District Court (Cal.) Holds Rooker-Feldman No Bar to FDCPA Claim that Was Not Intertwined with State Court Action

In King v. Legal Recovery Law Offices, Inc., 2014 WL 938559 (N.D.Cal. 2014), Magistrate Judge Westmore held that the Rooker-Feldman doctrine does not bar an FDCPA claim that is not intricately intertwined with the underlying state court action.  The facts were as follows:

On January 13, 2013, Plaintiff and Defendant settled the state court action by way of a stipulated judgment. (Id. ¶ 13; Def.’s Mot. to Dismiss, “Def.’s Mot.,” Dkt. No. 4, Ex. 1.) The parties agreed that the stipulated judgment would not be filed unless Plaintiff defaulted on the payment terms. (Compl.¶ 13.) The stipulated judgment provided that in the event of a default, Defendant would mail a notice of default to Plaintiff’s counsel, and give Plaintiff five days to cure the default, before attempting to enter the judgment in state court. (Id. ¶ 16.)  ¶  On January 18, 2013, Defendant notified the state court of the settlement by filing a notice of settlement. (Id. ¶ 14.) Thereafter, the court “set an OSC Dismissal for July 24, 2017.” (Id.) Plaintiff alleges that the state court action remains active, and that his attorney of record continues to be the Law Offices of Collins & Lamore. (Id.) Plaintiff alleges that between November 7, 2012, and the date of filing this complaint in federal court, there have been various communications between Plaintiff’s counsel and Defendant’s attorney, putting Defendant on notice that Plaintiff is represented by counsel. (Id. ¶ 15.)  ¶  On June 5, 2013, despite knowing that Plaintiff was represented by counsel, Defendant allegedly directly contacted Plaintiff by telephone. (Id. ¶ 6.) During the phone call, Defendant allegedly demanded that Plaintiff pay what he owed, demanded to know if he was still represented by counsel, and requested a letter by Plaintiff stating that he was no longer represented by an attorney. (Id.)  ¶  In addition, Defendant sent Plaintiff a notice of default, dated June 5, 2013, via U.S. mail, which stated that judgment would be requested if Plaintiff failed to make the required payments within five days. (Compl., Ex. B.) Plaintiff claims that pursuant to the settlement agreement, a default judgment cannot be requested until five days after proper service of notice of default, which must be mailed exclusively to Plaintiff’s counsel. (Compl.¶ 16.)

Judge Westmore held that the Rooker-Feldman doctrine did not bar the claim.

Here, the federal action does not raise a de facto appeal, as it does not dispute the terms of the stipulated judgment. Plaintiff does not allege as his legal injury an erroneous decision by the state court, and does not seek as his remedy relief from that judgment. Instead, Plaintiff is asking the Court to enforce the terms of the settlement agreement against Defendant. Other circuits have held that the Rooker–Feldman doctrine does not limit federal jurisdiction where the federal suit seeks to enforce a state court judgment. Coles v. Granville, 448 F.3d 853, 858–59 (6th Ci r.2006). Even though this suit may require the federal court to interpret the state court judgment, the district court is not being asked to exercise appellate review over the state court decision: “Merely requiring a federal court to understand what it is that a state court decided does not implicate Rooker–Feldman, but rather normal preclusion principles and rules of construction.” See id. Thus, Plaintiff’s action is not a de facto appeal. ¶  In addition, Defendant argues that Plaintiff’s federal claims are inextricably intertwined with the state court judgment. The Ninth Circuit, however, in clarifying the application of the Rooker–Feldman doctrine, has held that “only when there is already a forbidden de facto appeal does the ‘inextricably intertwined’ test come into play.” Noel, 341 F.3d at 1158. In other words, if the relief sought does not include the review and rejection of the state court judgment, RookerFeldman is not implicated, and the court need not inquire as to whether the issues raised are inextricably intertwined with the state court judgment. See id. Since the threshold requirement of a de facto appeal is not met in this case, the Court need not address Defendant’s argument that Plaintiff’s FDCPA claims are inextricably intertwined with the state court judgment. Moreover, there is no “judgment” to the extent that the settlement agreement is construed a judgment, and Plaintiff does not seek to overturn it, but to enforce it and raise new federal claims related to Defendant’s alleged actions. ¶  Accordingly, the Rooker–Feldman doctrine does not divest the district court of subject matter jurisdiction.