Shavei-Tzion v. Cadles of Grassy Meadows, II, LLC
Filing
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MEMORANDUM (Order to follow as separate docket entry).Signed by Honorable Malachy E Mannion on 6/7/17. (bs)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF PENNSYLVANIA
BET SHAVEI-TZION a/k/a BET
:
SHAVEI-TZION INTERNATIONAL
and/or BET SHAVEU-TZION, LTD., :
INTERNATIONAL,
:
Plaintiff,
:
v.
:
CADLES OF GRASSY MEADOWS,
II, LLC, substitute to Brown Bark, I,:
L.P. assignee of Sovereign Bank,
successor by merger to Main
:
Street Bank,
:
Defendant.
CIVIL ACTION NO. 3:17-0973
(JUDGE MANNION)
MEMORANDUM
Before the court is the plaintiff’s emergency motion for a preliminary
injunction. (Doc. 3). The plaintiff is a synagogue and religious organization
with a location in Eaton Township, Wyoming County, Pennsylvania. A 95-acre
parcel of property owned by the plaintiff is currently scheduled for Sheriff’s
Sale in Wyoming County on Thursday, June 8, 2017 pursuant to a mortgage
executed by the plaintiff on November 16, 2000 in favor of Main Street Bank.
This mortgage is currently held by the defendant as a subsequent assignee.
Based on the foregoing, the plaintiff’s motion will be DENIED.
I.
BACKGROUND
At an unspecified time in the year 2000, the plaintiff’s president, Rabbi
Harry Dombek, entered into an oral agreement with Mount Laurel Cemetery
Association (“Mount Laurel”) to pledge the 95-acre parcel of property at issue
so that Mount Laurel could obtain a $250,000.00 loan. Rabbi Harry Dombek
also served as president/trustee of Mount Laurel. In exchange, Mount Laurel
promised to donate certain funds to the plaintiff. The agreement was such that
the pledge would only be issued “if needed” in the event Mount Laurel could
not secure a loan on its own. (Doc. 1 ¶9). Although Mount Laurel’s own
property was valued at $1,600,000.00, the plaintiff went forward with the
agreement and executed a mortgage with Main Street Bank to secure a
promissory note signed by Mount Laurel. The mortgage and note were
subsequently assigned to Sovereign Bank by merger. In 2006, the mortgage
was, again, assigned to Brown Bark I, an investment land speculator.
Mount Laurel defaulted on the mortgage obligation while the mortgage
was held by Brown Bark I. A mortgage foreclosure action was filed in the
Wyoming County Court of Common Pleas on March 26, 2007. After initiating
the foreclosure action, the debt was assigned to the defendant and the
defendant was substituted as the proper plaintiff in the state foreclosure
action. On August 26, 2009, on summary judgment motion, the state court
determined that another 275-acre parcel of property owned by the plaintiff
was not sufficiently described in the mortgage so as to create a lien, but that
genuine issues of material fact existed as to whether the 95-acre parcel was
mortgaged. On November 19, 2014, after a non-jury trial, the state court ruled
that the note and mortgage were in default and lifted all stays on the subject
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property. With judgment entered in the state foreclosure action, the plaintiff’s
real property was scheduled for Sheriff’s Sale on June 8, 2017. The plaintiff
alleges that the advertisements for the Sheriff’s Sale incorrectly describe the
property subject to sale as being 190.64 acres in size.
On June 5, 2017, the plaintiff filed a complaint in this court. (Doc. 1). In
Count I of the complaint, the plaintiff alleges that the defendant violated the
Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §1692 et seq. by
failing to provide required notices. In Count II, the plaintiff alleges a procedural
due process violation. The plaintiff alleges that the Pennsylvania Rules of Civil
Procedure relating to foreclosure violate the Fourteenth Amendment of the
United States Constitution because the plaintiff would not able to seek
redress for the advertising deficiencies until after the sale is complete. The
plaintiff requests only equitable relief, a declaratory judgment invalidating the
judgment of the state court and an injunction to stop the pending sale. On
June 6, 2016, the plaintiff filed the current emergency motion for a preliminary
injunction.
II.
LEGAL STANDARD
The grant of injunctive relief, including preliminary injunctive relief, is an
extraordinary remedy and it should only be granted in limited circumstances.
Am. Tel. & Tel. Co. v. Winback & Conserve Program, Inc., 42 F.3d 1421,
1426–27 (3d Cir. 1994) (quoting Frank’s GMC Truck Cent., Inc. v. Gen.
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Motors Corp., 847 F.2d 100, 102 (3d Cir. 1988)) (alterations in original). The
court’s ultimate decision to deny a preliminary injunction is discretionary,
though legal and factual determinations will be reviewed according to their
normal standard. See Tenafly Eruv Ass’n, Inc. v. Borough of Tenafly, 309
F.3d 144, 156 (3d Cir. 2002).
In order to obtain a preliminary injunction, the moving party must
demonstrate the following:
(1) the likelihood that the plaintiff will prevail on the
merits at final hearing; (2) the extent to which the
plaintiff is being irreparably harmed by the conduct
complained of; (3) the extent to which the defendant
will suffer irreparable harm if the preliminary injunction
is issued; and (4) the public interest.
Id. at 1427 (quoting Merchants & Evans, Inc. v. Roosevelt Bldg. Prods., 963
F.2d 628, 623–33 (3d Cir. 1992)). More specifically, the third prong requires
a balancing of harms between the plaintiff and the defendant and a finding
that the balance favors the plaintiff’s request for relief. See Issa v. Sch. Dist.
of Lancaster, 847 F.3d 121, 131 (3d Cir. 2017).
“The injunction should issue only if the plaintiff produces evidence
sufficient to convince the district court that all four factors favor preliminary
relief.” Id. Moreover, it is only if the first two prongs are satisfied that the court
must inquire into the final two factors. Tenafly, 309 F.3d at 157. Thus, “a
failure to show a likelihood of success or a failure to demonstrate irreparable
injury must necessarily result in the denial of a preliminary injunction.” In Re
Arthur Treacher’s Franchise Litig., 689 F.2d 1137, 1143 (3d Cir. 1982).
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However, if a plaintiff proves the first two requirements, it will almost always
be the case that the public interest favors preliminary relief, Issa, 847 F.3d at
143, leaving the crux of the matter to the balance of competing interests.
III.
DISCUSSION
The plaintiff’s request fails based on the first two requirements for
issuing a preliminary injunction. Therefore, the court need not and will not
address the final two requirements. See Tenafly, 309 F.3d at 157.
A.
The Likelihood of Success on the Merits
To prove a likelihood of success on the merits of the claims, the plaintiff
need only prove a prima facie case, not a certainty that he or she will win.
Issa, 847 F.3d at 131. This does not require that the final decision be “wholly
without doubt,” only the “‘reasonable probability’ of success.” Id. (quoting
Punnett v. Carter, 621 F.2d 578, 583 (3d Cir. 1980)). The plaintiff has not
shown likelihood of success on either its FDCPA claim or constitutional claim.
The FDCPA prohibits a debt collector from using any “false, deceptive,
or misleading representation” as a means of collecting a debt. 15 U.S.C.
§1692e. It does not cover all debt, only those transactions that are “primarily
for personal, family, or household purposes”—i.e., consumer debt. §1692a(5).
It is not applicable to commercial or business debt. Horton v. Trans Union,
LLC, No. 12-2027, 2015 WL 1055776, at *5 (E.D. Pa. Mar. 10, 2015); In re
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Howe, 446 B.R. 170, 173 (Bankr. E.D. Pa. 2009). The nature of the debt as
business or consumer debt is based on the intended use of the money.
Horton, 2015 WL 1055776, at *5. “It is the plaintiff who bears the burden of
establishing whether an alleged obligation is a consumer debt under the
FDCPA.” Id.
Here, the plaintiff has not pled in the complaint or stated in its motion
that the debt incurred by Mount Laurel, a private entity, was for personal,
family, or household uses. Nor has the plaintiff indicated that this was the
case based on any attached exhibits. Without this, the plaintiff has not
established that the debt incurred is protected by the FDCPA. Thus, at this
stage, in light of the information before the court, the plaintiff in unlikely to
success on its FDCPA claim.
Moreover, even if the debt could be qualified as consumer debt, the
FDCPA does not provide for the injunctive relief, only monetary damages are
available to private litigants. Weiss v. Regal Collections, 385 F.3d 337, 342
(3d Cir. 2004), abrogated on other grounds by Campbell-Ewald Co. v. Gomez,
136 S. Ct. 663 (2016); see also Franklin v. GMAC Mortg., 523 F. App'x 172,
173 (3d Cir. 2013); Waridi v. Stern & Eisenberg, - -F. Supp.- -, 2017 WL
1282223, at *3 (E.D. Pa. April 3, 2017). The plaintiff has not requested any
specific monetary sums and the equitable relief requested is not an available
remedy. Thus, any request for injunctive relief based on the FDCPA alone
would, ultimately, fail.
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The plaintiff’s claim that Pennsylvania’s foreclosure procedures and its
post-deprivation remedies violate the procedural due process clause is also
unlikely to succeed. “Fundamentally, procedural due process requires notice
and an opportunity to be heard” before the deprivation of life, liberty, or
property. Mancini v. Northampton Cty., 836 F.3d 308, 315 (3d Cir. 2016)
(citing Matthews v. Eldridge, 424 U.S. 319, 333 (1976)). The notice must be
reasonably calculated to provide actual notice of the potential deprivation.
Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 798 (1983); see also RTC
Mortg. Trust 1994-N-2 v. Fry, 730 A.2d 476, 478 (Pa. 1999). The hearing
protections must be afforded “in a meaningful time and in a meaningful
manner.” Matthews, 424 U.S. at 333 (quoting Armstrong v. Manzo, 380 U.S.
545, 552 (1965)).
Here, there is no allegation that the plaintiff did not have notice of the
foreclosure action. Further, it is not alleged, nor would it be plausible to
suggest, that the plaintiff has not had opportunities to litigate its position with
respect to the foreclosure in state court. The foreclosure action has been
pending in state court since 2007. Further, the plaintiff admits that the
Pennsylvania Rules of Civil Procedure provide a remedy in the event the
Sheriff’s Sale is unlawful or improper at this late hour. Pennsylvania Rule of
Civil Procedure 3132 allows a party in interest to petition to “set aside [a] sale
and order a resale or enter any order which may be just and proper under the
circumstances.” PA. R. CIV. P. 3132. Thus, a claim that Pennsylvania’s
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foreclosure procedures do not satisfy the requirements of procedural due
process is highly unlikely to be successful on the merits.
In addition to the above hurdles to the plaintiff’s likely success in this
action, the Anti-Injunction Act, 28 U.S.C. §2283, also likely applies and
precludes the court from granting injunctive relief in this case. See Jung Yun
v. Bank of Am., N.A., No. 3:16-2416, 2016 WL 7324554 (M.D. Pa. Dec. 16,
2016). The Anti-Injunction Act deprives federal district courts of the ability to
“grant an injunction to stay proceedings in a State court.” 28 U.S.C. §2283.
“The Anti–Injunction Act simply does not allow federal courts to enjoin state
court proceedings, including mortgage foreclosure actions, absent the
application of an exception under the statute.” Clark v. United States Bank
Nat'l Ass'n, No. CIV.A. 03-5452, 2004 WL 1380166, at *3 (E.D.Pa. June 18,
2004). There are three narrow exceptions that allow a federal court to grant
equitable relief, but the court finds that all three are inapplicable to the present
case. The plaintiff has not cited to an exception that might be applicable to
save its request.
B.
The Demonstration of Irreparable Harm
With respect the second requirement for a preliminary injunction, the
plaintiff has not shown any irreparable harm if the sale were to proceed. As
the plaintiff admits, Pennsylvania Rule of Civil Procedure 3132 allows a party
to set aside a sale. This procedure is “grounded in equitable principles and is
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addressed to the sound discretion of the hearing court.” Kaib v. Smith, 684
A.2d 630, 631 (Pa. Super. Ct. 1996). If the judgment entered is void, the sale
will also be declared void. Harris v. Harris, 239 A.2d 783, 784–85 (Pa. 1968).
In addition, a sale may be set aside where there are irregularities and
deficiencies in the sale, including defects in advertisement. See Hampton v.
Swan, 109 A. 674 (Pa. 1920); Allegheny Cty. v. Golf Resort, Inc., 974 A.2d
1242, 1246 (Pa. Commw. Ct. 2009). Thus, to deem the harm of the sale
“irreparable” at this stage would ignore the post-deprivation safeguards, in
addition to the pre-deprivation safeguards, provided to the plaintiff under
Pennsylvania law.
Briefly addressing the plaintiff’s request for a hearing, “[t]he applicable
Federal Rule does not make a hearing a prerequisite for ruling on a
preliminary injunction.” Bradley v. Pittsburgh Bd. of Educ., 910 F.2d 1172,
1175 (3d Cir. 1990) (citing FED. R. CIV. P. 65(a)). A hearing is not necessary
where the moving party is “proceeding on a legal theory which cannot be
sustained.” Id. “Moreover, a district court is not obliged to hold a hearing when
the movant has not presented a colorable factual basis to support the claim
on the merits or the contention of irreparable harm.” Id. As explained above,
the plaintiff’s claim is highly unlikely to succeed based on substantive law and
the Anti-Injunction Act and there is no factual basis to support the claims and
the contention of irreparable harm. Accordingly, plaintiff’s request for a
hearing and motion for a preliminary injunction, (Doc. 3), will be DENIED.
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IV.
CONCLUSION
In accordance with the above, the plaintiff’s emergency motion for a
preliminary injunction, (Doc. 2), will be DENIED. An appropriate order will
issue.
s/ Malachy E. Mannion
MALACHY E. MANNION
United States District Judge
Dated: June 7, 2017
O:\Mannion\shared\MEMORANDA - DJ\CIVIL MEMORANDA\2017 MEMORANDA\17-0973-01.wpd
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