NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 14a0557n.06
No. 13-4227 FILED
Jul 25, 2014
UNITED STATES COURT OF APPEALS DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
ROBIN DUNCAN, JUSTIN ROCKEY, )
)
Plaintiffs-Appellants, )
) On Appeal from the United States
v. ) District Court for the Southern
) District of Ohio
U.S. BANK, NA; SELECT PORTFOLIO )
SERVICING, INC., )
)
Defendants-Appellees. )
)
_________________________________/
Before: GUY, KETHLEDGE, and STRANCH, Circuit Judges.
RALPH B. GUY, JR., Circuit Judge. Plaintiffs Robin Duncan and Justin Rockey
appeal from the district court’s dismissal of their claims against defendants U.S. Bank National
Association and Select Portfolio Servicing, Inc., for failure to state a claim and lack of
jurisdiction. For the reasons that follow, we affirm.
I.
Plaintiffs’ complaint asserted claims arising out of a residential mortgage loan, a loan
modification, and subsequent foreclosure of the mortgage on the property known as
8453 Olenbrook Drive, Lewis Center, Ohio. Duncan executed a note and mortgage on the
property in 2005, which were transferred and assigned to U.S. Bank National Association.
Plaintiffs alleged that they obtained a loan modification and made payments pursuant to that
Case No. 13-4227 2
agreement, but that Select Portfolio Servicing (SPS) instructed them to stop paying pursuant to
the loan modification because the “paperwork is still in transition.” Plaintiffs stopped paying in
August 2010, U.S. Bank and SPS instituted foreclosure proceedings in October 2010, and the
state court entered a default judgment in January 2011.
Plaintiffs alleged that from the initiation of the foreclosure proceedings and even after the
property sold at a sheriff’s sale, SPS made demands for money and stated that the foreclosure
would be dismissed if they paid certain amounts. In particular, after the judgment but before the
sale, SPS sent two written offers: a March 4, 2011 offer to “reinstate” the mortgage loan upon a
down payment of $4,230.78; and a May 4, 2011 offer to “halt” the foreclosure action for a
payment of $25,284.80. Duncan and Rockey did not accept either proposal, however. They did
file a motion for relief from judgment under Ohio R. Civ. P. 60, which the state court denied in a
written order dated June 1, 2011. The state court rejected their assertion that the complaint had
not been properly served, finding that Duncan and Rockey were each served by a process server
on October 20, 2010, and concluded that no showing had been made that meritorious defenses
existed. An appeal was taken from the final judgment, but that appeal was voluntarily dismissed
shortly after this action was commenced.
Plaintiffs’ federal complaint alleged claims for injunctive relief (count I), breach of
contract (count II), promissory estoppel (count III), violation of the Ohio Consumer Sales
Protection Act (OCSPA) (Ohio Rev. Code § 1345.02) (count IV), common law fraud (count V),
breach of the covenant of good faith and fair dealing (count VI), bad faith (count VII), unjust
enrichment (count VIII), and violation of the Fair Debt Collection Practices Act (15 U.S.C.
§§ 1692e and 1692f) (count IX). Defendants filed a motion to dismiss those claims pursuant to
Case No. 13-4227 3
Fed. R. Civ. P. 12(b)(1) and 12(b)(6), which the district court granted in a written decision
entered September 25, 2013.
Specifically, the district court dismissed the claim for injunctive relief for lack of
jurisdiction under the Rooker-Feldman doctrine. Next, the district court found that claim
preclusion under Ohio law barred the remaining claims “to the extent they concern events
culminating in defendants’ filing of the foreclosure action.” To the extent that claims were based
on the alleged conduct after the foreclosure action was filed, the district court found plaintiffs
had failed to state a claim for fraud or promissory estoppel because plaintiffs alleged that they
rejected defendants’ offers to reinstate the mortgage or halt the foreclosure proceedings for
payment of certain sums of money. Plaintiffs do not appeal that determination. Nor have
plaintiffs argued that the district court erred in finding that SPS was not a “debt collector” for
purposes of the FDCPA. Judgment was entered accordingly, and this appeal followed.
II.
A motion to dismiss under Rule 12(b)(1) is reviewed de novo if no fact-finding is
required. See DLX, Inc. v. Kentucky, 381 F.3d 511, 516 (6th Cir. 2004). The district court’s
grant of a motion to dismiss for failure to state a claim is also reviewed de novo. See Top Flight
Entm’t, Ltd. v. Schuette, 729 F.3d 623, 630 (6th Cir. 2013). To survive a motion to dismiss
under Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citation omitted). In evaluating a motion to dismiss, we review the complaint and any
documents attached to the complaint or the motion to dismiss if they are referred to in the
complaint and are central to the plaintiffs’ claims. See Commercial Money Ctr., Inc. v. Ill. Union
Ins. Co., 508 F.3d 327, 335-36 (2007); Weiner v. Klais & Co., 108 F.3d 86, 89 (6th Cir. 1997).
Case No. 13-4227 4
Asserting error in the application of the Rooker-Feldman doctrine, plaintiffs appear to
misread the district court’s decision as having dismissed all of their claims for lack of subject
matter jurisdiction. Under the Rooker-Feldman doctrine, “lower federal courts are precluded
from exercising appellate jurisdiction over final state-court judgments.” Lance v. Dennis,
546 U.S. 459, 463 (2006). This doctrine is limited to federal 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.”
Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005) (discussing Rooker v.
Fidelity Trust Co., 263 U.S. 413, 415-16 (1923), and Dist. of Columbia Ct. of App. v. Feldman,
460 U.S. 462, 476-82 (1983)).
Plaintiffs argue that they have alleged independent claims that escape Rooker-Feldman
because the state-court judgment was not the “source of the injury.” McCormick v. Braverman,
451 F.3d 382, 394 (6th Cir. 2006). The district court did not find otherwise except as to Count I,
which sought a temporary and permanent injunction to prevent plaintiffs’ eviction from their
home pursuant to the state-court judgment. This claim, asserted separately from the other
claims, specifically identified the state-court judgment as the source of the injury and invited the
district court to review and reject the judgment. The district court did not err in finding that
Count I did not assert an independent claim for which the source of the injury was other than the
state-court judgment.
Next, plaintiffs assert that the district court erred in applying res judicata—specifically
claim preclusion—to bar claims for breach of contract, promissory estoppel, and fraud arising
from alleged misconduct that culminated in the filing of the foreclosure action (i.e., pre-
foreclosure conduct). Federal courts are required to give the same effect to a state-court
Case No. 13-4227 5
judgment that would be given by a court of the state from which the judgment emerged. See
Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81 (1984). Under Ohio law, “a valid,
final judgment rendered upon the merits bars all subsequent actions based upon any claim arising
out of the transaction or occurrence that was the subject matter of the previous action.” Grava v.
Parkman Twp., 653 N.E.2d 226, 229 (Ohio 1995); see also Portage Cnty. Bd. of Comm’rs v.
Akron, 846 N.E.2d 478, 495 (Ohio 2006).
Claim preclusion under Ohio law has four elements: “‘(1) a prior final, valid decision on
the merits by a court of competent jurisdiction; (2) a second action involving the same parties, or
their privies, as the first; (3) a second action raising claims that were or could have been litigated
in the first action; and (4) a second action arising out of the transaction or occurrence that was
the subject matter of the previous action.’” Portage Cnty., 846 N.E.2d at 495 (quoting Hapgood
v. Warren, 127 F.3d 490, 493 (6th Cir. 1997)). Plaintiffs do not dispute that Ohio law recognizes
that a default judgment is a valid and final judgment on the merits. See Frazier v. Matrix
Acquisitions, LLC, 873 F. Supp.2d 897, 901 (N.D. Ohio 2012); Harris-Gordon v. MERS, No.
3:09cv02700, 2010 WL 3910167, at *2-3 (N.D. Ohio Oct. 4, 2010). The second requirement
was satisfied because all of the parties to this action were also parties to the foreclosure action.
Seeming to conflate the Rooker-Feldman source-of-injury inquiry with the third element
of claim preclusion, plaintiffs assert that these three claims could not have been brought in the
foreclosure action because the injury was not sustained until the state-court judgment was
entered. The district court explained that plaintiffs’ allegations, if accepted as true, would
compel the conclusion that plaintiffs were not legally responsible for the default in payment of
the mortgage. Plaintiffs could have raised claims that defendants’ alleged instruction that they
cease making mortgage payments and filing of the forfeiture action constituted a breach of the
Case No. 13-4227 6
loan modification agreement (breach of contract), a binding promise intended to induce inaction
upon which plaintiffs reasonably relied (promissory estoppel), or a material misrepresentation
(fraud) as counterclaims in the forfeiture action. See Marion Prod. Credit Ass’n v. Cochran,
533 N.E.2d 325, 330 (Ohio 1998) (“In an action upon a note secured by a mortgage, the
defendant is entitled to interpose all counterclaims and defenses he may have against the
creditor.”).
Finally, since these claims allege that the forfeiture action was wrongfully instituted, the
district court did not err in finding that the pre-forfeiture claims for breach of contract,
promissory estoppel, and fraudulent misrepresentation arose out of the same transaction or
occurrence that was the subject of the forfeiture action. Plaintiffs do not argue otherwise. The
district court did not err in concluding that these claims were barred by claim preclusion under
Ohio law.
AFFIRMED.1
1
Plaintiffs argue that the district court erred in finding that the OSCPA does not apply to “mortgage servicers,” but
the district court actually dismissed the claim on the grounds of claim preclusion. Plaintiffs did not appeal that
determination, or the dismissal on the merits of the claims based on conduct after the foreclosure action was filed.