Vargas v. Capital One Financial Advisors , 559 F. App'x 22 ( 2014 )

13-3262
Vargas v. Capital One Financial Advisors et al.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order
filed on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate
Procedure 32.1 and this court’s Local Rule 32.1.1. When citing a summary order in a
document filed with this court, a party must cite either the Federal Appendix or an
electronic database (with the notation “summary order”). A party citing a summary order
must serve a copy of it on any party not represented by counsel.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 13th day of March, two thousand fourteen.
PRESENT:
PIERRE N. LEVAL,
SUSAN L. CARNEY,
Circuit Judges,
KATHERINE POLK FAILLA,
District Judge.*
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IBELKA VARGAS, AND THE CLASS OF THOSE PERSONS SIMILARLY SITUATED,
Plaintiff-Appellant,
-v.- No. 13-3262
CAPITAL ONE FINANCIAL ADVISORS, AKA GREENPOINT SAVINGS BANK,
AKA GREENPOINT MORTGAGE FUNDING, COUNTRYWIDE BANK,
COUNTRYWIDE FINANCIAL CORPORATION, AKA COUNTRYWIDE HOME LOANS, INC.,
IBM LENDER BUSINESS PROCESS SERVICES, INC., SETERUS, BANK OF AMERICA, NA,
Defendants-Appellees.**
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* The Honorable Katherine Polk Failla, of the United States District Court for the Southern District of New
York, sitting by designation.
** The Clerk of Court is directed to amend the official caption in this case to conform to the above listing of
the parties.
FOR PLAINTIFF-APPELLANT: Phillip Jaffe, New York, NY.
FOR DEFENDANTS-APPELLEES: ANAND S. RAMAN, Skadden, Arps, Slate,
Meagher & Flom LLP, Washington, DC, for
Capital One Financial Advisors.
Christine Burke Cesare and Scott Harris
Kaiser, Bryan Cave LLP, New York, NY, for
Countrywide Bank, Countrywide Financial
Corporation, AKA Countrywide Home
Loans, Inc., and Bank of America, NA.
Allison J. Schoenthal and Courtney Colligan,
Hogan Lovells US LLP, New York, NY, for
IBM Lender Business Process Services, Inc.
and Seterus.
Appeal from an August 16, 2013 judgment of the United States District Court for the
Southern District of New York (Swain, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of the District Court is AFFIRMED.
Ibelka Vargas appeals from the judgment of the District Court dismissing her complaint
with prejudice pursuant to Federal Rule of Civil Procedure 12(b)(6). In 2012, Vargas brought this
putative class action against Defendants-Appellees Capital One Financial Advisors (“Capital One”);
Countrywide Bank; Countrywide Financial Corporation; Bank of America, NA; IBM Lender
Business Process Services, Inc.; and Seterus (collectively, the “Lenders”). She alleged that the
Lenders engaged in discriminatory residential mortgage loan practices in violation of the Fair
Housing Act, 42 U.S.C. § 3601, et seq.; the Equal Credit Opportunity Act, 15 U.S.C. § 1691; and 42
U.S.C. §§ 1981 and 1982.
The District Court’s dismissal rested on its determination that res judicata and a class
settlement agreement barred Vargas’s claims. Vargas is a member of the settlement class approved
by the United States District Court for the Northern District of California in Ramirez v. GreenPoint
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Mortgage Funding, Inc., No. 08-cv-00369 (TEH) (N.D. Cal. Apr. 12, 2011) (“Ramirez”). The
Ramirez settlement class is party to a Settlement Agreement entered into in 2011 with GreenPoint
Mortgage Funding (“GreenPoint”), the named defendant in the Ramirez litigation. GreenPoint was
in 2006 acquired by Capital One, which succeeded to GreenPoint’s interests in Vargas’s first and
second mortgage loans. As alleged in her complaint in the district court here, Vargas’s first
mortgage was thereafter successively acquired by the remaining Lenders, and her claims against
those Lenders are derivative of her claim against Capital One. Vargas did not opt out of the
Ramirez settlement class. The district court ruled, accordingly, that Vargas’s claims against Capital
One and the other Lenders were covered by res judicata and the release effected by the Settlement
Agreement approved by the Ramirez court.1
On appeal, Vargas argues that the district court erred in applying res judicata principles to her
claims, principally because of deficiencies Vargas perceives (1) in the delivery and substance of the
Ramirez settlement class notice, and (2) in the representation provided by Ramirez class counsel.
She also contends that res judicata does not bar the injunctive relief that she sought in the district
court, under which her loan would be modified and the principal owed would be reduced. We
assume the parties’ familiarity with the underlying facts, procedural history, and specification of
issues for review, to which we refer only as necessary to explain our decision to affirm.
“We review a district court’s dismissal of a complaint pursuant to Federal Rule of Civil
Procedure 12(b)(6) de novo, accepting all factual allegations in the complaint as true and drawing all
reasonable inferences in the plaintiff ’s favor.” Fait v. Regions Financial Corp., 655 F.3d 105, 109 (2d
Cir. 2011). To survive a motion to dismiss, a complaint must contain sufficient factual matter to
“state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
1 Of the Defendants-Appellees, only Capital One Financial Advisors filed a brief in this appeal. To the extent
that the claims against Capital One were correctly resolved by the district court’s dismissal—as we hold they were—the
claims against the remaining Lenders were also correctly dismissed.
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(internal quotation marks omitted). Most relevant here, we will “affirm the dismissal of a complaint
for failure to state a claim based on the affirmative defense of res judicata if all relevant facts are
shown by the court’s own records, of which we can take judicial notice.” AmBase Corp. v. City
Investing Co. Liquidating Trust, 326 F.3d 63, 72 (2d Cir. 2003) (internal quotation marks omitted).
In Ramirez, class representatives alleged that GreenPoint used a pricing policy for residential
mortgages that had a “widespread discriminatory impact on minority applicants for home mortgage
loans, in violation of the [Equal Credit Opportunity Act] and the [Fair Housing Act].” After three
years of pretrial proceedings, Ramirez was resolved by a court-approved Settlement Agreement
under which GreenPoint created a settlement fund of $14,750,000 for the benefit of the plaintiff
class. Of that amount, $3,687,500 (or 25%) was designated for class counsel’s fees, and an
additional $425,412.04 for costs actually incurred by counsel. Pursuant to the release contained in
the Agreement, members of the Ramirez plaintiff class were “deemed to have fully, finally and
forever released all claims, causes of action, or liabilities . . . whether known or unknown . . . as
alleged or as could have been alleged based upon the facts asserted in the Amended Complaint as to
the Released Party.” D. Ct. Dkt. No. 24-3 at 9-10. Section 2.23 of the Agreement defined the
“Released Party” to include GreenPoint “as well as its current, former and future direct and indirect
parent companies, affiliates, subsidiaries, agents, representatives, successors, . . . and assigns and all
persons acting for or on their behalf.” Id. at 4.
Notice of the proposed settlement was sent by first class mail to GreenPoint residential
mortgage borrowers at the addresses listed in GreenPoint’s records, which were updated using a
national database of address changes compiled by the United States Postal Service. On April 11,
2011, the district court issued its final approval of the settlement and dismissed the Ramirez action
with prejudice.
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Over one year later, in August 2012, Vargas filed the complaint at issue here, naming Capital
One and the other Lenders as defendants, and alleging primarily violations of the Equal
Opportunity Act and the Fair Housing Act. In 2013, the District Court dismissed her complaint, as
described above.
Vargas, a Hispanic woman, obtained first and second mortgage loans on her New Jersey
residence from GreenPoint in 2007. She does not dispute, accordingly, that she was a member of
the Ramirez settlement class, or that with respect to her current claims regarding the Lenders’
allegedly discriminatory conduct in making her mortgage loans, the Ramirez judgment satisfies the
elements of res judicata: it was a final judgment on the merits, by a court of competent jurisdiction,
in a case involving the same parties or their privies, and involving the same causes of action. See
EDP Med. Computer Sys. Inc. v. United States, 480 F.3d 621, 624 (2d Cir. 2007).
Instead, she invokes the Due Process Clause of the Constitution in an attempt to free
herself of res judicata and the binding elements of the settlement. Vargas argues that the Ramirez
judgment should not preclude her from prosecuting this suit because, in her view, the class
representatives were conflicted, and class counsel’s services and the notice provided to settlement
class members were inadequate. See Wolfert ex rel. Estate of Wolfert v. Transamerica Home First,
Inc., 439 F.3d 165, 171 (2d Cir. 2006) (“[A]n absent party denied [adequate] representation [can]
collaterally attack [a] class action judgment.”); Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811-12
(1985) (holding that a class action judgment awarding money damages will not bind an absent
plaintiff without adequate notice).
Vargas argues that class counsel in Ramirez was inadequate because (as she alleges) they
colluded with GreenPoint, accepting a grossly insufficient settlement award in exchange for
exorbitant attorneys’ fees. Vargas did not raise her claim of collusion in the District Court
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proceedings, however. “[P]erceiving that no miscarriage of justice will result,” Burnette v. Carothers,
192 F.3d 52, 58 (2d Cir. 1999), we conclude that Vargas has waived her argument claiming collusion.
Treating the broader issue of counsel’s adequacy as preserved, we are not persuaded by Vargas’s
argument. A settlement award that might seem low in comparison to an award of attorneys’ fees
and costs—and this one, with fees amounting to 25% of the total award, does not strike us as
particularly disproportionate—does not on its own establish any inadequacy of class counsel.
Neither does an award that seems low in comparison to the amount of damages that a plaintiff
speculates a class may suffer. We assess the adequacy of class counsel not by the results counsel
achieves, but rather by determining whether they are “qualified, experienced and generally able to
conduct the litigation.” In re Joint Eastern and Southern Dist. Asbestos Litig., 78 F.3d 764, 778 (2d
Cir. 1996) (internal quotation marks omitted). Vargas has made no showing that class counsel failed
to meet this standard. Thus, for these reasons and for those articulated by the District Court in its
Memorandum Order, we comfortably conclude that class counsel in Ramirez was adequate, and we
reject this aspect of Vargas’s collateral attack.
Vargas also challenges the Ramirez settlement by claiming that she received inadequate
notice of it and its terms, both because of the method used to deliver the notice and the notice’s
substance. When a class settlement is proposed, the court “must direct to class members the best
notice that is practicable under the circumstances.” Fed. R. Civ. P. 23(c)(2)(B); see also Rule 23(e)(1).
In addition to being sent by an adequate physical delivery method, Phillips Petroleum Co., 472 U.S.
at 798, a settlement notice “must fairly apprise the prospective members of the class of the terms of
the proposed settlement and of the options that are open to them in connection with the
proceedings,” Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 114 (2d Cir. 2005) (internal
quotation marks omitted).
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The Ramirez court directed that class notice be sent by first class mail to every prospective
member of the settlement class at addresses (as noted above) derived from GreenPoint’s records.
While Vargas denies actually receiving the notice, she does not dispute that notice was mailed to the
correct address and that, as GreenPoint avers, it was not returned to the sender as undeliverable.
Here, the District Court concluded that the delivery method approved by the Ramirez court was
reasonable, and Vargas has not advanced a credible argument that the method was not reasonable.
Nor does she claim that she opted out of the settlement, as the notice advised was her right.
Rather, Vargas presses her charge that the notice was substantively inadequate because it
failed, inter alia, to affirmatively advise members who are not satisfied with the settlement to opt-out
of the settlement and hire an attorney to pursue their “true damages.” Appellant’s Br. at 21. It was
further inadequate, Vargas maintains, because it did not set forth what Vargas calculates to be the
damages sustained by each class member over the full term of his or her mortgage. But Vargas cites
no authority for the propositions that a class notice need give legal advice to class members or
provide speculative calculations of defendants’ potential exposure to be sufficient under Rule 23.
For these reasons and for those articulated by the District Court in its Memorandum Order,
therefore, we easily reject Vargas’s contention regarding the substantive adequacy of the class notice.
Finally, Vargas contends that the District Court erred in dismissing her fourth cause of
action, which she claims was unaffected by Ramirez as a matter of either res judicata or the settlement
release. In this claim, Vargas appears to have sought reformation of at least one of her mortgages
to reduce the principal amount due, in line with an offer allegedly made by Bank of America.
Because the “events constituting the asserted injury are the same in this case as in its predecessor[],”
and “all the facts necessary to support the claims before us now were pleaded, or could have been
pleaded, in the first action,” In re Teltronics Services, Inc., 762 F.2d 185, 193 (2d Cir. 1985), we find
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no error in the District Court’s dismissal of the fourth cause of action, too, on the basis of the
settlement release and res judicata.
CONCLUSION
We have reviewed Vargas’s remaining arguments on appeal, and find them to be without
merit. For the reasons set forth above, we AFFIRM the August 16, 2013 judgment of the District
Court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
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