588 F. App'x 66
2d Cir.2015Background
- A putative class of homeowners sued multiple mortgage-related defendants alleging fraud and seeking damages related to state-court foreclosure proceedings; plaintiffs filed a Second Amended Complaint (SAC).
- District Court dismissed the SAC for lack of jurisdiction under the Rooker-Feldman doctrine and alternatively for failure to state a RICO claim; plaintiffs appealed.
- The Second Circuit reviewed de novo the jurisdictional Rooker-Feldman ruling and the Rule 12(b)(6) dismissal of RICO claims; denial of leave to amend reviewed for abuse of discretion.
- Plaintiffs alleged defendants used fraudulent statements and mail/wire communications as part of a scheme leading to injuries tied to state foreclosure judgments.
- Defendants argued (1) federal court lacked jurisdiction because plaintiffs sought review of state-court judgments (Rooker-Feldman) and (2) the RICO counts failed Rule 9(b)/pleading requirements and lacked facts showing fraudulent intent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rooker‑Feldman bars the suit | Babb: claims seek damages for defendants' fraud, not review of state judgments | Defendants: suit effectively attacks state-court foreclosure outcomes and is barred | Reversed district court — Rooker‑Feldman does not bar suit; plaintiffs seek damages, not reversal of state judgments (Vossbrinck controlling) |
| Whether RICO claims plead mail/wire fraud with requisite particularity and intent | Babb: SAC adequately alleges fraudulent statements, uses of mail/wires, and scheme injuries | Defendants: SAC lacks specific false statements, dates/places, purposes of communications, and facts supporting fraudulent intent; fails Rule 9(b) and Moore pleading standards | Affirmed dismissal on merits — RICO counts fail to plead falsity, particularized communications, purposes, and strong inference of intent; Rule 12(b)(6) dismissal proper |
| Whether denial of further leave to amend was an abuse of discretion | Babb: should have been allowed another amendment to cure defects | Defendants: district court warned plaintiffs of deficiencies and limited further amendments; denial appropriate | Affirmed — district court did not abuse discretion because plaintiffs were warned and the court precluded further amendments before the SAC was filed |
Key Cases Cited
- District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (U.S. 1983) (establishes Rooker‑Feldman doctrine barring lower federal review of state court judgments)
- Rooker v. Fidelity Trust Co., 263 U.S. 413 (U.S. 1923) (origin of federal-court nonreview principle of state judgments)
- Hoblock v. Albany County Board of Elections, 422 F.3d 77 (2d Cir. 2005) (standard of de novo review for Rooker‑Feldman issues)
- Moore v. PaineWebber, Inc., 189 F.3d 165 (2d Cir. 1999) (mail/wire fraud in RICO claims requires particularized allegations and intent)
- Lundy v. Catholic Health Sys. of Long Island Inc., 711 F.3d 106 (2d Cir. 2013) (standard for Rule 12(b)(6) review in Second Circuit)
- Ruotolo v. City of New York, 514 F.3d 184 (2d Cir. 2008) (standard of review for denial of leave to amend)