Sheils v. Wells Fargo Bank, N.A. (In re Fleming)

495 B.R. 68, 2013 WL 2026862, 2013 Bankr. LEXIS 1969
CourtUnited States Bankruptcy Court, M.D. Pennsylvania
DecidedMay 14, 2013
DocketBankruptcy No. 5-10-bk-09658-JJT; Adversary No. 5-12-ap-00234-JJT
StatusPublished
Cited by1 cases

This text of 495 B.R. 68 (Sheils v. Wells Fargo Bank, N.A. (In re Fleming)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, M.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sheils v. Wells Fargo Bank, N.A. (In re Fleming), 495 B.R. 68, 2013 WL 2026862, 2013 Bankr. LEXIS 1969 (Pa. 2013).

Opinion

OPINION 1

JOHN J. THOMAS, Bankruptcy Judge.

Before the Court is Defendants’ Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(1) and (b)(6) as made applicable to adversary proceedings by Federal Rule of Bankruptcy Procedure 7012. For the reasons provided herein, the Motion to Dismiss is granted, in part, and denied, in part.

A historical review of the litigation history between the Debtor and the Defendant2 is essential for resolution of the instant Motion. Prior to the filing of the bankruptcy, Wells Fargo initiated a Complaint in Mortgage Foreclosure against the Debtor resulting in the Court of Common Pleas of Luzerne County entering a default judgment in favor of Wells Fargo in November of 2007. The foreclosure judgment was not appealed nor was any action taken to have the judgment opened or stricken. Thereafter, approximately nine months later, the Debtor filed a Complaint against Wells Fargo and the Luzerne County Tax Claim Bureau at Civil No. 10573 of 2008 entitled Complaint for Declaratory Judgment and for Damages. That Complaint consisted of four Counts titled as follows: Count I, Declaratory Judgment; Count II, Negligence; Count III, Breach of Duty of Good Faith; and Count TV, Accounting. Count IV was not directed to Wells Fargo Bank but, rather, Luzerne County Tax Claim Bureau. '

A Motion for Summary Judgment was thereafter filed by Wells Fargo and denied by the Court of Common Pleas in June of 2009. That denial was responded to by Wells Fargo with a Motion for Reconsideration. The Debtor failed to respond to the Motion and by Order dated August 31, 2009, the Court of Common Pleas of Lu-zerne County granted Wells Fargo’s Motion for Reconsideration and vacated its earlier denial of June 2009. The Court dismissed with prejudice Debtor’s Complaint against Wells Fargo. The Court, after noting that the Plaintiff (Debtor) had not filed a response or brief opposing the Motion and therefore deeming it unopposed, wrote the following: “The doctrine of res judicata applies in this case preventing Plaintiff from asserting claims which could have been raised in the prior mortgage foreclosure action filed against the Plaintiff by Wells Fargo. See Wilkes v. Phoenix Home Life Mutual Insurance [71]*71Company, 902 A.2d 366, 276 [376] (Pa. 2006).” The Defendant writes in its Brief in Support of its Motion to Dismiss at page 6 that the Debtor did not appeal the entry of the 2009 state court judgment.

Debtor filed his Chapter 7 bankruptcy case on November 30, 2010. In August of 2012, the Trustee filed the underlying adversary Complaint against the Defendant. Again, a recitation of the Counts of the Complaint against the Defendant is essential for resolution and those Counts which are set forth as follows: Count I, Unfair Trade Practices and Consumer Protection Law [under state law]; Count II, Breach of Contractual Duty of Good Faith [under state law]; Count III, Negligence [under state law]; Count IV, Accounting [under Federal Bankruptcy Code]; Count V, Violation of Truth and Lending [under federal law]; Count VI, Violation of Real Estate Settlement Procedure Act [under federal law]; and Count VII, Breach of Contractual Fiduciary Duty [under state law]. The conduct of the Defendant giving rise to these causes of action all occurred pre-petition, excluding the Count requesting an accounting.

The Brief in Support of the Motion to Dismiss attacks the adversary making several arguments which can be summarized as follows. The Plaintiffs state law claims are barred by the application of the Rooker-Feldman Doctrine; several of Plaintiffs claims are barred by the gist of the action and/or the economic loss doctrine; and at least one claim is barred by the statute of limitations.

The challenge to this Court’s subject matter jurisdiction by way of the Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(1), must be addressed first. A review of the allegations of the Complaint reflects it does not contain a statement whether the proceeding is core or non-core and, if non-core, whether the pleader does or does not consent to entry of final orders or judgments by the bankruptcy judge as required by Federal Rule of Bankruptcy Procedure 7008. Plaintiffs Brief in Opposition to the Motion to Dismiss also does not address the jurisdictional issue. For its part, the Defendant has addressed the jurisdictional issue albeit in a very inarticulate manner. The Defendant recites some boilerplate legal conclusions as to the requirements of a Motion to Dismiss under Rule 12(b)(1) and finishes with an assertion that the party asserting jurisdiction, in this case the Plaintiff, bears the burden of showing the claims are properly before the Court. Further on, the Defendant at page nine of its brief concedes that the Debtor’s Bankruptcy Trustee, the Plaintiff in this adversary, is pursuing the Debtor’s pre-petition, non-core claims against Wells Fargo on behalf of the Debtor’s estate.

The Bankruptcy Court has jurisdiction over basically four types of matters: (1) cases under title 11, (2) proceedings arising under title 11, (3) proceedings arising in a case under title 11, and (4) proceedings related to a case under title 11. In re Marcus Hook Development Park, Inc., 943 F.2d 261, 263 (3rd Cir. 1991). If a proceeding invokes a substantive right provided by title 11 or if it is a proceeding which, by its nature, could arise only in the context of a bankruptcy case, then the matter is a core proceeding. Id. at 267.

I find that only Count IV (Accounting) of the underlying adversary proceeding presents this Court with a core proceeding under 28 U.S.C. § 157. All other Counts are non-core proceedings of which this Court retains jurisdiction.

The Defendant argues the Rooker-Feldman Doctrine deprives this Court of subject matter jurisdiction over the several state law causes of action because what the [72]*72Plaintiff is essentially trying to do is seek a review and relief by this Court of the state court judgments. I agree with the position of the Plaintiff that the instant Complaint is not an attempt to have the state court judgments, both the foreclosure and the 2009 default judgment, reviewed by this Court with an ultimate result of overturning those decisions. Nowhere in the Complaint or the prayer for relief does the Plaintiff seek relief from the state court judgments or request a ruling the state court judgments were wrong and should be avoided or vacated.

Alternatively, considerable argument by both parties addressed the impact of the res judicata language of the August 31, 2009 Order of the Court of Common Pleas. Essentially, the Defendant argues the entirety of the Counts of the Complaint must be dismissed because those Counts are all barred by the defense of res judicata.

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Bluebook (online)
495 B.R. 68, 2013 WL 2026862, 2013 Bankr. LEXIS 1969, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sheils-v-wells-fargo-bank-na-in-re-fleming-pamb-2013.