TERENCE P. KEMP, Magistrate Judge.
This case (in which the parties have consented to full disposition by the Magistrate Judge) is before the Court on a "notice of bankruptcy and suggestion stay [sic]" filed by defendant attorney Charles R. Griffith on his own behalf and on behalf of his client Florida Coastal Partners, LLC, relating to a bankruptcy filing made by plaintiff Tonya Brown. (Doc. 57). Also before the Court is a motion for summary judgment filed by defendant Carlisle, McNellie, Rini, Kramer & Ulrich, Co., LPA ("Carlisle") (Doc. 54), the plaintiffs' motion for leave to file an amended complaint and injunction or motion to stay (Doc. 60), and their amended motion for leave to file an amended complaint and injunction or motion to stay. (Doc. 61). For the reasons set forth below, the Court will find that Ms. Brown is no longer the real party in interest with respect to her claims in light of her pending bankruptcy. Thus, the Court will consider the pending motions only as they apply to Mr. Brown. The Court will grant Carlisle's summary judgment as to the claims brought by Mr. Brown only. Further, the Court will deny the motion for leave to file an amended complaint and injunction or motion to stay as moot. (Doc. 60). Finally, the Court also will deny Mr. Brown's amended motion for leave to file an amended complaint and injunction or motion to stay. (Doc. 61).
The Browns are property owners who are parties to a foreclosure action filed in the Delaware County Court of Common Pleas as Case No. 08-CVE-12-1598. A discussion of the procedural history of that foreclosure action is necessary to address the notice of bankruptcy and suggestion of stay and the pending motions.
CitiGroup Global Markets Realty Corp. ("CitiGroup") filed the foreclosure case against the Browns in December, 2008. On September 8, 2010, CitiGroup filed a motion to substitute Kondaur Capital Corporation ("Kondaur") as the plaintiff. CitiGroup attached an assignment of mortgage to the motion reflecting that CitiGroup had assigned the mortgage and note to Kondaur. Before the Court of Common Pleas ruled on the motion to substitute, it became aware that Mr. Brown had filed a petition in United States Bankruptcy Court. Consequently, pursuant to 11 U.S.C. §362, the Court of Common Pleas stayed the case on October 11, 2010. The Court of Common Pleas lifted the stay and returned the case to its active docket on July 5, 2011. Thereafter, on October 24, 2011, the Court of Common Pleas granted the motion to substitute. In doing so, the Court of Common Pleas noted that, after the action was filed, "Plaintiff CitiGroup ... assigned the subject mortgage together with the note to Kondaur...." Carlisle acted as counsel to both CitiGroup and Kondaur.
Kondaur and Florida Coastal Partners, LLC ("Florida Coastal") subsequently filed a joint motion to substitute party plaintiff and counsel. That motion, filed on August 20, 2013, reflected that the note and mortgage were transferred by Kondaur to Florida Coastal by assignment of mortgage dated December 11, 2011. The motion also sought to replace Carlisle and substitute Charles R. Griffith as the attorney for Florida Coastal. The Court of Common Pleas granted the joint motion to substitute party plaintiff and counsel on September 25, 2013.
On December 13, 2013, while the foreclosure action was still pending in the Court of Common Pleas, the Browns brought this action pursuant to this Court's federal question jurisdiction, alleging that Florida Coastal and John Doe, Individuals 1-50 violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§1692 et seq. The Browns also alleged fraud in connection with the mortgage on their property and sought to quiet the title to the property. On January 3, 2014, the Browns filed an amended complaint adding Mr. Griffith as a defendant and adding, among other allegations, a claim for slander of title. Finally, on May 23, 2014, with leave of Court, the Browns filed a "3rd amended complaint" against Florida Coastal, Mr. Griffith, Carlisle, and John Doe, Individuals 1-50.
Count one of the 3rd amended complaint alleges that the defendants violated the FDCPA. More specifically, the Browns allege that Carlisle falsely represented in the Common Pleas Court action that its clients were proper party plaintiffs (specifically, holders of the loan) when, in fact, they were debt collectors. The Browns allege that Carlisle's false and misleading representations resulted in judgments and sanctions against them in the foreclosure action. Similarly, the Browns allege that Mr. Griffith falsely represented that Florida Coastal was a proper party plaintiff in that case when, in fact, it was also a debt collector. The Browns further allege that Florida Coastal and Mr. Griffith misrepresented the character, amount, and legal status of the mortgage and note in violation of the FDCPA. The Browns also set forth state law claims for foreclosure fraud (count two), slander of title (count three), slander of credit (count four), emotional distress (count five), and quiet title (count six). On October 10, 2014, the Court granted in part a motion to dismiss by Carlisle, dismissing the Browns' claims against Carlisle for the intentional infliction of emotional distress and to quiet title. (Doc. 46).
One day after they filed the complaint in this case, the Browns removed the state court foreclosure action from the Delaware County Court of Common Pleas. It became Case No. 2:13cv-1232. On September 24, 2014, Judge Economus of this Court issued an Opinion and Order adopting a Report and Recommendation which determined that the Court lacked subject matter jurisdiction over the dispute, and he remanded the case to the Delaware County Court of Common Pleas. The Delaware County Court of Common Pleas entered a judgment of foreclosure on November 12, 2014 and a judgment confirming the sale and distribution of sale proceeds on February 11, 2015. In the final entry of confirmation and order for distribution, the Court of Common Pleas indicated that property was sold at Sheriff's sale for $240,000 to Florida Coastal, which then assigned its bid to Triton Investments, LLC. On February 13, 2015, the Browns filed an appeal and an emergency motion seeking a stay of the foreclosure and a writ of possession.
On February 20, 2015, Tonya Brown filed a Chapter 11 bankruptcy petition in the United States Bankruptcy Court for the Southern District of Ohio, Case No. 2:15-bk-50925. On February 27, 2015, Florida Coastal filed a notice of bankruptcy and suggestion of stay. The Ohio Court of Appeals for the Fifth Appellate District issued a judgment entry on March 13, 2015, staying the appeal in light of the pending bankruptcy. The Court of Appeals closed the action and stated that the parties may take action to reinstate the appeal after settlement of the bankruptcy or in the event that the bankruptcy court lifts the automatic stay. On May 7, 2015, the bankruptcy court granted relief from the automatic stay with respect to Triton Investments, LLC, its successors, and assigns — the purchaser of the property — limiting the relief to the "in rem action against the real property located at 6374 Hermitage Dr., Westerville, Ohio 43082."
The Browns appealed the bankruptcy court's decision lifting the stay with respect to Triton Investments LLC, and they moved to stay the appeal of the Court of Common Pleas case pending decision on the appeal of the bankruptcy court's order lifting the stay. The Court of Common Pleas granted the motion for a stay of execution of judgment pending appeal, subject to the posting of a supersedeas bond. On June 9, 2015, the Browns filed a notice urging that they were not required to post bond due to the pending bankruptcy.
In this case, also on February 27, 2015, Mr. Griffith and Florida Coastal filed a notice of bankruptcy and suggestion of stay. (Doc. 57). In examining that bankruptcy, the Court notes that the Office of the United States Trustee ("UST") moved the bankruptcy court for an order dismissing the Chapter 11 case. In its motion, the UST stated:
(Bankr. Doc. 47 at 5). Based on the contention that Ms. Brown refused to "play by the rules," the UST asked that the case be dismissed or, alternatively, converted to Chapter 7.
In this Opinion and Order, the Court will first examine the impact of Ms. Brown's bankruptcy on this litigation. After doing so, the Court will examine Mr. Brown's motions, namely the motion for leave to file an amended complaint and injunction or stay filed on May 14, 2015 (Doc. 60), and the amended motion for leave to file an amended complaint and injunction or motion to stay filed on May 15, 2015 (Doc. 61). Finally, the Court will consider the motion for summary judgment filed by Carlisle on January 1, 2015. (Doc. 54).
Once a debtor files a petition in bankruptcy, only the bankruptcy trustee has standing to pursue the debtor's prepetition causes of action.
There is no question that Ms. Brown is a Chapter 7 debtor. In light of the pending bankruptcy, Ms. Brown lacks standing to pursue her pre-petition claims in this Court because those claims are now considered to be "property of the estate." Because the Chapter 7 trustee is the real party in interest to Ms. Brown's claims, the Court will analyze the pending motions only to the extent that they pertain to Mr. Brown.
On May 14, 2015, Mr. Brown filed a motion for leave to file an amended complaint and injunction or stay. (Doc. 60). The following day, on May 15, 2015, Mr. Brown filed an amended motion for leave to file an amended complaint and injunction or motion to stay. (Doc. 61). The latter motion is identical to the one filed the previous day, except that the attached proposed fourth amended complaint differs in some respects. It is apparent that Mr. Brown intended for the amended motion (Doc. 61) to replace the original motion (Doc. 60). Consequently, the Court will deny the original motion as moot. (Doc. 60).
The Court now turns to the amended motion for leave to file an amended complaint and injunction or motion to stay. (Doc. 61). In the amended motion, Mr. Brown seeks leave to file a fourth amended complaint "to add violations of Racketeer Influenced Corrupt Organizations Act, 18 U.S.C. 1962 et seq., 1964 (`RICO') and new Defendants...."
Carlisle filed a response to the motion, arguing that Mr. Brown's motion should be denied. (Doc. 62). More specifically, Carlisle argues that it will suffer prejudice if the motion is granted "as it will unduly delay the already pending Motion for Summary Judgment...."
Mr. Griffith and Florida Coastal also filed a memorandum in opposition to Mr. Brown's motion, together with The Windsor Companies, Triton Investments, LLC, Alex Dorsey, and Luke Farrell. (Doc. 64). In a typical case, non-parties such as The Windsor Companies, Triton Investments, LLC, Alex Dorsey, and Luke Farrell would not, without leave of Court, be permitted to appear and oppose a motion for leave to amend.
In their memorandum in opposition, Mr. Griffith and Florida Coastal argue that Mr. Brown's motion should be denied because it is "just another attempt to try and delay the foreclosure process that has been ongoing."
As set forth previously by this Court, generally, motions to amend pleadings are governed by Rule 15(a) of the Federal Rules of Civil Procedure, which provides that after the time for amending as a matter of course has passed, "a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires." Fed. R. Civ. P. 15(a). The higher standard set forth in Rule 16(b) for modifying a scheduling order only applies when a court has issued a scheduling order setting a deadline for motions to amend the pleadings. Fed. R. Civ. P. 16(b). The Court has not entered a scheduling order in this case. Accordingly, the liberal standard set forth in Rule 15(a) applies here.
Under this standard, motions for leave to amend may be denied "where the court finds `undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the amendment, etc.'"
In this case, the Court finds that granting Mr. Brown's motion for leave to file a fourth amended complaint would cause undue delay and prejudice. Mr. Brown is attempting to add new parties and bring entirely new claims in a case which has been pending since December 10, 2013. To allow Mr. Brown to begin this case once again at this stage of the proceedings would cause undue delay and unfair prejudice to the existing defendants in that the addition of the new claims and defendants would require the existing defendants to expend additional resources to conduct additional discovery and would significantly delay the resolution of this dispute.
The Court now turns to Carlisle's motion for summary judgment. Summary judgment is not a substitute for a trial when facts material to the Court's ultimate resolution of the case are in dispute. It may be rendered only when appropriate evidentiary materials, as described in Fed. R. Civ. P. 56(c), demonstrate the absence of a material factual dispute and the moving party is entitled to judgment as a matter of law.
On January 8, 2015, Carlisle filed a motion for summary judgment, arguing that this action is merely an improper attempt by the Browns to re-litigate the foreclosure action filed and decided against them in state court. More specifically, Carlisle argues,
There is both a federal law standard and a state law standard for issue preclusion, also known as collateral estoppel, and these standards share several common elements. Under the federal standard, the party claiming preclusion must demonstrate:
Under both standards, Carlisle is able to establish that issue preclusion bars Mr. Brown's claims against it in this case. Mr. Brown's FDCPA claim (count one) raises issues as to whether Carlisle's clients were proper party plaintiffs, as opposed to debt collectors, and whether Carlisle made misleading representations with respect to the mortgage and note. In his fraud claim (count two), Mr. Brown alleges that Carlisle fraudulently back-dated an assignment of the mortgage and note, and that it fraudulently brought the foreclosure action on behalf of debt collectors. Mr. Brown's slander of title claim (count three) challenges the validity of the mortgage assignments. Finally, in his slander of credit claim (count four), Mr. Brown raises an issue concerning allegedly misleading and deceptive debt collection practices. As set forth by Carlisle, all of these issues were raised and resolved in the judgment decree and order of foreclosure issued by the Delaware County Court of Common Pleas on November 12, 2014.
In the judgment decree and order of foreclosure, the findings of the Court of Common Pleas included the following with respect to CitiGroup and Kondaur (collectively, "Carlisle's clients"):
In his memorandum in opposition to Carlisle's motion for summary judgment, Mr. Brown argues against this conclusion. (Doc. 58). First, Mr. Brown appears to argue that
In reply, Carlisle argues that "the Browns have waived the right (by failure to timely appeal) the validity and findings of the Judgment Entry of Foreclosure and are instead appealing the Confirmation of Sale order and questioning whether the execution of that Judgment Entry of Foreclosure...." (Doc. 59 at 4). Carlisle argues that the judgment entry of foreclosure and confirmation of sale order "are separate and distinct actions, both of which constitute final appealable orders once entered."
Irrespective of whether Mr. Brown waived his appeal of the judgment entry of foreclosure, "the fact of a pending appeal does not impact the
For the reasons set forth above, Carlisle's summary judgment is granted as to the claims brought by Mr. Brown only. (Doc. 54). Further, the motion for leave to file an amended complaint and injunction or motion to stay is denied as moot. (Doc. 60). Finally, to the extent that it is brought by Mr. Brown only, the amended motion for leave to file an amended complaint and injunction or motion to stay is denied. (Doc. 61).