Gray v. Central Mortgage Company et al

Filing 59

ORDER DISMISSING CASE. Signed by Judge Richard Seeborg on 4/20/11. (cl, COURT STAFF) (Filed on 4/20/2011)

*E-Filed 4/20/11*

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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SAN FRANCISCO DIVISION

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For the Northern District of California

United States District Court

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DORIAN W. GRAY,

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Plaintiff,

No. C 10-00483 RS
ORDER DISMISSING ACTION

v.
CENTRAL MORTGAGE COMPANY, et
al.,
Defendants.
____________________________________/

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Plaintiff Dorian Gray brought this action seeking injunctive relief to halt the non-judicial

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foreclosure of his home, and for damages arising from alleged violations of the Real Estate

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Settlement Procedures Act, 12 U.S.C. § 2605 et seq. (“RESPA”) and fraud. After the Court

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dissolved a temporary restraining order it had imposed enjoining foreclosure, the trustee’s sale went

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forward and defendant Central Mortgage Company purchased the property.

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Upon disclosure that Gray had petitioned for bankruptcy shortly before this action was filed,

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the Court issued an order to show cause directing Gray to present such evidence and authority as he

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might have to establish that he has standing to pursue the claims asserted in this case

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notwithstanding the bankruptcy. The order observed that there was no indication that Gray listed

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his claims against defendants among his assets during the bankruptcy proceedings, and that it

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appeared he affirmatively represented in those proceedings that he was not a party to any lawsuits.
NO. C 10-00483 RS
ORDER

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The order noted that nothing in the existing record reflected any abandonment by the bankruptcy

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trustee of the claims Gray is attempting to pursue here.

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In response to the order to show cause, Gray effectively concedes that his bankruptcy

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schedules never listed the affirmative claims for damages he seeks to pursue in this action among

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his assets. Gray argues instead that the bankruptcy court and/or the trustee nonetheless were aware

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that he held these claims, and that therefore they can be deemed to have been abandoned to him,

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such that he has standing to pursue this action. Gray contends that the trustee was aware of the

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claims because he discussed the real property and the Central Mortgage’s secured claim with the

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trustee at the section 341 meeting of creditors, and the trustee thereafter issued a “no asset” report.
Similarly, Gray suggests the bankruptcy court knew of the claims because in the context of

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For the Northern District of California

United States District Court

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opposing a motion for relief from stay, he argued that Central Mortgage lacked the right to

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foreclose. Gray advised the court that he had filed a complaint with the District Attorney, and that

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he was considering filing an adversary proceeding (presumably in the bankruptcy court) for a

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determination that Central Mortgage’s lien against the property was void.

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Gray has at most shown the bankruptcy court and trustee were aware that he believed he had

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certain defenses to any efforts by Central Mortgage to foreclose on the property. Additionally, even

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to the extent the court or trustee could be presumed to have been “aware” that Gray also intended to

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assert affirmative claims for damages, he has failed to show how that would excuse him from the

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obligation to list those claims as assets on his bankruptcy schedules so that all potentially affected

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parties could determine how to proceed. Although it might not have made an actual difference to

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any creditors in this particular case, failing to list an asset deprives creditors of the opportunity to

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make informed decisions about objections they may want to bring. Accordingly, Gray has not

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established a basis on which the claims he is pursuing in this action could properly be considered to

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have been abandoned to him, notwithstanding his failure to list them as assets in the bankruptcy

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proceeding.

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Accordingly, Gray lacks standing and this action must be dismissed. Without opining as to
whether or not Gray could re-open the bankruptcy proceeding, this dismissal is without prejudice to
NO. C 10-00483 RS
ORDER

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Gray’s filing of a new action in the event he is able to cure his lack of standing. See Dunmore v.

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U.S., 358 F.3d 1107, 1112-1113 (9th Cir. 2004). It is not clear whether Gray believes there are any

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grounds to set aside the foreclosure sale or whether he even wishes to pursue such a remedy. Again

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without opining as to whether any such claims are otherwise legally tenable, this dismissal is

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without prejudice to any challenge to the validity of the foreclosure on state law or other grounds

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that Gray may be able to assert separate and apart from the affirmative damages claims that he did

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not list among his assets during the bankruptcy.

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IT IS SO ORDERED.

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For the Northern District of California

United States District Court

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Dated: 4/20/11

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RICHARD SEEBORG
UNITED STATES DISTRICT JUDGE

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NO. C 10-00483 RS
ORDER

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