DRAKE v. CITIMORTGAGE INC.
| Decision Date | 13 April 2011 |
| Docket Number | No. 1:10-CV-305,1:10-CV-305 |
| Parties | ANGELINE RENEE DRAKE, Plaintiff, v. CITIMORTGAGE, INC. and THE STATE OF TENNESSEE Defendants. |
| Court | U.S. District Court — Eastern District of Tennessee |
OPINION TEXT STARTS HERE
MEMORANDUM
Before the Court are motions to dismiss filed by Defendants Citimortgage, Inc. and the State of Tennessee ("Citimortgage" and "Tennessee;" collectively, "Defendants") (Court File Nos. 13, 8). Plaintiff Angeline Drake ("Plaintiff") responded (Court File Nos. 17, 15), and Defendants replied (Court File Nos. 23, 16). Plaintiff subsequently filed a sur-reply to Tennessee's reply brief (Court File No. 22), and Tennessee replied (Court File No. 26). On February 23, 2011, the Court held a hearing on the motions to dismiss. The Court allowed the parties to submit additional briefing (Court File Nos. 28-33). For the reasons set forth in this memorandum, the Court will GRANT Citimortgage's motion to dismiss (Court File No. 13). Because this disposes of the entire case, the Court will DENY AS MOOT Tennessee's motion to dismiss (Court File No. 8).
This case arises out of the non-judicial foreclosure of Plaintiff's home by the holder of the mortgage, Citimortgage. On February 28, 2006, Plaintiff executed a mortgage loan on the property, secured by a deed of trust in favor of the lender. The deed included a "power of sale" clause, which allowed for a non-judicial foreclosure upon the property in the event of default. On August 23, 2010, the trustee, acting on instructions of Citimortgage, foreclosed upon the property.
On October 13, 2010, Citimortgage brought an unlawful detainer action against Plaintiff in the General Sessions Court of Hamilton County, Tennessee, seeking possession of the property it obtained by foreclosure sale. On November 1, 2010, Plaintiff answered Citimortgage's complaint, alleging Tennessee's foreclosure process is unconstitutional under the Due Process Clause of the 14th Amendment to the United States Constitution, unconstitutional under the Tennessee Constitution, and against Tennessee public policy. Plaintiff requested the General Sessions Court to find she is entitled to possession of the property.
On November 30, 2010, the Tennessee Attorney General filed an acknowledgment of Plaintiff's constitutional challenge to Tennessee's foreclosure process, wherein the Attorney General reserved the right to intervene in the state court proceeding, but did not so intervene at that time.
On January 13, 2011, Plaintiff filed an amended answer in the State Court proceeding, in which she struck her Constitutional challenge to the Tennessee non-judicial foreclosure statutes, and chose to rely instead upon a general denial of the claims made by Citimortgage. On January 21, 2011, an Agreed Order to Continue the Case Indefinitely was filed in the State Court, upon agreement of Plaintiff and Citimortgage. Apparently, on January 4, 2011, Plaintiff and Citimortgage had agreed to not to take any step in the State Court proceeding until the conclusion of the present federal action.
In her federal Complaint, Plaintiff asserts federal question jurisdiction, insofar as the action purportedly arises under the Due Process Clause of the 14th Amendment, and 28 U.S.C. § 1983 provides a cause of action. Any other claims, namely, that Tennessee's non-judicial foreclosure statutes violate the Tennessee constitution and Tennessee public policy, are purportedly within the Court's supplemental jurisdiction, pursuant to 28 U.S.C. § 1367. In her amended complaint Plaintiff also asserts diversity jurisdiction, since she and Citimortgage are diverse. Plaintiff seeks declaratory relief pursuant to the Declaratory Judgment Act declaring the Tennessee foreclosure process is unconstitutional, as well as a ruling that the Tennessee foreclosure process violates the Tennessee constitution and Tennessee public policy. Plaintiff requests this Court declare she was entitled to reasonable notice and a meaningful opportunity to be heard before foreclosure could take place, declare unconstitutional myriad provisions in Tennessee's statutes concerning non-judicial foreclosure, reach numerous conclusions about the specific features that would characterize a lawful non-judicial foreclosure regime, and set aside the foreclosure by Citimortgage.
Citimortgage urges the Court to dismiss Plaintiff s complaint for failure to state a claim. See Fed. R. Civ. P. 12(b)(6). Citimortgage argues the non-judicial foreclosure at issue does not constitute § 1983 "state action," thus there is no federal question.
A Rule 12(b)(6) motion should be granted when it appears "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Lewis v. ACB Bus. Servs., Inc., 135 F.3d 389, 405 (6th Cir. 1998). For purposes of this determination, the Court construes the complaint in the light most favorable to the Plaintiff and assumes the veracity of all well-pleaded factual allegations in the complaint. Thurman v. Pfizer, Inc., 484 F.3d 855, 859 (6th Cir. 2007). The same deference does not extend to bare assertions of legal conclusions, however, and the court is "not bound to accept as true a legal conclusion couched as a factual allegation." Papasan v. Allain, 478 U.S. 265, 286 (1986). The Court next considers whether the factual allegations, if true, would support a claim entitling the Plaintiff to relief. Thurman, 484 F.3d at 859. Although a complaint need only contain a "short and plain statement of the claim showing that the pleader is entitled to relief," Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Fed. R. Civ. P. 8(a)(2)), this statement must nevertheless contain "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. In other words, "[T]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
Upon consideration of the pleadings and briefs, the Court concludes Plaintiff s Constitutional claim should be dismissed for failure to state a claim, and the remaining state law claims should be dismissed pursuant to the Court's discretionary authority to refrain from granting equitable relief.
1. Constitutional Claim
It is well-established that the Fourteenth Amendment Due Process clause applies to state action, not private conduct. See Flagg Brothers, Inc. v. Brooks, 463 U.S. 149, 156 (1978). Thus, on its face, Plaintiffs complaint seems not to state a claim since the non-judicial foreclosure at issue is by definition a contractually-determined act involving private parties, not the state. Plaintiff recognizes this hurdle to her claim, but argues that Tennessee statutes recognizing, enforcing, and regulating non-judicial foreclosure effectively "convert" such foreclosures into state action. This argument is unpersuasive.
"[T]he actions of a private party will not be attributed to the state unless the state actually compels the action." King v. Emery, No. 87-5419, 1988 WL 1101, *1 (6th Cir. 1988); see also United States v. Coleman, 628 F.2d 961, 964 (6th Cir. 1980) (). Plaintiff provides a laundry-list of terms in Tennessee's non-judicial foreclosure statutes that purportedly make the state "pervasively involved" in the foreclosure process.1 However, these provisions show only that Tennessee recognizes the right of private parties to contract for power of sale, provides some default terms in the event contracts authorizing power of sale are silent on some issues, and will enforce such contracts. They do not show that Tennessee compels non-judicial foreclosure, or is otherwise so entwined with the non-judicial foreclosure process that its apparent private character is only illusory. In fact, if Tennessee's recognition and willingness to enforce private contracts authorizing non-judicial foreclosure amounts to State action, it is difficult to see why the enforcement of almost any private contractual remedy in Tennessee would not be State action.
The conclusion that Tennessee's statutes recognizing and enforcing non-judicial foreclosure do not "convert" such foreclosures into State action is consistent with the consensus of courts, including the Sixth Circuit and this District. In King, 1988 WL 1101 at *1, the Sixth Circuit held Tennessee's statutory recognition of non-judicial foreclosures "falls short of the compulsion required to establish state action," and affirmed this Court's dismissal of a case bringing constitutional challenges to the statutes. On facts quite similar to the case at bar, the Sixth Circuit stated:
The district court correctly concluded that this private foreclosure sale does not constitute state action. The Supreme Court has held that where state involvement in a private action constitutes no more than acquiescence or tacit approval, the private action is not transformed into state action even if the private party would not have acted without authorization of state law. Flagg Bros. v. Brooks, 436 U.S. 149 (1978). Indeed, under the Flagg standard, the actions of a private party will not be attributed to the state unless the state actually compels the action. United States v. Coleman, 628 F.2d 961, 964 (6th Cir. 1980).
Tennessee does not compel the use of private nonjudicial foreclosure sales in financing agreements, but rather allows the creditor to choose between judicial sale or private nonjudicial sale. Plaintiff contends that the two Tennessee Supreme Court cases, decided in the...
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