113 F. Supp. 3d 804
D. Maryland2015Background
- Trustees filed an order to docket a foreclosure against Rosa Maria Reyes in Montgomery County; foreclosure sale occurred and the court entered a final order of ratification in October 2014.
- After ratification, Reyes filed a response and a counterclaim (asserting RESPA and related defenses against Green Tree Servicing, LLC) on March 19, 2015; the Circuit Court clerk, under a local Administrative Order, opened a new case number for the counterclaim while marking it related to the foreclosure.
- The Administrative Order directs that counterclaims in foreclosure be docketed in the foreclosure case, “severed for the purpose of litigation,” assigned a separate case number, kept as related files, and delivered together to the judge for coordinated handling.
- Green Tree removed the counterclaim-only case (the newly assigned number) to federal court, asserting federal question jurisdiction based on Reyes’s federal claims.
- Reyes moved to remand; the district court analyzed whether the Administrative Order created an independent, removable civil action or merely administratively bifurcated the counterclaim from the foreclosure.
- The court concluded the Administrative Order effected administrative bifurcation/coordination, not creation of an independent action subject to removal, and therefore remanded the case to state court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a counterclaim filed in a foreclosure proceeding (but assigned a new case number under a local Administrative Order) is a separate civil action removable to federal court | Reyes: counterclaim remained part of the foreclosure proceeding and not removable; state court controls severance and docketing | Green Tree: Administrative Order created a separate civil action (severed for litigation) and that separate case is removable | Held: Administrative Order only administratively bifurcated and coordinated the files; it did not create an independent removable action — remand granted |
| Whether federal counterclaims by an original defendant can provide basis for removal | Reyes: federal counterclaim cannot serve as basis for removal when filed within nonremovable foreclosure action | Green Tree: counterclaim raises federal issues so removal is proper as to the counterclaim case number | Held: Court reaffirmed that a federal counterclaim by an original defendant does not create removal jurisdiction over a nonremovable foreclosure action |
| Whether the local Administrative Order’s use of “sever” transforms the counterclaim into an independent action | Reyes: “sever for litigation” is administrative; files remain related, delivered together to judge | Green Tree: “sever” indicates creation of a separate case capable of removal | Held: “Sever” was procedural/bifurcative, not jurisdictional; contextual directives show cases remain related and coordinated |
| Whether federal removal statute should be strictly construed in favor of remand | Reyes: removal burden rests on removing party; doubts resolved in favor of remand | Green Tree: invoked removal right under 28 U.S.C. § 1441(a) | Held: Applied strict construction against removal; removing party failed to carry burden |
Key Cases Cited
- Cohn v. Charles, 857 F. Supp. 2d 544 (D. Md.) (counterclaim in foreclosure does not create removable civil action)
- UTrue, Inc. v. Page One Sci., Inc., 457 F. Supp. 2d 688 (E.D. Va.) (permitting counterclaims to provide removal would improperly expand removal jurisdiction)
- Brown v. Tax Ease Lien Investments, LLC, 77 F. Supp. 3d 598 (W.D. Ky.) (administrative severance/bifurcation does not equal independent removable action)
- Barbour v. Int’l Union, 640 F.3d 599 (4th Cir.) (removal statutes strictly construed; doubts resolved in favor of remand)
- Dixon v. Coburg Dairy, Inc., 369 F.3d 811 (4th Cir.) (burden of demonstrating federal jurisdiction rests with removing party)
- Fairfax Sav. F.S.B. v. Kris Jen Ltd. P’ship, 338 Md. 1 (Md.) (practical difficulties of counterclaims in foreclosure and court’s discretion over severance)