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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
____________________
No. 14-12713
Non-Argument Calendar
____________________
D.C. Docket No. l:13-cv-00620-CG-N
JOHN H. MCCULLEY,
LINDA K. MCCULLEY,
Plaintiffs-Appellants,
versus
BANK OF AMERICA, N.A.,
MORRIS K. SIROTE,
JAMES L. PERMUTT,
ANDY SAAG,
SIROTE & PERMUTT PC,
Defendants-Appellees.
______________________
Appeal from the United States District Court
for the Southern District of Alabama
_____________________
(April 2, 2015)
Before TJOFLAT, MARCUS and JORDAN, Circuit Judges.
PER CURIAM:
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This is the second lawsuit John McCulley has brought to enjoin the
foreclosure of a mortgage he and Linda McCulley gave to Countrywide Home
Loans Servicing, L.P. (“Countrywide”), on June 27, 2007, on their residence to
secure a note in the principal amount of $347,150. In the first suit, McCulley v.
Countrywide Home Loans, Inc. (McCulley I), No. 12-0359-CG-C, 2013 WL
3187995 (S.D. Ala. June 21, 2013), filed on May 30, 2012, McCulley sued
Countrywide, CWALT, Inc., CWALT, Inc., Alternative Loan Trust 2007- 21CB,
The Bank of New York, Mortgage Electronic Registration Systems, and BAC Home
Loan Servicing, L.P. (“BAC”). He claimed, with respect to the same mortgage at
issue in the instant case: (1) that the note and mortgage, though in default, were not
subject to foreclosure; (2) that, due to fraud, no defendant was entitled to receive any
mortgage payments; (3) that the defendants had violated the Real Estate Settlement
Procedures Act; and, (4) that the defendants had violated the Truth in Lending Act
(“TILA”). As relief, McCulley sought a declaratory decree to the effect that
residence was not subject to foreclosure. The defendants moved for summary
judgment and the District Court granted the motion, holding that Bank of America,
N.A (“BANA”), as successor to BAC (itself the successor to Countrywide), which
held the note and mortgage, was entitled to foreclose on the mortgaged property.
The court simultaneously dismissed all of McCulley’s claims with prejudice.
On December 17, 2013, McCulley, joined by his wife, brought the instant
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damages action against BANA, and the law firm of Sirote & Permutt, P.C., 1 raising
several claims related to the allegedly wrongful foreclosure of their property. The
defendants promptly moved the District Court to dismiss the McCulleys’ complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6). Relying on Alabama law, the
District Court concluded that the McCulleys’ claims were barred by the doctrines of
res judicata and collateral estoppel because they had already brought one lawsuit,
McCulley I, based on their claim that BANA lacked the right to foreclose on their
home, and lost. Consequently, BANA was entitled to foreclose on their property.
The McCulleys, proceeding pro se, now appeal the District Court’s judgment.
They argue that the court erred in finding that they had effectively sued BANA in
McCulley I, and, thus, that the instant suit is barred under the doctrines of res
judicata and collateral estoppel. They contend that BANA was not named as a
defendant in the McCulley I complaint and was thus not a party to that suit. 2 They
further argue that the record does not establish that the final judgment in McCulley I
applied to either BANA or Sirote, as they were not parties to that suit.
We review de novo a district court’s grant of a motion to dismiss for failure to
1
The complaint also named several of the firm’s lawyers as defendants. The law firm
represented BANA in the foreclosure proceedings.
2
The McCulleys are correct that BANA was not named in the complaint in McCulley I,
however it was a party by the end of the lawsuit by virtue of Countrywide’s merger with BAC and
BAC’s subsequent merger with BANA. See McCulley I, 2013 WL 3187995 at *1.
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state a claim pursuant to Fed. R. Civ. P. 12(b)(6). Chaparro v. Carnival Corp., 693
F.3d 1333, 1335 (11th Cir. 2012). We also review de novo a district court’s
application of res judicata and collateral estoppel. Lozman v. City of Riviera
Beach, Fla., 713 F.3d 1066, 1069 (11th Cir. 2013). When determining whether to
give preclusive effect to a prior federal judgment, we apply federal preclusion
principles. Tampa Bay Water v. HDR Eng’g, Inc., 731 F.3d 1171, 1179 (11th Cir.
2013).
The doctrine of res judicata, or claim preclusion, bars the re-litigation of
claims that were raised or could have been raised in a prior proceeding. Lobo v.
Celebrity Cruises, Inc., 704 F.3d 882, 892 (11th Cir. 2013). Res judicata is
founded on the principle that a “full and fair opportunity to litigate protects a party’s
adversaries from the expense and vexation attending multiple lawsuits, conserves
judicial resources, and fosters reliance on judicial action by minimizing the
possibility of inconsistent decisions.” Ragsdale v. Rubbermaid, Inc., 193 F.3d
1235, 1238 (11th Cir. 1999) (quotations and alteration omitted). The party
asserting res judicata must establish four elements: “(1) the prior decision must have
been rendered by a court of competent jurisdiction; (2) there must have been a final
judgment on the merits; (3) both cases must involve the same parties or their privies;
and (4) both cases must involve the same causes of action.” Lobo, 704 F.3d at 892.
Similarly, under Alabama law, res judicata applies when the following four
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elements are met: “(1) a prior judgment on the merits, (2) rendered by a court of
competent jurisdiction, (3) with substantial identity of the parties, and (4) with the
same cause of action presented in both actions.” Chapman Nursing Home, Inc. v.
McDonald, 985 So.2d 914, 919 (Ala. 2007).
Generally, “one is not bound by a judgment in personam in a litigation in
which he is not designated as a party or to which he has not been made a party by
service of process.” Taylor v. Sturgell, 553 U.S. 880, 884, 128 S. Ct. 2161,
2166-67, 171 L. Ed. 2d 155 (2008) (quotation omitted). However, a nonparty is
bound by a judgment if he was in privity with a party to that judgment. Griswold v.
Cnty. of Hillsborough, 598 F.3d 1289, 1292 (11th Cir. 2010). Specifically, there
are six circumstances in which a court can find privity for purposes of res judicata:
(1) the nonparty agreed to be bound by the litigation of others; (2) a “substantive
legal relationship” existed between the person to be bound and a party to first suit;
(3) the nonparty was represented adequately by someone who was a party to the first
suit; (4) the nonparty assumed control over the prior litigation; (5) a party attempted
to relitigate issues through a proxy; and (6) a statutory scheme foreclosed successive
litigation by nonparties. Id. Further, two cases involve the same causes of action
for res judicata purposes when the causes of action arise out of the “same nucleus of
operative fact,” or are based upon the same factual predicate. Lobo, 704 F.3d at
893. It is the substance of the actions, not their form, that is important. Ragsdale,
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193 F.3d at 1239. Res judicata, however, “is no defense where, between the first
and second suits, there has been a modification of significant facts creating new
legal conditions.” Manning v. City of Auburn, 953 F.2d 1355, 1359 (11th Cir.
1992) (quotations and alterations omitted).
Collateral estoppel, or issue preclusion, bars the re-litigation of issues of fact
or law that were actually litigated and decided in a prior suit. CSX Transp., Inc. v.
Bhd. of Maint. of Way Emps., 327 F.3d 1309, 1317 (11th Cir. 2003). In this circuit,
a party seeking to apply the doctrine of collateral estoppel must establish: (1) the
issue at stake is identical to one involved in the prior litigation; (2) the issue was
actually litigated in the prior litigation; (3) the determination of the issue must have
been a critical and necessary part of the judgment in the prior litigation; and (4) the
party against whom collateral estoppel is asserted must have had a full and fair
opportunity to litigate the issue in the prior litigation. Tampa Bay Water, 731 F.3d
at 1180. Unlike res judicata, collateral estoppel is not limited to actions between
the same parties and their privies. Hart v. Yamaha-Parts Distribs., Inc., 787 F.2d
1468,1473 (11th Cir. 1986) (“A defendant who was not a party to the original action
may invoke collateral estoppel against the plaintiff.”). Under Alabama law, for
collateral estoppel to apply: “(1) [t]he issue must be identical to the one involved in
the previous suit; (2) the issue must have been actually litigated in the prior action;
and, (3) the resolution of the issue must have been necessary to the prior judgment.”
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Martin v. Reed, 480 So.2d 1180, 1182 (Ala. 1985).
Although the District Court erred in relying on Alabama law, rather than
federal law, see Tampa Bay Water, 731 F.3d at 1179, the court applied the correct
legal standards in dismissing the McCulleys’ suit because Alabama law on the
doctrines of res judicata and collateral estoppel is substantively the same as federal
law. The court properly dismissed the case on res judicata grounds because (1)
there was a final judgment on the merits in McCulley I, (2) the court in McCulley I
was a court of competent jurisdiction, (3) the parties in the instant case were either
parties or in privity with a party to the first suit, and (4) both lawsuits involved the
same causes of action. Similarly, because the issues raised in the instant case were
previously litigated and decided in McCulley I, in which the McCulleys had a full
and fair opportunity to litigate, the District Court also properly found them barred by
collateral estoppel.
AFFIRMED.
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