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Red Star Mortgage Corp. v. Branch

United States District Court, D. New Mexico

September 19, 2017

Red Star Mortgage Corporation, Plaintiff/Judgment Creditor
v.
Michael Branch; Branch Realty, LLC; Xacattack, LLC f/k/a Renaissance Properties, LLC, and Branch Realty Commercial Advisors, Defendants/Judgment Debtors.

          MEMORANDUM OPINION AND ORDER

          M. CHRISTINA ARMIJO Chief United States District Judge.

         THIS MATTER is before the Court on Motion of Michael Branch and Branch Realty, LLC to Remove Default Judgment from Registration with New Mexico Courts and for Stay of Execution of Judgment, filed January 31, 2017. [Doc. 8] The Court has considered the parties' submissions, the relevant law, and is otherwise fully advised in the premises. For the reasons that follow, the Motion is not well taken and shall be DENIED without prejudice to Defendants' ability to pursue the requested relief in the Eastern District of Pennsylvania.

         BACKGROUND

         This case began when Plaintiff/Judgment Creditor Red Star Mortgage Corporation (Red Star) filed a complaint in a Pennsylvania county court, which was later removed to a court within the Eastern District of Pennsylvania (EDPA), alleging, among other things, non-payment of a commission in connection with refinancing a real estate project (the Market Station at Santa Fe Railyards) in Santa Fe, New Mexico. [Doc. 9-1 p. 7; Doc. 9-6 p. 2] Red Star is financial company in Pennsylvania. [Doc. 10-1 p. 2] Allen Branch (Michael Branch's son) allegedly entered into an agreement with Red Star for the Santa Fe real estate project, the breach of which led to Red Star's lawsuit. [Doc. 10-1] In the original complaint, Branch Realty Commercial Advisors, Allen Branch, and Xacattack, LLC (an LLC of which Allen Branch is the sole member), were named as defendants, but Michael Branch and Branch Realty were not. [Doc. 9-1 p. 8; Doc. 9-7 p. 2; Doc. 9-3 p. 27-28] After the case was removed to the EDPA, Red Star filed a second amended complaint naming the same relevant parties as defendants. [Doc. 9-1 p. 9] A third amended complaint added Michael Branch and Branch Realty, LLC, as defendants. [Doc. 9-7 p. 4]

         There is conflicting information in the record about the nature of Branch Realty as a business, and Allen and Michael Branch's respective roles in the ownership and control of the business. For instance, the present Motion is brought by “Michael Branch and Branch Realty, LLC.” [Doc. 8 p. 1] And in a declaration submitted to the EDPA, Michael Branch stated that “Branch Realty, LLC is a New Mexico Limited Liability Company organized in 2001. I am the sole member of Branch Realty, LLC[.]” [Doc. 9-7 p. 4] In an affidavit submitted to the EDPA, however, Michael Branch described “Branch Realty” as a sole proprietorship in Santa Fe, New Mexico which sometimes uses the name “Branch Realty Commercial Advisors” as a description of its services, and which is owned by Michael Branch. [Doc. 9-6 p. 7] And, in an affidavit submitted to the EDPA, Allen Branch represented himself as “a principal member of Defendant Branch Realty LLC d/b/a Branch Realty Commercial Advisors[, ]” but his assertion is contradicted by another affidavit by Michael Branch which states that “Allen Branch is an associate broker with Branch Realty but has no ownership interest in Branch Realty, no management authority over Branch Realty, and no authority to bind me or Branch Realty to any contractual obligations[.]” [Doc. 9-2 p. 26; Doc. 9-3 p. 27] Thus, it is far from clear what Michael and Allen Branch's respective roles are in the Branch business, which may be an LLC or a sole proprietorship.

         Two months after Red Star filed its second amended complaint naming Branch Realty Commercial Advisors as a defendant, “Michael Branch d/b/a Branch Realty” filed a complaint for declaratory relief against Red Star Mortgage and Allen Branch (among others) in the First Judicial District Court in Santa Fe (the Santa Fe district court). [Doc. 8-1; Doc. 9-6 p. 3, 7] The complaint represented that “[a]n actual case and controversy exists as to whether Michael Branch [is] indirectly named as a party to the Litigation” (a reference to Red Start's lawsuit then underway in the EDPA). [Doc. 8-1 p. 3] It continued:

[i]f it is determined that there is an attempt to join Michael Branch as a party to the [l]itigation through naming Branch Realty Commercial Advisors, then this Court should determine that there is no jurisdiction in courts of Pennsylvania over Michael Branch relating to the [l]itigation, as Michael Branch has insufficient contacts with . . . Pennsylvania which would submit him to its courts' jurisdiction.
Wherefore, Michael Branch prays that this [c]ourt declare that Michael Branch is not a party to the [l]itigation or, in the alternative, that there is no jurisdiction over him in Pennsylvania courts[.]

[Doc. 8-1 p. 4] Approximately nine months later, on December 16, 2016, the Santa Fe district court entered a default judgment against Red Star, which had not entered an appearance in the matter, declaring:

. . . That Michael Branch personally or through any entity with which he is associated, including Branch Realty, Branch Realty LLC or Branch Realty Commercial Advisors, has had no contacts with the State of Pennsylvania.
. . . That Michael Branch personally or through any entity with which he is associated, including Branch Realty, Branch Realty LLC or Branch Realty Commercial Advisors, has had no involvement with . . . Red Star Mortgage[.]
[and]
. . . That Michael Branch personally or through any entity with which he is associated, including Branch Realty, Branch Realty LLC or Branch Realty Commercial Advisors, is not bound by any actions of Allen Branch and specifically by any actions or representations made by Allen Branch relating to Red[ S]tar Mortgage Corporation[.]

[Doc. 8-5 p. 2] In the meantime, however, the case in the EDPA was proceeding and Michael Branch involved himself ...


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