HARRIS v. WELLS FARGO BANK, N.A. et al

Filing 13

OPINION. Signed by Judge Esther Salas on 8/28/17. (DD, )

Not for Publication
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
MARCIA A. HARRIS,
Plaintiff,
Civil Action No. 16-3147 (ES) (JAD)
v.
OPINION
WELLS FARGO BANK, N.A.;
WORLD SAVINGS BANK, FSB;
WACHOVIA MORTGAGE, FSB;
UNKNOWN JOHN DOES;
UNKNOWN JANE DOES,
Defendants.
SALAS, DISTRICT JUDGE
I.

INTRODUCTION
Pro se Plaintiff Marcia A. Harris brings this action against Defendants Wells Fargo Bank,

N.A., World Savings Bank, FSB (“World”), and Wachovia Mortgage FSB (“Wachovia
Mortgage”) (collectively, “Wells Fargo”) 1 in connection with a residential mortgage loan
transaction and foreclosure action. Pending before this Court is Wells Fargo’s Motion to Dismiss
Plaintiff’s Amended Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and
12(b)(6). (D.E. No. 9, (“Def. Mov. Br.”)). The Court has considered the parties’ submissions and
resolves Wells Fargo’s motion without oral argument under Federal Rule of Civil Procedure 78(b).
Because the Entire Controversy Doctrine, res judicata, and collateral estoppel bar Plaintiff’s

1

World was the original mortgagee and note holder. (See Def. Mov. Br. at 2). According to Wells Fargo,
World changed its name to Wachovia Mortgage as of December 31, 2007. (Id.) Wachovia Mortgage was then
acquired and merged into Wells Fargo. (Id.)

Amended Complaint, the Court GRANTS Wells Fargo’s motion and dismisses Plaintiff’s
Amended Complaint with prejudice.
II.

FACTUAL & PROCEDURAL BACKGROUND
On May 22, 2006, Plaintiff executed a note in favor of World in the amount of $543,000

(the “Note”) and granted a mortgage (the “Mortgage”) to World, secured by property located at
477 Elkwood Terrace, Englewood, New Jersey 07631 (the “Property”) (collectively the “Loan”).
(D.E. No. 8, Am. Compl. ¶¶ 17-18; see also D.E. No. 9-2, (“Bender Cert.”), Ex. C at 83-88, 90104 (attaching copies of the Note and Mortgage)).2 Plaintiff defaulted on the Loan on or about
August 15, 2009. (D.E. No. 1-1, Ex. 4 (“State Compl.”)) ¶ 1-j).
Following Plaintiff’s default, Wells Fargo filed a complaint for foreclosure on or about
September 24, 2010, in the Superior Court of New Jersey, Chancery Division, Bergen County,
seeking to enforce the Note and Mortgage and foreclose upon the Property (“State Foreclosure
Action”). (State Compl.; see also Bender Cert., Ex. A). On July 24, 2012, Wells Fargo filed a
motion for summary judgment in the State Foreclosure Action, which the state court granted.
(Bender Cert. at Exs. C-D). On July 10, 2015, Plaintiff filed a motion to default Wells Fargo for
not allowing her to rescind her loan on May 9, 2015. (Id., Ex. E; D.E. 1-1, Ex. 6 (“Notice of
Rescission”) at 43-44). On September 25, 2015, however, Plaintiff withdrew her motion. (Id.,
Ex. F). Wells Fargo applied for entry of final judgment in the State Foreclosure Action on March
28, 2016. (Id., Ex. G). The state court granted final judgment of foreclosure in favor of Wells
Fargo on July 8, 2016. (Bender Cert. Ex. I (“State Final Judgment”)).

“[A] document integral to or explicitly relied upon in the complaint may be considered without converting
the motion to dismiss into one for summary judgment.” Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014) (quoting
In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)). Unless otherwise indicated, all internal
citations and quotation marks are omitted, and all emphasis is added.
2

2

On June 1, 2016, Plaintiff filed a Complaint in the District Court for the District of New
Jersey against Wells Fargo relating to the purported securitization of the Loan. (See generally
Compl.). On August 24, 2016, Plaintiff filed an Amended Complaint containing the same six
counts from her original Complaint. (See generally Compl. & Am. Compl.). Count One seeks
damages for alleged violations of the Real Estate Settlement Procedures Act (“RESPA”), 12
U.S.C. §§ 2601-2617. (Am. Compl. ¶¶ 47-57). Count Two alleges violations of the Truth in
Lending Act (“TILA”), 15 U.S.C. §§ 1601-1666j, and Regulation Z, 12 C.F.R. § 1026. (Id. ¶¶ 5875). Count Three alleges intentional and/or negligent infliction of emotional distress. (Id. ¶¶ 7683). Count Four seeks damages and equitable relief for alleged negligent misrepresentation. (Id.
¶¶ 84-95). Count Five seeks damages and equitable relief for Wells Fargo’s alleged negligence in
handling her loan payments. (Id. ¶¶ 96-102). Count Six seeks damages for alleged violations of
the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692-1692p. (Id. ¶¶ 63, 10320).
On September 9, 2016, Wells Fargo moved to dismiss Plaintiff’s Amended Complaint
under Rules 12(b)(1) and 12(b)(6). (Def. Mov. Br. at 1, 4-6). Plaintiff opposed Wells Fargo’s
motion on September 19, 2016. (D.E. No. 10, (“Pl. Opp. Br.”)). Wells Fargo filed a reply in
further support of its motion on September 26, 2016. (D.E. No. 11 (“Def. Reply Br.”)). The
motion is now ripe for resolution.
III.

LEGAL STANDARD
Wells Fargo seeks to dismiss Plaintiff’s Amended Complaint for lack of subject-matter

jurisdiction and for failure to state a claim under Federal Rules of Civil Procedure 12(b)(1) and
12(b)(6), respectively. Each requires a different standard of review. See Cohen v. Kurtzman, 45
F. Supp. 2d 423, 428 (D.N.J. 1999) (citing cases).
3

A. Rule 12(b)(1) – Lack of Subject Matter Jurisdiction
Federal courts have limited jurisdiction and are permitted to adjudicate cases and
controversies only as permitted under Article III of the Constitution. See U.S. Const. art. III, § 2;
see also Phila. Fed’n of Teachers v. Ridge, 150 F.3d 319, 322-23 (3d Cir. 1998) (“The existence
of a case and controversy is a prerequisite to all federal actions, including those for declaratory or
injunctive relief.”). Unless affirmatively demonstrated, a federal court is presumed to lack subject
matter jurisdiction. See Ridge, 150 F.3d at 323 (citing Renne v. Geary, 501 U.S. 312, 316 (1991)).
The party seeking to invoke federal jurisdiction has the burden of persuasion to establish subjectmatter jurisdiction. See Common Cause of Pa. v. Pennsylvania, 558 F.3d 249, 257 (3d Cir. 2009)
(citing DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 (2006)). Under Federal Rule of Civil
Procedure 12(h)(3), “[i]f the court determines at any time that it lacks subject-matter jurisdiction,
the court must dismiss the action.”
A motion to dismiss under Rule 12(b)(1) “attacks . . . the right of a plaintiff to be heard in
Federal court.” Kurtzman, 45 F. Supp. 2d at 428. When ruling on such a motion, a distinction
must be made between a facial and factual attack. Mortensen v. First Fed. Sav. & Loan Ass’n, 549
F.2d 884, 891 (3d Cir. 1977). If the Rule 12(b)(1) motion is a facial attack, “the court looks only
at the allegations in the pleadings and does so in the light most favorable to the plaintiff.” U.S. ex
rel. Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506, 514 (3d Cir. 2007). On the other hand, when
the Rule 12(b)(1) motion is a factual attack, “no presumptive truthfulness attaches to plaintiff’s
allegations, and the existence of disputed material facts will not preclude the trial court from
evaluating for itself the merits of jurisdictional claims.” Mortensen, 549 F.2d at 891.
Here, Wells Fargo’s motion to dismiss for lack of subject matter jurisdiction under Rule
12(b)(1) is a factual attack because it challenges the “actual facts” that support jurisdiction, and
4

not merely how those facts were pleaded. See U.S. ex rel. Atkinson, 473 F.3d at 514 (3d Cir. 2007).
Accordingly, the Court may “review evidence outside the pleadings” in determining whether
subject matter jurisdiction exists. Id.
B. Rule 12(b)(6) – Failure to State a Claim
“Rule 12(b)(6) requires a district court to dismiss a complaint if it fails to state a cognizable
legal claim.” Ulferts v. Franklin Res., Inc., 554 F. Supp. 2d 568, 572 (D.N.J. 2008). To withstand
a motion to dismiss under Rule 12(b)(6), “a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “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.” Id. “The plausibility
standard is not akin to a probability requirement, but it asks for more than a sheer possibility that
a defendant has acted unlawfully.” Id.
“When reviewing a motion to dismiss, all allegations in the complaint must be accepted as
true, and the plaintiff must be given the benefit of every favorable inference to be drawn
therefrom.” Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011). But “[a] pleading that offers
labels and conclusions or a formulaic recitation of the elements of a cause of action will not do.
Nor does a complaint suffice if it tenders naked assertion[s] devoid of further factual
enhancement.” Iqbal, 556 U.S. at 678. Additionally, “[i]n deciding a Rule 12(b)(6) motion, a
court must consider only the complaint, exhibits attached to the complaint, matters of public
record, as well as undisputedly authentic documents if the complainant’s claims are based upon
these documents.” Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010).

5

Finally, courts must construe complaints liberally in favor of a pro se plaintiff. See Higgs
v. Att’y Gen. of the U.S., 655 F.3d 333, 339 (3d Cir. 2011) (“Our policy of liberally construing pro
se submissions is driven by the understanding that implicit in the right of self-representation is an
obligation on the part of the court to make reasonable allowances to protect pro se litigants from
inadvertent forfeiture of important rights because of their lack of legal training.”). That said, pro
se litigants still “must follow the rules of procedure and the substantive law.” Thompson v. Target
Stores, 501 F. Supp. 2d 601, 603 (D. Del. 2007); see also McNeil v. United States, 508 U.S. 106,
113 (1993) (“[W]e have never suggested that procedural rules in ordinary civil litigation should
be interpreted so as to excuse mistakes by those who proceed without counsel.”).
IV.

DISCUSSION
Wells Fargo moves to dismiss Plaintiff’s Amended Complaint under Rule 12(b)(1) for lack

of subject-matter jurisdiction, and additionally, under Rule 12(b)(6) for failure to state a claim for
which relief may be granted. (Def. Mov. Br. at 4-5). Specifically, Wells Fargo argues that this
Court should dismiss Plaintiff’s Amended Complaint because it is barred by the Rooker-Feldman
doctrine, the Younger doctrine, and the Colorado River doctrine. (Id. at 1, 7-12). Additionally,
Wells Fargo argues that this Court should dismiss Plaintiff’s Amended Complaint because it is
barred by the Entire Controversy Doctrine, res judicata, and collateral estoppel. (Id. at 1, 12-16).
The Court will analyze each argument in turn.3

Because the Court finds that all of Plaintiff’s claims are barred by the Entire Controversy Doctrine, res
judicata, and collateral estoppel, it need not address Wells Fargo’s argument that Plaintiff “has failed to meet the wellestablished pleading standards for any claims.” (See Def. Mov. Br. at 17).
3

6

A. Rule 12(b)(1) – Lack of Subject Matter Jurisdiction
1. Rooker-Feldman Doctrine
The Rooker-Feldman doctrine bars federal district courts from hearing cases “that are
essentially appeals from state-court judgments,” such that “a favorable decision in federal court
would require negating or reversing the state-court decision.” Great W. Mining & Mineral Co. v.
Fox Rothschild LLP, 615 F.3d 159, 165, 170 n.4 (3d Cir. 2010). The Third Circuit has specifically
held that the Rooker-Feldman doctrine bars federal courts from providing relief that would
invalidate a state court foreclosure decision. See, e.g., Cuevas v. Wells Fargo Bank, N.A., 643 F.
App’x 124, 126-27 (3d. Cir. 2016).
For the Rooker-Feldman doctrine to apply, four requirements must be met: “(1) the federal
plaintiff lost in state court; (2) the plaintiff complains of injuries caused by the state-court
judgments; (3) those judgments were rendered before the federal suit was filed; and (4) the plaintiff
is inviting the district court to review and reject the state judgments.” Great W. Mining & Mineral
Co., 615 F.3d at 166 (citing Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284
(2005)). Here, the first, second, and fourth prongs are easily met: Plaintiff lost in the State
Foreclosure Action; Plaintiff complains of injuries caused by the state-court judgment; and
Plaintiff invites this Court to review and reject the state court judgment in favor of Wells Fargo.
(See State Final Judgment).
The third prong, however, is not satisfied. Plaintiff filed her Complaint in this Court on
June 1, 2016, before the state court entered final judgment on July 8, 2016. (Compl.; State Final
Judgment). To be sure, although the state court entered summary judgment against Plaintiff before
she filed her Complaint here, that entry of summary judgment alone does not render the state
judgment final to permit application of the Rooker-Feldman doctrine. See Farah v. Lasalle Bank
7

Nat’l Assoc., No. 15-2602, 2016 WL 1162644, at *7 (D.N.J. Mar. 23, 2016) (“The final judgment,
for purposes of Rooker-Feldman, is not the summary judgment rendering the foreclosure
uncontested, but the actual final judgment of foreclosure. Such a final judgment of foreclosure . .
. determines both the right to foreclose and the amount due on the mortgage.”).
In Exxon Mobil Corp., the Supreme Court warned against expanding the Rooker-Feldman
doctrine “beyond the contours of the Rooker and Feldman cases,” because doing so would
“overrid[e] Congress’ conferral of federal-court jurisdiction concurrent with jurisdiction exercised
by state courts, and supersed[e] the ordinary application of preclusion law pursuant to 28 U.S.C. §
1738.” 544 U.S. at 283. Indeed, the Supreme Court clarified that “neither Rooker nor Feldman
supports the notion that properly invoked concurrent jurisdiction vanishes if a state court reaches
judgment on the same or related question while the case remains sub judice in a federal court.” Id.
at 292. Rather, “[d]isposition of the federal action, once the state-court adjudication is complete,
would be governed by preclusion law.” Id. at 293. Thus, the Rooker-Feldman doctrine does not
apply in this context.
2. Younger Abstention Doctrine
Under the Younger abstention doctrine, “district courts must abstain from exercising
jurisdiction over a particular claim where resolution of that claim in federal court would offend
principles of comity by interfering with an ongoing state proceeding.” Lazaridis v. Wehmer, 591
F.3d 666, 670 (3d Cir. 2010). In 2013, the Supreme Court clarified the scope of the Younger
doctrine, holding that abstention is appropriate in only three “exceptional” situations: (i) state
criminal prosecutions; (ii) civil enforcement proceedings; and (iii) civil proceedings involving
certain orders that are uniquely in furtherance of the state courts’ ability to perform their judicial
functions. Sprint Commc’ns., Inc. v. Jacobs, 134 S. Ct. 584, 591 (2013); see also In re One2One
8

Commc’ns., LLC, 805 F.3d 428, 440 (3d Cir. 2015) (“In [Sprint] . . . the Court refused to extend
the three ‘exceptional’ situations where Younger abstention is appropriate, reaffirming Chief
Justice Marshall’s early and famous assertion of federal courts’ obligation to hear and decide cases
within their jurisdiction.”). An example of a civil enforcement proceeding is “a civil action in state
court to abate the showing of obscene movies which was in aid of and closely related to [the
State’s] criminal statutes.” Edelglass v. New Jersey, No. 14-0760, 2015 WL 225810, at *10
(D.N.J. Jan. 16, 2015) (citing Huffman v. Pursue, Ltd., 420 U.S. 592 (1975)). “Civil proceedings
in furtherance of a state court’s ability to perform judicial functions are exemplified by contempt
orders.” Id. (citing Juidice v. Vail, 430 U.S. 327 (1977)).
Wells Fargo argues that a federal court “‘must abstain’ from exercising jurisdiction when:
“(1) there are ongoing state proceedings that are judicial in nature; (2) the state proceedings
implicate important state interests; and (3) the state proceedings afford an adequate opportunity to
raise the federal claims.” (Def. Mov. Br. at 9) (quoting Lazaridis, 591 F.3d at 670). These
conditions stem from the Supreme Court’s decision in Middlesex Cty. Ethics Comm. v. Garden
State Bar Ass’n., 457 U.S. 423, 432 (1982). In Sprint, however, the Supreme Court explained that
the three Middlesex conditions would extend Younger to virtually all parallel state
and federal proceedings, at least where a party could identify a plausibly important
state interest. That result is irreconcilable with our dominant instruction that, even
in the presence of parallel state proceedings, abstention from the exercise of federal
jurisdiction is the exception, not the rule. In short, to guide other federal courts, we
today clarify and affirm that Younger extends to the three ‘exceptional
circumstances’ identified in NOPSI,4 but no further.
134 S. Ct. at 593-94.

The Court also explained that the Middlesex conditions “were not

dispositive” but were instead “additional factors appropriately considered by the federal court

4

New Orleans Pub. Serv., Inc. v. Council of City of New Orleans, 491 U.S. 350 (1989).

9

before invoking Younger.” Id. at 593 (emphasis in original). Wells Fargo neither addresses the
Supreme Court’s decision in Sprint, nor cites any post-Sprint authority. (See generally Def. Mov.
Br. at 9-10; Def. Reply Br. at 3-4).
Here, the State Foreclosure Action “is neither a criminal nor a civil enforcement
proceeding, nor is it uniquely in furtherance of the state court’s ability to perform its judicial
function.” See Hernandez v. Federal Nat’l Mortg. Ass’n, No. 14-7950, 2015 WL 3386126, at *2
(D.N.J. May 26, 2015) (declining to apply Younger where state action was an “ongoing state
foreclosure action”). Indeed, as another district court observed, “[s]ince Sprint, courts have
declined to apply the Younger doctrine in the context of state foreclosure proceedings.” Id. (citing
Carrier v. Bank of Am., N.A., No. 12-0104, 2014 WL 356219, at *1 (D.N.J. Jan. 31, 2014), aff’d
sub nom. Carrier v. Bank of Am. NA, 592 F. App’x 135 (3d Cir. 2015) (declining to apply Younger
despite existence of pending foreclosure action); Tucker v. Specialized Loan Servicing, LLC, 83 F.
Supp. 3d 635, 643-47 (D. Md. Feb. 3, 2015) (finding that Younger did not apply to foreclosure
proceeding in light of Sprint)). Accordingly, the Court declines to abstain under the Younger
doctrine.
3. Colorado River Doctrine
Under the Colorado River doctrine, a federal court may abstain from hearing a case “when
there is a parallel ongoing state court proceeding.” Nationwide Mut. Fire Ins. Co. v. George V.
Hamilton, Inc., 571 F.3d 299, 307 (3d Cir. 2009) (citing Colo. River Water Conservation Dist. v.
United States, 424 U.S. 800 (1976)). “Whether abstention is appropriate is a two-part inquiry.
The initial question is whether there is a parallel state proceeding that raises substantially identical
claims [and] nearly identical allegations and issues.” Id. at 307. Once the court determines that
proceedings are parallel, the court assesses six factors to determine whether “extraordinary
10

circumstances” warrant abstention: “(1) which court first assumed jurisdiction over [the] property;
(2) the inconvenience of the federal forum; (3) the desirability of avoiding piecemeal litigation;
(4) the order in which jurisdiction was obtained; (5) whether federal or state law controls; and (6)
whether the state court will adequately protect the interests of the parties.” Spring City Corp. v.
Am. Bldgs. Co., 193 F.3d 165, 171 (3d Cir. 1999). In cases involving parallel federal and state
foreclosure actions, “[t]his district has repeatedly invoked Colorado River to abstain from hearing
what amount to collateral attacks on pending state foreclosure proceedings.” Dickerson v. Wells
Fargo Bank, N.A., No. 15-3747, 2016 WL 820989, at *3 (D.N.J. Mar. 2, 2016).
Wells Fargo characterizes Plaintiff’s Amended Complaint as “nothing more than a
collateral attack on the Foreclosure Action she has already lost.” (Def. Mov. Br. at 1). First, Wells
Fargo argues that the State Foreclosure Action and this action are parallel proceedings because
they both involve the same parties, claims, and issues. (Id. at 11). Second, Wells Fargo states that
“the six factors weigh in favor of abstention,” arguing (among other things) that the state court
obtained jurisdiction over the matter first, that this action implicates “[an] important state interest,”
and that “there is no reason to believe that the state court was an inadequate forum for reviewing
any of [Plaintiff’s] claims.” (Id. at 12).
The Court declines to apply the Colorado River abstention doctrine. As a threshold matter,
the State Foreclosure Action does not appear to be a “parallel ongoing state court proceeding”
because the state court has already entered final judgment.

(See State Final Judgment);

Nationwide, 571 F.3d at 307. Tellingly, each case cited by Wells Fargo involved an ongoing state
court action—that is, when the district court decided to abstain under the Colorado River doctrine,
no final judgment had been entered in the parallel state court proceeding. See Ruffolo v. HSBC
Bank USA, N.A., No. 14-638, 2014 WL 4979699, at *2-3 (D.N.J. Oct. 3, 2014) (“Because this
11

Court will not interject itself into ongoing state court proceedings and possibly force an
impermissible direct contradiction of any final judgment in the Foreclosure Action, the Court must
abstain from deciding Plaintiffs’ claims pursuant to Colorado River.”); DiPietro v. Landis Title
Co., No. 11-5110, 2012 WL 2116404, at *3 (D.N.J. June 11, 2012) (“[B]ecause this Court cannot
interject itself into ongoing state court proceedings, the Court must dismiss his case in its
entirety.”); St. Clair v. Wertzberger, 637 F. Supp. 2d 251, 255 (D.N.J. 2009) (“If the Court were
to find that defendants violated the FDCPA by improperly instituting the state foreclosure action,
such a finding would be an impermissible direct contradiction of the final judgment of foreclosure,
if it is entered.”).
Furthermore, while the parties, claims, and issues are substantially the same, the issue of
rescission was never adjudicated on the merits in the State Foreclosure Action because Plaintiff
withdrew that motion before entry of final judgment. (See Bender Cert., Ex. F). Finally, the Court
adds that the Colorado River factors are to be “heavily weighted in favor of the exercise of
jurisdiction.” Nationwide, 571 F.3d at 308. Based on the foregoing, the Court declines to abstain
under the Colorado River doctrine.
As the Court declines to dismiss Plaintiff’s Amended Complaint under Rule 12(b)(1) for
lack of subject-matter jurisdiction, it will proceed to analyze the issues under Rule 12(b)(6).
B. Rule 12(b)(6) – Failure to State a Claim
1. Entire Controversy Doctrine
The Entire Controversy Doctrine “requires that a person assert in one action all related
claims against a particular adversary or be precluded from bringing a second action based on the
omitted claims against that party.” In re Mullarkey, 536 F.3d 215, 229 (3d Cir. 2008). The doctrine
has three purposes: (i) complete and final disposition of cases through avoidance of piecemeal
12

decisions; (ii) fairness to parties in an action and to others with a material interest in it; and (iii)
efficiency and avoidance of waste and delay. Id. “Federal courts in New Jersey apply the Entire
Controversy Doctrine to subsequent actions before them where the prior case reached a judgment
in a New Jersey state court.” Burke v. Health Scis. Const. Grp., Ltd., No. 10-0073, 2011 WL
1255403, at *3 (D.N.J. Mar. 30, 2011). To be sure, the Entire Controversy Doctrine “does not
apply to bar component claims that are unknown, unarisen, or unaccrued at the time of the original
action.” Mullarkey, 536 F.3d at 229.
Here, each of Plaintiff’s claims alleges wrongdoing on the part of Wells Fargo during the
events leading up to the State Foreclosure Action. To reiterate, Plaintiff alleges intentional and/or
negligent infliction of emotional distress, negligent misrepresentation, negligence, and violations
of RESPA, TILA, and the FDCPA. Each claim arises from the same set of operative facts giving
rise to the State Foreclosure Action and concerns issues previously adjudicated in that action,
namely, the validity of the Loan, Wells Fargo’s conduct in the creation of and performance under
the Loan, and Wells Fargo’s right to foreclose. Thus, Plaintiff “knew, or should have known
about” each claim during the State Foreclosure Action. See Napoli v. HSBC Mortg. Servs., No.
12-222, 2012 WL 3715936, at *3 (D.N.J. Aug. 27, 2012).
To the extent Plaintiff argues that her rescission claim in Count Two is not barred because
the state court never ruled on it (see Pl. Opp. Br. at 4, 10), such argument is without merit. On
May 9, 2015, Plaintiff moved in the State Foreclosure Action to default Wells Fargo for failing to
rescind the Loan, then voluntarily withdrew her motion two months later. (See Bender Cert. Exs.
E-F; Notice of Rescission). After Plaintiff withdrew her rescission motion, the state court entered
final judgment. (State Final Judgment). Thus, because Plaintiff knew about her rescission claim
before entry of final judgment in the State Foreclosure Action, she cannot raise it here. See William
13

Blanchard Co. v. Beach Concrete Co., 150 N.J. Super. 277, 292-93 (App. Div. 1977) (“[T]he
application of the doctrine requires that a party who has elected to hold back from the first
proceeding a related component of the controversy be barred from thereafter raising it in a
subsequent proceeding.”).5
2. Res Judicata and Collateral Estoppel
Under Third Circuit law, the “general rule regarding simultaneous litigation of similar
issues in both state and federal courts is that both actions may proceed until one has come to
judgment, at which point that judgment may create a res judicata or collateral estoppel effect on
the other action. Univ. of Md. v. Peat Marwick Main & Co., 923 F.2d 265, 275-76 (3d Cir. 1991).
“Res judicata acts as a bar to relitigation of an adjudicated claim between parties and those in
privity with them.” Fairbank’s Capital Corp. v. Milligan, 234 F. App’x 21, 23 (3d Cir. 2007).6
“Collateral estoppel, also known as issue preclusion, refers to the preclusive effect of a judgment
on the merits of an issue that was previously litigated or that could have been litigated.” Id. at 23.7
Finally, “[t]he Full Faith and Credit Act, 28 U.S.C. § 1783 . . . requires the federal court to give

Furthermore, even if the Court could entertain Plaintiff’s rescission claim, the Court notes that such claim
would be barred by the three-year time limit under 15 U.S.C. § 1635(f). See Farah, 2016 WL 1162644, at *11 (“[The]
three-year limitation is not a statute of limitation, barring untimely suits; it ‘govern[s] the life of the underlying right.’
. . . Thus ‘the Act permits no federal right to rescind, defensively or otherwise, after the 3-year period of § 1635(f) has
run.’” (quoting Beach v. Ocwen Fed. Bank, 523 U.S. 410, 413, 417 (1998))). Consequently, Plaintiff’s equitabletolling arguments would likely be rejected as a matter of law.
5

6

Res judicata applies when: (i) the judgment in the first action is valid, final, and on the merits; (ii) the parties
in both actions are the same or are in privity with each other; and (iii) the claims in the second action arise from the
same transaction or occurrence as the claims in the first action. Dennis v. MERS/Merscorp Mortg. Elec. Registration
Sys., Inc., No. 11-4821, 2011 WL 4905711, at *2 (D.N.J. Oct. 13, 2011).
7

Collateral estoppel applies when the following four factors are met: (i) the identical issue was previously
adjudicated; (ii) the issue was actually litigated; (iii) the previous determination was necessary to the decision; and
(iv) the party being precluded from relitigating the issue was fully represented in the prior action. Id.

14

the same preclusive effect to a state-court judgment as another court of that State would give.”
Exxon Mobil Corp., 544 U.S. at 293.
For the reasons discussed with respect to the Entire Controversy Doctrine, the Court finds
that Plaintiff’s Amended Complaint is barred by res judicata and collateral estoppel. See Rycoline
Prods., Inc. v. C & W Unlimited, 109 F.3d 883, 886 (3d Cir. 1997) (“New Jersey’s Entire
Controversy Doctrine and traditional res judicata principles are blood relatives. The Entire
Controversy Doctrine is essentially New Jersey’s specific, and idiosyncratic, application of
traditional res judicata principles.”).
V.

CONCLUSION
For the foregoing reasons, the Court finds that Plaintiff fails to state a claim for which relief

may be granted under Rule 12(b)(6), as her claims are barred under the Entire Controversy
Doctrine, res judicata, and collateral estoppel. Accordingly, the Court GRANTS Wells Fargo’s
Motion to Dismiss with prejudice. An appropriate Order accompanies this Opinion.

s/Esther Salas
Esther Salas, U.S.D.J.

15