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UMC Development, LLC v. District of Columbia

United States District Court, District of Columbia

October 8, 2013

UMC DEVELOPMENT, LLC and JACKSOPHIE GSCH, LLC, Plaintiffs,
v.
DISTRICT OF COLUMBIA, et al., Defendants

For UMC DEVELOPMENT, LLC, JACKSOPHIE GSCH, LLC, Plaintiffs: Derek Lawrence Shaffer, LEAD ATTORNEY, Heather H. Martin, QUINN EMANUEL URQUHART & SULLIVAN, LLP, Washington, DC.

For DISTRICT OF COLUMBIA, VINCENT C. GRAY, in his official capacity as Mayor of the District of Columbia, Defendants: Melissa Lael Baker, LEAD ATTORNEY, OFFICE OF THE ATTORNEY GENERAL FOR THE DISTRICT OF COLUMBIA, Washington, DC; Thomas Louis Koger, LEAD ATTORNEY, OFFICE OF THE ATTORNEY GENERAL, D.C., Public Interest Division, Washington, DC; Robert Joseph Rich, DC OFFICE OF THE ATTORNEY GENERAL, Public Interest Division, Washington, DC.

For NOT-FOR-PROFIT-HOSPITAL CORPORATION, Defendant: Emil Hirsch, Steven Andrew Pozefsky, LEAD ATTORNEYS, BRADLEY ARANT BOULT CUMMINGS LLP, Washington, DC.

For SPECIALTY HOSPITAL OF WASHINGTON-GSE HOLDINGS, LLC, CMC REALTY, LLC, Defendants: Kenneth Hanson Rosenau, LEAD ATTORNEY, ROSENAU & ROSENAU, Washington, DC.

OPINION

Page 14

MEMORANDUM OPINION

Gladys Kessler, United States District Judge.

Plaintiffs UMC Development, LLC (" UMC" ) and Jacksophie GSCH, LLC (" Jacksophie" ) (collectively, " 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 of 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

Page 15

set forth below, the Motion to Remand is granted as to Plaintiffs' District of Columbia claims and denied as to Plaintiffs' federal claims.

I. BACKGROUND[1]

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 agreement 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. See Compl. ¶ ¶ 76-147.

On June 14, 2013, the District Defendants removed the case to this Court pursuant to 28 U.S.C. § § 1441(a) and 1446. See Notice of Removal, ¶ ¶ 2-3 [Dkt. No. 1]. [2] The Notice of Removal stated that Defendant NFPHC consented to removal, id. at 1, but did not indicate whether Defendants SHW-GSE and CMC also consented.

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 filed an Opposition to the Motion (" Dist. Defs.' Opp'n" ) [Dkt. No. 7]. On July 30, 2013, Plaintiffs filed a Reply (" Pls.' Reply" )

Page 16

[Dkt. No. 8]. On August 5, 2013, the District Defendants filed a Sur-Reply (" Dist. Defs.' ...


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