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T. Barry Gray, Individually and As Executor of Estate v. Angela L. Martinez

September 20, 2011


The opinion of the court was delivered by: Savage, J.



Plaintiff, T. Barry Gray, individually and as executor of the Estate of Thelma L. Gray, brought this action challenging the constitutionality of state court mortgage foreclosure proceedings involving real estate mortgaged by his late mother and later transferred to various family members. Gray has sued both the current and the former Director of the Delaware County Office of Judicial Support, the Sheriff of Delaware County, the mortgagee's successor, and the purchaser and its successor of the foreclosed property. He contends that the default judgment was wrongly entered in an amount that was significantly higher than the balance owed on the mortgage. He claims that the defendants violated his constitutional rights because he was denied notice and an opportunity to contest the entry of judgment in the greater amount than was due on the note.

The litigation history of the foreclosure proceedings is long and confusing. This is the third attempt to have a federal court adjudicate this mortgage foreclosure dispute previously decided by the state court. In the first case, Gray v. Pagano, No. 07-2810 (E.D. Pa.), plaintiff's wife and son, Patricia and Patrick Gray, filed a complaint against the judge who presided over the state-court mortgage foreclosure action and against the sheriff who posted the property for sale, alleging that the order evicting them from the property and posting it for sale violated their constitutional rights. That action was dismissed for lack of subject matter jurisdiction under the Rooker-Feldman doctrine and on grounds of judicial and sovereign immunity.

Two days after the dismissal of the first action, in Civil Action No. 07-2948, plaintiffs Barry Gray, individually and as executor of his mother's estate, and his wife Patricia "removed" to this court a motion to avoid a fraudulent transfer, which had been filed by the creditor/mortgagee bank in the state-court foreclosure action. Noting that the "action" was the second attempt to litigate the ongoing state court foreclosure matter in federal court, Judge Ludwig of this court remanded the action to state court for lack of subject matter jurisdiction.

Plaintiffs appealed both decisions to the Third Circuit Court of Appeals. The dismissal of the first action was affirmed on July 23, 2008. See Gray v. Pagano, 287 F. App'x 155, 156 (3d Cir. 2008). The second appeal was dismissed for lack of jurisdiction.

While Gray's first appeal was pending, he filed a motion to proceed in forma pauperis in this action. His motion was denied because the cause of action was frivolous. Gray appealed. Without deciding whether Gray's cause of action was frivolous, the Third Circuit vacated the denial of Gray's motion and ordered us to consider Gray's motion to proceed in forma pauperis prior to deciding whether his complaint is subject to dismissal. See Gray v. Martinez, 352 F. App'x 656, 658 (3d Cir. 2009). On remand, we granted him in forma pauperis status on March 17, 2010.

Defendant Wachovia Bank National Association ("Wachovia") was served on October 4, 2010. After Wachovia failed to respond, a default was entered on January 28, 2011. Wachovia's motion to set aside default was filed on February 18, 2011.

A copy of the complaint was purportedly served on TCIF REO CIT, LLC ("TCIF") on October 6, 2010. At Gray's request, the Clerk entered a default against TCIF on November 24, 2010.

On December 14, 2010, Gray filed a voluntary bankruptcy petition in the Bankruptcy Court for the Eastern District of Pennsylvania. Pursuant to the Bankruptcy Code, Gray's bankruptcy petition resulted in an automatic stay of all proceedings in this action. Thus, Wachovia's motion remained outstanding.

On February 7, 2011, VRF REO LLC ("VRF"), the successor to TCIF, filed a notice that it was unable to move to open the default judgment entered against TCIF in light of the bankruptcy stay. Following the bankruptcy trustee's certification that the bankruptcy estate had been fully administered, the stay was lifted on April 21, 2011. On May 27, 2011, VRF moved to set aside the default entered against TCIF.

We granted the motions to set aside the defaults on July 21, 2011. Gray's motion for reconsideration of the order setting aside the default against TCIF was denied on August 11, 2011.*fn1

After the entry of defaults were set aside, defendants Wachovia and TCIF moved to dismiss the complaint, arguing that the federal court lacks jurisdiction to adjudicate Gray's claims under the Rooker-Feldman doctrine. Alternatively, they argue that because they are not state actors nor acting under color of state law, Gray has failed to state a § 1983 cause of action against them.

Under the Rooker-Feldman doctrine, we lack subject matter jurisdiction to hear Gray's claims. Even if we had jurisdiction, Gray has failed to state a ยง 1983 cause of action because the moving defendants are not state actors and were not acting ...

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