Woltring v. Specialized Loan Servicing, LLC

REBECCA A. WOLTRING,, Plaintiff, v. SPECIALIZED LOAN SERVICING, LLC, Defendant.

Case No. 14-CV-222

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN

Dated: June 16, 2014

DECISION AND ORDER GRANTING IN PART AND DENYING IN PART

THE DEFENDANT'S MOTION TO DISMISS

I. Facts and Procedural History

Rebecca A. Woltring ("Woltring") stopped making payments on her mortgage, leading the creditor holding that mortgage note to initiate a foreclosure action on January 23, 2007. (Docket No. 1, ¶¶ 10-11.) The foreclosure action dragged on for years, in part as a result of Woltring repeatedly filing eleventh hour bankruptcy petitions after a latest effort to rectify the default fell through for one reason or another. Each time, the bankruptcy petition was dismissed, see 07-26461-mdm, 11-32629-mdm, 12-33133-mdm (E.D. Wis. Bankr.), and after the third such filing, the bankruptcy court barred Woltring from filing any further bankruptcy actions for two years absent prior leave of the court, In re Woltring, No. 12-33133 (E.D. Wis. Bankr. Feb. 8, 2013), ECF No. 39. The foreclosure action culminated in an order on April 22, 2013 confirming the sheriff's sale. (Docket No. 12-4.)

Woltring filed the present action on March 1, 2014 alleging that the defendant, Specialized Loan Servicing, LLC, ("SLS"), violated the Fair Debt Collection Practices Act ("FDCPA") in various actions it took during the foreclosure proceedings. (Docket No. 1.) Woltring's complaint also includes a claim for invasion of privacy by intrusion on seclusion, which the court presumes is brought pursuant to Wis. Stat. § 995.50. (Docket No. 1.)

Rather than filing an answer, the defendant filed a motion to dismiss. (Docket No. 10.) The plaintiff responded, (Docket No. 15), and the defendant replied, (Docket No. 18). The pleadings on this motion are closed and the matter is ready for resolution. The parties previously consented to the full jurisdiction of a magistrate judge. (Docket Nos. 2, 5, 9.)

II. Motion to Dismiss Standard

The defendant moved to dismiss pursuant to Fed. R. Civ. 12(b)(1) on the basis the court lacks subject matter jurisdiction over the plaintiff's complaint. Alternatively, the plaintiff argues that dismissal under Rule 12(b)(6) is appropriate because the plaintiff's claims are barred under the doctrine of claim preclusion or certain of the plaintiff's claims are untimely under the statute of limitations.

As with any motion to dismiss, whether under Rule 12(b)(1) or 12(b)(6), the court accepts as true the factual allegations contained in the complaint and draws all reasonable inference in favor of the plaintiff. Hammond v. Clayton, 83 F.3d 191, 192 (7th Cir. 1996).

With respect to a motion to dismiss under Rule 12(b)(1), the court may consider matters outside the pleadings. Capitol Leasing Co. v. FDIC, 999 F.2d 188, 191 (7th Cir. 1993) (citing Grafon Corp. v. Hausermann, 602 F.2d 781, 783 (7th Cir. 1979). However, generally, if a court considers matters outside the pleadings on a motion to dismiss under Rule 12(b)(6), the court must treat the motion as one for summary judgment. Fed. R. Civ. P. 12(d). Here, both partieshave presented matters outside the pleadings. (Docket Nos. 12-1 - 12-20; 15-1 - 15-4.) However, a narrow exception applies for matters that may be subject to judicial notice under Fed. R. Evid. 201. Ennenga v. Starns, 677 F.3d 766, 773 (7th Cir. 2012). The defendant argues that this exception applies because the documents submitted are public records. (Docket No. 18 at 2, fn. 1.)

Although it is too simplistic to say that a matter is appropriate for judicial notice because it is a public record (at least as the term "public record" is colloquially utilized), the court concludes that the documents submitted here, given the context and purposes for which they were submitted, are appropriately subject to judicial notice under Rule 201. The defendant presents only the records of other courts. Federal courts have routinely regarded the docket or pleadings from other judicial proceedings as appropriate for judicial notice under Rule 201. Ideal Instruments, Inc. v. Rivard Instruments, Inc., 434 F. Supp. 2d 598, 618 n.5 (N.D. Iowa 2006) (citing cases); see also United States v. Doyle, 121 F.3d 1078, 1088 (7th Cir. 1997); Henson v. CSC Credit Servs., 29 F.3d 280, 284 (7th Cir. 1994).

But simply because a matter was previously submitted to another court does not mean that it is subject to judicial notice for all purposes. It is possible for this court to review matters filed in other courts and take judicial notice of certain facts such as the date a matter was filed, the claims alleged in a complaint or relief sought in a motion, or the court's resolution of a matter. But it would not necessarily be appropriate to look to matters such as letters attached to a pleading and take judicial notice of the truth of the matters asserted in those hearsay statements.

Thus, notwithstanding the submission of documents outside the pleadings, based upon the court's analysis set forth below, the court finds it unnecessary to convert the present motion to dismiss under Rule 12(b)(6) to one for summary judgment.

III. Analysis

a. Rooker-Feldman Doctrine

The Rooker-Feldman doctrine, see Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923); District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 486 (1983), bars "state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced" from pursuing an action asking the federal court to review and reject those judgments. Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005). Not only are direct attacks upon state court judgments barred by the Rooker-Feldman doctrine but so too are claims that are "inextricably intertwined with the state-court judgment…." Lewis v. Anderson, 308 F.3d 768, 772 (7th Cir. 2002). In determining whether a claim is inextricably intertwined, the crucial question is whether the court is, in essence, being called upon the review that state court judgment. Manley v. City of Chicago, 236 F.3d 392, 396 (7th Cir. 2001) (quoting Garry v. Geils, 82 F.3d 1362, 1369 (7th Cir. 1996)).

The Rooker-Feldman doctrine is distinct from the principles of issue or claim preclusion. Unlike issue or claim preclusion, which are governed by state law, Exxon, 544 U.S. at 294; In re Dollie's Playhouse, Inc., 481 F.3d 998, 1000 (7th Cir. 2007), the Rooker-Feldman doctrine is founded in the fact that the United States Supreme Court is the only federal court authorized to review the judgments of state courts and thus is jurisdictional, Manley, 236 F.3d at 396.

FDCPA claims will often emerge from efforts to collect on state court judgments. Yet the defendant has not directed the court to any case wherein a court held that an alleged violation of the FDCPA in the collection of that debt was barred by the Rooker-Feldman doctrine.

Here, however, Woltring did explicitly allege in post-judgment proceedings in the state foreclosure action that the plaintiff in that action violated the FDCPA. Specifically, in a "motionfor determination of amount to redeem judgment of foreclosure" filed on December 10, 2010, she stated that it is her position that "the plaintiff has overstated the amount owed and that she is not only entitled to actual damages, a penalty of no less than $100 or more than $1,000.00, and attorney fees and costs pursuant to 15 U.S.C. § 1692k." (Docket No. 12-11 at 5). This appears to be largely an afterthought, tacked onto a closing paragraph wherein Woltring requested attorney's fees for bringing her motion. Notably, relief under the FDCPA was not included in the relief she requested in that motion. (Docket No. 12-11 at 2.) It is also unclear whether the state court could have ordered such relief by way of an order on a post-judgment motion. Woltring now seems to acknowledge that her reference to the FDCPA was improper and, in fact, because the motion was brought against Consumer Solutions, LLC, who was a creditor rather than a debt collector and thus not covered by the FDCPA, meritless.

The court concludes that the Rooker-Feldman doctrine does not deprive the court of jurisdiction to hear the plaintiff's present claim. The claims raised here are distinct from those resolved in the state foreclosure action. The state court judgment, (Docket No. 12-2 at 2-6), did not determine whether the defendant in this action violated the FDCPA. It necessarily could not have given that the judgment predated all the alleged FDCPA violations. Nor did Woltring's reference to the FDCPA in a post-judgment motion result in a judgment of the state court that deprives this court of jurisdiction. To the extent that the plaintiff's reference in the motion might be construed as a request for relief, it was improperly presented and unrelated to the substantive relief requested in the motion, and thus was appropriately ignored by the state court. Relevant here, the state court judgment determined only the amount of Woltring's debt. (Docket No. 12-2 at 6.) While this determination is relevant to the factual dispute of whether SLS violated the FDCPA by misstating the amount of the debt, the resolution of the plaintiff's FDCPA claim willnot and could not include a recalculation of this amount of the judgment. No matter the outcome of this case, the state court judgment shall stand undisturbed.

Finally, the court rejects the defendant's argument that the circuit court's order confirming the sheriff's sale, (Docket No. 12-4), deprives this court of jurisdiction. Because the creditor was precluded from pursuing a deficiency judgment, (see Docket No. 12-2 at ¶12), this sale, the net proceeds of which totaled $495,192.48, resolved the matter for less than the amount even the plaintiff appears to acknowledge she owed. (Docket No. 1, ¶43.) The confirmation of sale order did not determine what was actually owed, nor confirm that the amount SLS sought in its prior...