THORNE et al v. ONEWEST BANK, FSB et al

Filing 11

MEMORANDUM OPINION filed. Signed by Judge Mary L. Cooper on 6/25/2015. (kas, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

PETER THORNE, et al.,
Plaintiffs,
v.
ONEWEST BANK, FSB, et al.,
Defendants.

:
:
:
:
:
:
:
:
:
:
:

CIVIL ACTION NO. 15-422 (MLC)
MEMORANDUM OPINION

COOPER, District Judge
Peter Thorne, individually and as executor of Nancy Thorne’s estate, and Peter
Thorne, Jr., brought this action (“Bad Faith Action”) in New Jersey Superior Court,
Middlesex County (“Middlesex Court”) against: (1) OneWest Bank, FSB (“OWB”); (2)
IndyMac Mortgage Services (“IMMS”), which is a division of OWB; and (3) Ocwen
Loan Servicing, LLC (“OLS”), which is OWB’s servicing agent (collectively, “Bank
Entities”). (See dkt. 1-1, Compl.) Peter Thorne and Peter Thorne, Jr., seek to recover
damages based upon OWB’s alleged bad faith in commencing a separate foreclosure
action against them in Middlesex Court (“Foreclosure Action”) when a dispute arose
between them and the Bank Entities concerning the modification of a loan linked to their
real property (“Property”). (Id.) The Bank Entities removed the Bad Faith Action
pursuant to 28 U.S.C. § 1332(a) (“Section 1332(a)”). (See dkt. 1, Notice of Removal.)

The Bank Entities now move for, inter alia, relief under the Rooker-Feldman
doctrine. (See dkt. 7.)1 Peter Thorne and Peter Thorne, Jr., cross-move for, inter alia,
remand. (See dkt. 9.) The Court will address the motion and the cross motion without
oral argument. See L.Civ.R. 78.1(b). The Court will: (1) grant the motion to the extent
that relief under the Rooker-Feldman doctrine is sought; (2) grant the cross motion to the
extent that remand is sought; (3) deny the motion and the cross motion to the extent that
any other relief is sought; and (4) remand the Bad Faith Action to Middlesex Court for
any further proceedings.
BACKGROUND2
Peter Thorne, Nancy Thorne, and Peter Thorne, Jr.: (1) were deemed by OWB and
IMMS to be behind on payments for the loan linked to the Property in November 2009;
(2) believed that thereafter they had obtained a loan modification through IMMS; and (3)
sought a further loan modification when a dispute arose between them and the Bank
Entities, perhaps due to their failure to make further payments.
OWB brought the Foreclosure Action against Peter Thorne, Nancy Thorne, and
Peter Thorne, Jr., in Middlesex Court on March 14, 2012, while the loan-modification

1

See D.C. Court of Appeals v. Feldman, 460 U.S. 462, 482 (1983); Rooker v. Fid. Trust
Co., 263 U.S. 413, 414–16 (1923).
2

The facts presented in this section are culled from the papers filed on this Court’s
docket. (See dkt. 1; dkt. 1-1; dkt. 7 (brief of Bank Entities); dkt. 9 (brief of Peter Thorne and
Peter Thorne, Jr., with exhibits); dkt. 10 (further brief of Bank Entities, with exhibits).) See also
http://njcourts.judiciary.state.nj.us (Middlesex Court docket for Foreclosure Action, No.
F-4724-12). Specific citation is provided for quotes.
2

dispute was ongoing. Middlesex Court entered a default judgment in favor of OWB
(“State Foreclosure Judgment”), and then approved a sheriff’s sale for the Property in
November 2013.
Peter Thorne, Jr., moved in Middlesex Court to vacate the State Foreclosure
Judgment on January 6, 2014. On February 10, 2014, Middlesex Court entered an order
on consent: (1) deeming the motion to vacate the State Foreclosure Judgment to be
withdrawn; and (2) granting leave for a motion to vacate to be made again when “[OWB]
informs [Peter Thorne, Jr.] that [OWB] will be proceeding with the foreclosure (in lieu of or
in termination of the workout agreement).” (Dkt. 9-5 at 1 (2-10-14 Middlesex Ct. Order).)
Peter Thorne and Peter Thorne, Jr., brought this separate Bad Faith Action in
Middlesex Court on December 15, 2014, alleging that the Bank Entities engaged in “bad
faith” and “improper behavior” by, inter alia, bringing the Foreclosure Action and
ultimately securing the State Foreclosure Judgment. (Dkt. 1-1 at 3–4.) They also alleged
that they suffered damages due to “a less favorable workout agreement, increased
mortgage debt, increased mortgage costs, increased mortgage payment[s], loss of equity,
[and] responsibility for payment of additional interest and [OWB]’s attorneys fees.” (Id.
at 4.) The Bank Entities then removed the Bad Faith Action here on January 21, 2015.
The Bank Entities filed their own motion under the Foreclosure Action in
Middlesex Court to vacate the State Foreclosure Judgment on February 2, 2015. Peter
Thorne and Peter Thorne, Jr., advise that “vacating the [State] [F]oreclosure [J]udgment
is required by [OWB’s] workout agreement with” them. (Dkt. 9-1 at 11.)
3

The Bank Entities filed the motion for, inter alia, relief under the Rooker-Feldman
doctrine in this Court on February 9, 2015.
Peter Thorne and Peter Thorne, Jr., filed the cross motion for, inter alia, remand in
this Court on February 16, 2015, and argue that:
[Peter Thorne and Peter Thorne, Jr.] still ha[ve] the right to attack the [State
Foreclosure] [J]udgment in New Jersey State Court. [The] motion [by Peter
Thorne, Jr.] to vacate the [State Foreclosure] [J]udgment was withdrawn
without prejudice and [the] time [of Peter Thorne and Peter Thorne, Jr.] to
attack the judgment is “tolled from the date that this motion was filed,
January 6, 2014, until such date that [OWB] informs [Peter Thorne, Jr.] that
[OWB] will be proceeding with the foreclosure (in lieu of or in termination
of the workout agreement).” [OWB] still has not informed [Peter Thorne and
Peter Thorne, Jr.] that it is proceeding with the foreclosure again, and the
workout agreement is still active, so the time to vacate the [State
Foreclosure] [J]udgment is still tolled. Thus, absent removal, [Peter Thorne
and Peter Thorne, Jr.] would still have the right to consolidate cases and
move to vacate the [State Foreclosure] [J]udgment.
(Id. at 12–13.)
Middlesex Court granted OWB’s motion to vacate the State Foreclosure Judgment
on February 24, 2015. However, the Middlesex Court docket lists the matter as being
disposed of “without prejudice”.
The Bank Entities filed further briefing in this Court on March 5, 2015.
LEGAL ANALYSIS
I.

ROOKER-FELDMAN DOCTRINE
This Court must refrain from entertaining the requests for relief brought by Peter

Thorne and Peter Thorne, Jr., in the Bad Faith Action, as granting any of those requests
4

could effectively reverse the decisions, directly or indirectly invalidate the determinations,
or void the rulings issued by Middlesex Court in the Foreclosure Action. See Moncrief v.
Chase Manhattan Mortg. Corp., 275 Fed.Appx. 149, 152–53 (3d Cir. 2008) (affirming
judgment dismissing claims attacking merits of separate state-court foreclosure action,
inter alia, as barred by Rooker-Feldman doctrine); Ayres-Fountain v. E. Sav. Bank, 153
Fed.Appx. 91, 92 (3d Cir. 2005) (instructing district court to dismiss claims concerning
separate state-court foreclosure action under Rooker-Feldman doctrine); see also El Ali v.
Litton Loan Serv’g, 217 Fed.Appx. 115, 116 n.1 (3d Cir. 2007) (dismissing appeal from
order that dismissed claims concerning separate state-court foreclosure action, inter alia,
as barred by Rooker-Feldman doctrine); Shih-Ling Chen v. Rochford, 145 Fed.Appx.
723, 725 (3d Cir. 2005) (same). This is particularly true here because: (1) the plaintiffs in
the Bad Faith Action — Peter Thorne and Peter Thorne, Jr. — are defendants in the
Foreclosure Action; and (2) the plaintiff in the Foreclosure Action — OWB — is named
as one defendant and is connected to the other two defendants in the Bad Faith Action.
It is of no moment that Middlesex Court is a lower state court. See E.B. v.
Verniero, 119 F.3d 1077, 1090 (3d Cir. 1997) (stating Rooker-Feldman doctrine bars
federal court from reviewing lower state-court decision); Port Auth. Police Benevolent
Ass’n v. Port Auth. of N.Y. & N.J. Police Dep’t, 973 F.2d 169, 177–78 (3d Cir. 1992)
(same).
If Peter Thorne and Peter Thorne, Jr., initially brought the Bad Faith Action in
federal court, then this Court might be compelled to dismiss the complaint pursuant to the
5

Rooker-Feldman doctrine. But Peter Thorne and Peter Thorne, Jr., initially brought this
Bad Faith Action in Middlesex Court, and objected to the removal. Therefore, the proper
disposition of the Bad Faith Action at this juncture is a remand. See State Farm Indem. v.
Fornaro, 227 F.Supp.2d 229, 241–42 (D.N.J. 2002) (remanding action under RookerFeldman); see also GRP Loan v. Vaneck, No. 08-375, 2008 WL 2902607, at *1 (D. Conn.
July 24, 2008) (same); Mortg. Elec. Registration Sys. v. Cromwell, No. 05-140, 2005 WL
2234041, at *1 (N.D. Fla. Sept. 13, 2005) (same). Thus, this Court agrees with the Bank
Entities that the Rooker-Feldman doctrine applies here, and agrees with Peter Thorne and
Peter Thorne, Jr., that the Bad Faith Action should be remanded for any further
proceedings.
II.

NO AUTHORITY
Peter Thorne and Peter Thorne, Jr., also seek to have a court review and adjudicate

issues that have arisen in the Foreclosure Action by litigating the Bad Faith Action. (See,
e.g., dkt. 1-1 at 3–4; see also dkt. 9-1 at 12 (stating they are “required to pay [OWB’s]
attorney’s fees in the [F]oreclosure [A]ction” that were incurred due to OWB’s
“multiyear delay in effectively negotiating the refinancing”, and that OWB “negotiate[d]
in bad faith”).)
But this federal district court is without authority to review and adjudicate issues
that have arisen in Middlesex Court in the separate Foreclosure Action. See Francis v.
TD Bank, N.A., 597 Fed.Appx. 58, 61 (3d Cir. 2014) (affirming dismissal of borrower’s
claims alleging misconduct by bank in bringing a separate state-court action for
6

foreclosure, and citing Atl. Coast Line R.R. Co. v. Bhd. of Locomotive Eng’rs, 398 U.S.
281 (1970), and In re Grand Jury Proceedings, 654 F.2d 268 (3d Cir. 1981)). Thus, the
Bad Faith Action should be remanded for any further proceedings on this ground as well.
III.

YOUNGER ABSTENTION
The Foreclosure Action may also be considered to be ongoing in Middlesex Court,

because: (1) the matters being addressed therein were disposed of “without prejudice”;
and (2) according to Peter Thorne and Peter Thorne, Jr., “absent removal, [they] would
still have the right to consolidate cases”. (Dkt. 9-1 at 13.) Thus, this Court should abstain
from exercising jurisdiction over the Bad Faith Action pursuant to the Younger abstention
doctrine. See Middlesex Cnty. Ethics Comm. v. Garden State Bar Ass’n, 457 U.S. 423,
435 (1982); Younger v. Harris, 401 U.S. 37, 43–54 (1971).
This Court should not interfere with the arguably ongoing Foreclosure Action by
addressing any of the claims in the Bad Faith Action. See Cunningham v. JP Morgan
Chase Bank, 537 Fed.Appx. 44, 44–45 (3d Cir. 2013) (affirming dismissal of claims in
federal court alleging there were instances of misconduct in a separate state-court action
where foreclosure was a possibility); Gray v. Pagano, 287 Fed.Appx. 155, 157–58 (3d
Cir. 2008) (dismissing complaint filed in connection with ongoing state-court foreclosure
action, inter alia, as barred by Younger abstention). The Bad Faith Action should be
remanded for any further proceedings on this ground as well.

7

CONCLUSION
The Court intends to remand the Bad Faith Action to Middlesex Court for any
further proceedings. The Court will issue an appropriate order and judgment.3

s/ Mary L. Cooper
MARY L. COOPER
United States District Judge
Dated: June 25, 2015

3

The Court notes that the Bank Entities demonstrated that the amount in controversy
exceeds $75,000. See 28 U.S.C. § 1332(a). (See dkt. 10 at 7 (Bank Entities calculating alleged
damages to be $92,459.87); cf. dkt. 9-1 at 9 n.1 (Peter Thorne and Peter Thorne, Jr., arguing they
believed that damages were in the $50,000 to $100,000 range, but they would not limit damages
to below $75,000 because they did not know the damages amount yet).)
But the Court would have investigated citizenship if not remanding this action. Peter
Thorne in his individual capacity is a New Jersey citizen; Peter Thorne, Jr., is a Utah citizen; and
OWB and IMMS are deemed to be California citizens. But Nancy Thorne’s citizenship at the
time of her death is not alleged, even though Peter Thorne is listed as estate executor. See 28
U.S.C. § 1332(c)(2); Estate of Thomas ex rel. Thomas v. Wakefern Food Corp., No. 12-1723,
2012 WL 6212657, at *3 (D. Conn. Dec. 13, 2012) (because plaintiff brought action “both as
administratrix for her husband’s estate and in her individual capacity, in addition to establishing
her own domicile . . . she must establish the citizenship of her late husband . . . at the time of his
death”); Lapkin v. AVCO Corp., No. 11-3424, 2012 WL 1977318, at *2 (N.D. Tex. May 31,
2012) (“when a person sues individually and as the legal representative of the decedent’s estate,
the court must examine the citizenship of the individual and that of the decedent to determine
whether diversity exists”); Ebstyne v. Ebstyne, No. 07-11, 2007 WL 1549464, at *1 (M.D. Ga.
May 25, 2007) (“for the purpose of determining diversity, Plaintiff . . . in his individual capacity
. . . is a citizen of the State of Washington; Plaintiff . . . in his representative capacity as executor
of [decedent’s] estate, is a citizen of the State of Georgia”).
The Bank Entities also were inconsistent as to the citizenship of OLS, which is a limited
liability company. (Compare dkt. 1 at 3 (alleging United States Virgin Islands citizen), with dkt.
10 at 5 (alleging Florida citizen).) See VICI Racing v. T-Mobile USA, 763 F.3d 273, 282 (3d
Cir. 2014) (limited liability companies are deemed to be citizens of states in which all of their
members are citizens, not states in which they were formed and have their principal places of
business). The Court notes that the assertion by Peter Thorne and Peter Thorne, Jr., that OLS “is
a corporation” and “a citizen of the state by which it has been incorporated and of the state where
it has a principal place of business” is without merit. (Dkt. 9-1 at 10.)
8