Opinion
1:02-CV-0773-LJM-WTL
January 29, 2004
ORDER ON DEFENDANTS' MOTIONS TO DISMISS
This matter is before the Court on the motion of defendant Chase Mortgage Company ("Chase"), and on the motion of Source One Mortgage ("Source One"), Citimortgage Corporation ("Citimortgage"), andRubin Levin, (collectively with Chase, "Defendants"), to dismiss the claims of the plaintiff, Lena R. Stefansson ("Stefansson"). Defendants argue that Stefansson's complaint and supplement thereto fail to state a claim upon which relief may be granted. For the reasons discussed herein, Defendants' motions are GRANTED.
I. BACKGROUND
Stefansson alleges that Source One prematurely caused a foreclosure suit in state court, although payment on the subject mortgage had been made. Compl. § III. Stefansson alleges Citimortgage failed to communicate with Source One regarding Stefansson's efforts to cure her default. Id. Stefansson alleges Chase "failed to recognize the errors of previous servicers of subject loan and has caused additional attorney fees and stress." Id. Finally, Stefansson alleges that Rubin Levin filed the foreclosure suit knowing that it was not supported by evidence, and that Rubin Levin caused exorbitant attorney fees. Id. Stefansson claims that because of Defendants' conduct as described, Defendants are liable for violating 24 C.F.R. § 203.606. Stefansson also alleges Rubin Levin violated the Fair Debt Collections Practices Act, 15 U.S.C. § 1692e (11) by failing to give Stefansson proper notification of its attempt to collect a debt, and denying Stefansson the opportunity to dispute the debt.
The Marion County, Indiana, Superior Court (the "State Court") ordered a decree of foreclosure ("State Court Order") on the subject property (the "Property"), on April 7, 2003. See Compl. Supp. Attachment 1.
II. STANDARD
Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a claim is subject to dismissal for "failure to state a claim upon which relief may be granted." United States v. Clark County, Indiana, 113 F. Supp.2d 1286, 1290 (S.D. Ind. 2000). When considering a motion under this rule, the Court must examine the sufficiency of a plaintiff's complaint, not the merits of the lawsuit. Id. The Court shall accept as true all well-pleaded factual allegations and draw all reasonable inferences in favor of the plaintiff. Id. Dismissal under Rule 12(b)(6) is proper only if the plaintiff could prove no set of facts in support of her claims that would entitle her to relief. Chavez v. Illinois State Police, 251 F.3d 612, 648 (7th Cir. 2001), citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Veazey v. Communications Cable of Chi., Inc., 194 F.3d 850, 854 (7th Cir. 1999).
III. DISCUSSION
Chase argues that Stefansson's complaint should be dismissed because the issues have already been fully litigated in state court, and because the relief Stefansson seeks would violate the Anti-Injunction Act, 28 U.S.C. § 2283. Source One, Citimortgage and Rubin Levin join in and adopt Chase's arguments.A. PREMATURE FORECLOSURE CLAIM
A federal court must give a state court judgment the same res judicata effect it would be given in the rendering state's courts. Torres v. Rebarchak, 814 F.2d 1219, 1222 (7th Cir. 1987) (citing 28 U.S.C. § 1738). Thus, whether Stefansson's claim for premature foreclosure is barred depends upon the preclusive effect of the State Court Order. See Hensley v. Jasper Police Dep't, 163 F. Supp.2d 1006, 1021 (S.D. Ind. 2001).
Indiana law recognizes two types of preclusion: claim preclusion and issue preclusion. Claim preclusion bars "a subsequent action on the same claim between the same parties or those in privity with them." In re Marriage of Moser, 469 N.E.2d 762, 765 (Ind.Ct.App. 1984) (emphasis in original). Claim preclusion operates when the following four factors exist: (1) a judgment from a court of competent jurisdiction, (2) on the merits, (3) in a suit between the same parties in which (4) the matter at issue was, or might have been, determined in the former suit. Hensley, 163 F. Supp.2d at 1021. The fourth factor means that any matter within the issues of the case that might have been alleged and proven will be presumed to have been proven and adjudicated. See Id.
Issue preclusion bars litigation of a particular issue that was actually litigated and determined in prior litigation. Moser, 469 N.E.2d at 765. For issue preclusion to apply, the same issue must necessarily have been adjudicated in the prior action. See Wedel v. American Elec. Power Serv. Corp., 681 N.E.2d 1122, 1131 (Ind.Ct.App. 1997).
The Indiana Trial Rules required Stefansson to plead an affirmative defense of payment of the loan. Ind. Rule Civ. P. 8(C). Otherwise, the affirmative defense would be waived. See Van Bibber Homes Sales v. Marlow, 778 N.E.2d 852, 859 (Ind.Ct.App. 2002). Thus, because the State Court ordered foreclosure, it either considered and rejected Stefansson's defense of payment, or Stefansson failed to plead the defense of payment and thus the defense was waived. The State Court obviously determined that Stefansson was in default on her payments, and that issue cannot be relitigated in this Court. The doctrine of res judicata thus prohibits Stefansson from litigating the matter of payment in this case. Defendants' motions to dismiss must be granted.
B. FAIR DEBT COLLECTIONS PRACTICES CLAIM
Stefansson also makes a claim against Rubin Levin for violation of the Fair Debt Collection Practices Act (the "Act"). The Act requires a debt collector to disclose in the initial contact with a consumer that the debt collector is attempting to collect a debt and that information obtained from the consumer will be used for the purpose of collecting the debt. 15 U.S.C. § 1692e (11). However, the Act specifically excludes formal pleadings made in connection with a legal action. Id. Stefansson's complaint specifically alleges that Rubin Levin filed a suit for foreclosure. Compl. § III. Nowhere does Stefansson allege that Rubin Levin attempted to collect a debt in any other way, which would bring it within the parameters of the Act. Stefansson's complaint fails to state a claim for violation of the Act.
IV. CONCLUSION
For the reasons discussed above, Defendants' motions to dismiss are GRANTED.IT IS SO ORDERED.