Gates v. Gusman, et al., No. 2:2015cv03898 - Document 50 (E.D. La. 2016)

Court Description: ORDER AND REASONS- IT IS ORDERED that this matter is STAYED. The matter shall be ADMINISTRATIVELY CLOSED without prejudice to its being reopened after resolution of the state court action if all issues have not been resolved or otherwise in the interest of justice. Signed by Judge Susie Morgan on 7/27/16.(cg)

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Gates v. Gusman, et al. Doc. 50 U N ITED S TATES D ISTRICT COU RT EASTERN D ISTRICT OF LOU ISIAN A GEORGE GATES, Plain tiff CIVIL ACTION VERSU S N O. 15 -3 8 9 8 MARLIN N . GU SMAN , ET AL., D e fe n d an ts SECTION : “E” ( 5) ORD ER AN D REAS ON S Before the Court are Defendant’s m otion for sum m ary judgm ent and Plaintiff’s m otion for sum m ary judgm ent. 1 Prior to ruling on the parties’ m otions for sum m ary judgm ent, the Court considers whether to exercise jurisdiction in light of Gates’ raising the sam e claim against the sam e party in a case pen ding before a Louisiana state court. BACKGROU N D Plaintiff George Gates (“Gates”) borrowed $ 25,0 0 0 from W.A.M.C. Investm ent Corporation and executed a prom issory note on Novem ber 16, 20 11. 2 Leonhard Casey (“Casey”), president of W.A.M.C. Investm ent Corporation, 3 is the holder and owner in due course of the note. 4 Gates agreed to pay 179 equal m onthly installm ents of $ 30 0 .0 4 beginning J anuary 1, 20 12, at an annual interest rate of 12 percent. 5 The loan was secured by residential property he owned, located at 9427 Streolitz Street in New Orlean s, Louisiana (“the Property”). 6 On August 29, 20 14, Casey’s attorney Irl Silverstein (“Silverstein”) filed a petition 1 R. Doc. 37 (Defendant’s m otion for sum m ary judgm ent); R. Doc. 40 (Plaintiff’s m otion for sum m ary judgm ent). 2 R. Doc. 37-4 at 2, 6– 7. 3 See id. at 8 . 4 Id. at 2. 5 Id. 6 Id. 1 Dockets.Justia.com for executory process on Casey’s behalf in the Civil District Court for the Parish of Orleans, State of Louisiana, pursuant to Louisiana Code of Civil Procedure art. 2631, et seq. 7 In Casey’s petition, Casey alleged that Gates failed to pay the installm ent due May 1, 20 13, and continuing installm ents thereafter, “thereby m aturing the unpaid principal balan ce of $ 24,539.61, together with interest thereon at the rate of 12% per annum until paid, together with accrued[] but unpaid late charges in the sum of $ 240 .0 0 , together with 25% attorney’s fees.”8 An Orleans Parish judge issued a writ of seizure directing the sheriff of Orleans Parish to seize and sell the Property. 9 The Property was sold to Yergalem H. Beraki (“Beraki”) at a sheriff’s sale on April 2, 20 15. 10 Beraki obtained a writ of possession for the Property on Septem ber 4, 20 15. 11 On April 29, 20 15, Gates filed a suit in the Civil District Court for the Parish of Orleans, State of Louisiana, against Gusm an, Casey, Silverstein, 12 Beraki, and Bradley Egenberg, an attorney who had represented Gusm an. 13 In the state-court case, Gates seeks to nullify the sheriff’s sale, arguing that he did not receive notice of the sheriff’s sale, and thus he was deprived of his property without due process under Mennonite Board of Missions v. Adam s 14 and Mullane v. Central Hanover Bank & Trust Co., 15 in violation of the U.S. Constitution. 16 Gates also asserts state-law causes of action for fraud and ill 7 See id. Id. at 3. 9 Id. at 5. 10 Id. at 19; R. Doc. 37-8 at 2. 11 R. Doc. 37-4 at 35. 12 The state court dism issed Gates’ claim s against Silverstein with prejudice on May 29, 20 15. See R. Doc. 37-9 at 73. 13 See R. Doc. 37-9. The case num ber is 20 15-40 72. 14 462 U.S. 791 (1983). 15 339 U.S. 30 6 (1950 ). 16 R. Doc. 37-9 at 4. 8 2 practices, detrim ental reliance, unfair trade practices, and unjust enrichm ent. 17 Gates seeks nullification of the sheriff’s sale and an injunction against his eviction from the Property. Gates also filed this suit in federal court against Sheriff Marlin N. Gusm an (“Gusm an”) on August 28, 20 15. 18 Gates nam ed Beraki as a defendant in an am en ded com plaint on Septem ber 2, 20 15, 19 and n am ed Casey as a defendant in a second am en ded com plaint on Septem ber 28, 20 15. 20 Gates alleges that Gusm an did not give him notice of the sheriff’s sale and deprived him of his property without due process under Mennonite and Mullane, in violation of the U.S. Constitution. 21 Gates seeks nullification of the sheriff’s sale and an injunction against his eviction from the Property. 22 On Septem ber 23, 20 15, Gates filed a m otion for a tem porary restrain ing order an d for a prelim inary injunction. 23 The Court granted the tem porary restraining order at a status conference on Septem ber 25, 20 15, subject to Gates’ posting a bond by Septem ber 28, 20 15. 24 Gates failed to post bond. 25 The Court therefore denied Gates’ m otion for a tem porary restraining order. 26 17 Id. at 5– 9. R. Doc. 1. 19 R. Doc. 2. Beraki’s nam e is m isspelled as “Baraki” in the am ended com plaint. 20 R. Doc. 16. Gates never effected service on Casey or Beraki of the federal com plaint, and on J anuary 19, 20 16, the Court ordered Gates to show good cause in writing as to why Casey and Beraki had not been served. R. Doc. 46. Gates failed to respond to the show-cause order, and on February 23, 20 16, the Court dism issed Gates’ claim s against Beraki and Casey without prejudice in accordance with Rule 4(m ) of the Federal Rules of Civil Procedure. R. Doc. 47. 21 See R. Doc. 16. 22 Id. 23 R. Doc. 11. 24 See R. Doc. 14. 25 See R. Doc. 20 . 26 Id. Gates filed another m otion for a tem porary restrain ing order on Septem ber 28 , 20 15, R. Doc. 17, which was the sam e as the m otion filed on Septem ber 23, 20 15, except that Gates also requested service on Leonhard Casey, who was added as a defendant in the am ended com plaint. R. Doc. 16. The Court den ied Gates’ second m otion for a tem porary restrain in g order on Septem ber 29, 20 15. R. Doc. 20 . 18 3 The Court also set a hearing on Gates’ m otion for a prelim inary injunction contingent upon Gates’ com plying with the deadlines set forth in Record Docum ent 14. 27 Gates failed to com ply with the Court’s deadlin es. Accordingly, the Court denied without hearing Gates’ m otion for a prelim inary injunction without prejudice on October 2, 20 15. 28 On October 28 , 20 15, Gusm an filed a m otion for sum m ary judgm ent, arguing Gates’ due process rights were not violated and that Gates has no right to nullify the sale, enjoin his eviction from the Property, or recover dam ages. 29 Gates also filed a m otion for sum m ary judgm ent on Novem ber 6, 20 15. 30 Gusm an filed an opposition to Gates’ m otion on Novem ber 24, 20 15. 31 LAW AN D AN ALYSIS Prior to ruling on the parties’ m otions for sum m ary judgm ent, the Court considers whether to exercise jurisdiction in light of Gates’ raising the sam e claim against the sam e party in his case pending before the Civil District Court for the Parish of Orleans, State of Louisiana. Federal courts have a “virtually unflagging obligation . . . to exercise the jurisdiction given them .”32 In “extraordinary and narrow circum stances,” however, a district court m ay abstain from exercising jurisdiction over a case, or postpone exercising jurisdiction, under Colorado River W ater Conservation District v. United States “when 27 R. Doc. 30 . Id. 29 R. Doc. 37. 30 R. Doc. 40 . Gates first filed his m otion for sum m ary judgm ent on October 26, 20 15, but due to deficiencies, the Court ordered him to refile his m otion to com ply with Rule 56 of the Federal Rules of Civil Procedure. See R. Doc. 35; R. Doc. 36. 31 R. Doc. 41. 32 Colo. River W ater Conserv ation Dist. v. United States, 424 U.S. 8 0 0 , 817 (1976). 28 4 there is a concurrent state proceeding, based on considerations of wise judicial adm in istration, giving regard to conservation of judicial resources and com prehensive disposition of litigation.”33 Courts abstain under Colorado River to avoid duplicative litigation when parallel proceedings are pending in federal and state court. 34 The Suprem e Court identified six factors courts should consider when determ ining whether “exceptional circum stances” exist that would perm it a district court to declin e exercising jurisdiction over a parallel federal action: (1) assum ption by either court of jurisdiction over a res; (2) relative inconvenience of the forum s; (3) avoidance of piecem eal litigation; (4) the order in which jurisdiction was obtained by the concurrent forum s; (5) to what extent federal law provides the rules of decisions on the m erits; and (6) the adequacy of the state proceedings in protecting the rights of the party invoking federal jurisdiction. 35 “These factors are not applied m echanically, but m ust be carefully balanced ‘with the balance heavily weighted in favor of the exercise of jurisdiction.’”36 Before applying these factors, the Court m ust determ ine whether the federal an d state actions are parallel. 37 Suits are “parallel” if they involve the sam e parties and the 33 Murphy v . Uncle Ben’s, In c., 168 F.3d 734, 737– 38 (5th Cir. 1999) (citin g Colo. River, 424 U.S. at 813) (internal quotation m arks om itted). See also Zerangue v. Maintenance Dredging, No. 11-191, 20 0 1 WL 1740 298 , at *1 (W.D. La. May 2, 20 11) (H ill, M.J .). 34 LAC Real Estate Holdings, L.L.C. v. Biloxi Marsh Lands Corp., 320 F. App’x 267, 270 (5th Cir. 20 0 9) (citing Diam ond Offshore Co. v. A&B Builders, Inc., 30 2 F.3d 531, 540 (5th Cir. 20 0 2), overruled on other grounds by Grand Isle Shipy ard, Inc. v. Seacor Marine, LLC, 58 9 F.3d 778 (5th Cir. 20 0 9)). 35 Stew art v. W estern Heritage Ins. Co., 438 F.3d 488 , 491 (5th Cir. 20 0 6) (quotin g Colo. River, 424 U.S. at 813). 36 Id. at 492. 37 LAC, 320 F. App’x at 270 (quoting Stew art, 438 F.3d at 492). 5 sam e issues, 38 though it “m ay be that there need not be applied in every instance a m incing insistence on precise identity” of parties and issues. 39 “Of central concern is whether there is ‘a substantial likelihood that the state litigation will dispose of all claim s presented in the federal case.’”40 The Court finds this case and the case before the state court are parallel. Gates is the plaintiff in both cases. 41 Gusm an, the only rem aining defendant in the federal action, is nam ed as a defendant in the state action. Gates’ state court suit raises the claim Gates m ade before this federal Court: whether his due process rights were violated for lack of notice of the sheriff’s sale. Although Gates also raises other issues an d nam es other defendants in the state-court lawsuit, “a federal case is considered parallel when there is a substantial likelihood that the state litigation will dispose of all claim s presented in the federal case.”42 There is no question in this case that resolution of the state-court case will dispose of the claim presently before this Court. The Court finds the federal action an d the state action are parallel. As a result, the Court m ust engage in the m ulti-factored analysis to determ in e whether there are exceptional circum stances warranting abstention or a stay of this case. 43 1. Assum ption by Either Court of Jurisdiction over a Res Neither the state court nor this Court has assum ed control over a property or 38 Id. (citing RepublicBank Dallas N at. Ass’n v. McIntosh, 8 28 F.2d 1120 , 1121 (5th Cir. 1987)). McIntosh, 828 F.2d at 1121; see also Brow n v. Pac. Life Ins. Co., 462 F.3d 384, 395 n.7 (5th Cir. 20 0 6). 40 Kenner Acquisitions, LLC v. BellSouth Telecom m ., In c., No. 0 6-3927, 20 0 7 WL 625833, at *2 (E.D. La. Feb. 26, 20 0 7) (Vance, J .) (quoting Lum en Const., Inc. v. Brant Const. Co., Inc., 78 0 F.2d 691, 695 (7th Cir. 1985)). 41 See id. at *2 (concludin g that the state and federal actions were parallel and findin g relevant that “Kenner Acquisitions is the plaintiff in both cases”). 42 Hanover Ins. Co. v. Plaquem ines Par. Gov’t, No. 12-1680 , 20 13 WL 1681892, at *5 (E.D. La. Apr. 17, 20 13) (Milazzo, J .) (citing Kenner Acquisitions, 20 0 7 WL 625833, at *2). 43 See Zerangue, 20 11 WL 1740 298, at *2. 39 6 vessel. The absence of this factor weighs against abstention. 44 2. The Relative Inconvenience of the Forum s The federal-court action and the state-court action are both in New Orleans, Louisiana. This factor, therefore, weighs against abstention. 45 3. The Avoidance of Piecem eal Litigation “The real concern at the hearth of the third Colorado River factor is the avoidance of piecem eal litigation, and the concom itant danger of inconsistent rulings . . . .”46 Although the case pen ding before this Court involves one plaintiff, one defendant, and one issue, the case pending before the state court involves the sam e plaintiff, several defendants including Gusm an, and several issues including the one pending before this Court. Were both cases to progress, this Court and the state court would decide the sam e issue and the danger of contradictory rulings exists. 47 Further, the state court is the only forum hearing Gates’ claim s for fraud and ill practices, detrim ental reliance, unfair trade practices, and unjust enrichm ent against Gusm an, Casey, Beraki, and Egenberg. The third factor strongly favors abstention to avoid piecem eal litigation. 48 4. The Order in w hich Jurisdiction W as Obtained Gates filed his state-court action on April 29, 20 15, and filed his federal-court action on August 28, 20 15. The state court was the first to obtain jurisdiction. “The fourth factor is not to be ‘m easured exclusively by which com plaint was filed first, but, rather, in 44 See Murphy , 168 F.3d at 738 (“The absence of this factor is not . . . a neutral item , of no weight in the scales. Rather, the absence of this first factor weighs against abstention.” (citations om itted) (internal quotation m arks om itted)). 45 See id.; Kenn er Acquisitions, 20 0 7 WL 625833, at *4. 46 Black Sea Inv., Ltd. v. United Heritage Corp., 20 4 F.3d 647, 650 – 51 (5th Cir. 20 0 0 ) (em phasis in original). 47 See Kenner Acquisitions, 20 0 7 WL 625833, at *4. 48 See Stew art, 438 F.3d at 492. 7 term s of how m uch progress has been m ade in the two actions.’”49 The state court has decided an exception of no cause of action under Louisiana law on the m erits. 50 In the federal case, on the other hand, there have been no substantive rulings on the m erits. The state litigation was filed first and has progressed further than the federal litigation. 51 This factor weighs in favor of abstention. 5. The Extent Federal Law Governs the Case In his federal case, Gates argues his due process rights were violated. Gates’ statecourt action raises a due process claim under the U.S. Constitution as well as several statelaw claim s. The Louisiana state court, as a court of general jurisdiction, is capable of adequately resolving Gates’ state and federal law claim s. 52 This factor is neutral. 6. Adequacy of State Court Proceedings The state litigation will protect the interest of both parties to this suit. Gates is the plaintiff in both cases, and Gates’ interest in both cases is the sam e: to nullify the sheriff’s sale an d enjoin his eviction from the Property. The Court finds that “the state court proceedings [are] adequate to protect the . . . plaintiff’s rights.”53 If any issues rem ain after the state court resolves the case before it, then this Court m ay lift the stay to resolve what rem ains properly before it. 54 Accordingly, this factor is neutral. 55 After balancing the Colorado River factors and weighing the com peting interests, the Court finds that this case should be stayed, particularly because “these parallel cases 49 Zerangue, 20 11 WL 1740 298, at *3 (quoting Black Sea, 20 4 F.3d at 651). See R. Doc. 37-9 at 73. 51 See R. Doc. 37-9. 52 See JPMorgan Chase Bank, N .A. v. Kelly , No. 10 -160 1, 20 10 WL 3720 720 , at *3 (E.D. La. Sept. 10 , 20 10 ) (Barbier, J .). 53 See LAC, 320 F. App’x at 271. 54 See Kenner Acquisitions, 20 0 7 WL 625833, at *4. 55 See Black Sea, 20 4 F.3d at 651 (“It is clear . . . that this factor can only be a n eutral factor or one that weighs against, not for, abstention.” (internal quotation m arks om itted)). 50 8 create a danger of piecem eal litigation,”56 a central concern of Colorado River. 57 The state court will eventually reach the Mennonite claim that Gates raises before this Court. Resolution of the Mennonite issue by the federal district court will not decide or significantly reduce the litigation before the state trial court, which would still be required to try Gates’ num erous state claim s against all of the defendants nam ed therein. 58 CON CLU SION For the foregoing reasons; IT IS ORD ERED that this m atter is STAYED . The m atter shall be AD MIN ISTRATIVELY CLOSED without prejudice to its being reopen ed after resolution of the state court action if all issues have not been resolved or otherwise in the interest of justice. N e w Orle a n s , Lo u is ian a, th is 2 7th d ay o f Ju ly, 2 0 16 . ___________ _______________ SU SIE MORGAN U N ITED S TATES D ISTRICT J U D GE 56 LAC, 320 F. App’x at 271. Stew art, 438 F.3d at 492. 58 See id. (findin g the federal district court did not abuse its discretion “by declinin g to hear the sin gle issue in this case” when the sam e claim and several others were pendin g before the state court). 57 9

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