Marvin Smith, III, et al v. HSBC Bank USA, National Associ, et al

Filing

Opinion issued by court as to Appellants Marvin B. Smith, III and Sharon H. Smith. Decision: Affirmed in part, Vacated in part, and Remanded. Opinion type: Non-Published. Opinion method: Per Curiam. The opinion is also available through the Court's Opinions page at this link http://www.ca11.uscourts.gov/opinions.

Case: 16-11045

Date Filed: 02/13/2017

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[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-11045
Non-Argument Calendar
________________________
D.C. Docket No. 2:15-cv-00070-LGW-RSB
MARVIN B. SMITH, III,
SHARON H. SMITH,
Plaintiffs-Appellants,
versus
HSBC BANK USA, NATIONAL ASSOCIATION,
WELLS FARGO BANK NATIONAL ASSOCIATION,
S. ANDREW SHUPING, JR.,
SHUPING, MORSE AND ROSS, LLP,
RUBIN LUBLIN, LLC, et al.,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Georgia
________________________
(February 13, 2017)

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Before MARCUS, WILLIAM PRYOR, and EDMONDSON, Circuit Judges.

PER CURIAM:

Plaintiffs Marvin and Sharon Smith, proceeding pro se, 1 appeal the district
court’s denial of their motion to remand and the district court’s dismissal with
prejudice of their complaint. Reversible error has been shown; we affirm in part
and vacate in part and remand.
Briefly stated, this appeal arises from the foreclosure proceedings on
Plaintiffs’ home in St. Simons Island, Georgia. In 2007 -- after Plaintiffs defaulted
on a number of loans, including the mortgage loan on their home -- Plaintiffs filed
for bankruptcy (“Smith I”). Between 2009 and 2012, the bankruptcy court, the
district court, and this Court issued several rulings in connection with a dispute that
arose about the ownership of a security deed on the property. For background, see
In re Smith, No. 07-20244 (Bankr. S.D. Ga. Sept. 17, 2012).
Ultimately, the bankruptcy court enjoined Plaintiffs from filing -- without
first obtaining the bankruptcy court’s leave -- a pleading or motion against
Countrywide Home Loans Servicing, LP, or its successor, BAC Home Loans
Servicing, LP. The bankruptcy court explained that Plaintiffs had “advanced

1

We construe liberally pro se pleadings. See Tannenbaum v. United States, 148 F.3d 1262, 1263
(11th Cir. 1998).
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groundless and patently frivolous litigation over the past three years solely to
harass a secured creditor and to prevent the enforcement of an order of this Court.”
Because Plaintiffs’ conduct demonstrated a bad faith abuse-of-process, the
bankruptcy court determined that sanctions were warranted.
This Court later expanded the bankruptcy court’s injunction by enjoining
Plaintiffs “from filing any pleadings, motions, or other papers seeking any form of
relief against” Countrywide Home Loans, Inc., as servicing agent for HSBC Bank
USA, and substituted party BAC Home Loans Servicing, LP, f/k/a Countrywide
Home Loan Servicing, LP “and/or any of its predecessor or successor entities in
any action in any other court, state or federal, in the United States, without first
obtaining leave from the district court.” See In re Smith, No. 13-13808 (11th Cir.
Dec. 19, 2013) (unpublished).
Plaintiffs then filed a lawsuit in the Southern District of New York (“Smith
II”), further challenging the foreclosure proceedings on their home. Plaintiffs
named as defendants HSBC Bank, National Association, Wells Fargo Bank, and
the law firms and lawyer involved in handling the foreclosure sale. The case was
transferred to the Southern District of Georgia.
While Smith II was still pending, Plaintiffs filed this civil action in a state
court in Glynn County, Georgia. Plaintiffs moved the state court to enter a
temporary restraining order (“TRO”) to enjoin the foreclosure sale. The state court
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denied Plaintiffs’ request for a TRO, noting Plaintiffs’ “established history of
engaging in frivolous litigation.”
Following the foreclosure on their home in May 2015, Plaintiffs withdrew
voluntarily Smith II and amended the present action to encompass the same
defendants and claims as asserted in Smith II. Plaintiffs did not, however, name as
defendants Countrywide Home Loans, Inc., BAC Home Loan Servicing, LP or
either company’s predecessor or successor entities.
Defendants removed the case to federal court. The district court denied
Plaintiffs’ motion to remand back to state court and dismissed Plaintiffs’ complaint
with prejudice. This appeal followed.

I.

We review de novo the district court’s denial of a motion to remand to state
court. Moore v. N. Am. Sports, Inc., 623 F.3d 1325, 1328 (11th Cir. 2010).
We reject Plaintiffs’ argument that the district court lacked subject-matter
jurisdiction over Plaintiffs’ complaint. The Rooker-Feldman 2 doctrine is
inapplicable to this case because the denial of Plaintiffs’ TRO request constituted
no final state court judgment. See O.C.G.A. §§ 9-11-54(a) (defining “judgment” to
2

District of Columbia Court of Appeals v. Feldman, 103 S. Ct. 1303 (1983); Rooker v. Fid. Trust
Co., 44 S. Ct. 149 (1923).
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include “a decree and any order from which an appeal lies”), 5-6-34(a)(7) (no
appeal lies from an order on a motion for a TRO); see also Exxon Mobil Corp. v.
Saudi Basic Indus. Corp., 125 S. Ct. 1517 (2005) (the Rooker-Feldman doctrine
applies only to “cases brought by state-court losers complaining of injuries caused
by state-court judgments rendered before the district court proceedings commenced
and inviting district court review and rejection of those judgments.”); Nicholson v.
Shafe, 558 F.3d 1266, 1268 (2009) (under Rooker-Feldman, “lower federal courts
are precluded from exercising appellate jurisdiction over final state-court
judgments”).
To the extent Plaintiffs now contend that subject-matter jurisdiction was
lacking based on the Younger 3 abstention doctrine, Plaintiffs raise that argument
for the first time on appeal. Because Plaintiffs failed to raise that issue before the
district court, it is not properly before us. See Access Now, Inc. v. Sw. Airlines
Co., 385 F.3d 1324, 1331 (11th Cir. 2004).
The district court exercised properly subject-matter jurisdiction over
Plaintiffs’ case and committed no error in denying Plaintiffs’ motion for remand.

3

Younger v. Harris, 91 S. Ct. 746 (1971).
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II.

In its order of dismissal, the district court cites both to Rule 41(b) and to
cases discussing a court’s inherent authority to impose appropriate sanctions. We
address each approach in turn.
We review for abuse of discretion a district court’s decision to dismiss a case
under Rule 41(b). Gratton v. Great Am. Commc’ns, 178 F.3d 1373, 1374 (11th
Cir. 1999).
Rule 41(b) authorizes a district court to dismiss a case for failure to comply
with a court order. Fed. R. Civ. P. 41(b). “The court’s power to dismiss is an
inherent aspect of its authority to enforce its orders and insure prompt disposition
of lawsuits.” Goforth v. Owens, 766 F.2d 1533, 1535 (11th Cir. 1985). Dismissal
with prejudice under Rule 41(b) is proper “where there is a clear record of ‘willful’
contempt and an implicit or explicit finding that lesser sanctions would not
suffice.” Gratton, 178 F.3d at 1374; see also Betty K Agencies, Ltd. v. M/V
Monada, 432 F.3d 1333, 1337-38 (11th Cir. 2005) (Rule 41(b) dismissal is
warranted only when “a party engages in a clear pattern of delay or willful
contempt (contumacious conduct).”). We stress that dismissal of a complaint with
prejudice “is considered a sanction of last resort, applicable only in extreme
circumstances.” Goforth, 766 F.2d at 1535.
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In its dismissal order, the district court acknowledged that -- by not naming
as defendants Countrywide Home Loans, Inc. or BAC Home Loans Servicing, LP
-- “Plaintiffs ostensibly avoided violating the letter” of this Court’s earlier
injunction order. Despite this, the district court concluded that dismissal with
prejudice was warranted given Plaintiffs’ history of “vexatious and abusive
litigation,” and Plaintiffs’ “refus[al] to quell their incessant abuse of judicial time
and resources, despite sanctions and warnings.”
To the extent the district court dismissed Plaintiffs’ complaint pursuant to
Rule 41(b), the district court abused its discretion. Based on its plain language,
involuntary dismissal under Rule 41(b) may be triggered only if a plaintiff fails to
prosecute his case, fails to comply with the Federal Rules of Civil Procedure or -pertinent to this appeal -- fails to comply with a court order. See Fed. R. Civ. P.
41(b) (“If the plaintiff fails to prosecute or to comply with these rules or a court
order, a defendant may move to dismiss the action or any claim against it.”
(emphasis added)); cf. State Exchange Bank v. Hartline, 693 F.2d 1350, 1352 (11th
Cir. 1982) (“Dismissal is generally reserved for cases of willful disobedience to
court orders.”). Because the district court concluded -- and we agree -- that
Plaintiffs did not in fact violate this Court’s injunction order, Rule 41(b) has no
application in this case: error to dismiss for doing something not forbidden by the
pertinent underlying court order.
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Apart from Rule 41(b), to the extent the district court dismissed Plaintiffs’
complaint based on some inherent authority to impose sanctions, we conclude the
dismissal with prejudice also constituted an abuse of the district court’s discretion.
We have found no binding case law from this Court or from the United States
Supreme Court recognizing a district court’s inherent authority (one not tied to a
specific Rule or Statute) to dismiss with prejudice a complaint -- particularly
without an opportunity to amend or to dismiss voluntarily without prejudice -- on
grounds that the complaint was patently frivolous or vexatious. We have observed
that some other circuits have upheld such dismissals. See Jefferson Fourteenth
Assocs. v. Wometco de Puerto Rico, Inc., 695 F.2d 524, 526 (11th Cir. 1983)
(citing O’Connell v. Mason, 132 F. 245 (1st Cir. 1904)). But these other-circuit
cases are not much like this case in their circumstances. Because Jefferson
involved no allegation of frivolity or vexatiousness, we declined to decide whether,
and the circumstances in which, a complaint may be dismissed for being patently
frivolous. See id. at 526 n.3 (“We do not hold that cases cannot, if proper
procedures are followed, be dismissed when they are so patently lacking in merit
as to be frivolous.”).4

4

Although the district court found that dismissal was appropriate, the Court did not expressly
find that no lesser sanction would do.
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Especially given the lack of precedent supporting a dismissal not tied to a
specific Rule or Statute, we conclude that the district court in this case acted
outside its authority in dismissing Plaintiffs’ complaint; we vacate the dismissal
and remand for further proceedings.5
AFFIRMED IN PART, VACATED IN PART AND REMANDED.

5

In vacating the district court’s dismissal order, we make no determination about whether
Plaintiffs’ complaint may be subject to dismissal on other grounds. To the extent Defendants
have raised alternative arguments in favor of dismissal, we remand for the district court to
consider these arguments in the first instance. We also do not rule out sanctions being imposed
later in this case.
We note that one appellee has suggested in passing that dismissal of Plaintiffs’ complaint
might be supported by 28 U.S.C. § 1915(e)(B)(i), pursuant to which a court may dismiss “at any
time” a complaint filed in forma pauperis upon a determination that the case is “frivolous or
malicious.” Plaintiffs’ complaint was filed initially in state court, where Plaintiffs received
permission to proceed without payment of the filing fee based on O.C.G.A. § 9-15-2. Upon
removing the case to federal court, Defendants paid the district court’s filing fee. Plaintiffs have
since paid the appellate filing fee in this Court. Because filing fees have been paid in both the
district court and in this Court -- and because the district court in no way relied on its power to
dismiss under section 1915(e) -- we do not reach that issue on appeal.
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