United States District Court, D. Maryland, Southern Division
MEMORANDUM OPINION AND ORDER
W. Grimm United States District Judge.
Markey, a Maryland resident, lost her Florida rental property
(the “Property”) in a foreclosure action to which
she was not a party. Am. Compl., ECF No. 1-3. U.S. Bank,
National Association, as Trustee for Citigroup Mortgage Loan
Trust Mortgage Pass-Through Certificates, Series 2005-3
(“U.S. Bank”), which held the Note and Deed of
Trust that Ms. Markey had executed in conjunction with the
mortgage loan she had obtained for the Property, had
initiated the foreclosure action; Wells Fargo Bank, N.A.
(“Wells Fargo”) had serviced the mortgage. More
than three years later, Ms. Markey filed suit against U.S.
Bank and Wells Fargo in Maryland state court, alleging
violations of Maryland and federal statutes and the common
law, based on the statements and representations Wells Fargo
made while she attempted to pay her arrears, obtain a loan
modification, appeal the denial of that modification, and
otherwise avoid foreclosure. Compl., ECF No. 1-2.
removed the lawsuit to this Court based on diversity
jurisdiction. Notice of Removal, ECF No. 1; Civil Cover
Sheet, ECF No. 1-1. Pending is their Motion to Dismiss, based
on res judicata or Rooker-
Feldman abstention grounds or, alternatively, for
failure to state a claim. ECF No. 19. Because Ms. Markey was not a
party to the foreclosure action, res judicata does
not bar her claims. The Rooker-Feldman doctrine also
is not a bar. But, the statutes of limitations ran on all but
her breach of contract/covenant of good faith and fair
dealing claim before she filed suit, and Ms. Markey fails to
state a claim for breach of contract. Therefore, I will grant
Defendants' motion. I will, however, allow Plaintiff to
amend her pleadings with regard to her one timely claim for
breach of contract.
Markey obtained the mortgage from U.S. Bank, secured by a
rental property she purchased in Florida (the
“Property”), and she executed a Note and Deed of
Trust of the Property in favor of the note holder on May 4,
2005. Am. Compl. ¶¶ 5, 9. Wells Fargo serviced the
loan. Id. ¶ 4. While Ms. Markey was preoccupied
with “serious health and mental health issues” in
late 2012, “the auto-debits for her mortgage on the
Subject Property apparently [did] not go through, ”
and Ms. Markey defaulted on her loan. Id.
¶¶ 11-14. Then, in early January 2013, she learned
from Wells Fargo that “her loan had been referred to
foreclosure.” Id. ¶¶ 14-16. She
attempted to negotiate a loan modification, but she claims
that the modification was “wrongfully denied”
after “a 26-month torturous process . . . that . . .
put her payments in huge arrears . . . .” Id.
28, 2013, U.S. Bank instituted foreclosure proceedings in
Florida state court. See State Ct. Docket, ECF No.
19-2; see also State Ct. Docket,
The summons for Ms. Markey was “returned not served,
” after which U.S. Bank sought and was granted
permission to effect service by publication; notice was
posted in a local newspaper in Florida once a week for two
consecutive weeks. State Ct. Docket.
Markey alleges that, while the foreclosure action was
pending, she was informed “of multiple foreclosure
sales dates scheduled, then lifted, then rescheduled.”
Pl.'s Opp'n 6-7 (citing Am. Compl. ¶¶
22-26). She submitted “more and more
repetitive documents” that defendants requested as part
of the loan modification process; appealed the denial of the
loan modification; and was told “not to worry about a
foreclosure sale, that [Defendants' representative] would
seek a postponement of the sale date just like she had done
before.” Id. After U.S. Bank postponed the
sale various times, the Property was sold through a
foreclosure sale on March 5, 2015. State Ct. Docket; Am.
Compl. ¶ 27. Meanwhile, Ms. Markey had gone to
the hospital on January 20, 2015 and from there to a
rehabilitation facility, where she remained until “mid
to late March, ” when she returned home and read
through “her back pile of mail” that had
accumulated and learned of the foreclosure sale. Am. Compl.
¶ 27. She claims that she continued to receive
correspondence from Defendants about avoiding foreclosure,
even after the Property sold. Id. ¶ 28.
Markey filed suit in Maryland state court on May 1, 2018,
challenging how Defendants handled her loan after she missed
payments. Compl. Specifically, she claims that Defendants
“engag[ed] in unfair acts and practices in their
servicing of Plaintiff's Loan, ” making
representations that were “deceptive” and
“purposefully and/or negligently misleading and
confusing” and caused her to fall farther into arrears
and ultimately default on her loan, without having the
opportunity to modify it. Am. Compl. ¶¶ 19, 57-60.
She lists various specific actions, such as “failure to
perform its loan servicing function consistent with its
responsibilities under [federal law] and its contracts with
the loan holder”; “refusal to accept
Plaintiff's proffered payment on the loan”; and
“failure to advise Plaintiff of her right to appeal the
initial denial of her modification application.”
Id. ¶ 61; see also Id. ¶¶
73, 112, 124, 135 (incorporating actions identified in ¶
61). She claims damages including a lowered credit score,
costs and fees, the loss of her property, and “extreme
anxiety and emotional distress contributing to the transient
ischemic attack (‘TIA') (mini-stroke) she suffered
in 2013 and her weakened immune system that [is] exacerbating
her battle with cancer.” Id. ¶¶ 67,
84, 98, 105, 113, 130; see also Id. ¶ 135
(claiming only physical damage for negligent infliction of
emotional distress count).
to Rule 12(b)(6), Markey's Amended Complaint is subject
to dismissal if it “fail[s] to state a claim upon which
relief can be granted.” Fed.R.Civ.P. 12(b)(6). A
complaint must contain “a short and plain statement of
the claim showing that the pleader is entitled to relief,
” Fed.R.Civ.P. 8(a)(2), and must state “a
plausible claim for relief, ” Ashcroft v.
Iqbal, 556 U.S. 662, 678-79 (2009). “A claim has
facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678. Rule 12(b)(6)'s purpose
“‘is to test the sufficiency of a complaint and
not to resolve contests surrounding the facts, the merits of
a claim, or the applicability of defenses.'”
Velencia v. Drezhlo, No. RDB-12-237, 2012 WL
6562764, at *4 (D. Md. Dec. 13, 2012) (quoting Presley v.
City of Charlottesville, 464 F.3d 480, 483 (4th Cir.
assert res judicata as an affirmative defense. The
Court may consider affirmative defenses such as res
judicata on motions to dismiss only when they
“clearly appear on the face of the complaint.”
Kalos v. Centennial Sur. Assocs., No. CCB-12-1532,
2012 WL 6210117, at *2 (D. Md. Dec. 12, 2012) (quoting
Andrews v. Daw, 201 F.3d 521, 524 n.1 (4th Cir.
2000) (citation and quotation marks omitted)). That is the
case here, as the suit concerns the propriety of foreclosure
proceedings in a Florida state court. Therefore, I will
consider res judicata as a basis for dismissal.
Rooker-Feldman doctrine “holds that
‘lower federal courts are precluded from exercising
appellate jurisdiction over final state-court
judgments.'” Thana v. Bd. of License
Comm'rs for Charles Cty., Md., 827 F.3d 314, 319
(4th Cir. 2016) (quoting Lance v. Dennis, 546 U.S.
459, 463 (2006) (per curiam)). It “assesses only
whether the process for appealing a state court judgment to
the Supreme Court under 28 U.S.C. § 1257(a) has been
sidetracked by an action filed in a district court
specifically to review that state court
judgment.” Id. at 320. Thus, the doctrine
“is to play” a “narrow role” and is
“confined to ‘cases brought by state-court losers
complaining of injuries caused by state-court judgments
rendered before the district court proceedings commenced and
inviting district court review and rejection of those
judgments.'” Id. at 319, 320 (quoting
Lance, 546 U.S. at 464 (quoting Exxon Mobil
Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284
(2005))). Indeed, “the Supreme Court has noted
repeatedly that, since the decisions in Rooker and
Feldman, it has never applied the doctrine
to deprive a district court of subject matter jurisdiction,
” and, “since Exxon, [the Fourth Circuit
has] never, in a published opinion, held that a district
court lacked subject matter jurisdiction under the
Rooker-Feldman doctrine.” Id. at 320.
“federal courts may still entertain claims the state
court examined, so long as those claims do not challenge the
state-court decision itself.” Lane v.
Anderson, 660 Fed.Appx. 185, 189 (4th Cir. 2016).
Defendants argue that “Plaintiff was required to defend
the Florida action in Florida and assert all her
claims and defenses there and may not appeal the decision or
seek to vacate the judgment by filing in another
court.” Defs.' Reply 3. Perhaps so. But, Ms.
Markey's claims allege damages based on how Defendants
handled her loan and specifically her application for a
mortgage loan modification. In all but Count VII (negligent
infliction of emotional distress), Ms. Markey claims damages
including a lowered credit score and costs and fees, Am.
Compl. ¶¶ 67, 84, 98, 105, 113, 130, and for all
counts she claims “extreme anxiety and emotional
distress contributing to the transient ischemic attack
(‘TIA') (mini-stroke) she suffered in 2013 and her
weakened immune system that [is] exacerbating her battle with
cancer, ” id. ¶ 67; see also Id.
¶¶ 84, 98, 105, 113, 130, 135. “While success
on these claims could call into question the validity of the
state court's . . . order authorizing foreclosure, the
claims do not seek appellate review of that order or fairly
allege injury caused by the state court in entering that
order.” Vicks v. Ocwen Loan Servicing, LLC,
676 Fed.Appx. 167, 169 (4th Cir. 2017). Thus, these claims
are not barred by the Rooker-Feldman doctrine. And,
although Plaintiff claims the “loss of the Subject
Property” as damages, Am. Compl. ¶¶ 67, 84,
98, 105, 113, 130, she does not seek review of the state
court order or injunctive relief regarding the Property in
her claim for relief, id. at 18. Thus, she does not
bring a direct “challenge [to] the state-court
decision itself, ” which this Court would lack
jurisdiction to review. See Lane, 660 Fed.Appx. at
189. Therefore, Defendants' Rooker-Feldman
defense is without merit.
Under Florida law, 
“res judicata applies where there is: (1) identity of
the thing sued for; (2) identity of the cause of action; (3)
identity of the persons and parties to the action; (4)
identity of the quality [or capacity] of the persons for or
against whom the claim is made; and (5) the original claim
was disposed on the merits.”
Kaplan v. Kaplan, 624 Fed.Appx. 680, 681 (11th Cir.
2015) (quoting Lozman v. City of Riviera Beach,
Fla., 713 F.3d 1066, 1074 (11th Cir. 2013) (quotation
and citation omitted) (alteration in original)). “The
policy underlying res judicata is that if a matter has
already been decided, the petitioner has already had his or
her day in court, and for purposes of judicial economy, that
matter generally will not be reexamined again in any court
(except, of course, for appeals by right).” Nassar
v. Nassar, No. 14-CV-1501-J-34MCR, 2017 WL 26859, at *6
(M.D. Fla. Jan. 3, 2017) (quoting Zikofsky v. Marketing
10, Inc., 904 So.2d 520, 523 (Fla. 4th Dist. Ct. App.
May 25, 2005)), aff'd, 708 Fed.Appx. 615 (11th
Cir. 2017), cert. denied, 139 S.Ct. 68 (2018).
argues that res judicata does not apply because she
never was served in the foreclosure proceeding, she never
appeared, and consequently the Florida court never obtained
personal jurisdiction over her. Pl.'s Opp'n 9-10.
Certainly, if the Florida court lacked jurisdiction, res
judicata would not bar a later suit. See
Nassar, 2017 WL 26859, at *10 (“[O]nly a final
judgment on the merits rendered by a court of competent
jurisdiction may bar a subsequent suit raising the same
claims.” (emphasis added)); Hedge v. Hedge,
816 So.2d 241, 243 (Fla. Dist. Ct. App. 2002) (holding that
order that was void for lack of personal jurisdiction could
not form basis for res judicata); see also
Williams v. Cadlerock Joint Venture, L.P., 980 So.2d
1241, 1243 (Fla. Dist. Ct. App. 2008) (“A foreign
judgment need not be recognized if the foreign court lacked
either personal or subject matter jurisdiction. . .
.“If . . . the defendant did not have the opportunity
to contest jurisdiction, he may raise the issue subsequently
in a proceeding brought to enforce the judgment.”
while the state court docket shows that Ms. Markey ultimately
was served, it was constructive service by publication after
the summons initially was “returned not served.”
See State Ct. Docket; see also Fla. Stat.
Ann. § 49.011(1) (“Service of process by
publication may be made in any court on any party identified
in § 49.021 in any action or proceeding: . . . [t]o
enforce any legal or equitable lien or claim to any title or
interest in real or personal property within the jurisdiction
of the court . . . .”). “‘The case law is
clear . . . that constructive service by publication under
[section 49.011(1), Florida Statutes] cannot confer a court
with jurisdiction over a person.' Rather, constructive
service confers only in rem jurisdiction on the
trial court.” Archer v. U.S. Bank Nat'l
Ass'n, 220 So.3d 477, 478 (Fla. Dist. Ct. App. 2017)
(quoting Milanick v. State, 147 So.3d 34, 35 (Fla.
Dist. Ct. App. 2014)). Significantly, this does not mean that
the court could not proceed with the foreclosure action;
“personal jurisdiction is not required to initiate a
foreclosure action because foreclosure proceedings instituted
against the subject property are in rem proceedings.”
argue that the Florida court nevertheless could exercise
personal jurisdiction over Plaintiff based on her ownership
of the Property in Florida. It is true that a nonresident of
Florida, like Ms. Markey, who “[o]wn[s] . . . any real
property within [Florida], ” as Ms. Markey did at the
time of the foreclosure action, “thereby submits
himself or herself . . . to the jurisdiction of the court of
[Florida] for any cause of action arising from [that
ownership].” Fla. Stat. § 48.193(1)(a)(3). But
this misses the point. The fact that the court could
exercise jurisdiction over Ms. Markey does not mean that it
did. Rather, “service [must be] perfected as
required by law” for the state court to have personal
jurisdiction over the defendant. See P.S.R. Assocs. v.
Artcraft-Heath, 364 So.2d 855, 857 (Fla. Dist. Ct. App.
1978); see also Fla. Stat. § 48.193(3)
(“Service of process upon any person who is subject to
the jurisdiction of the courts of [Florida] as provided in
this section may be made by personally serving the process
upon the defendant outside [Florida], as provided in §
48.194.”); Nat'l League for Nursing v.
Bluestone, 388 So.2d 1090, 1091 (Fla. Dist. Ct. App.
1980) (“[A] party invoking this long-arm statute must
effect personal service upon the defendant pursuant to
Section 48.194, Florida Statutes” to establish
jurisdiction.). In the foreclosure action, U.S. Bank resorted
to constructive service by publication which, as noted,
cannot confer personal jurisdiction. See Archer, 220
So.3d at 478-79. Therefore, the state court did not obtain
personal jurisdiction over Ms. Markey in the foreclosure
proceeding. See id.
the foreclosure proceeding is an in rem proceeding
over which the Florida court had subject matter jurisdiction,
despite its lack of personal jurisdiction over the homeowner.
SeeArcher, 220 So.3d at 478-79. Thus, this
case turns on whether in rem foreclosure proceedings
have preclusive effects on the property owner (as opposed to
the property itself) if the owner does not submit to the
court's jurisdiction but then files suit against the
lenders, that is, whether the parties are identical in a
subsequent proceeding when the court did not have personal