18‐3170
Edwards v. McMillen Capital, LLC

                        UNITED STATES COURT OF APPEALS
                            FOR THE SECOND CIRCUIT
                              ____________________

                                     August Term, 2019

(Argued: November 4, 2019                                      Decided: February 26, 2020)

                                    Docket No. 18‐3170

                                   ____________________

                                     PAUL EDWARDS,

                                     Plaintiff‐Appellant,

                                               v.

                               McMILLEN CAPITAL, LLC,

                                     Defendant‐Appellee.

                                   ____________________

Before: SACK, HALL, Circuit Judges, and RAKOFF, District Judge.

       Plaintiff‐Appellant appeals from the judgment of the United States District

Court for the District of Connecticut (Stefan R. Underhill, Judge) ruling that his




 Judge Jed S. Rakoff, of the United States District Court for the Southern District of New York,
sitting by designation.
claims against Defendant‐Appellee were barred under the Rooker‐Feldman

doctrine. Paul Edwards sued McMillen Capital, LLC in Connecticut state court,

and as permitted under Connecticut’s procedures, filed two amended complaints

and two “substitute” complaints. The state court dismissed the second amended

complaint and the first substitute complaint for failure to state a claim or as barred

by the applicable statutes of limitations. It later dismissed the case for failure to

prosecute. Edwards then instituted the present lawsuit in federal district court

based on substantially the same facts as pleaded in the state proceedings and

asserting the same claims as those in the second substitute complaint that was

dismissed for failure to prosecute. Because we agree that Edwards did not “lose”

in state court such that his federal complaint was, in substance, an appeal from an

adverse state‐court judgment, we conclude that the Rooker‐Feldman doctrine does

not apply. We therefore VACATE the judgment and REMAND for further

proceedings.

                               ____________________

                          PAUL EDWARDS, pro se, Cromwell, CT, Plaintiff‐
                          Appellant.

                          ANDREW S. KNOTT, KNOTT & KNOTT, LLC,
                          Cheshire, CT, for Defendant‐Appellee.
                                          2
PER CURIAM:

      Plaintiff‐Appellant Paul Edwards (“Edwards”), proceeding pro se, sued

Defendant‐Appellee McMillen Capital, LLC (“McMillen”), a private lender, in

Connecticut state court asserting several causes of action including fraud,

negligence, and violations of the Connecticut Unfair Trade Practices Act

(“CUTPA”) and the federal Truth in Lending Act (“TILA”). As permitted under

Connecticut’s procedures, Edwards filed two amended complaints and two

“substitute” complaints. The state court dismissed the second amended complaint

and the first substitute complaint for failure to state a claim or as barred by the

applicable statutes of limitations.   Without reaching the merits of the final

substitute complaint (the operative complaint), the court dismissed the case for

failure to prosecute under Connecticut Practice Book § 14‐3.        Edwards then

commenced the present lawsuit in the United States District Court for the District

of Connecticut based on substantially the same factual allegations and asserting

the same claims he had brought in state court.        The district court granted

McMillen’s motion to dismiss, reasoning that Edwards’s claims were barred under

what has become known as the Rooker‐Feldman doctrine. See Sung Cho v. City of


                                        3
New York, 910 F.3d 639, 644 (2d Cir. 2018) (discussing Rooker v. Fidelity Trust Co.,

263 U.S. 413 (1923), and District of Columbia Court of Appeals v. Feldman, 460 U.S.

462 (1983)). Edwards appeals, arguing that the Rooker‐Feldman doctrine does not

bar his federal complaint because (1) the doctrine requires him to have “lost” in

state court and (2) the final version of his state court complaint was dismissed for

failure to prosecute rather than decided against him on the merits. In sum, he

argues that he did not “lose” within the meaning of this Court’s Rooker‐Feldman

jurisprudence. We agree, and we therefore vacate the judgment of the district

court and remand for further proceedings.

                                BACKGROUND

      In June 2015, Edwards sued McMillen in Connecticut Superior Court

alleging that he had borrowed money from McMillen to purchase a home that he

intended to use as a primary residence, but that McMillen had fraudulently issued

him a commercial, rather than residential, loan with unfavorable and allegedly

unlawful terms and conditions. In that initial complaint, Edwards asserted five

causes of action: fraud, breach of the covenant of good faith and fair dealing, and

three violations of Connecticut state statutes. Edwards amended his complaint

twice, in October 2015 and January 2016, and ultimately added additional causes
                                         4
of action, including TILA violations, negligence, negligent infliction of emotional

distress, and “predatory lending.” In November 2016, the state court, in a written

decision, granted McMillen’s motion to strike Edwards’s amended complaint,

reasoning that his causes of action either did not exist under Connecticut law or

were barred by the applicable statutes of limitations and that the complaint failed

to state a claim.

      Later that month Edwards filed a “substitute” complaint alleging similar

facts and causes of action, and in June 2017 the state court again granted

McMillen’s motion to strike the substitute complaint, reasoning that the claims

were either legally insufficient, previously stricken, or time‐barred. Edwards then

filed a second substitute complaint asserting substantially the same facts as he had

pled previously but limiting his claims to TILA and CUTPA violations and

negligent infliction of emotional distress. McMillen filed a “request to revise” that

second substitute complaint, requesting that Edwards delete all of the claims he

had asserted therein. In response, in September 2017, Edwards objected to the

request for revision and filed a third substitute complaint. Shortly thereafter

Edwards moved to restore the second substitute complaint and to withdraw the

third substitute complaint. The state court, citing Connecticut Practice Book § 14‐
                                         5
3, entered a judgment of dismissal for “failure to prosecute said action with

reasonable diligence.”

      Six months later, in February 2018, Edwards initiated the current lawsuit in

the United States District Court in Connecticut by filing a complaint against

McMillen asserting substantially the same claims he brought in the second

substitute complaint.    He alleged that McMillen violated TILA and CUTPA,

breached the implied covenant of good faith and fair dealing, and is liable for

negligence and negligent infliction of emotional distress. McMillen moved to

dismiss, this time arguing that the federal complaint was barred by res judicata,

collateral estoppel, the Rooker‐Feldman doctrine, and the applicable statutes of

limitations because it alleged the same facts and raised the same causes of action

as the prior state court action. Edwards opposed the motion.

      In October 2018, the district court (Stefan R. Underhill, Judge) held a hearing

on the motion to dismiss and granted McMillen’s motion from the bench, ruling

that the Rooker‐Feldman doctrine barred Edwards’s claims. This timely appeal

followed.




                                         6
                                       DISCUSSION

      As we have recently explained, the Rooker‐Feldman doctrine establishes “the

clear principle that federal district courts lack jurisdiction over suits that are, in

substance, appeals from state‐court judgments.”         Sung Cho, 910 F.3d at 644

(quoting Hoblock v. Albany Cty. Bd. of Elections, 422 F.3d 77, 84 (2d Cir. 2005)). For

the doctrine to apply, “four requirements must be met: (1) the federal‐court

plaintiff must have lost in state court; (2) the plaintiff must complain of injuries

caused by a state‐court judgment; (3) the plaintiff must invite district court review

and rejection of that judgment; and (4) the state‐court judgment must have been

rendered before the district court proceedings commenced.” Id. at 645 (citing

Hoblock, 422 F.3d at 85). We review de novo the application of Rooker‐Feldman in

the dismissal of a case. Id. at 644.

      There is no dispute that Edwards commenced his federal action after

judgment was entered in his state court action. The issue, however, is whether he

“lost” in state court such that it can fairly be said that he complains of injuries

caused by the state court judgment and that he therefore seeks federal court review

of that judgment. The early iterations of Edwards’s complaint were dismissed for,

among other reasons, failure to state a claim or untimeliness. The Connecticut
                                           7
Supreme Court has ruled that when a plaintiff files an amended pleading after a

motion to strike is granted, the amended pleading “operates as a waiver of the

original pleading.” Lund v. Milford Hosp., Inc., 168 A.3d 479, 482 (Conn. 2017). In

other words, “[t]he original pleading drops out of the case and although it remains

in the file, it cannot serve as the basis for any future judgment, and previous

rulings on the original pleading cannot be made the subject of appeal.” Id.; see also

Royce v. Town of Westport, 439 A.2d 298, 300 (Conn. 1981) (“By withdrawing one

complaint and replacing it by another, the plaintiff escaped an adverse

judgment.”) (alterations and quotation omitted). Accordingly, only Edwards’s

final “substitute” complaint, the operative complaint and the one dismissed for

failure to prosecute under Connecticut Practice Book § 14‐3, is the one considered

in our Rooker‐Feldman analysis. Under Connecticut practice, the prior complaints

have become nullities. See Royce, 439 A.2d at 300 (“When a demurrer is sustained

and the pleading to which it was directed is amended, that amendment acts to

remove the original pleading and the demurrer thereto from the case.”) (emphasis

added).

      Connecticut law also provides that dismissals for failure to prosecute do not

constitute dispositions rendered on the merits. See, e.g., Legassey v. Shulansky, 611
                                         8
A.2d 930, 933 (Conn. App. 1992) (“Judgments based on the following reasons are

not rendered on the merits: want of jurisdiction; pre‐maturity; failure to

prosecute.”); Milgrim v. Deluca, 487 A.2d 522, 525 (Conn. 1985) (“[F]ailure to

prosecute with reasonable diligence [does not] bar a subsequent action on the

same claim.”).

      Here Edwards’s operative state court complaint was dismissed for failure to

prosecute; it therefore cannot be considered a dismissal on the merits. See Milgrim,

487 A.2d at 525. Because, under Connecticut law, his complaint was not dismissed

on the merits, Edwards could have refiled his complaint in state court. Instead he

decided to pursue his claim in federal court. For these reasons, we hold that the

Rooker‐Feldman doctrine does not preclude him from doing so.

      In reaching our determination, we note that other circuits have reached

similar conclusions. See, e.g., Merrill Lynch Bus. Fin. Servs., Inc. v. Nudell, 363 F.3d

1072, 1076 (10th Cir. 2004) (holding that Rooker‐Feldman does not bar federal

complaint where state court decision “did not pass on the merits of the case”);

Whiteford v. Reed, 155 F.3d 671, 674 (3d Cir. 1998) (same).

      Here, as Mr. Edwards reiterated at oral argument, he is not “invit[ing]

district court review and rejection” of a state court judgment. Hoblock, 422 F.3d at
                                           9
85. He simply chose to bring his claims elsewhere after the state court, by

operation of law, did not reach the merits of his arguments in the operative

complaint. As a result, in the district court, Edwards did not seek review of the

state court’s decision to dismiss his claim for failure to prosecute.

       There may be other reasons why Edwards’s claim could be subject to

dismissal,1 but because the district court’s decision was grounded solely in the

Rooker‐Feldman doctrine, the judgment is vacated. We leave to the district court’s

determination in the first instance the resolution of such other arguments, if any,

as may be advanced by the parties.

                                        CONCLUSION

       For the foregoing reasons, we VACATE the October 12, 2018 judgment of

the district court dismissing Edwards’s claims under the Rooker‐Feldman doctrine

and REMAND the case for further proceedings consistent with this order.




1 McMillen has argued before the district court that Edwards’s complaint is also barred by res
judicata but has not advanced this argument on appeal. Though the issue is not before us, we
doubt that principles of res judicata would bar Edwards’s claim. See Monahan v. N.Y.C. Dep’t of
Corr., 214 F.3d 275, 285 (2d Cir. 2000) (res judicata applies only if the previous action involved a
final adjudication on the merits); Wheeler v. Beachcroft, LLC, 129 A.3d 677, 685 (Conn. 2016) (same);
see also Milgrim, 487 A.2d at 525 (“[W]e have uniformly construed our rules pertaining to
dismissals for failure to prosecute with reasonable diligence not to bar a subsequent action on the
same claim.”).
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