Mbongo et al v. JP Morgan Chase Bank, N.A.
Filing
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MEMORANDUM OPINION. Signed by Judge Paul W. Grimm on 8/4/2014. (c/m 8/4/2014 aos, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Southern Division
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FLAUBERT MBONGO, et al.,
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Plaintiffs,
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v.
Civil Case No.: PWG-14-1620
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JP MORGAN CHASE BANK, N.A.,
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Defendant.
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MEMORANDUM OPINION
Plaintiffs, two Maryland homeowners who fell on tough economic times beginning in
2007, requested modification of their mortgages under the federal Home Affordable
Modification Program (“HAMP”).
Defendant, the bank servicing the mortgage, allegedly
engaged in a scheme to entice Plaintiffs to apply for modifications, all the while invoking
acceleration clauses in their mortgages, inter alia, to foreclose on their home. Defendant moves
to dismiss the action as barred by res judicata and, in the alternative, as failing to state a claim.
Finding that the doctrine of claim preclusion acts to bar Plaintiffs’ claims, I will grant
Defendant’s motion and dismiss the case with prejudice.1
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Because I find that res judicata bars the instant claims, I do not need to decide whether
Plaintiffs pleaded their claims sufficiently for purposes of Fed. R. Civ. P. 12(b)(6).
I.
BACKGROUND2
The factual background of this case3 was explained in a previous opinion of this Court
and need not be repeated in detail. See Mbongo v. JP Morgan Chase Bank, N.A., No. PJM-12872, 2013 WL 4052823, at *1 (D. Md. Aug. 9, 2013), aff’d, 552 F. App’x 258 (4th Cir. 2014).
Briefly, Plaintiffs Flaubert Mbongo and Charlotte Dikongue reside in Silver Spring, Maryland
with a home mortgage serviced by JP Morgan Chase Bank, N.A. (“Chase”). Compl. ¶ 7, ECF
No. 1. Previously, Plaintiffs filed a three-count complaint against Chase, as well as another
defendant, based on the alleged mishandling of Plaintiffs’ loan modification requests in a case
that was assigned to the Honorable Peter J. Messitte, a Senior District Judge of this Court. That
complaint sought damages for breach of contract, breach of the implied covenant of good faith
and fair dealing, and promissory estoppel. Mbongo, 2013 WL 4052823, at *2–4. In granting
defendants’ motion for summary judgment, Judge Messitte sympathized with the hardship
alleged by Plaintiffs, but held, “Plaintiffs have had their day in court on the record presently
before it and the Court is not inclined to extend this case any further. Any cause of action
predicated on the facts in this matter will be dismissed with prejudice.” Id. at *5. Plaintiffs
noted a timely appeal and the Fourth Circuit affirmed. Mbongo, 552 F. App’x 258.
Less than two months after the Fourth Circuit’s decision, Plaintiffs filed the instant fivecount complaint, predicated on the same factual matter as the previous complaint but setting
forth different causes of action and alleging facts not included previously. See Compl. The
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For purposes of considering a motion to dismiss, this Court accepts the well-pleaded facts that
Plaintiffs have alleged in their complaint as true. See Aziz v. Alcolac, 658 F.3d 388, 390 (4th Cir.
2011).
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Which included actions by the Defendant characterized by Judge Messitte of this Court as
“illustrat[ing] the perils of pro se plaintiffs attempting to navigate murky legal waters. Plaintiffs
may well have lived through the mishandling of their request for relief under HAMP at the hands
of [Chase and Wells Fargo].” See Mbongo v. JP Morgan Chase Bank, N.A., No. PJM-12-872,
2013 WL 4052823, at *4 (D. Md. Aug. 9, 2013), aff’d, 552 F. App’x 258 (4th Cir. 2014).
2
complaint seeks damages for violations of the Maryland Unfair or Deceptive Trade Practices
Act, Md. Code Ann., Com. Law II § 13-301; fraudulent misrepresentation; fraud; the DoddFrank Act, 12 U.S.C. §§ 5536, 5564–5565; and the Fair Credit Reporting Act, 15 U.S.C. § 1681.
Id. Chase has moved to dismiss, ECF No. 7; and filed a supporting memorandum, ECF No. 7-1;
Plaintiffs filed an opposition, ECF No. 13; and Chase has replied, ECF No. 14. A hearing is
unnecessary because the issues are presented adequately in the filings. See Loc. R. 105.6 (D.
Md. 2014).
II.
STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b)(6) provides for “the dismissal of a complaint if it
fails to state a claim upon which relief can be granted.” Velencia v. Drezhlo, No. RDB-12-237,
2012 WL 6562764, at *4 (D. Md. Dec. 13, 2012). This Rule’s purpose “‘is to test the sufficiency
of a complaint and not to resolve contests surrounding the facts, the merits of a claim, or the
applicability of defenses.’” Id. (quoting Presley v. City of Charlottesville, 464 F.3d 480, 483
(4th Cir. 2006)). To that end, the Court bears in mind the requirements of Rule 8, Bell Atlantic
Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009) when
considering a motion to dismiss pursuant to Rule 12(b)(6). Specifically, a 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)(2), and must state “a plausible claim for relief,” as “[t]hreadbare recitals of
the elements of a cause of action, supported by mere conclusory statements, do not suffice,”
Iqbal, 556 U.S. at 678–79. See Velencia, 2012 WL 6562764, at *4 (discussing the standard from
Iqbal and Twombly). “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.” Iqbal, 556 U.S. at 663. When ruling on such a motion, the Court must
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“accept the well-pled allegations of the complaint as true,” and “construe the facts and
reasonable inferences derived therefrom in the light most favorable to the plaintiff.” Ibarra v.
United States, 120 F.3d 472, 474 (4th Cir. 1997).
That said, “‘factual allegations must be enough to raise a right to relief above a
speculative level.’” Proctor v. Metro. Money Store Corp., 645 F. Supp. 2d 464, 472–73 (D. Md.
2009) (quoting Twombly, 550 U.S. at 545). Particularly, the Court is not required to accept as
true “a legal conclusion couched as a factual allegation,” Papasan v. Allain, 478 U.S. 265, 286
(1986), or “allegations that are merely conclusory, unwarranted deductions of fact or
unreasonable inferences,” Veney v. Wyche, 293 F.3d 726, 730 (4th Cir. 2002) (citation omitted).
Additionally, a plaintiff fails to state a claim where the allegations on the face of the complaint
show that an affirmative defense would bar any recovery. Jones v. Bock, 549 U.S. 199, 214–15
(2007) (citing Fed. R. Civ. P. 8(c)); see Brooks v. City of Winston-Salem, 85 F.3d 178, 181 (4th
Cir. 1996) (noting that dismissal is proper “when the face of the complaint clearly reveals the
existence of a meritorious affirmative defense.”).
“Matters outside of the pleadings are generally not considered in ruling on a Rule 12
motion.” Williams v. Branker, 462 F. App’x 348, 352 (4th Cir. 2012). However, “when a
defendant attaches a document to its motion to dismiss, ‘a court may consider it in determining
whether to dismiss the complaint [if] it was integral to and explicitly relied on in the complaint
and [if] the plaintiff[] do[es] not challenge its authenticity.’” Am. Chiropractic Ass’n v. Trigon
Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004) (quoting Phillips v. LCI Int’l Inc., 190 F.3d
609, 618 (4th Cir. 1999) (emendations in original)). In the Fourth Circuit, documents referenced
and relied upon by the plaintiff can be considered without converting a motion to dismiss into a
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motion for summary judgment. See Sec’y of State for Defence v. Trimble Navigation Ltd., 484
F.3d 700, 705 (4th Cir. 2007); HQM, Ltd. v. Hatfield, 71 F. Supp. 2d 500, 502 (D. Md. 1999).
Plaintiffs are proceeding pro se and their complaint is to be construed liberally. See
Haines v. Kerner, 404 U.S. 519, 520 (1972). However, liberal construction does not absolve
Plaintiffs from pleading plausible claims. See Holsey v. Collins, 90 F.R.D. 122, 128 (D. Md.
1981) (citing Inmates v. Owens, 561 F.2d 560, 562–63 (4th Cir. 1977)). As stated by the Fourth
Circuit,
It is neither unfair nor unreasonable to require a pleader to put his complaint in an
intelligible, coherent, and manageable form, and his failure to do so may warrant
dismissal. Corcoran v. Yorty, 347 F.2d 222, 223 (9th Cir.), cert. denied, 382 U.S.
966 (1965); Holsey v. Collins, 90 F.R.D. 122, 128 (D. Md. 1981). District courts
are not required to be mind readers, or to conjure questions not squarely presented
to them. Beaudett v. City of Hampton, 775 F.2d 1274, 1278 (4th Cir. 1985), cert.
denied, 475 U.S. 1088 (1986).
Harris v. Angliker, 955 F.2d 41, 1992 WL 21375, at *1 (4th Cir. 1992) (per curiam).
III.
DISCUSSION
The primary argument put forward by Chase is that Plaintiffs’ claims are barred by the
doctrine of res judicata. Def.’s Mem. 6–8. The parties agree that Maryland law controls the
question of res judicata in diversity actions.4 Id. at 6; Pl.’s Opp’n 3. However, “federal, not
state, law determines the preclusive effect of a prior federal judgment,” including actions where
“a federal court sits in diversity or has some other basis of jurisdiction.” Shoup v. Bell & Howell
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The complaint’s jurisdictional statement does not specify the basis for this Court’s jurisdiction,
whether federal question jurisdiction under 28 U.S.C. § 1331 or diversity jurisdiction
under § 1332. It appears that Plaintiffs intended to invoke this Court’s diversity jurisdiction
because the complaint’s jurisdictional statement cites Maryland law, Compl. ¶¶ 10–11, the
parties agree that Maryland law applies, Def.’s Mem. 6; Pl.’s Opp’n 3, and complete diversity
exists, Compl. ¶¶ 7–9. But, as noted above, Plaintiffs bring claims under several federal statutes
that would trigger this Court’s federal question jurisdiction. At this point, the distinction is
without a difference because federal law controls the question of res judicata in either event, as
explained below.
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Co., 872 F.2d 1178, 1179 (4th Cir. 1989) (internal citations omitted). “Res judicata, also known
as claim preclusion, bars a party from relitigating a claim that was decided or could have been
decided in an original suit.” Laurel Sand & Gravel Co. v. Wilson, 519 F.3d 156, 161 (4th Cir.
2008) (citing Pueschel v. United States, 369 F.3d 345, 355 (4th Cir. 2004)). “Generally, claim
preclusion occurs when three conditions are satisfied: 1) the prior judgment was final and on the
merits . . .; 2) the parties are identical, or in privity, in the two actions; and, 3) the claims in the
second are based upon the same cause of action involved in the earlier proceeding.” First Union
Com. Corp. v. Nelson, Mullins, Riley & Scarborough (In re Varat Enters.), 81 F.3d 1310, 1315
(4th Cir. 1996) (citing Kenny v. Quigg, 820 F.2d 665, 669 (4th Cir. 1987)). For the third prong,
[t]he test for deciding “whether the causes of action are identical for claim
preclusion purposes is whether the claim presented in the new litigation ‘arises
out of the same transaction or series of transactions as the claim resolved by the
prior judgment.’” Pittson Co. v. United States, 199 F.3d 694, 704 (4th Cir. 1999).
“Newly articulated claims based on the same [transactional] nucleus of facts may
still be subject to a res judicata finding if the claims could have been brought in
the earlier action.” Tahoe Sierra Pres. Council v. Tahoe Reg’l Planning Agency,
322 F.3d 1065, 1078 (9th Cir. 2003).
Laurel Sand, 519 F.3d at 162 (emendation in original) (emphasis added).
The subject matter of Plaintiffs’ instant complaint indisputably is covered by their
previous complaint: both allege improper conduct by Chase in refusing to modify Plaintiffs’
mortgage under HAMP.
See Compl.
The only substantive difference between Plaintiffs’
previous lawsuit and the present suit is the addition of four declarations as exhibits to the
complaint. Walker Decl., Compl. Ex. 7, ECF No. 1-7; Stillwell Decl., Compl. Ex. 8, ECF No. 18; Penaloza Decl., Compl. Ex. 9, ECF No. 1-9; Moynihan Decl., Compl. Ex. 10, ECF No. 1-10.
These declarations were filed in “another case in California” and obtained by Plaintiffs to
support their claims that Chase systematically was engaging in “illegal and deceptive practices.”
See Compl. ¶ 39. Each declarant appears to agree that “Chase management . . . trained and
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instructed employees to delay and encumber the loan modification process” and that “[t]he
company’s ‘ferris wheel’ system was used to delay, obstruct, and reject loan modification
applicants.” Walker Decl. ¶ 6; accord Stillwell Decl. ¶¶ 5–6 (same); Penaloza Decl. ¶¶ 5–6
(same); Moynihan Decl. ¶¶ 5–6 (same).
However, Chase correctly points out that the
declarations have no relation to Plaintiffs’ case other than purportedly evidencing that a single
Chase processing center in California may have engaged in unethical mortgage modification
schemes with respect to certain California plaintiffs. Def.’s Mem. 3–4. And, in any event,
Chase is correct that the declarations do nothing to prevent the application of res judicata to
Plaintiffs’ claims. Id. at 8. Plaintiffs advance two arguments to save their claims from res
judicata: (1) that the previous complaint was dismissed without prejudice, which allows them to
file a new suit, and (2) that only state judgments receive preclusive effect for the purposes of res
judicata.
Plaintiffs’ first claim simply is false. In its previous opinion, this Court ruled that “[a]ny
cause of action predicated on the facts in this matter will be dismissed with prejudice.” Mbongo,
2013 WL 4052823, at *5 (emphasis added).
Second, Plaintiffs are incorrect that only state court judgments can have preclusive effect.
As the Fourth Circuit has ruled,
While state law certainly controls the rights and duties of the parties in a federal
action founded upon diversity of citizenship, Erie R. Co. v. Tompkins, 304 U.S. 64
(1938), this circuit has recognized that “whether a federal court sits in diversity or
has some other basis of jurisdiction, questions of the effect and scope of its
judgment involve the power of the federal tribunal itself, and are not varied
merely because state rules of decision underlie the judgment.” Harnett v.
Billman, 800 F.2d 1308, 1312 (4th Cir. 1986); see also Firemen’s Fund Ins. Co. v.
Int’l Market Place, 773 F.2d 1068, 1069 (9th Cir. 1985); Precision Air Parts, Inc.
v. Avco Corp., 736 F.2d 1499, 1503 (11th Cir. 1984); Hunt v. Liberty Lobby, Inc.,
707 F.2d 1493, 1497 (D.C. Cir. 1983). The judgment of a federal court is no less
a federal judgment because it was rendered in diversity. “Federal law determines
the effects under the rules of res judicata of a judgment of a federal court,”
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Restatement (Second) of Judgments § 87 (1982), just as in a state court the law of
the state in which the judgment was rendered determines the preclusive effect a
federal court must give the judgment. Migra v. Warren City Sch. Dist. Bd. of Ed.,
465 U.S. 75, 81 (1984). Any other result would consign the effect of federal
judgments to the uncertainties of state law in whatever jurisdiction a subsequent
suit happened to be brought.
Shoup, 872 F.2d at 1179–80. Therefore, nothing in Judge Messitte’s prior ruling would prevent
it from having preclusive effect.
As to the merits of the res judicata question, I find that Plaintiffs’ claims are barred.
“[T]wo of the elements for the application of res judicata are not in dispute.” Pl.’s Opp’n 3.
There is no question that the parties in this action are the same as the parties in the previous
action or that summary judgment in defendants’ favor constituted a judgment on the merits. For
the third prong, although Plaintiffs allege different causes of action in this complaint, that does
not defeat claim preclusion if the new causes of action could have been brought in the earlier
case. See Laurel Sand, 519 F.3d at 162 (quoting Tahoe Sierra, 322 F.3d at 1078). In the Fourth
Circuit,
we follow the “transactional” approach when considering whether causes of
action are identical: “As long as the second suit ‘arises out of the same transaction
or series of transactions as the claim resolved by the prior judgment,’ the first suit
will have preclusive effect.” Ohio Valley Envtl. Coal. v. Aracoma Coal Co., 556
F.3d 177, 210 (4th Cir. 2009) (citation omitted). Under this transactional
approach, res judicata will bar a “newly articulated claim[]” if it is based on the
same underlying transaction and could have been brought in the earlier action.
See Laurel Sand & Gravel, Inc. v. Wilson, 519 F.3d 156, 162 (4th Cir. 2008).
Clodfelter v. Republic of Sudan, 720 F.3d 199, 210 (4th Cir. 2013). The underlying transaction
in this case is Chase’s handling of Plaintiffs’ application for a “mortgage modification plan under
the federal Home Affordable Modification Program (HAMP).” Mbongo, 552 F. App’x 258. All
claims regarding Plaintiffs’ 2010–11 attempts to modify their home mortgage with Chase and
Wells Fargo Bank, N.A.—the defendants in their previous lawsuit—were dismissed with
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prejudice by this Court. Mbongo, 2013 WL 4052823, at *5. And, Plaintiffs have not presented
any reason why the claims they assert in this suit were not available at that time. See Clodfelter,
720 F.3d at 210. Therefore, the instant claims, which seek damages for the same allegedly
illegal conduct regarding Plaintiffs’ requests for mortgage modifications, see Compl. 17–18, are
precluded and this case must be dismissed.5
IV.
CONCLUSION
For the reasons explained above, Chase’s Motion to Dismiss, ECF No. 7, will be
GRANTED by separate order.
Dated: August 4, 2014
/S/
Paul W. Grimm
United States District Judge
jwr
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Additionally, each of the four new declarations pre-dates Plaintiffs’ previous complaint, which
was filed in the Circuit Court for Montgomery County, Maryland, on February 3, 2012. See
Compl., ECF No. 2 (Civ. Case No. PJM-12-872); Penaloza Decl. ¶ 9 (dated October 11, 2010);
Walker Decl. ¶ 9 (dated November 29, 2010); Moynihan Decl. ¶ 10 (dated December 11, 2010);
Stillwell Decl. ¶ 9 (dated April 26, 2011). The remaining factual allegations in the instant
complaint are substantially identical to the previous action.
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