SHEDD et al v. BANK OF AMERICA NA, No. 4:2011cv00202 - Document 12 (M.D. Ga. 2012)
Court Description: ORDER granting 5 Motion to Dismiss Complaint Ordered by Judge Clay D. Land on 06/22/2012.(aaf)
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IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA COLUMBUS DIVISION DANNY SHEDD and JACINDA SHEDD, Plaintiffs, * * vs. * BANK OF AMERICA, N.A., * CASE NO. 4:11-CV-202 (CDL) Defendant. * O R D E R An Oklahoma state court entered a final judgment against Plaintiffs based upon their default on their mortgage on property located there, authorizing foreclosure on and sale of that property. Notwithstanding that valid state court judgment, Plaintiffs filed the present action in this Court against their lender’s successor based on the handling of that loan and the subsequent foreclosure on their property. asserted in this federal action are Because the claims inextricably intertwined with the claims that were finally decided in the Oklahoma state court action, this Court lacks subject matter jurisdiction to hear those claims under the Rooker-Feldman doctrine. Accordingly, this action is dismissed for lack of subject matter jurisdiction. FACTUAL BACKGROUND Viewed in the light most favorable to the Plaintiffs, the facts are as follows.1 In April 2007, Plaintiffs Danny and Jacinda Shedd (“Shedds”) executed a mortgage conveying a security interest in their home American in Brokers Bartlesville, Conduit, Oklahoma which was (“the Property”) subsequently assigned to to Countrywide Home Loans Servicing, LP (“Countrywide”), which is now Bank of America, N.A. (“BOA”) as a result of a merger. Compl. ¶ 7, ECF No. 1. After Mr. Shedd joined the Army in July 2008 and learned that he would be assigned to a post outside the state of Oklahoma, Mrs. Shedd called Countrywide to inquire about programs for active duty military who are required to move to a state other than where their residence is located. Id. ¶¶ 9-10. Shedds Countrywide submitted Countrywide, Mr. informed Shedd’s then, Mrs. Shedd active-duty without any that if military additional the orders to process or communications with Countrywide, the Shedds would qualify for a ninety day forbearance on their mortgage payments. 12. Id. ¶¶ 11- Mrs. Shedd then faxed Mr. Shedd’s military orders to Countrywide. Id. ¶ 13. 1 Because Defendants assert a facial challenge to subject matter jurisdiction, these “facts” are derived from the allegations in the pleadings and their attachments. See Samco Global Arms, Inc. v. Arita, 395 F.3d 1212, 1214 n.4 (11th Cir. 2005). 2 The Shedds listed the Property for sale on August 1, 2008 after Mr. Shedd Georgia. was ordered Id. ¶¶ 14-15. mortgage payment, but to report to Fort Benning in The Shedds paid their August 2008 they did not pay September, October, or November 2008. the mortgage Id. ¶ 16. in Mrs. Shedd contacted Countrywide and informed the company that she and Mr. Shedd had moved out of the Property and gave Countrywide their new Georgia address and their cell phone numbers. Id. ¶¶ 17-18. In November 2008, the Shedds sought to purchase a home in Georgia. Id. ¶ 19. Countrywide told the Shedds that they were approved for a mortgage contingent upon renting the Property. Id. ¶ 20. In December 2008, Mrs. Shedd attempted to pay the Property mortgage online, but her account was locked. In preparation for purchasing the home in Id. ¶ 22. Georgia, Mr. Shedd pulled his and Mrs. Shedd’s credit reports at the end of December 2008. Id. ¶ 24. These reports showed that the Shedds’ credit scores had dropped and reported a foreclosure status on the Property. Id. ¶ 25. After seeing these reports, Mr. Shedd called Countrywide and was informed that the Property was in foreclosure, no military orders had been received, and the Shedds had not been given the ninety day forbearance period that they requested under the Servicemembers Civil Relief (“SCRA”), 50 U.S.C. app. § 501 et seq. Id. ¶¶ 26, 28. Shedd active-duty then mailed another copy 3 of his Act Mr. military orders to Countrywide. Id. ¶ 27. In January 2009, Countrywide informed Mrs. Shedd that it had not previously received Mr. Shedd’s military orders and informed Mr. Shedd it was sorry for the mistake and would correct the past due payments. Id. ¶¶ 29-30. Notwithstanding these communications to the Shedds, Countrywide filed suit on January 13, 2009 against the Shedds in Oklahoma state court, seeking a judgment against them for the amount due on the note and mortgage to the Property and a decree of foreclosure to sell the Property (“Oklahoma lawsuit”). Compl. Ex. 1, Petition 2 & ¶¶ 10-11, Countrywide Home Loans Servicing, LP v. Shedd, No. CJ-2009-22 (D. Ct. Washington Cnty., Okla. Jan. 13, 2009) [hereinafter Countrywide], ECF No. 1-2 at 2. On January 26, 2009, a process server served the Shedds with summonses in the Oklahoma lawsuit. Compl. ¶¶ 32-33; Compl. Ex. 1, D. Shedd Aff. of Service 1, Countrywide, ECF No. 1-2 at 21; Compl. Ex. 1 J. Shedd Aff. of Service 1, Countrywide, ECF No. 1-2 at 24. After being served with the Oklahoma lawsuit, on January 28, 2009 Mr. Shedd again sent Countrywide his military orders. Compl. ¶ 36. Thereafter, a Countrywide representative apologized and told Mr. Shedd that Countrywide was granting the Shedds a modification, so they should disregard the summons, not call back, and wait for a call 4 from a loan modification negotiator. Id. ¶¶ 37-38. The Shedds called Countrywide again on March 5, 2009 and were informed that the mortgage was not undergoing a modification and Countrywide would not change any information it had provided to the credit reporting agencies. Id. ¶ 39. Later in March 2009, the Shedds requested a loan modification and Countrywide instructed them that the loan was under review for modification and to not call back. Id. ¶¶ 40-41. On March 12, 2009, Countrywide filed an Affidavit as to Military Service in the Oklahoma lawsuit, stating that “Plaintiff is unable to determine with certainty whether any of the Defendants . . . are presently engaged in the military service of the United States, as provided by the Servicemembers Civil Relief Act of 2003.” Compl. Ex. 1, Aff. as to Military Serv., Countrywide, ECF No. 1-2 at 25. On March 31, 2009, the Oklahoma state court (“Oklahoma court”) entered a Journal Entry of Judgment, finding the Shedds in default because the Summons was properly served on the Shedds and they failed to answer or appear in the matter. Compl. Ex. 1, Journal Entry of J. 1, Countrywide, ECF No. 1-2 at 26. The Oklahoma court further found that the Shedds defaulted on the note and mortgage owed to Countrywide, and the Court entered judgment against the Shedds in the sum of $128,849.36 plus interest, expenses, late charges, attorney’s fees, and other costs. 5 Id. at 2. The Court also authorized the foreclosure on the property and ordered judicial sale of the property. Id. at 3; Compl. Ex. 1, Special Execution & Order of Sale, Countrywide, ECF No. 1-2 at 30. In April 2009, the Shedds received the Journal Entry of Judgment in the mail at their Georgia address. Compl. ¶ 42. The Shedds called Countrywide and learned that Countrywide was not processing a modification and the Property would be sold May 18, 2009. Id. ¶ 43; Compl. Ex. 1, Notice of Sheriff’s Sale, Countrywide, ECF No. 1-2 at 43; Compl. Ex. 1, Aff. of Publ’n, Countrywide, ECF No. 1-2 at 48. The Shedds called Countrywide several more times asking for a modification, and Countrywide instructed them modification. to submit Compl. ¶ 44. specified documentation for a The Shedds submitted the documents, and Countrywide told them the modification was under review and not to call back. Id. ¶¶ 45-47. In July 2009, Countrywide told the Shedds that the Property would not be sold at foreclosure if they paid all back payments, loan fees, and legal fees. Id. ¶ 48. On July 6, 2009, the attorneys for Bank of America, N.A. (“BOA”), which had merged with Countrywide, requested that the Sheriff’s Sale be cancelled and the sale was cancelled. Id. ¶ 7; Compl. Ex. 1, Sheriff’s Return, Countrywide, ECF No. 1-2 at 51. Alias The sheriff subsequently ordered a sale of the Property at the appraised 6 value. Compl. Ex. 1, Second Alias Special Execution & Order of Sale 1, ECF No. 1-2 at 55. Before the modification Property papers from was sold, the Countrywide in Shedds received December they signed and sent back to Countrywide. 2009, loan which Compl. ¶¶ 50-52. Nevertheless, in February 2010, Countrywide disavowed knowledge of a loan modification and told the Shedds the Property was in foreclosure. auction on Id. ¶¶ 54-55. June 28, 2010 The Property was eventually sold at for less than judgment, while Mr. Shedd was in Iraq. the amount of Id. ¶¶ 59, 66-67. Oklahoma court approved the sale on July 19, 2010. the The Compl. Ex. 1, Order Confirming Sale, Countrywide, ECF No. 1-2 at 76. The Oklahoma judgment and the orders related to the foreclosure have not been vacated. In May 2011, a Judge Advocate General’s Corps officer wrote to BOA in an attempt to correct the adverse entries on the Shedds’ credit reports relating foreclosure on their property. to the that it foreclosed on judgment and Compl. Ex. 2, Letter from M. Lane to BOA (May 2, 2011), ECF No. 1-3. BOA default Mr. Servicemembers Civil Relief Act. Shedd Id. The officer notified in violation of the BOA acknowledged receipt of that letter, Compl. Ex. 3, Letter from BOA to J. Shedd (May 17, 2011), ECF No. 1-4, but never responded, Compl. ¶ 73. The Shedds’ credit reports still show the adverse entries. Id. ¶ 76. 7 The Shedds seek to hold Defendant BOA liable as follows: under the Servicemembers Civil Relief Act (“SCRA”), 50 U.S.C. app. § 501 et seq., for foreclosing on their Oklahoma property while Mr. Shedd was an active duty member of the Army; for fraud by BOA agents leading to the default and foreclosure; for violating the Real Estate Settlement Procedures Act of 1974, 12 U.S.C. § 2601 et seq. (“RESPA”); for wrongful foreclosure; and, for defamation in reporting the foreclosure to credit bureaus. DISCUSSION BOA seeks to dismiss the Shedds’ Complaint on the ground that the Court lacks subject matter jurisdiction under the Rooker-Feldman doctrine and alternatively seeks to dismiss the Shedds’ claims pursuant to Federal Rule 12(b)(6) for failure to state a claim.2 of Civil Procedure BOA argues that the Shedds’ claims are barred by Rooker-Feldman because they are inextricably intertwined with the claims and issues decided in the Oklahoma action, and the Shedds had a reasonable opportunity to participate in the Oklahoma action as the defendants in that action. The Shedds acknowledge that Rooker-Feldman may apply, but, rather than dismiss the action, they request that the Court stay the action while they seek to set aside the Oklahoma state court judgment. 2 See D.C. Court of Appeals v. Feldman, 460 U.S. 462, 476 (1983); Rooker v. Fid. Trust Co., 263 U.S. 413, 416 (1923). 8 I. Subject Matter Jurisdiction Under Rooker-Feldman Under the Rooker–Feldman doctrine, “‘a United States District Court has no authority to review final judgments of a state court in judicial proceedings. Review of such judgments may be had only in [the United States Supreme Court].’” Narey v. Dean, 32 F.3d 1521, 1524 (11th Cir. 1994) (alteration in original) (quoting Feldman, 460 U.S. at 482). “‘is confined to . . . cases brought by This doctrine state-court losers complaining of injuries caused by state-court judgments rendered before the district district court court review and proceedings rejection commenced of and those inviting judgments.’” Alvarez v. Att'y Gen. for Fla., No. 11–10699, 2012 WL 1579489, at *5 (11th Cir. May 8, 2012) (quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 292 (2005)). The Eleventh Circuit has explained that the “doctrine operates as a bar to federal court jurisdiction where the issue before the federal court was ‘inextricably intertwined’ with the state court judgment so that (1) the success of the federal claim would ‘effectively nullify’ the state court judgment, or that (2) the federal claim would succeed ‘only to the extent that the state court wrongly decided the issues.’” Id. (quoting Casale v. Tillman, 558 F.3d 1258, 1260 (11th Cir. 2009) (per curiam)). “The Rooker-Feldman doctrine is broad enough to bar all federal claims which were, or should have been, central to 9 the state court decision, even if those claims seek a form of relief that might not have been available from the state court.” Goodman ex rel. Goodman v. Sipos, 259 F.3d 1327, 1333 (11th Cir. 2001). When a federal court determines that it lacks subject matter jurisdiction under Rooker-Feldman, the court must dismiss the case. Id. at 1331 n.6. Applying these principles, the Court finds that the Shedds’ claims are inextricably intertwined with those in the Oklahoma action because they are premised on the Oklahoma court having ruled erroneously. wrongfully Id. at 1334. foreclosed on the The Shedds assert that BOA Shedds’ Property, foreclosed in violation of the SCRA, foreclosed in violation of RESPA, and foreclosed based on fraud. Compl. ¶¶ 79, 81-83. Deciding any of these claims or issues would effectively nullify the Oklahoma court’s orders and judgment, which authorized foreclosure on the Property, ordered the Property sold, and confirmed the sale of the Property. The Shedds also assert that BOA is liable for defamation because it reported false information to credit bureaus, specifically that the Property was in foreclosure and foreclosed on. Id. ¶¶ 25, 72, 76, 80. Shedds’ state law defamation A fundamental element of the claim is a finding Oklahoma foreclosure was unauthorized under the law. Court to make that determination, 10 it would that the For this necessarily be required to review, and potentially invalidate, the Oklahoma state court judgment and foreclosure orders, which it is not permitted to do under Rooker-Feldman. See Alvarez, 2012 WL 1579489, at *5. For Rooker-Feldman purposes and based on the present record before this Court, the Court also finds that the Shedds had a reasonable opportunity to participate in the Oklahoma action as defendants in that action. finding, however, See Goodman, 259 F.3d at 1334. should not preclude them from This seeking to vacate the Oklahoma judgment and related orders under Oklahoma law in an Oklahoma state court. For does these not claims. 892-93 district have reasons, subject Rooker-Feldman matter applies jurisdiction and over the the Court Shedds’ See Velardo v. Fremont Inv. & Loan, 298 F. App’x 890, (11th court Rooker-Feldman Cir. 2008) lacked doctrine (per subject to curiam) matter hear (affirming that the jurisdiction under the plaintiffs’ federal claims challenging the foreclosure action and judgment in a Florida court). Because the Court lacks subject matter jurisdiction over all of the Shedds’ claims, the Court must dismiss this action. Fed. R. Civ. P. 12(h)(3); Goodman, 259 F.3d at 1331 n.6. 11 II. The Shedds’ Request for Stay The Shedds request that if the Court concludes it does not have subject matter jurisdiction under Rooker-Feldman, then it should “stay these proceedings prior to ruling on Defendant’s motion to dismiss, because Plaintiffs are filing a Petition to Set Aside Judgment in the Washington County District Court in Oklahoma based on Defendant’s violations of the Servicemembers Civil Relief Act.” Pls.’ Resp. 1-2, ECF No. 7. This request misunderstands the nature of subject matter jurisdiction. If the Court lacks subject matter jurisdiction, it has no power to issue a stay. v. Am. It must dismiss the action. Tobacco Co., 168 F.3d 405, 410 See Univ. of S. Ala. (11th Cir. 1999) (“[W]ithout jurisdiction the court cannot proceed at all in any cause. Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and (internal quotation marks omitted). dismissing the cause.") Because the Court has no authority to rule upon the motion to stay, it is moot in light of the dismissal. CONCLUSION For the foregoing reasons, the Court grants BOA’s Motion to Dismiss (ECF No. 5) for lack of subject matter jurisdiction based on the Rooker-Feldman doctrine. 12 Accordingly, this action is dismissed without prejudice to Plaintiffs’ right to re-file the action should the circumstances warrant doing so after the completion of the proceedings in Oklahoma to vacate the relevant judgment and related orders there. IT IS SO ORDERED, this 22nd day of June, 2012. S/Clay D. Land CLAY D. LAND UNITED STATES DISTRICT JUDGE 13
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