Powell v. Ocwen Loan Servicing, LLC ( 2020 )

19-2735
Powell v. Ocwen Loan Servicing, LLC
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION ASUMMARY ORDER@). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A
COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second
Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the
City of New York, on the 28th day of December, two thousand twenty.
PRESENT:
DENNY CHIN,
JOSEPH F. BIANCO,
STEVEN J. MENASHI,
Circuit Judges.
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GARY POWELL, GAIL POWELL,
Plaintiffs-Appellants,
v. 19-2735
OCWEN LOAN SERVICING, LLC, as Servicer
for DEUTSCHE BANK NATIONAL TRUST
COMPANY, LITTON LOAN SERVICING LP,
DOES, 1-50,
Defendants-Appellees.
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FOR PLAINTIFFS-APPELLANTS: Gary Powell and Gail
Powell, pro se,
Wallingford, CT.
FOR DEFENDANTS-APPELLEES: Marissa Delinks, Hinshaw
& Cubertson, LLP, Boston,
MA.
Appeal from a judgment of the United States District Court for the District
of Connecticut (Meyer, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.
Plaintiffs-appellants Gary and Gail Powell, appearing pro se, sued
defendants-appellees Litton Loan Servicing, LLC and its successor, Ocwen Loan
Servicing, LLC ("Ocwen"), in the court below a few months after a Connecticut court
rendered a judgment of strict foreclosure against them. They asserted claims under
federal law for violations of the Fair Debt Collection Practices Act ("FDCPA"), 15
U.S.C. § 1692, and the Truth in Lending Act ("TILA"), 15 U.S.C. § 1631, and under state
law for breach of contract and the covenant of good faith and fair dealing,
estoppel/unclean hands, accounting, and fraud. The district court dismissed the
FDCPA and TILA claims for failure to state a claim and also deemed them abandoned,
dismissed the breach of contract and estoppel/unclean hands claims as barred under the
Rooker-Feldman doctrine, and dismissed the accounting and fraud claims as barred by
res judicata. The Powells appealed. We assume the parties= familiarity with the
underlying facts, the procedural history of the case, and the issues on appeal.
I. Rooker-Feldman
The Rooker-Feldman doctrine provides that federal courts lack subject
matter jurisdiction over "cases brought by state-court losers complaining of injuries
caused by state-court judgments rendered before the district court proceedings
commenced and inviting district court review and rejection of those judgments." Exxon
Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005). The Rooker-
Feldman doctrine applies where: (1) the federal-court plaintiff lost in state court; (2) she
complains of injuries caused by a state court judgment; (3) she seeks district court
review and rejection of that judgment; and (4) the state court judgment has been
rendered before the district court proceedings commenced. Hoblock v. Albany Cnty. Bd.
of Elections, 422 F.3d 77, 85 (2d Cir. 2005). We review the district court's application of
the Rooker-Feldman doctrine de novo. Sung Cho v. City of N.Y., 910 F.3d 639, 644 (2d Cir.
2018).
Here, the district court correctly found that all four requirements of the
Rooker-Feldman doctrine were satisfied. As to the first and fourth requirements, the
Powells filed this federal lawsuit three months after they had lost in state court, when
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the court rendered its amended judgment of strict foreclosure, and after the Powells'
time to appeal the judgment had passed. Exxon Mobil Corp., 544 U.S. at 284. The
Powells argue that they did not lose in state court because Connecticut did not afford
them an opportunity to appeal from the foreclosure. But they do not explain how or
why they did not have an opportunity to appeal the foreclosure judgment and provide
no case law or other support for their conclusory statement. While the Rooker-Feldman
doctrine does not apply if the "plaintiff had neither a practical reason nor a legal basis to
appeal the state-court decision that caused her alleged injuries," Green v. Mattingly, 585
F.3d 97, 103 (2d Cir. 2009), the Powells had an opportunity to appeal from the
foreclosure, Danzig v. PDPA, Inc., 11 A.3d 153, 158 (Conn. App. Ct. 2010) ("[A] judgment
of foreclosure constitutes an appealable final judgment when the court has determined
the method of foreclosure and the amount of the debt.").
The district court also correctly held that the second and third
requirements were satisfied. The Powells' claim for injunctive relief and their breach of
contract and estoppel/unclean hands causes of action sought to enjoin the foreclosure
and invalidate the legal basis for the foreclosure judgment. The Powells argue on
appeal that they are not seeking redress for injuries caused by the state court judgment,
but instead are seeking relief from problems they did not bring to the state court's
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attention—namely, Deutsche Bank's refusal to clarify certain terms of the loan
modification. They also argue that Rooker-Feldman does not apply because they sought
damages from Ocwen's breach of the loan modification agreement.
The Powells' arguments are unavailing. After a mediator found that they
failed to make payments pursuant to the loan modification, the state court ordered
foreclosure. In other words, the foreclosure judgment was based on the Powells'
breach of the modification agreement. In the court below, they argued that defendants'
alleged breach of contract rendered the loan modification "void and/or voidable";
claimed that defendants' alleged misrepresentations estopped them from executing the
foreclosure; and sought to enjoin defendants "from instituting, prosecuting or
maintaining foreclosure proceedings on [the property] or from otherwise taking any
steps to deprive [them] of ownership." Record on Appeal, Dkt. No. 1 ¶¶ 55, 62; id. at
10.
Thus, the core injury of which the Powells complain, "and which [they
seek] to have remedied, is the state foreclosure judgment" – correcting their loan
balance as found by the state court – and their stated aim in filing their complaint was
"to have the state judgment declared 'void.'" Vossbrinck v. Accredited Home Lenders, Inc.,
773 F.3d 423, 427 (2d Cir. 2014) (per curiam). That is true regardless of their preferred
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remedy. Because the validity of the loan modification agreement lay at the heart of
both the state court's foreclosure judgment and these two claims, the district court could
not have passed upon these claims without inviting a "review and rejection" of the state
court's judgment. Exxon Mobil Corp., 544 U.S. at 284.
As all four requirements of Rooker-Feldman were satisfied, the district court
correctly concluded that the doctrine barred the Powells' breach of contract and unclean
hands/estoppel claims.
For the same reasons, the Powells’ fraud claim is also barred from review
by the Rooker-Feldman doctrine. In their claim for fraud, the Powells seek a correction
of the mortgage balance found by the state court, contending that their actual mortgage
balance is much less. Thus, this claim also invites a "review and rejection," Exxon Mobil
Corp., 544 U.S. at 284, of the amount of debt determined by the state court in its final
judgment of foreclosure, see Danzig, 11 A.3d at 158.
II. TILA and FDCPA Claims
In their opposition to the motion to dismiss, the Powells did not address
defendants' arguments that their FDCPA claim was time-barred and that they could not
bring a TILA claim against loan servicers. They requested, in passing, that they should
have an opportunity to amend their complaint in the event the district court granted the
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motion to dismiss but did not otherwise suggest how they would amend these claims.
The district court held that the Powells: (1) failed to state a FDCPA claim because they
did not allege any facts suggesting improper debt collection took place within a year of
the date that they filed their federal complaint, thereby running afoul of the FDCPA
statute of limitations; and (2) failed to state a TILA claim because only "creditors" could
be sued and loan servicers were not creditors. Alternatively, the district court deemed
those claims abandoned because the Powells did not address them in opposition to the
motion to dismiss.
On appeal, the Powells argue that the district court erred in dismissing
their FDCPA and TILA claims by considering them abandoned. They then assert that,
given its obligation to afford pro se filings a liberal construction, the district court
should have provided them the opportunity to conduct discovery and amend their
complaint. They do not advance any new factual allegations that they would make if
granted leave to amend, but merely claim, in a conclusory fashion, that amendment
should have been granted because they are appearing pro se. They also have not
challenged the district court's dismissal of the FDCPA and TILA claims for failure to
state a claim, thereby abandoning those issues. LoSacco v. City of Middletown, 71 F.3d
88, 92–93 (2d Cir. 1995).
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Here, the district court did not consider whether it should have allowed
amendment; it relied on district court cases discussing abandonment as apparently
obviating the need to do so. We have taken a dim view of plaintiffs' attempts to
resurrect abandoned claims on appeal. See, e.g., Edward B. Marks Music Corp. v. Cont'l
Record Co., 222 F.2d 488, 492 (2d Cir. 1955) ("[A] plaintiff in his opposition to a motion
for summary judgment cannot abandon an issue and then, after an unpalatable decision
by the trial judge, on appeal, by drawing on the pleadings resurrect the abandoned
issue."). By abandoning their FDCPA and TILA claims, the Powells have acceded to
the district court's holding that the claims are barred.
Additionally, the Powells sought leave to amend only in the final sentence
of their opposition to the motion to dismiss and at no point offered any new factual
allegations that they would make if granted leave to amend. See Metz v. U.S. Life Ins.
Co. in City of N.Y., 662 F.3d 600, 603 (2d Cir. 2011) (per curiam) (leave to amend
unwarranted when, both before the district court and on appeal, the plaintiff "[did] not
advance new factual allegations that she would make if granted leave to amend, but
merely claim[ed] in conclusory fashion that had she been permitted to amend, she
could have pled allegations sufficient to make out a claim"). "It is within the court's
discretion to deny leave to amend implicitly by not addressing the request when leave
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is requested informally in a brief filed in opposition to a motion to dismiss." In re
Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 220 (2d Cir. 2006), abrogated on other
grounds by F.T.C. v. Actavis, Inc., 570 U.S. 136 (2013); see also Metz, 662 F.3d at 603 (denial
of leave to amend proper when plaintiff "sought leave to amend only in the final
sentence of her opposition to the motion to dismiss"). The district court therefore
properly dismissed the FDCPA and TILA claims.
Finally, the Powells' appellate brief does not raise any arguments concerning the
district court's dismissal of their accounting claim. Accordingly, they have waived any
challenge to the dismissal of this claim. LoSacco, 71 F.3d at 92–93.
We have considered the Powells' remaining arguments and find them to
be without merit. Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT:
Catherine O'Hagan Wolfe, Clerk of Court
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