Citing lower revenue expectations coupled with higher expected operating, interest and tax expenses, Ocwen Financial (OCN) now expects to post a loss in 2015.
The nonbank made the proclamation in a September investor presentation that was filed with the Securities and Exchange Commission Tuesday.
If the company does post a loss in 2015, it would make the second straight year of losing money for Ocwen. In 2014, Ocwen recorded a net loss of $546 million, a stark reversal from 2013, when Ocwen reported net income of $310.4 million.
One of the biggest pension funds in the world is going on the offensive against Brian Moynihan and Bank of America, and reaching far back into its playbook to do so.
The California State Teachers’ Retirement System (CalSTRS) earlier this month sent a letter to Bank of America detailing its opposition to the plan to install CEO Brian Moynihan as chairman.
It also sent the Securities and Exchange Commission a copy of the letter – a move that allows CalSTRS to take its argument to other shareholders and try and sway opinion against the leadership consolidation plan. That’s something it hasn’t done in at least two years.
The chart below contains common statutes of limitations for all 50 states, expressed in years.
We provide this chart as a rough guide. Check your state’s actual statutes of limitation for the time limit for your specific claim, which may be different than what you read here. For example, time limits for filing a lawsuit to recover on a bad debt are often shorter than the time limits for filing a lawsuit for breaches of other types of contracts. And while in some states the statute of limitations for foreclosing on a mortgage is the same as for written contracts, in other states there is a separate law and time period. (See Nolo’s Legal Research area for tips and links to websites where you can read your state’s statutes online.)
Statutes of Limitations for the 50 States (and the District of Columbia)
Four years ago, Robert and Joan Potter were facing a crisis. The monthly payments on their two-bedroom home in the coastal suburb of Laguna Niguel, Calif., had ballooned from $2,000 to $5,000 in the decade since they bought it for about $360,000. Now the retirees were rapidly falling behind.
“It was my parents’ dream home,” said their son, Derrick, 43. Derrick, who works as a mortgage consultant, said Robert and Joan got suckered into the kind of inflationary deal known as a negative amortization loan, since outlawed by state legislators. “They had some sleazy mortgage broker who said my mom, who hasn’t worked in 25 years, made $10,000 a month.”
Still, there was hope. The Potters heard about a firm called Brookstone Law, which was pioneering a novel strategy for challenging allegedly predatory banks. The best part: As long as Brookstone was representing Robert and Joan, the bank would hold off on collecting mortgage payments or foreclosing.
In 2011, Robert and Joan paid Brookstone $6,000 to become the lead plaintiffs in a “mass joinder” lawsuit against their lender, JPMorgan Chase Bank…
Florida’s ex-foreclosure king David J. Stern and his wife Jeanine have listed their waterfront mansion in Fort Lauderdale’s Harbor Beach — for $32 million, The Real Deal has learned.
The corner 60,000-square-foot lot along the Intracoastal features 505 feet of water frontage, which can fit up to a 300-foot megayacht, Dennis Stevick of DND Associates of ONE Sotheby’s told TRD. Stevick along with his partners Dale Atkins and Michelle Sorrentino are listing the property at 5 Harborage Isle Drive.
Dennis Stevick, Michelle Sorrentino and Dale Atkins
The Sterns paid an undisclosed amount for the 17,037-square-foot estate in 2009, according to Broward County property records. David Stern was disbarred by the Florida Supreme Court in 2014 for misconduct. At one point, his firm handled nearly as 118,000 cases, according to published reports. Earlier this year, he was hit with a $2 million lawsuit over unpaid services from a Miami-based process service company.
Symphony, the messaging tool backed by some of Wall Street’s biggest banks, has struck a deal with Dow Jones to offer news content in its service, a move that raises the stakes in its battle with Bloomberg, the market leader.
The content deal — likely to be unveiled this week — pits Dow Jones, part of Rupert Murdoch’s News Corp, against Michael Bloomberg’s eponymous company, the world’s largest financial information group.
All of Dow Jones’s newswire articles — including journalism produced by the Wall Street Journal newspaper — will be available on Symphony’s nascent service, according to people familiar with the situation. Dow Jones and Symphony declined to comment.
Deutsche Bank aims to cut roughly 23,000 jobs, or about one quarter of total staff, through layoffs mainly in technology activities and by spinning off its PostBank division, financial sources said on Monday.
That would bring the group’s workforce down to around 75,000 full-time positions under a reorganization being finalised by new Chief Executive John Cryan, who took control of Germany’s biggest bank in July with the promise to cut costs.
Cryan presented preliminary details of the plan to members of the supervisory board at the weekend. A spokesman for the bank declined comment.
Deutsche’s share price has suffered badly under stalled reforms and rising costs on top of fines and settlements that have pushed the bank down to the bottom of the valuation rankings of global investment banks. It has a price-book ratio of around 0.5, according to ThomsonReuters data.
EVERY DAY IN AMERICA, mortgage companies attempt to foreclose on homeowners using false documents.
It’s a byproduct of the mortgage securitization craze during the housing bubble, when loans were sliced and diced so haphazardly that the actual ownership was confused.
When the bubble burst, lenders foreclosing on properties needed paperwork to prove their standing, but didn’t have it — leading mortgage industry employees to forge, fabricate and backdate millions of mortgage documents. This foreclosure fraud scandal was exposed in 2010, and acquired a name: “robo-signing.”
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL
Case No. CV 15-04853-BRO (FFMx)
Date September 11, 2015
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC ET AL
V.
TIMOTHY J. JOHNSTON
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS [16]
I. INTRODUCTION
Pending before the Court is Defendant Timothy Johnston’s motion to dismiss
Plaintiffs Mortgage Electronic Registration Systems, Inc.’s (“MERS”), MERSCORP
Holdings, Inc.’s, and The Bank of New York Mellon f/k/a The Bank of New York as
Trustee for Structured Asset Mortgage Investments II Trust 2006-AR8, Mortgage Pass-
Through Certificates, Series 2006-AR8’s (“BNYM”) (collectively, “Plaintiffs”)
Complaint. (Dkt. No. 16.) After considering the papers filed in support of and in
opposition to the instant motion, the Court deems this matter appropriate for resolution
without oral argument of counsel. See Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. Because
the Court finds, sua sponte, that it lacks subject matter jurisdiction over this matter, the
Court GRANTS Defendant’s motion to dismiss Plaintiffs’ complaint with leave to
amend.
II. FACTUAL AND PROCEDURAL BACKGROUND
In February 2005, Defendant acquired title to real property (the “Property”) located
in Santa Maria, California, by means of a quitclaim deed. (Compl. ¶¶ 11–12.) The
quitclaim deed was recorded in the Santa Barbara County Recorder’s Office on July 31,
2006. (Compl. ¶ 12.) In July 2006, Defendant obtained a residential mortgage loan on
the Property for $408,700.00, secured by a deed of trust. (Compl. ¶ 30.) Defendant
recorded the deed of trust with the Santa Barbara County Recorder’s Office. (Id.) The
deed of trust identified Southstar Funding, LLC (“Southstar”) as the “Lender” on the
loan, and MERS as “a separate corporation . . . acting solely as a nominee for Lender and
Lender’s successors and assigns.” (Dkt. No. 11, Ex. A at 1; see Compl. ¶ 32.) The deed
of trust named MERS the beneficiary under the “Security Instrument . . . (solely as
nominee for Lender and Lender’s successors and assigns) and the successors and assigns
of MERS.” (Dkt No. 11, Ex. A at 1–2; Compl. ¶¶ 33–34.) Because the deed of trust
“grant[ed] a power of sale over the Property together with all improvements and interests
therein,” (Compl. ¶ 35), the deed of trust further provided:
Borrower [i.e., Defendant] understands and agrees that MERS holds only
legal title to the interests granted by Borrower in this Security Instrument,
but, if necessary to comply with law or custom, MERS (as nominee for
Lender and Lender’s successors and assigns) has the right: to exercise any or
all of those interests, including, but not limited to, the right to foreclose and
sell the Property; and to take any action required of Lender including, but
not limited to, releasing and canceling this Security Instrument.
(Dkt. No. 11, Ex. A at 2; see Compl. ¶ 35.)
In May 2012, Defendant filed an action in Santa Barbara Superior Court to quiet
title to the Property. (Compl. ¶ 40; see Dkt. No. 11, Ex. B.) Defendant named Southstar
as a defendant in the quiet title action, as well as “unknown persons and entities”
claiming any right or interest in the Property adverse to Defendant’s claim. (Compl. ¶¶
40, 46.) Defendant did not name Plaintiffs as defendants. (See Dkt. No. 11, Ex. B;
Compl. ¶ 46.)
When Southstar failed to appear and defend the state court quiet title action,
Defendant secured a default judgment for quiet title on April 17, 2013. (Compl. ¶¶ 47,
49.) Defendant recorded the judgment with the Santa Barbara Recorder’s Office.
(Compl. ¶ 50; see Ex. C.)
MERS assigned its rights and interests under the deed of trust to BNYM, as
trustee, on April 17, 2013. (Compl. ¶ 48.) On June 26, 2015, MERS, MERS’s parent
company MERSCORP Holdings, Inc., and BNYM filed the action now before this Court,
seeking to set aside Defendant’s quiet title judgment. (See Dkt. No. 1.) Plaintiffs allege
that Defendant intentionally violated California’s quiet title statutes which require
plaintiffs in quiet title actions to “name as defendants in the action the persons having
adverse claims to the title of the plaintiff against which a determination is sought.” Cal.
Civ. Proc. Code § 762.020. (See Compl. ¶¶ 26, 53, 60.) Plaintiffs’ Complaint requests:
(1) declaratory judgment for violation of California’s quiet title statutes (Cal. Civ. Proc.
Code §§ 760.010–764.045) and to set aside the void quiet title judgment, (Compl. ¶¶ 59–
67); and (2) declaratory judgment for violation of due process and to set aside the void
quiet title judgment, (Compl. ¶¶68–76).
Defendant filed the instant Motion to Dismiss on July 31, 2015. (Dkt. No. 16.)
Plaintiffs opposed Defendant’s motion on August 24, 2015, (Dkt. No. 21), and Defendant
timely replied on August 31, 2015, (Dkt. No. 23).
III. REQUEST FOR JUDICIAL NOTICE
When considering a motion to dismiss, a court typically does not look beyond the
complaint in order to avoid converting a motion to dismiss into a motion for summary
judgment. See Mack v. S. Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986),
overruled on other grounds by Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104
(1991). Notwithstanding this precept, a court may properly take judicial notice of
(1) material which is included as part of the complaint or relied upon by the complaint,
and (2) matters in the public record. See Marder v. Lopez, 450 F.3d 445, 448 (9th Cir.
2006); Lee v. City of L.A., 250 F.3d 668, 688–89 (9th Cir. 2001).
A court may also take judicial notice pursuant to Federal Rule of Evidence 201(b).
Under the rule, a judicially-noticed fact must be one which is “not subject to reasonable
dispute because it: (1) is generally known within the trial court’s territorial jurisdiction;
or (2) can be accurately and readily determined from sources whose accuracy cannot
reasonably be questioned.” Fed. R. Evid. 201(b). A court “must take judicial notice if a
party requests it and the court is supplied with the necessary information.” See Fed. R.
Evid. 201(c)(2); In re Icenhower, 755 F.3d 1130, 1142 (9th Cir. 2014).
Defendant requests that this Court take judicial notice of eleven documents,
including: (1) record searches from Delaware’s, California’s, Georgia’s, and New York’s
Secretary of State websites, (RJN, Exs. 1–3, 9–11); (2) the May 23, 2012 Notice of
Pendency of Action executed on May 15, 2012, and recorded in the official land records
of Santa Barbara as Instrument Number 2012-0033831, (RJN, Ex. 4); (3) copies of two
orders and one judgment from the state court quiet title action, (RJN, Exs. 5–7); and, (4) a
Corporate Assignment of Deed of Trust for the Property, dated April 17, 2013, (RJN, Ex.
8).
Plaintiffs do not oppose Defendant’s request. (See generally Opp’n.) In fact,
Plaintiffs incorporated the state court’s judgment for quiet title as an exhibit to their own
Complaint. (Compare Compl., Ex. C, with RJN, Ex. 7.) See Marder, 450 F.3d at 448
(explaining that a “court may consider evidence on which the complaint ‘necessarily
relies’” and “may treat such a document as ‘part of the complaint, and thus may assume
that its contents are true for purposes of a motion to dismiss under Rule 12(b)(6)’”
(quoting United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003))).
Because Defendant requests that the Court take judicial notice of documents that
are matters of public record and from sources whose accuracy cannot reasonably be
questioned—and which Plaintiffs do not question—the Court GRANTS Defendant’s
request for judicial notice in its entirety. See Reyn’s Pasta Bella, LLC v. Visa USA, Inc.,
442 F.3d 741, 746 n.6 (9th Cir. 2006) (holding that judicial notice of court filings is
proper); Burbank-Glendale-Pasadena Airport Auth. v. City of Burbank, 136 F.3d 1360,
1364 (9th Cir. 1998) (granting motion for judicial notice of pleadings filed in a related
state court action); Wise v. Wells Fargo Bank, N.A., 850 F. Supp. 2d 1047, 1057 (C.D.
Cal. 2012) (granting request for judicial notice of documents recorded in the Official
Records of the Los Angeles County Recorder’s Office); L’Garde, Inc. v. Raytheon Space
& Airborne Sys., 805 F. Supp. 2d 932, 937–38 (C.D. Cal. 2011) (granting judicial notice
of records searches from the California Secretary of State website because “the accuracy
of the results of records searches from the Secretary of State for the State of California
corporate search website [could] be determined by readily accessible resources whose
accuracy [could not] reasonably be questioned”).
IV. LEGAL STANDARD
A. Motion to Dismiss for Lack of Subject Matter Jurisdiction
A party may contest subject matter jurisdiction pursuant to a motion to dismiss
under Federal Rule of Civil Procedure 12(b)(1). Fed. R. Civ. P. 12(b)(1). Under Rule
12(b)(1), the moving party may either attack the pleadings on their face or present
extrinsic evidence for the district court’s consideration. Kohler v. CJP, Ltd., 818 F. Supp.
2d 1169, 1172 (C.D. Cal. 2011) (citing White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000)
(noting that Rule 12(b)(1) jurisdictional attacks “can be either facial or factual”)). A
district court must determine whether an attack is facial or factual, as this determination
governs the scope of the court’s review. See Kohler, 818 F. Supp. 2d at 1172.
When deciding a Rule 12(b)(1) motion that attacks the complaint on its face, a
court “must accept the allegations of the complaint as true.” Id. (citing Valdez v. United
States, 837 F. Supp. 1065, 1067 (E.D. Cal. 1993), aff’d, 56 F.3d 1177 (9th Cir. 1995)).
But in deciding a Rule 12(b)(1) motion that raises a factual attack, courts “may weigh the
evidence presented, and determine the facts in order to evaluate whether they have power
to hear the case.” Id. (citing Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987));
see also White, 227 F.3d at 1242 (when a motion relies on extrinsic evidence, a court
“need not presume the truthfulness of the plaintiffs’ allegations”).
The more expansive standard for factual attacks is inappropriate “where issues of
jurisdiction and substance are intertwined.” Roberts, 812 F.2d at 1177. Thus, “[a] court
may not resolve genuinely disputed facts where ‘the question of jurisdiction is dependent
on the resolution of factual issues going to the merits.’” Id. (quoting Augustine v. United
States, 704 F.2d 1074, 1077 (9th Cir. 1983)); see also Rosales v. United States, 824 F.2d
799, 803 (9th Cir. 1987). In such cases, the court must assume the truth of the
complaint’s allegations unless they are controverted by undisputed facts. Kohler, 818 F.
Supp. 2d at 1173; Roberts, 812 F.2d at 1177. Additionally, where the question of
jurisdiction “is so intertwined with the merits that its resolution depends on the resolution
of the merits, ‘the trial court should employ the standard applicable to a motion for
summary judgment.’” Careau Grp. v. United Farm Workers of Am., AFL-CIO, 940 F.2d
1291, 1293 (9th Cir. 1991) (quoting Augustine, 704 F.2d at 1077). In such cases, the
court must convert the motion into a Rule 12(b)(6) motion to dismiss or a Rule 56
summary judgment motion. Islands, Inc. v. U.S. Bureau of Reclamation, 64 F. Supp. 2d
966, 968 (E.D. Cal. 1999), vacated on other grounds, 10 Fed. App’x 491 (9th Cir. 2001).
The party asserting subject matter jurisdiction bears the burden of establishing it.
If the moving party presents extrinsic evidence to defeat subject matter jurisdiction, the
party asserting jurisdiction must present its own evidence to meet its burden. See Savage
v. Glendale Union High Sch., Dist. No. 205, Maricopa Cty., 343 F.3d 1036, 1039 n.2 (9th
Cir. 2003); St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir. 1989).
A federal court must determine its own jurisdiction even when there is no objection
to it. Rains v. Criterion Sys., Inc., 80 F.3d 339, 342 (9th Cir. 1996). Jurisdiction must be
determined from the face of the complaint. Caterpillar, Inc. v. Williams, 482 U.S. 386,
392 (1987). Under 28 U.S.C. § 1331, federal courts possess jurisdiction over “all civil
actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. §
1331. A case “arises under” federal law if a plaintiff’s “well-pleaded complaint
establishes either that federal law creates the cause of action” or that the plaintiff’s “right
to relief under state law requires resolution of a substantial question of federal law in
dispute between the parties.” Franchise Tax Bd. v. Constr. Laborers Vacation Trust for
S. Cal., 463 U.S. 1, 13 (1983).
B. Motion to Dismiss for Failure to State a Claim Under Rule 12(b)(6)
Under Rule 8(a), a complaint must contain a “short and plain statement of the
claim showing that the [plaintiff] is entitled to relief.” Fed. R. Civ. P. 8(a). If a
complaint fails to do this, the defendant may move to dismiss it under Rule 12(b)(6).
Fed. R. Civ. P. 12(b)(6). Courts generally “consider only allegations contained in the
pleadings, exhibits attached to the complaint, and matters properly subject to judicial
notice.” Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). “To survive a motion
to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A claim
is plausible on its face “when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.
“Factual allegations must be enough to raise a right to relief above the speculative level.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, there must be “more than a
sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678. “Where
a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops
short of the line between possibility and plausibility’” that the plaintiff is entitled to
relief. Id.
C. Whether to Provide Plaintiffs Leave to Amend Complaint
A district court should provide leave to amend when it grants a motion to dismiss
under Rule 12(b)(1) or Rule 12(b)(6) unless it is clear that the complaint could not be
saved by any amendment. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025,
1031 (9th Cir. 2008) (“Dismissal without leave to amend is improper unless it is clear,
upon de novo review, that the complaint could not be saved by any amendment.”); Snell
v. Cleveland, Inc., 316 F.3d 822, 828, 828 n.6 (9th Cir. 2002) (explaining that courts have
“the authority to grant leave to amend a complaint in order to cure defective allegations
of jurisdiction” and “[d]ismissal without leave to amend is improper unless it is clear,
upon de novo review, that the complaint could not be saved by amendment”) (citing Lee
v. City of L.A., 250 F.3d 668, 692 (9th Cir. 2001)). Leave to amend, however, “is
properly denied . . . if amendment would be futile.” Carrico v. City & Cty. of S.F., 656
F.3d 1002, 1008 (9th Cir. 2011).
V. DISCUSSION
Defendant moves to dismiss Plaintiffs’ complaint on the grounds that: the Court
lacks subject matter jurisdiction over the case under Federal Rule of Civil Procedure
12(b)(1) because the Rooker-Feldman doctrine applies, (Mot. at 4–6); Plaintiffs lack
capacity to sue, (Mot. at 6–12); res judicata bars Plaintiffs’ claims, (Mot. at 12–13);
Plaintiffs fail to join an indispensable party under Federal Rule of Civil Procedure
12(b)(7), (Mot. at 13–14); and Plaintiffs fail to state sufficient facts to make a plausible
claim for relief under Federal Rule of Civil Procedure 12(b)(6), (Mot. at 14–19).
Despite the fact that the Rooker-Feldman doctrine does not apply for the reasons
discussed below, the Court finds, sua sponte, that it lacks subject matter jurisdiction over
this action. The Court accordingly GRANTS Defendant’s motion to dismiss with leave
to amend.
A. The Rooker-Feldman Doctrine Does Not Apply Where Plaintiffs Were
Not Parties in the State Court Action
Defendant argues that the Rooker-Feldman doctrine bars Plaintiffs’ claims. (Mot.
at 5–6.) Because Defendant does not raise factual questions, this is a facial attack on
Plaintiffs’ pleadings. The Court therefore “accept[s] the allegations of the complaint as
true.” Kohler, 818 F. Supp. 2d at 1172 (citing Valdez, 837 F. Supp. at 1067).
Under the Rooker-Feldman doctrine, a district court does not have subject matter
jurisdiction to hear a direct appeal from a final judgment of a state court. Noel v. Hall,
341 F.3d 1148, 1155 (9th Cir. 2003). The doctrine also forbids “de facto” appeals of
state court decisions. Id. at 1158. But Rooker-Feldman does not apply when “the party
against whom the doctrine is invoked was not a party to the underlying state-court
proceeding.” Lance v. Dennis, 546 U.S. 459, 464 (2006) (internal quotations omitted).
Rooker-Feldman is thus inapplicable here where Defendant did not include Plaintiffs as
parties to the quiet title action. (Compl. ¶¶ 40, 46; see Dkt. No. 11, Ex. B.)
Defendant’s argument that “MERS was in privity with Southstar as the purported
nominee of Southstar” is inapposite. (Mot. at 5.) The Supreme Court has explicitly held
that the Rooker-Feldman doctrine does not bar plaintiffs from proceeding with an action
filed in district court on the ground that those plaintiffs were in privity with a party which
did not prevail in state court. Lance, 546 U.S. at 460. Defendant’s argument that
Rooker-Feldman applies to this case fails.
B. The Court Lacks Subject Matter Jurisdiction Over This Case Because
Plaintiffs Fail to Allege State Action Sufficient to Assert a Colorable
Constitutional Claim
Although Defendant’s Rooker-Feldman argument fails, the Court is obligated to
consider sua sponte whether it possesses subject matter jurisdiction and to dismiss the
action if it lacks jurisdiction. See Fed. R. Civ. P. 12(h)(3). Plaintiffs rely on their federal
constitutional claims to allege that the Court has subject matter jurisdiction over this
action. (Compl. ¶ 1 (“This Court has jurisdiction over this action under 28 U.S.C. §
1331, which confers original jurisdiction on federal district courts to hear suits alleging
the violation of rights and privileges under the United States Constitution.”).) Plaintiffs
assert that the quiet title judgment in the state court action violated Plaintiffs’ rights under
the Fifth and Fourteenth Amendments to the United States Constitution. (Compl. ¶¶ 68–
76.)
A constitutional claim is not “colorable” if it “clearly appears to be immaterial and
made solely for the purpose of obtaining jurisdiction or . . . is wholly insubstantial or
frivolous.” Boettcher v. Sec’y of HHS, 759 F.2d 719, 722 (9th Cir. 1985) (quoting Bell v.
Hood, 327 U.S. 678, 682–83 (1946)). “Dismissal for lack of subject-matter jurisdiction
because of the inadequacy of the federal claim is proper only when the claim is ‘so
insubstantial, implausible, foreclosed by prior decisions of this Court, or otherwise
completely devoid of merit as not to involve a federal controversy.’” Steel Co. v. Citizens
for a Better Env’t, 523 U.S. 83, 89 (1998) (quoting Oneida India Nation of N.Y. v. Cty. of
Oneida, 414 U.S. 661, 666 (1974)).
Plaintiffs have not alleged a cause of action under the Fifth Amendment. Bingue v.
Prunchak, 512 F.3d 1169, 1174 (9th Cir. 2008) (“[T]he Fifth Amendment’s due process
clause only applies to the federal government.”); see also Betts v. Brady, 316 U.S. 455,
462 (1942) (“Due process of law is secured against invasion by the federal Government
by the Fifth Amendment and is safe-guarded against state action in identical words by the
Fourteenth.”), overruled on other grounds by Gideon v. Wainwright, 372 U.S. 335
(1963). The state court judgment cannot violate Plaintiffs’ Fifth Amendment rights
where it is not federal government action.
The Fourteenth Amendment, on the other hand, prohibits state action that deprives
a person of life, liberty, or property without due process of law. Ingraham v. Wright, 430
U.S. 651, 672 (1977). As discussed below, Plaintiffs allege a “wholly insubstantial”
constitutional claim under the Fourteenth Amendment. See Boettcher, 759 F.2d at 722.
First, Plaintiffs’ constitutional claim under the Fourteenth Amendment fails to
allege state action. The Due Process Clause of the Fourteenth Amendment only applies
to the conduct of state actors. Jackson v. Brown, 513 F.3d 1057, 1079 (9th Cir. 2008);
see Shelly v. Kraemer, 334 U.S. 1, 13 (1948) (“Th[e Fourteenth] Amendment erects no
shield against merely private conduct, however discriminatory or wrongful.”). Plaintiffs’
sole reference to state action appears when Plaintiffs allege that “Johnston acted in
concert with the state court to obtain clear title to the Property in violation of MERS’
rights, and thus the Prior Action and Judgment entered therein constitute state acts.”
(Compl. ¶ 74.)
“[S]tate action may be found if, though only if, there is such a ‘close nexus
between the State and the challenged action’ that seemingly private behavior ‘may be
fairly treated as that of the State itself.’” Brentwood Acad. v. Tenn. Secondary Sch.
Athletic Ass’n, 531 U.S. 288, 295 (2001) (quoting Jackson v. Metro. Edison Co., 419 U.S.
345, 351 (1974)); see also Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 50 (1999)
(discussing the “state-action requirement of the Fourteenth Amendment” and that it
“requires both an alleged constitutional deprivation ‘caused by the exercise of some right
or privilege created by the State or by a rule of conduct imposed by the State or by a
person for whom the State is responsible,’ and that ‘the party charged with the
deprivation must be a person who may fairly be said to be a state actor’” (quoting Lugar
v. Edmondson Oil Co., 457 U.S. 922, 937 (1982))); Sutton v. Providence St. Joseph Med.
Ctr., 192 F.3d 826, 843 (9th Cir. 1999) (“[T]he plaintiff must establish some other nexus
sufficient to make it fair to attribute liability to the private entity as a governmental actor.
Typically, the nexus consists of some willful participation in a joint activity by the
private entity and the government.”); Fonda v. Gray, 707 F.2d 435, 437 (9th Cir. 1983)
(“A private party may be considered to have acted under color of state law when it
engages in a conspiracy or acts in concert with state agents to deprive one’s constitutional
rights.”). Plaintiffs do not provide the Court with a single factual allegation to suggest
that Defendant “acted in concert with the state court.” (See Compl. ¶ 74.) Plaintiffs’
assertion is merely conclusory and the Court need not accept it. See Twombly, 550 U.S.
at 555 (“[A] formulaic recitation of the elements of a cause of action will not do. Factual
allegations must be enough to raise a right to relief above the speculative level.”)
(internal citations omitted).
In this case, it will be difficult, if not impossible, for Plaintiffs to allege state action
here when “[California] courts have clearly indicated that a judgment obtained under [a
suit to quiet title] is not binding as to a person ‘known’ to plaintiff to have an adverse
claim, if that person is not named and served.” Gerhard v. Stephens, 68 Cal.2d 864, 908
(Cal. 1968). If, as Plaintiffs claim, Defendant knew “that MERS claimed a record
interest in the property adverse to [Defendant’s] claim of title” and “did not name MERS
as a defendant [in the state court action] despite [Defendant’s] actual knowledge,”
(Compl. ¶ 46), then California state courts would presumably not find Defendant’s state
court judgment binding on Plaintiffs. (See also Opp’n at 19–20 (stating that the
constitutionality issue “need never be reached” and “will not likely be reached in this
case”).)
Second, the “mere allegation” of a due process violation “is not sufficient to raise a
‘colorable’ constitutional claim to provide subject matter jurisdiction.” Hoye v. Sullivan,
985 F.2d 990, 992 (9th Cir. 1993) (“Every disappointed claimant could raise such a due
process claim, thereby undermining a statutory scheme designed to limit judicial review.”
(quoting Holloway v. Schweiker, 724 F.2d 1102, 1105 (4th Cir. 1984), cert. denied, 467
U.S. 1217 (1984))). Plaintiffs allege the following facts1: MERS held and claimed
various property rights and interests, (Compl. ¶ 70); the state court quiet title action
divested MERS of these rights and interests without due process of law, (Compl. ¶ 72);
the quiet title process established by the State of California requires “substantial
involvement from the state, in particular the state court,” and, as discussed above,
Defendant allegedly “acted in concert with the state court,” (Compl. ¶ 74).
Importantly, “[f]ederal courts are courts of limited jurisdiction.” Kokkonen v.
Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Plaintiffs’ own Opposition
suggests that their constitutional claims are “wholly insubstantial.” Plaintiffs admit that
the “Complaint only requests that the Court invalidate the California statute as alternative
relief in the event the statute does not require notice to MERS. Since that notice is
required on the face of the statute, this issue need never be reached.” (Opp’n at 19; see
also Opp’n at 20 n.5 (repeating that “the issue [challenging the constitutionality of a state
statute] will not likely be reached in this case”).)
Although Plaintiffs argue throughout their opposition that Mortgage Electronic
Registration Systems v. Robinson, 45 F. Supp. 3d 1207, 1213 (C.D. Cal. 2014)
(hereinafter, “Robinson”) is squarely on point, the Court finds that Robinson does not
save Plaintiffs’ Complaint in this case. In Robinson, the plaintiffs “asserted both
diversity and federal question jurisdiction.” Id. at 1213. The defendants in that case
failed to “explain how the availability of [] state-court remedies preclude[d] [the district
court] from exercising diversity jurisdiction, the existence of which Defendants [did] not
question.” Id.
Unlike Robinson, Plaintiffs do not allege that the Court has diversity jurisdiction
here. Plaintiffs’ opposition to Defendant’s motion to dismiss states in a conclusory
fashion that “Plaintiffs properly invoked this Court’s diversity and federal question
jurisdiction.” (Opp’n at 13.) The Court disagrees. Plaintiffs do not—at any point in
their complaint—allege diversity jurisdiction. (Compl. ¶ 1.) In fact, Plaintiffs do not
allege Plaintiff BNYM’s citizenship for purposes of diversity. (See Compl. ¶ 9.)
Plaintiffs only indicate that, as “reflected in Exhibit 9 of [Defendant’s] Request for
Judicial Notice—The Bank of New York Mellon (a plaintiff in this case) is registered
with the Secretary of State of California.” (Opp’n at 17.) And Plaintiffs aver that
Defendant resides at the Property in California. (Compl. ¶ 10.) As currently alleged, the
Court does not have enough information to determine whether the parties are completely
diverse. See Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). (See also RJN, Ex. 9
(indicating that BNYM is registered with the Secretary of State of California).)
Plaintiffs fail to properly allege diversity or federal question jurisdiction. The
Court therefore lacks subject matter jurisdiction over this matter.
VI. CONCLUSION
Because the Court lacks subject matter jurisdiction over this case, the Court
GRANTS Defendant’s motion to dismiss, with leave to amend.2 If Plaintiffs intend to
file an amended complaint, they must do so by September 25, 2015 at 4 p.m.
The Court VACATES the hearing set for Monday, September 14, 2015.
IT IS SO ORDERED. :
Initials of
Preparer rf
footnote:
1 The Court omits Plaintiffs’ legal conclusions, couched as factual allegations in their Complaint. (See
Compl. ¶¶ 69, 71, 73.)
2 Although it may be “difficult, if not impossible, for Plaintiffs to allege state action here,” the Court
grants leave to amend because amendment may not be futile with respect to diversity jurisdiction.
At an lAS Term, Part 29 of the Supreme
Court of the state of New York, held in· and
for the County of Kings, at the Courthouse,
at Civic Center, Brooklyn, New York, on
the 5th day of May, 2015.
PRESENT:
Hon. Wayne P. Saitta, Justice.
———————————-)(
DEUTSCHE BANK TRUST COMPANY AMERICAS AS
TRUSTEE,
Plaintiff,
v.
DOMINIC CODIO; JP MORGAN CHASE BANK, N.A.;
MORTGAGE ELECTRONIC REGISTRATION SYSTEM, INC.,
AS NOMINEE FOR AEGIS FUNDING D/B/A AEGIS HOME
EQUITY; NEW YORK CITY ENVIRONMENTAL CONTROL
BROAD; NEW YORK CITY PARKING VIOLATION BUREAU;
NEW YORK CITY TRANSIT ADJUDICATION BUREAU;
JOHN DOE, (Said name being fictitious, it being the intention
of Plaintiff to designate any and all occupants of premises
being foreclosed herein, and any parties, corporations or
entities, if any, having or claiming an interest or lien upon
the mortgaged premises),
Defendants.
—————————————-)(
Plaintift DEUTSCHE BANK TRUST COMPANY AMERICAS AS TRUSTEE, (hereinafter
“Plaintiff”), moves this Court for an Order pursuant to CPLR §3212 for Summary Judgment
against the Defendant and granting further relief as this Court deems just and proper.
Upon reading the Notice of Motion by Michel Lee, Esq., Attorney for Plaintift DEUTSCHE
BANK TRUST COMPANY AMERICAS AS TRUSTEE, dated June 6th, 2013 together with the
Affirmation in Support of Plaintiff’s Motion for Summary Judgment and Reference of Michel
Lee, Esq., dated June 6th, 2013 and all exhibits annexed thereto; the Memorandum of Law in
Support of Plaintiff’s Motion for Summary Judgment and Reference of Michel Lee, Esq., dated
June 6th, 2013; the Affirmation of Michel Lee, Esq., dated June 6th, 2013; the Reply Affirmation
of Jason J. Oliveri, Esq., Attorney for Plaintiff, DEUTSCHE BANK TRUST COMPANY AMERICAS AS
TRUSTEE, dated June 6th, 2013 and all exhibits annexed thereto; the Attorney’s Affirmation in
Opposition to Plaintiff’s Motion for Summary Judgment and Reference of S. John Lenoir, Esq.,
Attorney for Defendant, DOMINIC CODIO, dated November 25th, 2013, together with the
Defendant’s, DOMINIC CODIO, affidavit in Opposition to Plaintiff’s Motion for Summary
Judgment and Reference, dated November 25th, 2013 and all exhibits annexed thereto; the
Memorandum of Law in Further Support of Plaintiff’s Motion for Summary Judgment by Jason J.
Oliveri, Esq., dated December 18th, 2013; and after argument of counsel and due deliberation
thereon, Plaintiff’s motion for Summary Judgment and an Order of Reference is denied for the
reasons set forth below.
FACTS
Plaintiff moves for summary judgment, striking Defendant DOMINIC CODIO’s answer,
granting a default judgment against all other Defendants, amending the caption to substitute
“Deborah Thomas”, “Andre F Codio”, and “Alex Codio” for “John Doe”, and for Order
appointing a Referee to compute the amounts owing to Plaintiff.
Plaintiff brings this motion after the Second Department’s March 2, 2012 reversal of this
Court’s order of June 23, 2011, which granted dismissal of Plaintiff’s complaint based upon lack
of standing. The Second Department held that by producing an “allonge to note”, Plaintiff
made a sufficient showing to warrant denial of that branch of Defendant’s motion which had
sought dismissal based upon lack of standing.
Plaintiff brought this action to foreclose on a mortgage on the premises located at 631
East 32nd Street in Brooklyn, NY. The mortgage secured a note in the amount of $528,000.00,
executed by Defendant CODIO, in favor of AEGIS WHOLESALE CORPORATION.
Plaintiff states that on June 1, 2007, the note was “transferred” to Plaintiff and that the
mortgage was subsequently assigned to Plaintiff on March 16, 2010.
Defendant DOMINIC CODIO filed an answer containing a general denial, an affirmative
defense of lack of standing to sue, as well as asserting that Plaintiff failed to allege that it is the
legal owner and holder of the Note.
In response to this motion, Defendant CODIO submits an affidavit dated November 25,
2013, in which he states that on June 28, 2012, Plaintiff’s former counsel, Fincey Johns, Esq. of
Knuckles, Komosinski & Elliott, LLP, appeared at the office of his counsel and showed him and
his counsel an original promissory note with an allonge on a separate page following the note.
Johns provided Defendant and his counsel with copies of the promissory note and allonge he
presented that day.
Defendant states that the signature on the note shown to him by Johns on June 28,
2012, did not bear his signature.
ARGUMENTS
Plaintiff argues that because the Defendant defaulted on his obligation under the
mortgage, it is entitled to summary judgment and an Order of Reference to calculate the
amounts owing to it. Plaintiff argues that it has been in possession of the note indorsed in its
favor and mortgage since the commencement of the underlying action. Plaintiff also argues
that because Defendant CODIO did not respond to a notice to admit the authenticity of the
note Plaintiff claims he signed, he is now precluded from challenging the signature on the note.
Defendant CODIO argues that Plaintiff’s motion must be denied as it has not eliminated
all questions of fact as to each element of its right to foreclose on the mortgage. Defendant
argues that the affidavit of merit of Stephen Maxwell submitted by Plaintiff in support of its
motion fails to establish that Plaintiff has the legal right to bring the underlying action against
Defendant. Defendant also argues that issues contained in Plaintiff’s purported notice to
admit, which include the underlying elements of Plaintiff’s alleged claims, were issues in
dispute and therefore inappropriate for a notice to admit. Defendant’s counsel further argues
that he never received the notice to admit and therefore it should be deemed a nullity.
ANALYSIS
Where, as in this case, a plaintiffs standing to commence a foreclosure action is placed
in issue by the defendant in his answer, it is the plaintiff’s burden to prove that it has standing
to be entitled to relief. Wells Fargo Bank, N.A. v. Arias, 121 A.D.3d 973, 995 N.Y.S.2d 118, 118-
19 (2nd Dept 2014). In order to prove standing, Plaintiff must demonstrate that it was assigned
the note or was in possession of the note prior to the commencement of the action on March
18, 2010.
Plaintiff is incorrect in its assertion that the order of the Appellate Division, which
reversed dismissal of this action, precludes Defendant’s challenge to Plaintiff’s standing. The
Appellate Division did not hold that Plaintiff established that it was the transferee prior to the
commencement of the action, but only that it made a sufficient showing to warrant denial of
Defendant’s motion to dismiss for lack of standing. To be entitled to summary judgment in the
face of Defendant’s affirmative defense of lack of standing, Plaintiff must eliminate all
questions of fact as to its standing.
Assignment of the Mortgage
Plaintiff submits an assignment of mortgage, dated March 16, 2010, in which the
Defendant’s mortgage was assigned by MERS, as nominee for Aegis Wholesale Corporation, to
the Plaintiff. The assignment on its face purports to assign the mortgage only and not the note.
“[T]he mere assignment of the mortgage without an effective assignment of the underlying
note is a nullity .. “. U.S. Bank, N.A. v. Adrian Collymore, 68 A.D.3d 752, 754, 890 N.Y.S.2d 578,
580 (2nd Dept 2009).
Plaintiff also fails to offer any proof of authority of MERS to assign the mortgage on behalf
of Aegis Wholesale Corporation. The mortgage did not authorize MERS to assign the mortgage
or note. In the section entitled (/Borrower’s Transfer to Lender of Rights in the Property”, the
mortgage only gave MERS right as a nominee, and it did not give MERS the right to assign the
underlying mortgage, or the note. Plaintiff has submitted no evidence of MERS’ authority to
assign the mortgage or note. Bank of New York v. Silverberg, 86 A.D.3d 274, 281, 926 N.Y.S.2d
532, 538 (2nd Dept 2011).
A more serious problem with the assignment is that it is inconsistent with the allonge.
The assignment purports to be from MERS as nominee of Aegis Wholesale Corporation to
Plaintiffs. However, the purported allonge contains special endorsements from Aegis
Wholesale Corporation to Aegis Mortgage Corporation; then from Aegis Mortgage Corporation
to Residential Funding Company, LLC; and then from Residential Funding LLC to Plaintiff
DEUTSCHE BANK TRUST COMPANY, LLC.
Aegis Wholesale Corporation could not both negotiate the note to Aegis Mortgage
Corporation and assign the note to Deutsche Bank. Similarly the note could not be both
negotiated by Residential Funding Co., LLC to Deutsche Bank and assigned by Aegis Wholesale
Corporation to Deutsche Bank.
Negotiation of the Note
In addition to the purported assignments, Plaintiff also claims that the note was indorsed
and negotiated to it prior to the commencement of the action.
Plaintiff relies on the affidavit of Stephen Maxwell, Senior Litigation Analyst of Ocwen Loan
Servicing, LLC, the servicer of the Plaintiff, to establish that Plaintiff was in possession of the
note at the time the action was commenced.
Maxwell states that on or about June 1, 2007, the loan was transferred to Plaintiff as
trustee for Residential Funding Company, LLC and appends a copy of portions of a Pooling-and
Servicing Agreement dated June 1, 2007.
However, Maxwell does not state in his affidavit when the original note was physically
delivered to Plaintiff. The Pooling and Servicing Agreement is not evidence of the date of
physical delivery of the note.
Where an affidavit, in this case of the Plaintiff’s servicing agent, fails to give any factual
details as to the physical delivery of the note, it fails to establish that the Plaintiff had physical
possession of the note prior to commencement of the action. US Bank Nat. Ass’n v. Weinman,
123 A.D.3d 1108, 2 NYS3d 128 (2nd Dept 2014).
Furthermore, in examining the records appended to Plaintiff’s papers, there are two
different versions of the note annexed, one annexed as 11Exhibit A”, which includes a purported
allonge, and one annexed as part of 11Exhibit B”, which does not.
Defendant, in his affidavit, states that the signature on the note annexed as 11Exhibit A”
is not his, while the signature on the note annexed as 11Exhibit B”, which does not have an
allgone, bears his signature. Neither signature is acknowledged.
Defendant further attests that prior counsel for Plaintiff, Fincey John, Esq. of Knuckles,
Komosinski & Elliott, LLP, came to Defendant’s attorney’s office on June 28, 2012 and showed
them an original note, with an allonge, which corresponds to the version of the note annexed
as “Exhibit A”. Defendant states the signature, which appears on the note shown to them by
Plaintiff’s attorney, is not his.
In addition, Defendant submits a report of a Roger Rubin, a “Question Document
Examiner”, together with an affidavit of Rubin swearing to the truth of the contents of his
report. Rubin states that he examined handwriting exemplars provided to him by Defendant
and a copy of the note filed with the City Register, which Defendant admits bears his signature.
Rubin concluded, based on the exemplars and the note filed with the City Register, that the
signature on the note which was shown to Defendant by Plaintiff’s prior counsel, (which
corresponds to the version annexed as 11 Exhibit A”), is not CODIO’s signature.
Plaintiff produced an original note in court which had an allonge attached to it and
corresponded to the version annexed as “Exhibit A”.
The allonge contained the three endorsements, two purportedly signed by Lynn Harris as
secretary of Aegis Wholesale Corporation and Aegis Mortgage Corporation, respectively. The
Court observed that the two signatures on the allonge by Lynn Harris are clearly different
signatures. The Court gave Plaintiff the opportunity to produce Lynn Harris to attest to the
authenticity of her signatures. Counsel for Plaintiff stated he attempted to locate Harris but
was unable to do so.
Defendant’s denial of the signature on the note with the allonge, and report of Rubin
are sufficient to raise a question of fact as to whether Defendant signed the note to which the
allonge was attached.
Plaintiff argues that because Defendant failed to respond to a notice to admit dated
April 3, 2013, he is deemed to have admitted the genuineness of the copy of the note annexed
to the notice to admit. The copy of the note attached to the notice to admit included the
allonge.
Defendant’s counsel states in his affirmation that the notice to admit was never
received at his office. Plaintiff has submitted no affidavit of service or other proof that the
notice to admit was in fact served.
Further, it is not proper to use a notice to admit as to facts that are in contention. In his
answer, CODIO challenged the Plaintiff’s claim to have been assigned the note, and submitted a
copy of what he alleged to be the note he signed, which did not contain an allonge. Thus,
whether the note he signed was the version to which the allonge was attached was put in
dispute long before Plaintiff sent the notice to admit.
Also, the copy of the note sent with the notice to admit contains a certification by Aegis
Mortgage Corporation that it is a true and accurate copy. This copy contained the purported
allonge bearing an endorsement of the note from Residential Funding Company, LLC to Plaintiff.
As Aegis Mortgage Corporation endorsed the note to Residential Funding Company, LLC,
the endorsement by Residential Funding to Plaintiff necessarily occurred after the note was out
of Aegis’ possession, and in the possession of Residential Funding Company, LLC. At the time
Aegis certified the copy of the note, there would not have been an endorsement by Residential
· on the purported allonge.
This raises a question as to whether the “certified” copy of the note annexed to the
notice to admit was genuine, or whether the allonge was added to that copy of the note after it
had been certified by Aegis.
By reason of the foregoing, Defendant cannot be precluded on the basis of the notice to
admit from challenging whether the signature on the note that has the allonge attached, is his.
Defendant has raised a question of fact as to whether the note with the allonge bears his
signature .. Further, the different signatures of Lynn Harris and the discrepancies between the
allonge and the assignment raise questions about the genuineness of the allonge, precluding
summary judgment.
Plaintiff annexed affidavits of service on the remaining Defendants, who have failed to
appear in this matter, and seeks to amend the caption to name DEBORAH THOMAS, ANDRE
CODIO and ALEX CODIO as Defendants. However, Plaintiff had not provided an affidavit of
merit as to its complaint against the JOHN DOEs or even alleged whether the JOHN DOEs have a
claim against the property, or what the claim is. At this point default judgment against the
JOHN DOEs is not warranted.
WHEREFORE, Plaintiff’s motion seeking summary judgment against DOMINIC CODIO, to
amend the caption and for a default judgment against Deborah Thomas, Andre Codio and Alex
Codio is denied.
This shall constitute the decision and order of this Court.
ENTER,
HON. WAYNE P. SAI1TA
J s c J.S.C.
SUPREME COURT – STATE OF NEW YORK I.A.S. PART 7 – SUFFOLK COUNTY
PRESENT:
WILLIAM B. REBOLINI
Justice
JPMorgan Chase Bank, National Association, Plaintiff,
– against –
Gregory J. Nola, Nancy S. Nola,
Clerk of the Suffolk County District Court;
Cori J. Nola, “John Does” and “Jane Does”, said
names being fictitious, parties intended being
possible tenants or occupants of premises, and
corporations, other entities or persons who claim,
or may claim, a lien against the premises, Defendants.
Attorney for Defendants: Young Law Group, PLLC 80 Orville Drive, Suite 100 Bohemia, New York 11716
EXCERPT:
In support of her cross-motion for summary judgment dismissing the complaint as asserted
against her, defendant Nancy Nola has demonstrated her entitlement to judgment as a matter oflaw
(see Zuckerman v New York, supra). Ms. Nola states in her personal affidavit, among other things,
that she was advised by her attorney that subdivisions (A) and (R) were not initialized on the durable
power of attorney form as required by the statute in effect at the time it was executed. The form
explicitly required her to place her initials in designated spaces on the form to indicate her “choices”
with respect to the specific powers granted to her agents. Inasmuch as the subdivisions were marked
with an “x” Ms. Nola avers that the durable power of attorney was not valid. In addition, defendant
Nancy Nola contends that she was not aware that she was the co-borrower on the loan, and was not
served with the 90-day notice pursuant to RP APL 1304.
In opposition to the cross-motion, the plaintiff submits the personal affidavit of Tisha
Denney, Assistant Secretary for plaintiff, and several loan applications. Ms. Denney avers that
multiple loan modification applications were submitted bearing the signatures of Gregory Nola and
Nancy Nola. These applications were dated August 26, 2009/September 8, 2009; November 17,
2009/November22, 2009; January 18, 2011 ; February 11 , 2011; March 1, 2011 and March 31 , 2011,
and annexes copies of the applications. In addition, plaintiff states that Nancy Nola’s allegations that
she was unaware of the loan transaction are belied by her continued involvement with the loan when
she signed several applications to modify the loan. In addition, Nancy Nola admitted that she
submitted her financial information to the plaintiff to help her son through the loan modification
process. The power of attorney specifically gave power to apply and close on the contemplated loan
as by its explicit language. Moreover, plaintiff contends that it was not required to serve the 90-day
notice upon Nancy Nola inasmuch as the premises was not her primary residence. The Court agrees.
However, with regard to the validity of the power of attorney, “if the designated spaces are
not initialed, no authority is granted” (Matter of Marriott, 86 AD3d 943, 927 NYS2d 269 [4th Dept
2011 ]). Therefore, regardless of whether Nancy Nola executed the loan applications, since she did
not effectively authorize Gregory Nola to execute the note as her power of attorney, the power of
attorney is fatally defective and Nancy Nola cannot be held liable for payment on the note.
Accordingly, defendant Nancy Nola’s cross-motion for summary judgment dismissing the complaint
as asserted against her is granted, and the plaintiff’s motion for summary judgment as against
defendant Nancy Nola is denied.
In sum, plaintiffs motion for summary judgment on its complaint is granted only against
defendants Gregory Nola and Cori Nola. Defendant Nancy Nola’s cross-motion is granted solely
to the extent that the complaint is dismissed as asserted against her, and all other requested relief is
denied. The remaining motion by plaintiff for a protective order and defendant Nancy Nola’s crossmotion
to strike the complaint are denied as academic.
Based upon the foregoing, the plaintiffs motion for summary judgment is granted solely
against the defendants Gregory Nola and Cori Nola, whose answer is dismissed. That branch of the
motion seeking to fix the defaults as against the remaining defendants who have not answered or
appeared herein is granted. Plaintiffs request for an order of reference appointing a referee to
compute the amount due to plaintiff under the note and mortgage is also granted (Green Tree
Servicing LLC v Cary, 106 AD3d 691, 965 NYS2d 511 [2d Dept 2013]). Defendant Nancy Nola’s
cross-motion for summary judgment is granted only to the extent that the complaint is dismissed as
asserted against her, the action is severed and shall otherwise continue against the remaining
defendants. In addition, the Court finds that further discovery is not necessary at this juncture and
denies the plaintiffs motion for a protective order and the defendants’ cross-motion to strike the
complaint as academic.
The proposed order appointing a referee to compute pursuant to RP APL 3121, as modified
by the Court, is signed simultaneously herewith.
IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
No. 14-14706 D.C. Docket No. 1:13-cv-24510-WPD
CITY OF MIAMI, a Florida Municipal Corporation, Plaintiff – Appellant,
versus
CITIGROUP INC., CITIBANK, N.A., CITIMORTGAGE, INC., CITI HOLDINGS,INC., CITICORP TRUST BANK, FSB, Defendants – Appellees.
Appeals from the United States District Court for the Southern District of Florida
(September 1, 2015)
Before MARCUS and WILSON, Circuit Judges, and SCHLESINGER,* District Judge.
MARCUS, Circuit Judge:
On December 13, 2011, the City of Miami brought three separate fair housing lawsuits against Citigroup, Bank of America, and Wells Fargo. Each alleged that the bank in question had engaged in a decade-long pattern of discriminatory lending by targeting minorities for predatory loans. The complaints in each case were largely identical, each identifying the same pattern of behavior and supported by empirical data specific to each defendant. Moreover, each complaint contained the same two causes of action: one claim arising under the Fair Housing Act (FHA), 42 U.S.C. § 3601 et seq., as well as an attendant unjust enrichment claim under Florida law.
The three cases were heard by the same judge in the Southern District of Florida, and were resolved in the same way based on the district court’s order in the Bank of America case. In this case, like the others, the district court dismissed the City’s FHA claim with prejudice on three grounds: the City lacked statutory standing under the FHA because its alleged injuries fell outside the statute’s “zone of interests”; the City had not adequately pled that Citigroup’s conduct proximately caused the harm sustained by the City; and, finally, the City had run afoul of the statute of limitations and could not employ the continuing violation doctrine. Each of the three cases was appealed separately.
After thorough review, we are constrained to disagree with the district court’s legal conclusions about the City’s FHA claims. The most detailed account of our reasoning is set out in the companion case City of Miami v. Bank of America Corp., No. 14-14543. The same conclusions of law apply here. As a preliminary matter, we find that the City has constitutional standing to pursue its FHA claims. Furthermore, under controlling Supreme Court precedent, the “zone of interests” for the Fair Housing Act extends as broadly as permitted under Article III of the Constitution, and therefore encompasses the City’s claim. While we agree with the district court’s conclusion that the FHA contains a proximate cause requirement, we find that the City has adequately alleged proximate cause. Finally, the “continuing violation doctrine” would apply to the City’s claims, if they are adequately pled.
Because the district court imposed too stringent a zone of interests test and wrongly applied the proximate cause analysis, it erred in dismissing the City’s federal claims with prejudice and in denying the City’s motion for leave to amend on the grounds of futility. As for the state law claim, we affirm the dismissal because the benefits the City allegedly conferred on the defendants were not sufficiently direct to plead an unjust enrichment claim under Florida law.
Appeals from the United States District Court for the Southern District of Florida
(September 1, 2015)
Before MARCUS and WILSON, Circuit Judges, and SCHLESINGER,* District Judge.
MARCUS, Circuit Judge:
On December 13, 2011, the City of Miami brought three separate fair housing lawsuits against Wells Fargo, Bank of America, and Citigroup. Each alleged that the bank in question had engaged in a decade-long pattern of discriminatory lending by targeting minorities for predatory loans. The complaints in each case were largely identical, each identifying the same pattern of behavior and supported by empirical data specific to each defendant. Moreover, each complaint contained the same two causes of action: one claim arising under the Fair Housing Act (FHA), 42 U.S.C. § 3601 et seq., as well as an attendant unjust enrichment claim under Florida law.
The three cases were heard by the same judge in the Southern District of Florida, and were resolved in the same way based on the district court’s order in the Bank of America case. In this case, like the others, the district court dismissed the City’s FHA claim with prejudice on three grounds: the City lacked statutory standing under the FHA because its alleged injuries fell outside the statute’s “zone of interests”; the City had not adequately pled that Wells Fargo’s conduct proximately caused the harm sustained by the City; and, finally, the City had run afoul of the statute of limitations and could not employ the continuing violation doctrine. Each of the three cases was appealed separately.
After thorough review, we are constrained to disagree with the district court’s legal conclusions about the City’s FHA claims. The most detailed account of our reasoning is set out in the companion case City of Miami v. Bank of America Corp., No. 14-14543. The same conclusions of law apply here. As a preliminary matter, we find that the City has constitutional standing to pursue its FHA claims. Furthermore, under controlling Supreme Court precedent, the “zone of interests” for the Fair Housing Act extends as broadly as permitted under Article III of the Constitution, and therefore encompasses the City’s claim. While we agree with the district court’s conclusion that the FHA contains a proximate cause requirement, we find that the City has adequately alleged proximate cause. Finally, the “continuing violation doctrine” would apply to the City’s claims, if they are adequately pled.
IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
No. 14-14543
D.C. Docket No. 1:13-cv-24506-WPD
CITY OF MIAMI, a Florida Municipal Corporation, Plaintiff – Appellant,
versus
BANK OF AMERICA CORPORATION, BANK OF AMERICA, N.A., et al., Defendants – Appellees.
Appeals from the United States District Court for the Southern District of Florida
(September 1, 2015)
Before MARCUS and WILSON, Circuit Judges, and SCHLESINGER,* District Judge. MARCUS, Circuit Judge:
The City of Miami has brought an ambitious fair housing lawsuit against Bank of America,1 alleging that it engaged in a decade-long pattern of discriminatory lending in the residential housing market that caused the City economic harm. The City claims that the bank targeted black and Latino customers in Miami for predatory loans that carried more risk, steeper fees, and higher costs than those offered to identically situated white customers, and created internal incentive structures that encouraged employees to provide these types of loans. The predatory loans, as identified by the City, include: high-cost loans (i.e., those with an interest rate at least three percentage points above a federally established benchmark), subprime loans, interest-only loans, balloon payment loans, loans with prepayment penalties, negative amortization loans, no documentation loans, and adjustable rate mortgages with teaser rates (i.e., a lifetime maximum rate greater than the initial rate plus 6%). Complaint for Violations of the Federal Fair Housing Act at 34, City of Miami v. Bank of America Corp., No. 13-24506-CIV (S.D. Fla. July 9, 2014) (“Complaint”). The City alleged that by steering minorities toward these predatory loans, Bank of America caused minority-owned properties throughout Miami to fall into unnecessary or premature foreclosure, depriving the City of tax revenue and forcing it to spend more on municipal services (such as police, firefighters, trash and debris removal, etc.) to combat the resulting blight. The City asserts one claim arising under the Fair Housing Act (FHA), 42 U.S.C. § 3601 et seq., as well as an attendant unjust enrichment claim under Florida law.
Stung by years of criticism that it has coddled Wall Street criminals, the Justice Department issued new policies on Wednesday that prioritize the prosecution of individual employees — not just their companies — and put pressure on corporations to turn over evidence against their executives.
The new rules, issued in a memo to federal prosecutors nationwide, are the first major policy announcement by Attorney General Loretta E. Lynch since she took office in April. The memo is a tacit acknowledgment of criticism that despite securing record fines from major corporations, the Justice Department under President Obama has punished few executives involved in the housing crisis, the financial meltdown and corporate scandals.
“Corporations can only commit crimes through flesh-and-blood people,” Sally Q. Yates, the deputy attorney general and the author of the memo, said in an interview on Wednesday. “It’s only fair that the people who are responsible for committing those crimes be held accountable. The public needs to have confidence that there is one system of justice and it applies equally regardless of whether that crime occurs on a street corner or in a boardroom.”
This paper documents that the time required to initiate and complete a home foreclosure rose from about 9 months on average prior to the Great Recession to an average of 15 months during the Great Recession and afterward. We refer to these changes as foreclosure delay. We also document that many borrowers who are in foreclosure ultimately exit foreclosure and keep their homes by making up for missed mortgage payments. We analyze the impact of foreclosure delay on the U.S. labor market as an implicit credit line from a lender to a borrower (mortgagor) within a search model. In the model, foreclosure delay provides unemployed mortgagors with additional time to search for a high-paying job. We find that foreclosure delay decreases mortgagor employment by about 0.75 percentage points, nearly doubles the stock of delinquent mortgages, increases the rate of homeownership by about 0.3 percentage points, and increases job match quality, as mortgagors search longer. Severe foreclosure delays, such as those observed in Florida and New Jersey, can depress mortgagor employment by up to 1.3 percentage points. The model results are consistent with PSID and SCF data that show that employment rates rise for delinquent mortgagors once the mortgagor is in the foreclosure process.
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DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FOURTH DISTRICT
JUNIOR A. HARRIS,
Appellant,
v.
HSBC BANK USA, NATIONAL ASSOCIATION,
as Trustee for NAAC Mortgage Pass-Through Certificates Series 2007-1,
Appellee.
No. 4D14-54
[September 9, 2015]
Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Cynthia G. Imperato, Judge; L.T. Case No. CACE08029493(11).
Kenneth V. Hemmerle, II, Fort Lauderdale, and Richard P. McCusker, Jr., Delray Beach, for appellant.
Donna L. Eng, Michael K. Winston, and Dean A. Morande of Carlton Fields Jorden Burt, P.A., West Palm Beach, for appellee.
GERBER, J.
The borrower appeals from a final judgment of foreclosure entered for the bank after a trial. The borrower argues that the bank failed to prove it had standing when it filed the action. We agree and reverse for entry of judgment for the borrower.
The bank’s original complaint attached a copy of a note payable to another entity. The note did not contain an endorsement.
The bank later filed a second amended complaint. Attached were copies of the note and an assignment of the note. The note now contained an endorsement to the bank. However, the endorsement was undated. The assignment purported to transfer the note to the bank on an “effective” date before the bank filed its original complaint.
However, the assignment was executed after the bank filed its original complaint.
The borrower answered and raised lack of standing as an affirmative defense. The borrower argued that the endorsement was undated and the assignment was executed after the bank filed its original complaint.
At trial, the bank introduced into evidence the original note and the assignment. On the factual issue of whether the note was assigned to the bank before or after the bank filed the original complaint, the bank’s witness possessed no knowledge or information other than what the assignment’s face reflected.
After the close of all evidence, the trial court entered a final judgment of foreclosure for the bank.
This appeal followed. Our review is de novo. See Lloyd v. Bank of N.Y. Mellon, 160 So. 3d 513, 514 (Fla. 4th DCA 2015) (“We review the sufficiency of the evidence to prove standing to bring a foreclosure action de novo.”) (citation omitted).
We agree with the borrower that the bank failed to prove it had standing when it filed the action. We reach this conclusion for three reasons.
First, the note’s endorsement to the bank was undated. See Matthews v. Fed. Nat’l Mortg. Ass’n, 160 So. 3d 131, 133 (Fla. 4th DCA 2015) (“[T]he note introduced at trial . . . did not establish standing when the suit was commenced. The blank endorsement was undated.”).
Second, the assignment was “backdated” after the bank filed the action. See id. (“Nor does the backdated assignment, standing alone, establish standing.”) (citation omitted); Vidal v. Liquidation Props., Inc., 104 So. 3d 1274, 1277 n.1 (Fla. 4th DCA 2013) (“Allowing assignments to be retroactively effective would be inimical to the requirements of pre-suit ownership for standing in foreclosure cases.”).
Third, on the factual issue of whether the note was assigned to the bank before or after the bank filed the original complaint, the bank’s witness possessed no knowledge or information other than what the assignment’s face reflected. See Lloyd, 160 So. 3d at 515 (“Plaintiff’s evidence supporting its claim that the assignment . . . ‘related back’ to before the suit commenced was also insufficient to prove standing in this case. The witness testified that he did not have any information, other than the document itself, to verify when the assignment took place.”).
Based on the foregoing, we reverse and remand for entry of judgment for the borrower.
Reversed and remanded.
GROSS and DAMOORGIAN, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
As part of our periodic review of State foreclosure time lines, we’ve increased State foreclosure time lines for all foreclosure sales completed on or after August 1, 2015, in 34 of the 55 jurisdictions. You’ll see these changes reflected in your September Compensatory Fee Analysis report. Please review the updated time lines below.
We’ve also extended the temporary suspension of State foreclosure time line compensatory fee assessments in the District of Columbia, Massachusetts, New York (including New York City), and New Jersey from June 30, 2015, to December 31, 2015. The temporary suspension was originally announced in Single-Family Seller/Servicer Guide (Guide) Bulletin 2014-19[pdf].
NOTE: The changes discussed in this article will be formally announced in our October 2015 Guide Bulletin, including updates to Guide Exhibit 83, Freddie Mac State Foreclosure Time Lines.
Updated Freddie Mac State Foreclosure Time Lines
The following table shows our prior and updated foreclosure time lines (in calendar days):
Republican U.S. Rep. David Trott confirmed in a recent congressional report that he sold his 81 percent interest in the Farmington Hills-based law firm he helped lead for decades, with the partners buying out his stake over five years.
After winning the Republican primary against Rep. Kerry Bentivolio, R-Milford, a year ago, Trott said he would sell his stake in the firm his father started, then known as Trott & Trott PC, which processes home foreclosures for banks and lending institutions. He has not divulged the sale price.
The move came after a primary in which Bentivolio and his allies labeled Trott a “foreclosure king” because of the extensive work the firm performed processing foreclosures during the recession. Democrats continued to attack Trott, a Birmingham resident, on the issue during the fall campaign, but Trott won the November election with 56 percent of the vote to Democrat Bobby McKenzie’s 41 percent.
This paper examines the contrasting influence of portfolio lending and securitization in the resolution of distressed commercial real estate. The empirical analysis utilizes a large and unique data set of distressed commercial mortgages. The data set is constructed based on the recent financial crisis and includes portfolio and securitized loans. The main hypotheses address the marginal impact of portfolio versus securitized loans on the likelihood of resolution, resolution outcome, time to resolution and capital recovery rates. Conditional on a loan becoming troubled, we find that distressed commercial real estate loans held in a portfolio are more likely to be resolved and experience higher foreclosure rates compared to those that are securitized. Furthermore, portfolio loans experience shorter time to resolution and higher capital recovery rates when resolution is relatively swift. Our study is intended to contribute to the growing literature on distressed asset resolution and to provide new perspectives on how different lending options impact the financial resolution and workout process in a distressed commercial mortgage market.
This article is an op-ed piece, specifically discussing issues with what got America into the mortgage mess that finally collapsed in 2008. Review of a recently-released, 59-page”white paper” by SSRN (which they charged $5.00 to obtain a copy of) takes aim at the statistical behaviors of American consumers (as homeowners). I’m sure you’ll delight (sic) in what their research shows in this study, entitled: MORTGAGE REFINANCING, CONSUMER SPENDING, AND COMPETITION: EVIDENCE FROM THE HOME AFFORDABLE REFINANCING PROGRAM
Bad Government Policies
It doesn’t take a rocket scientist to figure out that when you combine an over-appraised home with a predatory loan, you’re in trouble if this combination fits into your scheme of things. This paper appears to endeavor to ferret out that the HARP (Home Affordable Refinance Program) was just another “joke” plied upon unsuspecting and desperate Americans eager to participate to reduce part of the foregoing equation, based largely on competitive “frictions” and other empirical data of no relevant use to borrowers.
Again, it appears the United States government is “writing checks its body can’t cash”.
This however has fueled statistics in other areas, as claimed in this report:
“Regions more exposed to the program saw a relative increase in non-durable and durable consumer spending, a decline in foreclosure rates, and a faster recovery in house prices.”
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