UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
) JEAN KELLY, ) ) Plaintiff, ) ) v. ) Civil Action No. 08-1695 (RMC) ) NOVASTAR, et al., ) ) Defendants. ) )
MEMORANDUM OPINION
Plaintiff Jean Kelly filed a complaint in this matter on October 3, 2008, seeking
damages, a declaratory judgment and injunctive relief against Defendants NovaStar Mortgage, Inc.
(“NovaStar”), First Horizon Home Loan Corporation (“First Horizon”), Saxon Mortgage Services,
Inc. (“Saxon”), First American Title Insurance Company (“American Title”), and Curran &
O’Sullivan.1 See Dkt. # 1. Defendants NovaStar and Saxon move to dismiss this case for improper
venue pursuant to Federal Rule of Civil Procedure 12(b)(3) and failure to state a claim pursuant to
Rule 12(b)(6). Def.’s Mot. to Dismiss [Dkt. # 2]. They also argue that Plaintiff’s claims against
NovaStar are barred by res judicata. For the reasons set forth below, the Court will grant
Defendants’ motion on the grounds that venue is improper here.
I. BACKGROUND
In October 2006, Plaintiff filed an action in the U.S. District Court for the District
1 The Complaint names “American Title” and “Curran & Fisher” as defendants, and then refers to a “Curran & Sullivan” in its factual allegations. The Court assumes that “America Title” refers to First American Title Insurance Company, who issued the title policy for Plaintiff’s mortgage, and that “Curran & Fisher” and “Curran & Sullivan” refer to Curran & O’Sullivan, the law firm that handled the foreclosure of Plaintiff’s property. See Def.’s Mot. to Dismiss [Dkt. # 2] at 2 n.3. of Maryland alleging breach of contract, unjust enrichment, conversion, fraudulent concealment, and
violations of the Truth in Lending Act, all relating to a promissory note for Plaintiff’s property in
Maryland. See Kelly v. Novastar Mortgage, Inc., Civ. No. AW-06-2616 (D. Md.) (Cmpl. [Dkt. #
1] filed Oct. 4, 2006). Two defendants in that matter, NovaStar and First Horizon, are also
defendants in this action. In December 2006, the Maryland action was dismissed pursuant to Federal
Rule of Civil Procedure 12(b)(6). Two years later, in October 2008, Plaintiff filed this case. This
case also revolves around the transfer of Plaintiff’s mortgage note among or between various
defendants. Compl. [Dkt. # 1] at 1-3. Plaintiff now alleges several violations of federal and state
law, including violations of the Securities Exchange Act of 1934 and the Racketeer Influenced and
Corrupt Organizations Act, each of which provides a private civil cause of action. See 15 U.S.C.
§ 78i(e); 18 U.S.C. § 1964(c).
II. LEGAL STANDARDS
Federal Rule of Civil Procedure 12(b)(3) provides that a case may be dismissed for
improper venue upon motion. See Hunter v. Johanns, 517 F. Supp. 2d 340, 343 (D.D.C. 2007); Fed.
R. Civ. P. 12(b)(3). “Because it is the plaintiff’s obligation to institute the action in a permissible
forum, the plaintiff usually bears the burden of establishing that venue is proper.” Freeman v. Fallin,
254 F. Supp. 2d 52, 56 (D.D.C. 2003). However, “[i]n considering a Rule 12(b)(3) motion, the court
accepts the plaintiff's well-pled factual allegations regarding venue as true, draws all reasonable
inferences from those allegations in the plaintiff's favor, and resolves any factual conflicts in the
plaintiff's favor.” Darby v. U.S. Dep’t of Energy, 231 F. Supp. 2d 274, 276 (D.D.C. 2002). To
prevail on a motion to dismiss for improper venue, a defendant must present facts sufficient to defeat
a plaintiff's assertion of venue. Id.; 2215 Fifth St. Assocs. v. U-Haul Int’l, Inc., 148 F. Supp. 2d 50,
-2- 54 (D.D.C. 2001) (citing 5A. Fed. Prac. & Proc. 2d § 1352).
III. ANALYSIS
Plaintiff has not established that venue is proper here. In a civil action where
jurisdiction is not founded on diversity of citizenship, venue is appropriate in a district where any
defendant resides, if all defendants reside in the same state, or where “a substantial part of the events
or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of
the action is situated.” 28 U.S.C. § 1391(b). No Defendant resides in the District of Columbia and
the events giving rise to the claim occurred entirely in Maryland. The property to which the note in
question relates is also located in Maryland. Plaintiff offers absolutely no facts or law in her
Complaint, Dkt. # 1, or in her Opposition to Defendant’s Motion to Dismiss, Dkt. # 9, that establish
that venue is proper in D.C.
“When a plaintiff files an action in the wrong district, 28 U.S.C. § 1406(a) directs
courts ‘to dismiss, or if it be in the interest of justice, transfer such case’ to the proper venue.”
Darby, 231 F. Supp. 2d at 277 (D.D.C. 2002) (quoting 28 U.S.C. § 1406(a)). Nonetheless, the
Court declines to transfer this case to the District of Maryland because it is not in the interest of
justice to do so. Plaintiff has failed to effect service upon First Horizon, American Title, and Curran
& O’Sullivan despite having filed the Complaint in October 2008, and is therefore well outside the
120-day window for service required under Federal Rule of Civil Procedure 4(m). Thus, these
defendants will be dismissed from the case without prejudice. See Fed. R. Civ. P. 4(m).
Furthermore, the acts giving rise to Plaintiff’s claims occurred in Maryland, Plaintiff resides in
Maryland, Plaintiff’s property is located in Maryland, and Defendants do business in Maryland —
all of which indicate that venue is proper in the District of Maryland. However, Plaintiff already
-3- brought similar claims based on these events in the District of Maryland and, having had those
claims rejected there, now seeks another forum. Justice does not require the Court to allow these
claims to proceed. See, e.g., In re Pickeral, 267 B.R. 1, 4 (Bankr. D.D.C. 2001) (denying transfer
where plaintiff intentionally brought an action in an improper venue in an attempt to stall foreclosure
on her property). Therefore, the remaining defendants also will be dismissed from this case.
Additionally, with respect to Defendant NovaStar, Plaintiff’s claims are barred by
res judicata. The four elements of res judicata this Court traditionally applies are: (1) an identity
of parties; (2) a judgment from a court of competent jurisdiction; (3) a final judgment on the merits;
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
) JEAN KELLY, ) ) Plaintiff, ) ) v. ) Civil Action No. 08-1695 (RMC) ) NOVASTAR, et al., ) ) Defendants. ) )
MEMORANDUM OPINION
Plaintiff Jean Kelly filed a complaint in this matter on October 3, 2008, seeking
damages, a declaratory judgment and injunctive relief against Defendants NovaStar Mortgage, Inc.
(“NovaStar”), First Horizon Home Loan Corporation (“First Horizon”), Saxon Mortgage Services,
Inc. (“Saxon”), First American Title Insurance Company (“American Title”), and Curran &
O’Sullivan.1 See Dkt. # 1. Defendants NovaStar and Saxon move to dismiss this case for improper
venue pursuant to Federal Rule of Civil Procedure 12(b)(3) and failure to state a claim pursuant to
Rule 12(b)(6). Def.’s Mot. to Dismiss [Dkt. # 2]. They also argue that Plaintiff’s claims against
NovaStar are barred by res judicata. For the reasons set forth below, the Court will grant
Defendants’ motion on the grounds that venue is improper here.
I. BACKGROUND
In October 2006, Plaintiff filed an action in the U.S. District Court for the District
1 The Complaint names “American Title” and “Curran & Fisher” as defendants, and then refers to a “Curran & Sullivan” in its factual allegations. The Court assumes that “America Title” refers to First American Title Insurance Company, who issued the title policy for Plaintiff’s mortgage, and that “Curran & Fisher” and “Curran & Sullivan” refer to Curran & O’Sullivan, the law firm that handled the foreclosure of Plaintiff’s property. See Def.’s Mot. to Dismiss [Dkt. # 2] at 2 n.3. of Maryland alleging breach of contract, unjust enrichment, conversion, fraudulent concealment, and
violations of the Truth in Lending Act, all relating to a promissory note for Plaintiff’s property in
Maryland. See Kelly v. Novastar Mortgage, Inc., Civ. No. AW-06-2616 (D. Md.) (Cmpl. [Dkt. #
1] filed Oct. 4, 2006). Two defendants in that matter, NovaStar and First Horizon, are also
defendants in this action. In December 2006, the Maryland action was dismissed pursuant to Federal
Rule of Civil Procedure 12(b)(6). Two years later, in October 2008, Plaintiff filed this case. This
case also revolves around the transfer of Plaintiff’s mortgage note among or between various
defendants. Compl. [Dkt. # 1] at 1-3. Plaintiff now alleges several violations of federal and state
law, including violations of the Securities Exchange Act of 1934 and the Racketeer Influenced and
Corrupt Organizations Act, each of which provides a private civil cause of action. See 15 U.S.C.
§ 78i(e); 18 U.S.C. § 1964(c).
II. LEGAL STANDARDS
Federal Rule of Civil Procedure 12(b)(3) provides that a case may be dismissed for
improper venue upon motion. See Hunter v. Johanns, 517 F. Supp. 2d 340, 343 (D.D.C. 2007); Fed.
R. Civ. P. 12(b)(3). “Because it is the plaintiff’s obligation to institute the action in a permissible
forum, the plaintiff usually bears the burden of establishing that venue is proper.” Freeman v. Fallin,
254 F. Supp. 2d 52, 56 (D.D.C. 2003). However, “[i]n considering a Rule 12(b)(3) motion, the court
accepts the plaintiff's well-pled factual allegations regarding venue as true, draws all reasonable
inferences from those allegations in the plaintiff's favor, and resolves any factual conflicts in the
plaintiff's favor.” Darby v. U.S. Dep’t of Energy, 231 F. Supp. 2d 274, 276 (D.D.C. 2002). To
prevail on a motion to dismiss for improper venue, a defendant must present facts sufficient to defeat
a plaintiff's assertion of venue. Id.; 2215 Fifth St. Assocs. v. U-Haul Int’l, Inc., 148 F. Supp. 2d 50,
-2- 54 (D.D.C. 2001) (citing 5A. Fed. Prac. & Proc. 2d § 1352).
III. ANALYSIS
Plaintiff has not established that venue is proper here. In a civil action where
jurisdiction is not founded on diversity of citizenship, venue is appropriate in a district where any
defendant resides, if all defendants reside in the same state, or where “a substantial part of the events
or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of
the action is situated.” 28 U.S.C. § 1391(b). No Defendant resides in the District of Columbia and
the events giving rise to the claim occurred entirely in Maryland. The property to which the note in
question relates is also located in Maryland. Plaintiff offers absolutely no facts or law in her
Complaint, Dkt. # 1, or in her Opposition to Defendant’s Motion to Dismiss, Dkt. # 9, that establish
that venue is proper in D.C.
“When a plaintiff files an action in the wrong district, 28 U.S.C. § 1406(a) directs
courts ‘to dismiss, or if it be in the interest of justice, transfer such case’ to the proper venue.”
Darby, 231 F. Supp. 2d at 277 (D.D.C. 2002) (quoting 28 U.S.C. § 1406(a)). Nonetheless, the
Court declines to transfer this case to the District of Maryland because it is not in the interest of
justice to do so. Plaintiff has failed to effect service upon First Horizon, American Title, and Curran
& O’Sullivan despite having filed the Complaint in October 2008, and is therefore well outside the
120-day window for service required under Federal Rule of Civil Procedure 4(m). Thus, these
defendants will be dismissed from the case without prejudice. See Fed. R. Civ. P. 4(m).
Furthermore, the acts giving rise to Plaintiff’s claims occurred in Maryland, Plaintiff resides in
Maryland, Plaintiff’s property is located in Maryland, and Defendants do business in Maryland —
all of which indicate that venue is proper in the District of Maryland. However, Plaintiff already
-3- brought similar claims based on these events in the District of Maryland and, having had those
claims rejected there, now seeks another forum. Justice does not require the Court to allow these
claims to proceed. See, e.g., In re Pickeral, 267 B.R. 1, 4 (Bankr. D.D.C. 2001) (denying transfer
where plaintiff intentionally brought an action in an improper venue in an attempt to stall foreclosure
on her property). Therefore, the remaining defendants also will be dismissed from this case.
Additionally, with respect to Defendant NovaStar, Plaintiff’s claims are barred by
res judicata. The four elements of res judicata this Court traditionally applies are: (1) an identity
of parties; (2) a judgment from a court of competent jurisdiction; (3) a final judgment on the merits;
and (4) an identity of the cause of action. See, e.g., Am. Forest Res. Council v. Shea, 172 F. Supp.
2d 24, 29 (D.D.C. 2001); see also U.S. Indus., Inc. v. Blake Constr. Co., 765 F.2d 195, 205 (D.C. Cir.
1985). The first three elements are easily met here. First, Plaintiff sued NovaStar in the District
Court for the District of Maryland in 2006, alleging common law and federal law claims. See Kelly
v. Novastar Mortgage, Inc., Civ. No. AW-06-2616 (D. Md.) (Cmpl. filed Oct. 4, 2006). Second, that
court dismissed the complaint for failure to state a claim upon which relief could be granted. See
id. (Mem. Op. filed Dec. 29, 2009). Third, “[a] dismissal, pursuant to Rule 12(b)(6), is a resolution
on the merits and is ordinarily prejudicial.” Okusami v. Psychiatric Inst. of Washington, Inc., 959
F.2d 1062, 1066 (D.C. Cir. 1992).
As to the fourth element, “courts in this circuit do not require literally identical claims
for res judicata to apply; instead, there is an identity of the causes of action when the cases are based
on the ‘same nucleus of facts[.]’” Capitol Hill Group v. Pillsbury Winthrop Shaw Pittman, LLP, 574
F. Supp. 2d 143, 149 (D.D.C. 2008); See Page v. United States, 729 F.2d 818, 820 (D.C. Cir. 1984)
(citations omitted) (“[A final] judgment bars any further claim based on the same ‘nucleus of facts,’
-4- for ‘it is the facts surrounding the transaction or occurrence which operate to constitute the cause of
action, not the legal theory upon which a litigant relies.’”); Sieverding v. ABA, 439 F. Supp. 2d 120,
123 (D.D.C. 2006) (finding plaintiff’s claims barred by res judicata where they could have been
brought in plaintiff’s earlier action and plaintiff had no reason to “file multiple suits based on the
same set of events.”). The doctrine of res judicata embodies the principle “that a party who once
has had a chance to litigate a claim before an appropriate tribunal usually ought not to have another
chance to do so.” SBC Comms. Inc. v. FCC, 407 F.3d 1223, 1229 (D.C. Cir. 2005) (quoting the
Restatement (Second) of Judgments ch. 1 at 6 (1982)).2 Plaintiff’s claims against NovaStar arise
from ostensibly the same factual allegations — that is, the events surrounding Defendants’ sale
and/or acquisition of Plaintiff’s mortgage note — as did her claims in the District of Maryland.
Compare Complaint [Dkt. # 1] at 1-3 with Kelly v. Novastar Mortgage, Inc., Civ. No. AW-06-2616
(D. Md.) (Mem. Op. filed Dec. 29, 2006). Thus, there is an identity of causes of action here, and
Plaintiff’s claims against NovaStar are barred by res judicata. NovaStar will be dismissed from this
case with prejudice.
IV. CONCLUSION
Because venue is improper here and it is not in the interest of justice to transfer
this case, Defendants First Horizon, Saxon, American Title, and Curran & O’Sullivan will be
2 The D.C. Circuit has “embraced the Restatement (Second) of Judgments’ pragmatic, transactional approach to determining what constitutes a cause of action” for res judicata purposes. U.S. Indus., Inc. v. Blake Constr. Co., 765 F.2d 195, 205 (D.C. Cir. 1985). “In addressing the cause-of-action question, the Restatement speaks in terms of a transaction or series of transactions and gives ‘weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage.’” Id. (quoting the Restatement (Second) of Judgments § 23(2) (1982)). The Restatement approach reflects the trend requiring a plaintiff to present in one suit all claims for relief that he may have arising out of the same transaction or occurrence. Id.
-5- dismissed from this case without prejudice. Based on res judicata, Defendant NovaStar will be
dismissed from this case with prejudice. A memorializing Order accompanies this Memorandum
Opinion.
Date: July 27, 2009 /s/ ROSEMARY M. COLLYER United States District Judge
-6-