Hoffmann v. Wells Fargo Bank, N.A., 242 F. Supp. 3d 372, 384 (E.D. Pa. 2017), considered whether a second attempt to collect on a debt could be precluded by an earlier favorable verdict in a foreclosure action. The court held that because there was a colorable claim in the second foreclosure action, and because the initial debt collection did not involve abusive, oppressive, or unconscionable conduct, the second action was not precluded.

The court also discusses generally the idea that res judicata should not apply in actions brought to enforce a mortgage. In support of this point, the court outlined some of the policy difficulties in following debt that changes hands multiple times. For example, “Wells Fargo’s initial loss in state court stemmed from the fact that it was at least the fifth holder of the debt.” Id. at 384 n.10. But on the other hand, res judicata creates incentives against irresponsible conduct and avoids giving the buyer a windfall. Id. The court cites Megan Wachspress, Jessie Agatstein, and Christian Mott’s comment, In Defense of “Free Houses,” 125 Yale L.J. 1115 (2016), for a discussion of these competing issues.