HARRIS v. AMERICAN SERVICING COMPANY et al
Filing
8
OPINION. Signed by Judge Jose L. Linares on 10/27/2016. (ld, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
SCOTT HARRIS,
Civil Action No. 2:16-cv-03643 (ILL) (JAD)
Plaintiff’,
OPINION
V.
AMERICAN SERVICING COMPANY
AND REED SMITH LLP,
Defendants.
LINARES, District Judge.
This matter comes before the Court by way of Defendants’, American Servicing Company
(“ASC”) and Reed Smith LLP (“Reed Smith”), Motion to Dismiss (ECF No. 7, (Def.’s Mot.
Dismiss))pro se Plaintiff Scott Harris’ complaint (ECF No. 1, Complaint (“Compl.”)). Defendants
move to dismiss pursuant to Fed. R. Civ. P. 12 (b)(6) for failure to state a claim upon which relief
can be granted, Fed. R. Civ. P. 12 (b)(l) for lack of subject-matter jurisdiction based on Rooker
Feldman jurisdictional grounds and also challenge the complaint under New Jersey’s Entire
Controversy Doctrine as enunciated in N.J. Ct. R. 4:30(a). Defendants’ motion is unopposed.
Without hearing oral argument, the Court has considered the parties’ submissions under Fed. R.
Civ. P. 78, and for the reasons set forth below grants Defendants’ Motion to Dismiss with
Prejudice.
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Background
This matter revolves around a foreclosure action against Husband and Wife, Scott Harris
(“Plaintiff’) and Lori A. Harris (“Mrs. Harris”).’ As the only borrower on the note, Mrs. Harris
obtained a 5460,000 loan to refinance residential property from United States Mortgage
Corporation on July 8, 2005. (ECF No. 7-3). However, both Plaintiff and Mrs. Harris signed the
security agreement. (ECF No. 7-4). Plaintiff and Mrs. Harris secured the note by executing to
Mortgage Electronic Registration Systems, Inc., as nominee for U.S. Mortgage Corp. (Id.). On
July 14, 2005, the Essex County Register recorded the Mortgage (the “Mortgage”). (ECf No. 75). The mortgage was later assigned on february 10, 2010 to U.S. Bank National Association, as
Trustee by MA$TR Alternative Loan Trust 2005-6 (“US Bank”); Wells Fargo is the servicing
agent for US Bank. (Id.). The Essex County Register recorded the assignment on April 22, 2010.
(Id.). On November 1, 2009, Plaintiff defaulted on the loan. (ECF No. 7-6).
State Cottrt Froceedins
Upon default, US Bank filed a Foreclosure Complaint in the Superior Court of New Jersey,
Essex County, Chancery Division (the “State Court”) on February 18, 2010. (ECf No. 7-6). ASC
retained Reed Smith LLP as counsel for the State Court proceedings and Plaintiffs subsequent
appeal. Def.’s Mot. Dismiss
¶ 4.
At the time the Foreclosure Complaint was filed, the November
1, 2009 loan payment and all succeeding payments remained outstanding. (ECF No. 7-7).
The
note contains a provision indicating that afier thirty days of the date due, if any installment payment
of interest, principal, taxes and insurance premium remain unpaid, the lender may exercise the
It is noted that in the State Court proceedings both Scott Harris and Lori A. Harris were named
defendants to the action. However, Scott Harris proceeding pro se, filed the federal complaint as
the only named Plaintiff. For purposes of this opinion, Scott Harris is named “Plaintiff’
throughout.
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option to demand the whole principal
sum
including all unpaid interest from the borrower. (ECf
No. 7-3, 6).
Proceeding pro Se, Plaintiff and Mrs. Harris, contested the Foreclosure Action by filing an
answer on December 3, 2015 disputing the alleged debt. (ECF No. 1-2). The answer disputed the
identity of the owner of the alleged debt, the amount due, the signatures on the loan documents,
the Defendants authority to collect the debt and further demanded a full accounting of payments
made and payments due. Id.
On August 26, 2015, the State Court decided in favor of US Bank
and issued a Writ of Execution, as a result the Note and Mortgage merged into the Final Judgment.
(ECF No. 7-7). Thereafier, Plaintiff filed a Motion to Vacate the Final Judgment. (ECF No. 7-8).
The State Court denied this motion in an Order dated January 6, 2016. (Id.).
On January 22, 2016, Plaintiff filed an appeal with the Superior Court of New Jersey, Appellate
Division (the “Appellate Division”) challenging the State Court’s decision. (ECf No. 7-10). Due
to deficiencies within the appeal, the Appellate Division denied Plaintiffs application pursuant to
N.J. Ct. R. 2:4-1(a). (ECF No. 7-1 1). The Appellate Division pennitted Plaintiff to resubmit the
appeal with a Notice of Motion to File Appeal as Within Time however Plaintiff failed to do so.
(Id.). Consequently the Appellate Division dismissed the action on April 5, 2016. (Id.).
Federal Action
On June 22, 2016, Plaintiff filed the instant Complaint proceeding pro se1. Plaintiffs claim
revolves around the foreclosure action asserting that Defendants engaged in “illegal conduct” and
“abusive behavior” in the collection of the alleged debt in violation of the Fair Debt Collection
The Court must construe a pro se complainant s claim liberally, however, a litigant is not simply
absolved from complying with the federal pleading requirements and Twombly. Erickson v.
Fardus, 551 U.S. 93 (2007)(quoting Estelle v. Gamble, 420 U.S. 97, 106 (1976); Thakar v. Tan,
372 F. App’x 325, 328 (3d Cir. 2010)).
-
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Practices Act (“FDCPA”). Cornpl.
8. In addition, Plaintiffs complaint contends that “Defendant
‘REED’ was statutorily required to obtain [the] consent and permission of the Plaintiff when it was
substituted as counsel on February 3, 2016 pursuant to 15 U.S.C.
§ 1692 (c) and 1692 (a)(2)” and
that “this consent was never obtained by Reed.” Id.J 10. Plaintiff further alleges that afier sending
Defendants a Notice of Dispute pursuant to 15 U.S.C.
§ 1 692g(a)(1 )(2) Defendants were required
to obtain verification and validation of the alleged debt from the original creditor and prior counsel,
but failed to do so. Id.
¶
12.
Plaintiff also claims that Defendants did not cease debt collection when requested by Plaintiff
pursuant to [15 U.S.C.]
§ 1692g(c)(c), “trespass[ed] in Plaintiffs private commercial affairs as
well as... harass[ed] and invade[d] Plaintiffs privacy,” “threaten[ed] to foreclose on Plaintiffs
property,” and did not “obtain express permission [from Plaintiff] or from a court of competent
jurisdiction to communicate with Plaintiff.” Id.
¶ 10, 12, 13, 14, 21. Plaintiff further includes in
his complaint that on three separate occasions, Plaintiff attempted to settle the matter privately and
requests that the Court “conduct a limited judicial review of Plaintiffs enforcement of its ‘private
right of action’ provided within the fDCPA.” Id.
¶ 15, 17. As a result of Defendants’ actions,
Plaintiff asserts that he suffers from headaches, nausea, embarrassment and insomnia and seeks
the following relief:
A. Declaratory judgment that defendants’ conduct violated the FDCPA;
B. Statutory damages: $1,000
C. Actual damages: $4,500
D. Actual damages: $500,000
E. Costs, fees, and expenses prior to and ongoing;
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F.
[] Defendant cease[] any further debt collection activity in compliance with plaintiffs’
injunctive relief 1692(c)(c)
G. []Such other and further relief as the Court may deem just and proper.
Id.
¶ 23. Defendants requested a Clerk’s extension of time to answer or move to August 30, 2016
which was granted by this Court. Def.’s Mot. Dismiss ¶ 9.
On August 30, 2016, Defendants filed the instant Motion to Dismiss with this Court. Def.’s
Mot. Dismiss
¶ 9. Defendants move to dismiss with prejudice claiming that the Court lacks
subject-matter jurisdiction to hear this case pursuant to Fed. R. Civ. P. 12 (b)(l) under the Rooker
Feldman Doctrine and additionally asserts that to the extent the Court may have jurisdiction, all
of the issues raised in Plaintiffs complaint “could have and should have” been raised during the
foreclosure action in the State Court. Id.
¶ 4. More specifically, Defendants maintain that
Plaintiffs allegations are barred by the Entire Controversy Doctrine, the Colorado River
Abstention Doctrine, resjtcdicata, collateral estoppel, and New Jersey’s Litigation Privilege. Id.
Defendants also base their motion to dismiss on fed. R. Civ. P. 12 (b)(6) claiming that the
complaint fails to plead any elements necessary to support Plaintiffs claims of fDCPA violations,
wrongful foreclosure, negligent infliction of emotional distress and intentional infliction of
emotional distress. Id.
¶ 22, 26, 27, 30. The Court grants Defendants’ Motion to Dismiss with
Prejudice due to lack of jurisdiction pursuant to Fed. R. Civ. P. 12 (b)(1) under Rooker-feidman
and to the extent that any claim does not fall within the bounds of Rooker-Feldman, the Court finds
that New Jersey’s Entire Controversy Doctrine bars any such claim at this time.
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Le%al Standard
Under Rule 12 (b)( 1) of the Federal Rules of Civil Procedure, a Defendant may move to
dismiss a complaint for lack of subject-matter jurisdiction. The Plaintiff, as the party asserting
jurisdiction, bears the burden to establish the federal court’s authority to hear the matter. Packard
v. Providential Nat ‘1 Bank, 994 F.2d 1039, 1045 (3d Cir. 1993). However, depending on the nature
of the attack under Fed. R. Civ. P. 12 (b)(1), which may either assert a factual or facial challenge
to the court’s jurisdiction, a presumption of truthfulness may attach to the plaintiffs allegations.
See Taliaferro v. Darby Twp. Zoning 3d., 458 F. 3d 181, 188 (3d Cir. 2006); Gould Electronics
Inc. v. United States, 220 F.3d 169,176 (3d Cir. 2000); Tttricentro, S.A. v. American Airlines, Inc.,
303 F. 3d 293, 300 n. 4 (3d Cir. 2002). When a defendant facially attacks the court’s jurisdiction
under Rule 12 (b)(1), this type of challenge effectively contests the adequacy of the language used
in the pleading; the trial court must therefore construe the pleadings in a light most favorable to
the plaintiff and presume all well-pleaded factual allegations in the complaint as true. Turicentro,
303 F. 3d 293, 300 n. 4; Gould, 2201 F.3d at 176. Alternatively, when bringing a factual attack,
the defendant contends that the facts on which the plaintiffs allegations rely are not true as a matter
of fact. Id. Therefore, the plaintiffs allegations do not benefit from a presumption of truthfulness;
the court, instead, must weigh the evidence in its discretion by taking into account affidavits,
documents, and even limited evidentiary hearings. Id.
Discussion
The Court lacks jurisdiction to hear the case pursuant to Fed. R. Civ. P. 12(b)(1) based on the
Rooker-feldman Doctrine and to the extent that any allegation in the Plaintiffs complaint does
not fall within the bounds of Rooker-Feldman, New Jersey’s Entire Controversy Doctrine bars
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any remaining claims. Therefore, for the reasons discussed below, the Court grants Defendants’
Motion to Dismiss with prejudice.
1. The Rooker-Feidman Doctrine
The Rooker-feidman Doctrine prohibits the use of federal courts as a remedy for unsuccessful
state court litigants. See District of Columbia Court ofAppeals v. feldman, 460 U.S. 462 (1983);
Rooker v. fidelity Tritst Co., 263 U.S. 413 (1923).
Lower federal courts do not provide an
“appropriate appellate proceeding” for state court litigants to collaterally attack a state court’s
judgment. Rooker, 263 U.S. 413, 415-16 (1923). The Doctrine “exhibit[s] the limited
circumstances in which [the Supreme] Court’s appellate jurisdiction over state court judgments
precludes a United States District Court from exercising subject matter jurisdiction in an action it
would be otherwise empowered to adjudicate.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp.,
544 U.S. 280, 291 (2005). Rooker-feidman divests a federal court of subject-matter jurisdiction
if either “the federal claim was actually litigated in state-court prior to the filing of the federal
action or the federal claim is inextricably intertwined with the state adjudication, meaning that
federal relief can only be predicated upon a conviction that the state-court was wrong.” In re
Knapper, 407 F. 3d 572, 580. (3d Cir. 2005). As the first circumstance invoking the doctrine is
readily determined, “inextricably intertwined” occurs when “the relief requested in the federal
action requires determining that the state court’s decision is wrong or would void the state court’s
ruling.” FOCUS v. Allegheny County Court of Common Fleas, 75 F. 3d 834, 840 (3d Cir. 1996).
This is true albeit narrow exceptions made by Congress. See generally 2$ U.S.C. § 2254 (an
individual in custody pursuant to a State Court judgment may entertain an application to a federal
court for a writ of habeas corpus after exhausting all State court remedies); 25 U.S.C. § 1914 (a
federal court has jurisdiction to invalidate a custody proceeding of an Indian Child).
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For Rooker-Feidman to apply, the Third Circuit sets forth the following requirements: “(1) the
federal plaintiff lost in state court; (2) the plaintiff cornplain[s] of injuries caused by [the] state
court judgn-ients; (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.” B.S. v. Somerset
Cnly., 704 F.3d 250,259-60 (3d Cir. 2010)(quoting Great W. Mining & Mineral Co. v. Fox
Rothschild LLP, 615 F. 3d 159 (3d Cir. 2010)).
This Court finds that the Rooker-Feidman Doctrine applies to Plaintiffs allegations
divesting the Court ofjurisdiction to hear this case as Plaintiffs claim fulfills the four requirements
set forth by Great Western Mining. First, Plaintiff lost in state court as a final judgment was
rendered against the Plaintiff by the State Court on July 1, 2015 and Plaintiffs motion to vacate
the final judgment was later denied by the State Court on January 6, 2016. Furthermore, the
Appellate Division denied Plaintiffs appeal and afier Plaintiff failed to submit a sufficient appeal
the Appellate Division entered a final judgment against the Plaintiff. Next, Plaintiff alleges that
his injuries result from the foreclosure action decided in favor of Defendants in the State Court.
More specifically, in his federal complaint Plaintiff contends that due to Defendants’ actions in
attempting to collect the outstanding mortgage payment, the Plaintiff has suffered from
“headaches, nausea, embarrassment, and insomnia.” Compl.J 18. Further, Plaintiff contends that
Defendants’ foreclosure practices in violation of the FDCPA resulted in “actual damages, statutory
damages,
[] costs, fees and expenses.” Compl. ¶ 23.
Third, the State Court rendered its final judgment prior to the commencement of this action in
federal court as Plaintiff filed his federal complaint on June 22, 2016 and the Appellate Court
dismissed the case on April 5, 2016. Lastly, the nature of Plaintiffs allegations requires the Court
to review and possibly reject the determinations made by the State Court. Every claim in Plaintiffs
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complaint revolves around the Foreclosure Action and further requests that the Court revisit the
events surrounding the acts of the Defendants in the collection of the alleged debt. For these
reasons, the Court finds that Rooker-Feidman applies to divest this Court ofjurisdiction to review
Plaintiffs claim.
2. Entire Controversy Doctrine
In observation of finality, fairness and judicial economy, the Entire Controversy Doctrine
requires a party to join all claims and parties that could be joined in a case based on the same
transaction or occurrence, or else forfeit the right to litigate the claim or join the party in a later
action. Fornarotto v. Am. Waterworks Co., 144 F. 3d 276, 279 (3d Cir. 199$); Heir v. Delaware
River Fort Authority, 218 F. $upp. 2d 627, 633 & n.6 (D.N.J. 2002). The Entire Controversy
doctrine applies to claims brought in federal court afier the litigation of a state court proceeding
involving the same transaction. Bennum v. Rutgers State Univ., 941 F. 2d 154, 163 (3d Cir. 1991).
The federal court must apply the state law regarding the Entire Controversy Doctrine “when there
was a previous state court action involving the same transaction.” Id. Accordingly, New Jersey
Court Rule 4:30 (a) asserts that “non-joinder of claims or parties required to be joined by the Entire
Controversy Doctrine shall result in the preclusion of the omitted claims to the extent required by
the Entire Controversy Doctrine.” However, N.J. Ct. R. 4:64-5 imposes the following limitations
on the preclusive effect in foreclosure proceedings:
Unless the court otherwise orders on notice and for good cause shown, claims for foreclosure
of mortgages shall not be joined with non-germane claims against the mortgagor or other
persons liable on the debt. Only genriane counterclaims and cross-claims may be pleaded in
foreclosure actions without leave of court. Non-germane claims shall include, but not be
limited to, claims on the instrument of obligation evidencing the mortgage debt, assumption
agreements and guarantees. A defendant who chooses to contest the validity, priority or
amount of any alleged prior encumbrance shall do so by filing a cross-claim against that
encumbrancer, if a co-defendant, and the issues raised by the cross-claim shall be determined
upon application for surplus money pursuant to R. 4:64-3, unless the court otherwise directs.
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The Appellate Division of the Superior Court of New Jersey explains that the meaning of
“germane” as used in the New Jersey Court Rules was “intended to limit counterclaims in
foreclosure actions to claims arising out of the mortgage transaction which is the subject matter
of the foreclosure action.” Leisure Technology-Northeast v. Klingbeil Holding Co.,137 N.J.
Super. 353, 349 A.2d 96, 98-9 (App. Div. 1975).
The Court finds that under New Jersey Law Plaintiffs allegations in his federal
complaint all arise out of the same transaction or occurrence as the foreclosure action in the State
Court proceedings. Because of this, these claims are all germane as defined by N.J. Ct. R. 4:64-5
and should have been raised in the State Court proceeding. Therefore, the Entire Controversy
Doctrine precludes any claims included in Plaintiffs complaint to the extent they are not covered
by the Rooker-feldrnan Doctrine.
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______,
Conclusion
For the reasons set forth above, Defendants’, American Servicing Company (“ASC”) and
Reed Smith LLP (“Reed Smith”), Motion to Dismiss pro se Plaintiff Scott Harris’ complaint is
granted with Prejudice pursuant to Fed. R. Civ. P. 12 (b)(1) for lack of subject-matter under the
Rooker-Feidman Doctrine. Furthermore, to the extent that any claim or claims do not fall within
said jurisdictional limitation, those claims are barred by New Jersey’s Entire Controversy
Doctrine. An appropriate order accompanies this Opinion.
DATED: October
2016
JOSE L. Lfl’1ARE$
UNITED STATES DISTRICT JUDGE
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Conclusion
For the reasons set forth above. Defendants’, American Servicing Company (“ASC”) and
Reed Smith LLP (“Reed Smith”), Motion to Dismiss pro se Plaintiff Scott Harris’ complaint is
granted with Prejudice pursuant to Fed. R. Civ. P. 12 (b)(1) for lack of subject-matter under the
Rooker-feidman Doctrine. Furthermore, to the extent that any claim or claims do not fall within
said jurisdictional limitation, those claims are barred by New Jersey’s Entire Controversy
Doctrine. An appropriate order accompanies this Opinion.
DATED: October
2016
J
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LINARES
ED STATES DISTRICT JUDGE
.
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