Federal National Mortgage Association v. Mashak

Background

Federal National Mortgage Association (Fannie Mae) moved for sanctions against Donald Mashak after he removed a foreclosure proceeding from state court to the United States District Court for the District of Minnesota. Fannie Mae argued that the removal was frivolous and vexatious, that Mashak had used improper litigation tactics, and that he improperly refused to consent to sending the case back to state court. Fannie Mae sought attorney’s fees, costs, and expenses under Federal Rule of Civil Procedure 11, 28 U.S.C. §§ 1447(c) and 1927, and the court’s inherent authority. It also sought restrictions on Mashak’s future federal filings and a prospective denial of any application to proceed without paying filing fees.

The court had previously granted Fannie Mae’s motion to remand. It concluded that the state-court complaint did not show a federal claim, that Mashak could not remove the case based on diversity jurisdiction under the forum-defendant rule, and that the 2022 removal was far beyond the 30-day removal deadline. The court also rejected Mashak’s argument that he could create federal jurisdiction by intending to assert claims under 18 U.S.C. § 241, explaining that the statute is criminal and does not provide a private right of action, and that removal jurisdiction generally depends on the initial complaint rather than a defendant’s anticipated counterclaims.

Attorney’s Fees and Costs

Under 28 U.S.C. § 1447(c), a court that remands a case may require payment of costs and actual expenses, including attorney’s fees, caused by the removal. The court explained that fees generally depend on whether the removal had an objectively reasonable basis when it was filed.

The court found that Mashak lacked even an arguable basis for removal. It relied on earlier rulings explaining that the foreclosure proceeding lacked a basis for federal-question jurisdiction, that the forum-defendant rule barred removal based solely on diversity jurisdiction, and that Mashak had been served years before the 2022 removal. The court found that a reasonable person in Mashak’s position would have known that the removal was improper. It therefore ordered Mashak to pay Fannie Mae’s just costs and expenses incurred as a result of the removal, including attorney’s fees.

Because the court awarded costs and expenses under § 1447(c), it did not decide whether the same payment could also be authorized under Rule 11 or the court’s inherent authority.

Filing Restriction

The court considered whether Mashak’s litigation history justified a filing restriction. It cited his repeated removals of state-court cases without a proper basis, repeated attempts to appeal remand orders that were not appealable, and other litigation that courts had found frivolous or lacking a good-faith basis. The court also found that his removals had caused unnecessary expenses for opposing parties and imposed burdens on the courts.

The court concluded that a restriction was appropriate and narrowly tailored. It ordered that Mashak be placed on the District of Minnesota’s restricted-filer list and prohibited him from filing any action in that district, whether started in federal court or removed from state court, unless he first obtained approval from a district or magistrate judge or was represented by counsel.

The court declined to include Fannie Mae’s requested prospective denial of any application to proceed without paying filing fees, finding that the filing restriction was sufficient to deter future abusive litigation.

Order

Judge Katherine Menendez ordered that Fannie Mae’s Motion for Sanctions was GRANTED. Mashak must pay Fannie Mae’s just costs and expenses, including attorney’s fees, resulting from the notice of removal. Fannie Mae was required to file an affidavit or declaration and supporting exhibits establishing its reasonable fees and expenses within 14 days of the order, after which Mashak would have 14 days to respond. The order also imposed the District of Minnesota filing restriction described above.