Orman v. Cent. Loan Admin. & Reporting

Leslie E. Orman, Petitioner, v. Central Loan Administration & Reporting, et al., Respondents.

No. CV-19-04756-PHX-DWL

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

December 12, 2019

ORDER

Pending before the Court are petitioner Leslie Orman's application to confirm an arbitration award (Doc. 5), respondents Central Loan Administration and Reporting's ("Cenlar") and CitiMortgage Incorporated's ("Citi") (collectively, "Respondents") motions to vacate the arbitration award and for sanctions (Docs. 13 and 15), Orman's motion for summary judgment (Doc. 19), and Orman's motion for sanctions (Doc. 33). This case arises from Orman's attempt to confirm a $10.3 million arbitration award arising from a proceeding in which Respondents did not participate. For the following reasons, Respondents' motions to vacate and for sanctions will be granted and Orman's application and motions for summary judgment and sanctions will be denied.

BACKGROUND

I. Factual Background

Orman and Respondents have a long and contentious history. It arises from a 2007 mortgage on a home in Pennsylvania. (Doc. 35 ¶ 1). That mortgage was eventually assigned to Citi. (Id. ¶ 2.)

In 2010, Orman and her husband stopped making payments on the Pennsylvania mortgage. (Id. ¶ 3.) This led to extensive litigation by the Ormans, all of which was ultimately unsuccessful. (Id. ¶¶ 4-6. See also Doc. 13-1.) Citi foreclosed and sold the home in March 2019. (Doc. 35 ¶¶ 5, 7.) Orman apparently continues to litigate the foreclosure issue to this day in Pennsylvania state court. (Id. ¶ 8. See also Doc. 19 ¶ 5 [Orman's contention that "the Appeals Court may overturn the judgment for foreclosure for lack of jurisdiction and forgery"].)

Orman believes the Pennsylvania mortgage was actually rescinded in 2010. (Doc. 19 ¶ 11.) She nonetheless received multiple offers from Citi for a loan modification pertaining to the Pennsylvania mortgage, some of which were mailed to her current residence in Arizona. (Id.) In response to one such offer, Orman sent a document entitled "Conditional Acceptance for the Value/Agreement/Counter Offer to Acceptance of Offer" to Respondents. (Doc. 5-2 at 2; Doc. 35 ¶ 10; Doc. 5-4 [actual document].) That document purports to accept Respondents' offer (although it does not specify which offer) pursuant to Orman's "terms and conditions." (Doc. 5-4 at 1.) Among those terms were requests for "proofs of claim" that "the banking Holiday proclaimed by Pres. Roosevelt . . . has been suspended, declared over, abolished, repealed" (id. at 3), that the United States was in Chapter 11 bankruptcy (id. at 4), the United States was in a continuing state of emergency (id. at 5), and a "caveat" that Orman was not a "party to your 'social compact' (contract) known as the Constitution (Charter) of the UNITED STATES" (id. at 6.) Among the voluminous requests and caveats was what purported to be an arbitration agreement. (Id. at 8-11.) That agreement stated that none of the parties would "argue, controvert, oppose, or otherwise protest ANY of the facts already agreed upon by the parties and set and established herein," that acceptance of the contract through silence would result in a summary disposition by a randomly chosen arbitrator, and that any conflict about the agreement would be decided by the arbitrator. (Id. at 8-9.)

Orman sent this "counter offer" on April 4, 2019. According to her, she received no reply. (Doc. 5-2 at 2-3.) The time to respond was extended, but Respondents still failedto respond. (Id. at 2.) Orman then sent a notice of default. (Id. at 2-3.) Again, Respondents failed to respond. (Id.) Finally, a request for arbitration was sent to Respondents, and they again took no action. (Id. at 3.)

Respondents have a different take on that sequence of events. Although Citi acknowledges it took no action when it received Orman's various mailings (Doc. 13 at 4), Cenlar contends it responded to Orman three different times. (Docs. 15-1, 15-2, and 15-3.) In its third response, which Cenlar contends was delivered to Orman's counsel in Pennsylvania, Cenlar explicitly rejected Orman's counter-offer. (Doc. 15-3.)

Regardless, Orman purported to proceed to arbitration. Robert Presley, of HMP Dispute Resolution, served as the arbitrator. (Doc. 5-2 at 1.) Presley based his decision only on documents provided by Orman—Citi and Cenlar provided nothing to him. (Doc. 5-3 at 1.) After summarizing Orman's counter-offer in a list containing entries such as "Banking Holiday still in progress" and "Invoked during time of war," Presley stated that he had "read the claim and other materials filed by the parties." (Id. at 3.) Then, "[a]fter considering the Claim, the testimony and evidence presented at the hearing," Presley awarded Orman $10,336,000.00 and forbade Respondents from enforcing an "inferior contract-claim against" Orman. (Id. at 4.) The award was notarized on May 28, 2019 in Kern County, California. (Id. at 5.)

Respondents claim they were not aware of this award until Orman filed her application for confirmation. (Doc. 13 at 6; Doc. 15 at 7.) Orman claims she invoiced Respondents for the award 30 days after it was issued. (Doc. 19 ¶ 7; Doc. 5-7.)

II. Procedural Background

On July 18, 2019, Orman, with the assistance of counsel, filed an application to confirm the arbitration award. (Doc. 1.) She filed an amended application the next day. (Doc. 5.) This was followed by a notice of lis pendens, giving notice that a proceeding to confirm the award for "monetary value exceeding $75,000 and return of property previously owned" by Orman was pending before the Court.¹ (Doc. 6.)

Between August 15 and 27, 2019, Citi and Cenlar filed separate motions to vacate the arbitration award (or, in the alternative, dismiss for improper venue) and for sanctions. (Docs. 13, 15.)

On August 30, 2019, Orman filed a response that also served as a motion to strike Respondents' motions and a motion for summary judgment. (Doc. 19.) At the same time, Orman's counsel moved to withdraw. (Doc. 18.)

On September 3, 2019, Orman filed a supplement to her motion. (Doc. 20.)

On September 5, 2019, the Court issued an order that resolved Orman's motion to strike and Orman's counsel's motion to withdraw. (Doc. 21.) As for the former, the Court noted that Orman did not offer any reasons why Respondents' motions should be struck—instead, she offered a slate of reasons why those motions should be denied. (Id. at 1-2.) Accordingly, the Court denied the motion to strike but clarified that, to the extent it was also a motion for summary judgment, it would remain pending. (Id. at 2 n.1.)

As for the motion to withdraw, the Court first noted that Orman had filed two documents (Docs. 19, 20) in her own name while still represented by counsel, in violation of Rule 11. (Id. at 3.) Further, counsel had electronically filed those documents for Orman, which violated LRCiv. 5.5(d). (Id. at 4.) Thus, counsel was "squarely on the hook for those filings." (Id.) Turning to the merits of the motion to withdraw, the Court was skeptical about counsel's proffered reason—that Orman would be able to more effectively advocate her position without counsel's legal expertise—but nevertheless granted the withdrawal request. (Id. at 4-5.) However, the Court retained jurisdiction over counsel for purposes of Respondents' motions for sanctions. (Id. at 5.)

On September 23, 2019, Orman filed a motion to reconsider the September 5, 2019 order. (Doc. 28.) The Court denied that motion. (Doc. 29.)

The parties have now completed their briefing. Pending before the Court is Orman's application to confirm (Doc. 5), her motion for summary judgment (Doc. 19), and hermotion for sanctions (Doc. 33). Respondents oppose the motion for summary judgment (Doc. 34), oppose the motion for sanctions (Doc. 36), and have fully briefed their own motions for sanctions and to vacate the arbitration award (Docs. 13, 15.) The argument underlying all of Respondents' papers is that the arbitration award was based on nothing—the "counter-offer" that served as the basis for the arbitration proceeding was not a contract between the parties, and thus could not require arbitration of any claims between Respondents and Orman. (See, e.g., Doc. 15 at 2.) Because Respondents believe the "counter-offer" was obviously a meaningless document that could not serve as the basis for arbitration or this action, they have also requested sanctions against Orman and her former counsel. (Id. at 2.) On that point, Orman's former counsel has filed a response opposing the imposition of sanctions. (Doc. 25.)

ANALYSIS

I. Arbitration Award

Orman asks the Court to confirm her arbitration award under 9 U.S.C. § 9.² Respondents request that the Court vacate the award, arguing it is based on a legally baseless "contract" to which they never assented.

Ordinarily, a district court "must confirm" an arbitration award. Aspic Eng'r & Constr. Co. v. ECC Centcom Constructors LLC, 913 F.3d 1162, 1166 (9th Cir. 2019) (internal quotation marks omitted). "Neither erroneous legal conclusions nor unsubstantiated factual findings justify federal court review of an arbitral award under" the Federal Arbitration Act. Id. (internal quotation marks omitted). That said, a court may, when faced with a circumstance outlined in 9 U.S.C. § 10 or § 11, vacate an award. Id.

A. Preliminary Matters

As an initial matter, Orman asserts that Respondents' motion to vacate is improper at this stage. (See, e.g., Doc. 33 at 5-6.) In her view, "only an Order to Vacate can be filedinto [a] 9 U.S.C. § 9 proceeding. Counsel is aware this Court has no Jurisdiction or Venue to make determinations on a Motion to Vacate under 9 U.S.C. § 10(a)(4)." (Id.) This appears to be an argument that, to prevent confirmation of her arbitration award, Respondents should have sought an order to vacate in a separate proceeding. To do so, Orman continues, Respondents had to litigate in the Eastern District of California, where the award was...