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Young v. Ditech Financial LLC

United States District Court, W.D. Washington, Seattle

September 3, 2019

STEVEN K. YOUNG, Plaintiff,
v.
DITECH FINANCIAL LLC, QUALITY LOAN SERVICE CORP OF WASHINGTON, Defendants.

          ORDER TO SHOW CAUSE AND PARTIALLY STAYING THE CASE

          JAMES L. ROBART, UNITED STATES DISTRICT JUDGE.

         A. Order to Show Cause

         On June 28, 2019, the court ordered pro se Plaintiff Steven K. Young to show cause why this case should not be dismissed for lack of subject matter jurisdiction. (OSC (Dkt. # 10).) The court noted that Mr. Young had not adequately pleaded the parties' citizenship necessary to invoke the court's diversity jurisdiction. (Id. at 1-2.) The court reminded Mr. Young that “[a] limited liability company has the citizenships of all of its members.” (Id. at 2 (citing Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006)).) The court also noted that even construed liberally, Mr. Young failed to properly invoke the court's federal question jurisdiction because his claim under the Fair Debt Collection Practices Act (“FDCPA”) relied on a statute that does not exist, and the statute that most closely resembles it, 15 U.S.C. § 1692e, “does not reference a statute of limitations or the tolling thereof, which is the basis for Mr. Young's purported FDCPA claim.” (OSC at 2-3.)

         On July 11, 2019, Mr. Young filed a notice to voluntarily dismiss Defendant Quality Loan Service Corp of Washington. (Dismissal Not. (Dkt. # 15).) The following day, Mr. Young responded to the court's order to show cause. (OSC Resp. (Dkt. # 16).) In his response, Mr. Young alleges that he is a citizen of Washington and that “Defendant DITECH is a citizen of the State of Pennsylvania.” (Resp. to OSC at 2.) Mr. Young does not assert the citizenship of any of Ditech Financial LLC's (“Ditech”) members. (See generally OSC Resp.) Mr. Young also states that he “erroneously cited 1692e § 807(5) regarding his FDCPA claim in his Complaint” and that the “correct citation is 15 U.S.C. § 1692e.” (Id.) Mr. Young “requests leave from the Court to further amend his complaint” to include the above language on diversity of citizenship, and to “remove tolling language as follows: ‘25. Plaintiff asserts and believes Defendant knew, as a result of the tolling of the statute of limitation, they did not have a right to collect payments or and or threaten to foreclose on Plaintiff's real property.'” (Id. at 2-3 (strikethrough in original) (bolding omitted).) Mr. Young provides no additional facts from which the court can determine whether Mr. Young's claim falls under 15 U.S.C. § 1692e. (See generally id.)

         Mr. Young has failed to show cause why his complaint should not be dismissed for lack of subject matter jurisdiction. The party invoking jurisdiction must allege facts that establish the court's subject matter jurisdiction. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992). Mr. Young failed to assert the citizenship of Ditech's members. (See generally Resp. to OSC.) Mr. Young also failed show cause as to the court's federal question jurisdiction. (See generally id.) Although he identified the specific statute under which he intends to bring his FDCPA claim (OSC at 2 (stating that the “correct citation is 15 U.S.C. § 1692e”)), Mr. Young failed to assert any facts to establish that his claim falls under that statute (see generally OSC Resp.). Instead, Mr. Young seeks to remove language regarding the statute of limitations and tolling from his complaint. (See Id. at 2-3.) In doing so, however, Mr. Young leaves his asserted claim devoid of any facts from which the court can determine that Mr. Young has sufficiently pleaded a claim under 15 U.S.C. § 1692e.

         Liberally construing Mr. Young's request “to further amend his complaint” (Resp. to OSC at 3) as a motion to file a third amended complaint, the Court finds that Mr. Young's proposed amendment would not cure his complaint's jurisdictional defects and therefore DENIES WITHOUT PREJUDICE Mr. Young's motion (Dkt. # 16). In consideration of Mr. Young's pro se status, the court will afford Mr. Young one more chance to present facts from which the court can determine it has subject matter jurisdiction over Mr. Young's case.

         Accordingly, the court ORDERS Mr. Young to show cause, within 14 days, why his complaint should not be dismissed for lack of subject matter jurisdiction. Mr. Young is instructed to file a written response to this order, which (a) asserts the citizenship of each member of Ditech, and if any member of Ditech is itself a limited liability company, each of that company's members, until each layer of limited liability company membership is reduced to the individual members;[1] and (b) asserts specific facts from which the court can determine whether Mr. Young's claim falls under 15 U.S.C. Section 1692e. If Mr. Young fails to show cause once again, the court will dismiss his complaint for lack of subject matter jurisdiction. See Fed. R. Civ. P. 12(h)(3); Rosales v. United States, 824 F.2d 799, 803 n.4 (9th Cir. 1987) (holding that if a federal court determines that it lacks subject matter jurisdiction at any time during a dispute, the court must dismiss the action).

         B. Order Staying Mr. Young's FDCPA Claim

         On August 5, 2019, Ditech, the sole remaining defendant, informed the court that it and its debtor affiliates voluntarily filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Southern District of New York (“the Bankruptcy Court”). (See Bankr. Not. (Dkt. # 20) at 1; Bankr. Pet. (Dkt. # 20-1) at 1.) Ditech correctly asserts that “the filing of a bankruptcy petition ‘operates as a stay, applicable to all entities,' of, or among other things ‘the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under [the Bankruptcy Code], or to recover a claim against the debtor that arose before the commencement of the [bankruptcy case]' and ‘any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.'” (Bankr. Not. at 2 (quoting 11 U.S.C. § 362(a)(1), (3)) (alterations in Bankr. Not).)

         However, Ditech also informed the court that the Bankruptcy Court issued a limited stay modification order (Stay Modification Order (Dkt. # 20-2)), which, at Ditech's request, modified the stay “to allow Interested Parties to assert and prosecute claims, cross-claims, third-party claims, and counter-claims” that fall into certain categories, defined as “Permitted Default Actions” (id. ¶ 16) and “Permitted Title Disputes (id. ¶ 20). The Stay Modification Order allows claims that fall into the defined categories to “proceed separately from any other claim that is stayed by the Bankruptcy Code.” (Id. ¶¶ 18, 22.) “Should there be any disagreements between or among any Interested Parties and/or the Debtors regarding whether any claims, cross-claims, third-party claims, or counterclaims fall within the exception the automatic stay approved by [the Bankruptcy Court], [the Bankruptcy Court] shall have exclusive jurisdiction to hear and resolve such disputes.” (Id. (alterations added).)

         The parties filed a joint status report on August 21, 2019. (JSR (Dkt. # 22).) In it, Ditech asserts that Mr. Young's FDCPA claim is subject to the Bankruptcy Court's automatic stay, but that “[Mr. Young's] claims for Quiet Title and Declaratory Relief are not stayed.” (Id. at 2.) Mr. Young makes no statement in the JSR or otherwise regarding which of his claims are subject to the Stay Modification Order. (See generally id.; see generally Dkt.) The court therefore concludes that Mr. Young's FDCPA claim-but not his claims for quiet title and declaratory relief-are subject to the automatic stay. See 11 U.S.C. § 362. Accordingly, the court STAYS this case with respect to Mr. Young's FDCPA claim until the automatic stay is lifted.[2] Mr. Young's remaining claims are not subject to this order to stay.

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Notes:

[1] See Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (examining the citizenship of a limited partnership whose partners included limited liability companies by looking to the citizenship of the ...


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