Dang v. PennyMac Loan Services, LLC

Background

In April 2017, Plaintiff Andy Kim Dang executed a mortgage on real property located at 4180 Xenwood Avenue South, St. Louis Park, Minnesota. In June 2020, the mortgage was assigned to Defendant PennyMac Loan Services, LLC. Dang experienced financial difficulties and filed Chapter 13 bankruptcy petitions in 2020 and 2024. PennyMac initiated foreclosure proceedings, and the property was sold at a foreclosure auction on April 25, 2024, to PennyMac itself. In July 2024, PennyMac conveyed the Sheriff's Certificate of Sale to Defendant Federal National Mortgage Association (FNMA).

On October 23, 2024, Dang filed a lawsuit in Minnesota state court and sought a temporary restraining order to set aside the foreclosure sale and prevent eviction. The state court denied that motion on October 25, 2024, partly because PennyMac had already conveyed its interest to FNMA and therefore could not initiate eviction. The redemption period — the window during which a foreclosed homeowner may reclaim the property by paying what is owed — ended on October 25, 2024, without Dang redeeming the property. Dang also filed an Amended Complaint that same day, adding FNMA as a defendant.

Defendants removed the action to federal court. The Amended Complaint raises claims under the Real Estate Settlement Procedures Act (12 U.S.C. § 2605(k)(1)(E)), violations of a Minnesota dual-tracking statute (Minn. Stat. § 582.043, subd. 6(d)(1)) that restricts foreclosure activity while loan modification is pending, negligent and fraudulent misrepresentation, breach of contract, and promissory estoppel, as well as requests for declaratory and injunctive relief.

In May 2025, FNMA filed an eviction action against Dang in Hennepin County. On September 25, 2025, the state court entered an eviction judgment in FNMA's favor and issued a Writ of Recovery of Premises and Order to Vacate the property. That same day, Dang filed an Emergency Motion for a Temporary Restraining Order in federal court, seeking to enjoin Defendants from requesting a writ of recovery in the state eviction case, to enjoin the Hennepin County Housing Clerk from issuing any writ of recovery, and to enjoin the Hennepin County Sheriff from executing or enforcing any writ of recovery. Dang later filed a Supplemental Motion to the same effect.

Legal Standard: The Anti-Injunction Act

The Anti-Injunction Act, 28 U.S.C. § 2283, provides that a federal court may not grant an injunction to stay (i.e., pause or stop) proceedings in a state court except in three narrow circumstances: (1) when expressly authorized by an Act of Congress; (2) when necessary in aid of the federal court's own jurisdiction; or (3) when necessary to protect or effectuate the federal court's own prior judgments. The Supreme Court has described the Act as fundamental to maintaining the dual federal-state court system, and courts have consistently held that its three exceptions are to be construed narrowly.

Analysis

Judge Magnuson applied each of the three exceptions and found none applicable.

First, the court found no Act of Congress that authorizes a federal court to stay a pending state court eviction proceeding, and Dang did not point to any. The court cited a prior District of Minnesota decision, Badrawi v. Wells Fargo Home Mortg., Inc., reaching the same conclusion in an analogous mortgage foreclosure case.

Second, the court held that the "protect or effectuate its judgments" exception was inapplicable because the federal court had not yet entered any judgment in Dang's underlying case. Without a prior federal judgment to protect, this exception cannot be invoked.

Third, the court stated that the "necessary in aid of jurisdiction" exception applies only when a state court proceeding threatens to so seriously interfere with a federal court's flexibility and authority to decide the pending federal case as to impair it — and no such interference had occurred here.

Because the Anti-Injunction Act barred the relief requested, the court stated it need not reach the Dataphase factors — the standard test used in the Eighth Circuit Court of Appeals for evaluating whether a temporary restraining order or preliminary injunction (an emergency court order temporarily blocking or requiring action) is warranted. See Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109 (8th Cir. 1981). The court also observed, however, that even if the Act posed no barrier, Dang had offered no argument in support of the relief sought.

Disposition

Both Dang's Emergency Motion for Temporary Restraining Order (Docket No. 36) and his Supplemental Motion for Temporary Restraining Order (Docket No. 47) were denied. The opinion does not address the status or merits of the underlying lawsuit, which appears to remain pending in federal court.