Zarour v. U.S. Bank, N.A.

Background

Simon Zarour, who was representing himself, brought a civil action against U.S. Bank, N.A., as legal title trustee for the Truman 2016 SC6 Title Trust, and several John Doe defendants. He paid the filing fee. The complaint challenged events connected to Zarour’s bankruptcy proceeding and a related state-court dispute involving lots 20 and 21 and lots 22 and 23.

Zarour alleged that only lots 22 and 23 were covered by the mortgage, but that U.S. Bank claimed lots 20 and 21 were also part of it. He alleged that U.S. Bank pursued a state-court action involving lots 20 and 21, filed a proof of claim in the bankruptcy proceeding, and sought to lift the bankruptcy stay using a judgment concerning lots 22 and 23. He described his injury as the loss of lots 20 and 21 and related financial damages. He sought an order voiding any judgment against lots 20 and 21 and damages under 11 U.S.C. § 362(k).

The Bankruptcy Court had dismissed Zarour’s Chapter 11 petition on U.S. Bank’s motion. Zarour’s lawyer later filed a notice of appeal on his behalf.

Court’s analysis

The court dismissed any claims seeking to challenge the Bankruptcy Court’s decision. It explained that the proper method for challenging that decision was Zarour’s appeal from the Bankruptcy Court’s order, rather than a new civil action in the District Court.

As to the alleged mortgage and state-court conduct, the court found that the complaint did not establish federal-question jurisdiction because the alleged facts did not suggest that U.S. Bank violated federal law concerning the mortgage. The complaint also did not allege that the amount in controversy exceeded $75,000, a requirement for diversity jurisdiction. Although the court said the parties appeared to be citizens of different states based on the information before it, it further found that the complaint did not clearly state a separate claim showing that Zarour was entitled to relief. The court noted that the requested intervention in the pending state-court matter might also be barred by principles limiting federal-court interference with certain state proceedings.

Ruling and next steps

Because it was unclear whether Zarour could state a claim within the court’s jurisdiction, the court granted him 30 days to amend. Judge Laura Taylor Swain directed Zarour to identify the relevant facts, defendants, events, injuries, and requested relief. The amended complaint had to replace, rather than supplement, the original complaint. The court stated that no summons would issue at that time and that failure to amend within the permitted period, without good cause, would result in dismissal for failure to state a claim. The court also certified that an appeal would not be taken in good faith and denied permission to appeal without prepaying fees.