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PENNSYLVANIA RECORD

Friday, March 29, 2024

Claim preclusion leads to dismissal in District Court's mortgage foreclosure action

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PHILADELPHIA – The U.S. District Court for the Eastern District of Pennsylvania granted a mortgage fund summary judgment in a foreclosure action on Tuesday, due to claim preclusion under the Rooker-Feldman doctrine.

Judge Thomas N. O’Neill Jr. reached this decision in the lawsuit brought by Troy Slaffey against PNMAC Mortgage Opportunity Fund Investors (PNMAC) and PennyMac Loan Services – who averred in an amended complaint the defendant committed four violations of the Fair Debt Collection Practices Act, 15 U.S.C. Section 1692(e), all of which are connected to a mortgage held by the defendants.

“On May 29, 2013, defendant PNMAC filed a foreclosure complaint against Slaffey in the Philadelphia County Court of Common Pleas, due to his default on a Jan. 26, 2007 mortgage and note. On Sept. 17, 2013, the state court entered an in rem default judgment in favor of PNMAC,” O’Neill said. “On Oct. 16, 2014, Slaffey filed a petition to open the default judgment in the state foreclosure proceeding.”

In a Nov. 18 reply to a subsequent defense motion opposing his petition, Slaffey “raised arguments similar to those he now raises, including the claim that PennyMac could not pursue the foreclosure because his debt was discharged in bankruptcy and the assignment was flawed.”

The Philadelphia County Court of Common Pleas later denied Slaffey’s petition to open the default judgment on Dec. 15, 2014, the state court denied Slaffey’s petition to open the default judgment.

This resulted in Slaffey immediately filing a “Mandatory Judicial Notice of Federal Order” in state court, seeking to overturn the foreclosure by claiming that “he owed no debt to PennyMac, alleging that PennyMac could not pursue the foreclosure or take any further actions in connection with the loan because his debt was discharged in bankruptcy, and requesting that the foreclosure case be dismissed,” according to O’Neill.

When this met move with opposition from PNMAC, Slaffey filed a motion to strike seeking the mortgage be vacated and all claims against him be dismissed. But in late March 2015, the Court denied Slaffey’s motion to strike and instead granted PNMAC’s cross-motion to strike.

“On May 21, 2015, again in state court, Slaffey filed a petition to strike the default judgment. In Slaffey’s petition to strike, he raised the same issues that he raises in his amended complaint in this action; for example, he claimed that PennyMac provided contradictory amounts of the debt owed and he owes no debt to PennyMac. By order dated June 25, 2015, the state court denied Slaffey’s petition to strike with prejudice,” O’Neill stated.

O’Neill went on to explain despite Slaffey’s amended claims in this lawsuit were “styled as FDCPA claims”, it was undisputed that his claims “relate to a loan that was the subject of a prior state foreclosure judgment.”

“This Court cannot entertain plaintiff’s claims without violating the Rooker-Feldman doctrine, which divests federal courts of jurisdiction in this situation,” O’Neill said. “Rooker-Feldman divests a federal court of jurisdiction and thus bars a federal claim if it ‘is inextricably intertwined with a state court adjudication, meaning that federal relief can only be predicated upon a conviction that the state court was wrong.”

O’Neill further indicated courts in the jurisdiction of the U.S. Court of Appeals for the Third Circuit have “repeatedly held that Rooker-Feldman prevents a borrower from challenging a mortgage in federal court if the mortgage was the subject of a state foreclosure judgment.”

“No appeal was taken in the state court action. Accordingly, the motion for summary judgment will be granted,” O’Neill said.

The defendants are represented by Kevin C. Rakowski, Laura E. Vandzules and Lauren E. O’Donnell of Blank Rome, in Philadelphia.

U.S. District Court for the Eastern District of Pennsylvania case 2:15-cv-02771

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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