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Harrington v. Dh Capital Management, Inc.

United States District Court, W.D. Kentucky, Louisville Division

November 5, 2014



JOSEPH H. McKINLEY, Jr., Chief District Judge.

This matter is before the Court on Defendant DH Capital Management, Inc.'s ("DH Capital") Motion to Dismiss [DN 5]. Fully briefed, this matter is ripe for review.


This case arises out of Defendant DH Capital's suit filed against Plaintiff Harrington to recover a credit card debt owed to U.S. Bank. While DH Capital initially filed suit in Warren County, Kentucky on October 4, 2011, Defendant eventually transferred the case to Jefferson County District Court. On February 10, 2014, Defendant and Plaintiff filed an Agreed Judgment with the Jefferson District Court that called for Plaintiff to make $60 payments each month starting on December 13, 2013. [Agreed Judgment, DN 1-2]. However, by June 25, 2014, DH Capital had determined that Harrington was in default on her payments required under the Agreed Judgment, and as a result, Defendant sought to garnish her wages.

After learning of the wage garnishment sent to her employer, Plaintiff filed an affidavit and a motion with the Jefferson District Court seeking to vacate the Agreed Judgment. Plaintiff asserted, inter alia, that the Agreed Judgment should be vacated on the grounds that: (1) Defendant's claim for the debt was barred by the statute of limitations; (2) the Agreed Judgment called for Plaintiff to pay an interest rate in excess of the permitted rate; and (3) the Agreed Judgment impermissibly required Plaintiff to pay attorney's fees. [Pl.'s Mot. to Vacate, DN 5-6, at 4-5]. On August 1, 2014, Jefferson District Court Judge David Bowles heard arguments on Plaintiff's motion to vacate and denied Plaintiff's motion pursuant to Kentucky Rule of Civil Procedure (CR) 60.02. [Hr'g Tr., DN 5-8, at 10]. Subsequently, Judge Bowles entered an Order denying Plaintiff's challenge to the garnishment. [Order Denying Garnishment Challenge, DN 5-9].

On September 10, 2014, Plaintiff Harrington filed suit in this Court seeking declaratory relief and damages related to the previously described facts. Plaintiff's Complaint alleges multiple causes of action falling under the Fair Debt Collections Practices Act ("FDCPA"), 15 U.S.C. ยง 1692 et seq. As it relates to the present motion to dismiss, three of those causes of action mirror the issues raised by Plaintiff in her motion to vacate the Agreed Judgment in state court. Specifically, Plaintiff claims that DH Capital filed suit on a debt outside the permissible statute of limitations, attempted to collect interest in excess of the permissible rate, and attempted to obtain attorney's fees. [Compl., DN 1, at 5-6].


Defendant seeks to dismiss Plaintiff's Complaint on two grounds. First, Defendant contends that the Court lacks subject matter jurisdiction based on the Rooker-Feldman doctrine, which originated from Rooker v. Fidelity Trust Co. , 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923) and District of Columbia Court of Appeals v. Feldman , 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983). Second, Defendant asserts that Plaintiff is barred from raising her claims based on issue and claim preclusion. Plaintiff responds to Defendant's first assertion by arguing that the Rooker-Feldman doctrine is inapplicable to the present case because her claims are independent from the issues she raised in her motion to vacate in state court. As to issue and claim preclusion, Plaintiff contends that her claims were not actually litigated at the state court, and thus not barred.

A. Rooker-Feldman Doctrine

"Rooker-Feldman is a combination of the abstention and res judicata doctrines, under which the Supreme Court's appellate jurisdiction precludes lower federal courts from engaging in what amounts to appellate review of state court proceedings." Brown v. First Nationwide Mortgage Corp. , 206 F.Appx. 436, 439 (6th Cir. 2006) (citing Exxon Mobil Corp. v. Saudi Basic Indus. Corp. , 544 U.S. 280, 283-84, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005)). As clarified by Exxon Mobil, the Rooker-Feldman doctrine deprives federal courts of jurisdiction over "cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments." Exxon Mobil , 544 U.S. at 284, 125 S.Ct. 1517; see also Feldman , 460 U.S. at 482; Rooker , 263 U.S. at 415-16. However, "[f]ederal jurisdiction is proper if a federal plaintiff presents an independent claim, albeit one that denies a legal conclusion that a state court has reached in a case to which he was a party.'" Brown , 206 F.Appx. at 439 (quoting Exxon Mobil , 544 U.S. at 293, 125 S.Ct. 1517). To distinguish permissible independent claims, the Sixth Circuit adopted the test used by the Fourth Circuit, which provides as follows:

The plaintiffs in Rooker and Feldman sought redress for an injury allegedly caused by the state-court decision itself-in Rooker, the plaintiff sought to overturn a state-court judgment in federal district court, and in Feldman, the plaintiffs sought to overturn a judgment rendered by the District of Columbia court in federal district court. In Barefoot [a pre-Exxon Mobil case], by contrast, we extended the Rooker-Feldman doctrine to apply in situations where the plaintiff, after losing in state court, seeks redress for an injury allegedly caused by the defendant's actions.

McCormick, 451 F.3d at 393 (quoting Davani v. Virginia Dep't of Transp. , 434 F.3d 712 (4th Cir. 2006)). Therefore, if a plaintiff's injury derives from some other source besides the state court decision, then the claim is independent and not barred by Rooker-Feldman. See Id . For claims determined to be independent, "state law determines whether the defendant prevails under principles of preclusion." Exxon , 544 U.S. at 293, 125 S.Ct. 1517, 1527, 161 L.Ed.2d 454 (2005) (quoting GASH Assocs. v. Rosemont , 995 F.2d 726, 728 (7th Cir. 1993)).

Shortly following the decision in Exxon Mobil, the Sixth Circuit addressed the application of the Rooker-Feldman doctrine in a case involving FDCPA claims. In Todd v. Weltman, Weinberg & Reis Co., L.P.A, a debt collection firm obtained a judgment against Robert Todd and his wife in state court for a debt related to the purchase of furniture. Todd, 434 F.3d 432, 434-35 (6th Cir. 2006). After the entry of judgment, the collection firm filed an affidavit stating that the plaintiffs had non-exempt assets that could be garnished. Id . at 435. As a result of the defendant's affidavit, the court froze the plaintiffs' bank account. Id . However, after a hearing on the garnishment order, the state court concluded that all of plaintiffs' asserts were exempt under state law. Id . The plaintiffs then filed suit in federal court claiming that the defendant violated the FDCPA by failing to adequately investigate plaintiffs' property in order to determine whether it was exempt or not. Id.

Applying the facts in Todd to the Supreme Court's holding in Exxon-Mobil, the Sixth Circuit concluded that Rooker-Feldman did not preclude the district court from exercising jurisdiction over the plaintiffs' FDCPA claims. Todd, 434 F.3d at ...

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