Case 0:14-cv-62846-WPD Document 24 Entered on FLSD Docket 04/02/2015 Page 1 of 10

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA
CASE NO. 14-62846-CIV-DIMITROULEAS
JOSEPH L. JEAN,
Plaintiff
v.
ONEWEST BANK, N.A. AKA
ONEWEST BANK, FSB AND JOHN
AND JANE DOES,
Defendants.
_____________________________________/
ORDER DENYING DEFENDANTS MOTION TO DISMISS
THIS CAUSE is before the Court upon Defendant OneWest Bank N.A.s Motion to
Dismiss (DE 20), filed herein on February 12, 2015. The Court has carefully considered the
Motion (DE 20), Plaintiffs Response thereto (DE 21), and Defendants Reply (DE 22), and is
otherwise fully advised in the premises.
I.

BACKGROUND
Joseph L. Jean (Jean) owned property located at 7105 South West 3rd Court, North

Lauderdale, Florida (Property). (DE 17, Am. Compl. 3.) Financial Freedom Senior Funding
Corporation (FFSFC) was a reverse mortgage lender that extended loans to senior citizens.
(Id. 7.) FFSFC transferred and assigned its interests and liabilities to OneWest Bank, N.A.
(OneWest). (Id. 12.)
In 2006, Jean entered into a reverse mortgage transaction with FFSFC in connection with
the Property. As the closing, FFSFC represented to Jean that it would purchase mortgage

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insurance protection (MIP) on his behalf. (Id. 8.) The MIP was designed to reimburse Jean
in the event of his default on the loan. (Id.)
On August 15, 2013, based upon Jeans failure to maintain property insurance, OneWest
filed a complaint for foreclosure against Jean in the Circuit Court of the Seventeenth Judicial
Circuit in Broward County, Florida. (DE 20-3, Complaint for Foreclosure 7.) 1 A default was
entered against Jean. (DE 20-4.) After the action was tried, the state court entered a Final
Judgment of Foreclosure on December 17, 2013. (DE 20-5.) The court found that OneWest was
due $239,340.05, including an initial MIP fee of $5,940 (the Initial MIP Fee).

(Id.)

Thereafter, a foreclosure sale of the Property occurred.

Soon thereafter, Jean filed a Verified and Emergency Amended Motion to Vacate
Default, Final Judgment and to Set Aside Foreclosure Sale and Certificate of Title (Motion to
Vacate) in state court on September 10, 2014. (DE 20-6.) In the Motion to Vacate, Jean
argued, among other arguments, that he had already paid the Initial MIP Fee at closing as
provided in the HUD Settlement Statement. (Id.) After a hearing, the state court denied Jeans
Motion to Vacate and confirmed the certificates of sale and title. (DE 20-7.)
Following the conclusion of the foreclosure proceeding, in November 2014, Jean learned
for the first time that FFSFC never purchased the promised MIP and never used the Initial MIP
Fee for the purpose of purchasing MIP, and that he would not be reimbursed for his losses
associated with the reverse mortgage. (Am. Compl. 9.)

In ruling on the res judicata issue, this Court is permitted to take judicial notice of the public
records filed in the foreclosure action. Horne v. Potter, 392 F. App'x 800, 802 (11th Cir. 2010)
(ruling that a district court may take judicial notice of the public documents filed in the former
action without converting a motion to dismiss to a motion for summary judgment).

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In January 2015, Jean brought the instant Amended Complaint against OneWest in this
Court, alleging claims for breach of contract, fraud, violation of the Real Estate Settlement
Procedures Act, 12 U.S.C. 2601 (RESPA), and violation of the Truth in Lending Act, 15
U.S.C. 1601 (TILA), all related to FFSFCs failure to purchase MIP on Jeans behalf. (DE
17.) In the Motion to Dismiss presently before the Court, OneWest seeks dismissal of the
Amended Complaint based upon the following three grounds: (1) res judicata, (2) Floridas
compulsory counterclaim rule, and (3) the statutes of limitations applicable to TILA and RESPA
claims. (DE 20.)
II.

LEGAL STANDARD
To survive a motion to dismiss, a complaint must contain factual allegations which are

Aenough to raise a right to relief above the speculative level . . . on the assumption that all the
allegations in the complaint are true (even if doubtful in fact).@ Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 555 (2007). AWhile a complaint attacked by a Rule 12(b)(6) motion to dismiss
does not need detailed factual allegations . . . a plaintiff=s obligation to provide the >grounds= of
his >entitle[ment] to relief= requires more than labels and conclusions, and a formulaic recitation
of the elements of a cause of action will not do.@ Id. Taking the facts as true, a court may grant a
motion to dismiss when, Aon the basis of a dispositive issue of law, no construction of the factual
allegations will support the cause of action.@ Marshall Cty. Bd. of Educ. v. Marshall Cty. Gas
Dist., 992 F.2d 1171, 1174 (11th Cir. 1993). Further, a court need not accept legal conclusions
as true, but only well-pleaded factual allegations are entitled to an assumption of truth. Ashcroft
v. Iqbal, 556 U.S. 662, 678-79 (2009).
III.

DISCUSSION
A.

Res Judicata

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1.

There is No Identity of Causes of Action between the Foreclosure Suit and

the Breach of Contract Claim in this Action.

To successfully invoke a res judicata defense, a party must satisfy two prerequisites.
Zikofsky v. Mktg. 10, Inc., 904 So. 2d 520, 523 (Fla. 4th DCA 2005). First, a judgment on the
merits must have been rendered in a former suit. Id. Second, the following four identities must
exist between the former suit and the suit in which res judicata is to be applied: (1) identity in
the thing sued for; (2) identity of the cause of action; (3) identity of the persons and parties to the
actions; and (4) identity of the quality or capacity of the persons for or against whom the claim is
made. Id. (citations and internal quotation marks omitted). Under the principle of res judicata,
if a matter has already been decided, the petitioner has already had his or her day in court, and
for purposes of judicial economy, that matter generally will not be reexamined again in any court
(except, of course, for appeals by right). Topps v. State, 865 So. 2d 1253, 1255 (Fla. 2004)
(emphasis in original).
In this case, res judicata does not apply to the breach of contract claim because there is no
identity of causes of action between the foreclosure action, which culminated in a default
judgment on the merits, and the breach of contract claim in this action. 2 In determining whether
there is an identity of causes of action, this Court must consider whether the facts and evidence
necessary to prove this action are different than the facts and evidence that were necessary to

Florida courts have held that default judgments may have res judicata effect. See e.g., AGB Oil
Co. v. Crystal Exploration & Prod. Co., 406 So. 2d 1165, 1168 (Fla. 3d DCA 1981) (holding
that limited partner was barred by doctrine of res judicata from relitigating issue of breach of
fiduciary duty by general partner where such issue could have been raised by a limited partner as
a ground for its motion to set aside default judgment entered against it in prior federal court
action); see also Cabinet Craft, Inc. v. A. G. Spanos Enters., Inc., 348 So. 2d 920, 922 (Fla. 2d
DCA 1977) ([F]or purposes of res judicata, a judgment entered upon default is just as
conclusive as one which was hotly contested.).

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prove the foreclosure claim. Smith v. Time Customer Servs., 132 So. 3d 841, 844 (Fla. 1st DCA
2013) (The determining factor in deciding whether the cause of action is the same is whether
the facts or evidence necessary to maintain the suit are the same in both actions.).
In the prior foreclosure action, the facts and evidence necessary to obtain the Judgment of
Foreclosure concerned Jeans failure to obtain property insurance, OneWests acceleration of the
amounts due under the note and mortgage based thereupon, and Jeans assertion, among other
arguments, that he had already paid the Initial MIP Fee included in the Judgment of Foreclosure.
During the foreclosure proceeding, neither party raised the issue of, or presented facts and
evidence on, FFSFCs breach of its obligation to obtain MIP.
The breach of contract claim in this action, on the other hand, requires the assertion of
facts and evidence concerning FFSFCs breach of its obligation to obtain MIP. Jean argues that
FFSFC breached its obligation to provide MIP when it failed to purchase insurance on his behalf
after the closing. Jean seeks return of the Initial MIP Fee and other sums as damages he suffered
as a result of FFSFCs breach. Jean is not challenging any part of the loan transaction, nor is he
challenging any aspect of the Judgment of Foreclosure. His claim is not that the Initial MIP Fee
should not have been assessed against him in the first place or included in the Judgment of
Foreclosure. Indeed, at least as to the breach of contract claim, Jean is not arguing that the
Judgment of Foreclosure should not have been entered.
Because the facts and evidence necessary to prove Jeans breach of contract claim
concerning FFSFCs failure to obtain MPI are different than those that were necessary to prove
the foreclosure suit, the Court concludes that an identity of causes of action does not exist as to
the breach of contract claim. See Harllee v. Procacci, 154 So. 3d 1145, 1148 (Fla. 4th DCA
2014) (finding no identity of causes of action between breach of shareholder agreement action

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based upon partys refusal to sell shares and later restitution action to recover dividends paid on
shares because the facts and evidence were different); Gold v. Bankier, 840 So. 2d 395, 397 (Fla.
4th DCA 2003) (holding there was no identity of causes of action because the facts required to
maintain each action were completely separate and distinct). Because one of the four identities
that must exist between the former suit and this suit is lacking, the doctrine of res judicata does
not apply to the contract claim. Zikofsky v. Mktg. 10, Inc., 904 So. 2d 520, 523 (Fla. 4th DCA
2005).
2.

The Amended Complaint Does Not Establish that the Fraud and Statutory
Claims Could Have Been Litigated in the Foreclosure Action.

[A] judgment is not res judicata as to rights which were not in existence and which
could not have been litigated at the time the prior judgment was entered. Wagner v. Baron, 64
So. 2d 267, 268 (Fla. 1953). [R]es judicata extends only to the facts and conditions as they
existed at the time the judgment was rendered, or more correctly speaking, at the time the issues
in the first action were made, and to the legal rights and relations of the parties as fixed by the
facts determined by that judgment. Hialeah Race Course, Inc. v. Gulfstream Park Racing Ass'n,
210 So. 2d 750, 753-54 (Fla. 4th DCA 1968). When other facts or conditions intervene before
the second suit, furnishing a new basis for the claims and defenses of the respective parties, the
issues are no longer the same and the former judgment cannot be pleaded in bar of the second
action. Id.
In this case, res judicata does not apply to the fraud, TILA, and RESPA claims at the
pleading stage, because the allegations of the Amended Complaint do not establish that Jean
knew about the fraud and falsified disclosures/charges at the time the foreclosure judgment was
entered.

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As to the fraud, TILA, and RESPA claims, Jean alleges that FFSFC made a fraudulent
representation that it would obtain MIP as an inducement to enter into the loan transaction, that
FFSFC unjustly obtained the Initial MIP Fee at closing, and that FFSFC falsified disclosures at
closing with respect to the Initial MIP Fee. Significantly, the allegations underlying the fraud,
TILA, and RESPA claims all relate to the underlying loan transaction and FFSFCs falsification
of charges that were ultimately included in the Judgment of Foreclosure. As such, the fraud,
TILA, and RESPA claims in this action raise issues that were [framed] by the [foreclosure]
pleadings or as an incident to or essentially connected to the subject matter of the first litigation.
AMEC Civil, LLC v. State, Dep't of Transp., 41 So. 3d 235, 239 (Fla. 1st DCA 2010) (quoting
Zikofsky v. Mktg. 10, Inc., 904 So. 2d 520, 523 (Fla. 4th DCA 2005)).
Nevertheless, the allegations of the Amended Complaint do not establish that Jean knew
about the fraud and statutory claims at the time the foreclosure proceeding was pending.
According to the Amended Complaint, Jean did not learn that FFSFC did not purchase the
promised MIP until November 2014 (Am. Compl. 15), which is well after the state court
entered its Judgment of Foreclosure in December 2013. See Equitable Life Assur. Soc. of U.S. v.
McKeithen, 178 So. 127, 128 (Fla. 1938) (holding that where insurer filed single defense denying
disability and judgment was entered against insurer, the insurer could not, in second action on
same policies for subsequent payments due, plead that contract was invalid for fraud in its
procurement when facts constituting the alleged fraud were known to insurer before trial in first
action). Further, the allegations of the Amended Complaint do not indicate that Jean should
have discovered the fraud, unjust charges, and falsified disclosures through the exercise of
diligence prior to entry of the foreclosure judgment. As such, the Court cannot conclude, based
upon the allegations of the Amended Complaint, that Jean could have litigated the fraud and

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statutory claims in the prior action since the alleged fraud/violations were unknown to him.
Accordingly, the Court concludes that the fraud and statutory claims are not barred by the
doctrine of res judicata at this time.
B.

Compulsory Counterclaims

Rule 1.170(a) of the Florida Rule of Civil Procedure defines a compulsory counterclaim
as a claim that arises out of the transaction or occurrence that is the subject matter of the
opposing party's claim. Fla. R. Civ. P. 1.170(a). A counterclaim that does not exist or has not
accrued at the time the answer is due is not compulsory within the meaning of rule 1.170(a).
Inter-Active Servs., Inc. v. Heathrow Master Assn, Inc., 809 So. 2d 900, 904 (Fla. 5th DCA
2002); Kellogg v. Fowler, White, Burnett, Hurley, Banick & Strickroot, P.A., 807 So. 2d 669,
672 (Fla. 4th DCA 2001). Here, as discussed above, Jeans breach of contract claim does not
arise out of the transaction that was the subject of the foreclosure action, and, construing the
allegations of the Amended Complaint in a light most favorable to the plaintiff, Jeans fraud and
statutory claims did not accrue until after he learned that FFSFC had not purchased MIP
coverage, i.e. in November 2014, which was well after the deadline for his answer to OneWests
August 15, 2013 Complaint for Foreclosure. Hence, the claims in the Amended Complaint are
not compulsory counterclaims subject to Rule 1.170(a).
C.

Statutes of Limitation

Claims for damages under TILA must be brought within one year from the date of the
occurrence of the violation. 15 U.S.C. 1640(e). The violation occurs when the transaction is
consummated. In re Smith, 737 F.2d 1549, 1552 (11th Cir. 1984). Equitable tolling is available
for stale TILA claims but only if the plaintiff was prevented from bringing suit on those claims
due to inequitable circumstances. Ellis v. Gen. Motors Acceptance Corp., 160 F.3d 703, 706

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(11th Cir. 1998); Sampson v. Washington Mut. Bank, 453 F. App'x 863, 865 (11th Cir. 2011).
Claims under RESPA must be brought within one year of the date of the occurrence of the
violation.

12 U.S.C. 2614.

This circuit has not addressed the issue directly, but

acknowledged the potential application of equitable tolling to RESPA actions. McCarley v.

KPMG Int'l, 293 F. App'x 719, 723 (11th Cir. 2008). Equitable tolling is appropriate when a
movant untimely files because of extraordinary circumstances that are both beyond his control
and unavoidable even with diligence. Sandvik v. United States, 177 F.3d 1269, 1271 (11th Cir.
1999).
In this case, while Jeans response to OneWests Motion to Dismiss suggests that
FFSFC/OneWest concealed the falsity of FFSFCs disclosures and costs concerning the MIP and
precluded Jean from discovering the fraudulent scheme (Response 6), there are no allegations
in the TILA or RESPA claims that establish inequitable circumstances that prevented Jean from
discovering violations. No such allegations are required, however, because Jean is not required
to negate a statute of limitations defense in his complaint.
A statute of limitations bar is an affirmative defense, and plaintiffs are not required to
negate an affirmative defense in their complaint. La Grasta v. First Union Sec., Inc., 358 F.3d
840, 845 (11th Cir. 2004) (citation and internal brackets and ellipsis omitted). Dismissal of a
claim at the pleading stage based upon statute of limitations ground is appropriate only if the
assertions of the complaint, read with the required liberality, would not permit the plaintiff to
prove that the statute was tolled. Wilson v. EverBank, N.A., No. 14-CIV-22264, 2015 WL
265648, at *11 (S.D. Fla. Jan. 6, 2015).
At this stage in the litigation, it is sufficient that the Court cannot conclude that the
assertions of the complaint, read with the required liberality, would not permit the plaintiff to

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prove that the statute was tolled. Id. Indeed, elsewhere in the Amended Complaint, Jean
alleges that he did not discover until November 2014 that FFSFC did not purchase the MIP that
it promised at the 2006 closing. (Am. Compl. 15.) While these allegations do not, in of
themselves, establish equitable tolling, they also do not disprove equitable tolling. Accordingly,
the Court concludes that dismissal under Rule 12(b)(6) for failure to state a claim based upon
statute-of-limitations grounds is inappropriate.
IV.

CONCLUSION
Based upon the foregoing, it is ORDERED AND ADJUDGED as follows:
1.

Defendant OneWests Motion to Dismiss (DE 20) is DENIED.

2.

Defendant OneWest shall file an Answer to Plaintiffs Amended Complaint

within fourteen (14) days of the date of this Order.

DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County, Florida,

this 2nd day of April, 2015.

Copies furnished to:

Counsel of record

10