Federal court says res judicata doctrine bars further action in mortgage foreclosure case

By Nicholas Malfitano | Mar 13, 2017

PHILADELPHIA – A federal judge said the doctrine of res judicata effectively bars several claims initiated in a mortgage foreclosure action from proceeding in court.

On Feb. 27, Judge Cynthia M. Rufe of the U.S. District Court for the Eastern District Court of Pennsylvania ruled to dismiss the federal litigation brought forward by plaintiffs Kathleen and Harry Keyser against defendants Stern & Eisenberg P.C., Edward J. Donnelly, Christina C. Viola, Ocwen Loan Servicing, LLC, Francis S. Hallinan and U.S. Bank National Association.

Plaintiffs Kathleen and Harry Keyser allege that defendants forged a note and mortgage, and subsequently relied upon the fraudulent documents to secure a state court judgment in mortgage foreclosure.

“In the state court action, the Bucks County Court of Common Pleas granted a motion for summary judgment in favor of defendant U.S. Bank, the holder of the note and mortgage in question, and plaintiffs’ property was subsequently sold to U.S. Bank at sheriff’s sale,” Rufe said.

Defendants Ocwen, U.S. Bank National Association, Stern & Eisenberg and Viola have moved to dismiss the instant complaint.

“The amended complaint sets forth seven claims: (1) Violation of the federal mail fraud statute, 18 U.S.C. Section 1341, based on defendants’ use of the mail to send the forged note and mortgage; (2) Fraud based on the note and mortgage being forged, and based on false allegations in the complaint and motion for summary judgment in the state court action; (3) Violation of the Fair Debt Collection Practices Act (FDCPA) based on defendants’ conspiracy to create fraudulent documents in order to ‘mislead the courts’; (4) Violation of the Uniform Commercial Code during the state court action based on defendants’ ‘not allowing an inspection to determine the authenticity or genuineness of the alleged notes’; (5) Violation of the FDCPA based on defendants’ production of forged and fraudulent promissory and mortgage notes to the state court; (6) A request that this Court void the fraudulent notes because defendants misrepresented their authenticity in state court; and (7) Identity theft based on defendants’ creation of a sham trust to foreclose on plaintiffs’ property,” Rufe said.

Ultimately, Rufe said the doctrine of res judicata served to bar the plaintiffs’ claims.

“All of plaintiffs’ claims are rooted in the theory that they never executed the note and mortgage at issue, and that the documents relied upon by defendants in the state court action were fraudulent. Plaintiffs’ claims in this action are entirely based on the state court action, which resulted in a final judgment on the merits involving defendants. Because plaintiffs’ grievances could have been raised in the state court action, res judicata bars plaintiffs from re-litigating them in this Court, and the complaint will be dismissed with prejudice,” Rufe said.

The defendants are represented by Evan Barenbaum of Stern & Eisenberg in Warrington, plus Brett L. Messinger and Brian J. Slipakoff of Duane Morris, in Philadelphia.

U.S. District Court for the Eastern District of Pennsylvania case 2:16-cv-02298

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

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