Andrew D. Dunavant, Jr. v. Sirote & Permutt, PC

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 14-13314
Non-Argument Calendar
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D.C. Docket No. 1:13-cv-00268-WS-M
ANDREW D. DUNAVANT, JR.,
MARY DUNAVANT,
Plaintiffs-Appellants,
versus
SIROTE & PERMUTT, P.C.,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Alabama
________________________
(February 9, 2015)
Before MARCUS, MARTIN, and BLACK, Circuit Judges.
PER CURIAM:
Andrew D. Dunavant, Jr., and Mary Dunavant (the Dunavants) appeal the
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district court’s partial denial of their motion for summary judgment and its grant of
the defendant’s motion for summary judgment. The Dunavants allege that the
defendant, Sirote & Permutt, P.C. (Sirote), unlawfully published two notices of
foreclosure sale for the Dunavants’ property after a state court enjoined the
foreclosure action. On appeal, the Dunavants first argue that the district court
incorrectly dismissed their claim under Section 1692e(5) of the Fair Debt
Collection Practices Act (FDCPA) for failure to show that Sirote’s publication of
the foreclosure notices amounted to the collection of a debt. Second, the
Dunavants argue that the district court erred by dismissing their claim under
Section 1692f(6) of the FDCPA as barred under the doctrine of res judicata. Third,
the Dunavants argue that the district court improperly dismissed their state-law
claim. After careful consideration, we affirm.
I.
This case arises out of a dispute over a security interest on real estate owned
by the Dunavants. After GMAC Mortgage, LLC (GMAC)—the Dunavants’
mortgage servicer—scheduled a foreclosure sale on their property, the Dunavants
filed a civil action in Alabama state court to prevent the sale. The court granted the
request in part, enjoining GMAC “from proceeding with any foreclosure action on
the subject property during the pendency of this litigation.” In March 2013, the
Dunavants amended their state-court complaint against GMAC alleging, among
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other things, tortious interference because it “violated the Court’s injunction order
and published foreclosure notices in the Foley Onlooker newspapers on April 17 &
May 18, 2012.” According to the Dunavants, these notices caused a third party to
pull out of a deal to buy the property. GMAC moved for summary judgment, and
the state court, without opinion, granted GMAC’s motion “on all claims except for
the permanent injunction claims” and dismissed them with prejudice.
The Dunavants then filed suit in federal court alleging that GMAC’s
counsel, Sirote, violated several provisions of the FDCPA and committed invasion
of privacy when Sirote published the notices of foreclosure sale. Among other
things, the FDCPA portion of the suit included allegations that: Sirote violated
FDCPA Section 1692e—which forbids debt collectors from using “any false,
deceptive, or misleading representation or means in connection with the collection
of any debt,” 15 U.S.C. § 1692e; and FDCPA Section 1692f—which prohibits debt
collectors from using unfair or unconscionable means to collect or attempt to
collect any debt, 15 U.S.C. § 1692f. The district court granted Sirote’s motion for
judgment on the pleadings on all aspects of the FDCPA claim except for the
Section 1692f(6) claim, and allowed the Section 1692f and state law invasion-of-
privacy claims to proceed. Then on summary judgment, the district court denied
the Dunavants’ motion for reconsideration of its dismissal of the Section 1692e(5)
claim; held that res judicata barred the Section 1692f(6) claim; and dismissed the
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remaining state law claim without prejudice because it no longer had supplemental
jurisdiction. The Dunavants timely appeal that order here.
II.
The Dunavants first appeal the district court’s denial of relief under Section
1692e(5) of the FDCPA. “[I]n order to state a plausible FDCPA claim under
§ 1692e, a plaintiff must allege . . . that the challenged conduct is related to debt
collection.” Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1216
(11th Cir. 2012). In its grant of Sirote’s motion for judgment on the pleadings, the
district court “dismissed the plaintiffs’ FDCPA claims . . . because it found that the
defendant’s act of publishing foreclosure notices amounted only to the
enforcement of a security interest and not the collection of a debt.” This was
because “the published notices on which plaintiffs’ claims are based did not
demand payment of the underlying debt.” The Dunavants did not appeal that
ruling. Instead, several months later, the Dunavants moved for summary judgment
on the Section 1692e(5) claim that the district court had already dismissed.
Although the Dunavants did not even “acknowledge[] that their claim ha[d] been
dismissed or request[] alteration of that ruling,” the district court charitably
construed their argument as a motion for reconsideration.
“We review the denial of a motion for reconsideration for an abuse of
discretion.” Richardson v. Johnson, 598 F.3d 734, 740 (11th Cir. 2010) (per
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curiam). A motion for reconsideration may not be used merely to “relitigate old
matters, raise argument or present evidence that could have been raised prior to the
entry of judgment.” Id. (quoting Michael Linet, Inc. v. Vill. of Wellington, 408
F.3d 757, 763 (11th Cir. 2005)) (internal quotation marks omitted). Typically, the
only grounds for granting a motion for reconsideration are “newly-discovered
evidence or manifest errors of law or fact.” In re Kellogg, 197 F.3d 1116, 1119
(11th Cir. 1999) (applying Bankruptcy Rule 9023, and noting that the rule
incorporates by reference Rule 59 of the Federal Rules of Civil Procedure).
The district court’s refusal to reconsider its decision regarding debt
collection was not an abuse of discretion. The district court relied in part on our
unpublished 1 decision in Warren v. Countrywide Home Loans, Inc., 342 F. App’x
458 (11th Cir. 2009) (per curiam), for the proposition “that an enforcer of a
security interest, such as a [mortgage company] foreclosing on mortgages of real
property . . . falls outside the ambit of the FDCPA except for the provisions of
section 1692f(6).” Id. at 460 (alteration and omission in original) (internal
quotation marks omitted). The Dunavants argue that we overruled Warren in
another unpublished case, Birster v. Am. Home Mortg. Serv., Inc., 481 F. App’x.
579, 582 (11th Cir. 2012) (per curiam). But one panel opinion cannot overrule
another. See Smith v. GTE Corp., 236 F.3d 1292, 1303 (11th Cir. 2001). In any
1
“Unpublished opinions are not considered binding precedent, but they may be cited as
persuasive authority.” 11th Cir. R. 36-2.
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event, these two panel opinions are not in conflict. In Birster, we merely noted that
“an entity can both enforce a security interest and collect a debt.” Id. at 583. The
Birster panel also decided that the defendant in that case “both attempt[ed] to
enforce a security interest and collect a debt,” and therefore held that the defendant
“may be liable under the FDCPA beyond § 1692f(6) even though it was also
enforcing a security interest.” Id. (second emphasis added).2 Here, by contrast, the
district court held that “publishing foreclosure notices amounted only to the
enforcement of a security interest and not the collection of a debt.” Thus, although
unpublished decisions are only persuasive authority, see Bonilla v. Baker Concrete
Constr., Inc., 487 F.3d 1340, 1345 n.7 (11th Cir. 2007), the district court did not
abuse its discretion in refusing to reconsider its decision to dismiss the Dunavant’s
Section 1692e(5) claim based on our unpublished decision in Warren.3
2
This decision mirrored our reasoning in Reese, in which we held that for the related
Section 1692e of the FDCPA, “[t]he fact that [a] letter and documents relate to the enforcement
of a security interest does not prevent them from also relating to the collection of a debt within
the meaning of § 1692e.” 678 F.3d at 1217 (emphasis added). Reese expressly “d[id] not decide
whether a party enforcing a security interest without demanding payment on the underlying debt
is attempting to collect a debt within the meaning of § 1692e.” Id. at 1218 n.3.
3
The Dunavants also argue that the district court’s decision is contrary to our decision in
Caceres v. McCalla Raymer, LLC, 755 F.3d 1299 (11th Cir. 2014). It is not. In that case, we
held that a particular letter was “a communication in connection with the collection of a debt”
because it stated that it was “for the purpose of collecting a debt,” was addressed “Dear Property
Owner,” referred to “collection efforts,” and “state[d] the amount of the debt and indicate[d] that
it must be paid in certified funds.” Id. at 1303. The notices of foreclosure sale at issue here were
published in a newspaper to inform the public about the status of the foreclosure sale, were not
addressed to the debtors, and included no information relating to the collection of payments from
them.
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III.
The Dunavants next challenge the district court’s grant of Sirote’s motion
for summary judgment on their Section 1692f(6) claim as barred under the doctrine
of res judicata. “We review de novo the district court’s grant of a motion for
summary judgment, considering all of the evidence and the inferences it may yield
in the light most favorable to the nonmoving party.” Ellis v. England, 432 F.3d
1321, 1325 (11th Cir. 2005) (per curiam). We “apply the res judicata principles of
the law of the state whose decision is set up as a bar to further litigation.” Kizzire
v. Baptist Health Sys., Inc., 441 F.3d 1306, 1308 (11th Cir. 2006) (internal
quotation marks omitted). “Under Alabama law, the essential elements of res
judicata are (1) a prior judgment on the merits, (2) rendered by a court of
competent jurisdiction, (3) with substantial identity of the parties, and (4) with the
same cause of action presented in both actions.” Green v. Jefferson Cnty.
Comm’n, 563 F.3d 1243, 1252 (11th Cir. 2009) (quoting Equity Res. Mgmt., Inc.
v. Vinson, 723 So. 2d 634, 636 (Ala. 1998)) (internal quotation marks omitted).
Since the first two prongs are not at issue, we address whether the district court
correctly held that Sirote met its burden of proving the identity-of-parties element
and the same-cause-of-action element with respect to the FDCPA claim. We
conclude that it did.
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A.
Alabama’s res judicata doctrine requires that the “parties be identical,
sometimes referred to as the mutuality of estoppel requirement.” Stewart v.
Brinley, 902 So. 2d 1, 10 (Ala. 2004) (citation omitted). “An exception is made to
this requirement for parties in privity with a party to the prior action.” Id. (citation
omitted). Thus, “[a] person may be bound by a judgment even though not a party
to a suit if one of the parties to the suit is so closely aligned with his interests as to
be his virtual representative.” Gonzalez, LLC v. DiVincenti, 844 So. 2d 1196,
1203 (Ala. 2002) (citation omitted). Or, said another way, the old and new parties
must “share th[e] same interest in the subject matter of the dispute.” Greene v.
Jefferson Cnty. Comm’n, 13 So. 3d 901, 912 (Ala. 2008). For instance, in
Gonzalez, the Alabama Supreme Court held that although the new defendants were
not named in the original action, “they were . . . contractors hired by the
[defendants] named in that [first] action.” 844 So. 2d at 1203 Because the original
defendants “had to defend the inspection work of their contractor, and [because]
the interests of [the contractors] were adequately represented in the original case,”
the defendants in the two actions were substantially identical for purposes of res
judicata. Id.
Here, the Dunavants sued GMAC in state court for publishing foreclosure
notices, and later sued GMAC’s lawyers, Sirote, in federal court for the same
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publication. Like in Gonzalez, the district court noted that Sirote, “by the
plaintiffs’ own insistence, . . . was agent to GMAC’s principal when it published
the foreclosure notices.” And “the plaintiffs do not allege that the past and present
defendant engaged in different conduct; on the contrary, they allege that both are
liable for the exact same conduct—[Sirote] as the actor and GMAC as the actor’s
principal.” Moreover, as Sirote notes on appeal, it “had an interest in the outcome
of the litigation between GMAC and the Dunavants” because it “desired a good
result for its own reputation and for the sake of its client.” GMAC was therefore
“so closely aligned with [Sirote’s] interests as to be [its] virtual representative.”
Gonzalez, 844 So. 2d at 1203 (citation omitted).
The Dunavants argue that the district court misconstrued the basis for the
state court’s summary dismissal of the Dunavant’s claim, suggesting that there is a
“very real possibility the state court determined that Sirote was the party solely
responsible for the foreclosure notices being published in violation of the
injunction.” They cite to Lee L. Saad Construction Co. v. DPF Architects, P.C.,
851 So. 2d 507 (Ala. 2002), in which the Alabama Supreme Court held that a
plaintiff could not rely on the doctrine of collateral estoppel because an arbitrator
did not “actually decide[]” a claim when it issued summary decisions without
explanation. Id. at 520–21.
However, Saad applied the collateral estoppel doctrine, not res judicata law,
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and the two doctrines are different. While res judicata precludes the litigation of
claims “that could have been adjudicated” in the previous action, Ex parte LCS
Inc., 12 So. 3d 55, 57 (Ala. 2008) (emphasis added), collateral estoppel precludes
only the re-litigation of issues that already have been adjudicated in a previous
action, see id. To show that the same issue has already been adjudicated, collateral
estoppel requires that the issue has been “actually litigated,” “necessary to the prior
judgment,” and “identical to the issue litigated in the present action.” Walker v.
City of Huntsville, 62 So. 3d 474, 487 (Ala. 2010) (quotation marks omitted). The
third prong of res judicata requires none of these elements, but rather requires only
that two parties “share th[e] same interest in the subject matter of the dispute.”
Greene, 13 So. 3d at 912. In short, cases that apply the collateral estoppel doctrine
requiring a particular basis for a prior adjudication of an issue do not apply in the
res judicata context. Nowhere in Alabama’s res judicata law does there exist a
requirement that another court expressly absolve the former defendant of liability
with findings of fact and conclusions of law. The only requirement is that a prior
party be “so closely aligned with [a new party’s] interests as to be his virtual
representative,” Gonzalez, 844 So. 2d at 1203 (citation omitted), and that the new
and old parties “share th[e] same interest in the subject matter of the dispute,”
Greene, 13 So. 3d at 912.
Similarly, the Alabama Court of Civil Appeals has held that res judicata
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“bar[s] a plaintiff from prosecuting a lawsuit against an employee when the same
plaintiff already has suffered an adverse judgment on the merits in an action
against the employer for the acts of the employee, provided that the prior judgment
for the employer was not based on grounds personal to the employer.” Thompson
v. SouthTrust Bank, 961 So. 2d 876, 885 (Ala. Civ. App. 2007) (emphasis added).
Analogizing to the lawyer-client relationship here, the Dunavants argue that Sirote
must therefore prove that the prior judgment for GMAC was not based on grounds
personal to GMAC. However, the district court determined that this proviso from
Thompson was “inconsistent with Alabama law concerning the third element of res
judicata,” and therefore found “ample indication the Alabama Supreme Court
would reject it.” We agree. Although decisions of the Alabama Supreme Court
require only that the past and current defendants share the same interest in the
subject matter of a dispute, see Greene, 13 So. 2d at 912, the Thompson proviso, in
the district court’s words, “appears to require . . . an identity of interest in
particular defenses to the litigation, something far beyond the governing standard.”
Beyond that, and as the district court notes, the Thompson court heavily—and
incorrectly—relied on the Alabama Supreme Court’s decision in Griffin v.
Bozeman, 173 So. 857 (1937), which addressed the separate doctrine of collateral
estoppel. Therefore, we conclude that the Alabama Supreme Court would require
only that Sirote show the existence of an identity of interest in the subject matter of
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the litigation. See State Farm Mut. Auto. Ins. Co. v. Duckworth, 648 F.3d 1216,
1224 (11th Cir. 2011) (noting that we consider state intermediate court rulings
“provided that there is no indication that the [state] Supreme Court would reject
them”). Because Sirote was GMAC’s counsel, and because both suits involve the
exact same conduct, Sirote has adequately proven the identity-of-parties element.
B.
Turning to the same-cause-of-action requirement, under Alabama law, “the
principal test for comparing causes of action . . . is whether the primary right and
duty or wrong are the same in each action.” Chapman Nursing Home, Inc. v.
McDonald, 985 So. 2d 914, 921 (Ala. 2007) (emphasis omitted) (citation omitted).
“Res 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.” Id. (emphasis omitted) (citation omitted). “As a result, two causes of
action are the same for res judicata purposes when the same evidence is applicable
to both actions.” Id. (citation omitted). Said another way:
If a claim, which arises out of a single wrongful act or dispute, is
brought to a final conclusion on the merits, then all other claims
arising out of that same wrongful act or dispute are barred, even if
those claims are based on different legal theories or seek a different
form of damages, unless the evidence necessary to establish the
elements of the alternative theories varies materially from the
evidence necessary for a recovery in the first action.
Vinson, 723 So. 2d at 638 (emphasis added).
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Here, the district court correctly found that this standard was met. The
primary wrong in both the suit against GMAC and the suit against Sirote is the
publication of the foreclosure notices. Also, both the tortious-interference claim
against GMAC and the FDCPA claim against Sirote arise out of the same nucleus
of operative facts. And the evidence needed to prove each claim does not
materially vary. In both cases, the district court notes that the Dunavants would
have to show “(1) that GMAC (through [Sirote]) published foreclosure notices; (2)
that this was done on particular dates in a particular publication; (3) that, on those
dates, an injunction was in place; (4) that the publication of the foreclosure notices
violated the terms of the injunction; and (5) that the publication caused a purchaser
to back out of his contract.” In short, there is little question that “substantially the
same evidence supports” the Dunavants’ claims against GMAC and Sirote. Geer
Bros., Inc. v. Crump, 349 So. 2d 577, 580 (Ala. 1977) (emphasis added).
The Dunavants argue that they are not required to bring an after-acquired
federal claim in ongoing state court litigation. They mistakenly rely on another
unpublished case, Moore v. Pak, 402 F. App’x 491 (11th Cir. 2010) (per curiam),
for the proposition that “the doctrine of res judicata does not punish a plaintiff for
exercising the option not to supplement the pleadings with an after-acquired
claim.” Id. at 494 (quoting Pleming v. Universal–Rundle Corp., 142 F.3d 1354,
1357 (11th Cir. 1998)). But the actual rule we have enunciated is that “for res
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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.” Manning v. City of Auburn, 953 F.2d
1355, 1360 (11th Cir. 1992) (footnote omitted) (emphasis added) (internal
quotation marks omitted). Here, the Dunavants actually asserted after-acquired
claims in a supplemental pleading against GMAC. Nonetheless, at that time, they
chose not to assert an FDCPA claim against Sirote for the very same publication of
foreclosure notices. The Dunavants have cited no case for the proposition that they
may now file federal claims against Sirote based on the same nucleus of operative
facts that governed their earlier amended claims against GMAC in state court. The
district court correctly found that Sirote proved the same-cause-of-action element.
We therefore affirm the district court’s dismissal of the Dunavant’s Section
1692f(6) claim as barred under the doctrine of res judicata.
IV.
Finally, we affirm the district court’s dismissal of the Dunavant’s state-law
invasion-of-privacy claim for lack of jurisdiction. “The decision to exercise
supplemental jurisdiction over pend[e]nt state claims rests within the discretion of
the district court.” Raney v. Allstate Ins. Co., 370 F.3d 1086, 1083–89 (11th Cir.
2004) (per curiam). “The district courts may decline to exercise supplemental
jurisdiction over a claim . . . if . . . the district court has dismissed all claims over
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which it has original jurisdiction.” 28 U.S.C. § 1367(c). Because the district court
properly dismissed the Dunavant’s claims under the FDCPA, see supra Parts II &
III, it did not abuse its discretion when it dismissed the Dunavant’s state law claim.
See Raney, 370 F.3d at 1089 (“We have encouraged district courts to dismiss any
remaining state claims when, as here, the federal claims have been dismissed prior
to trial.”).
AFFIRMED.
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