Opinion
Civil ACtion No. 00-2688 Section "N"
October 29, 2001
ORDER AND REASONS
Before the Court is plaintiff Joseph Ladd's Motion for Reconsideration of this Court's Order and Reasons of September 7, 2001, or in the Alternative, for Certification for Interlocutory Appeal under 28 U.S.C. § 1292(b). Also in its Order and Reasons of September 7, 2001, the Court ordered the parties to submit additional briefing on whether the Court should exercise supplemental jurisdiction over Ladd's state law causes of action. For the following reasons, Ladd's Motion for Reconsideration is DENIED, and the Court finds that it must exercise supplemental jurisdiction over Ladd's state law claims.
BACKGROUND
In September 2000, plaintiff Joseph Ladd ("Ladd") filed a putative class action lawsuit against defendant EquiCredit Corporation of America ("EquiCredit"). Ladd initially alleged that EquiCredit committed civil RICO violations by adding fraudulent charges to his mortgage account. In May 2001, Ladd amended his complaint to include individual and class action claims for state law breach of contract. Finally, in September 2001, Ladd raised individual and class action fraud claims.
In an Order and Reasons entered on September 7, 2001, the Court dismissed the RICO claim brought in Ladd's representative capacity on the grounds that individual issues of reliance preclude class certification. The Court also held that Ladd's mortgage agreement did not require notice before drive-by property inspections. Finally, the Court found that it lacked diversity jurisdiction over Ladd's state law breach of contract claims because the requisite amount in controversy did not exist.
LAW AND ANALYSIS 1. Motion for Reconsideration
Ladd asks the Court to reconsider two aspects of its September 7, 2001 Order. First, he challenges the Court's holding that the mortgage agreement does not require EquiCredit to provide notice before conducting drive-by property inspections. Ladd's mortgage agreement provides that the "Lender may make or cause to be made reasonable entries upon and inspections of Property, provided that the Lender shall give Borrower notice prior to any such inspection specifying reasonable cause therefore related to Lender's interest in the Property." Rec. Doc. No. 23, Ex. 1, Mortgage at ¶ 7. The Court previously held that this provision does not apply to drive-by property inspections, which do not require entry upon Ladd's property. On reconsideration, the Court again rejects Ladd's argument that EquiCredit must notify him before it drives past his property. The obvious purpose of the, notice provision is to prevent a lender from making unannounced entries upon a borrower's property. Ladd's interpretation, which would require a lender to notify a borrower before it drove past a house in public view, is inconsistent with a plain reading of the clause.
Alternatively, Ladd asks the Court to certify an interlocutory appeal of this contract interpretation issue. 28 U.S.C. § 1292(b) authorizes litigants to bring an immediate appeal of a non-final order upon the consent of both the district judge and the Court of Appeals. Interlocutory appeals represent a rarely used exception to the strong judicial policy disfavoring piecemeal appeals. See Clark-Dietz Assoc.-Eng'rs. Inc. v. Basic Constr. Co., 702 F.2d 67, 69 (5th Cir. 1993). The decision to certify an interlocutory appeal is within the sound discretion of the district court. See Swint v. Chambers County Comm'n, 514 U.S. 35, 47 (1995). The following three criteria should be used in determining whether a § 1292(b) appeal is appropriate: (1) the order from which the appeal is taken must involve a controlling question of law; (2) there must be substantial grounds for a difference of opinion concerning the issue; and (3) an immediate appeal must "materially advance the ultimate termination of the litigation." Id. at 46 (quoting § 1292(b)). Each of these three requirements must be met for certification to be appropriate. Ladd presents no legal authority or compelling factual argument that there is substantial grounds for a difference of opinion on the drive-by inspection issue, and he has not explained how this issue is dispositive of his case. Accordingly, his request for an interlocutory appeal is denied.
Ladd's second challenge comes in response to the Court's clarification of an earlier misconception. In a previous memorandum, Ladd cited a footnote in an Order and Reasons entered by this Court on December 5, 2000, which stated that "Paragraph 7 [of Ladd's mortgage] makes no mention of charging Ladd for, property inspections, and the Court has not found any provision authorizing such charges. However, Ladd only submitted the first two pages of his four page mortgage to the Court." Rec. Doc. No. 10 at 2, n. 1. Ladd incorrectly argued that this footnote was a ruling that "there is no provision in the mortgage authorizing EquiCredit to charge Mr. Ladd for drive-by inspections." Rec. Doc. No. 42 at 11. On September 7, 2001, the Court explained that Ladd's understanding was incorrect and noted that his promissory note does in fact authorize EquiCredit to charge him for its costs and expenses in enforcing the note. See Rec. Doc. No. 23, Ex. 1, Note at ¶ 6(d). However, the Court has not determined whether EquiCredit has fully complied with that provision or whether the charges against Ladd's account were actually proper.
2. Supplemental Jurisdiction
On September 7, 2001, the Court ordered briefing on whether federal diversity jurisdiction exists over Ladd's newly raised state law fraud claims. In particular, the Court questioned whether the requisite amount in controversy exists to establish diversity jurisdiction in light of the small amount of damages and the fact that, under Louisiana law, "attorney's fees usually are not allowed in civil actions in the absence of a statute or contract." F.D.I.C. v. Barton, 233 F.3d 859, 865 (5th Cir. 2000) (citing Smith v. Atkins, 48 So.2d 101, 103 (La. 1950)). Since the Court has not found a statute authorizing recovery and since Ladd has not cited any such statute, the Court does not find that a sufficient amount in controversy exists. Therefore, the Court does not have federal diversity jurisdiction over Ladd's state law fraud claim.
In the absence of diversity jurisdiction, the Court must determine whether to exercise supplemental jurisdiction over Ladd's state law claims in connection with its federal question jurisdiction over his individual RICO claim. 28 U.S.C. § 1367 grants federal courts supplemental jurisdiction over all claims that are so related to claims over which a court has original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. See 28 U.S.C. § 1367(a). The decision whether to exercise supplemental jurisdiction has traditionally been a matter within the district court's discretion, see United Mine Workers of America v. Gibbs, 383 U.S. 715, 726 (1966), and a court may decline jurisdiction if:
(1) the claim raises a novel or complex issue of State law,
(2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction,
(3) the district court has dismissed all claims over which it has original jurisdiction, or
(4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.28 U.S.C. § 1367(c). In Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 (1988), the Supreme Court instructed federal courts to "consider and weigh in each case, and at every stage of litigation, the values of judicial economy, convenience, fairness and comity in order to decide whether to exercise jurisdiction over a case brought in that court involving pendent state-law claims.
EquiCredit urges the Court to decline jurisdiction over Ladd's state law claims because the class claims for fraud and breach of contract, if certified, would substantially predominate over Ladd's individual RICO claim. Such a request must be considered with caution, and the Court does not find that the instant circumstances warrant declining jurisdiction. First, the state law class actions have not yet been certified, and due to the individual reliance issues they might never be certified. In addition, the Court must exercise jurisdiction over Ladd's individual RICO claim, which presents substantially the same issues as the state law fraud and breach of contract claims. Consequently, declining jurisdiction would offend the principle of judicial economy by forcing the parties to litigate similar issues in two different courts. Finally, the instant suit has been pending in this Court for over a year, and forcing the parties to renew their lawsuit in state court at this point would be both inconvenient and unfair. Accordingly, the Court will exercise its discretion to retain jurisdiction over Ladd's state law claims.
CONCLUSION
For the reasons given above, IT IS ORDERED that
(1) plaintiff Joseph Ladd's Motion for Reconsideration of this Court's Order and Reasons of September 7, 2001, or in the Alternative, for Certification for Interlocutory Appeal under 28 U.S.C. § 1292(b) is DENIED; and
(2) the Court will exercise supplemental jurisdiction over Ladd's pendent state law fraud and breach of contract claims.