Firestone v. CitiMortgage Inc.

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF OHIO

EASTERN DIVISION

MAGDA1 FIRESTONE, ) CASE NO. 5:19-cv-1539

)

PLAINTIFF, ) JUDGE SARA LIOI

)

vs. )

) MEMORANDUM OPINION AND

) ORDER

CITIMORTGAGE, INC., et al., )

)

DEFENDANTS. )

Plaintiff Magda Firestone (“plaintiff” or “Mrs. Firestone”) brought this federal action

challenging a 2001 “consumer loan transaction” involving her late husband and seeking to “halt

foreclosure” of her property located in Akron, Ohio and recover damages. (Doc. No. 1 (Complaint)

¶¶ 8, 11; see id. at 132 (Prayer for Relief).) Presently pending before the Court are dispositive

motions filed by defendants CitiMortgage, Inc. (“CitiMortgage”) and Kirkland Financial LLC

(“Kirkland”). Specifically, the Court shall address herein CitiMortage’s renewed motion to

dismiss, pursuant to Fed. R. Civ. P. 12(b)(1) and (6) (Doc. No. 27), and Kirkland’s motion for

judgment on the pleadings, pursuant to Fed. R. Civ. P. 12(c). (Doc. No. 30.) Plaintiff filed an

omnibus response to the motions (Doc. No. 31), and Kirkland and CitiMortgage each filed replies.

(Doc. No. 32 (Kirkland Reply); Doc. No. 33 (CitiMortgage Reply).)

1 While the case caption identifies plaintiff’s first name as “Madga,” elsewhere in the complaint and throughout the

parties’ briefing plaintiff’s first name is spelled “Magda.” For purposes of this opinion, the Court assumes the spelling

adopted by the parties in their briefing is the correct spelling.

2 Page number references are to the page numbers assigned to each individual document by the Court’s electronic

filing system, a practice recently adopted by the Court.

I. BACKGROUND

In 1999, plaintiff and her husband Steve Firestone (“Mr. Firestone”) purchased the Akron

property, upon which was a single-family dwelling, as “joint tenants with rights of survivorship.”

(Doc. No. 1 ¶ 14.) On June 28, 2001, the mortgage on the property was refinanced by means of a

note executed in favor of defendant First NLC Financial Services, LLC (“First NLC”). (Id. ¶ 8,

14; Doc. No. 1-2 (Promissory Note).) Plaintiff contends First NLC and defendant Country Home

Mortgage of Ohio (“Country Home”), “while acting as agents, mere straw entities, conduits, or

pass through companies for CitiMortgage[,] used predatory lending practices to induce [Mr.]

Firestone [] into refinancing [the couple’s] home.”3 (Doc. No. 1 ¶ 14.) According to the complaint,

these predatory lending practices included overvaluing the property, forging plaintiff’s signature

on the mortgage and other closing documents, misrepresenting the nature of the mortgage as a

second mortgage, including in the note an unconscionable final balloon payment, and subsequently

claiming that the note had been destroyed. (Id. ¶¶ 8, 13, 15, 16, 17, 20, 21, 23.)

On January 15, 2002, the refinanced mortgage and the note were assigned to CitiMortgage.

(Id. ¶ 10.) Plaintiff alleges that CitiMortgage was aware, or should have been aware, of First NLC’s

fraudulent activities, and actively “encouraged, motivated, and rewarded” these activities. (Id. ¶

22.) Between 2004 and 2008, CitiMortgage collected approximately $96,000 in payments from

plaintiff on the refinanced mortgage. (Id. ¶ 29.) She claims that these payments were made, despite

the fact that she owed no personal obligation on the note and mortgage. (Id. ¶¶ 28, 29.) Plaintiff

also avers that her efforts to discover information regarding the nature of the note and mortgage

were thwarted by CitiMortgage and First NLC. (Id. ¶¶ 25–29.)

3 Mr. Firestone passed away on April 19, 2004. (Doc. No. 1 ¶¶ 8, 28.)

2

On February 20, 2008, CitiMortgage initiated a foreclosure action on the property in the

Summit County Court of Common Pleas. (Id. ¶¶ 36–37; Doc. No. 28-1 (Docket for CitiMortgage,

Inc. v. Steve Firestone, Case No. CV-2008-02-1570).) Plaintiff asserted counterclaims in this state

court action and filed a motion to dismiss. (See Doc. No. 28-1.) On April 29, 2009, the state court

granted CitiMortgage’s motion for summary judgment and entered judgment against plaintiff in

the amount of $267,795.63 with interest. (Doc. No. 1 ¶ 39; Doc. No. 1-4 (State Court Judgment

Entry).) Plaintiff appealed, and the judgment was reversed and the case remanded. (Doc. No. 1 ¶

40.) CitiMortgage voluntarily dismissed the case on September 7, 2012. (Id. ¶ 41.) On May 1,

2014, CitiMortgage filed a second foreclosure action in state court. (Id. ¶ 42; Doc. No. 28-2

(Docket for CitiMortgage, Inc. v. Steve Firestone, Case No. CV-2014-05-2242).) Plaintiff

defended this second state court action, alleging that First NLC and CitiMortgage engaged in

fraudulent and deceptive behavior. CitiMortgage ultimately assigned the note and mortgage to

Kirkland on October 11, 2017, and Kirkland was substituted for CitiMortgage as the plaintiff in

the second foreclosure action. (Doc. No. 1 ¶ 4; see Doc. No. 28-2.) Plaintiff alleges herein that

Kirkland “is a mere conduit to which CitiMortgage” assigned the note “for the sole purpose of

concealing its actions.” (Doc. No. 1 ¶ 12.)

On July 5, 2019—while the second foreclosure action was still pending in state court—

plaintiff filed suit in federal court. (See Doc. No. 1.) In her complaint, she raised claims for

mortgage fraud, fraudulent concealment and fraudulent collection activities, fraudulent

presentment and misrepresentation, and mail fraud and wire fraud. She also alleged violations of

the Truth In Lending Act (“TILA”), the Fair Debt Collections Practice Act (“FDCPA”), and the

Federal Racketeer Influence and Corrupt Organization Act (“RICO”). In addition to CitiMortgage

3

and Kirkland, plaintiff named First NLC and Country Home as defendants. (See generally id.)

On November 12, 2019, CitiMortgage filed a motion to dismiss the complaint or,

alternatively, to stay the federal action pending disposition of the second state court foreclosure

action. (Doc. No. 10.) On March 18, 2020, after the Court afforded Kirkland several extensions,

Kirkland filed its answer and two counterclaims seeking declaratory relief. (Doc. No. 21.) The

Court thereafter granted CitiMortgage’s alternative motion to stay the federal action pending

resolution of the second state court foreclosure action and denied without prejudice the motion to

dismiss. (Doc. No. 23.)

A bench trial was conducted in state court before a magistrate in July 2019, at the

conclusion of which the magistrate issued findings of fact and conclusions of law and provisionally

granted judgment in favor of Kirkland. (Doc. No. 28-2 at 9.) On September 7, 2021, the state court

judge overruled the objections to the magistrate’s judgment and entered an order granting final

judgment in favor of Kirkland. (Doc. 28-5.) In so ruling, the state court specifically held, in part,

as follows:

In summary, [Mrs. Firestone] argues that the mortgagor(s) allegedly engaged in

fraudulent dealings either at the inception of the loan, throughout the loan process,

or when the loan was sold/transferred to another entity. However, a review of the

transcript in this matter does not suggest any credible evidence was elicited to

support these claims. Moreover, the Magistrate found in her Findings of Facts that

both Mr. Firestone and Mrs. Firestone signed the original mortgage back in 1999

and that it was filed with the Recorder. The Magistrate also found that Mr. Firestone

had secured a refinanced loan from which he paid off a loan from a prior mortgage,

paid off other debts and that some of the proceeds were given directly to the

Firestones. There is no evidence that Mr. Firestone objected to the terms of the

refinanced loan back in 2001, that the loan documents were not proper, or had any

other issues with that loan. Indeed, the Firestones appeared to have utilized that

money to their benefit.

Any objection to this initial mortgage and filing with the Recorder should have been

addressed many years ago pursuant to the Truth in Lending Act. That Act states

4

any claims of recession or other private causes of action need to be made within

three years of closing. 15 U.S.C. 1635(t), 15 U.S.C. 1640(e). The same is true for

the Refinanced mortgage that was secured by Mr. Firestone. Thus, the statute of

limitations expired many years ago.

The Magistrate also found that both Mr. and Mrs. Firestone were listed as

‘borrowers’ for purposes of the mortgage that secured the Refinanced Loan and,

that they both signed, initialed, all of the paperwork. Although M[r]s. Firestone

offered Ms. Stemple to refute that she signed the documents, the Magistrate did not

find the testimony actually established that fact. The Court agrees and will not

substitute its judgment for that of the Magistrate. Likewise, the Magistrate did find

credible the testimony of [Kirkland’s] expert witness, a forensic handwriting

expert, who ‘authenticated’ Mrs. Firestone’s signature that appears on the mortgage

documents. Finally, the Magistrate found that the testimony of the notary who

actually witnessed and notarized Mrs. Firestone’s signature to be credible and

effectively established it was her signature on the mortgage documents. Notably,

the Magistrate found no evidence of [f]raud.

(Id. at 2–3.) The state court issued a judgment and decree of foreclosure in rem on January 11,

2022. (Doc. No. 28-6.)

In light of the resolution of the second foreclosure case, the Court lifted the stay in this

action and set the matter for a case management conference. (Non-document Order, 10/05/2021.)

At defendants’ request, the Court stayed the case management conference and permitted

defendants to file dispositive motions. On March 7, 2022, CitiMortgage renewed its Rule 12(b)

motion, arguing that the Rooker-Feldman doctrine divested this Court of jurisdiction to reverse a

state court judgment and that plaintiff’s claims are otherwise barred by the doctrine of res judicata.

CitiMortgage also maintains that many of the claims are time-barred and that the fraud claims were

plead without the requisite particularity. On March 14, 2022, Kirkland filed its Rule 12(c) motion,

adopting the arguments advanced by CitiMortgage.

5

II. STANDARD OF REVIEW

CitiMortgage’s jurisdictional argument is grounded in Rule 12(b)(1). The plaintiff bears

the burden of proving jurisdiction in order to survive a Rule 12(b)(1) motion to dismiss on grounds

of lack of subject matter jurisdiction. Nichols v. Muskingum Coll., 318 F.3d 674, 677 (6th Cir.

2003) (quotation marks and citation omitted); Mich. S. R.R. Co. v. Branch & St. Joseph Counties

Rail Users Ass’n, Inc., 287 F.3d 568, 573 (6th Cir. 2002); Moir v. Greater Cleveland Reg’l Transit

Auth., 895 F.2d 266, 269 (6th Cir. 1990). Rule 12(b)(1) motions can present a facial or factual

challenge to the Court’s subject matter jurisdiction. DLX, Inc. v. Kentucky, 381 F.3d 511, 516 (6th

Cir. 2014) (citations omitted). A facial attack on the Court’s subject matter jurisdiction alleged in

the complaint “merely questions the sufficiency of the pleading.” Ohio Nat’l Life Ins. Co. v. United

States, 922 F.2d 320, 325 (6th Cir. 1990). When resolving a facial challenge, the Court accepts the

factual allegations of the complaint as true and construes the complaint in a light most favorable

to the non-moving party. U. S. v. A.D. Roe Co., Inc., 186 F.3d 717, 721–22 (6th Cir. 1999). If the

motion presents a factual challenge, the Court may consider evidence outside the pleadings to

determine if jurisdiction exists. See Nichols, 318 F.3d at 677. Further, there is no presumption of

truthfulness in favor of the non-moving party. A.D. Roe Co., 186 F.3d at 722.

CitiMortgage also seeks dismissal under Rule 12(b)(6), and Kirkland seeks the same relief

under Rule 12(c). Under Rule 12(c), a party may move for judgment on the pleadings any time

after the pleadings are closed but early enough not to delay trial. Fed. R. Civ. P. 12(c). The standard

of review for a motion for judgment on the pleadings is the same as for a motion to dismiss for

failure to state a claim for relief under Rule 12(b)(6). E.E.O.C. v. J.H. Routh Packing Co., 246

F.3d 850, 851 (6th Cir. 2001) (citing Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir. 1998)).

6

Rule 12(b)(6) permits dismissal of a complaint for failure to state a claim upon which relief

can be granted. In deciding a motion to dismiss under Rule 12(b)(6), the Court must accept all

factual allegations as true and make reasonable inferences in favor of the non-moving party. Keys

v. Humana, Inc., 684 F.3d 605, 608 (6th Cir. 2012) (citing Harbin-Bey v. Rutter, 420 F.3d 571,

575 (6th Cir. 2005)). Only “a short and plain statement of the claim showing that the pleader is

entitled to relief” is required. Id. (quoting Fed. R. Civ. P. 8(a)(2)). “[T]he statement need only give

the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Id. (quoting

Erickson v. Pardus, 551 U.S. 89, 93, 127 S. Ct. 2197, 167 L. Ed. 2d 1081 (2007)) (internal

quotation marks omitted) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct.

1955, 167 L. Ed. 2d 929 (2007)). Although the plaintiff need not plead specific facts, the “[f]actual

allegations must be enough to raise a right to relief above the speculative level” and to “state a

claim to relief that is plausible on its face.” Id. (quoting Twombly, 550 U.S. at 555, 570). A plaintiff

must “plead[] factual content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678,

129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009)).

Because many of plaintiff’s claims—including RICO and mail/wire fraud—require proof

of fraud as an element, plaintiff must also satisfy the heightened pleading requirements of Federal

Rule of Civil Procedure 9(b). “Rule 9(b) states that [i]n alleging fraud or mistake, a party must

state with particularity the circumstances constituting fraud or mistake.’” Jackson v. Segwick

Claims Mgmt. Servs., Inc., 699 F.3d 466, 475 (2012) (quoting Heinrich v. Waiting Angels Adoption

Servs., Inc., 688 F.3d 393, 403 (6th Cir. 2012)). “This includes alleging the ‘time, place, and

content’ of the fraudulent acts, the existence of a fraudulent scheme, the intent of the participants

7

in the scheme, and ‘the injury resulting from the fraud.’” Id. at 476 (quoting Heinrich, 688 F.3d at

403); see Bender v. Southland Corp., 749 F.2d 1205, 1216 (6th Cir. 1984) (upholding the district

court’s dismissal of RICO claims where the complaint failed to plead fraud with adequate

particularity).

Rule 9’s pleading requirement of particularity must be read in harmony with Rule 8’s

“policy of simplicity in pleading[.]” Michaels Bldg. Co. v. Ameritrust Co., N.A., 848 F.2d 674, 679

(6th Cir. 1988) (citing Fed. R. Civ. P. 8). Accordingly, courts should not be “too exacting” or

“demand clairvoyance from pleaders” in determining whether the requirements of Rule 9(b) have

been met. Id. at 681. Rather, “if the defendant has fair notice of the charges against him, [Rule

9(b)] is satisfied.” Shapiro v. Merrill Lynch & Co., 634 F. Supp. 587, 594 (S.D. Ohio 1986); see

Williams v. Duke Energy Int’l, Inc., 681 F.3d 788, 803 (6th Cir. 2012) (“‘Rule [9] requires that the

circumstances of the fraud be pled with enough specificity to put defendants on notice as to the

nature of the claim.’”) (quoting Michaels Bldg. Co., 848 F.3d at 680).

In entertaining a Rule 12(b)(6) motion, a court may consider documents that are referred

to in the pleadings and are integral to the claims without converting the motion to one for summary

judgment. See Bassett v. Nat’l Collegiate Athletic Ass’n, 528 F.3d 426, 430 (6th Cir. 2008) (citing

Amini Oberlin Coll., 259 F.3d 493, 502 (6th Cir. 2001)); Commercial Money Ctr., Inc. v. Ill. Union

Ins. Co., 508 F.3d 327, 335–36 (6th Cir. 2007) (citation omitted); see also Weiner v. Klais & Co.,

Inc., 108 F.3d 86, 89 (6th Cir. 1997) (court may consider documents that govern a party’s rights

and are necessarily incorporated by reference in the complaint on a motion to dismiss) (citation

omitted). The Court may also take judicial notice of proceedings in another court without

converting the motion into one for summary judgment. Buck v. Thomas M. Cooley Law School,

8

597 F.3d 812, 816 (6th Cir. 2010) (citation omitted).

III. DISCUSSION

A. Rooker-Feldman Doctrine

According to CitiMortgage, the complaint “must be dismissed because the Rooker-

Feldman doctrine precludes the Court from granting [p]laintiff the relief she seeks.” (Doc. No. 27

at 8.) The Rooker-Feldman doctrine is derived from two United States Supreme Court decisions

interpreting 28 U.S.C. § 1257(a) and stands for the principle that lower federal courts have no

jurisdiction to review state court judgments. See Dist. of Columbia Ct. of Appeals v. Feldman, 460

U.S. 462, 103 S. Ct. 1303, 75 L. Ed. 2d 206 (1983); Rooker v. Fidelity Trust Co., 263 U.S. 413,

44 S. Ct. 149, 68 L. Ed. 362 (1923). Section 1257(a) was enacted to prevent “end-runs around state

court judgments” by requiring litigants seeking review of that judgment to file a writ of certiorari

with the United States Supreme Court. Kovacic v. Cuyahoga Cnty. Dep’t of Children & Family

Servs., 606 F.3d 301, 309 (6th Cir. 2010). The Rooker-Feldman doctrine is based on the “negative

inference” that, if appellate court review of state judgments is vested in the United States Supreme

Court, then such review may not occur in the lower federal courts. Id. The doctrine, however, has

a narrow application. The doctrine “does not bar federal jurisdiction ‘simply because a party

attempts to litigate in federal court a matter previously litigated in state court.’” Berry v. Schmitt,

688 F.3d 290, 298 (6th Cir. 2012) (quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544

U.S. 280, 291, 125 S. Ct. 1517, 161 L. Ed. 2d 454 (2005)). Rather, “the doctrine applies only where

a state-court loser initiates an action in federal district court, complaining of injury caused by a

state court judgment, and seeks review and rejection of that judgment.” Id. at 298–99 (citing In re

Cook, 551 F.3d 542, 548 (6th Cir. 2009)).

9

While CitiMortgage argues that plaintiff’s claims are “inextricably intertwined” with the

second state court foreclosure action, the proper inquiry requires the Court to look to the “source

of the injury the plaintiff alleges in the federal complaint.” McCormick v. Braverman, 451 F.3d

382, 393 (6th Cir. 2006); see Kovacic, 606 F.3d at 309 (applying the “source of the injury” inquiry

and rejecting the “inextricably intertwined” standard).4 “If the source of the injury is the state court

decision, then the Rooker-Feldman doctrine would prevent the district court from asserting

jurisdiction. If there is some other source of injury, such as a third party’s actions, then the plaintiff

asserts an independent claim.” McCormick; 451 F.3d at 393; see Brown v. First Nationwide Mortg.

Corp., 206 F. App’x 436, 439 (6th Cir. 2006). As part of its inquiry, the Court should consider the

plaintiff’s requested relief. Evans v. Cordray, 424 F. App’x 537, 539 (6th Cir. 2011) (“The problem

with the district court’s analysis is that it determined the source of Evan’s injury without reference

to his request for relief.”)

In the foreclosure context, the Sixth Circuit has repeatedly held that a suit premised on

independently fraudulent conduct by a defendant, not comprising a direct attack on the judgment

of possession, is not barred by Rooker-Feldman. See, e.g., Veasley v. Fed. Nat’l Mortg. Ass’n

(FNMA), 623 F. App’x 290, 295 (6th Cir. 2015) (“Veasley’s complaint claims that the defendants

engaged in independent acts, i.e. the assignment of a faulty mortgage in violation of [Michigan

law], which gave rise to the state court’s judgment of possession. Rooker-Feldman does not

4 The Sixth Circuit originally endorsed the “inextricably intertwined” standard in Catz v. Chalker, 142 F.3d 279 (6th

Cir. 1998), abrogated by Coles v. Granville, 448 F.3d 853 (6th Cir. 2006). But this standard proved difficult to apply,

prompting the Supreme Court to clarify the doctrine’s narrow reach in McCormick, 451 F.3d at 394 (“[Inextricably

intertwined] was [the] exact language that was the source of the pre-Exxon Mobil woes as to the application of Rooker-

Feldman.”) In doing so, the Supreme Court implicitly repudiated inextricably intertwined as a standard. Exxon Mobil,

544 U.S. at 291–93. Following Exxon Mobil, the Sixth Circuit explained that in the context of Rooker-Feldman the

phrase “only describes the conclusion that a claim asserts an injury whose source is the state court judgment[.]”

McCormick, 451 F.3d at 393–95.

10

preclude jurisdiction” over these fraud claims); Brown, 206 F. App’x at 440 (“Brown’s claim that

the mortgage foreclosure decree was procured by fraud is not barred by Rooker-Feldman.”) These

cases stand in contrast with suits where the plaintiff seeks directly or by implication to overturn

the state court judgment, which Rooker-Feldman does prohibit. See, e.g., Givens v. Homecomings

Fin., 278 F. App’x 607, 609 (6th Cir. 2008) (“Givens requests in his complaint . . . a temporary

injunction that would ‘enjoin Defendants from physically entering onto plaintiff’s property’ and

that would ‘dispos[e] . . . of any other civil or procedural action regarding the subject property.’

Because the point of this suit is to obtain a federal reversal of a state court decision, dismissal on

the grounds of Rooker-Feldman was appropriate.”) (quoting complaint). That is true regardless of

how “intertwined” the factual premise of the causes of action is with any dispositive facts contested

in the state court action. Todd v. Weltman, Weinberg & Reis Co., L.P.A., 434 F.3d 432, 437 (6th

Cir. 2006) (“This situation was explicitly addressed by the Exxon Mobil Court when it stated that

even if the independent claim was inextricably linked to the state court decision, preclusion law

was the correct solution to challenge the federal claim, not Rooker-Feldman.”).

Here, plaintiff’s claims are based on a variety of alleged wrongful acts committed by

defendants before and during the state foreclosure proceedings. For instance, in her mortgage fraud

claim, plaintiff alleges she was harmed by defendants’ fraudulently obtaining the note by inducing

Mr. Firestone to file a loan application, including in the note an unconscionable balloon payment,

forging plaintiff’s signature on various loan documents, and ultimately assigning the note to hide

their wrongdoing. (Doc. No. 1 ¶¶ 15–23.) Even many of the allegations highlighted by

CitiMortgage make clear that the source of plaintiff’s injuries is not necessarily the foreclosure

judgment itself but the alleged fraud associated with the judgment. (See Doc. No. 33 at 4–5 (citing

11

Doc. No. 1 ¶ 8 [complaining of a “forged mortgage”]; ¶ 9 [alleging defendants “engaged in a

pattern and practice of illegal, corrupt, and unconscionable activities . . . with the express purpose

of defrauding Mr. Steve Firestone into entering an unconscionable transaction”]; ¶ 12

[“CitiMortgage [] assigned the Note and Mortgage for the sole purpose of concealing its actions”];

¶ 13 [noting that the remainder of the allegations in the complaint “illustrate[] a continuing course

of conduct by CitiMortgage Inc.” to engage in fraud and listing various fraudulent acts].) As such,

plaintiff’s allegations of fraud in connection with the state court foreclosure proceedings, “like

those in McCormick, did not constitute ‘complain[ts] of injuries caused by the state court

judgments,’ . . . because they do not claim that the source of [plaintiff’s] alleged injury is the

foreclosure decree itself. Instead, the claims concern the actions of [defendants] that preceded the

decree.” Brown, 206 F. App’x at 440 (finding fraud claims were not barred by Rooker-Feldman).

A review of plaintiff’s requested relief confirms that her federal claims are not entirely

foreclosed by Rooker-Feldman. See VanderKodde v. Mary Jane M. Elliott, P.C., 951 F.3d 397,

402 (6th Cir. 2020) (“A court cannot determine the source of the injury ‘without reference to [the

plaintiff’s] request for relief.’”) (quoting Berry, 688 F.3d at 299). While plaintiff alleges that she

brings this federal action “to halt foreclosure” (see Doc. No. 1 ¶ 11), and she requests that

defendants be enjoined from foreclosing on the property (see id. ¶ 60), her prayer for relief spans

the gambit of available remedies, including “compensatory damages in an amount exceeding

$200,000.00, actual damages, in addition to: statutory damages, civil penalties, equitable relief,

punitive damages, cancellation, recission,5 attorneys’ fees, and injunctive relief[.]” (Id., Prayer for

5 As will be discussed in more detail infra, the recission plaintiff seeks is the recission of the loan to Mr. Firestone and

not recission of the foreclosure decree. (See Doc. No. 1 ¶ 58.)

12

Relief, at 13.)

Accordingly, the Rooker-Feldman doctrine applies to the extent that plaintiff’s complaint

alleges that she was injured by the state court rulings. See McCormick, 451 F.3d at 393. But to the

extent that plaintiff’s complaint alleges other injuries having their source in the defendants’

purported fraudulent conduct before and during the state-court foreclosure rulings, the Rooker-

Feldman doctrines does not apply. See id.; see Brown, 206 F. App’x at 440.

B. Res Judicata

Nevertheless, the Court need not sort through plaintiff’s claims to determine which claims

survive a Rooker-Feldman analysis because all of the claims are barred by res judicata. The

doctrine of res judicata precludes plaintiff from litigating issues and claims that were decided by

the state courts, as well as issues and claims that could, and should, have been asserted in the state

court action.

Federal courts must give the same preclusive effect to a state court judgment as that

judgment would receive in the state courts. Abbott v. Mich., 474 F.3d 324, 330–31 (6th Cir. 2007)

(citing 28 U.S.C. § 1738); see Young v. Twp. of Green Oak, 471 F.3d 674, 680 (6th Cir. 2006). If

plaintiff would be precluded from filing this case in state court based on the case already decided

by the Summit County Court of Common Pleas, she cannot seek relief in this Court in order to

bypass the state procedural bar. To determine the preclusive effect a prior state court judgment

would have on the present federal action, the Court must apply the law of preclusion of the state

in which the judgment was rendered. Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75,

81, 104 S. Ct. 892, 79 L. Ed. 2d. 56 (1984).

In Ohio, the doctrine of res judicata encompasses the two related concepts of claim

13

preclusion and issue preclusion. State ex rel. Davis v. Pub. Emp. Ret. Bd., 899 N.E.2d 975, 981–

82 (Ohio 2008) (quotation marks and citation omitted). “Claim preclusion prevents subsequent

actions, by the same parties or their privies, based upon any claim arising out of a transaction that

was the subject matter of a previous action.” O’Nesti v. DeBartolo Realty Corp., 862 N.E.2d 803,

806 (Ohio 2007) (citation omitted). Claim preclusion also bars subsequent actions whose claims

“could have been litigated in the previous suit[.]” Id. “[C]laim preclusion has four elements in

Ohio: (1) a prior final, valid decision on the merits by a court of competent jurisdiction; (2) a

second action involving the same parties, or their privies, as the first; (3) a second action raising

claims that were or could have been litigated in the first action; and (4) a second action arising out

of the transaction or occurrence that was the subject matter of the previous action.” Hapgood v.

City of Warren, 127 F.3d 490, 493 (6th Cir. 1997) (quoting Hosp. Underwriting Grp., Inc. v.

Summit Health Ltd., 63 F.3d 486, 494 (6th Cir. 1995) (further citation omitted)). By contrast, issue

preclusion, or collateral estoppel, prevents the “relitigation of any fact or point that was determined

by a court of competent jurisdiction in a previous action between the same parties or their privies[,]

. . . even if the causes of action differ.” O’Nesti, 862 N.E.2d at 806 (citation omitted).

An analysis of the governing factors demonstrates that all of plaintiff’s claims are barred

by claim preclusion. First, the foreclosure judgment was a prior final, valid decision on the merits

by a court of competent jurisdiction. (See Doc. Nos. 28-5; Doc. No. 28-6.) Under Ohio law, a state

court decree in foreclosure is a final judgment. See In re Monas, 309 B.R. 302, 306–07 (Bankr.

N.D. Ohio 2004). Nevertheless, plaintiff disputes the finality of the state foreclosure decree on the

grounds that she lodged an appeal in the Ninth District Court of Appeals. (Doc. No. 31 at 5; see

Doc. No. 31-3 (Notice of Appeal, dated Feb. 10, 2022).) “The pendency of an appeal, however,

14

does not prohibit application of claim preclusion. The prior state court judgment remains ‘final’

for preclusion purposes, unless or until overturned by the appellate court.” Hapgood, 127 F.3d at

494 n.3 (citing Cully v. Lutheran Med. Ctr., 523 N.E.2d 531, 532 (1987) (collecting cases)). And,

in any event, on March 30, 2022 the court of appeals dismissed plaintiff’s appeal upon her “failure

to respond to a court order.” (Doc. No. 32 at 5 (Journal Entry).) The first factor is met.

The Court also finds that the second factor is met. While plaintiff argues that CitiMortgage

“is not a party to the second foreclosure” action (Doc. No. 31 at 5), she forgets that the second

factor is satisfied if the prior action involved the same parties or their privies. See Hapgood, 127

F.3d at 493. “Privity’ is a succession of interest or relationship to the same thing.” Metalworking

Mach. Co., Inc. v. Fabco, Inc., 477 N.E.2d 634, 637 (Ohio Ct. App. 1984) (emphasis in the

original) (citation omitted). “A party is in ‘privity’ with another if it succeeds to an estate or an

interest formerly held by the other, or where a party is so identified in interest with another that

the party represents the same legal right.” Jarvis v. Wells Fargo Bank, No. 09 CO 16, 2010 WL

2749602, at *8 (Ohio Ct. App. June 30, 2010) (citations omitted). As the successor-in-interest on

the note and mortgage, Kirkland is in privity with CitiMortgage. See EMC Mortg. Corp. v. Jenkins,

841 N.E.2d 855, 863 (Ohio Ct. App. 2005) (“An assignee of an interest in a promissory note and

mortgage is in privity with its assignor for purposes of res judicata.”).

The third element requires that all claims were litigated or could have been litigated in the

prior action. “The scope of claims covered by this prong is quite broad” and prevents “not only

relitigat[ion of] a claim previously adjudicated; it also precludes litigat[ion of] a claim or defense

that should have been raised, but was not, in the prior suit.” Frazier v. Matrix Acquisitions, LLC,

873 F. Supp. 2d 897, 902 (N.D. Ohio 2012) (quotation marks and citation omitted) (emphasis in

15

original). Under Ohio law, “the question is not what claims [the plaintiff] opted to include . . . but

what claims [she] could have included.” Trafalgar Corp. v. Miami Cnty. Bd. of Cnty. Comm’rs,

No. 3:05-cv-84, 2006 WL 689112, at *8 (S.D. Ohio Mar. 14, 2006). It is clear from the trial court’s

judgment that many of the issues relating to the alleged fraud of defendants—including the

purported forgery of plaintiff’s signature on loan and mortgage documents—were raised by

plaintiff in the second foreclosure action. (See Doc. No. 28-5 at 2–3.) To the extent that any of the

claims herein raise issues that were not raised in defense of the second foreclosure action, plaintiff

has not argued nor established that she was precluded from raising them in state court. Indeed,

courts have held that causes of action similar to plaintiff’s claims could have been brought in prior

foreclosure proceedings. See, e.g., Hines v. Franklin Sav. & Loan, No. 1:09-cv-914, 2011 WL

882976, at *1, *5 (S.D. Ohio Jan. 31, 2011) (concluding that plaintiff’s TILA and FDCPA claims

“could and should have been presented in the state court foreclosure action”), report and

recommendation adopted by 2011 WL 886128 (S.D. Ohio Mar. 10, 2011). The third factor is

satisfied.

Under Ohio law, the fourth factor—arising from the same transaction or occurrence—is

satisfied if the two actions arise from a “common nucleus of operative facts.” Hapgood, 127 F.3d

at 494. Plaintiff believes that this fourth factor is not met because the foreclosure action arises out

of the mortgage, while the present federal action arises out of her dealings with defendants. (Doc.

No. 31 at 5.) However, the same operative facts govern the issues in the federal and the state court

proceedings: the facts alleged in plaintiff’s federal complaint in support of her claims of mortgage

fraud, TILA, FDCPA, RICO, and mail and wire fraud—that defendants engaged in a fraudulent

course of dealings to first secure and then hide the true nature of the refinanced mortgage—are the

16

same facts underlying plaintiff’s defenses in the second state court foreclosure action. See, e.g.,

King v. Bank of Am. NA, No. 3:18-cv-2248, 2019 WL 3292184, at *8 (N.D. Ohio June 19, 2019)

(barring plaintiffs’ fraud/misrepresentation, civil conspiracy, OCPA, and RICO claims, which

were “all based on Plaintiffs’ allegations regarding improper indorsement or assignment of the

Note/Mortgage and the foreclosure proceedings that followed”). Because the claims herein arise

from the same common nucleus of operative facts, the fourth element of claim preclusion is also

satisfied.

As all of the factors are met, claim preclusion bars plaintiff from relitigating the claims

from her state court foreclosure lawsuit in this federal action, and dismissal of plaintiff’s claims is

appropriate for this reason alone.

C. Fraud Claims

However, plaintiff’s claims also suffer from a variety of pleading and other deficiencies.

The Court begins with plaintiff’s mortgage fraud claims in Counts One, Two, and Three. “Under

Ohio law, a claim for fraud is governed by a four-year statute of limitations.” Foster v. Foster, 113

N.E.3d 150, 158 (Ohio Ct. App. 2018) (citing Riddick v. Taylor, 105 N.E.3d 446, ¶ 11 (Ohio 2018)

(citing Ohio Rev. Code § 2305.09)). Because the discovery rule applies to claims for fraudulent

misrepresentation, a cause of action accrues and the limitations period begins when the plaintiff

discovers or, through the exercise of reasonable diligence, should have discovered the fraud.

Riddick, 105 N.E.3d at 451, ¶ 12 (quotation marks and citations omitted).

In Count One, plaintiff relies on the conduct, beginning with the loan to Steve Firestone,

that allegedly occurred in 2001 or 2002. (See Doc. No. 1 ¶¶ 8–10, 14–18.) Count Two is based on

alleged conduct occurring between 2004 and 2008 and relating to the payments on the note. (Id.

17

¶¶ 25–34.) All of this conduct occurred well outside the four-year window set forth in Ohio Rev.

Code § 2305.09.

In Count Three, plaintiff alleges that CitiMortgage engaged in fraud by initiating the two

foreclosure actions in 2008 and 2014, and, with respect to the second action, alleged that

CitiMortgage misrepresented the nature of plaintiff’s interest in the mortgaged property. (Doc. No.

1 ¶¶ 36–44.) All of these actions occurred outside the limitations period. The only factual allegation

of wrongdoing that occurred within the statutory window related to the 2016 and 2017 assignments

of the loan. (Id. ¶¶ 45–46.) “However, it is well settled in Ohio that mortgage debtors do not have

standing to challenge mortgage assignments.” Wells Fargo Bank v. Watson, 41 N.E.3d 79, 86

(Ohio Ct. App. 2015) (citation omitted); Deutsche Bank Nat’l Trust Co. v. Whiteman, No. 12AP-

536, 2013 WL 1749665, at *4 (Ohio Ct. App. April 23, 2013) (finding mortgagor lacked standing

to challenge the validity of the assignments of the note and mortgage and the use of “robo-signers”)

(citations omitted).

Plaintiff urges the Court to find equitable tolling of the statute of limitations under the

doctrines of unclean hands and fraudulent concealment. (See Doc. No. 31 at 6–8.) The unclean

hands doctrine prevents a party from asserting an equitable claim or defense where the party has

acted in bad faith. Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814,

65 S. Ct. 993, 89 L. Ed. 1381 (1945). “A statute of limitations defense, however, is a legal defense,

not an equitable one.” Ratliff v. Ohio State Univ., No. 2:19-cv-4746, 2021 WL 7186198, at *4

(S.D. Ohio Sept. 22, 2021) (emphasis in original) (citing, among authority, Grover by Grover v.

Eli Lilly & Co., 33 F.3d 716, 719 (6th Cir. 1994) (describing the statute of limitation as an “absolute

legal defense”). Accordingly, it cannot be defeated by an unclean hands argument. Id. (“Because

18

the statute of limitations is a legal, not equitable defense, the clean hands doctrine is . . .

inapplicable). As for the claims of fraudulent concealment, plaintiff relies on the series of

assignments and transfers designed, she believes, to hide defendants’ fraudulent behavior. (See

Doc. No. 31 at 6.) Again, plaintiff lacks standing to challenge these transactions. See Wells Fargo

Bank, 41 N.E.3d at 86. Counts One, Two, and Three are, therefore, time barred.

D. TILA Claim for Damages

Count Four alleges that defendants violated TILA by failing to provide the required

statutory disclosures. Specifically, she points to the 2001 loan, noting that she was not present at

the closing and received none of the disclosures required under TILA. (Doc. No. 1 ¶¶ 52–53.)

TILA provides, in pertinent part, “any action under this section may be brought in any United

States district court, or in any court of competent jurisdiction, within one year from the date of the

occurrence of the violation[.]” 15 U.S.C. § 1640(e). “[A] credit transaction which requires

disclosures under [TILA] is completed when the lender and borrower contract for the extension of

credit. The disclosures must be made sometime before this event occurs. If the disclosures are not

made, this violation of [TILA] occurs, at the latest, when the parties perform their contract.”

Wachtel v. West, 476 F.2d 1062, 1065 (6th Cir. 1973).

The performance of the loan contract occurred in 2001, and, as previously noted, plaintiff

lacks standing to challenge the assignments and transfers of the loan to support a claim of equitable

tolling. Additionally, to the extent plaintiff relies on CitiMortgage’s corporate structure to support

equitable tolling (see Doc. No. 31 at 6), plaintiff’s speculation that CitiMortgage manipulated its

corporate structure through a series of legal business transactions in order to hide the loan to her

late husband is insufficient to warrant such tolling. See Hamilton Cnty. Bd. of Comm’rs v. N.F.L.,

19

491 F.3d 310, 319 (6th Cir. 2007) (plaintiff must offer some affirmative act of fraudulent

concealment); see also Twombly, 550 U.S. at 555 (factual allegations may not be steeped in

speculation); Papasan v. Allain, 478 U.S. 265, 286, 106 S. Ct. 2932, 92 L. Ed. 2d 209 (1986) (The

court is not “bound to accept as true a legal conclusion couched as a factual allegation.”) Count

Five is time-barred.6

E. FDCPA Claim

In Count Six, plaintiff alleges that CitiMortgage violated the FDCPA by “repeatedly

engag[ing] in false and misleading representations and unfair practices” by misleading her “as to

the character and legal status of the note and mortgage[.]” (Doc. No. 1 ¶¶ 64–65.) In support of

her claim, she alleges that CitiMortgage is a “creditor and a debt collector as defined in [the

FDCPA].” (Id. ¶ 63.).

However, CitiMortgage does not meet the statutory definition of a “debt collector,” which

is any person “in any business the principal purpose of which is the collection of any debts, or who

regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be

owed or due another.” 15 U.S.C. § 1692a(6). The definition specifically excludes the creditor or

the person to whom the debt is owed. § 1692a(6)(F)(ii). Here, CitiMortgage is alleged to have

attempted to collect on the note it owned by means of the foreclosure actions. In doing so,

CitiMortgage was acting as a creditor and not a debt collector. See Montgomery v. Huntington

6 Count Six—seeking recission under TILA—is also untimely. As the Sixth Circuit noted in McCoy v. Harriman Util.

Bd., 790 F.2d 493, 496 (6th Cir. 1986), while a right to damages under the TILA is barred after one year under §

1640(e), an obligor retains the right to rescind a credit transaction for a failure to make the statutory disclosures for

three years under § 1635. Plaintiff’s federal TILA claim for recission was not brought within three years of the loan,

and, for the same reasons already discussed above, plaintiff is not entitled to equitable tolling.

20

Bank, 346 F.3d 693, 699 (6th Cir. 2003) (creditor could not be a debt collector under the FDCPA

where it was collecting on the debt owed it). For this reason, courts have consistently held that

mortgage holders are not “debt collectors” under the FDCPA. See, e.g., McAnaney v. Astoria Fin.

Corp., 357 F. Supp. 2d 578, 592 (E.D.N.Y. 2005); Scott v. Wells Fargo Home Mortg. Inc., 326 F.

Supp. 2d 709, 718 (E.D. Va. 2003); RBS Citizens, N.A. v. Zigdon, No. 93945, 2010 WL 2961534,

at *5 (Ohio Ct. App. July 29, 2010) (“creditors and mortgage service companies are not debt

collectors and are not subject to liability under the FDCPA”). Because CitiMortgage does not meet

the statutory definition of a “debt collector,” plaintiff’s FDCPA claim is subject to dismissal.7

F. RICO and Mail Fraud/Wire Fraud Claims

Finally, the Court finds that plaintiff’s claims involving RICO and mail fraud/wire fraud

(Counts Seven and Eight, respectively) are subject to dismissal under Rule 12(b)(6) for failure to

plead with the requisite particularity demanded by Fed. R. Civ. P. 9. In Count Seven, plaintiff

alleges that defendants “conduct[ed] their affairs through a pattern of corrupt activity in writing of

illegal loans, fraud, fraudulent presentment, fraudulent concealment and the collection of unlawful

debt.” (Doc. No. 1 ¶ 67.) In Count Eight, she generally cites to paragraphs 9 through 49 of the

complaint and further alleges that defendants “did use the United States Postal Service and/or other

electronic means in violation of 18 U.S.C. § 1341 and 1343.” (Id. ¶¶ 72–73.)

7 Additionally, plaintiff’s FDCPA is untimely as it was not brought within the one-year statute of limitations. See

Smith v. Lerner, Sampson & Rothfuss, L.P.A., 658 F. App’x 268, 273 (6th Cir. 2016) (“Civil actions under the Fair

Debt Collection Practices Act may be brought ‘within one year from the date on which the violation occurs.’”) (quoting

15 U.S.C. § 1692k(d)).

21

Generally, to comply with Rule 9(b), a plaintiff alleging RICO or fraudulent

misrepresentations must “allege the time, place, and content of the alleged misrepresentations[.]”8

U.S. ex rel. Bledsoe v. Cmty. Health Sys. Inc., 501 F.3d 493, 504 (6th Cir. 2007) (quotation marks

and citations omitted); see Frank v. Dana Corp., 547 F.3d 564, 570 (6th Cir. 2008) (To meet Rule

9(b) pleading requirements, a plaintiff must “(1) specify the statements that the plaintiff contends

were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and

(4) explain why the statements were fraudulent.”) (quotation marks and citation omitted). Similar

particularity is required when pleading mail and/or wire fraud. See Heinrich, 668 F.3d at 404

(citation omitted).

Through the allegations in the complaint, plaintiff alleges a combination of

misrepresentations and concealments by defendants that were, she believes, designed to hide from

her the true nature of the loan and refinanced mortgage. But even when a plaintiff is pleading

fraudulent concealment, she must still meet the particularity requirements in Rule 9(b).

Specifically, a pleader must still identify “the who, what, when, where, and how” of the alleged

omission. Republic Bank & Tr. Co. v. Bear Stearns & Co., Inc., 683 F.3d 239, 256 (6th Cir. 2012)

(quotation marks and citation omitted). In order to satisfy this pleading requirement, a plaintiff

must allege “(1) precisely what was omitted; (2) who should have made the representation; (3) the

content of the alleged omission and the manner in which the omission was misleading; and (4)

what [defendant] obtained as a consequence of the alleged fraud.” Id.

8 Mail fraud consists of “(1) a scheme to defraud, and (2) use of the mails in furtherance of the scheme.” Heinrich,

668 F.3d at 404 (quotation marks and citation omitted). “The elements of wire fraud are essentially the same except

that one must use the wires in furtherance of the scheme to defraud.” Id. (citation omitted).

22

Here, plaintiff’s vague allegations of misrepresentations and omissions fail to meet the

Rule 9(b) pleading standard. For example, in paragraph 28, plaintiff alleges that “[s]ubsequent to

[Mr. Firestone’s] death, CitiMortgage Inc. fraudulently concealed the legal fact that [plaintiff] had

no personal obligation on the note[.]” (Doc. No. 1 ¶ 28.) Such an allegation falls well short of

satisfying “the who, what, when, where, and how” needed to establish fraudulent concealment.

Other allegations of concealment are pled with the same inattention to particularity. (See, e.g., id.

¶¶ 13 [laundry list of fraudulent acts taken at unknown times by unknown individuals], 15

[unknown individual “induced” Mr. Firestone at an unknown time and by unidentified

misrepresentations or concealments to agree to the loan].) Counts Seven and Eight also fail because

they do not meet the Rule 9(b) pleading requirements.9

9 For these same reasons, to the extent that plaintiff attempts to rely on fraudulent concealment to equitably toll the

various statutes of limitations applicable to her claims, the effort falls short of entitling her to tolling.

23

IV. CONCLUSION

Ultimately, the Court finds that all of the claims in plaintiff's complaint are barred by the

doctrine of res judicata. Additionally, the claims are fatally flawed because they are time-barred

and/or suffer from other pleading deficiencies. Accordingly, for the foregoing reasons, defendants’

dispositive motions (Doc. Nos. 27, 30) are granted, and plaintiff’s claims are dismissed.'° This

case is closed.

IT IS SO ORDERED.

Dated: August 12, 2022 Bs we

HONORABLE SARA LIOI

UNITED STATES DISTRICT JUDGE

10 Given that Kirkland’s counterclaims merely seek declarations that Kirkland holds a valid lien on the property and

that plaintiff is not entitled to rescind the loan under TILA, its counterclaims are rendered moot by the Court’s

dismissal of plaintiff's claims. See Fed. Deposit Ins. Corp. v. Project Dev. Corp., No. 86-5490, 1987 WL 37488, at

*3 (6th Cir. 1987) (Under the “mirror image” rule, a declaratory judgment complaint should be dismissed when it

“merely restates the issues as a ‘mirror image’ to the complaint” because it “serves no purpose.”); see, e.g., Pettrey v.

Enter. Title Agency, Inc., No. 1:05-cv-1504, 2006 WL 3342633, at *3 (N.D. Ohio Nov. 17, 2006) (in real estate fraud

action, “mirror image” declaratory judgment counterclaims were properly dismissed because they would be rendered

moot if plaintiffs did not prevail on the claims in their complaint).

24