Fielder v. Credit Acceptance Corp.

• Decision Date: 08 May 1998
• Docket Number: No. 96-1210-CV-W-3.,96-1210-CV-W-3.
• Citation: 10 F.Supp.2d 1101
• Parties: Marvin FIELDER, et al., Plaintiffs, v. CREDIT ACCEPTANCE CORPORATION, et al., Defendants.
• Court: U.S. District Court — Western District of Missouri

10 F.Supp.2d 1101

Marvin FIELDER, et al., Plaintiffs, v. CREDIT ACCEPTANCE CORPORATION, et al., Defendants.

No. 96-1210-CV-W-3.

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

May 8, 1998.

Dale K. Irwin, Slough, Connealy, Irwin & Madden, Kansas City, MO, Bernard E. Brown, Brown Law Firm, Kansas City, MO, for Marvin Fielder and Deborah Williams.

Nancy Louise Ellingsworth, Daniel Yves Hall, Bryan Cave LLP, Kansas City, MO, Bryan E. Martin, Mitchell & Martin, Blue Springs, MO, Frank W. Lipsman, Mark W. Brennan, Bryan Cave, Kansas City, MO, John P. Scotellaro, Robert M. Moye, Bell, Boyd & Lloyd, Chicago, IL, for Credit Acceptance Corp.

David R. Mitchell, Bryan E. Martin, Mitchell & Martin, Blue Springs, MO, for Northeast Auto Credit Inc.

ORDER DENYING DEFENDANTS' MOTION TO DISMISS AND DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT

SMITH, District Judge.

Pending is Defendant Credit Acceptance Corporation's ("CAC") Motion to Dismiss for Lack of Subject Matter Jurisdiction (Doc. # 89) and CAC's Motion for Partial Summary Judgment (Doc. # 88). Upon careful consideration by the Court, for the reasons set forth below, Defendant CAC's motions are denied.

I. BACKGROUND

The factual background of this case has been previously set forth in detail in Fielder v. Credit Acceptance Corp., 175 F.R.D. 313 (1997). Therefore, only the facts relevant to this Order shall be discussed.

This Court granted class certification status to the Plaintiffs on October 9, 1997. Plaintiffs filed their Third Amended Complaint on March 10, 1998, containing fourteen counts against Defendant CAC and Defendant Northeast Auto Credit, Inc. Counts X and XI contain a prayer "for an order setting aside or in the alternative reforming any judgments to discharge plaintiffs from any liability based on excessive post-maturity interest charges" in the prayer. Counts XIII and XIV pray for an injunction barring CAC from proceeding with suits or taking judgments and "for an order setting aside or in the alternative reforming any judgments to discharge plaintiffs from liability." Plaintiffs claim CAC has continued to pursue default judgments in the Missouri state courts for deficiencies on retail installment contracts after the filing of this case. Plaintiffs claim class members are still being injured by those default judgments that have inaccurate calculations for interest and fees and because CAC is still pursuing action in state court against other class members. CAC claims it has obtained thousands of judgments against class members in Missouri state courts for amounts due and owing on retail installment contracts and has several pending matters. CAC is now voluntarily taking action in Missouri state courts to correct some of the interest calculations on the default judgments. CAC claims this Court does not have subject matter jurisdiction over any of Plaintiffs' claims for relief because they involve final Missouri state court judgments and are therefore barred by the Rooker-Feldman doctrine, res judicata and collateral estoppel. Plaintiffs claim the Rooker-Feldman doctrine, res judicata and collateral estoppel do not prevent this Court from adjudicating all Plaintiffs' claims.

II. DISCUSSION

A. Motion to Dismiss

CAC has filed a Motion to Dismiss for lack of subject-matter jurisdiction pursuant to Rule 12(h)(3) of the Federal Rules of Civil Procedure. A motion to dismiss should be granted when it appears that "the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Davis v. Hall, 992 F.2d 151, 152 (8th Cir. 1993) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). In ruling on a motion to dismiss, the Court is required to view the facts alleged in the complaint in the light most favorable to the Plaintiffs. Rule 12(h)(3) provides that "[w]henever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action." CAC contends that the Rooker-Feldman doctrine destroys this Court's jurisdiction because Plaintiffs' Third Amended Complaint requests relief that is essentially just a collateral attack on the state court judgments.

"The Rooker-Feldman doctrine states that district courts do not have subject matter jurisdiction over challenges to state court decisions in judicial proceedings." Charchenko v. City of Stillwater, 47 F.3d 981, 983 (8th Cir.1995) (citing Rooker v. Fidelity Trust Co., 263 U.S. 413, 416, 44 S.Ct. 149, 150, 68 L.Ed. 362 (1923); District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 476, 103 S.Ct. 1303, 1311, 75 L.Ed.2d 206 (1983)). "The only court with jurisdiction to review decisions of state courts is the United States Supreme Court." Neal v. Wilson, 112 F.3d 351, 356 (8th Cir. 1997) (citing Charchenko v. City of Stillwater, 47 F.3d 981, 983 (8th Cir.1995)).

A federal district court has jurisdiction over general constitutional challenges if these claims are not inextricably intertwined with the claims asserted in state court. A claim is inextricably intertwined if the federal claim succeeds only to the extent that the state court wrongly decided the issues before it. In other words, Rooker-Feldman precludes a federal action if the relief requested in the federal action would effectively reverse the state court decision or void its ruling.

Id. Plaintiffs contend that the Rooker-Feldman doctrine does not preclude subject matter jurisdiction in this Court. This Court agrees with Plaintiffs and finds that it has subject-matter jurisdiction over Plaintiffs' claims. Plaintiffs' requests for relief do not center on the fact that the Missouri state court default judgments are inherently wrong but rather focus on the correctness of the calculation of the award of damages. Plaintiffs claim "[t]housands of judgments were entered against absent class members" where the interest and fees were incorrectly calculated by charging excessive post-maturity interest.¹ Pl.'s Suggestions in Opp'n, p. 3. The incorrect calculation of the damage awards is the basis of Plaintiffs' claims of misrepresentation in violation of several Missouri statutes. Plaintiffs' claims are independent causes of action based on the Defendants' conduct which ultimately culminated in default judgments. Accordingly, the relief Plaintiffs request would not reverse the state courts' decisions but instead would compensate Plaintiffs for Defendants' misrepresentations leading to the entry of default judgments against them for incorrect damage awards.²

Additionally, Plaintiffs contend that even if the Missouri state court judgments raise Rooker-Feldman jurisdictional issues, this Court should still maintain subject matter jurisdiction for several reasons. First, some courts have established an exception that a "federal court may entertain a collateral attack on a state court judgment which is alleged to have been procured through fraud, deception, accident, or mistake." In re Sun Valley Foods Co. v. Detroit Marine Terminals, Inc., 801 F.2d 186, 189 (6th Cir. 1986) (citations omitted). See also Resolute Ins. Co. v. State of North Carolina, 397 F.2d 586 (4th Cir.1968); Raddatz v. Beaubien, 880 F.Supp. 500 (E.D.Mich.1995); Automobile Club of Michigan v. Stacey, 750 F.Supp. 259 (E.D.Mich.1990); Radiology Inst. Inc. v. Rodriguez, 818 F.Supp. 477 (D.P.R.1993) The Eighth Circuit has not addressed this exception to the Rooker-Feldman doctrine but this Court finds that it is especially applicable in this case and will follow the cases from other jurisdictions.³ MacKay v. Pfeil states that "the investigation of a new case arising upon new facts, although having relation to the validity of an actual judgment or decree, or the party's right to claim any benefit by reason thereof" would be within federal court jurisdiction. 827 F.2d 540, 543-44 (9th Cir. 1987) (citations omitted). In this case, the excessive post-maturity interest charges on the contracts could easily be attributed to accident or mistake and, conceivably, fraud or deception.⁴ Accordingly this Court will retain subject matter jurisdiction.

Secondly, the default judgments were entered mostly against absent class members and the issues of excessive post-maturity interest charges and official fees were not litigated before the state courts. See Hernandez v. Westoak Realty & Inv. Inc., 771 S.W.2d 876, 884 (holding that a default judgment only precludes the re-litigation of those issues necessarily resolved by that judgment for issue preclusion). This Court does not have access to all the default judgments but the Plaintiffs contend that the official fees or excessive post-maturity interest were not issues before the courts; much less were they litigated issues.⁵ Therefore, reading the Third Amended Complaint in the light most favorable to the Plaintiffs, CAC's Motion to Dismiss is denied.

Third, this Court has already determined that the claims for default judgments are not compulsory counterclaims in a class certification. See Fielder v. Credit Acceptance Corp., 175 F.R.D. 313 (W.D.Mo.1997). Plaintiffs also contend that any claims against CAC in the default judgments were not compulsory counterclaims because they were entered in associate circuit court. Rahman v. Matador Villa Assoc., 821 S.W.2d 102 (Mo. banc 1991) holds that the compulsory counterclaim rule does not apply in associate circuit court. Thus, the issues of excessive post-maturity interest and official fees were not litigated when the default judgments were entered; nor were they required to be litigated in associate circuit court.⁶

B. Motion for Partial Summary Judgment

A moving party is entitled to summary judgment on a claim only if there is a showing that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." See generally Williams v. City of St. Louis, 783 F.2d 114, 115 (8th Cir.1986). "[W]hile the...