Case Information
*1 SHIPP, District Judge
This mаtter comes before the Court upon the separate motions to dismiss filed by Defendant HSBC Bank USA, National Association as Trustee for Wells Fargo Asset Securities Corporation, Mortgage Asset-Backed Pass-Through Certificates Series 2007-001 7 ("HSBC") (ECF No. 6) and Defendants Zucker, Goldberg & Ackerman, LLC and Michael S. Ackerman, Esq. ("Zucker Goldberg") (ECF No. 21) (collectively "Defendants"). Through its Motion to Dismiss, HSBC seeks only to dismiss Count One of Plaintiffs Alfredo Francesco Ruffolo and Christine Ruffolo's ("Plaintiffs") Verified Complaint ("Complaint"). Plaintiffs filed opposition to HSBC's Motion (ECF No. 8), and HSBC repliеd (ECF No. 9). Zucker Goldberg, through their Motion to Dismiss, seek dismissal of Plaintiffs' Complaint on all counts, and Plaintiffs have informed the Court; by correspondence dated July 17, 2014, they are not opposing Zucker Goldberg's Motion to Dismiss. (ECF No. 22.) The Court has decided this matter without oral argument pursuant tо Local Civil Rule 78.1. For the reasons set forth below, the Court must *2 abstain from hearing Plaintiffs' case pursuant to Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976), and thus, Plaintiffs' Complaint is dismissed without prejudice.
I. BACKGROUND
The instant matter arose out of the foreclosure action on the real property owned by Plaintiffs located at 400 Warren Street, Stewartsville, New Jersey (the "Property"). Plaintiffs purchased the Property in 2002, and in 2007, Plaintiffs refinanced the loan secured by the note and mortgage on the Property. (Compl., ECF No.3.) Plaintiffs allege that at some later date the note and mortgagе were sold to another entity, presumably HSBC. (!d.) Plaintiffs allege that in or around July 2009, HSBC "made false and fraudulent representations of fact to [P]laintiffs in an effort to persuade them to 'stop paying their Note' for 90 consecutive days," and once Plaintiffs stopped paying for 90 days, Plaintiffs "would be guaranteed to qualify and receive a novation or loan modification." (!d. at 9.) Plaintiffs relied on HSBC's representations. (!d.) Plaintiffs allege that their reliance on HSBC' s representations resulted in HSBC declaring default on Plaintiffs' mortgage and HSBC commencing foreclosure рroceedings. (!d.)
In December 2010, Zucker Goldberg filed a Complaint for Foreclosure on behalf of their client, HSBC, against Plaintiffs in the Superior Court of New Jersey, entitled HSBC Bank USA, National Association as Trustee for Wells Fargo Asset Securities Corporation, Mortgage Asset Backed Pass-Through Certificates Series 2007-017 v. Ruffolo, eta/., Docket No. F-058732-10 (the "Foreclosure Action"). On or about January 24, 2011, Plaintiffs, through counsel, filed an Answer in the Foreclosure Action, which asserted affirmative defenses as to standing and fraud, and specifically that HSBC is "neithеr a possessor of the note, a holder in due course, or a non holder with a right to enforce." (Zucker Goldberg's Br. Ex. C, ECF No. 21-3.)
On December 31, 2013, three years into litigation in the Foreclosure Action, Plaintiffs, acting prose, removed the Foreclosure Action to this Court, styled HSBC Bank USA v. Ruffolo, et al., Docket No. 13-07926. In their Notice of Removal, Plaintiffs asserted fedеral jurisdiction on the basis of "a federal question, the threatened actual taking of title and rights to deeded real property without due process." Notice of Removal, HSBC Bank USA v. Ruffolo, et al., No. 13- 07926 (D .N.J. Dec. 31, 2013 ). HSBC moved to remand the Foreclosure Action, and by Order dated September 8, 2014, this Court remanded thе Foreclosure Action to the Superior Court of New Jersey pursuant to 28 U.S.C. § 1447. HSBC Bank USA v. Ruffolo, eta!., No. 13-07926 (D.N.J. Sept. 8, 2014).
On January 29, 2014, Plaintiffs, again proceeding pro se, initiated this action by filing a Complaint claiming that Defendants violated Plaintiffs' due process rights by instituting a foreclosure proceeding against the Property and included individual counts for negligence, declaratory relief, specific performance, accounting, breach of contract, violations of the Fair Debt Collections Practices Act ("FDCPA"), and fraud. (Compl., ECF No. 3.) Prose Plaintiffs' Complaint alleges that HSBC has no ownership rights of the note or mortgage in quеstion in the Foreclosure Action and that Defendants made fraudulent promises to Plaintiffs to induce Plaintiffs' default and the ensuing Foreclosure Action. (!d.) Plaintiffs contend that one or more of the issues raised in their Complaint would be sufficient to enjoin the Foreclosure Aсtion. (!d.)
HSBC filed a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure arguing that Count One, negligence, is barred by the Economic Loss Doctrine. (HSBC's Br., ECF No. 6.) Additionally, Zucker Goldberg filed a motion to dismiss pursuant to Rule 12(b)(l) of the Federal Rules of Civil Procedure arguing this action is nоt yet ripe for adjudication, as well as pursuant to Rule 12(b )( 6), arguing that Counts One, Five, and Six should *4 be dismissed because each fails to state a claim upon which relief can be granted. (Zucker Goldberg's Br., ECF No. 21-1.) The Court need not reach the merits of those arguments. Instead, under thе Colorado River doctrine, the Court dismisses Plaintiffs' Complaint in its entirety without prejudice.
II. DISCUSSION
A. Jurisdiction
This Court has jurisdiction over Plaintiffs' federal claims under 28 U.S.C. § 1331, and supplemental jurisdiction to hear Plaintiffs' state law claims under 28 U.S.C. § 1367.
B. .Analysis
A comparison of Plaintiffs' claims in the Complaint with Plaintiffs' claims in the earlier filed ongoing state court Foreclosure Action shows that Plaintiffs are attempting to have this Court interfere with the state foreclosure process and otherwise relitigate claims that are already being addressed in the state court. Plaintiffs bring this action to challenge HSBC' s right to institutе and perfect the pending Foreclosure Action, asserting that HSBC does not have standing to foreclose on the Plaintiffs' mortgage and fraud on the part of HSBC. (Compl., ECF No. 3.) Plaintiffs' claims in this action mimic Plaintiffs' affirmative defenses and counterclaims in the pending Foreсlosure Action. (Zucker Goldberg's Br. Ex. C, ECF No. 21-3.) Because this Court will not interject itself into ongoing state court proceedings and possibly force an impermissible direct contradiction of any final judgment in the Foreclosure Action, the Court must abstain from deciding Plaintiffs' claims pursuant to Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976), andthe Court must dismiss Plaintiffs' case in its entirety.
The Supreme Court, in
Colorado River,
explained that federal district courts may abstain
from hearing cases and controversies under "exceptional circumstances where the order to the
*5
pаrties to repair to the State court would clearly serve an important countervailing interest."
Colorado River,
424 U.S. at 813 (internal quotation marks omitted).
It is axiomatic that federal
courts have a "virtually unflagging obligation ... to exercise the jurisdiction given them" by
Congress.
!d.
at 817 (citing
England v. Louisiana State Bd. of Medical Examiners,
375 U.S.
411, 415 (1964);
McClellan v. Carland,
The threshold issue that must be decided in a Colorado River abstention case is whether the two actions are "parallel," meaning the "parallel" state proceeding involves the same parties and "substantially identical claims [raising] nearly identical allegations and issues." Nationwide Mut. Fire Ins. Co. v. George V Hamilton, Inc., 571 F.3d 299, 307 (3d Cir. 2009) (internal quotation marks omitted). Once a court determines a parallel state proceeding is pending, the court must then consider six factors in weighing whether abstention is appropriate: "(1) which court first assumed jurisdiction over the property; (2) the inconvenience of the federal forum; (3) the desirаbility of avoiding piecemeal litigation; ( 4) the order in which jurisdiction was obtained; ( 5) whether federal or state law controls; and ( 6) whether the state court will adequately protect the interests of the parties." !d. at 308 (internal quotation marks omitted).
In DiPietro v. Landis Title Co., a bank brought a foreclosure action against a plaintiff in state court seeking foreclosure and possession. No. 11-5110, 2012 WL 2116404 (D.N.J. June 11, 20 12) .. The plaintiff filed an answer to the foreclosure complaint and asserted defenses and counterclaims seeking, among other things, damages for fraud. While the state court action wаs still being litigated, the plaintiff brought claims in the district court against the bank, the law firm representing the bank in the foreclosure action, the title company, and the judge and law clerk whom the foreclosure proceedings were in front of in the state court. In the federаl action, the plaintiff asserted that defendants violated numerous constitutional, statutory, and common law rights during their involvement in a state court foreclosure action. Pursuant to the Colorado River doctrine, the district court dismissed the federal action in its entirety holding that the two aсtions were parallel and substantially identical, and "they implicate important state interests foreclosure of a property in New Jersey, the conduct of attorneys and judges in the state court, and the actions of a local bank and title compаny." !d. at *4.
Similarly, in St. Clair v. Wertzberger, a bank brought a foreclosure action against a plaintiff in state court, and the plaintiff failed to answer the foreclosure complaint. 63 7 F. Supp. 2d 251 (D.N.J. 2009). A Notice of Entry of Final Judgment was sent to the plaintiff, and the plaintiff filed a motion to set aside the judgment of foreclosure, which was denied. The plaintiff then filed a motion for reconsideration which was also denied, however, no final judgment was entered. The plaintiff subsequently brought an action in federal court against the attorneys whom represented the bank in the foreclоsure proceeding asserting violations of the Fair Debt Collections Practices Act in their prosecution of the foreclosure of the plaintiffs home. The district court, like in DiPietro, held that pursuant to the Colorado River doctrine the district court must abstain from the federal action because the two аctions were parallel and "a ruling in [the *7 district] court on plaintiffs claims would unnecessarily cause havoc with the rulings of the state court." !d. at 255.
By the same token, this action and the Foreclosure Action are parallel proceedings. Both cases involve еssentially the same parties: Plaintiffs; Defendant HSBC Bank; and Zucker Goldberg, HSBC's attorneys in the Foreclosure Action. Additionally, these cases contain substantially identical claims raising nearly identical allegations and issues. Specifically, Plaintiffs claim in both actions that HSBC dоes not have standing in the Foreclosure Action and that Defendants made fraudulent promises to Plaintiffs to induce their default. In their opposition brief to HSBC's Motion to Dismiss, Plaintiffs even assert that the two cases "are inextricably intertwined in terms of cause of action [counts] and party identity." (Pls.' Opp. Br. at 2, ECF No. 8.) Both actions principally concern whether Defendants are entitled to foreclose on Plaintiffs' Property and, thus, are parallel for purposes of the Colorado River doctrine.
Furthermore, the six factors weigh in favor of abstention. First, the statе court initially
obtained jurisdiction and has been overseeing the litigation of the Foreclosure Action for more
than three years, and the state also has jurisdiction over the
res,
Plaintiffs' home, which is
located in New Jersey. Second, Plaintiffs' Complaint requests a declaration or injunction that
would nullify or possibly contradict any ruling of the state court as to whether the transfer of title
was proper. Any relief that could be granted by this Court would directly impact New Jersey's
interest in protecting the authority of its judicial system. Like in
DiPietro,
these actiоns
"implicate important state interests-foreclosure of a property in New Jersey, the conduct of
attorneys ... in the state court, and the actions of a local bank."
DiPietro,
Based on these factors and that a ruling in this Court on Plaintiffs' claim could unnecessarily cause havoc with the rulings of the state court, this Court must abstain from hearing Plaintiffs' case and must dismiss Plaintiffs' Complaint without prejudice. Plaintiffs may rеfile their claims in this Court once their state court action has reached a final resolution, if appropriate. 1
III. CONCLUSION
For the reasons set forth above, and for other good cause shown, the Court must abstain from hearing Plaintiffs' case pursuant to the Colorado River doctrine; thus, Plaintiffs' Complaint 1 The Court notes that res judicata principles may then be implicated. See Exxon Mqbil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 292 (2005) ("Disposition of the federal action, once the state-court adjudication is complete, would be governed by preclusion law.") *9 is dismissed without prejudice. In light of the Court's decision, the Court need not address Defendants' arguments in support of dismissal. An Order consistent with this Opinion will be entered.
UNITED STATES DISTRICT JUDGE Dated: October3, 2014