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Myers v. Caliber Home Loans

United States District Court, M.D. Pennsylvania

September 13, 2019

MIKE MEYERS and MARY DONOHUE, Plaintiffs,
v.
CALIBER HOME LOANS, SETERUS, INC., LSF9 MASTER PARTICIPATION TRUST, BANK OF AMERICA, N.A. SUCCESSOR BY MERGER TO BAC HOME LOANS SERVICING, LP, FEDERAL NATIONAL MORTGAGE ASSOCIATION, AND PHELAN HALLINAN DIAMOND and JONES, PLLC, Defendants.

          MEMORANDUM

          Hon. John E. Jones III, Judge

         Presently pending before this Court is Defendants' Motion to Dismiss Plaintiffs' Complaint, (Doc. 12), filed by Defendants Caliber Home Loans (“Caliber”) and LSF9 Master Participation Trust (“LSF9”). For the reasons that follow, we grant the motion in full.

         I. FACTUAL BACKGROUND

         Though there are scant facts pled therein, we take the following from Plaintiffs' Complaint and assume it to be true, as we must. Where Plaintiffs' Complaint is lacking, we take from the public record, as we are permitted to do.[1]

         Plaintiffs bring the instant claim before this Court for actual, emotional, and putative damages based upon a Pennsylvania state foreclosure judgment on their home. Plaintiffs cite perceived defects in the state court foreclosure action to support their various claims, arguing that Defendants engaged in misrepresentations that led to the allegedly unlawful foreclosure and that Defendants charged unlawful fees in servicing their mortgage.

         On September 30, 2005, Plaintiffs executed and delivered a Mortgage Agreement to Mortgage Electronic Registration Systems, Inc. (“MERS”) against their home located at 5993 Anderson Road, Stewartstown, PA 17363 (“the Mortgage”) to secure a Note executed and delivered on March 11, 2004 (“the Note”). (Doc. 1 at 1, 3). The principal balance of the Mortgage was $225, 000.00.[2]The Mortgage was properly assigned to BAC Home Loans servicing, L.P. (“BAC”) on August 25, 2010. Id. BAC was succeeded in merger by Bank of America, N.A. Id.

         On March 1, 2010, Plaintiffs defaulted on the Mortgage. Id. Bank of America initiated a Complaint in Mortgage Foreclosure in the York County Court of Common Pleas on February 6, 2015.[3] Id. On February 11, 2016, the York County Court of Common Pleas entered a default judgment against Plaintiffs in the amount of $331, 211.33.[4] Since that time, Plaintiffs have attempted to open the default judgment, [5] filed several Emergency Stay Petitions on the Sheriff's Sale of the Property, [6] and appealed those decisions to the Pennsylvania Superior Court, [7]all to no avail. The Sheriff's Sale on the Property has been continued several times.[8]

         On October 1, 2016, Defendant Caliber became the servicer of the Mortgage. (Doc. 1 at 5). Defendant LSF9 became the creditor at this time. Id. On April 8, 2017, Caliber sent Plaintiffs a Loss Mitigation Application, which Plaintiffs completed and returned to Caliber. Id. However, Caliber claimed they were not required to review the application and no action was taken. Id. Plaintiffs unsuccessfully attempted to modify their loan on November 12, 2018. Id. On April 8, 2019, Plaintiffs filed a Notice of Bankruptcy with the Sheriff's Office and the Sheriff's Sale was canceled.[9] Plaintiffs filed a Complaint in our Court, reiterating the above facts and proceedings, on April 5, 2019. (Doc. 1).

         II. PROCEDURAL HISTORY

         In their Complaint, Plaintiffs allege violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C.A. § 1692, et seq., (Count I); breach of contract, (Count II); respondeat superior, (Count III); unjust enrichment, (Count IV); violation of the Racketeering Influenced and Corrupt Organizations Act (“RICO”), 18 USC § § 1961-1968, (Count V); violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 Pa.C.S.A. § 201 et seq., (Count VI); violation of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq., (Count VII); and violation of 12 C.F.R. § 1024.41, (Count VIII). Plaintiffs seek actual, emotional, and putative damages based upon the allegedly unlawful state foreclosure action and the allegedly impermissible actions on the part of Defendants that led to that foreclosure.

         Defendants Caliber and LSF9 filed the instant Motion to Dismiss on July 9, 2019. (Doc. 12). The Motion has been fully briefed, (Docs. 13, 14, 19), and is ripe for disposition.

         III. STANDARD OF REVIEW

         Defendants raise three separate arguments as to why we should dismiss Plaintiffs' claims in their entirety. Under the Rooker-Feldman doctrine, Defendants argue that the state foreclosure judgment bars federal courts from hearing claims already decided by the state court. Second, Defendants argue that, even if Rooker-Feldman does not apply, res judicata precludes disposition by this Court because the state foreclosure judgment satisfies the elements of res judicata in Pennsylvania. Finally, Defendants argue that Plaintiffs' have failed to state a cognizable claim under the Iqbal and Twombly standards that would permit us to grant relief.

         We first note that, while Defendants raise their arguments under F.R.C.P. 12(b)(6), their Rooker-Feldman doctrine argument is more properly brought under F.R.C.P. 12(b)(1). Singleton v. Jas Automotive LLC, 378 F.Supp.3d 334, 344 (E.D. Pa 2019) (holding that Rooker-Feldman arguments are properly addressed under 12(b)(1)). Therefore, we will address Defendants' Rooker-Feldman arguments as such. (“When a requirement goes to subject-matter jurisdiction, courts are obligated to consider sua sponte issues that the parties have disclaimed or have not presented.” Gonzalez v. Thaler, 565 U.S. 134, 141 (2012) (citing United States v. Cotton, 535 U.S. 625, 630 (2002))).

         Defendants' res judicata and deficient pleading arguments are both properly examined under Rule 12(b)(6).[10]

         A. Rule 12(b)(1)

         On a Rule 12(b)(1) motion, a court must first determine if the motion is a “facial” or a “factual” attack. Constitution Party of Pa. v. Aichele, 757 F.3d 347, 357 (3d Cir. 2014). A facial attack “considers a claim on its face” and argues that the claim “is insufficient to invoke the subject matter jurisdiction of the court.” Id. at 358. With a facial attack, “the court must only consider the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff.” Id. (quoting In re Schering Plough Corp. Intron, 678 F.3d 235, 243 (3d Cir. 2012)). With a factual attack, by contrast, “a court may weigh and ‘consider evidence outside the pleadings.'” Id. (quoting Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000)).

         Here, Defendants do not challenge jurisdiction based on the factual assertions contained in Plaintiff's Complaint. Rather, they contend that jurisdiction is lacking strictly as a matter of law based on the Rooker Feldman doctrine. Therefore, while Defendants do not expressly state which type of attack they are advancing, we construe their motion as a facial attack because they present a legal argument against jurisdiction as opposed to a factual one. See Constitution Party of Pennsylvania v. Aichele, 757 F.3d 347, 358 (3d Cir. 2014) (“A factual attack requires a factual dispute, and there is none here.”). Thus, we consider whether Plaintiffs' allegations, attached documents, and referenced proceedings establish the necessary jurisdiction in the light most favorable to Plaintiffs.

         1. Rooker-Feldman Doctrine

         Under the Rooker-Feldman doctrine, “federal district courts lack jurisdiction over suits that are essentially appeals from state-court judgments.” Great W. Mining & Mineral Co. v. Fox Rothschild, LLP, 615 F.3d 159, 165 (3d Cir. 2010). The doctrine applies only in “limited circumstances” and is “confined to cases… brought by state-court losers inviting district court review and rejection of the state court's judgments.” Skinner v. Switzer, 562 U.S. 521, 532 (2011) (quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 291-92 (2005).

         In an attempt to limit the doctrine's reach, the Third Circuit has instituted the following four requirements to bar a federal claim under Rooker-Feldman: (1) [T]he federal plaintiff lost in state court; (2) the plaintiff “complain[s] of injuries caused by [the] state-court judgments”; (3) those judgments were rendered before the federal suit was filed; and (4) the plaintiff is inviting the district court to review and reject the state judgments. Great W. Mining & Mineral Co., 615 F.3d at 166 (quoting Exxon Mobil, 544 U.S. at 284) (alterations in original).

         The first and third requirements present a straightforward analysis. Great W. Mining & Mineral Co., 615 F.3d at 166. Indeed, both requirements are met here for all counts because Plaintiffs lost the foreclosure action in state court when a default judgment was entered on February 11, 2016 and this action was initiated over three years later in federal court on April 5, 2019.[11]

         As to the second factor, whether plaintiff “complain[s] of injuries caused by [the] state-court judgments, ” “[i]f the defendants, rather than the state court judgments, caused the injuries complained of, Rooker-Feldman does not apply and the district court is not barred from reviewing those injuries.” Mikhail v. Kahn, 991 F.Supp.2d 596, 614 (E.D. Pa. 2014). In other words, “[t]he question is: was the source of the injury the defendant's conduct or the state court judgment?” When the injury is caused by the state court judgment, federal courts are barred from hearing the claim. Minton v. Cach, LLC, No. 14-4371, 2014 WL 4764183, at *3 (E.D. Pa. Sept. 25, 2014).

         The second and fourth requirements are “closely related.” Id. at 168. The fourth requirement asks, “whether the plaintiff's claims will require appellate review of state-court decisions by the district court.” Id. at 169. “Prohibited appellate review consists of a review of the proceedings already conducted by the ‘lower' tribunal to determine whether it reached its result in accordance with the law.” Id.

         Where a plaintiff attempts to litigate a matter that was previously litigated, “there is jurisdiction as long as the ‘federal plaintiff present[s] some independent claim,' even if that claim denies a legal conclusion reached by the state court.” Id. (quoting Exxon Mobil, 544 U.S. at 293). Put another way, “if the federal court's review does not concern ‘the bona fides of the prior judgment,' the federal court ‘is not conducting appellate review, regardless of whether compliance with the second judgment would make it impossible to comply with the first judgment.'” In re Phila. Entmt. & Dev. Partners, 879 F.3d 492, 500 (3d Cir. 2018) (quoting Great W. Mining & Mineral Co., 615 F.3d at 166).

         B. Rule 12(b)(6)

         In considering a motion to dismiss pursuant to Rule 12(b)(6), courts “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips v. Cty. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (quoting Pinker v. Roche Holdings, Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)).

         In resolving a motion to dismiss pursuant to Rule 12(b)(6), a court generally should consider only the allegations in the complaint, as well as “documents that are attached to or submitted with the complaint…and any matters incorporated by reference or integral to the claim, items subject to judicial notice, matters of public record, orders, [and] items appearing in the record of the case.” Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006).

         1. Res Judicata

         In determining the applicability of principles of res judicata, we must give the same preclusive effect to the judgment in the state foreclosure action as the courts in Pennsylvania, the state in which the judgment was entered, would give. See Lance v. Dennis, 546 U.S. 459, (2006) (“Congress has directed federal courts to look principally to state law in deciding what effect to give state-court judgments.”); see also Allegheny Int'l, Inc. v. Allegheny Ludlum Steel Corp., 40 F.3d 1416, 1429 (3d Cir.1994) (citing Kremer v. Chem. Constr. Corp., 456 U.S. 461, 466 (1982), and 28 U.S.C. § 1738).

         To establish res judicata in Pennsylvania, a defendant must demonstrate that there have been two actions which share: (1) the thing sued upon or for; (2) the cause of action; (3) the persons and parties to the action; and (4) the capacity of the parties to sue or be sued. Bearoff v. ...


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