UMC DEVELOPMENT, LLC аnd Jacksophie GSCH, LLC, Plaintiffs, v. DISTRICT OF COLUMBIA, et al., Defendants.
Civil Action No. 13-899 (GK)
United States District Court, District of Columbia.
October 8, 2013
GLADYS KESSLER, United States District Judge
In sum, none of Allina‘s arguments establishes that the Secretary‘s reading of the relevant statutory language is impermissible or unreasonable. And given the wide deference due the Secretary in interpreting the complexities of the Mediсare statute, the Court concludes that Allina‘s challenges under the APA are without merit.
CONCLUSION
For the foregoing reasons, the Court concludes that Allina‘s Motion for Summary Judgment will be DENIED and that the Secretary‘s Cross-Motion for Summary Judgment will be GRANTED. An appropriate Order accompanies this Memorandum Opinion.
later vacated without any substantive discussion by the CMS Administrator on the interpretive question at issue. Thus, neither of those adjudications established the Secretary‘s intеrpretation of the phrase “entitled to benefits under [Medicare] Part A” as used in the Medicaid fraction of the DSH proxy formula.
Derek Lawrence Shaffer, Heather H. Martin, Quinn Emanuel Urquhart & Sullivan, LLP, Washington, DC, for Plaintiffs.
MEMORANDUM OPINION
GLADYS KESSLER, United States District Judge
Plaintiffs UMC Development, LLC (“UMC“) and Jacksophie GSCH, LLC (“Jacksophie“) (cоllectively, “Plaintiffs“) bring this action against the District of Columbia and its Mayor, Vincent Gray (collectively, the “District Defendants“), Specialty Hospital of Washington-GSE Holdings, LLC (“SHW-GSE“), CMC Realty, LLC (“CMC“), and Not-for-Profit-Hospital, Corporation (“NFPHC“) (collectively, “Defendants“) for wrongful foreclosure, breach of contract, and related claims.
This matter is before the Court on Plaintiffs’ Motion to Remand the case to the District of Columbia Superior Court [Dkt. No. 6]. Upon consideration оf the Motion, the District Defendants’ Opposition [Dkt. No. 7], Plaintiffs’ Reply [Dkt. No. 8], NFPHC‘s Notice of Consent to Accept Service of Process [Dkt. No. 10], the District Defendants’ Sur-Reply [Dkt. No. 13], Plaintiffs’ Response to Docket Nos. 10, 11, and 13 and in Support of Plaintiffs’ Motion to Remand [Dkt. No. 15], Plaintiffs’ Evidentiary Objections to Docket No. 11-1 [Dkt. No. 14], NFPHC‘s Opposition to Plaintiffs’ Motion to Remand [Dkt. No. 20], and NFPHC‘s Notice of Joinder in Removal [Dkt. No. 24], and the entire record herein, and for the reasons
I. BACKGROUND1
This action arises out of a 2007 public-private development project between the District, Specialty Hospitals of America, LLC (“SHA“), and various SHA entities, which was aimed at rescuing the District‘s Greater Southeast Community Hospital (“Hospital“) from financial insolvency. Compl. ¶¶ 1, 16, 17. As part of this undertaking, the District entered into a limited partnership agrеement with Defendant SHW-GSE, a subsidiary of SHA, pursuant to which the District invested $49 million for the purpose of refinancing the Hospital and redeveloping its surrounding property. Compl. ¶¶ 20-25. Another SHA subsidiary, Defendant CMC, was created to own and manage the real property containing and surrounding the Hospital. Compl. ¶ 13. SHW-GSE and CMC then entered into a joint venture with Plaintiff Jacksophie through which Plaintiff UMC was to acquire some of the land surrounding the Hospital from CMC, along with related development rights. Compl. ¶¶ 29, 30, 32.
Despite the infusion of more than $50 million of public funds into the refinancing and redevelopment project, the Hospital‘s financial condition continued to deteriorate. Compl. ¶¶ 46-59. In 2010, the District declared the parent developer in default of various loan agreements, and foreclosed on the land containing and surrounding the Hospital, including the lots to be acquired by UMC. Compl. ¶¶ 60-71. Defendant CMC sued the District to prevent foreclosure, but dropped its case in 2011 after settling with the District. Compl. ¶¶ 69, 73; see CMC Realty, LLC v. Dist. of Columbia, No. 2010 CA 004571 (D.C. Super. Ct.) (the “Foreclosure Action“).
On May 31, 2013, Plaintiffs filed this action in the Superior Court for the District of Columbia bringing claims for, inter alia, wrongful foreclosure, breach of contract, specific performance, restitution, unjust enrichment, breach of fiduciary duty, tortious interference with prospective economic advantage, and violations of the Due Process Clause and the Takings Clause of the Fifth Amendment. Sеe Compl. ¶¶ 76-147.
On June 14, 2013, the District Defendants removed the case to this Court pursuant to
On July 12, 2013, Plaintiffs moved to remand the case to Superior Court, arguing that the District Defendants’ removal was procedurally defective because they had not obtained SHW-GSE‘s and CMC‘s timely consent to removal. [Dkt. No. 6]. On July 26, 2013, the District Defendants filеd an Opposition to the Motion (“Dist. Defs.’ Opp‘n“) [Dkt. No. 7]. On July 30, 2013, Plaintiffs filed a Reply (“Pls.’ Reply“)
Separately, on August 2, 2013, NFPHC, who had not previously appeared in the action, filed an appearance along with a Notice of Consent to Accept Service of Process Rendering Plaintiffs’ Motion to Remand Moot (“NFPHC‘s Notice“) [Dkt. No. 10]. NFPHC‘s Notice indicated that it also sought removal of the action, and сontended, therefore, that even if the District Defendants’ removal was procedurally defective, its own timely removal rendered the basis of Plaintiffs’ Motion to Remand moot. NFPHC‘s Notice was accompanied by the written consent to removal of all Defendants. [Dkt. No. 10-1]. On August 9, 2013, Plaintiffs filed a Response to NFPHC‘s Notice and the District Defendants’ Sur-Reply (“Pls.’ Sur-Sur-Reply“) [Dkt. No. 15] and a Notice of Evidentiary Objections to the exhibit to the District Defendants’ Sur-Reply [Dkt. No. 14]. On August 15, 2013, NFPHC filed an Opposition to Plaintiffs’ Motion to Remand (“NFPHC‘s Opp‘n“) [Dkt. No. 20]. Plaintiffs did not file a further response.3
II. STANDARD OF REVIEW
Under the federal removal statute “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.”
Where, as here, an action has been removed solely pursuant to
If a defendant‘s notice of removal is procedurally defective, a plaintiff may, within 30 days of such removal, move the court to remand the case back to state court. See
III. ANALYSIS
Plaintiffs’ primary contention is that the District Defendants’ Notiсe of Removal was defective because it was not accompanied by the timely consent of SHW-GSE and CMC. See Pls.’ Mem. at 2-5. The District Defendants argue that they were
Although the parties spend the better part of their papers debating these points, the Court need not reach them. Section
A. NFPHC‘s Removal Was Timely
Plaintiffs contend that NFPHC‘s removal was not timely because it was filed more than 30 days after Plaintiffs purportedly served NFPHC by mailing a copy of the summons, Complaint and initial order to the Mayor and the District of Columbia Office of the Attorney General. Pls.’ Sur-Sur-Reply at 6.
In response, NFPHC points out that Plaintiffs’ counsel‘s own affidavit establishes that she never attempted to sеrve NFPHC through the Mayor and the Attorney General, but instead endeavored to effect service through the District of Columbia‘s Superintendent of Corporations. NFPHC‘s Opp‘n at 5-6; see also Affidavit of Heather H. Martin ¶ 4 [Dkt. No. 8-1]. NDPHC also maintains that it would make no difference if Plaintiffs had served NFPHC through the Mayor and Attorney General because NFPHC could not be served through those offices; instead, it was required to be served through its chief executive officer pursuant tо
The Supreme Court has held that the 30-day period for removal under
District of Columbia law controls as to when effeсtive service occurred. See City of Clarksdale v. BellSouth Telecomm., Inc., 428 F.3d 206, 210 n. 6 (5th Cir.2005) (explaining that a court “look[s] to state law to verify that service of process effectively brought the defendant within the state court‘s jurisdiction“) (citing Lambert Run Coal Co. v. Baltimore & Ohio R.R., 258 U.S. 377, 382, 42 S.Ct. 349, 66 L.Ed. 671 (1922)). The parties agree that
The parties disagree, however, as to whether subsection 1 or 2 of Rule 4(j) applies. Plaintiffs argue that the Court should apply
The Council of the District of Columbia created NFPHC as “an instrumentality of the District” with a “separate legal existence within the District government,” and the power to sue and be sued in its own corporate name. See
Plaintiffs argue that
In any event, the debate between
NFPHC filed its notice of removal on August 2, well within thirty days of July 30. [Dkt. Nos. 10, 10-1]. Therefore, its removal was timely, and there is no justification for remanding the case because of any defect in the removal procedure.
B. The Court Declines to Exercise Supplemental Jurisdiction Over Plaintiffs’ D.C. Claims
Plaintiffs also ask the Court to exercise its discretion under
Defendants oppose remand of the D.C. claims, but they have not addressed Plaintiffs’ contention that such claims predominate over the federal claims. Insteаd, they argue that the Court is compelled to exercise jurisdiction because “section 1367(a) authorizes a district court to exercise its supplemental jurisdiction in mandatory language.” Dist. Defs.’ Opp‘n at 5 (emphasis added by District Defendants) (citing Lindsay v. Gov‘t Employees Ins. Co., 448 F.3d 416, 421 (D.C.Cir.2006)); see also NFPHC‘s Opp‘n at 7-8.
There is no dispute that the Court has original jurisdiction over Plaintiffs’ constitutional law claims, and the authority to exercise supplemental jurisdiction over the D.C. claims, which arise out of the same series of transactions as the constitutional claims. See Pls.’ Reply at 2, 5;
However, section 1367(c) expressly grants district courts the discretion to decline to exercise supplemеntal jurisdiction over a claim where: “(1) the claim raises a novel or complex issue of State law, (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction, or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.”
a doctrine of discretion, not of plaintiff‘s right. Its justification lies in considerations of judicial economy, convenience and fairness to litigants; if these are not present a federal court should hesitate to exercise jurisdiction over state claim . . . Needless decisions of state law should be avoided both as a matter of comity and to promote justice between
Two statutory grounds for declining supplemental jurisdiction support Plaintiffs’ position. First, Plaintiffs’ D.C. claims are four times as numerous as their federal claims, and provide a far broader basis for relief. The D.C. claims present contract, property, tort, fiduciary duty, and equitable theories, whereas the two federal claims invoke relatively narrow grounds for relief under the Fifth Amendment. Further, Plаintiffs are correct that, under the doctrine of constitutional avoidance, success on their D.C. claims may negate the need to reach the constitutional claims at all. See Lyng v. Nw. Indian Cemetery Protective Ass‘n, 485 U.S. 439, 445, 108 S.Ct. 1319, 99 L.Ed.2d 534 (1988) (“A fundamental and longstanding principle of judicial restraint requires that courts avoid reaching constitutional questions in advance of the necessity of deciding them.“) (citation omitted).
Second, Plaintiffs’ D.C. claims raise novel and complex issues of D.C. law. As alreаdy discussed, NFPHC, which was created by the District to acquire and operate the Hospital‘s assets after foreclosure, is a special governmental instrumentality with its own authorizing legislation under the D.C. Code. See
For example, the District Defendants have already moved to dismiss all of the claims against them on grounds of sovereign immunity. See Dist. Defs.’ Mot. to Dismiss All Claims in the Complaint Against Them at 13-22 [Dkt. No. 17]. Whether the District Defendants are immune from tort liability in this case turns on whether their actions involved “the permissible exercise of policy judgment[,]” a question the D.C. Court of Appeals has acknowledged “is not always an easy task” to answer. Aguehounde v. Dist. of Columbia, 666 A.2d 443, 447-48 (D.C.1995). The answer turns solely on D.C. law. See e.g., Owen v. City of Independence, 445 U.S. 622, 649, 100 S.Ct. 1398, 63 L.Ed.2d 673 (1980) (discussing the traditional “rationale underlying the common-law immunity for ‘discretionary’ functions” of municipalities) (emphasis added); Aguehounde, 666 A.2d at 447 (“Under the common law, a municipality is immune from suit for decisions made pursuant to the exercise of discretion, but not for actions which are ministerial.“) (emphasis added; citations omitted).
Because the D.C. courts have not yet interpreted the statutory and contractual authority creating the East of the River Hospital Revitalization Project, this Court would have little to guide it in determining whether the District‘s decision to foreclose on the land surrounding the Hospital was a permissible exercise of policy judgment. Accordingly, such an issue is more appropriately addressed by the District of Columbia courts. See Women Prisoners of D.C. Dep‘t of Corr., 93 F.3d at 922 (“The
Separately, determining whether Plaintiffs are entitled to equitable relief in the event that the legal remedies they seek are denied, will involve a nuanced balancing of public and private interests. As with the question of immunity, there is no direct guidance from the District of Columbia courts as to how this Court should weigh the public and private interests in this case, a consideration that favors remand. Cf. id. at 921-22 (agreeing “that the novelty of appellees’ request for equitable relief . . . precluded the exercise of supplemental jurisdiction“).
The District of Columbia courts are better equipped to address Plaintiffs’ D.C. claims, not only because they present novel and complex legal issues, but also because they implicate distinctly local policy interests, and may affect the District‘s ability to enter into similar public-private ventures in the future. See id. at 923 (“‘In general, principles of comity and the desirability of surer-footed reading of applicable law support the determination of state claims in state court. Moreover, the district court should not retain jurisdiction because this case directly implicates the processes by which a locality governs itself.‘“) (emphasis in original) (quoting Grano v. Barry, 733 F.2d 164, 169 (D.C.Cir.1984)).
Further, although it is not an express consideration under
Accordingly, the Court declines to exercise supplemental jurisdiction over Plaintiffs D.C. claims pursuant to
IV. CONCLUSION
For the foregoing reasons, Plaintiffs’ Motion to Remand is granted in part. An Order shall accompany this Memorandum Opinion.
ELECTRONIC PRIVACY INFORMATION CENTER, Plaintiff, v. OFFICE OF THE DIRECTOR OF NATIONAL INTELLIGENCE, Defendant.
Civil Action No. 12-1282 (JEB)
United States District Court, District of Columbia.
October 9, 2013