Toney v. Keil, Civil Action No. 13-cv-03386-CMA-MJW
| Decision Date | 26 September 2014 |
| Docket Number | Civil Action No. 13-cv-03386-CMA-MJW |
| Parties | JOHN TONEY, and VALERIE TONEY, Plaintiffs, v. BECKY KEIL, and ANDERSON & KEIL, Attorneys at Law, Defendants. |
| Court | U.S. District Court — District of Colorado |
Plaintiffs John and Valerie Toney lost a case in state court. They have made a federal case out of the state-court loss by suing the lawyers that represented their state-court adversaries. A number of doctrines prevent this Court from disturbing the state-court's adjudication of the Toneys' first case. In his Report and Recommendation, Judge Watanabe thought the Rooker-Feldman doctrine covered all of the Toneys' claims and dismissed their case on this ground alone.
This Court disagrees. Rooker-Feldman covers only Mr. Toney's claims, but Ms. Toney's fail under two additional doctrines. Accordingly, for slightly different reasons, this Court grants Defendants' motion to dismiss (Doc. # 9.), and adopts in part and rejects in part Judge Watanabe's Report and Recommendation (Doc. # 30).
This case began with the underlying state-court litigation in which Becky Keil and her law firm, Anderson & Keil,1 represented a debt-collection agency, Apollo, in collecting a debt from the Toneys. See Apollo Credit Agency. v. Toney, No. 2012C326544 (Arapahoe Cnty. Ct. 2012) (Toney I).2 The Court reviews that state-court litigation before considering the (overlapping) facts giving rise to this federal case.
The state-court litigation began on December 17, 2012, when Ms. Keil filed a complaint against Mr. Toney on behalf of her client, Apollo Credit, which sought to collect an April 2010 construction debt allegedly owed by Mr. Toney. Shortly thereafter, Mr. Toney filed counterclaims against Apollo Credit. (Doc. # 9-1 at 1.)
As relevant here, this Court construes Mr. Toney's counterclaims as falling into three broad categories. First, Mr. Toney alleged that Apollo violated the Fair Debt Collection Practices Act (FDCPA) by alleging with insufficient specificity the amount of the debt owed and by providing improper notice to Mr. Toney prior to filing the suit.Second, Mr. Toney alleged that Apollo Credit, through Ms. Keil, provided him with fraudulent paperwork related to his debt and thereby deprived him of his right to a fair trial. Third, Mr. Toney argued that Ms. Keil should be liable for sanctions under Rule 11 of the Colorado Rules of Civil Procedure for signing and filing the complaint when she "knew, or should have known through reasonable inquiry or due diligence, that the [Apollo Credit] had not complied with applicable state and federal laws regarding debt collectors prior to filing suit . . . ." (Doc. # 10-3 at 12.)
After Mr. Toney filed his counterclaim, the state court permitted, over Ms. Keil's objections, Ms. Toney to intervene as a defendant in the case. The state court acknowledged that Ms. Toney was not a party to the construction contract in question but granted Ms. Toney's request to be added as a party in order to protect her property interests. (Doc. # 13-4 at 1.)
On November 18, 2013, the state court issued its only order on the parties' claims and counterclaims. Four aspects of that order are relevant here. First, the court concluded that Apollo Credit was "completely within its bounds to bring suit here for breach of contract" and that Mr. Toney owed Ms. Keil's client $1977.28 plus interest. (Doc. # 16-4 at 3.) Second, the state court concluded that Apollo complied with the provisions of the FDCPA, and was in any case protected by the good faith attempt at compliance. Third, the court did not award judgment against Ms. Toney. (Id.) Fourth, while the court found that "the [Toneys] have failed to meet their burden . . . and have not proved a violation of the [FDCPA]" (id. at 4), the court inexplicably did not addressMr. Toney's motion for Rule 11 sanctions—nor has it addressed sanctions in any subsequent filings.
Shortly after the state court issued this order, Mr. Toney filed a motion for a new trial, in which he referenced a "hostile encounter" with Ms. Keil at Starbucks on June 10, 2013, and argued that Ms. Keil denied him fair discovery through her misrepresentations of the debt amount and her subpoena for the Toneys' bank records. Mr. Toney challenged the state court's conclusions on the FDCPA claim, again alleging that Apollo and Ms. Keil misrepresented the debt amount during the course of the suit. The state court summarily denied this motion on December 3, 2013. (Doc. # 9-1 at 3.)
The December 3 ruling constituted the last substantive proceeding before the state trial court.3 Colorado Rule of County Court Procedure 359(b) dictates that the Toneys had 21 days after disposition of the motion for a new trial to file an appeal, which means that the Toneys had until December 24, 2013, to appeal the adverse state-court rulings. The Toneys never took such action.
On December 16, 2013, the Toneys filed the instant action in federal court, alleging that Ms. Keil's attempts to collect Apollo's debt, including her conduct at the state-court trial, violated the FDCPA. (Doc. # 6.) Most of the Toney's allegations— detailed below—are identical to those raised in the state court litigation. Notably, all of these allegations relate to conduct that occurred prior to the state-court order finding for Apollo.
The Toneys' federal allegations fall into nine categories. They include accusations that Ms. Keil: (1) never provided sufficient information about the original amount of the debt owed; (2) provided him with a Fraudulent Terms and Conditions page for paper work related to the debt; (3) improperly subpoenaed bank records; (4) requested attorney's fees in a way that was not supported by her contract; (5) falsely stated that Apollo sought to inform the Toneys of the debt; (6) misrepresented that the Apollo contract did not tie the debt to the house; (7) mocked Ms. Toney at a Starbucks; (8) improperly accused Ms. Toney of practicing law without a license, and (9) mocked Ms. Toney during her testimony at trial.4
Ms. Keil moved to dismiss the Toney's claims on a number of grounds, (Doc. # 9), and this Court referred the motion to Judge Watanabe, who recommended that this Court dismiss Plaintiffs' federal claim because it lacks jurisdiction under the Rooker-Feldman doctrine.
Because Judge Watanabe dismissed the case on Rooker-Feldman grounds alone, he did not reach Ms. Keil's alternative argument that the federal claim failed on preclusion grounds or because the Toneys had failed to state a claim under Federal Rule of Civil Procedure 12(b)(6).
This Court agrees with Judge Watanabe that Rooker-Feldman bars Mr. Toney's claims. At the same time, Ms. Toney's claims do not fail under Rooker-Feldman, but rather on preclusion grounds.
First, this Court agrees with Judge Watanabe that Mr. Toney's claims fail under Rooker-Feldman. This doctrine is based on the theory "that federal courts, other than the United States Supreme Court, lack jurisdiction to adjudicate claims seeking review of state court judgments." Bisbee v. McCarty, 3 F. App'x 819, 822 (10th Cir. 2001) (citing D.C. Court of Appeals v. Feldman, 460 U.S. 462, 486; Rooker v. Fid. Trust Co., 263 U.S. 413, 415-16). Rather, "[r]eview of the state court judgment must proceed to the state's highest court and then to the United States Supreme Court pursuant to 28 U.S.C. § 1257." Id. (citing Facio v. Jones, 929 F.2d 541, 543 (10th Cir. 1991)).
Bolden v. City of Topeka, Kan., 441 F.3d 1129, 1141 (10th Cir. 2006).
In short, this straightforward doctrine dictates that if you lose a case in state court, you have to use the state appellate process and cannot file what amounts to an appeal of the state judgment in a federal district court.
Rooker-Feldman bars Mr. Toney's federal claims because they are all inextricably intertwined with final decisions made in the state court proceedings.
First, this Court agrees with Judge Watanabe that because Mr. Toney's state claims became unappealable just after he filed his federal suit, under the rubric for determining finality established by Chief Judge Krieger in McDonald v. J.P. Morgan Chase Bank, N.A., No. 12-cv-02749, 2014 WL 334813 (D. Colo. Jan. 30, 2014), such claims fall within Rooker-Feldman's scope.
In essence, McDonald solves a problem created by the Tenth Circuit's contradictory precedent on what constitutes finality in a state judgment for purposes of applying Rooker-Feldman. As noted above, the Toneys lost in state court, never filed a state appeal, and almost immediately filed the instant federal case attacking the state-court ruling: that is the exact scenario that the Supreme Court dictated is covered by Rooker-Feldman.
At the same time, there is an ambiguity in the law of the Tenth Circuit on whether Rooker-Feldman applies if the federal case is filed during the time that the state appellate window has yet to close. Two authorities suggest that if the federal case is filed during the time that the state appellate window is still open, then even if no state appeal is filed, Rooker-Feldman cannot apply. See Bear v. Patton, 451 F.3d 639 (10th Cir. 2006); Guttman v. Khalsa, 446 F.3d 1027, 1031 (10th Cir. 2006). One later authority states, however, that it is the time of the federal decision—as opposed to the time of the federal filing—that matters: thus, even if a federal case is filed during thetime period where the state appellate window is still open, Rooker-Feldman can apply, if that window has closed...
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