Court Opinion

ID: 9915035
Source: CourtListenerOpinion
Date Created: 2024-01-04 15:00:44.763317+00
Date Added: 2024-06-11T13:16:55.043014
License: Public Domain

USCA11 Case: 22-11355      Document: 66-1       Date Filed: 01/04/2024   Page: 1 of 16

                                                                 [PUBLISH]
                                       In the
                 United States Court of Appeals
                            for the Eleventh Circuit

                             ____________________

                                    No. 22-11355
                             ____________________

        ELIEZER TAVERAS,
        VALERIA ROSA TAVERAS,
                                                        Plaintiﬀs-Appellants,
        versus
        BANK OF AMERICA, N.A.,
        SERVIS ONE, INC., d.b.a.
        BSI FINANCIAL SERVICES,
        CHRISTIANA TRUST, a division of
        Wilmington Savings Fund Society,
        FSB, not in its individual capacity,
        but as trustee of ARLP Trust 4,

                                                      Defendants-Appellees.
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        2                          Opinion of the Court                 22-11355

                                ____________________

                    Appeal from the United States District Court
                         for the Middle District of Florida
                     D.C. Docket No. 6:21-cv-00189-WWB-EJK
                             ____________________

        Before JORDAN, ROSENBAUM, Circuit Judges, and MANASCO, District
        Judge.∗
        MANASCO, District Judge:
               This appeal presents the question whether a district court
        abused its discretion by abstaining from exercising federal jurisdic-
        tion pending the conclusion of a related state case. This case arises
        out of a dispute concerning the validity of a mortgage and an al-
        legedly fraudulent promissory note purportedly secured by a par-
        cel of real property located at 7706 Excitement Drive, Kissimmee,
        Florida 34747 (“the Property”). Appellants Eliezer and Valeria
        Taveras purchased the Property in 2006, and the Property is subject
        to an ongoing Florida state court foreclosure proceeding that has
        been pending since 2016.
              The district court determined that the Taverases’ federal
        claims should be stayed until conclusion of the state foreclosure
        case under the Colorado River abstention doctrine. See Colo. River
        Water Conservation Dist. v. United States, 424 U.S. 800, 813 (1976). On

        ∗ The Honorable Anna M. Manasco, U.S. District Judge for the Northern Dis-

        trict of Alabama, sitting by designation.
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        22-11355               Opinion of the Court                         3

        appeal, Mr. and Mrs. Taveras raise two issues: (1) whether the dis-
        trict court abused its discretion by abstaining from exercising juris-
        diction under Colorado River and staying the federal case, pending
        conclusion of the state court foreclosure case; and (2) whether the
        district court erred by denying the Taverases’ motion to amend the
        complaint.
             After careful consideration and with the beneﬁt of oral ar-
        gument, we aﬃrm.
                                 BACKGROUND

                This appeal arises out of the most recent in a series of law-
        suits litigating the validity of a mortgage and an allegedly fraudu-
        lent promissory note secured by the Property. The Property was
        the subject of an unsuccessful foreclosure action in 2008. Then in
        2014, the Taverases ﬁled a declaratory action in Florida state court
        against appellee Christiana Trust (“the Trust”), seeking a declara-
        tion that the mortgage on the Property was null and void. Taveras
        v. Christina [sic] Tr., No. 2014 CA 002620 MF (9th Cir. Ct. Fla. Aug.
        28, 2014). Mr. and Mrs. Taveras obtained a default declaratory judg-
        ment in the 2014 state case, and a state court appeal followed.
               The Taverases allege that, in June 2015, appellee Bank of
        America, N.A. (“BANA”), manufactured a false promissory note
        (“the Note”) to represent a security interest as a mortgage on the
        Property. The Note was purportedly executed by Valeria Taveras
        in September 2006 and documented a promise to pay $960,000. Mr.
        and Mrs. Taveras allege that a BANA employee endorsed the fraud-
        ulent Note; an employee of appellee Servis One, Inc., d.b.a. BSI
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        4                         Opinion of the Court                       22-11355

        Financial Services (“BSI”), executed a supporting aﬃdavit with
        false statements about Mrs. Taveras’s signature on the note; and the
        Trust then used the false Note and aﬃdavit to vacate the declara-
        tory judgment.
               Mr. and Mrs. Taveras ultimately agreed to dismiss the state
        court declaratory judgment action. They allege that this decision
        was based on various false representations by the appellees that in-
        duced them to believe the Trust held a valid note and that the
        Taverases would therefore not succeed in the declaratory judgment
        action. Mr. and Mrs. Taveras dismissed the declaratory judgment
        action in March 2016, and the appellate court reversed the declara-
        tory judgment.
                In April 2016, the Trust commenced a foreclosure action
        against Mr. and Mrs. Taveras in Florida state court, seeking to en-
        force the Note and foreclose on the Property. U.S. Bank Nat’l Ass’n
        v. Taveras, No. 2016 CA 000916 MF (9th Cir. Ct. Fla. Apr. 1, 2016). 1
        Mr. and Mrs. Taveras have raised multiple defenses, including that
        the Note is fraudulent and that Mrs. Taveras’s signature on the
        Note is forged. The state foreclosure case has been litigated exten-
        sively, including counterclaims, cross claims, discovery, motion
        practice, removal to federal court by the Taverases, and subsequent

        1 In July 2017, the Trust assigned the mortgage to U.S. Bank, N.A., as trustee,

        who then took the place of the Trust as plaintiff in the state foreclosure case.
        U.S. Bank is not a party to this appeal.
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        22-11355               Opinion of the Court                          5

        remand to state court. The foreclosure proceeding is ongoing and,
        as represented at oral argument, is set for trial in November 2023.
               In August 2019, the Taverases ﬁled the ﬁrst of three federal
        actions against the three appellees. Taveras v. Bank of Am., N.A., No.
        6:19-cv-01469-EJK (M.D. Fla. Aug. 8, 2019). Mr. and Mrs. Taveras
        asserted claims for violations of federal and Florida RICO statutes,
        among other claims, and also sought a declaration that they were
        not liable on the Note. In May 2020, the district court dismissed
        that suit without prejudice on Colorado River grounds and directed
        the Taverases to wait until conclusion of the state foreclosure ac-
        tion to reﬁle their case if appropriate. The Taverases did not appeal.
               Notwithstanding that directive, Mr. and Mrs. Taveras com-
        menced a second federal action against the Appellees in June 2020.
        Taveras v. Bank of Am., N.A., No. 6:20-cv-00973-WWB-EJK (M.D.
        Fla. June 8, 2020). The second action was dismissed in September
        2020 without prejudice for failure to ﬁle a case management report.
        The Taverases did not appeal.
                On January 27, 2021, Mr. and Mrs. Taveras commenced the
        underlying case, their third federal action. This case alleges claims
        for (1) fraud in the inducement related to the initial state court de-
        claratory judgment action; (2) violation of the federal civil RICO
        statute; (3) violation of the Florida civil RICO statute; (4) violation
        of a Florida statute prohibiting the recording of false or fraudulent
        documents in oﬃcial records; and (5) declaratory and injunctive re-
        lief. Like the ﬁrst federal case, this third action recounts the
        Taverases’ purchase of the Property; the events of the 2014 state
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        6                      Opinion of the Court                 22-11355

        declaratory judgment action, including the alleged fraudulent cre-
        ation and use of the Note; and the assignment of the mortgage and
        Note.
                The appellees moved to dismiss the complaint, based in part
        on the argument that the district court should abstain from exer-
        cising jurisdiction under Colorado River. While the motions to dis-
        miss were pending, Mr. and Mrs. Taveras moved for leave to amend
        the complaint. The proposed amended complaint provides some
        additional details and clariﬁes certain aspects of the original com-
        plaint, but both the original complaint and the proposed amended
        complaint involve the same core facts and issues.
               In November 2021, the magistrate judge entered a Report
        and Recommendation regarding the motions to dismiss and the
        motion for leave to amend the complaint. The magistrate judge
        concluded that (1) the third federal suit was substantially similar to
        the state foreclosure action; (2) abstention under Colorado River was
        warranted; and (3) the motion for leave to amend the complaint
        should be denied as futile, because the amendment would not af-
        fect the abstention analysis. The Taverases objected to the Report
        and Recommendation.
                Adopting in part the magistrate judge’s Report and Recom-
        mendation, the district court granted the motions to dismiss in part
        by staying the case under Colorado River until the conclusion of the
        state foreclosure case, but declining to dismiss the claims. The dis-
        trict court also denied the motion for leave to amend the com-
        plaint. The district court adopted most of the magistrate judge’s
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        22-11355               Opinion of the Court                          7

        ﬁndings regarding the similarity between the federal and state
        cases, the weight of each Colorado River factor, and the futility of
        the proposed amendments to the complaint. The district court rea-
        soned that the validity of the Note is central to the claims in both
        the state and federal cases, and the claims are therefore substan-
        tially similar even though they are not identical. The district court
        reasoned that while the parties to the state and federal actions are
        not identical, they are substantially similar. The district court con-
        sidered each of the Colorado River abstention factors and concluded
        that they weighed in favor of abstention. The district court deter-
        mined that allowing Mr. and Mrs. Taveras leave to amend their
        complaint would not change the Colorado River analysis.
               The Taverases moved the district court to reconsider the stay
        and denial of leave to amend. The district court denied the motion
        for reconsideration, and this appeal followed.
                            STANDARD OF REVIEW

               We review a district court’s decision to abstain from exercis-
        ing jurisdiction pursuant to Colorado River for abuse of discretion.
        Jackson-Platts v. Gen. Elec. Cap. Corp., 727 F.3d 1127, 1133 (11th Cir.
        2013). “A district court will abuse its discretion if it makes an error
        of law or makes a clearly erroneous factual ﬁnding.” Id.
                Although we ordinarily review district court orders denying
        leave to amend a complaint for abuse of discretion, Andrx Pharms.,
        Inc. v. Elan Corp., 421 F.3d 1227, 1236 (11th Cir. 2005), we review
        such decisions de novo when “the denial is based on a legal
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        8                      Opinion of the Court                  22-11355

        determination that amendment would be futile,” Gonzalez v. City
        of Deerﬁeld Beach, 549 F.3d 1331, 1332–33 (11th Cir. 2008).
               Pro se pleadings, such as those ﬁled by Mr. and Mrs. Taveras,
        “are held to a less stringent standard” and should be “liberally con-
        strued.” Tannenbaum v. United States, 148 F.3d 1262, 1263 (11th Cir.
        1998).
                                   DISCUSSION

                       I.     Abstention Under Colorado River

               The district court did not abuse its discretion when it ab-
        stained under Colorado River, pending conclusion of the related
        state court foreclosure action.
                Abstention is a determination that the district court “should
        abstain from exercising their jurisdiction.” Ambrosia Coal & Constr.
        Co. v. Morales, 368 F.3d 1320, 1327 (11th Cir. 2004). “Abstention from
        the exercise of federal jurisdiction is the exception, not the rule.”
        Colo. River, 424 U.S. at 813. District courts have a duty to adjudicate
        the controversies before them, and abstention “is an extraordinary
        and narrow exception.” Id. (cleaned up). A pending state court case
        ordinarily does not bar a federal case concerning the same dispute,
        and the potential for conﬂicting adjudications, standing alone, is
        not enough to justify abstention. Id. at 816–17. In limited and ex-
        ceptional circumstances, certain principles of “wise judicial admin-
        istration” do permit district courts to “dismiss a federal suit due to
        the presence of a concurrent state proceeding.” Id. at 818.
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        22-11355                Opinion of the Court                          9

               As a threshold matter, Colorado River abstention allows a fed-
        eral court to stay a case only “when federal and state proceedings
        involve substantially the same parties and substantially the same is-
        sues.” Ambrosia Coal, 368 F.3d at 1330. The issues and parties do not
        have to be identical to be substantially similar; if the standard re-
        quired identical issues and parties, a party could easily circumvent
        abstention with creative pleading. Id. at 1329–30.
               Once a court has determined that the proceedings involve
        substantially similar issues and parties, the court must weigh six
        factors to decide whether to abstain:
                      (1) whether one of the courts has as-
                      sumed jurisdiction over property,
                      (2) the inconvenience of the federal fo-
                      rum,
                      (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. Courts may also consider “the vexatious or reactive na-
        ture of either the federal or the state litigation” as part of their ab-
        stention inquiry. Id. (cleaned up).
               These factors and considerations are not a “mechanical
        checklist,” and “the abstention inquiry must be ‘heavily weighted
        in favor of the exercise of jurisdiction.’” Id. at 1332 (quoting Moses
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        10                     Opinion of the Court                 22-11355

        H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16 (1983)).
        No single factor is determinative, and the weight given to individ-
        ual factors may vary from case to case. Id. “One factor alone can
        be the sole motivating reason for the abstention.” Moorer v. De-
        mopolis Waterworks & Sewer Bd., 374 F.3d 994, 997 (11th Cir. 2004).
               Here, the district court did not abuse its discretion in ﬁnding
        that the federal and state proceedings involve substantially similar
        issues and parties, and that the Colorado River factors weigh in favor
        of abstention.
                            A. Substantially Similar Proceedings

                As to the threshold inquiry of substantial similarity, the is-
        sues are substantially similar, even though they are not identical.
        The claims in both the federal and state cases depend upon the va-
        lidity of the Note and the existence of a lien on the Property. The
        federal action asks the court to declare that Valeria Taveras has no
        liability under the Note and to enjoin the appellees from enforcing
        the Note, and those same issues are at the heart of the state fore-
        closure case.
               The parties to both actions are also substantially similar. The
        state foreclosure action was initiated by the Trust; the Trust’s suc-
        cessor in interest has now been substituted for the Trust as the
        plaintiﬀ, but the Trust remains a party as a counterclaim defendant.
        Mr. and Mrs. Taveras and BANA are defendants in the state case.
        BSI was previously joined as a third-party defendant in the state
        case, although BSI has since been dismissed. Mr. and Mrs. Taveras,
        the Trust, BANA, and BSI are all parties to the federal case.
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        22-11355                Opinion of the Court                          11

                            B. Colorado River Abstention Factors

               The district court did not abuse its discretion in determining
        that the Colorado River abstention factors, on balance, weigh in fa-
        vor of abstention. The ﬁrst and most compelling factor supporting
        abstention considers the order in which courts assume jurisdiction
        over property. See Ambrosia Coal, 368 F.3d at 1331. “[T]he court ﬁrst
        assuming jurisdiction over property may exercise that jurisdiction
        to the exclusion of other courts.” Colo. River, 424 U.S. at 818.
                The nature of foreclosure litigation explains why this ﬁrst
        factor weights in favor of abstention. A state foreclosure case is an
        action in rem: “a proceeding against the property ‘for the legal de-
        termination of the existence of the mortgage lien, the ascertain-
        ment of its extent, and the subjection to a sale of the estate pledged
        for its satisfaction.’” United States v. Begin, 160 F.3d 1319, 1321 (11th
        Cir. 1998) (quoting United States v. Alvarado, 5 F.3d 1425, 1429 (11th
        Cir. 1993)). Thus, the state court assumed jurisdiction over the
        Property when the state foreclosure case began, nearly ﬁve years
        before this federal suit.
               The district court thus did not abuse its discretion in weigh-
        ing this factor in favor of abstention, reasoning that even though
        the Taverases’ federal claims are broader than the state claims, the
        federal case cannot be resolved without making “legal conclusions
        that will directly aﬀect the [P]roperty,” over which the state court
        already has jurisdiction.
              The district court also did not abuse its discretion in ﬁnding
        that the third Colorado River factor, avoidance of piecemeal
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        12                      Opinion of the Court                  22-11355

        litigation, weighs in favor of abstention. This factor will not weigh
        in favor of abstention simply because there are concurrent state
        and federal proceedings that “will likely result in some unremarka-
        ble repetition of eﬀorts and possibly some piece-by-piece decision-
        making.” Ambrosia Coal, 368 F.3d at 1333. “And this factor does not
        favor abstention when litigation is inevitably piecemeal.” Jackson-
        Platts, 727 F.3d at 1142 (cleaned up). Rather, this factor favors ab-
        stention only in “those cases [that] will likely lead to piecemeal liti-
        gation that is abnormally excessive or deleterious,” such as those
        raising “property-speciﬁc concerns.” Ambrosia Coal, 368 F.3d at
        1333.
               Although the claims in the federal and state cases are not
        identical, inconsistent rulings regarding the Note and Property
        could create turmoil. And if the state court determines that the
        Note is valid and that the Property is subject to foreclosure, the
        Taverases will have no basis for pursuing the remaining claims in
        either forum, meaning that the state court has the potential to re-
        solve all claims and that the concurrent proceedings are not “inev-
        itably piecemeal.”
               Finally, the district court did not abuse its discretion in
        weighing the fourth Colorado River factor—the order in which the
        courts acquired jurisdiction and the relative progress of each case—
        in favor of abstention. The state case was ﬁled in April 2016, and
        the federal case was not ﬁled until January 2021. The district court
        did not comment on this factor, thus implicitly adopting the mag-
        istrate judge’s ﬁnding that the fourth factor supports abstention
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        22-11355               Opinion of the Court                         13

        since the state case was ﬁled nearly ﬁve years before the federal
        case. Neither the magistrate judge nor the district judge expressly
        considered the relative progress of the two cases, but the case rec-
        ords clarify that the state case has progressed much further. The
        federal case is at the initial pleading stage and no discovery has oc-
        curred, whereas the state case has included extensive discovery, mo-
        tions to dismiss, motions for summary judgment, and an upcoming
        trial setting in November 2023. See Ambrosia Coal, 368 F.3d at 1333
        (quoting Moses H. Cone, 460 U.S. at 21 (measuring the fourth factor
        not “exclusively by which complaint was ﬁled ﬁrst, but rather in
        terms of how much progress has been made in the two actions”)).
                The district court did not expressly address the ﬁfth factor of
        whether state or federal law applies, and the magistrate judge
        weighed this factor in favor of abstention because Florida state law
        governs the majority of the Taverases’ claims. This factor supports
        abstention in cases involving complex questions of state law that
        are best left to state courts, and this factor weighs slightly in favor
        of abstention when a case involves only state law claims. See Noonan
        S., Inc. v. Cnty. of Volusia, 841 F.2d 380, 382 (11th Cir. 1988). How-
        ever, in instances where a case includes both state and federal
        claims and both courts are capable of adjudicating both types of
        claims, this factor does not weigh for or against abstention. Ambro-
        sia Coal, 368 F.3d at 1334. Here, the district court did not abuse its
        discretion in implicitly adopting the magistrate judge’s ﬁnding that
        this factor supports abstention since almost all of the claims arise
        under Florida law. However, this factor should carry little weight
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        14                     Opinion of the Court                  22-11355

        since the state law claims are not novel or complex, and both courts
        are capable of adjudicating them.
               Although the two remaining factors do not weigh in favor
        of abstention, they also do not weigh against it. The district court
        did not abuse its discretion in ﬁnding that the second Colorado River
        factor—the convenience of the federal forum—does not weigh for
        or against abstention because the federal and state courts are both
        located in Central Florida and are therefore equally convenient to
        the evidence and witnesses. The sixth factor “will only weigh in fa-
        vor or against abstention when one of the fora is inadequate to pro-
        tect a party’s rights,” id. at 1334, and the district court did not err
        in implicitly adopting the magistrate judge’s conclusion that nei-
        ther forum is inadequate the protect the parties’ rights in this case.
               In sum, the district court did not err in weighing factors one,
        three, and four in favor of abstention or in ﬁnding that factors two
        and six do not weigh against abstention. The district court also did
        not abuse its discretion in weighing factor ﬁve in favor of absten-
        tion, although this factor oﬀers only minimal support. The district
        court therefore did not abuse its discretion in staying the case under
        Colorado River.
                We may also consider “the vexatious or reactive nature of
        either the federal or the state litigation” as part of the abstention
        inquiry. Ambrosia Coal, 368 F.3d at 1331 (cleaned up). Here, the dis-
        trict court did not err in implicitly adopting the magistrate judge’s
        conclusion that this third federal action, which was ﬁled in viola-
        tion of a prior district court order, is vexatious and reactive. The
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        22-11355               Opinion of the Court                       15

        other factors are suﬃcient to support Colorado River abstention
        without this consideration, but the vexatious nature of the litiga-
        tion does provide additional support for abstention.
                    II.    Denial of Motion for Leave to Amend

               Next, Mr. and Mrs. Taveras assert that the district court
        erred in denying their motion to amend the complaint. “[A] district
        court may properly deny leave to amend the complaint . . . when
        such amendment would be futile.” Hall v. United Ins. Co. of Am., 367
        F.3d 1255, 1262–63 (11th Cir. 2004). When the complaint as
        amended would still be dismissed, the district court may properly
        deny a motion for leave to amend as futile. Id. at 1263.
               Whether Mr. and Mrs. Taveras properly raised this issue on
        appeal is questionable, even in light of the liberal construction af-
        forded pro se ﬁlings. They devoted minimal space to the issue in
        their brieﬁngs, their statements are conclusory, and they do not cite
        any authority to explain their position. Because the Taverases pro-
        ceed pro se, we review the ruling out of an abundance of caution.
                The Taverases propose to make several amendments to their
        complaint, including reﬁning elements of their claims and correct-
        ing or removing causes of action. The proposed amended com-
        plaint does not change the crux of the dispute (whether the Note
        is valid and encumbers the Property) and does not change the par-
        ties. The new claims (two under Florida state law and one under
        federal law) do not change the balance of federal and state law
        claims in a way that impacts the Colorado River analysis. The new
        claims arise from the same facts and, like the claims in the original
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        16                    Opinion of the Court                22-11355

        complaint, are fraud-based. Like the operative complaint, the pro-
        posed amended complaint makes claims that are inextricably con-
        nected to the Property and Note at issue in the state foreclosure
        case. Because Colorado River abstention would still be appropriate
        under the amended complaint, the district court did not err in
        denying the motion to amend as futile.
                                 CONCLUSION
               We AFFIRM the district court’s order staying this case until
        conclusion of the state court foreclosure case and denying the mo-
        tion to amend the complaint.