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Avail Holding LLC v. Ramos

United States District Court, E.D. New York

March 9, 2017



          NICHOLAS G. GARAUFIS, United States District Judge.

         Plaintiff Avail Holding, LLC brings this residential mortgage foreclosure action against Defendant Frances Ramos ("Ramos" or "Defendant"), seeking to foreclose on a mortgage held by Ramos encumbering the property located at 101-22 132nd Street, South Richmond Hill, New York 11419 (the "Subject Property"). (See Compl. (Dkt. 1).) The Complaint also names the following additional defendants, alleging that they "have or may claim to have some interest in" the Subject Property: Commissioner of Social Services of the City of New York Social Services District; Credit Acceptance Corporation; New York City Environmental Control Board; New York City Transit Adjudication Bureau; and John Doe "1" through "12." (Id., ¶¶ 2-9.)

         Before the court is Ramos's Motion to Dismiss the Complaint on abstention grounds pursuant to Federal Rule of Civil Procedure 12(b) (the "Motion"). (See Not. of Mot. to Dismiss (Dkt. 18).) For the following reasons, Defendant's Motion is DENIED.

         I. BACKGROUND

         A. The Instant Action

         Except where otherwise indicated, the following facts are drawn from the Complaint and are presumed to be true for the purpose of this Memorandum and Order. Ramos resides in and owns the Subject Property. (Compl. ¶ 3; Aff. of Frances Ramos in Support of Mot. to Dismiss ("Ramos Aff.") (Dkt. 18-2) ¶ 2.) On June 15, 2007, Ramos executed a promissory note (the "Note") to First Franklin Financial Corp. ("First Franklin"), whereby First Franklin loaned her $392, 800. (Compl. ¶ 12.) The Note was secured by a mortgage (the "Mortgage") on the Subject Property, which Ramos executed, acknowledged, and delivered to Mortgage Electronic Registration Systems, Inc., as nominee for First Franklin. (Id. ¶ 13.) The Note and Mortgage were reassigned several times before being assigned to Plaintiff on November 6, 2015. (Id. ¶ 19.) Beginning in August 2010, Ramos stopped making the required monthly payments and thereby defaulted on the Mortgage. (Id. ¶ 21.) Default continues to date and, as of the filing of the Complaint, Ramos owes approximately $548, 653.76. (Id. ¶¶ 22, 26.)

         On December 11, 2015, Plaintiff commenced this foreclosure action pursuant to New York Real Property Actions and Proceedings Law ("RPAPL") §§ 1301 et seq. (Id. ¶ 1.) According to Ramos, this is the third foreclosure action that Plaintiff and its predecessors-in-interest have commenced against her, with the first two actions being dismissed "because the plaintiff in each failed to comply with New York foreclosure law's predicate notice requirements." (Ramos Aff. ¶ 7.)

         Ramos has moved to dismiss the Complaint pursuant to Rule 12(b) of the Federal Rules of Civil Procedure and the abstention doctrine.[1] (Not. of Mot. to Dismiss at 2.) She argues that the court should abstain from adjudicating this action "in order to effectuate New York's comprehensive regulatory scheme and consumer protections governing residential foreclosure actions, which address a foreclosure crisis of compelling interest to the State of New York." (See Def.'s Mem. of Law in Supp. of Mot. to Dismiss ("Def.'s Br.") (Dkt. 18-3) at 1.) Plaintiff opposes Defendant's Motion, arguing that the abstention doctrine is inapplicable to this case because (i) "New York state laws governing prosecution of a residential foreclosure action are clear, unambiguous and not subject to any significant differing interpretations of local policy"; and (ii) there is no administrative agency charged with adjudicating foreclosures in New York. (See Pl.'s Mem. of Law in Opp'n to Mot. to Dismiss ("Pl.'s Opp'n") (Dkt. 18-7) at 2, 10-11.)

         B. New York State's Residential Mortgage Foreclosure Process[2]

         In response to the mortgage foreclosure crisis, New York enacted the Foreclosure Prevention and Responsible Lending Act ("FPRLA"), which provides a series of legal protections and foreclosure prevention opportunities to homeowners at risk of losing their homes. See 2008 N.Y. Sess. Law Ch. 472 (S. 8143-A). (See also Def.'s Br. at 6.) Pursuant to protections enacted by the FPRLA, for example, a lender, an assignee or a mortgage loan servicers is required to send borrowers a notice of default at least 90 days before commencing a legal action against the borrower (see N.Y. Real Prop. Acts. § 1304) and must file certain information about the loan and the borrower with New York's Superintendent of Financial Services before initiating the lawsuit (see id. § 1306). In addition, in any foreclosure action involving an owner-occupied home, the parties must participate in a mandatory court-supervised settlement conference. (See N.Y.C.P.L.R. 3408.) At the settlement conference, parties are required to "negotiate in good faith to reach a mutually agreeable resolution, including but not limited to a loan modification, short sale, deed in lieu of foreclosure, or any other loss mitigation, if possible."[3] (Id.) The Uniform Rules for New York State Trial Courts provide that motions are "held in abeyance" while these settlement conferences are held. (See N.Y.Comp. Codes R. & Regs. tit. 22, § 202.12-a(c)(7).)

         In Queens County, New York, where the property at issue in this foreclosure matter is located, the New York Supreme Court created a specialized Residential Foreclosure Part to conduct the mandatory settlement conferences pursuant to Rule 3408 of the New York Civil Practice Law and Rules ("CPLR 3408").[4] (See Decl. of Christopher Newton (Newton Decl.) (Dkt. 18-1) ¶ 14.) The Residential Foreclosure Part is staffed by a judge and court referees who serve as mediators in the settlement conferences. (See also Id. ¶ 16.)


         Defendant does not dispute that the court has diversity jurisdiction to adjudicate this action.[5] Instead, Ramos argues that the court should decline to exercise its jurisdiction and should dismiss the case pursuant to the abstention doctrine. (See Def.'s Br. at 4-5.) "As a general rule, federal courts are under a virtually unflagging obligation to exercise the jurisdiction given them." Cannady v. Valentin, 768 F.2d 501, 503 (2d Cir. 1985) (per curiam) (internal citations omitted). Under the abstention doctrine, however, a district court may decline to exercise or postpone the exercise of its jurisdiction in certain "exceptional circumstances." Colo. River Water Conservation Dist. v. Akin, 424 U.S. 800, 813 (1976) (citation omitted).

Abdication of the obligation to decide cases can be justified under [abstention] doctrine only in the exceptional circumstances where the order to the parties to repair to the state court would clearly serve an important countervailing interest. It was never a doctrine of equity that a federal court should exercise its judicial discretion to dismiss a suit merely because a State court could entertain it.

Id. at 813-14 (citations and quotation marks omitted); see also Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996); Ctv. of Allegheny v. Frank Mashuda Co.. 360 U.S. 185, 189 (1959). "Because abstention is the exception, not the rule, a party seeking abstention carries a heavy burden" State Farm Mut. Auto. Ins. Co. v. Mallela. 175 F.Supp.2d 401, 410 (E.D.N.Y. 2001) (internal quotation marks and citation omitted); see Arkwright-Boston Mfrs. Mut. Ins. Co. v. City of N.Y.. 762 F.2d 205, 210 (2d Cir. 1985) (holding that party opposing the exercise of federal jurisdiction has the "burden of persuasion").

         Defendant argues that the instant action should be dismissed under the abstention principles outlined in Louisiana Power & Light Co. v. City of Thibodaux, 360 U.S. 25 (1959), and Burford v. Sun Oil Co., 319 U.S. 315(1943). For the following reasons, the court finds that neither doctrine ...

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