A Maryland court ruled that homeowners lose the right to file a subsequent lawsuit against a foreclosure proceeding if the grievances are not aired during the original foreclosure.

In Maryland, all foreclosures must go through the courts. In the latest Smalley v. Shapiro & Burson ruling, the U.S. District Court for the District of Maryland said if the homeowners did not bring robo-signing accusations to light the first time around, they would not get a second chance.

Ballard Spahr represented the defendants and successfully argued for a preclusion claim for matters already judged.

Charles Smalley and Pamela Ball both lost their homes in foreclosure. After the court ruled in favor of the lenders, the two former homeowners banded together to bring a class-action proceeding against law firm Shapiro & Burson, alleging their mortgage documents were robo-signed.

Smalley and Ball sought redress in federal courts after the foreclosures were litigated, seeking damages under the Fair Debt Collection Practices Act, the Maryland Consumer Protection Act and other statutes.

"Plaintiffs argued that attorneys fees assessed against them in the state-court foreclosure cases were improper because of the alleged "robo-signing" activities," said an email from Ballard Spahr’s Consumer Financial Services Group. "

The court dismissed the case in its entirety, ruling that plaintiffs could have raised their claims in the state-court foreclosure proceedings."

Smalley and Ball argued unsuccessfully that they should be exempt from res judicata because they became aware of the robo-signing only after their foreclosures were finalized.

Read the ruling here.

Write to Jacob Gaffney.

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