Botwin Family Partners, L.P. et al v. Thrivent Financial for Lutherans

Filing 16

MEMORANDUM AND ORDER granting 6 Motion to Dismiss and Motion to Stay Case; The court must abstain and dismiss this action without prejudice. Finding as moot 9 Motion to Consolidate Cases. Signed by District Judge Richard D. Rogers on 3/26/2013. (meh)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
BOTWIN FAMILY PARTNERS, L.P.,
DIANE BOTWIN ALPERT, and
DOUGLAS A. ALPERT,
Plaintiffs,
v.
THRIVENT FINANCIAL FOR LUTHERANS,
Defendant,

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Case No. 12-2549-RDR

MEMORANDUM AND ORDER
This matter is presently before the court upon defendant=s motion
to dismiss or stay.

Having carefully reviewed the arguments of the

parties, the court is now prepared to rule.
I.
This case arises from various loans that were made by defendant
Thrivent Financial for Lutherans (Thrivent) to plaintiff Botwin
Family Partners, L.P. (Botwin Family).

Plaintiffs Diane Botwin

Alpert and Douglas A. Alpert later signed guaranty agreements in
2000, 2002 and 2006 in which they agreed to guarantee to Thrivent
all obligations of the Botwin Family under the notes.

Thrivent

subsequently sent notice to the Botwin Family and the Alperts that
they were in default under the notes.
Botwin Family and the Alperts filed this case on August 22, 2012.
They

assert

various

causes

of

action

but

essentially

seek

declaratory relief from the court arising from the several loan

transaction agreements entered into with Thrivent.

Plaintiffs rely

upon the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691e(c) and
Regulation B, 12 C.F.R. 202.17(b).

They allege that Thrivent has

required them to incur personal liability on an obligation and debt
in violation of the ECOA.

They seek an order of the court finding

that the guarantors are not liable for the loans that were entered
into in 2000, 2002 and 2006.
On October 18, 2012, Thrivent filed an action in state court
asserting claims of breach of promissory notes, foreclosure of
mortgages, and breach of guaranty agreements.

Botwin Family and the

Alperts removed that case to this court on November 13, 2012.
action was assigned to Judge Murguia.

That

Thrivent moved to remand the

case to state court on November 27, 2012.
Meanwhile, in this case, the defendant filed the instant motion
to dismiss on October 22, 2012.

Plaintiffs filed a motion to

consolidate this case with Judge Murguia=s case on November 13, 2012.
On March 5, 2013, Judge Murguia granted Thrivent=s motion and remanded
his case to state court.1
II.
With this background, the court shall consider Thrivent=s motion
1

In light of Judge Murguia=s decision to remand his case to state
court, this court shall deny plaintiffs= motion to consolidate this
case with that case as moot.
2

to dismiss or stay.

Thrivent seeks to dismiss or stay this action

based upon (1) the Brillhart/Mhoon abstention doctrine; (2) the
Younger abstention doctrine; and (3) the Anti-Injunction Act, 28
U.S.C. ' 2283.

Thrivent also contends that this matter should be

dismissed because it is not a ripe controversy.
The

court

shall

proceed

to

Thrivent=s

arguments

on

the

application of the Younger abstention doctrine because we find that
it is dispositive.

Thrivent contends that abstention is appropriate

under doctrine of abstention established in Younger v. Harris, 401
U.S. 37 (1971).

Thrivent argues that all of the factors required

for Younger abstention are present here.

Plaintiffs counter that

Younger abstention is inapplicable because (1) they have asserted
a substantial federal question, i.e., the interpretation of the
application of the ECOA to the guaranties in this case; (2) federal
courts frequently adjudicate foreclosure actions governed by Kansas
law; and (3) the state court action is no longer pending.
Under Younger, a federal court must abstain from hearing a
federal case which interferes with certain state proceedings.
Pursuant to the Younger abstention doctrine, A[e]ven when a federal
court would otherwise have jurisdiction to hear a claim, the court
may be obliged to abstain when a federal-court judgment on the claim
would

interfere

with

an

important state interests.@

ongoing

state

proceeding

implicating

D.L. v. Unified School Dist. No. 497,
3

392 F.3d 1223, 1227B28 (10th Cir. 2004).

This court must abstain from

exercising jurisdiction if the following conditions are met:
(1) there is an ongoing state criminal, civil, or
administrative proceeding, (2) the state court provides
an adequate forum to hear the claims raised in the federal
complaint, and (3) the state proceedings involve important
state interests, matters which traditionally look to state
law for their resolution or implicate separately
articulated state policies.
Weitzel v. Div. of Occupational & Prof=l Licensing, 240 F.3d 871, 875
(10th Cir. 2001).
The aforementioned factors are present here.

At the time that

plaintiffs made their argument, the state court action had been
removed to this court.

However, as noted earlier, since that time

the case has been remanded to state court.

Thus, it is presently

pending in state court.
Thrivent has suggested, and the plaintiffs have not denied, that
the Kansas courts can properly consider all of the issues raised in
this case, including the claims involving the ECOA.

Plaintiffs have

argued that the claims made under the ECOA are Asubstantial@ federal
questions that should be resolved by this court.

Plaintiffs,

however, have failed to acknowledge that Congress, in passing the
ECOA, allowed concurrent jurisdiction to the state courts.

See 15

U.S.C. 1691e(c)(AUpon application by an aggrieved applicant, the
appropriate United States District Court or any other court of
competent jurisdiction may grant such equitable and declaratory
4

relief as is necessary to enforce the requirements imposed under this
subchapter.@).

Plaintiffs

have

availed

themselves

of

this

concurrent jurisdiction by asserting their ECOA claims in the state
case.

There is little question that the Kansas court can resolve

all of the claims presented by the parties.

Plaintiffs have not

satisfied the burden to show that state procedures do not afford them
an adequate remedy.
Finally, the court believes that the state case involves
important state interests because Thrivent is seeking foreclosure
on land located in Kansas.

In determining whether an important state

court interest is implicated in the proceedings, the court does Anot
look narrowly to its interest in the outcome of the particular case.
. .@ but, rather, to Athe importance of the generic proceedings to
the State.@

New Orleans Pub. Serv., Inc. v. Council of City of New

Orleans, 491 U.S. 350, 365 (1989).
involving

property

rights,

Courts have determined that cases

particularly

involve important state interests.

foreclosure

actions,

See Shaffer v. Heitner, 433

U.S. 186, 207B208 (1977)(recognizing a state=s Astrong interests in
assuring the marketability of property within its borders and in
providing a procedure for peaceful resolution of disputes about the
possession of that property.@); Gray v. Pagano, 287 Fed. Appx. 155,
157B58 (3rd Cir. 2008)(affirming district court=s abstention under
Younger where state-court foreclosure action was pending and A[a]ny
5

relief that could be granted by the district court would directly
impact Pennsylvania=s interest in protecting the authority of its
judicial system@);

Doscher v. Menifee Circuit Court, 75 Fed.Appx.

996 (6th Cir. 2003)(affirming district court=s application of Younger
abstention

and

finding

important

state

interest

in

mortgage

foreclosure); Borkowski v. Fremont Inv. and Loan of Anaheim, Cal.,
368 F.Supp.2d 822, 828 (N.D.Ohio 2005)(court would be required to
abstain from addressing matters presented in federal complaint under
Younger where these matters were the subject of a pending state
foreclosure matter, which is of paramount state interest); Logan v.
U.S. Bank Nat. Ass=n., 2010 WL 1444878 at *3 (C.D.Cal. April 11, 2010)
(A[P]roperty rights have historically been considered an area of
state concern.@); 3005 Cedar, LLC v. City of Minneapolis, 2010 WL
455307 at *3 (D.Minn. Feb. 3, 2010)(finding important state interest
in property rights). The fact that this court can, and has, litigated
foreclosure actions as suggested by plaintiffs does not mean that
we should interfere in a state foreclosure court proceeding that can
consider all of the issues raised by the parties.
Accordingly, because the Younger abstention doctrine applies,
this court is obligated to dismiss this action.

With this decision,

the court finds no need to consider the other arguments raised by
Thrivent.

6

IT IS THEREFORE ORDERED that plaintiffs= motion to consolidate
cases (Doc. # 9) be hereby denied as moot.
IT IS FURTHER ORDERED that defendants= motion to dismiss or stay
(Doc. # 6) be hereby granted.

The court must abstain and dismiss

this action without prejudice.
IT IS SO ORDERED.
Dated this 26th day of March, 2013, at Topeka, Kansas.

s/Richard D. Rogers
United States District Judge

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