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Dunn v. Mortgage Electronic Registration Systems

United States District Court, D. Oregon

May 15, 2018

JACK A. DUNN, Plaintiff,
v.
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS; and U.S. BANK, NATIONAL ASSOCIATION, Defendants.

          ORDER

          MICHAEL H. SIMON UNITED STATES DISTRICT JUDGE

         On March 9, 2018, Plaintiff Jack A. Dunn (“Dunn”) pro se filed this lawsuit in federal court against Defendants Mortgage Electronic Registration Systems (“MERS”) and U.S. Bank, National Association (“U.S. Bank”). On April 2, 2018, both Defendants entered appearances. The following day, April 3, 2018, both Defendants moved to dismiss, pursuant to Rules 8 and 12 of the Federal Rules of Civil Procedure. The next day after that, April 4, 2018, Dunn filed a notice informing the parties and the Court that on March 28, 2018, he had filed for Chapter 7 bankruptcy. On May 1, 2018, an attorney for U.S. Bank served Dunn with a state court Notice of Restitution and a Deadline to Vacate by Sunday, May 6, 2018, signed by the Clerk of the Clackamas County Circuit Court. ECF 10-1 at page 50.

         In this federal lawsuit, Dunn alleges claims for wrongful foreclosure, fraud on the court, intentional infliction of emotional distress, and violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq. Dunn seeks money damages, punitive damages, declaratory relief, and injunctive relief. Pending before the Court is Dunn's motion for a temporary restraining order (“TRO”) to prevent the enforcement of the state court's Notice of Restitution and Deadline to Vacate. For the reasons that follow, Dunn's motion is DENIED.

         STANDARDS

         In deciding whether to grant a motion for a temporary restraining order, courts look to substantially the same factors that apply to a court's decision on whether to issue a preliminary injunction. See Stuhlbarg Int'l Sales Co. v. John D. Brushy & Co., 240 F.3d 832, 839 n.7 (9th Cir. 2001). A preliminary injunction is an “extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter v. Natural Res. Def. Council, 555 U.S. 7, 22 (2008). A plaintiff seeking a preliminary injunction generally must show that: (1) the plaintiff is likely to succeed on the merits; (2) the plaintiff is likely to suffer irreparable harm in the absence of preliminary relief; (3) the balance of equities tips in favor of the plaintiff; and (4) an injunction is in the public interest. Winter, 555 U.S. at 20 (rejecting the Ninth Circuit's earlier rule that the mere “possibility” of irreparable harm, as opposed to its likelihood, was sufficient, in some circumstances, to justify a preliminary injunction).

         The Supreme Court's decision in Winter, however, did not disturb the Ninth Circuit's alternative “serious questions” test. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131-32 (9th Cir. 2011). Under this test, “‘serious questions going to the merits' and a hardship balance that tips sharply toward the plaintiff can support issuance of an injunction, assuming the other two elements of the Winter test are also met.” Id. at 1132. Thus, a preliminary injunction may be granted “if there is a likelihood of irreparable injury to plaintiff; there are serious questions going to the merits; the balance of hardships tips sharply in favor of the plaintiff; and the injunction is in the public interest.” M.R. v. Dreyfus, 697 F.3d 706, 725 (9th Cir. 2012) (citing Cottrell).

         DISCUSSION

         In 2013, U.S. Bank brought a judicial foreclosure proceeding against Dunn in the Circuit Court of the State of Oregon for the County of Clackamas.[1] On June 23, 2014, the Clackamas County Circuit Court entered final judgment in favor of U.S. Bank. The state court found that U.S. Bank “is the holder of the original note at issue in this matter and holds the beneficial interest in the Deed of Trust.” Through its final judgment, the state court foreclosed Dunn's interest in the property.

         Dunn's claims in this federal lawsuit are based on his contention that U.S. Bank does not in fact hold the beneficial rights to the Deed of Trust on Dunn's property because MERS illegally and improperly purported to assign those beneficial rights to U.S. Bank. Dunn argues that this allegedly illegal assignment resulted in an illegal judicial foreclosure, perpetrated a fraud on the state court, resulted in intentional infliction of emotional distress upon Dunn, and violated the FDCPA. Defendants respond that Dunn is unlikely to prevail on any of his claims because this Court does not have subject-matter jurisdiction under the Rooker-Feldman doctrine, [2] Dunn's claims are precluded by the earlier Clackamas County Circuit Court case, Defendants could not have inflicted emotional distress upon Dunn by enforcing their legal rights and enforcing a state court judgment, and Defendants are not debt collectors under the FDCPA. Because the Court agrees that Dunn has not shown a likelihood of success on the merits, or even raised serious questions, the Court does not analyze the three remaining TRO factors under Winter.

         A. Rooker-Feldman Doctrine

         Under the Rooker-Feldman doctrine, federal courts lack jurisdiction to hear cases that amount to collateral attacks on state court judgments. The basic premise of that doctrine is that “a federal district court does not have subject matter jurisdiction to hear a direct appeal from the final judgment of a state court.” Noel v. Hall, 341 F.3d 1148, 1154 (9th Cir. 2003). Instead, the United States Supreme Court is the only federal court with jurisdiction to hear appeals from state courts. Id.; see 28 U.S.C. § 1257.

         The scope of the Rooker-Feldman doctrine includes de facto appeals from a state court decision and “any issue raised in the suit that is ‘inextricably intertwined' with an issue resolved by the state court in its judicial decision.” Noel, 341 F.3d at 1158. A claim is inextricably intertwined with a state court judgment if the federal claim can succeed only to the extent that the state court wrongly decided the issues before it, or if the relief requested in the federal action would effectively reverse the state court decision or void its ruling. Doe & Assocs. Law Offices v. Napolitano, 252 F.3d 1026, 1029-30 (9th Cir. 2001) (citations omitted).

         Rooker-Feldman bars a suit from going forward if: (a) the plaintiff in the federal suit lost in the state court proceeding; (b) the state court determination is at the core of the federal lawsuit; (c) the federal lawsuit seeks review and rejection of the state court verdict; and (d) the state court judgment was entered before commencement of the federal action. McKithen v. Brown, 481 F.3d 89, 97 (2nd Cir. 2007). All of these elements are present in this case. Plaintiff lost in the state court, and his interest in the property was foreclosed. Dunn is now asking this Court to void the earlier decision of the state court that foreclosed Dunn's interest and concluded that U.S. Bank holds the beneficial interest in the Trust Deed. Dunn is further asking this Court to vacate the order of the state court, and enjoin its enforcement.

         Rooker-Feldman, however, does not bar a federal suit to set aside a state court judgment if that judgment was obtained by extrinsic fraud. Kougasian v. TMSL, Inc., 359 F.3d 1136, 1141 (9th Cir. 2004). Fraud on a court is “not an error by that court, ” but instead is “a wrongful act committed by the party or parties who engaged in the fraud.” Id. “Rooker-Feldman therefore does not bar subject matter jurisdiction when a federal plaintiff alleges a cause of action for extrinsic fraud on a state court and seeks to set aside a state court judgment obtained by that fraud.” Id. If the parties raised the issue of fraud before the state ...


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