Borg v. Phelan, Hallinan, Diamond & Jones, PLLC
Filing
27
ORDER: Defendant Phelan, Hallinan, Diamond & Jones, PLLC's Motion to Dismiss or Stay (Doc. # 6 ) is denied. Signed by Judge Virginia M. Hernandez Covington on 11/7/2016. (DMD)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
KELLY BORG, on behalf of
herself and all other
similarly situated
individuals
Plaintiff,
v.
Case No. 8:16-cv-2070-T-33TGW
PHELAN, HALLINAN, DIAMOND,
& JONES, PLLC,
Defendant.
______________________________/
ORDER
This matter comes before the Court pursuant to Defendant
Phelan, Hallinan, Diamond & Jones, PLLC’s Motion to Dismiss
or Stay, filed on August 16, 2016. (Doc. # 6). Plaintiff Kelly
Borg has filed a response in opposition to the Motion. (Doc.
# 17). For the reasons that follow, the Court denies the
Motion.
I.
Background
In 2005, Borg took out a mortgage to purchase a primary
residence. (Doc. # 1 at ¶ 10). U.S. Bank National Association
(U.S. Bank), which is the client of the law firm Phelan, later
obtained ownership of Borg’s mortgage obligation. (Id. at ¶
11).
1
On February 8, 2016, after Borg allegedly defaulted on
the
mortgage,
Phelan,
on
behalf
of
U.S.
Bank,
filed
a
foreclosure action in the Thirteenth Judicial Circuit in and
for Hillsborough County, Florida, against Borg and “Unknown
Tenants.”
(Id.
at
¶¶
12-14).
That
case
is
the
second
foreclosure action Phelan filed for U.S. Bank against Borg.
(Id. at 12). However, Borg prevailed in the first foreclosure
action. (Id.).
On July 19, 2016, Borg filed her class action Complaint
in this Court against Phelan, alleging Phelan violated the
Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq.
(FDCPA), during its representation of U.S. Bank in the pending
foreclosure action. (Id. at ¶ 14). U.S. Bank is not a party
in this case. Rather, Borg alleges only that Phelan violated
the FDCPA during the foreclosure action in four ways: (1)
“attempting
beyond
to
collect
Florida’s
five
monthly
year
installment
statute
of
payments
due
limitations”;
(2)
“assess[ing] charges against borrowers for serving process on
‘unknown tenants’”; (3) “falsely claim[ing] that [Phelan’s]
client, U.S. Bank, is the ‘holder’ of the note at issue and,
thus, entitled to sue [Borg] . . .”; and (4) “omitting the
fact that [Borg’s] home was previously subject to a prior
2
foreclosure lawsuit” and “fail[ing] to [file a second ‘Notice
of Intent to Foreclosure’ letter] prior to instituting the
second state court foreclosure.” (Id. at ¶¶ 15-18).
Subsequently, Phelan filed its Motion to Dismiss or
Stay, requesting that the Court abstain pursuant to the
Colorado River doctrine. (Doc. # 6). Borg filed her response
on September 23, 2016. (Doc. # 17). This matter is now ripe
for the Court’s review.
II.
Legal Standard
The Colorado River doctrine “addresses the circumstances
in which federal courts should abstain from exercising their
jurisdiction because a parallel lawsuit is proceeding in one
or more state courts.” Ambrosia Coal & Constr. Co. v. Pagés
Morales, 368 F.3d 1320, 1327 (11th Cir. 2004). The Colorado
River
doctrine
speaks
equally
to
declining
or
staying
consideration of a case. See, e.g., Clay v. AIG Aerospace
Ins. Servs., Inc., 61 F. Supp. 3d 1255, 1266 (M.D. Fla. 2014);
Fla. Dep’t of Fin. Servs. v. Midwest Merger Mgmt., LLC, No.
4:07cv207-SPM/WCS, 2008 WL 3259045, at *5 (N.D. Fla. Aug. 6,
2008).
Federal courts have a “virtually unflagging obligation”
to exercise the jurisdiction given them, and the general rule
is that “the pendency of an action in the state court is no
3
bar to proceedings concerning the same matter in the Federal
court having jurisdiction.” Colorado River Water Conservation
Dist. v. United States, 424 U.S. 800, 817 (1976). “And while
abstention
as
abstention
is
circumstances
a
general
matter
particularly
than
are
is
rare,
rare,
the
other
Colorado
permissible
abstention
in
River
fewer
doctrines.”
Jackson–Platts v. Gen. Elec. Capital Corp., 727 F.3d 1127,
1140 (11th Cir. 2013). “[A] federal court may dismiss an
action because of parallel state court litigation only under
‘exceptional’ circumstances . . . . Indeed, ‘only the clearest
of justifications will warrant dismissal.’” Am. Bankers Ins.
Co. of Fla. v. First State Ins. Co., 891 F.2d 882, 884 (11th
Cir. 1990) (quoting Colorado River, 424 U.S. at 818–19).
“The principles of this doctrine ‘rest on considerations
of
wise
judicial
conservation
of
administration,
judicial
resources
giving
and
regard
to
comprehensive
disposition of litigation.’” Moorer v. Demopolis Waterworks
& Sewer Bd., 374 F.3d 994, 997 (11th Cir. 2004)(quoting
Colorado River, 424 U.S. at 817, and emphasizing that courts
“may defer to a parallel state proceeding under ‘limited’ and
‘exceptional’ circumstances”).
“To
determine
whether
abstention
is
merited
under
Colorado River, a court must decide as a threshold matter
4
whether there is a parallel state action — that is, ‘one
involving substantially the same parties and substantially
the same issues.’” Sini v. Citibank, N.A., 990 F. Supp. 2d
1370, 1376 (S.D. Fla. 2014)(quoting Jackson–Platts, 727 F.3d
at 1140). However, the state and federal cases need not share
identical parties and issues to be considered parallel for
purposes of Colorado River abstention. Ambrosia Coal, 368
F.3d at 1329–30; O'Dell v. Doychak, No. 6:06-cv-677-ORL19KRS,
2006
WL
4509634,
at
*6
(M.D.
Fla.
Oct.
20,
2006)(“Parallel proceedings do not have to involve identical
parties, issues and requests for relief.”).
Assuming
satisfaction
of
that
threshold
issue,
the
Eleventh Circuit
has catalogued six factors that must be weighed in
analyzing the permissibility of abstention, namely:
(1) whether one of the courts has assumed
jurisdiction over property, (2) the inconvenience
of the federal forum, (3) the potential for
piecemeal litigation, (4) the order in which the
fora obtained jurisdiction, (5) whether state or
federal law will be applied, and (6) the adequacy
of the state court to protect the parties’ rights.
Ambrosia Coal, 368 F.3d at 1331.
“In
addition,
the
Eleventh
Circuit
[has]
noted
two
policy considerations that may influence whether a Colorado
River abstention is appropriate: (1) whether the litigation
is ‘vexatious or reactive in nature,’ and (2) whether the
5
concurrent cases involve a federal statute that evinces a
policy favoring abstention.” Beepot v. J.P. Morgan Chase
Nat’l Corp. Servs., Inc., No. 3:10-cv-423-J-34TEM, 2011 WL
4529604, at *8 (M.D. Fla. Sept. 30, 2011)(citing Ambrosia
Coal, 368 F.3d at 1331).
Balancing all the factors must be “heavily weighted in
favor of the exercise of jurisdiction.” Moses H. Cone Mem’l
Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 16 (1983).
Throughout this analysis, there remains a “presumption in
favor
of
the
federal
court
retaining
jurisdiction.”
Am.
Bankers, 891 F.2d at 885; Moses H. Cone, 460 U.S. at 25–26
(“[O]ur task in cases such as this is not to find some
substantial reason for the exercise of federal jurisdiction
by the federal court; rather, the task is to ascertain whether
there
exist
exceptional
justifications,
to
circumstances,
justify
the
the
clearest
surrender
of
of
jurisdiction.”)(quotation omitted).
III. Analysis
Phelan
argues
that
the
instant
FDCPA
action
is
substantially similar to the pending state foreclosure action
and the factors weigh in favor of abstention. (Doc. # 6 at 12). Borg acknowledges that the alleged FDCPA violations were
actions taken by Phelan in its representation of U.S. Bank
6
during the foreclosure action. (Doc. # 17 at ¶ 4). However,
Borg contends that the cases are not substantially similar in
parties or issues. (Id. at 5-6). The Court agrees with Borg
and finds that the present FDCPA action and the pending
foreclosure
action
are
not
similar
enough
to
warrant
abstention under the Colorado River doctrine.
Particularly helpful to the Court’s analysis is the
Eleventh Circuit opinion Acosta v. James A. Gustino, P.A.,
478 Fed. Appx. 620 (11th Cir. 2012), in which a borrower in
a state foreclosure action sued the lender’s law firm in
federal court for FDCPA violations it allegedly committed
during the foreclosure case. In Acosta, the Eleventh Circuit
disagreed
with
the
district
court’s
conclusion
that
a
defendant law firm was a substantially similar party to its
client in the foreclosure action because the firm “acted as
agents for the [client lender] in the state case regarding
all of the activities of which the [plaintiff in the federal
FDCPA case] complains.” Id. at 621. The Eleventh Circuit
warned
that
such
an
agency-based
finding
of
substantial
similarity “could capture a variety of different entities and
individuals
parties.’”
and
Id.
label
at
622.
them
as
‘substantially
While
identical
parties
similar
are
not
required, the Court notes that this case does not share the
7
same parties as the pending foreclosure case. Here, Borg names
Phelan, rather than U.S. Bank, as defendant. While U.S. Bank
hired Phelan to represent it in the foreclosure action, Phelan
committed
the
allegedly
unlawful
acts
during
that
representation.
Additionally, the alleged violations of the FDCPA do not
impinge
on
the
issue
underlying
the
foreclosure
action:
whether the mortgage is valid and Borg failed to make the
required payments on that mortgage. See Acosta, 478 Fed. Appx.
at 622 (expressing doubt that state action’s resolution would
decide the federal case because “the key to the federal case
is not only whether the debt was enforceable but also whether
the [defendant law firm’s] conduct when collecting the debt
complied with the [FDCPA]”). The cases involve different
claims — one under state foreclosure law and the other under
the FDCPA. Also, the cases involve different types of relief:
Borg seeks statutory damages under the FDCPA in the federal
case, while U.S. Bank seeks to foreclose on Borg’s home in
the state case.
Although the alleged FDCPA violations occurred in the
foreclosure action, it is unclear whether the Court would
have “nothing further to do in resolving any substantive part
8
of the case” if the state foreclosure action was decided.
Moses H. Cone, 460 U.S. at 28. As the Supreme Court explained,
When a district court decides to dismiss or stay
under Colorado River, it presumably concludes that
the parallel state-court litigation will be an
adequate vehicle for the complete and prompt
resolution of the issues between the parties. If
there is any substantial doubt as to this, it would
be a serious abuse of discretion to grant the stay
or dismissal at all.
Id.; see also Owens v. Ronald R. Wolf & Assocs, P.L., No. 1361769-CIV,
2013
WL
6085121,
at
*5
(S.D.
Fla.
Nov.
19,
2013)(not abstaining in FDCPA action against law firm that
represented the lender in state foreclosure action because
the court had “doubts whether the resolution of the state
court action in Plaintiff’s favor will bar all his claims
against Defendant”). Even if Borg prevails in the pending
foreclosure
action,
her
claims
against
Phelan
for
its
allegedly unlawful conduct under the FDCPA may survive.
The cases cited by Phelan do not alleviate the Court’s
doubts as the parties in those cases included at least one
defendant in the federal case that was also a plaintiff in
the
underlying
foreclosure
action.
See
Beepot,
2011
WL
4529604, at *7 (“[T]he state and federal proceedings are
parallel, involving the same parties, the same loan, and the
same property.”); see also Harper v. Chase Manhattan Bank,
9
138 Fed. Appx. 130, 133 (11th Cir. 2005)(borrower’s federal
statutory claims, including an FDCPA claim, against lender
were barred under the Rooker-Feldman abstention doctrine as
inextricably
intertwined
with
an
earlier
foreclosure
proceeding in state court in which borrower could have raised
these claims); Hendricks v. Mortg. Elec. Registration Sys.,
Inc., No. 8:12-cv-2801-T-30TGW, 2013 WL 1279035, at *3 (M.D.
Fla. Mar. 28, 2013)(noting that the “federal case and state
foreclosure
proceeding
involve
substantially
the
same
parties” with one defendant in the federal case, Deutsche
Bank, as a plaintiff in the foreclosure action).
As courts should not abstain “if there is any substantial
doubt about whether two cases are parallel,” the Court will
not abstain from the instant FDCPA action. Acosta, 478 Fed.
Appx. at 622; see also Owens, 2013 WL 6085121, at *5 (“Given
the Court’s doubts as to whether this action and the state
foreclosure action are truly parallel, the Court declines to
abstain.”).
However,
foreclosure
proceedings,
even
if
action
the
and
Court
the
Court
the
were
present
would,
to
case
find
are
nevertheless,
that
the
parallel
decline
to
abstain under Colorado River based on its weighing of the six
factors. Two factors do weigh in favor of abstention: the
10
state court has assumed jurisdiction over the property at
issue in the foreclosure action and the foreclosure was
commenced before initiation of the federal case. (Doc. # 6 at
7; Doc. # 17 at 8, 10).
Weighing against abstention, the FDCPA claims arise
under federal law and Borg argues that the federal court’s
expertise over the FDCPA makes it a better forum for the
protection of Borg’s rights. (Doc. # 17 at 10). Litigation in
this
Court
is
not
inconvenient
for
the
parties
as
the
foreclosure action is pending in state court in Hillsborough
County, Florida, minimizing any difficulty of litigating in
this Court for the parties or witnesses. Cf. Noonan S., Inc.
v. Cty. of Volusia, 841 F.3d 380, 382 (11th Cir. 1988)(“This
action was pending in Orlando, which is but fifty miles from
Daytona Beach, the site of Volusia County’s state court
action.
Any
inconvenience
associated
with
litigating
in
federal court would thus be negligible.”).
Additionally, piecemeal litigation, which “occurs when
different
tribunals
consider
the
same
issue,
thereby
duplicating efforts and possibly reaching different results,”
is not a serious risk because the federal and state cases do
not share the same defendants, same claims, or same types of
requested relief. Am. Int’l Underwriters, Inc. v. Cont’l Ins.
11
Co., 843 F.2d 1253, 1258 (9th Cir. 1988); see also Ambrosia
Coal,
368
F.3d
at
1333
(noting
that
“the
avoidance
of
piecemeal litigation does not favor abstention unless the
circumstances enveloping those cases will likely lead to
piecemeal
litigation
that
is
abnormally
excessive
or
deleterious”). Finally, the Court does not conclude that the
FDCPA action is vexatious and reactive in nature merely
because the FDCPA action is based on Phelan’s conduct in the
foreclosure case. Balancing these factors heavily in favor of
the exercise of jurisdiction, abstention would be improper.
As it is uncertain whether this case and the foreclosure
action share substantially the same parties and issues, the
Court declines to dismiss or stay the case pursuant to the
Colorado River doctrine.
Accordingly, it is hereby
ORDERED, ADJUDGED, and DECREED:
Defendant Phelan, Hallinan, Diamond & Jones, PLLC’s
Motion to Dismiss or Stay (Doc. # 6) is DENIED.
DONE and ORDERED in Chambers in Tampa, Florida, this
7th day of November, 2016.
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