United States District Court, E.D. Virginia, Alexandria Division
BRUCE J. SOLOWAY, et al., Plaintiffs,
FEDERAL HOME LOAN MORTGAGE CORPORATION, et al., Defendants.
M. HILTON UNITED STATES DISTRICT JUDGE.
MATTER comes before the Court on a Motion to Dismiss filed by
Defendants Federal Home Loan Mortgage Corporation
("FHLMC") and Federal Home Loan Mortgage
Corporation Board of Directors ("Board of
Directors") (collectively, "Freddie Mac"), and
on a Motion to Dismiss filed by Defendant Federal Housing
Financial Agency PFHFA"). FHFA is the Conservator of
Freddie Mac and has regulatory and oversight authority over
Freddie Mac. Upon consideration of the memoranda filed in
support of and in opposition to the motions, the Court
concludes that Plaintiffs' claims are barred by res
judicata, and their Amended Complaint must be dismissed.
matter arises from property once owned by the Plaintiffs,
Bruce J. Soloway and his wife, Lori A. Bloink
("Plaintiffs"), and subsequent foreclosure
proceedings. On December 24, 2007, Plaintiffs executed a
promissory note in order to obtain a loan in the amount of
$165, 000. On the same day, Plaintiffs executed a mortgage,
which encumbered real property located at 7533 Lund Road, SW,
Fife Lake, Michigan. In August 2011, the mortgage was
assigned to The Huntington National Bank, the servicer for
defaulted on their obligations set forth in the note and
mortgage, and non-judicial proceedings ensued. In April 2014,
Plaintiffs filed a complaint in the Forty-Sixth Circuit Court
of Kalkaska, Michigan ("the Kalkaska Court"),
naming Freddie Mac as a defendant. The complaint set forth
causes of action for quiet title and slander of title
relating to the initiation of a non-judicial foreclosure by
Huntington National Bank. Freddie Mac and the other
defendants moved for summary disposition. In response,
Plaintiffs voluntarily dismissed their claims for slander of
title. On January 27, 2015, the Kalkaska Court dismissed
Plaintiffs' remaining quiet title claim with prejudice,
and it imposed sanctions for filing a frivolous complaint.
Plaintiffs unsuccessfully moved for reconsideration and
initiated an appeal. The Kalkaska Court dismissed the appeal
for want of prosecution on December 2, 2015. As a result of
the Plaintiffs' default, Freddie Mac purchased the
Plaintiffs' property at a foreclosure sale in March 2015.
appearing pro se, filed a complaint in this Court on
March 6, 2017. After the Defendants moved to dismiss the
complaint, Plaintiffs filed an Amended Complaint on May 15,
2017. The Amended Complaint appears to center on the
foreclosure proceedings Plaintiffs challenged before the
Kalkaska Court, and it seeks damages for unjust enrichment,
negligence, and fraud. Plaintiffs also allege a violation of
their due process rights. Defendants now move to dismiss the
Amended Complaint. Because Plaintiff's complaint presents
claims that have previously been litigated in a different
forum, Plaintiff's claims are barred by res judicata.
Federal Rule of Civil Procedure 12(b)(6), a defendant may
move to dismiss a complaint for failure to state a claim upon
which relief can be granted. To survive a motion to dismiss,
a complaint must contain "sufficient factual matter,
accepted as true, to state a claim to relief that is
plausible on its face." Ashcroft v. Igbal, 556
U.S. 662, 678 (2009). District courts must give pro
se plaintiffs "the benefit of a liberally
construed complaint." Neild v. Wolpoff &
Abramson, L.L.P., 453 F.Supp.2d 918, 920 (E.D. Va.
2006) (quoting Beaudett v. City of Hampton, 775 F.2d
1274, 1278 (4th Cir.1984) .
claims are barred by the doctrine of res judicata, because
they have been previously litigated in another forum. Under
res judicata, "a prior judgment between the same parties
can preclude subsequent litigation on those matters actually
and necessarily resolved in the first adjudication."
Covert v. LVNV Funding, LLC, 779 F.3d 242, 246 (4th
Cir. 2015). In order for res judicata to bar an action, the
moving party must establish that: (1) the prior judgment was
final and on the merits; (2) the parties are identical, or in
privity, in both actions; and (3) the claims in the
subsequent action are based upon the same cause of action as
in the prior matter. Id. Claims are based on the
same cause of action when they arise out of the same
transaction or series of transactions as the claim resolved
by the prior judgment. Modderno v. Ocwen Loan
Servicing, LLC, No. 1:17-cv-77, 2017 WL 1234287, at
M (E.D. Va. Apr. 4, 2017) (citing Pittston Co. v. United
States, 199 F.3d 694, 704 (4th Cir. 1999)). All three
requirements are met here.
Plaintiffs' claims have been, or could have been,
previously decided by a final judgment on the merits.
Plaintiffs filed suit in the Kalkaska Court seeking to quiet
title, to obtain damages for slander of title, and to
challenge an assignment. After considering the merits of
Plaintiffs' claims, on January 27, 2015, the Kalkaska
Court granted a motion for summary disposition in favor of
the defendants and dismissed Plaintiffs' complaint.
Specifically, the court found that the mortgage on
Plaintiffs' property had not been erased by a prior
bankruptcy proceeding, that a claim of interest did not grant
title or remove the mortgage, and that Plaintiffs did not
have standing to challenge the assignment. The court further
found that the slander of title claim was devoid of legal
merit and that sanctions should be imposed. As a result, the
first element of res judicata is satisfied.
the parties are identical or in privity in both actions.
FHLMC was a party in the proceedings in the Kalkaska court,
as well as a defendant in the instant action. Although the
Board of Directors was not named in the Kalkaska Court case,
it is in privity with FHLMC because the Board of Directors is
part of the same corporation, and thus, its interest is so
identical with FHMLC that "representation by one party
is representation of the other's legal right." See
State Water Control Bd. v. Smithfield Foods, Inc.,
542 S.E.2d 766, 769 (Va. 2001). Similarly, although FHFA was
not a party in the Kalkaska Court case, as Conservator of
Freddie Mac, FHFA succeeds to all rights, titles, powers, and
privileges of Freddie Mac. See 12 U.S.C. §
4617(b)(2)(A). When the Kalkaska Court judgment became final
as to Freddie Mac, FHFA automatically succeeded to that
interest. As a result, the second element of res judicata is
the claims in this matter are based on the same claims from
the prior Kalkaska Court action. In the Kalkaska Court case,
Plaintiffs sought to quiet title, asked for damages for
slander of title, challenged an assignment. In the instant
case, Plaintiffs appear to challenge the Defendants'
authority to foreclose on their property. Although the claims
are not identical, the claims in this action are based upon
the same cause of action as in the previous matter that is, a
challenge to the foreclosure a challenge to Freddie Mac's
interest in the Plaintiffs' property. As a result, the
third element of res judicata is satisfied. Because all
elements are met, res judicata bars Plaintiffs' claims in
Plaintiffs' claims are barred by res judicata, all claims
against the Defendants must be dismissed. Furthermore, the
Court is of the opinion that allowing Plaintiffs to amend
their complaint for a ...