GERALD AUSTIN McHUGH, District Judge.
This federal action follows upon a state court foreclosure case lost by Plaintiff Thomas Doughty. The central question is whether any claims survive in light of the state court adjudication against him. I conclude that Mr. Doughty's claims arising out of the mortgage foreclosure are barred by the outcome of the state court action, and that his related claims have other fatal flaws. Accordingly, Defendant Wells Fargo Bank, N.A.'s Motion to Dismiss will be granted.
Plaintiff is the former owner of a home in Phoenixville, PA, which he lost in a foreclosure action that led to a sheriff's sale on November 16, 2017. Plaintiff asserts claims for wrongful foreclosure, Compl. ¶¶ 18-24, ECF No. 1, violations of the Fair Debt Collection Practices Act, id. ¶¶ 25-31, intentional infliction of emotional distress, id. ¶¶ 32-37, and seeks a declaratory judgment voiding the sheriff's sale and returning the property to him, id. ¶¶ 38-45. Plaintiff's claims all hinge on his contention that Wells Fargo did not have standing to foreclose on the property because it had assigned the promissory note [hereinafter "the Note"] connected with the mortgage on the property to a Ginnie Mae trust, and that Defendant "fraudulently made a misrepresentation of fact that it was the holder of the Note" in initiating foreclosure proceedings. Id. ¶¶ 20-21, 28-29, 36.
The Court of Common Pleas of Chester County has already resolved Plaintiff's allegation of fraud. In his Answer to Defendants' Complaint in Foreclosure, Plaintiff raised allegations identical to those presented here, contending that Wells Fargo had sold the Note, and thus had no legal interest in the property. See Defs.' Ex. C, ECF No. 6-6. Wells Fargo filed a Motion for Summary Judgment on its foreclosure complaint, Defs.' Ex. E, ECF No. 6-8, and in response, Plaintiff offered an affidavit from an individual named Joseph R. Esquivel, Jr., which stated:
Defs.' Ex. F, ECF No. 6-9. The Court of Common Pleas, however, noted that Wells Fargo had presented copies of both the mortgage and the Note. The court also found that, aside from Mr. Esquivel's affidavit, Plaintiff had not provided copies of any documents that Mr. Esquivel relied on in reaching his conclusions. Having found that Wells Fargo's documentation demonstrated its standing to bring a foreclosure action, the court granted Wells Fargo's motion. Id.
Plaintiff then filed a Motion for Reconsideration, in which he offered documentation supporting Mr. Esquivel's affidavit. Defs.' Ex. G, ECF No. 6-10. The court, in denying Plaintiff's motion, recognized that "Defendant provided the full report and documents related to Joseph R. Esquivel, Jr.'s Affidavit." See Defs.' Ex. I, ECF No. 6-12. After reviewing the additional filings, however, the court found that "[t]hose documents still do not support the assertion that `an interest in the Thomas E. Doughty Mortgage Loan Instrument was sold sometime shortly after July 12, 2007 to multiple classes of the Ginnie Mae REMIC Trust 2007-049.'" Id. In sum, the Court of Common Pleas considered and rejected the same theory on which Plaintiff now seeks to proceed in federal court.
In the present action, Plaintiff's claims all stem from the premise that the underlying foreclosure action was improper. In effect, Plaintiff seeks to relitigate the state court's judgment. Based on the outcome of the state court proceedings, Plaintiff's claims are barred by collateral estoppel and the Rooker-Feldman doctrine. Plaintiff has also failed to adequately allege his FDCPA and intentional infliction of emotional distress claims.
Defendants argue that claim preclusion should bar Plaintiff from proceeding with this action. Defs.' Mot. 16-18. While claim preclusion might apply, Defendants' argument is in many respects presented as one of issue preclusion, and in technical terms, the case is more appropriately analyzed in that way. In evaluating the preclusive effects of the state foreclosure judgment, I must apply Pennsylvania law. Metro. Edison Co. v. Pa. Pub. Util. Comm'n, 767 F.3d 335, 350-51 (3d Cir. 2014) (citing 28 U.S.C. § 1738 and Allen v. McCurry, 449 U.S. 90, 96 (1980)). Under Pennsylvania law, "[t]he doctrine of collateral estoppel precludes relitigation of an issue determined in a previous action if: (1) the issue decided in the prior case is identical to the one presented in the later action; (2) there was a final adjudication on the merits; (3) the party against whom the plea is asserted was a party or in privity with a party in the prior case; (4) the party or person privy to the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior proceeding; and (5) the determination in the prior proceeding was essential to the judgment." Office of Disciplinary Counsel v. Kiesewetter, 585 Pa. 477, 484, 889 A.2d 47, 50-51 (2005).
Courts in the Third Circuit have applied Pennsylvania law to preclude plaintiffs from re-litigating a mortgagee's standing to initiate a foreclosure proceeding. In Humphreys v. McCabe, Weisberg & Conway, P.C., 2016 WL 9024599 (E.D. Pa. 2016), aff'd, 686 F. App'x 95 (3d Cir. 2017), plaintiff brought FDCPA claims against the mortgagee's foreclosure counsel, alleging that counsel made false statements about the mortgagee's standing to initiate foreclosure proceedings. As a defense to the state foreclosure action, the plaintiff had raised the same allegation and presented supporting evidence. Id. at *5. The court found that, because the state court granted the mortgagee's motion for summary judgment in the foreclosure action, the state court necessarily determined that the defendant had not made false statements. Because the state court resolved this issue in granting the mortgagee's motion for summary judgment in the foreclosure proceeding, and because all other elements required for the application of collateral estoppel were met, the court dismissed the plaintiff's FDCPA claims. Id. at *5-6.
Similarly, collateral estoppel clearly applies to this case. First, by granting Wells Fargo's Motion for Summary Judgment, the state court decided the same issue that forms the basis of each of Plaintiff's claims here. As a defense to the foreclosure, Plaintiff argued that Wells Fargo fraudulently represented that it held the Note and had standing to foreclose on the property. In rejecting this defense, the court necessarily determined that this representation was not fraudulent. Second, the state court's decision to grant Wells Fargo's Motion for Summary Judgment, and subsequent denial of Plaintiff's Motion for Reconsideration, constituted a final adjudication on the merits. Third, Plaintiff was a party to the state court proceeding. Fourth, Plaintiff had a full and fair opportunity to litigate this issue, and he in fact did so on multiple occasions. See Humphreys, 2016 WL 9024599 at *5 (finding that state court foreclosure proceedings provided a full and fair opportunity to litigate the issue). Plaintiff submitted briefs that detailed why he believed Wells Fargo did not have standing, and submitted supporting evidence, including Mr. Esquivel's affidavit stating that "an interest in the [mortgage] was sold . . . to multiple classes of the Ginnie Mae REMIC Trust []." Defs.' Ex. F, ECF No. 6-9. In his motion for reconsideration in the state foreclosure action, Plaintiff also submitted documents supporting Mr. Esquivel's affidavit. Defs.' Ex. G, ECF No. 6-10.
Additionally, although the Rooker-Feldman doctrine has been significantly narrowed, I believe it is properly applied here to the extent that Plaintiff's claims seek review of the state court proceedings. Rooker-Feldman applies when four criteria are met: "(1) the federal plaintiff lost in state court; (2) the plaintiff `complain[s] of injuries caused by [the] state-court judgments'; (3) those judgments were rendered before the federal suit was filed; and (4) the plaintiff is inviting the district court to review and reject the state judgments." Great W. Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159, 166 (3d Cir. 2010) (citing Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005)). Here, by asserting wrongful foreclosure and declaratory judgment claims, for practical purposes Plaintiff seeks relief from the state court's judgment in the foreclosure proceeding; both claims require this court to "review and reject" the state court's foreclosure judgment. Because all four elements from Great Western Mining are met here, Plaintiff's wrongful foreclosure and declaratory judgment claims must be dismissed. See, e.g., Blank v. Optimum Fin. Servs., LLC, 2017 WL 1508990, at *6 (E.D. Pa. 2017), appeal dismissed, 2017 WL 5634297 (3d Cir. 2017) (dismissing wrongful foreclosure and declaratory relief claims for lack of subject-matter jurisdiction) (Quiñones Alejandro, J.); Laychock v. Wells Fargo Home Mort., 399 F. App'x 716, 718 (3d Cir. 2010) (applying Great Western Mining to find that Rooker-Feldman doctrine barred plaintiff's wrongful foreclosure claims).
Plaintiff's FDCPA claim fails for two unique reasons. First, Plaintiff has not properly alleged that Defendants are debt collectors within the meaning of the FDCPA. The facts alleged in the Complaint suggest that Defendant Wells Fargo is a "creditor" under 15 U.S.C. § 1692a(4), rather than a "debt collector," as defined in § 1692a(6), because Defendant has attempted to collect "in its own name" in initiating a foreclosure action against Plaintiff. Plaintiff has alleged no facts to suggest otherwise.
Plaintiff has also failed to adequately state a claim for intentional infliction of emotional distress (IIED). Though the Pennsylvania Supreme Court has not yet formally adopted the standard for IIED set forth in the Restatement (Second) of Torts, the Court of Appeals and Pennsylvania's intermediate appellate courts have followed the Restatement.
As a matter of law, the actions alleged here clearly fall well below the threshold of outrageous conduct necessary to state a claim for IIED in Pennsylvania.
For these reasons, Plaintiff's Complaint must be dismissed in its entirety. Because any amendment to Plaintiff's Complaint would be futile, dismissal shall be with prejudice.
Recognizing that Pennsylvania courts "have signaled their acceptance" of IIED, the Third Circuit has concluded that "the black letter rule of § 46 of the Restatement, along with the interpretive comments, may be applied as the basis in Pennsylvania law for [IIED]." Chuy v. Philadelphia Eagles Football Club, 595 F.2d 1265, 1274 (3d Cir. 1979).
