Theola VEASLEY, Plaintiff-Appellant, v. The FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA), BAC Home Loans Servicing, LP, fka Countrywide Home Loans Servicing LP (BAC), Defendants-Appellees.
No. 14-2535.
United States Court of Appeals, Sixth Circuit.
Oct. 1, 2015.
290
BEFORE: COLE, Chief Judge; GIBBONS and STRANCH, Circuit Judges. JULIA SMITH GIBBONS, Circuit Judge.
JULIA SMITH GIBBONS, Circuit Judge.
Plaintiff Theola Veasley appeals the district court‘s grant of summary judgment to defendants Federal National Mortgage Association (“Fannie Mae“) and BAC Home Loans Servicing in an action alleging a violation of
On appeal, Veasley argues that the district court erred (1) in determining that Veasley failed to raise an independent claim in the context of the Rooker-Feldman doctrine, (2) in finding that res judicata barred her claim, and (3) in denying her motion to amend her complaint following the district court‘s grant of summary judgment in favor of the defendants.
For the reasons set forth below, we affirm the decision of the district court and hold that the Rooker-Feldman doctrine does not preclude our jurisdiction and that Veasley‘s claim is barred by the doctrine of res judicata. In addition, the district court‘s denial of Veasley‘s post-judgment motion to amend her complaint is affirmed.
I.
On August 31, 2004, Veasley purchased a home at 24669 Lafayette Circle in South-
The mistake was discovered shortly thereafter, and in December of 2004, Veasley conveyed 24654 Lafayette to its intended owner who, in turn, conveyed 24669 Lafayette to Veasley. On October 21, 2005, the mortgage was modified to correct the metes-and-bounds description.
On August 30, 2010, the mortgage was assigned to BAC. Although the assignment contained the correct address of Veasley‘s property—24669 Lafayette Circle—it contained the erroneous metes-and-bounds description of 24654 Lafayette written in the original mortgage. Veasley defaulted on the mortgage in 2010 and BAC initiated foreclosure proceedings. A sheriff‘s sale was held on February 22, 2011, and Fannie Mae purchased 24669 Lafayette for $68,000. The sheriff‘s deed of the mortgage foreclosure included the correct metes-and-bounds description for 24669 Lafayette.
Under Michigan law, Veasley had six months to redeem the property by paying the highest amount bid at the sheriff‘s sale—in this case $68,000—plus interest and fees. See
Pursuant to its rights under the sheriff‘s deed, Fannie Mae brought an action in Michigan‘s 46th District Court to recover possession of 24669 Lafayette. On June 14, 2012, the state district court issued a judgment of possession in favor of Fannie Mae and an order for eviction was subsequently entered.
In lieu of appealing the judgment of possession, on July 12, 2012, Veasley filed a complaint in the Oakland County Circuit Court seeking to have the sheriff‘s sale of the property set aside as well as have any future eviction actions enjoined. Defendants removed the case to the Eastern District of Michigan. Following removal, the parties entered a joint stipulation, signed by the federal district judge, purporting to stay the state eviction action pending resolution of this case. The parties subsequently filed cross-motions for summary judgment. The district court granted defendants’ motion for summary judgment, denied Veasley‘s motion, and dismissed the case. The district court found that (1) the Rooker-Feldman doctrine did not preclude the court‘s jurisdiction because the jointly stipulated stay meant the state court‘s judgment was not sufficiently final to warrant the doctrine‘s application, and (2) res judicata barred Veasley‘s claim because it raised the same issue litigated during the judgment of possession.
Approximately two weeks after the district court‘s judgment was entered, Veasley filed two motions simultaneously: a motion for reconsideration and a motion for leave to file an amended complaint. The district court denied both motions. Veasley subsequently filed a motion for reconsideration or to amend and alter the district court‘s adverse ruling as to her original motions, which the district court
II.
Prior to addressing the merits of Veasley‘s arguments, we must consider whether the Rooker-Feldman doctrine deprives us of jurisdiction over the instant appeal.
The Rooker-Feldman doctrine is jurisdictional in nature and prevents lower federal courts from exercising appellate jurisdiction over final state-court judgments. See McCormick v. Braverman, 451 F.3d 382, 391-92 (6th Cir.2006). The scope of the doctrine is limited, barring only “cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005). The Rooker-Feldman doctrine does not “turn all disputes about the preclusive effects of judgments into matters of federal subject-matter jurisdiction.” Truong v. Bank of Am., N.A., 717 F.3d 377, 384 (5th Cir.2013) (quoting Freedom Mortg. Corp. v. Burnham Mortg., Inc., 569 F.3d 667, 671 (7th Cir.2009) (internal quotation marks omitted)).
There is no doubt that Veasley lost in a state court judgment rendered before the federal suit was filed. Thus, to determine whether the Rooker-Feldman doctrine bars Veasley‘s claim, we must look to the “source of the injury” alleged in the federal complaint. See McCormick, 451 F.3d at 393. In determining the source of the injury, we also consider Veasley‘s requested relief. See Berry v. Schmitt, 688 F.3d 290, 299-300 (6th Cir.2012).
The district court first found that the source of Veasley‘s injury was the state-court decision. Nevertheless, the court determined that one fact precluded the Rooker-Feldman from depriving the district court of its jurisdiction: the state court judgment was not final. See Lance v. Dennis, 546 U.S. 459, 463 (2006) (holding that the Rooker-Feldman doctrine only applies to final state-court judgments). The district court‘s reasoning, in its entirety, is as follows:
Here, there is no final state-court judgment. Though the state court has entered a judgment of possession and an order for eviction, the parties later stipulated to the entry of an order staying the state-court eviction proceedings while this case remains pending. As this Court has previously held, because of such a stipulation, the state court‘s order of eviction is not final, and therefore the state court proceedings are ongoing. See Selakowski [v. Fed. Home Loan Mortg. Corp.], [No. 13-12335], 2014 WL 1207874, at * 5 [(E.D.Mich. Mar. 24, 2014)] (finding that because the parties had stipulated to stay the state eviction proceeding, “[i]t follows that the state district court‘s order of eviction is not final, and that the state court proceedings are not yet concluded. This precludes the application of the Rooker-Feldman doctrine“). Therefore, Rooker-Feldman does not apply here. (DE 26, Op. and Order, Page ID 632.)
The district court‘s conclusion is perplexing. Not only is the unpublished decision it relies upon of limited precedential value, but the procedural history of that case is materially different in one respect—the state court, not the district court, entered the stay of eviction. Here, the state court in which Veasley‘s com-
The district court‘s confusion is understandable. At best, the caselaw concerning this topic is a jumble. But the panel need not wade into the quagmire of finality under the Rooker-Feldman doctrine because the judgment of possession entered by Michigan‘s 46th District Court was undoubtedly a final judgment.
While the Sixth Circuit has yet to adopt a clear principle for determining when a state court decision is final for the purposes of the Rooker-Feldman doctrine, Exxon Mobil instructs us that a state court judgment is sufficiently final when “the state proceedings [have] ended.” 544 U.S. at 291. One way in which a proceeding ends is when the time for appeal has expired. See Velazquez v. S. Fla. Fed. Credit Union, 546 Fed.Appx. 854, 857 (11th Cir.2013) (citing Nicholson v. Shafe, 558 F.3d 1266, 1275 (11th Cir.2009)); Sheriff v. Accelerated Receivables Solutions, Inc., 283 Fed.Appx. 602, 606 (10th Cir.2008) (“[S]tate proceedings are final for Rooker-Feldman purposes when a party allows the time for appeal from a lower state-court judgment to lapse.“) (citing Bear v. Patton, 451 F.3d 639, 642 (10th Cir.2006)); Federacion de Maestros de P.R. v. Junta de Relaciones del Trabajo de P.R., 410 F.3d 17, 24 (1st Cir.2005) (“[I]f a lower state court issues a judgment and the losing party allows the time for appeal to expire, then the state proceedings have ended.“).
Here, by the time Veasley filed her parallel complaint contesting the validity of the foreclosure in Oakland County Circuit Court, the judgment of possession was a final decision. On June 14, 2012, Michigan‘s 46th District Court entered the judgment of possession. Veasley‘s time to appeal the judgment expired ten days after entry of the judgment.
Nevertheless, the district court was correct in its ultimate conclusion that it was not stripped of jurisdiction, and “[w]e may affirm a decision of the district court if correct for any reason.” United States v. Montgomery, 377 F.3d 582, 585 (6th Cir.2004) (internal quotation marks omitted).
Veasley claims her injury does not stem from the state-court judgment; rather, she contends that she raised an independent claim alleging that the faulty mortgage assignment divested BAC of the right to foreclose on the property. The district court disagreed: “If the assignment of the Mortgage ... was indeed faulty, that faulty assignment did not harm [Veasley] in any way; indeed, it would benefit her by potentially eliminating her debt obligation.... [T]he source of [her] injury was the state-court judgment.”
In spite of any perceived benefits, the alleged faulty mortgage assignment—which vested BAC with the right to foreclose on the property—is the true source of Veasley‘s injury. Veasley‘s complaint asserted that the foreclosure of the property was conducted in error because it was
Rooker-Feldman does not preclude this court‘s jurisdiction over Veasley‘s case because the previous action in Michigan‘s 46th court, in which Fannie Mae sought to recover possession of 24669 Lafayette, was merely a continuation of the injury stemming from BAC‘s faulty assignment and subsequent foreclosure proceedings. Veasley does not claim that the state court judgments are unconstitutional or in violation of federal law; instead Veasley raises an independent claim which this court has jurisdiction to review. See McCormick, 451 F.3d at 395 (“[T]he [Rooker-Feldman] doctrine is confined to those cases ... when a plaintiff asserts before a federal district court that a state court judgment itself was unconstitutional or in violation of federal law.“) Although her independent claim regarding the faulty assignment necessarily denies a legal conclusion of the state court, i.e., that Fannie Mae is entitled to possession of the property, the Rooker-Feldman doctrine is “not a panacea to be applied whenever state [and federal] court decisions ... potentially or actually overlap.” Id. Instead, preclusion law is the appropriate avenue for resolving such issues. Id. at 392-93.
III.
Because this court has subject matter jurisdiction over the litigation, we now turn to Veasley‘s res judicata claim. A district court‘s application of res judicata is reviewed de novo. Ohio ex rel. Boggs v. City of Cleveland, 655 F.3d 516, 519 (6th Cir.2011). “The doctrine of res judicata is intended to relieve parties of the cost and vexation of multiple lawsuits, conserve judicial resources, and encourage reliance on adjudication, that is, to foster the finality of litigation.” Bryan v. JPMorgan Chase Bank, 304 Mich.App. 708, 848 N.W.2d 482, 485 (2014) (internal quotation marks omitted), appeal denied, 497 Mich. 869, 853 N.W.2d 355 (2014). Federal courts must give the same preclusive effect to a state-court judgment that would be given by a court of the state from which the judgment arose. Duncan v. U.S. Bank, NA, 574 Fed.Appx. 599, 602 (6th Cir.2014) (citing Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81 (1984)).
Michigan law bars an action under res judicata when “(1) the prior action was decided on the merits, (2) both actions involve the same parties or their privies, and (3) the matter in the second case was, or could have been, resolved in the first.” Adair v. State, 470 Mich. 105, 680 N.W.2d 386, 396 (2004). Generally, res judicata bars “every claim arising from the same transaction that the parties, exercising reasonable diligence, could have raised but did not.” Id. Neither party disputes that
To circumvent res judicata, Veasley contends that the defendants did not meet their burden of establishing which issues were “actually litigated“.2 Although Veasley seeks to characterize her complaint as addressing an issue that was not litigated before the state court, the state court‘s summary proceeding tackled the very issue raised in the present lawsuit: who has the right to possess the foreclosed home.
In her complaint, Veasley alleges that the assignment conveyed to BAC was invalid by virtue of an incorrect metes-and-bounds description. Accordingly, BAC, Veasley argues, did not have the right to foreclose on the property and, by extension, Fannie Mae—the purchaser of the property—did not have a valid right to possess the property. Therefore the heart of Veasley‘s complaint—rightful possession of 24669 Lafayette—is merely a part of the previously litigated issue concerning rightful possession of the property. Because the right to possession was “actually litigated” in the summary proceeding, Veasley‘s claim is barred by res judicata.3
Nevertheless, even assuming that res judicata is misplaced, Veasley‘s claim would fail on the merits. The Michigan Supreme Court has held that a foreclosure is not invalidated by a harmless assignment defect. Kim v. JPMorgan Chase Bank, N.A., 493 Mich. 98, 825 N.W.2d 329, 337 (2012) (“[W]e hold that defects or irregularities in a foreclosure proceeding result in a foreclosure that is voidable, not void ab initio.“). In Kim, the defendant failed to record the mortgage assignment
The mistake in Veasley‘s case is even less serious than that presented in Kim. Here, the mistake was merely a scrivener‘s error: an erroneous metes-and-bounds description of the property in the mortgage assignment. Despite the incorrect metes-and-bounds description, the assignment contained the correct address of Veasley‘s property. What is more, the sheriff‘s deed included both the correct metes-and-bounds description for 24669 Lafayette as well as the appropriate address. Thus, in order to succeed on her claim, Veasley must show that she was prejudiced by the defendants’ failure to include the correct metes-and-bounds description in the mortgage assignment. Kim, 825 N.W.2d at 337. She has failed to do so.
IV.
Following the district court‘s grant of summary judgment in favor of the defendants, Veasley moved for leave to file an amended complaint. The proposed amended complaint did not differ significantly from Veasley‘s original complaint as to its factual allegations; it merely included the addition of one new claim—a violation of
A district court‘s decision to deny a plaintiff‘s motion to amend her complaint is generally reviewed for an abuse of discretion. See Crawford v. Roane, 53 F.3d 750, 753 (6th Cir.1995). However, this court reviews de novo a district court‘s decision to deny a motion to amend based on the legal conclusion that the proposed amendment would be futile, i.e., would not withstand a motion to dismiss. Miller v. Calhoun Cnty., 408 F.3d 803, 817 (6th Cir.2005). When a motion under
To bolster her new additional claim, Veasley points to evidence allegedly proving defendants’ actions prevented her from redeeming 24669 Lafayette. The facts she emphasizes to support this claim, however, were already present in her first complaint. Veasley was therefore already aware of the defendants’ alleged misconduct and had no reason to wait to initiate a claim for violation of
A plaintiff is not allowed to use a post-judgment Rule 15 motion “to raise argu-
CONCLUSION
For the reasons set forth above, we affirm the district court‘s grant of summary judgment in favor of the defendants and affirm the district court‘s denial of the plaintiff‘s post-judgment motion to amend.