Opinion
CASE NO. 8:17-cv-2631-T-23JSS
08-14-2018
LIDICIS OCAMPO and ALBERTO GONZALEZ, Plaintiffs, v. BANK OF AMERICA, N.A., Defendant.
ORDER
A decade ago, the Treasury Department introduced the Home Affordable Modification Program, which allegedly requires a participating bank to use "reasonable efforts" to modify the mortgage of a person in default or reasonably likely to default. After an eligible mortgagor applies for a modification, the program requires several "trial payments" before the bank approves the modification.
Bank of America disputes that a "reasonably foreseeable" likelihood of default qualifies a mortgagor for a modification and contends that a modification requires either delinquency or an "imminent default."
THE PROCEDURAL HISTORY
In November 2017 Lidicis Ocampo and Alberto Gonzalez and 117 other plaintiffs sued Bank of America again in a single action. Case no. 8:17-cv-1534-RAL (M.D. Fla. June 27, 2017). The 292-page "shotgun" complaint, which copied swaths from a qui tam complaint in the Eastern District of New York, alleged fraud and the violation of Florida's Deceptive and Unfair Trade Practices Act. In the part of the complaint specific to them, Ocampo and Gonzalez alleged that in July 2009 a Bank of America employee, "Nicole," told the plaintiffs that a modification requires a default. (Doc. 1 at ¶ 1148 in case no. 8:17-cv-1534) Bank of America allegedly omitted to mention that a reasonably foreseeable likelihood of default might qualify a mortgagor for a modification. Moving to dismiss the complaint, Bank of America argued misjoinder of the plaintiffs' claims, failure to plead fraud with particularity, failure to state a claim, expiration of the four-year limitation, and the absence of a private right to sue a bank for violating the requirements of the Home Affordable Modification Program.
United States ex rel. Gregory Mackler v. Bank of America, N.A., Case no. 1:11-cv-3270-SLT (E.D.N.Y. July 7, 2011).
Before resolving the motion to dismiss, the presiding judge observed that the complaint, which alleged neither each plaintiff's citizenship nor the amount in controversy between each plaintiff and Bank of America, failed to invoke diversity jurisdiction. (Doc. 15 in case no. 17-cv-1534) Ordered to amend the complaint to invoke diversity jurisdiction, Ocampo and Gonzalez and the other plaintiffs submitted a 403-page complaint. (Doc. 16 in case no. 17-cv-1534) For the second time, Bank of America moved to dismiss the complaint and repeated the arguments from the earlier motions. The presiding judge in that action found misjoinder, severed the plaintiffs' claims, and ordered the plaintiffs to sue separately.
The plaintiffs heeded the presiding judge's command. Between October 30, 2017, and November 3, 2017, more than a hundred plaintiffs sued Bank of America in the Middle District of Florida in eighty actions and alleged fraud under Florida common law. Excepting names, dates, addresses, and the like, the complaints are identical. The actions are distributed among eight district judges in the Middle District of Florida. In two actions, the presiding judges found the claims barred by the four-year limitation.
Torres v. Bank of America, N.A., 2018 WL 573406 (M.D. Fla. Jan. 26, 2018) (Lazzara, J.), appeal filed (Case no. 18-10698); Paredes v. Bank of America, N.A., 2018 WL 1071922 (M.D. Fla. Feb. 27, 2018) (Chappell, J), appeal filed (Case no. 18-11337). Additionally, a district judge in California found an identical claim barred by a limitation. Mandiosa v. Bank of America, N.A., 2:17-cv-8153 (C.D. Cal. Mar. 15, 2018) (Walter, J.).
In Ocampo and Gonzalez's third complaint (but the first complaint in this case), the plaintiffs alleged (Doc. 1) four misrepresentations by Bank of America. First, Bank of America allegedly failed to mention that a reasonably foreseeable danger of default might qualify a mortgagor for a modification; second, Bank of America stated that the mortgagor failed to provide Bank of America with the documents necessary to complete the modification; third, Bank of America orally notified the mortgagor that the bank approved the requested modification; and fourth, Bank of America charged a "fraudulent" inspection fee. For the third time, Bank of America moved (Doc. 9) to dismiss the complaint.
A February 1, 2018 order (Doc. 12) dismisses each fraud claim except the claim that Bank of America omitted to mention that a reasonably foreseeable likelihood of default might qualify a mortgagor for a modification. In this claim, the plaintiffs allege that Bank of America instructed them on July 7, 2009, to "refrain from making their regular mortgage payments" in order to qualify for a modification. (Doc. 1 at ¶ 37) Bank of America allegedly omitted to mention that a reasonably foreseeable likelihood of default can qualify a mortgagor for a modification. (Doc. 1 at ¶ 37) Unaware of their option not to default, the plaintiffs allegedly "refrained from" paying their mortgage and, as a result, "fell into default status." (Doc. 1 at ¶ 39) As a "direct result" of Bank of America's alleged omission, the plaintiffs allegedly suffered the loss of both their home and the equity in their home. (Doc. 1 at ¶ 39)
Moving (Doc. 31) for summary judgment, Bank of America observes that the plaintiffs admitted an inability to pay the mortgage because of the parties' separation in 2009. Also, Bank of America argues that Rooker-Feldman bars the fraud claim and that the fraud claim constitutes a compulsory counterclaim that the plaintiffs must have asserted but failed to assert in the state-court foreclosure action.
Local Rule 3.01(b) required the plaintiffs to respond to the June 18, 2018 motion for summary judgment no later than July 2, 2018. A July 3, 2018 order (Doc. 34) extends the time to respond to the motion until July 16, 2018, and cautions the plaintiffs that "no further extension" of the time to respond is available. Rather than respond to the motion for summary judgment, on July 30, 2018 the plaintiffs moved to amend the complaint and moved under Rule 56(d), Federal Rules of Civil Procedure, to defer summary judgment. Because the plaintiffs offered no cogent reason for deferring the motion for summary judgment and because the plaintiffs failed to explain or identify the contemplated amendment, an August 2, 2018 order (Doc. 40) denies the plaintiffs' motion and requires the plaintiffs to respond to the June 18, 2018 motion for summary judgment no later than August 10, 2018. Several days after the expiration of the time within which to respond, the plaintiffs fail to respond and fail to request an extension of the time within which to respond.
DISCUSSION
First, Bank of America argues persuasively that Rooker-Feldman bars the fraud claim. In Figueroa v. Merscorp, Inc., 766 F.Supp.2d 1305 (S.D. Fla. 2011) (Altonaga, J.), aff'd, 477 Fed.Appx. 558 (11th Cir. May 11, 2012), a bank sued in state court to foreclose a mortgagor's property, and the state court entered judgment for the bank and ordered a foreclosure sale. Moving in state court to vacate the judgment, the mortgagor argued that the bank secured the foreclosure judgment through fraud. After the state court denied the motion, the mortgagor sued the bank in federal court under RICO and "[sought] damages arising out of the loss of his home." After thoroughly surveying the authority, Judge Altonaga found the claim "inextricably intertwined" with the foreclosure judgment. 766 F.Supp.2d at 1315-25. Affirming the dismissal under Rooker-Feldman, the Eleventh Circuit concluded, "The state court judgment formed the basis of or was intertwined with the injury complained of in Figueroa's instant complaint: that [Figureroa] lost his one half-interest in his property and home because of an improper foreclosure proceeding." 477 Fed.Appx. at 560.
Similarly, Nivia v. Nation Star Mortg., LLC, 620 Fed.Appx. 822 (11th Cir. Aug. 19, 2015), strongly suggests a bar by Rooker-Feldman. In Nivia, a bank won a foreclosure judgment in December 2011. Nine months after the judgment and a month before the foreclosure sale, the mortgagor requested a HAMP modification, which the bank denied. After the sale, the mortgagor sued in federal court for violations of HAMP and Florida's Deceptive and Unfair Trade Practices Act.
Finding the HAMP claim not barred by Rooker-Feldman, Nivia explains, "The homeowners alleged only that the lenders failed to respond adequately to their September 2012 request for a loan modification, which could not have been at issue in the foreclosure proceeding that concluded in December 2011." 620 Fed.Appx. at 824. In contrast, Nivia finds the FDUTPA claim barred by Rooker-Feldman: "We construe the homeowners' allegation to extend beyond the lenders' denial of the September 2012 loan modification request and to include conduct before the foreclosure judgment. In effect, the homeowners' claim amounts to an equitable defense to foreclosure that [the homeowners] failed to raise before the state court." 620 Fed.Appx. at 825. Because success on the FDUTPA claim suggested error in the foreclosure judgment, Nivia finds the FDUTPA claim barred by Rooker-Feldman.
Although finding the HAMP claim not barred by Rooker-Feldman, Nivia affirms the dismissal of the HAMP claim because HAMP confers no private right of action. 620 Fed.Appx. at 825 (citing Miller v. Chase Home Fin., LLC, 677 F.3d 1113 (11th Cir. 2012)).
Nothing (or, at least, nothing consequential) appears to distinguish the fraud claim in this action from the RICO claim in Figueroa or the FDUTPA claim in Nivia. The plaintiffs allege that Bank of America misrepresented the eligibility requirement for a modification and that this purported misrepresentation was "specifically designed by BOA to set Plaintiffs up for foreclosure." (Doc. 1 at ¶ 38) The majority of the complaint chronicles a scheme in which Bank of America allegedly tricked the plaintiffs into not paying the mortgage so that Bank of America could foreclose. The plaintiffs complain exclusively about a misrepresentation that preceded — and ultimately caused — the foreclosure. And the plaintiffs allege principally that the misrepresentation resulted in the "loss of home equity," a loss occasioned by the state-court action, which foreclosed the plaintiffs' right of redemption and resulted in a deficiency judgment that included not just principal and interest owing but also the inspection fees owing under the lending agreement. In sum, the fraud claim in this action appears a circuitous but unmistakable attempt to impugn the validity of the foreclosure judgment.
As Bank of America correctly recognizes in the motion (Doc. 33) in limine, the remainder of the complaint appears copied from complaints and affidavits in unrelated civil actions.
Second, if not barred by Rooker-Feldman, the fraud claim is barred by res judicata (which some decisions occasionally describe in this circumstance as "merger-and-bar"). Under Florida law, a compulsory counterclaim includes a counterclaim "logically related" to the claim. Neil v. South Fla. Auto Painters, Inc., 397 So. 2d 1160 (Fla. 3d DCA 1981). The Florida decisions construe this "logical-relation" test broadly. Montgomery Ward Dev. Corp. v. Juster, 932 F.2d 1378, 1381 & n.1 (11th Cir. 1991). The fraud claim in this action relates logically to Bank of America's claims in the foreclosure action: Bank of America alleged in state court that the plaintiffs defaulted on the mortgage, and the plaintiffs allege in this action that the default resulted from Bank of America's misrepresentation of the eligibility requirement for a modification. Because the plaintiffs must have counterclaimed but failed to counterclaim in state court, res judicata prevents the plaintiffs' litigating the claim in this action.
Viewed somewhat differently, the fraud claim constitutes an affirmative and equitable defense that the plaintiffs waived by failing to assert the defense in the state-court foreclosure action. Whatever the label, the same result obtains. --------
CONCLUSION
Bank of America allegedly told the plaintiffs that a mortgage modification requires a default but omitted to mention that a "reasonably foreseeable/imminent" default might qualify a mortgagor for a modification. The complaint alleges that Bank of America intentionally misrepresented the requirement in an effort to trick the plaintiffs into a foreclosure, which Bank of America successfully secured after suing in state court. Because the fraud claim is "inextricably intertwined" with the state-court foreclosure, Rooker-Feldman bars the claim. In any event, the fraud claim constitutes a compulsory counterclaim that the plaintiffs must have asserted but failed to assert in the state-court foreclosure action. The motion (Doc. 31) for summary judgment is GRANTED, and the action is DISMISSED under Rooker-Feldman for lack of subject-matter jurisdiction. The clerk is directed to enter a judgment of dismissal for lack of subject-matter jurisdiction, to terminate the pending motions, and to close the case.
ORDERED in Tampa, Florida, on August 14, 2018.
/s/_________
STEVEN D. MERRYDAY
UNITED STATES DISTRICT JUDGE