Nguyen v. Barham & Maucere LLC

Background

Kimloan Thi Nguyen brought claims under the Fair Debt Collection Practices Act, a federal law regulating debt-collection practices, and for abuse of process. She alleges that Barham & Maucere LLC, Reliant Loan Servicing, LLC, Fay Servicing, LLC, and Randall S. Miller & Associates, PLLC represented that she needed to pay more than $56,000, and later nearly $60,000, to avoid foreclosure of her home.

The dispute arose from a Minnesota foreclosure case involving a promissory note and mortgage. In February 2022, the Minnesota district court entered judgment for Reliant stating that the principal amount due was $22,803.82, plus interest, costs, disbursements, and attorney fees as allowed by law. Nguyen alleges that she tried to pay the judgment amount plus interest, but the defendants would not accept that payment. She then obtained a state-court order allowing her to pay $22,803.82 plus statutory interest to the court clerk in full satisfaction of the judgment.

While the federal case was pending, the state court granted a request to amend the judgment. It added $35,076 and $3,683.50 in attorney fees, bringing the total above $60,000 when combined with the original judgment. Nguyen informed the federal court that she had appealed the amended judgment.

Motion and jurisdictional concern

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b), arguing that Nguyen lacked standing and had failed to state a claim. They also argued that the federal lawsuit challenged a state-court judgment and could be barred by the Rooker-Feldman doctrine. That doctrine generally prevents federal district courts from acting as appellate courts over state-court decisions.

The federal court recognized that Nguyen’s lawsuit did not expressly ask it to overturn a state-court decision. But the court concluded that, if the amended state judgment establishing a debt above $60,000 were upheld, deciding whether the defendants’ collection efforts were unlawful could require the federal court to question the validity of that state judgment. The court therefore identified a possible jurisdictional problem but did not resolve it.

Ruling

The court ordered that the federal matter be stayed. It held the defendants’ pending motion to dismiss in abeyance while the state-court appeal proceeds. The court explained that the outcome of the appeal could clarify which legal issues control the federal motion. If the amended judgment is upheld, the court will need to consider whether any part of Nguyen’s federal case can proceed without violating Rooker-Feldman. If the amended judgment is reversed, the court may then address the defendants’ arguments under Rules 12(b)(1) and 12(b)(6).

The court did not grant or deny the motion to dismiss. Plaintiff’s counsel must notify the federal court and provide a copy of the appeal decision within seven days after the state court decides the appeal. Either party may then ask to lift the stay.