Plaintiffs hope Class Action Fairness Act will bring federal case

Two hundred forty owners of manufactured homes in a Howard County mobile home park are bringing a class-action suit to enforce Maryland building codes.

And, while the defendants have made a federal case out of it - literally - the plaintiffs are hoping a new law will put it right back into state court.

The irony is that the federal Class Action Fairness Act of 2005, enacted in February, is supposed to make it easier for defendants to move class-action lawsuits into federal courts, not the other way around.

It's really kind of the law of unintended consequences, said Jon D. Pels, who represents the class with Lawrence J. Anderson. We hope to be the first plaintiffs' lawyers in the country to use this as a sword.

The case

Plaintiffs Edward Morgan, Joseph and Mary Morse, and others filed suit March 15 in Howard County Circuit Court against Carlyle Group Inc., a retail distributor of manufactured homes, and park owners Aladdin Village Mobile Home Park LP. (The term manufactured home is synonymous with mobile home, according to the complaint.)

The plaintiffs, residents of Aladdin Village, contend that their homes were not installed on support piers with footings and ground anchors below a locally established frost line, as required by Maryland regulations. Further, they allege, the perimeter skirting used to enclose the foundation and crawl space is improperly ventilated, causing moisture problems.

The homes are damaged or will become damaged as a result of these latent defects and [are] un-level with doors and windows out of square and seams separating and walls warping resulting in a decreased value in the home and a loss of use/enjoyment by the homeowner, the complaint alleges. The defendants deny the allegations in court filings.

Joseph Morse, a retired stonemason and bricklayer, claims he has to have his home re-leveled every 18 months - a task he would not normally have to do.

Until it's installed right, this mobile home keeps shifting and sinking, he said in an interview last week. If it would have had concrete footers below the piers, it never would have moved. The piers are set right on dirt.

Morse and fellow plaintiff Morgan also said they've experienced serious moisture problems, requiring them to replace buckling floors and even warped sashes between windowpanes.

It's real inconvenient - it hurts in the pocketbook, Morse said. It costs quite a bit of money to fix this.

Classic and CAFA

In April, the defendants got the case moved from Howard County Circuit Court to federal court under the classic or complete diversity jurisdiction provisions of 28 U.S.C. Section 1332(a). That section remains outside CAFA, which is found at Section 1332(d).

The plaintiffs are Maryland citizens. Defendant Carlyle is a California corporation with a principal place of business in California. Aladdin Village is also organized under the laws of California; none of its general or limited partners live in Maryland.

Pels and Anderson even concede that diversity jurisdiction exists in Section 1332(a). So how can Pels and Anderson possibly think they can get this case remanded to Howard County?

Under the new Class Action Fairness Act, [it's] clear to us, anyway, when you file a class action, the CAFA now controls, Pels explained. If the plaintiffs can establish, under CAFA, that Aladdin's principal place of business is Maryland, there will be no diversity and the case will be remanded back to state court, he said. You don't go to Section 1332(a) anymore, you use CAFA.

The act is too new, Anderson noted, to have many cases interpreting it. Many of the early cases regarding the application of CAFA have turned on the date of filing.

It's a unique set of circumstances; if we didn't have the Class Action Fairness Act, we'd [stay] in federal court, Anderson said.

Minimal, not complete, diversity

Simply put, CAFA allows federal courts to hear more class-action cases on the basis of diversity jurisdiction (where plaintiffs and defendants are from different states or one is from a different country).

It used to be, you could only get to federal court if there was complete diversity between the parties, said attorney H. Scott Jones, who is representing the defendants in the Aladdin Village case along with lead attorney Andrew F. Radding and David B. Applefeld.

Radding and Jones declined to discuss the Aladdin Village case, but were more than happy to talk about CAFA in general.

You could have a thousand foreign defendants and one Maryland plaintiff, and one Maryland defendant would destroy diversity for the whole group, so it would go into Maryland state court and it couldn't be removed to federal court, because there isn't complete diversity, Jones said.

That led to some fairly easy manipulation, as indicated by the Senate hearings on the proposed measure.

Senate Report No. 109-14, for example, cites the example of one witness at a 2002 hearing on class actions who testified that the drug store she owned was named as a defendant in hundreds of suits so that the cases would remain in her plaintiff-friendly county.