Pennicott v. JPMorgan Chase Bank, N.A.

Background

On September 13, 2022, the court dismissed Marcia Pennicott’s Second Amended Complaint. It held that each asserted cause of action either was barred by res judicata—a rule generally preventing a party from bringing claims that could have been raised in an earlier case—or failed to state a claim under Federal Rule of Civil Procedure 12(b)(6). The earlier case involved a 2015 judgment of foreclosure and sale against Pennicott.

The court had allowed Pennicott to file a motion seeking permission to amend again. Pennicott then filed a proposed Third Amended Complaint without first obtaining permission. The court treated that filing as a motion for leave to amend.

Proposed claims

The proposed complaint asserted at least 19 causes of action, including claims concerning alleged fraud, loan origination and servicing, foreclosure processing, bankruptcy-related conduct, the False Claims Act, the Financial Institution Reform, Recovery and Enforcement Act of 1989, the Servicemembers Civil Relief Act, the Fair Debt Collection Practices Act, reformation, slander of title, and quiet title.

Why amendment was futile

The court explained that amendment may be denied when it would be futile, meaning the proposed changes would not fix the complaint’s legal problems. It found that the first, second, third, fourth, fifth, sixth, twelfth, thirteenth, fourteenth, fifteenth, sixteenth, seventeenth, eighteenth, and nineteenth claims concerned alleged wrongdoing in the loan’s origination or servicing, the foreclosure proceeding, or efforts to reverse the foreclosure judgment. Because those matters could have been raised as defenses in the foreclosure proceeding but were not, the court held that those claims were barred by res judicata.

The court held that the eighth, ninth, tenth, and eleventh claims also would be futile because the proposed complaint did not adequately plead Article III standing. Standing requires a plaintiff to show a concrete and particularized injury, a connection between that injury and the defendant’s conduct, and a likelihood that court-ordered relief would remedy the injury. The court found that these claims alleged general wrongdoing affecting the United States, states, or their citizens, rather than an injury to Pennicott personally. To the extent those claims were based on alleged effects on Pennicott’s mortgage or foreclosure, the court stated that they were also barred by res judicata.

The court separately addressed the seventh claim, brought under the False Claims Act. It noted that the claim did not require Pennicott to allege a personal injury, but held that the claim would nevertheless be futile because a person bringing this type of claim lacks a personal interest in the case and is not entitled to proceed without a lawyer.

Ruling

Judge Lorna G. Schofield ordered that Pennicott’s motion for leave to amend was denied. The court also ordered that the Second Amended Complaint was dismissed with prejudice and directed the Clerk of Court to close the case.