Bank of New York v. Romero
2016 NMCA 91
| N.M. Ct. App. | 2016Background
- In 2006 the Romeros executed a mortgage note; after default the Bank of New York (the Bank) sued for foreclosure in 2008 and obtained a judgment after trial.
- The Romeros appealed; this Court affirmed, but the New Mexico Supreme Court reversed in Bank of N.Y. v. Romero, holding the Bank lacked standing at filing and remanding with instructions to vacate the foreclosure judgment and dismiss the action for lack of standing.
- On remand the district court vacated the foreclosure judgment, ordered return of the property and related relief, and then dismissed the Bank’s foreclosure complaint "with prejudice." The court also stated the Bank was precluded from ever re-raising the issue that it could enforce the note and foreclose.
- The Bank appealed the "with prejudice" dismissal and the district court’s statement that the Bank is precluded from raising the foreclosure/standing issue in the future.
- The Court of Appeals considered (1) whether "law of the case" compelled a dismissal with prejudice, (2) whether claim preclusion (res judicata) or issue preclusion (collateral estoppel) barred refiling, and (3) whether the district court improperly conflated claim and issue preclusion.
Issues
| Issue | Plaintiff's Argument (Bank) | Defendant's Argument (Romeros) | Held |
|---|---|---|---|
| Whether the Supreme Court’s remand required dismissal with prejudice (law of the case) | The Supreme Court did not decide merits; silence means dismissal should be without prejudice and law of the case does not mandate prejudice | The Supreme Court’s language and commentary implied finality and intended to preclude the Bank from future attempts | Court: No clear law of the case mandating with-prejudice dismissal; ambivalence in Supreme Court opinion requires analysis of preclusion doctrines |
| Whether dismissal for lack of standing operates as a judgment on the merits (claim preclusion/res judicata) | Dismissal for lack of standing does not adjudicate the foreclosure merits; res judicata does not apply; dismissal should be without prejudice | Standing determination is threshold and should bar future suits; public-policy reasons favor preclusion | Court: Claim preclusion does not apply — no adjudication on the merits occurred, so dismissal with prejudice could not be justified on res judicata grounds |
| Whether the district court could bar the Bank from refiling by invoking issue preclusion (collateral estoppel) | Issue preclusion requires identical issue actually litigated and necessarily decided; premature to apply collateral estoppel to bar future suit | The Bank had a full and fair opportunity to litigate standing; issue preclusion should prevent re-litigation | Court: District court erred to apply issue preclusion to foreclose refiling; applying issue preclusion to bar the claim was premature and conflated doctrines |
| Proper remedy on remand | Dismissal without prejudice to permit a future action if standing is later established; preserve ability to litigate issue preclusion in a future case | Seek dismissal with prejudice and a ruling that Bank is forever precluded | Court: Reverse dismissal with prejudice; instruct dismissal without prejudice and vacate ruling that Bank is precluded from litigating standing in the future |
Key Cases Cited
- Bank of N.Y. v. Romero, 320 P.3d 1 (N.M. 2014) (Supreme Court reversed, holding Bank lacked standing and remanded to dismiss for lack of standing)
- Kirby v. Guardian Life Ins. Co. of Am., 231 P.3d 87 (N.M. 2010) (elements and standards for claim preclusion explained)
- Pielhau v. State Farm Mut. Auto. Ins. Co., 314 P.3d 698 (N.M. Ct. App. 2013) (distinguishes claim preclusion from issue preclusion; dismissal with prejudice has res judicata effect on claims)
- Trujillo v. City of Albuquerque, 965 P.2d 305 (N.M. 1998) (law of the case doctrine and its limits)
- Smith v. Bayer Corp., 564 U.S. 299 (U.S. 2011) (federal principle that a court generally cannot dictate preclusion consequences of its judgment to other courts)