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

Background

Simon Zarour filed this 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 was representing himself. The action challenged orders issued in Zarour’s bankruptcy proceeding, in which the Bankruptcy Court had exercised jurisdiction, treated the matter as a core bankruptcy proceeding, and dismissed the petition.

In an earlier order in this action, the district court dismissed Zarour’s claims challenging the Bankruptcy Court’s decisions and explained that such a challenge should ordinarily be brought by appealing the Bankruptcy Court’s decision to the district court. The court also allowed Zarour to amend his complaint to allege facts supporting diversity jurisdiction for a separate state-law claim that was not part of his ongoing state-court proceedings.

Amended Complaint

Zarour’s amended complaint repeated the same basic allegations and again challenged decisions made in Bankruptcy Court. He alleged that the Bankruptcy Court relied on fraudulent documents when granting a motion to stay, which he said led to the unlawful sale of his property. He sought a ruling that U.S. Bank and its attorneys had committed fraud on the Bankruptcy Court and violated federal bankruptcy law.

Zarour asserted that the action arose under 11 U.S.C. § 506 and Federal Rule of Bankruptcy Procedure 3004. The opinion describes his separate state-court proceedings as involving foreclosure and an action concerning title to real property in New Jersey. The district court concluded that the amended complaint did not state a separate state-law claim outside those proceedings.

Court’s Action

The district court determined that Zarour was challenging decisions rendered in Bankruptcy Court. It also concluded that the amended complaint might seek reconsideration of the Bankruptcy Court’s decision to deny his petition and damages for alleged violations of the automatic stay, the restriction that generally pauses certain collection actions when a bankruptcy case begins. Because the Bankruptcy Court might be able to provide that relief, and because the action was at least related to Zarour’s bankruptcy proceeding, the district court referred the action to the Bankruptcy Court under the general order of reference.

The court directed the clerk to refer the action to the United States Bankruptcy Court for the Southern District of New York and close the action on the district court’s records. The court also certified under 28 U.S.C. § 1915(a)(3) that any appeal would not be taken in good faith and denied permission to appeal without paying filing fees. Judge Laura Taylor Swain signed the order.