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Osuji v. Federal National Mortgage Association

United States District Court, E.D. New York

July 17, 2017

Samuel Osuji, Appellant,
v.
Federal National Mortgage Association and JP Morgan Chase Bank, N.A., Appellees.

          MEMORANDUM AND ORDER

          JOSEPH F. BIANCO United States District Judge.

         Samual Osuji ("appellant" or "Mr. Osuji") appeals from the Bankruptcy Court's ruling in which it permissibly abstained from the proceeding and held, in the alternative, that the Rooker-Feldman doctrine barred appellant's lawsuit. Because the Court concludes that the Bankruptcy Court clearly did not abuse its discretion in permissively abstaining from the proceeding, the ruling below is affirmed.

         I. Background

         The Court assumes the parties' familiarity with the full facts and procedural history of this action and summarizes the facts and history relevant to the instant appeal based on the Bankruptcy Record on Appeal ("R., " ECF Nos. 3-2 to 3-5).[1]

         A. The State Court Foreclosure Action

         This case originates from a note executed by Christine Phillips-Osuji ("Mrs. Osuji") for $296, 000 in favor of appellee JP Morgan Chase Bank ("Chase") (R. at 672-74), secured by a mortgage on property located at 95 Angevine Avenue, Hempstead, New York 11550 (the "Property") (id. at 676-94). Appellant signed neither document. (Id. at 674, 693.) Appellee Federal National Mortgage Association ("Fannie Mae, " and collectively with Chase, "appellees") was the original investor in the note and mortgage (collectively, the "loan"), and Chase was its servicer. (Id. at 669 ¶ 4.)

         On June 17, 2011, Chase commenced a foreclosure proceeding (the "Foreclosure Action") against Mrs. Osuji in state court after she defaulted on the loan. (Id. at 391-435, 1096.) Someone filed an answer and motion to strike the foreclosure complaint purportedly on behalf of Mrs. Osuji and appellant as "'John DOE' #1 and parties in interest."[2] (Id. at 437-98, 500-18.) The state court denied the motion to strike. (Id. at 524.)

         Appellant moved to intervene in the Foreclosure Action on June 4, 2012 (id. at 526-31), but the court denied the motion by order dated October 15, 2012 (id. at 533-34). Afterwards, appellant made several additional motions to intervene in, strike, or stay the Foreclosure Action, none of which proved successful. (See, e.g., Id. at 574-75, 591-92, 602, 631-645, 653.) Based on Mrs. Osuji's consent to an entry of a judgment of foreclosure and sale, the state court granted Chase's motion for an order of reference in the Foreclosure Action on October 30, 2015. (Id. at 655.)

         On February 2, 2016, Fannie Mae transferred its ownership interest in the loan to MTGLQ Investors, L.P. ("MTGLQ"), and service was transferred to Shellpoint Mortgage Servicing. (Id. at 696-98; see also Id. 1084-85.)

         B. Bankruptcy Proceedings

         Appellant filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code on December 30, 2015 and commenced an adversary proceeding against appellees on March 17, 2016, alleging that they have no ownership interest in the loan. (Id. at 5-107.) Appellees filed a motion to dismiss on May 26, 2016 (id. at 257-58), and, after the motion was fully briefed, the Bankruptcy Court issued an Order to Show Cause ("OTSC") why it should not abstain from the proceeding (id. at 1043-44). The parties briefed the issue, and the Bankruptcy Court held a hearing on the OTSC and appellees' motion to dismiss on August 15, 2016. (See Id. at 1087.) By order dated September 2, 2016 (the "September 2 Order"), the Bankruptcy Court voluntarily abstained from the proceeding and, in the alternative, granted appellees' motion to dismiss. (Id. at 1084-90.)

         C. Appeal

         Appellant filed his notice of appeal of the September 2 Order on September 8, 2016. (ECF No. 1.) This Court received the Bankruptcy Record on October 14, 2016. (ECF No. 3.) Appellant filed his brief in support of the appeal on March 3, 2017 (ECF No. 8), appellees responded on April 3, 2017 (ECF No. 9), and appellant filed a reply on April 27, 2017 (ECF No. 11). The Court has fully considered the parties' submissions.

         II. Discussion

         Appellant argues that the Bankruptcy Court abused its discretion in permissively abstaining from the proceeding and erred as a matter of law in concluding that the Rooker-Feldman doctrine barred his action against Fannie Mae and Chase. As set forth below, the Court concludes that the Bankruptcy Court did not abuse its discretion in ...


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