STEPHANIE K. BOWMAN, Magistrate Judge.
On April 5, 2019, Plaintiffs Fred A. Norman and Lydia Norman, proceeding pro se, paid the requisite filing fee and initiated this civil case against Superior Credit Union, Inc. formerly known as Cinco Credit Union, and three of its employees: Tom Hopper, Jim Zahneis, and Perry Lunhe.
Defendants have filed a motion for summary judgment. Plaintiffs have responded, and Defendants have filed a reply. For the reasons that follow, the undersigned now recommends that Defendants' motion be GRANTED and that this case be DISMISSED.
Because the undersigned concludes that this Court is without jurisdiction over this case, it is appropriate to begin with a review of Plaintiffs' claims. The entirety of the complaint sets forth those claims as follows:
Immediately below the above typed paragraphs in the complaint is the following handwritten statement:
(Doc. 1-1 at 4). In an answer filed on May 6, 2019, Defendants assert multiple defenses, including the defense that this Court lacks subject matter jurisdiction. (Doc. 3).
Defendants' jurisdictional challenge is reiterated in their pending motion for summary judgment. The motion additionally (and alternatively) raises the defenses of res judicata and collateral estoppel. (Doc. 9). To the extent that this Court has jurisdiction, Defendants further argue that the Court should dismiss this case under the Colorado River abstention doctrine because the Plaintiffs are simultaneously litigating their claims in state court. Although only
Plaintiffs have the burden to prove that this Court possesses subject matter jurisdiction. On its face, Plaintiffs' complaint contains no reference to
Pursuant to 28 U.S.C. § 1332, "[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between ... citizens of different States." A federal court has jurisdiction under § 1332 only if there is "complete diversity between all plaintiffs and all defendants." Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005). "To establish diversity jurisdiction, one must plead the citizenship of the corporate and individual parties." Naartex Consulting Corp. v. Watt, 722 F.2d 779, 792 n.20 (D.C. Cir. 1983); see also Leys v. Lowe's Home Ctrs., Inc., 601 F.Supp.2d 908, 912-13 (W.D. Mich. 2009). Here, the complaint identifies both Plaintiffs and Defendants as residents of Ohio. In addition, the only allegation that identifies any amount in controversy refers to a loan balance of $38,300 — an amount that falls well below the threshold amount for the exercise of diversity jurisdiction. See 28 U.S.C. § 1332(a).
Just as diversity jurisdiction appears to be lacking from the face of the complaint, so too is there an absence of any valid reference to federal question jurisdiction in the complaint. The sole reference to federal law is a single allegation that the interest rate being applied to Plaintiffs' loan is an "illegal interest rate[] that doesn't follow federal rules and regulations." However, Plaintiffs cite to no particular federal law, rule or regulation that would support a federal cause of action. A cursory and vague reference to unspecified "federal rules and regulations" is insufficient to invoke federal question jurisdiction. See also, generally, Apple v. Glenn, 183 F.3d 477, 479 (6th Cir. 1999) (affirming a trial court's authority to sua sponte dismiss a non-prisoner pro se complaint for lack of jurisdiction "at any time" where the filing fee has been made, "when the allegations of a complaint are totally implausible, attenuated, unsubstantial, frivolous, devoid of merit, or no longer open for discussion.").
In the body of Plaintiffs' responses in opposition to summary judgment, Plaintiffs briefly refer by title to several federal laws, including the Equal Credit Opportunity Act, the Truth in Lending Act, the Fair Credit Reporting Act, and the Real Estate Settlement Procedures Act, as well as one federal agency (FEMA). (Docs. 14, 15). Again, however, a cursory reference to federal law — without identifying any specific cause of action — is insufficient to carry Plaintiffs' burden to show that jurisdiction exists.
Although Plaintiffs' factual allegations are few, they refer to "theft and misappropriation of plaintiffs Savings and Primary Share and Mortgage accounts" by Defendants, beginning sometime in 1976 and continuing through to the present time. Defendants' motion for summary judgment asks this Court to take judicial notice of the fact that over the past fifteen years, Plaintiffs have repeatedly litigated the same or closely related grievances concerning their mortgage account(s) in multiple judicial forums, including twice in bankruptcy court and once in state court. Defendants identify three cases in which Plaintiffs have litigated the same claims. Plaintiffs failed to file any timely response in opposition to the Defendants' Proposed Undisputed Facts, (Doc. 8), which appear to be well-supported by evidence of record and are accepted by this Court.
The doctrines of collateral estoppel and res judicata, otherwise known as issue preclusion and claim preclusion, preclude Plaintiffs from relitigating the same issues in this Court that they previously litigated other judicial forums. Relevant prior final decisions include a 2004 Bankruptcy Court order (Plaintiffs' Bankruptcy Chapter 13 Plan Confirmation Order) and the same court's August 3, 2018 Order (Overruling the Debtors' Objection to Claim and Dismissal of the Bankruptcy). Plaintiffs also have litigated, and continue to litigate, the same issues in state court. In Plaintiffs' supplemental memorandum in opposition to summary judgment, Plaintiffs confirm that they are seeking a new determination of the same issues, based on their belief that the state and bankruptcy courts "made the wrong decisions." (Doc. 18, PageID 387). However, Plaintiffs offer no legal basis that would support this Court's rejection of issue preclusion and claim preclusion, both of which operate to bar the instant lawsuit.
Plaintiffs first challenged the underlying mortgage on which the instant case is based in the course of a 2004 bankruptcy proceeding. See, e.g., In re Norman, Case No. 1:04-BK-19054 (S.D. Bankr. Ohio) (establishing Plaintiffs' obligations on their loan including the principal amount due as of February 23, 2005 and "on ongoing interest rate on the mortgage." (Doc. 8-1 at ¶¶4-5, citing Doc. 5-1, PageID 17 and Doc. 5-2, PageID 22).
Plaintiffs next litigated the same issues in defense of a state court foreclosure proceeding initiated by the Credit Union after the Plaintiffs defaulted on their repayment obligations. (Doc. 8-1 at ¶¶ 6-7, citing Hamilton County Court of Common Pleas Case No. A 1404308 and Doc. 5-4, PageID 35-53). The Normans are represented by counsel in that state court action, which remains ongoing. Through counsel, the Normans asserted several defenses including arguments that the Credit Union failed to properly service the loan, that the Credit Union had assessed "fees, costs, and charges" that were not authorized by the terms of the mortgage, and that the Credit Union "wrongfully added and continues to unilaterally add...improper charges to the balance...." (Doc. 8-1 at ¶7). In state court, the Normans also maintained that the Credit Union "failed to properly credit and apply payments" to their account. (Doc. 8-1 at ¶7, quoting Doc. 5-5, PageID 55).
A state court magistrate ruled in favor of the Credit Union on summary judgment in the foreclosure action on July 29, 2015. (Doc. 8-1 at ¶8 citing Doc. 5-7, PageID 89-93). Before the magistrate's ruling became final, Plaintiffs initiated another bankruptcy case to again challenge their home mortgage debt, including the balance due, interest rate, and the Credit Union's administration of their account. (Doc. 8-1 at ¶¶9-10; Doc. 5-8, PageID 94). State court proceedings were stayed in light of the filing of a new bankruptcy case.
With respect to the Plaintiffs' most recent bankruptcy case,
Judge Hopkins's August 2018 order explained that he had conducted the extensive hearing in April "for the exclusive and explicit purpose of allowing the Debtors to `litigat[e] the amount owed to [the Credit Union] subsequent to the Debtors' 2004 confirmed plan.'" (Doc. 5-2, PageID 23). Through counsel, however, the Normans insisted that "[t]he major issue...is what interest rate governs this payment stream." (Doc. 8-1 at ¶17, citing Doc. 5-2, PageID 23, emphasis original). "Instead of proffering new evidence demonstrating miscalculations or misapplied payments..., the Debtors continued their reliance upon the singular argument that their mortgage was subject to a variable interest rate despite never having raised this issue prior to the 2004 confirmation order when it would have been appropriate." (Doc. 5-2 at PageID 24-25). Confirming their lack of challenge to the debt amount before the bankruptcy court, the Normans entered into stipulations that "necessarily include[d] agreement that the Debtors' payments were correctly applied by" the Credit Union. (Doc. 5-2, PageID 24 at n.3). Thus, Judge Hopkins held that the Normans had "failed to present evidence that any payments that were made after the 2004 confirmation order had been misapplied by [the Credit Union] or that [the Credit Union] had somehow miscalculated the amount of the debt...." (Id.) The Bankruptcy Court also rejected the challenge to the interest rate, holding that the 2004 bankruptcy case established the applicable interest rate and operated as res judicata to preclude the Normans from relitigating that issue. (Doc. 8-1 at ¶17, citing Doc 5-2, PageID 22-24, 27-28, additional citations omitted). The Bankruptcy Court dismissed the Normans' case in November 2018. Importantly, the Normans filed no appeal.
Once the bankruptcy case was dismissed, proceedings resumed in state court. The magistrate's 2015 ruling on the Credit Union's motion for summary judgment in the state court case remains pending for review by the assigned Common Pleas Judge. As recently as May 2019, counsel for the Normans filed new Objections and a motion to vacate the magistrate's 2015 decision in state court.
As explained above, the undersigned concludes that this Court lacks jurisdiction and alternatively, that Plaintiffs' case is completely barred by issue preclusion and claim preclusion based on the prior and rulings of the Bankruptcy Court. Defendants further argue that this Court should dismiss this case under the Colorado River abstention doctrine. See Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). The undersigned agrees but finds no need to discuss this doctrine in depth.
For the reasons stated,
Pursuant to Fed. R. Civ. P. 72(b), any party may serve and file specific, written objections to this Report and Recommendation ("R&R") within
