Court Opinion

ID: 9963388
Source: CourtListenerOpinion
Date Created: 2024-04-25 15:00:47.257319+00
Date Added: 2024-06-11T08:24:48.121781
License: Public Domain

23-457-bk
In re Zarour

                           UNITED STATES COURT OF APPEALS
                               FOR THE SECOND CIRCUIT

                                        SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.
CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS
PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE
32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER
IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE
FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A
COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

       At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 25th day of April, two thousand twenty-four.

        PRESENT: BARRINGTON D. PARKER,
                         RAYMOND J. LOHIER, JR.,
                         ALISON J. NATHAN,
                                 Circuit Judges.
        ------------------------------------------------------------------
        IN RE: SIMON ZAROUR,

                         Debtor.
        ------------------------------------------------------------------
        SIMON ZAROUR,

                        Debtor-Plaintiff-Appellant,

                  v.                                                         No. 23-457-bk

        JP MORGAN CHASE BANK,

                         Defendant-Appellee.
        ------------------------------------------------------------------
      FOR APPELLANT:                                SIMON ZAROUR, pro se, Spring
                                                    Valley, NY

      FOR APPELLEE:                                 BRIAN PETER SCIBETTA,
                                                    McCalla Raymer Leibert
                                                    Pierce, New York, NY

      Appeal from a judgment of the United States District Court for the

Southern District of New York (Vincent L. Briccetti, Judge).

      UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the judgment of the District Court is AFFIRMED.

      Debtor-Plaintiff-Appellant Simon Zarour appeals from a judgment of the

United States District Court for the Southern District of New York (Briccetti, J.),

affirming a May 18, 2022 order of the United States Bankruptcy Court for the

Southern District of New York (Drain, B.J.). The Bankruptcy Court dismissed

Zarour’s adversary complaint against Defendant-Appellee JP Morgan Chase

Bank (“Chase”) alleging fraud in connection with a foreclosure on a New Jersey

property. We assume the parties’ familiarity with the underlying facts and the

record of prior proceedings, to which we refer only as necessary to explain our

decision to affirm.

      “A district court’s order in a bankruptcy case is subject to plenary review,

meaning that this Court undertakes an independent examination of the factual

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findings and legal conclusions of the bankruptcy court.” In re Cacioli, 463 F.3d

229, 234 (2d Cir. 2006) (quotation marks omitted); see In re Maxwell Commc’n

Corp., 93 F.3d 1036, 1044 (2d Cir. 1996).

      Zarour principally argues that the Bankruptcy Court erred in dismissing

his adversary complaint on res judicata grounds because his claims that Chase

submitted fraudulent documents to the Bankruptcy Court were independent of

the claims he asserted in a different proceeding before the Chancery and

Appellate Divisions of the New Jersey Superior Court (the underlying

foreclosure action). He also argues that the District Court erred in dismissing his

claims on Rooker-Feldman grounds. See Rooker v. Fid. Tr. Co., 263 U.S. 413 (1923);

D.C. Court of Appeals v. Feldman, 460 U.S. 462 (1983).

      Because res judicata provides an independent basis for affirmance, we

need not resolve whether Rooker-Feldman is also a proper basis. See Butcher v.

Wendt, 975 F.3d 236, 242 (2d Cir. 2020) (“[W]e may assume hypothetical

jurisdiction where the jurisdictional issue is statutory in nature.”); accord In re

Fogarty, 39 F.4th 62, 70 n.11 (2d Cir. 2022).

      A federal court applying the doctrine of res judicata to determine whether

an earlier state court judgment bars a subsequent action applies the law of the

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State that rendered the judgment. See AmBase Corp. v. City Investing Co.

Liquidating Tr., 326 F.3d 63, 72 (2d Cir. 2003). Under New Jersey law, which

applies here, res judicata has three elements:

      (1) the judgment in the prior action must be valid, final, and on the
      merits; (2) the parties in the later action must be identical to or in
      privity with those in the prior action; and (3) the claim in the later
      action must grow out of the same transaction or occurrence as the
      claim in the earlier one.

McNeil v. Legis. Apportionment Comm’n of State, 177 N.J. 364, 828 A.2d 840, 859

(2003) (quotation marks omitted).

      We conclude that the first two elements are satisfied based on the record

before us. We consider the third element in light of New Jersey’s “entire

controversy” doctrine, which “embodies the principle that the adjudication of a

legal controversy should occur in one litigation in only one court; accordingly, all

parties involved in a litigation should at the very least present in that proceeding

all of their claims and defenses that are related to the underlying controversy.”

Highland Lakes Country Club & Cmty. Ass’n v. Nicastro, 201 N.J. 123, 988 A.2d 90,

91 (2009) (quotation marks omitted); see also McNeil, 828 A.2d at 858–59.

      Here, all of Zarour’s claims grew out of the same underlying foreclosure

action. Ultimately, Zarour seeks to “vacate the foreclosure sale” and final

judgment, and “void” the mortgage. App’x 30, 43. Zarour nevertheless argues

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that his claims before the Bankruptcy Court are not foreclosed because they arise

under legal theories that differ from those he advanced in the New Jersey state

courts. Zarour also argues that he could not have litigated his fraud claims in the

foreclosure action because he did not discover the fraud until 2019.

      We are not persuaded. In entering and affirming the foreclosure

judgment, the New Jersey state courts independently examined the documents

(the mortgage and adjustable rate note) Zarour alleges are fraudulent, found that

they were valid, that Zarour defaulted on his obligations under the mortgage

and note, and that Chase therefore had the right to foreclose. 1 Zarour could have

contested the mortgage and note before the state courts then, but he may not do

so now. See Adelman v. BSI Fin. Servs., Inc., 179 A.3d 431, 435–37 (N.J. App. Div.

2018). Thus, “any putative differences between the causes of action would not

overcome the bar of [res judicata].” Culver v. Ins. Co. of N. Am., 115 N.J. 451, 559

A.2d 400, 406 (1989); see also Applestein v. United Bd. & Carton Corp., 35 N.J. 343,

173 A.2d 225, 231–32 (1961).

1
 We are also not persuaded by Zarour’s claim that Chase presented a fraudulent
mortgage and/or note to the Bankruptcy Court in order to lift the stay, but presented
authentic versions of those documents to the New Jersey state courts in the foreclosure
action. Lifting the stay served only to allow the foreclosure action to proceed, at which
point the state courts independently examined the relevant documents.
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      Finally, the Bankruptcy Court did not err in denying Zarour leave to

amend his complaint. Because Zarour’s claims are barred by res judicata, they

cannot be revived merely by repleading. See Terry v. Incorporated Village of

Patchogue, 826 F.3d 631, 633 (2d Cir. 2016) (noting that the district court did not

err in denying plaintiff leave to amend because the claims in his original pro se

complaint were barred by res judicata and the new claim in his proposed

amendment was conclusory). Under these circumstances, the Bankruptcy Court

did not err in denying leave to amend.

      We have considered Zarour’s remaining arguments and conclude that they

are without merit. For the foregoing reasons, the judgment of the District Court

is AFFIRMED.

                                       FOR THE COURT:
                                       Catherine O’Hagan Wolfe, Clerk of Court

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