United States District Court, W.D. Washington, Seattle
KAREN D. SMITH, Plaintiff,
BANK OF NEW YORK MELLON, et al., Defendants.
C. Coughenour United States District Judge.
matter comes before the Court on Defendant Malcolm &
Cisneros' (“M&C”) motion to dismiss (Dkt.
No. 21). Having thoroughly considered the parties'
briefing and the relevant record, the Court finds oral
argument unnecessary and hereby DENIES the motion for the
reasons explained herein.
February 9, 2007, Plaintiff Karen D. Smith obtained a loan
from Mortgage Solutions Management, Inc. and secured the loan
with a deed of trust on the residence. (Dkt. No. 10 at 4.) In
July 2007, Plaintiff stopped making payments on the loan.
(Id.) Shortly thereafter, Plaintiff filed for
bankruptcy and her mortgage loan was eventually discharged.
(Id. at 5.) Defendant Bank of New York Mellon
retained an in rem interest in Plaintiff's
property after the discharge and recorded a series of notices
of trustee's sales from 2009 through 2016, though none of
the sales occurred. (Id. at 5-6.) In November 2016,
Plaintiff initiated mediation under Washington's
Foreclosure Fairness Act. (Id. at 6.) During
mediation, Plaintiff was informed that her loan modification
application was denied. (Id.) Plaintiff alleges that
M&C, who represented the loan servicer Defendant
Shellpoint, stopped participating in mediation. (Id.
at 6-7.) On January 10, 2018, a foreclosure mediation
certificate was issued stating that “[Defendant
Shellpoint] failed to timely participate in mediation.”
(Dkt. 10-2 at 3.)
April 11, 2018, M&C filed a judicial foreclosure
complaint on behalf of Defendant Bank of New York Mellon in
King County Superior Court against Plaintiff's property.
(Dkt. No. 10 at 7.) After being removed to federal court,
Judge Thomas S. Zilly dismissed the judicial foreclosure
complaint with prejudice, finding that it was time-barred.
(Id.); see The Bank of New York Mellon v. Karen
D. Smith, No. C18-0764-TSZ, Dkt. No. 16 (W.D. Wash.
subsequently filed this lawsuit, alleging that M&C is a
debt collector and violated the Washington Consumer
Protection Act (“CPA”), Revised Code of
Washington § 19.86.020, and the Federal Fair Debt
Collection Practices Act (“FDCPA”), 15 U.S.C.
§ 1692, when it filed a lawsuit to collect on a
time-barred mortgage debt. (Dkt. No. 10 at 9-11, 15-16.)
M&C moves to dismiss all claims against it pursuant to
Federal Rule of Civil Procedure 12(b)(6). (Dkt. No. 21.)
Federal Rule of Civil Procedure 12(b)(6) Legal
defendant may move to dismiss a complaint if a plaintiff
“fails to state a claim upon which relief can be
granted.” Fed.R.Civ.P. 12(b)(6). A motion to dismiss
can be based on the lack of a cognizable legal theory or on a
lack of sufficient facts alleged. Balistreri v. Pacifica
Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988).
“To survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to state
a claim for relief that is plausible on its face.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
“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. While detailed
factual allegations are not necessary, mere conclusory
statements or “a formulaic recitation of the elements
of a cause of action” will not suffice. Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 545 (2007).
ruling on a motion to dismiss for failure to state a claim,
the Court may consider the complaint, documents attached to
the complaint, documents incorporated by reference in the
complaint, or matters that are subject to judicial notice.
U.S. v. Ritchie, 342 F.3d 903, 907-08 (9th Cir.
2003). The Court may judicially notice adjudicative facts
that are not in dispute. Fed.R.Evid. 201(a)-(b). Adjudicative
facts are those that a jury would review. See Fed.
R. Evid. 201(a) advisory committee's notes to 1972
proposed rules. M&C asks the Court to take judicial
notice of three notices of discontinuance of trustee's
sale recorded against Plaintiff's property and the
judicial foreclosure complaint filed in the prior lawsuit
between the parties. (Dkt. No. 21 at 3-4, 12.)
the facts contained in the discontinuance notices are not
disputed, the Court finds that judicial notice of these
documents is unnecessary. M&C attaches these notices to
support its argument that the judicial foreclosure complaint
was not time-barred. (Dkt. No. 21 at 8.) However, Judge Zilly
already ruled that the judicial foreclosure complaint was
time-barred. See The Bank of New York Mellon, No.
C18-0764-TSZ, Dkt. No. 16. The Court agrees with Plaintiff
that M&C is collaterally estopped from re-litigating the
statute of limitations issue in this case. All of the
elements of collateral estoppel apply here: (1) the issue
decided in the previous case is identical to the issue raised
here; (2) Judge Zilly entered a final judgment on the merits;
(3) M&C was in privity with the plaintiffs in the
previous case; and (4) application of collateral estoppel
does not work an injustice against M&C. See
Christensen v. Grant County Hosp. Dist. No. 1, 96 P.3d
957, 961 (Wash. 2004).
Court also finds it unnecessary to judicially notice
M&C's previous judicial foreclosure complaint.
M&C attaches the complaint in support of its argument
that it is not a debt collector. (Dkt. No. 21 at 12.) M&C
argues that the judicial foreclosure complaint only sought to
foreclose the deed of trust and did not seek a deficiency
judgment against Plaintiff. (Id.) However, both the
judicial foreclosure complaint and Plaintiff's amended
complaint state that M&C sought attorney fees and other
expenses from Plaintiff in the prior action. (Dkt. Nos. 21-4
at 6, 10 at 11.) In other words, the judicial foreclosure
action could have resulted in a monetary judgment against
Plaintiff. Thus, even if the Court were to take judicial
notice of the judicial foreclosure complaint, Plaintiff is
not precluded from stating a claim upon which relief can be
granted under the FDCPA. Therefore, M&C's request for
judicial notice is DENIED.