Taylor v. Deutsche Bank Nat'l Tr. Co.

KENNETH S. TAYLOR, Plaintiff, v. DEUTSCHE BANK NATIONAL TRUST COMPANY, et al., Defendants.

CASE NO. 5:19CV2212

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION

January 31, 2020

PEARSON, J.

JUDGE BENITA Y. PEARSON

MEMORANDUM OF OPINION AND ORDER [Resolving ECF No. 1]

Bankruptcy Judge Alan M. Koschik submitted a Proposed Findings of Fact and Conclusions of Law for the Court's review. ECF No. 1. Plaintiff has objected¹ and Defendants have not responded and the time to do so has passed. For the reasons stated below, the Court adopts the Bankruptcy Court's Proposed Findings of Fact and Conclusions of Law in part² and dismisses the non-core claims in their entirety with prejudice.

I. Introduction

A. Mortgage

This case stems from a promissory note for a home in Twinsburg, Ohio signed by Plaintiff and his wife ("the Taylors") in February 2006. ECF No. 1 at PageID #: 6. To purchase the property, the Taylors signed a promissory note with Option One Mortgage Company ("Option One") in the amount of $84,500. Id.; Deutsche Bank Nat'l Trust Co. v. Taylor, 2013 WL 5442380, at *1 (Ohio Ct. App. Sept. 30, 2013). As collateral for the loan, the promissory note granted Option One a mortgage on the property owned by the Taylors. Deutsche Bank Nat'l Trust Co. v. Taylor, 2013 WL 5442380, at *1. Option One assigned the mortgage to Defendant Deutsche Bank National Trust Company ("Deutsche Bank") in June 2007. Id.

The Taylors never made a monthly payment after March 30, 2007.³ Deutsche Bank Nat'l Trust Co. v. Taylor, 2011 WL 345990, at *1 (Ohio Ct. App. Feb. 2, 2011). In November 2007, the Taylors defaulted on the mortgage and Deutsche Bank filed a foreclosure action against them. Deutsche Bank Nat'l Trust Co. v. Taylor, 2013 WL 5442380, at *1.

B. Previous Litigation in Federal and State Court

Although some of the claims raised before the Court are new, the underlying facts have been litigated in the federal and state courts for over a decade.⁴

1. State Case

After Deutsche Bank filed an action that was dismissed in federal court⁵, it brought a foreclosure action in state court. The state court entered a foreclosure decree and the appellate court affirmed granting of summary judgment but reversed summary judgment on Plaintiff's counterclaims due to procedural error.⁶ Deutsche Bank Nat'l Trust Co. v. Taylor, 2011 WL 345990, at *3-5. On remand, the state trial court entered summary judgment in Deutsche Bank's favor on those counterclaims and the appellate court affirmed in part.⁷ Deutsche Bank Nat'l Trust Co. v. Taylor, 2013 WL 5442380, at *1-4.

2. Case Number 5:10-cv-2766

In 2010, while the first state appeal was pending, the Taylors filed claims against Deutsche Bank under the Truth in Lending Act ("TILA")⁸ in the Northern District of Ohio. Taylor v. Deutsche Bank Nat'l Trust Co., 2010 WL 5463046, at *1 (N.D. Ohio Dec. 29, 2010). The Court dismissed their claims as being barred by the Rooker-Feldman⁹ doctrine and precluded by the state court's prior judgment. Id. at *2. After the case was remanded and the Court further explained the grounds for dismissal, the Sixth Circuit affirmed.¹⁰

C. Property Sale

Deutsche Bank purchased the Taylors' property at a foreclosure sale. Deutsche Bank Nat'l Trust Co. v. Taylor, 2016 WL 5724200, at *1 (Ohio Ct. App. Sept. 30, 2016). A state trial court confirmed the sale and deed. Id. An appellate court affirmed. Id. at *5

In 2017, the Ohio trial court entered an amended confirmation entry "for the sole purposeof correcting the conveyance fee." Deutsche Bank Nat'l Trust Co. v. Taylor, 2018 WL 893852, at *1 (Ohio Ct. App. Feb. 14, 2018). Plaintiff filed four subsequent motions which were denied and the appellate court affirmed the lower's court disposition of the motions. Id. at *2-3.

On August 7, 2018, the Ohio trial court issued a writ directing the Sheriff of Summit County to evict the Taylors. ECF No. 1 at PageID #: 13. Plaintiff filed subsequent motions in state court which were denied. Id. at PageID #: 14.

D. Bankruptcy Proceeding and Adversary Case

On September 27, 2018, Plaintiff¹¹ filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the Northern District of Ohio. Id. After filing a bankruptcy petition, Plaintiff filed an adversary case¹² in the Bankruptcy Court, raising six additional federal and state laws claims not grounded in bankruptcy law including: (1) a claim challenging the validity of the state foreclosure action and foreclosure deed, (2) a TILA claim, (3) a claim alleging that Defendants Attorney Franks and Franks' firm, Manley Deas Kochaski LLC ("Manley Deas"), are unauthorized to serve as counsel for Deutsche Bank, (4) claims for adverse possession and "color of title" under 42 U.S.C. §§ 1981, 1982, and 1983, (5) a claim for intentional infliction ofemotional distress, and (6) a claim to quiet title to the property.¹³ After Defendants filed a motion to dismiss, the Bankruptcy Court submitted a Proposed Findings of Fact and Conclusions of Law recommending dismissal of the non-core claims. ECF No. 1.

The Bankruptcy Court also dismissed the remaining core bankruptcy claims in the adversary proceeding and subsequently issued an Order lifting the automatic stay imposed when Plaintiff filed for bankruptcy. See id. at PageID #: 26-27. In addition to objecting to the Bankruptcy Court's Proposed Findings of Fact and Conclusions of Law, Plaintiff has appealed the lifting of the bankruptcy stay.¹⁴

II. Standard of Review

A. Proposed Findings of Fact and Conclusions of Law

Pursuant to 28 U.S.C. § 157(b)(3), the Bankruptcy Court must first determine whether claims brought in an adversary proceeding are core or not core to the bankruptcy proceeding. The Bankruptcy Court submits a proposed findings of fact and conclusions of law on the non-core claims to the district court for review. Id. § 157(c)(1). Any final judgment on the non-core claims shall be entered by the district court after de novo review. Id. Below, the Court conductsa de novo review of the Bankruptcy Court's Proposed Conclusions of Law and Findings of Fact. Id.; see also Fed. R. Bankr. P. 9033(d).

B. Motion to Dismiss

In deciding a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), the Court must take all well-pleaded allegations in the complaint as true and construe those allegations in a light most favorable to the plaintiff. Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citations omitted). A cause of action fails to state a claim upon which relief may be granted when it lacks "plausibility in th[e] complaint." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 564 (2007). A pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009) (quoting Fed. R. Civ. P. 8(a)(2)). Plaintiff is not required to include detailed factual allegations, but must provide more than "an unadorned, the-defendant-unlawfully-harmed-me accusation." Id. at 678. A pleading that offers "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. Nor does a complaint suffice if it tenders "naked assertion[s]" devoid of "further factual enhancement." Id. at 557. It must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Id. at 570.

"A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Twombly, 550 U.S. at 556. Where a complaint pleads facts that are "merely consistent with" a defendant's liability,it "stops short of the line between possibility and plausibility of 'entitlement to relief.'" Id. at 557 (brackets omitted). "[When] the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged but it has not 'show[n]' 'that the pleader is entitled to relief.'" Iqbal, 556 U.S. at 679 (quoting Rule 8(a)(2)). The Court "need not accept as true a legal conclusion couched as a factual allegation or an unwarranted factual inference." Handy-Clay v. City of Memphis, Tenn., 695 F.3d 531, 539 (6th Cir. 2012) (citations and internal quotation marks omitted).

III. Discussion

The Bankruptcy Court recommended dismissing all of Plaintiff's non-core claims including: (1) a claim challenging the validity of the state foreclosure action and foreclosure deed, (2) a TILA claim, (3) a claim challenging Defendants Attorney Franks' and Manley Deas' role as counsel for Deutsche Bank, (4) adverse possession and "color of title" under 42 U.S.C. §§ 1981, 1982, and 1983, (5) claim for intentional infliction of emotional distress, and (6) quiet title to the property. The Court addresses each claim below respectively.

A. Preclusion of Plaintiff's Challenges to Foreclosure Action and Sheriff's Sale

Plaintiff challenges the validity of the state court foreclosure action and the sheriff's sale. The Bankruptcy Court held that Plaintiff's claims were precluded under Ohio issue preclusion law and that it must provide full and faith credit to the preclusive effect pursuant to 28 U.S.C. § 1738. ECF No. 1 at PageID #: 18-19. Issue preclusion, also known as collateral estoppel, prevents a party from relitigating an issue decided by a court. O'Nesti v. DeBartolo Realty Corp., 862 N.E.2d 803, 806 (Ohio 2007) (citation omitted). Issue preclusion applies when thefact or issue (1) was actually and directly litigated in the prior action; (2) the court actually determined the fact or issue in question; and (3) the party against whom issue preclusion is asserted was a party, or in privity with a party, to the prior action. Wenglor Sensors, Ltd. v. Baur, 847 F.Supp.2d 1041,...