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Scott v. CG Bellkor, LLC

United States District Court, E.D. Virginia, Richmond Division

March 27, 2017

TYRONE REED SCOTT, Administrator of the Estate of Delia Scott, Plaintiff,
v.
CG BELLKOR, LLC, et al, Defendants.

          MEMORANDUM OPINION

          M. Hannah Lauck, Judge

         This matter comes before the Court on three motions: (1) the Motion to Dismiss Non-Diverse Parties filed by Defendant Fickling Management Services ("Fickling") (the "Motion to Drop Parties"), (ECF No. 18); (2) the Motion to Dismiss for Failure to State a Claim filed by Fickling (the "Fickling Motion to Dismiss"), (ECF No. 20); and, (3) the Motion to Dismiss for Failure to State a Claim/Lack of Subject Matter Jurisdiction filed by Defendant Blue Valley Apartments, LLC ("Blue Valley") (the "Blue Valley Motion to Dismiss"), (ECF No. 22). Defendants CG Bellkor, LLC and Premier Re Fund, III LLC have not appeared in this case.

         Plaintiff Tyrone Reed Scott[1] has responded to the Motion to Drop Parties, (ECF No. 24), the Fickling Motion to Dismiss, (ECF No. 26), and the Blue Valley Motion to Dismiss, (ECF No. 25). Fickling replied to Plaintiffs response to the Motion to Drop Parties, (ECF No. 28), and to Plaintiffs response to the Fickling Motion to Dismiss, (ECF No. 29). Blue Valley replied to Plaintiffs response to the Blue Valley Motion. (ECF No. 27.) Accordingly, the matters are ripe for disposition. The Court dispenses with oral argument because the materials before it adequately present the facts and legal contentions, and argument would not aid the decisional process. For the reasons that follow, the Court will grant the Motion to Drop Parties, the Fickling Motion to Dismiss, and the Blue Valley Motion to Dismiss.

         I. Factual and Procedural Background

         A. Procedural Background

         Plaintiff filed two complaints in the Circuit Court for the City of Richmond. Fickling removed this case ("Scott /') with Blue Valley's consent, and Blue Valley removed the other, Tyrone Scott v. CG Bellkor, LLC, et al. ("Scott IF), No. 3:16cvl4 (E.D. Va. filed Jan. 6, 2016), with Fickling's consent. Both defendants removed pursuant to 28 U.S.C. §§ 1441[2] and 1446, [3]asserting diversity jurisdiction under 28 U.S.C. § 1332[4] as the basis for removal.[5] Both complaints named as defendants CG Bellkor, LLC, Blue Valley Apartments, Inc., and Fickling Management Services. Scott II also named as a defendant Premier RE Fund, III LLC. In all other respects, the two complaints were identical. The Court consolidated the two cases into this case number, and directed the parties to address the issue of fraudulent joinder and file responsive pleadings. (May 17, 2016 O. 3, ECF No. 17.) Fickling then filed the Motion to Drop Parties and the Fickling Motion to Dismiss, and Blue Valley filed the Blue Valley Motion to Dismiss. All motions are ripe for disposition.

         B. Summary of Allegations in the Complaint[6]

         Ms. Scott, a Virginia resident, worked as a Leasing Agent at the Chamberlayne Garden Apartments (the "Apartments"). (Compl. ¶ 13.) On December 19, 2013, Ms. Scott reported to work at the Apartments' Management Office with the Apartments' Property Manager, Carolyn Chapman. During Ms. Scott's shift, a man named Benjamin Dancy entered the leasing office and asked to speak with a leasing agent who no longer worked for the Apartments. When Ms. Scott told Dancy that the leasing agent Dancy asked for no longer worked there, Dancy pulled out a knife, robbed Ms. Scott, and ushered Ms. Scott and Ms. Chapman into the bathroom adjacent to the leasing office. Dancy then stabbed Ms. Scott multiple times. Ms. Scott died from the stab wounds that night.

         Before the incident on December 19, 2013, Ms. Scott had "advised [the Apartments'] Management of the criminal activity on or around [the Apartments]" and had requested that the Apartments' Management hire security to "patrol the area and protect" the employees. (Compl. ¶¶ 18, 19.)[7]

         Plaintiff brings a claim of negligence against CG Bellkor, LLC, Blue Valley, Fickling, and Premier Re Fund III arising out of Ms. Scott's death. In support of his claim, Plaintiff asserts that all defendants: (1) "should have known that there was increased criminal activity at or surrounding the [Apartments], " (Compl. ¶ 21); (2) "had a duty to act to prevent or eliminate a known threat, " (Compl. ¶ 22); (3) had additional duties to "provide adequate security, [and to] protect from foreseeable acts, " (Compl. ¶ 24); and, (4) "should have known that security was necessary to patrol and protect [Ms. Scott], " (Compl. ¶ 23). Plaintiff avers that "[a]s a direct and proximate result of the negligent actions of the Defendants ... [Ms. Scott] has suffered a loss of life, wages[J and future income." (Compl. at 4.) Plaintiff, as the administrator of Ms. Scott's estate, sues on Ms. Scott's behalf seeking one hundred million dollars in compensatory damages and one hundred million dollars in punitive damages.

         II. Analysis; Motion to Drop Parties

         Because federal courts are courts of limited subject-matter jurisdiction, if the Court lacks jurisdiction over this matter, it cannot rule on the merits of the Fickling Motion to Dismiss or the Blue Valley Motion to Dismiss. Instead, the Court must remand this case to the state court. Accordingly, the Court will address the Motion to Drop Parties first.

         The Motion to Drop Parties seeks to dismiss CG Bellkor, LLC ("CG Bellkor") and Premier RE Fund, III LLC ("Premier") as fraudulently joined. (Mot. Drop Parties 2.) Fickling argues that the Court should drop CG Bellkor because it "ceased to exist as a legal entity on December 5, 2013, two weeks before the incident sued upon in this matter." (Id. at 3.) On May 30, 2013, CG Bellkor sold the Apartments to Blue Valley and "relinquished ownership, operations[, ] and maintenance of the Apartments." (Id.) Therefore, "[a]s of May 30, 2013, more than six months prior to the incident complained of [in Plaintiffs Complaint], CG Bellkor no longer owned, operated[, ] or maintained the Apartments." (Id.) Fickling contends that Premier should be dropped because it "had no interest, ownership or otherwise, and no operations or maintenance responsibilities with respect to the Apartments on December 19, 2013." (Id. at 4.)

         Further, contrary to the allegations in Plaintiffs Complaint, Fickling contends that "Premier did not "merge with or purchase stock" or "assume the debts and/or liabilities" of either CG Bellkor or Blue Valley. (Id.)

         Thus, according to Fickling, the important dates and events are as follows:

May 30, 2013:

CG Bellkor sold the Apartments

May 30, 2013:

Blue Valley bought the apartments

December 5, 2013:

CG Bellkor ceased to exist as a legal entity

December 19, 2013:

Ms. Scott murdered at the Apartments

May 15, 2014:

Premier formed as a corporate entity

July 28, 2014:

Premier first acquired an interest in the Apartments

         In support of its Motion to Drop Parties, Fickling refers to the Notice of Cancellation of Existence of CG Bellkor, LLC (the "Notice of Cancellation"), (ECF No. 1-3), and the Substitute Trustee's Deed (the "Deed"), (ECF No. 1-4), both of which were attached to Fickling's Notice of Removal, and attaches the Affidavit of Jonathan Cutler, Manager of Premier RE Fund III LLC (the "Cutler Affidavit"), (ECF No. 19-1). The Notice of Cancellation comes from the Commonwealth of Virginia State Corporation Commission Office of the Clerk and states that, because the Commission did not receive CG Bellkor's annual registration fee on or before November 30, 2013, CG Bellkor's "existence was automatically canceled as of that date." (Notice Cancellation 1.) The cancellation means that CG Bellkor "is no longer authorized to transact business and its properties and affairs have passed automatically to its managers, members, or holders of its interests as trustees in liquidation." (Id.) The Deed, dated June 14, 2013, indicates that CG Bellkor defaulted on a Note, which was secured by the Apartments. (Deed of Trust ¶ A.) On November 8, 2012, Fannie Mae accelerated the Note and loan, and appointed a substitute trustee who sold the property at a public auction on May 30, 2013. (Id. ¶¶ C-E.) Fannie Mae bought the property at auction and sold it to Blue Valley. (Id. ¶ F, G.)

         The Affidavit of Jonathan Cutler outlines the lack of relationship between Premier and CG Bellkor or Blue Valley. Cutler, the Manager of Premier RE Fund III LLC, attests that Premier formed as a corporate entity on May 15, 2014, and first acquired an ownership interest in the Apartments on July 28, 2014. Cutler states that Premier "acquired Chamberlayne Garden Apartments from Blue Valley Apartments, Inc. through a traditional real estate purchase agreement, with no consideration or contemplation of merging, purchasing stock[, ] or assuming the debts and/or liabilities of Blue Valley Apartments, Inc., or any other entity." (Cutler Aff. ¶ 8.) Specifically, Cutler swears that Premier "did not merge with or purchase stock" and "did not, at any time, assume the debts and/or liabilities" of Blue Valley. (Id. ¶¶ 9, 10.) Cutler vows that Premier "does not now, nor has it ever had, [sic] any relationships or conducted any transactions, business or otherwise, with CG Bellkor." (Id. ¶ 4.) Premier "did not merge with or purchase stock" and "did not, at any time, assume the debts and/or liabilities" of CG Bellkor. (Id. ¶¶ 5, 6.) Cutler affirms that Premier "had no interest, ownership or otherwise, and no operations or maintenance responsibilities with respect to Chamberlayne Garden Apartments as of December 19, 2013." (Id. ¶ 11.)

         Plaintiff offers no evidence to rebut the Cutler Affidavit, the Notice of Cancellation, or the Deed. Plaintiff concedes that "there is no dispute about when Premiere [sic] acquired the subject property, " but argues that Premier's lack of interest in the Apartments at the time of Ms. Scott's death "does not preclude Premier from being held liable." (Pl.'s Resp. Mot. Dismiss Parties 3, ECF No. 24.) Plaintiff contends that "just because CG Belkor [sic] owned the land before the incident does not necessarily indicate that CG Belkor [sic] relinquished all responsibilities." (Id.) Plaintiff further states that "Plaintiff is uncertain as to whether or not the acquisition by Premiere [sic] was an outright land transfer, a stock/asset purchase, or if Premier assumed any responsibilities for handling debts and/or claims against the party before they acquired ownership." (Id. at 4.) Plaintiff presents nothing to support his bald speculations that the information in the Cutler Affidavit is incorrect.

         A. Removal Jurisdiction

         Under 28 U.S.C. § 1441(a), [8] a defendant may remove a civil action to a federal district court if the plaintiff could have originally brought the action in federal court. 28 U.S.C. § 1441(a). Section 1446 delineates the procedure for removal, including the requirement that the defendant file a notice of removal in the district court and the state court. See 28 U.S.C. §§ 1446(a), (d). The state court loses jurisdiction upon the removal of an action to federal court. 28 U.S.C. § 1446(d) ("[T]he State court shall proceed no further unless and until the case is remanded.").

         "The party seeking removal bears the initial burden of establishing federal jurisdiction." Abraham v. Cracker Barrel Old Country Store, Inc., Civil Action No. 3:1 lcvl82, 2011 WL 1790168, at *1 (E.D. Va. May 9, 2011) (citing Mulcahey v. Columbia Organic Chem. Co., 29 F.3d 148, 151 (4th Cir. 1994)). No presumption favoring the existence of federal subject matter jurisdiction exists because federal courts have limited, not general, jurisdiction. Id. (citing Pinkley Inc. v. City of Frederick, 191 F.3d 394, 399 (4th Cir. 1999)). Courts must construe removal jurisdiction strictly. Id. (citing Mulcahey, 29 F.3d at 151). "If federal jurisdiction is doubtful, a remand is necessary." Id. (quoting Mulcahey, 29 F.3d at 151).

         Federal diversity jurisdiction requires complete diversity of citizenship. Id. at *2 (citing Carden v. Arkoma Assocs., 494 U.S. 185, 187 (1990)); see also 28 U.S.C. § 1332(a)(1). "[T]he 'citizenship of each plaintiff [must be] diverse from the citizenship of each defendant.'" Abraham, 2011 WL 1790168, at *2 (quoting Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996) (second alteration in original)).

         B. The Fraudulent Joinder Doctrine

         The fraudulent joinder doctrine operates as an exception to the complete diversity requirement, permitting a district court to disregard, for jurisdictional purposes, the citizenship of certain nondiverse defendants, assume jurisdiction over a case, and dismiss the nondiverse defendants, thereby retaining jurisdiction. Id. (citing Mayes v. Rapoport,198 F.3d 457, 461 (4th Cir. 1999)). "To show fraudulent joinder, the removing party must demonstrate either 'outright fraud in the plaintiffs pleading of jurisdictional facts' or that 'there is no possibility that the plaintiff would be able to establish a cause of action against the in-state defendant in state court.'" Hartley v. CSX Transp., Inc.,187 F.3d 422, 424 (4th Cir. 1999) (alteration in original) (quoting Marshall v. Manville Sales Corp.,6 F.3d 229, 232 (4th Cir. 1993)). "The party alleging fraudulent joinder bears a heavy burden-it must show that the plaintiff cannot establish a claim even after resolving all issues of law and fact in the plaintiffs favor." Id. "This standard is even more favorable to the plaintiff than the standard for ruling on a motion to dismiss under [Federal Rule of Civil Procedure] 12(b)(6)." Id. A defendant is fraudulently joined "if there is no 'reasonable basis for predicting that state law might impose ...


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