Arritola v. Muniz

1

DAVID J. PEREZ ARRITOLA, Plaintiff, v. CARLOS GARCIA MUNIZ, et al., Defendants.

Civ. No. 3:22-cv-01507 (MAJ)

United States District Court, D. Puerto Rico

March 27, 2023

OPINION AND ORDER

MARIA ANTONGIORGI-JORDAN, UNITED STATES DISTRICT JUDGE

Pending before the Court is Co-defendant Carlos Garcia's (“Garda”) Motion to Remand (ECF No 36). For the reasons set forth below, the Motion to Remand is GRANTED, and Plaintiff's Second Amended Complaint is DISMISSED WITHOUT PREJUDICE. (ECF No. 18).

I. Factual and Procedural Background

On May 16, 2022, Plaintiff David J. Perez Arritola (“Plaintiff” or “Arritola”) filed various state law claims against several Defendants before the Puerto Rico Court of First Instance, San Juan Superior Court.^[1] (“Commonwealth Court”) (ECF No. 1-2). Plaintiff and several Defendants are former business partners of Plaza de Diego S.E., a business entity organized under the laws of the Commonwealth of Puerto Rico. Id. Plaintiff alleges, asserting his rights and those of the partnership, that Defendants breached their fiduciary duties by engaging in self-dealing regarding the sale of real property and the development of a housing development. Id. Moreover, Plaintiff alleges Defendants inappropriately dissolved the partnership. Id. As such, Plaintiff's initial complaint before the Commonwealth Court sought the unwinding of the real property sale; monetary damages for Defendants' alleged breach of fiduciary duties; and injunctive relief. Id. In sum, Plaintiff's claims fall generally under Title 31 of Puerto Rico Civil Code which governs issues such as corporate governance, real property, and contracts. See generally, P.R. Laws Ann. tit. 31, §§ 1 - 5305.

After Plaintiff filed his complaint in the Commonwealth Court, co-defendant the United States Department of Housing and Urban Development, (“HUD”), filed a Notice of Removal asserting this Court has jurisdiction over Plaintiff's claims according to 28 U.S.C. § 1442. (“§ 1442”) (ECF No. 1).^[2] Known as the “federal officer removal statute” § 1442(a)(1), it allows for a defendant to remove a case commenced in state court, against “[t]he United States or any agency thereof or any officer (or any person acting under that officer) . . . for or relating to any act under color of such office.” See 28 U.S.C. § 1442(a)(1).^[3] HUD based its Notice of Removal on the amended complaint Plaintiff filed before the Commonwealth Court. (ECF Nos. 1, 1-1).

Immediately thereafter, co-defendants Carlos Garcia, Horizontes Development Retirement Plan Trust, Plaza de Diego S.E., and MAC Development Corp. immediately filed a Motion to Remand. (ECF No. 5). Co-defendant's request for remand was joined by co-defendant De Diego Village, LLC. (ECF No. 8).

In lieu of opposing the request for remand, Plaintiff once again amended his complaint, though did so without leave of the Court. (ECF No. 18). That amended complaint stylized as “Second Amended Complaint”; reasserted the state law claims Plaintiff first made before the Commonwealth Court. (ECF Nos. 1-1, 18). Plaintiff also sought relief from this Court based on Defendants' purported violations of “Puerto Rico's Civil Code, 31 P.R. Laws Ann. §3018 and §3052.” (ECF No. 18 at 3). In addition, Plaintiff contended this Court had supplemental jurisdiction to hear his state law claims, based on 28 U.S.C. § 1367, because “they are also [sic] related to the federal claims that they form part of the same case or controversy under Article III of the United States Constitution.” Id.

On November 17, 2022, HUD, the removing party, filed a Motion to Dismiss under Fed.R.Civ.P. 12(b)(1) and 12(b)(6). (ECF No. 7). Several weeks later, Plaintiff filed a Notice of Voluntary Dismissal under Fed.R.Civ.P. 41(a)(1)(A)(i) dismissing all claims against HUD without prejudice. (ECF No. 31). Plaintiff noted it was moving for voluntary dismissal against HUD and accepted “all the legal ramifications that [the] dismissal may entail.” Id. (emphasis added).

Now pending before the Court is Co-defendant Gartfa's Supplemental Motion to Remand. (ECF No. 36).^[4] In brief, Gartfa seeks remand because following Plaintiff's voluntary dismissal of claims against HUD, all that is left for the Court to decide are “purely state law claims.” Id. at 4. According to Gartfa, the Court should decline to exercise its supplemental jurisdiction and remand the remaining state law claims. Id. at 7-10. Gartfa's motion is unopposed.

II. Applicable Law

(i) Voluntary Dismissal

Fed. R. Civ. P. 41(a)(1)(A) permits a plaintiff to dismiss an action without a court order by filing “a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment.” Fed.R.Civ.P. 41(a)(1)(A)(i). The First Circuit explained that “‘an action under Rule 41(a)(1)(A)(i) can refer to all claims a plaintiff has brought against a single defendant in a multi-defendant suit rather than only all claims against all defendants in such a suit.” Donahue v. Fannie Mae, 971 F.3d 1, 3 (1st Cir. 2020).

Here, HUD filed a Motion to Dismiss in lieu of an answer to the Amended Complaint. (ECF Nos. 7, 1-1). The First Circuit has ruled that a motion to dismiss does not qualify as a responsive pleading. Leonard v. Parry, 219 F.3d 25, 30 (1st Cir. 2000). Thus, the Court finds that because Defendant HUD has not answered the complaint, nor filed a motion for summary judgment, Plaintiff has the right to voluntarily dismiss their claims against HUD without the need for an order from this Court. (ECF No. 31); Donahue v. Fannie Mae, 971 F.3d at 3; Cruz-Mendez v. Hosp. Gen. Castaner, Inc., 637 F.Supp.2d at 77 (ruling voluntary dismissal was warranted under Rule 41(a)(1)(A)(i) because the defendants' motion to dismiss was not considered a responsive pleading-nor an answer to the complaint-thus the court's permission was not required).

(ii) Remand under 28 U.S.C. § 1367(c)(3)

We now turn to Co-Defendant Garda's Motion to Remand. (ECF No. 36). Under 28 U.S.C. § 1367(a) (“§ 1367(a)”), a federal district court may exercise supplemental jurisdiction over state-law claims that the court would not otherwise have subject matter jurisdiction to hear, provided the claims are part of the same case or controversy as the claims the court had original jurisdiction over. See 28 U.S.C. § 1367(a). Supplemental jurisdiction promotes judicial efficiency because a party's claims that arise from the same “nucleus” of facts can be decided in one trial by the federal court, rather than in two trials between a federal and a state court. See Ortiz-Bonilla v Federation de Ajedrez de Puerto Rico, Inc., 734 F.3d 28, 35 (1st Cir. 2013); Diaz-Morales v. Rubio-Paredes, 170 F.Supp.3d 276, 290 (D.P.R. 2016).

That said, § 1367(c) enumerates instances a district court can decline to exercise supplemental jurisdiction over a claim it could have heard under § 1367(a). Among those occasions are: “(2) [if] the claim substantially predominates over the claim or claims over which the district court has original jurisdiction” and “the district court has dismissed all claims over which it has original jurisdiction.” 28 U.S.C. §§ 1367(c)(2),(c)(3).

Indeed, “when all federal claims have been dismissed, it is an abuse of discretion for a district court to retain jurisdiction over the remaining pendent state law claims unless doing so would serve overriding interests including, ‘fairness, judicial economy, convenience, and comity.'” In re Fin. Oversight & Mgmt. Bd. for Puerto Rico, 60 F.4th 9, 16 (1st Cir. 2023) (quoting Desjardins v. Willard, 777 F.3d 43, 45 (1st Cir. 2015)) see also Wilber v. Curtis, 872 F.3d 15, 23 (1st Cir. 2017) (if no federal claim remains-remaining state law claims are “better addressed by the state courts”); Ramos-Echevarna v. Pichis, Inc., 659 F.3d 182, 191 (1st Cir. 2011) (“the district court did not abuse its discretion in dismissing” state law claims done so at the early stages of a suit).

Following the dismissal of HUD and its corresponding federal claim, the Court must resolve whether to retain jurisdiction over the remaining claims. See Santana-Vargas v. Banco Santander Puerto Rico, 948 F.3d 57, 61 (1st Cir. 2020); Miller v. Town of Wenham Massachusetts, 833 F.3d 46, 56 (1st Cir. 2016); Robles-Rodriguez v. Municipality of Ceiba, 531 F.Supp.3d 474, 482 (D.P.R. 2021). “[T]he termination of the foundational federal claim does not divest the district court of power to exercise supplemental jurisdiction but, rather, sets the stage for an exercise of the court's informed discretion.”Roche v. John Hancock Mut. Life Ins. Co., 81 F.3d 249, 256-57 (1st Cir. 1996). The trial court must factor in “concerns of comity, judicial economy, convenience, fairness, and the like.” In re Fin. Oversight & Mgmt. Bd. for Puerto Rico, 60 F.4th at 16. Accordingly, the Court will analyze Co-defendant Garcia's Motion to Remand by examining the aforementioned factors. Id.

At this juncture, the balance of factors weighs heavily towards declining jurisdiction over the remaining state law claims. Miller v. Town of Wenham Massachusetts, 833 F.3d at 56. When the foundational federal claims have been dismissed at an early stage in the litigation, the interests of fairness and the like tilt heavily towards declining jurisdiction over state law claims. Wilber v. Curtis, 872 F.3d at 23; Ramos-Echevarria v. Pichis, Inc., 659 F.3d at 191.

To elaborate, even after Plaintiff's voluntary dismissal of the only federal claim, the litigation here is still in its infancy. The court has set none of the milestone deadlines or settings, nor conducted discovery or a scheduling conference. See e.g., Maldonado v. P.R. Indust. Mfg. Operation Corp., 352 F.Supp.2d 161, 164 (D.P.R. 2004); Labiosa-Herrera, 153 F.Supp.3d at 551 (the court...