Gelver Martinez v. Bank of America NA, 664 F. App'x 250

Background

Martinez obtained a mortgage that was later pooled and securitized; he alleged the promissory note was never deposited into the trust and transfers/assignments (via MERS, BANA, Nationstar) were defective, rendering the mortgage unenforceable.
Nationstar filed a foreclosure action in New Jersey state court; Martinez answered, counterclaimed against Nationstar, and cross-claimed against BANA and MERS. The state court granted summary judgment to Nationstar, returned the matter to foreclosure track, and Martinez later entered a loan modification with Nationstar.
After the state foreclosure proceeded, Martinez filed a federal suit asserting breach of contract and seeking a declaration under 28 U.S.C. § 2201; he invoked diversity jurisdiction under 28 U.S.C. § 1332(a).
Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(1) and 12(b)(6), asserting Rooker–Feldman, res judicata, collateral estoppel, New Jersey’s Entire Controversy Doctrine (ECD), lack of standing, and mootness based on the loan modification.
The District Court dismissed, relying on Rooker–Feldman and alternative merits reasoning; denied leave to amend and reconsideration. Martinez appealed.
The Third Circuit affirmed but on different grounds: it rejected Rooker–Feldman as the principal bar and held the complaint was barred by New Jersey’s Entire Controversy Doctrine (res judicata principles), making amendment futile.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether federal court lacked subject-matter jurisdiction under Rooker–Feldman	Martinez: federal suit filed before final state judgment; not seeking appellate review of an existing final state judgment	Defendants: federal relief would effectively overturn state foreclosure ruling; Rooker–Feldman bars the suit	Rejected Rooker–Feldman as improper here; federal suit filed before final state judgment and did not constitute appellate review of a final state judgment
Whether federal claims were precluded by New Jersey’s Entire Controversy Doctrine / res judicata	Martinez: federal claims distinct or permissible despite prior state proceedings	Defendants: claims were or could have been litigated in state foreclosure and are barred by ECD/res judicata	Held that ECD/res judicata barred Martinez’s federal suit because (1) state matter produced a final judgment via settlement/loan-modification dismissal, (2) parties identical or in privity, (3) claims arise from same transaction
Whether Martinez lacked standing to challenge assignments/ownership	Martinez: has standing to challenge enforceability of his mortgage and seek damages/declaratory relief	Defendants: mortgagor lacks prudential standing to challenge assignments between third parties	Court did not rest decision on standing; concluded ECD dismissal made amendment futile and upheld dismissal
Whether dismissal without leave to amend and denial of reconsideration was appropriate	Martinez: should be permitted to amend or obtain reconsideration	Defendants: amendment would be futile given preclusion/ECD	Denial of leave to amend and reconsideration affirmed as not an abuse of discretion because amendment would be futile due to ECD preclusion

Key Cases Cited

Baldwin v. Univ. of Pittsburgh Med. Ctr., 636 F.3d 69 (3d Cir.) (pleading standard / accepting well-pleaded facts)
Rooker v. Fidelity Trust Co., 263 U.S. 413 (Sup. Ct.) (foundational Rooker authority)
D.C. Court of Appeals v. Feldman, 460 U.S. 462 (Sup. Ct.) (Rooker–Feldman doctrine)
Great W. Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159 (3d Cir.) (limits on Rooker–Feldman application)
In re Mullarkey, 536 F.3d 215 (3d Cir.) (discussion of ECD/germaneness in foreclosure context)
Bennun v. Rutgers State Univ., 941 F.2d 154 (3d Cir.) (ECD prevents claims that could have been litigated previously)
Ford-Clifton v. Dep’t of Veterans Affairs, 661 F.3d 655 (Fed. Cir.) (settlement-based dismissal constitutes final judgment for res judicata)