Sander v. JP Morgan Chase

Background

Marie Sander, proceeding without a lawyer, sued JPMorgan Chase Bank, N.A.; Jamie Dimon; McCalla Raymer Leibert Pierce LLC; and Kyle Jacobs, Esq. She alleged that the defendants collaborated to fraudulently deprive her of residential property through state-court foreclosure proceedings. Her claims included mortgage fraud and conspiracy, violations of the Racketeer Influenced and Corrupt Organizations Act, the Equal Protection Clause, Title VI of the Civil Rights Act of 1964, 18 U.S.C. § 242, and the Truth in Lending Act. She sought $60 million in damages.

The complaint concerned property at 56 Touissant Avenue and a foreclosure action brought by Chase in Supreme Court, Westchester County. The state court entered an order of reference and default judgment against Sander and Ledivin Corp. on July 26, 2021. On April 25, 2022, the state court issued an order confirming the referee’s report and a judgment of foreclosure and sale.

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), which addresses the federal court’s subject-matter jurisdiction, and Rule 12(b)(6), which addresses whether a complaint states a legally sufficient claim. The court decided the Rule 12(b)(1) issue first and considered Sander’s complaint, her opposition, and her additional letters under the rules applicable to a self-represented litigant.

Colorado River Abstention

The defendants argued that the federal court should abstain—that is, decline to exercise its jurisdiction—under the Colorado River doctrine because of the related state foreclosure action. That doctrine can apply in exceptional circumstances when parallel state and federal cases involve substantially the same parties and issues, and handling the dispute in state court would conserve judicial resources or avoid conflicting results.

The court found that the two cases were parallel. Sander was a defendant in the state foreclosure action, while Chase was the plaintiff there and a defendant in the federal case. Although Dimon, McCalla, and Jacobs were not parties to the state action, the court found that their interests were aligned with Chase’s because Dimon was Chase’s chief executive officer and McCalla and Jacobs represented Chase in the foreclosure case. The court also found that both cases concerned the validity of Chase’s interest in the property and the propriety of Chase’s foreclosure conduct.

The court concluded that the abstention factors strongly favored declining to hear the federal case. The state court had assumed control over the property in the property-centered foreclosure proceeding. Allowing both cases to continue risked inconsistent decisions and duplicative litigation, particularly because the federal case included defendants who were not parties to the state case and the state case included Ledivin Corp., which was not a party to the federal case. The state foreclosure action had been filed more than three years earlier and was nearly complete, while the federal case had not progressed beyond the pleadings stage.

The court treated the convenience factor as neutral because the two courthouses were only a short distance apart, and it treated the factors concerning governing law and protection of federal rights as neutral. It nevertheless held that the state court’s control over the property, the risk of inconsistent outcomes, and the substantially greater progress of the state case made abstention appropriate.

Disposition

The court held that Sander’s claims had to be dismissed based on abstention and granted the defendants’ motion to dismiss. It declined to grant leave to amend because it found that the defects could not be cured by a revised complaint. The court certified that an appeal would not be taken in good faith and denied permission to appeal without paying court fees. The Clerk was directed to terminate the motion and close the case.

The opinion does not expressly state whether the dismissal was with or without prejudice; this summary therefore does not characterize it that way.