Downs v. Indy Mac Mortgage Services, FSB et al

Filing 8

ORDER DISMISSING CASE. Downs' renewed motion to proceed IFP is denied. Downs' amended complaint is dismissed and she is not granted leave to amend. Downs claims under the FDCPA are dismissed without prejudice. Downs remaining claims are dismissed with prejudice. The Clerk is instructed to enter judgment accordingly and close the file.Signed by Chief Judge David R. Herndon on 9/13/2013. (mtm)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
KIM DOWNS,
Plaintiff,
v.
INDY MAC MORTGAGE
SERVICES, FSB, et al.,
Defendant.

Case No. 13-cv-858-DRH-DGW
MEMORANDUM & ORDER

HERNDON, Chief Judge:
I.

Introduction

Plaintiff Downs filed a civil suit on August 19, 2013 (Doc. 2). The Court
previously denied Downs’ motion for leave to proceed in forma pauperis (IFP),
instructing her to file an amended complaint by September 23, 2013 (Doc. 5).
Now before the Court are Downs’ motion for declaratory judgment (Doc. 6) and
her amended complaint (Doc. 7), which the Court construes as a renewed motion
for leave to proceed IFP. For the reasons stated below, the Court denies her leave
to proceed IFP, dismisses her amended complaint, and does not grant Downs
leave to file a second amended complaint.

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II.

Law and Application

By granting a motion for pauper status, a court authorizes a lawsuit to
proceed without prepayment of fees. The Prison Litigation Reform Act (“PLRA”)
significantly changed the district court’s responsibilities in reviewing pro se
complaints and in forma pauperis motions. The Seventh Circuit has clarified that
the PLRA “changed § 1915 not only for cases brought by prisoners, but in some
respect for all indigent litigants.” Hutchinson v. Spink, 126 F.3d 895, 899 (7th
Cir. 1997).
Under the PLRA, the Court must screen any indigent’s complaint (those
filed by prisoners and non- prisoners alike) and dismiss the complaint if (a) the
allegation of poverty is untrue, (b) the action is frivolous or malicious, (c) the
action fails to state a claim upon which can be granted, or (d) the action seeks
monetary relief against a defendant who is immune from such relief. 28 U.S.C. §
1915(e)(2). Moreover, FEDERAL RULE

OF

CIVIL PROCEDURE 12 directs that, “[i]f the

court determines at any time that it lacks subject-matter jurisdiction, the court
must dismiss the action.” Fed. R. Civ. P. 12(h)(3).
A claim is legally frivolous when it lacks an arguable basis either in law or
in fact. Denton v. Hernandez, 504 U.S. 25, 31 (1992); Neitzke v. Williams, 490
U.S. 319, 325 (1989). Thus, a court may dismiss a claim as frivolous where it is
based on an indisputably meritless legal theory or where the factual contentions
are clearly baseless. Neitzke, 490 U.S. at 327.
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To avoid dismissal for failure to state a claim, the complaint must contain a
“short and plain statement of the claim showing that the pleader is entitled to
relief.” Fed. R. Civ. P. 8(a). A complaint must plead “enough facts to state a claim
to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 570 (2007). A complaint is plausible on its face “when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). The Court is obligated to accept factual allegations as true, see Smith
v. Peters, 631 F.3d 418, 419 (7th Cir. 2011), and must liberally construe the
allegations of a pro se complaint when evaluating a claim’s plausibility. See
Rodriguez v. Plymouth Ambulance Serv., 577 F.3d 816, 821 (7th Cir. 2009).
Unlike

state

courts,

federal

courts

can

only

entertain

“cases

or

controversies” that are “authorized by Article III of the Constitution and the
statutes

enacted

by

Congress

pursuant

thereto.” Buchel–Ruegsegger

v.

Buchel, 576 F.3d 451, 453 (7th Cir. 2009) (quoting Bender v. Williamsport Area
Sch. Dist., 475 U.S. 534, 541 (1986)). Due to the limited nature of federal judicial
power, district courts have a duty to evaluate subject-matter jurisdiction—even if
the parties do not raise this issue—before reaching the merits of a case. See id.
Assuming the truth of Downs’ factual allegations, her amended complaint
arises from a recent judgment of foreclosure entered against her in state court.
Generally, Downs alleges she entered into a mortgage contract in 2006. In 2009,
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she entered into a loan modification mortgage agreement with defendant Indy Mac
Mortgage Services (“Indy Mac”) and Quicken Loans. Ten days later, Indy Mac
signed a business asset purchase agreement with One West Bank. At this point,
Downs continued to make her loan payments as regularly scheduled. Five months
later, Downs’ monthly payment went from $1,460.01 to $2,660.00. Downs
withheld payment of the increased mortgage payments because Indy Mac and One
West Bank told Downs they were “looking into the matter.” Subsequently, One
West Bank filed foreclosure proceedings against Downs. The State court entered
default judgment against Downs. Downs hired attorney Charles Stegmeyer
(“Stegmeyer”) to persuade the court to “reconsider” the default judgment.
Stegmeyer was unsuccessful. Downs’ appeal was “denied.” Downs’ bankruptcy
proceedings are pending (Doc. 7, pp. 3-6).
On the basis of the above, Downs brings Count One for “breach of contract”
against Indy Mac and Quicken Loans, basically arguing Indy Mac’s agreement with
One West Bank constitutes a breach of contract with Downs (Doc. 7, p. 6). In a
very similar vein, Downs’ Count Two alleges Indy Mac, Quicken Loans, and One
West Bank “[c]onspir[ed] to deprive [Downs] of her original contract and property
rights,” which amounts to “conversion.” She also states the defendants intended
to deprive Downs of her due process rights under the Fifth and Fourteenth
Amendments, violated 42 U.S.C. § 1983, and the Fair Debt Collections Practices
Act (“FDCPA”), 15 U.S.C. § 1692e. Finally, Count Three alleges defendants One
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West Bank, Indy Mac, and Quicken Loans, “illegal[ly] invoked State court
jurisdiction” with the intent to deprive Downs of “constitutional rights to her
property.” As to Stegmeyer, it appears Downs brings a malpractice action against
him (Doc. 7-1). Downs has also filed a motion for declaratory judgment and
injunctive relief. While the Court is frankly unsure exactly what sort of injunctive
relief Downs seeks, it appears she asks that the Court stay the foreclosure
proceedings against her.
The Court must first address the threshold issue of jurisdiction. Subject
matter jurisdiction of federal district courts is limited to actions raising questions
under the Constitution, laws, or treaties of the United States, 28 U.S.C. § 1331,
and cases in which there is diversity of citizenship, 28 U.S.C. § 1332. Downs’
amended complaint does not allege that she and defendants are citizens of
different states. The Court previously informed Downs that her initial complaint
did not adequately allege diversity of citizenship. The Court sees no reason to
believe that leave to file a second amended complaint would result in adequate
allegations of diversity.
As for federal question jurisdiction, 28 U.S.C. § 1331, Downs cites 42
U.S.C. § 1983 and the FDCPA. 1 “To state a claim under § 1983, a plaintiff must
allege the violation of a right secured by the Constitution and laws of the United

1

Downs’ introduction to her amended complaint additionally cites numerous statutes that the
Court will not specifically analyze. They are not listed in the body of her amended complaint and
clearly do not offer her the relief she seeks. See 42 U.S.C. §§ 1985, 1986, 1988, and 31 U.S.C. §
3729.

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States, and must show that the alleged deprivation was committed by a person
acting under color of state law.” West v. Atkins, 487 U.S. 42, 48 (1988). Downs
simply cannot allege a violation of § 1983 on the basis of her alleged mortgage
contract dispute or default judgment entered against her in state court. Further,
as to Downs’ citation to the FDCPA, she vaguely alleges defendants made “false
writing and misleading statements.” Such conclusory allegations are not sufficient
to state a claim under the FDCPA. Further, under the FDCPA, defendants would
have to be debt collectors as opposed to creditors. Downs has not alleged facts
demonstrating defendants were debt collectors. See Schlosser v. Fairbanks
Capital Corp., 323 F.3d 534, 536 (7th Cir. 2003).
Finally, it is clear to the Court that at the heart of Downs’ claims is her
desire that this Court hold the state court judgment of foreclosure invalid. To this
extent, the Rooker-Feldman doctrine divests this Court of jurisdiction over
Downs’ claims. See Reed v. Makowiecki, 448 Fed. App’x. 613, 615 (7th Cir.
2011) (lawsuit seeking review of state-court foreclosure judgment squarely fits
within category of “cases brought by state-court losers complaining of injuries
caused by state-court judgments rendered before the district court proceedings
commenced,” which a federal court cannot review, despite plaintiffs’ attempt to
characterize suit as a civil rights action) (citation omitted); Crawford v.
Countrywide Home Loans, Inc., 647 F.3d 642, 646-47 (7th Cir. 2011).

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III.

Conclusion

For the reasons stated above, Downs has not stated a claim upon which the
Court can grant relief and she has not met her burden of demonstrating subjectmatter jurisdiction exists over her claims. Accordingly, Downs’ amended
complaint, which the Court construes as a renewed motion for leave to proceed
IFP, is DENIED (Doc. 7). Downs’ motion for declaratory judgment is DENIED.
Her claims are dismissed under 28 U.S.C. § 1915(e)(2)(B) and Fed. R. Civ. P.
12(h)(3). Downs is not granted leave to amend. Downs’ claims under the FDCPA
are dismissed without prejudice. Downs’ remaining claims are dismissed with
prejudice. The Clerk is instructed to enter judgment accordingly and close the file.

IT IS SO ORDERED.
Signed this 13th day of September, 2013.

Digitally signed
by David R.
Herndon
Date: 2013.09.13
15:43:45 -05'00'
Chief Judge
United States District Court

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