Tuesday, April 30, 2013

Bankster Accused In State Court Of Squeezing WV Homeowner For Illegal Fees Uses Notice Of Removal In Forum-Shopping Maneuver In Effort To Have Case Heard By Potentially Friendlier Federal Judge

In Charleston, West Virginia, The West Virginia Record reports:

  • Notice of Removal(1) has been filed in a lawsuit against U.S. Bank National Association after the defendant claims the case meets the $75,000 threshold to remove it to federal court.(2)

    John and Esther Stitt claim U.S. Bank National Association violated their mortgage contract, according to the complaint, which was filed March 14 in Kanawha Circuit Court.

    The Notice of Removal was filed April 4 in the U.S. District Court for the Southern District of West Virginia at Charleston.

    U.S. Bank National Association repeatedly misrepresented amounts due on John and Esther Stitt’s account and assessed a variety of illegal fees to the account, according to the suit.

    The Stitts claim the defendant also refused to credit payments on the account by either returning payments or placing the payments in suspense and, rather than provide the Stitts with any assistance, the defendant ultimately chose to pursue foreclosure, in violation of their mortgage contract.

    The Court has diversity jurisdiction over the case and U.S. District Courts have “original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000…and is between…citizens of different states,” the Notice of Removal states.

    The Stitts are seeking actual damages and civil penalties. They are being represented by Daniel T. Lattanzi, Jennifer Wagner and Bren J. Pomponio of Mountain State Justice Inc.(3)
Source: Notice of Removal filed in U.S. Bank National Association lawsuit.

(1) Once a defendant has filed a notice to remove a case [filed in a state court], jurisdiction is transferred automatically and immediately by operation of law from the state court to the federal court. Any objection to removal must be presented to the federal court. If a federal court finds that the notice of removal was in fact defective or that the federal court does not have jurisdiction, the case is remanded to the state court.. Source: Wikipedia.

(2) An ABA Journal article (see Judge Says Firm Must Explain ‘Fraudulent’ Removals or Pony Up $25K) offers this observation on the legal maneuver used in this story by U.S. Bank to find a friendlier forum to defend against this lawsuit, one commonly used in civil cases by big-time corporate defendants and their white-shoe law firms in lawsuits brought by (possibly under-financed) individuals and other plaintiffs on behalf of individuals, of moving a case from a state to a federal court:
  • [I]t is widely believed that plaintiffs, particularly individuals rather than corporations, fare better in state courts where they have greater likelihood of getting to a jury and often benefit from more favorable interpretations of law. Defendants in turn tend to prefer the federal courts. Thus removals can become a cat-and-mouse game in which a plaintiff names a party having nothing to do with the matter as one of the defendants to prevent the other side from removing the matter to federal court. That court can find fraudulent joinder and keep the case or remand it.

    But studies have shown a greater increase in recent years of defendants removing cases to federal court, only for them to be dispatched back to state court for erroneous removal. One researcher, a third-year student at New York University School of Law, found that most often in such situations, the plaintiffs are individuals. And the rate of their cases being remanded back to state court is higher, too, wrote Christopher Terranova in last summer’s edition of the Willamette Law Review (PDF).

    He adds that “the delays and costs of that extra procedural step to federal court are more costly and burdensome for most individual plaintiffs than they are for bigger defendants with more assets."
For the above-referenced Willamette Law Review article, see Erroneous Removal As A Tool For Silent Tort Reform: An Empirical Analysis Of Fee Awards And Fraudulent Joinder (article also available at http://ssrn.com/abstract=1073402).

For an example of one Federal judge excoriating a lawyer and law firm for, according to the judge, their history of fraudulent removal requests of cases from state court to Federal court, see Hollier v. Willstaff Worldwide, Case 6:08-cv-01382-TLM-CMH (W.D. La. 2009):
  • Sadly, the Court is not surprised by G.W. Premier’s counsels’ tactics in this proceeding as Ungarino & Eckert, L.L.C.’s reputation proceeds it. This case is but one in a long line of fraudulent and improper removals that Ungarino & Eckert, and more specifically Matthew Ungarino, have filed in this and other districts. [...] [For more, see Hollier v. Willstaff Worldwide (pp. 4-9).].
(3) Mountain State Justice, Inc. is a non-profit public interest law office dedicated to pursuing litigation focusing primarily on combating predatory lending and abusive debt collection techniques on behalf of low-income West Virginians, and which provides free legal services in its areas of practice to qualifying individuals.

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