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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO: 17-80728-CV-MIDDLEBROOKS

LAURENCE SCHNEIDER,

Plaintiff,

v.

FIRST AMERICAN BANK, as successor

by merger to Bank of Coral Gables, LLC,

Defendant.
________________;/
ORDER GRANTING DEFENDANT'S MOTION FOR ABSTENTION

THIS CAUSE comes before the Court on Defendant First American Bank's ("First

American") Motion Asking the Court to Abstain from Exercising Jurisdiction ("Motion"), filed

September 6, 2017. (DE 34). Plaintiff Laurence Schneider ("Schneider") responded on

September 20, 2017, (DE 38), to which First American replied on September 27, 2017 (DE 41).

For the following reasons, the Motion is granted.

I. BACKGROUND

This case arises out of First American's alleged mishandling of Schneider's mortgage

loan, and Defendant's ultimate foreclosure on Schneider's home which secured the loan.

(Federal Docket Entry ("FDE") 26). Schneider alleges he and the Bank of Coral Gables

executed a HELOC loan ("the loan"), the proceeds from which Schneider used to purchase a

home ("the Property"). Schneider alleges that in 2014, First American merged with the Bank of

Coral Gables, acquiring its assets, including the bank's rights in Schneider's loan. The terms of

the loan required Schneider to make recurring monthly payments, however the Parties did not

specify a date upon which payment was due each month. Instead, the agreement stated that

D.E. 149
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payment was due every month by "the payment due date" and payments not received within 15

days of the payment due date were deemed late. (FDE 26 at 6).

Schneider alleges that his first contact with First American was in May of 2015 when a

First American representative called to inform him that he was late in his payments and that if he

did not pay the past-due amounts, First American would foreclose on the mortgage. (FDE 26 at

7). Schneider alleges that he was current in his payments at the time of this phone call. He

alleges that a First American representative later admitted that Schneider was not late on his

payments and that the confusion was due to First American's own clerical mistakes. The

representative allegedly assured Schneider that First American would immediately correct any

delinquencies reported to the credit bureaus. (FDE 26 at 8). Schneider alleges that First

American made many other mistakes in handling his loan, including telling him on other

occasions that he was late in making payments when he was not. He alleges that First American

representatives consistently assured him that their own mistakes caused him to appear late in

their system, however, they recognized that he was not late in his payments. Schneider alleges

that First American repeatedly assured him that they would correct any delinquency reported to

the credit agencies. Schneider alleges that despite First American's assurances, First American

misrepresented to credit bureaus that Schneider was late in his payments and did not cure these

misrepresentations.

a. Federal Complaint

Schneider alleges that First American violated 12 U.S.C. §§ 2601 et seq. (Real Estate

Settlement Procedures Act ("RESPA")) (Count I); and 15 U.S.C. § 1601 et seq. (Truth in

Lending Act ("TILA")) (Count II); Schneider also alleges that First American breached the terms

of the Parties' loan agreement (Count III); and defamed Schneider (Count IV).

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a. State Court Complaint

First American initiated foreclosure proceedings on the Property on August 17, 2016 in

the Fifteenth Judicial Circuit in and for Palm Beach County Florida in case no.

502016CA009292. (the "State Court proceedings"). Schneider, as Defendant in the foreclosure

action, filed an Answer, Affirmative Defenses and Counterclaim ("Counterclaim"). The

Counterclaim alleged the Affirmative Defense of Unclean Hands, and in support recited a

summarized account of the allegations contained in the instant federal Complaint. Further,

Schneider alleged the following counterclaims: Violation of the Fair Credit Reporting Act (15

U.S.C. § 1681) (Count I); Negligent and/or Fraudulent Misrepresentation (Count II); and

Conversion (Count III). Schneider's Counterclaim supports both Counts I and II with allegations

similar to those alleged in the instant Complaint. On June 27, 2017, the State Court entered a

Final Judgment of Foreclosure against Schneider and Granted First American's Motion for

Summary Judgment. (State Docket Entry (hereinafter "SDE" 125, 126). Schneider appealed the

State Court's entry of judgment and that appeal is currently pending in the Fourth District Court

of Appeals. See Schneider v. First American Bank, et al, 4Dl 7-2239 (Fla. 4th DCA 2017).

II. DISCUSSION

Defendant argues that I should abstain under the doctrine enunciated by the Supreme

Court in Colorado River. In Colorado River, the Supreme Court recognized that, in certain

"exceptional" circumstances, abstention may be appropriate "due to the presence of a concurrent

state proceeding." Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 818

(1976). As a threshold matter, for Colorado River to apply, there must be "federal and state

proceedings involv[ing] substantially the same parties and substantially the same issues."

Ambrosia Coal & Const. Co. v. Pages Morales, 368 F.3d 1320, 1330 (11th Cir. 2004). Once the

threshold has been met, there are six factors a court considers in determining abstention:

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(1) whether one of the courts has assumed jurisdiction over property, (2) the
inconvenience of the federal forum, (3) the potential for piecemeal litigation, (4)
the order in which the fora obtained jurisdiction, (5) whether state or federal law
will be applied, and (6) the adequacy of the state court to protect the parties'
rights.

Id. at 1331. In addition to the six factors, "'the vexatious or reactive nature of either the federal

or the state litigation may influence the decision whether to defer to a parallel state litigation

under Colorado River."' Id. (quoting Moses H Cone Memorial Hosp. v. Mercury Constr. Corp.,

460 U.S. 1, 17 n.20 (1983)). Finally, "whether the concurrent cases involve a federal statute that

evinces a policy favoring abstention" is considered as well. Id.

"[T]he decision whether to dismiss a federal action because of parallel state-court

litigation does not rest on a mechanical checklist, but on a careful balancing of the important

factors as they apply in a given case, with the balance heavily weighted in favor of the exercise

of jurisdiction." Moses H Cone, 460 U.S. at 16. "One factor alone can be the sole motivating

reason for the abstention." Moorer v. Demopolis Waterworks & Sewer Bd., 374 F.3d 994, 997

(11th Cir. 2004).

A. Threshold Issue: Concurrent State Litigation Involving the Same Parties and
Substantially the Same Issues.

As noted above, Schneider appealed the state Court's entry of judgment in favor of First

American and that appeal remains pending in the Fourth District Court of Appeals. First

American argues that the state court proceeding involves substantially the same issue as those

presented here, noting that "they [both] relate to the validity of the [loan] and the Parties'

performance of their obligations under the loan." (DE 34 at 6).

Without specifically distinguishing the two proceedings, Schneider argues that they are

neither related nor parallel. (FDE 38). I find that the two proceedings involve substantially the

same issues. In essence, Schneider's state Counter-Claim and his federal Complaint raise the

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same issues but seek different relief. Schneider's Counter-claim alleges that First American

improperly serviced the Loan, and therefore, any non-payment or late payment did not constitute

a default on the Loan. (DE 35-1 , 14). Thus, Schneider alleged, foreclosure was inappropriate.

Schneider's federal Complaint alleges that First American improperly serviced the loan and

therefore Schneider is entitled to damages. Both proceedings relate to First American's handling

of Schneider's loan with First American and First American's foreclosure on the Property

securing that loan.

While Schneider's state Counter-Claim and federal Complaint allege somewhat different

causes of action, the allegations giving rise to each cause of action are substantially the same.

For instance, the Counter-Claim alleges that First American violated the Fair Credit Reporting

Act in part by "furnish[ing] information, which in many instances was inaccurate, to the three

major credit bureaus, about Schneider's credit worthiness." (DE 35-1 at 6). In the federal

Complaint, Schneider argues that First American Bank defamed him in part by "disseminating

erroneous, false, and misleading information about the HELOC loan to the credit reporting

agencies." (DE 26 at 30). Both the state and federal pleadings raise the substantially the same

issues regarding whether First American improperly serviced Schneider's loan, and therefore, the

two proceedings involve substantially the same Parties and issues. Accordingly, I find that the

threshold issue is satisfied, and I will therefore consider the six factors.

B. Balancing the Factors

i. Jurisdiction over property.

The first factor the court must consider is "whether one of the courts has assumed

jurisdiction over property." Ambrosia, 368 F.3d at 1332. This factor weighs against abstention

when "neither the district court nor the state circuit court assumed jurisdiction over any

property." Jackson-Platts v. Gen. Elec. Capital Corp., 727 F.3d 1127, 1141 (11th Cir. 2013).

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Where the state court has asserted jurisdiction over real property, this factor weighs in favor of

abstention. Beepot v. JP. Morgan Chase Nat. Corp. Servs., Inc., No. 3:10-CV-423-J-34, 2011

WL 4529604, at *8 (M.D. Fla. Sept. 30, 2011) ("Most significantly, the Florida court in the State

Court Foreclosure Proceeding has assumed jurisdiction of the Florida property, satisfying the

first, and in this case, the most important factor."). 1 Here, the State Court assumed jurisdiction

over the Property. (PDE 34 at 7). This factor, therefore, weighs in favor of abstention.

ii. Convenience of the federal forum.

The Parties agree that "the convenience of the federal forum is neutral." (PDE 34 at 7;

PDE 38 at 6).

iii. Potential for piecemeal litigation.

First American argues "there is a potential for piecemeal litigation because there is a risk

of inconsistent results." (PDE 34 at 7). Schneider responds that there is no potential for

piecemeal litigation "as any ruling from either court will not affect nor impact the litigation in

the other venue." (PDE 38 at 6). "Run of the mill piecemeal litigation will not do: this factor

does not favor abstention unless the circumstances enveloping those cases will likely lead to

piecemeal litigation that is abnormally excessive or deleterious." Jackson-Platts, 727 F.3d at

1142 (internal quotations omitted). Here, although exercising jurisdiction may lead to

inconsistent results, any piecemeal litigation is not abnormally excessive. Accordingly, this

factor weighs against abstention.

1
Some district courts have found this factor weighs against abstention unless the federal court
asserts jurisdiction over the property. See e.g., Burdick v. Bank of Am., NA., 99 F. Supp. 3d
1372, 1377 (S.D. Fla. 2015). However, the language from the Eleventh Circuit in Ambrosia and
Jackson-Platts indicates that either court's assertion of jurisdiction over the property weighs in
favor of abstention.
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iv. The order in which jurisdiction was obtained.

Here, the State action was filed on August 17, 2016, while the Federal Action was

initiated on June 13, 2017. However, the fourth factor "should not be measured exclusively by

which complaint was filed first, but rather in terms of how much progress has been made in the

two actions." Ambrosia, 368 F.3d at 1333 (quoting Moses H Cone, 460 U.S. at 21). First

American argues that the State foreclosure proceeding was filed 10 months before this

proceeding and notes that the State Court has already entered Final Judgment, whereas the

Parties in this action have not yet begun discovery. (FDE 34 at 8). Schneider apparently

concedes that this factor weighs in favor of abstention as he does not address it in his Response.

Given the entry of Final Judgment in the State case and the fact that the Parties have not yet

begun discovery in this proceeding, this factor weighs in favor of abstention.

v. State versus federal law.

First American argues that both proceedings are "at their cores, disputes over [the

Property] and the validity, and enforceability of the loan instruments secured by the Property ...

[which are] signally[] state law concern[s]." (FDE 34 at 8) (citation omitted). Schneider argues

that in this case, "the principal law at issue to be applied to the facts is federal law, unlike the

purely state law based claims raised in the state court foreclosure proceedings." (FDE 38 at 7).

The federal Complaint alleges causes of action under both federal and state law. However, it

does not present any "complex questions of state law that a state court might be best suited to

resolve" and therefore, I find that this factor is neutral. Noonan South, Inc. v. Volusia County,

841 F.2d 380,382 (11th Cir. 1988).

vi. Adequacy of the state court.

First American argues that Florida State Court is best suited to protect the Parties' rights

as this is fundamentally a dispute relating to real property in Florida, citing Preston v. Fishman,

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2011 WL 129843 (M.D. Fla. 2011) ("[t]he state forum enJoys a surpassmg advantage in

experience in, and knowledge of, foreclosure and pertinent state property law."). Schneider

responds that "the state court proceedings will not adequately protect [his] rights under federal

law" without providing any reasons why he believes that to be the case. (FDE 38 at 7).

Schneider's contention is especially unpersuasive in light of the fact that Schneider's state

Counter-claim in the state proceedings seeks relief under federal law.2 (FDE 35-1). Further,

"Florida state courts routinely entertain federal statutory TILA, RESP A and FDCP A claims, and

common law claims, as counterclaims or affirmative defenses in state foreclosure actions."

Beepot v. JP. Morgan Chase Nat. Corp. Servs., Inc., No. 3:10-CV-423-J-34, 2011 WL 4529604,

at *8 (M.D. Fla. Sept. 30, 2011) ("citing Harper v. Chase Manhattan Bank, 138 Fed. Appx., 130,

133 n.2). Accordingly, the state court can protect Schneider's rights. The "fact that both forums

are adequate to protect the parties' rights merely renders this factor neutral." Jackson-Platts, 727

F.3d at 1143 (internal quotations omitted).

C. Reactive nature of the instant litigation.

A court should consider the "sequence of events," in determining whether a case is

vexatious and reactive. Lops v. Lops, 140 F.3d 927, 964 (11th Cir. 1998) (citing Allen v.

Louisiana State Bd. of Dentistry, 835 F.2d 100, 105 (5th Cir. 1988)). The sequence of events

here suggests that Schneider's choice to file this action was at least in part reactive to the state

court proceedings. It appears that on June 12, 2017, the Parties attended a hearing before Judge

Ferrara in the State Foreclosure proceeding. (SDE 105, 106). The very next day, on June 13,

2017, Schneider filed this action. (FDE 1). Two weeks later, on June 27, 2017, the State Court

entered a Final Judgment of Foreclosure against Schneider and Granted First American's Motion

2
As noted above, Count I of Schneider's state Counter-claim alleges that Defendant violated the
Fair Credit Reporting Act (15 U.S.C. § 1681).
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for Summary Judgment. (SDE 125, 126). To the extent a timeline can shed light on whether a

party's filing a federal complaint was "vexatious or reactive" to a pending state court proceeding,

I find that the timeline here suggests that Schneider's choice to file the federal complaint may

have been, in part, reactive to the state court proceedings. Schneider fails to address this policy

consideration in his response and provides no explanation as to why he filed the federal action

when he did. Accordingly, the reactive nature of this suit weighs in favor of abstention.

D. Policy in favor of abstention.

Defendant argues that because RESP A provides concurrent jurisdiction in state and

federal courts, the statute evinces a policy favoring abstention. (FDE 34 at 8). The fact that a

statute provides concurrent jurisdiction in both state and federal courts is insufficient by itself to

demonstrate a policy favoring abstention. See Willson v. Bank of America, NA., 684 Fed. Appx.

897 (11th Cir. 2017) ("Although it is true that the statute at issue in Colorado River granted

concurrent state and federal jurisdiction, ... it was 'the clear federal policy for the avoidance of

piecemeal adjudication of water rights in a river system; that evinced a policy favoring

abstention."'). Finding no other evidence indicating a policy favoring abstention, I find that this

factor is neutral.

III. CONCLUSION

Having reviewed the Colorado River factors-noting that the jurisdiction over property,

the order in which jurisdiction was obtained, and the reactive nature of this action each weigh in

favor of abstention-I find abstention is warranted under these circumstances. This conclusion

is in line with other cases similarly finding that Colorado River abstention is appropriate where

there is an ongoing foreclosure action. See e.g., Willson v. Bank of America, NA., 684 Fed.

Appx. 897 (11th Cir. 2017) (affirming district court's choice to abstain from exercising

jurisdiction over a case involving RESP A claims where a concurrent state foreclosure action was

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pending in state appellate court under Colorado River); Delaney v. Specialized Loan Servicing,

LLC, No. 15 C 5260, 2015 WL 7776902, at *4 (N.D. Ill. Dec. 3, 2015) (abstaining under

Colorado River from adjudicating RESP A claims in light of ongoing foreclosure action and

compiling cases finding the same); Shedd v. Bank of Am., N.A., No. 4:13-CV-18 CDL, 2013 WL

4056359, at *7 (M.D. Ga. 2013) (abstaining under Colorado River based on concurrent

foreclosure action).

"[A] stay, not a dismissal, is the proper procedural mechanism for a district court to

employ when deferring to a parallel state-court proceeding under the Colorado River doctrine."

Moorer, 374 F.3d at 998. A stay is, therefore, appropriate. Accordingly, it is hereby

ORDERED AND ADJUDGED that Defendant First American Bank's Motion Asking

the Court Abstain from Exercising Jurisdiction (DE 34) is GRANTED. This case is STAYED

pending final resolution of the foreclosure action. All pending motions are DENIED without

prejudice subject to refiling if and when the stay is lifted. The Clerk of Court shall

administratively CLOSE this case. All deadlines, including the trial date, are TERMINATED.

Any motion to lift the stay must be filed within 20 days of the resolution of the state foreclosure

action.

DONE AND ORDERED in Chambers in West Palm Beach, Fl

of January, 2018.

D ALD M. MIDDLEBROOKS
Copies to: Counsel of Record UNITED STATES DISTRICT JUDGE