Giroux v. Fed Nt’l Mortgage Assoc.

2014 DNH 135

• Court: District Court, D. New Hampshire
• Decided: June 16, 2014
• Docket: 14-cv-58-PB
• Status: Published

Opinion

Giroux v. Fed Nt’l Mortgage Assoc. 14-cv-58-PB 6/16/14

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Sharel L. Giroux

v. Case No. 14-cv-58-PB Opinion No. 2014 DNH 135

Federal National Mortgage Association, et al.

MEMORANDUM AND ORDER

Sharel Giroux has filed suit against the Federal National

Mortgage Association (“Fannie Mae”) and MERSCORP Holdings, Inc.

She seeks (1) a declaratory judgment that Fannie Mae does not

hold rights in her mortgage or promissory note; (2) a permanent

injunction barring Fannie Mae from enforcing the note; and (3)

further discovery from MERSCORP. Both defendants move to

dismiss on res judicata grounds.

I. BACKGROUND

In January 2007, Giroux signed a promissory note with

American Home Mortgage Corporation (“AHMC”). The note was

secured by a mortgage on her home held by Mortgage Electronic

1 Registrations Systems, Inc. (“MERS”) as nominee for AHMC. On

November 19, 2008, MERS assigned the mortgage to Fannie Mae.

The written assignment purported to transfer both the note and

the mortgage. Doc. No. 5-3. Bank of America and BAC Home Loans

allegedly serviced the mortgage for Fannie Mae.

On August 30, 2011, Giroux sought a declaratory judgment in

Belknap County Superior Court that Fannie Mae, Bank of America,

BAC Home Loans, and MERS all lacked authority to enforce the

note. She also sought a permanent injunction against all

parties attempting to enforce the note. Among other things,

Giroux argued that “Ms[.] Giroux is unaware of contract or

agency by which AHMC appointed or authorized MERS to be Giroux

Mortgage mortgagee as AHMC’s nominee.” Doc. No. 5-4.

On November 15, 2012, the superior court dismissed all

defendants save Fannie Mae. Doc. No. 5-6. On December 7, 2012,

the court dismissed Fannie Mae, the purported holder of the

note. Doc. No. 5-7. On October 10, 2013, the Supreme Court

affirmed both decisions.

Giroux subsequently received notice of a foreclosure sale

scheduled for January 7, 2014. On January 6, 2014, she filed

this complaint and a motion for a temporary restraining order

and preliminary injunction against Fannie Mae in Merrimack

County Superior Court. The complaint alleges that the mortgage 2 Fannie Mae is seeking to foreclose is invalid because AHMC

lacked a sufficient relationship with MERS to permit MERS to

serve as its nominee when the mortgage was issued. After a

hearing on January 14, the court cited Giroux’s “previous

opportunities to litigate issues arising from the respondents’

attempts to foreclose on the mortgage” in denying her motion for

injunctive relief. Doc. No. 5-10. On February 5, 2014, the

defendants removed the case to this court.

II. STANDARD OF REVIEW

I analyze the government’s motion under the familiar

standard that governs motions to dismiss for failure to state a

claim. Under this standard, a plaintiff must present factual

allegations sufficient to “state a claim to relief that is

plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570

(2007)). Res judicata is an affirmative defense that can serve

as the basis for a motion to dismiss but “dismissal can occur

only when facts that ‘conclusively establish the affirmative

defense’ are ‘definitively ascertainable from the allegations of

the complaint, the documents (if any) incorporated therein,

matters of public record, or other matters of which the court

may take judicial notice,’ including the records of prior 3 judicial proceedings.” Sutliffe v. Epping Sch. Dist., 2008 DNH

076, 3-4 (quoting Banco Santander de P.R. v. Lopez-Stubbe (In re

Colonial Mortg. Bankers Corp.), 324 F.3d 12, 15-16 (1st Cir.

2003)).

III. ANALYSIS

Fannie Mae argues that Giroux’s current claims are barred

by res judicata. Res judicata precludes litigation “in a later

case of matters actually decided, and matters that could have

been litigated, in an earlier action between the same parties

for the same cause of action.” Sleeper v. Hoban Family P’ship,

157 N.H. 530, 533 (2008). For the doctrine to apply, “(1) the

parties must be the same or in privity with one another; (2) the

same cause of action must be before the court in both instances;

and (3) a final judgment on the merits must have been rendered

in the first action.” Id. (citing Meier v. Town of Littleton,

154 N.H. 340, 342 (2006)). The New Hampshire Supreme Court has

held that the “same cause of action requirement” encompasses

“all theories on which relief could be claimed on the basis of

the factual transaction in question.” Brooks v. Trs. of

Dartmouth Coll., 161 N.H. 685, 694 (2011) (quoting E. Marine

Constr. Corp. v. First S. Leasing, Ltd., 129 N.H. 270, 275

(1987)). 4 Giroux does not challenge either Fannie Mae’s contention

that the parties in both actions are the same or its claim that

both cases arise from the same factual transaction. It is also

quite clear that the prior action went to a final judgment.1

Accordingly, the only issue that merits extended discussion is

Giroux’s contention that res judicata does not apply because New

Hampshire’s venue law barred her from litigating her challenge

to the mortgage in Belknap County.

Giroux bases her argument on the fact that New Hampshire

courts treat “local actions” differently than “transitory

actions” for venue purposes. Local actions are defined at

common law as actions “aris[ing] out of a local subject,”

including “whatever is founded upon privity of estate,” whereas

transitory actions are “personal actions which might have arisen

in any county,” including “actions in . . . contract.” The

Educ. Soc’y of the Denomination Called Christians v. Varney, 54

1 Giroux argues that the final judgment requirement was not satisfied because she never challenged the mortgage in the prior action. As a result, she argues, res judicata does not apply because there was no final judgment entered with respect to her mortgage claims. This argument is based on a mistaken understanding of the final judgment requirement, which applies to the action brought rather than the specific claims that were litigated in the prior action. This must be so because res judicata could otherwise never be used to bar claims that were not litigated but that could have been litigated in the prior action.

5 N.H. 376, 377-78 (1847). Local actions involving property

ordinarily must be commenced in the county where the property is

located whereas transitory actions may be brought in any county

where either party resides. N.H. Rev. Stat. Ann. § 507:9.

Relying on this distinction, Giroux claims that her challenges

to the note were transitory claims that were properly brought in

Belknap County where one of the named defendants was located,

but her mortgage claims are local claims that can only be

brought in Merrimack County, where the property is located.

Accordingly, she argues that her challenges to the mortgage

cannot be barred by res judicata because she could not have

raised them in the Belknap County action.

I question the premise that underlies Giroux’s argument.2

However, even if her underlying premise is correct, she cannot

escape the effect of res judicata by splitting her claims and

attempting to litigate some of them in Belknap County while

2 A claim challenging a mortgage is both a local claim and a transitory claim because it can be founded either on privity of estate or privity of contract. See Holyoke v. Clark, 54 N.H. 578, 579 (1974). Although an action to enjoin a foreclosure is a local action that must be brought in the county where the property is located, Tucker v. Lake, 67 N.H. 193 (1892), Giroux did not seek to enjoin a proposed foreclosure in the prior action. Thus, she could have brought claims for declaratory relief challenging the validity of the mortgage as a transitory claim in Belknap County together with her claims challenging the note.

6 reserving other claims for a later action in another county. As

the Second Restatement of Judgments recognizes, when a plaintiff

elects to proceed “in a court which has jurisdiction to redress

an invasion of a certain interest of the plaintiff, but not

another . . . [t]he plaintiff, having voluntarily brought his

action in a court which can grant him only limited relief,

cannot insist upon maintaining another action on the claim.”

Restatement (Second) Judgments, § 24 cmt.g (1982); see also 18

Charles G. Wright & Arthur R. Miller, Federal Practice and

Procedure § 4412 (2d ed. 2002).

Giroux has provided no good reason why she did not

initially bring suit in Merrimack County, where her home was

located and where she was then living. Because she clearly

could have brought all of her claims in such an action, she

cannot avoid res judicata by arguing that her decision to

proceed in Belknap County prevented her from being able to

present her challenges to the mortgage in that action.

All of Giroux’s current claims involve matters that have

actually been decided or that could have been litigated in the

Belknap County action. See Sleeper, 157 N.H. at 533. The

initial suit involved the same parties and the same cause of

action. It was decided on the merits by the Belknap County

Superior Court and the trial court’s rulings were affirmed by 7 the New Hampshire Supreme Court. Accordingly, all of the

current claims are barred by res judicata.

IV. CONCLUSION

For the reasons discussed above, I grant the defendants’

motion to dismiss. Doc. No. 5.

SO ORDERED.

/s/Paul Barbadoro Paul Barbadoro United States District Judge

June 16, 2014

cc: Michael J. DiCola, Esq. Thomas J. Pappas, Esq. Gary M. Burt, Esq.