Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 1 of 21 PageID #: 1230 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ----------------------------------------------------------X GABRIEL CICCONE, an individual, FILED CLERK 9:16 am, Jan 09, 2017 U.S. DISTRICT COURT EASTERN DISTRICT OF NEW YORK LONG ISLAND OFFICE -against- Plaintiff, OPINION AND ORDER 15-cv-6809 (SJF)(SIL) FLAGSTAR BANK, FSB, WESTVUE NPL TRUST AND WESTVUE NPL TRUST II; BANK OF NEW YORK AS TRUSTEE FOR SECURITIZED TRUST FLAGSTAR HOME EQUITY LOAN TRUST, SERIES 2007-1X; FLAGSTAR BANK FSB; MORTGAGE ELECTRONIC REGISTRATION SYSTEM, AKA MERS AND DOES 1 THROUGH 100, INCLUSIVE, FCI LENDER SERVICES INC., Defendants. ----------------------------------------------------------X FEUERSTEIN, District Judge: On November 30, 2015 pro se plaintiff Gabriel Ciccone ( Plaintiff ) commenced this action against defendants Flagstar Bank, FSB ( Flagstar ), Westvue NPL Trust ( Westvue I ) and Westvue NPL Trust II ( Westvue II ), The Bank of New York Mellon Trust Company, N.A. ( BNY ), 1 Mortgage Electronic Registration System, a/k/a MERS ( MERS ), and FCI Lender Services, Inc. ( FCI ) (Flagstar, Westvue I, Westvue II, BNY, MERS, and FCI collectively, Defendants ) by filing a complaint that asserts federal statutory and state common law causes of action relating to the origination, assignment, securitization, and present interests in a mortgage loan that Plaintiff obtained in September 2006 to purchase real property located in Huntington, 1 Formerly known as The Bank of New York Trust Company, N.A., as Trustee for Flagstar Bank, FSB Asset Backed Pass-Through Certificates, Series 2007-1. Sued herein as Bank of New York as trustee for Securitized Trust Flagstar Home Equity Loan Trust, Series 2007-1X.
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 2 of 21 PageID #: 1231 New York. Defendants have filed separate motions to dismiss Plaintiff s complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. 2 Defendants motions are granted to the extent set forth herein, and Plaintiff s complaint is dismissed with prejudice. I. BACKGROUND 3 Plaintiff owns and resides at real property located at 63 Youngs Hill Road, Huntington, New York (the Property ). (Compl. 8, 29). On September 28, 2006, Plaintiff obtained a loan in the amount of $588,000 from Flagstar, which he promised to repay by executing a note, dated September 28, 2006, in favor of Flagstar in the same amount (the Note ), and which was secured by a mortgage on the Property (the Mortgage ). (Id. 2, 29). 4 The Mortgage lists Plaintiff as the borrower, Flagstar as the lender, and MERS as the mortgagee of record for purposes of recording this mortgage as a nominee for Flagstar and its successors and assigns. (Mortg. at 1 B-D; Compl. 33). The Mortgage provides that Plaintiff understand[s] and agree[s] that MERS (as nominee for [Flagstar] and [Flagstar s] successors and assigns) has the right to exercise any and all of [Flagstar s] rights, including, but not limited to, the right to 2 BNY moves to dismiss for Plaintiff s lack of standing to assert certain claims pursuant to Rule 12(b)(1) and for failure to state viable claims pursuant to Rule 12(b)(6). (See generally Memorandum in Support of BNY s Motion to Dismiss (Dkt. 54-3)). BNY also argues that, in the event the Court dismisses Plaintiff s federal claims, it should decline to exercise supplemental jurisdiction over Plaintiff s state-law claims. (See id.). Westvue and FCI move to dismiss for failure to state viable claims pursuant to Rule 12(b)(6). (See generally Memorandum in Support of Westvue s and FCI s Motion to Dismiss (Dkt. 57-1)). Flagstar and MERS move to dismiss for Plaintiff s lack of standing to assert certain claims pursuant to Rule 12(b)(1) and for failure to state viable claims pursuant to Rule 12(b)(6). (See generally Memorandum in Support of Flagstar s and MERS Motion to Dismiss (Dkt. 60-7)). 3 The facts set forth herein are derived from Plaintiff s complaint, the allegations of which are accepted as true for present purposes, other relevant documents that are incorporated by reference or are otherwise integral to the allegations in the complaint, and matters of which the Court takes judicial notice. See, e.g., DiFolco v. MSNBC Cable LLC, 622 F.3d 104, 111 (2d Cir. 2010); Kramer v. Time Warner Inc., 937 F.2d 767, 774 (2d Cir. 1991). 4 Plaintiff attached a copy of the Mortgage to his complaint as Exhibit A. Though Plaintiff did not also attach a copy of the Note to his complaint, he referenced it throughout, and it is also referenced in the Mortgage. (See Compl. 3-7, 14, 16, 18, 19, 21-27, 29-36; Mortg. E). Flagstar and MERS attached a copy of the Note as Exhibit B to the Declaration of Jeffrey A. Dougherty, Esq., dated March 4, 2016 ( Dougherty Decl. ). Additionally, Plaintiff alleges that Westvue was a secured party under the Mortgage, but the Mortgage lists Flagstar as the sole lender / secured party. (See Compl. 29; Mortg., passim). 2
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 3 of 21 PageID #: 1232 foreclose and sell the Property and to take any action required of [Flagstar] including, but not limited to, releasing and canceling this Security Instrument [the Mortgage]. (Mortg. at 2). The Mortgage also provides that [t]he Note, or an interest in the Note, together with this Security Instrument, may be sold one or more times, that Plaintiff might not receive any prior notice of these sales, and that [t]here may be a change of the Loan Servicer as a result of the sale of the Note [or] unrelated to a sale of the Note (Id. at 8, 20). 5 Plaintiff alleges that, at some unspecified time, Flagstar sold, transferred and securitized [the Mortgage], with other loans and mortgages into the Series 2007-1X Trust, of which BNY was the trustee, which had a closing date of March 15, 2007, and which was governed by a contract known as a Pooling and Servicing Agreement ( PSA ). (Compl. 3, 20, 30, Ex. B at 7-8). Plaintiff alleges that the PSA requires that each Note or Mortgage/Deed of Trust had to be indorsed, assigned, or transferred, respectively, to the trust and executed by multiple intervening parties before it reached the Trust, and that the PSA requires a complete and unbroken chain of transfers/assignments to and from each intervening party. (Id. 35-36; see id. 32). Plaintiff does not allege that he is a party to or an intended beneficiary of the PSA, nor does he attach a copy of the PSA to his complaint or cite any specific provisions of the PSA, but he alleges that the debt or obligation evidence by the Note and the Mortgage was not properly assigned and/or transferred to Defendants operating the pooled mortgage funds or trusts in accordance with the PSA (Id. 34). On August 23, 2011, MERS, as Flagstar s nominee, assigned the Mortgage to Flagstar, which is reflected in an assignment of mortgage form recorded in the Suffolk County Clerk s 5 Loan Servicer is defined as [t]he entity that collects the Periodic Payments and performs other mortgage loan servicing obligations under the Note, this Security Instrument [the Mortgage], and Applicable Law (Mortg. at 8, 20). 3
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 4 of 21 PageID #: 1233 Office on October 21, 2011. (Dougherty Decl. Ex. D). According to a report generated by a company called Certified Forensic Loan Auditors that Plaintiff attached to his complaint, on August 5, 2015, Flagstar assigned the Note and Mortgage to Westvue I, and on August 11, 2015, Westvue I assigned the Note and Mortgage to Westvue II. (Compl. Ex. B at 7-13). In a borrower welcome letter dated July 29, 2015, FCI informed Plaintiff that it was servicing Plaintiff s loan on behalf of Westvue II and was authorized to collect payments from Plaintiff under the Note on Westvue II s behalf. (Id. Ex. C at 13). In correspondence from between August 31, 2015 and February 10, 2016, FCI notified Plaintiff that he had failed to make payments under the Note since before February 1, 2014 and that he must make a payment of between $68,591.85 and $90,192.41 to cure the default. (Plaintiff s Response to Motion to Dismiss, dated May 3, 2016 ( Pl. Opp. ), Ex. G). 6 Though FCI s correspondence warns of the possibility of foreclosure in the event of continuing default, Plaintiff does not allege any facts suggesting that any Defendant has commenced a foreclosure proceeding against him and none of the documents annexed to the complaint, Defendants moving papers, or Plaintiff s opposition papers suggest that any Defendant has yet commenced a foreclosure proceeding. On November 30, 2015, Plaintiff commenced this action by filing a form complaint that is available on Certified Forensic Loan Auditors website, and which at least one other plaintiff has previously filed in this Court. 7 Plaintiff s complaint asserts ten (10) causes of action that fall 6 In a letter dated August 31, 2015, FCI informed Plaintiff that he must make a payment of $90,192.41 by November 29, 2015 to cure the default. (Pl. Opp., Ex. G at 1-2). In a letter dated November 9, 2015, FCI s counsel informed Plaintiff that he must make a payment of $68,591.85 plus any additional monthly payments, late charges and fees which become due by December 9, 2015 to cure the default. (Id., Ex. G at 7-8). The reasons for the decrease in the cure amount between August 31, 2015 and November 9, 2015 are not clear, nor are they material for present purposes, as Plaintiff does not contest the fact that he has failed to make monthly payments as required under the terms of the Note for a substantial period of time or suggest that he has cured the default. 7 A template of Plaintiff s complaint is available for download at http://www.certifiedforensicloanauditors.com/pdfs/sample-complaint-package/complaint-petition.pdf. This Court was presented with a virtually identical complaint in Mohamed v. World Savings Bank, FSB et al., No. 15-cv-5934. 4
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 5 of 21 PageID #: 1234 into three (3) general categories. The first category consists of claims challenging the propriety of mortgage loan securitization and arguing that, due to discrepancies in the securitization process, none of the Defendants have any right to collect amounts due under the Note or to foreclose on the Property under the Mortgage. These claims are: (i) a lack of standing to foreclose claim arguing, inter alia, that none of the Defendants have the right to foreclose on the Property because Defendants did not properly comply with the terms of Defendants own securitization requirements (contained in the PSA) and falsely or fraudulently prepared documents required to foreclose (Compl. 56-74 First Cause of Action); (ii) a quiet title claim arguing that none of the parties to neither the securitization transaction, nor any of the Defendants, hold a perfected and secured claim in the Property; and that all Defendants are estopped and precluded from asserting an unsecured claim against Plaintiff s estate (Id. 111-18 Sixth Cause of Action); and (iii) a declaratory judgment claim seeking a ruling that, inter alia, [P]laintiff is entitled to the exclusive possession of the [P]roperty [and] owns [the Property] in fee simple and Defendants have no estate, right, title, lien, or interest in or to the [Property] (Id. 119-30 Seventh Cause of Action). The second category consists of common law tort claims arguing that Plaintiff has been emotionally and/or financially damaged as a result of Defendants improper assertion of an interest in the Note, Mortgage, and/or Property. These claims are: (i) an intentional infliction of emotional distress claim in which Plaintiff alleges that he has suffered severe emotional distress, including but not limited to lack of sleep, anxiety, and depression as a result of Defendants fraudulently attempting to foreclose or claiming the right to foreclose on a property in which they have no right, title, or interest (Id. 92-102 Fourth Cause of Action); and (ii) a (SJF)(AKT), a case in which the plaintiff sought, among other things, to undo a state court foreclosure judgment by asserting the exact same claims, using the exact same language, that Plaintiff asserts here. 5
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 6 of 21 PageID #: 1235 slander of title claim in which Plaintiff alleges that Defendants disparaged Plaintiff s exclusive valid title by preparing, posting, publishing, and recording documents including, but not limited to, the Notice of Default, Notice of Trustee s Sale, Trustee s Deed, and documents evidencing the commencement of judicial foreclosure by a party who does not possess that right (Id. 103-10 Fifth Cause of Action). The third category consists of claims attacking the underlying mortgage loan transaction and/or subsequent securitization process as fraudulent and in violation of federal consumer protection laws. These claims are: (i) a fraud in the concealment claim in which Plaintiff alleges that Defendants concealed the fact that the Loans were securitized as well as the terms of the Securitization Agreements, which induced Plaintiff to enter into the loans (Id. 75-83 Second Cause of Action); (ii) a fraud in the inducement claim in which Plaintiff alleges that Defendants[ ] intentionally misrepresented to Plaintiff [that they] were entitled to exercise the power of sale provision contained in the Mortgage/Deed of Trust and that they are holder and owner of the Note and the beneficiary of the Mortgage/Deed of Trust, which induced Plaintiff to enter into the loans (Id. 84-91 Third Cause of Action); (iii) a claim that Defendants violated the Truth in Lending Act of 1968 ( TILA ), 15 U.S.C. 1601 et seq., and the Home Ownership and Equity Protection Act of 1994 ( HOEPA ), 15 U.S.C. 1639, by failing to provide Plaintiff with accurate material disclosures required under TILA/HOEPA and not taking into account the intent of the State Legislature in approving this statute which was to fully inform buyers of the pros and cons of adjustable rate mortgages in a language that they can understand and comprehend; and advise them to compare similar loan products with other lenders (Id. 131-40 Eighth Cause of Action); (iv) a claim that Defendants violated the Real Estate Settlement Procedures Act of 1974 ( RESPA ), 12 U.S.C. 2601 et seq., because the 6
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 7 of 21 PageID #: 1236 payments between the Defendants were misleading and designed to create a windfall (Id. 141-47 Ninth Cause of Action); and (v) a claim seeking rescission of the loan and all accompanying loan documents (Id. 148-52 Tenth Cause of Action). II. DISCUSSION A. Legal Standards 1. Rule 12(b)(1) Standing [A] district court may properly dismiss a case for lack of subject matter jurisdiction under Rule 12(b)(1) if it lacks the statutory or constitutional power to adjudicate it. Shabaj v. Holder, 718 F.3d 48, 50 (2d Cir. 2013) (internal quotations omitted). Article III of the Constitution limits the jurisdiction of federal courts to Cases and Controversies. Lujan v. Defenders of Wildlife, 504 U.S. 555, 559 (1992). In order to establish constitutional standing, a plaintiff must show three (3) things: (1) he has suffered a concrete and particularized injury that is actual or imminent, not conjectural or hypothetical ; (2) there is a causal connection between the injury and the defendant s conduct; and (3) it is likely that a favorable decision by the court will redress the injury. Id. at 560-61. The plaintiff bears the burden of establishing standing. Rajamin v. Deutsche Bank Nat. Trust Co., 757 F.3d 79, 84 (2d Cir. 2014) (citing Lujan, 504 U.S. at 560-61). Where a defendant moves to dismiss for lack of subject matter jurisdiction and for failure to state a claim, courts should generally address the issue of subject matter jurisdiction first. See, e.g., Saint-Guillen v. U.S., 657 F. Supp. 2d 376, 380 (E.D.N.Y. 2009) (internal citations omitted). 2. Rule 12(b)(6) In considering a motion to dismiss pursuant to Rule 12(b)(6), district courts accept[ ] all factual allegations in the complaint as true, and draw[ ] all reasonable inferences in the plaintiff s 7
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 8 of 21 PageID #: 1237 favor. Shomo v. City of New York, 579 F.3d 176, 183 (2d Cir. 2009) (internal quotations omitted). To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). [A] complaint is not required to have detailed factual allegations, but it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation. DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir. 2010) (quoting Iqbal, 556 U.S. at 678). While a pro se complaint is to be read liberally, and generally should not [be] dismiss[ed] without granting leave to amend at least once when a liberal reading of the complaint gives any indication that a valid claim might be stated, Shomo, 579 F.3d at 183 (internal quotations omitted), a court may dismiss a pro se plaintiff s first complaint with prejudice where it is frivolous and leaves no doubt that plaintiff cannot allege facts sufficient to state a claim. Coleman v. Suffolk County, 154 Fed. App x 250, 251 (2d Cir. 2005). B. Lack of Standing to Assert Claims Challenging Securitization Process As in Barnett v. Countrywide Bank, FSB, 60 F. Supp. 3d 379 (E.D.N.Y. 2014), this Court construes Plaintiff s lack of standing to foreclose, quiet title, and declaratory judgment claims to collectively constitute a general challenge to the mortgage securitization process, and holds that Plaintiff lacks standing to assert these claims. 60 F. Supp. 3d at 385-87. In Rajamin, mortgagorplaintiffs sought a declaratory judgment that the defendant-trusts to which their mortgage loans had been assigned had no right to collect loan payments or commence foreclosure proceedings based upon their failure to comply with the terms of assignment / securitization agreements to which the plaintiffs were not parties. 757 F.3d at 85-86. The Second Circuit held that these plaintiffs lacked standing to challenge the securitization process. See id. The mortgagorplaintiffs argued that they were suffering damages with each and every payment to 8
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 9 of 21 PageID #: 1238 Defendants on the theory that defendants were not proper parties to receive and collect such payments. Id. at 85 (quoting plaintiff s complaint). The Second Circuit held that this was not a concrete and particularized injury, as the securitization of the plaintiffs mortgage loans did not oblige them to do anything that they were not already obliged to do pursuant to the terms of their underlying loan documents (e.g., make specified monthly principal and interest payments). See id. [P]laintiffs acknowledge that they took out the loans and were obligated to repay them, with interest; and they have not pleaded or otherwise suggested that they ever paid defendants more than the amounts due, or that they ever received a bill or demand from any entity other than defendants. Thus, there is no allegation that plaintiffs have paid more than they owed or have been asked to do so. Id. The Second Circuit also held that the plaintiffs allegation that Defendants have commenced or authorized the commencement of foreclosure proceedings where payments have not been made or received was insufficient to establish constitutional standing. Id. (quoting plaintiffs complaint). Id. Plaintiffs have acknowledged that they were declared in default on their mortgages, and that foreclosure proceedings were instituted by Deutsche Bank, claiming to own those mortgages Just as there was no allegation in the Complaint that any entity other than defendants had demanded payments, there was no allegation of any threat or institution of foreclosure proceedings against any plaintiff by any entity other than defendants. Similar to the plaintiffs in Rajamin, Plaintiff admits that he borrowed $588,000 from Flagstar, which he is obligated to repay pursuant to the terms of the Note, which is secured by the Mortgage on the Property. (See Compl. 29, 38). Plaintiff does not dispute that he is in default on this loan. While Plaintiff s complaint itself is far from clear, it is clear from 9
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 10 of 21 PageID #: 1239 documents attached to the complaint and to Plaintiff s opposition brief that the Note was most recently assigned to Westvue II, which, through FCI, its loan servicer, is attempting to collect the past-due payments from Plaintiff. Plaintiff does not allege that multiple entities are simultaneously attempting to collect payments from him under the Note or threatening foreclosure under the Mortgage. Plaintiff does not allege that the securitization and/or assignment of the Note or Mortgage has created any new encumbrances on the Property or in any way altered the terms of repayment that he agreed to when he signed the Note and Mortgage in September 2006. Put simply, Plaintiff has failed to allege that the post-origination assignment / securitization of the Mortgage and/or Note has adversely affected him in any way at all, or that, absent such assignment / securitization, he would be in a better position than he currently is. Accordingly, Plaintiff s lack of standing to foreclose, quiet title, and declaratory judgment claims fail due to his lack of constitutional standing to assert those claims. Plaintiff also challenges the securitization process by alleging that the assignment(s) of the Note and/or Mortgage failed to comply with unspecified provisions of the PSA and/or New York State law governing trusts, and is / are therefore void. (See, e.g., Compl. 32, 34, 41). As in Rajamin and Barnett, Plaintiff lacks prudential standing to mount a challenge to the securitization of the Note and/or Mortgage on these bases. The prudential standing rule normally bars litigants from asserting the rights or legal interests of others in order to obtain relief from injury to themselves. Rajamin, 757 F.3d at 86 (quoting Warth v. Seldin, 422 U.S. 490, 509 (1975)). The plaintiff generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties. Id. (quoting Warth, 422 U.S. at 499). 10
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 11 of 21 PageID #: 1240 Plaintiff does not allege that he was a party to or third-party beneficiary of the PSA or any other agreement governing the assignment / securitization of the Mortgage and/or Note. Accordingly, he lacks standing to challenge the assignment / securitization process by asserting that it did not comply with unspecified terms of the PSA. See id. at 87 ( The notes and deeds of trust to which plaintiffs were parties did not confer upon plaintiffs a right against nonparties to those agreements to enforce obligations under separate agreements to which plaintiffs were not parties. ); Barnett, 60 F. Supp. 3d at 387 ( The Plaintiffs lack prudential standing here because they are not parties to, nor third-party beneficiaries of, the Assignment or the PSA. ) (internal quotations and alterations omitted); Obal v. Deutsche Bank Nat. Trust Co., No. 14 Civ. 2463, 2015 WL 631404, at *3 (S.D.N.Y. Feb. 13, 2015). In alleging that the assignment / securitization of the Mortgage and/or Note was in contravention of unspecified provisions of New York State trust law, Plaintiff is presumably relying upon New York Estates, Powers and Trusts Law ( EPTL ) 7-2.4, which provides: If the trust is expressed in the instrument creating the estate of the trustee, every sale, conveyance or other act of the trustee in contravention of the trust, except as authorized by law, is void. N.Y. EPTL 7-2.4 (McKinney). The EPTL provides no basis for Plaintiff to challenge the manner in which the Note and/or Mortgage were assigned to a trust because an action taken in contravention of the trust instrument the PSA in this instance, according to Plaintiff s complaint is voidable only at the instance of a trust beneficiary or a person acting in his behalf. Rajamin, 757 F.3d at 90. Plaintiff is the mortgagor-debtor in connection with the Mortgage and Note that were allegedly transferred into various trusts (Westvue II most recently) in connection a broader mortgage loan securitization process, and is not the beneficiary of the trusts; the beneficiaries are the investors, or certificateholders, who purchased interests in the 11
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 12 of 21 PageID #: 1241 stream of income expected to be generated through the various mortgage loans that were placed into the trusts. See id. ( Plaintiffs here are not beneficiaries of the securitization trusts; the beneficiaries are the certificateholders. Plaintiffs are not even incidental beneficiaries of the securitization trusts, for their interests are adverse to those of the certificateholders. Plaintiffs do not contend that they did not receive the proceeds of their loan transactions; and their role thereafter was simply to make payments of the principal and interest due. ). Accordingly, Plaintiff lacks both constitutional and prudential standing to challenge the assignment / securitization process, and his lack of standing to foreclose (first cause of action), quiet title (sixth cause of action), and declaratory judgment (seventh cause of action) claims are dismissed. C. Rule 12(b)(6) Arguments 1. Fraud Claims The statute of limitations for fraud claims in New York is the greater of six years from the date the cause of action accrued or two years from the time the plaintiff discovered the fraud, or could with reasonable diligence have discovered it. N.Y. C.P.L.R. 213(8). Both of Plaintiff s fraud claims relate to the alleged lack of disclosure of the Mortgage s and/or Note s terms at the time Plaintiff obtained the loan from Flagstar in September 2006. (See Compl. 76-80, 87). Plaintiff did not commence this action until November 2015 more than nine (9) years after he obtained the loan and his complaint contains no allegations regarding discovery or diligence. Accordingly, his fraud claims are untimely. Even if Plaintiff s fraud claims were timely, they are not viable. The elements of fraud under New York law are: (1) a misrepresentation or a material omission of fact which was false and known to be false by defendant, (2) made for the purpose of inducing the other party to rely upon it, (3) justifiable reliance of the other party on the misrepresentation or material omission, 12
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 13 of 21 PageID #: 1242 and (4) injury. Premium Mortg. Corp. v. Equifax, Inc., 583 F.3d 103, 108 (2d Cir. 2009) (internal quotations and alterations omitted). [S]uch a claim must be pleaded with particularity. Id. (citing Fed. R. Civ. P. 9(b)). In order to satisfy the Rule 9(b) particularity requirement, the complaint must (1) detail the statements (or omissions) that the plaintiff contends are fraudulent, (2) identify the speaker, (3) state where and when the statements (or omissions) were made, and (4) explain why the statements (or omissions) are fraudulent. Tamir v. Bank of New York Mellon, No. 12-cv-4780 (DLI)(JO), 2013 WL 4522926, at *5 (E.D.N.Y. Aug. 27, 2013) (quoting Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 187 (2d Cir. 2004)) (additional citations omitted). Both of Plaintiff s fraud claims are, in essence, premised on the notion that one or more Defendants failed to adequately inform Plaintiff of the possibility that the Mortgage and Note might be assigned and/or securitized when he obtained the loan from Flagstar in September 2006. (See id. 76-80, 87). 8 Plaintiff has failed to allege any misrepresentation concerning the potential assignment and/or securitization of the Note and Mortgage; in fact, the Mortgage specifically provides that [t]he Note, or an interest in the Note, together with this Security Instrument [the Mortgage], may be sold one or more times, and that Plaintiff might not receive any prior notice of these sales. Nor has he alleged that his injuries (i.e., defaulting on his loan, being threatened with foreclosure) were in any way caused by the assignment / securitization of the Mortgage and Note rather than his failure to make the periodic loan payments required by the terms of the Note, or that he would have avoided default if the Note and Mortgage were not 8 Plaintiff s fraud in the inducement claim also contains allegations that one or more Defendants have falsely represented that they have an interest in the Note and Mortgage, and/or a right to foreclose on the Property, when in fact they do not due to deficiencies in the assignment / securitization process. (See Compl. 85, 86, 88). Such allegations are nothing more than a general challenge to the assignment / securitization process. For the reasons set forth above, Plaintiff lacks both constitutional and prudential standing to mount such a challenge. 13
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 14 of 21 PageID #: 1243 assigned / securitized. Moreover, Plaintiff s complaint does not identify any specific statement attributable to any specific Defendant at any specific time, and therefore fails to meet Rule 9(b) s heightened pleading requirements. Accordingly, Plaintiff s fraud in the concealment (second cause of action) and fraud in the inducement (third cause of action) claims are dismissed. 2. Intentional Infliction of Emotional Distress Claim Under New York law, the tort of intentional infliction of emotional distress has four elements: (1) extreme and outrageous conduct; (2) intent to cause severe emotional distress; (3) a causal connection between the conduct and the injury; and (4) severe emotional distress. Restis v. Am. Coalition Against Nuclear Iran, Inc., 53 F. Supp. 3d 2014 (S.D.N.Y. 2014) (citing Bender v. City of New York, 78 F.3d 787, 790 (2d Cir. 1996)). New York courts have found liability for intentional infliction of emotional distress only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized society. Id. (quoting Stuto v. Fleishman, 164 F.3d 820, 827 (2d Cir. 1999)). Plaintiff s complaint, and the documents annexed to the complaint and included with his opposition papers, suggest, at most, that certain Defendants (most recently Westvue II and FCI) have sent Plaintiff correspondence seeking long overdue loan payments and have informed Plaintiff that continued failure to make payments could result in foreclosure. Such commonplace and predictable conduct by a noteholder-mortgagee seeking past-due payments falls far short of extreme and outrageous. See, e.g., Hourani v. Wells Fargo Bank, N.A., 158 F. Supp. 3d 142, 149 (E.D.N.Y. 2016) (intentional infliction of emotional distress claim failed where debtormortgagor did not allege, for example, physical threats, verbal abuse, harassment, intimidation, or public humiliation. ) (citing Stuto, 164 F.3d at 828). Nowhere does Plaintiff suggest that he 14
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 15 of 21 PageID #: 1244 did not default on his loan or that the Mortgage does not allow the Note-holder to foreclose on the Property in the event of default. Instead, as with many of his other claims, Plaintiff s intentional infliction of emotional distress claim is premised on the notion that, due to purported defects in the assignment / securitization process, none of the Defendants have the right to seek payments from him or to foreclose on the Property. (See, e.g., Compl. 96) ( Defendants conduct fraudulently attempting to foreclose or claiming the right to foreclose on a property in which they have no right, title, or interest is so outrageous and extreme that it exceeds all bounds which is usually tolerated in a civilized community. ). This is not a viable basis for an intentional infliction of emotional distress claim because it is anchored to a faulty attack on the mortgage securitization process. Barnett, 60 F. Supp. 3d at 392 (quoting Zbitnoff v. NationStar Mortgage LLC, No. C 13-05221 (WHA), 2014 WL 2119875, at *4 (N.D. Cal. May 21, 2014)). Accordingly, Plaintiff s intentional infliction of emotional distress claim (fourth cause of action) is dismissed. 3. Slander of Title Claim To state a claim for slander of title under New York law, a plaintiff must allege (1) a communication falsely casting doubt on the validity of complainant s title, (2) reasonably calculated to cause harm, and (3) resulting in special damages. Abraham v. Am. Home Mortg. Servicing, Inc., 947 F. Supp. 2d 222, 236 (E.D.N.Y. 2013) (internal quotations and citations omitted); see also Powaroo v. Countrywide Bank, No. 09-cv-2924 (ARR)(SMG), 2010 WL 1048822, at *6 (E.D.N.Y. Mar. 18, 2010) ( The heart of an action for slander of title is the false disparagement of the title of another s property, resulting in special damages. ). In order to state a viable slander of title claim, the complaint must allege facts with sufficient particularity so that the falsehood and intent to cause harm are clear. Powaroo, 2010 WL 1048822, at *6. 15
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 16 of 21 PageID #: 1245 Plaintiff s slander of title claim consists of allegations that Defendants, and each of them, disparaged Plaintiff s exclusive valid title by preparing, posting, publishing, and recording documents including, but not limited to, the Notice of Default, Notice of Trustee s Sale, Trustee s Deed, and documents evidencing the commencement of judicial foreclosure by a party who does not possess that right, and that Defendants knew or should have known that such documents were improper in that Defendants had no right, title, or interest in the Property. (Compl. 104-05). Plaintiff further alleges that Defendants knew the documents were false and created and published them with malicious intent to injure Plaintiff (Id. 109). As with Plaintiff s intentional infliction of emotional distress claim, the purported falsity of such documents rests exclusively on Plaintiff s meritless argument that none of the Defendants have the right to seek payments from him or to foreclose on the Property due to shortcomings in the assignment / securitization process. See Zbitnoff, 2014 WL 2119875, at *4 (dismissing slander of title claim, along with intentional infliction, lack of standing, and quiet title claims, because they depend[ed] on this faulty theory that plaintiff had standing to challenge the mortgage securitization process). Accordingly, Plaintiff s slander of title claim (fifth cause of action) is dismissed. 4. TILA and HOEPA Claims The purpose of TILA is to assure meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit 15 U.S.C. 160(a). HOEPA is a 1994 amendment to TILA intended to address abusive practices in refinances and closed-end home equity loans with high interest rates or high fees. 9 Plaintiff alleges that, at the time he entered the loan 9 See http://files.consumerfinance.gov/f/201305_compliance-guide_home-ownership-and-equity-protection-actrule.pdf 16
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 17 of 21 PageID #: 1246 transaction with Flagstar in September 2006, Defendants violated TILA/HOEPA by failing to provide Plaintiff with accurate material disclosures required under TILA/HOEPA and not taking into account the intent of the State Legislature in approving this statute which was to fully inform buyers of the pros and cons of adjustable rate mortgages in a language that they can understand and comprehend; and advise them to compare similar loan products with other lenders. (Compl. 133). Claims for damages under TILA / HOEPA may be brought within one year from the date of the occurrence of the violation... 15 U.S.C. 1640(e); see Tamir, 2013 WL 4522926, at *2; Barnett, 60 F. Supp. 3d at 392. The date of the occurrence of the violation is the date on which the borrower accepts the creditor s extension of credit. Barnett, 60 F. Supp. 3d at 392 (internal quotations and citations omitted). Plaintiff entered the underlying loan transaction with Flagstar in September 2006 and did not file this action until November 2015, more than nine (9) years later. Plaintiff alleges that the one (1) year statute of limitations should be tolled due to Defendants failure to effectively provide required disclosures and notices. (Compl. 134). Courts have routinely rejected such arguments on the commonsense ground that the alleged violation of TILA cannot serve as the sole basis for tolling the statute of limitations explicitly provided within the TILA statute. See, e.g., Deswal v. U.S. Nat. Ass n, No. 13-cv-03354 (RJD)(MDG), 2014 WL 1932589, at *2 (E.D.N.Y. May 14, 2014) ( In TILA and RESPA cases, courts have held uniformly that fraudulent conduct beyond the nondisclosure itself is necessary to equitably toll the running of the statute of limitations. ) (internal quotations and citations omitted) (emphasis in original); Grimes v. Fremont Gen. Corp., 785 F. Supp. 2d 269, 286 (S.D.N.Y. 2011) ( [I]f the very nondisclosure or misrepresentation that gave rise to the TILA violation also tolled the statute of limitations, the effect of the statute of limitations would be nullified. ) (internal quotations and 17
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 18 of 21 PageID #: 1247 citations omitted). Plaintiff s complaint, read liberally, does not suggest that any of the Defendants engaged in fraudulent conduct with respect to the underlying loan terms beyond nondisclosure, so tolling is inapplicable. Accordingly, Plaintiff s TILA and HOEPA claims (eighth cause of action) are dismissed as untimely. 5. RESPA Claim Plaintiff s form complaint alleges that Defendants violated RESPA because the payments between the Defendants were misleading and designed to create a windfall. (Compl. 146). Though Plaintiff fails to specify which provision of RESPA was allegedly violated, the Court treats Plaintiff s RESPA claim as alleging that one or more Defendants violated 12 U.S.C. 2607(a), which provides that [n]o person shall give [or] accept any fee [or] kickback pursuant to any agreement that business incident to or a part of a real estate settlement service shall be referred to any person, and/or 2607(b), which provides that [n]o person shall give [or] accept any portion of any charge made or received for the rendering of a real estate settlement service other than for services actually performed. 12 U.S.C. 2607(a), (b); see Das v. WMC Mortg. Corp., 831 F. Supp. 2d 1147, 1163 (N.D. Cal. 2011) (noting that 2607(a) and (b) provides private right of action for payment of a kickback and unearned fees for real estate settlement services ); see also Barnett, 60 F. Supp. 3d at 393 (treating identical allegation as claim under 2607). Plaintiff s complaint does not indicate which Defendant(s) Plaintiff believes violated 2607 s prohibition against kickbacks and unearned fees, or how or when they violated it. Plaintiff s 2607 claim therefore does not satisfy the basic pleading requirements of Rule 8 and Iqbal. Moreover, Plaintiff failed to address any of the Defendants arguments regarding 2607 in his opposition, so his 2607 claims are deemed abandoned. See, e.g, Plahutnik v. Daikin Am. 18
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 19 of 21 PageID #: 1248 Inc., 912 F. Supp. 2d 96, 104 (S.D.N.Y. 2012); Jain v. McGraw-Hill Companies, Inc., 827 F. Supp. 2d 272, 280 (S.D.N.Y. 2011). Though he does not suggest this anywhere in his complaint, Plaintiff argues for the first time in his opposition brief that Westvue NPL Trust never did or conducted an in depth investigation as required by RESPA 12 U.S.C. 2605(e). (Pl. Opp. at 10). 2605(e) requires, inter alia, that a servicer of a federally related mortgage loan respond to a borrower s qualified written request ( QWR ) 10 within thirty (30) days of receiving the QWR. See 12 U.S.C. 2605(e)(2). Though Plaintiff fails to explain this anywhere in his complaint or opposition brief, it appears from documents attached to his opposition brief that, on or about November 4, 2015, Plaintiff sent a letter to Westvue I and/or Westvue II and/or FCI requesting a plethora of documents relating to the Mortgage and Note, and the assignment / securitization thereof, and, on or about November 24, 2015, counsel for Westvue I and/or Westvue II and/or FCI responded with many, but not all, of the requested documents and an offer to contact them with any further questions. (See Pl. Opp., Ex. B, D). Pursuant to 2605(e)(2)(C), in response to a QWR requesting information and after conducting an investigation, the servicer must provide the borrower with a written explanation or clarification that includes information requested by the borrower or an explanation of why the information requested is unavailable or cannot be obtained by the servicer; and the name and telephone number of an individual who can provide assistance to the borrower. 12 U.S.C. 2605(e)(2)(C). Plaintiff s unadorned statement in his opposition brief that Westvue 10 A QWR is defined as a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that (i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and (ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower. 12 U.S.C. 2605(e)(1)(B). 19
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 20 of 21 PageID #: 1249 NPL Trust never did or conducted an in depth investigation... provides no basis to infer that Westvue I, Westvue II, FCI, or any of the other Defendants responded to a QWR in a manner that ran afoul of 2605(e). Moreover, [a] plaintiff bringing a 2605 claim must sufficiently allege one of two types of damages: (1) actual damages to the borrower as a result of the failure to comply with 2605; or (2) statutory damages in the case of a pattern or practice of noncompliance with the requirements of 2605. Gorbaty v. Wells Fargo Bank, N.A., Nos. 10- cv-3291 (NGG)(SMG), 10-cv-3354 (NGG)(SMG), 2012 WL 1372260, at *5 (E.D.N.Y. Apr. 18, 2012) (quoting 12 U.S.C. 2605(f)). Neither Plaintiff s complaint nor his opposition brief suggests that Plaintiff suffered any damages as a result of any Defendant s failure to conduct[ ] an in depth investigation or that any Defendant has engaged in a pattern or practice of noncompliance with 2605 s requirements. Accordingly, Plaintiff does not have a viable claim under either 2605 or 2607, and his RESPA claim (ninth cause of action) is dismissed in its entirety. 6. Rescission Plaintiff also seeks rescission of his loan under TILA, and for other various reasons, including fraudulent concealment, fraudulent inducement, failure to abide by the PSA, making illegal or fraudulent transfers of the note and Mortgage/Deed of Trust, and Public Policy Grounds. (Compl. 148-52). 1635(f) of TILA provides that [a]n obligor s right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first, notwithstanding the fact that the information and forms required under this section or any other disclosures required under this part have not been delivered to the obligor. 15 U.S.C. 1635(f); see also Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412 (1998) ( 1635(f) completely extinguishes the right of rescission at the end of the 3-20
Case 2:15-cv-06809-SJF-SIL Document 65 Filed 01/09/17 Page 21 of 21 PageID #: 1250 year period ). Plaintiff s loan closed September 2006 and he did not commence this action until November 2015, more than nine (9) years later. Thus, his TILA rescission claim is untimely. To the extent [Plaintiff s] claim for rescission rests on other causes of action in the complaint, [his] failure to state a claim as to any of these other claims is the death knell of [his] rescission claim. Barnett, Civil, 60 F. Supp. 3d at 394 (quoting Simmons v. Bank of America, N.A., No. PJM 13-0733, 2014 WL 509386, at *7 (D. Md. Feb. 6, 2014)). Accordingly, Plaintiff s claim for rescission (tenth cause of action) is dismissed. III. CONCLUSION Defendants motions to dismiss (Dkt. Nos. 54, 57, 60) are granted for the reasons and to the extent set forth herein. Plaintiff s complaint is dismissed with prejudice. The Clerk of the Court is directed to close this case and serve Plaintiff with a copy of this order. SO ORDERED. s/ Sandra J. Feuerstein Sandra J. Feuerstein United States District Judge Dated: January 9, 2017 Central Islip, New York 21