Edwards v. McMillen Capital, LLC
| Decision Date | 29 March 2021 |
| Docket Number | No. 3:18-cv-346 (SRU),3:18-cv-346 (SRU) |
| Court | U.S. District Court — District of Connecticut |
| Parties | PAUL EDWARDS, Plaintiff, v. MCMILLEN CAPITAL, LLC, Defendant. |
Litigation between the parties in this action, stemming from a dispute over the terms and purpose of a 2012 loan transaction, has been ongoing since 2015. Following lengthy proceedings in state court that resulted in dismissal for failure to prosecute, Paul Edwards, proceeding pro se, filed the instant complaint in February 2018. In that complaint and the subsequent amended complaint, Edwards raises substantially the same claims that he raised in state court. Specifically, Edwards contends that terms of a loan extended to him by McMillen Capital, LLC were improperly structured as a commercial (rather than consumer) transaction and that those terms violated the federal Truth in Lending Act (TILA) (15 U.S.C. §§ 1601, et seq.), the Connecticut Truth in Lending Act (Conn. Gen. Stat. § 36a-675, et seq.) and the Connecticut Unfair Trade Practices Act (CUTPA) (Conn. Gen. Stat. § 42-110a et seq.). He additionally brings claims of negligence, negligent infliction of emotional distress and breach of the implied covenant of good faith and fair dealing. The action was dismissed in 2018 as barred under the Rooker-Feldman doctrine, and Edwards timely appealed. After the Second Circuit vacated the dismissal and remanded the case, McMillen Capital again moved for dismissal of all claims. For the following reasons, the motion to dismiss is granted.
The dispute in this case centers on a loan transaction that took place in April 2012, nearly nine years ago. Am. Compl. Doc. No. 8 at 4. In March of that year, Edwards entered into a real estate purchase contract with Fannie Mae for a property located at 7 New Lane, Cromwell, Connecticut. See id; see also Pl.'s Ex. G, Doc. No. 60-7. To finance the purchase of the home, Edwards obtained a loan from McMillen Capital secured by a mortgage on the property and evinced by a note. See Am. Compl. Doc. No. 8 at 23, Pl.'s Ex. J, Doc. No. 60-10. The terms of the mortgage note specifically provided that the loan was a commercial transaction. See id. The note (as well as the loan commitment letter) additionally provided, however, that Edwards was obligated to occupy the property within 60 days of executing the note and must continue to occupy the property for at least one year. See id; see also Def.'s Exhibit G, Doc. No. 53. Edwards also confirmed his intention to "owner occupy" the property to McMillen Capital prior to the execution of the mortgage note. See Pl.'s Ex. H, doc. No. 60-8.
Relying on those documents, Edwards contends that McMillen Capital was aware of his intention to use the loan to purchase his primary residence and therefore violated various provisions of federal and state law by structuring the terms of the loan as a commercial rather than consumer transaction. McMillen Capital moves for dismissal on the grounds that Edwards' claims are barred by res judicata and collateral estoppel, as well as by the relevant statutes of limitations. McMillen Capital additionally contends that Edwards has failed to state a claim for negligence, breach of the implied covenant of good faith and fair dealing, NIED or a violation of CUTPA.
For the following reasons, the motion to dismiss is GRANTED.
The history of litigation in state court between the parties is relatively lengthy. Relevant here, Edwards filed a complaint with the Connecticut Banking Commission regarding the terms of the loan in December 2013; he then filed a complaint in Middlesex Superior Court on June 24, 2015. See Exhibit D Doc. No. 60-4. He amended the complaint in October of 2015 and revised it twice (on January 20, 2016 and again on February 29, 2016). Id. Following that second revision, McMillen Capital filed a motion to strike the complaint in its entirety, which was granted by Judge Aurigemma on November 4, 2016.1 Id.Edwards timely filed a substitute complaint, which McMillen also moved to strike. Id. Judge Domnarski granted that motion on June 7, 2017. Id. Edwards filed a second substitute complaint on June 19, 2017. Id. On July 17, 2017 McMillen filed a request to revise that second substitute complaint, requesting that Edwards delete the complaint in its entirety because it was duplicative of the previously struck complaint. Id. Edwards filed an objection to the request to revise, which was overruled by Judge Domnarski on August 28, 2017. Id.
Edwards then filed a third substitute complaint on September 12, and a motion for a continuance to extend the date to close the pleadings, which was denied. Id. On September 18, Edwards filed a motion to restore the second substitute complaint to the docket and to withdraw the third substitute complaint. The court does not appear to have acted on that motion. Id. On September 20, 2017 the action was dismissed for failure to prosecute on the grounds that Edwards had failed to timely close the pleadings. See Pl.'s Exhibit C Doc. No. 60-3. Edwards filed a motion to reopen the judgment of dismissal, which was denied. Id.
On February 27, 2018 Edwards filed the original complaint in the case at bar. He amended the complaint on March 20, 2018. See Compl. Doc. No. 1; see also Am. Compl. Doc. No 8. In the amended complaint, at issue here, Edwards alleges five separate claims related to the 2012 loan transaction, including: (1) violations of TILA and the Connecticut TILA; (2) violations of CUTPA; (3) negligence; (4) negligent infliction of emotional distress and; (5) breach of the implied covenant of good faith and fair dealing. On May 4, 2018 McMillen Capital moved to dismiss the amended complaint, arguing that the claims were barred under the doctrines of res judicata, collateral estoppel and Rooker-Feldman. See First Mot. to Dismiss, Doc. No. 14 at 1. In the alternative, McMillen Capital argued that the claims were legally insufficient and barred by various statutes of limitations. Id.
On October 10, 2019 following a hearing, I granted the motion to dismiss on the grounds that the claims were barred under the Rooker-Feldman doctrine. See Min. Entry Doc. No. 37; see also Trans. of Mot. Hrg., Doc. No 47. Edwards timely appealed the dismissal. See Not. of Appeal, Doc. No. 42. The Second Circuit vacated the dismissal and remanded the case, holding that despite the state court's carefulconsideration of Edwards' claims and the similarity between those claims and the claims raised in the amended complaint, the action was not barred under the Rooker-Feldman doctrine. See Edwards v. McMillen Capital, LLC, 952 F.3d 32 (2d Cir. 2020). The Court focused specifically on the fact that the action was ultimately not dismissed on the merits, but instead was dismissed for failure to prosecute. Because the action had not been finally decided on the merits by the state court, consideration in federal court of the same claims was not precluded under the Rooker-Feldman doctrine. Id.
McMillen Capital subsequently filed this second motion to dismiss, arguing that the claims are barred by res judicata and collateral estoppel. See generally Mem. in Supp. of Mot. to Dismiss, Doc. No. 53 ( ). In the alternative, McMillen Capital contends that the claims should be dismissed as legally insufficient and barred by the relevant statutes of limitations. Id. Edwards maintains that his claims are not barred by res judicata or collateral estoppel because the dismissal for failure to prosecute was not a judgment on the merits. See Mem. in Opp. to Sec. Mot. to Dismiss ("Pl.'s Mem."), Doc. No. 60 at 10, 13, 19. Edwards additionally maintains that his claims are both timely and adequately pleaded.
A motion to dismiss for failure to state a claim under Rule 12(b)(6) is designed "merely to assess the legal feasibility of a complaint, not to assay the weight of evidence which might be offered in support thereof." Ryder Energy Distribution Corp. v. Merrill Lynch Commodities, 748 F.2d 774, 779 (2d Cir. 1984) (quoting Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980)). A court considering a motion under Rule 12(b)(6) must accept the material facts alleged in the complaint as true, draw all reasonable inferences in favor of the plaintiffs, and decide whether it is plausible that plaintiffs have a valid claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007); Leeds v. Meltz, 85 F.3d 51, 53 (2d Cir. 1996). Although a plaintiff bears the burden of establishing plausibility at the pleading stage, the standard is "not akin to a probability requirement." Iqbal, 556 U.S. at 678. Instead, the well-pleaded facts must "permit the court to infer more than the mere possibility of misconduct" in order to establish a right to relief. Id. at 679.
A court deciding a Rule 12(b)(6) motion is additionally limited to considering facts alleged in the complaint, and generally may not look to evidence outside the pleadings. "When matters outside the pleadings are presented in response to a 12(b)(6) motion, a district court must either exclude the additional material and decide the motion on the complaint alone or convert the motion to one for summary judgment." Friedl v. City of New York, 210 F.3d 79, 83 (2d Cir. 2000) (internal citations omitted). Under established precedent in this Circuit, a court may additionally consider "documents attached to the complaint as an exhibit or incorporated in it by reference", "matters of which judicial notice may be taken", and "documents either in plaintiffs' possession or of which plaintiffs had knowledge and relied on in bringing suit" without converting the motion to one for summary judgment. Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993). A court may additionally consider "documents used by [a] defendant" so long as a plaintiff has "actual notice of all the...
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