Heald et al v. Federal Home Loan Mortgage Corporation

Filing 14

ORDER granting 6 Motion to Dismiss for Failure to State a Claim. So Ordered by Judge Paul J. Barbadoro.(jna)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE

Martin and Lucille Heald
v.

Civil No. 13-cv-488-PB
Opinion No. 2014 DNH 113

Federal Home Loan
Mortgage Corporation
MEMORANDUM AND ORDER
In November 2010, Martin and Lucille Heald lost their home
to foreclosure.

The current owner of the home, the Federal Home

Loan Mortgage Corporation (“Freddie Mac”), has served them with
a notice to evict.

In response, the Healds have sued Freddie

Mac seeking both a declaratory judgment that the foreclosure was
invalid and an injunction preventing their eviction.
The Healds challenged the foreclosure in a prior action in
state court that named Wells Fargo as the defendant rather than
Freddie Mac.

Doc. No. 6-7.

In that action, the Healds alleged,

among other things, that Wells Fargo improperly assigned the
note and mortgage to Freddie Mac one day before the foreclosure
sale.

The Healds also claimed that the foreclosure was improper

because Wells Fargo falsely claimed during the sale that it was
being conducted on behalf of Wells Fargo when in fact Freddie

Mac held the note and mortgage.

On July 17, 2012, the superior

court rejected the Healds’ claims, and on February 21, 2013, the
New Hampshire Supreme Court affirmed the superior court’s
ruling.

Doc. Nos. 6-2, 6-8.

The Healds have repackaged their claims from the prior
state court action and seek to reassert them against Freddie
Mac.

Unsurprisingly, Freddie Mac argues that the Healds’ claims

are barred by res judicata or, in the alternative, collateral
estoppel.

I find it more appropriate to analyze the Healds’

claims under collateral estoppel.

See Miller v. Nationstar

Mortg., LLC, 2012 DNH 130, 8.
Collateral estoppel “bars a party to a prior action . . .
from relitigating any issue or fact actually litigated and
determined in the prior action.”
129 N.H. 561, 570 (1987).

Daigle v. City of Portsmouth,

It only precludes the relitigation

“‘of issues actually raised and determined in the earlier
litigation.’”

Miller, 2012 DNH 130, 9 (quoting Morgenroth &

Assocs. v. State, 126 N.H. 266, 270 (1985)).

A successful

collateral estoppel claim requires that (1) the issue subject to
estoppel “must be identical in each action”; (2) the first
action “must have resolved the issue finally on the merits”; and
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(3) “the party to be estopped must have appeared as a party in
the first action, or have been in privity with someone who did
so.”

Daigle, 129 N.H. at 570.

Each of these elements turn on a

more general requirement, that the “party against whom estoppel
is pleaded must have had a full and fair prior opportunity to
litigate the issue or fact in question.”

Id.

The issue subject

to estoppel must have been essential to the first judgment.
Tyler v. Hannaford Bros., 161 N.H. 242, 247 (2010) (citing
Restatement (Second) of Judgments § 27 cmt. h)(1982)).
Healds were party to the first action.

The

I thus consider whether

the issues in each suit are identical and whether the prior suit
resolved the issues on the merits.
The Healds seek to invalidate Freddie Mac’s foreclosure
deed and enjoin their eviction.

They contend that the state

court decisions were the “product of the misrepresentations and
fraudulent conduct” of Wells Fargo, Freddie Mac’s agent during
the foreclosure.

Doc. No. 1-1.

They argue that the illegal

foreclosure makes Freddie Mac’s attempt to evict them an “unfair
and deceptive act[]” in violation of New Hampshire’s Consumer
Protection Statute.

They attempt to differentiate this suit by

emphasizing that the foreclosure proceedings were “the product
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of fraud.”

In a final attempt to escape preclusion, the Healds

argue that their claims could not have been raised in the
original action, filed in January 2011, because Freddie Mac did
not have any interest in the property until it recorded its
assignment and deed in March 2011.
The problem with the Healds’ arguments is that they rely
upon the alleged invalidity of Freddie Mac’s foreclosure, an
issue that was extensively litigated in the New Hampshire
Superior Court, which found that Freddie Mac properly foreclosed
on the property and was thus the lawful owner after the
foreclosure sale.

The Healds appealed the decision to the New

Hampshire Supreme Court, which affirmed the lower court.

The

Healds’ attempt to dodge preclusion by characterizing their
current suit as involving different claims and allegations of
fraud is unavailing.

“That the cause of action is different in

the two cases does not mean that the issues are not identical.”
Tsiatsios v. Tsiatsios, 144 N.H. 438, 442 (1999) (citing
Restatement (Second) of Judgments § 42 cmt. c).

The state

courts expressly discussed Mr. Heald’s allegations of fraud and
the validity of Freddie Mac’s foreclosure given that it occurred
before Freddie Mac recorded its interest in the property.
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Each

of the issues that the Healds now raise has been fully and
finally resolved by the state courts.

In earlier proceedings,

the Healds had a full and fair opportunity to litigate the
validity of Freddie Mac’s foreclosure.

Because these issues

were actually decided by a final judgment on the merits, the
Healds are precluded from bringing these claims again in this
court.

IV.

CONCLUSION

For the reasons discussed above, I grant Freddie Mac’s motion to
dismiss the Healds’ complaint.

Doc. No. 6.

SO ORDERED.

/s/Paul Barbadoro
Paul Barbadoro
United States District Judge
May 21, 2014
cc:

Martin Heald, pro se
Lucille Heald, pro se
Kevin P. Polansky, Esq.
Michael R. Stanley, Esq.

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