Smith et al v. HSBC Bank USA, National Association et al

Filing 37

ORDER denying Plaintiffs' 5 Motion to Remand; granting Defendants' 8 Motion to Strike; granting Defendants' 10 Motion to Dismiss Case as Frivolous; granting Defendants' 12 Motion to Strike; and dismissing as moot 15 Motion to Stay. Plaintiffs' Complaint is DISMISSED with prejudice. The Clerk of Court is authorized and directed to enter the appropriate judgment of dismissal and to CLOSE this case. Signed by Chief Judge Lisa G. Wood on 3/1/2016. (csr)

3n the Entteb tate Jitrtct Court
for the boutbern flitrict of 4eoria
3Iruubiick ibiion
MARVIN B. SMITH; and SHARON H.
SMITH,
Plaintiffs,

HSBC BANK USA, NATIONAL
ASSOCIATION; WELLS FARGO BANK,
NATIONAL ASSOCIATION; S. ANDREW
SHUPING, JR.; SHUPING, MORSE AND
ROSS, LLP; RUBThJ LUBLIN, LLC; BRET
CHANESS; and PETER LUBLIN,
Defendants.

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CIVIL ACTION NO.: 2:15-cv-70

ORDER

Presently before the Court is Plaintiffs' Motion to Remand
this case to the Superior Court of Glynn County, Georgia, dkt.
no. 5, and Defendants' Motions to Strike, or, in the Alternative,
Motion to Dismiss Plaintiffs' Complaint. Dkt. Nos. 8, 10, 12.
For the reasons stated below, the Court DENIES Plaintiffs' Motion
to Remand, GRANTS Defendants' Motions to Strike Plaintiffs'
Complaint, DISMISSES Plaintiffs' claims with prejudice, and
CLOSES this case. Accordingly, Plaintiffs' pending Motion to

Stay Defendants' Motions to Dismiss Plaintiff's Complaint is
DISMISSED as moot.
BACKGROUND
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In this action, Plaintiffs Marvin and Sharon Smith assert
myriad claims against entities and individuals involved in the
foreclosure of their home.' See Dkt. No. 1-1, PP. 5-6. In
August 2006, the Smiths obtained a loan for $1,767,500.00 from
Synovus Mortgage Corporation and signed a security deed pledging
as collateral their property at 311 10th Street, Saint Simons
Island, Georgia. Id. at pp. 110-32. In 2007, Plaintiffs filed a
Chapter 7 bankruptcy petition and ceased making payments on their
loan.

Dkt. No. 1-1, p. 13. Over the next eight years, as

summarized below, Plaintiffs brought cases stemming from their
Chapter 7 bankruptcy to this Court as plaintiffs or appellants no
less than fourteen times, of which at least three have been cases
challenging their home loan and foreclosure proceedings.
Due to their numerous frivolous filings, both the United
States Bankruptcy Court and the Eleventh Circuit Court of Appeals
sanctioned Plaintiffs for engaging in abusive litigation. In
2012, the United States Bankruptcy Court for the Southern
District of Georgia sanctioned Plaintiffs sua .sponte under 11

In their Complaint, Plaintiffs allege that Defendants wrongfully
foreclosed upon their home and committed fraud upon the Court.
Specifically, Plaintiffs allege that Defendants' foreclosure of their
home violated the federal and Georgia Racketeer Influenced and
Corruption Organizations ('RICO") Acts, the Federal Debt Collection
Protection Act, the Georgia Fair Business Protection Act, and Georgia
Elder Abuse laws. Plaintiffs further allege that Defendants are
liable for breaches of contract, breaches of good faith and fair
dealing, negligence, and fraud by omission, and that Defendants have
been unjustly enriched by the foreclosure of Plaintiffs' home. Dkt.
No. 1-1, pp. 5-6.
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U.S.C. § 105(a) and its inherent powers, concluding that
Plaintiffs "have advanced 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" and that "the Smiths give no indication that this behavior
will change, absent judicial action." Smith v. BAC Home Loans
Servicing LP, (In Re: Smith), No. 07-20244, 2012 WL 4758038
(Bankr. S.D. Ga. Sept. 17, 2012). The Bankruptcy Court
sanctioned Plaintiffs from further abusive filings as follows:
The Smiths are barred from filing any pleadings or
motions in this Court wherein they name Countrywide
Home Loans Inc., Countrywide Home Loan Servicing LP, or
BAC Home Loans Servicing LP. The Smiths are instead
directed to submit any such pleading to the Clerk of
Court. The Clerk will then submit the pleading to me,
and I will determine whether the pleading asserts a
meritorious claim or simply reasserts the claim that I
dismiss in this Order. If a pleading is appropriate,
it will be docketed. If a pleading is inappropriate,
it will be docketed as stricken, but will not be
publicly viewable.
Id. at *9
On appeal, the Eleventh Circuit sanctioned Plaintiffs for
filing a frivolous appeal and expanded the Bankruptcy Court's
pre-screening injunction as follows:
In addition to the pre-screening injunction imposed by
the bankruptcy court, which remains in place,
Appellants are hereby ENJOINED from filing any
pleadings, motions, or other papers seeking any form of
relief against Appellee 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.
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Smith v. Countrywide Home Loans, Inc., No. 13-13808-DD (11th Cir.
Dec. 19, 2013). Undeterred by the sanctions orders, Plaintiffs
filed a request to file another lawsuit in the Bankruptcy Court.
When the Bankruptcy Court did not rule on their request as
quickly as they wished, Plaintiffs filed a motion for leave to
file suit in this Court, which the Court rejected as frivolous.
Smith v. Countrywide Home Loans, No. CV214-136, 2014 WL 4854715,
at *1 (S.D. Ga. Sept. 22, 2014). The Bankruptcy Court then
denied Plaintiffs leave to file the lawsuit—noting that it raised
the same challenges that had been previously rejected—and
admonished Plaintiffs for "continuing to file baseless and
vexatious lawsuits" in hopes of indefinitely delaying
foreclosure. Order, In Re: Smith, No. 07-20244 (Bankr. S.D. Ga.
Oct. 6, 2014), ECF No. 648. This Court denied their appeal of
the Bankruptcy Court's order as "utterly frivolous and lacking in
any basis of good faith." Order, In Re: Smith, No. MC214-13
(S.D. Ga. Dec. 16, 2014), ECF No. 1.
When foreclosure proceedings resumed, Plaintiffs filed a
nearly identical lawsuit in the United States District Court for
the Southern District of New York. Dkt. No. 1-1, pp. 50-109. In
that lawsuit, Plaintiffs named as Defendants: HSBC Bank USA,
National Association, in its capacity as trustee for the trust in
which Plaintiffs' loan is located; Wells Fargo Bank, as master
servicer of the trust in which Plaintiffs' loan is located; and
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Shuping, Morse, and Ross, LLP and Rubin Lublin, LLC, the law
firms handling the foreclosure sale of their property, as well as
attorney S. Andrew Shuping, Jr. Id. at 53. After the United
States District Court for the Southern District of New York
transferred the case to this Court, Rubin Lublin, LLC, moved to
strike it as barred by the Eleventh Circuit's injunction. Mot.
to Strike, Smith v. HSBC Bank, USA, 2:15-cv-47, (S.D. Ga. Apr.
24, 2015), ECF No. 6. Plaintiffs then voluntarily withdrew their
complaint on May 7, 2015, dkt. no. 1-1, p.8, and, on the same
day, filed a nearly identical complaint in the Glynn County,
Georgia, Superior Court, listing attorneys Brett Chaness and
Peter Lublin as named defendants, dkt. no. 1-1, p. 4. Shortly
after filing suit in the Southern District of New York,
Plaintiffs, without obtaining prior approval from this Court or
the Bankruptcy Court, also filed a petition for a temporary
restraining order ("TRO") in the Superior Court of Glynn County,
Georgia, on April 29, 2015, to enjoin the foreclosure sale of
their property. Id. at p. 11. The Glynn County Superior Court
denied Plaintiffs' request for a TRO, noting their "established
history of engaging in frivolous litigation." Id. at pp. 318,
324. Defendants filed a notice of removal of Plaintiffs'
Complaint in this Court, to which Plaintiffs filed a Motion to
Remand. Dkt. No. 1; Dkt. No. 5. Defendants filed Responses

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opposing Plaintiffs' Motion to Remand and moved to strike
Plaintiffs' Complaint. Dkt. Nos. 8, 10, 12, 18, 19, 20.
DISCUSSION
I. Motion to Remand

A defendant may remove a case from state court to federal
court if the federal court had jurisdiction to hear the case
originally. See 28 U.S.C. § 1331

("[A] district court has

subject matter jurisdiction over all civil actions arising under
the Constitution, laws, or treaties of the United States."); see
also 28 U.S.C. § 1441(a) ("[A]ny civil action brought in a state
court of which the district courts of the United States have
original jurisdiction, may be removed by the defendant or the
defendants, to the district court of the United States for the
district and division embracing the place where such action is
pending."). Given that removal jurisdiction raises significant
federalism concerns, "federal courts are directed to construe
removal statutes strictly. Indeed, all doubts about jurisdiction
should be resolved in favor of remand to state court." City of
Vestavia Hills v. Gen. Fidelity Ins. Co.., 676 F.3d 1310, 1313
(11th Cir. 2012) (quoting Univ. of S. Ala. v. Am. Tobacco Co.,
168 F.3d 405, 411 (11th Cir. 1999)). The removing party "bear[s]
the burden of demonstrating federal jurisdiction." Triggs v.
John Crump Toyota, Inc., 154 F.3d 1284, 1287 n.4 (11th Cir.

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To determine whether a claim arises under federal law,
courts apply the well-pleaded complaint rule, "which provides
that federal jurisdiction exists only when a federal question is
presented on the face of the plaintiff's properly pleaded
complaint." Smith v. GTE Corp., 236 F.3d 1292, 1310 (11th Cir.
2001) (quoting Caterpillar Inc. v. Williams, 482 U.S. 386, 392
(1987)). Federal question jurisdiction will be found where a
"well-pleaded complaint standing alone establishes either that
federal law creates the cause of action or that the plaintiff's
right to relief necessarily depends on resolution of a
substantial question of federal law." Baltin v. Alaron Trading
Corp., 128 F.3d 1466, 1472 (11th Cir. 1997) (citing Franchise Tax
Bd. of Cal. v. Constr. Laborers Vacation Tr. for S. Cal., 463
U.S. 1, 27-28 (1983)).
Defendants maintain that the face of Plaintiffs' wellpleaded complaint clearly presents federal questions because the
Complaint raises claims under the Fair Debt Collection Practices
Act, 15 U.S.C. § 1692, and the federal RICO Act, 18 U.S.C.
§1961. Dkt. No. 18, pp. 1-2; Dkt. No. 19, pp. 1-2; Dkt. No. 20,
p. 1. Plaintiffs, however, argue that the Rooker-Feldman
doctrine bars this Court's exercise of jurisdiction over their
claims. Dkt. No. 5. According to Plaintiffs, the Glynn County
Superior Court's denial of their TRO was a final state court

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decision and, therefore, this Court may not exercise jurisdiction
over their case.
"Generally speaking, the Rooker-Feldman doctrine recognizes
that federal district courts do not have jurisdiction to act as
appellate courts and precludes them from reviewing final state
court decisions." Green v. Jefferson Cty. Comm'n, 563 F.3d 1243,
1249 (11th Cir. 2009). The Rooker-Feldman doctrine applies only
to cases that are "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." Exxon Mobil Corp. v.
Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005); see also
Nicholson v. Shafe, 558 F.3d 1266, 1272-74, 1278-79 (11th Cir.
2009) . "The doctrine bars the losing party in state court from
seeking what in substance would be appellate review of the state
judgment in a United States district court, based on the losing
party's claim that the state judgment itself violates the loser's
federal rights." Brown v. R.J. Reynolds Tobacco Co., 611 F.3d
1324, 1330 (11th Cir. 2010) (quotation marks omitted)
Plaintiffs contend that "the Rooker-Feldman doctrine bars
federal court review of [a] state-court order[] authorizing a
sheriff's sale" pursuant to a denial of a TRO protesting that
sale. Dkt. No. 16, p. 2. Plaintiffs' argument is without merit.
Under Georgia law, a judgment is "a decree and any order from
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which an appeal lies." O.C.G.A. § 9-11-54(a). An appeal does
not lie from an order on a motion for a TRO. See O.C.G.A. § 5-634. ("Appeals may be taken . . . [from] all judgments or orders
granting or refusing to grant mandamus or any other extraordinary
remedy, except with respect to temporary restraining orders[.]")
Therefore, the Rooker-Feldman doctrine does not prevent this
Court's exercise of jurisdiction over Plaintiffs' claims.
Accordingly, after applying the well-pleaded complaint rule,
the Court finds that Plaintiffs' Complaint asserts a federal
question such that federal question jurisdiction is proper under
28 U.S.C. § 1331. Plaintiffs clearly cite to federal statutes as
bases for their causes of action. Dkt. No. 1-1, p. 52
Therefore, this case was properly removed to this Court pursuant
to 28 U.S.C. § 1441(a).

2

Though Plaintiffs assert a greater number of state law claims than
federal law claims in their Complaint, remand on that basis would be
inappropriate due to the frivolity of those state law claims. For
example, Plaintiffs set forth the state law claim of "Elder Abuse,"
under O.C.G.A. § 30-5-8. Dkt. No. 1-1, p. 4. This statute, which
prescribes criminal liability for the failure to report the abuse of
elderly persons, is wholly unrelated to the subject matter of
Plaintiffs' Complaint. Regardless of the number of state law claims
asserted in the Complaint, the gravamen of Plaintiffs' Complaint is
tied directly to federal law. Therefore, this Court's exercise of
jurisdiction is proper.
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II. Motions to Strike, or Alternatively, to Dismiss

A district court is authorized, on motion, to dismiss an
action for failure to obey 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 ensure prompt disposition of
legal actions. Link v. Wabash R.R. Co., 370 U.S. 626, 630-31
(1962). "Federal courts have the inherent power to dismiss an
action for misconduct that abuses the judicial process and
threatens the integrity of that process—including misconduct
unrelated to the merits of the case." Vargas v. Peltz, 901 F.
Supp. 1572, 1582 (S.D. Fla. 1995). In invoking its inherent
power to punish conduct which abuses the judicial process, a
court must exercise discretion in fashioning an appropriate
sanction, which may range from dismissal of a lawsuit to an
assessment of attorney's fees. Chambers v. NASCO, Inc., 501 U.S.
32, 45-46 (1991) . Dismissal is generally proper where less
drastic sanctions would be ineffective. Aztec Steel Co. v. Fla.
Steel Corp., 691 F.2d 480, 481-82 (11th Cir. 1982). "The legal
standard to be applied under Rule 41(b) is whether there is a
clear record of delay or willful contempt and a finding that
lesser sanctions would not suffice." Weiland v. Palm Beach Cty.
Sheriff's Office, 792 F.3d 1313, 1320 (11th Cir. 2015) (quoting
Goforth v. Owens, 766 F.2d 1533, 1535 (11th Cir. 1985)).

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As discussed above, both the Bankruptcy Court and the
Eleventh Circuit ordered Plaintiffs to obtain leave from this
Court before filing "any pleadings, motions, or other papers
seeking any form of relief against [Countrywide Home Loan
Servicing LP, or BAC Home Loans 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[.]" Smith v.
Countrywide Home Loans, Inc., No. 13-13808-DD (11th Cir. Dec. 19,
2013). While Plaintiffs ostensibly avoided violating the letter
of this Order by filing a complaint against HSBC Bank, USA, Wells
Fargo Bank, and the law firms and attorneys involved in the
foreclosure sale of their property, as opposed to Country Wide
Home Loan Servicing, LP, or BAC Home Loans Servicing, LP, or
their predecessor or successor entities, their efforts at
circumvention will not be rewarded.
A review of Plaintiffs' claims reveals that they are
baseless, as they assert the same theories and employ the same
tactics that courts have repeatedly admonished them to cease in
prior actions. Plaintiffs' continued efforts to stall and/or
reverse the foreclosure of their property have once again
resulted in vexatious and abusive litigation. Because Plaintiffs
refuse to quell their incessant abuse of judicial time and
resources, despite sanctions and warnings by this Court, the
Bankruptcy Court, and the Eleventh Circuit, dismissal
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of their Complaint with prejudice is appropriate. See Fed. R.
Civ. P. 41(b); Connolly v. Papachristid Shipping Ltd., 504 F.2d
917, 920 (5th Cir. 1974)

("[A] court has the inherent power to

manage its calendar and to guarantee that errant lawyers and
parties recognize that it has the power to impose reasonable and
appropriate sanctions to ensure that its orders are complied
with.") . Plaintiffs are further admonished that the pre-suit
permission requirement placed on Plaintiffs by the Bankruptcy
Court includes HSBC Bank USA, National Association; Wells Fargo
Bank; S. Andrew Shuping, Jr. and the law firm of Shuping, Morse,
and Ross, LLP; Bret Chaness, Peter Lublin, and the law firm or
Rubin Lublin, LLC; and any other individual and/or entity
involved in or related to the foreclosure and/or sale of
Plaintiffs' former property located at 311 10th Street, Saint
Simons Island, Georgia.
CONCLUSION

For the foregoing reasons, the Court GRANTS Defendants'
Motions to Strike Plaintiffs' Complaint, dkt. Nos. 8 and 12, and
GRANTS Defendants' Motion to Dismiss, dkt. no. 10. The Court
DENIES Plaintiffs' Motion to Remand, dkt. no. 5, and DISMISSES

Plaintiffs' Complaint with prejudice, dkt. no. 1-1. Plaintiffs'
pending Motion to Stay Defendants' Motion to Dismiss Plaintiffs'
Complaint, dkt. no. 15, is DISMISSED as moot.

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The Clerk of Court

is authorized and directed to enter the appropriate judgment of
dismissal and to CLOSE this case.
SO ORDERED, this 1st day of March, 2016.

LISA GODBEY VOOD, CHIEF JUDGE
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA

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