Melvin Sealey v. BBT

Filing

Opinion issued by court as to Appellant Melvin Lewis Sealey. Decision: Affirmed. Opinion type: Non-Published. Opinion method: Per Curiam. The opinion is also available through the Court's Opinions page at this link http://www.ca11.uscourts.gov/opinions.

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[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-16641
Non-Argument Calendar
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D.C. Docket No. 2:15-cv-00837-WKW-TFM

MELVIN LEWIS SEALEY,
Plaintiff-Appellant,
versus
BRANCH BANKING AND TRUST COMPANY,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Middle District of Alabama
________________________
(June 7, 2017)
Before TJOFLAT, WILLIAM PRYOR, and ROSENBAUM, Circuit Judges.
PER CURIAM:

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Melvin Sealey, proceeding pro se, appeals the dismissal of his lawsuit
against Branch Banking and Trust Company (“BB&T”) alleging state-law claims
related to the foreclosure of his home in Crenshaw County, Alabama. The district
court found that Sealey’s lawsuit was barred by the doctrine of claim preclusion
and the “two dismissal rule” of Rule 41(a)(1)(B), Fed. R. Civ. P., because Sealey
twice had voluntarily dismissed the same claims against defendants in privity with
BB&T.

On appeal, Sealey challenges the district court’s subject-matter

jurisdiction and the correctness of the dismissal. After careful review, we affirm.
I. Background
This is the third lawsuit Sealey has filed related to the foreclosure of his
home in Crenshaw County (the “Property”). All three are relevant to this appeal.
The relevant background facts, common to all three lawsuits, are these. In
2004, Sealey obtained a loan for the Property, secured by a mortgage with Colonial
Bank. Colonial Bank acted as the servicer of the loan from its inception until
October 2008. Colonial Bank was declared insolvent in 2009, and BB&T was
assigned as successor of its rights by the Federal Deposit Insurance Corporation.
A few years later, BB&T initiated foreclosure proceedings, claiming that Sealey
had defaulted on the loan. The foreclosure sale occurred in July 2014.
In all three lawsuits, Sealey alleged that no default had occurred and that
BB&T lacked the authority to conduct the foreclosure sale. It appears that Sealey
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believes his mortgage was satisfied by bailout funds after Colonial Bank became
insolvent.
Sealey filed his first lawsuit in Alabama state court in September 2014,
against BB&T and four of its employees, alleging both state- and federal-law
causes of action. After removing the action to federal court on the basis of federalquestion jurisdiction, the defendants moved to dismiss the complaint for failure to
state a claim. A magistrate judge issued a report and recommendation (“R&R”)
recommending that the motion to dismiss be granted. Instead of objecting to the
R&R, Sealey filed a notice voluntarily dismissing his claims against the individual
defendants pursuant to Rule 42(a)(1)(A)(i), Fed. R. Civ. P. The district court
withdrew the R&R as to the individual defendants and acknowledged Sealey’s
voluntary dismissal of these claims. However, the court found that BB&T had
been named as a defendant and that the voluntary dismissal did not apply to
BB&T, so the court adopted the R&R as to BB&T and dismissed the claims
against BB&T “without prejudice” for failure to state a claim.
Sealey filed his second lawsuit in federal district court on October 28, 2014,
naming as defendants the same four BB&T employees as in the first complaint.
Sealey again raised both state- and federal-law causes of action. He included
additional allegations that the defendants committed fraud and filed false mortgage
papers. As with the first case, a magistrate judge issued an R&R recommending
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that the defendants’ motion to dismiss be granted. Instead of filing objections,
Sealey filed a notice voluntarily dismissing his claims without prejudice under
Rule 41(a)(1)(A)(i).

As a result, the district court withdrew the R&R and

acknowledged the voluntary dismissal of the case.
Then, in October 2015, Sealey filed this third lawsuit in Alabama state court,
naming BB&T as the sole defendant. BB&T removed the complaint to federal
district court on the basis of diversity jurisdiction and then moved to dismiss the
complaint. Sealey, in turn, sought to have the case remanded to state court. In
separate R&Rs, a magistrate judge recommended denying Sealey’s motion to
remand and granting BB&T’s motion to dismiss.
Regarding the motion to dismiss, the magistrate judge found that the third
lawsuit was barred under the doctrine of claim preclusion. In relevant part, the
magistrate judge concluded that Sealey’s two prior voluntary dismissals of the
same claims against the individual BB&T employees operated as an adjudication
on the merits under the “two dismissal rule” of Rule 41(a)(1)(B). The magistrate
judge also found that the individual BB&T employees were in privity with BB&T
for purposes of preclusion. Over Sealey’s objections, the district court adopted the
magistrate judge’s R&Rs, denied Sealey’s motion to remand, and dismissed his
complaint. Sealey now appeals.

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Liberally construing Sealey’s brief on appeal, he offers two main arguments.
First, he contends that the district court lacked subject-matter jurisdiction. Second,
he argues that the court erred in applying the doctrine of claim preclusion.
II. Standards of Review
We review de novo whether the district court had subject-matter jurisdiction
following removal. Castleberry v. Goldome Credit Corp., 408 F.3d 773, 780–81
(11th Cir. 2005). We likewise review de novo the district court’s application of the
doctrine of claim preclusion, though whether a party is in privity with another for
preclusion purposes is a question of fact reviewed for clear error. Griswold v. Cty.
of Hillsborough, 598 F.3d 1289, 1292 (11th Cir. 2010).
We liberally construe the filings of pro se parties. Tannenbaum v. United
States, 148 F.3d 1262, 1263 (11th Cir. 1998).

At the same time, liberal

construction does not permit courts to act as “de facto counsel.” Campbell v. Air
Jam. Ltd., 760 F.3d 1165, 1168–69 (11th Cir. 2014). Issues not briefed on appeal,
even by pro se litigants, are considered abandoned. Timson v. Sampson, 518 F.3d
870, 874 (11th Cir. 2008).
III. Subject-Matter Jurisdiction
When a case originally filed in state court is removed to federal court, the
case must be remanded to state court if federal jurisdiction is lacking. 28 U.S.C. §
1447(c). Ordinarily, federal jurisdiction exists where the case either (1) presents a
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question of federal law or (2) involves parties of diverse citizenship and an amount
in question that exceeds $75,000. See 28 U.S.C. §§ 1331 & 1332(a)(1). As the
removing party, BB&T bore the burden of establishing federal subject-matter
jurisdiction. See Friedman v. New York Life Ins. Co., 410 F.3d 1350, 1353 (11th
Cir. 2005).
Here, the district court properly denied Sealey’s motion to remand. In its
notice of removal, BB&T established that Sealey was an Alabama Citizen, that
BB&T was a citizen of North Carolina, and that Sealey sought damages in excess
of $75,000. See 28 U.S.C. 1332(a). With diverse parties and a sufficient amount
in controversy, the court had diversity jurisdiction over Sealey’s complaint.
Sealey’s invocation of the “well-pleaded complaint rule” is off the mark.
That rule comes into play when evaluating whether federal-question jurisdiction
exists. See Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (“The presence
or absence of federal-question jurisdiction is governed by the ‘well-pleaded
complaint rule[]’ . . . .”). Here, though, the court exercised diversity jurisdiction,
not federal-question jurisdiction, so the well-pleaded complaint rule did not apply.
Additionally, because removal was proper under the federal rules, Sealey’s
reliance on the Alabama state rules of venue is misplaced. See Castleberry, 408
F.3d at 783 (“[F]ederal law determines whether the exercise of removal
jurisdiction was proper, irrespective of state law procedural violations.”).
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IV. Claim Preclusion
The doctrine of claim preclusion, sometimes referred to as res judicata,
“bars the filing of claims which were raised or could have been raised in an earlier
proceeding.” Citibank, N.A. v. Data Lease Fin. Corp., 904 F.2d 1498, 1501 (11th
Cir. 1990); see Taylor v. Sturgell, 553 U.S. 880, 892 (2008) (claim preclusion and
issue preclusion are collectively referred to as “res judicata”). Claim preclusion
bars a subsequent lawsuit when four elements are present: (1) a final judgment on
the merits was entered; (2) the prior decision was rendered by a court of competent
jurisdiction; (3) the parties, or those in privity with them, are identical in both suits;
and (4) the same cause of action is involved in both cases. Davila v. Delta Air
Lines, Inc., 326 F.3d 1183, 1187 (11th Cir. 2003); Ragsdale v. Rubbermaid, Inc.,
193 F.3d 1235, 1238 (11th Cir. 1999). Because this case involves the preclusive
effect of a Rule 41(a) dismissal, we apply federal preclusion principles. Citibank,
904 F.2d at 1501.
Here, the district court correctly concluded that claim preclusion applied to
bar Sealey’s current suit against BB&T. Two of the elements of claim preclusion
do not appear to be in serious dispute. First, the district court in the two prior
actions was a court of competent jurisdiction. In light of Sealey’s federal-law
claims, the court had federal-question jurisdiction. Second, the same cause of
action was involved in all three cases because each complaint arose out of the same
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“nucleus of operative fact”—BB&T’s assumption of Sealey’s mortgage and
subsequent foreclosure of the property. See Maldonado v. U.S. Att’y Gen., 664
F.3d 1369, 1375 (11th Cir. 2011) (“[T]wo cases are generally considered to
involve the same cause of action if the latter case arises out of the same nucleus of
operative fact, or is based upon the same factual predicate, as the former one.”)
(internal quotation marks omitted). Even if the specific legal theories raised in the
current case are not identical to those raised previously, claim preclusion bars not
only those claims that were actually litigated in the prior suit, but any and all legal
theories and claims that could have been brought out of the same nucleus of
operative fact. Id. at 1376.
Turning to the question of whether a “final judgment on the merits” was
entered, the answer in this case depends on whether the “two-dismissal rule” of
Rule 41(a)(1)(B), Fed. R. Civ. P., applied. 1 Rule 41(a)(1) allows plaintiffs to
dismiss an action without court order before the opposing party files an answer or a
summary-judgment motion.

Fed. R. Civ. P. 41(a)(1)(A)(i).

Ordinarily, “the

dismissal is without prejudice.” Fed. R. Civ. P. 41(a)(1)(B). But, under the so1

Ordinarily, the district court’s dismissal of Sealey’s first lawsuit as against BB&T for
failure to state a claim under Rule 12(b)(6) would “unambiguously constitute[] a ruling ‘on the
merits,’” Borden v. Allen, 646 F.3d 785, 812 (11th Cir. 2011), making resort to the two-dismissal
rule unnecessary. Despite dismissing the complaint for failure to state a claim and denying leave
to amend as futile, however, the court stated that the dismissal was “without prejudice,”
indicating that Sealey could raise these claims again. We assume without deciding that this prior
dismissal cannot ground the application of claim preclusion. But cf. N.A.A.C.P. v. Hunt, 891
F.2d 1555, 1560 (11th Cir. 1990) (holding that a Rule 12(b)(6) dismissal was a judgment on the
merits even though it was unclear whether the claims were dismissed with or without prejudice).
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called two-dismissal rule, “if the plaintiff previously dismissed any federal- or
state-court action based on or including the same claim, a notice of dismissal
operates as an adjudication on the merits.” Id. We have said that the primary
purpose of the two-dismissal rule is to prevent unreasonable abuse of the plaintiff’s
unilateral right to dismiss an action. ASX Inv. Corp. v. Newton, 183 F.3d 1265,
1268 (11th Cir. 1999).
Here, the district court did not err in applying the two-dismissal rule. It is
undisputed that Sealey voluntarily dismissed his two prior cases (against the
individual BB&T employees) by filing a notice of dismissal, pursuant to Fed. R.
Civ. P. 41(a)(1)(A)(i), after a magistrate judge issued an R&R recommending that
his claims be dismissed. The district court concluded that these two Rule 41
voluntary dismissals “resulted in an adjudication on the merits” of his claims
against the individual BB&T defendants. Sealey offers no clear reason to doubt
the correctness of the court’s ruling on this point, which is consistent with the goal
of preventing unreasonable abuse of the plaintiff’s unilateral right to dismiss an
action. 2 See ASX Inv., 183 F.3d at 1268. Accordingly, there was a final judgment
“on the merits” because the two-dismissal rule of Rule 41(a)(1)(B) applied.

2

The magistrate judge discussed whether the two dismissal rule applied in the “unique
circumstances” of this case, where “the notices of voluntary dismissal occur[ed] on the same date
and the cases clos[ed] on the same date,” ultimately concluding that it did apply because Sealey’s
actions—such as seeking remand of the first suit after initiating the second suit in federal court—
clearly showed that he elected to proceed with two distinct lawsuits. Even liberally construing
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Finally, the district court did not clearly err in finding the individual BB&T
employees were in privity with BB&T. See Griswold, 598 F.3d at 1292 (a finding
of privity is reviewed for clear error). Generally, “one is not bound by a judgment
in personam in a litigation in which he is not designated as a party or to which he
has not been made a party by service of process.” Taylor, 553 U.S. at 884
(quotation marks omitted). However, a nonparty is bound by a judgment if he was
in privity with a party to that judgment. Griswold, 598 F.3d at 1292. Specifically,
there are six circumstances in which privity exists, including, as relevant here,
where (a) a “substantive legal relationship” existed between the party to be bound
and a party to first suit, and (b) the nonparty assumed control over the prior
litigation. See id.
Here, the district court found that, although the Rule 41 dismissal pertained
to only the individual BB&T employees, BB&T was in privity with them because
they were “being sued for official actions they took as BB&T employees” and
were represented by counsel for BB&T. See Citibank, 904 F.2d at 1502–03
(agreeing with most other circuits “that employer-employee or principal-agent
relationships may ground a claim preclusion defense, regardless which party to the
relationship was first sued”). Based on both the employment relationship and

his brief, we cannot discern a cognizable challenge to this conclusion from Sealey. See Timson,
518 F.3d at 874 (issues not briefed are considered abandoned).
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BB&T’s control over the prior litigation, the court did not clearly err in finding that
privity existed. See Griswold, 598 F.3d at 1292–93.
In sum, the district court properly determined that the doctrine of claim
preclusion applied to bar Sealey’s third lawsuit challenging BB&T’s and its
employees’ actions in connection with the foreclosure of his property. To the
extent Sealey contends that he should have been permitted to amend his complaint
before dismissal, we agree with the district court that amendment would have been
futile under the circumstances. See Corsello v. Lincare, Inc., 428 F.3d 1008, 1014
(11th Cir. 2005). Accordingly, we affirm the judgment of the district court.
AFFIRMED.

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