Smith v. Lerner, Sampson & Rothfuss, L.P.A., et al

File Name:16a0470n.06; No. 15-3563
The Sixth Circuit Court of Appeals affirmed the decision of the district court which held that the borrower's claims against the defendants for an FDCPA violation were untimely and the borrower's claim against the defendants under RICO were barred by res judicata.
Procedural context:
Residential mortgage loan to borrower with sale of loan by originating mortgagee to FHLMC. MERS transferred note and mortgage to Bank of America which then filed state court foreclosure. Default judgment granted in foreclosure and borrower's motion to vacate under Rule 60(b) also denied. No appeal by borrower from either ruling. Borrower filed bankruptcy the day before state court foreclosure sale and subsequently filed suit in district court under FDCPA, RICO and state law against BOA, MERS, law firm and others.
District court found that the FDCPA claim was untimely due to the failure to bring the claim within one year of the filing of the state court case. The district court also found that the RICO claim was based on facts that constituted a compulsory counterclaim that was not brought by borrower in the state court action. Once district court dismissed the FDCPA claim and the RICO claim it then declined to exercise supplemental jurisdiction over the state law claims and dismissed those as well. On appeal, the Sixth Circuit reviewed the district court decision de novo. The FDCPA claim arose on filing of the state court action - four years before the district court suit- and was time barred. Under claim preclusion and issue preclusion, the doctrine of res judicata barred the RICO claim. The district court's decision not to exercise supplemental jurisdiction over the state law claims was within its discretion.
Boggs, Rodgers and Berg- District Judge sitting by designation

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