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Easley v. New Century Mortgage Corp.


July 28, 2009


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


This is a predatory lending case. The complaint sets forth violations of 42 U.S.C. § 1983 (Count VI), the Fair Debt Collection Practices Act, 15 U.S.C. §1692e(8) (Count I), and the Bankruptcy Code (Count III), together with state law claims.*fn1 The action arises from a residential mortgage loan. Defendant Deutsche Bank National Trust Company, as mortgage assignee, moves to dismiss. Fed. R. Civ. P. 12(b)(1 and (6).

On August 26, 2004, plaintiff was issued a loan by New Century Mortgage Corp. secured by a fixed-rate mortgage, later assigned to Deutsche Bank. Complaint, ¶¶ 13, 14. On September 29, 2005, plaintiff filed for bankruptcy protection. Id., ¶ 15; docket entries in In re: Easley, No. 05-33533, exhibit "C" to defendant's motion. On August 18, 2006, the Bankruptcy Court approved a stipulation under which plaintiff agreed to make both arrearage and regular monthly payments to Deutsche Bank. Complaint, ¶ 16; exhibit "C" to defendant's motion. When plaintiff did not pay the February or March 2007 installments, Deutsche Bank filed a "Certification of Default" in the still pending bankruptcy case, requesting relief from the automatic stay. Certification, Exhibit "B" to defendant's motion. Plaintiff did not oppose the request, and on April 20, 2007, the Bankruptcy Court granted Deutsche Bank permission to foreclosure on plaintiff's property. Docket entries in In re: Easley, exhibit "C" to defendant's motion; April 20, 2007 order, exhibit "D" to defendant's motion.

On August 21, 2007, Deutsche Bank commenced foreclosure proceedings in the Philadelphia Court of Common Pleas. Complaint, ¶ 25; docket entries, exhibit "E" to defendant's motion. Plaintiff did not answer or defend, and a default judgment was entered. Exhibit "E" to defendant's motion. On June 6, 2008, the property was sold at sheriff's sale. Complaint, ¶ 28.

On September 8, 2008, plaintiff filed this action, requesting, inter alia, recission of the loan, return of the property free and clear, return of funds given by plaintiff, forfeiture of loan proceeds, statutory, compensatory and punitive damages. Complaint, ad damnum clause. Deutsche Bank's motion to dismiss will be granted.*fn2

Rooker-Feldman bars review of state court mortgage foreclosure proceedings. The doctrine "is narrowly tailored and only applies to 'cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those proceedings.'" Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005).*fn3 It prohibits the exercise of lower federal court jurisdiction over claims that were actually litigated in state court*fn4 or where the claim is inextricably intertwined with the state court's adjudication. ITT Corp. v. Intelnet Int'l. Corp., 366 F.3d 205, 210 (3d Cir. 2004).*fn5

Here, plaintiff's claims for recission of her loan and termination of defendant's security interest in the property are barred. Moreover, "[i]nsofar as Plaintiff['s] action in this court would require a determination that [her] liability on the mortgage differs ( i.e., is less than) the amount of the state court foreclosure judgment... such relief is precluded by Rooker-Feldman." In re Stuart, 367 B.R. 541, 552 (E.D. Pa. 2007). Plaintiff's request for return of funds paid by plaintiff under the mortgage, and forfeiture of loan proceeds are not subject to review. A judgment in plaintiff's favor would have the effect either of negating the state court's judgment or constituting a finding that the judgment was erroneously entered.

Furthermore, as argued by Deutsche Bank, res judicata bars review of issues that are not precluded by Rooker-Feldman, but were or could have been decided and resolved by the state court in the foreclosure proceedings.*fn6 In particular, defendant points to claims that defendant did not accurately account for payments made by plaintiff (¶ 23), improperly instituted the mortgage foreclosure proceedings (¶ 25), lacked standing to sue for foreclosure (¶ 26), and failed to provide appropriate notices under Acts 6 and 91 under Pennsylvania law (¶ 26). However, those issues have been conclusively determined in defendant's favor by entry of the default judgment in the mortgage foreclosure action, and plaintiff may not now relitigate them in this action.*fn7

Plaintiff's § 1983 claim also must be dismissed because Deutsche Bank is not a state actor, and the mortgage foreclosure proceeding is not state action. In order to plead a claim under 42 U.S.C. § 1983, plaintiff must "demonstrate a violation of a right secured by the Constitution and the laws of the United States [and] that the alleged deprivation was committed by a person acting under color of state law." Nanya-Nashut v. Centex Home Home Equity Corp., 2003 WL 22871667, at *1 (E.D. Pa. 2003), quoting Mark v. Borough of Hatboro, 51 F.3d 1137, 1141 (3d Cir. 1995). "'under color of state law' has the same meaning as 'state action.'" Nanya-Nashut, at *1, citing United States v. Price, 383 U.S. 787, 794 n.7 (1966). "Even when a bank and an attorney utilize state foreclosure procedures, that will not constitute state action." Nanya-Nashut, at *2, citing Shipley v. First Federal Savings and Loan Ass'n. of Del., 703 F.Supp. 1122, 1129-31 (D. Del. 1988), aff'd, 877 F.2d 57 (3d Cir. 1987). The complaint does not allege state action, and plaintiff's § 1983 claim must therefore be dismissed.

Edmund V. Ludwig, J.

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