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Medrano v. Ocwen Loan Sericing, LLC

United States District Court, N.D. Illinois, Eastern Division

January 31, 2017

GUILLERMO R. MEDRANO, Plaintiff,
v.
OCWEN LOAN SERVICING, LLC, BAYVIEW LOAN SERVICING, LLC, MRF ILLINOIS, ONE LLC, and BAYVIEW ASSET MANAGEMENT LLC, Defendants.

          MEMORANDUM OPINION AND ORDER

          Harry D. Leinenweber, United States District Court Judge

         Before the Court are the Defendants' Motions to Dismiss [ECF Nos. 44 and 46]. For the reasons stated herein, the Court grants the Motions and dismisses Medrano's Complaint with prejudice.

         I. BACKGROUND

         Plaintiff Guillermo Medrano (“Medrano”) filed this lawsuit in early 2016, complaining of conduct that took place after the Defendants in this case brought a mortgage foreclosure suit against him in the Circuit Court of Cook County. According to Medrano, the Defendants - Bayview Asset Management, LLC (“BAM”), its wholly-owned subsidiary, Bayview Loan Servicing, LLC (“Bayview”), MRF Illinois One, LLC, Ocwen Financial Corporation (“Ocwen Financial”), and its wholly-owned subsidiary, Ocwen Loan Servicing, LLC (“Ocwen”) - engaged in a series of “fraudulent assignments” of Medrano's mortgage loan. See, ECF No. 30 (Am. Compl.) ¶¶ 37-68, 95-97, 108, and 121. They also charged him “bogus” property inspection fees while he was in default. Id. ¶¶ 51, 54, 65-68, 95, 109, 121, and 133-34. To benefit from their alleged fraudulent assignments and assessment of fees, the Defendants refused to “properly review and approve Plaintiff for a loan modification.” Id. ¶¶ 67-70. Instead, they foreclosed on and sold Medrano's mortgaged property.

         Medrano contends that the Defendants' conduct runs afoul of both federal and state law. In particular, he alleges that the Defendants violated the Racketeer Influence and Corruption Organizations Act (“RICO”) by fraudulently assigning his loan and charging him fees; that Ocwen violated the Real Estate Settlement Procedures Act (“RESPA”) by obtaining a foreclosure judgment against him while he was being reviewed for a loan modification; and that Ocwen and Bayview discriminated against him, a Hispanic, by failing to review his application for a loan modification, thus violating the Equal Credit Opportunity Act (“ECOA”). Medrano also brings two causes of action predicated on state law.

         At bottom, the gravamen of Medrano's Complaint is that the Defendants “fraudulently procured a foreclose [sic] judgment” against him. Am. Compl. ¶¶ 65, 67. Medrano's alleged injuries stem from this foreclosure and the subsequent sale of his home pursuant to the judgment. For example, Medrano complains that he has been harmed “because he has to incur attorney fees to defend the Foreclosure, his home has been sold, and he has had the fees assessed to his account based on the Defendants['] scheme to defraud and he has loss [sic] equity in his home.” Id. ¶ 99.

         Medrano is at least correct in stating that the Defendants obtained a foreclosure judgment against him. On November 24, 2014 - more than a year before Medrano filed his current lawsuit - the Circuit Court entered a default judgment of foreclosure and sale in Medrano's case. See, ECF No. 17, Ex. A (“Foreclosure Judgment”). The court characterized its judgment as “fully dispositive of the interest of all defendants, ” including Medrano, and found that the creditors, Defendants in this case, were owed $199, 188.67. Id. ¶ 2. In accordance with the Circuit Court's order, the mortgaged property was then sold to satisfy the debt. On October 28, 2016, while the case before this Court was pending, the Circuit Court entered a final order confirming the sale and approving of the distribution of the proceeds. See, ECF No. 67, Ex. A (“Order Confirming Sale”).

         Medrano neither contested the Foreclosure Judgment nor appealed the Order Confirming Sale. Instead, he complains of the actions of the parties involved in his mortgage foreclosure by bringing this federal suit.

         II. ANALYSIS

         As discussed below, the Court questions whether it has subject matter jurisdiction over Medrano's suit given the jurisdictional limitation imposed by Rooker-Feldman. Although the Court ultimately concludes that it has jurisdiction, it finds that Medrano's federal claims are barred by res judicata as a result of the judgment rendered against him in the state foreclosure case. It therefore relinquishes jurisdiction over his state-law claims and dismisses the case in its entirety. See, Groce v. Eli Lilly & Co., 193 F.3d 496, 501 (7th Cir. 1999).

         A. Jurisdiction

         When Rooker-Feldman applies to a claim, district and federal appellate courts are divested of their power to address any issue related to that claim, including res judicata. See, Garry v. Geils, 82 F.3d 1362, 1365 (7th Cir. 1996). The Court thus first looks to see if Rooker-Feldman bars it from hearing Medrano's case.

         Simply put, Rooker-Feldman precludes lower federal courts from deciding claims that seek review of state-court judgments. See, e.g., Brown v. Bowman, 668 F.3d 437, 442 (7th Cir. 2012). As the Supreme Court said in the cases from which the doctrine derived its name, the United States Supreme Court is the only federal court that may review such judgments. See, Rooker v. Fid. Tr. Co., 263 U.S. 413, 415-16 (1923); D.C. Court of Appeals v. Feldman, 460 U.S. 462, 482 n.16 (1983). However, as the Supreme Court has also explained, Rooker-Feldman is a narrow doctrine. See, Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005). It strips lower federal courts of their jurisdiction only where “state-court losers” bring suits “complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced.” Id. Moreover, the “state-court losers” must be “inviting district court review and rejection of those [state-court] judgments” in their federal suits. Id.

         Such invitations are extended both when a plaintiff seeks to set aside a state-court judgment and when his claims are “inextricably intertwined” with that judgment. See, e.g., Brown, 668 F.3d at 442. “The determination of whether a federal claim is ‘inextricably intertwined' hinges on whether it alleges that the supposed injury was caused by the state court judgment or, alternatively, whether the federal claim alleges an independent prior injury that the state court failed to remedy.” Id. Moreover, the plaintiff must have had a reasonable opportunity to raise the issue in state-court proceedings. See, id.; Long v. Shorebank Dev. Corp.,182 F.3d 548, 557-58 (7th Cir. 1999) ...


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