counterclaims against it. He claims
that BOA "raised a Federal Question related to Bankruptcy in the foreclosure case; the decision of
the case depends on the construction of the Bankruptcy codes", and that he has regained standing to
raise claims against BOA. ECF No. 1 at 6. He also alleges that this court has jurisdiction under 28
U.S.C. § 1332(2) based on diversity of the parties.' ECF No. 1 at 9. Additionally, Koola contends
that removal is proper under 28 U.S.C. § 1334 and § 1452 because BOA,Koola, and the state courts
have "raised several chapters of Title 11 Bankruptcy in this State Court Action." ECF No. I at 9.
Finally, Koola contends that this Court has supplemental jurisdiction pursuant to 28 U.S.C. §
1441(c) and 1452 as to his claim that BOA owed him a duty of care pursuant to FIRREA and the
South Carolina HPA, that this Court has supplemental jurisdiction over his claim that BOA breached
its duty of care when it repeatedly denied his application for an affordable loan modification, that the
'Koola argues that this Court has, jurisdiction based on 28 U.S.C. §§ 1441(a) and 1332
because Plaintiff is a citizen of the states of North Carolina and California and Koola is a citizen of
South Carolina, and the amount in controversy exceeds $75,000 (Koola states that the original loan
amount was $136,192). ECF No. 1 at 9.
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applicable statute of limitations does not bar his claims against BOA, and that the state court orders
potentially violated constitutional provisions because they allegedly reconstructed bankruptcy codes
to override the bankruptcy court's orders related to 11 U.S.C. §§ 350(b) and 554(c). ECF No. I at
9-17.
1446(b)
BOA initially contends that Koola's removal of this action was untimely under 28
U.S.C. § 1446(b), which provides generally that:
The notice of removal of a civil action or proceeding shall be filed within 30 days
after the receipt by the defendant, through service or otherwise, of a copy of the initial
pleading setting forth the claim for relief upon which such action or proceeding is
based, or within 30 days after the service of summons upon the defendant if such
initial pleading has then been filed in court and is not required to be served on the
defendant, whichever period is shorter.
28 U.S.C. § 1446(b).
BOA notes that Koola was served with the Amended Summons and Complaint on
September 13, 2010, which was nearly six years prior to the removal of this action, and that Koola's
removal of this case was therefore manifestly untimely. For his part, Koola does not appear to
dispute this fact and admits that there was no federal jurisdiction evident on the face of the Amended
Complaint, as it involves a foreclosure action related to a promissory note and a mortgage securing
the promissory note and nothing else. Instead, Koola argues that he timely removed this action
pursuant to 28 U.S.C. § 1446(b)(3), as discussed below. ECF No. 38, at pp. 2-7.
1446(b)(3)
BOA contends that, contrary to Koola's assertions, removal was also untimely under
28 U.S.C. § 1446(b)(3), which provides:
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Except as provided in subsection (c), if the case stated by the initial pleading is not
removable, a notice of removal may be filed within 30 days after receipt by the
defendant, through service or otherwise, of 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.
28 U.S.C. § 1446(b)(3).
In his Notice of Removal, Koola states that he first learned that there were federal
claims involved in this case in April 2012, when BOA filed its motion for summary judgment. ECF
No. 1, at p. 6. BOA argues, however, that "[e]ven if this were true, which [BOA] denies, the notice
of removal would still be untimely." The undersigned agrees. Even assuming, for purposes of
argument only, that Koola's removal time did not start to run until BOA filed its motion for summary
judgment, this action was still removed four years (based on Koola allegedly first learning of federal
claims in BOA's motion for summary judgment) or two years (based on the Master in Equity's order
granting BOA's motion for summary judgment) after Koola allegedly learned of the existence of
federal causes of action, which is well outside the 30-day time period provided for in 28 U.S.C. §
1446(b)(3).
In his response to the Plaintiffs motion to remand, Koola argues that he could not
remove this action based on BOA's motion for summary judgment in April 2012 because the
"charges" were "true" in April 2012. Koola asserts that when the bankruptcy court closed the
reopened Chapter 7 estate in November 2013, the estate was returned to Koola so he could assert
counterclaims against BOA, but the substantial federal question was rendered moot and remained
uncontested. Koola next claims that the Master in Equity's April 25, 2014 order did not make
removal ascertainable because the order did not cite specific bankruptcy codes or authorities to make
Koola aware of the federal question. He claims that the February 17, 2016 opinion from the Court
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of Appeals of South Carolina cited specific bankruptcy codes and authorities and made the federal
question raised by BOA in 2012 a contested claim in February 2016. However, the issues relating
to Koola' s bankruptcy filing were clearly presented in the earlier state court filings, and it is readily
apparent that it was only after Koola had lost in the state courts did he then choose to seek removal
of the case to this Court. See ECF 1, pp. 6-7.
Further, even if Koola was not barred from removal based on untimeliness, the ground
that he asserts for removal is that BOA raised a federal defense in response to Koola's counterclaims.
However, as previously noted, defenses do not establish removal jurisdiction. See Merrell Dow
Pharm., Inc. v. Thompson, 478 U.S. 804, 808 (1986); Cook v. Georgetown Steel Corp., 770 F.2d
1272, 1275 (4th Cir. 1985)["A federal defense to a state cause of action is not sufficient to invoke
federal jurisdiction."]. Additionally, to the extent that Koola argues that this Court has jurisdiction
based on the counterclaims he asserted (he appears to allege state law counterclaims, including a
claim that Plaintiff "was negligent and willful in its failure to verify the accuracy/truthfulness of the
statements in the Builders' Certification" that was required to be submitted as the purchased property
'Koola appears to be requesting as part of his removal of this case that this Court review these
decisions made by the state courts, claiming errors by the Master in Equity and the Court of Appeals
of South Carolina. However, to the extent that Koola is attempting to appeal state court proceedings
to this Court, he may not do so, as federal district courts do not hear "appeals" from state court
actions. See District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 476-82 (1983)[a
federal district court lacks authority to review final determinations of state or local courts because
such review can only be conducted by the Supreme Court of the United States under 28 U.S.C.
§ 1257]; Rookery. Fidelity Trust Co., 263 U.S. 413 (1923).
'Additionally, even if the Court were to assume that Koola did not learn that he had a
removable case until February 2016, as he contends, he still did not file his notice of removal timely.
Although Koola filed a petition for rehearing with the South Carolina Court of Appeals, he does not
deny that he knew of his alleged basis for removal in February 2016.
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had been converted from an apartment to a condominium - see ECF No. 1-1 at 150, 241), he fails to
establish federal jurisdiction because a counterclaim by a defendant does not serve as the basis for
"arisingunder"jurisdiction. Holmes Group, Inc. v. Vomado Air Circulation Sys., Inc., 535 U.S. 826,
831(2002). Simply put, federal defenses and counterclaims cannot provide a basis for removal.
Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987)[stating "it is now settled law that a case may
not be removed to federal court on the basis of a federal defense"]; see also UTrue, Inc. v. Page One
Sci., Inc., 457 F.Supp.2d 688, 690 (E.D.Va. 2006)[holding that a federally-based counterclaim by an
original defendant is not eligible to serve as the basis for removal on federal question grounds and
noting "[m]oreover, were the well-pleaded complaint rule not to apply on removal, and were
counterclaims permitted to become a basis for jurisdiction on removal, the result would be an
unwarranted and nearly limitless expansion of removal jurisdiction."]; Cohn v. Charles, 857
F. Supp.2d 544, 548 (D.Md. 2012)[foreclosure proceeding was not removable, nor did it become
removable when federal defenses were asserted or the counterclaim filed].'
Koola also contends that this action is removable under 28 U.S.C. §§ 1334 and 1452
because this case is related to his cases under Title 11. ECF No. 38 at 10. However, as was noted
in the original Report and Recommendation filed in this case, although Koola had at one point filed
a Chapter 7 bankruptcy petition, an order of discharge was entered in that case on July 13, 2009 (ECF
No. 1-1 at 160), prior to the filing of this state law foreclosure action by BOA. An order reopening
Koola's bankruptcy case, which appears to have been based on Koola's assertion of claims against
BOA as assets of the bankruptcy estate, was entered on May 22, 2012. ECF No. 1 at 159. However,
'Given that this Court does not have original jurisdiction over BOA's claims, it shOuld not
exercise supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a)
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on November 6,2013, Koola' s bankruptcy case was again closed. ECF No. 1-1 at 161; see also ECF
No. 1-1 at i79. The Fourth Circuit follows the Third Circuit's test for "related to" jurisdiction as
set forth in Pacor, Inc. v. Higgins, 743 F.2d 984 (3rd Cir. 1984), overruled on other grounds by Things
Remembered, Inc. v. Petrarca, 516 U.S. 124(1995). See In re Celotex Corp., 124 F.3d 619, 625 (4th
Cir. 1997). Under the broad Pacor test, "[t]he usual articulation of the test for determining whether
a civil proceeding is related to bankruptcy is whether the outcome of that proceeding could
conceivably have any effect on the estate being administered in bankruptcy." Pacor, 743 F.2d at 994;
see also Blanton v. IMN Fin. Corp., 260 B.R. 257,262 (Bankr. M.D .N.C. 2001); In re Rainbow Sec.
Inc., 173 B.R. 508, 511 (Banlcr. M.D.N.C. 1994). A civil case filed in a district court is related to a
case in bankruptcy if the outcome in the civil case "could conceivably have any effect on the estate
being administered in bankruptcy... if the out-come could alter the debtor's rights, liabilities, options,
or freedom of action (positively or negatively) and which in any way impacts upon the handling and
administration of the bankrupt estate." Celotex Corp. v. Edwards, 514 U.S. 300, 308, n. 6
(1995)(quoting Pacor, 743 F.2d at 994) (internal quotations omitted) (italics in Pacor).
This removed case is not related to bankruptcy as there is no indication that the
outcome of the removed action could conceivably have an effect on any estate being administered
in bankruptcy. Koola admits that in November 2013, the bankruptcy court "closed the case after the
'To the extent that Koola is attempting to appeal the bankruptcy court's decision, Federal Rule
of Bankruptcy Procedure 8002 requires that an appeal of a bankruptcy court's order be filed with the
bankruptcy clerk within fourteen days after entry of the bankruptcy court's decision. If the party
seeking review of the bankruptcy court's decision fails to file its appeal within the fourteen-day
period, the district court has no jurisdiction to review or modify that order. Smith v. Dairymen, Inc.,
790 F.2d 1107, 1109 (4th Cir. 1986). Thus, any attempt to appeal is untimely as any such claim
raised in the notice of removal is more than fourteen days after the entry of the bankruptcy court's
decision closing Koola's case on November 6, 2013.
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trustee certified that the bankruptcy estate ha[d] been fully administered [pursuant to 11 U.S.C.A. §
554(c)]."8 ECF No. 1 at 5. Thus, as his claims are no longer part ofabankruptcy action, they are not
removable on that basis.'
C.
Diversity of Citizenship 28 U.S.C. 1446(c)
-
BOA also argues that Koola's attempt to remove based on diversity of citizenship is
untimely because, even if this case fell under § 1446(b)(3); see, discussion,supra; the case was
removed more than one year after the commencement of the action, and Koola has not alleged bad
faith. "A case may not be removed under subsection (b)(3) on the basis of jurisdiction conferred by
section 1332 more than 1 year after commencement of the action, unless the district court finds that
the plaintiff has acted in bad faith in order to prevent a defendant from removing the action." 28
U.S.C. § 1446(c)(1).
Although Koola does not appear to have asserted bad faith as a reason for his not
removing this action based on diversity jurisdiction in his Notice of Removal (ECF No. 1 at 9), he
'The cited statute provides:
Unless the court orders otherwise, any property scheduled under section 521(a)( 1) of
this title not otherwise administered at the time of the closing of a case is abandoned
to the debtor and administered for purposes of section 350 of this title.
11 U.S.C. § 554(c).
'Furthermore, if a party makes a timely motion for remand and the proceeding is related to
a case under Title 11, but does not arise under or arise in Title 11, and such proceeding (1) is "based
upon a [s]tate law claim or [s]tate law cause of action," (2) "could not have been commenced in a
court of the United States absent jurisdiction under [§ 1334]" and (3) "can be timely adjudicated,...
in a [s]tate forum," then pursuant to § 1334(c)(2) the district court must abstain from hearing the case.
28 U.S.C. § 1334(c)(2); see Sheets v. Caliber Home Loans, Inc., No. 3:15-CV-72, 2016 WL 183559,
*3 (N.D.W.Va. Jan. 14, 2016).
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does claim in his response to the Plaintiff's motion to remand that the one-year limitation under §
1446(c)(1) does not apply because BOA acted in bad faith. Specifically, Koola argues that BOA had
actual knowledge that he received a Chapter 7 bankruptcy discharge in July 2009 and that Koola
failed to include claims against BOA in Schedule B of the bankruptcy petition, and that BOA's failure
to raise the federal question in the Complaint and Amended Complaint filed in July and September
2010 therefore constituted an action in bad faith. He also argues that BOA should have written to the
Master in Equity to request an amended order which stated specific bankruptcy codes so that he
would have had grounds to remove the state court action earlier. However, -BOA did not commit
"bad faith" by failing to anticipate a federal defense to counterclaims Koola asserted to its Complaint
or Amended Complaint, or by not asking the Master in Equity to "correct" his order to cite
bankruptcy code. Additionally, the purported "bad faith" argued by Koola has nothing to do with
federal diversity.
In 2011, Congress amended § 1446 to include the bad faith exception to the statute's
one-year limitation on removal of diversity actions. See H.R. Rep. No. 112-10, at * 15 (2011). The
exception was added to prevent plaintiffs fromjoining non-diverse parties to actions solely to prevent
a defendant from removing to federal court. See Heller v. Am. States Ins. Co., 2016 WL 1170891,
at *2 (C.D. Cal. Mar. 25, 2016). The determination of bad faith is left to the discretion of the district
court, but "the exception to the bar of removal after one year is limited in scope." H.R. Rep. No.
112-10, at * 15; see A.S. ex rel. Miller v. SmithKline Beecham Corp., 769 F.3d 204, 211-12 (3d Cir.
2014)[holding that equitable tolling of the one-year bar was inappropriate where no "extraordinary
circumstances" were present]. in a different context, a court in this district noted that "[a]lthough the
term 'bad faith' is not defined in the Federal Rules of Civil Procedure, courts have held that the term
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2:16-cv-01634-RMG Date Filed 10/19/16 Entry Number 41 Page 16 of 19
'bad faith' connotes an action taken without any colorable legal or factual basis." Rutherford v.
Cannon, No. 8:09—cv-2137, 2010 WL 3475283, at *1 (D.S.C. Sept.2, 2010). Here, there was no
removal spoiling party kept in the case in bad faith to destroy diversity. As such, Koola failed to
remove within one year, and he has not shown bad faith, such that he fails to show that this case was
timely removed based on diversity jurisdiction under § 1332.10
"°Jn addition to the ground for remand discussed hereinabove, in the original Report and
Recommendation entered on July 29, 2016, the undersigned also found that, in the absence of a
federal question being presented on the face of the Complaint, Koola was precluded as a matter of
law from removing this case on the basis of diversity of citizenship since he is a citizen of the state
in which the action was brought (South Carolina). See 28 U.S.C. § 1441(b)(2) [a "civil action
otherwise removable solely on the- basis of the jurisdiction under section 1132(a) of this title may not
be removed if any of the parties in interest properly joined as defendant is a citizen of the state in
which such action is brought"]. In his objections to that Report and Recommendation, Koola asserted
that Plaintiff had "waived" any defense of lack of diversity in its motion to remand because it had
"not raised any objection" on this basis. ECF N. 29, at p. 9. See also ECF No. 35, atp. 3. However,
Koola was required to have removed this action within thirty (30) days of its filing on the basis of
diversity jurisdiction. 28 U.S.C. § 1446(a). He did not do so, as indeed there was no diversity
jurisdiction. 28 U.S.C. § 1446(b)(2). Plaintiff addressed Koola's diversity claims under § 1446(c),
as that appeared to be the basis on which Koola had removed this case to federal court. Even so, by
Order filed August 18, 2016, Plaintiff was granted fifteen days to file any response to Koola's
objections to remand, and on August 31, 2016, Plaintiff filed a response in which it specifically
addresses Koola's waiver claim and argues, inter
that this case is not removable because
"Defendant Koola is a citizen and resident of South Carolina, which is where the case was brought",
citing to 28 USC § 1441(b)(2). The undersigned does not find that Plaintiff having first addressed
this novel issue [i.e., a waiver argument that has not at this point been adopted by the Fourth Circuit]
only after Koola first raised it in objections to an earlier Report and Recommendation, instead of
initially in its motion to remand, would justify a finding of waiver (even assuming that to be a valid
doctrine in this circuit) of this issue by the Plaintiff under the facts of this case. In any event, as is
discussed hereinabove, this action is subject to remand on other grounds.
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2:16-cv-01634-RMG Date Filed 10/19/16 Entry Number 41 Page 17 of 19
Conclusion
Based on the foregoing, it is recommended' that BOA's motion to remand (ECF No.
18) be granted, and that this case be remanded back to state court.'2
"While many Courts have held that an order of remand is non-dispositive and can be issued
by a United States Magistrate Judge in a non-consent case, it is not firmly established whether the
undersigned can issue an order of remand, or whether a Report and Recommendation is required. See
Jones v. Unison Ins. Co., No. 00-1217, 2000 WL 1350648, at * 1 (4th Cir. Sept. 20, 2000) [Noting
that Fourth Circuit has not addressed question of whether Magistrate Judge may issue remand orders
in non-consent cases]; cf. Williams v. Beemiller, Inc., 527 F.3d 259 (2d Cir. 2008)[Finding that
remand orders are dispositive]; Vogel v. U.S. Office Products Co., 258 F.3d 509, 514-517 (6th Cir.
200 l)[same]; First Union Mortgage Co. v. Smith, 229 F.3d 992,996-997 (10th Cir. 2000)[same]; j
re U.S. Healthcare, 159 F.3d 142, 145-146 (3d Cir. 1998)[same]; Vaguillas Ranch Co. v. Texaco
Exploration & Production, Inc., 844 F. Supp. 1156, 1163 (S.D.Texas 1994); McDonough v. Blue
Cross of Northeastern Pennsylvania, 131 F.R.D. 467 (W.D.Pa. 1990); City of Jackson v. Lakeland
Lounge of Jackson, Inc., 147 F.R.D. 122,124 (S.D.Miss. 1993); Long v. Lockheed Missiles & Space
Co., 783 F.Supp. 249 (D.S.C. 1992); Stanion v. Staley, No. 16-750, 2016 WL 3629087 at * 1, n. 1
(D.N.C. June 29, 2016); William E. Smith Trucking, Inc. v. Rush Trucking Centers of North
Carolina, Inc., No. 11-887,2012 WL 214155, at * 2-6 (M,D.N.C. Jan. 24, 2012) [Analyzing relevant
statutes and caselaw and finding that remand order is nondispositive]; Pikkert v. Pastene, No. 031212, 2003 WL 21154296 (4th Cir. May 20, 2013), cert. denied, 541 U.S. 987 (2014)[unpublished,
but finding that a magistrate judge's remand order is not reviewable by the appellate court]. While
the undersigned has issued orders of remand in some circumstances in non-pm se cases, in light of
the Defendants' pro se status, and out of an abundance of caution, this Report and Recommendation,
instead of an Order, is being entered so that the Defendant can contest remand before the District
Judge, if he so desires.
"Although the pro se Defendant requested a hearing on Plaintiffs motion, the parties have
adequately addressed the issues in the motion to remand, objections to the first report and
recommendation, and the responses. As such, the facts and legal contentions are adequately
presented in the materials before the Court and a hearing would not aid the decisional process.
Further, as to this Report and Recommendation, the parties may file objections as noted in the notice
below. Koola's motion for a hearing is therefore denied.
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2:16-cv-01634-RMG Date Filed 10/19/16 Entry Number 41 Page 18 of 19
The parties are referred to the Notice Page attached hereto.
Iq
'r"(Yii
Bristow Marchant
United States Magistrate Judge
October 19, 2016
Charleston, South Carolina
18
030
It,
2:16-cv-01634-RMG Date Filed 07/29/16 Entry Number 27 Page 1 of 9
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
Bank of America, N.A.,
) C/A: 2:16-1634-RMG-BM
)
Plaintiff,
)
vs.
REPORT AND RECOMMENDATION
Johnson D. Koola; First Citizens Bank and Trust
Company, Inc., f/k/a First Citizens Bank and
Trust Company of South Carolina; and
Cambridge Lakes Condominium Homeowners
Association, Inc., f/k/a Cambridge Lakes
Horizontal Property Regime,
Defendants.
)
This action was originally filed by the Plaintiff in July 2010 in the South Carolina
Court of Common Pleas, Charleston County. Attachments to Notice of Removal, ECF No. 1-1 at
224-228. This is an action for foreclosure of a mortgage. An Amended Summons and Complaint,
which added Defendants First Citizens Bank and Trust Company, Inc. and Cambridge Lakes
Condominium Homeowners Association, Inc., was filed in September 2010. ECF No. 1-1 at 231236. Defendant Johnson D. Koola (Koola) filed an amended answer and counterclaims against
Plaintiff on March 24, 2011. ECF No. 1-1 at 240-245. The Honorable Mikell R. Scarborough,
Master in Equity for Charleston County, granted Plaintiff's motion for summary judgment as to
Koola's counterclaims in an order entered April 25, 2014, and Koola's motion to reconsider was
denied in May 2014. ECF No. 1-I at 149-154. Koola appealed this decision to the South Carolina
Court of Appeals, which affirmed on February 17, 2016, and denied Koola's petition for rehearing
APPENDIX E
031
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on April 21, 2016. ECF No. 1-1 at 5-8. Thereafter, on May 20, 2016, Koola, proceeding pro
,
removed the State Cotirt action to this United States District Court.'
The removal statute, 28 U.S.C. § 1441, allows a state court defendant to remove a
case to a federal district court if the state court action could have originally been filed there. See
Darcangelo v. Verizon Commc'ns, Inc., 292 F.3d 181, 186 (4th Cir. 2002). When considering
removal jurisdiction, federal courts must "scrupulously confine their own jurisdiction to the precise
limits which the statute has defined." Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 109
(1941 )(internal quotation marks and citation omitted). Federal courts are courts of limited
jurisdiction,
Kokkonen v. Guardian Life Ins. Co. of America. 511 U.S. 375, 377 (1994), and a
district court is charged with ensuring that all cases before it are properly subject to such jurisdiction.
In re Bulldog Trucking, Inc., 147 F.3d 347, 352 (4th Cir. 1998). In addition, "[r]emoval statutes
must be strictly construed against removal," Scott v. Greiner. 858 F.Supp. 607, 610 (S.D.W.Va.
1994), and a federal court must "resolve all doubts about the propriety of removal in favor of
retained state courtj urisdiction." Marshall v. Manville Sales Corp., 6 F.3d 229,232 (4th Cir. 1993);
see also Palisades Collections LLC v. Shorts, 552 F.3d 327, 333-34 (4th Cir. 2008); Mulcahey, 29
F.3d at 151 "lf federal jurisdiction is doubtful, a remand is necessary."]. The burden is on the
'In his Notice of Removal Koola asserts that First Citizens Bank and Trust Company, Inc.
and Cambridge Lakes Condominium Homeowners Association, Inc. are no longer parties to the case.
However, although it appears that these Defendants have dismissed their cross-claims against Koola,
there is no indication that they have been dismissed as defendants in this action. See Charleston
County Public Index, http://jcmsweb.charlestoncounty.org/Publiclndex/CaseDetails.aspx?County
=10&CourtAgency= 10002&Casenum=20 10CP I 006060&CaseType=V (last visited July 27,2016).
This Court "may properly take judicial notice of mattersof public record." See Philips v. Pitt Cntv.
Mem. Hosp., 572 F.3d 176, 180 (4th Cir. 2009); see also Colonial Penn Ins Co. v. Coil, 887 F.2d
1236, 1239 (4th Cir. 1989) ["We note that '[t]he most frequent use ofjudicial notice is in noticing
the content of court records."].
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removing defendant to establish subject matter jurisdiction; Mulcahy v. Columbia Organic
Chemicals Co., Inc., 29 F.3d 148, 151 (4th Cir. 1994); and a district court is obligated to consider
sua sponte whether jurisdiction is present and to remand the case to state court if it determines that
it lacks jurisdiction. See 28 U.S.C. § 1447(c); Fed. R. Civ. P. 12(h)(3); EllenburaySartan Motors
Chassis, Inc., 519 F.3d 192, 196 (4th Cir. 2008).2
Generally a case can be filed in a federal district court only if there is diversity of
citizenship under 28 U.S.C. § 1332, or if there is federal question jurisdiction under 28 U.S.C.
§ 1331. Koola argues that this Court has jurisdiction pursuant to 28 U.S.C. § 1331 (Federal
question), because Plaintiff "raised a Federal Question related to Bankruptcy in the foreclosure case;
the decision of the case depends on the construction of the Bankruptcy codes" and he claims that he
regained standing to raise claims against Plaintiff. ECF No. I at 6. He also appears to contend that
this Court has jurisdiction based on diversity jurisdiction. ECF No. I at 93 However, neither of
these grounds for jurisdiction exists here.
First, a careful review of the pleadings in this case fails to reveal any basis for federal
question j uri sdiction. This is a state law foreclosure action, and a review of the amended complaint
'Although the Plaintiff has separately filed a motion seeking a remand of this action; see
Court Docket Nos. 18 and 20; as the undersigned has determined that this Federal Court lacks
jurisdiction over this case, sua sponte remand is being recommended. If this recommendation is
adopted, Plaintiff's motion will be moot.
3Koola also complains about the rulings in the state court decisions. To the extent that Koola
is attempting to appeal the state court proceedings to this Court, however, federal district courts do
not hear "appeals" from state court actions. See District of Columbia Court of Anpeals V. Feldman,
460 U.S. 462, 476-82 (1983)[a federal district court lacks authority to review final determinations
of state or local courts because such review can only be conducted by the Supreme Court of the
United States under 28 U.S.C. § 1257]; Rooker v. Fidelity Trust Co., 263 U.S. 413(1923).
(
3
3
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reveals that it is solely based on state law. See ECF No. 1-1 at 231-236. No federal jurisdiction
exists over a complaint which "merely states a cause of action for enforcement of a promissory note
and foreclosure of the associated security interest in real property." Burbage v. Richburg, 417 F.
Supp.2d 746, 749 (D.S.C. 2006); see also Pettis v. Law Office of Hutchens. Seater. Kellam and
C/A No. 3:13-147-FDW, 2014 WL 526105, at *2 (W.D.N.C. Feb. 7, 2014)(collecting cases);
Deutsche Bank Nat'! Trust Co. v. Lovett, CIA No. 3:12-18 19-JFA, 2013 WL 528759, at *2 (D.S.C.
Feb. 11, 2013). While it may be that Koola is attempting to raise defenses to the foreclosure action
based on a federal statute or constitutional amendment, any such defenses do not establish removal
jurisdiction. See Merrell Dow Pharm.. Inc. v. Thompson, 478 U.S. 804, 808 (1986); Cook v.
Georgetown Steel Corp., 770 F.2d 1272, 1275 (4th Cir. 1985)["A federal defense to a state cause of
action is not sufficient to invoke federal jurisdiction."]. Further, to the extent that Koola argues that
this Court has jurisdiction based on the counterclaims he asserted (he appears to allege state law
counterclaims, including a claim that Plaintiff "was negligent and willful in its failure to verify the
accuracy/truthfulness of the statements in the Builders' Certification" that was required to be
submitted as the purchased property had been converted from an apartment to a condominium Lee
-
ECF No. 1-1 at 150, 241), he fails to establish federal jurisdiction because a counterclaim by a
defendant does not serve as the basis for "arising under" jurisdiction. Holmes Group. Inc. v.
Vornado Air Circulation Sys.. Inc., 535 U.S. 826, 831(2002).
Koola also contends that 28 U.S.C. § § 1334 and 1452 provide authority for removal.
A case may be removed pursuant to § 1452 to a district court that "has jurisdiction of such claim or
4
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cause of action under section 1334 of this title." 28 U.S.C. § 1452(a). Title 28 U.S.C. § 1334
provides, in pertinent part:
Except as provided in subsection (b) of this section, the district courts shall have
original and exclusive jurisdiction of all cases under title 11.
Except as provided in subsection (e)(2), and notwithstanding any Act of Congress
that confers exclusive jurisdiction on a court or courts other than the district courts,
the district courts shall have original but not exclusive jurisdiction of all civil
proceedings arising under title 11, or arising in or related to cases under title 11.
28 U.S.C. § 1334(a) and (b).
Here, the removed case is not a case brought under title 11, nor has Koola asserted that the removed
case arises in or relates to a case under title 11. Although Koola had at one point filed a Chapter 7
bankruptcy case, an order of discharge was entered in that case on July 13, 2009, prior to the Plaintiff
bringing this action. ECF No. 1-I at 160. An order reopening Koola's bankruptcy case, which
appears to have been based on Koala's assertion of claims against Plaintiff as assets of the
bankruptcy estate, was entered on May 22, 2012. ECF No. I at 159. However, on November 6,
2013, Koala's bankruptcy case was closed. ECF No. 1-1 at 161; see also ECF No. i - i at 179.
The Fourth Circuit follows the Third Circuit's test for "related to"jurisdiction as set
forth in Pacor, Inc. v. Higgins, 743 F.2d 984 (3rd Cir. 1984), overruled on other grounds by Things
Remembered, nc. v. Petrarca, 516 U.S. 124(1995). See In re Celotex Corp., 124 F.3d 619,625 (4th
'To the extent that Koola is attempting to appeal the bankruptcy court's decision, Federal
Rule of Bankruptcy Procedure 8002 requires that an appeal of a bankruptcy court's order be filed
with the bankruptcy clerk within fourteen days after entry of the bankruptcy court's decision. lithe
party seeking review ofthe bankruptcy court's decision fails to file its appeal within the fourteen-day
period, the district court has nojurisdiction to review or modify that order. Smith v. Dairymen. Inc.,
790 F.2d 1107, 1109(4th Cir. 1986). Thus, any attempt by Koola to appeal at this time is untimely,
as any such claim raised in the notice of removal is more than fourteen days after the entry of the
bankruptcy court's decision closing Koola's case on November 6, 2013.
r5_
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Cir. 1997). Under the broad Pacor test, "[t]he usual articulation of the test for determining whether
a civil proceeding is related to bankruptcy is whether the outcome of that proceeding could
conceivably have any effect on the estate being administered in bankruptcy." Pacor, 743 F.2d at 994;
see also Blanton v. IMN Fin. Corp., 260 B.R. 257,262 (Barikr.M.D.N.C.200 1); In re Rainbow Sec.
Inc., 173 B.R. 508, 511 (Bankr.M.D.N.C. 1994). This removed case is not related to bankruptcy as
there is no indication that the outcome of the removed action could conceivably have an effect on
any estate being administered in bankruptcy. Koola admits that in November 2013, the bankruptcy
court "closed the case after the trustee certified that the bankruptcy estate ha[d] been fully
administered [pursuant to 11 U.S.C.A. § 554(c)]."5 ECF No. 1 at 5. Thus, as his claims are no
longer part of a bankruptcy action, they are not removable on that basis.
Finally, Koala also argues that this Court has jurisdiction based on 28 U.S.C.
§§ 1441(a) and 1332, because Plaintiff is a citizen of the states of North Carolina and California and
Koola is a-citizen of South Carolina. However, in the absence of a federal question being presented
on the face of the Complaint, Koola is precluded as a matter of law from removing this case on the
basis of diversity of citizenship since he is a citizen of the state in which the action was brought
(South Carolina). See 28 U.S.C. § 1441(b)(2)["A civil action otherwise removable solely on the
basis of the jurisdiction under section 1332(a) of this title may not be removed if any of the parties
'The cited statute provides:
Unless the court orders otherwise, any property scheduled under section 521 (a)(1) of
this title not otherwise administered at the time of the closing of a case is abandoned
to the debtor and administered for purposes of section 350 of this title.
II U.S.C. § 554(c).
6
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in interest properly joined and served as defendants is a citizen of the State in which such action is
brought."].
Conclusion
A district court is obligated to consider sua snonte whetherjurisdiction is present and
remand the case to state court if it determines that it lacks jurisdiction. See 28 U.S.C. § 1447(c);
Fed. R. Civ. P. 12(h)(3); Ellenbiirg v. Spartan Motors Chassis, Inc., 519 F.3d at 196. Therefore,
based on the foregoing, it is recommended this case be remanded back to state court.
6While many Courts have held that an order of remand is non-dispositive and can be issued
by a United States Magistrate Judge in a non-consent case, it is not firmly established whether the
undersigned can issue an order of remand, or whether a Report and Recommendation is required.
See Jones v. Unison Ins. Co., No, 00-1217, 2000 WL 1350648, at * I (40 Cir. Sept. 20, 2000)
[Noting that Fourth Circuit has not addressed question of whether Magistrate Judge may issue
remand orders in non-consent cases]; cf Williams v. Beemiller. Inc.. 527 F.3d 259 (2d Cir.
2008)[Finding that remand orders are dispositive]; Vogel v. U.S. Office Products Co., 258 F.3d 509,
514-517 (6th Cir. 2001)[same]; First Union Mortgage Co. v. Smith, 229 F.3d 992, 996-997 (10th
Cir. 2000)[same]; In re U.S. Healthcare, 159 F.3d 142, 145-146 (3d Cir. 1998)[same]; Vapuillas
Ranch Co. v, Texaco Exploration & Production. Inc., 844 F. Supp. 1156, 1163 (S.D.Texas 1994);
McDonough v. Blue Cross of Northeastern Pennsylvania, 131 F.R.D. 467 (W.D.Pa. 1990); Cit"Lof
Jackson v. Lakeland Lounge of Jackson, Inc., 147 F.R.D. 122, 124 (S.D.Miss. 1993); Long v.
Lockheed Missiles & Space Co., 783 F.Supp. 249 (D.S.C. 1992); Stanion v. Staley, No. 16-750,
2016 WL 3629087 at * 1, n. 1 .(D.N.C. June 29,2016); William E. Smith Trucking. Inc. v. Rush
Trucking Centers of North Carolina, Inc., No. 11-887,2012 WL 214155, at * 2-6 (M,D.N.C. Jan.
24 ) 2012) [Analyzing relevant statutes and caselaw and finding that remand order is nondispositive];
Pikkert v. Pastene, No. 03-1212,2003 WL 21154296 (4th Cir. May 20, 2013), cert. denied, 541 U.S.
987 (2014)[unpublished, but finding that a magistrate judge's remand order is not reviewable by the
appellate court]. While the undersigned has issued orders of remand in some circumstances, in light
of the Defendant Koola' s p
status, and out of an abundance of caution, this Report and
Recommendation, instead of an Order, is being entered so that the Defendant can contest remand
before the District Judge, if he so desires.
A
7 .
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The parties are referred to the
Ju1
2016
Charleston, South Carolina
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2:16-cv-01634-RMG Date Filed 07/29/16 Entry Number 27 Page 9 of 9
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and
Recommendation with the District Judge. Objections must specifically identify the portions of the
Report and Recommendation to which objections are made and the basis for such objections. "[I]n
the absence of a timely filed objection, a district court need not conduct a de novo review, but instead
must 'only satisfy itself that there is no clear error on the face of the record in order to accept the
recommendation.'" Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005)
(quoting Fed. R. Civ. P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of
this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); see Fed. R. Civ. P.
6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by
mailing objections to:
Robin L. Blume, Clerk
United States District Court
Post Office Box 835
Charleston, South Carolina 29402
Failure to timely file specific written objections to this Report and Recommendation
will result in waiver of the right to appeal from a judgment of the District Court based upon
such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Am, 474 U.S. 140 (1985); Wright v.
Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronee, 727 F.2d 91 (4th Cir. 1984).
039
P
FILED: September 12, 2017
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 17-1013
(2:16-cv-0 163 4-RMG)
BANK OF AMERICA NA
Plaintiff Appellee
-
V.
JOHNSON D. KOOLA
Defendant Appellant
-
ORDER
The court denies the petition for rehearing and rehearing en bane. No judge
requested a poll under Fed. R. App. P. 35 on the petition for rehearing en bane.
Entered at the direction of the panel: Judge Wilkinson, Judge Niemeyer, and
Judge Motz.
For the Court
Is! Patricia S. Connor, Clerk
APPENDIX F.
040
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.