# RAUSO v. FEIN

> District Court, E.D. Pennsylvania · December 21, 2022

URL: https://www.frixlaw.com/law-library/cases/10404695

## Case

- **Court:** District Court, E.D. Pennsylvania
- **Decided:** December 21, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

GENNARO RAUSO : CIVIL ACTION
Plaintiff, pro se :
: NO. 13-0693
v. :
:
BARBARA FEIN, et al. :
Defendants :

NITZA I. QUIÑONES ALEJANDRO, J. DECEMBER 21, 2022

MEMORANDUM OPINION

INTRODUCTION

This matter relates primarily to a mortgage foreclosure on a property located at 218 East
Wood Street in Norristown, Pennsylvania (the “Property”). Plaintiff Gennaro Rauso (“Rauso”),
proceeding pro se,1 filed a complaint averring over two hundred statutory and common law
violations by the mortgage holder and agents of the mortgage holder involved in the foreclosure
of the Property. By opinion and Order dated May 12, 2015, the Honorable Lawrence F. Stengel,
to whom this matter was assigned, dismissed many of the claims and stayed the action with respect
to the remaining claims pending completion of the underlying state-court foreclosure action. See
Rauso v. Fein, 2015 WL 2217411 (E.D. Pa. May 12, 2015). The state-court foreclosure action
ended, and this matter was reassigned to the undersigned following Judge Stengel’s retirement.
Presently, before the Court are the renewed motions to dismiss filed by Defendants U.S.
Bank, Select Portfolio Servicing, Inc., Fairbanks Capital Corporation, and Mortgage Electronic
Registration Systems, Inc. (collectively, “Moving Defendants”), seeking dismissal of all remaining
claims as barred by the doctrines of res judicata (claim preclusion) and collateral estoppel (issue

1 Rauso purports to bring this action on behalf of himself and as the assignee of the rights of Twenty
Six Schappert Terrace, LLC (“TSST”) and D and B Property Investors Corporation (“D&B”).
preclusion). [ECF 117, 127]. Rauso opposes the motions and simply argues that the state-court
judgement is void. [ECF 132]. For the reasons set forth herein, Moving Defendants’ motions to
dismiss are granted.

BACKGROUND
When considering a motion to dismiss for failure to state a claim pursuant to Federal Rule
of Civil Procedure (“Rule”) 12(b)(6), the court “must accept all of the complaint’s well-pleaded
facts as true, but may disregard any legal conclusions.” Fowler v. UPMC Shadyside, 578 F.3d
203, 210–11 (3d Cir. 2009). Here, the salient facts relevant to Rauso’s claims are set forth in great
detail in Judge Stengel’s previous opinion, Rauso, 2015 WL 2217411, at *1–4, and are

incorporated by reference herein. Additional facts relevant to Moving Defendants’ motions are
summarized as follows:
Elliotte Brown (“Brown”) purchased the Property on October 12, 2001. He
obtained a mortgage on the property for $56,000 from BNC Mortgage, Inc.
(“BNC”). The mortgage named Defendant Mortgage Electronic Registration
Systems, Inc. (“MERS”), as the mortgagee and BNC’s nominee. The mortgage
was recorded on October 31, 2001. Defendant Fairbanks Capital Corporation
(“Fairbanks”) serviced the mortgage from October 12, 2001 to March 23, 2003.
Thereafter, Defendant Select Portfolio Servicing, Inc. (“SPS”), became the
servicer. MERS assigned the note and mortgage to Defendant U.S. Bank (“U.S.
Bank”).
Brown later defaulted on the terms of the note and mortgage and, as a result,
on March 26, 2012, U.S. Bank initiated foreclosure proceedings in the Court of
Common Pleas of Montgomery County (the “State-Court Foreclosure Action”).2
On January 23, 2013, Rauso, as Brown’s agent-in-fact, “assigned himself
personally all of Brown’s rights, title, interests claims and defenses of every kind
and nature whatsoever.” (Am. Compl., ECF 18, at ¶ 90). On this same day, he also
assigned himself all of TSST’s rights, title, and interests, as TSST’s agent-in-fact
and its sole shareholder/officer. On February 4, 2012, Rauso—as sole stockholder,

2 Previous foreclosure actions were commenced but temporarily resolved by the negotiation of
various forbearance agreements.
President, Vice President, and Treasurer of D & B—assigned himself personally
all of D & B’s rights, title, and interests.
On January 29, 2013, Rauso filed a motion to intervene in the State-Court
Foreclosure Action. On February 6, 2013, he filed this pro se action, in both his
personal capacity and as assignee for Brown, TSST, and D & B, asserting 205
counts under 12 causes of action. As noted, this federal action was stayed pending
completion of the State-Court Foreclosure Action.
State-Court Foreclosure Action3
U.S. Bank, as the assignee of MERS, filed the State-Court Foreclosure
Action against Brown and TSST on March 26, 2012. That complaint asserted that
the transfer made from Brown to D & B, and D & B to TSST, without prior written
consent by the lender, violated the mortgage agreement. The complaint further
alleged other breaches of the mortgage agreement, and outlined fees and costs
requested as part of the foreclosure. The complaint also outlined what steps U.S.
Bank took prior to filing the complaint to comply with Pennsylvania’s Act 6.
On January 29, 2013, Rauso petitioned to intervene in the State-Court
Foreclosure Action. The Montgomery County court denied Rauso’s motion to
intervene on June 10, 2013, finding that Rauso had no property interest in the
Property and, therefore, did not have standing in the case. Rauso appealed the
decision to the Superior Court of Pennsylvania. On May 15, 2014, the Superior
Court quashed the appeal on the basis that the decision was not final and, therefore,
unappealable. The Superior Court denied Rauso’s application for re-argument on
July 17, 2014. Rauso appealed the Superior Court’s decision to the Pennsylvania
Supreme Court. On December 30, 2014, the Pennsylvania Supreme Court affirmed
the Superior Court’s decision to quash Rauso’s appeal.
The State-Court Foreclosure Action was resolved by judgment in favor of
the Trust and against all defendants, and the Property was subsequently sold at
sheriff’s sale in May 2021. There are no post-judgment motions or appeals pending
in the State-Court Foreclosure Action.

3 Both parties have asked the court to take judicial notice of certain facts found in other court
documents. A court “must take judicial notice if a party requests it and the court is supplied with the
necessary information.” Fed. R. Evid. 201(c). Judicial notice can be taken at any stage of a case. Fed. R.
Evid. 201(d). Matters of public record or facts that can be accurately and readily determined to be accurate
may be judicially noticed. See Fed. R. Evid. 201(b); City of Pittsburgh v. West Penn Power Co., 147 F.3d
256, 259 (3d Cir. 1998); see also Pension Ben. Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192,
1196 (3d Cir. 1993) (“[A] court may consider an undisputedly authentic document that a defendant attaches
as an exhibit to a motion to dismiss if the plaintiff’s claims are based on the document.”). This Court has
taken judicial notice of the information contained in the State-Court Foreclosure Action, as requested by
the parties and outlined below.
LEGAL STANDARD
When considering a Rule 12(b)(6) motion to dismiss, courts must determine whether the
complaint contains “sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The plausibility standard

requires more than a “sheer possibility that a defendant has acted unlawfully.” Id. “A claim has
facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678 (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “Threadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do not suffice.” Id. To survive a motion
to dismiss under Rule 12(b)(6), “a plaintiff must allege facts sufficient to ‘nudge [her] claims
across the line from conceivable to plausible.’” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234
(3d Cir. 2008) (quoting Twombly, 550 U.S. at 570).

DISCUSSION
Moving Defendants argue that Rauso’s remaining claims are barred by res judicata (claim
preclusion) and collateral estoppel (issue preclusion) because they are the same claims and/or
involve the same facts and issues as those raised, or that could have been raised, and adjudicated
in the State-Court Foreclosure Action. Generally, res judicata and collateral estoppel preclude
claims and issues that have previously been adjudicated to a final judgment in another court of
competent jurisdiction. See, e.g., Moncrief v. Chase Manhattan Mortg. Corp., 275 F. App’x 149,

153 (3d Cir. 2008).
In response, Rauso merely argues that these legal doctrines do not bar his claims because
the judgment in the State-Court Foreclosure Action is void ab initio. Specifically, Rauso contends
that the default judgment that was entered against Rauso’s predecessor-in-interest (Brown) was
void because it was premised on the state court’s incorrect determination that Brown had failed to
file a pleading to the complaint. Rauso is mistaken.
“The Rooker-Feldman doctrine prevents “inferior” federal courts from sitting as appellate
courts for state court judgments.” In re Knapper, 407 F.3d 573, 580 (3d Cir. 2005) (citations

omitted). A claim filed in federal court is barred by the doctrine under two circumstances:
first, if the federal claim was actually litigated in state court prior to
the filing of the federal action or, second, if the federal claim is
inextricably intertwined with the state adjudication, meaning that
federal relief can only be predicated upon a conviction that the state
court was wrong. In either case, Rooker-Feldman bars a litigant’s
federal claims and divests the District Court of subject matter
jurisdiction over those claims.

Id. A federal claim is “inextricably intertwined” with the state-court adjudication when:
(1) the federal court must determine that the state court judgment
was erroneously entered in order to grant the requested relief, or (2)
the federal court must take an action that would negate the state
court’s judgment . . . . In other words, Rooker–Feldman does not
allow a plaintiff to seek relief that, if granted, would prevent a state
court from enforcing its orders.

Id. at 581 (citation omitted).
As noted, Rauso responds to Defendants’ res judicata and collateral estoppel arguments
by arguing solely that the state-court judgment at issue is void. In light of this “void” argument,
Rauso cannot prevail on his federal claims here “without obtaining an order that ‘would negate the
state court judgment.’” Id. Because Rauso’s claims would require an order from this Court
effectively overturning the state court judgment, Rauso’s claims are inextricably intertwined with
the state court adjudication and, thus, barred by the Rooker-Feldman doctrine.
Rauso’s apparent reliance on the void ab initio exception to Rooker-Feldman is also
misplaced. The “rarely invoked ‘void ab initio’ exception to the Rooker-Feldman doctrine,”
typically only applies in bankruptcy proceedings and, then, is only applicable when it is apparent
that “the state court lacked personal or subject matter jurisdiction.” Schmitt v. Schmitt, 324 F.3d
484, 487 (7th Cir. 2003) (citing In re James, 940 F.2d 46, 52 (3d Cir. 1991)). In James, a state-
court judgment at issue was void because it violated the Bankruptcy Code’s automatic stay and,
therefore, subject-matter jurisdiction was lacking in the state court. 940 F.2d at 52. Here there

was no violation of the automatic stay or other problem with the subject matter of the Pennsylvania
judgment. As a result, the discussion of Rooker-Feldman in James in the context of a void ab
initio exception is not applicable.
Turning to Moving Defendants’ argument that Rauso’s remaining claims are barred by res
judicata and collateral estoppel, this Court notes again that Rauso has provided no argument in
response to Moving Defendants’ arguments other than his now rejected argument that the state-
court judgment is void. Notwithstanding the absence of any opposition by Rauso, this Court will
address Moving Defendants’ preclusion arguments.
As the United States Supreme Court has noted, the “[d]isposition of [a] federal action, once
the state-court adjudication is complete, would be governed by preclusion law.” Exxon Mobil

Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 293 (2005). “The Full Faith and Credit Act, 28
U.S.C. § 1738 . . . requires the court to ‘give the same preclusive effect to a state-court judgment
as another court of that State would give.’” Id. (citations omitted). Two possible preclusion
doctrines apply in Pennsylvania, to wit: res judicata and collateral estoppel. In Pennsylvania,
such preclusion doctrines “‘[foreclose] re-litigation in a later action of an issue of fact or law which
was actually litigated and which was necessary to the original judgment.’” Dici v.
Pennsylvania, 91 F.3d 542, 548 (3d Cir. 1996) (quoting Hebden v. Workmen’s Comp. Appeal
Bd., 632 A.2d 1302, 1304 (Pa. 1993)). Application of the doctrine of res judicata requires
concurrence of four elements: “(1) identity of the thing sued for; (2) identity of the cause of action;
(3) identity of the persons and parties to the action; (4) identity of the quality of the persons for or
against whom the claim is made.” Pittsburgh v. Zoning Bd. of Adjustment, 559 A.2d 896, 901 (Pa.
1989). “Collateral estoppel applies if (1) the issue decided in the prior case is identical to one
presented in the later case; (2) there was a final judgment on the merits; (3) the party against whom

the plea is asserted was a party or in privity in the prior case; (4) the party or person in privity to
the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue
in the prior proceeding and (5) the determination in the prior proceeding was essential to the
judgment.” Id.
Here, Rauso’s remaining claims against Moving Defendants all involve challenges and
determinations to the note, mortgage, and State-Court Foreclosure Action, or seek to preclude
Moving Defendants from prosecuting the State-Court Foreclosure Action. In the State-Court
Foreclosure Action, which was litigated between Moving Defendants and Rauso’s predecessor-in-
interest,4 the state court necessarily determined that the note and mortgage were valid and
enforceable because the court could not have otherwise entered judgment in favor of U.S. Bank.

See In re Calabria, 418 B.R. 862, 866–67 (W.D. Pa. 2009) (“In Pennsylvania, actions in mortgage
foreclosure are dependent on the existence of a valid mortgage. Without a valid mortgage, there
is simply nothing to foreclose upon.”). These undisputed facts—nowhere challenged by Rauso—
meet each of the requirements of both res judicata and collateral estoppel. As such, Rauso’s
remaining claims against Moving Defendants are barred. Accordingly, Moving Defendants’
motions to dismiss are granted.

4 Notably, Rauso attempted to intervene in the State-Court Foreclosure Action, though his attempt
was rejected by the state courts.
CONCLUSION
For the reasons set forth above, Moving Defendants’ motions to dismiss are granted with
respect to all of Rauso’s remaining claims. An Order consistent with this Memorandum Opinion
follows.

NITZA I. QUIÑONES ALEJANDRO, J.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10404695. Public record. Not legal advice.