SANCHEZ v. SELECT PORTFOLIO SERVICING, INC.

Filing 8

OPINION. Signed by Chief Judge Jose L. Linares on 10/18/17. (sr, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

Civil Action No.: 17-4091 (JLL)

MARY SANCHEZ,
Plaintiff,

OPINION

V.

SELECT PORTFOLIO SERVICING, INC.,
Defendant.

LINARES, Chief District Judge.

This matter comes before the Court by way of Defendant Select Portfolio Servicing, Inc.’s
motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure.
(ECF No. 6). For the reasons set forth below, the Court concludes that it lacks subject matter
jurisdiction overpro se Plaintiff Mary Sanchez’s Complaint, (ECF No. 1), pursuant to the Rooker
Feldman doctrine. To the extent that Plaintiffs claims are not barred by the Rooker-feidman
doctrine, the Court finds that they are baiTed by the entire controversy doctrine.
I.

BACKGROUND’

Plaintiff commenced this action on June 6, 2017. (ECF No. 1 (“Cornpl.”)). On August 16,
2017, Defendant Select Portfolio Servicing, Inc. filed the motion to dismiss Plaintiffs Complaint
that is currently before this Court. (ECF No. 6).

On January 25, 2007, Plaintiff executed a mortgage in favor of Washington Mutual Bank

This background is derived from Plaintiffs Complaint. which the Court must accept as true at this stage of the
proceedings. See Aiston v. Countnitide fin. Coip.. 585 F.3d 753. 75$ (3d Cir. 2009).

(“the Mortgage”). (Compi.

¶J 12—14).

Pursuant to the Mortgage agreement, Washington Mutual

Bank (“Washington Mutual”) extended Plaintiff a loan, which she agreed to pay back in monthly
installments. (Id.

¶

12—13). According to Defendant, Plaintiff defaulted on the Mortgage shortly

thereafter. (ECF No. 6, Ex. E). On July 2, 2008, LaSalle Bank, as trustee for Washington Mutual,
instituted a foreclosure action against Plaintiff in the Superior Court of New Jersey, Chancery
Division, Bergen County, under docket number F-25531-0$ (the “Foreclosure Action”). (ECF No.
6, Ex. B). LaSalle Bank filed an amended complaint in the Foreclosure Action on November 17,
2008. (ECF No. 6, Ex. C). Plaintiff failed to respond to the amended complaint and the Superior
Court entered a Final Judgment in the Foreclosure Action and issued a Writ of Execution for the
sale of the property at issue. (ECF No. 6, Exs. E, F). Following Washington Mutual’s collapse in
the financial crisis of 2008, Plaintiffs loan was discharged and transferred to Defendant. (Cornpl.

¶ 15—18).
On December 6, 2016, LaSalle Bank filed a motion to appoint a special master. (ECF No.
6, Ex. G). Plaintiff filed an opposition, and LaSalle Bank filed a reply. (ECF No. 6. Exs. H, I).
The Superior Court entered an order granting LaSalle Bank’s motion to appoint a special master.
(ECF No. 6, Ex. J). Earlier that year, in January of 2016, Plaintiff also sought to modify the terms
of her loan agreement. (Compl.

¶

19—2 1). Defendant proposed modifications, which Plaintiff

did not accept, and Plaintiff now alleges that the terms of her loan agreement were changed
“abruptly” to an “egregious” monthly payment. (Id.

¶ 23—26).

Plaintiff alleges that she has no

contractual obligation to pay the increased monthly payment to Defendant, and that such increase
was not included “under any provision within any agreement, and was done without any
consideration for Plaintiff.” (Id.

¶J 27—28).
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Plaintiff then filed the instant action against Defendant, alleging that Defendant breached
the terms of the Mortgage, and violated the Implied Covenant of Good Faith and Fair Dealing.
(Id. ¶43—7l).
II.

LEGAL STANDARD

Defendant seeks to dismiss Plaintiffs Complaint for lack of subject matter jurisdiction
and/or failure to state a claim, under Federal Rules of Civil Procedure 1 2(b)( 1) and 1 2(b)(6),
respectively. There are differing standards of review under each. See Cohen v. Kurtzman, 45 F.
Supp. 2d 423, 42$ (D.N.J. 1999) (collecting cases).
A. Rule 12(b)(1) 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;

Lance v. Coffman, 549 U.S. 437, 439 (2007). Unless affirmatively demonstrated, a federal court
is presumed to lack subject matter jurisdiction. See Phi/a. Fed ‘n of Teachers v. Ridge, 150 F.3d
319, 323 (3d Cir. 199$) (citing Renne e. Geaiy, 501 U.S. 312, 316 (1991)). The burden of
demonstrating the existence of federal jurisdiction is on the party seeking to invoke it.

See

Common Cause ofPa. v. Pennsy/vania, 55$ F.3d 249, 257 (3d Cir. 2009) (citing Daim/erChtysler
Corp.

V.

Cimo, 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 42$. When ruling on such a motion, a distinction
must be made between a facial and factual attack. Mortensen v. First Fed. Say. & Loan Ass ‘n, 549

3

F.2d 884, 891 (3d Cir. 1977). If the Rule 12(b)(1) motion is a facial attack, “the court looks oniy
at the allegations in the pleadings and does so in the light most favorable to the plaintiff.” US. ex

rd. Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506, 514 (3d Cir. 2007) (citing Mortensen, 549
F.2d at $91). On the other hand, when the Rule 1 2(b)( 1) motion is a factual attack, “no presumptive
truthfulness attaches to plaintiffs 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, Defendant’s motion to dismiss under Rule 12(b)(1) is a factual attack, as it challenges
the “actual facts” that support jurisdiction, and not merely how those facts were pled. See Pa.
Shtbttilding Co., 473 f.3d at 514. Accordingly, the Court may “review evidence outside the
pleadings” in determining whether subject matter jurisdiction exists. Id. (citation omitted).
B. Rule 12(b)(6) failure to State a Claim

To withstand a motion to dismiss for failure to state a claim, a “complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.”
Ashcrofl v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Ati. Coip. v. Twornbly, 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., 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). “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. (quoting Twombly, 550 U.S. at 556).
To determine the sufficiency of a complaint under Twombly and Iqbal in the Third Circuit,

the Court must take three steps. “first, it must ‘tak[e] note of the elements a plaintiff niust plead

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to state a claim.’ Second, it should identify allegations that, ‘because they are no more than
conclusions, are not entitled to the assumption of truth.’ finally. ‘[w]hen there are well-pleaded
factual allegations, a court should assume their veracity and then determine whether they plausibly
give rise to an entitlement for relief.” See Connellv v. Lane Constr. Coip., 809 F.3d 780, 787 (3d
Cir. 2016) (quoting Iqbat, 556 U.S. at 675, 679) (citations omitted). “In 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. Be/ic/tick, 605 F.3d 223, 230 (3d Cir. 2010). The Third Circuit
has held that the Court can review the record of prior actions between the parties and take judicial
notice of the same in considering a motion to dismiss. See Toscano v. Conii. Gen. Life Ins. Co.,
288 F. App’x 36, 3$ (3d Cir. 2008).
The Court also notes that pleadings submitted by

pro

se litigants are subject to liberal

construction. See Higgs v. Att’v Gen.. 655 F.3d 333, 339 (3d Cir. 2011). The Court is required to
accept a pro se plaintiffs well-pleaded factual allegations as true while drawing reasonable
inferences in his or her favor. Capogrosso v. Sup. Ct. of ALl, 58$ F.3d 180, 184 (3d Cir. 2009).
However, a pro se complaint must still contain sufficient factual matter to state a claim to relief
that is plausible on its face. Frank/in v. GMACMortg., 523 F. App’x 172, 173 (3d Cir. 2013).
III.

ANALYSIS

A. The Rooker-fetdman Doctrine Deprives This Court of Jurisdiction

Defendant moves to dismiss Plaintiffs Complaint on the grounds that it is baiTed by the
Rooker-Feidman doctrine (ECF No. 6, at 4—7).

Under the Rooker-feidman doctrine, federal

district courts are barred from hearing cases “that are essentially appeals from state-court

5

judgments.” Great W. Mining & Mineral Co. v. fox Rothschild LLF, 615 F.3d 159, 165 (3d Cir.
2010). Put another way, a suit is barred under the Booker-feldman doctrine where “a favorable
decision in federal court would require negating or reversing the state-court decision.” Id. at 170
n.4 (citations omitted). The Third Circuit has explicitly held that federal courts are barred by the
Booker-Feldman doctrine from providing relief that would overturn a state court foreclosure
decision. See, e.g., Gage v. Wells Fargo Bank, NA AS, 521 F. App’x 49, 51 (3d Cir. 2013); Mann
v. Nat’l City Bank of md., 471 F. App’x 101, 105 (3d Cir. 2012); Moncriefv. Chase Manhattan
Mortg. Corp., 275 F. App’x 149, 152—53 (3d Cir. 2008); Ayres-Foztntain v. E. Say. Bank, 153 F.
App’x 91, 92 (3d Cir. 2005).
In order for the Rooker-Feldman doctrine to apply, four requirements must be met: “(1)
the federal plaintiff lost in state court; (2) the plaintiff ‘cornplain[s] 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 (quoting Exxon Mobil Corp. v. Saudi Basic Indtts. Coip.,
544 U.S. 280, 284 (2005)). “The second and fourth requirements are the key to determining
whether a federal suit presents an independent, non-barred claim” and these requirements are
“closely related.” Id. at 166, 168.
The first and third prongs are clearly met in the instant action. Plaintiff lost her Foreclosure
Action in the Superior Court of New Jersey. The Superior Court rendered that judgment on
February 8, 2010. (ECF No. 6, Ex. E). Plaintiff filed her Complaint in this case on June 6, 2017.
(ECFN0. 1).

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The second and fourth prongs are also satisfied here. The Third Circuit recently assessed
a case with a nearly identical factual scenario and held that the second and fourth prongs of the
Booker-Feldman test were met and that the doctrine baiTed jurisdiction. In Gage v. Wells Fargo
Bank, the plaintiff, Gage, “defaulted on his mortgage, and Wells Fargo subsequently filed a
foreclosure complaint in state court” which ruled in Wells Fargo’s favor. 521 F. App’x at 50.
Gage filed a subsequent complaint in federal court challenging the foreclosure judgment and
sheriffs sale. Id. The district court grated Wells Fargo’s motion to dismiss and held that the
claims were barred under the Booker-Feldman doctrine. Id. In affirming, the Third Circuit held
that all four prongs of the Booker-Feldman test were satisfied and stated that:
Gage cannot evade Booker-Feldman by arguing on appeal that he was not injured
by the foreclosure judgment, but rather by Wells Fargo’s purportedly fraudulent
actions. The complaint reveals the nature of Gage’s claims against Wells Fargo:
that the bank had no right to foreclose on the property and therefore committed
“criminal acts” by enforcing the foreclosure judgment (Counts I and IV). These
claims are in essence an attack on the state court judgment of foreclosure.
Furthermore, an aspect of the relief that Gage requests—to have the deed to the
property restored to him—makes it abundantly clear that he seeks to overturn the
foreclosure judgment. Accordingly, the claims against Wells Fargo were properly
dismissed under the Booker-Feldman doctrine.
Id. at 51.
For similar reasons, the Court finds that the second and fourth requirements are met here
and that Plaintiffs claims are barred by Booker-Feldman.

Plaintiffs Complaint effectively

complains of injuries caused by the Superior Court’s final judgment. (See, e.g., Compl.

¶

27

(alleging that Defendant has no standing to collect on the debt); ¶ 3 2—42 (arguing that Defendant’s
foreclosing on Plaintiffs home was inappropriate becatise Plaintiff was in the process of
modifying the terms of her loan payments to Defendant);

¶ 59 (accusing Defendant of “depriving

[Plaintiff] of the benefit of owning, holding, possessing, and maintaining her real property.”)).
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Plaintiff also requests “a restraining order preventing and/or baning any sale of Plaintiff s property
while in litigation.” (Id. at 10). It is thus “abundantly clear” that Plaintiffs Complaint is “in
essence an attack on the state court judgment of foreclosure.”

Gage, 521 F. App’x at 51.

Adjudicating Plaintiffs claims would require this Court to impermissibly engage in appellate
review of the Foreclosure Action. In particular, an adjudication of Plaintiffs breach of contract
claims would challenge the validity of the foreclosure Action itself, as would a restraining order
barring the sale of Plaintiffs property. “This type of action is exactly what Rooker-Feldman is
meant to prevent: an attempt to invalidate the final judgment of foreclosure and various other
orders from a state court action in a separate federal court action.” Willoughby v. Zucker, Goldberg
& Ackerman, LLC, No. 13-7062 (FSH), 2014 WL 2711177, at *4 (D.N.J. June 16, 2014).
For these reasons, the Court finds that it does not have jurisdiction over Plaintiffs
Complaint.
B. Plaintiff’s Remaining Claims Are Barred by the Entire Controversy Doctrine

To the extent Plaintiff raises independent claims regarding Defendant’s alleged misconduct
preceding the Superior Court’s Order appointing a special master to conduct the foreclosure sale,
(ECF No. 6, Ex. J), such claims are barred by the entire controversy doctrine.
Like traditional res judicata, the entire controversy doctrine is intended to prevent
piecemeal litigation by requiring the assertion of all claims arising from a single controversy in
one action. See Frevratil v. Mohr, 678 A.2d 243, 248 (N.J. 1996). Its “purposes are to encourage
comprehensive and conclusive litigation determinations, to avoid fragmentation of litigation, and
to promote party fairness and judicial economy and efficiency
Landis Sewerage Auth., 800 A.2d 861, 868 (N.J. 2002).

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.

.

.

.“

K-Land Coip. No. 28 v.

“Generally speaking, the entire

controversy doctrine requires whenever possible all phases of a legal dispute to be adjudicated in
one action. At a minimum, all parties to a sttit should assert all affirmative claims and defenses
arising out of the underlying controversy.” Prevratil, 67$ A.2d at 246. In other words, “a party
cannot withhold part of a controversy for later litigation even when the withheld component is a
separate and independently cognizable cause of action.” In re Mttllarkey, 536 F.3d 215, 229 (3d
Cir. 2008) (citing Paramount Aviation Corp. v. Agusta, 178 F.3d 132, 137 (3d Cir. 1999)). In
applying the doctrine, “the central consideration is whether the claims

...

arise from related facts

or the same transaction or series of transactions.” DiTrotio v. Anti/es, 662 A.2d 494, 502 (N.J.
1995). The doctrine is an “equitable principle under which the Court may exercise its judicial
discretion based on the particular circumstances inherent in a given case.” In re Mu/turkey, 536
F.3d at 230 (citing Mystic Isle Dcv. Corp v. Perskie & Nehmad, 662 A.2d 523, 529—30 (N.J. 1995)).
The entire controversy doctrine applies to foreclosure proceedings, but extends only to
“germane” counterclaims. See In re Mit/turkey, 536 F.3d at 229 (citing Leisure Tech-Ne. v.
Klingbeil Ho/ding Co., 349 A.2d 96, 98—99 (N.J. Super. Ct. App. Div. 1975)); see a/so N.J. Ct. R.
4:64-5.

In the foreclosure context, germane claims are those “arising out of the mortgage

transaction which is the subject matter of the foreclosure action.” Leisttre Tech.-Ne., 349 A.2d at
98; see a/so Coleman v. C’hase Home fin., LLC cx ret. Chase Manhattan Mortg. Corp., 446 F.
App’x 469, 471—73 (3d Cir. 2011) (applying entire controversy doctrine to mortgage transaction).
Claims challenging the validity of the loan or the circumstances surrounding the origination of the
loan are geniane to a New Jersey Foreclosure action. See Bank ofl’LY v. Ukpe, No. 09-17 10,
2009 WL 4895253, at *7 (D.N.J. Dec. 9, 2009). Furthennore, claims “challenging the amount due

9

on a mortgage” are also germane. Fatetta v. Wells Fargo Bank, NA, No. 09-2848, 2010 WL
1931256, at *11 (D.N.J. May 13, 2010).
Here, Plaintiffs claims are germane because they clearly “aris[e] out of the mortgage
transaction which is the subject matter of the foreclosure action.” Leisure Tech., 349 A.2d at 98.
Plaintiff argues that she has no contractual obligation to continue payments to Defendant,
rendering the mortgage invalid. (Compl.

¶f 26—29).

Alternatively, if there is a contract, Plaintiff

claims Defendant breached that contract and the implied covenant of good faith by raising her
monthly loan payments. (Compl.

¶ 43—71).

All of these claims arise from the existence of the

Mortgage and the parties’ respective rights thereunder. See DiTrilio, 662 A.2d, at 502. Plaintiffs
claims are also germane in that they both challenge the validity of the loan itself, see Ukpe, 2009
WL 4895253, at *7, and challenge the amount due on the mortgage, see Fatetta, 2010 WL

1931256, at *11.
Plaintiffs claims were undoubtedly known to her and had accrued at the time of the
underlying action. See Mystic Isle, 662 A.2d at 530. Though courts should apply the entire
controversy doctrine with caution when dealing with pro se litigants, In re Mullarkey, 536 F.3d at
230, this Court believes Plaintiff had an opportunity to raise the claims presently before this Court
in the Foreclosure Action. Plaintiff filed an “Objection to Plaintiffs Motion for a Special Master”
in the Foreclosure Action on December 30, 2016. According to Plaintiffs Complaint, she was
aware of her claims against Defendant raised in the instant action on May 18, 2016, at the latest.
(Cornpl.

¶ 26).

It is thus clear that by May 18, 2016, Plaintiff was aware that Defendant had raised

the cost of her monthly loan payments and should have challenged that raise in the Superior Court.

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_________________

(Compi.

¶ 23, 26—28). As such, Plaintiffs claims here must be dismissed pursuant to the entire

controversy doctrine, to the extent they are not barred by Rooker-feldinan.

IV.

CONCLUSION

For the aforementioned reasons, the Court concludes that it does not have jurisdiction over
Plaintiffs Complaint.

Accordingly, Plaintiffs Complaint is dismissed with prejudice.

appropriate Order and Judgment accompanies this opinion.

DATED: October 1Ol7
JO L. LTNARES
CefJudge, United States District Court

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An