Ann Marie DeSouza v. JPMorgan Chase Home Lending Division , 608 F. App'x 776 ( 2015 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 14-14861
Non-Argument Calendar
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D.C. Docket No. 1:14-cv-00117-TWT
ANN MARIE DE SOUZA,
Plaintiff-Appellant,
versus
JPMORGAN CHASE HOME LENDING DIVISION,
MCCURDY CANDLER, LLC,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(April 24, 2015)
Before TJOFLAT, WILSON, and ROSENBAUM, Circuit Judges.
PER CURIAM:
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Ann Marie De Souza, proceeding pro se, appeals the district court’s
dismissal of her complaint against McCurdy & Candler LLC (“McCurdy”) and
JPMorgan Chase Bank, N.A. 1 (“Chase”), alleging violations of the Fair Debt
Collection Practices Act, 15 U.S.C. § 1692, et seq. (“FDCPA”), and the Truth in
Lending Act, 15 U.S.C. § 1601, et seq. (“TILA”), in connection with the attempted
foreclosure of her home. The district court dismissed the complaint based on the
doctrine of res judicata, denied De Souza leave to amend, and issued an injunction
restricting De Souza’s ability to bring any further action arising out of attempts to
foreclose on her home. De Souza challenges each of these rulings on appeal.
After careful review, we affirm the dismissal of the complaint and the denial of
leave to amend, but we vacate the injunctive provisions and remand for further
proceedings.
I.
De Souza purchased a home in Lawrenceville, Georgia, in July 2003 and
obtained a mortgage from HomeBanc Mortgage Company (“HomeBanc”). The
mortgage appears to have been sold in 2007 to EMC Mortgage Corp., which later
merged with Chase. As a result of the merger, Chase succeeded to EMC
Mortgage’s interests.
1
Notwithstanding the caption, there is no dispute that the proper defendant is JPMorgan
Chase Bank, N.A.
2
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De Souza began receiving debt-collection letters and notices of foreclosure
sale in March 2009, and she continued to receive such letters through at least
November 2013. McCurdy first sent correspondence to De Souza on behalf of
EMC Mortgage and later on behalf of Chase. These letters and notices, along with
the representations made therein, have been the subject of De Souza’s several
lawsuits challenging the attempted foreclosure of her home. Because it is relevant
to the issues on appeal, we review the course of De Souza’s litigation with regard
to the attempted foreclosure of her home.
In March 2010, De Souza filed a pro se complaint (“first action”) in the
United States District Court for the Northern District of Georgia against EMC
Corporation in connection with the foreclosure proceedings, alleging violations of
the FDCPA and the Fair Credit Billing Act (“FCBA”). This action was dismissed
without prejudice for failure to pay the filing fee after De Souza was denied leave
to proceed in forma pauperis. De Souza v. EMC Mortg. Corp., No. 1:10-cv-00906
(N.D. Ga. 2010).
Then, in April 2010, De Souza filed a second pro se complaint (“second
action”) containing identical allegations, this time in the Northern District of
Texas. The action was transferred to the Northern District of Georgia, where a
magistrate judge issued a report recommending that De Souza’s complaint be
dismissed with prejudice. Before the district court took any action on the
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magistrate judge’s report, however, De Souza voluntarily dismissed her complaint
without prejudice under Rule 41, Fed. R. Civ. P. De Souza v. EMC Mortg. Corp.,
No. 11-cv-00082 (N.D. Ga. 2011).
In March 2012, De Souza filed a third pro se complaint (“third action”), this
time in the Southern District of New York, against Chase, EMC Mortgage, and
McCurdy alleging violations of the FDCPA and the TILA, among other claims.
De Souza filed an amended complaint before the action was again transferred to
the Northern District of Georgia. After transfer, De Souza, with leave of the court,
filed a counseled second amended complaint on December 20, 2013. The second
amended complaint was based on, among other things, various “Notices of
Foreclosure Sale” with demands for immediate payment of the debt sent by
McCurdy and Chase from March 2009 through November 2013. The district court
dismissed De Souza’s second amended complaint with prejudice in April 2014.
De Souza v. JP Morgan & Chase Co., No. 1:13-cv-02447 (N.D. Ga. 2014).
Finally, in September 2013, De Souza filed the instant fourth pro se
complaint (“fourth action”), this time in the Southern District of Ohio, against
Chase and McCurdy. The complaint again alleged violations of the FDCPA and
the TILA based on allegedly “fraudulent” debt-collection letters and notices of
foreclosure sale sent by McCurdy on behalf of Chase from March 2009 through
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August 2013. De Souza also asserted that, based on the letters, she sent debt
validation requests to both Chase and McCurdy, but both entities failed to respond.
Because the third action had been dismissed with prejudice while the fourth
action was pending, the magistrate judge directed the parties to address whether the
fourth action was barred by the doctrine of res judicata. The defendants responded
by moving to dismiss the complaint on that basis. De Souza did not respond. The
magistrate judge recommended dismissing the instant complaint on the basis of res
judicata. The magistrate judge also found that granting leave to amend would be
futile because any claims based on the same basic facts would also be barred by res
judicata.
Along with the magistrate judge’s report, the court sent notice to all parties
stating that any written objections to the report must be filed within fourteen days.
The notice also warned that failure to object would limit appellate review of factual
findings to plain error only. No objections were submitted.
In September 2014, the district court adopted the magistrate judge’s report
and dismissed the fourth action with prejudice as barred by res judicata. Further,
the court ordered De Souza “to pay the full filing fee as to any future lawsuits filed
in any federal court arising out of attempts to foreclose upon the property [at issue]
and . . . to post a cash bond in the amount of $10,000.00 to satisfy any award of
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Rule 11 sanctions in any such action filed in or removed to any federal court in the
United States.” This appeal followed.
II.
Generally, we review de novo the grant of a motion to dismiss for failure to
state a claim under Rule 12(b)(6), Fed. R. Civ. P. Leib v. Hillsborough Cnty. Pub.
Transp. Comm’n, 558 F.3d 1301, 1305 (11th Cir. 2009). We likewise review de
novo the district court’s application of res judicata.2 Griswold v. Cnty. of
Hillsborough, 598 F.3d 1289, 1292 (11th Cir. 2010). We review a district court’s
denial of a motion to amend for an abuse of discretion, but we review de novo the
underlying legal conclusion of whether amendment would have been futile.
Corsello v. Lincare, Inc., 428 F.3d 1008, 1012 (11th Cir. 2005).
III.
“The doctrine of res judicata, or claim preclusion, bars the parties to an
action from litigating claims that were or could have been litigated in a prior action
between the same parties.” Lobo v. Celebrity Cruises, Inc., 704 F.3d 882, 892
2
Before the implementation of Eleventh Circuit Rule 3–1, which took effect on
December 1, 2014, we reviewed de novo a magistrate judge’s legal conclusions in a report and
recommendation even if the party failed to object to them. See Dupree v. Warden, 715 F.3d
1295, 1300 (11th Cir. 2013). Now, however, Rule 3–1 provides that we may review unobjected-
to factual findings and legal conclusions contained in a magistrate judge’s report and
recommendation for plain error only. This rule applies “if the party was informed of the time
period for objecting and the consequences on appeal for failing to object.” 11th Cir. R. 3–1.
Here, although De Souza failed to object to the magistrate judge’s report, she did so before Rule
3–1 took effect and without being informed of the consequences prescribed by Rule 3–1. We,
therefore, review de novo the legal question of res judicata.
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(11th Cir. 2013). The party invoking res judicata must show the following:
“(1) there is a final judgment on the merits; (2) the decision was rendered by a
court of competent jurisdiction; (3) the parties, or those in privity with them, are
identical in both suits; and (4) the same cause of action is involved in both cases.”
Ragsdale v. Rubbermaid, Inc., 193 F.3d 1235, 1238 (11th Cir. 1999); see Lobo,
704 F.3d at 892. Only the fourth element is at issue in this appeal.
De Souza argues that the facts and claims raised in the fourth action were
different from those asserted in the third action. Specifically, she asserts, her
claims related to the correspondence sent by McCurdy and Chase in August 2013
were not raised in the prior proceeding. Res judicata does not bar these claims, she
contends, because these claims were not in existence when the third action was
filed and were not actually asserted or litigated in that action, and she was under no
obligation to assert these claims in a supplemental pleading.
For purposes of res judicata, two cases are really the same “claim” or “cause
of action” if they are based on the same “nucleus of operative facts” or are “based
upon the same factual predicate.” Griswold, 598 F.3d at 1293 (quotation marks
omitted). As a result, “[r]es judicata applies not only to the exact legal theories
advanced in the prior case, but to all legal theories and claims arising out of the
same nucleus of operative facts.” Wesch v. Folsom, 6 F.3d 1465, 1471 (11th Cir.
1993)).
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However, the doctrine of res judicata does not require parties to file
supplemental pleadings in order to state claims that arise after the original
complaint is filed. Manning v. City of Auburn, 953 F.2d 1355, 1360 (11th Cir.
1992). For res judicata purposes, “claims that ‘could have been brought’ are
claims in existence at the time the original complaint is filed or claims actually
asserted by supplemental pleadings or otherwise in the earlier action.” Id.
(footnote omitted; emphasis in original).
Here, the district court did not err in concluding that De Souza’s complaint
was barred by res judicata. Both the third and fourth actions asserted violations of
the FDCPA and the TILA, arising from attempts to collect the mortgage debt and
to foreclose on the property. Despite this similarity, De Souza is correct that she
did not have to include the allegations concerning the letters and notices she
received in August 2013, which were sent after the original complaint in the third
action was filed. See id. However, our review of her second amended complaint
in the third action, which she filed in December 2013, shows that she in fact did so.
De Souza’s second amended complaint in the third action alleges the
following: “On or about March 7, 2009, and on various dates through and
including November 18, 2013, while this litigation has been pending, Chase and its
foreclosure counsel, [McCurdy], sent the Plaintiff various “Notices of Foreclosure
Sale” . . . . No. 1:13-cv-02447, Pl’s Second Am. Compl. ¶ 22. She further alleged
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that these notices demanded immediate payment of the debt. These allegations
would, of course, include notices sent by McCurdy or Chase on August 14 or 15,
2013. Thus, the same factual predicate—the correspondence sent on August 14 or
15, along with the previous correspondence sent in March 2009 and February
2012—was actually asserted in both actions. See Manning, 953 F.2d at 1360.
Because the third and fourth actions arose out of the same “nucleus of
operative facts,” any claims based on those facts—even if the legal theories
asserted in the fourth action are different from those asserted in the third action—
are barred by res judicata because they are considered the same “claim” or “cause
of action.” Griswold, 598 F.3d at 1293; Ragsdale, 193 F.3d at 1238. Accordingly,
the district court did not err in granting the defendants’ motion to dismiss.
De Souza also contends that, even if the district court did not err in applying
res judicata, she should have been granted leave to amend her complaint before
dismissal. Where it appears that a more carefully drafted complaint might state a
claim, a pro se plaintiff must be given at least one opportunity to amend the
complaint before the court dismisses the action with prejudice. See Bank v. Pitt,
928 F.2d 1108, 1112 (11th Cir. 1991), overruled in part by Wagner v. Daewoo
Heavy Indus. Am. Corp., 314 F.3d 541, 542 (11th Cir. 2002) (en banc) (holding
that this rule does not apply to counseled plaintiffs). However, the district court
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need not grant leave to amend “where amendment would be futile.” Corsello, 428
F.3d at 1014.
Here, the district court did not abuse its discretion by denying leave to
amend before dismissing De Souza’s complaint with prejudice because amendment
would have been futile. See id. Any claims based on the same “nucleus of
operative facts,” however carefully pled, would also be barred by res judicata.
IV.
Finally, De Souza challenges the district court’s injunction ordering her to
pay the full filing fee and post a $10,000 cash bond if she files any future federal
action relating to the attempted foreclosure of her home.
We have recognized that “[f]ederal courts have both the inherent power and
the constitutional obligation to protect their jurisdiction from conduct which
impairs their ability to carry out Article III functions.” Procup v. Strickland, 792
F.2d 1069, 1073-74 (11th Cir. 1986) (en banc). District courts also have power
under 28 U.S.C. § 1651(a) “to enjoin litigants who are abusing the court system by
harassing their opponents.” Harrelson v. United States, 613 F.2d 114, 116 (5th
Cir. 1980). 3 However, while severe restrictions may be imposed, litigants “cannot
be completely foreclosed from any access to the court.” Procup, 792 F.2d at 1074;
see Miller v. Donald, 541 F.3d 1091, 1096-97 (11th Cir. 2008) (noting that
3
We are bound by all Fifth Circuit decisions issued before October 1, 1981. Bonner v.
City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc).
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financial restrictions on filing may be inappropriate where they would completely
bar an indigent litigant’s access to the courts).
Here, the district court’s order is in the nature of an injunction issued to
protect itself and others against abusive litigation, not a sanction under Rule 11,
Fed. R. Civ. P., as De Souza suggests. See Procup, 792 F.2d at 1073-74;
Harrelson, 613 F.2d at 116. We review the injunctive provisions for an abuse of
discretion. Miller, 541 F.3d at 1096. A district court abuses its discretion if it
“imposes some harm, disadvantage, or restriction upon someone that is
unnecessarily broad or does not result in any offsetting gain to anyone else or
society at large.” Klay v. United Healthgroup, Inc., 376 F.3d 1092, 1096 (11th Cir.
2004). We will also find an abuse of discretion if “neither the district court’s
decision nor the record provide sufficient explanation to enable meaningful
appellate review.” See Cox Enters., Inc. v. News-Journal Corp., 510 F.3d 1350,
1360 (11th Cir. 2007) (concerning the refusal to award prejudgment interest).
We do not doubt that it was within the district court’s discretion to impose
some form of injunction against De Souza given the course of litigation, now
spanning five years and four states, surrounding the foreclosure of De Souza’s
home. However, under the circumstances, we conclude that the district court
abused its discretion in imposing the filing injunctions it did in this case.
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First, the scope of the injunction sweeps more broadly than the facts or
circumstances “already raised and litigated” in these cases. Miller, 541 F.3d at
1098; cf. Traylor v. City of Atlanta, 805 F.2d 1420, 1422 (11th Cir. 1986)
(upholding injunction where it was clear that the district court intended only to
prohibit party from “attempting to relitigate specific claims arising from the same
set of factual circumstances that [had] been litigated and adjudicated in the past”).
Rather, the court’s order applies to “any future lawsuits . . . arising out of attempts
to foreclose upon the property.” Thus, the injunction could apply to facts or claims
occurring after the district court’s decision, which may not be barred by res
judicata.
Second, the court offered no justification for its imposition of the specific
injunctive provisions. In particular, the court did not explain its reasoning for, or
make any factual findings in support of, the $10,000 cash-bond requirement or
how that requirement was tailored to De Souza and the specific facts of her history
as a litigant in these cases.4 Of course, the magistrate judge’s report contains a
thorough description of the four actions De Souza filed relating to the foreclosure
of her home, and we view the district court’s sua sponte injunctive order against
4
We note that this Court has not addressed the propriety of imposing a similar cash-bond
requirement in order to cover prospective sanctions in a future, as yet unfiled, lawsuit. Cf.
Pedraza v. United Guar. Corp., 313 F.3d 1323 (11th Cir. 2002) (concerning appellate cost bonds
under Rule 7, Fed. R. App. P.). Although district courts may respond to abusive litigants “with
imaginative new techniques designed to protect the court access of all litigants,” Procup, 792
F.2d at 1073, we cannot meaningfully evaluate the court’s injunction in this case without
additional reasoning and findings.
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that background. See Cox Enters., Inc., 510 F.3d at 1360. It is also clear that the
purpose of the bond requirement is to deter De Souza from filing another
complaint related to the foreclosure. However, the record in this case alone is
insufficient to allow this Court to meaningfully review the imposition of the cash-
bond requirement or the specific amount set by the district court. See id.
Third, the court provided no notice of its intent to issue an injunction, nor
was the issue discussed in the magistrate judge’s report and recommendation. See,
e.g., Brow v. Farrelly, 994 F.2d 1027, 1038 (3d Cir. 1993) (providing that notice
should be given to the litigant to show cause why injunctive relief should not
issue); cf. Fed. R. Civ. P. 11(c)(1) (requiring notice and a reasonable opportunity to
respond before sanctions may be imposed).
For these reasons, we vacate the injunctive provisions and remand this
matter to the district court for further proceedings regarding whether and what
form of injunctive relief should issue against De Souza.
V.
In sum, the district court properly dismissed De Souza’s complaint as barred
by the doctrine of res judicata and did not abuse its discretion in denying leave to
amend based on futility. Therefore, we affirm the district court on these issues.
However, we vacate the imposition of the injunctive provisions and remand for
further proceedings consistent with this opinion.
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AFFIRMED in part; VACATED AND REMANDED in part.
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