Opinion
Civil Action No. 03-3369, Section: I/2.
August 20, 2004
ORDER AND REASONS
Before the Court is the motion of defendants, Herschel C. Adcock, Jr. ("Adcock"), GE Capital Home Mortgage Services, Inc. ("GE Capital"), and Wells Fargo Home Mortgages, Inc. ("Wells Fargo"), for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the following reasons, the motion for summary judgment is GRANTED IN PART and DENIED IN PART.
Rec. Doc. Nos. 40 and 48. In an abundance of caution, defendants filed two identical motions for summary judgment signed by two different attorneys, Herschel Adcock and Sherrill Davidson, because plaintiff's amended motion to disqualify lawyer-defendant Adcock was pending. See Rec. Doc. Nos. 11 and 24. The Court denied plaintiff's amended motion with regard to Adcock representing himself on July 22, 2004, and dismissed, without prejudice as premature, the plaintiff's request to dismiss Adcock from representing co-defendants, GE Capital and Wells Fargo. Rec. Doc. No. 64.
Background
In the spring of 1999, plaintiff, Barbara Ann Jackson ("Jackson"), also known as Barbara Fenelon, and her daughter, Cheryl L. Fenelon ("Fenelon"), executed a promissory note in favor of GE Capital in conjunction with the issuance of a mortgage on their residence located at 4968 Lurline Drive in New Orleans, Louisiana. On March 22, 2002, the promissory note was modified via a loan modification agreement with Wells Fargo as the subservicing agent for GE Capital. After the modification, plaintiff and her daughter failed to pay the note's installments as they became due. Based on non-payment of the note, GE Capital filed a petition on September 18, 2002, seeking to foreclose, by executory process and without appraisal, on the mortgage. The Orleans Parish Civil District Court granted foreclosure.On August 20, 2003, Jackson and Fenelon then filed a state court petition for injunction, motion for expedited injunction hearing, and memorandum in support of injunction. In their petition for injunction, Jackson and Fenelon asserted a myriad of discrepancies, theories, and defenses to GE's foreclosure and the mortgage, all of which form the basis of plaintiff's instant action for damages. The state district court denied Jackson's and Fenelon's petition for injunction. Jackson and Fenelon did not appeal the state court judgment and the delays for appealing the judgment have since passed.
Attachment to Rec. Doc. No. 48, Exhibit C, Plaintiff's petition for injunction, motion for expedited injunction hearing and memorandum in support of injunction.
Attachment to Rec. Doc. No. 48. Plaintiff alleged, inter alia, that GE was "illegally practicing law without a license by suing on a debt owed to another," that the mortgage obligation was extinguished by novation, that Wells Fargo never perfected the March, 2002, obligation, and that the notice of seizure was not performed in accordance to law.
Attachment to Rec. Doc. 48, Exhibit D. Plaintiff's petition for injunction was denied by the Louisiana state district court on October 20, 2003. The court stated:
This Court, after considering the law applicable to the facts of this case, the memoranda of law submitted and the arguments of counsel and defendants, finds in favor of plaintiff, GE Capital Mortgage Services, Inc. and against the defendants, Barbara A. Fenelon [Jackson] and Cheryl L. Fenelon for the reasons set forth below:
Louisiana Code of Civil Procedure Article 2751 provides that:
" the defendant in the executory proceeding may arrest the seizure and sale of the property by injunction when the debt secured by the security interest, mortgage, or privilege is extinguished, or is legally unenforceable, or if the procedure required by law for an executory proceeding has not been followed."
However, in this case, defendants [Jackson and Fenelon] have not provided any evidence that the debt is extinguished, legally unenforceable or that plaintiffs have not followed the procedures for an executory proceeding.
This Court notes that the record clearly reflects that the defendants have not satisfied this debt in that the Promissory Note was in default beginning with the payment due on May 1, 2002 and all payments thereafter. Therefore, defendants have not satisfied the provisions that the security interest, mortgage or privilege has been extinguished.
Furthermore, defendants argue that GE Capital Mortgage Services, Inc. is not the proper lender in that GE Capital Mortgage's obligation was extinguished when defendants entered into a new obligation on March 22, 2002. However, this Court finds that the March 22, 2002 Modification Agreement did not create a wholly new obligation, but instead modified the terms of the previous Note and Security Instrument. Also, the Modification Agreement did not create a wholly new lender. As stated on its face, the Modification Agreement was agreed to by Wells Fargo Home Mortgage, Inc., as subservicing agent for GE Capital Mortgage Services, Inc., the Lender. Therefore, this Court finds that GE Capital Mortgage Services, Inc. is the proper party to bring this executory proceeding and the March 22, 2002 Modification Agreement did not extinguish the Note and Security Instrument.
Additionally, this Court finds that plaintiff has followed all procedures required by law for an executory proceeding pursuant to Louisiana Code of Civil Procedure Articles 2531 et seq.
Attachment to Rec. Doc. No. 48, Exhibit D; GE Capital Mortgage Services, Inc. v. Fenelon, No. 02-14840, Civil District Court for the Parish of Orleans, State of Louisiana (October 20, 2003).
On September 17, 2003, Jackson filed a petition for damages against Adcock, GE Capital, Wells Fargo, and Joshua Rendeno, a civil deputy sheriff, in Orleans Parish Civil District Court. On September 26, 2003, plaintiff filed an amended petition for damages, asserting numerous additional claims against the same defendants. Jackson alleges that Adcock, as attorney for GE Capital in the state court foreclosure action, fraudulently misrepresented that GE Capital had a security interest in Jackson's residence when he knew that GE Capital had sold the note on the property to Wells Fargo. Jackson also alleges that because Adcock made fraudulent misrepresentations in the foreclosure petition, plaintiff incurred damages and monetary losses. Plaintiff states that defendants, Adcock and GE Capital, committed fraud, intentional misrepresentation, and violations of the Louisiana Unfair Trade Practices Act because they falsified certain facts with respect to Rondeno's service of the notice of seizure. Jackson also contends that Adcock, GE Capital, and Wells Fargo were negligent in several ways and that they committed other torts in their attempts to foreclose on the Lurline Street mortgage. In addition to these state law claims, Jackson alleges that by Adcock's actions in the state court proceedings to foreclose on the property, Adcock violated the federal Fair Debt Collection Practices Act and the Truth in Lending Act. Once plaintiff filed her amended petition, which included these federal claims, defendants jointly removed the case to this Court.
Attachment to Rec. Doc. No. 1. Mr. Rondeno was dismissed with prejudice on April 5, 2004, pursuant to plaintiff's motion. Rec. Doc. 12.
Attachment to Rec. Doc. No. 1. Plaintiff's amended petition for damages contains 119 paragraphs of allegations against defendants. Of the 119 paragraphs, the Court can identify only a handful of claims. Most of plaintiff's allegations are bare allegations of wrongdoing which lack specificity, e.g. Paragraph 54 states: "The March 2002 transaction was rescinded by the mortgagors because of Wells Fargo's violation of Truth in Lending laws."
Attachment to Rec. Doc. No. 1., Amended petition, ¶ 6.
Attachment to Rec. Doc. No. 1, Amended petition, ¶ 16.
Attachment to Rec. Doc. No. 1, Amended petition, ¶ 20.
Attachment to Rec. Doc. No. 1, Amended petition, ¶¶ 39-71.
Attachment to Rec. Doc. No. 1, Amended petition, ¶¶ 72-78, 99, 118-19.
Rec. Doc. No. 1. Since removal, Rendeno was dismissed with prejudice pursuant to plaintiff's motion. Rec. Doc. No. 12.
On July 6, 2004, defendants filed a motion for summary judgment arguing that Jackson's claims are barred by res judicata and collateral estoppel, that plaintiff fails to state a claim upon which relief can be granted, and that her claims are prescribed. Plaintiff argues that the defendants' motion fails on its face to show that they are entitled to relief.
Rec. Doc. No. 40. The motion dated July 6, 2004 was signed by attorney-defendant Adcock. Defendants re-filed the same motion on July 7, 2004, signed by attorney Sherrill Davidson. Rec. Doc. No. 48.
Rec. Doc. No. 71. In plaintiff's opposition to the motion for summary judgment, plaintiff asserts that it is not the Court's function to determine what facts are true. Plaintiff also reiterates her remand arguments, but the Court has already determined that remand is unavailable at this time. Rec. Doc. No. 72.
Analysis
Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, 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." Fed.R.Civ.P. 56 (c). Once the moving party carries its burden pursuant to Rule 56(c), the nonmoving party must 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, 587, 106 S. Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). That burden is not satisfied by creating merely some metaphysical doubt as to the material facts, by conclusory allegations, unsubstantiated assertions or by only a scintilla of evidence. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations omitted). The materiality of facts is determined by "the substantive law's identification of which facts are critical and which facts are irrelevant." Anderson v. Liberty Lobby, Inc. 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed.2d 202 (1986). Therefore, a fact is material if it "might affect the outcome of the suit under the governing law." Id. A dispute about a material fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial." Matsushita, 475 U.S. at 587, 106 S. Ct. at 1356 (internal quotation omitted).In order to demonstrate that summary judgment should not lie, the nonmoving party must "go beyond the pleadings and by her own affidavits, or by the 'depositions, answers to interrogatories, and admissions on file,' designate 'specific facts showing that there is a genuine issue for trial.'" Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S. Ct. 2548, 2553, 91 L. Ed.2d 265 (1986); Auguster v. Vermillion Parish School Board, 249 F.3d 400, 402 (5th Cir. 2001). A court will resolve factual controversies in favor of the nonmoving party, "but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Little, 37 F.3d at 1075. The mere existence of a scintilla of evidence on the non-moving party's position is insufficient to defeat a properly supported motion for summary judgment, and the non-movant may not rely on mere allegations and denials. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 252, 106 S. Ct. 2505, 2512, 91 L. Ed.2d 202 (1986). The non-moving party must present evidence upon which a reasonable jury could reasonably find for the non-mover. Id. The Court will not, however, in the absence of any proof, assume that the nonmoving party could or would prove the necessary facts. See id. (citing Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888, 110 S. Ct. 3177, 3188, 111 L.Ed.2d 695 (1990)).
Moreover, this Court must enter summary judgment for a party when the nonmoving party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552, 91 L. Ed.2d 265 (1986). "In such a situation, there can be 'no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex Corp., 477 U.S. at 322-23, 106 S. Ct. at 2552; Munoz v. Orr, 200 F.3d 291, 307 (5th Cir. 2000) ("A complete failure of proof as to one element requires summary judgment against the entirety of the claim") (citation omitted).
A. CLAIMS AGAINST GE CAPITAL
Defendants argue that Jackson's claims against GE Capital are barred by res judicata. Federal courts apply state law res judicata principles in determining whether to give a state court's judgment preclusive effect in federal court. Steph v. Scott, 840 F.2d 267, 270 (5th Cir. 1988). Therefore, Louisiana law controls.
Louisiana law holds that the doctrine of res judicata includes issue preclusion (i.e., collateral estoppel). See Terrebonne Fuel Lube, Inc. v. Placed Refining Co., 666 So. 2d 624, 631 (La. 1996) (stating "[r]es judicata is an issue preclusion device found both in federal law and in state law"). "Res judicata" is broadly used in Louisiana to include both claim preclusion (traditionally, "res judicata") and issue preclusion. Blanchard v. ABC Ins. Co., 867 So. 2d 901, 904 (La.App. 2d Cir. 2004) (citing Hudson v. City of Bossier, 766 So. 2d 738, 743 (La.App. 2d Cir. 2000)). "Thus, res judicata used in the broad sense, has two different aspects: 1) foreclosure of relitigating matters that have never been litigated but should have been advanced in the earlier suit; and 2) foreclosure of relitigating matters that have been previously litigated and decided." Id. at 905.
Pursuant to La.R.S. 13:4231(3), issue preclusion may bar a subsequent suit. Section 13:4231(3) declares, "[a] judgment in favor of either the plaintiff or the defendant is conclusive, in any subsequent action between them, with respect to any issue actually litigated and determined if its determination was essential to that judgment." La.R.S. 13:4231(3) (emphasis and italics added).
In Burguieres v. Pollingue, 843 So. 2d 1049 (La. 2002), the Louisiana Supreme Court set forth five criteria that must be met for a matter to be considered res judicata. They are: (1) the judgment is valid; (2) the judgment is final; (3) the parties are the same; (4) the cause or causes of action asserted in the second lawsuit existed at the time of final judgment in the first litigation; and (5) the cause or causes of action asserted in the second lawsuit arose out of the transaction or occurrence that was the subject matter of the first litigation. Id. at 1053.
Unlike the federal rules, Louisiana's issue preclusion requires mutuality of the parties. Williams v. City of Marksville, 839 So. 2d 1129, 1132 (La.App. 3d Cir. 2003). GE Capital is the only defendant who was a party to Jackson's and Fenelon's injunction action.
As previously stated, in state court, Jackson petitioned for the issuance of an injunction. Jackson requested that the state court arrest the seizure and sale of the property. Jackson alleged that the debt was extinguished, it was legally unenforceable, and that GE Capital did not properly follow the procedures required for an executory proceeding.
The state court declared that GE Capital's obligation was legally enforceable and that it was not extinguished by the 2002 modification agreement. It also held that GE Capital had followed all procedures required by law for an executory proceeding.
Jackson now seeks damages based on GE Capital's allegedly wrongful foreclosure petition. The five requirements for res judicata exist: a valid, final judgment, which involves the same parties, the same transactions, and causes of action available to Jackson at the time of her petition for injunction. The validity of the foreclosure and Jackson's defenses were addressed by the state district court. Jackson's request for damages is predicated upon the same factual allegations that were presented in her petition for injunction, i.e., that the obligation was unenforceable, extinguished, and that the required foreclosure procedures were not followed. Accordingly, all of Jackson's claims against GE Capital with regard to its alleged wrongful foreclosure on her residence are barred by Louisiana's doctrine of res judicata.
Attachment to Rec. Doc. No. 1, Amended petition for damages, ¶¶ 6, 7, 9, 18, 19, 23, 38, 39, 40, 42. 47-52, 57-66, 68, 81, 83, 90, 93, and 98. In light of the Court's ruling on the res judicata issue, the Court need not address the other grounds that defendants urge in support of the motion for summary judgment with regard to GE Capital.
B. TRUTH IN LENDING ACT CLAIMS
Jackson alleges Truth in Lending Act (TILA) violations against Wells Fargo based on the March, 2002, loan modification agreement. Plaintiff contends that Wells Fargo violated TILA by not issuing disclosures.
Plaintiff does not specifically allege TILA violations against Adcock or GE Capital, but any TILA claim based on the March, 2002; modification agreement would be barred for the same reasons.
The TILA states that "[a]ny action under this section may be brought . . . within one year from the date of the occurrence of the violation." 15 U.S.C. § 1640(e). "[T]he limitations period in Section 1640(e) runs from the date of consummation of the transaction but . . . the doctrine of equitable tolling may, in the appropriate circumstances, suspend the limitations period until the borrower discovers or had reasonable opportunity to discover the fraud or nondisclosures that form the basis of the TILA action." King v. California, 784 F.2d 910, 915 (9th Cir. 1986). Jackson read and signed the loan modification documents in March, 2002, but she did not file this action until September, 2003, more than one year later. Nothing prevented Jackson from comparing the loan documents and TILA's statutory and regulatory requirements. Accordingly, the statute of limitations bars her TILA claims. See id.
Equitable tolling requires specific claims of fraudulent concealment. King, 784 F.2d at 915; see Ramirez v. City of San Antonio, 312 F.3d 178, 183 (5th Cir. 2002) ("We have found that equitable tolling may be appropriate when 'the plaintiff is actively misled by the defendant about the cause of action or is prevented in some extraordinary way from asserting his rights.'") (quoting Teemac v. Henderson, 298 F.3d 452, 457 (5th Cir. 2002). There is no evidence nor has Jackson alleged that, through no fault of her own, defendants misled her about the nature of her rights. See King, 784 F.2d at 914-15.
Attachment to Rec. Doc. No. 1, Amended petition for damages, ¶¶ 54-61, 103-11, 117-19.
In light of the Court's ruling on the prescription issue, the Court does not address defendants' Rooker-Feldman doctrine argument with regard to Jackson's claims against Wells Fargo.
C. LOUISIANA UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION LAW CLAIMS
Jackson asserts a violation of the Louisiana Unfair Trade Practices and Consumer Protection Act (LUTPA) against Rondeno, GE Capital, and Adcock. LUTPA provides a private cause of action for any person who suffers damages as a result of unfair or deceptive acts or practices in the conduct of any trade or commerce. La.R.S. 51:1401-1420. Section 51:1409(E) establishes a one-year prescriptive period which is not subject to interruption or suspension. Fox v. Dupree, 633 So. 2d 612, 614 (La.App. 1st Cir. 1993).
Plaintiff dismissed Rondeno. See supra notes 8 and 15.
La.R.S. 51:1409(E) states: "The action provided by this section shall be prescribed by one year running from the time of the transaction or act which gave rise to this right of action."
Jackson alleges that the violations of LUTPA occurred when defendants falsified facts pertaining to the sheriff's return of service of the notice of seizure. The specific date of these alleged violations is not present in the record, but the thrust of Jackson's case is that the foreclosure action was riddled with misrepresentations. Jackson filed her state court petition on September 17, 2003, less than one year from the date that GE Capital filed its foreclosure petition. Therefore, any alleged LUTPA violations based on Adcock's filing of GE Capital's foreclosure action are not prescribed.
Attachment to Rec. Doc. No. 1, Plaintiff's amended petition, ¶ 20.
Attachment to Rec. Doc. No. 1, Plaintiff's petition.
However, Jackson's LUTPA claim against GE Capital relates to the foreclosure proceeding, which is barred by the doctrine of res judicata. Furthermore, LUTPA does not regulate the practice of law. Esteve v. Longo, 630 So. 2d 312, 315 (La.App. 5th Cir. 1993). Adcock merely represented GE Capital in the procedurally proper foreclosure proceeding, and as previously stated, plaintiff dismissed Rondeno from this action. Based upon the record, there is no basis for a LUTPA claim against defendants.
D. FAIR DEBT COLLECTION PRACTICES ACT CLAIM
Jackson asserts a claim for violations of the Fair Debt Collection Practices Act (FDCPA) against Adcock as collection attorney for GE Capital. In Heintz v. Jenkins, the United States Supreme Court held that the FDCPA applies to attorneys who engage in "regular" consumer debt-collection, including litigation. Heintz v. Jenkins, 514 U.S. 291, 299, 115 S. Ct. 1489, 1493, 131 L. Ed.2d 395 (1995).
Attachment to Rec. Doc. No. 1, Amended petition for damages, ¶¶ 11, 72-79. The section of the FDCPA relevant to the parties is 15 U.S.C. § 1692f(1), which provides:
A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:
(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.
Defendants contend that Jackson's FDCPA claim against Adcock is prescribed. 15 U.S.C. § 1692k(d) contains a one-year statute of limitations. Adcock, on behalf of GE Capital, filed the foreclosure petition on September 18, 2002. Jackson filed her petition for damages on September 17, 2003, and she filed her amended petition, which contains the FDCPA claim, on September 26, 2003. Pursuant to Louisiana law, Jackson's amendments, which arise out of the conduct, transaction, or occurrence set forth in her original pleading, relate back to the date of filing the original pleading. La. Code Civ. Proc. Ann. art. 1153. Therefore, Jackson's amended pleadings relate back to the September 17, 2003, original petition, i.e., the September 17, 2003, original petition. Accordingly, Jackson's FDCPA claim was filed within one year of any alleged violation related to the filing of the foreclosure petition and her FDCPA claim against Adcock is not barred by the statute of limitations.
15 U.S.C. § 1692k(d) states: "An action to enforce any liability created by this subchapter may be brought . . . within one year from the date on which the violation occurs."
Defendants do not contend that Jackson's amendments do not relate back.
Defendants do not present any other legal basis for summary judgment on this claim.
Conclusion
Plaintiff, the non-moving party, has presented no evidence upon which a reasonable jury could find in her favor on any claim against GE Capital, the TILA claim against Wells Fargo, or her LUTPA claims. Taking this summary judgment record as a whole, for the reasons stated above, the Court, therefore, finds that there is no genuine issue of fact in dispute and that, as a matter of law, defendants are entitled to judgment on the aforementioned claims. With regard to Jackson's Fair Debt Collection Practices Act claim, defendants have not established that there is no genuine issue of material fact.Accordingly,
IT IS ORDERED that with respect to all of plaintiff's claims against GE Capital, defendants' motion for summary judgment is GRANTED and GE Capital is DISMISSED WITH PREJUDICE. IT IS FURTHER ORDERED that with respect to plaintiff's LUTPA and TILA claims against the remaining defendants, the motion of defendants for summary judgment is GRANTED and those claims are DISMISSED WITH PREJUDICE.
With respect to Jackson's remaining FDCPA claim against Adcock, defendants' motion is DENIED.