Medrano v. Ocwen Loan Sericing, LLC et al
Filing
69
MEMORANDUM OPINION AND ORDER. Signed by the Honorable Harry D. Leinenweber on 1/31/2017:Civil case terminated. Mailed notice(wp, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
GUILLERMO R. MEDRANO,
Plaintiff,
v.
Case No. 16 C 898
OCWEN LOAN SERVICING, LLC,
BAYVIEW LOAN SERVICING, LLC,
MRF ILLINOIS, ONE LLC, and
BAYVIEW ASSET MANAGEMENT LLC,
Judge Harry D. Leinenweber
Defendants.
MEMORANDUM OPINION AND ORDER
Before the Court are the Defendants’ Motions to Dismiss
[ECF Nos. 44 and 46].
grants
the
Motions
For the reasons stated herein, the Court
and
dismisses
Medrano’s
Complaint
with
prejudice.
I.
BACKGROUND
Plaintiff Guillermo Medrano (“Medrano”) filed this lawsuit
in early 2016, complaining of conduct that took place after the
Defendants
in
this
case
brought
a
mortgage
foreclosure
against him in the Circuit Court of Cook County.
suit
According to
Medrano, the Defendants – Bayview Asset Management, LLC (“BAM”),
its
wholly-owned
subsidiary,
Bayview
Loan
Servicing,
LLC
(“Bayview”), MRF Illinois One, LLC, Ocwen Financial Corporation
(“Ocwen Financial”), and its wholly-owned subsidiary, Ocwen Loan
Servicing, LLC (“Ocwen”) – engaged in a series of “fraudulent
assignments” of Medrano’s mortgage loan.
Compl.) ¶¶ 37-68, 95-97, 108, and 121.
See, ECF No. 30 (Am.
They also charged him
“bogus” property inspection fees while he was in default.
¶¶ 51, 54, 65-68, 95, 109, 121, and 133-34.
Id.
To benefit from
their alleged fraudulent assignments and assessment of fees, the
Defendants refused to “properly review and approve Plaintiff for
a loan modification.”
Id. ¶¶ 67-70.
Instead, they foreclosed
on and sold Medrano’s mortgaged property.
Medrano contends that the Defendants’ conduct runs afoul of
both federal and state law.
Defendants
violated
the
In particular, he alleges that the
Racketeer
Influence
and
Corruption
Organizations Act (“RICO”) by fraudulently assigning his loan
and
charging
him
fees;
that
Ocwen
violated
the
Real
Estate
Settlement Procedures Act (“RESPA”) by obtaining a foreclosure
judgment against him while he was being reviewed for a loan
modification; and that Ocwen and Bayview discriminated against
him, a Hispanic, by failing to review his application for a loan
modification, thus violating the Equal Credit Opportunity Act
(“ECOA”).
Medrano also brings two causes of action predicated
on state law.
At bottom, the gravamen of Medrano’s Complaint is that the
Defendants
“fraudulently
procured
- 2 -
a
foreclose
[sic]
judgment”
against him.
Am. Compl. ¶¶ 65, 67.
Medrano’s alleged injuries
stem from this foreclosure and the subsequent sale of his home
pursuant to the judgment.
For example, Medrano complains that
he has been harmed “because he has to incur attorney fees to
defend the Foreclosure, his home has been sold, and he has had
the
fees
assessed
to
his
account
based
on
the
Defendants[’]
scheme to defraud and he has loss [sic] equity in his home.”
Id. ¶ 99.
Medrano is at least correct in stating that the Defendants
obtained a foreclosure judgment against him.
On November 24,
2014 – more than a year before Medrano filed his current lawsuit
– the Circuit Court entered a default judgment of foreclosure
and
sale
in
Medrano’s
case.
(“Foreclosure Judgment”).
as
“fully
dispositive
of
See,
ECF
No.
17,
Ex.
A
The court characterized its judgment
the
interest
of
all
defendants,”
including Medrano, and found that the creditors, Defendants in
this case, were owed $199,188.67.
Id. ¶ 2.
In accordance with
the Circuit Court’s order, the mortgaged property was then sold
to satisfy the debt.
On October 28, 2016, while the case before
this Court was pending, the Circuit Court entered a final order
confirming the sale and approving of the distribution of the
proceeds.
See, ECF No. 67, Ex. A (“Order Confirming Sale”).
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Medrano
neither
contested
the
Foreclosure
appealed the Order Confirming Sale.
Judgment
nor
Instead, he complains of
the actions of the parties involved in his mortgage foreclosure
by bringing this federal suit.
II.
As
discussed
subject
matter
below,
ANALYSIS
the
jurisdiction
Court
over
questions
Medrano’s
whether
suit
jurisdictional limitation imposed by Rooker-Feldman.
the
Court
ultimately
concludes
that
it
has
it
has
given
the
Although
jurisdiction,
it
finds that Medrano’s federal claims are barred by res judicata
as a result of the judgment rendered against him in the state
foreclosure case.
It therefore relinquishes jurisdiction over
his state-law claims and dismisses the case in its entirety.
See, Groce v. Eli Lilly & Co., 193 F.3d 496, 501 (7th Cir.
1999).
A.
When
Rooker-Feldman
Jurisdiction
applies
to
a
claim,
district
and
federal appellate courts are divested of their power to address
any issue related to that claim, including res judicata.
Garry v. Geils, 82 F.3d 1362, 1365 (7th Cir. 1996).
See,
The Court
thus first looks to see if Rooker-Feldman bars it from hearing
Medrano’s case.
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Simply put, Rooker-Feldman precludes lower federal courts
from deciding claims that seek review of state-court judgments.
See, e.g., Brown v. Bowman, 668 F.3d 437, 442 (7th Cir. 2012).
As the Supreme Court said in the cases from which the doctrine
derived its name, the United States Supreme Court is the only
federal court that may review such judgments.
See, Rooker v.
Fid. Tr. Co., 263 U.S. 413, 415-16 (1923); D.C. Court of Appeals
v. Feldman, 460 U.S. 462, 482 n.16 (1983).
However, as the
Supreme Court has also explained, Rooker-Feldman is a narrow
doctrine.
See, Exxon Mobil Corp. v. Saudi Basic Indus. Corp.,
544 U.S. 280, 284 (2005).
It strips lower federal courts of
their jurisdiction only where “state-court losers” bring suits
“complaining
of
injuries
caused
by
state-court
judgments
rendered before the district court proceedings commenced.”
Id.
Moreover, the “state-court losers” must be “inviting district
court review and rejection of those [state-court] judgments” in
their federal suits.
Id.
Such invitations are extended both when a plaintiff seeks
to set aside a state-court judgment and when his claims are
“inextricably
intertwined”
Brown, 668 F.3d at 442.
with
that
judgment.
See,
e.g.,
“The determination of whether a federal
claim is ‘inextricably intertwined’ hinges on whether it alleges
that the supposed injury was caused by the state court judgment
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or,
alternatively,
whether
the
federal
claim
alleges
an
independent prior injury that the state court failed to remedy.”
Id.
Moreover,
the
plaintiff
must
have
had
a
reasonable
opportunity to raise the issue in state-court proceedings.
See,
id.; Long v. Shorebank Dev. Corp., 182 F.3d 548, 557-58 (7th
Cir. 1999) (“[A]n issue cannot be inextricably intertwined with
a
state
reasonable
court
judgment
opportunity
to
if
the
raise
plaintiff
the
issue
did
in
not
have
state
a
court
proceedings.”).
In this case, Medrano does not contest that his claims are
“inextricably intertwined” with the Circuit Court’s foreclosure
judgment.
This is because the injuries Medrano complains of –
the attorney fees expended to defend the foreclosure suit, the
debt deemed owing to the Defendants, and the sale of the home to
satisfy that debt – all flow from the court’s judgment.
The Circuit Court determined the amount of the debt and
ordered the sale of the home.
The debt assessment and the loss
of the property are thus injuries caused by the court.
See,
Schuh v. Druckman & Sinel, L.L.P., 2008 U.S. Dist. LEXIS 15079,
at *19-22 (S.D.N.Y. Feb. 29, 2008) (noting that the plaintiffs
“do not allege that the defendants unilaterally commandeered the
title to their home [or] put the property up for auction. . . .
Rather, these events occurred as a result of the judgment of
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foreclosure
being
entered
against
plaintiffs”);
Spencer
v.
Mortg. Acceptance Corp., No. 05 C 356, 2006 U.S. Dist. LEXIS
31668, at *12-15 (N.D. Ill. May 4, 2006) (concluding that the
plaintiff’s claims arose from the foreclosure judgment entered
against her because “her claimed injury in the present matter is
the loss of the Property at a judicial sale”).
As for the attorney’s fees, the Seventh Circuit has said
that in circumstances like these, “[t]he need to litigate was
not a loss independent of the state court’s decision.”
v. Steel, 773 F.3d 884, 886-87 (7th Cir. 2014).
Harold
Medrano here
alleged that the Defendants “fraudulently assigned” his loan,
implying that they did not own the loan when they instituted the
foreclosure suit against him.
Medrano,
like
the
If the allegation is true, then
plaintiff
decision in his favor.”
in
Id.
Harold,
“was
entitled
the
a
Therefore, “[n]o injury occurred
until the state judge ruled against [the plaintiff].”
Furthermore,
to
injuries
caused
by
the
Id.
Circuit
judgment subsume other wrongs Medrano alleged.
Court’s
For instance,
the amount of money that the Circuit Court determined was owed
to the Defendants presumably included the property inspection
fees
that
Medrano
calls
“bogus,”
“improper,”
or
“excessive.”
Similarly, the foreclosure sale that the court ordered mooted
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Medrano’s application for a loan modification and extinguished
any equity he had in the property.
Medrano also had reasonable opportunity to raise the issues
in state court.
For example, Illinois law allows for fraud to
be pleaded as a defense in a foreclosure action.
See, Henry v.
Farmer City State Bank, 808 F.2d 1228, 1235 (7th Cir. 1986)
(“The
Henrys’
substantiated,
allegations
would
have
of
been
fraud
a
and
complete
forgery,
defense
to
if
the
foreclosure proceedings.”); Bartucci v. Wells Fargo Bank N.A.,
No. 14 CV 5302, 2016 U.S. Dist. LEXIS 38864, at *11 (N.D. Ill.
Mar. 24, 2016) (“Plaintiff was entitled to raise any claims as
to fraud in the state foreclosure action.”).
Medrano thus was
able to bring his claim of fraudulent assignments to fight the
foreclosure.
See, e.g., Sheikhani v. Wells Fargo Bank, 526 F.
App’x 705, 707 (7th Cir. 2013) (“[N]o state law prevented a
challenge in the foreclosure proceedings to the validity of the
assignment to Wells Fargo.”).
of
injuries
caused
by
He did not and instead complains
the
foreclosure
here.
In
such
circumstances, the first prong of Rooker-Feldman – invitation to
review and reject a state-court judgment – is satisfied.
Nonetheless,
Medrano
argues
that
Rooker-Feldman
does
not
apply because he “filed the present action while the[] statecourt proceedings were still pending” and Plaintiff “still ha[s]
- 8 -
an appeal pending.”
Medrano’s contention that he has a pending
appeal in state court is puzzling.
There is no appeal on the
record of Medrano’s foreclosure case, pending or otherwise.
It
is true, however, that Medrano commenced this lawsuit before the
state court issued its Order Confirming Sale, even if the suit
was filed after the Foreclosure Judgment.
Illinois
law
is
clear
that
absent
special
certifying
language, a judgment of foreclosure is an interlocutory order
that cannot be appealed.
See, EMC Mortg. Corp. v. Kemp, 367
Ill. Dec. 474, 476 (2012).
This is because “although a judgment
of foreclosure is final as to the matters it adjudicates, a
judgment foreclosing a mortgage, or a lien, determines fewer
than all the rights and liabilities in issue.” Id.
After a
foreclosure judgment is issued, a mortgagor like Medrano still
has the opportunity to redeem the property from the foreclosure
or reinstate the mortgage by “curing all defaults.”
See, ILCS
735 ILCS 5/15-1602, 5/15-1603; HSBC Bank USA, N.A. v. Townsend,
793 F.3d 771, 775 (7th Cir. 2015).
Even after the property has
been sold, the state court still may “vacate the judicial sale
and,
in
rare
cases,
the
underlying
judgment.”
Id.
at
777
(quoting Wells Fargo Bank, N.A. v. McCluskey, 376 Ill. Dec. 438,
445-46 (2013)).
However, the law is not as clear on whether
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interlocutory, nonappealable rulings like foreclosure judgments
are outside of the scope of Rooker-Feldman.
Two Seventh Circuit opinions are in tension with each other
when it comes to this question.
In TruServ Corp. v. Flegles,
Inc., 419 F.3d 584, 591 (7th Cir. 2005), the court held that “an
interlocutory
ruling
does
not
evoke
the
doctrine or preclude federal jurisdiction.”
[Rooker-Feldman]
The holding has
been questioned elsewhere in this circuit, albeit only in dicta.
As Judge Easterbrook said in writing for the court in Harold,
773 F.3d at 885-86, “[t]he principle that only the Supreme Court
can
review
the
decisions
by
the
state
judiciary
in
civil
litigation is as applicable to interlocutory as to final statecourt decisions.”
Id. at 886.
Courts relying on either TruServ or Harold have come to
differing
conclusions
about
whether
a
district
exercise jurisdiction in a case like Medrano’s.
court
may
A vast majority
of courts in our district have leaned on TruServ and found that
Rooker-Feldman does not apply when the federal suits commenced
before the state courts issued the orders confirming sale.
See,
Hodges v. CIT Grp. (In re Hodges), 350 B.R. 796, 801-03 (Bankr.
N.D. Ill. 2006) (“Rooker-Feldman does not deprive this court of
jurisdiction. . . .
The state court had entered a judgment of
foreclosure, true enough. But a judgment of foreclosure does not
- 10 -
end a mortgage foreclosure case in Illinois.”); Vangsness v.
Deutsche Bank Nat’l Tr. Co., No. 12 C 50003, 2012 U.S. Dist.
LEXIS 169388, at *3-5, *8 (N.D. Ill. Nov. 29, 2012); Garavito v.
Suntrust Mortg., Inc., No. 11 C 6056, 2013 U.S. Dist. LEXIS
30192,
at
*3,
*8
(N.D.
Ill.
Mar.
6,
2013);
Andrews
v.
CitiMortgage, Inc., No. 13 C 8513, 2014 U.S. Dist. LEXIS 77114,
at *2-3 (N.D. Ill. June 6, 2014) (Leinenweber, J.); Vazquez v.
J.P. Morgan Chase Bank, N.A., No. 13-cv-04749, 2014 U.S. Dist.
LEXIS 124802, at *10-11 (N.D. Ill. Sep. 8, 2014); Bolden v.
Wells Fargo Bank, N.A., No. 14 C 403, 2014 U.S. Dist. LEXIS
161521,
at
*7
(N.D.
Ill.
Nov.
18,
2014);
Schuller
v.
Am.’s
Wholesale Lender, No. 14 C 4097, 2015 U.S. Dist. LEXIS 119464,
at *6 (N.D. Ill. Sep. 9, 2015); Berry v. Wells Fargo Bank N.A.,
No. 15 C 5269, 2015 U.S. Dist. LEXIS 166660, at *6-7 (N.D. Ill.
Dec. 14, 2015); Lihter v. Pierce & Assocs., No. 16 C 50080, 2016
U.S. Dist. LEXIS 123788, at *5-6 (N.D. Ill. Sep. 13, 2016).
But adherence to Truserv has not been uniform.
Some judges
have found that district courts have no jurisdiction to hear a
case where a foreclosure judgment was issued before the filing
of the federal suit.
See, Carpenter v. PNC Bank, N.A., 633 F.
App’x 346, 347 (7th Cir. 2016); Taylor v. Fannie Mae, 374 F.3d
529, 532-36 (7th Cir. 2004); Byrd v. Homecomings Fin. Network,
407
F.Supp.2d
937,
940-41,
943-44
- 11 -
(N.D.
Ill.
2005).
For
example, in Carpenter, 633 F. App’x at 347, the appellate court
recognized that “Carpenter’s [foreclosure] judgment may not yet
be appealable under state law.”
But relying on Harold, the
court concluded that “that distinction does not help Carpenter
here” and applied Rooker-Feldman to bar her federal suit.
also,
Garavito,
2013
U.S.
Dist.
LEXIS
30192,
at
See
*11-13
(reasoning that “the purposes behind the Rooker-Feldman doctrine
would be served by allowing an Illinois foreclosure judgment to
satisfy the finality requirement” but declining to apply RookerFeldman because of TruServ).
It appears then that whether Rooker-Feldman applies in a
case
like
this
one
is
an
unsettled
issue
in
this
circuit.
Arguments can be made on both sides, but in this Court’s best
judgment, Rooker-Feldman bars the lawsuit here.
the
latest
Seventh
directly on point.
Circuit
opinion
on
the
Carpenter is
issue,
and
it
is
Moreover, the Court is persuaded by the
reasoning behind Judge Easterbrook’s dictum that Rooker-Feldman
should apply to interlocutory and final orders alike:
“A truly
interlocutory decision should not be subject to review in any
court; review is deferred until the decision is final.”
Harold,
773 F.3d at 886 (emphasis in original).
The Court recognizes that it has taken a contrary position
previously.
See, Andrews, 2014 U.S. Dist. LEXIS 77114, at *2-3.
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However, that ruling preceded the issuance of Harold.
having
the
benefit
of
Harold,
the
Court
has
agreement with Judge Easterbrook on this issue.
Since
indicated
its
For instance,
the Court stated in its oral ruling in Frencher v. Caliber Home
Loans, No. 16 C 01550, Dec. 7, 2016, that the disputed issue was
“foreclosed
from
review
doctrine . . . because
by
this
the
Court
state
by
the
Rooker-Feldman
court’s
ruling
was
interlocutory and not subject to review in any court.”
In short, the Court finds that Rooker-Fedlman bars it from
exercising
jurisdiction
in
this
case.
It
thus
dismisses
Medrano’s Complaint with prejudice on FED. R. CIV. P. 12(b)(1)
grounds.
B.
Preclusion
Although the Court concludes that it does not have subject
matter
jurisdiction
in
this
case,
given
the
uncertainty
in
Seventh Circuit case law surrounding the issue, the Court next
considers whether Medrano’s claims are barred by res judicata as
a result of the foreclosure judgment.
Since an Illinois state
court rendered the judgment against Medrano, the Court consults
the preclusion law of Illinois to determine whether res judicata
applies.
See, Arlin-Golf, LLC v. Vill. of Arlington Heights,
631 F.3d 818, 821 (7th Cir. 2011).
Under Illinois law, the
doctrine acts as a bar to subsequent claims when:
- 13 -
“(1) there
was
a
final
judgment
on
the
merits
rendered
by
a
court
of
competent jurisdiction, (2) there is an identity of cause of
action,
and
privies.”
(3)
there
is
an
identity
of
parties
or
their
River Park v. City of Highland Park, 184 Ill. 2d 290,
302 (1998).
Identical
federal
parties
lawsuit
and
or
the
their
privies
state-court
are
present
action.
in
Medrano
this
was
a
defendant in the foreclosure action, and he is the Plaintiff
here.
The Defendants he sues in this case – Bayview, BAM,
Ocwen,
Ocwen
Financial,
and
MRF
Illinois
One
–
were
the
plaintiffs or plaintiffs’ privies in Medrano’s foreclosure case.
Bayview, a wholly-owned subsidiary of BAM, filed the complaint
to
foreclose
on
Medrano’s
property.
Am.
Compl.
¶¶
7,
39.
Bayview then transferred the right to service the loan to Ocwen,
a
wholly-owned
Ex. 8.
subsidiary
of
Ocwen
Financial.
Am.
Compl.,
Ocwen subsequently requested that MRF Illinois One be
substituted as a party plaintiff in Medrano’s foreclosure case.
Id.
The parties in this case thus are identical to those in the
foreclosure action.
In addition, the Circuit Court of Cook County, a court of
undisputed
competent
jurisdiction
in
the
foreclosure
matter,
rendered a final judgment on the merits when it entered the
Order Confirming Sale.
See, Kemp, 367 Ill. Dec. at 476 (holding
- 14 -
that the order confirming sale is a “final and appealable order
in a foreclosure case”).
The fact that the Order Confirming
Sale was issued after Medrano commenced his federal suit does
not put his action outside the scope of res judicata, unlike the
situation with Rooker-Feldman.
See, GASH Assocs. v. Rosemont,
995 F.2d 726, 728 (7th Cir. 1993) (“Equating the Rooker-Feldman
doctrine with preclusion is natural. . . .
But the two are not
coextensive.”); Exxon Mobil, 544 U.S. at 284 (“Rooker-Feldman
does
not
otherwise
doctrine . . .”).
override
or
supplant
preclusion
A court may decline to apply Rooker-Feldman
and yet find that res judicata precludes a case like Medrano’s
where
the
between
order
the
confirming
filing
of
the
the
foreclosure
federal
district court makes its ruling.
lawsuit
sale
and
was
the
issued
time
the
Lihter, a case decided in this
district just last year, did exactly that.
See, Lihter, 2016
U.S. Dist. LEXIS 123788, at *5-7.
Medrano nonetheless argues that “there has been no final
judgment on the merits in the Foreclosure Action because the
time
for
incorrect.
an
appeal
has
not
ended.”
But
this
is
factually
The time for an appeal ended on November 28 of last
year, 30 days from the date of the entry of the Order Confirming
Sale.
See, 735 ILCS 5/2-1401.
There was no appeal filed within
the permissible 30-day period; in fact, there has been no appeal
- 15 -
filed at all by the writing of this memorandum opinion.
Thus,
however unsettled “the law of Illinois [may be] on the question
of whether a pending appeal destroys the claim preclusive effect
of a judgment,” the issue matters not one bit for Plaintiff’s
case.
Rogers v. Desiderio, 58 F.3d 299, 302 (7th Cir. 1995).
In this case, the Order Confirming Sale is the final judgment.
Accordingly, Medrano’s claims are barred by res judicata if
there is an identity of cause of action between those claims and
his foreclosure lawsuit.
To determine whether there is such an
identity, this Court employs the transactional analysis used in
Illinois whereby “separate claims will be considered the same
cause of action for purposes of res judicata if they arise from
a single group of operative facts, regardless of whether they
assert different theories of relief.”
at 311.
which
River Park, 184 Ill. 2d
The claims so considered include those “based on facts
could
have
constituted
a
defense
or
counterclaim
to
a
prior proceeding if the successful prosecution of the second
action would nullify the initial judgment or would impair rights
established in the initial action.”
(internal quotation marks omitted).
Henry, 808 F.2d at 1232
In short, “the law of claim
preclusion in Illinois . . . precludes the sequential pursuit
not only of claims actually litigated, but of those that could
- 16 -
have been litigated.”
Dookeran v. Cty. of Cook, 719 F.3d 570,
576 (7th Cir. 2013) (internal quotation marks omitted).
The
Court
determine
considers
whether
they
Medrano’s
are
barred.
claims
one
Medrano’s
by
RICO
one
to
claim
is
centered on the allegations that the Defendants committed fraud
in handling his mortgage loan.
See, Am. Compl. ¶¶ 65-70 (tiled
“RICO Allegations, Scheme to Defraud”).
But, as evidenced by
the default foreclosure judgment entered against him, Medrano
did not raise any such allegations of fraud in state court.
Under such circumstance, the Seventh Circuit has found that the
plaintiff’s RICO claim is precluded by res judicata.
In
Henry,
808
their mortgage.
Henrys
then
F.2d
at
1230-31,
the
Henrys
defaulted
The bank sued for foreclosure and won. Id.
instituted
suit
in
the
district
court.
on
The
Like
Medrano, they alleged that the bank and others “had engaged in a
[] scheme of racketeering activity to defraud . . . through use
of the mails and interstate wires”.
¶¶ 65-92.
Id. at 1231; Am. Compl.
Their case was dismissed, and the Henrys appealed.
On appeal, the Seventh Circuit found that the district court
should
not
even
have
reached
the
question
plaintiffs stated a cause of action under RICO.
at 1232.
of
whether
the
Henry, 808 F.2d
The Henrys’ RICO claims, held the court, “are barred
by the doctrine of res judicata because they failed to raise
- 17 -
their fraud claims as a defense in the state court mortgage
foreclosure proceedings initiated by the Bank.”
Id.
The Seventh Circuit found the reasoning of Henry equally
applicable
where
a
plaintiff
failed
to
defend
the
previous
action and consequently, had a default judgment entered against
him.
See, Whitaker v. Ameritech Corp., 129 F.3d 952, 957 (7th
Cir. 1997) (“The fact that Whitaker failed to defend her case
does
not
alter
this
analysis
[of
Henry]
because
a
default
judgment in Illinois is a judgment on the merits and has the
same
preclusive
litigation”).
effect
as
Henry
and
a
judgment
Whitaker
resulting
thus
from
teach
that
arduous
where
allegations of fraud “go to the heart” of a previously decided
case and yet the plaintiff did not raise them, the plaintiff is
thereafter precluded from bringing a RICO claim based on such
allegations.
These two cases control here.
In his RICO claim, Medrano
complains that the Defendants “fraudulently procured a foreclose
[sic] judgment” against him.
Such allegations “go to the heart
of what was decided in the state court,” namely that far from
committing fraud, the Defendants were legitimately owed a sum of
money and that Medrano’s house properly was sold to satisfy that
debt.
the
Whitaker, 129 F.3d at 957.
contrary,
including
that
the
- 18 -
Any cognizable argument to
Defendants
were
committing
fraud in pursuing foreclosure against Medrano, should have been
raised in the foreclosure action.
Medrano cannot be allowed to
bring such arguments now “in the disguise of civil RICO claims
in federal court.”
Medrano’s
allegations
Henry, 808 F.2d at 1237.
RESPA
and
underlying
ECOA
both
claims
of
these
fare
no
claims
better.
The
are
the
that
Defendants failed to “properly review” Medrano’s application for
a loan modification and instead foreclosed on and sold his home.
See, Am. Compl. ¶¶ 101-03, 152-53.
raised
such
arguments
in
the
However, Medrano should have
foreclosure
action
since
they
clearly affected whether the Defendants may foreclose on his
home.
He did not.
His claims now are barred by his failure
then.
See, e.g., Bartucci, 2016 U.S. Dist. LEXIS 38864, at *9
(dismissing an ECOA claim when “Plaintiff was entitled to raise
his
HAMP
[Home
Affordable
Modification
Program]
argument”
in
state court but did not); Ruffino v. Bank of Am., N.A., No. 13
C 50124, 2013 U.S. Dist. LEXIS 143151, at *1-4, *10-11 (N.D.
Ill. Oct. 3, 2013) (dismissing a RESPA claim when the plaintiff
alleged that the bank “did not have a right to initiate the
foreclosure
Bank,
FSB,
proceeding
2015
IL
against
App
plaintiff”);
(5th)
140086-U,
Downs
¶ 17
v.
OneWest
(“The
key
allegations in Downs’s lawsuit against the Bank were that the
Bank
violated
the
terms
of
the
- 19 -
mortgage,
did
not
own
the
mortgage,
procedures.
presented)
and
failed
to
follow
proper
to
foreclosure
She could have presented (and logically should have
her
evidence
and
her
arguments
during the foreclosure action. . . .
bother
mortgage
appear
and
contest
the
on
those
matters
However, Downs did not
foreclosure.
.
.
.
The
doctrine of res judicata clearly barred her lawsuit.”).
III.
CONCLUSION
For the reasons stated herein, the Defendants’ Motions to
Dismiss [ECF Nos. 44 and 46] are granted.
Plaintiff’s Complaint
is dismissed with prejudice.
IT IS SO ORDERED.
Harry D. Leinenweber, Judge
United States District Court
Dated: January 31, 2017
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