Politics & MoneyMortgage

11th Circuit Court affirms dismissal of RICO complaint against MERS

Homeowner Ignacio Damian Figueroa tried to get the U.S. Court of Appeals for the 11th District to overturn a district court’s dismissal of a Racketeer Influenced and Corrupt Organizations Act, or RICO, complaint he filed against Merscorp and  former foreclosure attorney David J. Stern, among others.

But the 11th Circuit sided with the lower court, holding that the federal district court lacked subject-matter jurisdiction over the case, thereby leading to a dismissal of the complaint.

Figueroa’s case began when his mortgage went into default, prompting IndyMac Federal FSB bank to file a foreclosure action against him in state court.

The 11th Circuit’s final ruling claims Figueroa never responded to the initial complaint, and the state court went ahead and granted IndyMac’s foreclosure request.

Figueroa later filed motions asking the state court to vacate the decision by raising fraud claims and claiming he would file a counterclaim in federal court under the federal RICO statute. The state court denied those motions, and the property was eventually sold.

Figueroa then launched a federal suit, raising three separate RICO violations against Mortgage Electronic Registration Systems, its parent Merscorp, and numerous other parties tied to the transaction, according to court records. He contended IndyMac was not the designated holder of the mortgage when the foreclosure process began.

The federal district court dismissed the case, concluding that it lacked subject-matter jurisdiction since the Rooker-Feldman legal doctrine precludes federal courts — other than the U.S. Supreme Court — from reviewing the final judgments of state courts.

The 11th Circuit wrote: “We conclude, as did the district court, that the Rooker-Feldman criteria are satisfied. Figueroa was a state-court loser in his state court foreclosure proceeding. The state court judgment formed the basis of or was intertwined with the injury complained of in Figueroa’s instant compliant: that ‘he lost his one-half interest in his property and home’ because of an improper foreclosure proceeding. The state court proceedings had ended before Figueroa instituted the present federal lawsuit in the district court. Figueroa also sought, in effect, to have the district court review and reject the state court proceedings because his federal RICO claims could only succeed if the state court’s foreclosure judgment was in error.”

The court also said Figueroa had an opportunity to litigate his RICO claims in state court and failed to do so.

In response to the case dismissal, Merscorp Holdings Vice President of Corporate Communications Janis Smith said, “We are sensitive to the effects the downward economy has had on consumers over the past several years; however, increased attempts to avoid legitimate foreclosure proceedings via tactical legal maneuvers has failed time and again in both federal and state court rulings.”


3d rendering of a row of luxury townhouses along a street

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