Farzan v. Bayview Loan Servicing, LLC.

• Decision Date: 17 February 2021
• Docket Number: Civil Action No. 3:20-cv-03330-FLW
• Parties: REZA FARZAN, Appellant, v. BAYVIEW LOAN SERVICING, LLC., et al., Appellees.
• Court: U.S. District Court — District of New Jersey

REZA FARZAN, Appellant, v. BAYVIEW LOAN SERVICING, LLC., et al., Appellees.

Civil Action No. 3:20-cv-03330-FLW

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

February 17, 2021

*NOT FOR PUBLICATION*

OPINION

WOLFSON, Chief Judge

:

This matter arises out of a state foreclosure action and related proceedings in the United States Bankruptcy Court for the District of New Jersey ("USBC"). After petitioning for Chapter 13 bankruptcy, pro se Plaintiff Reva Farzan filed an Adversary Complaint against Bayview Loan Servicing, LLC, its law firm Schiller, Knapp, Lefkowitz, & Hertzal LLP, and Samantha Dickie, a notary (collectively, "Defendants"). Farzan alleged that Defendants forged various documents relating to his mortgage. The USBC dismissed Farzan's Adversary Complaint under the Rooker-Feldman doctrine, holding that the lower federal courts cannot hear cases that are essentially appeals from state court judgments. The question on appeal is whether that dismissal was proper.¹ For the following reasons, the Court AFFIRMS the USBC's Order granting Defendants' Motion to Dismiss.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Because of the complicated and lengthy procedural history in this case, but the parties' narrow dispute on appeal, the Court recounts only certain facts it deems relevant.² Farzan executed a mortgage for the property located at 23 Twin Terrace, Holmdel, New Jersey, with American Mortgage Network, Inc., on February 14, 2005, in the amount of $359,650. In 2009, Mortgage Electronic Registration Systems, Inc., a nominee of American Mortgage, assigned the note to J.P. Morgan Chase, which then assigned it to Bayview in 2014. Bayview and Farzan executed a loan modification in 2015. Still, the loan went into default, and in 2016, Bayview initiated a foreclose action in Superior Court, Monmouth County, Chancery Division. See Def. Br. II, Ex. A.

Farzan vigorously contested the foreclosure action. In his state court Answer, he contended that the assignments were "fraudulent," the signatures on them were forged, the signatories lacked the authority to execute them in any event, Bayview could not foreclose because it did not possess the original mortgage note, and he never agreed to the modification. Id., Ex. B., at 3, 6, 14-16. Bayview moved for summary judgment in January 2017, which the court granted, notwithstanding the fact that J.P. Morgan Chase lost the note. Id., Exs. C-E. Then, for the better part of two years, Farzan filed numerous appeals, dismissal motions, removal motions, and motions for a stay, id., Exs. G-H, as well as a separate federal action against J.P. Morgan Chase,³ id., Exs. I-J, all of which rehashed the contentions in his Answer. None was successful. The state court entered final judgment on September 3, 2019. Id., Ex. F. On October 10, 2019, before the state court deadline to appeal the judgment, Farzan filed for Chapter 13 bankruptcy. See Case No. 19-29256, ECF No. 1. In connection with that petition, on November 4, 2019, he filed an Adversary Complaint challenging the authenticity of the 2009 and 2014 assignments and the 2015 loan modification. Def. Br. II, Ex. K; see Case No. 19-02228, ECF No. 1. In short, as Farzan has maintained since the beginning, Bayview has no standing to foreclose because of the allegedly forged or fraudulent documents, which he claims he never signed, and he has no obligation to pay the mortgage or judgment. Bayview moved to dismiss.⁴

In a hearing on January 28, 2020, Farzan admitted that he had already litigated the foreclosure in state court, see Case No. 20-03330, ECF No. 2, Ex. 3 (Jan. 28 Hearing), at T4:11-13, and did not have an appeal pending there, id. at T3:21-24, but nevertheless was "disputing" Bayview's "standing to foreclose." Id. at T6:20-22. The USBC explained that "the State court has made a decision on that already," which "is not for me to re-review." Id. at T7:1-12. Farzan responded that the Rooker-Feldman doctrine "does not apply when there's a fraud," id. at T7:13-16, but the USBC noted that "the State court Judge found that there was no fraud . . . . [s]o, [the Court] can't revisit that" either. Id. at T7:17-20. Farzan then alleged forgery, but the USBC noted once again that Farzan "brought all that up to the State court judge." Id. at T8:12-16. Accordingly, in an oral decision, the USBC "dismiss[ed] the complaint . . . based on . . . the Rooker-Feldmandoctrine that says that [federal courts] can't do anything about facts and issues that were presented before a State court that the State court has decided already."⁵ Id. at T12:22-13:1.

Unsatisfied with the outcome, Farzan appealed. The question is whether Rooker-Feldman bars the USBC from exercising subject matter jurisdiction over the claims in Farzan's Adversary Complaint.⁶ Farzan insists the answer is no for reasons which are difficult to discern, but which seem to center on whether there is actually a final judgment in the state court foreclosure action and whether Rooker-Feldman exempts allegations of fraud. Defendants contend that the USBC "properly concluded that it lack[ed] jurisdiction" because "all of [Farzan's] claims are inextricably tied to the underlying foreclosure proceeding and either were, or could have been litigated in that action," Def. Br. I, at 9, and as such, constitute "a collateral attack on the state court [judgment]." Def. Br. II, at 14.

Since Farzan filed his appeal, two important events have occurred in the underlying bankruptcy proceedings. First, the USBC granted stay relief to Bayview, which enabled it to commence foreclosure proceedings. See In re Farzan, No. 19-29256, 2020 WL 2769046, at *10-11 (Bankr. D.N.J. May 20, 2020). Farzan appealed that decision, but I dismissed it on October 20, 2020, for failure to prosecute. See ECF No. 87; In re New Century TRS Holdings, Inc., 619 Fed. App'x. 46, 48 (3d Cir. 2015) (finding that a court, "in its discretion, may dismiss a bankruptcy appeal [on such grounds]"). Second, the USBC issued an Order confirming Farzan's ModifiedChapter 13 Plan on July 16, 2020. See Case No. 19-29256, ECF No. 84. That Order provides that Bayview "will be paid outside of the [] Plan." Id. at 3.

II. LEGAL STANDARD

This Court has jurisdiction under 28 U.S.C. § 158(a). "[T]he nature of the issues presented on appeal" determines the "proper standard of review." In re Beers, No. 09-1666, 2009 WL 4282270, at *3 (D.N.J. Nov. 30, 2009). I review factual findings for clear error, Am. Flint Glass Workers union v. Anchor Resolution Corp., 197 F.3d 76, 80 (3d Cir. 1999), exercise of discretion for abuse thereof, In re United Healthcare Sys., Inc., 396 F.3d 247, 249 (3d Cir. 2005), and conclusions of law de novo. Mellon Bank, N.A. v. Metro Common's, Inc., 945 F.2d 635, 642 (3d Cir. 1991).

There does not appear to be a factual dispute here. Instead, Farzan objects to the legal conclusion reached by the USBC in granting Defendants' Motion to Dismiss—namely, that the Rooker-Feldman doctrine bars subject matter jurisdiction. I review that de novo. See In re JOL Advisors, Inc., No. 15-7912, 2017 WL 772912, at *7 (D.N.J. Feb. 28, 2017) (applying de novo review when a bankruptcy court granted a motion to dismiss); In re Farrington, No. 17-26505, 2019 WL 1149881, at *3 (D.N.J. Mar. 11, 2019) (applying de novo review when a bankruptcy court invoked Rooker-Feldman). Where a court lacks subject matter jurisdiction under Rooker-Feldman, as here, dismissal is appropriate. Jacobsen v. Citi Mortg. Inc., No. 17-1555, 2017 WL 3877848, at *1 (D.N.J. Sept. 5, 2017), aff'd sub nom., 715 Fed. App'x. 222 (3d Cir. 2018).

III. DISCUSSION

The Rooker-Feldman doctrine "prevents the lower federal courts from exercising jurisdiction over cases brought by state-court losers challenging state-court judgments renderedbefore the district court proceedings commenced." Lance v. Dennis, 546 U.S. 459, 460 (2006). It is implicated when, "in order to grant the federal plaintiff the relief sought, the federal court must determine that the state court judgment was erroneously entered or must take action that would render that judgment ineffectual." FOCUS v. Allegheny County Court of Common Pleas, 75 F.3d 834, 840 (3d Cir. 1996). It applies "equally to federal bankruptcy courts." In re Madera, 586 F.3d 228, 232 (3d Cir. 2006); In re Knapper, 407 F.3d 573, 582 (3d Cir. 2005). A federal court lacks subject matter jurisdiction pursuant to Rooker-Feldman when "(1) the federal plaintiff lost in state court; (2) the plaintiff complain[s] of injuries caused by [the] state-court judgments; (3) those judgments were rendered before the federal suit was filed; and (4) the plaintiff is inviting the district court to review and reject the state judgments." Great Western Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159, 167-69 (3d Cir. 2010) (quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 283 (2005)).

A. Farzan Lost in State Court and Judgment Was Rendered Before This Suit

The first and third Rooker-Feldman elements are satisfied in this case. Farzan lost the foreclosure action at summary judgment in January 2017, the state court entered final judgment in September 2019, Farzan did not file his Chapter 13 petition until October 2019, and he did not file the present Adversary Complaint until November 2019. Accord In re Farrington, 2019 WL 1149881, at *4 ("In or around May 2017, Appellant was the losing party in the Foreclosure Action in the Superior Court of New Jersey. Appellant did not file the Bankruptcy Action until August 2017 and did not file her Adversary Complaint in the Bankruptcy Court until December 2017, i.e., several months after the Superior Court entered final judgment against [her].").

Farzan insists that "judgment" was not actually "rendered" before he filed his Adversary Complaint because he may still appeal in state court. See Pl. Br., at 14 ("The alleged final judgmentorder of 9/3/2019 has not been affirmed by the Supreme Court of NJ."); id. at 10-11 ("...