Ison v. Schulman

Opinion

JAMES J. ISON AND THE ISON No. 2:21-cv-01546-JAM-KJN LAW FIRM, PC, Plaintiffs, v. DEFENDANTS’ MOTION TO DISMISS (ECF NO. 38) SUPERIOR COURT OF CALIFORNIA, ETHAN P. SCHULMAN, et al., Defendants. The matter is before the Court on Stuart D. Diamond and Stuart D. Diamond Law & Mediation Office’s (“Diamond Defendants”) motion to dismiss Plaintiffs’ First Amended Complaint (“FAC”). FAC, ECF No. 12.; Mot. to Dismiss (“Mot.”), ECF No. 38. Plaintiffs oppose the motion. See Opp’n, ECF No. 46. Defendants replied. See Reply, ECF No. 48. For the reasons set forth below, the Court GRANTS Defendants’ motion to dismiss.1

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

judicata. As the Court previously observed, the conduct at issue is the same conduct adjudicated in the underlying San Francisco Superior Court state proceedings, only now repackaged for federal court. Further, there has been a final judgment on the merits of the state court and there is no appeal pending. Finally, Plaintiffs are parties in both actions, satisfying the last element for claim preclusion. As such, claim preclusion is appropriate. It suffices here to say that had any claim not been dismissed under Rooker-Feldman, it would have been dismissed under claim preclusion. IIl. ORDER For the reasons set forth above, the Court GRANTS Defendants’ Motion to Dismiss with prejudice. Dated: August 21, 2023 ep JOHN A. MENDEZ SENIOR UNITED*STATES DISTRICT JUDGE