United States District Court, W.D. Wisconsin
OPINION & ORDER
D. PETERSON, DISTRICT JUDGE
James and Marcia Lorang bring claims against defendant Ditech
Financial LLC for violations of the Real Estate Settlement
Procedures Act (RESPA), 12 U.S.C. § 2605; the Fair Debt
Collection Practices Act (FDCPA), 15 U.S.C. § 1692; the
Wisconsin Consumer Act, Wis.Stat. § 224.77; and the
implied duty of good faith and fair dealing. Ditech owns and
services plaintiffs' residential mortgage.
plaintiffs have moved for a preliminary injunction barring
Ditech from confirming the sheriff's sale of
plaintiffs' property, purportedly pursuant to Federal
Rule of Civil Procedure 65. Dkt. 19. But plaintiffs misapply
Rule 65: they do not seek injunctive relief in this action.
In fact, this action does not concern their foreclosure.
Rather, plaintiffs request that this court stay proceedings
in their state court foreclosure action. Because the
Anti-Injunction Act bars the requested injunction, the court
will deny plaintiffs' motion.
story is complicated, but only a few facts are relevant to
the court's analysis here. Some time ago, plaintiffs
defaulted on their mortgage. So Bank of America accelerated
the loan and initiated a foreclosure action in state court.
Bank of America eventually assigned plaintiffs' mortgage
to Ditech. In 2015, Ditech offered to consider modifying
plaintiffs' loan. The parties dispute whether plaintiffs
submitted all documents necessary to apply for a loan
modification or other loss mitigation, and whether Ditech
ever approved plaintiffs for a “trial period
plan” to modify plaintiffs' mortgage payments. But
for purposes of this motion, it is sufficient to note that
plaintiffs never received a loan modification.
2016, the state court granted summary judgment and entered
judgment of foreclosure in favor of Ditech. Plaintiffs did
not appeal the order. Ditech arranged to sell plaintiffs'
property via a sheriff's sale on November 9, 2016, and
Fannie Mae purchased the property. Plaintiffs had moved to
stay the sale the day before, but the state court denied the
November 11, 2016, Ditech moved to confirm the sale of
plaintiffs' property in state court. The confirmation of
sale hearing is set for December 13, 2016.
have framed their motion as one for a preliminary injunction
pursuant to Rule 65. But plaintiffs' complaint does not
seek injunctive relief-it is strictly an action for damages.
Plaintiffs are actually asking the court to enjoin an
unrelated state court foreclosure action, pending resolution
of this federal action. In fact, plaintiffs have already
moved the state court for the exact relief they seek now, and
the state court denied the motion. To win the injunction they
seek from this court, plaintiffs must make a very compelling
showing of actual necessity. Plaintiffs argue that the
requested injunction is necessary because if they prevail in
this action and recover damages, they may have enough money
to redeem their property. But the Anti-Injunction Act
prohibits the court from enjoining the state court action.
Anti-Injunction Act states that “[a] court of the
United States may not grant an injunction to stay proceedings
in a State court except as expressly authorized by Act of
Congress, or where necessary in aid of its jurisdiction, or
to protect or effectuate its judgments.” 28 U.S.C.
§ 2283. Courts construe these three exceptions narrowly.
In re Diet Drugs, 282 F.3d 220, 233 (3d Cir. 2002)
(citing Atl. Coast Line R.R. Co. v. Bhd. of Locomotive
Eng'rs, 398 U.S. 281, 297 (1970)); see also
Zurich Am. Ins. Co. v. Superior Court for Cal., 326 F.3d
816, 824 (7th Cir. 2003) (“Because of the Act's
constitutional foundation, its three exceptions are to be
applied narrowly[.]”). “Any doubts as to the
propriety of a federal injunction against state court
proceedings should be resolved in favor of permitting the
state courts to proceed in an orderly fashion to finally
determine the controversy.” Atl. Coast, 398
U.S. at 297.
Congress has not expressly authorized the requested
injunction, the court may grant plaintiffs' requested
injunction only if it is “necessary in aid of [this
court's] jurisdiction” or “to protect and
effectuate its judgments.” “Both exceptions to
the general prohibition of [§] 2283 imply that some
federal injunctive relief may be necessary to prevent a state
court from so interfering with a federal court's
consideration or disposition of a case as to seriously impair
the federal court's flexibility and authority to decide
that case.” Id. at 294-95.
the ‘aid of jurisdiction' exception to the
Anti-Injunction Act applies only to parallel state in
rem rather than in personam actions.”
Winkler v. Eli Lilly & Co., 101 F.3d 1196, 1202
(7th Cir. 1996). Exceptions to this general rule typically
include highly unusual complex cases, such as school
desegregation cases, see Garcia v. Bauza-Salas, 862
F.2d 905, 909 (1st Cir. 1988), and complex multidistrict
litigation, “where a parallel state court action
threatens to frustrate proceedings and disrupt the orderly
resolution of the federal litigation, ”
Winkler, 101 F.3d at 1202. But generally the
necessary in aid of jurisdiction exception empowers federal
courts to stay parallel state court actions “that might
render the exercise of the federal court's jurisdiction
nugatory.” Id. at 1203. Put simply, the
injunction must be necessary. Adkins v. Nestle
Purina PetCare Co., 779 F.3d 481, 485 (7th Cir.),
cert. denied sub nom., Nestle Purina PetCare Co.
v. Curts, 136 S.Ct. 32 (2015) (“No matter what one
makes of the word ‘jurisdiction' in § 2283, an
injunction is proper only when ‘necessary' to
protect federal jurisdiction.”). Necessary does not
mean prudent, beneficial, helpful, or convenient.
Id.; see also In re Diet Drugs, 282 F.3d at
234 (“[I]t may not be sufficient that state actions
risk some measure of inconvenience or duplicative
have not demonstrated that the requested stay is necessary to
this court's exercising jurisdiction over this case. In
fact, they make no attempt to argue that it is. Rather, the
injunction would serve to help them attempt to keep their
home. Plaintiffs' reason for requesting the injunction
does not affect the court's ability to resolve this case.
The “necessary in aid of is jurisdiction”
exception to the Anti-Injunction Act does not apply here.
neither does the remaining exception. The “to protect
or effectuate its judgments” exception permits federal
courts to “enjoin litigation of matters finally
adjudicated in federal court.” Harper Plastics,
Inc. v. Amoco Chems. Corp., 657 F.2d 939, 946 ...