Opinion
No. 00 CIV. 205 (DLC).
October 25, 2000.
For Plaintiff: Jacqueline MH Bukowski, Esq. New York, NY.
For Defendants: Steven S. Rand New York, NY.
OPINION AND ORDER
Plaintiff Cecil Beckford ("Beckford") asserts in this action, filed on January 11, 2000, that defendants Citibank N.A. ("Citibank") and Citibank Mortgage Inc. ("CMI") violated federal and state law during foreclosure proceedings pending in the Bronx County Supreme Court from 1992 to 1999. The defendants have moved for summary judgment on the ground that the Rooker-Feldman doctrine prevents this Court from exercising subject matter jurisdiction over Beckford's claims. For the reasons discussed below, defendants' motion is granted.
BACKGROUND
The following facts are undisputed unless otherwise noted. In 1988, Beckford executed and delivered a 15 year, $120,000 mortgage to Citibank. In January of 1992, Citibank filed a foreclosure action in Supreme Court, Bronx County, alleging Beckford's default on his mortgage payments. On or about June 1, 1994, Citibank sold and assigned Beckford's note and mortgage to Ontra, Inc. ("Ontra"). Beckford asserts in his verified complaint that he did not receive notice of the transfer to Ontra.
In their Rule 56.1 statement, defendants assert that CMI notified Beckford of the transfer to Ontra as a matter of course. Since plaintiff has not filed a Rule 56.1 statement in response to the defendants' Rule 56.1 statement, the facts set forth in defendants' Rule 56.1 motion are admitted. See Local Civil Rule 56.1(c); Titan Indem. Co. v. Triborough Bridge Tunnel Auth., Inc., 135 F.3d 831, 835 (2d Cir. 1998). Moreover, plaintiff has not filed an affidavit in Opposition to this motion. Consequently, the defendants' assertion that Beckford was given notice of the transfer to Ontra is unopposed for purposes of this motion. The affirmation filed by plaintiff's attorney does not change this result because it is unsigned and does not reflect personal knowledge of the statements it contains. Similarly, plaintiff's verified complaint cannot be used to circumvent the requirements of Local Rule 56.1. See Monahan v. N.Y.C. Dep't of Corr., 214 F.3d 275, 292 (2000). Nonetheless, as demonstrated by the discussion above, even if the Court accepted Beckford's assertion in his verified complaint that he did not receive notice, the Court does not have jurisdiction over this dispute.
On December 6, 1995, CMI incorrectly informed Beckford that his mortgage had been paid in full as of June 1, 1994. On November 1, 1996, Ontra sold Beckford's note and mortgage to third-party defendant First Bank of Beverly Hills ("First Bank") which retained third-party defendant Wilshire Credit Corporation ("Wilshire") to service the mortgage and collect payments. Ontra advised Beckford in writing that it was transferring servicing of the loan to Wilshire. Although Beckford did not contact Wilshire or Ontra regarding this correspondence, he did contact CMI. In response, on January 22, 1997, CMI again incorrectly informed Beckford that his mortgage had been paid in full as of June 1, 1994.
On June 27, 1997, a Referee submitted to the Bronx Supreme Court a computation of the principal and interest on the mortgage due to Citibank. On July 30, 1997, Beckford filed a cross-motion in state court to oppose Citibank's motions to confirm the Referee's computation and to enter a judgment of foreclosure and sale. In his cross motion, Beckford asserted that he had paid his loan in full, and attached the 1995 and 1997 letters sent to him by CMI as support. On September 16, 1997, the state court entered a final judgment of foreclosure and sale against Beckford. On November 21, 1997, the Referee held a foreclosure sale and 55-11, Inc. ("55-11") purchased the property. In January 1998, 55-11 initiated eviction proceedings against Beckford in Bronx Civil Court, and a warrant to remove Beckford was issued by the Landlord-Tenant Court.
By Order to Show Cause dated October 13, 1998, Beckford moved to stay his eviction and to vacate the prior foreclosure order on the grounds that he had been unaware of the foreclosure judgment, had not been able to defend himself in the foreclosure action, and had a meritorious defense in that the mortgage had been paid off prior to entry of the foreclosure judgment. Citibank opposed Beckford's motion and both Citibank and Beckford submitted evidence in support of their positions.
On March 10, 1999, the Bronx Supreme Court issued an order ("Order") denying Beckford's motion. The Order concluded that "[a]ll appropriate legal procedures were observed by [Citibank] and its successors in action in their conduct [of this] action since its inception in 1992." On April 23, 1999, the state court granted Beckford's motion to reargue, but affirmed its prior decision. Beckford was evicted on May 10, 1999.
DISCUSSION
Beckford's complaint asserts that defendants violated the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2605 (b), by failing to inform him that his mortgage was transferred to Ontra on June 1, 1994. Beckford additionally asserts through state law claims that defendants failed to credit his mortgage payments, and misrepresented to him that his loan had been fully paid in 1995 and 1997. He seeks damages arising from Citibank's failure to inform him of the transfer to Ontra in 1994, and title of the property under the theories that the mortgage was satisfied, fraud, and misrepresentation. Defendants have moved for summary judgment on the grounds that plaintiff's claims are barred by the Rooker-Feldman doctrine, res judicata, and collateral estoppel. Plaintiff asserts that his claims are not barred because they arose after the foreclosure proceedings began and because these claims were not fully adjudicated in the state proceedings.
Summary judgment may not be granted unless the submissions of the parties, taken together, "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. The moving party bears the burden of demonstrating the absence of a material question of fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The substantive law governing the case will identify those issues that are material, and "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment."Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1987). In making this determination, the Court must view all facts in the light most favorable to the nonmoving party. See id. If the moving party meets its burden, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Rule 56(e), Fed.R.Civ.P.
Plaintiff asserts that defendants violated Title 12, Section 2605 of the United States Code because they did not provide him with notice that they had assigned servicing rights to Ontra in 1994. 12 U.S.C. § 2605 requires that "each servicer of any federally related mortgage loan shall notify the borrower in writing of any assignment, sale, or transfer of the servicing of the loan to any other person." Defendants argue that the Section 2605 claim is barred by the Rooker-Feldman doctrine and res judicata because it was or could have been raised in the state foreclosure proceedings.
The Rooker-Feldman doctrine prevents lower federal courts from reviewing a claim that would result in a reversal or modification of a state court judgment since only the United States Supreme Court may review such judgments. See Hachamovitch v. DeBuono, 159 F.3d 687, 693 (2d Cir. 1998). The doctrine has been described as one that bars jurisdiction over claims that are inextricably intertwined" with a state court determination. See, e.g., id. at 694; see also Pennzoil Co. v. Texaco, 481 U.S. 1, 25 (1987) (Marshall, J., concurring). There is confusion over both the contours of the doctrine, and even the continued vitality of this judicially crafted limitation where there is a federal statutory grant of jurisdiction. See Hachamovitch, 159 F.3d at 696. Nonetheless, it appears that, at a minimum, the Rooker-Feldman doctrine deprives lower federal courts of subject matter jurisdiction over litigation that is barred by the doctrines of res judicata and collateral estoppel. See id.; Doctor's Associates, Inc. v. Distajo, 107 F.3d 126, 137-38 (2d Cir. 1997); Moccio v. New York State Officer of the Court Administrator, 95 F.3d 195, 198-200 (2d Cir. 1994).
Because the prior action occurred in a New York state court, New York's res judicata and collateral estoppel doctrines govern. See Kremer v. Chemical Const. Corp., 456 U.S. 461, 466, 482, 483 n. 24 (1982); Colon, 58 F.3d at 869 n. 2. Under New York law, the doctrine of res judicata or claim preclusion bars future litigation of claims that were or could have been raised in a prior proceeding where that prior proceeding resulted in a final. judgment on the merits. See Boguslavsky v. South Richmond Securities Inc., 225 F.3d 127, 130 (2d Cir. 2000) (per curiam). This doctrine applies as well to defenses that could have been litigated, see Clarke v. Frank, 960 F.2d 1146, 1150 (2d Cir. 1992), including defenses to a foreclosure, see Drew v. Chase Manhattan Bank, NA, No. 95 Civ. 3933 (JGK), 1998 WL 430549, at *7 (S.D.N.Y. July 30, 1998) (quoting Gray v. Bankers Trust Co., 442 N.Y.S.2d 610, 612 (3d Dep't 1981) (citations omitted), appeal denied, 459 N.Y.S.2d 1026 (1983)). Although New York's permissive counterclaim rule means that "res judicata generally will not necessarily bar claims that could have been counterclaims in a prior action," Eubanks v. Liberty Mortgage Banking, Ltd., 976 F. Supp. 171, 173 (E.D.N.Y. 1997), this exception for counterclaims does not permit an attack on a judgment. As the New York Court of Appeals has explained:
Our permissive counterclaim rule may save from the bar of res judicata those claims for separate or different relief that could have been but were not interposed in the parties' prior action. It does not, however, permit a party to remain silent in the first action and then bring a second one on the basis of a preexisting claim for relief that would impair the rights or interests established in the first action.Henry Modell Co. v. Minister, Elders Deacons of Ref. Prot. Dutch Church, 68 N.Y.2d 456, 462 n. 2 (1986) (citations omitted) See also Thenjitto v. City of New York, 96 Civ. 4668 (JG), 1999 WL 104591, at *9 (E.D.N.Y. Jan. 8, 1999)
Regardless of whether plaintiff's RESPA claim is more properly characterized as a defense or as a counterclaim to the state foreclosure action, the Rooker-Feldman doctrine prevents this Court from considering it now. Plaintiff's RESPA claim was available to him during the state foreclosure proceedings, he remained silent on this issue during those proceedings, and litigation of the issue now would frustrate the rights and interests established in those proceedings. In particular, the plaintiff was on notice of the facts underlying the RESPA claim prior to litigating two sets of motions in state court, but failed to raise the issue. In 1998, Citibank presented evidence to the state court that it had sold the plaintiff's mortgage to Ontra in 1994. Plaintiff, who was litigating his order to show cause, did not assert at that time that he had not received notice of the transfer. Nor did plaintiff so assert in 1999, when he requested the state court to reconsider the Order denying his motion to show cause.
Analogous claims under the Truth in Lending Act are properly brought as counterclaims. See Eubanks, 976 F. Supp. at 173.
In addition, to the extent that Beckford seeks to recover title over the property, his claim is barred by the Rooker-Feldman doctrine because it would require reversal of the state court's foreclosure judgment. To the extent that plaintiff seeks to recover "actual damages" from the failure to notify, see 12 U.S.C. § 2605(e), there is no evidence that any right to damages exists apart from the foreclosure itself. See Drew, 1998 WL 430549 at *5 RESPA does not permit recovery for CMI's inaccurate statements to the plaintiff to the effect that the mortgage had been fully paid.
B. Additional Claims
Because this Court does not have subject matter jurisdiction over plaintiff's federal claim, it cannot exercise supplemental jurisdiction over plaintiff's state law claims. See Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1187 (2d Cir. 1996)
CONCLUSION
This Court lacks subject matter jurisdiction to hear plaintiff's RESPA claim and, subsequently, lacks jurisdiction to hear plaintiff's state law claims. Defendants' motion for summary judgment is hereby granted. The Clerk of Court is directed to close this case.
SO ORDERED: