Opinion ID: 777616
Heading Depth: 2
Heading Rank: 2

Heading: analysis

Text: 11 We review de novo a district court's grant of a motion to dismiss on the basis of subject matter jurisdiction. See Nihiser v. Ohio Envtl. Prot. Agency, 269 F.3d 626, 627 (6th Cir.2001). We review a district court's imposition of sanctions pursuant to Federal Rule of Civil Procedure 11 for abuse of discretion. 28 U.S.C. § 1927; Union Planters Bank v. L & J Dev. Co., 115 F.3d 378, 384 (6th Cir.1997). We also review a district court's grant of a permanent injunction for abuse of discretion. In re Dublin Sec., Inc., 133 F.3d 377, 380 (6th Cir.1997), cert. denied, 525 U.S. 812, 119 S.Ct. 45, 142 L.Ed.2d 35 (1998).
12 In District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983), the Supreme Court held that federal court review of state court proceedings is jurisdictionally limited to the Supreme Court of the United States by 28 U.S.C. § 1257. 12 See also Patmon v. Michigan Sup.Ct., 224 F.3d 504, 506 (6th Cir.2000). We refer to this doctrine as the Rooker-Feldman doctrine. See also Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923). The Feldman Court stated that United States District Courts ... do not have jurisdiction ... over challenges to state court decisions in particular cases arising out of judicial proceedings even if those challenges allege that the state court's action was unconstitutional. Review of those decisions may only be had in this Court. Feldman, 460 U.S. at 486, 103 S.Ct. 1303; see also Anderson v. Charter Township of Ypsilanti, 266 F.3d 487, 492 (6th Cir.2001). In a more recent decision, the Supreme Court restated the doctrine as follows: under [the doctrine] a party losing in state court is barred from seeking what in substance would be appellate review of the state judgment in a United States district court, based on the losing party's claim that the state judgment itself violates the loser's federal rights. Johnson v. De Grandy, 512 U.S. 997, 1005-06, 114 S.Ct. 2647, 129 L.Ed.2d 775 (1994). 13 We have held that there are two elements to a Rooker-Feldman analysis. First, in order for the Rooker-Feldman doctrine to apply to a claim presented in federal district court, the issue before the Court must be [inextricably intertwined] with the claim asserted in the state court proceeding. Catz v. Chalker, 142 F.3d 279, 293 (6th Cir.1998) (quotation omitted). Where federal relief can only be predicated upon a conviction that the state court was wrong, it is difficult to conceive the federal proceeding as, in substance, anything other than a prohibited appeal of the state-court judgment. Id. (quotation omitted). Second, the Rooker-Feldman doctrine precludes federal court jurisdiction where the claim is a specific grievance that the law was invalidly — even unconstitutionally — applied in the plaintiff's particular case. Id. In contrast, the Rooker-Feldman doctrine does not bar federal court jurisdiction where the claim is a general challenge to the constitutionality of the state law applied in the state action. Id. See also Patmon, 224 F.3d at 509-10. 14 In this case, the district court held that it lacked subject matter jurisdiction under the Rooker-Feldman abstention doctrine because [c]learly, Plaintiffs' complaints amount to nothing more than a challenge to various state-court judgments against them. J.A. at 184 (Opinion and Order). The record fully supports this conclusion. In Count I of their November 9, 1999 complaint before the district court, the Tropfs directly attacked the state court judgments against them: 15 9. That the authorities in Michigan will provide no remedy for the theft of Plaintiffs' land except that Plaintiffs accept a collusive, unjust, and un-collectable Judgment ... and that the Defendants be allowed to wrongfully confiscate the Plaintiffs [sic] land without trial, or compensation ... violating the Plaintiffs [sic] constitutional rights under the Fourteenth Amendment. 16 23. That the Michigan Courts have consistently refused to apply the Michigan Law applicable to the Plaintiffs' claims because of the collusive nature of the lawsuits, and, the decisions of the Courts are inconsistent with Michigan Law, have been misapplied, unjustly enrich Defendants and violate Plaintiffs' constitutional rights to be treated equally under the 14th Amendment. 17 J.A. at 25, 27-28 (Nov. 9, 1999 Compl.). Furthermore, all the rest of the Tropfs' claims not only appear to be inextricably intertwined with the state court judgments regarding the validity of the warranty deed and the land contract, but they also appear to be particular to the Tropfs' case. 18 The Tropfs allege a variety of vague fraud and RICO claims, as well as constitutional due process and equal protection violations under 42 U.S.C. § 1983. See J.A. at 22-33 (Nov. 9, 1999 Compl.). 13 All their claims, however, rely on the argument that the warranty deed and land contract executed by the Tropfs and Wolenski were fraudulent. Because the warranty deed and the land contract were upheld in all of the state actions involving the Tropfs, 14 the Tropfs' federal claims are therefore predicated on their conviction that the state courts were wrong — the very definition of inextricably intertwined. Moreover, the Tropfs do not argue that any state law applied to them is itself unconstitutional; instead, they argue only that their equal protection and due process rights were violated in the particular application of the state laws to their case. Thus, the district court was correct in finding that it did not have subject matter jurisdiction based on the Rooker-Feldman abstention doctrine. 19 Because the district court did not have subject matter jurisdiction over the Tropfs' case, it should not have reached the merits of the case. We therefore do not address the district court's holdings as to res judicata and Federal Rule of Civil Procedure 12(b)(6).
20 Following its grant of the defendants' motions to dismiss, the district court held a hearing at which the court imposed three different types of sanctions on the Tropfs and their attorney. Although the district court dismissed the Tropfs' claims on the ground that it lacked subject matter jurisdiction over them pursuant to the Rooker-Feldman doctrine, we conclude that it was nonetheless permissible for the district court to impose on the Tropfs and their attorney monetary sanctions and an injunctive sanction related to the federal courts. However, we conclude that it was impermissible for the district court to impose on the Tropfs an injunctive sanction related to the state courts and state administrative proceedings.
21 The district court found the Tropfs jointly and severally liable with their attorney to MGB for costs and fees in the amount of $14,000 and to the Title Insurance defendants for costs and fees in the amount of $12,165.35. 15 Under 28 U.S.C. § 1919, [w]henever any action or suit is dismissed in any district court ... for want of jurisdiction, such court may order the payment of just costs. In addition, the Supreme Court has held that district courts can impose sanctions pursuant to Federal Rule of Civil Procedure 11, without impermissibly expanding the judicial authority conferred in Article III, in cases where it is later determined that the court lacks subject matter jurisdiction. Willy v. Coastal Corp., 503 U.S. 131, 137-39, 112 S.Ct. 1076, 117 L.Ed.2d 280 (1992). In Willy, the Court stated that `[i]t is well established that a federal court may consider collateral issues after an action is no longer pending.... [A]n imposition of a Rule 11 sanction is not a judgment on the merits of an action. Rather, it requires the determination of a collateral issue: whether the attorney has abused the judicial process, and, if so, what sanction would be appropriate.' Id. at 138, 112 S.Ct. 1076 (quoting Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395-96, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990)). 16 22 Rule 11 requires that to the best of [an attorney's or unrepresented party's] knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, ... claims, defenses, and other legal contentions [presented to the court in a paper] are warranted by existing law or by a nonfrivolous argument for the extension, modification or reversal of existing law or the establishment of new law and the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery. Fed.R.Civ.P. 11(b)(2)-(3). If an attorney or a party violates these requirements, the district court may impose a sanction consisting of an order directing payment ... of some or all of the reasonable attorneys' fees and other expenses incurred as a direct result of the violation. Fed.R.Civ.P. 11(c)(2). However, monetary sanctions may not be imposed on represented parties for the violation of subsection (b)(2) involving unwarranted legal contentions. Fed.R.Civ.P. 11(c)(2)(A); see also Union Planters, 115 F.3d at 384. In this circuit, the test for the imposition of Rule 11 sanctions is whether the individual's conduct was reasonable under the circumstances. See id. (quotation omitted). The district court found that: 23 In this case, the Plaintiffs have brought at least five lawsuits related to the same transaction. They have repeatedly lost in the state courts. They have brought suit twice against the Zajacs, individuals who purchased property pursuant to a court order. Moreover, they have unreasonably and vexatiously multiplied the proceedings by filing countless motions with the court, requiring the Defendants to respond, when the underlying action had no merit. 24 J.A. at 188 (Opinion and Order). We agree with the district court that the Tropfs' attorney presented frivolous legal arguments to the district court and that both the Tropfs and their attorney presented factual allegations to the district court that patently lacked evidentiary support. The validity of the land contract and the warranty deed were litigated numerous times in the state courts; for the Tropfs and their attorney to attempt to litigate the issue again in federal court-relying on unsubstantiated legal and factual claims — was unreasonable under the circumstances. We therefore conclude that the district court did not abuse its discretion in imposing monetary sanctions on the Tropfs and their attorney in the amount of the defendants' costs and fees. 17
25 Rule 11 also authorizes the imposition of nonmonetary sanctions. Fed.R.Civ.P. 11(c)(2) (the sanction may consist of, or include, directives of a nonmonetary nature). The 1993 Advisory Committee Notes to the Rule emphasize that: [t]he court has significant discretion in determining what sanctions, if any, should be imposed for a violation, subject to the principle that the sanctions should not be more severe than reasonably necessary to deter repetition of the conduct by the offending person or comparable conduct by similarly situated persons. In Ortman v. Thomas, 99 F.3d 807, 811 (6th Cir.1996), we modified a district court's nonmonetary sanction under Rule 11 that had permanently enjoined a plaintiff from filing any civil lawsuit [in federal court] alleging or asserting factual or legal claims based upon or arising out of the legal or factual claims alleged in this action or any of the actions underlying it. Ortman v. Thomas, 906 F.Supp. 416, 424 (E.D.Mich.1995), aff'd, 99 F.3d 807 (6th Cir.1996). Instead of the permanent injunction, we imposed a prefiling requirement, mandating that the plaintiff obtain certification from a magistrate judge that the claims were not frivolous or asserted for an improper purpose before filing further complaints. We held that [w]e do not believe a person can be absolutely foreclosed from initiating an action in a court of the United States, though it is permissible to require one who has abused the legal process to make a showing that a tendered lawsuit is not frivolous or vexatious before permitting it to be filed. Ortman, 99 F.3d at 811; see also Feathers v. Chevron U.S.A., Inc., 141 F.3d 264, 269 (6th Cir.1998) (There is nothing unusual about imposing prefiling restrictions in matters with a history of repetitive or vexatious litigation.); Filipas v. Lemons, 835 F.2d 1145 (6th Cir.1987). 18 26 In this case, the district court permanently enjoined the Tropfs and their attorney from filing any civil lawsuit in a United States District Court alleging or asserting factual or legal claims based upon or arising out of any of the legal or factual claims alleged in these actions without written permission from the district court. J.A. at 897 (Apr. 5, 2000 Order Granting Sanctions). Although the Tropfs do not have a history of vexatious or repetitive litigation in the federal courts, they do have such a history in the state courts regarding this matter. And as the district court found that it did not have subject matter jurisdiction over the Tropfs' claims under the Rooker-Feldman doctrine because the claims had been litigated in the state courts, it is likely that any other federal court would also lack subject matter jurisdiction over the legal and factual claims that the Tropfs allege in this case. We therefore conclude that the above injunction does not seem to be more severe than reasonably necessary to prevent the Tropfs from filing further repetitive actions in the federal courts. 27 The district court also enjoined the Tropfs from filing any civil lawsuit in any state court or administrative proceeding alleging or asserting a factual or legal claim based upon or arising out of any of the legal or factual claims alleged in these actions against the federal defendants without first posting a surety bond or cash in the amount of $50,000. J.A. at 897 (Apr. 5, 2000 Order Granting Sanctions). This circuit has not addressed whether a district court can impose prefiling requirements on parties in state courts and state administrative proceedings. The Fifth Circuit, however, has permitted the imposition of injunctive sanctions barring any future litigation by the parties on any cause of action arising from the fact situation at issue in the federal district court. See Villar v. Crowley Maritime Corp., 990 F.2d 1489, 1498-99 (5th Cir.1993), cert.denied, 510 U.S. 1044, 114 S.Ct. 690, 126 L.Ed.2d 658 (1994); Harrelson v. United States, 613 F.2d 114, 116 (5th Cir.1980). In Villar, the court stated generally that federal courts have broad powers to protect their judgments and the integrity of the courts as a whole. Id. at 1499. In Harrelson, the court located its power to issue the injunction against the parties in the All Writs Act, codified at 28 U.S.C. § 1651. 19 Commentators have also stated that: Basic power to protect the preclusive effects of a federal judgment by injunction may well inhere in the very existence of federal courts. If a more definite grant of general authority is needed, it can be found in the All Writs Act. As to any individual case, the grant of subject matter jurisdiction that supported the original judgment continues to provide ancillary jurisdiction for a protective injunction. 18 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 4405 (1981) (footnote omitted). 28 The Anti-Injunction Act, however, codified at 28 U.S.C. § 2283, prohibits a federal court from issuing injunctions 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. The Supreme Court has held that this prohibition extends to indirect injunctions against parties. Atlantic Coast Line Ry. Co. v. Bhd. of Locomotive Eng'rs, 398 U.S. 281, 287, 90 S.Ct. 1739, 26 L.Ed.2d 234 (1970) (It is settled that the prohibition of § 2283 cannot be evaded by addressing the order to the parties or prohibiting utilization of the results of a completed state proceeding.); see also Silcox v. United Trucking Serv., Inc., 687 F.2d 848, 850 (6th Cir.1982). But the Supreme Court has also held that the Act only prohibits injunctions against pending state court proceedings; the Act does not preclude injunctions against the institution of state court proceedings. Dombrowski v. Pfister, 380 U.S. 479, 485 n. 2, 85 S.Ct. 1116, 14 L.Ed.2d 22 (1965). We have held that the Anti Injunction Act prohibits federal courts from issuing injunctions against state court proceedings commenced after the institution of the federal suit but before the ... injunction was issued. Roth v. Bank of the Commonwealth, 583 F.2d 527, 528 (6th Cir.1978), cert. granted, 440 U.S. 944, 99 S.Ct. 1420, 59 L.Ed.2d 632, cert. dismissed, 442 U.S. 925, 99 S.Ct. 2852, 61 L.Ed.2d 292 (1979). The Supreme Court has held that proceedings for the purposes of the Act include all steps taken or which may be taken in the state court or by its officers from the institution to the close of the final process. Hill v. Martin, 296 U.S. 393, 403, 56 S.Ct. 278, 80 L.Ed. 293 (1935). 29 In this case, the district court's injunction as written does not directly or indirectly enjoin pending state proceedings; the injunction requires only that the Tropfs post a bond before filing civil lawsuits in state court or state administrative proceedings. However, as discussed above, while their federal action was pending, the Tropfs filed another claim in state court on February 29, 2000 against Holzman, and they amended the complaint on January 8, 2001. Pursuant to the sanctions order issued on April 5, 2000, the U.S. district court issued an order of contempt and enjoining and/or dismissing state court proceeding on April 25, 2001. In the April 25, 2001 order, the district court found that the Tropfs had failed to post a $50,000 bond or cash before filing their amended complaint in the state court against Holzman, and the court held that if the Tropfs and their attorney failed to post the bond or cash within a day, they would be required immediately [to] file an Order dismissing the State Court proceeding. 20 In addition, the district court held that if the Tropfs and their attorney did not comply with the April 25, 2001 order, they would be held in criminal contempt of the court. Inasmuch as the April 25, 2001 order indirectly enjoins a state court proceeding commenced after the institution of the federal suit but before the injunction was issued, it squarely violates the prohibitions of the Anti-Injunction Act. 21 We conclude, therefore, that the district court abused its discretion in its April 25, 2001 order indirectly enjoining pending state court proceedings. 30 We also conclude that the district court's April 5, 2000 injunction requiring the Tropfs to post a $50,000 bond or cash before filing a civil lawsuit in any state court or state administrative proceeding was an abuse of discretion as it applies to future filings of the Tropfs. Where a district court dismisses a case for lack of jurisdiction, it does not have the authority, either inherently or under the All Writs Act, to enjoin actions by the parties in the state courts or state administrative proceedings. As noted above, the Supreme Court has held that the Anti-Injunction Act only prohibits pending state court proceedings, and we have held that the Act does not prohibit injunctions against state administrative proceedings. American Motors Sales Corp. v. Runke, 708 F.2d 202, 204 (6th Cir.1983) (state administrative proceedings). Therefore, the district court did not violate the Anti Injunction Act in enjoining the Tropfs from filing future civil lawsuits in the state courts or state administrative proceedings. 31 However, the All Writs Act only authorizes the issuance of writs in aid of ... jurisdiction[]. 28 U.S.C. § 1651(a). We have held that federal courts must have an independent basis for subject matter jurisdiction in order to issue a writ in aid of such jurisdiction. See Michigan v. City of Allen Park, 954 F.2d 1201, 1216 (6th Cir.1992); Maczko v. Joyce, 814 F.2d 308, 310 (6th Cir.), cert. denied, 484 U.S. 828, 108 S.Ct. 98, 98 L.Ed.2d 58 (1987). Even if we located the district court's authority to impose the injunction in some inherent power, such power is restricted to the aid of federal jurisdiction. See Villar, 990 F.2d at 1498-99; Wright, Miller & Cooper, supra, § 4405. And this court has stated that even if the Anti Injunction Act does not apply, the power of a district court to enjoin a litigant from proceeding in a state action ... should be exercised sparingly. Silcox, 687 F.2d at 850. Because the district court did not have subject matter jurisdiction over the Tropfs' claims and did not adjudicate them on the merits, the court should not have enjoined the Tropfs from filing any civil lawsuit in the state courts or in state administrative proceedings without posting a bond or cash. The state courts have the full power to decide how to handle any further litigation in state court involving this protracted matter.