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Date: 11-28-2017

Case Style:

Samuel Topchain v. JPMorgan Chase Bank, N.A.

Missouri Court of Appeals - Western District Courthouse - Kansas City, Missouri

Case Number: WD80472

Judge: Karen King Mitchell

Court: Missouri Court of Appeals, Western District on appeal from the Circuit Court, Jackson County

Plaintiff's Attorney: John Campbell, Erich Vieth, and Alicia Campbell

Defendant's Attorney: Robert J. Hoffman and Jennifer A. Donnelli, Kansas City, MO, Attorneys for Respondent

JPMorgan Chase Bank, N.A. Richard C. Wuestling and Susan M. Dimond, St. Louis, MO, Attorneys for Respondent Martin, Leigh, Laws & Fritzlen, P.C.

Andrew R. Kasnetz, Timothy C. Sansone, and Joseph F. Devereux, III, St. Louis, MO, Attorneys for Respondent Select Portfolio Servicing, Inc.

Description: Samvel Topchian appeals the judgment of the Circuit Court of Jackson County, Missouri,
granting summary judgment to JPMorgan Chase Bank, N.A. (Chase), Martin, Leigh, Laws &
Fritzlen, PC (MLLF), and Select Portfolio Servicing, Inc. (SPS) on Topchian’s claims of breach
of contract (against Chase), violations of the Missouri Merchandizing Practices Act (MMPA)
(against Chase, MLLF, and SPS), and common law fraud (against Chase). In granting Chase’s
motion for summary judgment, the circuit court concluded that Topchian’s claims were
2
precluded by a judgment implementing the settlement of a federal class action and that a
collateral attack on that judgment was inappropriate. In granting MLLF’s and SPS’s motions for
summary judgment, the circuit court held that those parties were released from Topchian’s
MMPA claims by the prior judgment. On appeal, Topchian argues that the circuit court erred in
granting summary judgment because: (1) the class action judgment was entered without
personal jurisdiction over Topchian or adequate notice to him, (2) Topchian was denied adequate
representation by counsel for the class, (3) Topchian was denied adequate representation by class
representatives, (4) the class action settlement was the product of fraud, and (5) the claims
released by the class action judgment are different from the claims Topchian asserts in this case.
Finding that summary judgment is appropriate, we affirm.
Background1
On or about September 1, 2005, Topchian borrowed $221,000, as evidenced by a 30-year
deed of trust bearing his signature and referencing a promissory note he signed to document the
loan. Chase serviced the loan at all times relevant to the events forming the basis of Topchian’s
claims. Topchian experienced financial difficulties, and, beginning in 2009, he participated in a
Stated-Income Trial Period Plan (TPP) under the Home Affordable Modification Program
(HAMP). The TPP required Topchian to submit “trial plan” payments to Chase as a prerequisite
to a possible permanent loan modification. Topchian made trial payments under the TPP from
May to December 2009. In December 2009, Topchian received a “Home Affordable
Modification Agreement” from Chase. That Agreement stated that it would not take effect
unless certain preconditions were satisfied, including (1) timely payments by Topchian, (2)
continued accuracy of representations he had made, and (3) receipt by Topchian of a copy of the
1 “When considering an appeal from summary judgment, this court reviews the record in the light most
favorable to the party against whom judgment was entered.” St. Anthony’s Med. Ctr. v. H.S.H., 974 S.W.2d 606,
609 (Mo. App. E.D. 1998).
3
Agreement bearing Chase’s signature. It is undisputed that Topchian never received a copy of
the Agreement signed by Chase.2
Pursuant to the TPP, Topchian made payments at the lower, modified rate throughout
2010, but, beginning in January 2011, Chase refused to accept his payments. Previously, on
June 8, 2010, Chase had sent Topchian a letter stating, “we are not considering your request for a
modification because you notified us that you are withdrawing your request or you have failed to
accept the Trial Period Plan or Home Affordable Modification within the required time period.”
Then, in December 2010, Chase apparently contacted Topchian to update his paperwork so he
could receive a signed copy of the modification from Chase. Again on February 9, 2011, Chase
informed him, “We are writing about your request for a permanent loan modification on the
account above. We are unable to offer you a modification through [HAMP] at this time.” On
August 19, 2011, and August 22, 2011, Chase again provided the same written notice of
modification denial to Topchian.
MLLF signed an engagement letter with Chase on April 12, 2011, agreeing to act as
attorney for Chase, represent it in bankruptcy and foreclosure matters, and provide legal services
and representation. MLLF, as Chase’s attorney and trustee, sent correspondence to Topchian
regarding his failure to make payments pursuant to the original note. Specifically, on
February 6, 2012, MLLF sent Topchian a letter stating “[MLLF] has been retained by JPMorgan
Chase Bank, National Association to act as trustee to foreclose the above Deed of Trust.” Then
2 Topchian alleges that he and Chase entered into a permanent mortgage modification agreement based on
the following: (1) he signed and returned the Home Affordable Modification Agreement to Chase within the time
period provided; (2) he complied with the modification agreement by paying the agreed amount for March through
December 2010, and those payments were accepted by Chase; and (3) Chase employees assured him over the
telephone that he had a permanent modification even though he never received a copy signed by Chase. Chase
disputes Topchian’s assertion that he had a permanent mortgage modification agreement. For the reasons we
discuss below, we agree with the circuit court that the disputed fact of whether Topchian obtained a permanent
mortgage modification is not material. Therefore, the existence of this disputed fact does not negate the propriety of
summary judgment.
4
on February 29, 2012, MLLF sent Topchian a “Notice of Trustee’s Sale” signed by MLLF as
“Successor Trustee.”3 There has been no foreclosure sale on the property securing Topchian’s
loan.
Meanwhile, in October 2011, cases in which various plaintiffs had sued Chase in separate
lawsuits in 2010 and 2011 were consolidated into a multi-district class action lawsuit styled
JPMorgan Chase Mortgage Modification Litigation, MDL Docket No. 2290, Case No. 1:11-md-
02290-RGS, in the United States District Court for the District of Massachusetts. The
consolidated actions pertained to Chase’s handling of mortgage borrowers’ requests for
modifications of their loans. Following consolidation, plaintiffs filed an amended class action
complaint on January 20, 2012. Part I of the class action complaint asserted claims for breach of
contract and violations of state consumer protection statutes arising from Chase’s alleged breach
of TPP agreements under HAMP. Specifically, in Part I, the plaintiffs alleged that
[i]n their TPP Agreements, proffered under HAMP, . . . Chase set forth a finite
“trial period,” and promised that successful compliance with the [A]greement
would result in the tender of a permanent loan modification. Plaintiffs, for their
part, have fully complied with these [A]greements by submitting the required
documentation and making payments. Despite Plaintiffs’ full performance, Chase
has failed to meet its contractual obligation to tender promised permanent
modifications, or even to notify Plaintiffs by the trial period deadline that they
would not be receiving a permanent modification.
Part III of the class action complaint included three underlying complaints involving claims that
Chase breached final loan modification agreements either by continuing to treat the accounts as
if no modification had occurred or by canceling the modifications without notice several months
3 Topchian claims that MLLF acted as a debt collector and “servicer” in the transaction with Chase, and, in
support of his MMPA claim against MLLF, he lists “duties” MLLF was to perform as an alleged “debt collector.”
Topchian does not cite any authority for his interpretation of MLLF’s legal status or duties, and his interpretation
conflicts with both the engagement letter between Chase and MLLF and correspondence from MLLF to Topchian.
5
after the modifications had been granted.4 Part III set out claims for breach of contract and
violations of state consumer protection laws, including the MMPA, arising from Chase’s failure
to honor such modification agreements. The class action complaint specifically referenced the
MMPA because two of the named plaintiffs were residents of Missouri. The class action
complaint also alleged violations of common law.
On June 15, 2012, Topchian filed a pro se petition in the Small Claims Court of the
Circuit Court of Jackson County, Missouri, seeking $3 million in damages from Chase for breach
of contract. His petition was in the form of a letter that set out detailed facts but did not provide
any legal basis for his claims. Chase removed the case to the U.S. District Court for the Western
District of Missouri on the basis of diversity jurisdiction. Chase then filed a motion to dismiss
or, in the alternative, a motion for a more definite statement. The district court denied the motion
to dismiss but granted the motion for a more definite statement, directing Topchian to amend his
petition. His amended petition included some additional facts, but no legal theories, and Chase
moved to dismiss the amended petition under Federal Rule of Civil Procedure 12(b)(6) for
failure to state a claim upon which relief can be granted. The district court granted the motion to
dismiss and later denied Topchian’s motion for reconsideration. He appealed the dismissal of his
amended petition to the U.S. Court of Appeals for the Eighth Circuit. While Topchian’s appeal
was pending, his current attorneys agreed to represent him. The Eighth Circuit reversed, in part,
and remanded the district court’s grant of Chase’s motion to dismiss, finding that Topchian had
4 Donna Follmer, a plaintiff in one of the three underlying complaints involving alleged final loan
modification agreements, is identified as a Class Representative in the Settlement Agreement. Like Topchian,
Follmer alleged that she had a loan modification agreement with Chase, Chase breached that agreement after
accepting several payments from Follmer under the agreement, and Chase subsequently attempted to foreclose on
her property. The plaintiffs in the other two underlying complaints involving modification agreements did not
become members of the Settlement Class.
6
stated a claim for breach of contract. Topchian v. JPMorgan Chase Bank, N.A., 760 F.3d 843,
851 (8th Cir. 2014).5
While Topchian’s pro se case was pending, SPS became the sub-servicer of Topchian’s
loan on May 3, 2013, under a Limited Power of Attorney. At that point, SPS became Chase’s
true and lawful Attorney-In-Fact with respect to Topchian’s loan.
In November 2013, the class representatives and Chase reached a Settlement Agreement
in the federal class action, for which they jointly sought the court’s approval. Consistent with the
class action complaint, the Settlement Agreement included assertions that Chase “breached
agreements with the Plaintiffs by failing to provide a modification of Plaintiffs’ loans under
HAMP . . . and “breached the terms of permanent loan modifications.” The court held a
preliminary approval hearing on December 5, 2013, which included evidence and argument by
class counsel and Chase. The next day, the court issued a Preliminary Approval Order directing
implementation of the Settlement Agreement and certifying a class for that purpose. The
Preliminary Approval Order directed that notice be sent to Chase borrowers who were identified
as potentially being in the class. Topchian was on the list of potential class members, and notice
of the settlement was mailed to him. He admitted receiving the notice in January 2014.
The notice Topchian received (Class Notice) was titled “NOTICE OF PROPOSED
SETTLEMENT OF CLASS ACTION LAWSUIT RELATED TO YOUR JPMORGAN CHASE
LOAN MODIFICATION.” The Class Notice stated, “You are a ‘Settlement Class Member’ if:
(1) your loan is serviced by Chase and you participated in a [TPP] extended by
Chase under the [HAMP] . . . , and
5 The Eighth Circuit found that Topchian either stated a claim because the requirement that Chase sign and
return the agreement was a condition precedent that Chase waived by either the oral representations of its agent or
accepting payment, or, alternatively, even if the requirement that Chase sign was not a condition precedent, but a
limitation on the mode of acceptance, Chase could orally waive that condition. Topchian v. JPMorgan Chase Bank,
N.A., 760 F.3d 843, 851-52 (8th Cir. 2014). In reviewing the lower court’s grant of Chase’s motion to dismiss, the
Eighth Circuit was required to view all facts in the light most favorable to Topchian, and, in doing so, the court
concluded that he had alleged sufficient facts to survive the motion to dismiss.
7
(2) you made timely and sufficient trial payments required by the TPP, and
(3) your property has not been foreclosed, and
(4) you have either (a) not received a permanent loan modification eligibility
decision since the start of your trial period described in your . . . TPP, or (b)
you did receive an eligibility decision denying the loan for permanent
modification during or after your trial period described in your . . . TPP, and
(5) you are not currently a debtor in bankruptcy proceedings.6
In a later section titled “Who Represented Me?” the Class Notice stated, “The following
Plaintiffs have or had mortgage loans that were serviced by Chase and also sought (or sought and
obtained) permanent loan modifications from Chase.” (Emphasis added.)
The Class Notice included an opt-out procedure and stated, “If you do not opt out, you
will be bound by this Settlement.” The Class Notice outlined the release of claims effectuated by
the settlement, and advised class members as follows:
If you, or someone acting on your behalf, are currently litigating claims against
Defendants or other released parties that are the same as or similar to those
addressed here, you will be barred from pursuing the claims released by the
Settlement unless you validly opt out, as described [herein].7
. . . .
Unless you exclude yourself, you will be part of the Settlement Class, and that
means that any claims you have about Chase’s consideration of, and other
conduct in connection with, your request to have your home mortgage loan
modified will be fully and completely resolved, and that you cannot sue, continue
to sue, or be part of any other lawsuit against Chase about Chase’s handling of
your request for a loan modification.
. . . .
If you want to keep the right to sue or continue to sue Chase, on your own, about
Chase’s handling and consideration of your request for a loan modification, you
must exclude yourself from the Settlement Class in this case.
6 The Settlement Agreement included the same criteria for class membership.
7 The Settlement Agreement described in detail the types of claims and parties that would be released. We
do not include the full release provisions here because they are irrelevant to our resolution of this case.
8
The Class Notice provided detailed instructions for opting out and announced the opt-out
deadline of March 18, 2014, in bold typeface. Topchian did not opt out because he did not
interpret the “Settlement Class,” as described in the Class Notice, to include individuals like
himself who allegedly had received permanent loan modifications that were subsequently
breached by Chase. Therefore, he saw no need to take any action in response to the Class
Notice. To support his decision not to act, Topchian now relies on the Eighth Circuit’s opinion
in Topchian v. JPMorgan Chase Bank, N.A., 760 F.3d 843 (8th Cir. 2014), reversing the district
court’s grant of Chase’s motion to dismiss Topchian’s pro se case because he had pleaded
sufficient facts to state a claim for breach of contract against Chase.8
In other relevant sections, the Class Notice included instructions for objecting to all or
any part of the Settlement Agreement while still remaining a member of the class and directed
recipients to the settlement website for a complete copy of the Settlement Agreement. The Class
Notice also stated,
If you have your own attorney, you may wish to have him or her review this
Notice to get advice about how to proceed. This is particularly true if you have
litigation pending on any subject including mortgage modification and/or
foreclosure against Chase. . . . You have the right to consult with your own
attorney, at your own expense, before deciding how best to proceed.
Finally, the Class Notice explained that, after final approval of the settlement, Chase
would send all class members an invitation letter explaining “the process for making a new
application for a mortgage modification based on your current circumstances.” Other benefits
provided by the Settlement Agreement, and listed in the Class Notice, included free debt and
8 The Eighth Circuit issued its opinion in Topchian on July 28, 2014, more than four months after the close
of the opt-out period. Therefore, Topchian could not have relied on the Eighth Circuit’s opinion when deciding
whether to respond to the Class Notice. When he had to make that determination, there was no court decision
indicating that he may have had a permanent modification.
9
credit management counseling, foreclosure stays during the application process, and waiver of
certain previously assessed fees in those cases where a new loan modification is approved.
The class action court held a Final Fairness Hearing on May 7, 2014, following which the
court entered a Final Approval Order, Final Judgment, and Order of Dismissal with Prejudice.
The class action judgment, which included the same definition of “Settlement Class,” set forth
several findings relevant to this case. First, the court found that the Settlement “Agreement is the
product of good faith, arm’s-length negotiations by Parties, with the substantial involvement of
an independent, nationally respected mediator, and that each Party was represented by
experienced counsel.” Next, the court found that it had “subject matter jurisdiction over the
Action, and, for purposes of this settlement only, personal jurisdiction over all the Parties,
including all Settlement Class Members.” In approving the Settlement Agreement, the court
found the Agreement to be “in all respects, fair, just, reasonable, and adequate to the Settlement
Class Members.” Finally, the court found that the Class Notice “was provided to the Settlement
Class consistent with the Preliminary Order and that it was the best notice practicable and fully
satisfied the requirements of the Federal Rules of Civil Procedure, due process, and applicable
law.”
With respect to fees, costs, and awards, the class action judgment approved attorneys’
fees and costs in the amount of $9.5 million and an incentive award of $3,500 to each Class
Representative. The class action court determined that those amounts were appropriate based
on the following findings:
(1) The [S]ettlement provides substantial benefits for the class.
(2) The settlement award of attorneys’ fees and expenses is within the range of
reasonable fees for similar class action settlements.
10
(3) The requested fees are substantially below the total lodestar fees of Class
Counsel, based on declarations submitted to the Court.
(4) The litigation raised numerous questions of law and fact, Class Counsel were
opposed by highly skilled defense counsel, the litigation was intensely contested
through the completion of the Settlement Agreement, and there was substantial
risk that Plaintiffs would not prevail on some or all of their claims.
(5) The Settlement was negotiated at arm’s-length and without collusion, with the
assistance of highly qualified mediators.
(6) The fees will be paid in addition to and will not diminish any class settlement.
On September 12, 2014, SPS, the then new sub-servicer of Topchian’s loan, sent the
required “invitation to reapply” letter to Topchian, acknowledging that he was “recently notified
of the JPMorgan Chase Mortgage Modification class action settlement that took place in the
United States District Court for the District of Massachusetts” and inviting him to complete a
new application for a loan modification free of charge. Topchian admits receiving the
“invitation to reapply” letter, but he did not reapply. Instead, on October 22, 2014, he dismissed
his breach of contract suit then pending in the U.S. District Court for the Western District of
Missouri following remand by the Eighth Circuit, and, on December 10, 2014, he filed the
present lawsuit against Chase and added MLLF and SPS as defendants.
Topchian asserted four claims against Chase: (1) breach of contract, (2) violation of the
MMPA in connection with the original sale of the loan, (3) violation of the MMPA in connection
with the loan modification, and (4) common law fraud. He asserted one MMPA claim against
MLLF, alleging that MLLF (1) attempted to collect on a debt it knew or should have known was
invalid because Chase mishandled the [TPP], (2) sought payment on a debt it knew or should
have known was invalid because of the [TPP], (3) failed to investigate the legitimacy of the debt
before attempting to collect it, and (4) ignored Topchian’s repeated statements that he was not in
default. With respect to SPS, Topchian claimed that SPS, as the sub-servicer of Topchian’s loan,
11
sent him letters that incorrectly stated he was in default, requested payment amounts that were
not due, and demanded payment different from the terms of his modification agreement.
Chase, MLLF, and SPS filed motions for summary judgment on the affirmative defenses
of res judicata and release, claiming that, because Topchian received the Class Notice, he was a
member of the Settlement Class, and he did not opt out, he is bound by the class action
judgment. Topchian opposed the motions for summary judgment, arguing that (1) the federal
district court in Massachusetts lacked personal jurisdiction over him; (2) he had received a
permanent loan modification, and the Class Notice did not include borrowers like him who had
permanent modifications; and (3) the class action judgment was improper on several grounds.
The circuit court heard arguments on July 22, 2016. On January 10, 2017, the circuit court
granted summary judgment in favor of Chase, MLLF, and SPS. Topchian filed this appeal.
Standard of Review
Whether the circuit court properly entered summary judgment “is purely an issue of law
which th[e c]ourt reviews de novo.” Hill v. Ford Motor Co., 277 S.W.3d 659, 664 (Mo. banc
2009) (citing ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376
(Mo. banc 1993)). Under the de novo standard of review, appellate courts use the same decision
criteria as the lower courts. In this case, that means we will affirm summary judgment if there is
no genuine dispute as to any material fact and the moving parties are entitled to judgment as a
matter of law. Rule 74.04(c)(6);9 ITT Commercial Fin. Corp., 854 S.W.2d at 378. For
defendants seeking summary judgment on a properly pled affirmative defense, the facts required
to support the defense must not be genuinely disputed. Id. at 381. Summary judgment will be
upheld “if the facts alleged to be in dispute are actually the differing opinions of the parties
9 All rule references are to the Missouri Supreme Court Rules (2017), unless otherwise noted.
12
concerning the legal effect of documents or actions determining their respective rights.” Baker v.
State Farm Mut. Auto. Ins. Co., 806 S.W.2d 742, 743 (Mo. App. E.D. 1991).
Analysis
On appeal, Topchian claims the circuit court erred in granting summary judgment to
Chase, MLLF, and SPS because (1) the class action judgment was entered without personal
jurisdiction over him or adequate notice to him, (2) he was denied adequate representation by
counsel for the class, (3) he was denied adequate representation by the class representatives,
(4) the class action settlement was the product of fraud, and (5) the claims released by the class
action judgment are different from the claims he asserts in this case. At their core, Topchian’s
claims on appeal can be restated as: (1) he was not a proper party to the class action judgment
(Point I) and, even if he were, his claims against Chase, MLLF, and SPS are different from the
claims resolved by the class action judgment (Point V); and (2) the class action judgment is
improper and is subject to collateral attack by Topchian in this proceeding (Points II – IV).
Finding that Topchian’s claims against Chase, MLLF, and SPS are barred by res judicata and
that a collateral attack on the class action judgment is not appropriate in this case, we affirm the
circuit court’s grant of summary judgment as to Chase, MLLF, and SPS.
Claims Against Chase
First, we consider Topchian’s claims against Chase, which also form the basis of his
claims against MLLF and SPS.
A. The Preclusive Effect of the Class Action Judgment
The circuit court granted Chase’s motion for summary judgment based on its affirmative
defense of res judicata. In determining whether res judicata (also called claim preclusion) bars
Topchian’s claims against Chase, we apply federal preclusion law. “The preclusive effect of a
13
judgment is generally determined by the laws of the jurisdiction in which the judgment was
rendered.” State ex rel. Greitens v. Am. Tobacco Co., 509 S.W.3d 726, 734 (Mo. banc 2017);
Strobehn v. Mason, 397 S.W.3d 487, 494 (Mo. App. W.D. 2013). Here, the federal district court
of Massachusetts issued the class action judgment, so we analyze Topchian’s claims under
federal res judicata law as interpreted by the United States Court of Appeals for the First
Circuit.10
On appeal, Topchian argues that the circuit court erred in granting summary judgment to
Chase. But rather than focusing on the propriety of the circuit court’s reliance on the doctrine of
res judicata, Topchian claims that grounds exist to refuse to give “full faith and credit” to the
federal court’s class action judgment and, thus, it should not be enforced in Missouri. However,
Topchian fails to cite any relevant First Circuit authority requiring the reviewing court to engage
in a “full faith and credit” analysis of a judgment’s enforceability in this context. To the
contrary, the First Circuit has confirmed that a final judgment in a class action should be
recognized without a corresponding review of “full faith and credit” considerations. Nottingham
Partners v. Trans-Lux Corp., 925 F.2d 29, 32-33 (1st Cir. 1991) (confirming the preclusive
effect of a class action settlement and noting that although “appellants attempt, through various
doctrinal and pedagogical manipulations, to have us review the propriety of the class certification
and their inclusion in the class[,] . . . a court-approved settlement containing a release may be
applied against a class member . . . , even if that member objects to the settlement, so long as
acceptable procedural safeguards have been employed”).11 We believe that the starting point to
10 If the issuing court was acting pursuant to federal diversity jurisdiction, federal law sometimes requires
applying the res judicata law of the state in which the issuing court was sitting. Semtek Int’l Inc. v. Lockheed Martin
Corp., 531 U.S. 497, 508 (2001). That does not impact our analysis in this case, however, because Massachusetts
and First Circuit res judicata principles are the same. Dolan v. Chase Home Fin., LLC, No. 12-11662-GAO, 2015
WL 4776786 at *11 (D. Mass. July 10, 2015).
11 Moreover, we note the U.S. Supreme Court’s statement in Semtek Int’l Inc. v. Lockheed Martin Corp.,
531 U.S. 497, 506-07 (2001), that the Full Faith and Credit Clause and the full faith and credit statute “[b]y their
14
address the propriety of the circuit court’s grant of summary judgment is to determine whether
the class action judgment satisfies the elements necessary for it to have preclusive effect under
the doctrine of res judicata. In that vein, we first address those aspects of Topchian’s arguments
that relate to res judicata—specifically, his argument that his claims against Chase are different
than the claims resolved in the class action (Point V), and that, because he received inadequate
notice, he was not a party to the class action (Point I).
1. There are three elements for application of res judicata.
“Under the doctrine of res judicata, a final judgment on the merits of an action precludes
the parties from relitigating claims that were or could have been raised in the prior action.”
Haag v. United States, 589 F.3d 43, 45 (1st Cir. 2009). To assert a defense of res judicata, a
defendant must show that there was: “(1) a final judgment on the merits in an earlier proceeding,
(2) sufficient identicality between the causes of action asserted in the earlier and later suits, and
(3) sufficient identicality between the parties in the two actions.” Dolan v. Chase Home Fin.,
LLC, No. 12-11662-GAO, 2015 WL 4776786, at *11 (D. Mass. July 10, 2015)12 (quoting Hatch
v. Trail King Indus., Inc., 699 F.3d 38, 45 (1st Cir. 2012)).
2. The class action judgment is a final judgment on the merits.
The class action judgment was a final judgment on the merits, satisfying the first element
of res judicata. Dolan, 2015 WL 4776786, at *12. In fact, Topchian admitted as much in his
Surreply Suggestions in Opposition to Chase’s Motion for Summary Judgment in this case.
Despite this admission, Topchian is critical of the fact that the judgment in the earlier case
terms . . . govern the effects to be given only to state-court judgments. . . . [N]o other federal textual provision,
neither of the Constitution nor of any statute, addresses the claim-preclusive effect of a judgment in a federal
diversity action.” Id.
12 In Dolan, which involved a challenge to the same class action judgment at issue in this case, the United
States District Court for the District of Massachusetts found that the prior class action judgment precluded plaintiffs’
claims that were based on the same nucleus of operative facts as the claims being asserted by Topchian here.
15
resulted from a class action. However, “[i]t is . . . well settled that claim preclusion may apply to
bar a subsequent claim based on a prior adjudication of the claim in a class action.” Id. at *11;
see also Reppert v. Marvin Lumber & Cedar Co., Inc., 359 F.3d 53, 56 (1st Cir. 2004) (“There is
of course no dispute that under elementary principles of prior adjudication a judgment in a
properly entertained class action is binding on class members in any subsequent litigation.”
(quoting Matsushita Elec. Indus. Co., Ltd. v. Epstein, 516 U.S. 367, 379 (1996)). Missouri
courts, like courts elsewhere, recognize the legitimacy of a class action and its resulting
res judicata effect. Morris v. Union Pac. R.R. Co., 825 S.W.2d 911, 914-15 (Mo. App. E.D.
1992) (affirming circuit court’s grant of summary judgment based on res judicata effect of a final
judgment implementing a class action settlement).
3. There is sufficient identity of causes of action.
The second element of res judicata is sufficient identity between the causes of action
asserted in the earlier and later litigation. In his fifth point on appeal, Topchian claims the circuit
court erred in granting summary judgment to Chase because the class action involved claims
arising from Chase’s denial of permanent modifications, not claims such as his, where Chase
entered into a permanent modification and later breached it. We disagree.
For purposes of this element, the First Circuit employs a transactional analysis, whereby
identity exists “if both sets of claims—those asserted in the earlier action and those asserted in
the subsequent action—derive from a common nucleus of operative facts.” Dolan, 2015 WL
4776786, at *12 (quoting Breneman v. United States ex rel. F.A.A., 381 F.3d 33, 38 (1st Cir.
2004)). “In other words, as long as the ‘new complaint grows out of the same transaction or
series of connected transactions as the old complaint,’ the causes of action are considered to be
identical for res judicata purposes.” Kale v. Combined Ins. Co. of Am., 924 F.2d 1161, 1166 (1st
16
Cir. 1991) (quoting Issac v. Schwartz, 706 F.2d 15, 17 (1st Cir. 1983)). If the two claims are
“founded upon the same transaction, [arise] out of the same nucleus of operative facts, and [seek]
redress for essentially the same basic wrong,” the claims are sufficiently identical or related
“notwithstanding any differences in remedies sought or theories of recovery pleaded.” Id.; see
also Morris, 825 S.W.2d at 915 (plaintiff’s failure to distinguish his new claims as being based
on a different set of facts from those involved in the settled class action proved the
appropriateness of defendant’s res judicata defense, where the release approved in the settled
class action waived all claims that were or could have been raised in the class action).
Although the identity of causes of action element focuses on commonality of facts, and
the theories of recovery need not be identical, Kale, 924 F.2d at 1166, it is noteworthy that, in
this case, Topchian asserted four claims against Chase that mirror those raised by the plaintiffs in
the class action. Topchian asserted: (1) breach of contract, (2) violation of the MMPA in
connection with the original sale of the loan, (3) violation of the MMPA in connection with the
loan modification, and (4) common law fraud. The crux of each of his claims is that Chase
mishandled his TPP loan modification under HAMP because Chase ultimately did not honor his
permanent modification but instead took steps to foreclose on his property. The factual basis for
each of Topchian’s claims are duplicative of the factual underpinning of the settled class claims.
The class breach of contract claims alleged that the plaintiffs “fully complied with their
[TPP] Agreements” but that Chase “failed to meet its contractual obligation[s].” The class action
also included allegations that Chase breached final loan modification agreements either by
continuing to treat the accounts as if no modification had occurred or by canceling the
modifications without notice several months after the modifications had been granted. Similarly,
Topchian alleges his loan modification was a valid contract after he made “trial period
17
payments” and he “performed the obligations required under the permanent modification,” but
“Chase refused to honor the permanent modification, refused to accept payments under the
contract, and ultimately initiated foreclosure.”
With respect to the MMPA, the class action complaint specifically alleged that Chase
“violated the consumer protection and unfair and deceptive acts and practices laws of . . .
Missouri,” citing “Mo. Rev. Stat § 407.020” because two of the named plaintiffs were residents
of Missouri. The Complaint alleged that Chase “deceived . . . and misled Plaintiffs as they
sought loan modifications, frequently requesting duplicative information from them and holding
foreclosure over their heads while continuing to collect monthly payments . . . often foreclos[ing]
in any event.” Whether described in connection with the sale of the original loan or as a separate
transaction for a modification, Topchian’s allegations are strikingly similar. He claims that
(1) Chase “told [him] . . . he had a permanent modification” yet noticed a foreclosure anyway,
(2) it was unfair for Chase to accept payments under the alleged modification before foreclosing,
and (3) it was unfair to discuss modification “while moving towards foreclosure.”
Topchian also asserts his final claim—one for common law fraud—based on facts very
similar to those asserted in support of the deception claims in the class action complaint, which
alleged that Chase’s actions amounted to “common law violations,” a term that includes common
law fraud. Here, Topchian seeks “redress for essentially the same wrong” alleged in the class
action complaint. Kale, 924 F.2d at 1166. Any alleged misrepresentations or “willful” breach of
contract by Chase in handling Topchian’s modification were part of the same transaction or
“common nucleus of operative facts,” as the other claims in the class action complaint. As the
court held in Dolan, analyzing the very same class action judgment, “[t]he common nucleus of
18
facts also includes Chase mishandling the loan applications and making misrepresentations about
modifying the borrowers’ loans.” 2015 WL 4776786, at *12.
Topchian argues that his current claims are different because he had a permanent
modification. His argument fails to acknowledge that the class action complaint included three
underlying complaints involving claims that Chase breached final loan modifications, and a
plaintiff in one of those underlying complaints became a Class Representative. Like Topchian,
that plaintiff alleged that she had a loan modification agreement with Chase, that Chase breached
that agreement after accepting several payments from her under that agreement, and that Chase
subsequently commenced foreclosure proceedings on her property. Part III of the class action
complaint expressly set out claims for breach of contract and violations of state consumer
protection laws arising from Chase’s failure to honor final modifications. One factual
underpinning for this class claim is that the TPP program was an offer to modify and that, once
the debtor successfully completed the temporary program and Chase accepted the modified
payments, the modification had occurred and Chase had no right to deny modification. Although
Topchian’s claim of an existing modification is based, in part, on an alleged oral representation
by an agent of Chase that a modification had been approved even though Chase had not provided
the required signed modification agreement, that factual difference alone is not enough to
undercut the common nucleus of operative facts. In the present case, Topchian alleges that
“Chase refused to honor the permanent modification, refused to accept payments under the
contract, and ultimately initiated foreclosure.” In view of the striking similarities between
Topchian’s current claims against Chase and those settled in the class action, we find there was
19
sufficient identity among the causes of action to satisfy the second element of res judicata.13
Topchian’s Point V is denied as to Chase.
4. There is sufficient identity of parties between the two actions.
The third element of res judicata is sufficient identity between the parties. In Point I of
this appeal, Topchian claims that giving res judicata effect to the class action judgment would
violate his due process rights because the notice he received was “muddled” and inadequate to
give the class action court jurisdiction over him. Because we agree with the circuit court that
Topchian received adequate class notice, failed to opt out, and thus was a member of the class,
we find the identity of parties element of res judicata was met.14
Class action courts require the named plaintiffs to deliver the “best practicable” notice to
absent class members, which is notice “reasonably calculated, under all the circumstances, to
apprise interested parties of the pendency of the action and afford them an opportunity to present
their objections.” Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812 (1985). The notice must
“describe the action and the plaintiffs’ rights in it,” the absent plaintiffs must be given an
opportunity to opt out of the class, and the named plaintiffs must “adequately represent the
interests of the absent class members.”15 Id.; see also Reppert, 359 F.3d at 56-57 (after a class
action court gives notice that is reasonably calculated to inform absent class members, “if the
absent class members fail to opt out of the class action, such members will be bound by the
13 Topchian cites Whole Woman’s Health v. Hellerstedt, 136 S. Ct. 2292, 2305 (2016), for the proposition
that even an identical claim is not precluded if later evidence emerges that would support it. Hellerstedt held that
petitioners’ post-enforcement as-applied challenge to aspects of Texas laws regulating abortion providers was not
the same claim as their pre-enforcement facial challenge. Id. The Supreme Court’s holding in that case has no
bearing on the present case where Topchian points to no development of new material facts, and his claims in this
case are not predicated on events that postdate the class action judgment.
14 Typically, when there is an issue of identity of parties, it arises because the plaintiff in the later action
was not a party to the earlier lawsuit but, instead, was so closely connected to a party in the earlier action that the
plaintiff becomes bound by the earlier judgment, e.g., the plaintiff in the later action may have been in privity with,
or a successor in interest to, a plaintiff in the earlier action. The issue of identity of parties typically does not arise,
as in this case, where the plaintiff in the later action was, in fact, a party in the previous action.
15 We address Topchian’s due-process-based collateral attack on the adequacy of representation by class
counsel and class representatives in the next section.
20
court’s actions, including settlement and judgment”). The right to opt out is important because it
“allow[s] for an inference of consent, which [i]s sufficient to support the class action court’s
jurisdiction over the class member who otherwise ha[s] no connection with [the forum state.]”
Juris v. Inamed Corp., 685 F.3d 1294, 1330 (11th Cir. 2012) (explaining the U.S. Supreme
Court’s ruling in Shutts regarding personal jurisdiction in the class action context).
Thus, personal jurisdiction is unique in class action cases: “a forum State may exercise
jurisdiction over the claim of an absent class-action plaintiff, even though that plaintiff may not
possess the minimum contacts with the forum which would support personal jurisdiction over a
defendant.” Shutts, 472 U.S. at 811. Recognizing that “the class action was an invention of
equity to enable [the court] to proceed to a decree in suits where the number of those interested
in the litigation was too great to permit joinder,” the Supreme Court determined that a plaintiff in
a class action suit need receive only “notice plus an opportunity to be heard and participate in the
litigation, whether in person or through counsel.” Id. at 808, 812.
In this case, the Class Notice was titled “NOTICE OF PROPOSED SETTLEMENT OF
CLASS ACTION LAWSUIT RELATED TO YOUR JPMORGAN CHASE LOAN
MODIFICATION.” The Class Notice stated:
You are a “Settlement Class Member” if:
(1) your loan is serviced by Chase and you participated in a [TPP] extended by
Chase under the [HAMP] . . . , and
(2) you made timely and sufficient trial payments required by the TPP, and
(3) your property has not been foreclosed, and
(4) you have either (a) not received a permanent loan modification eligibility
decision since the start of your trial period described in your . . . TPP, or (b)
you did receive an eligibility decision denying the loan for permanent
modification during or after your trial period described in your . . . TPP, and
21
(5) you are not currently a debtor in bankruptcy proceedings.
The opening paragraph of the Class Notice stated, “You are eligible for benefits because
you had a stated-income trial period plan during the relevant time period that was not converted
to a permanent modification or had a request for a permanent modification denied.” (Emphasis
added.) The Class Notice also described the plaintiffs as those who “have or had mortgage loans
that were serviced by Chase and also sought (or sought and obtained) permanent loan
modifications from Chase.” (Emphasis added.) Clearly, the Settlement Class included people
who, like Topchian, alleged they had permanent modifications that Chase breached.
Topchian’s loan was serviced by Chase, and he had participated in a TPP extended by
Chase under the HAMP. He made timely and sufficient trial payments required by the TPP. The
property securing his loan had not been foreclosed.16 He received an eligibility decision denying
the loan for permanent modification during or after his trial period. In fact, before receiving the
class action notice, Topchian received four notices denying the loan for permanent
modification.17 And he was not a debtor in bankruptcy proceedings.18
Topchian claims that because he already had a loan modification from Chase, he
interpreted the four notices from Chase expressly denying him a permanent modification to be
breaches of the existing modification. Thus, he claims that the class action notice, which
informed him that he was a member of the class if he received an eligibility decision denying the
loan for modification, was not adequate to put him on notice that he was a member of the class.
Whether the four notices from Chase are characterized as denials of a permanent modification
16 Although the property securing Topchian’s loan was the subject of two foreclosure notices, it is
undisputed that no foreclosure sale occurred.
17 Topchian received the Class Notice in January 2014. The four notices he received denying his loan for
permanent modification were dated June 8, 2010, February 9, 2011, August 19, 2011, and August 22, 2011.
18 Topchian admits that his loan was serviced by Chase, he made payments, and he is not in bankruptcy.
He contends that he was not a class member because his property was foreclosed (an argument we dismiss, supra)
and because he already had a permanent loan modification.
22
(as they expressly stated) or as breaches of an existing modification (as Topchian interpreted
them), we find that Topchian should have realized that he met the Settlement Class criteria.
Despite the plain language of the Class Notice and the undisputed facts in this case, Topchian
neither opted out of the settlement nor objected to the Class Notice or the Settlement Agreement
as part of the proceedings in the class action court. The fact that Topchian now claims the Class
Notice was “muddled” does not create a genuine dispute of material fact negating the propriety
of summary judgment. Summary judgment will be upheld “if the facts alleged to be in dispute
are actually the differing opinions of the parties concerning the legal effect of documents or
actions determining their respective rights.” Baker, 806 S.W.2d at 743. Topchian may have
subjectively believed that the Class Notice did not apply to him, but the undisputed material facts
show that Topchian was a member of the Settlement Class as described in the Notice and he did
not opt out of the class or otherwise object to the Settlement Agreement.
Topchian relies primarily on Twigg v. Sears, 153 F.3d 1222 (11th Cir. 1998), to argue
that the Class Notice was inadequate. In that case, the court certified a class of Sears customers,
some of who were overcharged for repair work actually done by Sears and others who were
charged for services never actually performed. Id. at 1224. On appeal, the Eleventh Circuit
found that the notice, which described the class as customers who experienced “unnecessary
and/or improper repairs,” did not adequately alert customers having services never actually
performed that they were part of the class. Id. at 1228. The notice in Twigg was directed to
“[a]ll persons or entities who, during the period from June 10, 1988 to September 2, 1992,
inclusive, purchased automotive repair services (including parts and/or labor) from any Sears,
Roebuck & Co. Auto Center.” Id. The court concluded that the meaning of the term
23
“automotive repair services” and the question of whether that term encompassed certain issues
were “susceptible to debate.” Id.
In contrast, the Class Notice used precise language in defining the class, and the
definition clearly included Topchian. The Class Notice plainly stated that Topchian was a class
member if, among other criteria, he had “either (a) not received a permanent loan modification
eligibility decision since the date of your initial trial period described in your [TPP], or (b) you
did receive an eligibility decision denying the loan for permanent modification during or after
your trial period described in your [TPP].” (Emphasis added.) While the parties dispute whether
Topchian met part (a) of this criterion, there is no dispute that he met part (b). The record clearly
shows that he received four separate written eligibility denials. Finding that, unlike the notice in
Twigg, the Class Notice did not include objectively ambiguous language, we do not find Twigg
instructive.19
As a Class Member and the plaintiff in the present case, Topchian satisfied the identity of
parties element of res judicata. Topchian’s Point I is denied.
B. Collateral Challenges to the Class Action Judgment based on Alleged Violations of
Due Process
Even though the three elements for application of res judicata are satisfied here, Topchian
objects to the res judicata effect of the class action judgment on three additional grounds: (1)
inadequate representation by counsel for the class, (2) inadequate representation by named class
plaintiffs, and (3) fraud.
19 Topchian also cites Hege v. Aegon USA, LLC, 780 F. Supp. 2d 416 (D. S.C. 2011), to support his
argument that the Class Notice was deficient. In Hege, the class notice at issue contained a material misstatement of
the governing law, leading members to believe that they would be better off in the class than they would be if they
opted out. Id. at 430-31. The Class Notice in the present case did not contain a misstatement of applicable law, nor
did it misinform class members about their options. Therefore, we find Hege distinguishable.
24
Courts recognize the right of collateral attack on foreign judgments in certain
circumstances. Generally, courts allow collateral attacks based on lack of subject matter
jurisdiction,20 failure to give due notice,21 and fraud in the procurement or concoction of the
judgment. Slavens v. Slavens, 379 S.W.3d 900, 905 (Mo. App. W.D. 2012) (quoting Prom
Motor Hotel, Inc. v. Motel Training Co. of Am., 686 S.W.2d 896, 897 (Mo. App. W.D. 1985)).
In the class action context, “[a]bsent class members can collaterally challenge the res judicata
effect of a prior class judgment either because they were not adequately represented . . . or
because there was not adequate notice.” Juris, 685 F.3d at 1313 (internal citations omitted); see
also Hege v. Aegon USA, LLC, 780 F. Supp. 2d 416, 429 (D. S.C. 2011) (allowing collateral due
process review of a prior class action judgment and concluding that both class notice and
representation were constitutionally insufficient); Hesse v. Sprint Corp., 598 F.3d 581, 587-88
(9th Cir. 2010) (allowing limited collateral review of the adequacy of representation where the
class action court did not make sufficient findings on the issue).22
20 In his Reply Brief on appeal, Topchian raises subject matter jurisdiction, claiming that a recent U.S.
Supreme Court decision establishes that the Massachusetts court could not have had subject matter jurisdiction. In
Bristol-Myers Squibb Co. v. Superior Court of California, the Supreme Court held that a state court did not have
specific jurisdiction over non-resident plaintiffs’ tort claims for injuries not suffered in the state because federal
constitutional due process limits jurisdiction to states where there is a substantial connection to the forum. 137
S. Ct. 1773, 1781 (2017). Bristol-Myers Squibb did not involve a class action brought in federal court, and the Court
expressly stated that “we leave open the question whether the Fifth Amendment imposes the same restrictions on the
exercise of personal jurisdiction by a federal court.” Id. at 1784. Therefore, that case is not relevant to the
jurisdictional analysis in this case. In fact, in explaining why he thinks Bristol-Myers is relevant here, Topchian asks
this court to imagine that he had brought an individual claim against Chase in Massachusetts. His argument ignores
the fact that the case given preclusive effect here was a class action, not an individual claim in a court that might not,
under those circumstances, have had jurisdiction.
21 We addressed the issue of due notice in the context of our earlier discussion about the identity of parties
prong of res judicata.
22 In note 16 of its opinion in Juris, the Eleventh Circuit describes a split of authority with respect to the
scope or depth of collateral review. Juris, 685 F.3d at 1314, n.16. “Some courts hold that collateral review is
limited, and absent class members are not permitted to relitigate—in a collateral attack—due process arguments that
were raised by class objectors and rejected by the certification court.” Id. “On the other hand, other authorities
favor a more probing, broader, merits-based collateral review.” Id. We need not decide the proper scope of
collateral review available to Topchian in this case because, even assuming that the circuit court could have revisited
the underlying merits of each of Topchian’s arguments, we would affirm the circuit court’s holding that Topchian
failed to demonstrate a violation of his due process rights.
25
Topchian argues that the circuit court erred in granting summary judgment because he
was not adequately represented by class counsel (Point II) or the class representatives (Point III).
In support of these arguments, Topchian asserts that both class counsel and class representatives
“sold out” the absent class members insofar as the class action judgment awarded class counsel
$9.5 million in attorneys’ fees and $3,500 in compensation to each class representative, while the
absent class members received nothing of value.23 Topchian also points out that the Settlement
Agreement included a “clear sailing” provision.24 These are the only facts Topchian presents in
support of his argument that class counsel and class representatives provided inadequate
representation in violation of his due process rights.
We find Topchian’s arguments regarding the adequacy of representation by class
counsel and class representatives to be merely a pretext for challenging the fairness of the class
settlement approved by the class action court. That court approved the settlement as “in all
respects, fair, just, reasonable, and adequate to the Settlement Class Members.” With respect to
the $9.5 million in attorneys’ fees and the $3,500 in compensation to each class representative,
the class action court determined that those amounts were appropriate for several reasons,
including: (1) the Settlement Agreement provided substantial benefits for the class; (2) the
award of attorneys’ fees and expenses was within the range of reasonable fees for similar class
action settlements; (3) the fees were substantially below the total lodestar fees of class counsel;
and (4) the fees were in addition to, and would not diminish, any class settlement.
23 In addition to allowing class members to reapply for a loan modification and to access free debt and
credit management counseling, Chase also agreed to waive certain fees for class members who reapply for
modifications, stay foreclosure proceedings while the new applications are pending, and waive certain previously
assessed fees for those applicants who receive modifications. The class action court concluded that the Settlement
Agreement afforded substantial benefits to class members.
24 A clear sailing provision is an agreement by which the party who will pay attorneys’ fees agrees not to
object to the fee award as long as it does not exceed a specified maximum amount. Hege, 780 F. Supp. 2d at 433.
26
In support of his argument that class counsel was inadequate, Topchian cites Hege, 780
F. Supp. 2d at 432-35, wherein the court determined that a prior state court order in a class action
was not entitled to preclusive effect because the class counsel did not provide adequate legal
representation for the entire class. The evidence on which the Hege court concluded that class
counsel was inadequate included: (1) the amount of the fees collected by class counsel ($3.5
million); (2) the existence of a “clear sailing” provision in the settlement agreement, which was
agreed upon by the parties before the class action was even filed; (3) the fact that, with the clear
sailing provision in place, class counsel began opposing all dissention to the settlement;
(4) evidence that class counsel failed to engage the defendant in any adversarial manner; and
(5) evidence of “outright hostility” to class members where class counsel actively opposed full
recovery for class members. Id.
While Topchian is correct that the court in Hege considered the amount of the attorneys’
fees and the existence of a clear sailing provision to be relevant to the adequacy of counsel
inquiry, the Hege court did not hold that those two factors, alone, would be sufficient to sustain a
due process challenge based on inadequate legal representation. Instead, as in Hege, there must
be evidence of something outside of the class action court’s approved settlement terms, and there
is no such evidence in the present case. In fact, the class action court specifically found that the
litigation was “intensely contested” through completion of the Settlement Agreement, which was
“negotiated at arm’s-length and without collusion.” Moreover, the class action court was the
proper forum to object to the Settlement Agreement on these grounds, and Topchian had notice
and opportunity to object but failed to do so. We are bound by the substantive findings of the
class action court regarding the fairness of the Settlement Agreement. Points II and III are
denied.
27
In Point IV of his appeal, Topchian claims that the circuit court erred in granting
summary judgment because there was evidence the Settlement Agreement was the product of
fraud. But the issue before this court is whether the circuit court erred in giving preclusive effect
to the class action judgment. Thus, the question is whether there was fraud in procurement of the
judgment and not the Settlement Agreement. Topchian claims that several aspects of the
Settlement Agreement were fraudulent, including the facts that class counsel was paid $9.5
million in fees, absent class members received no economic benefit from the settlement, the
threshold for the number of class opt-outs that would lead to the voiding of the settlement was
confidential, and there was an agreement that class counsel would not say anything negative
about Chase. To the extent that these terms were approved by the class action court as a part of
its review and approval of the fairness of the settlement, we are bound by that court’s substantive
findings. The class action court found that the Settlement “Agreement is the product of good
faith, arm’s-length negotiations by Parties, with the substantial involvement of an independent,
nationally respected mediator, and that each Party was represented by experienced counsel.”
The class action court also found that the Settlement Agreement “is, in all respects, fair, just,
reasonable, and adequate to the Settlement Class Members.” We are bound by the class action
court’s substantive findings as to fairness of the settlement.
The remainder of Topchian’s claims in Point IV involve alleged fraud regarding the
notice he received of the class action. Topchian claims class counsel committed fraud when they
sent the “misleading” Class Notice to him. As discussed, supra, in response to Topchian’s
Point I, we find the Class Notice to be adequate and, thus, there is no basis for Topchian’s claim
that he was defrauded by receiving the notice.
28
Next, Topchian argues that Chase committed fraud by having the settlement
administrator send the Class Notice directly to him even though he was represented at the time
by legal counsel in a separate lawsuit against Chase. The Class Notice instructed Topchian, “If
you have your own attorney, you may wish to have him or her review this Notice to get advice
about how to proceed. This is particularly true if you have litigation pending on any subject
including mortgage modification and/or foreclosure against Chase.” (Emphasis added.) The
Notice also stated, “You have a right to consult with your own attorney, at your own expense,
before deciding how best to proceed.” Finally, the Notice instructed class members how to
preserve existing claims against Chase. Specifically, the Notice stated, “If you want to keep the
right to sue or continue to sue Chase, on you own, about Chase’s handling and consideration of
your request for a loan modification, you must . . . .” We find no fraud in the delivery of the
Class Notice directly to Topchian and no basis to believe that Topchian’s due process rights were
violated by the delivery of the notice. Point IV is denied.
Claims Against MLLF and SPS
Topchian alleges that MLLF and SPS violated the MMPA by engaging in unfair,
deceptive, and misleading practices in connection with the attempted foreclosure on his property.
Specifically, Topchian claims that MLLF violated the MMPA by collecting on a debt it knew or
should have known was invalid because Chase mishandled the TPP, seeking payment on a debt it
knew or should have known was invalid because of the TPP, failing to investigate the legitimacy
of the debt before attempting to collect it, and ignoring Topchian’s repeated statements that he
was not in default. With respect to SPS, Topchian asserts that SPS, as the sub-servicer of
Topchian’s loan, sent him letters incorrectly stating he was in default, requested payment
amounts that were not due, and demanded payment different from the terms of his modification
29
agreement. The circuit court granted summary judgment to MLLF and SPS on the ground that
Topchian’s MMPA claims against them were released by the class action judgment. In Point V
of his appeal, Topchian argues that the circuit court erred in granting summary judgment to
MLLF and SPS because the class action judgment did not release his current claims. Finding
that these claims also are barred by res judicata, we affirm the circuit court’s grant of summary
judgment to MLLF and SPS on that basis and do not reach the alternative defense of release.25
Despite the fact that MLLF and SPS were not involved in the class action, they contend
that Topchian’s MMPA claims against them are barred by res judicata because his claims arise
out of the same transaction or series of transactions that formed the basis of the class action and
MLLF and SPS were in privity with Chase by virtue of their agency relationship with Chase. As
we discussed earlier in connection with Chase, the First Circuit employs a transactional approach
in determining whether causes of action are identical for purposes of res judicata. The claims are
identical if they both “derive from a common nucleus of operative facts.” Dolan, 2015 WL
4776786, at *12 (quoting Breneman, 381 F.3d at 38). Topchian alleges MLLF violated the
MMPA by collecting on a debt it knew or should have known was invalid, failing to investigate
the legitimacy of the debt, and ignoring Topchian’s assertions that he was not in default.
Similarly, Topchian alleges SPS, as the sub-servicer of his loan, violated the MMPA by sending
him letters that incorrectly stated his loan was in default and requested payment amounts that
were inconsistent with the terms of his modification agreement. These allegations of
wrongdoing flow directly from Topchian’s claim that he and Chase entered into a modification
25 The Respondents’ affirmative defense of release is complicated by choice-of-law issues. In granting
MLLF’s and SPS’s motions for summary judgment based on the affirmative defense of release, the circuit court
relied exclusively on the language of the Settlement Agreement. The circuit court did not cite any case law to
support its conclusion, so we do not know which law the court applied. Without expressly addressing the question
of which law applies, Topchian relies on a First Circuit opinion on release, while Respondents cite Missouri case
law. According to the Settlement Agreement itself, which is the source of the court-approved release of claims
provisions, it is governed by California law. We need not resolve the issue of which forum’s law applies because
we find that Topchian’s claims against MLLF and SPS are barred by res judicata.
30
agreement that Chase subsequently refused to honor. Thus, his claims against MLLF and SPS
derive from a common nucleus of operative facts—Chase’s mishandling of Topchian’s loan
modification—and seek redress for the same basic wrong—failure to honor his loan modification
by seeking payment that differed from the terms of the modification and commencing
foreclosure. Therefore, the claims settled in the class action are sufficiently similar to the claims
Topchian is pursuing here, and that prong of the res judicata defense is satisfied with respect to
his claims against MLLF and SPS.
Turning to the final prong of res judicata—identity of parties—we find that the parties in
the class action and here are identical because both MLLF and SPS were in privity with Chase.
Res judicata applies if there is privity between a defendant in the earlier action and a defendant
in the later action. Silva v. City of New Bedford, 660 F.3d 76, 80 (1st Cir. 2011). “Where one
party acts for or stands in the place of another in relation to a particular subject matter, those
parties are in privity” for purposes of res judicata. Kogut v. Mortg. Elec. Reg. Sys., Inc.,
No. 13-11825-RGS, 2014 WL 61345, at *2 (D. Mass. January 7, 2014) (quoting RG Fin. Corp.
v. Vergara-Nunez, 446 F.3d 178, 187 (1st Cir. 2006)).26
Courts have addressed privity with respect to defendants who, like MLLF, were agents
and attorneys and, like SPS, were mortgage servicers. In Kimball v. Orlans & Associates, 651
Fed. Appx. 477, 481 (6th Cir. 2016), the Court of Appeals for the Sixth Circuit barred the
plaintiffs’ claims against Orlans & Associates, a law firm that served as Chase’s agent and
attorney in connection with foreclosures. The Sixth Circuit held that “[t]he Attorney Defendants
are also in privity with Chase concerning mortgage foreclosure by virtue of their position as
foreclosure counsel.” Id. Similarly, in finding that a mortgage servicer acts as the agent of the
26 In RG Financial Corporation v. Vergara-Nunez, 446 F.3d 178, 187 (1st Cir. 2006), the First Circuit
applied Massachusetts law, but as we noted earlier, Massachusetts and First Circuit res judicata principles are the
same.
31
mortgagee to effect collection of mortgage payments, the First Circuit noted that “it will be a rare
case in which those two parties are not perfectly identical with respect to successive suits arising
out of a single mortgage transaction.” RG Fin. Corp., 446 F.3d at 187. This is not one of those
rare cases.
Here, the undisputed material facts show that MLLF was acting as attorney for Chase and
was Chase’s appointed successor trustee to foreclose on Topchian’s property. The undisputed
material facts also show that SPS became the sub-servicer of Topchian’s loan under a 2013
Limited Power of Attorney. Topchian has not alleged that either MLLF or SPS acted in any
other capacity in their dealings with him. Therefore, both MLLF and SPS were in privity with
Chase and are identical to Chase for purposes of res judicata. Point V also is denied with respect
to MLLF and SPS.

Outcome: Summary judgment is appropriate here because there is no genuine dispute as to any
material fact and Chase, MLLF, and SPS are entitled to judgment as matter of law on the
affirmative defense of res judicata. Accordingly, we affirm.

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