FLATAU et al v. SHERMAN FINANCIAL GROUP LLC et al

Filing 81

ORDER GRANTING 53 Motion for Leave to File; GRANTING 20 Motion to Dismiss; and GRANTING 21 Motion to Dismiss Complaint. If the Plaintiffs wish to raise new arguments with regard to whether the claims ag ainst Arrow are barred by the Rooker-Feldman doctrine, they shall file a supplemental brief within fourteen days of this order. Absent any new meritorious arguments, the Court will dismiss Arrow. Ordered by US DISTRICT JUDGE MARC THOMAS TREADWELL on 12/14/15. (tlh)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
MACON DIVISION
WILLIAM M. FLATAU, as trustee in
bankruptcy for Calvin Ferrell Davis,
CALVIN FERRELL DAVIS, and
LASHAN DENISE DAVIS,

)
)
)
)
)
Plaintiff,
)
)
v.
)
)
SHERMAN FINANICAL GROUP, LLC, et )
al.,
)
)
Defendants.
)
)

CIVIL ACTION NO. 5:14-CV-245(MTT)

ORDER
Defendants LVNV Funding LLC, Resurgent Capital Services LP, Sherman
Acquisition LLC, Sherman Financial Group LLC, Sherman Originator LLC (the
“Sherman Defendants”), and Atlas Acquisitions LLC (“Atlas”) have moved to dismiss the
Plaintiffs’ second amended and recast complaint (Doc. 74) for lack of subject matter
jurisdiction pursuant to the Rooker-Feldman doctrine and failure to state a claim as to all
counts. (Docs. 20; 21).1
Arrow Financial Services LLC (“Arrow”), which was recently added as a
Defendant, has not yet moved to dismiss. However, because the primary point of the
motions is that the Court lacks subject matter jurisdiction, the Court will consider the
Court’s subject matter jurisdiction over the Plaintiffs’ claims against Arrow sua sponte.
See Univ. of S. Ala. V. Am. Tobacco Co., 168 F.3d 405, 410 (11th Cir. 1999) (“[A] court
1

As noted by the Court in its order granting the Plaintiffs’ motion to amend, the second amended
complaint did not moot the Defendants’ motions to dismiss. (Doc. 73 at 3). The Plaintiffs acknowledged
that the Court could grant the Plaintiffs leave to amend and then “rule on the merits of the pending
motions to dismiss.” (Doc. 71 at 4).

should inquire into whether it has subject matter jurisdiction at the earliest possible
stage in the proceedings. Indeed, it is well settled that a federal court is obligated to
inquire into subject matter jurisdiction sua sponte whenever it may be lacking.”).
I.

BACKGROUND2

A. Statement of the Facts
The Plaintiffs allege that the “Defendants collectively participate in the operation
and management of a sophisticated consumer debt collection enterprise.” (Doc. 74, ¶
15). Defendant Sherman Financial operates its part of this enterprise through various
“interdependent subsidiaries engaged in purchasing and servicing portfolios of
consumer defaulted debt.” (Id. ¶ 17). Defendants LVNV Funding LLC (“LVNV”) and
Sherman Acquisition are “two of Sherman Financial’s asset holding entities [who] do
nothing more than own portfolios of consumer debt.” (Id. ¶ 21). “Resurgent, one of
Sherman Financial’s operating entities,” collects consumer debt owned by LVNV by
entering into agreements with law firms that file debt collection lawsuits in state courts.
(Id. ¶ 22). Like Sherman Financial, Arrow also “acquired defaulted consumer debts at a
large discount and then sought to collect on those debts by bringing actions in state
courts,” and then in June 2012, Arrow sold most of its “consumer debt portfolio” to
LVNV. (Id. ¶ 26). “Atlas purchases consumer bankruptcy debt at a large discount from
entities such as LVNV and Sherman Acquisitions” and collects the purchased debts by
filing proofs of claim in bankruptcy. (Id. ¶ 27).
The Plaintiffs allege Calvin Ferrell Davis was a victim of the Defendants’
“scheme” which began when Arrow filed a complaint in the State Court of Houston

2

The facts are taken from the allegations in the second amended and recast complaint (Doc. 74) and
accepted as true for purposes of the motion.
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County to recover a “defaulted credit card debt from ‘Calvin Davis’… allegedly owed to
Wells Fargo Financial Inc. (‘Wells Fargo’) amounting to $17,369.63 (the ‘Debt’).” (Id. ¶¶
28-29). However, the Plaintiffs allege Davis has only had an automobile loan with Wells
Fargo, which he paid off on March 7, 2006. (Id. ¶ 30). The complaint listed Davis’s
address as 6089 Lakeview Road Apt. 904, Warner Robins, Georgia 31088 (“the
Lakeview Apartment”). (Id. ¶ 33). Davis’s girlfriend lived at this address in 2005 and
2006, and Davis received mail there during that time. (Id. ¶ 34). He also listed this
address on his 2005 W-2 and his automobile loan with Wells Fargo. (Id.). However, the
Plaintiffs deny Davis ever lived there or had any connection with the address at the time
of the Houston County action in 2010. (Id.).
Arrow hired process server Bradley Hill to serve Davis, and Hill swore under
penalty of perjury that he personally served Davis at the Lakeview Apartment on
September 22, 2010. (Id. ¶ 35). However, Hill was not an authorized process server in
Georgia. (Id. ¶ 36). Also, a man named Hung Van Thai lived at the Lakeview
Apartment on the date Hill swore he served Davis, while Davis lived in Powder Springs,
Georgia, 120 miles away.3 (Id. ¶¶ 37-38). Counsel for Arrow swore in state court that
Davis was served at the Lakeview Apartment and that Davis was in default for failing to
file a responsive pleading to the complaint. (Id. ¶ 40). The State Court of Houston
County entered a default judgment against Davis in the amount of $18,160.25 on March
15, 2011. (Id. ¶ 42). Counsel for Arrow filed a “Notice of Assignment of Judgment” to

3

Also pending before the Court is the Plaintiffs’ motion for leave to file a second supplement sur-reply to
the motions to dismiss. (Doc. 53). This sur-reply is simply to supplement the record with the affidavit of
Mr. Hung Van Thai, a picture of Davis, a picture of Hung Van Thai, and Hill’s affidavit of service. (Doc.
53-1). For purposes of this motion, the Plaintiffs’ motion is GRANTED. (Doc. 53).
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LVNV in the State Court of Houston County and sent a copy to the Lakeview Apartment,
but Davis did not receive it because he did not reside there. (Id. ¶¶ 44-45).
After Arrow assigned the debt to LVNV, LVNV mailed Davis a letter on May 31,
2013 to notify him that it intended to initiate garnishment proceedings. (Id. ¶¶ 47-48).
Specifically, the letter stated that “a garnishment has been, or will be filed,” that “it will
be served upon [Davis’s employer],” and that it would be filed in the name of “LVNV
Funding LLC FNA Arrow Financial Services LLC.” (Id. ¶ 48). This letter was mailed to
his mother-in-law’s residence where Davis has never resided. (Id. ¶ 49). The Plaintiffs
allege LVNV knew that Davis did not reside at his mother-in-law’s residence and did not
owe the debt. (Id. ¶ 50). Nevertheless, LVNV initiated garnishment proceedings on
June 7, 2013 in the State Court of Fayette County, Georgia, and thereafter Davis’s
employer was served with a summons of continuing garnishment which stated that
Davis owed $21,201.42 plus costs to LVNV. (Id. ¶ 53). Davis’s employer notified him
about the garnishment on June 17, 2013. (Id. ¶ 56). The Plaintiffs allege Davis was
completely unaware of the preceding events until he spoke with his employer. (Id. ¶
46).
On June 20, 2013, Davis called LVNV’s counsel to dispute the validity of the
garnishment proceedings in Fayette County, to inform LVNV that he never had a Wells
Fargo account and never lived at the Lakeview Apartments, and to request them to
investigate the purported Wells Fargo account. (Id. ¶ 61). LVNV maintained that Davis
owed the debt and that the default judgment arising out of the Houston County action
was valid and refused to investigate or release the garnishment. (Id. ¶¶ 62-63).
Thereafter, Davis’s attorney called LVNV’s counsel who maintained Davis owed the

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debt. (Id. ¶ 65). Instead of moving to set aside the default judgment, Davis filed for
bankruptcy to immediately stop the garnishment. (Id. ¶¶ 66, 68, 70-71).
LVNV then “assigned or transferred” the default judgment to Sherman Acquisition
who then “assigned or sold” the judgment to Atlas. (Id. ¶¶ 72-73). The Plaintiffs allege
that “both entities [knew] … Davis never owed the Debt, that neither entity had
documentation to support attempting to collect the supposed Debt, and that the Default
Judgment had been fraudulently obtained.” (Id. ¶ 73). Atlas filed a proof of claim in
bankruptcy on August 30, 2013 “as the purported assignee of Wells Fargo” to collect the
debt from Davis, stated the “basis of its proof of claim was a ‘Credit Card,’” and claimed
Davis owed $23,343.06. (Id. ¶¶ 75-76). The Plaintiffs allege Atlas knew its claim
“lacked substantial justification” and included false information in the proof of claim. (Id.
¶ 76).
B. Procedural Background
Following the bankruptcy proceedings, the Plaintiffs filed this lawsuit. The
Sherman Defendants and Atlas moved to dismiss the Plaintiffs’ complaint primarily on
the ground the Court lacks subject matter jurisdiction pursuant to the Rooker-Feldman
doctrine. (Docs. 20-21). The Defendants argued that the Plaintiffs’ allegations were
effectively a challenge of the default judgment in Houston County. (Id.). In response,
the Plaintiffs adamantly argued that Rooker-Feldman was inapplicable because the
Defendants actually sued a different Calvin Davis in state court. (Docs. 32 at 2; 34 at
1).
However, this argument became problematic when documents surfaced
suggesting a connection between the “real” Calvin Davis and the address for the Calvin

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Davis sued in state court. (Doc. 46-1). The Plaintiffs then reframed their argument to
challenge service of process in state court. (Doc. 56). The Court stayed the case to
allow the Plaintiffs to challenge the default judgment, but the State Court of Houston
County concluded it lacked jurisdiction to hear the Plaintiffs’ motion because of Davis’s
bankruptcy discharge. (Docs. 63; 66-1). Given the evidence that came to light during
the parties’ briefing and during the attempt to set aside the default judgment, the
Plaintiffs asked the Court for permission to amend their complaint, dismiss Greene &
Cooper as a Defendant, and add Arrow as a Defendant. (Doc. 66). The Court granted
these requests. (Doc. 73).
II.

DISCUSSION

A. Motion to Dismiss Standard Pursuant to Fed. R. Civ. P. 12(b)(1)
“A defendant can move to dismiss a complaint under Rule 12(b)(1) for lack of
subject matter jurisdiction by either facial or factual attack.” Stalley v. Orlando Reg'l
Heathcare Sys., Inc., 524 F.3d 1229, 1232 (11th Cir. 2008). “A facial attack on the
complaint requires the court merely to look and see if the plaintiff has sufficiently alleged
a basis of subject matter jurisdiction, and the allegations in his complaint are taken as
true for the purposes of the motion.” Id. at 1232–33 (internal quotations and citation
omitted). A factual attack, however, “challenges the existence of subject matter
jurisdiction using material extrinsic from the pleadings, such as affidavits or testimony.”
Id. at 1233. The Defendants here have introduced material extrinsic from the pleadings
and thus have made a factual attack on the Court’s jurisdiction. The parties have been
given ample opportunity to brief the issue and submit evidence to the Court.

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B. Motion to Dismiss Standard Pursuant to Fed. R. Civ. P. 12(b)(6)
To avoid dismissal pursuant to Fed. R. Civ. P. 12(b)(6), a complaint must contain
sufficient factual matter to “state a claim to relief that is plausible on its face.” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). “At the motion to dismiss stage, all well-pleaded facts are accepted as
true, and the reasonable inferences therefrom are construed in the light most favorable
to the plaintiff.” Garfield v. NDC Health Corp., 466 F.3d 1255, 1261 (11th Cir. 2006)
(internal quotation marks and citation omitted). However, “where the well-pleaded facts
do not permit the court to infer more than the mere possibility of misconduct, the
complaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled to relief.’“
Iqbal, 556 U.S. at 679 (alteration in original) (quoting Fed. R. Civ. P. 8(a)(2)).
“[C]onclusory allegations, unwarranted deductions of facts or legal conclusions
masquerading as facts will not prevent dismissal.” Oxford Asset Mgmt., Ltd. v. Jaharis,
297 F.3d 1182, 1188 (11th Cir. 2002). The complaint must “give the defendant fair
notice of what the ... claim is and the grounds upon which it rests.” Twombly, 550 U.S.
at 555 (alteration in original) (internal quotation marks and citation omitted). Where
there are dispositive issues of law, a court may dismiss a claim regardless of the
alleged facts. Marshall Cty. Bd. of Educ. v. Marshall Cty. Gas Dist., 992 F.2d 1171,
1174 (11th Cir. 1993).
C. Rooker-Feldman Doctrine
The Plaintiffs have asserted claims pursuant to the Fair Debt Collection Practices
Act (“FDCPA”), Georgia’s Racketeer Influenced and Corrupt Organizations (“RICO”)
statute, and Georgia’s Fair Business Practices Act (“GFBPA”), as well as claims for

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intentional infliction of emotional distress, loss of consortium, negligence per se,
attorney’s fees, and punitive damages. Each Defendant argues the Court lacks subject
matter jurisdiction over these claims pursuant to the Rooker-Feldman doctrine.
Rooker-Feldman is a narrow doctrine confined to 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.” Vasquez v. YII Shipping Co., Ltd., 692 F.3d 1192, 1195-96 (11th Cir.
2012) (quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284
(2005)); see also Lance v. Dennis, 546 U.S. 459, 464 (2006). The doctrine operates as
a bar to federal court jurisdiction where claims are “inextricably intertwined” with the
state-court judgment. Alvarez v. Attorney Gen. for Fla., 679 F.3d 1257, 1262-63 (11th
Cir. 2012) (citation omitted). In other words, the doctrine prevents state-court losers
“from seeking what in substance would be appellate review of the state judgment in a
United States district court, based on the losing party’s claim that the state judgment
itself violates the loser’s federal rights.” Johnson v. De Grandy, 512 U.S. 997, 10051006 (1994). However, the doctrine is “inapplicable where the party against whom the
doctrine is invoked was not a party to the underlying state-court proceeding.” Lance,
546 U.S. at 464.
D. Analysis
For the Rooker-Feldman doctrine to apply, the state-court proceedings must
have ended before the federal case was filed. Nicholson v. Shafe, 558 F.3d 1266,
1274-75 (11th Cir. 2009). It is clear the state-court proceedings had ended before this
case was filed, and the Plaintiffs do not challenge this point. In their many briefs, the

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Plaintiffs have raised and raised again a number of arguments against the applicability
of the Rooker-Feldman doctrine. However, in their final pleading on the issue, the
Plaintiffs have distilled their arguments to three: (1) Davis was not a party to the statecourt action because he was not properly served; (2) their claims are independent of the
state-court judgment as they “flow at least in part from” the Defendants’ later conduct;
and (3) preclusion law, rather than Rooker-Feldman, applies and does not bar the
Plaintiffs from bringing their state or federal claims to this Court. (Doc. 66 at 9-10). The
Court addresses these arguments in turn.
1. Whether Davis Was a Party to the State-Court Action
Davis contends that he was not a “state-court loser” because he was never
properly served in the state-court action. Id. at 9. However, a claim of faulty service
does not allow a party to avoid the Rooker-Feldman doctrine. See, e.g., Skit Int’l, Ltd. v.
DAC Techs. of Ark., Inc., 487 F.3d 1154, 1157 (8th Cir. 2007); In re Knapper, 407 F.3d
573, 581 (3d Cir. 2005); Schmitt v. Schmitt, 324 F.3d 484, 487 (7th Cir. 2003). “[S]tate
courts [are] competent to determine their own jurisdictional boundaries,” and Davis
could have raised the faulty service issue to the state court. Schmitt, 324 F.3d at 487.
Citing O.C.G.A. § 9-11-60(a), the Plaintiffs also argue that Rooker-Feldman does
not prevent the Court “from collaterally reviewing the state default judgment for lack of
personal jurisdiction” due to faulty service because pursuant to Georgia law, “[a]
judgment void on its face may be attacked in any court by any person.” (Doc. 66 at 4
(alteration in original) (quoting O.C.G.A. § 9-11-60(a)). However, the Eleventh Circuit
has stated that “[O.C.G.A. § 9-11-60] establishes a method for attacking Georgia state

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court judgments, but only in Georgia state courts.” 4 Rice v. Grubbs, 158 F. App’x 163,
166 (11th Cir. 2005); see also Akin v. PAFEC Ltd., 991 F.2d 1550, 1558 (11th Cir.
1993). Accordingly, the “any court” language in the statute does not include this Court.5
In short, that Davis may not have been properly served does not prevent the
application of the Rooker-Feldman doctrine.
2. Whether the Plaintiffs’ Claims are Independent of the State-Court
Judgment
The Plaintiffs also argue that Rooker-Feldman does not apply because their
claims are independent of the state-court judgment. (Doc. 66 at 9). The necessary
implication is that their claims are not inextricably intertwined with that judgment. See
Goodman ex rel. Goodman v. Sipos, 259 F.3d 1327, 1333-34 (11th Cir. 2001). As
stated, “the Rooker-Feldman doctrine operates as a bar to federal court jurisdiction
where the issue before the federal court was ‘inextricably intertwined’ with the state
court judgment.” Alvarez, 679 F.3d at 1262. “A claim is inextricably intertwined if it
4

The Plaintiffs also cite O.C.G.A. § 9-12-16 to argue that this Court is not prohibited from collaterally
reviewing the state-court judgment that is void. Like O.C.G.A. § 9-11-60(a), this statute provides that any
court can hold a judgment void when the court issuing the judgment had no jurisdiction over the person or
subject matter. O.C.G.A. § 9-12-16. However, for the same reason the Eleventh Circuit held O.C.G.A. §
9-11-60(a) is not a method for federal courts to attack state court judgments, neither is O.C.G.A. § 9-1216 such a method.

5

The Plaintiffs cite to the Third Circuit’s decision in In re James, 940 F.2d 46 (3d Cir. 1991), to support
their argument the Court is permitted to collaterally attack the state-court judgment. (Doc. 66 at 5).
There, the Third Circuit reasoned that while a federal bankruptcy court may not overturn or vacate a
state-court judgment because the bankruptcy court disagrees with the merits of a state court’s decision,
“a federal bankruptcy court may intervene … when the state proceedings” result in a void judgment. In re
James, 940 F.2d at 52. The court reasoned that “[b]ecause a void judgment is null and without effect, the
vacating of such a judgment is merely a formality and does not intrude upon the notion of mutual respect
in federal-state interests.” Id. Thus, the court recognized the void ab initio exception to the RookerFeldman doctrine which allows federal courts to review state-court judgments that are a legal nullity. See,
e.g., In re Pavelich, 229 B.R. 777, 783 (9th Cir. 1999). However, as the Plaintiffs recognize, the Eleventh
Circuit has declined to adopt this exception. (Doc. 56 at 5 n.2). See Ware v. Polk Cty. Bd. of Cty.
Comm’rs, 394 F. App’x 606, 608 (11th Cir. 2010). Further, to the Court’s knowledge, the exception has
only been applied in bankruptcy cases, such as when a state court acts in violation of the bankruptcy
discharge. See, e.g., In re Pavelich, 229 B.R. 777 at 782. This narrow application is “to protect the
dominant federal role in that specialized area of the law” that is bankruptcy. Schmitt, 324 F.3d at 487.
Given this precedent, the Court declines to invoke the void ab initio exception here.
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would effectively nullify the state court judgment, or [if] it [would] succeed[ ] only to the
extent that the state court wrongly decided the issues.” Casale v. Tillman, 558 F.3d
1258, 1260 (11th Cir. 2009) (internal quotation marks and citations omitted). Here, the
Plaintiffs’ claims against Arrow and the Sherman Defendants primarily regard the
proceedings in the State Court of Houston County and the State Court of Fayette
County. The Plaintiffs’ claims against Atlas regard its filing a proof of claim in
bankruptcy court.
a. The claims against Arrow and the Sherman Defendants
The gravamen of the Plaintiffs’ allegations against Arrow and the Sherman
Defendants, specifically LVNV, is a challenge to the debt and to the validity and
propriety of the proceedings and default judgment in the State Court of Houston County
and the corresponding garnishment proceedings in the State Court of Fayette County.
The alleged FDCPA violations are based on Arrow’s filing the Houston County action
and service of process, LVNV’s pursuing the garnishment action, and LVNV’s
communication with Davis and his attorney6 that Davis owed the debt and that LVNV
had a valid judgment against him.7 (Doc. 74, ¶¶ 96-100). The Georgia RICO claims are

6

Even if the Rooker-Feldman doctrine did not bar this claim, the Plaintiffs still have failed to state a claim
based on LVNV’s counsel’s communication with Davis’s attorney given the purpose of the FDCPA is to
protect consumers. See Kropelnicki v. Siegel, 290 F.3d 118, 127 (2d Cir. 2002) (“A review of the
FDCPA's purpose, as explained both in the statute and in the legislative history … leads us to believe that
alleged misrepresentations to attorneys for putative debtors cannot constitute violations of the FDCPA.”);
see also Richmond v. Higgins, 435 F.3d 825, 828 n.4 (8th Cir. 2006) (collecting cases that conclude the
same).

7

The Plaintiffs also allege LVNV violated various provisions of the FDCPA by refusing to investigate the
debt or provide documentation of it. (Doc. 74, ¶¶ 96, 100). Specifically, the Plaintiffs allege LVNV’s
refusal to investigate and provide documentation constitutes harassing, oppressive, and abusive conduct
as well as an unfair or unconscionable means to collect the debt. (Id.). The FDCPA includes a provision
that requires a debt collector to verify a debt should the debtor dispute the debt within 30 days of the debt
collector’s initial communication. See 15 U.S.C. § 1692g(b). However, the Plaintiffs have not alleged that
the debt-verification requirements in this provision had been triggered, that LVNV did not comply with the
notice and validation requirements of § 1692g, or even that LVNV violated § 1692g. Without allegations
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based on Arrow’s and LVNV’s allegedly making false statements in the state-court
proceedings; Arrow’s mailing the complaint, motion for default judgment, and notice of
assignment of judgment filed in Houston County; and LVNV’s telling Davis on the phone
that he owed the debt and that it had a valid default judgment against him. (Id. ¶ 86).
The GFBPA claim is premised on the alleged FDCPA and Georgia RICO violations. (Id.
¶ 104). The intentional infliction of emotional distress claim is based on the Defendants’
“attempt[ ] to collect the fraudulent Debt and the Default Judgment from Calvin Ferrell
Davis.” (Id. ¶ 111). The remaining claims are simply derivative of the FDCPA, Georgia
RICO, and GFBPA claims. In other words, each of these claims, regardless of the legal
theory upon which it is premised, is connected with the state-court judgment and
corresponding garnishment.
If the Court were to accept that Arrow and the Sherman Defendants violated the
above statutes and legal doctrines through their attempt to a collect a debt that Davis
allegedly does not owe and was not properly collected in the state-court proceedings,
the Court “would effectively declare the state court judgment was fraudulently procured
and thus void.” Kropelnicki, 290 F.3d at 129. For the FDCPA claims (and thus the
GFBPA claim and derivative state law claims) to prevail, the Court would have to
conclude that the debt was not properly owed and not properly collected in state court.
For the Georgia RICO claims to prevail, the Court would have to conclude that Arrow
and the Sherman Defendants committed various predicate acts of racketeering activity
during the litigation of the state court action that resulted in a default judgment and
that LVNV’s debt-verification obligations had been triggered, it cannot be said LVNV’s alleged refusal to
investigate or otherwise verify the debt constitutes harassing, oppressive, abusive, unfair, or
unconscionable collection activity. Therefore, even if this part of the Plaintiffs’ FDCPA claim were
independent of the state-court judgment, the Plaintiffs have failed to sufficiently allege a FDCPA claim
premised on this conduct.
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during the corresponding garnishment action and enforcement. Thus, the Court would,
in effect, conclude that the default judgment and corresponding garnishment were
wrongfully obtained and thus void. See Figueroa v. Merscorp, Inc., 766 F. Supp. 2d
1305, 1324 (S.D. Fla. 2011), aff’d, 477 F. App’x 558 (11th Cir. 2012). Indeed, if the
State Court of Houston County had not entered a default judgment against Davis, the
claims premised on the default judgment and corresponding garnishment would cease
to exist.
In sum, it is clear the FDCPA, Georgia RICO, and GFBPA claims and the
derivative claims premised on the allegedly fraudulent service; false filings, mailings,
and communications; and other acts of litigation in state court to collect the debt are a
de facto appeal challenging the validity of the default judgment and corresponding
garnishment and thus are inextricably intertwined with the state-court judgment.8
b. The claims against Atlas
The Plaintiffs allege Atlas violated Georgia RICO and the FDCPA by knowingly
and fraudulently filing a false proof of claim in bankruptcy to collect the debt. (Doc. 74,
¶¶ 86, 73-77, 96-97, 99-100). If the Court were to conclude that Atlas’s proof of claim

8

In their motion to stay and motion to terminate the stay and amend the complaint, the Plaintiffs also
argue their claims are not inextricably intertwined with the state-court judgment because Davis had no
reasonable opportunity to raise his claims in state court. (Doc. 56 at 5-6; 66 at 10 n.6). True, claims are
not inextricably intertwined “where a party did not have a reasonable opportunity to raise his federal claim
in state proceedings.” Casale, 558 F.3d at 1260 (internal quotation marks and citation omitted). But
here, this argument is just a rehash of the Plaintiffs’ argument that Davis was not properly served.
Moreover, Davis had a reasonable opportunity to raise the issues regarding the propriety of the
Defendants’ collection efforts and the validity of the default judgment and corresponding garnishment in
state court. The Plaintiffs acknowledge that Georgia law allows a defendant to set aside a default
judgment at any time if the motion is based on the court’s lack of jurisdiction. See O.C.G.A. §§ 9-11-60(d)
and (f). And “[w]hen garnishment proceedings are based upon a judgment” that is being challenged, the
garnishment may be ordered to be “released and stayed until the validity of the judgment” is resolved.
See O.C.G.A. § 18-4-65. During these proceedings, the state defendant may challenge the conduct of
the state plaintiffs. See Figueroa, 477 F. App’x at 561 (holding the plaintiff had a reasonable opportunity
to raise his RICO claims in state court as evidenced by his arguments in his motions to vacate the
judgment). But here, Davis filed for bankruptcy instead of raising his claims in state court.
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was false and fraudulently filed because Atlas knew the state judgment was wrongfully
obtained and that Davis did not owe the underlying debt, the Court would still, in effect,
conclude the state-court judgment that Davis did owe the debt was erroneous,
wrongfully obtained, and void. See In re Knapper, 407 F.3d 573, 581 (3d Cir. 2005)
(holding that the plaintiff’s attack in bankruptcy on the state-court judgment for lack of
personal jurisdiction due to defective service of process was “inextricably intertwined
with the state-court judgment and thus barred by Rooker-Feldman”). Again, this claim
challenges the validity of the state-court judgment and thus is inextricably intertwined
with that judgment. The Plaintiffs’ “attempt to cloak [their]” claim as an FDCPA
challenge and a predicate act under Georgia RICO does not alter the result. Id. at 585
(Rosen, J., concurring). “Courts must look beyond the form to address the substance of
the claim.” Id. And here, the substance of the FDCPA and Georgia RICO claims—the
collection of an allegedly invalid state-court judgment—is inextricably intertwined with
that judgment, and the Plaintiffs had a reasonable opportunity to challenge the validity
of this judgment and the propriety of creditors’ collection of it in state court.9
The Court is aware of the Eleventh Circuit’s recent opinion in Molina v. Aurora
Loan Servs., LLC, __F. App’x__, 2015 WL 7753215 (11th Cir.). There, the plaintiff’s
“principal claim [was] that the defendants discriminated against her during the loan
modification process” that occurred after the defendants obtained a foreclosure
judgment against her in state court. Id. at *3. The Eleventh Circuit held that this claim
was not barred by the Rooker-Feldman doctrine because the plaintiff had no reasonable
9

Also, it may very well be that the Plaintiffs’ FDCPA claim is precluded by the Bankruptcy Code. See
Simmons v. Roundup Funding, LLC, 622 F.3d 93, 96 (2d Cir. 2010); Walls v. Wells Fargo Bank, N.A., 276
F.3d 502, 510 (9th Cir. 2002); Neal v. Atlas Acquisitions, LLC, 2015 WL 5687785, at *7 (M.D. Fla.);
Townsend v. Quantum3 Group, LLC, 535 B.R. 415, 427-28 (M.D. Fla. 2015); Johnson v. Midland
Funding, LLC, 528 B.R. 462, 470-71 (S.D. Ala. 2015). Cf. Crawford v. LVNV Funding, LLC, 758 F.3d
1254, 1262 n.7 (11th Cir. 2014) (declining to address the issue because the defendants did not raise it).
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opportunity to raise it during the foreclosure proceedings. Id. The discriminatory
conduct that formed the substance of the claim occurred two years after the state-court
proceedings, and the substance of the claim was different from the substance of the
state-court claims. See id. But here, the Plaintiffs’ argument is just a rehash of their
argument that Davis was not properly served and that he did not owe the underlying
debt. The Court recognizes that the conduct at issue—the filing of an allegedly false
proof of claim—occurred subsequent to the state-court judgment. But the substance of
the claim is still that the state-court judgment was erroneous.
In sum, the Plaintiffs’ claims challenge the validity of the default judgment and the
corresponding garnishment and otherwise complain of injuries caused by the state
court. Thus, the Court could not decide in the Plaintiffs’ favor without effectively
deciding that the state court made an erroneous judgment. See Franklin v. Arbor
Station, LLC, 549 F. App’x 831, 833 (11th Cir. 2013) (reasoning the same). This is
precisely what the Rooker-Feldman doctrine seeks to prevent. Even if certain claims
were independent of the state-court judgment, those claims would still be dismissed for
the reasons discussed.
3. Whether Preclusion Law Applies
In their final motion before the Court, the Plaintiffs rather confusingly add that
because their injuries “flow at least in part from” the Defendants’ later conduct,
preclusion law, rather than Rooker-Feldman, applies, and preclusion law does not bar
their claims because O.C.G.A. § 9-11-60(a) permits the Court to collaterally attack the
state-court judgment. (Doc. 66 at 8-10). The Plaintiffs contend that because their
claims are independent of the state-court proceedings and not an attempt to set aside

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the judgment, “state law determines whether the defendant prevails under principles of
preclusion.” (Doc. 66 at 8 (bold, italics, and citation omitted)).
However, as discussed, the Plaintiffs are seeking a de facto appeal challenging
the validity of the default judgment and corresponding garnishment, and thus, their
argument is without merit. See Vasquez, 692 F.3d at 1196 (“The question of whether a
federal court may review factual issues determined by a state court is a question of
collateral estoppel and res judicata, whereas the Rooker-Feldman doctrine is confined
to cases that invit[e] district court review and rejection of judgments.” (alteration in
original) (internal quotation marks and citation omitted)). In any event, the Plaintiff’s
preclusion argument raises the same meritless argument regarding O.C.G.A. § 9-1160(a).
III.

CONCLUSION

For the foregoing reasons, the Defendants’ motions to dismiss are GRANTED.
(Docs. 20; 21). If the Plaintiffs wish to raise new arguments with regard to whether the
claims against Arrow are barred by the Rooker-Feldman doctrine, they shall file a
supplemental brief within fourteen days of this order. Absent any new meritorious
arguments, the Court will dismiss Arrow.
SO ORDERED, this 14th day of December, 2015.
S/ Marc T. Treadwell
MARC T. TREADWELL, JUDGE
UNITED STATES DISTRICT COURT

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