Huffstickle v. 21st Mortg.

• Decision Date: 10 April 2023
• Docket Number: C.A. 19-2523-MGL-PJG
• Parties: Brian James Huffstickle; Michelle Dawn Huffstickle, Plaintiffs, v. 21st Mortgage, Defendant.
• Court: U.S. District Court — District of South Carolina

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Brian James Huffstickle; Michelle Dawn Huffstickle, Plaintiffs, v. 21st Mortgage, Defendant.

C.A. No. 19-2523-MGL-PJG

United States District Court, D. South Carolina, Rock Hill Division

April 10, 2023

REPORT AND RECOMMENDATION

PAIGE J. GOSSETT, UNITED STATES MAGISTRATE JUDGE

The plaintiffs, Brian James Huffstickle and Michelle Dawn Huffstickle, who are self-represented litigants, bring this action seeking equitable relief arising out of the defendant's mortgage practices. Plaintiffs file this action in forma pauperis under 28 U.S.C. § 1915. This matter is before the court pursuant to 28 U.S.C § 636(b) and Local Civil Rule 73.02(B)(2) (D.S.C.) for a Report and Recommendation on the defendant's motion for summary judgment. (ECF No. 32.) Pursuant to Roseboro v Garrison, 528 F.2d 309 (4th Cir. 1975), the court advised the Huffstickles of the summary judgment and dismissal procedures and the possible consequences if they failed to respond adequately to the defendant's motion. (ECF No. 35.) The Huffstickles filed a response in opposition to the motion (ECF No. 37), and the defendant replied (ECF No. 38). Having reviewed the record presented and the applicable law, the court concludes that the defendant's motion should be granted.

BACKGROUND

The following facts are either undisputed or are taken in the light most favorable to the Huffstickles, to the extent they find support in the record. This matter arises out of a mortgage held by Defendant 21st Mortgage Corporation (“21st Mortgage”) on real property owned by Plaintiffs Brian James Huffstickle and Michelle Dawn Huffstickle. On August 28, 2018, 21st Mortgage instituted a foreclosure action against the Huffstickles in the Lancaster County Court of Common Pleas. (Def.'s Mot. Summ. J., Ex 3, ECF No. 33-3.) The Lancaster County Court issued an order and judgment of foreclosure and sale on November 16, 2018 and scheduled a foreclosure sale on January 7, 2019. (Id., Ex. 6, ECF No. 33-6.) The Lancaster County Court found as a matter of fact that the Huffstickles were served but failed to appear and defend, and therefore, they were held in default. (Id. at 3.) The Huffstickles filed two pro se cases in the United States Bankruptcy Court for the District of South Carolina on January 4, 2019 and May 3, 2019, which delayed the foreclosure sale. (Id., Ex. 7, ECF No. 33-7.) Those cases were dismissed and the foreclosure sale was held on September 9, 2019, in which 21st Mortgage was the successful bidder. (Id.) The Huffstickles did not appeal the Lancaster County Court's order and judgment of foreclosure and sale.

The Huffstickles filed this action on September 9, 2019-the day of the foreclosure sale. The Huffstickles allege that 21st Mortgage “engaged in unethical, deceptive, and illegal mortgage practices by withholding important information, giving false information, breach of trust, and illegally foreclosing on the plaintiff's home.” (Compl., ECF No. 1 at 5.) Specifically, the Huffstickles allege 21st Mortgage failed to provide them with repayment options because 21st Mortgage believed they could not afford those options, provided them with incorrect payoff amounts and reinstatement fees, failed to uphold a loss mitigation agreement, and failed to offer reinstatement fees as provided for in their contract. (Id.) The Huffstickles ask the court to enjoin 21st Mortgage from pursuing eviction of the Huffstickles from the subject property, and they seek damages based on mental, emotional, and physical injuries caused by 21st Mortgage's practices. (Id.)

DISCUSSION

A. Summary Judgment

Summary judgment is appropriate only if the moving party “shows that there is no genuine dispute as to any material fact and the [moving party] is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A party may support or refute that a material fact is not disputed by “citing to particular parts of materials in the record” or by “showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1). Rule 56 mandates entry of summary judgment “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

In deciding whether there is a genuine issue of material fact, the evidence of the nonmoving party is to be believed and all justifiable inferences must be drawn in favor of the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). However, “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.” Id. at 248.

The moving party has the burden of proving that summary judgment is appropriate. Once the moving party makes this showing, however, the opposing party may not rest upon mere allegations or denials, but rather must, by affidavits or other means permitted by the Rule, set forth specific facts showing that there is a genuine issue for trial. See Fed.R.Civ.P. 56(c), (e); Celotex Corp., 477 U.S. at 322. Further, while the federal court is charged with liberally construing a complaint filed by a pro se litigant to allow the development of a potentially meritorious case, see, e.g., Erickson v. Pardus, 551 U.S. 89 (2007), the requirement of liberal construction does not mean that the court can ignore a clear failure in the pleadings to allege facts which set forth a federal claim, nor can the court assume the existence of a genuine issue of material fact where none exists. Weller v. Dep't of Soc. Servs., 901 F.2d 387 (4th Cir. 1990).

B. Defendant's Motion

21st Mortgage moves for summary judgment, arguing the Plainitffs' claims are barred by res judicata (“claim preclusion”). The court agrees. “Under the doctrine of claim preclusion, a final judgment forecloses ‘successive litigation of the very same claim, whether or not relitigation of the claim raises the same issues as the earlier suit.' ” Taylor v. Sturgell, 553 U.S. 880, 892 (2008) (quoting New Hampshire v. Maine, 532 U.S. 742, 748 (2001)). State law governs whether a prior state court judgment has claim preclusive effect in federal courts. Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 85 (1984); Passaro v. Virginia, 935 F.3d 243, 249 (4th Cir. 2019), cert. denied, No. 19-565, 2020 WL 129611 (U.S. Jan. 13, 2020); Dionne v. Mayor & City Council of Baltimore, 40 F.3d 677, 682 (4th Cir. 1994) (“The Full Faith and Credit Statute, 28 U.S.C. § 1738, obligates federal courts to apply state preclusion rules to determine whether a prior state court judgment has either issue or claim preclusive effect ....”).

Under South Carolina law, claim preclusion bars “ ‘subsequent actions by the same parties when the claims arise out of the same transaction or occurrence that was the subject of a prior action between those parties.' ” Judy v. Judy, 712 S.E.2d 408, 414 (S.C. 2011) (quoting Plum Creek Dev. Co. v. City of Conway, 512 S.E.2d 106, 109 (S.C. 1999)). Therefore, “ ‘[a] litigant is barred from raising any issues which were adjudicated in the former suit and any issues which might have been raised in the former suit. Id. (alteration in original); S.C. Pub. Interest Found. v. Greenville Cty., 737 S.E.2d 502, 506 (S.C. Ct. App. 2013).

Here both the Huffstickles and 21st Mortgage were parties to the 2018 state foreclosure action in which the rights of the parties were adjudicated in light of the Huffstickle's default on the note and mortgage. While the Huffstickles argue that their claims in this case concern 21st Mortgage's actions during the terms of the mortgage and not the foreclosure process, they also admit that those actions led to the foreclosure of the subject property. (Pls.' Resp. Opp'n Summ. J., ECF No. 37 at 3.) Therefore, this case concerns the same parties and the same transaction and occurrence-the Huffstickle's default on the note and mortgage-as the 2018 state foreclosure action. As 21st Mortgage correctly points out, the Huffstickles' claims in this case were compulsory counterclaims that the Huffstickles were required to assert in the state foreclosure proceeding. See generally Carolina First Bank v. BADD, L.L.C., 778 S.E.2d 106, 109 (S.C. 2015) (“In a foreclosure action, a counterclaim arises out of the same transaction or occurrence and is thus compulsory, when there is a logical relationship between the counterclaim and the enforceability of the guaranty agreement.”) (internal quotation marks omitted). Because the Huffstickles' claims in this case should have been raised in the state foreclosure action, they are barred here. See Judy, 712 S.E.2d at 414 (“[A] litigant is barred from raising . . . any issues which might have been raised in the former suit.”); see also 50 C.J.S. Judgments § 1028 (2020) (“[A] compulsory counterclaim must be pleaded in response to the other party's pleading or it is precluded, on the ground of...