Jones v. Select Portfolio Servicing, Inc.
1:23-cv-07772
| E.D.N.Y | May 24, 2024Background
- Plaintiffs, Phillip Jones (property owner) and his sister Vira Lynn Jones, filed a pro se action challenging a 2015 foreclosure initiated by U.S. Bank (the Trust) and serviced by Select Portfolio Servicing (SPS) on Mr. Jones’s Brooklyn property.
- Plaintiffs allege the Trust lacked standing to foreclose due to fraudulent mortgage assignments and seek to discharge the mortgage and obtain damages.
- The state foreclosure action resulted in a final judgment of foreclosure in March 2023, which Mr. Jones did not appeal, and foreclosure proceedings are progressing in state court.
- Plaintiffs brought federal claims (including under TILA and RESPA), as well as due process claims, in the Eastern District of New York in October 2023.
- Defendants moved to dismiss based on Colorado River abstention, res judicata, and collateral estoppel. Plaintiffs failed to oppose the motion or prosecute the case.
- The Magistrate Judge issued a Report and Recommendation that the federal case be dismissed, primarily due to preclusion and failure to prosecute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Colorado River Abstention | Federal court should hear the case; state judgment not preclusive | Ongoing state foreclosure means federal court should abstain | Abstention not warranted as state judgment is final, not parallel |
| Res Judicata (Claim Preclusion) | Trust lacked standing in foreclosure due to fraud; federal claims distinct | Foreclosure judgment on merits precludes all claims/defenses related to mortgage | Claims barred: foreclosure judgment is final, all related claims precluded |
| Collateral Estoppel (Issue Preclusion) | Fraudulent assignment and standing issues not previously litigated | Validity of assignments/standing decided in foreclosure action | Issues raised necessarily decided in state court; preclusion applies |
| Failure to Prosecute | N/A | Plaintiffs failed to oppose or comply with court orders | Dismissal additionally warranted for failure to prosecute |
Key Cases Cited
- Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (sets out abstention doctrine when parallel state and federal actions exist)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard for Rule 12(b)(6) motions)
- Ashcroft v. Iqbal, 556 U.S. 662 (establishes plausibility standard for federal pleadings)
- Green v. Montgomery, 219 F.3d 52 (federal courts must give state judgments preclusive effect)
- Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (presumption in favor of federal jurisdiction absent clearest justification)
- Hughes v. Rowe, 449 U.S. 5 (pro se pleadings held to a less stringent standard)