Williams v. PRK Funding Servs., Inc.

• Decision Date: 06 July 2018
• Docket Number: CASE NO. C18-48 RSM
• Citation: Williams v. PRK Funding Servs., Inc., CASE NO. C18-48 RSM (W.D. Wash. Jul 06, 2018)
• Court: U.S. District Court — Western District of Washington
• Parties: DAMON CHARLES WILLIAMS, Plaintiff, v. PRK FUNDING SERVICES, INC., et al., Defendants.

DAMON CHARLES WILLIAMS, Plaintiff, v. PRK FUNDING SERVICES, INC., et al., Defendants.

CASE NO. C18-48 RSM

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

July 6, 2018

ORDER ON PENDING MOTIONS

I.INTRODUCTION

Pro se Plaintiff¹ has filed suit against 29 named Defendants and 100 Doe Defendants.Pending before the Court are five motions to dismiss:

1) Motion of Defendants City of Seattle, Melvin Britt Jr., & Ronald Campbell to Dismiss for Lack of Subject Matter Jurisdiction and Failure to State a Claim.Dkt. #24.The Court will refer to the City of Seattle as "Defendant City," to Melvin Britt Jr. as "Defendant Britt," to Ronald Campbell as "Defendant Campbell," and to these Defendants collectively as the "City Defendants."

2) DefendantJonathan Dreitzler's Motion to Dismiss and Joinder in City of Seattle Defendants' Motion to Dismiss.Dkt. #41.The Court will refer to Jonathan Dreitzler as "Defendant Dreitzler."

3) DefendantsWindermere Services Company's and Kathyrn [sic] Hinds' Motion to Dismiss for Failure to State a Claim.Dkt. #45.The Court will refer to Windermere Services Company as "Defendant Windermere," to Kathryn Hinds as "Defendant Hinds," and to these Defendants collectively as the "Windermere Defendants."

4) King County and Thomas MacKenzie Brown's Motion to Dismiss.Dkt. #53.The Court will refer to King County as "Defendant County," to Thomas MacKenzie Brown as "Defendant Brown," and to these Defendants collectively as the "County Defendants."

5) DefendantWells Fargo Bank, N.A.'s Motion to Dismiss.Dkt. #74.The Court will refer to Wells Fargo Bank, N.A.² as "DefendantWells Fargo."

Plaintiff has opposed these Motions.³Dkts. #55-60, #79-84, #89, #92-#95, and #97.⁴Also pending before the Court is Plaintiff's Motion and Notice of Motion to Strike the Notice ofAppearance of Michael S. Deleo & Michael T. Callan.Dkts. #76-78.Defendant Dreitzler has opposed Plaintiff's Motion.Dkt. #88.Having reviewed the record and for the reasons set forth below, the Court resolves the Motions as follows.

II.BACKGROUND⁵

Plaintiff's claims relate to a 2009 non-judicial foreclosure and subsequent trustee sale of property in which Plaintiff may have had an ownership interest.The numerous parties sued by Plaintiff are involved, to varying degree, in the events leading up to or following that sale.The Court will attempt to present a brief overview and detail the involvement of individual Defendants with regard to their specific motions below.

Plaintiff secured a loan of one million three hundred eleven thousand dollars ($1,311,000) from Private Lenders Group, LLC("PLG") on or about January 24, 2007.SeeDkt. #3-1at 17-39.The loan was intended to be used by Williams Family Holdings LLC—of which Plaintiff was a member/manager—for the purpose of financing and funding the construction of a single family residence at 515 35th Avenue South, Seattle, WA. Id. at 17.The loan was secured by a deed of trust upon the property.Id. at 37-38.Following closing of the transaction, PLG assigned the promissory note to PRK Funding Services, Inc.("PRK"), as custodian for the noteholders in PLG Fund I, LLC.Id. at 32, 37-38.

Plaintiff began construction on the property but the project was not completed in the anticipated timeframe and ran into financial trouble due to the conduct of PLG and its agents.Dkt. #3at ¶ 34;Dkt. #3-1at 2-13.Plaintiff attempted to refinance the project.Id.But the trustee on the deed of trust ultimately initiated non-judicial foreclosure under Chapter 61.24, Revised Code of Washington.Dkt. #3-1at 37-39; 84-85.The trustee sale was scheduled for September11, 2009.Id. at 38.Plaintiff filed for voluntary Chapter 7 bankruptcy on September 10, 2009.Id. at 15.Nevertheless, the trustee held the trustee sale, as scheduled, on September 11, 2009, with PRK purchasing the property.Id. at 37-39.Plaintiff's Chapter 7 bankruptcy was later dismissed, on October 7, 2009, "for Failure to File Schedules or Statements."Id. at 68.

After the trustee sale, PRK and Plaintiff each asserted ownership over the property.Id. at 78, 84-85.On January 19, 2010, Plaintiff filed a "Notice of Fraud and Intent to Litigate" against the property with the King County Auditor.Id. at 89-92.On January 25, 2010, representatives of PRK and PLG summoned the police to the property, gained entry to the structure, and towed a vehicle from the property.Id. at 41-62.Thereafter, Plaintiff obtained a temporary protection order against Jonathan Dreitzler, an agent of PLG and PRK, on January 26, 2010, from the King County District Court.Id. at 120-27.PRK initiated an unlawful detainer action against Plaintiff in King County Superior Court on January 29, 2010.Id. at 111-17.Also on January 29, 2010, Plaintiff filed a lis pendens against the property with the King County Auditor.Id. at 131-33.

Ultimately, on December 8, 2010, PRK sold the property to Kirill Gavrylyuk and Chandrika Shankarnarayan and they have remained in possession ever since.Id. at 94.

III.DISCUSSION

A.The Court Has Subject Matter Jurisdiction

As an initial matter, City Defendants and County Defendants seek dismissal under Federal Rule of Civil Procedure 12(b)(1) on the basis that this Court lacks jurisdiction over Plaintiff's action.Dkt. #24at 5-9;Dkt. #53at 3-4.Plaintiff bears the burden of establishing that his case is properly within the limited jurisdiction of the federal court.Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377(1994);In re Ford Motor Co./Citibank (South Dakota), N.A.,264 F.3d 952, 957(9th Cir.2001).At the pleading stage, Plaintiff must plead sufficient allegations to show a proper basis for the federal court to assert subject matter jurisdiction over the action.McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189(1936).

Federal question jurisdiction exists when the plaintiff's claim arises "under the Constitution, laws, or treaties of the United States."28 U.S. C. § 1331."[A] federal question [must be] presented on the face of the plaintiff's properly pleaded complaint."Caterpillear, Inc. v. Williams, 482 U.S. 386, 392(1987).A complaint making state law claims with passing reference to a federal statute will not establish jurisdiction.Lippitt v. Raymond James Financial Services, Inc., 340 F.3d 1033, 1040-41(9th Cir.2003).Rather, the state law claims must implicate a substantial federal question.Id. at 1042.Jurisdiction is proper where "the right to relief depends on the resolution of a substantial, disputed federal question."Id.(quotingARCO Envtl. Remediation, L.L.C. v. Dep't of Health and Envtl. Quality of the State of Mont., 213 F.3d 1108, 1114(9th Cir.2000))(quotation marks omitted).

City Defendants and County Defendants argue that Plaintiff's Complaint fails to assert a federal question because any Constitutional claims are frivolous and mere seasoning to state law claims.Dkt. #24at 5-9;Dkt. #53at 3-4.City Defendants argue further that to the extent Plaintiff's Complaint asserts violations of the automatic bankruptcy stay under 11 U.S.C. § 362, the bankruptcy courts have exclusive jurisdiction over those claims.Dkt. #24at 6-8.But the Court is satisfied that federal question jurisdiction exists here.

First, Plaintiff asserts somewhat vague allegations related to racketeering, presumably under 18 U.S.C. § 1961 et seq.Dkt. #3 at ¶¶ 37-52.While the allegations do not specifically invoke the federal statute—as opposed to Washington's analog, Chapter 9A.82, Revised Codeof Washington—, the allegations utilize the phrasing of the federal statute.Plaintiff's RICO claims alone are sufficient to invoke this Court's jurisdiction and will be addressed below.

Second, Plaintiff's central grievance is that the trustee sale occurred in violation of the automatic bankruptcy stay, in violation of federal law.⁶Even so, City Defendants argue that violations of the bankruptcy stay are "within the exclusive jurisdiction of the federal bankruptcy courts."Dkt. #24at 7(citingMSR Exploration, Ltd. v. Meridian Oil, Inc., 74 F.3d 910, 916(9th Cir.1996)).But City Defendants' reliance on MSR Exploration, Ltd. is misplaced.In that case, the Ninth Circuit concluded that a state law claim of malicious prosecution, which arose out of a creditor's claim against the debtor in an earlier bankruptcy, was preempted by the bankruptcy code.Id. at 913.As part of the court's consideration, it noted that the bankruptcy code provided the debtor with sufficient protections from false creditor claims within the confines of the bankruptcy action.Id. at 915.Thus, while a claim for a violation of the bankruptcy code was not before the court, it opined that such a claim should be asserted within the underlying bankruptcy proceeding.Id. at 916.

MSR Exploration, Ltd. does not preclude the Court's jurisdiction and more recent precedent supports this Court's jurisdiction, at least at this early stage.SeeIn re Curtis, 571 B.R. 441(9th Cir. BAP2017)(noting that that "district courts have jurisdiction over bankruptcy cases and proceedings; the bankruptcy court's jurisdiction over such matters is purely and solely derivative of the district court's jurisdiction . . . .[and] entirely dependent upon the referral by the district court").While this Court has generally referred bankruptcy matters to the bankruptcy court, LCR 87(a), the Court is permitted to withdraw the referral and may do so by exercisingjurisdiction.28 U.S.C. § 157(d);Anderson v. Fed. Deposit Ins. Corp., 918 F.2d 1139(4th Cir.1990)(finding that district court impliedly withdrew referral to bankruptcy court where it exercised jurisdiction over a case in which the bankruptcy trustee was substituted as plaintiff).As noted in In re Curtis, "[l]itigants are not precluded from requesting transfer of a case from a district court to a bankruptcy court."571 B.R. at 449;LCR 87(b).But at this early stage and due to the numerous other...