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Dibble v. Wells Fargo Bank, National Association

United States District Court, D. New Mexico

December 27, 2016

PHILLIP W. DIBBLE and PATTY JO DIBBLE, Plaintiff,
v.
WELLS FARGO BANK, NATIONAL ASSOCIATION, Defendant.

          Phillip W. Dibble Patty Jo Dibble Los Lunas, New Mexico Plaintiffs pro se.

          Allison Louise Gambill Snell & Wilmer LLP Denver, Colorado and Sandra A. Brown Snell & Wilmer LLP Phoenix, Arizona Attorneys for the Defendant.

          MEMORANDUM OPINION AND ORDER ADOPTING THE CHIEF MAGISTRATE JUDGE'S PROPOSED FINDINGS AND RECOMMENDED DISPOSITION

         THIS MATTER comes before the Court on: (i) the Chief Magistrate Judge's Proposed Findings and Recommended Disposition on Defendant's Motion to Dismiss, filed on August 29, 2016 (Doc. 19)(“PFRD on Motion to Dismiss”); and (ii) the Plaintiff's Objection to the Proposed Findings and Recommended Disposition on Defendant's Motion to Dismiss, filed August 29, 2016 (Doc. 20)(“Objections”). On December 28, 2016, the Court referred the case, pursuant to 28 U.S.C. § 636(b), to the Honorable Karen B. Molzen, Chief Magistrate Judge for the United States District Court for the District of New Mexico, for a report and recommendation. She issued the PFRD on Motion to Dismiss on December 19, 2016, recommending that the Court dismiss the Plaintiffs' claims for declaratory and injunctive relief for lack of subject-matter jurisdiction and that the Court dismiss their claims for damages under the Truth-in-Lending Act, 15 U.S.C. 1601-1667f (“TILA”), with prejudice for failure to state a claim.

         Plaintiffs Phillip W. Dibble and Patty Jo Dibble filed a Complaint for Declaratory Judgment and for Restitution, on December 28, 2015. See Complaint for Declaratory Judgment and for Restitution, filed December 28, 2015 (Doc. 1)(“Complaint”). Therein, the Dibbles seek a “declaratory judgment that [their] Mortgage . . . is terminated, released, void, and invalid.” Complaint ¶ 21, at 4. Additionally, they request “an emergency stay of all actions made or to be made by the Thirteenth Judicial District Court . . . in case no. D-1314-CV-2011-1059.” Complaint ¶ 27, at 5. The referenced state court action is a foreclosure action that Defendant Wells Fargo Bank, National Association, filed in 2011 against the Dibbles in state district court. Just as Chief Magistrate Judge Molzen took judicial notice of the Thirteenth Judicial District Court, County of Valencia, State of New Mexico's records in the underlying foreclosure action in her PFRD on Motion to Dismiss, the Court does the same on de novo review. See St. Louis Baptist Temple, Inc. v. Fed. Deposit Ins. Corp., 605 F.2d 1169, 1172 (10th Cir. 1979)(reasoning that federal courts may take notice of proceedings in other courts when they have a direct relation to the matters before the court).

         Considering the Defendant's Motion to Dismiss, filed February 1, 2016 (Doc. 11), and the Plaintiffs' Motion to Strike Defendant's Motion to Dismiss, filed February 11, 2016 (Doc. 13), which she construed as a response to the Motion to Dismiss, Chief Magistrate Judge Molzen concluded, first, that the Rooker-Feldman doctrine[1] applies to certain of the Dibbles' claims, because the determination they seek -- that is, that their mortgage is terminated or void after TILA rescission -- would necessarily disturb the state-court judgment of foreclosure. See PFRD on Motion to Dismiss at 8. Accordingly, she recommended dismissal of the Dibbles' claims for declaratory judgment and for a stay of the state courts' actions for lack of subject-matter jurisdiction. See PFRD on Motion to Dismiss at 9.

         Second, with respect to the Dibbles' claim for damages, Chief Magistrate Judge Molzen concluded that, even viewing the Complaint's allegations in the light most favorable to the Dibbles, they were never entitled to a TILA right of rescission and that they therefore fail to state a plausible claim for damages under 15 U.S.C. § 1640(a). See PFRD on Motion to Dismiss at 9-10. Chief Magistrate Judge Molzen noted that 15 U.S.C. § 1635(e) exempts residential mortgage transactions from the right of rescission when the mortgage is obtained to acquire the property, see 15 U.S.C. §§1635(e) and 1602(x), and explained that the Dibbles have made no allegation that their mortgage was obtained for some reason other than to acquire the property, see PFRD on Motion to Dismiss at 10. Further, she explained that a § 1635(a) right of rescission expires after three years and, thus, any right to rescission expired well before the Dibbles tried to exercise such a right. See PFRD on Motion to Dismiss at 10 (explaining that the Dibbles' mortgage was dated July 6, 2007, but that their notice of rescission was sent on September 22, 2015, more than eight years later).

         The Dibbles do not directly address Chief Magistrate Judge Molzen's application of the Rooker-Feldman doctrine to certain of their claims. In her PFRD on the Dibbles' motion for a temporary restraining order, Chief Magistrate Judge Molzen recommended that the Court not grant the TRO because of the Younger[2] abstention doctrine and the Rooker-Feldman doctrine. When the Court looked at the motion for the TRO, it saw continuing state activity, and thought that probably Younger -- not Rooker-Feldman would be the relevant standard for the motion. On clearer examination of the state docket, the Court thinks its initial judgment about what abstention doctrine applied -- on the matter of the TRO -- was wrong. It now thinks that the Rooker-Feldman doctrine -- not Younger -- bars the Dibbles' claim, because Younger requires ongoing state proceedings but Rooker-Feldman requires completed state action. Compare 4 Am. Jur. 2d Appellate Review § 10, with 32A Am. Jur. 2d Federal Courts § 1082. The Court previously reasoned that the doctrine was not implicated in this case. See Memorandum Opinion and Order Adopting the Chief Magistrate Judge's Proposed Findings and Recommended Disposition 5, filed September 12, 2016 (Doc. 21)(“MOO”). In their response to the Dibbles' objections, filed after the Court's determination that the doctrine was inapplicable, Wells Fargo reasserts its previous position that “Rooker-Feldman applies.” Wells Fargo Bank, N.A.'s Response to Plaintiffs' Objection to the Proposed Findings and Recommended Disposition on Defendant's Motion to Dismiss at 2, filed September 15, 2016 (Doc. 22).

         In its MOO, the Court concluded that the Rooker-Feldman doctrine was not implicated, because state court proceedings were ongoing. See MOO at 4 n.3. As noted in that opinion, the United States Court of Appeals for the Tenth Circuit has clarified that “the Rooker-Feldman doctrine only applies to cases brought ‘after the state proceedings have ended.'” Guttman v. Khalsa, 446 F.3d at 1031-32 (holding that state court proceedings had not ended and that the Rooker-Feldman doctrine did not apply, where the plaintiff had petitioned for certiorari to the Supreme Court of New Mexico, but the appellate court had not yet acted before the plaintiff filed his federal action). In making this clarification, the Tenth Circuit identified a case from the United States Court of Appeals for the First Circuit that “helpfully explained the situations where a judgment would be considered final for Rooker-Feldman purposes.” Guttman v. Khalsa, 446 F.3d at 1032 n.2 (referencing Federacion de Maestros de Puerto Rico v. Junta de Relaciones del Trabajo de Puerto Rico, 410 F.3d 17, 24 (1st Cir. 2005)).

         In Federacion de Maestros de Puerto Rico, the First Circuit held that state proceedings have “ended” for purposes of the Rooker-Feldman doctrine in three situations: (i) when the highest state court in which review is available has affirmed the judgment below and nothing is left to be resolved; (ii) the state action has reached a point where neither party seeks further action; or (iii) the state court proceedings have finally resolved all the federal questions in the litigation, but state law or purely factual questions remain. See 410 F.3d at 24-25. With respect to the third situation, the First Circuit explained that “Rooker-Feldman applies where the state proceeding has ended with respect to the issues that the federal plaintiff seeks to have reviewed in federal court, even if other matters remain to be litigated.” Federacion de Maestros de Puerto Rico at 26.

         The Dibbles appealed a denial of their motion to vacate the foreclosure judgment to the Court of Appeals of New Mexico, which issued a summary affirmance of the lower court's judgment. See Wells Fargo Bank, N.A. v. Dibble, No. 34, 244 (N.M. Ct. App. May 28, 2015). There is no indication on the Court of Appeals of New Mexico's docket that the Dibbles petitioned for a writ of certiorari with the Supreme Court of New Mexico; nor have the Dibbles alleged that they sought a writ of certiorari. Following the mandate from the Court of Appeals of New Mexico, the Dibbles filed a post-judgment Emergency Motion to Vacate Writ of Assistance, Sale and Declare Judgment Void, which the state court also resolved in Wells Fargo's favor before the commencement of this federal action. See Wells Fargo Bank, N.A. v. Patty J. Dibble, Thirteenth Judicial District, State of New Mexico, D-1314-CV-201101059. That the Dibbles lost in state court is not in dispute; that loss is why they attempted to mount a collateral attack in federal court days later.

         Nevertheless, the state district court issued a writ of assistance on January 5, 2016, following the Dibbles' filing of the current federal action. This state court action complicated application of the Rooker-Feldman doctrine. A writ of assistance is “[a] writ to enforce a court's decree transferring real property, the title of which has been previously adjudicated.” Writ of assistance, Black's Law Dictionary (10 ed. 2014), http://thelawdictionary.org/writ-of-assistance/ (last visited December 27, 2016). The issuance of the writ was the singular action that the state court took in the foreclosure case following the commencement of this federal action. According to the Dibbles, the state court already had “purposed to immediately issue a writ of assistance” at the time they filed their Complaint. Complaint ¶ 26, at 5. Under the circumstance, the Court concludes that the formal issuance of the writ of assistance was essentially a ministerial act[3] by the state court to enforce its previous adjudication of the foreclosure action's merits.

         The Tenth Circuit's rationale in Mann v. Boatright, 477 F.3d 1140 (10th Cir. 2007), although not directly on point, provides some support for applying the Rooker-Feldman doctrine despite ongoing activity in the underlying state court case. There, the plaintiff filed a federal suit seeking to enjoin various orders that a state probate court issued, most importantly those appointing a guardian and conservator for her father. See 477 F.3d at 1145. The Tenth Circuit determined that the state probate proceedings became final for Rooker-Feldman purposes at the time that the state court granted petitions for guardianship and conservatorship, even though there would be ongoing activity in the state probate case, including, for instance, administrative filings. See 477 F.3d at 1146. In reaching this determination, the Tenth Circuit considered what constituted a final judgment of a state probate court under Colorado law, noting that the rules of finality were the same as those that governed other kinds of civil cases. See 477 F.3d at 1146-47.

         This holding was not idiosyncratic; the Tenth Circuit repeatedly has held that the Rooker-Feldman doctrine applies when purely administrative or ministerial tasks ensue from a state-court judgment. For example, in Panos v. Supreme Court of Utah, 198 Fed.App'x 692 (10th Cir. 2006), in an opinion that then-Chief Judge Tacha wrote and Judges O'Brien and McConnell joined, the Tenth Circuit considered a § 1983 civil rights complaint against the Supreme Court of Utah, in which Panos, appearing pro se, asked the federal district court for declaratory and injunctive relief when a state court cited him with contempt of court and attempted to enforce the contempt order. See Panos v. Supreme Court of Utah, 2005 WL 3455112 (D. Utah 2005). The United States District Court for the District of Utah dismissed Panos' complaint for lack of subject-matter jurisdiction under Rooker-Feldman. See 2005 WL 3455112, at *4. Panos appealed to the Tenth Circuit, arguing that Rooker-Feldman was inapplicable, because a contempt citation is an administrative act and not a judicial act. See Panos v. Supreme Court of Utah, 198 Fed.App'x 692 (10th Cir. 2006). The Tenth Circuit disagreed, affirming the federal district court's reasoning behind application of the Rooker-Feldman doctrine. See Panos v. Supreme Court of Utah, 198 Fed.App'x at 692.

         Under New Mexico law, there generally are two final, appealable orders in foreclosure actions: the foreclosure decree and an order confirming the sale. See Speckner v. Riebold, 1974-NMSC-029, 523 P.2d 10 (1974). It is the foreclosure decree that “operates to foreclose the mortgage [and] declares the rights of the parties in the mortgaged premises.” Speckner v. Riebold ¶ 2, 523 P.2d at 12. In Bank of America, N.A. v. Lipper, No. 32, 469 (N.M. Ct. App. May 16, 2013)(unpublished), an opinion addressing the appeal of a writ of assistance, the Court of Appeals of New Mexico reasoned that a defendant subject to foreclosure who failed to appeal either the foreclosure decree or the subsequent order confirming the sale had “waived any arguments with respect to the merits of the underlying foreclosure and judicial sale.” Bank of America, N.A. v. ...


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