Saadi v. CitiMortgage, Inc.
1:17-cv-01966
N.D. Ill.Oct 10, 2017Background
- Saadi obtained a mortgage in 2006; Citi (servicing the loan) commenced state-court foreclosure in DuPage County in 2011 and ultimately purchased the property at sheriff’s sale in January 2016; sheriff’s deed recorded August 24, 2016.
- Between 2012 and 2015 Saadi repeatedly submitted loss-mitigation / hardship applications; Citi exchanged multiple notices (complete/incomplete), paused foreclosure activity at times while reviewing, and ultimately denied modification and short-sale alternatives.
- Saadi filed this federal suit alleging Citi "dual-tracked" the loan (pursued foreclosure while processing applications), violating 12 C.F.R. § 1024.41 (RESPA regulation), and seeking damages for Citi’s participation in the foreclosure.
- Citi moved to dismiss under Fed. R. Civ. P. 12(b)(1) and 12(b)(6), arguing lack of subject-matter jurisdiction under Rooker–Feldman and that res judicata bars Saadi’s claims.
- The district court found Saadi’s claims were inextricably intertwined with the state-court foreclosure judgment and constituted matters that could have been raised in that proceeding, and thus dismissed for lack of subject-matter jurisdiction (Rooker–Feldman) and, alternatively, as precluded by res judicata.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court has jurisdiction given state foreclosure judgment (Rooker–Feldman) | Saadi contends he seeks damages for independent unlawful conduct (dual-tracking), not to vacate the state judgment | Citi contends federal review is barred because Saadi effectively attacks the state-court foreclosure and sale | Court: Rooker–Feldman bars the suit—claims are inextricably intertwined with state-court rulings and could have been raised there |
| Whether Saadi’s claims are precluded by prior state-court judgment (res judicata) | Saadi argues his federal statutory claim under § 1024.41 is distinct and seeks damages not addressed in state foreclosure | Citi argues the denial and foreclosure arise from the same transaction and the state judgment is final on the merits | Court: Res judicata would bar the claims because they arise from the same group of operative facts as the foreclosure |
| Pleading sufficiency under Rule 12(b)(6) | Saadi alleges facts showing repeated applications and Citi’s concurrent foreclosure activity | Citi argues the complaint cannot avoid jurisdictional/preclusion defects and fails to state an independent claim | Court: Did not reach merits—dismissal based on jurisdiction/preclusion; facts accepted as pleaded for 12(b)(6) purposes |
| Whether alleged § 1024.41 violation yields independent damages claim | Saadi maintains statutory damages for CFPB regulation breaches independent of state process | Citi maintains enforcement or challenge to foreclosure conduct must be brought in state court and is barred here | Court: Even if substantive claim exists, it is barred here by jurisdictional and claim-preclusion doctrines |
Key Cases Cited
- United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942 (7th Cir.) (party asserting jurisdiction bears the burden)
- Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440 (7th Cir.) (distinguishing facial and factual 12(b)(1) challenges)
- Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536 (7th Cir.) (courts may consider evidence beyond pleadings on factual jurisdictional attacks)
- Kelley v. Med–I Solutions, LLC, 548 F.3d 600 (7th Cir.) (Rooker–Feldman precludes federal jurisdiction over claims seeking review of state judgments)
- Brokaw v. Weaver, 305 F.3d 660 (7th Cir.) (explaining scope of Rooker–Feldman)
- Brown v. Bowman, 668 F.3d 437 (7th Cir.) (tests for inextricably intertwined and opportunity to raise issue in state court)
- Mains v. Citibank, N.A., 852 F.3d 669 (7th Cir.) (distinguishing damages for independent unlawful conduct from attempts to vacate state judgments)
- Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (U.S.) (Rooker–Feldman framework and limits)
- Parungao v. Cmty. Health Sys., Inc., 858 F.3d 452 (7th Cir.) (elements of res judicata under Illinois law)
- Chicago Title Land Tr. Co. v. Potash Corp. of Saskatchewan Sales Ltd., 664 F.3d 1075 (7th Cir.) (transactional test and scope of claim preclusion)