Ison v. Schulman

• Court: District Court, E.D. California
• Decided: August 21, 2023
• Docket: 2:21-cv-01546
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT 10 EASTERN DISTRICT OF CALIFORNIA 11 12 JAMES J. ISON AND THE ISON No. 2:21-cv-01546-JAM-KJN LAW FIRM, PC, 13 Plaintiffs, 14 ORDER GRANTING DIAMOND v. DEFENDANTS’ MOTION TO DISMISS 15 (ECF NO. 38) SUPERIOR COURT OF CALIFORNIA, 16 COUNTY OF SAN FRANCISCO, ETHAN P. SCHULMAN, et al., 17 Defendants. 18 19 The matter is before the Court on Stuart D. Diamond and 20 Stuart D. Diamond Law & Mediation Office’s (“Diamond Defendants”) 21 motion to dismiss Plaintiffs’ First Amended Complaint (“FAC”). 22 FAC, ECF No. 12.; Mot. to Dismiss (“Mot.”), ECF No. 38. 23 Plaintiffs oppose the motion. See Opp’n, ECF No. 46. Defendants 24 replied. See Reply, ECF No. 48. For the reasons set forth 25 below, the Court GRANTS Defendants’ motion to dismiss.1 26

27 1This motion was deemed suitable for submission without hearing under E.D. Cal. L.R. 230(g). The hearing was scheduled for 28 July 11, 2023. 1 I. BACKGROUND 2 The parties are familiar with the facts of this case. The 3 Court will therefore only repeat them as necessary to support its 4 Order herein. This action stems from an unsuccessful mediation 5 session in the case of Talens v. The Japanese Feast, Inc. (Case 6 No. 19-cv-05403). FAC ¶ 63. Plaintiffs represented Brenda 7 Talens. Defendant Mercury Casualty insured and defended The 8 Japanese Feast, Inc. Id. ¶ 65. Defendant Diamond mediated the 9 session on December 16, 2020. Id. ¶ 103. 10 The mediation concluded after four hours without a 11 settlement. Id. ¶ 85. Because parties were held in separate 12 conference rooms during the mediation, Plaintiffs did not see the 13 other side. Id. ¶ 71. Plaintiffs began to suspect that 14 Defendant Mercury’s adjuster, Defendant Brenda Strong, did not 15 actually attend the mediation. Id. ¶ 83. Plaintiffs requested 16 confirmation from Defendant Diamond the next day that Strong had 17 in fact been in attendance. Id. ¶ 73. Strong’s attendance at 18 the mediation was one of the conditions Plaintiffs raised in 19 Talen to dismiss one of Mercury’s insured from the suit. Id. 20 ¶¶ 72-83. Defendant Diamond presented proof of Strong’s 21 attendance, including a signed attendance sheet, parking 22 receipts, and a voided check for lunch costs, but Plaintiffs 23 remained unsatisfied. Id. Plaintiffs refused to dismiss the 24 agreed upon party from suit, prompting Mercury to seek monetary 25 sanctions against them for failure to dismiss. Id. 26 This prompted Plaintiffs to file a state action in San 27 Francisco Superior Court against Mercury and Kern Segal, the 28 attorney representing Mercury. Id. ¶¶ 91-92. Plaintiffs 1 asserted defamation, abuse of process, civil rights violation, 2 intentional infliction of emotional distress, fraud and deceit, 3 and violations of California’s Unfair Competition Law (“UCL”), 4 Cal. Bus. & Prof Code §§ 1700, et seq. In response, Mercury 5 filed, and Defendant Judge Schulman granted an anti-SLAPP motion, 6 striking all claims. See July 12, 2021, Order, Defs.’ Request 7 for Judicial Notice (“RJN”), ECF No. 15-4. The state court found 8 that the defendants in state court had provided ample evidence 9 Strong was physically present at the mediation. Id. 10 Plaintiffs moved for reconsideration and, in their motion, 11 made numerous accusations that attacked the integrity of Judge 12 Schulman and the bench on which he sits. See September 20, 2021, 13 Order, Defs.’ RJN, ECF No. 15-6. Plaintiffs doubled down on 14 their attacks in their opposition to Mercury’s motion to tax 15 costs. Id. Judge Schulman denied Plaintiffs’ motion for 16 reconsideration and granted Mercury’s motion for costs. Id. 17 Judge Schulman also found Mr. Ison in direct contempt for his 18 statements attacking the court, fined him $5,000, and directed 19 the clerk of court to forward his findings and judgment to the 20 State Bar. Id. Plaintiffs appealed Judge Schuman’s order. The 21 appellate court dismissed the appeal. 22 On August 27, 2021, Plaintiffs filed suit in federal court 23 based on the same facts, alleging claims for constitutional 24 violations, violations of the Racketeer Influenced and Corrupt 25 Organizations Act (“RICO”), 18 U.S.C. §§ 1961 et seq., and fraud. 26 Plaintiffs sued both judicial and non-judicial defendants. The 27 Judicial Defendants include Chief Justice of California Tani 28 Cantil-Sakauye, Judge Ethan P. Schulman, the Judicial Council of 1 California, and the Superior Court of California, County of San 2 Francisco. The Non-Judicial Defendants include Mercury General 3 Corporation (erroneously sued as Mercury Insurance Company), 4 Mercury Casualty Company, California Automobile Insurance 5 Company, Randall R. Petro, Tara L. Strong, Kern Segal & Murray, 6 Phillip A. Segal, Bryana S. McGuirk, Todd P. Drakeford, Michael 7 G. Thomas (erroneously sued as Michael S. Thomas), Grace M. 8 Harriett (erroneously sued as Grace M. Harriet), Stuart D. 9 Diamond, and Stuart Diamond Law & Mediation Office. 10 All Judicial Defendants and all Non-Judicial Defendants, 11 except for Stuart D. Diamond and Stuart Diamond Law & Mediation 12 Office, moved to dismiss Plaintiffs’ claims against them. See 13 ECF Nos. 15 & 22. The Court granted both motions and dismissed 14 all claims with prejudice. Because Diamond Defendants had not 15 been served, the Court issued an order to show cause as to why 16 service had not been completed within 90 days per Fed. R. Civ. 17 P. 4(m). ECF No. 28. Plaintiffs filed a satisfactory response 18 and thereafter cured service. Defendants Diamond and Diamond Law 19 come now before the Court to request dismissal of the claims 20 against them under Fed. R. Civ. P. 12(b)(1) for lack of subject 21 matter jurisdiction. 22 II. OPINION 23 A. Legal Standard 24 Federal courts are courts of limited jurisdiction. Kokkonen 25 v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). The 26 burden of establishing jurisdiction rests upon the party 27 asserting it. Id. Lack of subject matter jurisdiction may be 28 raised by either party at any point during the litigation via 1 12(b)(1) motion. Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006). 2 Even if parties do not raise it, the Court has an affirmative 3 duty to determine whether subject matter jurisdiction exists. 4 Fed. R. Civ. P. 12(h)(3). “Jurisdiction is power to declare the 5 law, and when it ceases to exist, the only function remaining to 6 the court is that of announcing the fact and dismissing the 7 cause.” Ex parte McCardle, 74 U.S. 506, 514 (1869). 8 When a party makes a facial attack on a complaint, 9 jurisdiction must be determined on the pleadings. Safe Air for 10 Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). The 11 Court shall consider the factual allegations of the complaint to 12 be true and determine whether they establish subject matter 13 jurisdiction. Savage v. Glendale Union High Sch. Dist. No., 205, 14 343 F.3d 1036, 1039, n.1 (9th Cir. 2003) 15 B. Discussion 16 Defendants assert that Plaintiffs’ claims are barred by the 17 Rooker-Feldman doctrine and principles of res judicata and that 18 the Court therefore lacks subject matter jurisdiction over this 19 case. For the reasons below, the Court agrees. 20 1. Rooker-Feldman Doctrine 21 “Under Rooker-Feldman, a federal district court does not 22 have subject matter jurisdiction to hear a district appeal from 23 the final judgment of a state court.” Noel v. Hall, 341 F.3d 24 1148, 1154 (9th Cir. 2003). When a plaintiff loses his case in 25 state court and then seeks relief from the allegedly erroneous 26 state court judgment in federal court, the resulting federal suit 27 is “a forbidden de facto appeal.” Id. at 1156. Not only is a 28 district court barred from hearing de facto appeals from state 1 court, a district court “must also refuse to decide any issue 2 raised in the suit that is ‘inextricably intertwined’ with an 3 issue resolved by the state court in its judicial decision.” Id. 4 at 1158. 5 Of the three claims levied against the Diamond Defendants, 6 Plaintiffs’ § 1983 and RICO claims are squarely barred by Rooker- 7 Feldman. As Plaintiffs admit, “Plaintiffs’ federal claims are 8 premised on Mercury’s, Diamond’s and Kern Segal’s violation of 9 his constitutional rights flowing from their colluding with a 10 state court judge to effectuate a result designed to damage 11 Plaintiffs and enrich themselves.” Opp’n at 16 (emphasis added). 12 As such, these claims clearly seek to redress an injury inflicted 13 by the state court’s decision and therefore fall under the purvey 14 of Rooker-Feldman. As the Ninth Circuit in Noel instructs, 15 “[t]he Rooker-Feldman doctrine, generally speaking, bars a 16 plaintiff from bringing a § 1983 suit to remedy an injury 17 inflicted by the state court’s decision.” Noel, 341 F.3d at 1165 18 (quoting Jensen v. Foley, 295 F.3d 745, 747-48 (7th Cir. 2002)) 19 (internal citations omitted). Because Plaintiffs characterize 20 their Civil Rights Act and RICO causes of action the same way, 21 namely that both “flow[] from [Defendants] colluding with a state 22 court judge,” both come within the scope of Rooker-Feldman. 23 Opp’n at 16. Accordingly, this Court finds it lacks subject 24 matter jurisdiction to hear either claim. 25 What remains is Plaintiffs’ fraud claim, which is based on 26 the same set of facts as Plaintiffs’ fraud claim in the state 27 court action. Because the state court already ruled on 28 Plaintiffs’ fraud claim and because the facts are largely 1 duplicative, Plaintiffs’ fraud claim is “inextricably 2 intertwined” with the state court judgment below. “Once a 3 federal plaintiff seeks to bring a forbidden de facto appeal, as 4 in Feldman, that federal plaintiff may not, as part of the suit 5 in which the forbidden appeal is brought, seek to litigate an 6 issue that is ‘inextricably intertwined’ with the state court 7 judicial decision from which the forbidden de facto appeal is 8 brought.” Noel, 341 F.3d 1158. Accordingly, this Court finds it 9 also lacks subject matter jurisdiction over Plaintiffs’ fraud 10 claim and the Diamond Defendants are entitled to dismissal of 11 Plaintiffs’ fourth, fifth, and sixth claims against them. 12 Further finding that amendment would be futile, the Court 13 dismisses these claims with prejudice. Deveraturda v. Globe 14 Aviation Sec. Servs., 454 F.3d 1043, 1049 (9th Cir. 2006). 15 2. Res Judicata 16 Diamond Defendants assert that the same claims barred by 17 Rooker-Feldman are also barred by the doctrine of res judicata. 18 Mot. at 7. Under 28 U.S.C. § 1738, federal courts must give 19 “full faith and credit” to judgments of state courts. In 20 California, claim preclusion applies if (1) the second lawsuit 21 involves the same “cause of action” as the first, (2) the first 22 lawsuit resulted in a final judgment on the merits, and (3) the 23 party claim preclusion is being asserted against was a party, or 24 in privity with a party, to the first lawsuit. Bernhard v. Bank 25 of Am. Nat. Trust & Sav. Ass’n, 19 Cal.2d 807, 812, 122 P.2d 892 26 (1942). 27 Having found dismissal proper under the Rooker-Feldman 28 doctrine, the Court will not belabor its analysis under res eee em RI EI EEE EEE

1 judicata. As the Court previously observed, the conduct at 2 issue is the same conduct adjudicated in the underlying San 3 Francisco Superior Court state proceedings, only now repackaged 4 for federal court. Further, there has been a final judgment on 5 the merits of the state court and there is no appeal pending. 6 Finally, Plaintiffs are parties in both actions, satisfying the 7 last element for claim preclusion. As such, claim preclusion is 8 appropriate. It suffices here to say that had any claim not 9 been dismissed under Rooker-Feldman, it would have been 10 dismissed under claim preclusion. 11 IIl. ORDER 12 For the reasons set forth above, the Court GRANTS 13 Defendants’ Motion to Dismiss with prejudice. 14 IT IS SO ORDERED. 15 Dated: August 21, 2023 16 ep JOHN A. MENDEZ 18 SENIOR UNITED*STATES DISTRICT JUDGE 19 20 21 22 23 24 25 26 27 28