17-1280-cv Harris v. BNC Mortg., Inc.
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.
1 At a stated term of the United States Court of Appeals for the Second Circuit, 2 held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of 3 New York, on the 12th day of June , two thousand eighteen. 4 5 PRESENT: 6 PIERRE N. LEVAL, 7 ROBERT D. SACK, 8 CHRISTOPHER F. DRONEY, 9 Circuit Judges. 10 _____________________________________ 11 12 SYMONOUS-GRETA HARRIS, EX RELATIONE 13 AND AUTHORIZED REPRESENTATIVE FOR: 14 SYMONOUS HARRIS, ET AL., 15 16 Plaintiff-Appellant, 17 18 v. 17-1280-cv 19 20 BNC MORTGAGE, INC., WELLS FARGO BANK, 21 N.A., DBA AMERICA'S SERVICING COMPANY, 22 N.A., DBA AMERICA'S SERVICING COMPANY, 23 LEHMAN BROTHERS HOLDINGS INC., U.S. BANK 24 NATIONAL ASSOCIATION, AURORA LOAN 25 SERVICES, LLC, DEUTSCHE BANK NATIONAL 26 TRUST COMPANY, STRUCTURED ASSET 27 INVESTMENT LOAN TRUST, STRUCTURED ASSET 28 SECURITIES CORPORATION, JOHN AND JANE 29 DOES, ALL OTHER PARTIES OF INTEREST 150, 30 ALL PERSONS UNKNOWN, CLAIMING ANY LEGAL 1 OR EQUITABLE RIGHT, TITLE, ESTATE, LIEN OR 2 INTEREST IN THE PROPERTY DESCRIBED IN THE 3 COMPLAINT ADVERSE TO PLAINTIFFS TITLE OR 4 ANY CLOUD ON PLAINTIFF'S TITLE THERETO, 5 6 Defendants-Appellees. 7 8 _____________________________________ 9 10 11 FOR PLAINTIFF-APPELLANT: Symonous-Greta Harris, pro se, 12 Brooklyn, NY. 13 14 FOR DEFENDANTS-APPELLEES: Laurence P. Chirch, Sandelands Eyet 15 LLP, New York, NY (for BNC 16 Mortgage, Inc., Lehman Brothers 17 Holdings Inc., Aurora Loan Services, 18 LLC, Structured Asset Securities 19 Corporation). 20 21 ` Chava Brandriss, Lisa J. Fried, Cameron 22 E. Grant, Hogan Lovells US LLP, New 23 York, NY (for Wells Fargo Bank, N.A., 24 DBA America's Servicing Company, 25 N.A., DBA America's Servicing 26 Company, U.S. Bank National 27 Association). 28 29 Deutsche Bank National Trust Company 30 did not appear. 31 32 Appeal from a March 28, 2017, judgment of the United States District Court for the 33 Eastern District of New York (Brodie, J.).
34 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, 35 AND DECREED that the judgment of the district court is AFFIRMED.
36 Appellant Symonous-Greta Harris, pro se, sued several financial institutions for 37 violations of the Truth in Lending Act, the Equal Credit Opportunity Act, the Real Estate 38 Settlement Procedures Act, and state law, alleging that the defendants fraudulently obtained 39 a default judgment against her in a 2009 foreclosure action in state court because they lacked 40 a valid mortgage note. The district court dismissed her complaint as barred by res judicata 41 because Harris could have raised these claims as a defense or counterclaim in the state 1 foreclosure action. We assume the parties' familiarity with the underlying facts, the 2 procedural history of the case, and the issues on appeal.
3 "We review the grant of a motion to dismiss de novo, accepting as true all factual 4 claims in the complaint and drawing all reasonable inferences in the plaintiff's favor." Fink 5 v. Time Warner Cable, 714 F.3d 739, 740-41 (2d Cir. 2013). We also review de novo a 6 district court's application of res judicata. Brown Media Corp. v. K&L Gates, LLP, 854 7 F.3d 150, 157 (2d Cir. 2017).
8 Under the Full Faith and Credit Act, 28 U.S.C. § 1738, a federal court must apply 9 New York res judicata law to New York state court judgments. See Hoblock v. Albany 10 Cnty. Bd. of Elections, 422 F.3d 77, 93 (2d Cir. 2005). In New York, "the doctrine of res 11 judicata gives binding effect to the judgment of a court of competent jurisdiction and 12 prevents the parties to an action, and those in privity with them, from subsequently 13 relitigating any questions that were necessarily decided therein." Watts v. Swiss Bank 14 Corp., 27 N.Y.2d 270, 277 (1970) (internal quotation marks omitted). "[I]f claims arise 15 out of the same factual grouping they are deemed to be part of the same cause of action and 16 the later claim will be barred without regard to whether it is based upon different legal 17 theories or seeks different or additional relief." Davidson v. Capuano, 792 F.2d 275, 278 18 (2d Cir. 1986) (internal quotation marks omitted).
19 Res judicata bars Harris's claim in this later action. The foreclosure default 20 judgment is a final judgment on the merits. Harris argues that the default judgment in the 21 foreclosure action cannot bar her claims because none of her claims were fully litigated on 22 the merits. But actual litigation is not required for res judicata; it need only be shown that 23 a party had the opportunity to litigate the claims. See EDP Med. Comput. Sys., Inc. v. 24 United States, 480 F.3d 621, 626 (2d Cir. 2007) ("Res judicata does not require the 25 precluded claim to actually have been litigated . . . . That is why it has long been the law 26 that default judgments can support res judicata as surely as judgments on the merits."); 27 Henry Modell & Co. v. Minister, Elders & Deacons of Reformed Protestant Dutch Church 28 of New York, 68 N.Y.2d 456, 461 (1986) (noting that "a default judgment awarding 29 possession to the landlord has been held to preclude litigation of subsidiary issues necessary 30 to establish the tenant's subsequent claim for separate equitable relief").
31 Harris argues that she lacked the opportunity to litigate because she was the 32 defendant and had "no obligation to litigate" in the foreclosure action. Harris is correct that 33 New York, unlike the federal courts, does not have a compulsory counterclaim rule, 34 requiring a defendant to raise any counterclaim it has that arises out of the facts of the 35 plaintiff's claims. Henry Modell & Co., 68 N.Y.2d at 461 (discussing New York rule); Fed. 36 R. Civ. P. 13(a) (federal compulsory counterclaim rule). But "a party is not free to remain
3 1 silent in an action in which [s]he is the defendant and then bring a second action seeking 2 relief inconsistent with the judgment in the first action by asserting what is simply a new 3 legal theory." Henry Modell & Co., 68 N.Y.2d at 461. Harris seeks to obtain declaratory 4 relief that the defendants did not have a valid mortgage note and fraudulently obtained 5 mortgage documents, and therefore were not entitled to recover any property or money from 6 her related to the mortgage. This relief would be inconsistent with the judgment in the 7 foreclosure action.
8 Further, both the foreclosure action and the instant suit involve the same cause of 9 action. Both cases involve allegations that Harris took out a mortgage with BNC Mortgage 10 Inc. and that the mortgage was assigned to U.S. Bank National Association ("U.S. Bank"), 11 as trustee of the Structured Assert Investment Loans Trust ("SAILT").
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17-1280-cv Harris v. BNC Mortg., Inc.
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.
1 At a stated term of the United States Court of Appeals for the Second Circuit, 2 held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of 3 New York, on the 12th day of June , two thousand eighteen. 4 5 PRESENT: 6 PIERRE N. LEVAL, 7 ROBERT D. SACK, 8 CHRISTOPHER F. DRONEY, 9 Circuit Judges. 10 _____________________________________ 11 12 SYMONOUS-GRETA HARRIS, EX RELATIONE 13 AND AUTHORIZED REPRESENTATIVE FOR: 14 SYMONOUS HARRIS, ET AL., 15 16 Plaintiff-Appellant, 17 18 v. 17-1280-cv 19 20 BNC MORTGAGE, INC., WELLS FARGO BANK, 21 N.A., DBA AMERICA'S SERVICING COMPANY, 22 N.A., DBA AMERICA'S SERVICING COMPANY, 23 LEHMAN BROTHERS HOLDINGS INC., U.S. BANK 24 NATIONAL ASSOCIATION, AURORA LOAN 25 SERVICES, LLC, DEUTSCHE BANK NATIONAL 26 TRUST COMPANY, STRUCTURED ASSET 27 INVESTMENT LOAN TRUST, STRUCTURED ASSET 28 SECURITIES CORPORATION, JOHN AND JANE 29 DOES, ALL OTHER PARTIES OF INTEREST 150, 30 ALL PERSONS UNKNOWN, CLAIMING ANY LEGAL 1 OR EQUITABLE RIGHT, TITLE, ESTATE, LIEN OR 2 INTEREST IN THE PROPERTY DESCRIBED IN THE 3 COMPLAINT ADVERSE TO PLAINTIFFS TITLE OR 4 ANY CLOUD ON PLAINTIFF'S TITLE THERETO, 5 6 Defendants-Appellees. 7 8 _____________________________________ 9 10 11 FOR PLAINTIFF-APPELLANT: Symonous-Greta Harris, pro se, 12 Brooklyn, NY. 13 14 FOR DEFENDANTS-APPELLEES: Laurence P. Chirch, Sandelands Eyet 15 LLP, New York, NY (for BNC 16 Mortgage, Inc., Lehman Brothers 17 Holdings Inc., Aurora Loan Services, 18 LLC, Structured Asset Securities 19 Corporation). 20 21 ` Chava Brandriss, Lisa J. Fried, Cameron 22 E. Grant, Hogan Lovells US LLP, New 23 York, NY (for Wells Fargo Bank, N.A., 24 DBA America's Servicing Company, 25 N.A., DBA America's Servicing 26 Company, U.S. Bank National 27 Association). 28 29 Deutsche Bank National Trust Company 30 did not appear. 31 32 Appeal from a March 28, 2017, judgment of the United States District Court for the 33 Eastern District of New York (Brodie, J.).
34 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, 35 AND DECREED that the judgment of the district court is AFFIRMED.
36 Appellant Symonous-Greta Harris, pro se, sued several financial institutions for 37 violations of the Truth in Lending Act, the Equal Credit Opportunity Act, the Real Estate 38 Settlement Procedures Act, and state law, alleging that the defendants fraudulently obtained 39 a default judgment against her in a 2009 foreclosure action in state court because they lacked 40 a valid mortgage note. The district court dismissed her complaint as barred by res judicata 41 because Harris could have raised these claims as a defense or counterclaim in the state 1 foreclosure action. We assume the parties' familiarity with the underlying facts, the 2 procedural history of the case, and the issues on appeal.
3 "We review the grant of a motion to dismiss de novo, accepting as true all factual 4 claims in the complaint and drawing all reasonable inferences in the plaintiff's favor." Fink 5 v. Time Warner Cable, 714 F.3d 739, 740-41 (2d Cir. 2013). We also review de novo a 6 district court's application of res judicata. Brown Media Corp. v. K&L Gates, LLP, 854 7 F.3d 150, 157 (2d Cir. 2017).
8 Under the Full Faith and Credit Act, 28 U.S.C. § 1738, a federal court must apply 9 New York res judicata law to New York state court judgments. See Hoblock v. Albany 10 Cnty. Bd. of Elections, 422 F.3d 77, 93 (2d Cir. 2005). In New York, "the doctrine of res 11 judicata gives binding effect to the judgment of a court of competent jurisdiction and 12 prevents the parties to an action, and those in privity with them, from subsequently 13 relitigating any questions that were necessarily decided therein." Watts v. Swiss Bank 14 Corp., 27 N.Y.2d 270, 277 (1970) (internal quotation marks omitted). "[I]f claims arise 15 out of the same factual grouping they are deemed to be part of the same cause of action and 16 the later claim will be barred without regard to whether it is based upon different legal 17 theories or seeks different or additional relief." Davidson v. Capuano, 792 F.2d 275, 278 18 (2d Cir. 1986) (internal quotation marks omitted).
19 Res judicata bars Harris's claim in this later action. The foreclosure default 20 judgment is a final judgment on the merits. Harris argues that the default judgment in the 21 foreclosure action cannot bar her claims because none of her claims were fully litigated on 22 the merits. But actual litigation is not required for res judicata; it need only be shown that 23 a party had the opportunity to litigate the claims. See EDP Med. Comput. Sys., Inc. v. 24 United States, 480 F.3d 621, 626 (2d Cir. 2007) ("Res judicata does not require the 25 precluded claim to actually have been litigated . . . . That is why it has long been the law 26 that default judgments can support res judicata as surely as judgments on the merits."); 27 Henry Modell & Co. v. Minister, Elders & Deacons of Reformed Protestant Dutch Church 28 of New York, 68 N.Y.2d 456, 461 (1986) (noting that "a default judgment awarding 29 possession to the landlord has been held to preclude litigation of subsidiary issues necessary 30 to establish the tenant's subsequent claim for separate equitable relief").
31 Harris argues that she lacked the opportunity to litigate because she was the 32 defendant and had "no obligation to litigate" in the foreclosure action. Harris is correct that 33 New York, unlike the federal courts, does not have a compulsory counterclaim rule, 34 requiring a defendant to raise any counterclaim it has that arises out of the facts of the 35 plaintiff's claims. Henry Modell & Co., 68 N.Y.2d at 461 (discussing New York rule); Fed. 36 R. Civ. P. 13(a) (federal compulsory counterclaim rule). But "a party is not free to remain
3 1 silent in an action in which [s]he is the defendant and then bring a second action seeking 2 relief inconsistent with the judgment in the first action by asserting what is simply a new 3 legal theory." Henry Modell & Co., 68 N.Y.2d at 461. Harris seeks to obtain declaratory 4 relief that the defendants did not have a valid mortgage note and fraudulently obtained 5 mortgage documents, and therefore were not entitled to recover any property or money from 6 her related to the mortgage. This relief would be inconsistent with the judgment in the 7 foreclosure action.
8 Further, both the foreclosure action and the instant suit involve the same cause of 9 action. Both cases involve allegations that Harris took out a mortgage with BNC Mortgage 10 Inc. and that the mortgage was assigned to U.S. Bank National Association ("U.S. Bank"), 11 as trustee of the Structured Assert Investment Loans Trust ("SAILT"). Harris argues that 12 the foreclosure action is not the "same cause of action" because the legal causes of action 13 were not same in the two suits, relying primarily on Manning v. City of Auburn, 953 F.2d 14 1355 (11th Cir. 1992). But Manning is inapplicable because it applies the "primary right 15 and duty" test for res judicata, which is the test applicable in Eleventh Circuit, but not in 16 New York. Manning, 953 F.2d at 1358-59. In contrast, New York applies the 17 transactional approach, which does not consider whether the infringement of rights at issue 18 is the same as that asserted in an earlier litigation, but rather examines the "factual grouping" 19 to determine whether the claims are based on the same set of facts. See Davidson, 792 F.2d 20 at 278; see also Smith v. Russel Sage Coll., 54 N.Y.2d 185, 192-93 (1981). Even though 21 the facts in Harris's federal complaint are a "different shading" of the facts alleged in the 22 foreclosure complaint, they are a part of the same transaction. Both the complaint and the 23 foreclosure action involved allegations relating to the origin of Harris's mortgage and its 24 subsequent assignment. See Smith, 54 N.Y.2d at 192-93 (holding that whether a factual 25 grouping constitutes a transaction or series of transactions depends on how the facts are 26 related in time, space, origin, or motivation, whether they form a convenient trial unit, and 27 whether . . . their treatment as a unit conforms to the parties' expectations or business 28 understanding or usage" (internal quotation marks omitted)).
29 Finally, eight of the nine parties in the instant suit are the same parties or their privies 30 from the foreclosure action. A party in privity "includes those who are successors to a 31 property interest, those who control an action although not formal parties to it, those whose 32 interests are represented by a party to the action, and possibly coparties to a prior action." 33 Chase Manhattan Bank, N.A. v. Celotext Corp., 56 F.3d 343, 346 (2d Cir. 1995) (quoting 34 Watts v. Swiss Bank Corp., 27 N.Y.2d 270, 277 (1970)). There are nine named parties in 35 this action: Harris, U.S. Bank, SAILT, Wells Fargo Bank, Lehman Brothers Holdings Inc., 36 Aurora Loan Services, BNC Mortgage Inc., Structured Asset Securities Corporation 37 ("SASC"), and Deutsche Bank National Trust Company. U.S. Bank, Harris, and SAILT 38 were named parties in the prior action. Five of the other parties—Wells Fargo, Lehman
4 1 Brothers, Aurora, BNC Mortgage, and SASC—are in privity with U.S. Bank and SAILT 2 through various contracts or arrangements. Because there was a judgment on the merits in 3 the foreclosure action, which was the same cause of action as the instant case, the claims 4 against these defendants are precluded.
5 The remaining defendant is Deutsche Bank. Although Deutsche Bank did not enter 6 an appearance, the district court dismissed the claims against it based on res judicata. But 7 the record does not reflect what relationship, if any, Deutsche Bank has to any of the other 8 parties or to Harris's mortgage. The district court therefore erred by assuming that 9 Deutsche Bank was in privity to U.S. Bank or SAILT and that the claims against it were 10 precluded.
11 However, we may affirm the district court's dismissal of the complaint on an 12 alternative ground. See Leon v. Murphy, 988 F.2d 303, 308 (2d Cir. 1993) ("We may 13 affirm. . . on any basis for which there is a record sufficient to permit conclusions of law, 14 including grounds upon which the district court did not rely."). Harris's complaint fails to 15 state a claim against Deutsche Bank. A complaint must plead "enough facts to state a claim 16 to relief that is plausible on its face," Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 17 (2007), and "allow[] the court to draw the reasonable inference that the defendant is liable 18 for the misconduct alleged," Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Harris alleged 19 no facts suggesting that Deutsche Bank violated any state or federal law and her conclusory 20 allegations that the defendants collectively violated these laws are insufficient to state a 21 claim. See Kirch v. Liberty Media Corp., 449 F.3d 388, 398 (2d Cir. 2006) ("[C]onclusory 22 allegations or legal conclusions masquerading as factual conclusions will not suffice to 23 [defeat] a motion to dismiss." (second alteration in original)).
24 Although a pro se plaintiff should be afforded leave to amend following a Federal 25 Rule of Civil Procedure 12(b)(6) dismissal "when a liberal reading of the complaint gives 26 any indication that a valid claim might be stated," Cuoco v. Moritsugu, 222 F.3d 99, 112 27 (2d Cir. 2000), no such leave was required here because it would be futile. The complaint 28 gives no indication that Harris could assert a valid claim against Deutsche Bank because the 29 allegations concern only BNC Mortgage and its assignment of the note to U.S. Bank and 30 SAILT. Deutsche Bank also does not appear in any mortgage documents. There is 31 nothing to suggest, even with a liberal reading of the complaint, that the "plaintiff has a 32 claim that she has inadequately or inartfully pleaded and that she should therefore be given 33 a chance to reframe." Id.
5 1 We have considered all of Harris's remaining arguments and find them to be without 2 merit. For the foregoing reasons, the judgment of the district court is AFFIRMED.
3 FOR THE COURT: 4 Catherine O'Hagan Wolfe, Clerk of Court