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Twin Trees, LLC v. Haring

United States District Court, W.D. Virginia, Harrisonburg Division

May 2, 2019

TWIN TREES, LLC, Plaintiff,
v.
ELIZABETH HARING, Defendant.

          MEMORANDUM OPINION

          MICHAEL F. URBANSKI, CHIEF UNITED STATES DISTRICT JUDGE

         Plaintiff Twin Trees, LLC ("Twin Trees") filed an unlawful detainer action to evict a corporate tenant of which defendant Elizabeth Haring ("Haring") was president. After receiving a judgment in state court, Twin Trees filed two summonses to be served on Haring; after a series of missed hearings and bankruptcy petitions, Haring removed this matter to this court. Twin Trees moved to remand. Pursuant to 28 U.S.C. § 636(b)(1)(B), the court referred the issue of removability to United States Magistrate Judge Joel C. Hoppe for a report and recommendation. Judge Hoppe recommended Twin Trees's motion be granted, and Haring objected to this conclusion.

         For the reasons stated below, the court will OVERRULE Haring's objection, ADOPT the report and recommendation in its entirety, and GRANT Twin Trees's motion to remand.

         I.

         This issue arises from a landlord-tenant dispute that began in the fall of 2014, when Twin Trees and "Hughes Insurance and Old Town Insurance" executed a three-year lease on a building in Mount Jackson, Virginia. ECF No. 1-2, at 13. Hating (then Elizabeth Coomes) and her husband at the time, Charles R. Coomes ("Coomes"), signed on behalf of tenants Hughes Insurance/Old Town. Id. at 16-17. The tenants stopped paying rent, and in late November of 2015, both Hating and Coomes vacated the property. Id. at 11.

         Twin Trees filed an unlawful detainer action to evict in die Shenandoah County General District Court in October 2015. ECF No. 7-1, at 1. The summons named "Old Town Insurance & Financial Services, Inc." as the sole defendant and alleged that Old Town had breached the lease by failing to pay $2, 200 in rent and $220 in late fees. Id. Twin Trees also sought $2, 451.52 in damages for renovation at the property, plus court costs and interest. Id. Twin Trees later filed a motion to amend to request additional damages and reimbursement. ECF No. 1-4, at 1-5.

         After heating argument on the amended unlawful detainer claim, the Honorable Judge W. Dale Houff of the Shenandoah County General District Court entered default judgment against Old Town in the amount of $6, 877.34, plus possession of the property and late fees. See ECF No. 7-1. On March 3, 2016, Hating filed for bankruptcy under Chapter 13 in the United States Bankruptcy Court for the Western District of Virginia, Harrisonburg Division. ECF No. 7-3, at 1. Hating had, however, filed for bankruptcy twice in the previous year, and pursuant to 11 U.S.C. § 362(c)(4)(A), the automatic stay did not go into effect. Coomes v. Structured Asset Sec, No. 5:16-cv-48, 2017 WL 2799903, at *1 (W.D. Va. June 27, 2017). When one of her creditors filed a motion to confirm that no stay was in effect, Hating asked the court to impose a stay despite the previous bankruptcy petitions. Id. On May 9, the bankruptcy court did so, with the condition Hating timely pay her mortgage and "achieve a confirmed Chapter 13 Plan by July 6, 2016." Id. After several continuances, the bankruptcy court dismissed Haring's Chapter 13 petition on May 9, 2016 because Haring had failed to make the required payments and her proposed Chapter 13 plan that was "not feasible and confirmable." Id. at 3-4.

         Meanwhile, in April 2016, Twin Trees asked the Shenandoah County General District Court to issue two summonses to answer interrogatories in connection with the default judgment against Old Town in die unlawful detainer action. ECF No. 5-1, at 1-2 & 10-11. These summonses were directed to Haring as die registered agent for Old Town but listed two different addresses. Id. The summonses are labeled "Case No. [G]V15-1876-02" and "Case No. [G]V15-1876-03," Id. at 1 & 10; they are collateral proceedings brought to execute the money judgment entered against Old Town.[1] Haring was personally served at one of the addresses to which the summonses were sent, and a hearing was set for May 23, 2016. ECF No. 5-1, at 1 & 10-11. Twin Trees agreed to cancel the hearing and postpone post-judgment proceedings until Haring's bankruptcy proceedings concluded. ECF No. 7-10, at 1-2.

         On September 18, 2017, Twin Trees's counsel appeared in general district court and questioned Haring about Old Town's assets. ECF No. 7-10, at 2. He felt that the responses Haring provided were "vague and incomplete," and so filed a motion for production of documents regarding die corporation's assets. Id. Judge Houff set a hearing on this motion for October 2 at 1:00 pm, but at 8:56 am that day, Haring told the court clerk and Twin Trees's counsel that she would not be present because she lived in Indiana, was having car trouble, and "could not afford to fly to Virginia and rent a car on such short notice." ECF No. 5-2, at 17. Judge Houff then entered an order directing Haring to produce the requested records in her capacity as president of Old Town. ECF No. 7-5, at 1-2.

         Twin Trees filed a motion (later granted) for a hearing to determine whether Haring had complied with the order for production on December 11, 2017. ECF No. 7, at 3. The morning of the hearing, Haring informed the court clerk and Twin Trees's counsel that she would not attend the hearing because she had just filed for Chapter 11 bankruptcy with the United States Bankruptcy Court for the Eastern District of Virginia at Alexandria in Old Town's name. Id. at 3-4. Judge Houff canceled the hearing and stayed post-judgment proceedings. Haring failed to pay the filing fee for her bankruptcy petition despite having been granted an extension of time to do so, and her petition was dismissed without prejudice on May 31, 2018. Id. at 4.

         After this dismissal, Judge Houff rescheduled the hearing to determine if Haring had complied with the order to produce Old Town's financial records. The hearing was set for August 20, 2018 at 2:00 pm. ECF No. 7-8. That day, at 1:10 pm, Haring informed the court clerk and Twin Trees's counsel that she had filed another Chapter 11 bankruptcy petition in Old Town's name, and again the hearing was canceled. ECF No. 7, at 5. After a hearing and a series of motions from Twin Trees, Haring, and Coomes, the bankruptcy court concluded the petition had been filed in bad faith and dismissed it with prejudice on September 10, 2018. In re: Old Town II. No. 18-12856 (Bankr. E.D. Va. Sept. 10, 2018).

         Judge Houff held a status conference on October 15, 2018; Hating had been hospitalized that morning and did not attend. ECF No. 1, at 12. Judge Houff set another hearing to determine if Hating had complied with the motion to produce records. ECF No. 7-13, at 1-2. Hating filed written objections arguing why Judge Houff could not proceed with this matter. ECF No. 5-3. On December 20, 2018, Twin Trees's counsel sent Hating a letter confirming the hearing scheduled for January 7, 2019 before Judge Houff at 2:00 pm and enclosed a copy of the original motion to produce. ECF No. 1-2, at 31-32.[2] Hating filed her notice of removal the morning of January 7, 2019. ECF No. 1. She emailed Twin Trees's counsel and the court clerk at 12:08 pm to inform them she would not be present at the hearing as the removal had "immediately diveste[ed]" the state court "of jurisdiction (assuming for the sake of argument that it had jurisdiction in the first instance)." ECF No. 7-14, at 1. Hating requested Judge Houff not hold the hearing, as she "imagine[d] the Federal Court would entertain a motion for sanctions upon [Twin Trees's counsel] if that occurred." Id. The hearing was continued until April 1, 2019 at 2:00 pm. See ECF No. 5, at 15.

         Hating asserts that this court has original jurisdiction over the state-court proceeding on both federal question and diversity grounds. ECF No. 1. Twin Trees timely filed a motion to remand this matter to state court. ECF No. 7. Apart from contesting the grounds for removal on a substantive level, Twin Trees also asserts that Hating filed her Notice of Removal more than thirty days after she received the initial pleading, and even if this were not so, proceedings could not be removed when she filed her Notice because more than one year had passed since Twin Trees commenced the action. 28 U.S.C. § 1446(b)(1) & (c)(1).

         In addressing the parties' arguments, Judge Hoppe assumed without deciding that: (1) the summonses to answer interrogatories issued on April 20, 2016 are the initial pleadings in Twin Trees, LLC v. Old Town Financial & Investment Services. Inc., Nos. GV15-1876-02 and GV15-1876-03; (2) the post-judgment proceeding is a civil action within the meaning of the general removal statute; and (3) Haring is a "defendant," or a real party in interest to the action, who may seek removal under 28 U.S.C. § 1441(a). Judge Hoppe stated in connection with these assumptions:

I make these assumptions, not because Ms. Haring's arguments have any merit, but for one reason only: to resolve a straightforward question about this court's subject-matter jurisdiction without wading into a veritable thicket of ...

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