United States District Court, E.D. New York
MEMORANDUM AND ORDER
F. BIANCO United States District Judge.
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
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).
State Court Foreclosure Action
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.)
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." (Id. at 437-98, 500-18.) The
state court denied the motion to strike. (Id. at
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
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.)
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.)
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'
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 ...