Martinez v. BAC Home Loans Servicing, L.P. et al

Filing 33

OPINION AND ORDER re: 11 MOTION to Dismiss filed by BAC Home Loans Servicing, L.P. For the foregoing reasons, Defendant's motion to dismiss is GRANTED. The Clerk of the Court is directed to close the motion at Docket No. 21 and the case. (Signed by Judge Lorna G. Schofield on 6/13/2014) (mro)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
ISABEL MARTINEZ,
:
Plaintiff,
:
:
-against:
:
BAC HOME LOANS SERVICING, L.P., et al., :
Defendants. :
:
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6/13/14

13 Civ. 02867 (LGS)
OPINION AND ORDER

LORNA G. SCHOFIELD, District Judge:
Pro se Plaintiff Isabel Martinez brought this case against Defendants Bank of America,
N.A., and three John Does for alleged predatory lending practices that led to the foreclosure on
her Pennsylvania home. This case is now before the Court on Defendant Bank of America’s
Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following
reasons, the Court grants Defendant’s motion.
BACKGROUND
The following facts are taken from the Complaint, the mortgage agreement attached
thereto and the Pennsylvania state court order dated April 5, 2013.1
On or about July 19, 2006, Plaintiff obtained a loan in the amount of $141,300 from
Countrywide Home Loans, Inc., secured by a mortgage on a residence located at 25 S. Madison
Street, Allentown, Pennsylvania. After Plaintiff defaulted on her mortgage, Defendant Bank of

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Although the April 5 order was attached to Defendant’s moving papers rather than the
Complaint, the Court takes judicial notice of it pursuant to Rule 201(b) of the Federal Rules of
Evidence. See Oneida Indian Nation v. New York, 691 F.2d 1070, 1086 (2d Cir. 1982) (“When
there is no dispute as to the authenticity of . . . materials and judicial notice is limited to law,
legislative facts, or factual matters that are incontrovertible, such notice is admissible.”).

America2 brought suit against her in the Lehigh County Court of Common Pleas in
Pennsylvania. On April 5, 2013, that court granted judgment in mortgage foreclosure against
Plaintiff in the amount of $196,733.48.
On April 30, 2013, Plaintiff commenced the action before this Court. The Complaint
alleges that Defendant engaged in predatory lending practices and illegally foreclosed on her
house. On October 21, 2013, Defendant moved to dismiss on the grounds that Plaintiff’s claims
are barred by res judicata and that they also fail as a matter of law. Plaintiff submitted two
substantially similar oppositions, respectively on January 6, 2014, and January 17, 2014.
Defendant filed its reply on January 24, 2014.
STANDARD
On a motion to dismiss, this Court accepts as true all well-pleaded factual allegations and
draws all reasonable inferences in favor of the non-moving party. See Anderson News, L.L.C. v.
Am. Media, Inc., 680 F.3d 162, 185 (2d Cir. 2012), cert denied, 133 S. Ct. 846 (2013). To
withstand dismissal, a pleading “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 Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Threadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.
While “‘detailed factual allegations’” are not necessary, the pleading must be supported by more
than mere “‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of
action.’” Id. (quoting Twombly, 550 U.S. at 555). “Nor does a complaint suffice if it tenders
‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Id. (alteration in original)
(quoting Twombly, 550 U.S. at 557). Rule 8 of the Federal Rules of Civil Procedure “requires
2

Bank of America is the successor in interest to BAC Home Loans Servicing, L.P., which was
formerly known as Countrywide Home Loans Servicing, L.P.
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factual allegations that are sufficient to ‘give the defendant fair notice of what the . . . claim is
and the grounds upon which it rests.’” Anderson News, 680 F.3d at 182 (alteration in original)
(quoting Twombly, 550 U.S. at 555). Moreover, “where the well-pleaded facts do not permit the
court to infer more than the mere possibility of misconduct, the complaint has alleged – but it has
not shown – that the pleader is entitled to relief.” Iqbal, 556 U.S. at 679 (internal quotation
marks omitted); see also Fed. R. Civ. P. 8(a)(2).
In construing complaints by plaintiffs proceeding pro se, the court “appl[ies] a more
flexible standard to evaluate their sufficiency than [it] would when reviewing a complaint
submitted by counsel.” Lerman v. Bd. of Elections, 232 F.3d 135, 140 (2d Cir. 2000); see
Erickson v. Pardus, 551 U.S. 89, 94 (2007) (“[A] pro se complaint, however inartfully pleaded,
must be held to less stringent standards than formal pleadings drafted by lawyers.” (internal
quotation marks omitted)). Thus, the court is obligated to construe pro se pleadings with
“‘special solicitude,’ interpreting the complaint to raise the ‘strongest [claims] that [it]
suggest[s].’” Hill v. Curcione, 657 F.3d 116, 122 (2d Cir. 2011) (alterations in original) (quoting
Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 474-75 (2d Cir. 2006)).
DISCUSSION
Plaintiff’s claims are barred by res judicata as a result of the Pennsylvania state court’s
foreclosure judgment against her.
The doctrine of res judicata establishes that “a final judgment on the merits of an action
precludes the parties or their privies from relitigating issues that were or could have been raised
in that action.” Allen v. McCurry, 449 U.S. 90, 94 (1980). Federal courts “consistently accord[]
preclusive effect to issues decided by state courts,” thereby “promot[ing] the comity between
state and federal courts . . . .” Id. at 95-96. “When ‘determin[ing] the effect of a state court
judgment, federal courts . . . are required to apply the preclusion law of the rendering state.’”
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Giannone v. York Tape & Label, Inc., 548 F.3d 191, 192-93 (2d. Cir. 2008) (alteration in
original) (quoting Conopco, Inc. v. Roll Int’l, 231 F.3d 82, 87 (2d. Cir. 2000)). Under the law of
Pennsylvania, where the foreclosure judgment was rendered, the application of res judicata
requires “a concurrence of four conditions: 1) [i]dentity in the thing sued upon; 2) [i]dentity of
the cause of action; 3) [i]dentity of persons and parties to the action; and, 4) [i]dentity of the
quality or capacity of the parties suing or sued.” Stevenson v. Silverman, 208 A.2d 786, 787-88
(Pa. 1965). The Pennsylvania Supreme Court held that “a broad view should be taken” of res
judicata, and that its application should not be restricted by “technical requirements . . . contrived
only to obscure the real purpose – a second trial on the same cause by the same parties.”
Hochman v. Mortg. Fin. Corp., 137 A. 252, 253 (Pa. 1927); see Sheridan v. NGK Metals Corp.,
609 F.3d 239, 261 (3d Cir. 2010) (“We take a broad view of what constitutes the same cause of
action.” (internal quotation marks omitted)). Moreover, res judicata “applies not only to claims
actually litigated, but also to claims which could have been litigated during the first proceeding if
they were part of the same cause of action.” Balent v. City of Wilkes-Barre, 669 A.2d 309, 313
(Pa. 1995).
The parties in this action, Plaintiff Martinez and Defendant Bank of America, are the
same two parties to the foreclosure action before the Pennsylvania Court of Common Pleas.
Moreover, all of Plaintiff’s claims – even when liberally construed to encompass fraud, unjust
enrichment, conspiracy, due process and perhaps the Fair Debt Collection Practices Act –
concern the defaulted mortgage loan that led to the foreclosure of Plaintiff’s Pennsylvania house,
and could have been brought in the foreclosure action. Res judicata therefore bars Plaintiff from
bringing those claims here. See Easley v. New Century Mortg. Corp., 394 F. App’x 946, 947,
949 (3d. Cir. 2010) (finding that the plaintiff’s Pennsylvania law claim based on allegations of
“misrepresentation, deception, unfair trade practices, wrongful use of the foreclosure process,
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and a host of other wrongs related to the mortgage and foreclosure” were “intimately tied to the
creation of the mortgage and subsequent foreclosure,” and therefore could have been brought as
a counterclaim in the foreclosure action); see also Wexler v. Citibank, No. 94 Civ. 4172, 1994
WL 580191, at *5 (E.D. Pa. Oct. 21, 1994) (holding that res judicata barred the plaintiffs from
bringing an action in federal court to challenge the validity of their mortgage because the same
issue had already been adjudicated in a prior Pennsylvania state court foreclosure action); Smith
v. Litton Loan Servicing, LP, No. 04 Civ. 2846, 2005 WL 289927, at *5 (E.D. Pa. Feb. 4, 2005)
(finding that the plaintiffs’ arguments relating to the validity of their mortgage under federal law
“would have been defenses to foreclosure,” and therefore that a foreclosure judgment in
Pennsylvania state court “constitute[d] a bar to the reassertion of [their] claims in their attempt to
collaterally attack the foreclosure judgment in [federal] [c]ourt”).
Plaintiff argues that she “was denied personal delivery of the summons and notice” in the
state court foreclosure action. To the extent that the argument challenges the validity of the
judgment issued by the Pennsylvania court, it is one to be raised with that court, not in a
collateral attack here. Moreover, although the foreclosure judgment here apparently was issued
upon Plaintiff’s default,3 Pennsylvania state law has long held that “a judgment by default is res
judicata and quite as conclusive as one rendered on a verdict after litigation insofar as a
defaulting defendant is conceived.” Zimmer v. Zimmer, 326 A.2d 318, 320 (Pa. 1974). Courts in
the Third Circuit have applied res judicata to foreclose suits that attempt to relitigate default
foreclosure judgments obtained in Pennsylvania courts. See, e.g., Moncrief v. Chase Manhattan
Mortg. Corp., 275 F. App’x 149, 153-54 (3d Cir. 2008) (holding that because the plaintiff could
3

The Complaint does not plead, nor does the Pennsylvania state court order make apparent, that
the foreclosure judgment was issued upon Plaintiff’s default in the underlying action. Indeed,
the only references to Plaintiff’s default in the underlying action are in Defendant’s motion
papers. Nevertheless, in light of the discussion to follow, this issue need not be resolved.
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have raised her argument regarding the legality of her mortgage in state court proceedings that
ended in a default foreclosure judgment against her, the claim preclusion doctrine under
Pennsylvania law barred her federal suit over same); see also Laychock v. Wells Fargo Home
Mortg., No. 07 Civ. 4478, 2008 WL 2890962, at *4 n.5 (E.D. Pa. July 23, 2008) (prohibiting the
plaintiff from relitigating the legitimacy of a foreclosure judgment obtained in default), aff’d,
399 F. App’x 716 (3d Cir. 2010); Wexler, 1994 WL 580191, at *5 (same).
Plaintiff’s other arguments are similarly unavailing. Plaintiff contends that Defendant’s
motion is untimely; the docket sheet shows, however, that Defendant filed the instant motion on
October 21, 2013, even before Defendant was served with the Complaint on October 25, 2013.
Plaintiff also asserts that the declaration of Scott H. Kaiser, an attorney for Defendant, must be
rejected because he lacks “first-hand knowledge of any facts.” While Plaintiff is correct that Mr.
Kaiser’s assertions in his declaration should not be considered on this motion, which concerns
only the sufficiency of the pleadings, the Court is nevertheless entitled to take judicial notice of
facts “not subject to reasonable dispute,” such as the Pennsylvania state court order attached to
the declaration. Fed. R. Evid. 201(b); see Hirsch v. Arthur Andersen & Co., 72 F.3d 1085, 1095
(2d Cir. 1995).
The Court notes that a case with strikingly similar facts was recently dismissed by Judge
Forrest. Vargas v. Countrywide Home Loans, Inc., No. 12 Civ. 6857, 2013 WL 5881543
(S.D.N.Y. Nov. 1, 2013). That case also involved a collateral attack in this Court on a default
foreclosure judgment issued by the Lehigh County Court of Common Pleas in Pennsylvania, and
the complaint made similar allegations of “fraud, predatory lending, and deceptive practices in
connection with a mortgage loan.” Id. at *1. Indeed, as Defendants pointed out, the plaintiffs in
that case apparently now reside at the same New York address as Plaintiff here, and the

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foreclosed-upon properties in both cases are located in Allentown, Pennsylvania. Judge Forrest
dismissed that action on res judicata grounds. This opinion accords with Vargas in all respects.
CONCLUSION
For the foregoing reasons, Defendant’s motion to dismiss is GRANTED. The Clerk of
the Court is directed to close the motion at Docket No. 21 and the case.
SO ORDERED.
Dated: June 13, 2014
New York, New York

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