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Challenger v. U.S. Bank

March 13, 2009


The opinion of the court was delivered by: Joel A. Pisano United States District Judge


Currently before the Court are motions to dismiss Plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) by U.S. Bank, Mortgage Electronic Registration Systems Inc. ("MERS"), and Intercounty Mortgage Network Corporation ("IMNC"), (collectively, "Defendants"). Also before the Court is a motion by pro se plaintiff, Christina Challenger, for a temporary injunction to stop foreclosure proceedings with respect to a mortgage loan she obtained from IMNC in 2003. Final judgment was entered in the state court foreclosure action on March 22, 2007, and a sheriff's sale of the property is presently scheduled for March 31, 2009. The Court decides these motions without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons set forth below, Defendants' motions to dismiss are granted, and Plaintiff's motion for injunctive relief is denied.


On May 23, 2003, Plaintiff*fn1 executed and delivered to MERS (as nominee for IMNC) a Mortgage on her property located at 1128 Ruby Drive, Toms River, New Jersey. Compl. ¶ 11, Certification of Edward Kirn ("Kirn Cert."), Ex. D at 34.*fn2 The Mortgage secured a Note in the amount of $206,045. Id. at 31. It appears that the Note and the Mortgage were at some point subsequently assigned to U.S. Bank.

On September 14, 2005, MERS initiated foreclosure proceedings in the Superior Court of New Jersey alleging that the Plaintiff had defaulted on the Note. Kirn Cert. at ¶ 2, Ex. A. Plaintiff, through counsel, filed an answer contesting the foreclosure on or about October 21, 2005. Id., Ex. B. Plaintiff's answer included four separate defenses to foreclosure: (1) MERS breached the terms of a loss mitigation settlement entered into with the foreclosure defendants; (2) MERS engaged in bad faith and "lacked fair dealing" in failing to provide certain documents to defendants that were "required for loss mitigation"; (3) unclean hands; and (4) MERS failed to comply with applicable federal servicing regulations and/or acted in bad faith with respect to those regulations. Id.

Shortly thereafter, on October 31, 2005, MERS filed a motion in the foreclosure action for summary judgment seeking to strike Plaintiff's contesting answer. Plaintiff opposed the motion. Id. ¶ 5, 6. The judge denied MERS's motion and conducted a trial on all issues raised in the foreclosure action. Id. ¶ 8,9. Following the trial, on September 18, 2006, an order was entered striking Plaintiff's contesting answer. Id., Ex. G. Final judgment of foreclosure was entered on March 22, 2007. Id., Ex.

On June 29, 2007, Plaintiff filed a Chapter 13 bankruptcy petition, Case No. 07-19213, which stayed further action on the foreclosure proceedings. In the course of the bankruptcy action, U.S. Bank Home Mortgage filed a proof of claim with respect to the Note to which Plaintiff objected. The bankruptcy court overruled Plaintiff's objection and allowed the claim. On November 9, 2007, the bank moved for relief from the automatic stay to allow the foreclosure proceedings to continue, and the bankruptcy court granted that motion on January 9, 2008.

Plaintiff filed her complaint in this action on March 27, 2008. The complaint alleges that Defendants violated the Truth in Lending Act, 15 U.S.C. § 1601 et seq. ("TILA"), Truth in Lending Act Regulations, Regulation Z, 12 C.F.R. § 226.1 et seq., the Real Estate Settlement Procedures Act ("RESPA"), 15 U.S.C. § 2601, et seq., the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691 et seq. and Article 9 of the Uniform Commercial Code by failing to make various disclosures and provide certain documentation to Plaintiff in connection with the mortgage transaction. By way of relief, Plaintiff seeks rescission of the transaction, an order enjoining Defendants from undertaking any foreclosure proceedings, the return of all monies Plaintiff paid to Defendants, and damages.


Defendants have moved to dismiss Plaintiff's complaint alleging that Plaintiff has failed to state a claim upon which relief can be granted. They assert two grounds in support of their motion. First, Defendants argue that the theory of res judicata bars Plaintiff's claims because the claims were or could have been litigated in the state court action. Second, Defendants assert that Plaintiff's right to rescind for violations of TILA and RESPA expired on May 23, 2006, three years after the date of the transaction at issue.

As a threshold matter, however, the Court has an obligation to satisfy itself that it has subject matter jurisdiction in this case. Federal courts have an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party. Arbaugh v. Y & H Corp., 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed. 2d 1097 (2006). In this regard, the Court finds that it is barred by the Rooker-Feldman doctrine from exercising subject matter jurisdiction over the majority of the issues in this case. See D.C. Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983); Rooker v. Fid. Trust Co., 263 U.S. 413, 416, 44 S.Ct. 149, 68 L.Ed. 362 (1923).

The Rooker-Feldman doctrine deprives a federal district court of jurisdiction to review, directly or indirectly, a state court adjudication. Only the United States Supreme Court has such jurisdiction. 28 U.S.C. § 1257. As noted by the Third Circuit Court of Appeals:

The Rooker-Feldman doctrine arises from 28 U.S.C. § 1257 which states in relevant part that "final judgments or decrees rendered by the highest court of a state in which a decision could be had, may be reviewed by the Supreme Court." Since Congress has never conferred a similar power of review on the United States District Courts, the Supreme Court has inferred that Congress did not intend to empower District Courts to review state court decisions. . . .

The Rooker-Feldman doctrine prohibits District Courts from adjudicating actions in which the relief requested requires determining whether the state court's decision is wrong or voiding the state court's ruling. Although ยง 1257 refers to orders and decrees of the highest state court, the ...

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