AMODOL v. HSBC BANK USA, NATIONAL ASSOCIATION
3:16-cv-02367
D.N.J.Jan 10, 2018Background
- Plaintiffs Jose and Denise Amodol executed a 2006 mortgage; they defaulted and HSBC (as assignee) initiated foreclosure in 2010.
- Plaintiffs participated in state-court foreclosure proceedings and the NJ foreclosure mediation program; parties later entered a Home Affordable Modification Program (trial) Agreement requiring trial payments in early 2015.
- HSBC denied permanent modification in June 2015 citing title issues; title issues were later resolved but modification was still denied. State court entered final judgment of foreclosure on January 8, 2016.
- Plaintiffs filed this federal suit in April 2016 asserting breach of contract, NJ Consumer Fraud Act, RESPA, and FDCPA claims, seeking reinstatement of the modification and to enjoin foreclosure.
- Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(1) (lack of subject-matter jurisdiction via Rooker–Feldman) and 12(b)(6). The court granted dismissal under 12(b)(1) and dismissed the case with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court has jurisdiction or Rooker–Feldman bars the suit | Amodols say claims arise from Defendants’ breach of the modification Agreement, not an attack on the state judgment | Defendants contend the federal claims attack and seek to undo the state foreclosure judgment, so Rooker–Feldman deprives the court of jurisdiction | Rooker–Feldman applies; court lacks subject-matter jurisdiction and dismisses under Rule 12(b)(1) |
| Whether plaintiffs’ claims were actually litigated in state court | Amodols assert the state judgment did not resolve the federal claims | Defendants point to state-court proceedings where Amodols raised objections about the loan modification | Court finds plaintiffs raised these arguments in state court and lost; supports Rooker–Feldman application |
| Whether plaintiffs seek relief that would negate the state judgment | Amodols seek reinstatement of the trial modification and injunction staying foreclosure | Defendants argue such relief would require overturning or nullifying the state-court foreclosure judgment | Court holds requested relief would necessarily negate the state judgment, so jurisdiction is barred |
| Whether court should reach the merits under Rule 12(b)(6) | Amodols urge merits review of contract, consumer protection, RESPA, FDCPA claims | Defendants say court lacks jurisdiction so merits need not be reached | Court declines to reach the merits because of lack of jurisdiction; dismissal with prejudice entered |
Key Cases Cited
- Rooker v. Fidelity Trust Co., 263 U.S. 413 (federal district courts cannot review state court judgments)
- District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (federal courts lack jurisdiction over claims that are inextricably intertwined with state court judgments)
- Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (distinguishes independent federal claims from those that would require rejecting state-court decisions)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading standard: plausibility)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard and evaluation of conclusions vs. facts)
- Davis v. Wells Fargo, 824 F.3d 333 (12(b)(1) standing and caution against converting jurisdictional challenges into merits attacks)
- In re Knapper, 407 F.3d 573 (Rooker–Feldman principle and limits on federal review of state judgments)