February 9, 2013
Pennsylvania Court Holds that a Homeowner May Bring Suit in Federal Court After State Court Issued a Judgment of Default against Homeowner
In Straker v. Deutsche Bank National Trust, et al., No. 3:09 CV 338, 2011 WL 398374 (M.D. Pa. Feb. 3, 2011), the district court held that a homeowner’s case would not be dismissed, as requested by Defendants, due to subject matter jurisdiction, issue preclusion, claim preclusion, or the statute of limitations. Claims regarding the Real Estate Settlement Procedures Act (RESPA) as to Homeq would not be dismissed, while claims involving the Racketeer Influenced and Corrupt Organizations Act (RICO), RESPA as to Deutsche Bank and MERS were dismissed.
In 2006, MERS sold Plaintiff two subprime loans. MERS assigned one mortgage to Deutsche Bank, “who instituted a foreclosure action in state court, which resulted in a judgment by default against Plaintiff.” The homeowner Plaintiff then filed a complaint in federal court, claiming RICO and RESPA violations, civil conspiracy, unjust enrichment, and fraudulent inducement. The Defendants moved to dismiss the complaint, and Plaintiff moved to strike part of Defendants’ motion.
The district court reviewed the Magistrate Judge’s report and recommendation de novo. With regard to subject matter jurisdiction, the district court determined that “the Rooker Feldman doctrine did not divest this Court of jurisdiction” because Plaintiff was complaining of injuries that existed before the state court foreclosure actions, and were not caused by the state court proceedings. Further, the court ruled issue preclusion does not estop Plaintiff from relitigating in federal court since “the state court judgment against [Plaintiff] was by default.” Notably, claim preclusion did not estop Plaintiff from bringing suit at this point in litigation since Plaintiff alleged she was not served with a complaint in the foreclosure action, which voids a judgment in Pennsylvania.
Plaintiff’s common law claims and RESPA claim under 12 U.S.C. 2607 were not time-barred. The statute of limitations for common law claims runs from the time “plaintiff learns of the injury and its cause.” Plaintiff claimed she discovered her claims within this time span, and so, the claims cannot be dismissed under a 12(b)(6) motion. With respect to the RESPA claim, the statute of limitations was “not evident on the face of the amended complaint” and so the claim cannot be dismissed under a 12(b)(6) motion.
The court also ruled that Plaintiff’s RICO claims should be dismissed because plaintiff failed to state a claim under 18 U.S.C. 1964. Plaintiff “fail[ed] to allege sufficient facts to support her claims and lacks the requisite level of precision required in civil claims based on underlying fraud under Federal Rule of Civil Procedure 9(b).”
Claims under 12 U.S.C. 2605(e) were dismissed in part. Plaintiff claims that Deutsche Bank failed to sign its response to a qualified written request, but there is no requirement under RESPA for this, and so Plaintiff fails to state a claim under 2605(e). However, with respect to Defendant Homeq, Plaintiff states a claim, because she alleged Homeq failed to timely respond, which is indeed a violation of 2605(e).
All claims relating to MERS were dismissed since Plaintiff failed “to allege that MERS took any actions leading to [Plaintiff’s] alleged harm.”
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