May 22, 2012

Steve Friedman, Senior Attorney, National Legal Research Group

Although the economy is hopefully on the rebound, the deluge of foreclosures continues.  And as the foreclosures continue, so too do the various legal battles associated with them.  A recent case in the U.S. District Court for the District of Maryland addresses an interesting and somewhat "murky" area of civil procedure in the context of a foreclosure action.  Cohn v. Charles, Civ. No. PJM 11-2013, 2012 WL 273751, at *4 (D. Md. Jan. 30, 2012).

I.          Section 1441 Removal

"Removal" is defined as "the transfer of an action from state to federal court."  Black's Law Dictionary "removal" (9th ed. 2009).

Except as otherwise expressly provided by Act of Congress, 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.

28 U.S.C. § 1441(a).  Furthermore, "a claim arising under" federal law may be removed even if coupled with a related state law claim, provided that both the federal and state claims are asserted against the same defendant or defendants.  See id. § 1441(c)(1).

Based on the above-stated portions of the removal statute, it has long been well established that "[o]nly a defendant to an action—neither a counter‑defendant nor a third‑party defendant—may remove a case under § 1441(a)."  Cohn, 2012 WL 273751, at *1 (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 107-09 (1941); Palisades Collections LLC v. Shorts, 552 F.3d 327, 332 (4th Cir. 2008)).

In determining whether an action "arises under federal law" within the meaning of § 1441(c)(1), courts employ the so-called "well-pleaded complaint rule," whereby the court looks to "'the face of the plaintiff's properly pleaded complaint.'"  Id. at *2 (quoting Verizon Md., Inc. v. Global NAPS, Inc., 377 F.3d 355, 363 (4th Cir. 2004) (citing Caterpillar v. Williams, 482 U.S. 386, 392 (1987))).

Accordingly, "[t]o determine whether [a particular] action was properly removed, the Court must first identify which party 'brought' the case in state court," which in turn "will determine which party was the 'defendant' in that court, hence able to initiate removal, and what constituted the 'complaint' for the purposes of the well‑pleaded complaint rule."  Id.

II.         The Cohn Case

In Cohn, the trustees for a deed of trust (the "Trustees") initiated a foreclosure action in the Circuit Court for Prince George's County, Maryland, regarding a certain parcel of Maryland real estate owned by Yanel Charles ("Charles").  See 2012 WL 273751, at *1.  Thereafter, Charles timely filed a counterclaim against the Trustees as well as a third-party complaint against the successor mortgagee, Nationstar Mortgage, LLC ("Nationstar"), alleging violations of the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq., and the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2601 et seq.   In response, the Trustees and Nationstar timely removed the counterclaim and third-party complaint to federal district court pursuant to 28 U.S.C. § 1441(a).  Charles then moved to remand the matter back to state court.

A.         Removal Not Authorized

May 8, 2012

Fred Shackelford, Senior Attorney, National Legal Research Group

Courts in various jurisdictions have arrived at different conclusions when deciding whether umbrella insurance policies are statutorily required to provide uninsured ("UM") or underinsured ("UIM") motorist coverage. One article has summarized the case law as follows:

Although uninsured or underinsured motorist coverage is an almost universally statutorily required component of motor vehicle liability policies, the question whether "excess" or "umbrella" insurance policies are also required to provide such coverage varies jurisdictionally. Many courts addressing the issue have found that umbrella policies, which are designed to protect against an infrequent risk of catastrophic loss in the form of excess judgments, and for which proportionally low premiums are paid, do not fall within the scope of an uninsured motorist statute which was intended to apply only to primary policies . . . .  Conversely, some courts have found that their uninsured motorist statutory schemes do contemplate the inclusion of umbrella policies. Those cases which consider whether an excess or umbrella policy is statutorily required to provide uninsured motorist coverage, as well as cases which consider whether coverage is provided by the terms of a policy, and, if so, at what point such coverage begins, have been collected and analyzed in this annotation.

Lisa K. Gregory, Annotation, "Excess" or "Umbrella" Insurance Policy as Providing Coverage for Accidents with Uninsured or Underinsured Motorists, 2 A.L.R.5th 922 (1992 & Westlaw database updated weekly).

This issue was recently resolved in Colorado in the case of Apodaca v. Allstate Insurance Co., 255 P.3d 1099 (Colo. 2011). In Apodaca, the insureds were covered under automobile and umbrella policies, both of which were issued by Allstate. The automobile policy included UM/UIM coverage in the amount of $100,000 per person and $300,000 per occurrence, while the umbrella policy provided $1 million in excess liability coverage for occurrences arising out of, among other things, "occupancy of a land vehicle . . . by an insured for personal transportation."  Id. at 1100. The umbrella policy did not expressly provide UM/UIM coverage, and it specifically excluded coverage for "personal injury or bodily injury to an insured."  Id. at 1101.

A Colorado statute requires that UM/UIM coverage be offered and included, unless rejected in writing, in any "automobile liability or motor vehicle liability policy" delivered or issued in Colorado.  Colo. Rev. Stat. § 10-4-609(1)(a). The court framed the issue as whether an umbrella policy that includes supplemental liability coverage for automobiles or motor vehicles is within the scope of this statute.  The court noted that an umbrella policy is a distinct type of excess liability policy, which may also provide primary coverage for certain risks that an underlying policy may not cover.

The Lawletter Vol 36 No 11

Fred Shackelford, Senior Attorney, National Legal Research Group

What is the potential liability of a testing laboratory that incorrectly analyzes a DNA sample?  This was the issue before the Oklahoma Supreme Court in Berman v. Laboratory Corp. of America, 2011 OK 106, 268 P.3d 68.  In the Berman case, the plaintiff sought assistance from the Department of Human Services ("DHS") to determine the paternity of her child and to collect child support.  The agency arranged for the defendant laboratory (LabCorp) to conduct a DNA test. LabCorp tested the sample twice and both times incorrectly reported that a particular individual, Herbert White Jr., was not the child's father.

However, after a different laboratory performed a DNA test and found that White was in fact the father, the plaintiff sued LabCorp for having negligently tested the DNA sample.  She sought damages for the loss of past and future child support payments that White would have been required to pay if the paternity test results had been correctly reported.  After the court disposed of an immunity defense, it addressed an issue of first impression in Oklahoma: "[D]oes LabCorp owe Berman, as the parent seeking to prove the paternity of her child, a duty of care to conduct accurate DNA testing which was ordered by DHS for child support purposes?"  Id. ¶ 16.

The Lawletter Vol 36 No 11

Matt McDavitt, Senior Attorney, National Legal Research Group

While a person's entry upon the land of another without consent ordinarily constitutes tortious trespass, there are exceptions to the rule, including privileged entry based on necessity.  Factually, privileged entry might occur in a circumstance where a person's property or dependents (i.e., an animal or a child) enters or wanders onto the property of another and necessity dictates that for the parent or owner to retrieve his or her property or offspring, he or she must enter the lands of another.  This so-called "privileged entry" exception appears in the Restatement (Second) of Torts:

(1)        One is privileged to enter land in the possession of another, at a reasonable time and in a reasonable manner, for the purpose of removing a chattel to the immediate possession of which the actor is entitled, and which has come upon the land otherwise than with the actor's consent or by his tortious conduct or contributory negligence.

(2)        The actor is subject to liability for any harm done in the exercise of the privilege stated in Subsection (1) to any legally protected interest of the possessor in the land or connected with it, except where the chattel is on the land through the tortious conduct or contributory negligence of the possessor.

April 24, 2012

John Stone, Senior Attorney, National Legal Research Group

Title IX of the Education Amendments of 1972 prohibits gender‑based discrimination by federally funded educational institutions. It provides that "[n]o person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance." 20 U.S.C. § 1681(a).  In Jackson v. Birmingham Board of Education, 544 U.S. 167 (2005), the Supreme Court held that retaliation against a person because that person has complained of sex discrimination is also a form of gender‑based discrimination actionable under Title IX.

On its first occasion to say what a plaintiff must prove to prevail on a retaliation claim under Title IX, the Ninth Circuit has reinstated a case for a plaintiff whose claim had been dismissed on summary judgment by a federal district court.  Emeldi v. Univ. of Or., No. 10-35551, 2012 WL 933821 (9th Cir. filed Mar. 21, 2012). As other federal circuits have done, the Ninth Circuit applied the same framework as is used to decide retaliation claims brought against employers under Title VII of the Civil Rights Act of 1964.  See, e.g., Papelino v. Albany Coll. of Pharm. of Union Univ., 633 F.3d 81, 91B92 (2d Cir. 2011) (applying the Title VII framework to a Title IX retaliation claim); Frazier v. Fairhaven Sch. Comm., 276 F.3d 52, 67 (1st Cir. 2002) (same).

According to that framework, a plaintiff who lacks direct evidence of retaliation must first make out a prima facie case of retaliation by showing that he or she was engaged in protected activity, he or she suffered an adverse action, and there was a causal link between the two.  Once the plaintiff has made the threshold prima facie showing, the defendant must articulate a legitimate, nonretaliatory reason for the challenged action; if the defendant does so, the plaintiff must then show that the reason is pretextual either directly, by persuading the court that a discriminatory reason more likely motivated the employer, or indirectly, by showing that the employer's proffered explanation is unworthy of credence.

In Emeldi, the plaintiff was a graduate student who alleged that she had been retaliated against because she had complained about bias based on gender. Her complaints were on such matters as the lack of women on the faculty, the failure to give female students the same support and attention as male doctoral candidates received, and the fact that male students had opportunities that were not available to female students, such as access to more and better resources, including more office space and better technology for collecting data.

The court found that the plaintiff's complaints to the Dean of the College of Education and, later, to an administrator about gender‑based institutional bias and about a male professor's—her dissertation committee chair's—unequal treatment of her in particular and of female graduate students in general constituted "protected activity" under Title IX; moreover, the protected status of her alleged statements stayed intact whether or not she would ultimately be able to prove her underlying contentions about discrimination.

April 17, 2012

Doug Plank, Senior Attorney, National Legal Research Group

In the landmark case of Gideon v. Wainwright, 372 U.S. 335 (1963), the U.S. Supreme Court established that the Sixth Amendment guarantee of the right to counsel requires States to provide an attorney to every criminal defendant charged with a felony.  Subsequently, in Strickland v. Washington, 466 U. S. 668 (1984), the Court went a step further and determined that the right to counsel is meaningless unless a defendant's attorney performs at a minimum level of competence at trial.  The Court thus found in Strickland that a convicted defendant could challenge the validity of his or her conviction on a showing of the ineffectiveness of his or her counsel at trial, adopting a two-part test under which the defendant has to show both (1) that his or her counsel's representation fell below an objective standard of reasonableness, and (2) that he or she was prejudiced as a result.  In Hill v. Lockhart, 474 U.S. 52 (1985), the Court held that Strickland's requirements extend to the situation in which an attorney provides incompetent advice to a defendant that causes the defendant to accept a plea agreement, reasoning that the entry of a guilty plea represents a waiver of a trial in violation of the right to a fair trial and that such a waiver satisfies the second prong of the Strickland test.  Most recently, in Padilla v. Kentucky, 130 S. Ct. 1473 (2010), the Court held that a criminal defendant could show that he or she had been denied the effective assistance of counsel when his or her attorney recommended entering a guilty plea without explaining that a collateral consequence of the plea would be the defendant's deportation, finding that the deportation could satisfy the prejudice requirement of the Strickland test.

However, until the recent decisions of the Court in Missouri v. Frye, No. 10-444, 2012 WL 932020 (U.S. Mar. 21, 2012), and Lafler v. Cooper, No. 10-209, 2012 WL 932019 (U.S. Mar. 21, 2012), the Supreme Court had never addressed the situation in which a defense attorney renders incompetent advice that persuades a criminal defendant to reject a favorable plea agreement and to decline to plead guilty.  By 5-4 votes in each case, the Court held for the first time in Frye and Lafler that a criminal defendant has the right to effective assistance of counsel in plea negotiations even where the negotiations do not result in a guilty plea.  Commentators have hailed these decisions as being extremely significant, with one law professor stating that they represent "'the single greatest revolution in the criminal justice process since Gideon v. Wainwright provided indigents the right to counsel.'"  Adam Liptak, Justices' Ruling Expands Rights of Accused in Plea Bargains, N.Y. Times, Mar. 21, 2012 (quoting Wesley M. Oliver).