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Grady v. Bank of Elmwood

United States District Court, D. Arizona

October 30, 2014

Michael Grady; Jennifer Grady, Plaintiffs,
v.
Bank of Elmwood; Elmwood Financial Corporation; Jonathan Levin; Sarah Levin, Defendants. Tri City National Bank, Counterclaimant,
v.
Michael Grady and Jennifer Grady, Counterdefendant. The Federal Deposit Insurance Corporation as Receiver for Bank of Elmwood, Intervenor.

ORDER

JAMES A. TEILBORG, Senior District Judge.

I. Background

This case arises from Plaintiffs attempt to avoid a foreclosure on their residence. The residence was sold via a Trustee sale on October 25, 2012. Grady v. Tri City National Bank, CV 11-2507-PHX-JAT (D. Ariz. May 13, 2013). Doc. 25 at 2. Tri City National Bank purchased the residence at the Trustee Sale. Plaintiffs are still in possession of the residence. Tri City National Bank is taking action in state court to evict Plaintiffs from the residence.

On April 4, 2012, this Court denied Plaintiffs leave to amend their complaint to add a TILA rescission claim against Tri City National Bank. Doc. 47. In that Order, the Court denied leave to amend on futility grounds. Id. Plaintiffs moved to reconsider. Doc. 50. The Court denied reconsideration. Doc. 54. Plaintiffs again moved to reconsider. Doc. 70. The Court denied reconsideration. Doc. 80. Plaintiffs again moved to reconsider. Doc. 98. The Court again denied reconsideration. Doc. 102.

As a result of the denial of leave to amend, Tri City National Bank was dismissed as a party to this case. Doc. 122. No judgment was entered pursuant to Federal Rule of Civil Procedural 54(b). Further, the Court denied Plaintiffs' request for Rule 54(b) "certification." Doc. 102 at 5.

On June 18, 2014, Plaintiffs filed a notice that they had settled all remaining claims with all remaining parties. Doc. 196. As a result, the Court dismissed this entire case on July 1, 2014. Doc. 200. This settlement did not include Tri City National Bank because it was not a "party" at the time of settlement.

Plaintiffs assert that on October 16, 2014, the state court judge issued an order for the issuance of a "writ of restitution" which would give Tri City National Bank "possession" of the property. Doc. 214 at 5, 13. On October 20, 2014, Plaintiffs moved this Court for an injunction pending appeal. Doc. 214. In their proposed order they seek to have this Court order that: "Appellee Tri City National Bank, NA shall not enforce a writ of restitution that has issued or will be issued by the Maricopa County Superior Court at case number CV 12-016990 and shall not evict Appellants from or otherwise gain possession of real property located at 5624 East Sanna Street, Paradise Valley, Arizona 85253." Doc. 215 at 2.

As the above discussion indicates, the injunction sought in this case under Federal Rule of Appellate Procedure 8 is against Tri City National Bank. As further discussed above, because the Court denied leave to amend the complaint to add a claim against Tri City National Bank, Tri City National Bank is not a party to this case. Doc. 122.

II. Status of Tri City National Bank

Notwithstanding the denial of leave to amend to add Tri City National Bank as a Defendant, Tri City National Bank's status is not perfectly clear. Specifically, on August 5, 2010, Tri City National Bank (as the holder of the note on Plaintiffs' residence following the original holder going through FDIC receivership and the FDIC transferring this note to Tri City National Bank) moved to intervene in this case in state court prior to removal. Doc. 214 at 3. The State court granted that motion and also allowed the FDIC to intervene Id. The FDIC then removed this case to federal court.

After Tri City National Bank intervened in this case, Plaintiffs sent their TILA rescission letter that gave rise to the cause of action that Plaintiffs attempted to amend their complaint to add against Tri City Nation Bank. Id. Tri City National Bank opposed the motion to amend on futility grounds; and, as stated above, this Court denied the motion.

Nonetheless, the record reflected that Tri City National Bank still had a "counterclaim" pending; and Plaintiffs' moved for a temporary retraining order and preliminary injunction based on their affirmative defenses to the counterclaim. Doc. 142. This Court ordered briefing on whether an intervenor who was never added as a defendant could have a counterclaim. Tri City National Bank conceded it could not. Doc. 197 at 12-14. Accordingly, the counterclaim was deemed not to be pending, and the Court denied Plaintiffs' request for injunctive relief based on affirmative defenses to the counterclaim. Id. at 16-18 (explaining Tri City National Bank's status).[1]

The Court has been unsuccessful in locating any cases discussing whether a "party" who successfully moves to intervene as a Defendant, but then successfully opposes a motion to amend to add said "party" as a Defendant, is subject to an injunction under Federal Rule of Appellate Procedure 8(a) during the pendency of the appeal challenging the denial of leave to amend.

In its response at Doc. 221, Tri City National Bank argues that for purposes of an injunction, it is not a "party" over which this Court has jurisdiction. Citing Scott v. Donald, 165 U.S. 107, 117 (1897), Tri City National Bank notes that this Court generally cannot enjoin persons or entities who are not parties to the suit. At this point, Tri City National Bank is not a party to this suit.[2] This Court agrees with Tri City National Bank that because Tri City National Bank is not a party, it is not subject to this Court's injunctive powers. Accordingly, Plaintiffs' motion for injunction pending appeal is denied for ...


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