In Webb v. Midland Credit Mgmt., No. 20cv2211-MMA-WVG, 2021 U.S. Dist. LEXIS 173479, at *11-12 (S.D. Cal. Sep. 13, 2021), Judge Anello dismissed an FDCPA claim challenging the propriety upon which a state court debt judgment was obtained. The facts were as follows:
On December 11, 2018, Midland filed a state court complaint against Plaintiff “for the principal amount of $2,183.46 and costs of $246.00 for a total of $2,429.46.” See Doc. No. 3-4 at 2.1 Shortly after, a Midland employee, Jeanette Ruff (“Ruff”), prepared a “Declaration in Lieu of Testimony” (“Declaration”), served Plaintiff with the Declaration, see FAC ¶ 12, and filed the Declaration with the state court. See Doc. No. 16-9 at 2. However, Plaintiff’s service copy allegedly differed from the copy filed with the court in so far as Plaintiff’s copy was missing the first two and a half paragraphs of Ruff’s declaration testimony. Compare Doc. No. 3-2 with Doc. No. 3-3. Plaintiff alleges he was not aware of the missing content until after the state court issued its final order and judgment. See FAC ¶ 22. The missing paragraphs included Ruff’s statement that she is an officer of Midland, which the state court accepted as true. See Doc. No. 3-4 at 3. Ruff’s characterization as an officer was dispositive to the outcome of the state court action. See Doc. No. 3-4 at 3. Specifically, absent Ruff’s characterization as an officer of Midland, the state court would not have admitted the Declaration into evidence in lieu of Ruff’s live testimony at trial. See FAC ¶¶ 17-19, 22. Ruff’s declaration testimony provided the key evidence which in the state court’s judgment established Plaintiff’s liability on account stated and breach of contract theories for the full amount of the debt owed. See Doc. No. 3-4 at 3-4. Plaintiff alleges, however, that “R[uff] was never an officer” and that Defendants’ “characterization of R[uff] as an ‘officer’ . . . was false and misleading.” See FAC ¶¶ 13-14. Plaintiff alleges that the misrepresentation violated sections 1692e, 1692f, and 1692k of the FDCPA and seeks actual damages, statutory damages, costs, and reasonable attorney fees.
Judge Anello found that the Rooker-Feldman doctrine did not bar the claim.
Here, Plaintiff asserts as his injury that Defendants’ “characterization of R[uff] as an ‘officer’ . . . was false and misleading” and this “false and misleading assertion to the [State] Court in the Underlying Action that Ruff was an officer, and Defendants’ concealment of this assertion from [Plaintiff] were acts that, both separately and in connection with one another, constituted unfair and misleading conduct resulting in damage” to Plaintiff and violation of the FDCPA. FAC ¶¶ 14, 23. According to Plaintiff, “Defendants’ false and misleading conduct ultimately was the deciding factor in the Underlying Action, resulting in an improperly obtained judgment against” Plaintiff. Id. ¶ 21. Plaintiff seeks as his remedy actual damages, statutory damages, costs, and reasonable attorney fees pursuant to 15 U.S.C. § 1692k. Thus, while Plaintiff “den[ies] a legal conclusion [*12] that a state court has reached in a case to which [Plaintiff] was a party,” Exxon Mobil Corp., 544 U.S. at 293, he does not seek expressly “relief from the state court judgment.” Kougasian, 359 F.3d at 1140. Accordingly, the Court finds that this action is not barred by the Rooker-Feldman doctrine. See, e.g., Jenkins-Brown v. Liberty Acquisitions Servicing, LLC, No. 3:14-cv-01610-ST, 2015 U.S. Dist. LEXIS 125044, at *15 (D. Or. July 29, 2015) (citing Foster v. D.B.S. Collection Agency, 463 F Supp2d 783, 798 (S.D. Ohio 2006) (Rooker-Feldman does not bar FDCPA claim when plaintiffs’ alleged injuries “are not the result of the state court judgments themselves, but rather from the allegedly illegal practices Defendants used to obtain those state court judgments.”)).
But, Judge Anello instead held that collateral estoppel barred the Plaintiff’s claim.
Here, Plaintiff does not dispute that all the elements for collateral estoppel are satisfied. The parties were in privity and there was a final judgment on the merits in the state court action. See, e.g., Dailey v. City of San Diego, 223 Cal. App. 4th 237, 255 (2013). In addition, the underlying facts of Plaintiff’s current claims were within the scope of the state court action as clearly indicated in the state court record. Plaintiff elected to place the Ruff Declaration and Defendants’ use thereof and reliance thereon squarely at issue in the state court action. After considering Plaintiff’s multiple objections to the Ruff Declaration and overruling them all, the state court determined that the Declaration was valid and admissible. Plaintiff could have challenged the legal adequacy of the service of the Declaration – the gravamen of his current claim – in the state court action; he did not do so. Plaintiff also could have availed himself of his right to pursue a direct appeal from the judgment entered against him; he did not do so. The relevant facts were within the scope of the state court action, “related to the subject-matter and relevant to the issues, so that [they] could have been raised,” and therefore “the [state court] judgment is conclusive.” Villacres v. ABM Industries Inc., 189 Cal. App. 4th 562, 576 (2010); see also Basurto v. Imperial Irrigation Dist., 211 Cal. App. 4th 866, 888 (2012) (“[E]ven though the causes of action be different, the prior determination of an issue is conclusive in a subsequent suit between the same parties as to that issue and every matter which might have been urged to sustain or defeat its determination.”) (quoting Pacific Mut. Life Ins. Co. v. McConnell, 44 Cal. 2d 715, 724-725 (1955)). Moreover, “the public policies underlying collateral estoppel—preservation of the integrity [*16] of the judicial system, promotion of judicial economy, and protection of litigants from harassment by vexatious litigation”—are served in this case. Lucido, 51 Cal. 3d at 343. Plaintiff’s conclusory assertion that he failed to raise the underlying factual issues in the state court action “because Midland thwarted” his “ability to fully litigate the claims” is not well-taken. Doc. No. 22 at 22. The record clearly reflects that Midland filed the Ruff Declaration on the docket of the state court action on November 13, 2019. See Doc. Nos. 3-3, 16-5, and 16-9. The filed copy of the declaration was publicly available and accessible by Plaintiff, proceeding through counsel, at the time Plaintiff filed his trial brief on December 16, 2019 and prior to trial on December 17, 2019. See Doc. No. 16-9. Plaintiff therefore had the opportunity to challenge the Ruff Declaration in all relevant respects – including any discrepancies between the service copy and the filed copy – at trial as well as during post-trial proceedings. Plaintiff’s contrary allegations that “behind [his] back, Defendants presented legally significant, differing information to the adjudicating officer” and “Defendants’ assertion that Ruff is an ‘officer’ was never revealed to [Plaintiff] or counsel until the issuance of the statement of decision in the Underlying Action,” FAC ¶¶ 16, 22, are belied by the state court record – which Plaintiff himself does not challenge as accurate – and therefore need not be taken as true by the Court. See Lazy Y Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008) (court “need not accept as true allegations contradicting documents that are referenced in the complaint or that are properly subject to judicial notice.”); see also Stewart v. Kodiak Cakes, LLC, No. 19-cv-2454-MMA (MSB), 2021 U.S. Dist. LEXIS 82267, at *85 (S.D. Cal. Apr. 28, 2021) (“A court does not accept as true allegations contradicted by documents attached to or referred to in the complaint [or] matters subject to judicial notice. . ..”). Ultimately, Plaintiff “had an adequate incentive to fully litigate” these issues in the state court proceeding and “had a fair opportunity” to do so. Murphy, 164 Cal. App. 4th at 404 (internal citations omitted). Plaintiff is collaterally estopped from litigating these issues in this court. See, e.g., Kemper v. Cty. of San Diego, 242 Cal. App. 4th 1075, 1090 (2015) (“[T]he fact a party asserts new legal or factual theories or new evidence relevant to an issue previously decided does not affect the applicability of the collateral estoppel bar.”). And because collateral estoppel bars this action, amendment of Plaintiff’s complaint would be futile; thus, dismissal is with prejudice. See, e.g., Rainwater v. Banales, 2008 WL 5233138, at *9 n.6 (C.D. Cal. Dec. 15, 2008) (“Because of the unavoidable applicability of res judicata and collateral estoppel, granting Plaintiff leave to amend would be futile.”); see also Cruz v. Child Welfare Servs., Civ. No. 16-00669 JMS-KSC, 9-10 (D. Haw. Feb. 28, 2017).