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

Filing 84

ORDER granting 8 , 48 , and 49 Motions to Dismiss; denying 62 Motion for Reconsideration; denying as moot 81 Motion to Amend Parties. The Clerk is DIRECTED to enter the appropriate judgment of DISMISSAL and close this case. Signed by Judge Lisa G. Wood on 9/1/2017. (ca)

In

tHniteti States; IBtsitrttt Conrt

tor t|ie ^onttiem Biotnct ot(f^eorsta
?limnotDt(k IBtiitscton
MARVIN B. SMITH, III & SHARON
H. SMITH,

Plaintiffs,
No. 2:15-CV-70

V.

HSBC BANK USA, N.A.; WELLS
FARGO BANK, N.A.; S. ANDREW
SHUPING, JR.; SHUPING, MORSE &
ROSS LLP; RUBIN LUBLIN, LCC;
BRET CHANESS; and PETER LUBLIN;
Defendants.

ORDER

Younger

foreclosure

abstention

case, the

is

not

complaint

necessary

fails

to

in

state

this

pro

se

any federal

claim, and this Court will decline to exercise supplemental
jurisdiction over the state claims.
BACKGROUND

This case was removed under federal-question jurisdiction
on June 9, 2015.

Dkt. No. 1 at 2.

This Court dismissed pro

se Plaintiffs Marvin and Sharon Smith's claims—including one
for wrongful foreclosure—on March 1, 2016.

See generally Dkt.

No. 37.

The Eleventh Circuit remanded on February 14, 2017.

Dkt. Nos. 42-43.

The
2017.

July

Smiths

moved

Dkt. No. 48.

7,

2017.

for

Younger

abstention

Dkt.

No.

61.

The

Smiths

Dkt. No. 62.

has been fully briefed and is now ripe.

Peter

March

22,

The Court denied that request as moot on

reconsideration on July 11, 2017.

71, 75-79.

on

moved

for

That motion

Dkt. Nos. 63-65, 67,

Also before the Court are Defendants Bret Chaness,

Lublin,

and

Rubin

Lublin,

LLC's

(together,

^^Rubin

Lublin") June 6, 2015 motion to strike the complaint, dkt. no.
8

(briefed

at

dkt.

nos.

9,

17,

22-25); the

March

28,

2017

dismissal motion of S. Andrew Shuping, Jr. and Shuping, Morse

& Ross LLP (together, "Shuping"), dkt. no. 48 (briefed at dkt.
nos. 51, 56, 80); the March 29, 2017 one brought by HSBC Bank
USA, N.A. and Wells Fargo Bank, N.A. (together, "the Banks"),
dkt.

no.

49 (briefed

at dkt.

nos.

56, 80); and

the

Smiths'

August 21, 2017 motion to amend the parties, dkt. no. 81.
LEGAL STAinDARDS

"/■pjro se pleadings are
V.

Montford,

517

F.3d

1249,

.

.

.

1252

construed liberally."
(11th

court cannot "serve as de facto counsel

Cir.

2008) .

for a party,

Alba
But

or

.

.

a

.

rewrite an otherwise deficient pleading in order to sustain an
action."

657

Powers v.

(11th Cir.

2010)

Avondale Baptist Church,

(per curiam)

393 F.

App'x 656,

(citation omitted) .

A

district

court's

Younger-abstention

decision

is

reviewed for abuse of discretion, but the court cannot abstain

""if there have been proceedings of substance and the federal

litigation thus has moved beyond the embryonic stage before
the

state

action

commences."

For

Your

Eyes

Alone,

Inc.

v.

City of Columbus, 281 F.3d 1209, 1217 (11th Cir. 2002).

A suit can be dismissed if the plaintiff fails ^^to state

a claim upon which relief can be granted."
12(b)(6).

Fed. R. Civ. P.

A complaint must be ''a short and plain statement of

the claim showing that the pleader is entitled to relief."
Fed. R. Civ. P. 8(a)(2).
enough

to

level."

raise

a

right

Its ""[f] actual allegations must be
to

relief

above

the

speculative

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007);

see also Ashcroft v. Igbal, 556 U.S. 662, 678 (2009).

""contain

inferential allegations from

which

[the

It must

court]

can

identify each of the material elements necessary to sustain a
recovery under some viable legal theory."
Ctr. for

Choice, Inc., 253 F.3d

Although

a

court

must

assume

Roe v. Aware Woman

678, 684 (11th Cir. 2001).
the

truthfulness

of

the

complaint's factual allegations, it is ""not bound to accept as
true

a

legal

conclusion

couched

as

a

factual

allegation."

Papasan v. Allain, 478 U.S. 265, 286 (1986).

""The decision to exercise supplemental jurisdiction over
pendant

state

claims

rests

within

the

discretion

of

the

district court."

Raney v. Allstate Ins. Co., 370 F.3d 1086,

1088-89 (11th Cir. 2004) (per curiam).
decline

to

dismissed

exercise
all

supplemental

claims

over

""'A district court may

jurisdiction
which

it

if

has

it

^has

original

jurisdiction'"—in fact, it is encouraged to do so.

Marshall

V. Washington, 487 F. App'x 523, 527 (11th Cir. 2012) (per
curiam) (quoting 28 U.S.C. § 1367(c)(3)).
DISCUSSION

Younger abstention does not apply.
claims

fail.

The

Court

over their state ones.

declines

The Smiths' federal

supplemental

jurisdiction

This case will be dismissed.

I. rOUNSER ABSTENTION WOULD NOT BE APPROPRIATE.

Abstention under Younger is not in order.

Federal courts

are under a ''virtually unflagging obligation . . . to exercise
the jurisdiction given them."

Colo. River Water Conservation

Dist. V. United States, 424 U.S. 800, 817 (1976).

are

some

classes

of

cases

in

which

the

But "there

withholding

of

authorized equitable relief because of undue interference with
state proceedings is 'the normal thing to do.'"

New Orleans

Pub. Serv., Inc. v. Council of City of New Orleans, 491 U.S.

350, 359 (1989) (citation omitted).

One such class was recognized by Younger v. Harris, 401
U.S. 37 (1971).

Younger abstention is only proper if three

questions

answered

can

be

"yes":

(1)

is

there "an

ongoing

state judicial proceeding" with which "the federal proceeding
would

interfere";

(2)

if

there

important state interests"; and

opportunity in

the

state

is,

does

(3) "is there

proceedings to

presented in the federal case.

it

"implicate

an

adequate

raise" the issues

Middlesex Cty. Ethics Comm. v.

Garden State Bar Ass^n, 457 U.S. 423, 432 (1982); 31 Foster

Children v. Bush, 329 F.3d 1255, 1276 (11th Cir. 2003).
The first element is unmet here.

state ejectment proceeding.

To be sure, there is a

Dkt. No. 47 at 7.

Although the

Georgia Supreme Court denied certiorari, dkt. no. 61 at 1, and
the Superior Court denied the Smiths' motion to vacate, dkt.
no. 77-2 SI 4, the Smiths may appeal that denial.
at 4.

Dkt. No. 62

The Court will assume that this is enough to keep the

parallel proceeding alive under Younger.
Abstention is still improper because this Court would not
interfere with the state one.

The Smiths make two arguments

to

a

the

contrary.

They

say

favorable

ruling

on

their

wrongful-foreclosure claim here could be raised as a defense
there,

and

they

point

to

their

July

counterclaim for wrongful foreclosure.

19,

2016

Dkt. No. 67-1.

state
Both

theories fail, albeit for different reasons.
A. A Federal Win Would Not Be a State Defense.

A

federal

foreclosure

ruling

could

not

that
serve

the
as

Smiths
a

suffered

wrongful

state

ejectment

defense.

[C]hallenges to a foreclosure sale cannot be asserted as a
defense

in

a

. .

.

dispossessory

proceeding."

Vines

v.

LaSalle Bank N.A., 691 S.E.2d 242, 243 (Ga. Ct. App. 2010);
Hurt

V.

Norwest

App.

2003)

C'A

Mortq.,

Inc.,

580 S.E.2d

challenge to the

580, 586 (Ga.

Ct.

validity of foreclosure

in

defense of a dispossessory proceeding will not lie . . . .").
Neither can supposed defects in a landlord's title.
Kennedy,
Eqana

423 S.E.2d

283,

286 (Ga.

Hague v.

Ct. App. 1992); contrast

v. HSBC Mortq. Corp., 669 S.E.2d 159, 160-61 (Ga. Ct.

App. 2008) (featuring plaintiff who denied ever signing any
security deed).

Indeed, ^^after foreclosure sale, the former

owner cannot attack dispossession without first setting aside
the foreclosure and

deed."

Solomon

v. Norwest Mortq. Corp.,

538 S.E.2d 783, 784 (Ga. Ct. App. 2000) (citation omitted).
A debtor might have ''standing to challenge a foreclosure
based on an unrecorded or facially invalid assignment."

Ames

V. JP Morgan Chase Bank, N.A., 783 S.E.2d 614, 622 n.7 (Ga.

2016).

But

that

would

only

give

a

party

one

more

anti-

foreclosure sword—not one more anti-ejectment shield.
It

is

true

that

judgment

in

a

prior

suit

adjudicating the legal or equitable title to . . . land will
estop

a

Funding

Homeless,

later

. . .

Solutions,

Inc.,

776

dispossessory

LLC

v.

S.E.2d

Metro

504,

proceeding[.]"
Atlanta

507

(Ga.

Task

Ct.

Premium
Force

App.

for

2015)

(citation

omitted)

(emphasis

added).

(last

But

wrongful-foreclosure

ejected.

two

here,

alterations

there

judgment:

The

Dkt. No. 77-1 SI 8.

will

in

not

Smiths

original)

be

a

were

prior

already

Any judgment here would not

interfere with the state ejectment proceeding.
B. The State Counterclaim Is No Reason to Abstain.

Nor

would

these

proceedings

interfere

with

the

state

counterclaim, even though that claim is basically identical to
one of the claims here.

time

over

the

foreclosure.

Superior

predate

Court' with

respect

to"

wrongful

Hoai v. Sun Refining & Mktq. Co., 866 F.2d 1515,

1519 (D.C. Cir. 1989).

not

This Court ''clearly has priority in

the

While "[t]he state action . . . need

federal

action

for

Younger abstention

to

apply," "if there have been proceedings of substance" before
the state claim is raised, then "federal courts do not have

the discretion to abstain from exercising jurisdiction."

For

Your Eyes Alone, Inc. v. City of Columbus, 281 F.3d 1209, 1217
(11th Cir. 2002) (citing Haw. Hous. Auth. v. Midkiff, 467 U.S.
229, 238 (1984); Doran v. Salem Inn, Inc., 422 U.S. 922, 929
(1975)); see also Merck Sharp & Dohme Corp. v. Conway, 909 F.

Supp. 2d 781, 789 (E.D. Ky. 2012) ("[Abstention] should not
. . . encourage gamesmanship . . . .").

As of July 19, 2016, when the Smiths raised their state
counterclaim,

this

case

had

41

docket

entries

spanning

thirteen months.

Dkt. No. 1; Dkt. No. 67-1 at 4.

This Court

had already dismissed the Smiths' case as frivolous and the
Smiths had appealed.

Dkt. Nos. 37, 39.

Thus, this case had

^^moved beyond matters of mere procedure to matters that are

key to the eventual outcome."
County,

No.

1:15-CV-2606,

Tokyo Gwinnett, LLC v. Gwinnett

2017

WL

1134448, at *5 (N.D.

Ga.

Mar. 27, 2017), appeal filed. No. 17-11871 (11th Cir. Apr. 24,
2017).

This Court must proceed to the merits.

II. THE SMITHS' FEDERAL CLAIMS MUST BE DISMISSED.

The

Smiths'

four

federal

claims

must

be

dismissed

for

failure to state a claim.^
A. The Fraud-upon-the-Court Claim Must Be Dismissed.

The Smiths complain of fraud upon the Bankruptcy Court
and the Eleventh Circuit.

Dkt. No. 1-1 at 70, 72.

This claim

fails due to res judicata, which ^^bars the filing of claims
which

were

raised

proceeding."

or

could

have

been

raised

in

an

earlier

Raqsdale v. Rubbermaid, Inc., 193 F.3d 1235,

1238 (11th Cir. 1999).

Four elements have to be met: (1) ^'a

final judgment on the merits" (2) made by a proper court; (3)
either the same parties or '"those in privity with them"; and
(4) "the same cause of action."

The
Smiths'

fraud
loan

claim

servicer

here
was

Id.

turns

on

allegations

misidentified

and

their

that

the

loan

was

^ The Court need not decide whether certain defendants were properly added,
See Dkt. No. 9 at 10; Dkt. No. 10-1 at 5; Dkt. No. 12 at 10.
8

never

owned

by

HSBC

Bank

USA,

N.A.

Id.

at

69-70.

The

supposed misrepresentations were made on February 7 and April

11, 2011.^

Id. at 70.

The Bankruptcy Court rejected these

arguments half a decade ago.

See In re Smith, No. 07-20244,

2012 WL 4758038, at *4-5 (Bankr. S.D. Ga. Sept. 17, 2012).
This Court affirmed, 2013 WL 3874772 (S.D. Ga. July 25, 2013),

and the Smiths' appeal was dismissed. No. 13-13808 (11th Cir.
Dec. 19, 2013).

That was a final judgment on the merits, by

proper courts, as to the same cause of action raised here.
The Smiths argue that the parties have changed.

17 at 9.

Their own complaint belies this.

Dkt. No.

Although Rubin

Lublin was not a party at the time of the Bankruptcy Court's

order, privity is obvious—it filed the papers at issue.
No. 1-1 at 69.

Dkt.

Privity is also indisputable as to HSBC Bank

USA, N.A.—its servicing agent was the filing party.

Id.

The Smiths then say that the loan assignment and certain
SEC documents were not in the record when the Bankruptcy Court

ruled.

this

Dkt. No. 17 at 9.

was

evidence

so.
in

Because

But the Smiths do not explain why

res judicata

applies to

support of them) that could

before, this argument fails.

have

claims

been

(or

brought

This claim must be dismissed.

^ The complaint also mentions an alleged April 24, 2014 misrepresentation^
but it was made by a non-party.

Id. at 71.

B. The FDCPA Claim Must Be Dismissed.

The Smiths'

FDCPA claim

will also be dismissed.

As for

the Banks, the Smiths do not actually allege a violation.
Dkt. No. 1-1 at 96-97.

See

And neither Rubin Lublin nor Shuping

is a ^Mebt collector" under FDCPA.

A debt collector is ^^any

person who uses any instrumentality of interstate commerce or

the mails in any business the principal purpose of which is
the collection

of any debts, or

who

regularly collects

or

attempts to collect, directly or indirectly, debts owed or due
or asserted to be owed or due another."

15 U.S.C. § 1692a(6).

The complaint here alleges only that Rubin Lublin and
Shuping called themselves ^Mebt collector[s]."

Dkt. No. 1-1

at

FDCPA

96.

Rubin

Lublin, LLC said:

^'Should

the

apply,

please be advised that this firm is acting as a debt collector

attempting to collect a debt and any information obtained will
be

used

warned

for

that

purpose."

that it was

Similarly,

Shuping

Id.

at 286.

not admitting

only

said

that

that

it

It

specifically

FDCPA applies.

^^WA]S

ATTEMPTING

Id.

TO

COLLECT A DEBT" and ''ANY INFORMATION OBTAINED [WOULD] BE USED

FOR THAT PURPOSE."

I^ at 228, 234, 237, 244.

This does not trigger FDCPA.

"The question . . . is not

simply what the firm called itself but rather whether the firm
acted

as

statute."

a

debt

collector

as

that

term

is

defined

by

the

Saint Vil v. Perimeter Mortg. Funding Corp., 630 F.

10

App'x 928, 931 (11th Cir. 2015) (per curiam).

The complaint

here does not allege ''whether [Defendants'] principal purpose

of

business

was

collecting

debts

or

enforcing

security

interests or whether [they] routinely collected debts."

Id.

It therefore fails to allege that Rubin Lublin or Shuping is a
debt collector.

This claim will be dismissed.

C. The Constitutional Claim Must Be Dismissed.

The Smiths claim HSBC Bank USA, N.A. violated their Fifth

and

Fourteenth

hearing.
private
because

Amendment

rights

Dkt. No. 1-1 at 106.
mortgagee
it

does

does

not

to

a

judicial

foreclosure

But "a foreclosure sale by a

not"

raise

"involve

state

constitutional
action."

concerns

Crooked

Creek

Prop., Inc. V. Hutchinson, 432 F. App'x 948, 949 (11th Cir.

2011) (per curiam); see also Roberts v. Cameron-Brown Co., 556

F.2d

356,

involved

358

with

. . . .").

(5th
the

Cir.

1977)^

activity

that

("The

government

causes

the

must

actual

be

injury

This claim must be dismissed.

D. The Federal RICO Claim Must Be Dismissed.

Lastly,
dismissed.

the
A

Smiths'

RICO

federal

plaintiff

RICO

has to

allegations

must

be

allege that defendants

"participated in an illegal enterprise 'through a pattern of
racketeering activity.'"

Am. Dental Ass'n v. Ciqna Corp., 605

F.3d

Cir.

1283,

1290

(11th

2010)

(quoting

18

U.S.C.

§

^ Binding precedent, under Bonner v. City of Prichard, 661 F.2d 1206, 1207
(11th Cir. 1981) (en banc).
11

1962(c)).

Racketeering activity includes mail and wire fraud,

upon which the Smiths rely.
at 95.

18 U.S.C. § 1961(1); Dkt. No. 1-1

Plaintiffs who rely on fraud claims—like the Smiths-

must meet the heightened pleading standard of Federal Rule of
Civil Procedure 9(b).

Morales,

482

alleging:

F.3d

""(1)

Ambrosia Coal & Constr. Co. v. Pages

1309,

the

1316 (11th

precise

Cir. 2007).

statements,

That means

documents,

or

misrepresentations made; (.2) the time and place of and person

responsible for the statement; (3) the content and manner in
which the statements misled the Plaintiffs; and (4) what the

Defendants gained by the alleged fraud."
The

Smiths

do

not

clear

this

Id. at 1316-17.
hurdle.

They

first

characterize as mail fraud 'Mt]he mailing of . . . wrongful

foreclosure documents and notices" by S. Andrew Shuping, Jr.
on January 26, 2011.

Id. at 92-93.

how the documents misled them.

This is also true as to Rubin

Lublin, LLC's June 17, 2014 mailing.
The

Smiths

misrepresentations

continue

to

the

But they do not allege

Smiths

Id. at 95.

that

''any

(and

fraudulent

there

is

abundant

evidence of misrepresentations as set forth more specifically
above) . . . were and are . . . mail and wire fraud."

93.

Id. at

This falls far short of the required specificity.

Finally, the Smiths complain of "[t]he mailing of motions
and

other

court

filings

containing
12

.

.

.

fraudulent

misrepresentations.

Id.

at

But

94.

^''courts

have

consistently refused to recognize -as wire or mail fraud even

litigation activities that rise to the level of malicious
prosecution

simply

because

the

mail or

wires

were

used."

FindTheBest.com, Inc. v. Lumen View Tech. LLC, 20 F. Supp. 3d

451, 460 (S.D.N.Y. 2014); s^ also I.S.

Joseph

Co.

v.

J.

Lauritzen A/S, 751 F.2d 265, 267-68 (8th Cir. 1984) (per R.

Arnold, J.) (''[T]he law of torts may provide a remedy.

Resort

to a federal criminal statute is unnecessary."); Auburn Med.

Ctr, Inc. V. Andrus, 9 F. Supp. 2d 1291, 1299 (M.D. Ala. 1998)

(same).
Curtis

There is good reason to follow that norm here.
&

Assoc., P.C.

v. Law

Offices of

David

See

M. Bushman,

Esq., 758 F. Supp. 2d 153, 173 (E.D.N.Y. 2010), aff'd, 443 F.
App'x 582 (2d Cir. 2011) (^'Plaintiffs' interpretation of RICO
. . . would result in the inundation of federal courts with

civil RICO actions that could potentially subsume all other
state and federal litigation in an endless cycle where any

. . .

litigant

violations. . . .

immediately
[LJitigants

sues

opponents

might

for

hesitate

to

RICO
avail

themselves of the courts and available legal remedies or be

unable to find representation to help vindicate their rights.
Moreover, allowing [such cases] . . . would inappropriately

bypass

the

omitted)).

state

tribunal

.

.

.

."

(internal

citation

This final federal claim must be dismissed.
13

III. THE COURT DECLINES TO EXERCISE SUPPLEMENTAL JURISDICTION.

This

Court

now

lacks

federal-question

jurisdiction.

Especially as some of the Smiths' state claims may pose open
legal questions, this Court declines to exercise supplemental
jurisdiction over them.

See Bagqett v. First Nat'l Bank of

Gainesville, 117 F.3d 1342, 1353 {11th Cir. 1997).
CONCLUSION

For these reasons, the Smiths' motion for reconsideration

as to Younger abstention, dkt. no. 62, is DENIED.

Defendants'

motions to dismiss, dkt. nos. 8, 48, and 49, are GRANTED as to
the

Smiths'

federal claims.

This

Court DECLINES to exercise

supplemental jurisdiction over the Smiths' state claims.

The

Clerk of Court is DIRECTED to enter the appropriate judgment
of

DISMISSAL

and

close

this

case.

All

other

outstanding

motions are DENIED as moot.^

SO ORDERED, this 1st day of September, 2017.

LISA GODBEY WOOD, DISTRICT JUDGE
UNITED STATES DISTRICT COURT
SOUTHERN

DISTRICT OF GEORGIA

The Smiths only seek to add state claims against new parties
79 at 2.

14

Dkt.

No.