Paulson v. Fairway America Corporation et al

Filing 17

ORDER: Denying Motion to Vacate 12 ; Denying Motion 16 ; Denying Motion for Leave to Proceed in Forma Pauperis 2 ; Denying Motion for Appointment of Counsel 3 . ; Denying 6 Application for CM/ECF Registration as a Self-Represented Party ; Adopting Findings and Recommendation 8 . The complaint (#1) is dismissed with prejudice.(See attached PDF for complete details) Signed on 2/11/2015 by Judge Owen M. Panner. (jkm)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
MEDFORD DIVISION
LAUREN PAULSON,
No. 1:14-cv-1544-CL
Plaintiff,
v.

FAIRWAY AMERICA CORP., et al.,

ORDER

Defendants.

PANNER, District Judge:

Magistrate Judge Mark D. Clarke filed

(

a Report and

Recommendation, and the matter is now before this court.
U.S.C.

§

636(b) (1) (B),

Fed. R. Civ. P. 72(b).

See 28

Because Plaintiff

objects to .the Report and Recommendation, I review this matter de
novo.

28 U.S.C.

§

636(b) (1)

Commodore Bus. Mach.,

Inc.,

After reviewing de novo,
I.

(.C);

McDonnell Douglas Corp. v.

656 F. 2d 1309, 1313 (9th Cir. 1981).

I dismiss this action with prejudice.

Plaintiff's Motion to Vacate

Plaintiff moves to vacate the Report and Recommendation
1

- ORDER

because he did not consent to a

m~gistrate-judge.

But a

magistrate-judge has the authority to issue findings and
recommendations (F&R)

1

without consent because an F&R has no

effect unless an Article III judge adopts it.
Block, 932 F.2d 795, 798

See McKeever v.

(9th Cir. 1991).

Plaintiff argues Judge Clarke "evinces the

same_~ort

of

patent bias against the Plaintiff as Paulson has experienced
throughout this litigation commencing in 2008."
3, ECF No. ·12).

Mot. Vacate at

To disqualify a judge, there must be a showing

of "such a high degree of favoritism or antagonism as to make
fair judgment impossible."
540, 555 (1994).

Liteky v. United States, 510 U.S.

The alleged bias "must usually. stem from an

extrajudicial source."

Pesnell v. Arsenault, 490 F.3d 1158, 1164

(9th Cir. 2007).
Here, the alleged instances of bias do not stem from extrajudicial -sources.

The rulings cited by. Plaintiff do not show the

type of prejudice that could justify recusal.

For example,

Plaintiff contends that the R&R "attempt[s] to further diminish
him" by noting that he is no longer a member of the Oregon State
Bar.

Mot. to Vacate at 3.

Although Plaintiff has sought/

reinstatement, he has been disbarred.

See Paulson v. Oregon St.

Bar, No. 6:13-cv-175-AA, 2013 WL 2659605, at *1
2013)

(D. Or. June 4,

(citing In re Paulson, 346 Or. 676, 216 P.3d 859 (2009) ·

(per curiam) ) .

1

Plaintiff's status is relevant because this court

This court uses the terms "Report and Recommendation" and
"Findings and Recommendation" interchangeably.
2

- ORDER

generally treats the pleadings of non-lawyers with more
than those written by lawyers.
I deny
II.

Plai~tiff's

leni~ncy

See id.

Motion to Vacate.

Plaintiff's Complaint Must Be Dismissed With Prejudice

I agree with the Report and Recommendation (R&R) that
Plaintiff's complaint· should be dismissed for failure to state a
claim.

Although the R&R recommends dismissal without prejudice,

I conclude dismissal must be with prejudice.
A. Claims Based on the Foreclosure of Plaintiff's Property

Plaintiff's complaint centers on the non-judicial
foreclosure of real property he owned in Washington County:

a

historical structure called the M.E. Blanion house, and three
adjacent rental properties.

Compl. at 83.

Plaintiff claims

Defendant FHLF,. LLC lacked standing to foreclose,
him proper notice, and committed fraud,

failed to give

among other claims.

Piaintiff brings claims against the attorneys who represented
FHLF, LLC; the trustee of his Chapter 7 bankruptcy estate; the
bankruptcy judges who presided over the bankruptcy proceedings;

'
and judges from this district and the Ninth Circuit who ruled
against Plaintiff in prior actions.

Because Plaintiff has

previously raised, or could have raised, these claims about the
foreclosure in previous actions,

Plaintiff is barred from raising

the claims here.
In determining th?t Plaintiff's claims are precluded by
prior judgments, I take judicial notice of the docket sheets,
pleadings, briefs, orders, and other documents filed as part of
3

- ORDER

the official record in prior actions filed by or against
Plaintiff.

See Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442

F.3d 741, 746 n.6 (9th Cir. 2006)

(affirming dismissal based on

claim preclusion, court took judicial notice of court filings in
underlying or related litigation).
actions:

Here, I focus on two prior

a 2008 action Plaintiff filed in this court,

challenging the then-pending foreclosure and

~laiming

he and a

class of similarly situated persons were victims of predatory
lending practices, Paulson v. Fairway America Corp., No. 3:08-cv982-PK, 2010 WL 5129690
36178

(D. Or. Dec. 10, 2010), aff'd, No. 10-

(9th Cir. June 28, 2011); and the forcible entry and

detainer (FED) actions filed by FHLF, LLC, against Plaintiff in
Washington County Circuit Court, FHLF, LLC v. Paulson, Nos.
C100084EV, C100085EV, C100086EV (Wash. Cnty. Cir. Ct. May 3,
2010), appeal dismissed, A145469, A145470, A145470

(Or. Ct. App.

Feb. 2, 2011), petition for review denied, S059272

(lead case)

(Or. Sup. Ct. May 31, 2011)
1.

2

•

Paulson v. Fairway America Corp.
a.

Background and Procedural History

In 2005, Fairway Commercial Mortgage Corp.

(Fairway) made a

loan to Huber-Wheeling Crossing (HWC), a limited liability
company of which Plaintiff.is the sole member.

To secure the

loan, Fairway obtained trust deeds on Plaintiff's house

~nd

adjacent 'rental properties.

2

See Paulson v. Arbaugh (In re Paulson), No. 3:12-mc-196-MO
(D. Or.), ECF No. 12-1, at 3-4, 5, 19.
4

- ORDER

-.In February 2008, HWC stopped making payments on on the
loan.

Compl. at 78.

Between February and August 2008, FHLF, LLC

and Plaintiff attempted to negotiate an agreement but were unable
to do so.

~ompl.

at 79.

In August 2008, FHLF, LLC notified

Plaintiff that it would proceed with foreclosure if he did not
cure the default.
On August 21, 2008, Plaintiff filed an action in this court
seeking to enjoin the foreclosure,

Paulson v. Fairway America

Corp., 3:08-cv-982-PK (Fairway America).

In January 2009,

Plaintiff filed his second amended complaint, naming many of the
same defendants Plaintiff names here: Falrway America Corp.;
FHLF, LLC; Sterling Savings Bank; Wells Fargo Foothills; Joan
Doe, a mortgage broker; Matt Burk, president of Fairway; and Joel
Parker, an attorney.
14.

_See Fairway America, 2d Am. Compl., ECF No.

As in this action, Plaintiff brought claims for fraud,

breach of contract, breach of good faith and fair dealing,
conspiracy, promissory estoppel, usury, rescission, accord and
satisfaction, and violations of state and federal consumer
protection statutes.

Plaintiff alleged he represented a class of

similarly situated persons harmed by predatory lending practices.
In April 2009, HWC, Plaintiff's limited liability company,
conveyed the property to Plaintiff.

Plaintiff, represented by

attorney Matt Arbaugh, then filed a Chapter 11 bankruptcy case
"[t]o prevent the threatened foreclosure."
on the bankruptcy filing,
Fairway America.
5

- ORDER

Compl. at 80.

this court stayed proceedings in

Based

FHLF, LLC moved in the bankruptcy court for relief from the
automatic stay so it could proceed with foreclosure of
Plaintiff's property.

In June 2009, FHLF, LLC and Plaintiff

stipulated that Plaintiff would have until September 14, 2009, to
sell the property, and that FHLF, LLC could then proceed with
foreclosure if Plaintiff was not successful.

See FHLF, LLC v.

Paulson, No. 3:10-cv-48-MO (D. Or.), FHLF, LLC's Mem. in Support
of Mot. Remand, Ex. 2, at 6, ECF 7-6.

When the properties did

not sell, FHLF, LLC conducted a non-judicial foreclosure of the
property on September 25, 2009.
In November 2009, Plaintiff converted the Chapter 11
bankruptcy to a Chapter 7 bankruptcy.

The bankruptcy court

appointed Amy Mitchell as trustee of the bankruptcy estate.

In

February 2010, Mitchell filed a motion in the bankruptcy court to
approve the settlement of the Fairway America action in exchange
for a payment of $5,000 from FHLF, LLC.

In re Paulson, Bankr.

No. 09-32439-rld7, Mot. and Notice of Intent to Settle, ECF No.
93

(Bankr. D. Or.).

Over Arbaugh's written objections on
c

Plaintiff's behalf, id., ECF No. 103, the bankruptcy court
approved the _settlement.

The Bankruptcy Appellate Panel

affirmed, and the Ninth Circuit dismissed the appeal for failure
to pay fees.

Paulson v. Mitchell (In re Paulson), No. OR-10'

1173-MkHJu, 2011 WL 3300082 (B.A.P. 9th Cir, May 10, 2011),
appeal dismissed,

9th Cir. No. 11-60038 (9th Cir. Aug. 16, 2011)

(order).
In June 2010, the defendants in Fairway America moved for
6

- ORDER

summary judgment in this court, arguing that the settlement
agreement in the Chapter 7 case resolved all pending

claim~.

Magistrate-Judge Paul Papak recommended granting the defendants'
motion for summary judgment because the trustee in a Chapter 7
case has authority to settle the estate's claims even if the
debtor objects.

Fairway America, Am. Findings & Recommendation

(F&R), ECF No. 123, 2010 WL 5135901

(D. Or. Sept. 20, 2010).

Judge Ancer Haggerty adopted Judge Papak's F&R on de novo review.
Id., ECF No. 137, 2010 WL 5129690

(D. Or. Dec. 10, 2010).

Judge

Haggerty held that "plaintiff's arguments regarding the fairness
of the settlement were properly presented to the bankruptcy
court, and were properly resolved there."

Id. at *2.

then issued a judgment dismissing the action.

This court

Id., ECF No. 138.

The Ninth Circuit summarily affirmed, concluding "the questi_ons
raised in this appeal are so insubstantial as not to require
further argument."

9th Cir. No. 10-36178, Docket Entry 24, at 1

(9th Cir. June.28, 2011)
b.

(order).

Legal Standards for Claim Preclusion

A final federal court judgment on the merits bars a
subsequent action between the same parties involving the same
-claims.

First Pacific Bancorp, Inc. v. Helfer, 224 F.3d 1117,

1128 (9th Cir. 2000) .

"For claim preclusion to apply, there must

be (1) an identity of claims in the two actions;

(2) a final

judgment on the merits in the first action; and (3') identity or
privity between the parties in the two actions."
Airlines, Inc., 216 F.3d 845, 850 (9th Cir. 2000).
7

- ORDER

Frank v. United
"The central

criterion in determining whether there is an identity of claims
between the first and second adjudications is 'whether the two
suits arise out of the same transactional nucleus of facts.'" Id.
at 851

(quoting Costantini v. Trans World Airlines,

1199, 1201-02 (9th Cir. 1982)).

A district court's judgment on

appeal retains its preclusive effect.
Inc., 838 F.2d 318, ·327
c.

681 F.2d

Robi v. Five Platters,

(9th Cir. 1988).

Claim Preclusion Bars Plaintiff's Claims Here

Plaintiff's claims here arise from the same nucleus of facts
as the claims he raised in Fairway America; there is a final
judgment on the merits in Fairway America; and the same parties
are in both actions.

I conclude that the judgment in Fairway

America bars Plaintiff's claims that challenge the legality of
the foreclosure and subsequent eviction and bankruptcy
'

proceedings.
In his objections to the R&R,

Plaintiff argues that a

"collateral attack is always available to attack a defect in the
underlying proceedings where the issue is Legal Standing before
the courts.
No. 13.

That issue is never waived .

II

Obj. at 25, ECF

But as Judge Posner observed, "The principle that

jurisdictional defects may be noticed at any time is limited
. by the ·equally important principle that litigation must have an
end."

In re Factor VIII or IX Concentrate Blood Prods.

Litigation, 159 F.3d 1016, 1019 .(7th Cir. 1998).

"A party that

has had an opportunity to litigate the question of subject matter
jurisdiction may not .
8

- ORDER

. reopen that question in a collateral

attack upon an adverse judgment.

It has long been the rule that

principles of res judicata apply to jurisdictional
determinations--both subject matter and personal."
Ireland v. Compagnie des Bauxites de Guinee,
9 (1982); United
(9th Cir. 1991)

St~tes

Ins. Corp. of

456 U.S. 694, 702 n.

v. Van Cauwenberghe, 934 F.2d 1048, 1058

(accord).

Plaintiff contends that the courts in which he argued the
standing issue did not expressly address the issue.

But claim

preclusion applies "with equal force to suits in which
jurisdiction has been expressly determined and those in which
resolution of the jurisdictional

~uestion

Cooper v. Productive Transp. Servs., Inc.

is merely implicit."
(In re Bulldog

Trucking, Inc.), 147 F.3d 347, 352 (4th Cir. 1998).

By ruling in

FHLF, LLC's favor, this court implicitly determined that-FHLF,
LLC had standing.
(1938)

See Stoll v. Gottlieb, 305 U.S. 165, 171-72

("Every court in rendering a judgment tacitly, if not

expressly, determines its jurisdiction over the parties and the
subject matter.").
Plaintiff cites Pershing Park Villas Homeowners Association
v. United Pacific Insurance Co., 219 F.3d 895, 899-900

(9th Cir.

2000), but that decision did not concern a collateral attack on a
final judgment.
America, No.

Plaintiff also cites Rinegard-Guirma v. Bank of

10~cv-1065-PK,

2010 WL 3945476 (D. Or. Oct. 6,

2010), in which this court ·issued a preliminary injunction
enjoining the pending foreclosure of the plaintiff's property ..

9

- ORDER

The decision in Rinegard-Guirma, however, was not on the merits
of the plaintiff's claims, and has been superseded by subsequent
decisions clarifying Oregon law.

to.,

ReconTrust

2.

See, e.g., Brandrup v.

N.A., 353 Or. 668, 303 P.3d 301 (2013)

FED Actions Bar Plaintiff's Claims Here

Plaintiff's claims here also barred by the state court
judgment in the FED action brought by FHLF, LLC.
a.

FHLF ,. LLC v. Paulson

In January 2010, FHLF, LLC obtained an order from the
bankruptcy court lifting the automatic stay to allow it to bring
FED actions against Plaintiff in Washington County Circuit Court.
Plaintiff promptly removed the FED actions to this court.
~otices

LLC v. Paulson, No. 3:10-cv-48-MO,
1, 2.

FHLF,

of Removal, ECF Nos.

FHLF, LLC was the sole plaintiff in the FED actions.
Plaintiff filed an answer and a third-party complaint,

asserting the same claims.against many of the same defendants as
he did in the Fairway America litigation.

Id., ECF No. 4.

Michael Mosman granted FHLF, LLC's motion for remand.

Judge

The FED

actions were sent back to Washington County Circuit Court.
After a trial in state court, Plaintiff lost the FED
actions.

The Oregon Court of Appeals dismissed Plaintiff's

appeals on procedural grounds, and the Oregon Supreme Court
denied his petitions for review.
Paulson)

1

No. 3:12-mc-196-MO (D. Or.), ECF No. 12-1, at 5, 19

(copy of Or. Sup. Ct. order

10 - ORDER

See Paulson v. Arbaugh (In re

denyi~g

Plaintiff's petition for

reconsideration) .
b.

Legal Standards for FED Claim Preclusion

This court must ''give to a state-court judgment the same
preclusive effect as would be given that judgment under the law
of the State in which the judgment was rendered."

Migra v.

Warren City School Dist. Bd. of Educ., 465 U.S. 75, 81 (1984).
In Oregon, claim preclusion prohibits "a party who has litigated
a claim against another from further litigation on that same
claim on any ground or theory of relief that the party could have
litigated in the first instance."
605,

608, 215 P.3d 879, 881

G.B. v. Morey, 229 Or. App.

(2009).

Under Oregon law, as under

federal law, a judgment has preclusive effect even if it is on
appeal.

Ron Tonkin Gran Turismo, Inc. v. Wakehouse Motors, Inc.,

46 Or. App. 199, 207-08, 611 P.2d 658,

662

(1980).

Here, the prior judgment is ln an FED action.

An FED action

is "limited to the determination of the right to possession,of
premises in the context of a landlord-tenant relationship."
Schmidt v. Hart, 237 Or. App. 412, 421, 241 P.3d 329, 335 (2010).
But -judgments in FED actions

hav~

that either were or could have

preclusive effect on issues

b~en

resolved in the. FED action.

See Perkins v. Conradi, 153 Or. App. 273, 276,
1023 (prior FED judgment precluded

claims~to

956 P.2d 1022,

ownership of land in

subsequent action because the plaintiff could have addressed
issue while defending prior FED action but failed to do so),
adhered to as modified on other grounds, 154 Or. App. 439, 959

11 - ORDER

P.2d 1013 (1998).
c. The FED Judgments Bar Plaintiff's Claims Here

Here, the legality of the foreclosure and eviction was
litigated to judgment in the FED actions.
~ould

raised or

foreclosure.

Plaintiff either

have raised his challenges to the validity of the

Because FHLF ,• LLC was the only plaintiff in the FED

actions, the judgment shows the state court concluded FHLF, LLC
had stariding.

Plaintiff is barred from raising claims here

related to the validity of the foreclosure and eviction.
B.

Class Action Claims

Plaintiff seeks. to bring a class action on behalf of "all
the borrowers of these named financial or banking Defendants and
their subsidiaries or assigns from 1997 to the present."
ato306.

Compl.

Because Plaintiff is barred by claim preclusion from

challenging his own foreclosure, he is not a proper class
representative.

And because Plaintiff is not an attorney, he

cannot represent the proposed class. - See Paulson v. Or. State
Bar, No. 6:13-cv-175-AA, 2013 WL 1870549, at *2
2013)

(D. Or. May 3,

("As a non-lawyer, plaintiff may not represent others in a

class action.").

This accords with "the general rule p~ohibiting

pro se plaintiffs from pursuing claims on behalf of others in a
representative capacity."

Simon v. Hartford Life, Inc. 546 F.3d

661, 664

Plaintiff's class action claims are

(9th Cir. 2008).

dismis~ed

12 - ORDER

with prejudice.

C.

Claims Against Judicial Officers

Plaintiff brings claims against state and federal judges for
damages and injunctive relief.

I dismiss these claims for

failure to state a claim.
Plaintiff's claims for damages against judicial defendants
are barred by absolute judicial immunity.

Judges are absolutely

immune from actions for damages based on judicial acts taken
within the jurisdiction of their courts, and lose their immunity
only when they act "in the clear absence of all jurisdiction or
perform[] an act outside [their]

'judicial' capacity."

v. Pope, 793 F.2d 1072, 1075 (9th Cir. 1986)

Ashelman

(en bane).

"[A]bsolute immunity insulates-judges from charges of erroneous
acts or irregular actions, even when it is alleged that such
action was driven by malicious or corrupt motives, or when the
exercise of judicial authority is 'flawed by the commission of
grave procedural errors.'"
(9th Cir. 2002)

In re Castillo, 297 F.3d 940, 947

(citations omitted)).

Plaintiff's coriclusory

allegations of conspiracy and corruption are not sufficient to
overcome the shield of absolute judicial immunity.
Plaintiff's claims for injunctive and declaratory relief
against state and federal judges also fail to state a claim.

As

to state judges, the Anti-Injunction Act prohibits federal courts
from enjoining proceedings in state courts "except as expressly
authorized by Act of Congress, or where

necessar~

in aid of its

jurisdiction, or to protect or e£fectuate its judgment."

13 - ORDER

28

U.S.C.

§

2283.

None of those exceptions apply here.

Under 42 U.S.C.

§

1983, federal courts may not grant

injunctive relief in actions against na judicial officer for an
act or omission taken in such officer's judicial capacity .
unless a declaratory decree was violated or declaratory relief
was unavailable."

Plaintiff has not met these conditions for

injunctive or declaratory relief against the defendant state
court judges.
As to the Ninth Circuit judges named, this court lacks
authority to enjoin them.

As to the federal bankruptcy and

district judges, Plaintiff's claims are meritless.

I dismiss

Plaintiff·'s claims against the defendant judges with prejudice.
CONCLUSION

Magistrate Judge Clarke's Report and Recommendation (#8) is
adopted.

The complaint

(#1) is dismissed with prejudice.

Plaintiff's application to proceed in forma pauperis
motion for appointment of counsel (#3),

applicat~on

(#2),
for CM/ECF

registration (#6), moti'on to vacate (#12), and motion for status
(#16) are denied,
IT IS SO ORDERED.

DATED this _ _./L...f-( day of February, 2015.

~711~
OWEN M. PANNER
U.S. DISTRICT JUDGE

14 - ORDER