Schwartz et al., vs. Bank of Hawaii, et al.,
Filing
29
ORDER DENYING PLAINTIFFS' MOTION FOR TEMPORARY RESTRAINING ORDER re 24 - Signed by JUDGE J. MICHAEL SEABRIGHT on 6/28/12. (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Drs. Stephen M. Schwartz and Alma Schwartz served by first class mail at the address of record on June 28, 2012.
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
DR. STEPHEN M. SCHWARTZ, and
DR. ALMA SCHWARTZ,
)
)
)
Plaintiffs,
)
)
vs.
)
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BANK OF HAWAII CORPORATION, )
ET AL.,
)
)
Defendants.
)
_______________________________ )
CIVIL NO. 12-00267 JMS-KSC
ORDER DENYING PLAINTIFFS’
MOTION FOR TEMPORARY
RESTRAINING ORDER
ORDER DENYING PLAINTIFFS’ MOTION FOR TEMPORARY
RESTRAINING ORDER
I. INTRODUCTION
Before the court is a Motion for Temporary Restraining Order
(“TRO”) filed by pro se Plaintiffs Stephen M. Schwartz and Alma Schwartz
(“Plaintiffs”) on June 26, 2012. In their Motion for TRO, Plaintiffs seek to
postpone a foreclosure sale relating to real property located at 72-4075 Alahee
Place, Kailua-Kona, Hawaii 96740 (“the subject property”). The foreclosure sale
is scheduled to occur on June 29, 2012. The court has reviewed the Motion, the
Opposition, and the filings in this action and in other related actions. Based on the
following, the Motion for TRO is DENIED.
II. BACKGROUND
On May 18, 2012, Plaintiffs filed a 66-page document entitled
“Action for Relief from Void Judgment Pursuant to Federal Rules of Court
60(B)(2)(3) and (4)” (“the original Complaint”). Doc. No. 1, Compl. The original
Complaint makes a variety of confusing allegations against Defendants Bank of
Hawaii Corporation, Bank of Hawaii, Peter S. Ho, Derek J. Norris, Mark Rossi,
Mary Sellers, Gary Williams, Mitzi Lee, Randy Muraoka, Lawrence Johnson, and
Lawrence R. Johnson Construction, Inc. (collectively “Defendants”) relating to a
promissory note and mortgage secured by the subject property, and a
corresponding state court judgment and pending foreclosure proceedings. Id. at 2,
4, 11, 22.
On June 26, 2012, Plaintiffs filed a 130-page “Amended Independent
Action for Relief from Void Judgment Pursuant to Federal Rules of Court
60(B)(2)(3) and (4),” Doc. No. 23, which the court construes as an Amended
Complaint filed in response to a now-moot Motion to Dismiss, which sought to
dismiss the original Complaint. The Amended Complaint clarifies in some
respects the allegations of the original Complaint by attaching a copy of a
Mortgage on the subject property recorded in the Hawaii Bureau of Conveyances
on September 6, 2005. The Mortgage corresponds to a Promissory Note of
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$1,499,999 secured by the subject property. Id., Am. Compl. at 16 & Ex. A. The
Amended Complaint also attaches a February 9, 2010 Judgment and Foreclosure
Decree from the Circuit Court of the Third Circuit, State of Hawaii. Id. Ex. B.1
The record confirms that a foreclosure action concerning the subject
property was filed in August 2009 against Plaintiffs by Bank of Hawaii in the
Circuit Court of the Third Circuit, State of Hawaii. Bank of Hawaii prevailed in
that action and obtained an Interlocutory Decree of Foreclosure and Order of Sale
on February 9, 2010. See Bank of Haw. v. Schwartz et al., Civ. No. 3CC09-100340K (Haw. Cir. Ct), docket available at http://hoohiki2.courts.state.hi.us/jud/
Hookiki/main.htm) (last visited June 28, 2012). After that state court judgment
was entered, Plaintiffs filed a counterclaim in that proceeding, raising similar
claims that they assert in this action, in an attempt to prevent the foreclosure sale.
See Doc. No. 28-2, Defs.’ Opp’n Ex. A. The state court dismissed that
counterclaim. Id. Ex. C.
Thereafter, Plaintiffs filed bankruptcy actions in Hawaii and
Pennsylvania. On April 17, 2012, the U.S. Bankruptcy Court for the Eastern
District of Pennsylvania (“Pennsylvania Bankruptcy Court”) dismissed Plaintiff
1
These Exhibits may be considered to be part of the Amended Complaint for present
purposes. See, e.g., United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003) (“Certain written
instruments attached to pleadings may be considered part of the pleading.”) (citing Fed. R. Civ.
P. 10(c)).
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Alma Schwartz’s bankruptcy action, finding in part that
pursuant to 11 U.S.C. § 362(d)(4), [Alma Schwartz] filed
the petition in this case as part of a scheme to delay,
hinder and defraud [Bank of Hawaii] that involved
(i) multiple transfers by Debtor and her spouse, Stephen
M. Schwartz, or all or part ownership of [the subject
property] without the consent of [Bank of Hawaii],
whose claim is secured by an interest in [the subject
property], and without court approval, and (ii) multiple
bankruptcy filings by [Alma Schwartz] and her spouse,
Stephen M. Schwartz, affecting [the subject property.]
Doc. No. 28-5, Defs.’ Opp’n Ex. 5 (Order of U.S. Bankruptcy Court for the
Eastern District of Pennsylvania) at 2. The Pennsylvania Bankruptcy Court further
found and ordered that:
[Bank of Hawaii] is hereby permitted to exercise its state
law rights and remedies with respect to the [subject
property] by commencing and/or continuing a state
foreclosure proceeding, conducting a Sheriff’s sale of
[the subject property], taking possession of [the subject
property], and/or exercising any other remedies to which
it is entitled under the Existing Loan Documents . . . in
order to recover the obligations and indebtedness due and
owing to [Bank of Hawaii] by [Alma Schwartz] and
Stephen M. Schwartz[.]
Id. at 2-3. As to timing, it found that “[Bank of Hawaii] may immediately enforce
and implement this Order and pursue its state law remedies as it relates to [the
subject property].” Id. at 3.
On June 26, 2012, Plaintiffs filed their Motion for TRO, in which they
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seek an Order “temporarily enjoining Defendants’ [sic] and/or any party from any
further action against Plaintiff [sic], including, but not limited to, postponing the
Foreclosure Sale to occur on June 29, 2012.” Doc. No. 24, Mot. at 3. Defendants
(aside from Gary Williams, Lawrence Johnson, Lawrence R. Johnson
Construction, Inc., and Guy Sakamoto) filed an Opposition to the Motion on June
28, 2012. Doc. No. 28. Pursuant to Local Rule 7.2(d), the court finds the Motion
suitable for disposition without an oral hearing.
III. STANDARD OF REVIEW
A court may issue a TRO without written or oral notice to the adverse
party only if the party requesting the relief provides an affidavit or verified
complaint providing specific facts that “clearly show that immediate and
irreparable injury, loss, or damage will result to the movant before the adverse
party can be heard in opposition.” Fed. R. Civ. P. 65(b)(1)(A).
Even if such notice is provided, a TRO may issue only if Plaintiffs
meet their burden under well-established factors. The standard for issuing a
temporary restraining order is identical to the standard for issuing a preliminary
injunction. See, e.g., Hawaii v. Gannett Pac. Corp., 99 F. Supp. 2d 1241, 1247 (D.
Haw. 1999); cf. Stuhlbarg Int’l Sales Co. v. John D. Brush & Co., 240 F.3d 832,
839 n.7 (9th Cir. 2001) (observing that an analysis of a preliminary injunction is
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“substantially identical” to an analysis of a temporary restraining order).
A “preliminary injunction is an extraordinary and drastic remedy
never awarded as of right.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7,
24 (2008) (citation omitted). A “plaintiff seeking a preliminary injunction must
establish that he is likely to succeed on the merits, that he is likely to suffer
irreparable harm in the absence of preliminary relief, that the balance of equities
tips in his favor, and that an injunction is in the public interest.” Id. at 20; accord
Sierra Forest Legacy v. Rey, 577 F.3d 1015, 1021 (9th Cir. 2009). “That is,
‘serious questions going to the merits’ and a balance of hardships that tips sharply
towards the plaintiff can support issuance of a preliminary injunction, so long as
the plaintiff also shows that there is a likelihood of irreparable injury and that the
injunction is in the public interest.” Alliance for Wild Rockies v. Cottrell, 632 F.3d
1127, 1135 (9th Cir. 2011). Winter emphasized that plaintiffs seeking preliminary
relief must demonstrate that “irreparable injury is likely in the absence of an
injunction.” 555 U.S. at 22; see also Stormans, Inc. v. Selecky, 586 F.3d 1109,
1127 (9th Cir. 2009).
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IV. DISCUSSION
Initially, Plaintiffs have not demonstrated that they have fully
complied with the requirements of Rule 65. Plaintiffs did not provide any specific
facts establishing that “immediate and irreparable injury, loss, or damage will
result” to Plaintiffs.
More importantly, even if all Defendants have had sufficient notice,
Plaintiffs’ Motion for TRO fails to establish that Plaintiffs have satisfied all the
Winter standards. At minimum, Plaintiffs have not established that they are likely
to succeed on the merits. Plaintiffs have therefore failed to carry their burden on
their Motion for TRO.
The Amended Complaint, construed liberally, alleges that the process
whereby Plaintiffs’ loan was securitized somehow rendered the Note and Mortgage
invalid. See, e.g., Doc. No. 23, Am. Compl. ¶ 305 (“Once a loan is securitized, it
forever loses its security (i.e., the Deed of Trust, or the ability for the bank to
foreclose on your house).”). Plaintiffs apparently challenge aspects of Pooling
Service Agreements, id. at 120, and allege that banks are not the real parties at
interest when loans are securitized. Id. ¶ 320 (“Defendants in their entirety are not
the real parties in interest and are committing another massive fraud upon the
Plaintiffs[.]”). But “courts have uniformly rejected the argument that securitization
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of a mortgage loan provides the mortgagor a cause of action.” Rodenhurst v. Bank
of Am., 773 F. Supp. 2d 886, 898 (D. Haw. 2011) (citing numerous cases); Fed.
Nat’l Mortg. Ass’n v. Kamakau, 2012 WL 622169, at *4 (D. Haw. Feb. 23, 2012)
(same).
Plaintiffs also argue that the subject judgment is void because there is
no evidence “that any of the named Defendants’, [sic] were in lawful possession of
the original unaltered promissory note upon which Defendants’ [sic] relied to
acquire their void judgment.” Doc. No. 24-1, S. Schwartz Aff. ¶ 5; Doc No. 23,
Am. Compl. ¶ 341 (“Bank of Hawaii and/or Bank of Hawaii Corporation does not
have in their possession either the Promissory and/or the Deed of Trust or the
Mortgage Note and cannot support proper assignment to the depositor, an/or to any
trust that is register [sic] through the Security [sic] and Exchange Commission.”).
This court, however, recently reiterated the well-established rule rejecting this
“show me the note theory.” See Pascual v. Aurora Loan Servs., 2012 WL
2355531, at *7 (D. Haw. June 19, 2012) (explaining that “courts have soundly
rejected borrowers’ claims based on a lender’s non-possession of and/or failure to
produce the [ ] note.”) (numerous citations omitted).
Moreover, Plaintiffs’ claims seeking to vacate the state court
foreclosure judgment are likely barred by the Rooker-Feldman doctrine. Plaintiffs
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cite Federal Rule of Civil Procedure 60(b) as the premise of the relief they seek.
Rule 60(b) indeed provides for relief from a judgment in certain situations. Such
relief, however, is from a federal -- not a state -- judgment. Under RookerFeldman, federal district courts are precluded from reviewing state court
judgments in “cases brought by state-court losers complaining of injuries caused
by state-court judgments rendered before the district court proceedings and inviting
district court review and rejection of those judgments.” Exxon Mobil Corp. v.
Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005).
Plaintiffs’ claims also appear to be barred by 28 U.S.C. § 2283,
“which precludes a federal court from granting ‘an injunction to stay proceedings
in a State court except as expressly authorized by Act of Congress . . .’ [and]
‘extends not only to injunctions affecting pending proceedings, but also to
injunctions against the execution or enforcement of state judgments.’” Hicks v.
Wells Fargo Bank, N.A., 2012 WL 346660, at *2 (D. Haw. Feb. 2, 2012) (denying
motion for emergency injunctive relief seeking to prevent ejectment action based
upon an allegedly void state court foreclosure judgment); Scherbenske v. Wachovia
Mortg., FSB, 626 F. Supp. 2d 1052, 1058 (E.D. Cal. 2009) (denying motion for
TRO seeking to enjoin state court detainer action, relying on 28 U.S.C. § 2283);
Phillips v. Chas. Schreiner Bank, 894 F.2d 127, 131 (5th Cir. 1990) (similar).
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Furthermore, the record establishes that the Pennsylvania Bankruptcy
Court has already decided that the state court foreclosure action may proceed. An
order from this court granting the requested TRO would be an impermissible
collateral attack on an Order of the Pennsylvania Bankruptcy Court. See, e.g.,
Adams v. U.S. Attorney’s Office, 2011 WL 3359555, at *1 (D. D.C. Aug. 3, 2011)
(“As a general rule applicable here, a federal district court lacks subject matter
jurisdiction to review the decisions of another federal court.”) (citations omitted).
In short, Plaintiffs’ claims seeking to void the state court judgment are
-- for multiple independent reasons -- unlikely to succeed on the merits.2
Because Plaintiffs have not demonstrated that they are likely to
succeed on the merits of their claims seeking to void the state court judgment, they
necessarily cannot obtain a TRO -- Winter requires all four elements (likelihood of
success, likelihood of irreparable harm, a favorable balance of equities, and
demonstrating that an injunction is in the public interest). Winter, 555 U.S. at 20.
2
The Amended Complaint also appears to allege claims for violations of the Fair Debt
Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”). As Defendants point out,
however, there is no provision in the FDCPA entitling them to injunctive relief. See 15 U.S.C.
§ 1692k (providing damage remedy for violations). Any FDCPA claims are not grounds to grant
a TRO to stop the subject foreclosure.
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V. CONCLUSION
For the foregoing reasons, Plaintiffs’ Motion for Temporary
Restraining Order is DENIED.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, June 28, 2012.
/s/ J. Michael Seabright
_____________________________
J. Michael Seabright
United States District Judge
Schwartz et al. v. Bank of Hawaii Corporation et al., Civ. No. 12-00267 JMS-KSC, Order
Denying Plaintiffs’ Motion for Temporary Restraining Order
11
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