Heald v Fed Home Loan Mtg

2014 DNH 113

• Court: District Court, D. New Hampshire
• Decided: May 21, 2014
• Docket: 13-cv-488-PB
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Martin and Lucille Heald

v. Civil No. 13-cv-488-PB Opinion No. 2014 DNH 113 Federal Home Loan Mortgage Corporation

MEMORANDUM AND ORDER

In November 2010, Martin and Lucille Heald lost their home

to foreclosure. The current owner of the home, the Federal Home

Loan Mortgage Corporation (“Freddie Mac”), has served them with

a notice to evict. In response, the Healds have sued Freddie

Mac seeking both a declaratory judgment that the foreclosure was

invalid and an injunction preventing their eviction.

The Healds challenged the foreclosure in a prior action in

state court that named Wells Fargo as the defendant rather than

Freddie Mac. Doc. No. 6-7. In that action, the Healds alleged,

among other things, that Wells Fargo improperly assigned the

note and mortgage to Freddie Mac one day before the foreclosure

sale. The Healds also claimed that the foreclosure was improper

because Wells Fargo falsely claimed during the sale that it was

being conducted on behalf of Wells Fargo when in fact Freddie Mac held the note and mortgage. On July 17, 2012, the superior

court rejected the Healds’ claims, and on February 21, 2013, the

New Hampshire Supreme Court affirmed the superior court’s

ruling. Doc. Nos. 6-2, 6-8.

The Healds have repackaged their claims from the prior

state court action and seek to reassert them against Freddie

Mac. Unsurprisingly, Freddie Mac argues that the Healds’ claims

are barred by res judicata or, in the alternative, collateral

estoppel. I find it more appropriate to analyze the Healds’

claims under collateral estoppel. See Miller v. Nationstar

Mortg., LLC, 2012 DNH 130, 8.

Collateral estoppel “bars a party to a prior action . . .

from relitigating any issue or fact actually litigated and

determined in the prior action.” Daigle v. City of Portsmouth,

129 N.H. 561, 570 (1987). It only precludes the relitigation

“‘of issues actually raised and determined in the earlier

litigation.’” Miller, 2012 DNH 130, 9 (quoting Morgenroth &

Assocs. v. State, 126 N.H. 266, 270 (1985)). A successful

collateral estoppel claim requires that (1) the issue subject to

estoppel “must be identical in each action”; (2) the first

action “must have resolved the issue finally on the merits”; and

2 (3) “the party to be estopped must have appeared as a party in

the first action, or have been in privity with someone who did

so.” Daigle, 129 N.H. at 570. Each of these elements turn on a

more general requirement, that the “party against whom estoppel

is pleaded must have had a full and fair prior opportunity to

litigate the issue or fact in question.” Id. The issue subject

to estoppel must have been essential to the first judgment.

Tyler v. Hannaford Bros., 161 N.H. 242, 247 (2010) (citing

Restatement (Second) of Judgments § 27 cmt. h)(1982)). The

Healds were party to the first action. I thus consider whether

the issues in each suit are identical and whether the prior suit

resolved the issues on the merits.

The Healds seek to invalidate Freddie Mac’s foreclosure

deed and enjoin their eviction. They contend that the state

court decisions were the “product of the misrepresentations and

fraudulent conduct” of Wells Fargo, Freddie Mac’s agent during

the foreclosure. Doc. No. 1-1. They argue that the illegal

foreclosure makes Freddie Mac’s attempt to evict them an “unfair

and deceptive act[]” in violation of New Hampshire’s Consumer

Protection Statute. They attempt to differentiate this suit by

emphasizing that the foreclosure proceedings were “the product

3 of fraud.” In a final attempt to escape preclusion, the Healds

argue that their claims could not have been raised in the

original action, filed in January 2011, because Freddie Mac did

not have any interest in the property until it recorded its

assignment and deed in March 2011.

The problem with the Healds’ arguments is that they rely

upon the alleged invalidity of Freddie Mac’s foreclosure, an

issue that was extensively litigated in the New Hampshire

Superior Court, which found that Freddie Mac properly foreclosed

on the property and was thus the lawful owner after the

foreclosure sale. The Healds appealed the decision to the New

Hampshire Supreme Court, which affirmed the lower court. The

Healds’ attempt to dodge preclusion by characterizing their

current suit as involving different claims and allegations of

fraud is unavailing. “That the cause of action is different in

the two cases does not mean that the issues are not identical.”

Tsiatsios v. Tsiatsios, 144 N.H. 438, 442 (1999) (citing

Restatement (Second) of Judgments § 42 cmt. c). The state

courts expressly discussed Mr. Heald’s allegations of fraud and

the validity of Freddie Mac’s foreclosure given that it occurred

before Freddie Mac recorded its interest in the property. Each

4 of the issues that the Healds now raise has been fully and

finally resolved by the state courts. In earlier proceedings,

the Healds had a full and fair opportunity to litigate the

validity of Freddie Mac’s foreclosure. Because these issues

were actually decided by a final judgment on the merits, the

Healds are precluded from bringing these claims again in this

court.

IV. CONCLUSION

For the reasons discussed above, I grant Freddie Mac’s motion to

dismiss the Healds’ complaint. Doc. No. 6.

SO ORDERED.

/s/Paul Barbadoro Paul Barbadoro United States District Judge

May 21, 2014

cc: Martin Heald, pro se Lucille Heald, pro se Kevin P. Polansky, Esq. Michael R. Stanley, Esq.