Horowitz v. Sulla, CIVIL NO. 15-00186 JMS-BMK

• Decision Date: 11 September 2015
• Docket Number: CIVIL NO. 15-00186 JMS-BMK
• Parties: LEONARD G. HOROWITZ, an Individual; and SHERRI KANE, an Individual, Plaintiffs, v. PAUL J. SULLA, JR., an Individual; ET AL., Defendants.
• Court: U.S. District Court — District of Hawaii

LEONARD G. HOROWITZ, an Individual; and SHERRI KANE, an Individual, Plaintiffs, v. PAUL J. SULLA, JR., an Individual; ET AL., Defendants.

CIVIL NO. 15-00186 JMS-BMK

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAII

September 11, 2015

ORDER (1) DISMISSING COUNTS I, V, VI, VII, VIII, IX, AND XIX; (2) STAYING ACTION UNDER COLORADO RIVER WATER CONSERVATION DISTRICT v. UNITED STATES, 424 U.S. 800 (1976); AND (3) DENYING PLAINTIFFS' COUNTER-MOTION FOR SANCTIONS, DOC. NO. 23

I. INTRODUCTION

This action by pro se Plaintiffs Leonard G. Horowitz ("Horowitz") and Sherri Kane ("Kane") (collectively "Plaintiffs") is another attempt by Plaintiffs to have this federal court intervene in an ongoing and long-running dispute between Plaintiffs and Defendant Paul J. Sulla, both individually and in a corporate capacity as a Law Corporation ("Sulla"), among others.¹ The disputearises out of a foreclosure on a property located in Pahoa, Hawaii, and has been the subject of several past and pending state and federal court actions.² See, e.g., Hester v. Horowitz, Civ. No. 14-00413 JMS-RLP (D. Haw. 2014) (remanded to the Third Circuit Court of the State of Hawaii on January 7, 2015); Horowitz v. Sulla, Civ. No. 13-00500 HG-BMK (D. Haw. 2013) (dismissed for lack of subject matter jurisdiction on March 14, 2014); Hester v. Horowitz, No. 3RC14-1-000466 (Haw. 3rd Cir. Ct. 2014); Hester v. Horowitz, No. 3CC14-1-000304 (Haw. 3rd Cir. Ct. 2014) (pending);³ Horowitz v. Sulla, No. CAAP-15-0000094 (appeal pending in the Hawaii Intermediate Court of Appeals); and Hester v. Horowitz, CAAP-15-0000658 (appeal pending in the Hawaii Intermediate Court of Appeals).⁴

Before the court is (1) Sulla's "Motion to Dismiss 'Verified Complaint for Deprivation of Rights and Injunctive Relief' filed May 19, 2015," Doc. No. 15; (2) Defendant "The Eclectic Center of Universal Flowing Light-Paulo Roberto Silva E. Souza's" Substantive Joinder, Doc. No. 16; and (3) Plaintiffs' "Counter-Motion for Sanctions in Reply to Defendant Paul J. Sulla, Jr.'s Motion to Dismiss." Doc. No. 23. Based on the following, the court GRANTS the Motion to Dismiss, and Substantive Joinder, in PART. The court DISMISSES Counts I, V, VI, VII, VIII, IX, and XIX. The court STAYS the remainder of the action under Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976) ("Colorado River"). Finally, the court DENIES Plaintiffs' Counter-Motion for Sanctions.

II. BACKGROUND

Plaintiffs' seventy-two page Verified Complaint (along with a Declaration of Horowitz and Kane, an Affidavit of Horowitz, and Exhibits A to S attached to the Verified Complaint) alleges the following twenty counts:

Count I Deprivation of Civil Rights (42 U.S.C. § 1983)

Count II Violation of 42 U.S.C. § 1981(a)(b)(c) (Equal Rights Under the Law)

Count III Violation of 15 U.S.C. §§ 1692(e)(2)(A) et seq. (False and Misleading Representations in Debt Collection)Count IV Violation of Hawaii Revised Statutes ("HRS") §§ 480-2 and 480-8 (Unfair and Deceptive Trade Practices)

Count V Violation of 18 U.S.C. § 241 (Conspiracy Against Rights)

Count VI Violation of 18 U.S.C. § 242 (Deprivation of Rights Under Color of Law)

Count VII Violation of 18 U.S.C. § 1341 (Mail Fraud)

Count VIII Violation of 18 U.S.C. § 1343 (Wire Fraud)

Count IX Violation of 18 U.S.C. § 1342 (Fictitious name)

Count X Malpractice

Count XI Fraudulent Transfer of Property (HRS § 651C)

Count XII Conversion of Real Property

Count XIII Trespass to Chattels

Count XIV Defamation and/or Commercial Disparagement

Count XV Intentional Infliction of Emotional Distress

Count XVI Wrongful Foreclosure

Count XVII Civil RICO (18 U.S.C. § 1964)

Count XVIII Fraud and/or Misrepresentation

Count XIX Violation of 18 U.S.C. § 514(a) (Fictitious obligations)

Count XX Slander of Title

These claims arise from the same set of circumstances described inother cases from this court regarding a judicial and non-judicial foreclosure by Defendant Jason Hester (represented by Sulla) on real property located at 13-3775 Pahoa-Kalapana Road (the "property") in Pahoa, Hawaii. See generally Horowitz v. Sulla, 2014 WL 1048798, at *2-3 (D. Haw. Mar. 14, 2014) (Civ. No. 13-00500 HG-BMK) (describing the same background); Doc. No. 46 (Hester v. Horowitz, Civ. No. 14-00413 JMS-RLP), Order at 2-7 (similar description).

Without explaining all of the alleged details, the instant Complaint (as well as the other complaints or counterclaims) alleges that Horowitz and/or the "Royal Bloodline of David," with Horowitz as its "Overseer," obtained the property in 2004 from Cecil Loran Lee. Unbenownst to Horowitz, Lee was a felon, and the property was subject to certain liens. The property was subsequently the subject of a judicial foreclosure action in 2005, and (among other proceedings) non-judicial foreclosure, and quiet title/summary possession actions by Hester in 2010, 2011, and 2014. The Complaint alleges that Sulla, Hester, and other persons and entities were involved in a complicated scheme to defraud Plaintiffs and to obtain the property from Horowitz and/or the Royal Bloodline of David. It also alleges (as before) potentially-related libelous or defamatory statements by related parties, including Defendant Alma Ott. More specifically, Hester (represented by Sulla) allegedly wrongfully obtained title to the propertythrough a 2010 non-judicial foreclosure, leading to quiet title/summary possession proceedings that are now pending against Horowitz in the Third Circuit Court of the State of Hawaii in Hester v. Horowitz, No. 3CC14-1-000304 (Haw. 3rd Cir. Ct. 2014) (the "pending state court action").

The pending state court action is the same proceeding that Hester filed in state court in August 2014, but which Horowitz and Kane removed to this court in September 2014. See Hester v. Horowitz, Civ. No. 14-00413 JMS-RLP (D. Haw. Sept. 12, 2014). This court remanded it to state court on January 8, 2015 for lack of subject matter jurisdiction. See Hester v. Horowitz, 2015 WL 127890, at *1 (D. Haw. Jan. 8, 2015). Most important for present purposes, Horowitz and Kane filed a lengthy First Amended Counterclaim against Hester (impleading Sulla and others) in that action while it was pending in this court, amending their counterclaim previously filed in state court. See Doc. No. 10 (Civ. No. 14-00413 JMS-RLP). That First Amended Counterclaim alleged over twenty counts (including many of the same counts, such as a civil RICO claim and defamation-related claims, that are alleged against Sulla and/or Defendant Alma Ott in this action) based on the premise that Sulla, Hester, and others schemed to deprive Horowitz and/or the Royal Bloodline of David of the property. And as a result of this court's January 8, 2015 remand, that First Amended Counterclaim was alsoremanded to state court as part of that same action.

Essentially, then, the Complaint in this action duplicates the First Amended Counterclaim that is part of the pending state court action. (At minimum, the claims in the Complaint arise out of the same transactions, or series of transactions, at issue in the pending state court action -- and thus could have been asserted as part of that First Amended Counterclaim). See Kauhane v. Acutron Co., 71 Haw. 458, 464, 795 P.2d 276, 279 (1990) (reasoning, for purposes of res judicata, that "[t]o determine whether a litigant is asserting the same claim in a second action, the court must look to whether the 'claim' asserted in the second action arises out of the same transaction, or series of connected transactions, as the 'claim' asserted in the first action") (citing Restatement (Second) of Judgments § 24 (1982)).

Moreover, the state court subsequently dismissed the duplicative First Amended Counterclaim on March 27, 2015. See Doc. No. 49 (No. 3CC14-1-000304 (3rd Cir. Ct. Haw.) (available at hoohiki1.courts.state.hi.us/jud/Hoohiki/main.htm?spawn=1). In dismissing, the state court adopted "in total the arguments submitted on behalf of Mr. Hester," and "specifically reject[ed] the argument of [Horowitz and Kane] as to any type of tolling of their causes of action." See id. (also available at www.courts.state.hi.us/legal_references/records/jims_system_availability.html (Hester v. Horowitz, CAAP-15-0000327), Notice of Appeal, Ex. B).⁵ Horowitz and Kane attempted to appeal that dismissal to Hawaii's appellate courts, but the appeal was dismissed for lack of appellate jurisdiction because final judgment has not entered. See Hester v. Horowitz, 2015 WL 3936947, at *2 (Haw. Ct. App. June 25, 2015). After the state court dismissed the First Amended Counterclaim, Plaintiffs filed this duplicative action on May 19, 2015. Doc. No. 1.

III. DISCUSSION

A. Counts I, V, VI, VII, VIII, IX, and XIX are Dismissed

The court begins by examining its subject matter jurisdiction. Plaintiffs claim federal question jurisdiction, invoking "28 U.S.C. §§ 1331, 1337(a), 1345 and 1355(a); 42 U.S.C. § 1988; and Article III, Section 2, of the Constitution." Doc. No. 1, Compl. ¶ 5.⁶ In this regard, the Complaint assertsseveral federal causes of action that plainly fail.⁷

Count I is brought under 42 U.S.C. § 1983 for deprivation of civil rights under "color of state law." See, e.g., West v. Atkins, 487 U.S. 42, 48 (1988). But none of the Defendants is a state actor, and nothing is alleged that could possibly be construed as joint action with state or county government, or fairly attributed to the government. See, e.g., Kirtley v. Rainey, 326 F.3d 1088, 1092 (9th Cir. 2003) ("While generally not applicable to private parties, a § 1983 action can lie against a private party when 'he is a willful participant in joint action with the State or its agents.'") (quoting Dennis v. Sparks, 449 U.S. 24, 27 (1980)); Sutton v. Providence St. Joseph Med. Or., 192 F.3d 826, 835 (9th Cir. 1999) ("The ultimate issue in determining whether a person is subject to suit under § 1983 is the same question posed in cases arising under the Fourteenth Amendment: is the alleged...