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Vargas v. Capital One Financial Advisors

United States District Court, Second Circuit

August 15, 2013

CAPITAL ONE FINANCIAL ADVISORS a/k/a Greenpoint Savings Bank, a/k/a Greenpoint Mortgage Funding et al., Defendants.



Plaintiff Ibelka Vargas ("Plaintiff") brings this putative class action against Defendants Capital One Financial Advisors ("Capital One"); Countrywide Financial Corporation; Bank of America, NA; IBM Lender Business Process Services, Inc.; and Seterus (collectively, "Defendants"), alleging that Defendants engaged in discriminatory lending practices in violation of the Fair Housing Act, 42 U.S.C. § 3604; the Equal Credit Opportunity Act, 42 U.S.C. § 1691; and 42 U.S.C. §§ 1981 and 1982. The Court has jurisdiction of this action pursuant to 28 U.S.C. § 1331.

Capital One moves to dismiss the Complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6), alleging that Plaintiff is bound by a previous class action settlement between Capital One's predecessor in interest and a class of which Plaintiff was a member, and that Plaintiff is therefore barred from bringing this action under the doctrine of res judicata and the settlement release. For the following reasons, Capital One's motion to dismiss is granted.


Capital One contends that the court-approved class action settlement in the case of Ramirez v. GreenPoint Mortgage Funding, Inc. , 268 F.R.D. 627 (N.D. Cal. 2010), precludes Plaintiff from bringing this action. In 2008, the plaintiffs in Ramirez brought a class action suit in the Northern District of California against GreenPoint Mortgage Funding ("GreenPoint"), an entity that Capital One had acquired in 2006 and closed in 2007. (Am. Compl. ¶¶ 18, 32.) The Ramirez plaintiffs claimed that GreenPoint used a "Discretionary Pricing Policy" that "authorize[d] additional discretionary financing charges and interest rate mark-ups[, ]" regardless of objective criteria. (Joseph L. Barloon Declaration in Support of Capital One's Motion to Dismiss, Ex. A, Second Amended Complaint, ¶ 2 (hereinafter "Barloon Decl.").) Plaintiffs in that case alleged that the Discretionary Pricing Policy "ha[d] a widespread discriminatory impact on minority applicants for home mortgage loans, in violation of [the Equal Credit Opportunity Act] and [the Fair Housing Act]." Id . For purposes of the settlement of the action, the United States District Court for the Northern District of California (the "California Court") certified a Settlement Class of plaintiffs consisting of "[a]ll African-American or Hispanic persons throughout the United States to whom GreenPoint originated a residential-secured loan in GreenPoint's wholesale lending channel between January 1, 2004, and January 1, 2008." (Barloon Decl., Ex. F, Final Approved Order, ¶ 4.) It is undisputed that Plaintiff Vargas is within the Ramirez settlement class as defined by the Ramirez Court's order.

The settlement in the Ramirez action was concluded after three years of discovery and motion practice, through work with an impartial mediator. The terms of the settlement included: a total settlement fund of $14, 750, 000; an award of 25% of the settlement fund, totaling $3, 687, 500, paid to class counsel, plus actual costs of $425, 412.04; service awards of no more than $8, 000 for each original named plaintiff household and $2, 000 for each named plaintiff household added by amendment; and one year of foreclosure prevention counseling for all class members. (See Barloon Decl., Ex. C, Stipulation and Agreement of Settlement); Barloon Decl., Ex. F, ¶ 12.) The Settlement Agreement also included a release where-under "Plaintiffs and each Settlement Class Member... are deemed to have fully, finally and forever released all claims, causes of action, or liabilities... as alleged or as could have been alleged based upon the facts asserted in the Amended Complaint as to the Released Party."[1] (Barloon Decl., Ex. F, ¶ 9.)

The California Court preliminarily approved the Settlement Agreement and directed that a Notice of the proposed settlement be sent to the class members, via first-class mail, informing them of the Settlement Agreement, its terms, and their options. (Barloon Decl., Ex. B, Order Granting Motion for Preliminary Approval of Class Action Settlement.) The Notice was to be mailed "to Settlement Class Members at the most recent address shown in Defendant's electronic records" (Barloon Decl, Ex C, ¶ 5.2), a method of delivery that the California Court found to "constitute due and sufficient notice to all persons entitled thereto" (Barloon Decl., Ex. B, ¶ 10) and "the best notice practicable [which] fully satisfied the requirements of the Federal Rules of Civil Procedure, due process, and any other applicable laws" (Barloon Decl., Ex. F, ¶ 6). The Notice summarized the Ramirez proceedings; defined the claims that were released by the Settlement Agreement; and informed the class members of their legal rights and options, including the rights to make a claim for settlement benefits, to exclude themselves from the settlement, to object, to speak in court about the fairness of the settlement, and to do nothing.[2] (Christina Peters-Stasiewicz Decl., Ex. A, Notice of Proposed Settlement (hereinafter, "Stasiewicz Decl.").) The Notice also described the settlement class and informed class members of the date, time, and location of the Final Fairness Hearing. (Id.) For those who were interested, the Notice provided the address of a website on which class members could view the text of the Agreement. (Id.)

On January 6, 2011, the settlement administrator mailed this Notice to Plaintiff, a Hispanic woman who received a mortgage from GreenPoint in 2007, at her current address.[3] The Notice was not returned as undeliverable. Plaintiff did not respond to the Settlement Notice. (Stasiewicz Decl., ¶ 7-8.)

United States District Judge Thelton E. Henderson entered his final order and judgment approving the settlement on April 12, 2011, specifically finding, inter alia, that the "Settlement is, in all respects, fair, just, reasonable and adequate to the Settlement Class Members" (Barloon Decl., Ex. F, ¶ 3), that "Plaintiffs[] and Class Counsel have fairly and adequately represented and protected the interests of all of the Settlement Class Members" (id. ¶ 5), and that "Plaintiffs and each Settlement Class Member... are deemed to have fully, finally and forever released all claims, causes of action, or liabilities... as alleged or as could have been alleged based upon the facts asserted in the Amended [Ramirez] Complaint as to [the Released Parties]" (id. ¶ 9). The California Court also found appropriate and approved, based on the record before it and findings detailed in its order, specific service awards for named plaintiffs and a fee award to class counsel comprising 25% of the settlement fund, and an award to class counsel of over $425, 000 for costs. (Id. ¶ 12.) The final approval order authorizes the Released Parties to file it "in any action that may be brought against [them] in order to support a defense... based on principles of res judicata... or any other theory of claim preclusion or issue preclusion or similar defense or counterclaim" and enjoins Settlement Class Members "from commencing or prosecuting against [the Released Parties] any action or proceeding in any court or tribunal asserting any of the Released Claims." (Id. ¶¶ 14, 15.)


"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570 (2007)). "The affirmative defense of res judicata may be the basis of a motion to dismiss a pleading when it is clear from the records properly before the Court that the doctrine applies." Lucky Brand Dungarees Inc. v. Ally Apparel Res. LLC, No. 05 Civ. 6757(LTS)(MHD), 2006 WL 3771005, at *1 (S.D.N.Y. Dec. 20, 2006) (citations omitted). "Res judicata applies to preclude later litigation if the earlier decision was (1) a final judgment on the merits, (2) by a court of competent jurisdiction, (3) in a case involving the same parties or their privies, and (4) involving the same [claim, or] cause of action." Cameron v. Church , 253 F.Supp.2d 611, 619 (S.D.N.Y. 2003) (internal quotation marks and citation omitted).

First, "a dismissal, with prejudice, arising out of a settlement agreement operates as a final judgment for res judicata purposes." Marvel Characters, Inc. v. Simon , 310 F.3d 280, 287 (2d Cir. 2002). Judge Henderson, in a court of competent jurisdiction, "dismisse[d] with prejudice the [Ramirez] action on the merits" when he approved the Settlement agreement. (See Barloon Decl, Ex. F, ¶ 8.) Thus, the Settlement Agreement constitutes a final judgment on the merits for res judicata purposes.

"An individual is a member of a class certified pursuant to Rule 23(b)(3) if plaintiffs follow proper notice procedures and the putative member did not opt out." Gonzalez v. City of New York , 396 F.Supp.2d 411, 416 (S.D.N.Y. 2005). There is no dispute that Plaintiff is within the definition of the Settlement Class as certified in the Ramirez action and did not opt out of the settlement. Likewise, Defendant Capital One, as owner and/or affiliate of GreenPoint, was in privity with GreenPoint during the Ramirez case for res judicata purposes. (See Am. Compl. ¶ 18; Barloon Decl., Ex. C, ¶ 2.23.) Accordingly, both Plaintiff and Capital One were either parties or in privity with the parties in the Ramirez case.

Finally, the causes of action in this case are identical in all relevant respects to the causes of action in Ramirez. Plaintiffs in Ramirez brought ECOA and FHA claims against GreenPoint based on its Discretionary Pricing Policy;' Plaintiff asserts those same claims against Defendants in this case. (See Am. Compl; Barloon Decl., ...

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