UNITED STATES CO URT OF APPEALS FOR THE TENTH CIRCUIT

DAVE SHELDON; DARREN K. KEARNS, Plaintiffs-Appellants,

v. TARA KHANAL; ABU B. ATHAR; DAVID J. MELO, Esq., individually and as a firm; NETWORK MORTGAGE, INC.; SHAMS UDDIN, a/k/a Mohammed Shams Uddin, individually; WINZONE REALTY, INC.; JULIE S.C. WONG, individually; SWEENEY, GALLO, REICH & BOLZ, LLP; ROSEMARIE A. KLIE, Esq., individually; SAND CANYON CORPORATION, f/k/a Option One Mortgage Corporation; OPTION ONE MORTGAGE CORPORATION, Defendants-Appellees. No. 10-3237 (D.C. No. 2:10-CV-02412-CM-GLR) (D. Kan.)

ORDER AND JUDGMENT *

* After examining the briefs and appellate record, this pane l has determined unanimously that oral argument would not mate rially assist the de termination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctr ines of law of the case, res judicata, and collateral estoppel. It may be cite d, however, for its persuasi ve value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. FILED United States Court of Appeals Tenth Circuit 

### October 10, 2012 Elisabeth A. Shumaker Clerk of Court- 2 - Before MURPHY , HARTZ , and GORSUCH , Circuit Judges.

This is the third lawsu it spawned by the aborted sale of a house in New York owned by plaintiffs Dave Sheldon and Darren Kearns 1 (Sellers). Sellers sued Tara Khanal, the potential buyer; he r husband, Abu B. Athar; he r attorney, David J. Melo, Esq.; 2 the real estate agents, Julie S.C. Wong and Winzone Realty, Inc. (Wong); mortgage company Network Mortgage Inc. and its broker, Shams Uddin (Uddin); mortgage lender Option One Mortgage Corp.; 3 and the attorneys who represented Khanal in subsequent New York state c ourt proceedings, Rosema rie Klie, Esq. and the firm of Sweeney, Gallo, Reich & Bolz , L.L.P. (Klie). The district court dismissed on res judicata groun ds all of Sellers’ claims, except their contract claim against Melo, which the court dismissed without prejudice becau se the same claim was then pending in another fede ral court. On appeal Sellers contend that the district court erred in denying their motion to re mand the case to Kansas state court, from whence it was removed, and in dismissing th eir claims based on res judicata. We affirm the district court’s judgment in all respects excep t the merits dismissal of

1 Kearns, who is a licensed attorney, has filed the briefs on appeal both as counsel for Sheldon and as a pro se party. “While we ordinarily constr ue pro se pleadings liberally, the same courte sy need not be extended to licensed attorneys.” Mann v. Boatright , 477 F.3d 1140, 1148 n. 4 (10th Cir. 2007) (citation omitted).
2 Sellers sued Melo both “p ersonally and individually” a nd “as a firm.” Aplt. App. at 110. Except where noted, our referenc es to “Melo” include both capacities.
3 Option One has since changed its name to Sand Canyon Corp., but we will continue to refer to it by its previous name.- 3 - Sellers’ contract claim agains t Khanal. That portion of th e judgment is reversed and remanded with instructions to the district court to modify the judgment to reflect that this claim is dismissed for lack of subject-matter jurisdiction. I. Procedural History In February 2007, following her cancellati on of the real estate contract with Sellers, Khanal sued Sellers in New York state court ( Sheldon I ) to recover, among other things, the return of her $50,000 down payment. Khanal was unable to secure service on Kearns, but in September 2007 she obtained a judgment against Sheldon. See Khanal v. Sheldon , No. 2958/07, 2007 WL 2850994, at *2 (N.Y. Sup. Ct. Sept. 19, 2007). The court held that the contr act provided that the down payment would be returned to Khanal if she could not get a written mortgage co mmitment, and because she had produced a written denial from a mortgage lender (Option One), she was entitled to a return of the down payment. See id. Sheldon filed a motion to vacate the decision, and when it was denied, he appealed. Meanwhile, in March 2007, Sellers filed a diversity complain t in federal court in Kansas 4 ( Sheldon II ) naming everyone who is a defendant in this case. 5 Sellers asserted 14 claims for relief , including breach of contract , fraud, and other tortious conduct. In August 2008, wh ile motions to dismiss Selle rs’ complaint were pending,

4 Sheldon is a resident of Kansas and Kearns, who is a resi dent of Missouri, maintains an office in Kansas.
5 Sellers also sued several other parties, not involved in the pres ent action, on claims arising out of Sellers’ purchase of the property at a sheriff’s sale.- 4 - the court transferred the cas e to the United States Dist rict Court for the Eastern District of New York (the Eastern District). Following a conference in the Eastern District, all the pending motions to dism iss were withdrawn without prejudice, discovery was stayed, and the court se t a schedule for defe ndants’ responsive pleadings. Melo, Uddin, Wong, Klie, and Option One filed new motions to dismiss, and Khanal filed an answer. Thereafter the Eastern District entered an order reiterating that discovery was stayed as to all parties until th e motions to dismiss were resolved. On September 30, 2009, the Easter n District entered a lengthy order dismissing each of Sellers’ claims. See Sheldon v. Khanal , No. 08-cv-3676, 2009 WL 3233093 (E.D.N.Y. Sept. 30, 2009). The court dismissed Selle rs’ contract claim against Melo under Fed. R. Civ. P. 12(b)(1) for lack of subject- matter jurisdiction, because there was not a suffici ent amount in controversy. See id. at *6. It dismissed the remaining claims agains t Melo and all the claims against the other defendants under Rule 12(b)(6) for failure to state a claim for relief. See id. at *8-16. Although the court recognized that neither Athar nor Khanal had filed a motion to dismiss, it concluded that Sellers’ clai ms against them should still be dismissed for failure to state a claim. See id. at *8 (Athar), *19 (Khanal). Relying on the New York state court’s judgment in favor of Khanal in Sheldon I , the court alternatively dismissed Sellers’ claims against Melo, Uddin, and Klie because th ey were barred by collateral estoppel and it alternatively dismissed Seller s’ claims against Khanal because they- 5 - were barred by res judicata. See id. at *18-19. Sellers appeal ed the Eastern District’s decision to the Second Circuit. On June 8, 2010, while Sellers’ appeal was pending before the Second Circuit, a New York state appellate court reve rsed the judgment against Sheldon in Sheldon I and remanded the matter for further proceedings. See Khanal v. Sheldon , 74 A.D.3d 894, 894-96 (N.Y. App. Div. 2010). The court held that Sheldon had provided a reasonable excuse for his failure to res pond to Khanal’s summary-judgment motion and had advanced a “potentially mer itorious defense” to her claims. Id . at 896. Rather than await the outco me of their appeal to th e Second Circuit or of the remanded proceedings in New York state court, Sellers file d the current action ( Sheldon III ) on June 24, 2010, in Kansas state court. They alleged 14 claims for relief similar to those alleged in Sheldon II . On July 22 Option One filed a notice of removal to the United States District Court for the District of Kansas (the Kansas District Court), and all the defendants except Athar either joined in or consented to the removal. On July 27 Se llers filed a motion to rema nd, contending the removal was improper, and Option One filed in the Ka nsas District Court a motion to dismiss, arguing that Sellers’ claims were barred by both res ju dicata and the statute of limitations. Several w eeks later, Sellers filed in the Kansas District Court a motion to amend their complaint. On September 3, 2010, the Kansas Dist rict Court (1) denied Sellers’ motion for remand; (2) set aside the Clerk’s default entered agai nst Khanal, Melo, and Klie;- 6 - (3) granted Option One’s motion to dismis s on the basis of re s judicata; (4) sua sponte dismissed Sellers’ claims against al l the other defendants; and (5) denied as moot Sellers’ motion to ame nd the complaint. Sellers have appealed, challenging both the denial of their motion to remand and the dismissal of their claims on res judicata grounds. III. Denial of the Motion to Remand “This court has jurisdiction over a denial of a motion to remand to state court when coupled with the app eal of a final judgment.” Huffman v. Saul Holdings Ltd. P’ship , 194 F.3d 1072, 1076 (10th Cir. 1999) (internal quotation marks omitted). “[W]e review a district cour t’s determination of the propr iety of removal de novo.” Id. “[T]here are two types of improperly re moved cases: those in which the federal court has no subject matter jurisdiction and those with defects in the removal procedure itself.” Id. “A defect in subj ect matter jurisdiction can never be waived[;] . . . [a] procedural defect, however, does not involve the subject matter jurisdiction of the court and may be waived.” Id. at 1076-77. In their mo tion to remand, Sellers contended there were both ju risdictional and procedural defects in the removal. A. Alleged Jurisdictional Defect Sellers argued that the Ka nsas District Court lacked subject-matter jurisdiction over the removed action because the Eastern District had ruled in Sheldon II that Sellers’ contract claim agains t Melo did not meet the re quired amount in controversy and hence there was no federa l diversity jurisdiction over the claim. Sellers argued- 7 - that if the Kansas District Court lacked jurisdiction ove r the claim agai nst Melo, the case could not be removed to federal court. Sellers reur ge this argument on appeal. To be sure, jurisdictional ru lings can have preclusive e ffect, in that “dismissals for lack of jurisdiction preclude relitigation of the issues determined in ruling on the jurisdiction question.” Park Lane Res. L.L.C. v. U.S. Dep’t of Agric. , 378 F.3d 1132, 1136 (10th Cir. 2004) (interna l quotation marks omitted). But even if the Kansas District Court lacked jurisdiction ove r the contract claim against Melo, 6 the other claims could still be removed. The remova l statute authorizes th e removal from state court of “any civil action



### . . . of which the district courts of the United States have original jurisdiction.” 28 U.S.C. § 1441(a). “[A] di strict court has original jurisdiction of a civil action for purposes of § 1441(a) as long as it has original jurisdiction over a subset of the claims constituting the action.” Exxon Mobile Corp. v. Allapattah Services, Inc. , 545 U.S. 546, 563 (2005). Thus , even if there are claims in the action over which the Kansas District Court lacks original jurisdiction because they fall short of the required amount in controversy, the entire action can be removed to federal court under §1441(a) so long as the Kansas District Court has

6 Perhaps the Eastern Distri ct’s ruling that Sellers’ cont ract claim against Melo did not meet the required amount in controversy would have pr ecluded relitigation of that issue in Sheldon III at the time it was removed to fe deral court. But the preclusive effect of the Eastern Distri ct’s jurisdictional ruling was lost when the Second Circuit resolved the appeal from the Eastern Di strict’s judgment without affirming that ruling. See Sheldon v. Khanal , 396 F. App’x 737, 739-40 (2d Cir. 2010); 18A Charles Alan Wright, et al., Federal Practice & Procedure § 4432, at 63-64 & n.24 (2d ed.).- 8 - original jurisdiction over one claim. That the court may not have original jurisdiction over all the claims “is of no moment.” Id. at 559. There may be a question whether the federal court can exercise supplementa l jurisdiction over the other claims; but Sellers do not raise such a challenge. B. Alleged Procedural Defects Sellers also challenged the propriet y of the removal on two procedural grounds. First, they argued that removal was improper b ecause Athar did not consent to the removal. If a case is removed base d solely on federal diversity jurisdiction, “all defendants who have been properly joined and served must join in or consent to the removal of the action.” 28 U.S.C. § 1446(b)(2)(A) (emphasis added). Option One argued that Athar’s consent was not n ecessary because Athar was only a nominal party, he had not been served at the time the case was removed, and, in any event, Option One had been informed that he was dead. The Kansas District Court concluded that Athar’s cons ent to removal was not neces sary because he had not been served at the time Op tion One filed its notice of re moval. On appeal Sellers argue that Athar was not simp ly a nominal party and that the Kansas District Court should have remanded the case to state court b ecause he did not join in the removal. We reject the argument as contrary to the clear statutory language requiring only served defendants to cons ent to removal. Sellers also challenged the removal on the ground that Option One failed to include with its notice of removal the requi red copies of all the summonses served on- 9 - defendants. A defendant who wishes to remove a case from state to federal court must, within 30 days after receipt of the comp laint, file a notice of removal in federal court “together with a copy of all process, pleadings, and orders served upon such defendant . . . in such action.” 28 U.S. C. § 1446(a), (b). Option One was served with the complaint on June 28 and filed its no tice of removal on July 22. It failed to include copies of the summonses with its notice of removal. 7 But immediately after Sellers raised th e defect in their motion to remand on July 27, Option One filed in the Kansas District Court c opies of all the state-court pleadings, including the summonses. In its response to Sellers’ motion to remand, Option One argued that its July 27 filing cured the original defect. Sellers’ reply did not address the sufficiency of Option One’s attempt to cu re the defect; it simply reiterated their argument that the failure to include the summonses with the notice of removal necessitated a remand. The Kansas District Court conc luded that no remand was warranted because Option One had filed all the necessary state-court pleadings, including the summonses that Selle rs contended were missing. Sellers renew on appeal th eir argument that the omi ssion of the summonses in the notice of removal required a remand. We reject the argument. A removing defendant’s failure to att ach to its notice of remova l the required state-court documents--in particular, a summ ons--is a procedural defect th at can be cured, either

7 Although the parties failed to include a copy of the notice of removal in their appendices, we may take judici al notice of it as well.- 10 - before or after the 30- day removal period. See Countryman v. Farmers Ins. Exchg. , 639 F.3d 1270, 1273 (10th Ci r. 2011) (per curiam). For the first time on appeal, Seller s argue that Option One’s cure was insufficient to avoid a remand and that Me lo did not properly join in the removal petition. We need not address these bela ted arguments. Nonjur isdictional defects must be raised within 30 da ys after the filing of the no tice of removal or they are waived. See 28 U.S.C § 1447(c); Huffman , 194 F.3d at 1077; 14C Charles Alan Wright, et al., Federal Practice & Procedure § 3739 (4th ed.) (“After the expiration of the 30-day period following the filing of th e removal notice, the right to object to nonjurisdictional defects in the removal process is consid ered waived.”) (collecting cases). Moreover, there are no unusual circumstances here that would lead us to depart from our general rule that we will not consider an argument that was not raised in the district court. See United States v. Jarvis , 499 F.3d 1196, 1202 (10th Cir. 2007) (thi s court will consider an argument not raised in di strict court only in “the most unusual circumstances” (internal quotation marks omitted)). III. Dismissal of Claims on Res Judicata Grounds We review de novo the district court’s conclusions of law on the applicability of res judicata. Nwosun v. Gen. Mills Restaurants, Inc. , 124 F.3d 1255, 1257 (10th Cir. 1997). “[F]eder al common law governs the cl aim-preclusive effect of a dismissal by a federal cour t sitting in diversity.” Semtek Int’l Inc. v. Lockheed Martin Corp. , 531 U.S. 497, 508 (2001). Under fede ral law the preclusive effect of a- 11 - federal diversity cour t’s judgment usually should be de termined by applying “the law that would be applied by the state courts in the State in which the federal diversity court sits.” Id . In this case, that is the law of New York, wh ere the Eastern District sits. “In New York, res judicata, or claim preclusion, bars successive litigation based upon the same transaction or series of connected transactions if: (i) there is a judgment on the merits rendered by a court of competent jurisdiction, and (ii) the party against whom the doctrin e is invoked was a party to th e previous action, or in privity with a party who was.” People ex rel. Spitzer v. Applied Card Sys., Inc. , 894 N.E.2d 1, 12 (N.Y. 2008) (citations omit ted) (internal quotati on marks omitted)). Sellers made several argum ents in the Kansas Distri ct Court why res judicata should not bar their claims, and they repeat those arguments on appeal. First, Sellers argue that res judicata should not apply because, after the Ea stern District issued its decision in Sheldon II , the New York state appellate court set aside Khanal’s judgment against Sheldon in Sheldon I . But in ruling that Sell ers’ claims were barred by res judicata, the Kansas District Court did not rely on either the New York state trial court’s original ruling in Sheldon I or on the Eastern Dist rict’s alternate-ground dismissal in Sheldon II . Rather, the Kansas Distri ct Court relied on the Eastern District’s determination that Sellers failed to state a ny claims for relief, 8 which was

8 As mentioned earlier, the Eastern District did not dismiss the co ntract claim against Melo in Sheldon II on the ground that it failed to state a claim fo r relief, and the (continued)- 12 - not affected by the New York state court’ s subsequent reversal of the original judgment in Sheldon I

. We do note, however, that while the pr esent appeal has been pending, the Second Circuit reversed the Eastern District ’s dismissal of Selle rs’ contract claim against Khanal and remanded that claim for further proceedings. Sheldon v. Khanal , 396 F. App’x 737, 740 (2d Cir. 2010). Cons equently, the res judicata effect of the Eastern District’s initial dismissa l of that claim no longer exists. See, e.g., Sage Realty Corp. v. Proskauer Rose LLP , 251 A.D.2d 35, 39 (N.Y. App. Div. 1998) (once court’s decision is reversed, it has no preclusive effect). Ordinarily, this would lead us to reverse the Kansas District Court’s dismissal of the contract claim agains t Khanal and remand the matter to the Kansas District Court for further proceedings. But after the Second Circuit remanded the contract claim against Khanal to the Eastern District, the Easter n District concluded that the claim did not meet the required amount in c ontroversy and dismissed it for lack of subject-matter jurisdiction. Sheldon v. Khanal , No. 08-cv-3676, 2011 WL 3876970, at *9-10 (E.D.N.Y. Aug. 31, 2011). Se llers did not appeal that decision.

Kansas District Court did not dismiss the like claim in Sheldon III on res judicata grounds. Rather, the Kansas District C ourt dismissed the claim without prejudice on the ground that the Eastern District’s decision was then pending before the Second Circuit, which might conclude the East ern District did have subject-matter jurisdiction over the claim a nd remand it for further pr oceedings. Sellers do not challenge the dismissal of th eir contract claim against Me lo by the Kansas District Court. Our discussion is therefore limite d solely to the dismissal of Sellers’ other claims on res judicata grounds.- 13 - Under the doctrine of collateral est oppel, a party may not relitigate a jurisdictional issue that was decided against it in prior proceedings. See DirecTV Latin Am., LLC v. Pratola , 94 A.D.3d 628, 628-29 (N.Y. App. Div.), leave to appeal denied , ___ N.E.2d ___, No. 20 12-599, 2012 WL 401746 4 (N.Y. Sept. 13, 2012); Keeler v. W. Mtn. Corp ., 105 A.D.2d 953, 954-55 (N.Y. App. Div. 1984); see also Park Lane Res. L.L.C. v. U.S. Dep’t of Agric. , 378 F.3d 1132, 1136 (10th Cir. 2004) (“[D]ismissals for lack of jurisdiction preclude relitigati on of the issues determined in ruling on the jurisdictional question.” (internal quotation marks omitted)). Accordingly, if we were to reverse the Kansas District Cour t’s dismissal of the contract claim against Khanal and remand it to the Kansas District Court for further proceedings, the Kansas Distri ct Court would have to dism iss the claim for lack of jurisdiction. Rather than remand for further proceed ings, we will simply remand with directions to the Kansas District Court to modify it s judgment to re flect that the contract claim against Khanal is dismissed for lack of subject-matter jurisdiction. Sellers also argue that the claims s hould not be barred by res judicata because the complaint they filed in Sheldon III “has substantive diffe rences from the prior Amended Complaint that was dismissed” by the Eastern District. Aplt. Opening Br. at 21 22. Sellers do not, however, explai n what the substan tive differences are- 14 - between the two complaints 9 nor how those differences would avoid the bar of res judicata. Res judicata “applie s not only to claims actually lit igated but also to claims that could have been raised in the prior litigation.” In re Hunter , 827 N.E.2d 269, 274 (N.Y. 2005). Our review of the complain t filed in this action does not reveal any new claims that Sellers c ould not have raised in Sheldon II

. In addition, Sellers argued in the Ka nsas District Cour t and now argue on appeal that res judicata should not apply b ecause they were not given a full and fair opportunity to litigate their clai ms in the Eastern District. “The rationale underlying [the] principle [of res judicat a] is that a party who has been given a full and fair opportunity to litigate a cl aim should not be allowed to do so again.” Id .; see also Kremer v. Chem. Constr. Corp. , 456 U.S. 461, 480-81 & n.22 (1982) (res judicata does not apply if the party ag ainst whom it is asserted did not have a full and fair opportunity to litigate its clai ms in the earlier proceeding; the “[r]edetermination of issues is warranted if there is reason to doubt the quality, ex tensiveness, or fairness of procedures followed in prior litigation” (i nternal quotation marks omitted)). “[T]he question as to whether a party had a full and fair opportunity to litigate a prior determination, involves a pr actical inquiry into the re alities of litigation.” Gilberg v. Barbieri , 423 N.E.2d 807, 809 (N.Y. 1981) (i nternal quotation marks omitted).

9 In the Kansas District C ourt, Sellers argued that the tw o complaints were different because the current complaint “h as more specificity as to wh at actually transpired in the case.” Aplt. App. at 179.- 15 - Sellers contend that they were denied a full and fair opportunity to litigate their claims in the Eastern District because they were denied discovery before the court ruled on the motions to dismiss. Bu t discovery is not n ecessary to resolve a motion to dismiss for failure to state a claim for relief; “[t]he court’s function on a Rule 12(b)(6) motion is not to weigh potentia l evidence that the pa rties might present at trial, but to assess whethe r the plaintiff’s . . . complain t alone is legally sufficient to state a claim for which relief may be granted,” Peterson v. Grisham , 594 F.3d 723, 727 (10th Cir. 2010) (inter nal quotation marks omitted) . One purpose of requiring that a complaint state a plausi ble claim for relief is “to avoid ginning up the costly machinery associated with our civil discovery regime on the basis of a largely groundless claim.” Kan. Penn Gaming, LLC v. Collins , 656 F.3d 1210, 1215 (10th Cir. 2011) (interna l quotation marks omitted). The Eastern District a ppropriately limited discovery to preserve judicial resources while the motions to dismiss were pending, and the Sellers have not shown that this limitation was unfair. If Sellers thought the East ern District had abused its discretion by limiting discovery, the appropri ate forum for them to challenge that limitation was in the Second Circ uit. Sellers have not show n that they were denied the opportunity to litigate th eir claims fully and fairly in the Eastern District. IV. Other Requests for Relief Sellers also argue on appeal that the evidence they obtained through discovery in Sheldon I following the remand from the New Yo rk state appellate court would- 16 - justify relief under Fed. R. Civ. P. 60(b). Sellers request that this court grant them Rule 60(b) relief and “allow plaintiffs to ha ve a trial on the merits against all parties and all claims.” Aplt. Opening Br. at 25; see also id. at 26 (“[P]laintiffs request that the Court of Appeals separately employ Ru le 60 to vacate any portion of the ruling that is based upon Res Judicata.”). The simp le answer to this request is that the Federal Rules of Civil Procedure apply to th e district courts, not to the courts of appeals. See Cooter & Gell v. Hartmarx Corp. , 496 U.S. 384, 406 (1990); Fed. R. Civ. P. 1 (“These rules govern the procedur e in all civil actions and proceedings in the United States district courts . . . .” (emphasis added)). Finally, Sellers contend, in a single sentence of their opening brief, that “[s]everal of the defendants are in default and therefore the Clerk’s default should be reinstated against same.” Aplt. Opening Br. at 27. Th is statement, which does not advance any reasoned argument as grounds fo r appeal, is insufficient to invoke appellate review. See Reedy v. Werholtz , 660 F.3d 1270, 1274 (10th Cir. 2011).- 17 - V. Conclusion The judgment of the Kansas District Court is affirmed in part, reversed in part, and remanded with instructions to the Kans as District Court to modify its judgment to dismiss Sellers’ contract claim against defendant Ta ra Khanal for lack of subject-matter jurisdiction.

Entered for the Court

Harris L Hartz Circuit Judge