District Court (Cal.) Says Rooker-Feldman Doctrine Is No Impediment to FDCPA Claim Challenging Service of Underlying State Court Debt Collection Complaint

Further, there is a split among district courts in the Ninth Circuit over this issue. Some federal district courts in California have held that an FDCPA claim that is brought subsequent to a state court default judgment and that alleges false proof of service is “inherently challenging the entry of default.” Bryant v. Gordon & Wong Law Grp., 681 F. Supp. 2d 1205, 1208 (E.D. Cal. 2010); see also Grant v. Unifund CCR Partners, 842 F. Supp. 2d 1234, 1238 (C.D. Cal. 2012). In contrast, other district courts in California have held otherwise. In Rubio, another court in this district found that Rooker-Feldman does not bar FDCPA claims alleging improper service that are brought subsequent to state court default judgments. See Rubio, 2015 WL 13650046 at *5. Similarly, the Second Circuit has held that an FDCPA claim based on allegations of use of “sewer service”³ to obtain state court default judgments was not barred by Rooker-Feldman because the claim spoke “not to the propriety of the state court judgments, but to the fraudulent course of conduct that defendants pursued in obtaining such judgments.” Sykes v. Mel S. Harris & Assoc., 780 F.3d 70, 94-95 (2d Cir. 2015).  In the instant case, the Court finds that Plaintiff’s claim is not barred by the Rooker-Feldman doctrine. As discussed above, the Rooker-Feldman doctrine prohibits this Court from “exercising subject matter jurisdiction over a suit that is a de facto appeal from a state court judgment.” Kougasian, 359 F.3d at 1139. “A de facto appeal exists when ‘a federal plaintiff asserts as a legal wrong an allegedly erroneous decision by a state court, and seeks relief from a state court judgment based on that decision.’ ” Bell v. City of Boise, 709 F.3d 890, 897 (9th Cir. 2013) (quoting Noel, 341 F.3d at 1164). “In contrast, if ‘a federal plaintiff asserts as a legal wrong an allegedly illegal act or omission by an adverse party, Rooker-Feldman does not bar jurisdiction.’ ” Id. (quoting Noel, 341 F.3d at 1164).  “Should the action not contain a forbidden de facto appeal, the Rooker-Feldman inquiry ends.” Bell, 709 F.3d at 897. If, however, the plaintiff has brought a forbidden de facto appeal, then the Court must also perform a “second and distinct step in the Rooker-Feldman analysis” to determine whether any other issues are “inextricably intertwined” with the de facto appeal and decline to hear such inextricably intertwined issues. Id.; see also Noel, 341 F.3d at 1158 (“The federal suit is not a forbidden de facto appeal because it is ‘inextricably intertwined’ with something. Rather, it is simply a forbidden de facto appeal. Only when there is already a forbidden de facto appeal in federal court does the ‘inextricably intertwined’ test come into play.”) Plaintiff’s claim is not a de facto appeal from a state court judgment. Even though the state court denied Plaintiff’s motion to set aside the default judgment in the state court action, Plaintiff’s claim is not a de facto appeal because it neither asserts “as a legal wrong” an “erroneous decision by a state court” nor seeks “relief from a state court judgment.” See Noel, 341 F.3d at 1164. Plaintiff’s complaint only alleges that ABC violated FDCPA by using a fraudulent affidavit of service and a fraudulent “Declaration of Reasonable Diligence.” FAC ¶¶ 9, 11. Plaintiff does not complain of any legal injury caused by a state court judgment, “but rather of a legal injury caused by an adverse party.” Noel, 341 F.3d at 1163. Further, the Ninth Circuit has held that “a plaintiff alleging extrinsic fraud on a state court is not alleging a legal error of a state court.” Kougasian, 359 F.3d at 1140-41. Because extrinsic fraud is “conduct which prevents a party from presenting his claim in court,” id. at 1140 (quoting Wood v. McEwen, 644 F.2d 797, 801 (9th Cir. 1981) ), Plaintiff’s assertion that ABC filed a fraudulent affidavit and declaration of service amounts to an allegation of extrinsic fraud on the state court.  . . .This Court agrees with Engelen, Rubio, and Sykes, which all found that the existence of a prior state court default judgment does not necessarily bar an FDCPA claim alleging fraudulent service under Rooker-Feldman.   Because Plaintiff’s FDCPA claim does not constitute a de facto appeal from a state court judgment, it is not barred by the Rooker-Feldman doctrine. Accordingly, ABC’s motion to dismiss Plaintiff’s claim on Rooker-Feldman grounds is DENIED.