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Elam v. Aurora Services Loan, LLC

United States District Court, W.D. Tennessee, Western Division

May 2, 2018

LINDA S. ELAM, FREDERICK J. ELAM, Plaintiffs,
v.
AURORA SERVICES LOAN, LLC, AURORA COMMERCIAL CORPORATION, HSBC BANK USA, N.A., LEHMAN BROTHERS, WEIL, SOTSALL AND MANGESS ATTORNEYS, COLLETTE FARLEY, NATIONSTAR MORTGAGE, LLC, MORTGAGE ELECTRONIC REGISTRATION SERVICES, REALTY MORTGAGE CORPORATION, FIRST BANK, Defendants.

          ORDER ADOPTING MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION, DENYING PLAINTIFFS' MOTION TO AMEND, AND GRANTING DEFENDANTS' MOTIONS TO DISMISS

          THOMAS L. PARKER, UNITED STATES DISTRICT JUDGE.

         Several motions, including Defendants' Motion to Dismiss and Plaintiffs' Motion to Amend their Complaint, were referred to the Magistrate Court for a Report and Recommendation (“R&R”). (ECF No. 81.)[1] In a comprehensive decision, the Magistrate Court recommended denying Plaintiffs' Motion to Amend and granting Defendants' Motions to Dismiss. (ECF No. 85.) Plaintiffs filed timely objections to the R&R. (ECF No. 86.) Now, after reviewing each parties' filings, the Court adopts the R&R, denies Plaintiffs' Motion to Amend and grants Defendants' Motions to Dismiss.

         STANDARD OF REVIEW

         “Within 14 days after being served with a copy of the recommended disposition, a party may serve and file specific written objections to the proposed findings and recommendations.” Fed.R.Civ.P. 72(b)(2). The “failure to properly file objections constitutes a waiver of appeal.” See Howard, 932 F.2d at 508 (citing United States v. Walters, 638 F.2d 947, 950 (6th Cir. 1981)). But, when a timely objection is filed, “[t]he district judge must determine de novo any part of the magistrate judge's disposition that has been properly objected to.” Fed.R.Civ.P. 72(b)(3). After conducting a de novo review, a district court need not articulate all the reasons it that rejects a party's objections. Tuggle v. Seabold, 806 F.2d 87, 92 (6th Cir. 1986).

         DISCUSSION

         Plaintiffs did not object to the R&R's Findings of Fact. This Court reviewed the record and finds the R & R's thorough recitation of facts is correct and complete. (R & R, ECF 85, PageID 818-826.) Accordingly, this Court ADOPTS the R&R's proposed Findings of Fact.

         Plaintiffs object to the R&R on these grounds-(1) the Magistrate Judge misapplied the doctrine of res judicata (2) improperly barred Plaintiffs' claims under the applicable statutes of limitation and (3) generally erred in recommending a denial of Plaintiffs' Motion to Amend and a grant of Defendants' Motions to Dismiss. (ECF No. 86.) The Court takes each of these arguments in turn.

         A. Plaintiffs' Claims are Barred by the Doctrine of Res Judicata.

         This Court must apply Tennessee law on res judicata. See Perez v. Aetna Life Ins. Co., 150 F.3d 550, 555 n. 5 (6th Cir. 1998); Gen. Elec. Med. Sys. Europe v. Prometheus Health, 2010 WL 3521918, at *5 n. 1 (6th Cir. 2010). The Tennessee Supreme Court and the Sixth Circuit both adopt the Second Restatement's definition of res judicata. See Creech v. Addington, 281 S.W.3d 363, 380-81 (Tenn. 2009); J.Z.G. Res., Inc. v. Shelby Ins. Co., 84 F.3d 211, 215 (6th Cir. 1996); Wheeler v. Dayton Police Dep't, 807 F.3d 764, 767 (6th Cir. 2015). The Second Restatement's conception of res judicata, thus, frames our discussion.

         The doctrine of res judicata addresses previous adjudication. Under res judicata, a court will bar a claim if that claim was “definitively settled by [a prior] judicial decision” (a final judgment on the merits). Res Judicata, Black's Law Dictionary (10th ed. 2014); see Taylor v. Sturgell, 553 U.S. 880, 882 (2008); Restatement (Second) of Judgments §§ 17, 24 (1982). The doctrine thus accomplishes a twofold goal-giving full faith and credit to other courts of competent jurisdiction and conserving judicial resources by barring plaintiffs from getting a second bite at the apple when the cases arise out the same transaction or series of transactions. See 28 U.S.C. § 1738; Restatement (Second) of Judgments § 18. Though res judicata outlines the general preclusive effects of prior adjudications, it really encompasses two separate concepts-claim preclusion and issue preclusion. See Restatement (Second) of Judgments §§ 17, 24 (1982).

         Claim preclusion “foreclose[es] any litigation of matters that never have been litigated because of the determination that they should have been advanced in an earlier suit.” Charles Alan Wright & Mary Kay Kane, Law of Federal Courts 722-23 (5th ed. 1994); see Restatement (Second) of Judgments § 17; Kane v. Magna Mixer Co., 71 F.3d 555, 560 (6th Cir. 1995). If the plaintiff prevailed in a prior judgment, “[t]he plaintiff cannot thereafter maintain an action on the original claim or any part thereof . . . and [i]n an action upon the judgment, the defendant cannot avail himself of the defenses he might have interposed, or did interpose, in the first action.” Restatement (Second) of Judgments § 18. If the defendant prevailed in the prior judgment, the judgment “bars another action by the plaintiff on the same claim.” Id. at § 19.

         Issue preclusion “foreclose[es] relitigation of matters that have once been litigated and decided.” Wright at 722-23 supra; see Kane, 71 F.3d at 560; Restatement (Second) of Judgments § 17. In other words, “[w]hen an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.” Restatement (Second) of Judgments § 27.

         This action concerns a dispute over title to a piece of property-50 Brierwood Circle, Piperton, Tennessee 38107 (“Brierwood”)-specifically who owns Brierwood. Plaintiffs' Complaint “request[s] the court to have the property remain in the name of [Plaintiffs' trust] . . . and have all mortgages and liens removed . . . .” (ECF No. 1 at PageID 6.)

         Plaintiffs previously litigated the state of Brierwood's title in Fayette County, Tennessee, Chancery Court. See Nationstar Mort., LLC v. Elam, No. 15895 (Tenn. Ch. Ct. May 8, 2015). The Chancery court found that Plaintiffs received a mortgage in which “the intent of the parties to the transaction was that [Brierwood] would be collateral for the loan.” Id. at 3-4. Thus, the Chancery Court reformed Brierwood's title “to reflect that the interest of [Plaintiffs' trust] . . . was effectively conveyed” through a deed of trust that ...


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