Kim Downs v. Indy Mac Mortgage Services

NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604

Submitted March 12, 2014*
Decided March 20, 2014

Before

WILLIAM J. BAUER, Circuit Judge

RICHARD A. POSNER, Circuit Judge

DANIEL A. MANION, Circuit Judge

No. 13-3209

KIM DOWNS, Appeal from the United States District
Plaintiff-Appellant, Court for the Southern District of Illinois.

v. No. 13-cv-00858

INDYMAC MORTGAGE SERVICES, David R. Herndon,
FSB, et al., Chief Judge.
Defendants-Appellees.

ORDER

Kim Downs brought this federal suit, seeking to challenge the validity of a recent
foreclosure judgment entered against her in state court. The district court dismissed her
suit at screening for lack of subject matter jurisdiction. We affirm.

*
After examining the briefs and the record, we have concluded that oral
argument is unnecessary. Thus, the appeal is submitted on the briefs and record.
See FED. R. APP. P. 34(a)(2)(C).
No. 13-3209 Page 2

Downs based her complaint on the following allegations, which we regard as
true for purposes of this appeal. Swanson v. Citibank, N.A., 614 F.3d 400, 402 (7th Cir.
2010). The state court foreclosure judgment against her arose out of a mortgage loan
that she entered into in 2006 with an unidentified party. In 2009 she entered into a loan
modification agreement with IndyMac Mortgage Service (a division of OneWest Bank)
and Quicken Loans, an on-line lender. Ten days later, her loan was transferred to
OneWest Bank. Several months later her monthly payments nearly doubled, and
Downs withheld payment because IndyMac and OneWest Bank told her they were
“looking into the matter.” OneWest Bank later initiated foreclosure proceedings against
her in Illinois state court. After she failed to defend the case, Downs suffered a default
judgment. She later lost her state court appeal.

Downs then sued the banks and her attorney in federal court, alleging that they
breached her mortgage contract, deprived her of her property, and used deceptive
practices to foreclose the mortgage. The district court screened the complaint under 28
U.S.C. § 1915(e)(2) and denied her leave to proceed in forma pauperis. The court
questioned whether it had subject matter jurisdiction over Downs’s claims: diversity
jurisdiction, 28 U.S.C. § 1332, could not support this litigation because Downs and all of
the defendants appeared to be citizens of Illinois; and federal question jurisdiction, 28
U.S.C. § 1331, was lacking because the “body” of her complaint concerned state law and
she had not identified any cognizable federal question. The court allowed her to amend
the complaint to “detail[] facts that demonstrate this Court’s jurisdiction as well as the
bases of her claim.”

In an amended complaint, Downs elaborated upon the circumstances leading to
the foreclosure and, in a jurisdictional statement, cited 42 U.S.C. § 1983 and the Fair
Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692.

The district court dismissed the complaint with prejudice, concluding that it
lacked subject matter jurisdiction. The court explained that the amended complaint did
not allege diversity of citizenship (despite Downs having been informed that her initial
complaint failed to allege that she was a citizen of a state different than defendants), and
the court saw “no reason to believe that leave to file a second amended complaint
would result in adequate allegations of diversity.” Nor did the complaint, added the
court, allege federal question jurisdiction: Downs could not assert a claim under § 1983
without alleging a deprivation committed by a state actor, or under the FDCPA without
alleging that any defendants were debt collectors. Finally, it was “clear” to the court
No. 13-3209 Page 3

that the “heart” of Downs’s suit was her desire to have the state court’s foreclosure
judgment invalidated—a claim barred under the Rooker-Feldman doctrine, Rooker v. Fid.
Trust Co., 263 U.S. 413 (1923); D.C. Court of Appeals v. Feldman, 460 U.S. 462 (1983).

On appeal, Downs insists that she can establish jurisdiction and should have
been allowed another opportunity to amend her complaint. Regarding diversity
jurisdiction, for instance, she maintains that she alleged in her initial complaint that the
defendants were corporations of different states, and that she—as a pro se litigant—
should have been afforded liberal pleading construction and the “benefit of any doubt.”
But even pro se litigants must follow the requirements of complete diversity in federal
court and identify the citizenship of each of the parties. See Meyerson v. Harrah’s E. Chi.
Casino, 299 F.3d 616, 617 (7th Cir. 2002); Denlinger v. Brennan, 87 F.3d 214, 217 (7th Cir.
1996). Downs does not plead her own citizenship (she cites her Illinois address, but
residency does not establish citizenship, see Meyerson, 299 F.3d at 617), or that of her
attorney. Nor does she specify where each of the defendant businesses is incorporated
or has its principal place of business. 28 U.S.C. § 1332(a),(c)(1).

As for federal question jurisdiction, Downs invokes the due process clause of the
Fifth and Fourteenth Amendments, as well as unspecified “constitutional rights under
42 U.S.C. [§] 1983,” and “false writing and misleading statements” in violation of the
FDCPA. But as the district court properly explained, these conclusory allegations are
insufficient to state a claim under § 1983. See Briscoe v. LaHue, 663 F.2d 713, 723 (1981);
Bowman v. City of Franklin, 980 F.2d 1104, 1107 (7th Cir. 1992); Franklin v. Curry, 738 F.3d
1246, 1250–51 (11th Cir. 2013). Moreover, the complaint failed to state a claim under the
FDCPA, see Schlosser v. Fairbanks Capital Corp., 323 F.3d 534, 536 (7th Cir. 2003), as none
of the defendants was alleged to be a debt collector as defined by the statute.

Downs also argues that the district court erred when it denied her leave to
amend her complaint again so that she could make allegations sufficient to allege
diversity jurisdiction and state a claim under 42 U.S.C. § 1983 and the FDCPA. But
Downs failed to provide the district court with a proposed filing that would have done
this, and even her brief on appeal does not explain how jurisdiction could be satisfied.
Because Downs has twice amended her complaint and failed to show federal
jurisdiction, the district judge did not abuse his discretion by declining to allow her an
opportunity to file a third. See Airborne Beepers & Video, Inc. v. AT&T Mobility Inc., 499
F.3d 663, 666–67 (7th Cir. 2007); Cacia v. Norfolk & W. Ry., 290 F.3d 914, 921–22 (7th Cir.
2002).
No. 13-3209 Page 4

Finally, we observe that the district court dismissed Downs's FDCPA claims
without prejudice and all of her other claims with prejudice. But the district court
dismissed Downs's state law claims for lack of subject-matter jurisdiction or lack of
federal jurisdiction under the Rooker-Feldman doctrine. Such a dismissal must be without
prejudice. See T.W. by Enk v. Brophy, 124 F.3d 893, 898 (7th Cir. 1997) (“But when a suit is
dismissed for want of subject-matter jurisdiction, that is, because the court has no power
to resolve the case on the merits even if the parties are content to have it do so, it is error
to make the dismissal with prejudice.”); Frederiksen v. City of Lockport, 384 F.3d 437, 438
(7th Cir. 2004) (“The Rooker–Feldman doctrine is a rule of federal jurisdiction. A suit
dismissed for lack of jurisdiction cannot also be dismissed ‘with prejudice’; that’s a
disposition on the merits, which only a court with jurisdiction may render.”). Perhaps
the district court meant to dismiss Downs’s FDCPA claims—which were dismissed for
failure to state a claim—with prejudice and the remaining claims without prejudice.
Regardless, dismissing Downs's other claims with prejudice is an easily corrected error.
We modify the judgment of the district court to show that all of Downs’s claims are
dismissed without prejudice. As modified, the judgment is AFFIRMED.