Dunn v. Mortgage Electronic Registration Systems et al

Filing 21

ORDER - Plaintiff's motion for temporary restraining order (ECF 16 ) is DENIED. Signed on 5/15/2018 by Judge Michael H. Simon. Copy mailed to Plaintiff 5/15/2018. (mja)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

JACK A. DUNN,
Plaintiff,

Case No. 3:18-cv-417-YY
ORDER

v.
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS; and
U.S. BANK, NATIONAL ASSOCIATION,
Defendants.
Michael H. Simon, District Judge.
On March 9, 2018, Plaintiff Jack A. Dunn (“Dunn”) pro se filed this lawsuit in federal
court against Defendants Mortgage Electronic Registration Systems (“MERS”) and U.S. Bank,
National Association (“U.S. Bank”). On April 2, 2018, both Defendants entered appearances.
The following day, April 3, 2018, both Defendants moved to dismiss, pursuant to Rules 8 and 12
of the Federal Rules of Civil Procedure. The next day after that, April 4, 2018, Dunn filed a
notice informing the parties and the Court that on March 28, 2018, he had filed for Chapter 7
bankruptcy. On May 1, 2018, an attorney for U.S. Bank served Dunn with a state court Notice of
Restitution and a Deadline to Vacate by Sunday, May 6, 2018, signed by the Clerk of the
Clackamas County Circuit Court. ECF 10-1 at page 50.
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In this federal lawsuit, Dunn alleges claims for wrongful foreclosure, fraud on the court,
intentional infliction of emotional distress, and violations of the Fair Debt Collection Practices
Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq. Dunn seeks money damages, punitive damages,
declaratory relief, and injunctive relief. Pending before the Court is Dunn’s motion for a
temporary restraining order (“TRO”) to prevent the enforcement of the state court’s Notice of
Restitution and Deadline to Vacate. For the reasons that follow, Dunn’s motion is DENIED.
STANDARDS
In deciding whether to grant a motion for a temporary restraining order, courts look to
substantially the same factors that apply to a court’s decision on whether to issue a preliminary
injunction. See Stuhlbarg Int’l Sales Co. v. John D. Brushy & Co., 240 F.3d 832, 839 n.7 (9th
Cir. 2001). A preliminary injunction is an “extraordinary remedy that may only be awarded upon
a clear showing that the plaintiff is entitled to such relief.” Winter v. Natural Res. Def. Council,
555 U.S. 7, 22 (2008). A plaintiff seeking a preliminary injunction generally must show that:
(1) the plaintiff is likely to succeed on the merits; (2) the plaintiff is likely to suffer irreparable
harm in the absence of preliminary relief; (3) the balance of equities tips in favor of the plaintiff;
and (4) an injunction is in the public interest. Winter, 555 U.S. at 20 (rejecting the Ninth
Circuit’s earlier rule that the mere “possibility” of irreparable harm, as opposed to its likelihood,
was sufficient, in some circumstances, to justify a preliminary injunction).
The Supreme Court’s decision in Winter, however, did not disturb the Ninth Circuit’s
alternative “serious questions” test. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127,
1131-32 (9th Cir. 2011). Under this test, “‘serious questions going to the merits’ and a hardship
balance that tips sharply toward the plaintiff can support issuance of an injunction, assuming the
other two elements of the Winter test are also met.” Id. at 1132. Thus, a preliminary injunction
may be granted “if there is a likelihood of irreparable injury to plaintiff; there are serious
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questions going to the merits; the balance of hardships tips sharply in favor of the plaintiff; and
the injunction is in the public interest.” M.R. v. Dreyfus, 697 F.3d 706, 725 (9th Cir. 2012)
(citing Cottrell).
DISCUSSION
In 2013, U.S. Bank brought a judicial foreclosure proceeding against Dunn in the Circuit
Court of the State of Oregon for the County of Clackamas.1 On June 23, 2014, the Clackamas
County Circuit Court entered final judgment in favor of U.S. Bank. The state court found that
U.S. Bank “is the holder of the original note at issue in this matter and holds the beneficial
interest in the Deed of Trust.” Through its final judgment, the state court foreclosed Dunn’s
interest in the property.
Dunn’s claims in this federal lawsuit are based on his contention that U.S. Bank does not
in fact hold the beneficial rights to the Deed of Trust on Dunn’s property because MERS
illegally and improperly purported to assign those beneficial rights to U.S. Bank. Dunn argues
that this allegedly illegal assignment resulted in an illegal judicial foreclosure, perpetrated a
fraud on the state court, resulted in intentional infliction of emotional distress upon Dunn, and
violated the FDCPA. Defendants respond that Dunn is unlikely to prevail on any of his claims
because this Court does not have subject-matter jurisdiction under the Rooker-Feldman

1

Defendants request that the Court take judicial notice of publicly-available documents
filed in the state court proceeding, arguing that taking judicial notice of such documents will not
convert the pending motion to a motion for summary judgment and noting that they can rely on
documents outside of the pleadings if their authenticity is uncontested. ECF 20. The pending
motion for a temporary restraining order, however, is not a motion under Rule 12 of the Federal
Rules of Civil Procedure and Defendants’ concern about converting the motion to a summary
judgment motion is inapplicable. The Court considers the exhibits submitted by Defendants and
Dunn in deciding the pending motion.
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doctrine,2 Dunn’s claims are precluded by the earlier Clackamas County Circuit Court case,
Defendants could not have inflicted emotional distress upon Dunn by enforcing their legal rights
and enforcing a state court judgment, and Defendants are not debt collectors under the FDCPA.
Because the Court agrees that Dunn has not shown a likelihood of success on the merits, or even
raised serious questions, the Court does not analyze the three remaining TRO factors under
Winter.
A. Rooker-Feldman Doctrine
Under the Rooker–Feldman doctrine, federal courts lack jurisdiction to hear cases that
amount to collateral attacks on state court judgments. The basic premise of that doctrine is that
“a federal district court does not have subject matter jurisdiction to hear a direct appeal from the
final judgment of a state court.” Noel v. Hall, 341 F3d 1148, 1154 (9th Cir. 2003). Instead, the
United States Supreme Court is the only federal court with jurisdiction to hear appeals from state
courts. Id.; see 28 U.S.C. § 1257.
The scope of the Rooker-Feldman doctrine includes de facto appeals from a state court
decision and “any issue raised in the suit that is ‘inextricably intertwined’ with an issue resolved
by the state court in its judicial decision.” Noel, 341 F.3d at 1158. A claim is inextricably
intertwined with a state court judgment if the federal claim can succeed only to the extent that
the state court wrongly decided the issues before it, or if the relief requested in the federal action
would effectively reverse the state court decision or void its ruling. Doe & Assocs. Law Offices v.
Napolitano, 252 F.3d 1026, 1029-30 (9th Cir. 2001) (citations omitted).
Rooker-Feldman bars a suit from going forward if: (a) the plaintiff in the federal suit lost
in the state court proceeding; (b) the state court determination is at the core of the federal
2

The Rooker–Feldman doctrine takes its name from Rooker v. Fidelity Tr. Co., 263
U.S. 413 (1923), and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983).
PAGE 4 – ORDER

lawsuit; (c) the federal lawsuit seeks review and rejection of the state court verdict; and (d) the
state court judgment was entered before commencement of the federal action. McKithen v.
Brown, 481 F.3d 89, 97 (2nd Cir. 2007). All of these elements are present in this case. Plaintiff
lost in the state court, and his interest in the property was foreclosed. Dunn is now asking this
Court to void the earlier decision of the state court that foreclosed Dunn’s interest and concluded
that U.S. Bank holds the beneficial interest in the Trust Deed. Dunn is further asking this Court
to vacate the order of the state court, and enjoin its enforcement.
Rooker-Feldman, however, does not bar a federal suit to set aside a state court judgment
if that judgment was obtained by extrinsic fraud. Kougasian v. TMSL, Inc., 359 F.3d 1136, 1141
(9th Cir. 2004). Fraud on a court is “not an error by that court,” but instead is “a wrongful act
committed by the party or parties who engaged in the fraud.” Id. “Rooker-Feldman therefore
does not bar subject matter jurisdiction when a federal plaintiff alleges a cause of action for
extrinsic fraud on a state court and seeks to set aside a state court judgment obtained by that
fraud.” Id. If the parties raised the issue of fraud before the state court, however, and the state
court made a determination that there was no fraud, then Rooker-Feldman does apply. Reusser v.
Wachovia Bank, N.A., 525 F.3d 855, 860 (9th Cir. 2008).
Dunn alleges in his complaint that MERS did not have the authority to transfer to U.S.
Bank the beneficial rights in Dunn’s Trust Deed as it purported to do with the assignment it
presented as evidence to the state court. Dunn also submits as an exhibit a “MERS Procedural
Manual” that contains the following statement: “Although MERS tracks changes in ownership of
the beneficial rights for loans registered on the MERS System, MERS cannot transfer the
beneficial rights to the debt. The debt can only be transferred by properly endorsing the
promissory note to the transferee.” ECF 16-1 at 23. In their brief, Defendants do not discuss

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Dunn’s allegation of extrinsic fraud or the fraud exception to the Rooker-Feldman doctrine.
Based on the current record before the Court, the Court cannot conclude at this time that the
Rooker-Feldman doctrine applies.
B. Claim Preclusion of Claims against U.S. Bank
Federal courts must “afford the same full faith and credit to state court judgments that
would apply in the State’s own courts.” Kremer v. Chem. Constr. Corp., 456 U.S. 461, 463
(1982). A federal court is bound to “give the same . . . preclusive effect to a state court judgment
as that judgment would have in the state courts of the state in which it was rendered.” Noel v.
Hall, 341 F.3d 1148, 1160 (9th Cir. 2003). “Claim preclusion requires (1) an identity of claims,
(2) a final judgment on the merits, and (3) privity between parties.” Howard v. City of Coos
Bay, 871 F.3d 1032, 1039 (9th Cir. 2017) (quotation marks omitted).
There was a final judgment on the merits in the Clackamas County Circuit Court case,
and U.S. Bank and Dunn were parties in that action. Thus, the second and third factors for claim
preclusion are met with respect to Dunn’s claims against U.S. Bank. The question now focuses
on the first factor, whether the claims are identical.
A court should consider four criteria when evaluating whether claims are identical:
(1) whether rights or interests established in the prior judgment
would be destroyed or impaired by prosecution of the second
action; (2) whether substantially the same evidence is presented in
the two actions; (3) whether the two suits involve infringement of
the same right; and (4) whether the two suits arise out of the same
transactional nucleus of facts.
Id. The four criteria “are not applied mechanistically. The fourth criterion is the most important.”
Id. (quotation marks and citation omitted). “[T]he inquiry about the ‘same transactional nucleus
of facts’ is the same inquiry as whether the claim could have been brought in the previous

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action.” Id. (alteration and emphasis in original) (quotation marks omitted). The Ninth Circuit
explains that this is because:
If the harm arose at the same time, then there was no reason why
the plaintiff could not have brought the claim in the first action.
The plaintiff simply could have added a claim to the complaint. If
the harm arose from different facts at a different time, however,
then the plaintiff could not have brought the claim in the first
action.
Liquidators of European Fed. Credit Bank, 630 F.3d 1139, 1151 (9th Cir. 2011). “Thus,
[w]hether two suits arise out of the same transactional nucleus depends upon whether they are
related to the same set of facts and whether they could conveniently be tried together.”
Howard, 871 F.3d at 1039 (alteration in original) (quotation marks omitted).
The claims that Dunn brings in this lawsuit for fraud on the court, intentional infliction of
emotional distress, violations of the FDCPA, and the claim that he makes regarding the
unlawfulness of the judicial foreclosure are all claims that he could have asserted during the state
court case. Dunn relies on documents that were executed before the state court lawsuit (the Trust
Deed and the Assignment of the Trust Deed) and the state court complaint itself. Yet in his state
court answer, Dunn did not raise a defense or counterclaim to the wrongful foreclosure or assert
the fraud claim that he now raises (namely, that MERS improperly purported to assign rights to
U.S. Bank), and Dunn did not assert any counterclaim for intentional infliction of emotional
distress or violation of the FDCPA.
All four criteria support claim preclusion in this case. First, the interests established by
the Clackamas County Circuit Court would be destroyed by granting the relief that Dunn seeks
in this federal court. The state court found that U.S. Bank held the beneficial interest in the Deed
of Trust, which necessarily would be voided if the Court finds that the assignment from MERS
to U.S. Bank was improper. The state court also judicially foreclosed Dunn’s interest in the real
PAGE 7 – ORDER

property, which Dunn specifically asks this Court to void. Second, substantially the same
evidence will be involved in both actions. Third, the two suits involve alleged infringement of
the same rights. Fourth and finally, the two lawsuits arise out of the same transactional nucleus
of facts. Accordingly, claim preclusion is appropriate in favor of U.S. Bank against all claims
asserted by Dunn in this case. Therefore, Dunn cannot show a likelihood of success on the merits
against U.S. Bank.
C. Claims and TRO Against MERS
Although the Court does not apply claim preclusion to the claims against MERS, the
TRO sought by Dunn is not appropriate with respect to MERS. Dunn appears to treat MERS and
U.S. Bank together for purposes of all claims and remedies, but they are separate Defendants.
Regarding the unlawful foreclosure and fraud on the court claim, U.S. Bank is the entity that
judicially foreclosed upon Dunn. Dunn does not submit evidence that MERS filed anything
fraudulent with the state court or that MERS conspired with U.S. Bank to perpetrate a fraud upon
the court. Dunn also does not show how MERS attempted to collect on any debt or how MERS
caused Dunn’s emotional distress, which was allegedly caused by the judicial foreclosure
proceeding prosecuted by U.S. Bank. MERS is not the entity that foreclosed on Dunn or issued
the Notice of Restitution and Deadline to Vacate, which is what Dunn is seeking to have
enjoined through his pending motion for TRO. Thus, even though the Court is not precluding
Dunn’s claims against MERS under the doctrine of claim preclusion, a TRO is not appropriate
against MERS because the Court cannot enjoin MERS from taking an action that it is not taking;
the only action at issue is being taken by U.S. Bank, and Dunn’s claims against U.S. Bank are
precluded. Further, Dunn has not shown a likelihood of success on the merits or serious
questions going to the merits of his claims against MERS.

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CONCLUSION
Plaintiff’s motion for temporary restraining order (ECF 16) is DENIED.
IT IS SO ORDERED.
DATED this 15th day of May, 2018.
/s/ Michael H. Simon
Michael H. Simon
United States District Judge

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