In Clark v. Cavalry Portfolio Services, LLC, 2017 WL 6757224, at *4 (S.D.N.Y., 2017), Judge Bricetti found that the adequacy of service of process was not litigated in the underlying debt collection suit and could form the basis of an FDCPA claim.
Thus, pursuant to the transactional approach applied under New York law when analyzing whether an issue was or could have been raised in a prior proceeding, this claim is not barred by res judicata. See, e.g., Toohey v. Portfolio Recovery Assocs., LLC, 2016 WL 4473016, at *5 (S.D.N.Y. Aug. 22, 2016) (res judicata did not bar claim that “[d]efendants filed a false, misleading or deceptive affidavit and were engaged in an ongoing scheme to defraud putative debtors,” because it did not “arise out of the same factual grouping as the underlying debt-collection lawsuit”); Cameron v. LR Credit 22, LLC, 998 F. Supp. 2d 293, 298 (S.D.N.Y. 2014) (res judicata did not bar claim regarding deceptive state court action because state court judgment “determined [plaintiff’s] liability,” whereas plaintiff’s federal claim “relate[d] to Defendants’ alleged misconduct that preceded the Settlement and subsequent judgment. Although [plaintiff] might have raised these allegations as defenses or counterclaims, New York law did not require her to do so.”).

On the other hand, Judge Kelly found in Tiene v. Law Office of J. Scott Watson, P.C., 2018 WL 278704, at *7 (E.D.Pa., 2018) that the issue of service of process — although not precluded by the Rooker-Feldman doctrine — was, in fact, litigated in the underlying state court action, precluding that issue from forming the basis for an FDCPA claim.

Applying the requirements of issue preclusion to this case, we believe that all three elements are satisfied. First, the allegation of improper service of process is identical in both the Municipal Court Lawsuit and the Federal Lawsuit. Second, the service issue was clearly litigated in the first action, as the Municipal Court Judge made a specific finding that JSW and Drexel did not engage in any kind of misrepresentation with regard to serving Tiene at the Boonton Address. Indeed, the Municipal Court Judge stated as follows at the May 11, 2017 hearing:
The Court: Okay, well I think that it’s all based on reasonableness, but okay. I am going to – listen, not for the reason you stated in terms of whether or not I believe – I do not believe that [Tiene] was intentionally not notified. I believe that [Drexel and JSW] used information available to them, and it might have even been supplied by [Tiene]. So, I am putting that on the record, but I am going to vacate the [default] judgment and we are going to have the hearing.
(Defs.’ Mem. Support Mot. Summ. J., Ex. 11 at 18-19) (emphasis added). The Municipal Court Judge made a specific finding on the service issue, concluding that service was based on reasonableness and that JSW and Drexel did not engage in intentional wrongdoing. Tiene merely seeks to relitigate an issue that was already decided in state court. Therefore, issue preclusion bars his claim in this Court that service of process of the Municipal Court Lawsuit was somehow improper.