ADAMS v. BOENEMAN III KB LLC KB LLC KB LLC (2020)

ORDER

THIS CAUSE is before the Court on Plaintiff Bayberry Lakes Homeowners Association, Inc.'s Motion for Reconsideration (“Association Motion,” Doc. 203); Plaintiffs' Motion for Reconsideration (“Class Certification Motion for Reconsideration,” Doc. 207); and Plaintiffs' Supplemental Motion for Reconsideration and Remand (“Supplemental Motion,” Doc. 208). Defendants filed Responses (Doc. Nos. 206, 209, 210) to each motion, and Plaintiffs were permitted a Reply (Doc. 217) in support of the Supplemental Motion. As set forth below, the Association and Supplemental Motions will be granted, and the Class Certification Motion for Reconsideration will be denied.

I. Background

Plaintiffs are the individual owners of fifty-six homes in the Bayberry Lakes community. (Third Am. Compl., Doc. 160, ¶ 13; Ex. A. to Third Am. Compl., Doc. 160-1, at 2–3). Defendants KB Home Gold Coast, LLC; KB Home Jacksonville, LLC; and KB Home Orlando, LLC (“KB Defendants”) are alleged to have been the developers and general contractors for 275 ¹ homes located in Bayberry Lakes. (Doc. 160 ¶¶ 15–16, 18–19, 21–22; Ex. B to Third Am. Compl., Doc. 160-2 at 2–7). Defendants Gerald Boeneman, George Glance, III, Michael Holder, and Joshua Spalten (“Individual Defendants”) are alleged to have been building contractors and/or primary qualifying agents for the same 275 homes. (Id. ¶¶ 25, 27, 29, 31).

Plaintiffs alleged that all 275 homes were built with construction defects and sought to assert class claims relating to those defects. (See id. ¶¶ 33–37, 51). Originally, this case also involved claims by the Bayberry Lakes Homeowner's Association (“the Association”) regarding the same alleged defects, but those claims were dismissed because the Association lacked standing to bring them. (See generally “Association Order,” Doc. 202). This Court also denied class certification, determining that Plaintiffs' claims failed to meet the required element of predominance. (See “Class Certification Order,” Doc. 205, at 11–16).

Now, Plaintiffs seek reconsideration of both the Association Order and the Class Certification Order. Plaintiffs do not take issue with the Court's determination that the Association lacks Article III standing, but they argue that the Association's claims should have been remanded instead of dismissed. With regard to the Class Certification Order, Plaintiffs argue in their Class Certification Motion for Reconsideration that the Court's denial was incorrect—that the class should have been certified. Plaintiffs then take an opposite position in their Supplemental Motion, arguing that the individual claims must be remanded because there was never an expectation that the class claims would be certified. The Court will address each motion.

II. Legal Standard

District courts are afforded considerable discretion to reconsider prior decisions. See Harper v. Lawrence Cty., 592 F.3d 1227, 1231–32 (11th Cir. 2010) (discussing reconsideration of interlocutory orders); Lamar Advert. of Mobile, Inc. v. City of Lakeland, 189 F.R.D. 480, 488–89, 492 (M.D. Fla. 1999) (discussing reconsideration generally and under Federal Rule of Civil Procedure 54(b)); Sussman v. Salem, Saxon & Nielsen, P.A., 153 F.R.D. 689, 694 (M.D. Fla. 1994) (discussing reconsideration under Rule 59(e) and Rule 60(b)). Courts in this District recognize “three grounds justifying reconsideration of an order: (1) an intervening change in controlling law; (2) the availability of new evidence; and (3) the need to correct clear error or manifest injustice.” McGuire v. Ryland Grp., Inc., 497 F. Supp. 2d 1356, 1358 (M.D. Fla. 2007) (quotation omitted); Montgomery v. Fla. First Fin. Grp., Inc., No. 6:06-cv-1639-Orl-31KRS, 2007 WL 2096975, at *1 (M.D. Fla. July 20, 2007).

“Reconsideration of a previous order is an extraordinary measure and should be applied sparingly.” Scelta v. Delicatessen Support Servs., Inc., 89 F. Supp. 2d 1311, 1320 (M.D. Fla. 2000). “[M]otions for reconsideration should not be used to raise arguments which could, and should, have been previously made.” Id. (quotation omitted). Stated differently, “[a] party who fails to present its strongest case in the first instance generally has no right to raise new theories or arguments in a motion for reconsideration.” McGuire, 497 F. Supp. 2d at 1358 (quotation omitted). To permit otherwise would “essentially afford[ ] a litigant two bites at the apple.” Am. Home Assurance Co. v. Glenn Estess & Assocs., Inc., 763 F.2d 1237, 1239 (11th Cir. 1985) (quotation omitted).

III. Analysis

A. Denial of Class Certification

As noted, Plaintiffs take issue with this Court's denial of their Motion for Class Certification. In their Class Certification Motion for Reconsideration, however, Plaintiffs merely disagree with the Court's analysis and re-hash previous arguments. This is not a basis for reconsideration. Moreover, the Court notes that the main argument advanced by Plaintiffs is that an individualized inspection of each and every home has already been completed, and therefore, there will not be a need for a significant amount of additional evidence to be introduced if the class were certified. Plaintiffs argument misses the point entirely. If the individual claims proceed, evidence regarding the defects present in the fifty-six homes owned by the individual Plaintiffs will need to be presented. If the class were certified, individualized evidence of the defects present in 275 homes must be presented. The fact that Plaintiffs may have access to such individualized evidence regarding the 275 homes is irrelevant. The Class Certification Motion for Reconsideration will be denied.

B. Supplemental Motion

Next, Plaintiffs contradict the arguments they made in the Class Certification Motion for Reconsideration and argue that the proposed class never had an expectation of certification, and therefore, this Court lacks jurisdiction over Plaintiffs' individual claims. Specifically, Plaintiff's class claims are in federal court on the basis of the Class Action Fairness Act (“CAFA”), which provides, in relevant part, that “district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which ․ any member of a class of plaintiffs is a citizen of a State different from any defendant.” 28 U.S.C. § 1332(d)(2). Once CAFA jurisdiction is established, it is not destroyed by the denial of class certification. Wright Transp., Inc. v. Pilot Corp., 841 F.3d 1266, 1271 (11th Cir. 2016). However, if at any time—including after class certification is denied—the district court determines that it never had jurisdiction in the first place, remand is appropriate. Id. In Wright, the Eleventh Circuit explained: “Class-action claims filed in or removed to federal court under CAFA can be dismissed for lack of jurisdiction if those claims contain frivolous attempts to invoke CAFA jurisdiction or lack the expectation that a class may be eventually certified.” Id.

Most district courts in the Eleventh Circuit have read this statement as setting out two separate scenarios where dismissal or remand is appropriate: (1) where the class claims are frivolous and (2) where the class claims “lack the expectation that a class may be eventually certified.” E.g., Perisic v. Ashley Furniture Indus., No. 8:16-cv-3255-EAK-SPF, 2018 WL 8581976 at *5, 2018 U.S. Dist. LEXIS 233677 at *14 (M.D. Fla. Nov. 7, 2018) (noting that “there are two scenarios where claims filed in, or removed to, federal court under CAFA can be dismissed for lack of jurisdiction”: frivolity and lack of expectation of certification (emphasis in original)); Arias-Bonello v. Progressive Select Ins. Co., No. 0:17-cv-60897-UU, 2017 WL 7793885, at *1–2, 2017 U.S. Dist. LEXIS 222876, at *4–5 (S.D. Fla. Dec. 27, 2017) (analyzing frivolity and lack of expectation separately). However, Defendants argue that Wright did not provide two scenarios where CAFA jurisdiction is lacking, but instead, that the language in Wright indicates that “frivolous” and “lack the expectation that a class may be eventually certified” mean the same thing. Thus, according to Defendants, class claims that otherwise qualify for CAFA jurisdiction should only be remanded or dismissed for lack of jurisdiction if they are frivolous.

Defendants point to Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805, 806 (7th Cir. 2010)—a Seventh Circuit case cited by the Eleventh Circuit in Wright. Specifically, the Cunningham case stated that the cited portion of CAFA “implies at most an expectation that a class will or at least may be certified eventually. The absence of such an expectation could mean that the suit was not within the jurisdiction conferred by the Class Action Fairness Act—that it wasn't really a class action. Frivolous attempts to invoke federal jurisdiction fail, and compel dismissal.” Id. at 806. Defendants argue that the Cunningham Court was equating lacking an expectation of certification with frivolity; that they are one in the same. Defendants then go on to assert that the Eleventh Circuit adopted this meaning in Wright. First, while Wright did cite Cunningham, it did not expressly quote or adopt the language used in Cunningham. Thus, it is likely that the Eleventh Circuit used the conjunction “or” purposely to mean two scenarios where CAFA jurisdiction is lacking. Regardless, even if it did not, it is unreasonable to read the addition of the language “or lack the expectation that a class may be eventually certified” to be meaningless. If the Eleventh Circuit had meant to refer only to frivolous claims as that term is traditionally understood, it would not have included additional language.

The term “frivolous” is well developed in legal cannon; it carries a specific meaning and a great amount of weight. Indeed, bringing a frivolous claim or making frivolous arguments subjects the proponent to the possibility of sanctions. See, e.g., Didie v. Howes, 988 F.2d 1097, 1104 (11th Cir. 1993) (explaining that frivolous claims—i.e., those that “have no reasonable factual basis” or that are “based on a legal theory that has no reasonable chance of success and that cannot be advanced as a reasonable argument to change existing law”—may warrant sanctions under Federal Rule of Civil Procedure 11). And, for good reason, courts take very seriously the use of the word frivolous, understanding the consequences often associated with such a designation. By including the phrase “or lack the expectation that a class may be eventually certified,” it appears that the Wright Court was, at a minimum, indicating that a claim need not necessarily meet the traditional understanding of “frivolous” in order to fail to invoke CAFA jurisdiction. This interpretation is consistent with Cunningham. Regardless, this game of semantics is unnecessary. Whether there are two options—frivolous claims and, separately, claims that lack an expectation of certification—or only one option—“frivolous” as that word was expanded by Wright to include claims that lack an expectation of certification—it makes no practical difference in this case.

The parameters of claims that lack an expectation of certification, however, are amorphous. The Eleventh Circuit has not weighed in on this issue since Wright, and only very few district court cases have addressed it. Nevertheless, two of those cases are informative here. The case most closely analogous is Perisic v. Ashley Furniture Industries, Inc., No. 8:16-cv-3255-EAK-SPF, 2018 WL 8581976, 2018 U.S. Dist. LEXIS 233677 (M.D. Fla. Nov. 7, 2018). There, the plaintiff filed putative class action claims, alleging that the defendant made various misrepresentations regarding one of its products. Id. at *1, 2018 U.S. Dist. LEXIS 233677 at *2. Certification of the class claims was denied because, inter alia, the class was not ascertainable and there were too many individualized issues to meet the predominance and commonality factors of Federal Rule of Civil Procedure 23(b). Perisic v. Ashley Furniture Indus., No. 8:16-cv-3255-T-17MAP, 2018 WL 3391359, at *5, 2018 U.S. Dist. LEXIS 118337, at *17-17 (M.D. Fla. June 27, 2018), Report and Recommendation adopted by, 2018 WL 4381184, 2018 U.S. Dist. LEXIS 218663 (M.D. Fla. Aug. 13, 2018). After a thorough analysis of the Eleventh Circuit's CAFA jurisdiction jurisprudence, the Perisic Court determined that it lacked CAFA jurisdiction over the plaintiff's individual claims. 2018 WL 8581976 at *1–6, 2018 U.S. Dist. LEXIS 233677 at *4–18. In doing so, it determined that the plaintiff's claims lacked the expectation that a class would eventually be certified because of “the administrative infeasibility of Plaintiff's chosen method of identifying class members and the uniqueness of each proposed class member's sales experience with [the defendant].” Id. at *6, 2018 U.S. Dist. LEXIS 233677 at *17–18.

Similarly, in Arias-Bonello, the plaintiff brought putative class claims on behalf of those who were insured by the defendant and who were denied benefits under a specific provision of a policy issued by the defendant. 2017 WL 7793885, at *1, 2017 U.S. Dist. LEXIS 222876, at *1–2. In determining that it lacked CAFA jurisdiction over the claims, the Arias-Bonello Court explained that “given the myriad of individualized issues concerning, among other things, whether each putative class member entered into an enforceable contract and whether [the d]efendant's breach caused each putative class member to suffer damages, a class was unlikely to be certified in this case.” Id. at *2, 2017 U.S. Dist. LEXIS 222876 at *5. Notably, both of these cases found the presence of obvious and numerous individualized issues as an important factor in determining that CAFA jurisdiction did not exist.²

Contrary to Perisic and Arias-Bonello, the court in Blobner v. R.T.G. Furniture Corporation indicated that “perhaps [only] the most frivolous of CAFA claims could result in a dismissal for lack of subject matter jurisdiction.” 407 F. Supp. 3d 1270, 1272 (M.D. Fla. 2019). However, while the Blobner Court quoted the relevant language from Wright, it did not appear to consider the implications of the phrase “lack the expectation that a class may be eventually certified.” See id. Instead, the analysis in Blobner largely relies on a district court case from the Southern District of New York—Fleisher v. Phoenix Life Insurance Co., 997 F. Supp. 2d 230, 235 (S.D.N.Y. 2014)—which was decided prior to Wright and, obviously, did not examine the “lacks expectation” language either. Accordingly, this Court does not find Blobner persuasive in this instance.

Here, like in Perisic and Arias-Bonello, it is obvious that the class claims involve numerous individualized questions such that there was never an expectation that the class could be certified. Indeed, as noted above, even the evidence presented by Plaintiffs in support of the motion for class certification was almost entirely individualized. Accordingly, this Court lacks subject matter jurisdiction over Plaintiff's individual claims,³ and those claims must be remanded. The Court now turns to the Association's claims.

C. Association Motion

As explained above, this Court dismissed the Association's claims for lack of Article III standing. Plaintiffs do not seek reconsideration of the Court's substantive finding, but instead, request that the Court remand those claims rather than dismissing them. Defendant's only objection to the remand of the Association's claims is that remand is only appropriate where the Court lacks jurisdiction over the entire case.⁴ And, because Defendants contend that the Court still has jurisdiction over the class claims, Defendant argues remand of the Association's claims would be inappropriate. However, given the above discussion, this Court does lack jurisdiction over this entire case. Accordingly, remand is appropriate. 28 U.S.C. § 1447(c) (“If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.”).

IV. Conclusion

As discussed above, this case is due to be remanded. While the Court acknowledges Plaintiffs' gamesmanship involved in these motions, the Court is bound to apply the law in a neutral manner and cannot exercise jurisdiction where none exists. Nevertheless, to the extent that Plaintiffs state that they intend to seek attorneys' fees pursuant to § 1447(c), the Court reminds Plaintiffs that “[a]bsent unusual circumstances, courts may award attorney's fees under § 1447(c) only where the removing party lacked an objectively reasonable basis for seeking removal.” Taylor Newman Cabinetry, Inc. v. Classic Soft Trim, Inc., 436 F. App'x 888, 890 (11th Cir. 2011) (quoting Martin v. Franklin Capital Corp., 546 U.S. 132, 141, 126 S.Ct. 704, 163 L.Ed.2d 547 (2005)). Plaintiffs should ensure that they have a legitimate basis for filing any such motion; the filing of frivolous motions may result in the imposition of sanctions against the filer.

In accordance with the foregoing, it is ORDERED and ADJUDGED as follows:

1. Plaintiff Bayberry Lakes Homeowners Association, Inc.'s Motion for Reconsideration (Doc. 203) is GRANTED.

a. The Association Order (Doc. 202) is VACATED in part. Insofar as it dismisses the Association's claims, the Association Order is vacated. Instead, the Association's claims will be remanded with the rest of this case.

2. Plaintiffs' Motion for Reconsideration (Doc. 207) is DENIED.

3. Plaintiffs' Supplemental Motion for Reconsideration and Remand (Doc. 208) is GRANTED.

4. Plaintiff's Motion to Set In-Person Rule 16 Conference (Doc. 223) is DENIED as moot.

5. This case is REMANDED to the Circuit Court of the Seventh Judicial Circuit in and for Volusia County, Florida, Case No. 2017 31905 CICI.

6. The Clerk is directed to close this case.

DONE and ORDERED in Orlando, Florida on May 4, 2020.

FOOTNOTES

1.   There appears to be confusion as to exactly how many homes in Bayberry Lakes community are at issue. Plaintiffs' Third Amended Complaint and Motion for Class Certification state that there are 275, (Doc. 160 ¶ 1); Plaintiffs' expert, Felix Martin, stated in his expert report that there were 266, (Doc. 132-9 at 3), but then in his deposition Martin stated that he was mistaken and there are 276 homes, (Doc. 170-1 at 32:1–7). For purposes of this Order, the precise number is irrelevant.

2.   Defendants argue that Perisic and Arias-Bonello do not apply here because, in those cases, the courts also determined that the class claims were frivolous and neither party argues here that Plaintiff's class claims were frivolous. However, both courts clearly made two alternate findings; their determination that the class claims lacked an expectation of certification was entirely separate from its analysis regarding frivolity. Thus, Perisic and Arias-Bonello are persuasive authority here.

3.   Defendants also argue that this Court already determined that it had CAFA jurisdiction. While the Court did deny Plaintiff's previous motion to remand, that was on the basis of the amount in controversy. (See generally Sept. 28, 2018 Order, Doc. 130). The issue of certification was not addressed previously. (Id.).

4.   Given that Defendants' argument is now moot, the Court makes no assessment of whether it is correct or not.

CARLOS E. MENDOZA, UNITED STATES DISTRICT JUDGE