179 F. Supp. 3d 458
E.D. Pa.2016Background
- Plaintiffs (Trina and Richard Lewis) were subject to a mortgage foreclosure in Pennsylvania state court; Wilmington Trust obtained in rem judgments (2015 and 2016) and plaintiffs did not appeal.
- Plaintiffs then filed suit in federal court after removal, asserting 13 claims relating to the mortgage and foreclosure (fraud, quiet title, breach of contract, RESPA, HOEPA, wrongful foreclosure, slander of title, negligence, emotional distress, dual tracking, etc.).
- Plaintiffs allege the defendants (Citi, CitiMortgage, Wilmington Trust, and MERS) did not own the mortgage, made improper transfers, had unauthorized signatories, and denied multiple Requests for Mortgage Assistance.
- Defendants moved to dismiss, arguing lack of subject matter jurisdiction under Rooker-Feldman for certain claims and that remaining claims are barred by res judicata.
- The district court considered whether Rooker-Feldman strips jurisdiction over claims that seek to undermine the state-court foreclosure judgment and whether preclusion principles prevent relitigation of issues that could have been raised in the state action.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court has jurisdiction over claims that attack state foreclosure judgment (Rooker-Feldman) | Plaintiffs seek relief against defendants for wrongful foreclosure, quiet title, slander of title, breach of mortgage-related contract and duties — i.e., federal review of state judgment is appropriate | Rooker-Feldman bars federal review because the federal suit seeks to overturn or is inextricably intertwined with the state-court foreclosure judgment | Court: Rooker-Feldman applies; no subject-matter jurisdiction for quiet title, breach of contract, breach of good faith and fair dealing, wrongful foreclosure, and slander of title |
| Whether remaining claims are precluded by res judicata | Plaintiffs contend fraud, RESPA, HOEPA, negligence, emotional distress, and dual-tracking claims are distinct and can proceed | Defendants argue those claims arose from the same mortgage/foreclosure and either were raised or could have been raised in the state action; parties/privities are identical or in privity | Court: Res judicata bars the remaining claims because they could have been litigated in the state foreclosure action and defendants are in privity |
| Whether defendants are in privity with the state-court plaintiff/party for res judicata purposes | Plaintiffs dispute that prior transfer/nominee relationships create privity | Defendants assert privity based on nominee, mortgagee, and assignee relationships concerning the mortgage | Court: Privity exists (Citi and MERS in privity with Wilmington Trust) for preclusion purposes |
| Whether plaintiff's procedural posture (removal after filing in state court) affects Rooker-Feldman/res judicata analysis | Plaintiffs argue removal allows federal adjudication | Defendants note courts apply Rooker-Feldman and preclusion even where removal occurred; federal courts lack authority to review state judgments | Court: Removal does not avoid Rooker-Feldman or res judicata; doctrines apply and bar/fare dismissal |
Key Cases Cited
- Nesbit v. Gears Unlimited, Inc., 347 F.3d 72 (3d Cir. 2003) (federal courts must satisfy subject-matter jurisdiction and may raise it sua sponte)
- Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923) (federal courts lack authority to act as appellate courts over state-court judgments)
- District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983) (clarified limits on federal review of state-court decisions)
- Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (2005) (distinguished preclusion from Rooker-Feldman; articulated when Rooker-Feldman bars federal jurisdiction)
- Great W. Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159 (3d Cir. 2010) (articulated four-part test for Rooker-Feldman application)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for Rule 12(b)(6))
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard requiring more than conclusory allegations)
- Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009) (two-part Twombly/Iqbal framework for pleading analysis)
- Pension Benefits Guaranty Corp. v. White Consol. Indus., Inc., 998 F.2d 1192 (3d Cir. 1993) (materials district courts may consider on a Rule 12(b)(6) motion)
- Rycoline Prods., Inc. v. C & W Unlimited, 109 F.3d 883 (3d Cir. 1997) (state-court judgments receive same preclusive effect in federal court as in state court)