Opinion
Civil Action 1:21-cv-00601-WJM-SKC
12-13-2023
JAMES HARRISON MASSEY, Plaintiff, v. COMPUTERSHARE LIMITED, et al., Defendants.
RECOMMENDATION ON SLS'S MOTION TO DISMISS (DKT. 93) AND COMPUTERSHARE'S MOTION TO DISMISS (DKT. 110)
S. Kato Crews, United States Magistrate Judge
Before the Court on referral is Defendant Specialized Loan Servicing LLC's (SLS) and Bank of America's Motion to Dismiss (Dkt. 93) and Computershare Limited's and Computershare US, Inc.'s Motion to Dismiss (Dkt. 110) pro se Plaintiff James Massey's Second Amended Complaint (SAC) (Dkt. 71-1). This matter arises out of Plaintiff's April 2, 2020, receipt of a Notice of Default and Intent to Foreclose from SLS. It involves a payoff check Plaintiff sent SLS through certified mail to terminate his mortgage debt, SLS claiming it never received the check, Plaintiff never sending SLS a replacement check, and SLS foreclosing on his home. See generally Dkt. 50 (Background).
On May 12, 2020, Plaintiff sued SLS in federal court in the Western District of Kentucky. Id. at p.3. That Court granted SLS's motion to dismiss and entered final judgment on January 29, 2021. Id. at p.6. Plaintiff then brought this action on March 1, 2021. Id. Relevant here, on December 7, 2021, the presiding district judge, Senior Judge William J. Martinez, issued an order dismissing all claims against SLS, Computershare Loan Services, and Bank of America that arose out of facts that occurred on or before May 12, 2020-he dismissed those claims with prejudice finding they were barred by res judicata. Id. at p.19. For claims against SLS, Computershare Loan Services, and Bank of America which arose out of facts that occurred after May 12, 2020, Judge Martinez dismissed those claims without prejudice. Id. On August 24, 2022, this Court granted Plaintiff's request to amend his complaint and accepted Docket 71-1 for docketing as the SAC, which is now the operative complaint. Dkts. 71, 80.
The SAC asserts ten claims for relief, nine numbered and the tenth un-numbered: (1) violation of the Colorado Consumer Protection Act (CCPA), Dkt. 71-1, ¶¶30-38; (2) invasion of the right of privacy, id. at ¶¶45-58; (3) defamation, id. at ¶¶59-70; (4) “intentional infliction of severe emotional distress,” id. at ¶¶71-79; (5) extortion and attempted theft by fraud and deception, id. at ¶¶80-84; (6) civil elder abuse/attempted civil financial exploitation, id. at ¶¶85-91; (7) violation of the Fair Debt Collection Practices Act (FDCPA), id. at ¶¶92-100; (8) violation of the Colorado Fair Debt Collection Practices Act (CFDCPA), id. at ¶¶101-103; (9) violation of the Colorado Nonbank Mortgage Services Act (CNMSA), Id. at ¶¶104-105; and (10) (unnumbered) civil conspiracy in violation of the CCPA, id. at ¶¶39-44. The SAC appears to assert each claim against each Defendant. See id. at ¶¶30-105. Defendants now move to dismiss the SAC in its entirety based on res judicata, and alternatively, under Rule 12(b)(6) for failing to state a claim upon which relief can be granted.
The Court has carefully considered the SAC, the respective Motions and associated briefing, and applicable law. No hearing is necessary. For the reasons shared below, the Court respectfully RECOMMENDS the SAC be DISMISSED against Defendants SLS, Bank of America, Computershare Limited and Computershare US, Inc., because res judicata bars the claims against them, and alternatively, it fails under Rule 12(b)(6). The Court also RECOMMENDS dismissal of Defendant Computershare, Inc. because Plaintiff has failed to demonstrate proper service on this Defendant.
BACKGROUND
The underlying facts leading to Plaintiff filing his federal case in Kentucky, and filing his prior complaints here, are recounted in Judge Martinez's prior order dismissing the First Amended Complaint (FAC) against these same Defendants. Dkt. 50. The only claims Judge Martinez dismissed without prejudice were any claims based on events that post-date May 12, 2020. As explained more fully below, the SAC is a dearth of factual allegations, and therefore, the Court does not set many out here. See generally Dkt. 71-1.
The SAC purports to base its claims on acts done after May 12, 2020. Dkt. 711, ¶¶1, 2. But the SAC contains nominal factual allegations, as opposed to conclusory statements and mere recitations of the elements of the claims, about Defendants' respective alleged acts or omissions. The only factual allegations the Court perceives are the allegations that Plaintiff received 20 monthly HELOC account statements for account number 1020103328 dated May 31, 2020, through December 31, 2021, which Plaintiff attached and incorporated into the SAC. See Dkt 71-1, ¶¶3-4, 63. In addition, aside from Paragraphs 43, 44, and 87 (which are conclusory), none of Plaintiffs allegations specify which Defendant purportedly did what, and when, that would lead to liability on any claims. Because there are few facts in the SAC to recount, the Court will instead first focus on the legal issue of res judicata, followed by the alternative Rule 12(b)(6) ground for dismissal.
LEGAL PRINCIPLES
Res Judicata
Federal common law governs the preclusive effect of a prior dismissal by a federal court sitting in diversity. Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508 (2001). But federal law in turn ordinarily applies “the law that would be applied by state courts in the State in which the federal diversity court sits.” Id. Because SLS invokes the preclusive effect of a diversity-based judgment of a federal district court in Kentucky, the court applies Kentucky law in determining the preclusive effect of the judgment in the Kentucky Action. See id. at 509 (effect of judgment by California federal district court sitting in diversity is determined from California's law of claim preclusion); In re Sprint Nextel Derivative Litig., 437 F.Supp.3d at 935 (“Because Defendants invoke the preclusive effect of a diversity-based judgment of a federal district court in New York - La. Mun. Police Emp. Ret. Sys. v. Hesse, 962 F.Supp.2d 576 (S.D.N.Y. 2013) (“LAMPERS”) - the court applies New York law in determining the preclusive effect of the LAMPERS judgment.”)
Under Kentucky law, res judicata, or claim preclusion, “is a bar to a subsequent action where a former judgment has been rendered by a court of competent jurisdiction between the same parties upon the same matter directly involved in the prior suit.” Drake v. McKinney, 2020 WL 5301155, at *2-3 (W.D. Ky. Sept. 4, 2020) (quoting Wallace v. Ashland Oil & Transp. Co., 305 S.W.2d 541, 543-44 (Ky. 1957)). “In Kentucky, three elements must be met for res judicata. They are identity of the parties, identity of the causes of action, and resolution of the prior action on the merits.” Id. (quoting Petty v. Lynch, 102 Fed.Appx. 24, 25 (6th Cir. 2004)).
The scope of the doctrine is very broad:
[t]he rule is elementary that, when a matter is in litigation, parties are required to bring forward their whole case; and “the plea of res judicata applies not only to the points upon which the court was required by the parties to form an opinion and pronounce judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.”Id. (quoting Combs v. Prestonsburg Water Co., 84 S.W.2d 15, 18 (Ky. 1935) (internal citations omitted)). Therefore, res judicata applies not only to the issues disposed of in the first action, but to every point which properly belonged to the subject of the litigation in the first action and which in the exercise of reasonable diligence could have been brought forward at the time. Id. (citation omitted). “Where two actions involving the same issue are pending between the same parties, ‘irrespective of which action or proceeding was first brought, it is the first final judgment rendered in one of the courts which becomes conclusive in the other as res judicata.'” Id. (quoting Westwood Chem. Co. v. Kulick, 656 F.2d 1224, 1227 (6th Cir. 1981)).
ANALYSIS
A. SLS's and Bank of America's Motion to Dismiss
1. Res Judicata
The Court recommends finding res judicata applies to bar Plaintiff's claims against SLS and Bank of America. Concerning the first element-identity of the parties-Judge Martinez previously found SLS/CLS and Bank of America were in privity with each other, thus satisfying the first prong. Dkt. 50, p.13. Concerning the third element-resolution of the prior action on the merits-the Kentucky case resolved on the merits. Id. at p.18. Thus, the Court focuses on the second element- identity of the causes of action.
Kentucky “courts follow the Restatement's transactional approach to analyze the identity of causes of action. This approach looks beyond the legal theories asserted to see if the two claims stem from the same underlying circumstances.” Borntraeger v. Clayton, No. 2013-CA-000537-MR, 2014 WL 6879056, at *3 (Ky. Ct. App. Dec. 5, 2014). Put differently, to avoid the preclusive effect of res judicata, the first and second cases must “not arise from the same set of facts . . . .” Smith v. Bob Smith Chevrolet, Inc., 275 F.Supp.2d 808, 814 (W.D. Ky. 2003).
In the Kentucky Action, Plaintiff attached to that complaint monthly HELOC statements that showed the balance of his HELOC loan and payments due. See, e.g., Ky. Dkt. 1-6 (August 31, 2019, statement for account no. 1020103328). While the SAC purports to allege claims that arise from facts occurring after May 12, 2020 (Dkt. 71-1, ¶¶1, 2), the limited factual allegations in the SAC incorporate 20 monthly HELOC statements for the same account number involved in the Kentucky Action- number 1020103328-but dated May 31, 2020, through December 31, 2021. See Id. at ¶¶3-4, 63, Exs. 1-20. These monthly HELOC statements are not only for the same account, but they include the same substantive information (with revised amounts due) as the HELOC statements submitted with the complaint in the Kentucky Action. Compare, e.g., Dkt. 71-2, with, e.g., Ky. Dkt. 1-6. Judge Martinez has already ruled that claims based on facts that arose prior to May 12, 2020, are barred by res judicata. And among the facts considered in the Kentucky Action were Plaintiff's monthly HELOC statements issued prior to that date.
The Court finds Plaintiff's claims here stem from the same underlying circumstances that were involved in the Kentucky action. The SAC merely takes Plaintiff's updated monthly HELOC statements issued after May 12, 2020, to allege a series of claims that involve the same material facts involved in the Kentucky Action, to wit: a payoff check Plaintiff sent SLS through certified mail to terminate his mortgage debt, SLS claiming it never received the check, Plaintiff never sending SLS a replacement check, and SLS foreclosing on his home.
Indeed, the SAC contains allegations, for example, “that the plaintiff did not owe a debt of any kind to any of the defendants, in connection with any Home Equity Line of credit of any description[;]” “In May, 2020, and, at times during each and every month following consecutively in time thereafter, the defendants knowingly, intentionally, maliciously, and wantonly, engaged in trade practices, that included making False Representations, and, known to be Misrepresentations[;]”“For not less than twenty (20) consecutive months after May, 2020, the defendants deliberately pursued a common plan to knowingly, and fraudulently, induce the plaintiff, against his will, to pay money to the defendants, under the pretext of collection of a debt that defendants knew the plaintiff did not owe[;]” and “During the month of May, 2020, and at all times relevant thereafter, the plaintiff was not a debtor of the defendant pursuant to any home equity line of credit.” Dkt. 71-1 at ¶¶27, 33, 40; 53; see also Id. at ¶¶36, 42-43, 63, 88-89.
The Court respectfully recommends finding an identity of the causes of action exists between the claims raised in the SAC and the matters ruled upon in the Kentucky Action, even when considering the SAC's effort to style its claims as arising after May 12, 2020. Drake, 2020 WL 5301155, at *2-3 (discussing that res judicata applies not only to the points raised in a prior case, but also to every point which properly belonged to the subject of the litigation and which might have been brought at that time). The Court thus respectfully recommends finding Plaintiff's claims in the SAC against SLS/CLS, and Bank of America are barred by res judicata.
2. Rule 12(b)(6)
Even if his claims were not barred by res judicata, the Court respectfully recommends Plaintiff's claims should be dismissed for failing to state a claim upon which relief can be granted. In deciding a motion under Rule 12(b)(6), the Court must “accept as true all well-pleaded factual allegations . . . and view these allegations in the light most favorable to the plaintiff.” Casanova v. Ulibarri, 595 F.3d 1120, 112425 (10th Cir. 2010) (quoting Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009)). The Court is not, however, “bound to accept as true a legal conclusion couched as a factual allegation.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
To survive a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Id. (internal quotation marks omitted). A claim is plausible when the plaintiff “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. This standard requires more than the mere possibility that a defendant has acted unlawfully. Id. Facts that are “merely consistent” with a defendant's liability are insufficient. Id. “[T]o state a claim in federal court, a complaint must explain what each defendant did to him or her; when the defendant did it; how the defendant's actions harmed him or her; and what specific legal right the plaintiff believes the defendant violated.” Nasious v. Two Unknown B.I.C.E. Agents, 492 F.3d 1158, 1163 (10th Cir. 2007).
The SAC woefully fails to do this. Aside from the allegations identifying the Defendants, the SAC merely makes conclusory statements about the “defendants” and group-pleads their alleged conduct throughout. See generally Dkt. 71-1; cf. Carrado v. Daimler AG, No. 17-cv-3080-WJM-SKC, 2018 WL 4565562, at *3 (D. Colo. Sept. 24, 2018) (“Group pleading violates Rule 8 when a plaintiff fails to distinguish among multiple defendants, including on claims that could not apply to certain defendants.”) (citing Snyder v. ACORD Corp., 2016 WL 192270, at *3 (D. Colo. Jan. 15, 2016), aff'd 684 Fed.Appx. 710 (10th Cir. 2017) (repeatedly referencing 113 defendants as a group when only a small minority engaged in certain conduct violated Rule 8)). The SAC only makes separate (albeit conclusory) allegations about SLS in Paragraphs 43 and 44, and about Bank of America in Paragraph 87. See id. This is insufficient to survive a motion to dismiss based upon Rule 12(b)(6) because the SAC fails to allege which Defendant did what alleged acts.
The only factual allegations that the Court must consider are the allegations that incorporate the monthly HELOC statements. See Dkt. 71-1, ¶¶3-4, 63. Yet the SAC stops there and does not set forth any further factual allegations. The remainder of the allegations are simply too vague and conclusory, or merely recite the legal elements of the claims. Consequently, in the alternative, the Court respectfully recommends finding the SAC fails Rule 12(b)(6) and granting SLS's and Bank of America's Motion to Dismiss on this alternative basis.
B. Computershare's Motion to Dismiss
For similar reasons to those stated above, the Court respectfully recommends granting Computershare's Motion to Dismiss.
1. Res Judicata
When Judge Martinez issued his Order dismissing the FAC, Dkt. 50, he warned Plaintiff that SLS had persuasively argued that the then-unserved Computershare Defendants were likely in privity with SLS for purposes of res judicata, stating:
the Court notes that SLS makes a compelling argument as to why the unserved Defendants are in privity with it; . . . the Court strongly cautions him to consider whether he can make a non-frivolous argument that they are not in privity with SLS and therefore bound by the dismissal of claims against SLS in the Kentucky Action and the Court's ruling here.Id. at p.13, n.11. This Court now finds that privity exists between SLS and the Computershare Defendants for purposes of res judicata.
To be sure, Plaintiff's SAC argues that SLS and the Computershare Entities are “alter egos” and that Computershare Limited is the parent entity of the others. See Dkt. 71-1, pp.6-7. Plaintiff then doubles down on his position in his Response to Computershare's Motion. See, e.g., Dkt. 114, pp.8-9 (“From its various business locations, under names which include; Computershare Limited; Computershare; Computershare Inc., Computershare US, and, various other business entities operating under the ‘brand' name, Computershare, and Specialized Loan Servicing, LLC, and, Computershare Loan Services, the defendants conduct business operations, and, engage in business activities throughout the United States, and, The State of Colorado.”); Id. at p.9 (“In 2011, Computershare Limited, aka, Computershare Inc., aka, Computershare US, Inc., acquired Specialized Loan Servicing, LLC, as a wholly-owned subsidiary, and, alter ego of Computershare Limited.”); Id. at p.13 (“Reference, in any context, to ‘the Computershare Entities', is entirely synonymous with collectively making individual reference to; Computershare Limited, (CPU); Computershare US; Computershare Inc.; Computershare Loan Services; Computershare Loan Services, LLC; Specialized Loan Servicing, LLC; Lenderlive Network; and Lenderlive Network, LLC.”).
Thus, the Court finds SLS to be in privity for purposes of res judicata with the Computershare Defendants. The Court, therefore, respectfully recommends finding the claims against the Computershare Defendants are barred by res judicata for the same reason res judicata bars Plaintiff's claims against SLS and Bank of America.
2. Rule 12(b)(6)
In the alternative, the SAC fails Rule 12(b)(6) against the Computershare Defendants for the same reasons already discussed above. Consequently, in the alternative, the Court respectfully recommends finding the SAC falls short of Rule 12(b)(6) and granting Computershare's Motion to Dismiss on this alternative basis.
B. Failure to Perfect Service upon Computershare, Inc.
The Court observes from the docket that Plaintiff has still not perfected service of process on Computershare, Inc. At no time in this case has Plaintiff requested a correctly captioned summons directed to Computershare, Inc., as the Clerk of Court indicated was necessary. See Dkt. 32 (4/30/2021: requesting a summons be issued to Computershare, Inc., among others), Dkt. 33 (4/30/2021: Clerk's “Administrative
Notice: summons submitted has incomplete caption and is not issued. Each summons caption must include all defendants.”). The Court thus respectfully recommends dismissing Computershare, Inc., pursuant to Rule 4(m).
* * *
For the reasons shared above, the Court RECOMMENDS:
1. Granting Defendant Specialized Loan Servicing LLC's (SLS) Motion to Dismiss (Dkt. 93); 2. Granting Computershare Limited's and Computershare U.S. Inc.'s Motion to Dismiss (Dkt. 110); 3. Dismissing the SAC in its entirety, to include as against Bank of America based on its joinder in SLS's Motion; and 4. Dismissing Computershare, Inc., from this action based on Plaintiff's failure to perfect service under Rule 4(m).