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Paulson v. Fairway America Corp.

United States District Court, D. Oregon, Medford Division

February 11, 2015

FAIRWAY AMERICA CORP., et al., Defendants.


OWEN M. PANNER, District Judge.

Magistrate Judge Mark D. Clarke filed a Report and Recommendation, and the matter is now before this court. See 28 U.S.C. § 636(b) (1) (B), Fed.R.Civ.P. 72(b). Because Plaintiff objects to the Report and Recommendation, I review this matter de novo. 28 U.S.C. § 636(b) (1) (C); McDonnell Douglas Corp. v. Commodore Bus. Mach., Inc., 656 F.2d 1309, 1313 (9th Cir. 1981). After reviewing de novo, I dismiss this action with prejudice.

I. Plaintiff's Motion to Vacate

Plaintiff moves to vacate the Report and Recommendation because he did not consent to a magistrate-judge. But a magistrate-judge has the authority to issue findings and recommendations (F&R)[1] without consent because an F&R has no effect unless an Article III judge adopts it. See McKeever v. Block, 932 F.2d 795, 798 (9th Cir. 1991).

Plaintiff argues Judge Clarke "evinces the same sort of patent bias against the Plaintiff as Paulson has experienced throughout this litigation commencing in 2008." Mot. Vacate at 3, ECF No. 12). To disqualify a judge, there must be a showing of "such a high degree of favoritism or antagonism as to make fair judgment impossible." Liteky v. United States, 510 U.S. 540, 555 (1994). The alleged bias "must usually. stem from an extrajudicial source." Pesnell v. Arsenault, 490 F.3d 1158, 1164 (9th Cir. 2007).

Here, the alleged instances of bias do not stem from extra-judicial sources. The rulings cited by. Plaintiff do not show the type of prejudice that could justify recusal. For example, Plaintiff contends that the R&R "attempt[s] to further diminish him" by noting that he is no longer a member of the Oregon State Bar. Mot. to Vacate at 3. Although Plaintiff has sought, reinstatement, he has been disbarred. See Paulson v. Oregon St. Bar, No. 6:13-cv-175-AA, 2013 WL 2659605, at *1 (D. Or. June 4, 2013) (citing In re Paulson, 346 Or. 676, 216 P.3d 859 (2009) (per curiam)). Plaintiff's status is relevant because this court generally treats the pleadings of non-lawyers with more leniency than those written by lawyers. See id.

I deny Plaintiff's Motion to Vacate.

II. Plaintiff's Complaint Must Be Dismissed With Prejudice

I agree with the Report and Recommendation (R&R) that Plaintiff's complaint should be dismissed for failure to state a claim. Although the R&R recommends dismissal without prejudice, I conclude dismissal must be with prejudice.

A. Claims Based on the Foreclosure of Plaintiff's Property

Plaintiff's complaint centers on the non-judicial foreclosure of real property he owned in Washington County: a historical structure called the M.E. Blanton house, and three adjacent rental properties. Compl. at 83. Plaintiff claims Defendant FHLF., LLC lacked standing to foreclose, failed to give him proper notice, and committed fraud, among other claims. Plaintiff brings claims against the attorneys who represented FHLF, LLC; the trustee of his Chapter 7 bankruptcy estate; the bankruptcy judges who presided over the bankruptcy proceedings; and judges from this district and the Ninth Circuit who ruled against Plaintiff in prior actions. Because Plaintiff has previously raised, or could have raised, these claims about the foreclosure in previous actions, Plaintiff is barred from raising the claims here.

In determining that Plaintiff's claims are precluded by prior judgments, I take judicial notice of the docket sheets, pleadings, briefs, orders, and other documents filed as part of the official record in prior actions filed by or against Plaintiff. See Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006) (affirming dismissal based on claim preclusion, court took judicial notice of court filings in underlying or related litigation). Here, I focus on two prior actions: a 2008 action Plaintiff filed in this court, challenging the then-pending foreclosure and claiming he and a class of similarly situated persons were victims of predatory lending practices, Paulson v. Fairway America Corp., No. 3:08-cv-982-PK, 2010 WL 5129690 (D. Or. Dec. 10, 2010), aff'd, No. 10-36178 (9th Cir. June 28, 2011); and the forcible entry and detainer (FED) actions filed by FHLF, LLC, against Plaintiff in Washington County Circuit Court, FHLF, LLC v. Paulson, Nos. C100084EV, C100085EV, C100086EV (Wash. Cnty. Cir. Ct. May 3, 2010), appeal dismissed, A145469, A145470, A145470 (Or. Ct. App. Feb. 2, 2011), petition for review denied, S059272 (lead case) (Or. Sup.Ct. May 31, 2011)[2]

1. Paulson v. Fairway America Corp.

a. Background and Procedural History

In 2005, Fairway Commercial Mortgage Corp. (Fairway) made a loan to Huber-Wheeling Crossing (HWC), a limited liability company of which Plaintiff is the sole member. To secure the loan, Fairway obtained trust ...

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