Wellington v. Profolio Home Mortgage Corporation et al
Filing
25
MEMORANDUM OPINION AND ORDER by District Judge James O. Browning granting 11 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ; Adopting 22 REPORT AND RECOMMENDATIONS re 11 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM filed by MTGLQ Investors, LP; denying 17 MOTION to Amend/Correct Complaint filed by David Wellington; overruling 23 Objections, 17 MOTION to Amend/Correct Complaint; the Plaintiffs Complaint to Quiet Title and for Declaratory Relief, filed April 9, 2021 (Doc. 1-1), is dismissed with prejudice; and (vii) the Court will enter a Final Judgment. (bap)
Case 1:21-cv-00322-JB-GBW Document 25 Filed 01/10/22 Page 1 of 15
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
DAVID WELLINGTON,
Plaintiff,
vs.
No. CIV 21-0322 JB/GBW
PROFOLIO HOME MORTGAGE
CORPORATION and MTGLQ INVESTORS,
LP,
Defendants.
MEMORANDUM OPINION AND ORDER ADOPTING THE MAGISTRATE JUDGE’S
PROPOSED FINDINGS AND RECOMMENDED DISPOSITION
THIS MATTER comes before the Court on: (i) Defendant MTGLQ Investors, LP’s
Motion to Dismiss, filed April 20, 2021 (Doc. 11)(“MTD”); (ii) the Plaintiff’s Motion for Leave
to File Amended Complaint, filed June 21, 2021 (Doc. 17)(“Motion to Amend”); (iii) the
Magistrate Judge’s Proposed Findings of Fact and Recommended Disposition, filed July 27, 2021
(Doc. 22)(“PFRD”); and (iv) the Plaintiff’s Objections to Magistrate Recommendation, filed
August 5, 2021 (Doc. 23)(“Objections”). The Court will overrule Plaintiff David Wellington’s
Objections and adopt the PFRD. Accordingly, the Court will grant the MTD, dismiss D.
Wellington’s Complaint to Quiet Title and for Declaratory Relief, filed April 9, 2021 (Doc. 11)(“Complaint”), and deny D. Wellington’s Motion to Amend.
FACTUAL AND PROCEDURAL BACKGROUND
D. Wellington filed his Complaint in State court on March 4, 2021, asserting that a
mortgage on property that he owns in joint tenancy with his sister is invalid and seeking a
judgment quieting title against the original lender on the mortgage -- Defendant Profolio Home
Mortgage Corporation -- and its successor, Defendant MTGLQ Investors, LP. See Complaint
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¶¶ 1-15, at 1-4. MTGLQ Investors removed the suit to the United States District Court for the
District of New Mexico on April 9, 2021, see Notice of Removal at 1, filed April 9, 2021 (Doc.
1), and filed the MTD on April 20, 2021, see MTD at 1. MTGLQ Investors argues that MTGLQ
Investors, LP v. Wellington, No. CIV. 17-487 KG/LNF -- an action it brought against D.
Wellington’s sister, the borrower on the disputed mortgage, to foreclose on the mortgage D.
Wellington’s claim -- precludes D. Wellington’s claim. See MTD at 1-2. In that suit, Monica
Wellington, D. Wellington’s sister, asserts counterclaims disputing the validity of the assignment
of the mortgage from the original lender to the successor. See MTGLQ Invs., LP v. Wellington,
856 F. App’x 146, 151-52 (10th Cir. 2021)(unpublished). 1 The Honorable Kenneth Gonzales,
United States District Judge for the United States District Court for the District of New Mexico,
dismissed the counterclaims and ultimately entered a judgment of foreclosure, which the United
States Court of Appeals for the Tenth Circuit affirmed on March 31, 2021. See MTGLQ Invs.,
LP v. Wellington, 856 F. App’x at 152, 166.
1
MTGLQ Invs., LP v. Wellington, is an unpublished opinion, but the Court can rely on an
unpublished opinion to the extent its reasoned analysis is persuasive in the case before it. See 10th
Cir. R. 32.1(A)(“Unpublished decisions are not precedential, but may be cited for their persuasive
value.”). The Tenth Circuit has stated:
In this circuit, unpublished orders are not binding precedent, . . . and we have
generally determined that citation to unpublished opinions is not favored. However,
if an unpublished opinion or order and judgment has persuasive value with respect
to a material issue in a case and would assist the court in its disposition, we allow
a citation to that decision.
United States v. Austin, 426 F.3d 1266, 1274 (10th Cir. 2005). The Court concludes that MTGLQ
Invs., LP v. Wellington, 856 F. App’x 146 (10th Cir. 2021), Pevehouse v. Scibana, 229 F. App’x
795 (10th Cir. 2007), and Phillips v. Pub. Serv. Co., 58 F. App’x 407 (10th Cir. 2003), have
persuasive value with respect to a material issue, and will assist the Court in its disposition of this
Memorandum Opinion and Order Adopting the Magistrate Judge’s Proposed Findings and
Recommended Disposition.
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On June 21, 2021, D. Wellington filed a Motion to Amend, seeking to add a new claim
“for relief from the judgment that defense counsel asserts applies to this case.” Motion to Amend
at 2. D. Wellington’s proposed amended complaint maintains his claim for quiet title and
declaratory judgment in its original form, but adds a new claim for relief from judgment. See First
Amended Complaint to Quiet Title and for Relief from Judgment ¶¶ 17-26, at 4-5, filed June 21,
2021 (Doc. 17-1)(“Amended Complaint”). MTGLQ Investors oppose D. Wellington’s motion,
contending that his proposed amendment is futile for the same reason that his original claim must
be dismissed: res judicata bars D. Wellington from re-litigating claims adjudicated in the prior
suit. See Response to Motion for Leave to File Amended Complaint at 1, filed July 6, 2021 (Doc.
18)(“Response”). In reply, D. Wellington argues that an independent action for relief from
judgment is excepted from the doctrine of res judicata. See Reply to Response to Motion for
Leave to Amend at 1, filed July 12, 2021 (Doc. 19)(“Reply”)(citing Fed. R. Civ. P. 60(d)(1)).
On July 27, 2021, the Honorable Gregory Wormuth, United States Magistrate Judge for
the United States District Court for the District of New Mexico, filed his PFRD addressing the
two pending motions. See PFRD at 1. Magistrate Judge Wormuth recommends granting MTGLQ
Investors’ MTD the Complaint with prejudice. See PFRD at 6-11. In concluding that res judicata
bars D. Wellington’s claim, Magistrate Judge Wormuth concluded that, for this claims’ purposes,
D. Wellington was in privity with his sister, because of their joint tenancy with right of
survivorship in the mortgaged property and the similarity of their respective claims. See PFRD at
8-10.
Magistrate Judge Wormuth also recommends denying D. Wellington’s Motion to Amend
his Complaint. See PFRD at 11-15. Based on D. Wellington’s citation to rule 60(d)(1) of the
Federal Rules of Civil Procedure in his Reply, Magistrate Judge Wormuth determines that D.
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Wellington intends to allege an independent, equitable action for relief from judgment. See PFRD
at 11. Because such an action affords a “narrow exception to res judicata,” Magistrate Judge
Wormuth rejects MTGLQ Investors’ argument that this new claim is precluded in addition to D.
Wellington’s original claim. PFRD at 12. In analyzing the sufficiency of D. Wellington’s new
allegations, however, Magistrate Judge Wormuth determines that the proposed amendment is
futile, because of the lack of sufficient factual allegations showing that D. Wellington’s
circumstances meet the high threshold required to obtain equitable relief from judgment. See
PFRD at 13-14. Because the claim for relief from judgment was separate and distinct from the
claim in the original Complaint, Magistrate Judge Wormuth recommends rejecting D.
Wellington’s Motion to Amend. See PFRD at 14-15; Reply at 1-2.
LAW REGARDING OBJECTIONS TO A PFRD
District courts may refer dispositive motions to a Magistrate Judge for a recommended
disposition. See Fed. R. Civ. P. 72(b)(1)(“A magistrate judge must promptly conduct the required
proceedings when assigned, without the parties’ consent, to hear a pretrial matter dispositive of a
claim or defense or a prisoner petition challenging the conditions of confinement.”). Rule 72(b)(2)
of the Federal Rules of Civil Procedure governs objections: “Within 14 days after being served
with a copy of the recommended disposition, a party may serve and file specific written objections
to the proposed findings and recommendations.” Fed R. Civ. P. 72(b)(2). Finally, when resolving
objections to a Magistrate Judge’s proposal, “[t]he district judge must determine de novo any part
of the magistrate judge’s disposition that has been properly objected to. The district judge may
accept, reject, or modify the recommended disposition; receive further evidence; or return the
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matter to the magistrate judge with instructions.” Fed. R. Civ. P. 72(b)(3). Similarly, 28 U.S.C.
§ 636 provides:
A judge of the court shall make a de novo determination of those portions of the
report or specified proposed findings or recommendations to which objection is
made. A judge of the court may accept, reject, or modify, in whole or in part, the
findings or recommendations made by the magistrate judge. The judge may also
receive further evidence or recommit the matter to the magistrate judge with
instructions.
28 U.S.C. § 636(b)(1)(C).
“The filing of objections to a magistrate’s report enables the district judge to focus attention
on those issues -- factual and legal -- that are at the heart of the parties’ dispute.” United States v.
One Parcel of Real Property, With Buildings, Appurtenances, Improvements, and Contents,
Known As: 2121 East 30th Street, Tulsa Okla., 73 F.3d 1057, 1059 (10th Cir. 1996)(“One
Parcel”)(quoting Thomas v. Arn, 474 U.S. 140, 147 (1985)). As the United States Court of
Appeals for the Tenth Circuit has noted, “the filing of objections advances the interests that
2
underlie the Magistrate’s Act,[ ] including judicial efficiency.” One Parcel, 73 F.3d at 1059 (citing
Niehaus v. Kansas Bar Ass’n, 793 F.2d 1159, 1165 (10th Cir. 1986); United States v. Walters, 638
F.2d 947, 950 (6th Cir. 1981)).
The Tenth Circuit has held “that a party’s objections to the magistrate judge’s report and
recommendation must be both timely and specific to preserve an issue for de novo review by the
district court or for appellate review.”
One Parcel, 73 F.3d at 1060. “To further advance the
policies behind the Magistrate’s Act, [the Tenth Circuit], like numerous other circuits, ha[s]
adopted ‘a firm waiver rule’ that ‘provides that the failure to make timely objections to the
magistrate’s findings or recommendations waives appellate review of both factual and legal
2
Congress enacted the Federal Magistrate’s Act, 28 U.S.C. §§ 631-39, in 1968.
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questions.’” One Parcel, 73 F.3d at 1059 (quoting Moore v. United States, 950 F.2d 656, 659
(10th Cir. 1991)). “[O]nly an objection that is sufficiently specific to focus the district court’s
attention on the factual and legal issues that are truly in dispute will advance the policies behind
the Magistrate’s Act.” One Parcel, 73 F.3d at 1060. In addition to requiring specificity in
Objections, the Tenth Circuit has stated that “[i]ssues raised for the first time in objections to the
magistrate judge’s recommendation are deemed waived.” Marshall v. Chater, 75 F.3d 1421, 1426
(10th Cir. 1996). See United States v. Garfinkle, 261 F.3d 1030, 1030-31 (10th Cir. 2001) (“In
this circuit, theories raised for the first time in objections to the magistrate judge’s report are
deemed waived.”). In an unpublished opinion, the Tenth Circuit stated that “the district court
correctly held that [a petitioner] had waived [an] argument by failing to raise it before the
magistrate.” Pevehouse v. Scibana, 229 F. App’x 795, 796 (10th Cir. 2007)(unpublished).
In One Parcel, in accord with other Courts of Appeals, the Tenth Circuit expanded the
waiver rule to cover objections that are timely but too general. See One Parcel, 73 F.3d at 1060.
The Supreme Court of the United States of America -- in the course of approving the United States
Court of Appeals for the Sixth Circuit’s use of the waiver rule -- has noted:
It does not appear that Congress intended to require district court review of
a magistrate’s factual or legal conclusions, under a de novo or any other standard,
when neither party objects to those findings. The House and Senate Reports
accompanying the 1976 amendments do not expressly consider what sort of review
the district court should perform when no party objects to the magistrate’s report.
See S. Rep. No. 94-625, pp. 9-10 (1976) (hereinafter Senate Report); H.R. Rep. No.
94-1609, p. 11 (1976), U.S. Code Cong. & Admin. News 1976, p. 6162 (hereinafter
House Report). There is nothing in those Reports, however, that demonstrates an
intent to require the district court to give any more consideration to the magistrate’s
report than the court considers appropriate. Moreover, the Subcommittee that
drafted and held hearings on the 1976 amendments had before it the guidelines of
the Administrative Office of the United States Courts concerning the efficient use
of magistrates. Those guidelines recommended to the district courts that “[w]here
a magistrate makes a finding or ruling on a motion or an issue, his determination
should become that of the district court, unless specific objection is filed within a
reasonable time.” See Jurisdiction of United States Magistrates, Hearings on S.
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1283 before the Subcommittee on Improvements in Judicial Machinery of the
Senate Committee on the Judiciary, 94th Cong., 1st Sess., 24 (1975)(emphasis
added)(hereinafter Senate Hearings). The Committee also heard Judge [Charles]
Metzner of the Southern District of New York, the chairman of a Judicial
Conference Committee on the administration of the magistrate system, testify that
he personally followed that practice. See id., at 11 (“If any objections come in,
. . . I review [the record] and decide it. If no objections come in, I merely sign the
magistrate’s order.”). The Judicial Conference of the United States, which
supported the de novo standard of review eventually incorporated in
§ 636(b)(1)(C), opined that in most instances no party would object to the
magistrate’s recommendation, and the litigation would terminate with the judge’s
adoption of the magistrate’s report. See Senate Hearings, at 35, 37. Congress
apparently assumed, therefore, that any party who was dissatisfied for any reason
with the magistrate’s report would file objections, and those objections would
trigger district court review. There is no indication that Congress, in enacting
§ 636(b)(1)(C)), intended to require a district judge to review a magistrate’s report
to which no objections are filed. It did not preclude treating the failure to object as
a procedural default, waiving the right to further consideration of any sort. We thus
find nothing in the statute or the legislative history that convinces us that Congress
intended to forbid a rule such as the one adopted by the Sixth Circuit.
Thomas v. Arn, 474 U.S. at 150-52 (footnotes omitted).
The Tenth Circuit also has noted, “however, that ‘[t]he waiver rule as a procedural bar need
not be applied when the interests of justice so dictate.’” One Parcel, 73 F.3d at 1060 (quoting
Moore v. United States, 950 F.2d at 659 (“We join those circuits that have declined to apply the
waiver rule to a pro se litigant’s failure to object when the magistrate’s order does not apprise the
pro se litigant of the consequences of a failure to object to findings and recommendations.”
(citations omitted)). Cf. Thomas v. Arn, 474 U.S. at 154 (“Any party that desires plenary
consideration by the Article III judge of any issue need only ask. [A failure to object] does not
preclude further review by the district judge, sua sponte or at the request of a party, under a de
novo or any other standard.”). In One Parcel, the Tenth Circuit noted that the district judge had
decided sua sponte to conduct a de novo review despite the objections’ lack of specificity, but the
Tenth Circuit held that it would deem the issues waived on appeal, because it would advance the
interests underlying the waiver rule. See 73 F.3d at 1060-61 (citing cases from other Courts of
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Appeals where district courts elected to address merits despite potential application of waiver rule,
but Courts of Appeals opted to enforce waiver rule).
Where a party files timely and specific objections to the Magistrate Judge’s PFRD, “on . . .
dispositive motions, the statute calls for a de novo determination, not a de novo hearing.” United
States v. Raddatz, 447 U.S. 667, 674 (1980). The Tenth Circuit has stated that a de novo
determination, pursuant to 28 U.S.C. § 636(b), “requires the district court to consider relevant
evidence of record and not merely review the magistrate judge’s recommendation.” Griego v.
Padilla (In re Griego), 64 F.3d 580, 583-84 (10th Cir. 1995). The Supreme Court has noted that,
although a district court must make a de novo determination of the objections to recommendations
under 28 U.S.C. § 636(b)(1), the district court is not precluded from relying on the Magistrate
Judge’s PFRD. See United States v. Raddatz, 447 U.S. at 676 (“[I]n providing for a ‘de novo
determination’ rather than de novo hearing, Congress intended to permit whatever reliance a
district judge, in the exercise of sound judicial discretion, chose to place on a magistrate’s proposed
findings and recommendations.” (quoting 28 U.S.C. § 636(b)(1)); Bratcher v. Bray-Doyle Indep.
Sch. Dist. No. 42 of Stephens Cty., 8 F.3d 722, 724-25 (10th Cir. 1993)(holding that the district
court’s adoption of the Magistrate Judge’s “particular reasonable-hour estimates” is consistent
with a de novo determination, because “the district court ‘may accept, reject, or modify, in whole
or in part, the findings or recommendations made by the magistrate,’ . . . [as] ‘Congress intended
to permit whatever reliance a district judge, in the exercise of sound judicial discretion, chose to
place on a magistrate’s proposed findings and recommendations.’” (quoting 28 U.S.C. § 636(b)(1)
and citing United States v. Raddatz, 447 U.S. at 676 (emphasis omitted)).
Where no party objects to the Magistrate Judge’s proposed findings and recommended
disposition, the Court has, as a matter of course in the past and in the interests of justice, reviewed
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the Magistrate Judge’s recommendations. In Workheiser v. City of Clovis, No. CIV 12-0485
JB/GBW, 2012 WL 6846401 (D.N.M. Dec. 28, 2012)(Browning, J.), where the plaintiff failed to
respond to the Magistrate Judge’s PFRD, although the Court determined that the plaintiff “has
waived his opportunity for the Court to conduct review of the factual and legal findings in the
[proposed findings and recommended disposition],” the Court nevertheless conducted such a
review. 2012 WL 6846401, at *3. The Court generally does not, however, review the Magistrate
Judge’s PFRD de novo, and determine independently necessarily what it would do if the issues
had come before the Court first, but rather adopts the PFRD where “[t]he Court cannot say that
the Magistrate Judge’s recommendation . . . is clearly erroneous, arbitrary, [obviously] 3 contrary
to law, or an abuse of discretion.” Workheiser v. City of Clovis, 2012 WL 6846401, at *3. This
3
The Court previously used as the standard for review when a party does not object to the
Magistrate Judge’s proposed findings and recommended disposition whether the recommendation
was “clearly erroneous, arbitrary, contrary to law, or an abuse of discretion,” thus omitting
“obviously” in front of contrary to law. Solomon v. Holder, No. CIV 12-1039 JB/LAM, 2013
WL 499300, at *4 (D.N.M. Jan. 31, 2013)(Browning, J.)(adopting the recommendation to which
there was no objection, stating: “The Court determines that the PFRD is not clearly erroneous,
arbitrary, contrary to law, or an abuse of discretion, and accordingly adopts the recommendations
therein”); O’Neill v. Jaramillo, No. CIV 11-0858 JB/GBW, 2013 WL 499521 (D.N.M. Jan. 31,
2013)(Browning, J.)(“Having reviewed the PRFD under that standard, the Court cannot say that
the Magistrate Judge’s recommendation is clearly erroneous, arbitrary, contrary to law, or an abuse
of discretion. The Court thus adopts Judge Wormuth’s PFRD.”)(citing Workheiser v. City of
Clovis, 2012 WL 6846401, at *3); Galloway v. JP Morgan Chase & Co., No. CIV 12-0625
JB/RHS, 2013 WL 503744 (D.N.M. Jan. 31, 2013)(Browning, J.)(adopting the Magistrate Judge’s
recommendations upon determining that they were not “clearly contrary to law, or an abuse of
discretion.”). The Court does not believe that “contrary to law” accurately reflects the deferential
standard of review that the Court intends to use when there is no objection. Finding that a
Magistrate Judge’s recommendation is contrary to law would require the Court to analyze the
Magistrate Judge’s application of law to the facts or the Magistrate Judge’s delineation of the facts
-- in other words performing a de novo review, which is required when a party objects to the
recommendations only. The Court believes adding “obviously” better reflects that the Court is not
performing a de novo review of the Magistrate Judges’ recommendations. Going forward,
therefore, the Court will, as it has done for some time now, review Magistrate Judges’
recommendations to which there are no objections for whether the recommendations are clearly
erroneous, arbitrary, obviously contrary to law, or an abuse of discretion.
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review, which is deferential to the Magistrate Judge’s work when there is no objection,
nonetheless provides some review in the interest of justice, and seems more consistent with the
intent of the waiver rule than no review at all or a full-fledged review. Accordingly, the Court
considers this standard of review appropriate. See Thomas v. Arn, 474 U.S. at 151 (“There is
nothing in those Reports, however, that demonstrates an intent to require the district court to give
any more consideration to the magistrate’s report than the court considers appropriate.”). The
Court is reluctant to have no review at all if its name is going to go at the bottom of the order
adopting the Magistrate Judge’s PFRD.
ANALYSIS
D. Wellington presents no Objection to Magistrate Judge Wormuth’s recommendation
that the Court grant MTGLQ Investors’ MTD. See Objections at 1-3. In fact, D. Wellington’s
only reference to the MTD is an assertion that rejecting Magistrate Judge Wormuth’s
recommendation on the Motion to Amend “would also make defense counsel’s pending motion
to dismiss moot.” Objections at 4 n.3. This assertion is incorrect. The MTD relates to the claim
in D. Wellington’s operative Complaint, while D. Wellington’s proposed Amended Complaint
introduces a new claim for relief from judgment. Even if the Court were to grant D. Wellington
leave to amend his Complaint to bring a new claim for relief from judgment, it would not save
his original claim from dismissal. D. Wellington does not specifically object to Magistrate Judge
Wormuth’s recommendation that the Court dismiss his original claim with prejudice because res
judicata bars his original claim. See PFRD at 6-11. The Court therefore reviews de novo the
portion of the PFRD to which D. Wellington objects, but reviews the rest of the PFRD to
determine whether it is clearly erroneous, arbitrary, obviously contrary to law, or an abuse of
discretion. See Workheiser v. City of Clovis, 2012 WL 6846401, at *3. Having reviewed the
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PFRD, the Court agrees that res judicata bars D. Wellington’s original Complaint, and therefore
adopts Magistrate Judge Wormuth’s recommendation to dismiss the Complaint with prejudice. 4
Turning to Magistrate Judge Wormuth’s recommendation that the Court deny D.
Wellington’s Motion to Amend, D. Wellington’s central objection is that Magistrate Judge
Wormuth improperly resolved the Motion to Amend on grounds that the MTGLQ Investors does
not argue. See Objections at 1-3. While MTGLQ Investors raises futility as the basis to deny D.
Wellington leave to amend, its argument is limited to contending that res judicata bars all of D.
Wellington’s claims. See Response at 1. Magistrate Judge Wormuth, on the other hand,
grounded his futility conclusions in an analysis of the requirements to pursue an independent
action for relief from judgment, as rule 60(d) of the Federal Rules of Civil Procedure permits.
See PFRD at 11-15.
Courts have inherent authority to act sua sponte, i.e., of their own accord, on certain
matters. See Link v. Wabash R.R. Co., 370 U.S. 626, 630 (1962). The Tenth Circuit permits
courts dismiss a complaint sua sponte where it is “patently obvious” that the plaintiff cannot
prevail on the facts alleged and that permitting an opportunity to amend would be futile.
McKinney v. Oklahoma, 925 F.2d 363, 365 (10th Cir. 1991). Under this rule, a court must
4
The Court agrees with the result Magistrate Judge Wormuth reaches in his res judicata
analysis, but notes that Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497 (2001), and
Knight v. Mooring Capital Fund, LLC, 749 F.3d 1180 (10th Cir. 2014), establish that federal
common law requires that the law of preclusion of the state in which the diversity court sits
determines the preclusive effect of a judgment of a federal court sitting in diversity. See Semtek
Int’l Inc. v. Lockheed Martin Corp., 531 U.S. at 506-08; Knight v. Mooring Capital Fund, LLC,,
749 F.3d at 1186. See also Matosantos Commer. Corp. v. Applebee’s Int’l, Inc., 245 F.3d 1203,
1207-08 (10th Cir. 2001). The Court, therefore, applies New Mexico res judicata law to all the
elements of the res judicata analysis, and not simply to the question whether D. Wellington and
M. Wellington are in privity. Nevertheless, because the same result is reached, the Court adopts
the PFRD in all other respects.
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determine -- sua sponte -- if the amendment will be futile before it can dismiss a complaint sua
sponte. Thus, a court is not limited to arguments that the parties present when deciding that leave
to amend a complaint would be futile. Sua sponte dismissal “comports with due process and does
not infringe the right of access to the courts” so long as “adequate procedural safeguards” protect
the plaintiff’s ability to raise meritorious claims. Curley v. Perry, 246 F.3d 1278, 1284 (10th Cir.
2001).
Here, there are adequate procedural safeguards concerning Magistrate Judge Wormuth’s
sua sponte reasoning for finding D. Wellington’s proposed amendment futile. First, Magistrate
Judge Wormuth concluded -- and the Court agrees -- that the claim raised in the proposed
Amended Complaint would be subject to dismissal without prejudice. See PFRD at 15. This
conclusion does not prevent D. Wellington from making further amendments and then raising his
new claim in a new suit. See Phillips v. Pub. Serv. Co., 58 F. App’x 407, 409 (10th Cir.
2003)(unpublished)(finding “no real disadvantage” from sua sponte dismissal where the plaintiff
is free to file another complaint). Second, 28 U.S.C. § 636(b)(1)(C)’s mandatory objection period
provided D. Wellington with notice and an opportunity to respond to Magistrate Judge Wormuth’s
recommendations before the Court began to consider them. See Smith v. Dorsey, 30 F.3d 142,
1994 WL 396069, at *3 (10th Cir. 1994)(unpublished table decision)(“Although the magistrate
judge raised the issue sua sponte, there is no due process problem here, as petitioner had an
opportunity to address the matter by objecting to the magistrate judge’s recommendation prior to
the district court’s adoption thereof.”).
D. Wellington argues that he is unable to object to Magistrate Judge Wormuth’s
recommendations, because of the rule that “theories raised for the first time in objections to the
magistrate judge’s recommendations are deemed waived.” Objections at 2 (quoting United States
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v. Garfinkle, 261 F.3d at 1031). D. Wellington misunderstands this rule’s operation. Its purpose
is to prevent a party from undermining the goals of the Magistrate’s Act by making one argument
before the Magistrate Judge and, upon finding it rejected, presenting a new argument to the district
judge. Marshall v. Chater, 75 F.3d at 1427 (“‘Allowing parties to litigate fully their case before
the magistrate and, if unsuccessful, to change their strategy and present a different theory to the
district court would frustrate the purpose of the Magistrates Act.’” (quoting Greenhow v. Sec’y of
Health & Hum. Servs., 863 F.2d 633, 638-39 (9th Cir. 1988), overruled on other grounds by
United States v. Hardesty, 977 F.2d 1347 (9th Cir. 1992))); Paterson-Leitch Co. v. Mass. Mun.
Wholesale Elec. Co., 840 F.2d 985, 991 (1st Cir. 1988)(emphasizing the inefficiency and
fundamental unfairness in permitting a litigant “to set its case in motion before the magistrate,
wait to see which way the wind was blowing, and -- having received an unfavorable
recommendation -- shift gears before the district judge”). In short, this waiver rule prevents parties
from shifting positions.
It does not prevent Magistrate Judges from making sua sponte
recommendations. See, e.g., Smith v. Dorsey, 1994 WL 396069, at *3. Furthermore, the waiver
of issues raised for the first time in Objections is not a “firm waiver,” unlike the rule that “the
failure to make timely objections to the magistrate judge’s findings or recommendations waives
appellate review of both factual and legal questions.” One Parcel, 73 F.3d at 1059. The Court
has discretion to consider newly raised arguments as it deems proper. See, e.g., Hunnicutt v.
Moore, No. CV 18-0667 JB/KRS, 2020 WL 5640625, at *7 (D.N.M. Sept. 21,
2020)(Browning, J.)(exercising discretion to consider the merits of arguments raised for the first
time in objections).
D. Wellington asserts that it would be “inconsistent (and absurd) if a magistrate could
present issues in his recommendation for the very first time, but because a party never addressed
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them before the magistrate (because the opposing party never raised them), any subsequent
objections to the issue would be ‘deemed waived’ by the non-prevailing party.” Objections at 2.
If D. Wellington’s waiver rule interpretation is correct, the result that he describes would indeed
be absurd. That D. Wellington recognizes his interpretation’s absurdity and nonetheless assumes
that it constrains him from raising substantive Objections is hard to understand. D. Wellington
was not prevented from making objections to any matter discussed in the Magistrate Judge’s
PFRD, whether raised by a party or by the Magistrate Judge sua sponte. Indeed, pursuant to the
“firm waiver” rule, Plaintiff was obligated to raise objections to preserve his appellate rights, as
the Magistrate Judge informed him. PFRD at 15 (“A party must file any objections . . . if that
party wants to have appellate review of the proposed findings and recommended disposition. If
no objections are filed, no appellate review will be allowed.”). D. Wellington’s Objection
premised on waiver, therefore, is overruled.
D. Wellington’s only apparent substantive objection is that Magistrate Judge Wormuth
errs in construing his proposed amended complaint as “sounding in fraud.” Objections at 3 n.2.
Whether D. Wellington intended to raise allegations of fraud is beside the point. As Magistrate
Judge Wormuth explained, an independent action for relief from judgment is “available only to
prevent a grave miscarriage of justice” and “reserved for injustices so gross as to justify departing
from ‘rigid adherence to the doctrine of res judicata.’” PFRD at 11 (quoting United States v.
Beggerly, 524 U.S. 38, 46-47 (1998)). Upon de novo review of the proposed amended complaint,
the Court agrees with Magistrate Judge Wormuth that D. Wellington’s allegations are insufficient
to establish that he can meet United States v. Beggerly’s very high threshold, whether premised
on fraud or on some other grounds. The Court agrees, therefore, that D. Wellington’s proposed
amended complaint would be subject to dismissal without prejudice. The Court overrules D.
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Case 1:21-cv-00322-JB-GBW Document 25 Filed 01/10/22 Page 15 of 15
Wellington’s Objections and adopts the Magistrate Judge’s recommendation to deny Plaintiff
leave to amend.
IT IS ORDERED that: (i) the Plaintiff’s Objections to Magistrate Recommendation,
filed August 5, 2021 (Doc. 23), are overruled; (ii) the recommendations in the Magistrate Judge’s
Proposed Findings and Recommended Disposition, filed July 27, 2021 (Doc. 22), are adopted,
but the Court does not adopt all the PFRD’s legal analysis; (iii) the PFRD’s findings and analysis
are otherwise adopted as indicated in this Memorandum Opinion and Order; (iv) Defendant
MTGLQ Investors, LP’s Motion to Dismiss, filed April 20, 2021 (Doc. 11), is granted; (v) the
Plaintiff’s Motion for Leave to File Amended Complaint, filed June 21, 2021 (Doc. 17), is denied,
but the Plaintiff may file his claim for equitable relief from the judgment in MTGLQ Invs., LP v.
Wellington in another action if the Plaintiff thinks he has any more to allege that would satisfy the
United States v. Beggerly, 524 U.S. 38 (1998), standard; (vi) the Plaintiff’s Complaint to Quiet
Title and for Declaratory Relief, filed April 9, 2021 (Doc. 1-1), is dismissed with prejudice; and
(vii) the Court will enter a Final Judgment.
___________________________________
UNITED STATES DISTRICT JUDGE
Counsel and parties:
David Wellington
Albuquerque, New Mexico
Plaintiff Pro Se
Solomon S. Krotzer
Houser LLP
Albuquerque, New Mexico
Attorneys for the Defendants
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