Graham v. Savage

KENT GRAHAM and COLETTE SAVAGE, Plaintiffs v. MARK SAVAGE, MICHAEL MCDONALD, VIJAY MEHTA, CHIEF JUSTICE THOMAS GRAY, JUSTICE REX DAVIS, and JUDGE LEE HARRIS, Defendants

No. 1:21-CV-151-RP-SH

United States District Court, W.D. Texas, Austin Division

August 30, 2021

TO THE HONORABLE ROBERT PITMAN UNITED STATES DISTRICT JUDGE

REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

SUSAN HIGHTOWER UNITED STATES MAGISTRATE JUDGE

Before the Court are Judge Lee Harris's First Amended Motion to Dismiss (Dkt. 26); Chief Justice Thomas Gray's First Amended Motion to Dismiss (Dkt. 27); Defendant Michael McDonald's Motion to Dismiss (Dkt. 29); Defendant Rex Davis's First Amended Motion to Dismiss (Dkt. 33) Defendant Mark Savage's First Amended Motion to Dismiss (Dkt. 39); Defendant Mark Savage's Motion to Have Plaintiff Colette Savage Declared a Vexatious Litigant (Dkt 41); Defendants Michael McDonald, Rex Davis, and Mark Savage's Motions for Judicial Notice (Dkts. 30, 34 &amp 40);^[1] The Judicial Defendants' Motion to Stay Scheduling Conference and Discovery (Dkt. 46); Plaintiffs' Motion to Declare Defendants as True Vexatious Litigants (Dkt. 63); Plaintiffs' Motions for Extension of Time to File Response/Reply Briefs (Dkts. 53 & 66);^[2] Plaintiffs' Motion to Amend Complaint (Dkt. 71); Plaintiffs' Motion to Offer Proof (Dkt. 74); and the parties' various response and reply briefs. On July 18, 2021, the District Court referred all pending and future motions in this case to the undersigned Magistrate Judge, pursuant to 28 U.S.C. § 636(b), Federal Rule of Civil Procedure 72, and Rule 1 of Appendix C of the Local Rules of the United States District Court for the Western District of Texas. Dkt. 43.

I. General Background

This lawsuit seeks to overturn Texas state court rulings regarding a family trust, a promissory note, a deed of trust, and the foreclosure of certain property in Hubbard, Texas.

A. Facts

The Court relies on the factual summaries contained in the Texas Court of Appeals' opinion in Savage v. Savage, No. 10-17-00139-CV, 2018 WL 5290041, at *1 (Tex. App.-Waco Oct. 24, 2018, pet. denied); the opinion of the United States District Court for the Northern District of California in Savage v. Savage, No. 19-CV-07994-DMR, 2020 WL 2525079, at *2 (N.D. Cal. May 18, 2020), aff'd., 2021 WL 3758347 (9th Cir. Aug. 25, 2021); and the California Court of Appeals' opinion in Savage v. Savage, No. A150984, 2018 WL 4959441 (Cal.Ct.App. Oct. 15, 2018). See n.1 supra.

In 1993, Texas residents William and Beatrice Savage established a family trust (“Trust”) providing that their assets would pass to the Trust at the time of their deaths. William and Beatrice named their children, Mark Savage and Colette Savage, as beneficiaries of the Trust. Savage, 2018 WL 5290041, at *1. Mark was appointed as attorney-in-fact for Beatrice. Id.

In February 2014, after William died, Beatrice began to experience serious health issues. Id. Mark traveled to California, where Beatrice was living, to take care of her and manage her affairs. Shortly thereafter, Mark and Colette's half-brother, Steven Sommer, filed a petition for appointment of a conservator over Beatrice and her estate in California probate court. Savage, 2018 WL 4959441, at *1. The California probate court appointed a professional fiduciary as conservator of Beatrice's estate and a professional fiduciary as successor trustee to replace Mark. Beatrice died in August 2014. Id.

In June 2014, in an attempt to repay Mark for defending the probate litigation on Mark and Colette's behalf, Colette signed two unsecured California $240, 000 promissory notes in favor of Mark. Savage, 2018 WL 5290041, at *2. On August 22, 2014, Colette signed in Mark's favor a third $240, 000 promissory note, which was secured by a Deed of Trust on six tracts of land located in Hubbard, Texas (the “Texas Note”). Id. The Texas Note matured on January 1, 2015. In October 2015, Colette made two payments to Mark totaling $7, 063, but still owed Mark a balance of $221, 164 on the Texas Note. Colette did not make any further payments on the Texas Note. Id. Thereafter, Mark initiated foreclosure proceedings on three of the six properties Colette used as collateral for the Texas Note. The foreclosure was scheduled for January 5, 2016.

B. Colette's Prior Lawsuits

A few days before the foreclosure was to take place, Colette, proceeding pro se, filed suit against Mark and his attorney, Michael McDonald, in Hill County District Court (“Texas State Court”), seeking to stop the foreclosure sale and alleging that the Texas Note and Deed of Trust were invalid. Savage v. Savage, No. 52, 939 (66th Dist. Ct., Hill County, Tex. Dec. 28, 2015) (Dkt. 30-1 at 3-15). In addition to seeking a preliminary injunction to stop the foreclosure, Colette asserted breach of contract, violations of the Texas Deceptive Trade Practices Act, and violations of various federal lending regulations. Id.

The Texas State Court ruled that the Texas Note and Deed of Trust were valid and enforceable and that all of Colette's claims were meritless. Dkt. 40 at 26-31. The court further ordered Colette to pay Mark $290, 497.27 in total principal and interest on the Texas Note, $77, 546.93 in attorneys' fees, and post-judgment interest. Id. at 29-30. On October 24, 2018, the Texas Court of Appeals affirmed the Texas State Court's judgment and findings. 2018 WL 5290041. Subsequently, The Texas Supreme Court denied Colette's petition for review and motion for rehearing of petition for review. Dkt. 40 at 62.

While Colette's first suit was still on appeal, she filed against Mark another lawsuit in state court entitled “Bill of Review, ” which attempted to challenge the trial court's rulings. See Savage v. Savage, No. CV-219-18-DC (66th Dist. Ct., Hill County, Tex. Apr. 20, 2018) (Dkt. 30-1 at 52-82). On July 6, 2018, the court dismissed the case with prejudice as baseless and awarded attorneys' fees to Mark. Dkt. 30-1 at 84-85. Colette's appeals were denied. Dkt. 29 at 5.

Colette also unsuccessfully attempted to challenge the Texas State Court's rulings regarding the validity of the Texas Note and Deed of Trust in the California probate proceedings. See Savage v. Savage, No. 1700381 (Cal. Super. Ct. Dec. 17, 2019) (Dkt. 40 at 89-93) (denying reconsideration of motion to vacate the Texas state court judgment).

On December 5, 2019, Colette filed suit in the United States District Court for the Northern District of California, attempting to challenge the Texas and California State Court rulings regarding the Texas Note, Deed of Trust, and foreclosure. Savage v. Savage, No. 19-CV-07994-DMR, 2020 WL 2525079, at *2 (N.D. Cal. May 18, 2020), aff'd, 2021 WL 3758347 (9th Cir. Aug. 25, 2021). The Northern District of California described Colette's claims as follows:

As best as the court can tell, the heart of Plaintiff's complaint is that a court order issued by a state court in Texas regarding the promissory note conflicts with orders by a California state probate court. Plaintiff alleges that she was “prevented from suing” Defendant in Texas for fraud-related behavior, and that he was therefore able to “garnish” her inheritance by obtaining an “erroneous” monetary judgment in Texas and then enforcing it against her in California. According to Plaintiff, “[t]he entire litigation in Texas was a premeditated hoax on a fake debt, ” and the “[c]onflicting orders” by the Texas and California courts “must be resolved.”

Id. at *1. The court reasoned that “Plaintiff's complaint and current motions for injunctive relief make clear that she asserts legal claims that challenge the propriety of various state court orders and seeks relief from those orders.” Id. at *6. Thus, the court found that Colette's lawsuit “amounts to a forbidden de facto appeal of state court decisions that entered judgment against her in Defendant's favor regarding a promissory note she executed in Texas.” Id. at *5. Therefore, the district court held that Colette's lawsuit was barred under the Rooker-Feldman doctrine^[3] and dismissed it for lack of subject matter jurisdiction. Id.

The Ninth Circuit Court of Appeals found that the district court properly dismissed Savage's action for lack of subject matter jurisdiction under the Rooker-Feldman doctrine. Savage v. Savage, 2021 WL 3758347, at *1 (9th Cir. Aug. 25, 2021).

C. This Lawsuit

On February 11, 2021, Colette and her associate Kent Graham (together, “Plaintiffs”) filed this lawsuit, once again challenging the validity of the Texas Note, the Deed of Trust, and the foreclosure of her property. Plaintiffs also ask the Court to overturn the decisions of the Texas State Courts, claiming that the judges and justices committed fraud and other criminal acts in ruling on her claims. Colette names as Defendants Savage; McDonald; Vijay Mehta, the purchaser of the foreclosed property; Judge Lee Harris, District Judge of Hill County, Texas; Chief Justice Thomas Gray of the Texas Tenth Court of Appeals; and Rex Davis, retired justice of the Texas Tenth Court of Appeals. Harris, Gray, and Davis are referred to herein as the “Judicial Defendants.”

All of the Defendants now seek dismissal of Plaintiffs' Complaint under Federal Rules of Civil Procedure 12(b)(1) and/or 12(b)(6).

II. Legal Standards

A. Rule 12(b)(1)

Federal district courts are courts of limited jurisdiction and may exercise only such jurisdiction as is expressly conferred by the Constitution and federal statutes. Kokkonen v Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A federal court has subject matter jurisdiction over civil cases “arising under the Constitution, laws, or treaties of the United States, ” and over civil cases in which the amount in controversy exceeds $75, 000,...