Can federal court stop state court's UD proceeding?


#1

Hello, everybody; We picked up a property through trustee’s sale in northern Cal. Currently, the previous owners are suing the bank for wrongful foreclosure in the federal court. The trial is many months away due to the heavy workload of federal judges.We have already filed the unlawful detainer lawsuit in the local superior court. The trial date is coming very soon. The foreclosed home owners, all of a sudden, changed the smooth UD flow by filing an “Ex Parte Emergency Motion” in the federal court to seek order to enjoin our UD action. Their blatan intention is to try to borrow the “superior” federal court power to suspend the state court’s UD process.Has anybody ever heard of any case law in which federal court could successfully interfere state court’s UD action?Many thanks


#2

I’m not a lawyer and can’t exactly answer your question, but I can tell you that this is something I’ve heard from a number of our customers. In fact we’ve heard there are some unlicensed folks selling “how-to” info to homeowners on how to abuse the courts by continuous filings in the local, bankruptcy and federal courts until a judge finally realizes and forces it to stop. One particular, VERY experienced investor just told me that he recently had one that took a year to resolve. Not trying to bum you out, but it’s important to be in the right frame of mind so you can make appropriate decisions on how to handle. High on my list of suggestions would be to engage with the homeowner - offer to help them. If they actually have a good case (highly doubtful - few homeowners win these battles), then you’ll lose the deal anyway and better to help them get their home back quickly. If, on the other hand, you show you are honest and aren’t working against them, they’ll be a lot more likely to realize they are tilting at windmills and be open to cash for keys. Important to note that they can still pursue their case against the bank even if they settle with you. Sometimes they are ok with moving, but just want compensation. You can help a little, and leave them to seek more from the bank. Bottom line, you will likely either have to wait it out, or get creative. Hope that helps.


#3

Hi AllCal,

I have not faced the Fed vs State Court situation you’re dealing with … but pay a lawyer to fight and that’s what they’ll do. There are always actions and counter actions on the legal chess board. Sadly, it’s most oft the lawyers on each side who ‘win’ in any protracted battle.

One key question for you is the date the now “ex”-homeowner filed his legal action versus his lender? Was the ‘lis pendens’ filed before or after the trustee sale date? Your legal position is considerably strengthened if the ex-homeowner’s lawsuit was filed after the trustee sale. If the legal action was initiated and recorded?before the trustee sale (even hours before), then the 3rd party investor (you) who acquired the property would have been on ‘constructive notice’ of the legal action (no longer a BFP) and hence their lawyer would likely claim that you were aware, or should have been aware of the recorded lis pendens, ‘before you bought’, and hence you could be added to the lawsuit and not easily shed the action (via demurrer or some other means).?

If?however, he filed the lawsuit _ after _ the trustee sale, the ‘ex’ home-owner will likely have a much bigger hill to climb getting a judge to invalidate (reverse) the sale … especially if you have already recorded the trustee’s deed upon sale. Even if the 'ex" wins in court vs the lender, he likely won’t get the house back … just damages v the lender. ?


#4

Retain?a lawyer to file for a remove action to remand the case back to state court. Federal court does not have jurisdiction over the land dispute therefore?the case will be remanded back to the state court. hope this help.


#5

Thanks for all your answers.

Yes, the foreclosed homeowners filed theif “wrongful foreclosure” lawsuit??? AFTER? the trustee sale. So our BFP status is intact.

I spoke to an attorney last week briefly. He thinks that federal court will eventually interfere with state court’s UD action once the federal judge realizes the foreclosed homeowner’s case has legal ground. But I called another attorney today, his answer is pretty the same as “cool2rock” ‘s. Federal legal system doesn’t have Landlord-tenant law. Federal court has no jurisdiction over the state court’s UD proceeding. More likely, the ex-owners’ emergency motion to stop our UD action will be tossed out by the federal judge. Just keep my fingers crossed.

?


#6

My other attorney’s reply confirms with your answer that federal court judge will not interfere the state court’s UD action unless it is federal bankruptcy court. But fortunately, it is just the regular federal civil court.


#7

Let us know what happens.