Kathy M. Layfield v. Deutsche Bank Nat'l Trust Co., (11th Cir. 2006)

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[D O NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FILED

F O R THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

AUG 24, 2006

THOMAS K. KAHN

N o . 05-17177

CLERK

N o n - A r g u m e n t Calendar

D . C. Docket No. 05-21924-CV-AJ

B K C Y No. 03-14882 BKC-RAM

In Re: KATHY M. LAYFIELD,

Debtor.

KATHY M. LAYFIELD,

Plaintiff-Appellant,

versus

DEUTSCHE BANK NATIONAL TRUST COMPANY,

Secured Creditor,

Defendant-Appellee.

A p p e al from the United States District Court

fo r the Southern District of Florida

(A u g u st 24, 2006)

B efo re ANDERSON, BIRCH and HULL, Circuit Judges.

P E R CURIAM: K a th y M. Layfield, proceeding pro se, appeals the district court's order a ff ir m in g the bankruptcy court's order finding that Layfield, the debtor, owed D eu tsch e Bank National Trust Co. ("DBK"), a secured creditor, $1,197,442.70.

After review, we affirm.

I. BACKGROUND I n May 2002, DBK's predecessor, Cendant Mortgage, filed a foreclosure a ctio n against Layfield in Florida state court. In August 2002, DBK was su b stitu ted as the party-plaintiff. On March 26, 2003, Layfield filed a motion for ju d icial disqualification in the foreclosure action. On April 30, 2003, without ru lin g on the motion to disqualify, the state court granted final summary judgment in favor of DBK in the amount of $1,076,320.72 and set June 6, 2003 as the date f o r the foreclosed property to be sold. On May 8, 2003, Layfield filed an e m e rg e n c y motion for rehearing in state court. The following week, Layfield filed a voluntary petition for bankruptcy under Chapter 13, which was later converted to a Chapter 11 proceeding. The state court in the foreclosure action denied L ayfield 's motion for rehearing and stayed further proceedings in light of the b an k ru p tcy filing. D B K filed a proof of claim in the bankruptcy proceedings, to which Layfield o b jected . During the bankruptcy proceedings, Layfield's property was sold, and th e proceeds of the sale were placed in an escrow account. On December 30, 2004, th e bankruptcy court entered an order authorizing the payment of $800,188.09 to D B K from the escrow account, which represented the entire principal owed by L ayfield . The remaining dispute was over what, if any, additional amounts L ayfield owed to DBK.

On April 8, 2005, after holding an evidentiary hearing, the bankruptcy court en tered an order overruling Layfield's objections to DBK's secured claims. The b a n k r u p tc y court found that, under the doctrine of res judicata, the state foreclosure ju d g m en t established that the principal sum due, as of the date of the judgment, w a s $1,076,320.72. Additionally, the bankruptcy court found that Layfield owed D B K $86,164.57 in interest and that DBK was entitled to $34,957.52 in postju d g m en t escrow advances. The bankruptcy court also found that the total amount o f the allowed claim was $1,197,442.70, of which $800,188.09 had already been p aid , leaving a balance of $397,254.62.

L ayfield appealed the bankruptcy court's order to the district court. The d istrict court affirmed, concluding that the bankruptcy court properly applied the d o c tr in e of res judicata as to the state court foreclosure judgment. Layfield filed th is appeal.

II. DISCUSSION O n appeal, Layfield argues that the doctrine of res judicata should not apply b ecau se the state court foreclosure judgment is void under Florida law.1 "A s the second court of review of a bankruptcy court's judgment, this Court e x a m in e s independently the factual and legal determinations of the bankruptcy c o u r t and employs the same standards of review as the district court." In re Issac L easeco , Inc., 389 F.3d 1205, 1209 (11 th Cir. 2004) (quotation marks omitted).

"F actu al findings by the bankruptcy court are reviewed under the limited and d eferen tial clearly erroneous standard." In re Club Assocs., 951 F.2d 1223, 1228 (1 1 th Cir. 1992). However, "legal conclusions by the bankruptcy court and the d is tr ic t court are reviewed by this court de novo." Id. A lower court's legal co n clu sio n s as to res judicata are subject to de novo review. N.A.A.C.P. v. Hunt, 8 9 1 F.2d 1555, 1560 (11th Cir. 1990).

In determining the preclusive effect of a state court judgment, a federal court m u s t look to the rules of res judicata in the state in which the judgment was ren d ered . Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S. 373, 380, 105 S . Ct. 1327, 1331-32 (1985) (citing 28U.S.C. § 1738, which requires federal co u rts to give state records and judicial proceedings full faith and credit). Thus, F lo rid a law controls our analysis.

I n Florida, "[t]he doctrine of res judicata applies when four identities are p resen t: (1) identity of the thing sued for; (2) identity of the cause of action; (3) id en tity of persons and parties to the action; and (4) identity of the quality of the p erso n s for or against whom the claim is made." Topps v. State, 865 So.2d 1253, 1 2 5 5 (Fla. 2004). However, "[t]he doctrine of res judicata is not applicable where th e judgment plead[ed] was entered without complying with jurisdictional req u irem en ts because for that reason the judgment is void." Florida Nat'l Bank of J ac k s o n v ille v. Kassewitz, 25 So.2d 271, 275 (Fla. 1946).

L ayfield does not dispute that the four identities of res judicata are present.

Instead, Layfield contends that the doctrine should not apply because the f o r ec lo s u r e judgment is void. Specifically, Layfield argues that the Florida court la ck e d jurisdiction to enter the foreclosure judgment because the district court had failed to rule upon her motion for judicial disqualification. Under Florida law, a m o tio n for judicial disqualification must be ruled on within thirty days following its presentation to the court, or the motion is automatically granted. Tableau Fine A rt Group, Inc. v. Jacoboni, 853 So.2d 299, 302-03 (Fla. 2003); see also Fla. R.

Ju d . Admin. 2.160(j). Here, the state court did not rule on Layfield's d isq u alificatio n motion within thirty days. However, Layfield's disqualification m o tio n was filed in March 2003. The thirty-day requirement applies only to m o tio n s filed after August 20, 2003. See id. at 303 (applying this holding p r o s p e c tiv e ly ); see also City of Hollywood v. Witt, 868 So.2d 1214, 1218 n. 6 (Fla.

D ist. Ct. App. 2004) (noting that the mandate in Tableau did not issue until A u g u st 20, 2003). Therefore, the state court's failure to rule on her pending m o tio n did not mean that the motion was automatically granted and did not divest th e state court judge of jurisdiction to grant summary judgment.

A cc o rd in g ly, because Layfield has failed to show that the state court's f o r ec lo s u r e order is void, the bankruptcy court properly applied the doctrine of res ju d icata to the state court foreclosure judgment and the district court properly a ff ir m e d the bankruptcy court's order.

A F F IR M E D .

1 In addition, Layfield argues on appeal that the lower courts were precluded from applying the doctrine of res judicata because the state court violated her due process rights when it conducted its summary judgment hearing in her absence, despite having prior notice that she would be unable to attend. However, because Layfield did not raise this argument below, this argument is deemed waived. See Irving v. Mazda Motor Corp., 136 F.3d 764, 769 (11th Cir. 1998).

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