Gustavia Home LLC v. Brown et al

Filing 46

MEMORANDUM AND ORDER denying without prejudice 37 Motion to Dismiss; denying without prejudice 39 Motion for Sanctions. Therefore, Nationstar's motion to dismiss (Docket no. 37) and motion for sanctions (Docket no. 39) are denied without prejudice to a future application after Gustavia's motion to intervene and vacate the Judgment of Foreclosure and Sale in the state court action isresolved. Until that time, this action is stayed. SO ORDERED. (Signed by Magistrate Judge James C. Francis on 9/15/2017) Copies Transmitted this Date By Chambers. (anc)

Taylor Avenue.

Nationstar moves to dismiss this action pursuant

to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil
Procedure and moves for sanctions pursuant to Rule 11 of the
Federal Rules of Civil Procedure.

Nationstar argues that this

court lacks subject matter jurisdiction under the prior exclusive
jurisdiction

doctrine

and

that

the

lawsuit

is

barred

by

res

judicata, collateral estoppel, and the prior pending doctrine
because of a pending mortgage foreclosure action filed by Aurora
Loan

Services,

LLC

(“Aurora”),

Nationstar’s

predecessor-in-

interest on its mortgage, in New York State Supreme Court, Bronx
County.

(Memorandum of Law in Support of Defendant Nationstar

Mortgage

LLC’s

Motion

to

Dismiss

for

Lack

of

Subject

Matter

Jurisdiction and Pursuant to Rule 12(b)(6) and in Support of
Nationstar’s Motion for Rule 11 Sanctions (“Def. Memo.”) at 5-10;
Corporate Assignment of Mortgage dated May 5, 2009, attached as
part of Exh. A to Declaration of Joyce A. Davis dated July 19,
2017 (“Davis Decl.”)).
Aurora filed the state court action on June 5, 2009.

(Summons

(“State Court Summons”), Aurora Legal Services, LLC v. Browne,
Index No. 381143/09 (N.Y. Sup. Ct. June 5, 2009), attached as Exh.
E to Davis Decl.).

The defendants in the state court action

defaulted, and an Order of Reference was entered on the default in
September 2010.

(Decision/Order (“1/26/17 Order”), Nationstar
2

Mortgage, LLC v. Browne, Index No. 381143/09 (N.Y. Sup. Ct. Jan.
26,

2017),

attached

as

predecessor-in-interest

Exh.
on

H

to

its

Davis

mortgage,

Decl.).

Gustavia’s

Mortgage

Electronic

Registration Systems, Inc. (“MERS”), is one of the defendants in
the

state

court

action.

(State

Court

Summons;

Corporate

Assignment of Mortgage dated July 6, 2008, attached as part of
Exh. B to Davis Decl.).
MERS assigned its mortgage to Gustavia in September 2016.
(Corporate Assignment of Mortgage dated Sept. 16, 2016, attached
as part of Exh. B to Davis Decl.).

In November 2016, Gustavia

filed a motion to vacate the defendants’ default and the Order of
Reference entered on the default.

(Def. Memo. at 4; Memorandum

of Law in Opposition to Defendant Nationstar Mortgage LLC’s Motion
to Dismiss for Lack of Subject Matter Jurisdiction and Pursuant to
Rule 12(b)(6) and in Opposition of Nationstar’s Motion for Rule 11
Sanctions (“Pl. Memo.”) at 3).

The motion was denied on January

26, 2017, because Gustavia was not a party to the state court
action and had not sought to intervene as a successor assignee.
(1/26/17 Order).

Gustavia instituted this action on December 2,

2016, while that motion was still pending.
On

May

Foreclosure

2,

2017,

the

and

Sale

in

state
favor

court
of

entered

Nationstar.

a

Judgment

of

(Judgment

of

Foreclosure and Sale, Aurora Loan Services, LLC v. Browne, Index
3

No. 381143/09 (N.Y. Sup. Ct. May 2, 2017), attached as Exh. I to
Davis Decl.).

On July 6, 2017, Gustavia moved for leave to

intervene in the state court action and to vacate the Judgement of
Foreclosure and Sale.

(Def. Memo. at 4; Pl. Memo. at 3).

motion is still pending.

That

(Def. Memo. at 4; Pl. Memo. at 3).

The outcome of Nationstar’s motion to dismiss this action may
turn on the resolution of Gustavia’s pending motion in the state
court action.

That is, if the motion is denied, the state court

may no longer be exercising jurisdiction over 1723 Taylor Avenue,
in which case the prior exclusive jurisdiction doctrine would not
apply.

See Chapman v. Deutsche Bank National Trust Co., 651 F.3d

1039, 1043-44 (9th Cir. 2011) (“The prior exclusive jurisdiction
doctrine

holds

that

‘when

one

court

is

exercising

in

rem

jurisdiction over a res, a second court will not assume in rem
jurisdiction over the same res.’” (quoting Marshall v. Marshall,
547 U.S. 293, 311, (2006)); Bergsrud v. Bank of America, N.A., 13
CV 998, 2014 WL 280920, at *2 (D. Nev. Jan. 23, 2014) (holding
that “the prior-exclusive jurisdiction does not apply” where “the
action in [] state court involving the property that is at the
heart of this case has been dismissed”).

Nor would the “prior

pending” or “prior pending action” doctrines.

See Zigmund v.

Foster, 106 F. Supp. 2d 352, 363 (D. Conn. 2000) (“[R]eliance on
the prior pending action doctrine is misplaced” where state court
4