Scott v. Bank of New York Mellon Trust Company et al

Filing 23

ORDER - IT IS ORDERED DENYING plaintiff's motion to remand (doc. 15 ). IT ISORDERED DENYING plaintiff's motion for a preliminary injunction (doc. 12 ), plaintiff's motion for reconsideration of our denial of a temporary restraining order (doc. 18 ), and defendants' motion for sanctions (doc. 21 ). IT IS FURTHER ORDERED GRANTING defendants' motion to dismiss with prejudice (doc. 6 ). Signed by Judge Frederick J Martone on 5/13/11. (SAT)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Plaintiff,
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vs.
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Bank of New York Mellon Trust)
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Company, et al.,
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Defendants.
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Jack Scott,

No. CV-11-0414-PHX-FJM
ORDER

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We have before us five motions: (1) defendants’ motion to dismiss (doc. 6), plaintiff’s

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response (doc. 14), and defendants’ reply (doc. 17); (2) plaintiff’s motion for a preliminary

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injunction (doc. 12); (3) plaintiff’s motion to remand (doc. 15), defendants’ response (doc.

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19), and plaintiff’s reply (doc. 20); (4) plaintiff’s motion for reconsideration (doc. 18) of our

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order denying his motion for a temporary restraining order (doc. 16); and (5) defendants’

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motion for sanctions (doc. 21), and plaintiff’s response (doc. 22).

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This action is plaintiff’s second attempt to undo the sale of property at 7628 E. Onyx

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Court, Scottsdale, AZ (“the property”). In August, 2009, plaintiff filed a quiet title action in

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the Superior Court of Arizona in Maricopa County, and defendants removed. See Scott v.

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Bank of New York Mellon Trust Company, et al., No. CV-09-2056. Judge Bolton entered

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the parties’ requested preliminary injunction, which prevented defendants from interfering

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with plaintiff’s possession of the property until the action was resolved. See Order of

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October 26, 2009 (doc. 18), No. CV-09-2056. Judge Bolton then granted defendants’ motion

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for summary judgment on plaintiff’s single cause of action to quiet title to the property and

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dissolved the preliminary injunction. See Order of August 13, 2010 at 5 (doc. 45), No. CV-

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09-2056. Plaintiff appealed that decision to the United States Court of Appeals for the Ninth

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Circuit. See Amended Notice of Appeal (doc. 67), No. CV-09-2056. The appeal is currently

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pending. See Complaint at 14. Judge Bolton also denied plaintiff’s motions to “amend the

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judgment,” to stay the enforcement of judgment, and for reconsideration of the denial of his

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motion to reinstate the preliminary injunction.

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Defendants then filed a forcible entry and detainer action in the Superior Court of

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Arizona in Maricopa County. See Complaint at 15. Plaintiff subsequently filed an action

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in the Superior Court contending that defendants’ detainer action is in breach of the

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preliminary injunction entered in the litigation before Judge Bolton, and defendants removed.

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We denied plaintiff’s motion for a temporary restraining order (doc. 16).
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We first consider plaintiff’s motion to remand. Plaintiff argues that defendants have

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not established complete diversity and that the amount in controversy does not exceed

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$75,000, pursuant to 28 U.S.C. § 1441. Motion to Remand at 3, 5.
A

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Plaintiff is a citizen of Arizona. According to defendants, defendant Bank of New

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York Mellon Trust Company is Delaware company with its principal place of business in

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New York. See Notice of Removal (doc. 1).1 Defendants GMAC Mortgage, Residential

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Funding Company, LLC, and Homecomings Financial, LLC are limited liability companies

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organized under the laws of Delaware. An “LLC is a citizen of every state of which its

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owners/members are citizens.” Johnson v. Columbia Properties Anchorage, LP, 437 F.3d

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894, 899 (9th Cir. 2006). All three LLC defendants are wholly owned indirect subsidiaries

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of Ally Financial, Inc., a Delaware corporation with its principal place of business in

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While defendant uses the word “company,” we assume the Bank is a corporation
because counsel has failed to describe the Bank’s ownership.

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Michigan. See Notice of Removal at 4. A corporation is a citizen only of the state in which

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it is incorporated and where it has its principal place of business. See 28 U.S.C. §

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1332(c)(1). Because Ally Financial is not a citizen of Arizona, neither are the wholly-owned

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LLC defendants. Plaintiff provides no evidence contradicting defendants’ allegations

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regarding their citizenship. There is complete diversity among the parties.

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B

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The amount in controversy exceeds $75,000. Plaintiff brought this action to prevent

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defendants from interfering with his possession of the property, which he alleges breaches

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an agreement entered in the 2009 action. See Complaint, ¶ 21. Plaintiff contends that he

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seeks “only that the Defendants be compelled to comply with the terms of the agreement.”

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Motion to Remand at 5. That “agreement,” a preliminary injunction, prohibited defendants

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from “selling, transferring, conveying, disposing, encumbering or otherwise transacting with

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the Property or any interest therein, until there is a resolution of the above-captioned action.”

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Order of August 13, 2010 at 5 (doc. 45), No. CV-09-2056. “In actions seeking declaratory

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or injunctive relief, it is well established that the amount in controversy is measured by the

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value of the object of the litigation.” Hunt v. Washington State Apple Advertising Com’n,

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432 U.S. 333, 347, 97 S.Ct. 2434, 2443 (1977). Therefore, the amount in controversy in this

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action for injunctive relief is the value of the subject of the injunction from the 2009 action,

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which is the property. Defendants allege that defendant Bank of New York Mellon Trust

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purchased the property at foreclosure for $400,500, the property secured a $495,000 loan,

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and that plaintiff is more than $75,000 in arrears on his loan payments. Notice of Removal,

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¶ 19. Plaintiff introduces no evidence that contradicts defendants’ assertions about the value

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of the property. We therefore conclude that the amount in controversy exceeds $75,000.

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Because there is complete diversity among the parties and the amount in controversy
exceeds $75,000, we deny plaintiff’s motion to remand (doc. 15).
II

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Defendants move to dismiss on the grounds that plaintiff’s complaint is barred by res

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judicata. “To trigger the doctrine of res judicata, the earlier suit must have (1) involved the
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same ‘claim’ or cause of action as the later suit, (2) reached a final judgment on the merits,

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and (3) involved identical parties or privies.” Sidhu v. Flecto Co., Inc., 279 F.3d 896, 900

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(9th Cir. 2002) (citing Hydranautics v. FilmTec Corp., 204 F.3d 880, 887 (9th Cir.2000)).

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In determining whether this suit contains the same claims as the 2009 action, we

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consider: “(1) whether rights or interests established in the prior judgment would be

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destroyed or impaired by prosecution of the second action; (2) whether the two suits involve

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infringement of the same right; (3) whether substantially the same evidence is presented in

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the two actions; and (4) whether the two suits arise out of the same transactional nucleus of

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facts.” Sidhu, 279 F.3d at 900 (citing Nordhorn v. Ladish Co., Inc., 9 F.3d 1402, 1405 (9th

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Cir. 1993)). Judge Bolton previously concluded that defendants have rightful title to the

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property and the right to pursue a forcible detainer action against plaintiff. Thus, any action

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on our part would impair that right.

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preliminary injunction, and therefore this action implicates the same rights and depends on

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the same evidence. Both actions arise out of the same nucleus of facts; the foreclosure of the

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property. Plaintiff’s attempt to distinguish this action as one concerning the breach of “an

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agreement” in connection with the 2009 action, rather than as one about permanent title to

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the property, is unavailing. The only agreement plaintiff points to is the preliminary

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injunction that Judge Bolton dissolved. There is no evidence of any other contractual

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arrangement between the parties, and therefore no operative facts and no claims distinct from

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those previously litigated. Res judicata bars all claims that were, or could have been,

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asserted.

Plaintiff previously attempted to reinstate the

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Judge Bolton’s grant of summary judgment to defendants constitutes a final judgment

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in the 2009 action, irrespective of the appeal pending before the Ninth Circuit. See Tripati

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v. Henman, 857 F.2d 1366, 1367 (“To deny preclusion in these circumstances would lead to

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an absurd result: Litigants would be able to refile identical cases while appeals are pending,

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enmeshing their opponents and the court system in tangles of duplicative litigation.”). The

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two actions also involve the same parties.

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Plaintiff’s effort to enforce an injunction that was previously lifted and to relitigate
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claims that have been adjudicated is barred by res judicata. We therefore grant defendants’

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motion to dismiss with prejudice (doc. 6).

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III

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Because we grant defendants’ motion to dismiss, we deny as moot plaintiff’s motions

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for a preliminary injunction (doc. 12) and for reconsideration of our denial of a temporary

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restraining order (doc. 18).

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IV

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Pursuant to Rule 11, Fed. R. Civ. P., defendants move for sanctions in the form of an

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order requiring plaintiff to seek leave from the court prior to filing “any additional state or

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federal court actions against Defendant related to the facts and allegations set forth in the

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above-captioned action and such other sanctions as the Court deems appropriate to deter the

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conduct complained of herein.” Motion for Sanctions at 1. Defendants argue this sanction

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is necessary because plaintiff has filed several meritless actions and motions intended to

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forestall a valid foreclosure of the property. Id. at 2. Plaintiff contends that his allegations

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are not frivolous or vexatious, and that this is his first action for “breach of an agreement.”

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See Response to Motion for Sanctions at 5–6.

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We may impose sanctions upon a determination that plaintiff’s filings are presented

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for an improper purpose, not warranted by existing law, or lacking in factual support. See

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Fed. R. Civ. P. 11. Plaintiff’s effort to enforce a vacated preliminary injunction is clearly

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meritless. However, we take into account plaintiff's pro se status when determining whether

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the filing was reasonable. Warren v. Guelker, 29 F.3d 1386, 1390 (9th Cir. 1994). There is

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no evidence that plaintiff’s misguided belief in the viability of his claims is less than genuine.

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It is possible that plaintiff’s post-trial motions in the 2009 action, as well as the meritless

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complaint before us, reflect plaintiff’s ignorance of the law, rather than an improper intent.

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Moreover, while we have the authority to enjoin further litigation, we decline, at this time,

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to burden this court with the screening of any future filings.

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Instead, we encourage plaintiff to acknowledge what by now should be abundantly

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clear: no remedy is available in this court. Now on notice, he will be declared a vexatious
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litigant should he file another action involving this property.

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IT IS ORDERED DENYING plaintiff’s motion to remand (doc. 15). IT IS

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ORDERED DENYING plaintiff’s motion for a preliminary injunction (doc. 12), plaintiff’s

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motion for reconsideration of our denial of a temporary restraining order (doc. 18), and

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defendants’ motion for sanctions (doc. 21).

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IT IS FURTHER ORDERED GRANTING defendants’ motion to dismiss with
prejudice (doc. 6).
DATED this 13th day of May, 2011.

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