Fedorova et al v. Wells Fargo & Company et al

Filing 23

MEMORANDUM OPINION Signed by the Honorable Samuel Der-Yeghiayan on 5/20/2016: Mailed notice (mw, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ELENA FEDOROVA,

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Plaintiff,
v.
WELLS FARGO & COMPANY, et al.,
Defendants.

No. 16 C 1810

MEMORANDUM OPINION
SAMUEL DER-YEGHIAYAN, District Judge
This matter is before the court on Defendants’ motions to dismiss. For the
reasons stated below, the motions to dismiss are granted.

BACKGROUND
Plaintiff Elena Fedorova (Fedorova) allegedly obtained a mortgage
(Mortgage) for her condominium in 2006. In June 2006 Fedorova allegedly stopped
making payments on the Mortgage, and foreclosure proceedings (Foreclosure
Action) were initiated in Illinois state court. In August 2012, a judgment of
foreclosure was entered in the Foreclosure Action. In February 2013, the sale of the
condominium was approved in the Foreclosure Action. Fedorova then filed various
post-judgment motions in the Foreclosure Action, which were denied by the trial

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court. Fedorova also pursued an appeal in state court which was unsuccessful.
Fedorova then filed the instant action in state court and this action was removed to
federal court in January 2016. Fedorova includes in her pro se amended complaint
various claims involving alleged fraud and violations of federal and state law statutes
brought against certain federal Governmental entities and employees (collectively
referred to as “Government Defendants”) and claims brought against certain private
entites involved in the Mortgage and Foreclosure Action (collectively referred to as
“Private Defendants”). Government Defendants and Private Defendants have filed
motions to dismiss.

LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(1) (Rule 12(b)(1)) requires a court to
dismiss an action when it lacks subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1);
see also Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995)(stating that when
reviewing a motion to dismiss brought under Rule 12(b)(1), the court “must accept as
true all well-pleaded factual allegations, and draw reasonable inferences in favor of
the plaintiff”). When subject matter jurisdiction is not apparent on the face of the
complaint and is contested, “the district court may properly look beyond the
jurisdictional allegations of the complaint . . . to determine whether in fact subject
matter jurisdiction exists.” Sapperstein v. Hager, 188 F.3d 852, 855-56 (7th Cir.
1999)(internal quotations omitted)(quoting United Transportation Union v. Gateway
Western Railway Co., 78 F.3d 1208, 1210 (7th Cir. 1996)). The burden of proof in
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regards to a Rule 12(b)(1) motion is on the party asserting that the court has subject
matter jurisdiction. Id.
In ruling on a motion to dismiss brought pursuant to Federal Rule of Civil
Procedure 12(b)(6) (Rule 12(b)(6)), the court must draw all reasonable inferences
that favor the plaintiff, construe the allegations of the complaint in the light most
favorable to the plaintiff, and accept as true all well-pleaded facts and allegations in
the complaint. Appert v. Morgan Stanley Dean Witter, Inc., 673 F.3d 609, 622 (7th
Cir. 2012); Thompson v. Ill. Dep’t of Prof’l Regulation, 300 F.3d 750, 753 (7th Cir.
2002). A plaintiff is required to include allegations in the complaint that “plausibly
suggest that the plaintiff has a right to relief, raising that possibility above a
‘speculative level’” and “if they do not, the plaintiff pleads itself out of court.”
E.E.O.C. v. Concentra Health Services, Inc., 496 F.3d 773, 776 (7th Cir.
2007)(quoting in part Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007));
see also Morgan Stanley Dean Witter, Inc., 673 F.3d at 622 (stating that “[t]o survive
a motion to dismiss, the complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face,” and that “[a] claim has
facial plausibility when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct
alleged”)(quoting Ashcroft v. Iqbal, 556 U.S. 662 (2009))(internal quotations
omitted).

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DISCUSSION
I. Government Defendants’ Motion to Dismiss
Government Defendants argue that this court lacks jurisdiction over the claims
brought against them. Unless there has been a waiver of immunity, “sovereign
immunity shields the Federal Government and its agencies from suit.” Michigan v.
U.S. Army Corps of Engineers, 667 F.3d 765, 774 (7th Cir. 2011)(internal quotations
omitted)(quoting F.D.I.C. v. Meyer, 510 U.S. 471, 475 (1994)). There is nothing in
the record that would indicate that the federal government has waived its sovereign
immunity in this case. Fedorova argues that the federal government has waived its
sovereign immunity in the Federal Tort Claims Act (FTCA). (Resp. Govt. 5); See
Couch v. United States, 694 F.3d 852, 856 (7th Cir. 2012)(stating that “[t]he FTCA is
a limited waiver of the United States’ sovereign immunity” and that “[i]t is the
exclusive remedy for any tort claim resulting from the negligence of a government
employee acting within the scope of employment”). However, a FTCA claim must
be initiated in federal court. See Alinsky v. United States, 415 F.3d 639, 643 (7th Cir.
2005)(stating that “[t]he FTCA grants federal courts jurisdiction over” certain tort
claims); Abu-Humos v. First Merit Bank, 2015 WL 7710374, at *1 (N.D. Ill.
2015)(explaining that “while common law torts are cognizable under the FTCA, state
courts lack jurisdiction over such claims”). Nor is there an indication that Fedorova
even complied with the administrative exhaustion requirements before seeking to
bring a FTCA claim. See Augutis v. United States, 732 F.3d 749, 752 (7th Cir.
2013)(explaining administrative steps before bringing a FTCA claim in court).
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Although this action has now been removed to federal court, this court merely
acquired derivative jurisdiction upon removal and thus is not prevented from
dismissing this action based upon a lack of subject matter jurisdiction. See Rodas v.
Seidlin, 656 F.3d 610, 615 (7th Cir. 2011)(stating that “[w]hen a case is removed
from state to federal court, the jurisdiction of the latter is said in a limited sense to
derive from the former” and that “[a]ccordingly, [w]here the state court lacks
jurisdiction of the subject matter or of the parties, the federal court acquires none,
although in a like suit originally brought in federal court it would have had
jurisdiction”)(internal quotations omitted)(quoting Minnesota v. United States, 305
U.S. 382 (1939)).
Fedorova also references the Tucker Act, 28 U.S.C. § 1491, as a basis for
jurisdiction. (Resp. Govt. 1). However, even if the Fedorova had pled a valid
Tucker Act claim, based on his claims for damages, the only court with jurisdiction
over such a claim would be the Court of Federal Claims. See United States v.
Norwood, 602 F.3d 830, 833 (7th Cir. 2010)(indicating that if the plaintiff’s “claim
exceeded $10,000, he would have to proceed in the Court of Federal Claims”).
Fedorova also contends that she is bringing claims under 28 U.S.C. § 1983, § 1985,
and § 1986 against Government Defendants for alleged constitutional violations and
other federal statutes. However, there has been now showing that the federal
government has waived its sovereign immunity to any such claims or that
Government Defendants were state actors. See Young v. Sproat, 2016 WL 659657,
at *4 (C.D. Ill. 2016)(stating that the plaintiff could not “bring a § 1983 suit against
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the United States because § 1983 applies to state actors, not federal actor”). Nor are
there even sufficient facts alleged relating to the personal involvement of the
individual Government Defendants to state valid claims against them. See Vance v.
Peters, 97 F.3d 987, 991 (7th Cir. 1996)(stating that “Section 1983 creates a cause of
action based on personal liability and predicated upon fault; thus, liability does not
attach unless the individual defendant caused or participated in a constitutional
deprivation”)(internal quotations omitted)(quoting Sheik-Abdi v. McClellan, 37 F.3d
1240, 1248 (7th Cir.1994)). Therefore, Government Defendants’ motion to dismiss
is granted.

II. Claims Brought Against Private Defendants
Private Defendants argue that the claims brought against them are barred by
the doctrines of res judicata and collateral estoppel. Under the doctrine of res
judicata, also known as claim preclusion, “a final judgment on the merits of an action
precludes the parties or their privies from relitigating issues that were or could have
been raised in that action.” Barr v. Bd. of Trustees of W. Illinois Univ., 796 F.3d
837, 839 (7th Cir. 2015)(internal quotations omitted)(quoting Allen v. McCurry, 449
U.S. 90, 94 (1980)). Under the doctrine of collateral estoppel, also known as issue
preclusion, “once an issue is actually and necessarily determined by a court of
competent jurisdiction, that determination is conclusive in subsequent suits based on
a different cause of action involving a party to the prior litigation.” Carter v. C.I.R.,
746 F.3d 318, 321 (7th Cir. 2014)(internal quotations omitted)(quoting Montana v.
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United States, 440 U.S. 147, 153 (1979)); see also Barrow v. Falck, 11 F.3d 729, 731
(7th Cir. 1993)(stating that the doctrine of collateral “applies only to issues that were
actually litigated and not merely to those that could have been”).
Since the Foreclosure Action occurred in Illinois state court, the court will
apply Illinois state law regarding the doctrines of res judicata and collateral estoppel.
See Bonnstetter v. City of Chicago, 811 F.3d 969, 975 (7th Cir. 2016)(stating that
because the pertinent court proceeding “occurred in an Illinois state court, [the court
applied] Illinois law pertaining to res judicata”); Rose v. Bd. of Election Comm’rs for
City of Chicago, 815 F.3d 372, 374 (7th Cir. 2016)(stating that “[b]ecause the prior
judgment is from an Illinois state court, Illinois preclusion principles apply”). Under
Illinois law, a party seeking to invoke the doctrine of res judicata must show: (1) that
there was “a final judgment on the merits rendered by a court of competent
jurisdiction,” (2) that the prior action was “the same cause of action,” and (3) that the
prior action involved “the same parties or their privies.” Id.; see also Empress
Casino Joliet Corp. v. Johnston, 763 F.3d 723, 727-28 (7th Cir. 2014)(stating that
under Illinois law the doctrine applies when “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 (3) there is an identity of parties or their privies”)(internal quotations
omitted)(quoting River Park, Inc. v. City of Highland Park, 703 N.E.2d 883, 889 (Ill.
1998)).

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A. Final Judgment On the Merits
In the instant action, Private Defendants have shown the state court entered a
final judgment in the Foreclosure Action after considering the merits of the
Complaint to Foreclose Mortgage, and that a judicial sale was subsequently approved
by the court. Although Fedorova asserts in a conclusory fashion that the judgment is
invalid, she has not shown the judgment to be invalid. Fedorova argues that the
judgment was procured by fraud. Juszczyk v. Flores, 777 N.E.2d 454, 456 (Ill. App.
Ct. 2002)(stating that “[b]oth Illinois Appellate and Supreme Court case law have
consistently held that a judgment or order is void . . . where the judgment or order is
procured by fraud”). However, Fedorova has not shown that there was any extrinsic
fraud that would have deprived the state court of jurisdiction in the Foreclosure
Action. See, e.g., First Bank of Lake v. Buck, 2011 IL App (5th) 100398-U, ¶ 13
(stating that “[c]ollateral attacks . . .are limited to the grounds that the rendering court
lacked either subject matter jurisdiction or personal jurisdiction or that the foreign
judgment was procured by extrinsic fraud”). Fedorova also admits in her amended
complaint that she already presented to the Illinois Appellate Court on appeal her
argument that the judgment was invalid because the “case was based on fraud” and
that the argument was rejected by the court. (A. Compl. Par. 103). Thus, a binding
final judgment on the merits was entered in the Foreclosure Action.

B. Identity of Cause of Action
Private Defendants contend that the claims presented in this action are part of
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the same cause of action in the Foreclosure Action in the res judicata context.
Generally, under Illinois law, “different kinds or theories of relief still constitutes a
single cause of action if a single group of operative facts give rise to the assertion of
relief.” River Park, Inc., 703 N.E.2d at 891 (internal quotations omitted)(quoting
Pfeiffer v. William Wrigley Jr. Co., 484 N.E.2d 1187 (Ill. App. Ct. 1985)). The facts
and claims presented in the instant action all relate to the same foreclosure on the
Mortgage and the same group of facts that were the basis for the claims and defenses
presented in the Foreclosure Action.
Private Defendants have shown that in the Foreclosure Action, Fedorova
presented many of her claims in the Foreclosure Action. To the extent that she now
seeks to present new claims and arguments to this court involving the same operative
facts, she has not adequately explained why she was unable to present such claims or
arguments in the Foreclosure Action. For example, Fedorova now argues that
Private Defendants signed a Consent Order with the Board of Governors of the
Federal Reserve System in April 2011, and that a National Mortgage Settlement was
entered in April of 2012. However, Fedorova fails to adequately explain why she
was prevented from raising such arguments in the Foreclosure Action prior to the
approval of the judicial sale in February 2013. Thus, there is an identity of a cause of
action.

C. Identity of the Parties
Private Defendants contend that there is an identity of the parties. The record
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reflects that Fedorova was a party in the Foreclosure Action. Private Defendants
have also shown that there exists privity between them and the plaintiff in the
foreclosure action. Therefore, there is an identity of the parties.
Fedorova is thus barred from presenting her claims against the Private
Defendants in this action. The court also notes that even if Fedorova’s claims
brought against Private Defendants were not barred by the doctrines of res judicata
and collateral estoppel, many of her claims would be dismissed for lack of
jurisdiction due to the fact that no private right of action. Therefore, Private
Defendants’ motion to dismiss is granted.

III. Motion for Leave to File An Amended Complaint
Fedorova requests in response to the instant motion for leave in the alternative
to file an amended complaint. Although “[l]eave to amend a complaint should be
freely given when justice so requires[,] . . . leave may be denied where the
amendment would be futile.” Doe v. Vill. of Arlington Heights, 782 F.3d 911, 919
(7th Cir. 2015)(internal quotations omitted)(quoting Fed. R. Civ. P. 15(a)(2)). As
explained above, the federal government has not waived sovereign immunity and
there are no claims relating to the Foreclosure Action that would fall within the
jurisdiction of this court. Fedorova has also had ample opportunity to litigate her
dispute with Private Defendants in the Foreclosure Action in state court. Fedorova
has not pointed to any new facts or claims that would render a proposed amended
complaint anything other than a futile action. The court also notes that Fedorova was
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already given one opportunity to amend her complaint in state court prior to removal.
Therefore, the motion for leave to file an amended complaint is denied.

CONCLUSION
Based on the foregoing analysis, Defendants’ motions to dismiss are granted
and Fedorova’s motion for leave to file an amended complaint is denied.

___________________________________
Samuel Der-Yeghiayan
United States District Court Judge
Dated: May 20, 2016

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