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Larry v. JP Morgan Chase Bank

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA


March 23, 2010

ROY LARRY, PLAINTIFF,
v.
JP MORGAN CHASE BANK, N.A., ET AL., DEFENDANTS.

The opinion of the court was delivered by: Gregory G. Hollows United States Magistrate Judge

ORDER

Plaintiff is proceeding in this action pro se and in forma pauperis pursuant to 28 U.S.C. § 1915. This proceeding was referred to this court by Local Rule 72-302(21), pursuant to 28 U.S.C. § 636(b)(1).

By order of September 28, 2009, plaintiff was directed to show cause why this case should not be stayed based on abstention grounds, based on his request to consolidate this case with an unlawful detainer action against him which is proceeding in superior court. Plaintiff did not respond to that order.

This action concerns plaintiff's attempts to prevent foreclosure of his residence. He contends that he executed a note for $620,000 secured by a deed of trust on his home on May 5, 2006, and that on August 9, 2006, he took out a line of credit on the same home in the amount of $66,900. (Compl. at 5.) Plaintiff was in negotiations with Chase, the beneficiary of the deed of trust, to modify the loan around October 22, 2008 and April 22, 2009. According to the complaint, the loan was in default from March 1, 2008 through July 1, 2009. Defendant commenced foreclosure proceedings on the property around May 27, 2009, with a trustee sale on June 3, 2009. (Id. at 6.)

Claims include violations of the Truth in Lending Act, violation of the Real Estate Settlement Procedure Act, wrongful foreclosure, breach of fiduciary duty, breach of contract, breach of implied covenant of good faith and fair dealing, fraud by intentional misrepresentation, fraud by concealment, violation of Cal. Civ. Code § 2923.5(b), quiet title, set aside trustee sale, and cancellation of trustee's deed.*fn1 Plaintiff seeks injunctive and declaratory relief, as well as monetary damages.

ABSTENTION

As plaintiff has not responded to the order to show cause regarding the unlawful detainer action proceeding in superior court, the undersigned must assume from plaintiff's September 4, 2009 filing that he has an ongoing state action regarding the same property that is the subject of the instant litigation. After further review, however, the undersigned has determined not to stay these proceedings.

The concern for comity and federalism require the courts to refrain from interfering in pending state civil proceedings where important state interests are involved. Huffman v. Pursue, Ltd., 420 U.S. 592, 95 S.Ct. 1200, 43 L.Ed.2d 482 (1975); Juidice v. Vail, 430 U.S. 327, 97 S.Ct. 1211, 51 L.Ed.2d 376 (1977).

Federal courts, invoking principles of equity, federalism, and comity, may abstain in rare cases from exercising jurisdiction, deferring to state proceedings involving the same or similar issues as those presented to the federal court. The theories supporting abstention vary depending on the factual and procedural posture of each case, but their philosophical underpinnings overlap. See, e.g., Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 116 S.Ct. 1712. (1996); Middlesex County Ethics Committee v. Garden State Bar Ass'n, 457 U.S. 423, 102 S.Ct. 2515 (1982); Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 96 S.Ct. 1236 (1976); Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746 (1971); Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098 (1943); Railroad Commission of Texas v. Pullman, 312 U.S. 496, 61 S.Ct. 643 (1941).

When the relief sought in federal court is declaratory or injunctive relief directed to the state or its agencies, the principles of abstention set forth in Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746 (1971) may counsel federal court abstention. Pursuant to Younger, federal courts refrain from interfering with pending state criminal or civil proceedings, including state administrative proceedings. Ohio Civil Rights Comm'n v. Dayton Christian Schools, Inc., 477 U.S. 619, 106 S.Ct. 2718 (1986). Absent extraordinary circumstances, a federal court should abstain from granting declaratory or injunctive relief where: (1) there is an ongoing state court proceeding; (2) there is an important state interest at issue; and (3) there is an adequate opportunity for plaintiff to litigate the federal claims in the state court proceeding. See, e.g., Hirsh v. Justices of the Supreme Court of California, 67 F.3d 708 (9th Cir. 1995) (affirming abstention in case presenting constitutional challenge to state bar proceeding.).

Here, plaintiff concedes there is an ongoing proceeding in state court. (Dkt. # 6.) Plaintiff states in that motion that the state unlawful detainer proceeding commenced on July 2, 2009, prior to the August 7, 2009 complaint filed in this action. Given the procedural posture of this case, which remains at the complaint stage with no defendants yet served, the court has no difficulty concluding that for Younger purposes, the state proceedings precede this federal action. See Confederated Salish v. Simonich, 29 F.3d 1398, 1405 (9th Cir. 1994) (abstention proper if no proceedings of substance occurred in the federal action); Fresh Intern. Corp. v. Agricultural Labor Relations Board, 805 F.2d 1353, 1358 (9th Cir. 1986) (if the federal suit is in a very early stage when state proceedings are filed, Younger applies).

Considering the second Younger factor, the importance to the state of monitoring property disputes within the state cannot be disputed. Nevertheless, unlawful detainer actions are summary proceedings to determine right to possession and to obtain possession of the property. They do not permit cross-complaints or counterclaims. Underwood v. Corsino, 133 Cal. App.4th 132, 135, 34 Cal. Rptr.3d 542 (2005). Defenses other than those related to the narrow issue of possession are generally excluded, even if they arise out of the same subject matter as the unlawful detainer action. Id. Although it is plaintiff's burden to show that he is barred from raising his federal claims in the underlying state proceedings, see Lebbos v. Judges of the Superior Court, 883 F.2d 810, 815 (1989), and plaintiff has failed to meet this burden, for purposes of efficiency this matter will be resolved at the present time. Because plaintiff could not bring his federal claims in the ongoing state proceeding, this action will not be stayed.*fn2

THE COMPLAINT

The determination that plaintiff may proceed in forma pauperis does not complete the required inquiry. Pursuant to 28 U.S.C. § 1915(e)(2), the court is directed to dismiss the case at any time if it determines the allegation of poverty is untrue, or the action is frivolous or malicious, fails to state a claim on which relief may be granted, or seeks monetary relief against an immune defendant. The court cannot make this determination on the present record. Therefore, the court reserves decision on these issues until the record is sufficiently developed.

Good cause appearing, IT IS ORDERED that:

1. The Clerk of the Court is directed to issue forthwith, and the U.S. Marshal is directed to serve within ninety days of the date of this order, all process pursuant to Fed. R. Civ. P. 4, including a copy of this court's status order, without prepayment of costs.

2. The Clerk of the Court shall send plaintiff one USM-285 form for each defendant, one summons, a copy of the complaint, an appropriate form for consent to trial by a magistrate judge, and this court's status order.

3. Plaintiff is directed to supply the U.S. Marshal, within 15 days from the date this order is filed, all information needed by the Marshal to effect service of process, and shall file a statement with the court that said documents have been submitted to the United States Marshal. The court anticipates that, to effect service, the U.S. Marshal will require at least:

a. One completed summons for each defendant;

b. One completed USM-285 form for each defendant;

c. One copy of the endorsed filed complaint for each defendant, with an extra copy for the U.S. Marshal;

d. One copy of this court's status order for each defendant; and

e. One copy of the instant order for each defendant.

4. In the event the U.S. Marshal is unable, for any reason whatsoever, to effectuate service on any defendant within 90 days from the date of this order, the Marshal is directed to report that fact, and the reasons for it, to the undersigned.

5. The Clerk of the Court is directed to serve a copy of this order on the U.S. Marshal, 501 "I" Street, Sacramento, Ca., 95814, Tel. No. (916) 930-2030.


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