Court Opinion

ID: 3175160
Source: CourtListenerOpinion
Date Created: 2016-02-05 17:02:47.60741+00
Date Added: 2024-06-11T12:05:23.106773
License: Public Domain

FILED
                                                      United States Court of Appeals
                       UNITED STATES COURT OF APPEALS         Tenth Circuit

                                    TENTH CIRCUIT                            February 5, 2016

                                                                           Elisabeth A. Shumaker
                                                                               Clerk of Court

 ELBERT KIRBY, JR.; CALEB
 MEADOWS,

        Plaintiffs - Appellants,
                                                               No. 15-5089
 v.                                               (D.C. No. 4:15-CV-00233-GKF-TLW)
                                                               (N.D. Okla.)
 OCWEN LOAN SERVICING, LLC;
 RESMAE MORTGAGE
 CORPORATION; US BANK
 NATIONAL ASSOCIATION; LASALLE
 BANK NATIONAL ASSOCIATION;
 SAXON MORTGAGE SERVICES,

        Defendants - Appellees.

                               ORDER AND JUDGMENT*

Before HOLMES, MATHESON, and PHILLIPS, Circuit Judges.

       On June 3, 2015, the district court granted Appellants’ motion to proceed in forma

pauperis and dismissed this action sua sponte under 28 U.S.C. § 1915(e)(2)(B)(ii) for

failure to state a claim. The court held the “case is barred by the doctrine of res judicata,

       * Afterexamining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f) and 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 This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App.
P. 32.1 and 10th Cir. R. 32.1.
or claim preclusion, due to the court’s judgment dismissing an earlier case filed by

[Appellants] against the same defendants.” 15-CV-233-GKF-TLW, Doc. 5 at 1.

Appellants appeal. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.1

                                  I.   BACKGROUND

       On July 11, 2014, Elbert Kirby, Jr., and Caleb Meadows (“Appellants”) filed suit

(“First Suit”) against OCWEN Loan Servicing, LLC; Resmae Mortgage Corporation;

LaSalle Bank National Association; and US Bank National Association. Appellants

alleged that, each month for four years, Appellees sent them mail claiming that they held

a security interest in Appellants’ property. Although Appellants’ complaint alleged

deprivation of a property interest, it failed to identify a cause of action, the property

interest in question, or how Appellees deprived them of an interest. The court dismissed

the complaint without prejudice and granted Appellants leave to file an amended

complaint (“Amended Complaint”).

       The Amended Complaint, filed January 6, 2015, added Saxon Mortgage Services

as a defendant and added a RICO claim under 18 U.S.C. § 1964(c), which authorizes

“[a]ny person injured in his business or property” as a result of racketeering activities

prohibited in 18 U.S.C. § 1962 to bring suit to recover treble damages. The Amended

Complaint alleged Appellees falsely claimed to own a security interest through a

mortgage on Appellants’ home.

       1
        Although we liberally construe pro se litigants’ filings, see Erickson v. Pardus,
551 U.S. 89, 94 (2007), we may not “assume the role of advocate,” Yang v. Archuleta,
525 F.3d 925, 927 n.1 (10th Cir. 2008) (quotations omitted); see also United States v.
Pinson, 584 F.3d 972, 975 (10th Cir. 2009), and we do not “fashion . . . arguments for
[them],” United States v. Fisher, 38 F.3d 1144, 1147 (10th Cir. 1994).

                                             -2-
        Because Appellants’ in forma pauperis motion had alleged they own their home

outright, the district court stated, “[Appellants’] contention that the [Appellees] deprived

them of property they claim to own outright is clearly baseless, and thus, factually

frivolous.” 14-CV-389-GKF-FHM, Doc. 26 at 4-5 (internal quotations omitted). On

January 21, 2015, the court therefore dismissed the Amended Complaint with prejudice

under § 1915(e)(2)(B)(ii), which provides “the court shall dismiss the case at any time if

the court determines . . . the action . . . fails to state a claim on which relief may be

granted.”

       On May 1, 2015, Appellants filed a second suit against Appellees (“Second Suit”),

this time alleging Appellees violated the Truth in Lending Act (“TILA”), 15 U.S.C.

§ 1631 et seq., concerning the mortgage on their home. Specifically, Appellants alleged

they properly rescinded the mortgage under TILA, but Appellees did not recognize the

rescission, thereby causing Appellants mental, emotional, and actual damages.

       On June 3, 2015, the district court dismissed the case sua sponte under 28 U.S.C.

§ 1915(e)(2)(B)(ii). It held res judicata barred the Second Suit because (i) there was a

final judgment in the First Suit, (ii) the parties were identical in both suits, (iii) the claims

arose out of the same transaction in both suits, and (iv) Appellants had a full and fair

opportunity to litigate all of their claims in the First Suit. The court dismissed the

complaint with prejudice and entered judgment on June, 3, 2015.

       Appellants moved to reconsider. See Fed. R. Civ. P. 59(e). They argued the court

erred in its application of res judicata because the two suits did not involve the same

transaction—the First Suit dealt with RICO claims whereas the Second Suit involved

                                              -3-
TILA claims. Appellants further argued that even if res judicata applied, there had been

an intervening change in controlling law between dismissal of the First Suit and the filing

of the Second Suit, thereby justifying reconsideration. The court denied the motion on

September 3, 2015.

       On September 23, 2015, Appellants filed a timely notice of appeal.

                                  II.   DISCUSSION

       On appeal, Appellants argue the court erred in its application of res judicata and in

denying Appellants’ motion to reconsider. We disagree.

                            A. Dismissal Based on Res Judicata2

       We review de novo § 1915(a)(2)(B)(ii) dismissals. Kay v. Bemis, 500 F. 3d 1214,

1217 (10th Cir. 2007). Res judicata is a question of law that we review de novo. Plotner

v. AT&T Corp., 224 F.3d 1161, 1168 (10th Cir. 2000).

       Res judicata bars a claim when “(1) the prior suit . . . ended with a judgment on

       2
         Although not raised on appeal, we briefly address whether the court had
authority under 28 U.S.C. § 1915 to dismiss Appellants’ complaint sua sponte based on
res judicata, which is an affirmative defense. We have held a “complaint may be
dismissed sua sponte under § 1915 based on an affirmative defense . . . only when the
defense is obvious from the face of the complaint and no further factual record is required
to be developed.” Fogle v. Pierson, 435 F.3d 1252, 1258 (10th Cir. 2006) (internal
quotations omitted); see also Fratus v. DeLand, 49 F.3d 673, 675 (10th Cir. 1995)
(stating a complaint may not be dismissed “by raising sua sponte an [affirmative defense]
that was neither patently clear from the face of the complaint nor rooted in adequately
developed facts”). Here, the court could clearly recognize the defense of res judicata
from Appellants’ complaint. The court was familiar with the First Suit and did not need
to have additional facts to address res judicata. See Arizona v. California, 530 U.S. 392,
412 (2000) (“[I]f a court is on notice that it has previously decided the issue presented,
the court may dismiss the action sua sponte, even though the defense has not been raised.
This result is fully consistent with the policies underlying res judicata: it is not based
solely on the defendant’s interest in avoiding the burdens of twice defending a suit, but is
also based on the avoidance of unnecessary judicial waste.”).

                                            -4-
the merits; (2) the parties [are] identical or in privity; (3) the suit [is] based on the same

cause of action; and (4) the [Appellants have] had a full and fair opportunity to litigate

the claim in the prior suit.” Id.

       The first two elements are satisfied. The court entered a final judgment against

Appellants for failing to state a claim in the First Suit, and the parties in the two suits are

identical.

       As to the third element, we apply a “transactional approach” to determine whether

the two suits are based on the same claim. See id. at 1169. Under the transactional

approach, “a claim arising out of the same transaction, or series of connected transactions

as a previous suit, which concluded in a valid and final judgment, will be precluded.”

Yapp v. Excel Corp., 186 F.3d 1222, 1227 (10th Cir. 1999); see also Plotner, 224 F.3d at

1169 (“[A] cause of action includes all claims or legal theories of recovery that arise from

the same transaction, event, or occurrence.” (quotations omitted)).

       In the First Suit, Appellants brought a RICO claim alleging Appellees falsely

claimed a security interest on Appellants’ home and that Appellees sought payment based

on a mortgage on Appellants’ home. In the Second Suit, Appellants alleged Appellees

violated TILA in connection with the same mortgage. Appellants argue the two suits are

not the same because Appellants did not raise any TILA claims in the First Suit. But both

suits involve the same mortgage, and Appellants could have brought the TILA claim

when they alleged the RICO claim. Appellants do not argue they lacked facts needed to

raise the TILA claim in the First Suit. Thus, because both suits involve a transaction

regarding the same mortgage and no additional facts were needed to bring the TILA

                                              -5-
claim, the third res judicata element is satisfied.

        As to the fourth element, we “focus on whether there were significant procedural

limitations in the prior proceeding, whether the party had the incentive to litigate fully the

issue, or whether effective litigation was limited by the nature or relationship of the

parties.” SIL-FLO, Inc. v. SFHC, Inc., 917 F.2d 1507, 1521 (10th Cir. 1990). Appellants

do not allege any facts suggesting the First Suit was deficient for these reasons. They

argue only that they did not have a “full and fair opportunity” to litigate the TILA claim

because of an intervening change of controlling law. We address this argument in the

next section.

       The court did not err in finding all four elements of res judicata satisfied.

                                    B. Motion to Reconsider

       A court’s decision regarding a Rule 59(e) motion to reconsider is reviewed for an

abuse of discretion. Phelps v. Hamilton, 122 F.3d 1309, 1324 (10th Cir. 1997). “An

abuse of discretion occurs where the district court clearly erred or ventured beyond the

limits of permissible choice under the circumstances.” Hancock v. Am. Tel. & Tel. Co.,

Inc., 701 F.3d 1248, 1262 (10th Cir. 2012) (quotations omitted). A court also abuses its

discretion when it “issues an arbitrary, capricious, whimsical, or manifestly unreasonable

judgment.” Rocky Mountain Christian Church v. Bd. of Cty. Comm’rs, 613 F.3d 1229,

1239-40 (10th Cir. 2010) (citations omitted).

       A Rule 59(e) motion authorizes the court to reconsider a judgment and may be

granted when there is “an intervening change in the controlling law,” but a motion to

reconsider should not be used “to revisit issues already addressed or advance arguments

                                              -6-
that could have been raised earlier.” Servants of the Paraclete v. Does, 204 F.3d 1005,

1012 (10th Cir. 2000); see also Jaramillo v. Gov’t Emp. Ins. Co., 573 F. App’x 733, 749

(10th Cir. 2014) (unpublished) (stating that an intervening change in controlling law

requires “extraordinary circumstances”). Appellants argue the Supreme Court’s ruling in

Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 (2015), constitutes an

intervening change in controlling law that merits reconsideration of the court’s order. We

disagree. Although Jesinoski was decided between the dismissal of the First Suit and the

filing of the Second Suit, it did not amount to a change in controlling law.

       Appellants argue Jesinoski changed the law to allow homeowners to rescind

residential mortgages under TILA. They contend they could rescind their mortgage

under Jesinoski but could not have done so when they filed the First Suit. But Jesinoski

does not address whether a residential mortgage can be rescinded under TILA, nor does it

change any other law. Rather, it resolves uncertainty as to how a loan under TILA may

be rescinded by stating “a borrower need only provide written notice to a lender in order

to exercise his right to rescind.” Jesinoski, 135 S. Ct. at 793. Jesinoski has no bearing on

whether Appellants could have brought the TILA claims during the First Suit. It

therefore does not constitute an intervening change of controlling law and, accordingly,

the court did not err in denying Appellants’ motion to reconsider.

                                III.   CONCLUSION

       All four elements of res judicata were satisfied, and the court did not abuse its

discretion in denying Appellants’ motion to reconsider. We therefore affirm the court’s

                                            -7-
decisions to dismiss the complaint with prejudice and deny Appellants’ motion to

reconsider.

                                                ENTERED FOR THE COURT,

                                                Scott M. Matheson, Jr.
                                                Circuit Judge

                                          -8-