Court Opinion

ID: 2770319
Source: CourtListenerOpinion
Date Created: 2015-01-15 19:01:06.163725+00
Date Added: 2024-06-11T10:47:18.415433
License: Public Domain

Case: 14-60259      Document: 00512903586         Page: 1    Date Filed: 01/15/2015

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                          United States Court of Appeals

                                    No. 14-60259
                                                                                   Fifth Circuit

                                                                                 FILED
                                  Summary Calendar                        January 15, 2015
                                                                            Lyle W. Cayce
TIMOTHY P. DAVIS; NIKKI P. DAVIS,                                                Clerk

                                                 Plaintiffs - Appellants
v.

CHASE HOME FINANCE, L.L.C., formerly doing business as Chase
Manhattan Mortgage Corporation; GREENWICH CAPITAL FINANCIAL
PRODUCTS, INCORPORATED, also known as RBS Financial Products,
Incorporated; PRIORITY TRUSTEE SERVICES OF MISSISSIPPI, L.L.C.;
JOHN & JANE DOES 1-100; NATIONWIDE TRUSTEE SERVICES,
INCORPORATED,

                                                 Defendants - Appellees

                   Appeal from the United States District Court
                     for the Southern District of Mississippi
                             USDC No. 3:12-CV-456

Before CLEMENT, HAYNES, and COSTA, Circuit Judges.
PER CURIAM:*
       Plaintiff – appellants (the “Davises”) contend that Chase Home Financial
LLC (“Chase”) (or its predecessors in interest) violated the terms of their
mortgage by foreclosing on the Davises’ home in 2009. The Davises appeal the

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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district court’s grant of Chase’s motion to dismiss on the grounds of full faith
and credit, res judicata, and collateral estoppel. For the following reasons, we
AFFIRM.

                            FACTS AND PROCEEDINGS
       The Davises’ property, located at 157 Van Doren Street, Pearl,
Mississippi (the “Property”), was subject to two mortgage loans with Novastar
Mortgage, Inc.—RBS Financial Products, Inc. (“RBS”) and Chase’s predecessor
mortgage holder. Following Hurricane Katrina, on September 29, 2005, the
Davises agreed to loan modifications for both mortgages. These modifications
extended the time for repaying the loan but did not forgive the loans. The
Davises defaulted on the first mortgage and foreclosure proceedings were
initiated. 1
       On February 27, 2007, the Davises filed for a temporary restraining
order (“TRO”) in the County Court of Rankin County, Mississippi (“county
court”), seeking to enjoin the foreclosure sale scheduled for the next day. That
same day, the county court issued the TRO. On April 3, 2008, after more than
a year of no further action by the Davises, RBS filed a motion to dissolve the
TRO and dismiss the case. This motion was granted on April 8, 2008, on the
basis that the Davises had failed to bring the matter for a hearing and the TRO
had expired by its own terms. The court not only lifted the TRO, it also allowed
RBS to foreclose on the Property, finding that RBS was the creditor to the
mortgage and entitled as a matter of law to foreclose. 2 The Davises neither
objected to this order nor appealed.

       1   There was no foreclosure on the second mortgage. R. at 1581 n.2.
       2   The order stated, in relevant part: “IT FURTHER APPEARING TO THE COURT
that Defendant is the creditor holding a first priority security interest in [the Property, and
that] . . . . Plaintiffs defaulted on their payment obligations under the terms of the Note. . . .
Defendant is well within its contractual and legal rights to foreclose on the property. The
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       The Property was sold at foreclosure on February 4, 2009. Then, on
February 15, 2011, the Davises filed a complaint for discovery in Chancery
Court of the First Judicial District of Hinds County, Mississippi against RBS,
Chase, Nationwide Trustee Services, Inc. (“NTS”), and Priority Trustee
Services of Mississippi, LLC (“PTS”).              The complaint for discovery was
transferred to the Chancery Court of Rankin County, Mississippi (“chancery
court”) on November 3, 2011. On August 20, 2012, that court granted Chase’s
motion to dismiss, labeling the complaint for discovery a “fishing expedition,”
noting that it “could and should” have filed a discovery motion in the previous
case in county court, and holding that res judicata barred consideration of the
motion based on the county court’s order. The Davises appealed this order to
the Mississippi Supreme Court. The appeal was dismissed as untimely.
       Before the resolution of the complaint for discovery, on February 6, 2012,
the Davises filed another complaint in the Circuit Court of the First Judicial
District of Hinds County (“circuit court”). The complaint sought damages for
fraud, fraudulent conveyance, injunctive relief, unjust enrichment, breach of
the duty of good faith and fair dealing, negligence, and emotional distress. 3
Chase removed the case to the District Court for the Southern District of
Mississippi and filed a motion for judgment on the pleadings or to dismiss. The
district court dismissed the case on March 10, 2014, adopting the findings of
the magistrate judge that the claims were barred by res judicata, collateral
estoppel, and the Full Faith and Credit Act and dismissing the case with
prejudice. The Davises filed this timely appeal. In their appeal the Davises

Plaintiffs bear the burden of proving each element of their petition and have not brought this
matter on for hearing. Therefore, the [TRO] has expired by its terms and should be dissolved
and the Defendant should be allowed to proceed with enforcing its security interest in the
property . . . .”
       3 Chase’s brief presents an illustrative chart showing the similarities between the

county, chancery, and circuit court actions. Red Br. at 24–28 (Chase’s Br.).
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challenge the district court’s three bases for dismissal, arguing that the current
suit is not barred by res judicata, collateral estoppel, or the Full Faith and
Credit Act due to either the county court’s TRO order or the chancery court’s
dismissal of the complaint for discovery.

                                 DISCUSSION
I. Standard of Review
      A “court's decision to give full faith and credit to [a] state court judgment”
is reviewed de novo. In re Garner, 56 F.3d 677, 679 (5th Cir. 1995) (internal
quotation mark omitted), abrogated on other grounds by Kawaauhau v. Geiger,
523 U.S. 57 (1998).

II. Full Faith and Credit
      There are two hurdles the Davises must clear in order to demonstrate
that the district court erred in dismissing their claims. First, they must show
that the Full Faith and Credit Act does not preclude this court from considering
their res judicata and collateral estoppel counter arguments. Second, they
must show that—even if this court can consider the res judicata and collateral
estoppel issues—the Davises’ claims are not precluded. Because we find that
the Full Faith and Credit Act compels us to follow the res judicata and
collateral estoppel determinations of the chancery court, we do not reach the
second question.
      The Full Faith and Credit Clause states: “Full Faith and Credit shall be
given in each State to the public Acts, Records, and judicial Proceedings of
every other State. And the Congress may by general Laws prescribe the
Manner in which such Acts, Records and Proceedings shall be proved, and the
Effect thereof.” U.S. Const. art. IV, § 1. The Full Faith and Credit Act expands

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the Full Faith and Credit Clause and requires federal courts to give full faith
and credit to state court proceedings:
      The records and judicial proceedings of any court of any . . . State,
      Territory or Possession . . . shall have the same full faith and credit
      in every court within the United States and its Territories and
      Possessions as they have by law or usage in the courts of such
      State, Territory or Possession from which they are taken.

28 U.S.C. § 1738.
      Thus a federal court is required to give a state-court judgment the same
preclusive effect that it would have under the law of the state in which it was
rendered. Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81 (1984).
Since both the county court and chancery court judgments against the Davises
were rendered by a Mississippi state court, this court must apply Mississippi
rules of preclusion. See 28 U.S.C. § 1738; Matsushita Elec. Indus. Co. v.
Epstein, 516 U.S. 367, 373 (1996). Thus, if a Mississippi court would give
preclusive effect to the chancery court’s res judicata determination then the
district court’s decision was correct. See Parsons Steel, Inc. v. First Ala. Bank,
474 U.S. 518, 523 (1986) (“under the Full Faith and Credit Act a federal court
must give the same preclusive effect to a state-court judgment as another court
of that State would give.”). Similarly, if the county court’s judgment would be
considered final and accorded res judicata effect in a Mississippi court, then
the district court must be affirmed.
      Mississippi requires that four identities exist for res judicata to apply.
The past and current case must share the same: subject matter; cause of action;
“parties to the cause of action”; and, “quality or character of a person against
whom the claim is made.” EMC Mortg. Corp. v. Carmichael, 17 So. 3d 1087,
1090 (Miss. 2009).
      The chancery court clearly ruled on the res judicata issue.

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      “The Court further finds and determines that the Complaint for
      Discovery here is also barred by the doctrine of res judicata based
      on the previous litigation and Orders entered by the County Court
      of Rankin County, Mississippi, including the April 8, 2008 Order.
      Both the subject matter and the causes of action are the same.
      Finally, the parties are the same because both the Rankin County
      Court litigation and this litigation are brought by the same
      Plaintiffs against the same defendant and its successors in
      interest.

R. at 1342. The chancery court then dismissed the cause with prejudice. This
ruling was made final when the Mississippi Supreme Court dismissed the
Davises’ appeal as untimely.
      The chancery court’s ruling appears consistent with Mississippi Rule of
Civil Procedure 41(b), which states that failure to prosecute is a justification
for dismissal, ordinarily with prejudice. Taylor v. General Motors Corp., 717
So. 2d 747, 748–49 (Miss. 1998). But, irrespective of the correctness of the
county or chancery court, it is not this court’s purview to review their orders.
In fact, even if the chancery court’s determination about the effect of the county
court decision was erroneous, its preclusive effect on this court remains
binding. See Matter of Brady, Tex., Mun. Gas Corp., 936 F.2d 212, 219 (5th
Cir. 1991).
      Having determined that the chancery court did clearly dispose of the
complaint for discovery on res judicata grounds, this court must consider the
“preclusive effect” of that decision. Board of Trustees of Galveston Wharves v.
Pires, 40 F.3d 385, 1994 WL 652551 at *3–4 (per curiam) (table op.)
(interpreting Parsons, 474 U.S. at 523). That is, would a Mississippi court
evaluating the Davises’ circuit court complaint (the complaint underlying this
case) hold that it is precluded by the chancery court decision? A Mississippi
court answering this question looks to Carmichael’s “four identities,” described
above. Carmichael, 17 So. 3d at 1090. Thus, if the “four identities” supporting

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the chancery court claim and the circuit court claim are the same then we may
conclude that the circuit court claim would be precluded in Mississippi just as
the chancery court claim was.
      First, the chancery claim and circuit claim clearly both involve the same
subject matter, the foreclosure on the Davises’ home. Compare R. at 305–13,
with R. at 28–35. Second, the two claims both involve the same cause of action,
that is, they involve the same “underlying facts and circumstances.”           See
Carmichael, 17 So. 3d at 1090; Compare R. at 305–13 with R. at 28–35. Third,
the identity of the parties to the causes of action are the same. Compare, R. at
303–04, with R. at 23–25. Lastly, the quality and the character of the parties
against whom the causes of action are brought are the same. See Carmichael,
17 So. 3d at 1091 (holding this fourth identity satisfied where the two parties
were both mortgage lenders).
      It is true, as the Davises argue, that the relief sought in the chancery
court (discovery) and the circuit court (equitable and legal relief) are different.
The legal theories asserted, however, are not dispositive to any of the four
identities.   See Walton v. Bourgeois, 512 So. 2d 698, 701–02 (Miss. 1987)
(holding that identity exists where the “underlying facts and circumstances are
the same,” when the second complaint advanced a new legal theory that could
and should have been advanced in the first complaint.).             The Davises’
complaint for discovery was based on the same alleged malfeasance as the
circuit court complaint. The factual background described in each filing is
nearly identical. The fact that one filing sought discovery before relief and the
other filed a complaint, does not change the preclusive effect of the chancery
court decision upon the circuit court decision.
      The Full Faith and Credit Act, therefore, requires this court to give full
faith and credit to the decision of the chancery court that the county court’s
order precluded additional litigation in Mississippi on the same operative facts.
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We may not, therefore, consider the merits of the Davises’ claims. This court
need not, indeed, may not, conduct either an independent determination of
whether the chancery court’s decision about the county court order was correct
or whether the county court’s decision itself was properly decided.
      The Davises make two additional arguments in response to the Full
Faith and Credit defense. First, they argue that the chancery court ruling
stated that the Davises still had “discovery options” in the federal district
court. This argument is not persuasive. The chancery court’s decision to
dismiss the case was not based on the pending federal case. The complaint
was not dismissed because there was parallel litigation in which the Davises
could pursue discovery. The complaint was dismissed because the county court
judgment was considered a substantive final judgment with preclusive effect.
      Second, the Davises argue that the county court’s ruling does not have
preclusive effect in Mississippi. In support of this position the Davises make
several arguments, including that the county court dismissed the case under
Mississippi Rule of Civil Procedure 65, which governs temporary restraining
orders and does not constitute a final judgment, rather than Rule 41(b), which
states that a dismissal for failure to prosecute is generally considered an
adjudication upon the merits. These attempted distinctions are inapposite
because they ask this court to analyze the substance of the county court opinion
as opposed to the chancery court’s res judicata opinion. As explained, it is not
the task of this court to evaluate, as if on direct appeal, the county court’s
ruling.
      The chancery court determined that the county court’s April 8, 2008
order had preclusive effect in Mississippi. Full faith and credit requires that
this court defer to the chancery court’s determination. Thus we need not
address the district court’s other bases for granting summary judgment.

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                              CONCLUSION
     For the foregoing reasons, we AFFIRM the district court’s decision to
grant Chase’s motion to dismiss on the ground that the Davises’ claims were
barred by the Full Faith and Credit Act.

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