Reaves v. American Home Mortgage Servicing, Inc., et al
ORDER denying 57 Motion for Summary Judgment and accepting 73 Memorandum and Recommendations - Where claims remain for trial, in accordance with case management order entered September 25, 2015, this case now is ripe for entry of an order governing deadlines and procedures for final pretrial conference and trial. The parties are DIRECTED to confer and file within 14 days from the date of this order a joint status report informing of 1) estimated trial length; 2) par ticular pretrial issues which may require court intervention in advance of trial, if any; and 3) three suggested alternative trial dates. In addition, the parties shall specify if they wish to schedule a court-hosted settlement conference or addition al alternative dispute resolution procedures in advance of trial, and if so the date for completion of such. Finally, the parties shall inform whether any additional discovery may aid resolution of the case. Signed by District Judge Louise Wood Flanagan on 9/29/2017.(Certified copy served via U.S. Mail upon Margaret Reaves, 604 Sardis Drive, Raleigh, NC 27603) (Tripp, S.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
AMERICAN HOME MORTGAGE
SERVICING, INC. and OCWEN
LOAN SERVICING, LLC,
This matter is before the court on defendant’s motion for summary judgment. (DE 57).
Pursuant to 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72(b), United States
Magistrate Judge Robert B. Jones, Jr., entered memorandum and recommendation (“M&R”),
wherein it is recommended that the court deny defendant’s motion. Defendants timely filed
objections to the M&R1, and the issues raised are ripe for ruling. For the reasons that follow, the
court accepts the recommendation in the M&R, and denies defendant’s motion.
STATEMENT OF THE CASE
Plaintiff, proceeding pro se, commenced this action April 28, 2015, asserting violations of
federal consumer protection law, breach of contract, and related state law torts against defendants
Plaintiff also objected to the M&R (DE 75-1). However, plaintiffs’ objections address factual matters not
pertinent to magistrate judge’s determination that defendants’ motion for summary judgment should be denied.
Rather, plaintiff objects, primarily, to the magistrate judge’s recitation of certain facts referencing defendants’
contentions that plaintiff failed to make mortgage payments on time. In this manner, plaintiff’s objections constitute
an attempt to litigate the merits of claims, which issues are not now before the court. Therefore, the court does not
address information presented in plaintiff’s objections at this juncture.
American Home Mortgage Servicing, Inc. (“AHMSI”) and Ocwen Loan Servicing, LLC (“Ocwen”).
Plaintiff’s claims arise from defendants’ alleged failures to service properly a loan secured by
property located at 2521 Springhill Ave, Raleigh, North Carolina (“2521 Springhill Ave property”).
Plaintiff seeks compensatory and punitive damages.
Plaintiff initiated prior action asserting similar claims against AHMSI in the General Court
of Justice, Superior Court Division, for Wake County on April 1, 2014, alleging that AHMSI failed
to properly credit her mortgage payments in violation of the North Carolina Unfair and Deceptive
Trade Practices Act. Reeves v. Am. Home Mortg., Inc. (“Reaves I”), No. 14 CVS 4069; see App.
to Defs.’ Stmt. of Material Facts (“SOMF”) Ex. A (DE 62-1). On May 29, 2014, the trustee for nonparty Option One, which was the original servicer for the loan, initiated foreclosure proceedings
against the 2521 Springhill Ave property in Wake County Superior Court. In re Foreclosure of Real
Property Under Deed of Trust from Margaret W. Reeves (“the foreclosure proceeding”), Notice of
Hr’g., No. 14 SP 1727; see App. Defs.’s SOMF Ex. B (DE 62-2). On December 29, 2014, the Wake
County Superior Court stayed Reaves I pending resolution of the foreclosure proceeding. Reaves
I, No. 14 CVS4069, Dec. 29, 2014 Order; see App. to Defs.’ SOMF Ex. C (DE 62-3). The record
taken into this court indicates that the foreclosure proceeding remains pending. (DE 77-2 at 3).
Nothing before the court indicates that the stay of Reaves I has been lifted.
On June 25, 2014, plaintiff filed a complaint against Wells Fargo Bank, Trustee Services of
Carolina, and Brock and Scott in Wake County Superior Court alleging that those defendants did
not credit properly plaintiff’s payments for property taxes, and, as a result, she overpaid her taxes.
Reeves v. Wells Fargo Bank (“Reaves II”), No. 14 CVS 8427; see App. to Defs.’ SOMF Ex. D (DE
62-4). Plaintiff filed a third action August 26, 2014, against Sand Canyon Corporation, Dale
Sugimoto, Brock and Scott, and Ocwen Loan Servicing, alleging that the defendants filed a
fraudulent affidavit with the Wake County Register of Deeds on April 7, 2014, in connection with
the foreclosure proceeding. Reeves v. Sand Canyon Corp. (“Reaves III”), No. 14 CVS 11169; see
App. to Defs.’ SOMF Ex. F (DE 62-6). On December 29, 2014, the Wake County Superior Court
dismissed Reaves II and Reaves III with prejudice. Reaves II, No. 14 CVS 8427, Dec. 29, 2014
Order; see App. to Defs.’ SOMF Ex. E (DE 62-5); Reaves III, No. 14 CVS 11169, Dec. 29, 2014
Order, App. to Defs.’ SOMF Ex. G (DE 62-7).
In this case, standing as Reaves IV, defendants filed the instant motion November 30, 2016,
asserting that plaintiff’s claims are barred by the Rooker-Feldman doctrine and res judicata, or, in
the alternative, that the court should stay this action pursuant to Colorado River abstention pending
resolution of the foreclosure proceeding. In support of their motion, defendants rely upon the state
court files and plaintiff’s complaint. Plaintiff’s response in opposition does not address defendants’
arguments, but constitutes an attempt to present evidence pertinent to the merits of her claims.
STATEMENT OF THE UNDISPUTED FACTS
The court incorporates as follows the statement of facts set forth in the M&R, where such
statement accurately reflects the evidence of record:
Plaintiff's claims relate to actions taken by Defendants in the course of
servicing her mortgage loan, including during foreclosure proceedings in North
Carolina state court. Plaintiff and her now-deceased husband obtained a loan for
$117,600.00 from First Greensboro Home Equity, Inc. on or about December 23,
2002, secured by Plaintiff's residence. Am. Compl. [DE-38] ¶¶ 17, 19. At the time
of origination, Option One was the servicer of the loan, and AHMSI became the
servicer on or about May 2008. Id. ¶¶ 20, 36. AHMSI changed its name to
Homeward Residential Holdings in December 2012, and was acquired that same
month by Ocwen's parent corporation (Ocwen Financial Corporation). Id. ¶¶ 2-3. On
or about June 7, 2013, Plaintiff received a letter from Ocwen on behalf of Homeward
Residential informing her that she was delinquent on the loan by 21 payments. Id.
¶ 54. According to Plaintiff, Defendants violated federal, state, and common law in
connection with servicing Plaintiffs mortgage loan by wrongfully taking the
(i) adjusted escrow withholdings in amounts and at times that are not
permitted; (ii) failed to respond to inquiries by [P]laintiff within the
time required by law; (iii) when they did respond, Defendants failed
to do so timely as required by law; (iv) failed to properly credit
payments received from [P]laintiff; (v) failed to notify Plaintiff [that]
payments received from her were not being credited, but rather held
for an unreasonable duration of time; (vi) failed to return funds which
Defendants [were] under [an] obligation to return; (vii) making
written and verbal false and misleading statements as to the amount
owed and status of Plaintiff's account; (viii) notified Plaintiff that
they and other Defendants had commenced foreclosure or other
proceedings, notwithstanding that they were not permitted to
commence those proceedings; (ix) failed to timely and clearly advise
Plaintiff of changes to her obligations predicated upon Defendants’
files; and (x) frustrated and/or harassed Plaintiff who attempted to
find out more information concerning her mortgages and her rights
and obligations [thereunder].
Id. ¶ 14.
Specifically, Plaintiff claims that Defendants violated the Real Estate
Settlement Practices Act (“RESPA”), 12 U.S.C. § 2601 et seq., by failing to respond
to qualified written requests sent by Plaintiff, Am. Compl. [DE-38] ¶¶ 60-66;
violated the Truth in Lending Act (“TILA”);15 U.S.C. § 160.1 et seq., by failing to
provide required notices, Am. Com pl. [DE-3 ¶¶ 67-7]; violated the Fair Debt
Collection Practices Act (“FDCPA”), 15 U.S. C. § 1692 et seq., by making false and
misleading representations to Plaintiff about the character, amount, and legal status
of her debt, Am. Compl. [DE-38] ¶¶ 72–80; violated the North Carolina Fair Debt
Collection Practices Act (“NCDCPA”), N.C. Gen. Stat. § 75-50 et seq., by engaging
in unfair acts in collecting Plaintiff's debt, Am. Compl. [DE 38] ¶¶ 81–87; violated
the North Carolina Unfair and Deceptive Trade Practices Act (“NC UDTPA”), N.C.
Gen; Stat.§ 75-1.1 et seq., by failing to properly credit Plaintiff's account, charging
unauthorized fees and costs, and sending false and misleading communications, Am.
Compl. [DE-38] at ¶¶ 88-94; breached Plaintiffs contract by improperly crediting
Plaintiff's account, charging unauthorized fees and costs, and attempting to foreclose
on Plaintiff's residence when she was not in default, Am. Compl. [DE-38] ¶¶ 95–99;
breached the implied covenant of good faith and fair dealing by acting to deprive
Plaintiff of her contractually-bestowed benefits and preventing her from fulfilling her
contractual obligations, Id. ¶¶ 100–04; and acted negligently in the course of
servicing Plaintiff's mortgage loan, Id. ¶¶ 105–09. Plaintiff seeks monetary relief, to
include actual, statutory, compensatory, and punitive damages, costs, and attorney's
fees. Id. at 23-24 ¶¶ 1–10.
(DE 73 at 2-4).
Standard of Review
Summary judgment is appropriate where “the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). The party seeking summary judgment “bears the initial responsibility of informing the district
court of the basis for its motion, and identifying those portions of [the record] which it believes
demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317,
Once the moving party has met its burden, the non-moving party must then “come forward
with specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. Ltd.
v. Zenith Radio Corp., 475 U.S. 574, 586–87 (1986) (internal quotation omitted). Only disputes
between the parties over facts that might affect the outcome of the case properly preclude the entry
of summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (holding
that a factual dispute is “material” only if it might affect the outcome of the suit and “genuine” only
if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party).
“[A]t the summary judgment stage the [court’s] function is not [itself] to weigh the evidence
and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Id.
at 249. In determining whether there is a genuine issue for trial, “evidence of the non-movant is to
be believed, and all justifiable inferences are to be drawn in [non-movant’s] favor.” Id. at 255; see
United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (“On summary judgment the inferences to
be drawn from the underlying facts contained in [affidavits, attached exhibits, and depositions] must
be viewed in the light most favorable to the party opposing the motion.”).
Nevertheless, “permissible inferences must still be within the range of reasonable probability,
. . . and it is the duty of the court to withdraw the case from the [factfinder] when the necessary
inference is so tenuous that it rests merely upon speculation and conjecture.” Lovelace v. SherwinWilliams Co., 681 F.2d 230, 241 (4th Cir. 1982) (quotations omitted). Thus, judgment as a matter
of law is warranted where “the verdict in favor of the non-moving party would necessarily be based
on speculation and conjecture.” Myrick v. Prime Ins. Syndicate, Inc., 395 F.3d 485, 489 (4th Cir.
2005). By contrast, when “the evidence as a whole is susceptible of more than one reasonable
inference, a [triable] issue is created,” and judgment as a matter of law should be denied.
Id. at 489-90.
To assist in its review of a dispositive motion, the court may “designate a magistrate judge
to conduct hearings . . . and to submit . . . proposed findings of fact and recommendations for the
disposition [of the motions for judgment on the pleadings].” See 28 U.S.C. § 636(b)(1)(B). The
parties may object to the magistrate judge’s findings and recommendations, and 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.” Id. § 636(b)(1). The court does not perform a de
novo review where a party makes only “general and conclusory objections that do not direct the
court to a specific error in the magistrate’s proposed findings and recommendations.” Orpiano v.
Johnson, 687 F.2d 44, 47 (4th Cir.1982). Absent a specific and timely filed objection, the court
reviews only for “clear error,” and need not give any explanation for adopting the M&R. Diamond
v. Colonial Life & Accident Ins. Co., 416 F.3d 310, 315 (4th Cir. 2005); Camby v. Davis, 718 F.2d
198, 200 (4th Cir.1983). Upon careful review of the record, “the court may accept, reject, or modify,
in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. §
Under the Rooker-Feldman doctrine, district courts lack subject matter jurisdiction to hear
actions “brought by state-court losers complaining of injuries caused by state-court judgments
rendered before the district court proceedings commenced and inviting district court review and
rejection of those judgments.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284
(2005). The doctrine applies only “when the loser in state court files suit in federal district court
seeking redress for an injury allegedly caused by the state court’s decision itself.” Davani v. Va.
Dep’t of Transp., 434 F.3d 712, 713 (4th Cir. 2006). By contrast, the doctrine does not apply where
a federal plaintiff asserts a claim independent of the prior state claim, such as where the injury
complained of in federal court was caused by a third party rather than by the state court judgment
itself. See Exxon, 554 U.S. at 293; Davani, 434 F.3d at 719.
Defendants lodge no specific objection to the magistrate judge’s determination that plaintiff’s
claims are not barred by the Rooker-Feldman doctrine; rather, defendants’ merely note general
disagreement with the magistrate judge’s determination and proceed to advance argument under
principles of res judicata not raised before the magistrate judge. (See DE 77 at 4). Accordingly, the
court finds that arguments set forth in plaintiff’s objections pertaining to the Rooker-Feldman
doctrine raise no issues for the court to review de novo. See Orpaino, 687 F.2d at 47. Therefore,
the court adopts in full the analysis set forth in section IV.A. of the M&R concluding that the
Rooker-Feldman doctrine presents no bar to plaintiff’s claims, where said claims constitute
independent legal action vis a vis her earlier claims and do not seek impermissible appellate review
of claims previously decided in state court. See Exxon, 554 U.S. at 293.
In their objections, defendants assert, for the first time, that plaintiff’s claims are res judicata
barred, where the Wake County Superior Court dismissed Reaves II and Reaves III, with prejudice.
“Generally, the preclusive effect of a judgment rendered in state court is determined by the law of
the state in which the judgment was rendered.” Laurel Sand & Gravel, Inc. v. Wilson, 519 F.3d 156,
162 (4th Cir. 2008). Under North Carolina law, “a final judgment on the merits in one action
precludes a second suit based on the same cause of action between the same parties or their privies.”
Whitacre P’Ship v. Biosignia, Inc., 358 N.C. 1, 15 (2004). The doctrine bars relitigation of all
matters that were actually determined or, “in the exercise of due diligence could have been presented
for determination in the prior action.” Bockweg v. Anderson, 333 N.C. 486, 498 (1993). “A
dismissal with prejudice is an adjudication on the merits and has res judicata implications.” Caswell
Realty Assocs. I, L.P. v. Andrews Co., 128 N.C. App. 716, 720 (1998).
In the instant matter, plaintiff’s claims are not res judicata barred because plaintiff does not
seek to relitigate claims dismissed in Reaves II or Reaves III. Plaintiff’s complaint in Reaves II
includes allegations of improper mortgage servicing based upon largely the same facts alleged in
the instant matter. Compare, Reaves II, Pl.’s Compl. ¶¶ 3–23, No. 14 CVS 8427 (DE 62-4) (alleging
improper mortgage servicing between 2008 and 2014)), with (DE 38 ¶¶ 17–59 (same)). However,
the caption of Reaves II, both as it appears on the face of the complaint and upon the Superior
Court’s order dismissing the case with prejudice, indicates that none of the defendants in this matter
were parties to Reaves II. See Reaves II, Pl.’s Compl., No. 14 CVS 8427; App. Defs.’ SOMF Ex.
D (DE 62-4) (captioned defendants consisting of Wells Fargo Bank, Trustee Services of North
Carolina, and Brock and Scott); id., Dec. 29, 2014 Order; App. to Defs.’ SOMF Ex. E (DE 62-5)
(same). Defendants direct the court’s attention to no evidence establishing that any Reaves II
defendant is identical to or in privity with any party appearing here, and the court’s independent
review of the record discloses no such identity or privity, either. Accordingly, plaintiff’s claims are
not res judicata barred based upon earlier dismissal of Reaves II. See Whitacre, 358 N.C. at 15.
With respect to Reaves III, defendants argue that plaintiff’s claims are res judicata barred
where plaintiff’s complaint in Reaves III alleged facts pertaining to servicing of plaintiff’s loan and
where defendant Ocwen appeared as a defendant in Reaves III. This argument fails, however,
because plaintiff’s claims in Reaves III, in fact, arose out of alleged false affidavits filed in the
foreclosure proceeding and did not embrace underlying allegations of improper loan servicing. See
Reaves III, Compl. at 1–2, No. 14 CVS 11169; App. Defs.’ SOMF Ex. F (DE 62-6). Thus, the Wake
County Superior Court did not adjudicate plaintiff’s underlying claims of improper loan servicing.
See Bockweg, 333 N.C. at 498.2
Defendants argue that the instant action is precluded based upon dismissal of Reaves III on
the ground that plaintiff’s claims in that action should be read broadly to embrace plaintiff’s
Defendants do not argue expressly that, in the alternative, plaintiff’s claims “could have been brought” in
the dismissed actions. See Bockweg, 333 N.C. at 498. The court considers res judicata on this alternative basis
waived. See State v. Mackenzie, 292 N.C. 170, 176 (1977) (“[T]he defense of res judicata is waived unless properly
raised in the trial court.”). In any event, this case presents an anomalous fact pattern where plaintiff indeed asserted
her underlying claims of improper loan servicing in Reaves I, which presently is stayed, but did not reassert those
claims in Reaves III, which was dismissed. Defendants cite no authority suggesting that a plaintiff complaining of
injuries occurring after the filing date of a pending lawsuit (here Reaves I) must re-allege the same claims in a later
lawsuit (here Reaves III) to avoid preclusive consequences in the event the later-filed action is decided on the merits
before the earlier-filed action is adjudicated, as here. On the unusual facts of this case, where the state court could
have managed the state cases differently, such as through consolidation of cases, dismissal of the instant action
based upon res judicata is unwarranted. See Bockweg, 333 N.C. at 498; see also 18 Charles Alan Wright & Arthur
R. Miller, Federal Practice and Procedure § 4404 (3d. ed. 2017) (“[C]omplicated questions may arise when –
through inattention or poorly managed strategic maneuvering – the parties and courts stumble into situations that are
not readily answered either by preclusion theory or by common sense.”).
underlying claims of improper loan servicing. However, although the complaint in Reaves III makes
reference to plaintiff’s underlying claims of improper loan servicing, see Reaves III, No. 14 CVS
11169; see App. Defs.’s SOMF Ex. B (DE 62-2) (“I have been fighting for my home since 2009”)),
the facts alleged in that complaint are germane to plaintiff’s allegation that the Reaves III defendants
filed a false affidavit April 7, 2014, in connection with the foreclosure proceeding. Therefore,
defendants’ argument that the Wake County Superior Court’s dismissal with prejudice of Reaves
III embraces claims asserted in this action is without merit.
Colorado River Abstention
Under the doctrine of Colorado River abstention, a district court may “abstain where parallel
litigation exists in federal and state court and exceptional circumstances warrant abstention.”
Gannet Co. v. Clark Constr. Grp., 286 F.3d 737, 740 (4th Cir. 2002) (internal citations omitted).
“The rule is well recognized that the pendency of an action in the state court is no bar to proceedings
concerning the same matter in the Federal court having jurisdiction.” vonRosenberg v. Lawrence,
849 F.3d 163, 167 (4th Cir. 2017) (quoting McClellan v. Carland, 217 U.S. 268, 282 (1910)). Thus,
“[t]he doctrine of abstention, under which a District Court may decline to exercise or postpone the
exercise of its jurisdiction, is an extraordinary and narrow exception to the duty of a District Court
to adjudicate a controversy properly before it.” Colorado River Water Conservation Dist. v. United
States, 424 U.S. 800, 813 (1976). “The Supreme Court has recognized several factors that are
relevant in determining whether a particular case presents such exceptional circumstances: (1)
jurisdiction over the property; (2) inconvenience of the federal forum; (3) the desirability of avoiding
piecemeal litigation; (4) the order in which jurisdiction was obtained; (5) whether federal law is
implicated; and (6) whether the state court proceedings are adequate to protect the parties’ rights.”
Gannet, 286 F.3d at 741.
In the instant matter, multiple factors weigh against abstention. First, this in personam action
does not invoke the court’s jurisdiction over any property, as does the foreclosure proceeding. See
id.; see also Princess Lida of Thurn and Taxis v. Thompson, 305 U.S. 456, 466–67 (1939) (holding
concurrent litigation between state and federal courts permissible for actions in personam but that
“if the two suits are in rem, or quasi in rem, . . . the jurisdiction the one court must yield to that of
the other.”). Second, defendants concede that this forum is not inconvenient. See Gannet, 286 F.3d
at 741. Third, three counts of the complaint assert violations of federal law; thus, “federal law is
implicated[.]” See id. The court also finds that abstention would serve to minimize piecemeal
litigation, that the Wake County Superior Court first obtained jurisdiction over some of plaintiff’s
claims, and that the state court proceedings are adequate to protect the parties’ rights, which factors
each weigh in favor of abstention. See id. However, none of the foregoing factors weighing in favor
of abstention are out of the ordinary for any parallel litigation in the state and federal courts;
therefore, in light of all the Gannet factors, defendants have not demonstrated the presence of
“exceptional circumstances” justifying abstention. See Gannet, 286 F.3d at 741.
Defendants’ argument to the contrary, which emphasizes efficiencies gained by allowing the
foreclosure proceeding and Reaves I to proceed to judgment before continuation of this action, does
not overcome the strong presumption that this court will exercise its jurisdiction when a claimant
properly invokes it. See Colorado River, 424 U.S. at 813. Therefore, defendants’ request for stay
under abstention principles is denied.
Based upon the foregoing, the court ACCEPTS the recommendation in the M&R and
DENIES defendants’ motion for summary judgment (DE 57). Where claims remain for trial, in
accordance with case management order entered September 25, 2015, this case now is ripe for entry
of an order governing deadlines and procedures for final pretrial conference and trial. The parties
are DIRECTED to confer and file within 14 days from the date of this order a joint status report
informing of 1) estimated trial length; 2) particular pretrial issues which may require court
intervention in advance of trail, if any; and 3) three suggested alternative trial dates. In addition, the
parties shall specify if they wish to schedule a court-hosted settlement conference or additional
alternative dispute resolution procedures in advance of trial, and if so the date for completion of
such. Finally, the parties shall inform whether any additional discovery may aid resolution of the
SO ORDERED, this the 29th day of September, 2017.
LOUISE W. FLANAGAN
United States District Judge
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