Court Opinion

ID: 2790977
Source: CourtListenerOpinion
Date Created: 2015-04-02 15:01:00.963444+00
Date Added: 2024-06-11T11:10:51.198382
License: Public Domain

Case: 14-12713   Date Filed: 04/02/2015   Page: 1 of 7

                                                     [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT

                        ____________________

                            No. 14-12713
                        Non-Argument Calendar
                        ____________________

                  D.C. Docket No. l:13-cv-00620-CG-N

JOHN H. MCCULLEY,
LINDA K. MCCULLEY,

                                                          Plaintiffs-Appellants,

                                  versus
BANK OF AMERICA, N.A.,
MORRIS K. SIROTE,
JAMES L. PERMUTT,
ANDY SAAG,
SIROTE & PERMUTT PC,
                                                        Defendants-Appellees.
                       ______________________

               Appeal from the United States District Court
                  for the Southern District of Alabama
                        _____________________

                             (April 2, 2015)

Before TJOFLAT, MARCUS and JORDAN, Circuit Judges.

PER CURIAM:
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      This is the second lawsuit John McCulley has brought to enjoin the

foreclosure of a mortgage he and Linda McCulley gave to Countrywide Home

Loans Servicing, L.P. (“Countrywide”), on June 27, 2007, on their residence to

secure a note in the principal amount of $347,150. In the first suit, McCulley v.

Countrywide Home Loans, Inc. (McCulley I), No. 12-0359-CG-C, 2013 WL
3187995 (S.D. Ala. June 21, 2013), filed on May 30, 2012, McCulley sued

Countrywide, CWALT, Inc., CWALT, Inc., Alternative Loan Trust 2007- 21CB,

The Bank of New York, Mortgage Electronic Registration Systems, and BAC Home

Loan Servicing, L.P. (“BAC”). He claimed, with respect to the same mortgage at

issue in the instant case: (1) that the note and mortgage, though in default, were not

subject to foreclosure; (2) that, due to fraud, no defendant was entitled to receive any

mortgage payments; (3) that the defendants had violated the Real Estate Settlement

Procedures Act; and, (4) that the defendants had violated the Truth in Lending Act

(“TILA”). As relief, McCulley sought a declaratory decree to the effect that

residence was not subject to foreclosure. The defendants moved for summary

judgment and the District Court granted the motion, holding that Bank of America,

N.A (“BANA”), as successor to BAC (itself the successor to Countrywide), which

held the note and mortgage, was entitled to foreclose on the mortgaged property.

The court simultaneously dismissed all of McCulley’s claims with prejudice.

      On December 17, 2013, McCulley, joined by his wife, brought the instant

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damages action against BANA, and the law firm of Sirote & Permutt, P.C., 1 raising

several claims related to the allegedly wrongful foreclosure of their property. The

defendants promptly moved the District Court to dismiss the McCulleys’ complaint

pursuant to Federal Rule of Civil Procedure 12(b)(6). Relying on Alabama law, the

District Court concluded that the McCulleys’ claims were barred by the doctrines of

res judicata and collateral estoppel because they had already brought one lawsuit,

McCulley I, based on their claim that BANA lacked the right to foreclose on their

home, and lost. Consequently, BANA was entitled to foreclose on their property.

       The McCulleys, proceeding pro se, now appeal the District Court’s judgment.

They argue that the court erred in finding that they had effectively sued BANA in

McCulley I, and, thus, that the instant suit is barred under the doctrines of res

judicata and collateral estoppel. They contend that BANA was not named as a

defendant in the McCulley I complaint and was thus not a party to that suit. 2 They

further argue that the record does not establish that the final judgment in McCulley I

applied to either BANA or Sirote, as they were not parties to that suit.

       We review de novo a district court’s grant of a motion to dismiss for failure to

       1
         The complaint also named several of the firm’s lawyers as defendants. The law firm
represented BANA in the foreclosure proceedings.
       2
        The McCulleys are correct that BANA was not named in the complaint in McCulley I,
however it was a party by the end of the lawsuit by virtue of Countrywide’s merger with BAC and
BAC’s subsequent merger with BANA. See McCulley I, 2013 WL 3187995 at *1.

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state a claim pursuant to Fed. R. Civ. P. 12(b)(6). Chaparro v. Carnival Corp., 693
F.3d 1333, 1335 (11th Cir. 2012). We also review de novo a district court’s

application of res judicata and collateral estoppel. Lozman v. City of Riviera

Beach, Fla., 713 F.3d 1066, 1069 (11th Cir. 2013). When determining whether to

give preclusive effect to a prior federal judgment, we apply federal preclusion

principles. Tampa Bay Water v. HDR Eng’g, Inc., 731 F.3d 1171, 1179 (11th Cir.

2013).

      The doctrine of res judicata, or claim preclusion, bars the re-litigation of

claims that were raised or could have been raised in a prior proceeding. Lobo v.

Celebrity Cruises, Inc., 704 F.3d 882, 892 (11th Cir. 2013). Res judicata is

founded on the principle that a “full and fair opportunity to litigate protects a party’s

adversaries from the expense and vexation attending multiple lawsuits, conserves

judicial resources, and fosters reliance on judicial action by minimizing the

possibility of inconsistent decisions.” Ragsdale v. Rubbermaid, Inc., 193 F.3d
1235, 1238 (11th Cir. 1999) (quotations and alteration omitted). The party

asserting res judicata must establish four elements: “(1) the prior decision must have

been rendered by a court of competent jurisdiction; (2) there must have been a final

judgment on the merits; (3) both cases must involve the same parties or their privies;

and (4) both cases must involve the same causes of action.” Lobo, 704 F.3d at 892.

Similarly, under Alabama law, res judicata applies when the following four

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elements are met: “(1) a prior judgment on the merits, (2) rendered by a court of

competent jurisdiction, (3) with substantial identity of the parties, and (4) with the

same cause of action presented in both actions.” Chapman Nursing Home, Inc. v.

McDonald, 985 So. 2d 914, 919 (Ala. 2007).

      Generally, “one is not bound by a judgment in personam in a litigation in

which he is not designated as a party or to which he has not been made a party by

service of process.” Taylor v. Sturgell, 553 U.S. 880, 884, 128 S. Ct. 2161,

2166-67, 171 L. Ed. 2d 155 (2008) (quotation omitted). However, a nonparty is

bound by a judgment if he was in privity with a party to that judgment. Griswold v.

Cnty. of Hillsborough, 598 F.3d 1289, 1292 (11th Cir. 2010). Specifically, there

are six circumstances in which a court can find privity for purposes of res judicata:

(1) the nonparty agreed to be bound by the litigation of others; (2) a “substantive

legal relationship” existed between the person to be bound and a party to first suit;

(3) the nonparty was represented adequately by someone who was a party to the first

suit; (4) the nonparty assumed control over the prior litigation; (5) a party attempted

to relitigate issues through a proxy; and (6) a statutory scheme foreclosed successive

litigation by nonparties. Id. Further, two cases involve the same causes of action

for res judicata purposes when the causes of action arise out of the “same nucleus of

operative fact,” or are based upon the same factual predicate. Lobo, 704 F.3d at

893. It is the substance of the actions, not their form, that is important. Ragsdale,

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193 F.3d at 1239. Res judicata, however, “is no defense where, between the first

and second suits, there has been a modification of significant facts creating new

legal conditions.” Manning v. City of Auburn, 953 F.2d 1355, 1359 (11th Cir.

1992) (quotations and alterations omitted).

      Collateral estoppel, or issue preclusion, bars the re-litigation of issues of fact

or law that were actually litigated and decided in a prior suit. CSX Transp., Inc. v.

Bhd. of Maint. of Way Emps., 327 F.3d 1309, 1317 (11th Cir. 2003). In this circuit,

a party seeking to apply the doctrine of collateral estoppel must establish: (1) the

issue at stake is identical to one involved in the prior litigation; (2) the issue was

actually litigated in the prior litigation; (3) the determination of the issue must have

been a critical and necessary part of the judgment in the prior litigation; and (4) the

party against whom collateral estoppel is asserted must have had a full and fair

opportunity to litigate the issue in the prior litigation. Tampa Bay Water, 731 F.3d

at 1180. Unlike res judicata, collateral estoppel is not limited to actions between

the same parties and their privies. Hart v. Yamaha-Parts Distribs., Inc., 787 F.2d

1468,1473 (11th Cir. 1986) (“A defendant who was not a party to the original action

may invoke collateral estoppel against the plaintiff.”). Under Alabama law, for

collateral estoppel to apply: “(1) [t]he issue must be identical to the one involved in

the previous suit; (2) the issue must have been actually litigated in the prior action;

and, (3) the resolution of the issue must have been necessary to the prior judgment.”

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Mart. v. Reed, 480 So. 2d 1180, 1182 (Ala. 1985).

      Although the District Court erred in relying on Alabama law, rather than

federal law, see Tampa Bay Water, 731 F.3d at 1179, the court applied the correct

legal standards in dismissing the McCulleys’ suit because Alabama law on the

doctrines of res judicata and collateral estoppel is substantively the same as federal

law. The court properly dismissed the case on res judicata grounds because (1)

there was a final judgment on the merits in McCulley I, (2) the court in McCulley I

was a court of competent jurisdiction, (3) the parties in the instant case were either

parties or in privity with a party to the first suit, and (4) both lawsuits involved the

same causes of action. Similarly, because the issues raised in the instant case were

previously litigated and decided in McCulley I, in which the McCulleys had a full

and fair opportunity to litigate, the District Court also properly found them barred by

collateral estoppel.

       AFFIRMED.

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