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Burgos v. Sand Canyon Corp

United States District Court, M.D. Georgia, Columbus Division

October 3, 2019

PEDRO J. BURGOS, Plaintiff,



         Plaintiff alleges that Defendant, his loan originator, fraudulently assigned his security deed to Wells Fargo Bank and that Wells Fargo later wrongfully foreclosed on his home. Plaintiff sued Defendant in the Superior Court of Muscogee County. Plaintiff did not properly serve the Defendant, and he did not name Wells Fargo as a defendant. Plaintiff nonetheless obtained a default judgment against Defendant that set aside the original security deed, the assignment to Wells Fargo, and the deed under power. Years later, Defendant learned of the action and filed a motion to set aside the default judgment due to lack of personal jurisdiction. The Superior Court granted the motion, then Defendant removed the action to this Court and filed a motion to dismiss Plaintiff's complaint.

         Plaintiff, who is represented by counsel, has flooded the Court with a series of motions and briefs, but the resolution of them requires the Court to answer three simple questions: (1) was this action properly removed to this Court such that this Court has subject matter jurisdiction? (2) was the default judgment previously entered in the state court properly set aside? and (3) does Plaintiff's complaint state a claim upon which relief may be granted? The answer to the first two questions is yes, and the answer to the third is no. Accordingly, this action is dismissed.

         I. Was Removal Proper and Does the Court Have Jurisdiction?

         It is undisputed that complete diversity of citizenship exists and that the amount in controversy requirement is met. Plaintiff is a Georgia citizen. Compl. at 2 ¶ 1, ECF No. 1-1. Defendant is a citizen of California. Compl. Ex. A, Certificate of Withdrawal, ECF No. 1-1 at 31 (stating that defendant is a California corporation). The amount in controversy exceeds $75, 000.00. See, e.g., Compl. at 23 ¶ 1 (seeking more than $5 million in compensatory damages). Accordingly, diversity jurisdiction exists under 28 U.S.C. § 1332(a)(1).

         Plaintiff's arguments that this run-of-the-mill wrongful foreclosure/fraud/RICO action asserting in personam tort claims is somehow subject to the exclusive in rem jurisdiction of the Georgia state courts are so unpersuasive that the Court's disposition of them requires no further elaboration. Plaintiff also misunderstands Younger abstention. It has no application here. See generally Younger v. Harris, 401 U.S. 37 (1971) (in exceptional circumstances, federal courts should abstain from adjudicating actions being litigated in state courts). It is clear that Plaintiff's quiet title action in state court is not an exceptional circumstance warranting abstention. The general rule is that pendency of a parallel state court action “is no bar to proceedings concerning the same matter in the Federal court having jurisdiction.” Sprint Commc'ns, Inc. v. Jacobs, 571 U.S. 69, 73 (2013) (quoting Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976)). No. legitimate basis exists for abstention under the circumstances presented in this action.

         Finally, Defendant's removal was timely. A notice of removal must be filed “within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based.” 28 U.S.C. § 1446(b)(1). The present record supports the finding that Defendant was not properly served with Plaintiff's complaint until June 14, 2019, after Defendant removed the action to this Court. Plaintiff previously attempted to serve the Georgia Secretary of State with the state court action pursuant to Georgia law. But because Defendant obtained a certificate of withdrawal of its authority to transact business in Georgia in 2008, before this action was filed, service of process on the Georgia Secretary of State is proper if a copy of the process is also mailed to an officer of the withdrawn corporation at the mailing address provided by the company in its application for withdrawal. O.C.G.A. § 14-2-1520(c). Merely serving a secretary of state, without more, violates due process. Ware v. Fleetboston Fin. Corp., 180 Fed.Appx. 59, 62 (11th Cir. 2006) (per curiam) (citing Wuchter v. Pizzutti, 276 U.S. 13, 21 (1928)). Therefore, in the context of serving a foreign corporation, “the failure to comply strictly with the statutory requirements for service on such corporation renders the attempted service defective.” Id. (citing Howard v. Technosystems Consol. Corp., 536 S.E.2d 753, 756 (Ga.Ct.App. 2000)).

         Plaintiff did not point to any evidence that process was delivered to Defendant in 2013. The correct address for service of process was 6531 Irvine Center Drive, Irvine CA 92618. Burgos Aff. (Mar. 12, 2019) Ex. A, Letter from D. Sugimoto to Sec'y of State (Sept. 15, 2008), ECF No. 1-5 at 34. When Plaintiff originally filed his affidavit of service in state court in 2013, he presented evidence that he mailed the letter to Defendant at 6351 Irvine Center Drive, Irvine CA 92618. Burgos Aff. (Apr. 5, 2013) Ex. A, Certified Mail Receipts, ECF No. 1-3 at 92. Thus, he mailed the process and complaint to the wrong address. When Defendant moved to set aside the default judgment in state court, Plaintiff submitted another affidavit, admitting that he made an error when he handwrote the address but asserting that he typed the address correctly in a separate area of the envelope. Burgos Aff. ¶ 6 (Mar. 12, 2019), ECF No. 1-5 at 30. In support of this assertion, Plaintiff points to what he says is a copy of the envelope that contained the process and complaint mailed to Defendant, which he avers he obtained from the post office.[1] Id. Ex. B, Envelope, ECF No. 1-5 at 37. But that envelope is clearly marked “Returned to Sender, Not Deliverable as Addressed, Unable to Forward.” Id. Plaintiff pointed to no evidence that the envelope containing the process and complaint were delivered to Defendant, and his own evidence suggests that it was not delivered and that it was returned to him.

         Based on the present record, the Court finds that Defendant was not properly served with the complaint in this action before the action was removed. And the removal clock cannot begin before service of official process. Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 347-48 (1999) (“[A] named defendant's time to remove . . . [is not triggered] by mere receipt of the complaint unattended by any formal service.”). Defendant nevertheless removed the action within thirty days of the state court's order setting aside the default judgments and reopening the action. A defendant may elect to remove before service of process because “nothing in the removal statute, or any other legal provision, requires that a defendant be served with the complaint before filing a notice of removal.” Whitehurst v. Wal-Mart, 306 Fed.Appx. 446, 448 (11th Cir. 2008) (per curiam). Removal was timely under 28 U.S.C. § 1446(b).

         The Court rejects Plaintiff's argument that even if removal was timely under 28 U.S.C. § 1446(b), it was untimely under 28 U.S.C. § 1446(c). If a case is removed pursuant to § 1446(b)(3) because it was not removable by the initial pleading but later became removable, then it must be removed within one year after commencement of the action unless the court finds that the plaintiff acted in bad faith to prevent removal. 28 U.S.C. § 1446(c)(1). Here, the action was removable based on the initial pleading, so removal was not pursuant to § 1446(b)(3); thus § 1446(c)(1)'s one-year limitation does not apply.

         Having timely removed this action which the Court has subject matter jurisdiction over based upon diversity of citizenship, Defendant is entitled to have this action adjudicated in this Court. Plaintiff's motion to remand and jurisdiction-related motions are denied.

         II. Should this Court Disturb the State Court's Setting Aside of Plaintiff's Default Judgment?

         After receiving briefs from the parties and holding a hearing where Plaintiff was represented by counsel, the state court determined that Plaintiff had not properly served the Defendant in the state court action in which Plaintiff had previously obtained default judgments. Therefore, the state court set aside the default judgments for lack of personal jurisdiction. Plaintiff claims that the state court had no authority to set aside the judgment and that this Court should not accept the default judgment as having been set aside.

         “As a general rule, when a case is removed to federal district court under original jurisdiction the federal court treats everything done in the state court as if it had in fact been done in the federal court.” Salery v. United States, 373 Fed.Appx. 29, 30 n.1 (11th Cir. 2010) (citing Savell v. S. Ry. Co., 93 F.2d 377, 379 (5th Cir. 1937)). “Therefore, assuming an error occurred in the state court, a federal district court ‘may dissolve or modify injunctions, orders, and all other proceedings which have taken place in state court prior to removal.'” Id. (quoting Maseda v. Honda Motor Co., 861 F.2d 1248, 1252 (11th Cir. 1988)). The Court finds no error in the state court's decision to set aside the default judgment. As discussed previously, the record supported the finding that Defendant had not been properly served with the complaint, and thus the state court did not have personal jurisdiction over the Defendant at the ...

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