684 Fed.Appx. 235 (3rd Cir. 2017), 16-2221, In re Lau

Docket Nº:16-2221
Citation:684 Fed.Appx. 235
Opinion Judge:PER CURIAM
Party Name:In re: JOSEPH H. LAU AND RAQUEL R. LAU, Debtors v. BANK OF AMERICA, N.A.; MERSCORP HOLDINGS, INC.; FANNIE MAE JOSEPH H. LAU AND RAQUEL R. LAU, Appellants
Attorney:JOSEPH H. LAU, Plaintiff - Appellant, Pro se, Stewartsville, NJ. RAQUEL R. LAU, Plaintiff - Appellant, Pro se, Stewartsville, NJ. For BANK OF AMERICA NA, MERSCORP HOLDINGS INC, FANNIE MAE, Defendants - Appellees: Kerry A. Duffy, Esq., Philip S. Rosen, Esq., Zeichner Ellman & Krause, Roseland, NJ;...
Judge Panel:Before: RESTREPO, SCIRICA and FISHER, Circuit Judges.
Case Date:March 27, 2017
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

Page 235

684 Fed.Appx. 235 (3rd Cir. 2017)

In re: JOSEPH H. LAU AND RAQUEL R. LAU, Debtors

JOSEPH H. LAU AND RAQUEL R. LAU, Appellants

v.

BANK OF AMERICA, N.A.; MERSCORP HOLDINGS, INC.; FANNIE MAE

No. 16-2221

United States Court of Appeals, Third Circuit

March 27, 2017

Submitted Pursuant to Third Circuit LAR 34.1(a) March 21, 2017

NOT PRECEDENTIAL

Editorial Note:

This opinion is not regarded as Precedents which bind the court under Third Circuit Internal Operating Procedure Rule 5.7. (See Federal Rule of Appellate Procedure Rule 32.1)

On Appeal from the United States District Court for the District of New Jersey. (D.N.J. No. 3-15-cv-06413). District Judge: Honorable Peter G. Sheridan.

JOSEPH H. LAU, Plaintiff - Appellant, Pro se, Stewartsville, NJ.

RAQUEL R. LAU, Plaintiff - Appellant, Pro se, Stewartsville, NJ.

For BANK OF AMERICA NA, MERSCORP HOLDINGS INC, FANNIE MAE, Defendants - Appellees: Kerry A. Duffy, Esq., Philip S. Rosen, Esq., Zeichner Ellman & Krause, Roseland, NJ; William M. E. Powers, III, Esq., Powers Kirn, Moorestown, NJ.

Before: RESTREPO, SCIRICA and FISHER, Circuit Judges.

Page 236

OPINION[*]

PER CURIAM

Joseph and Raquel Lau appeal from two orders of the United States District Court for the District of New Jersey, affirming on appeal an order issued by the United States Bankruptcy Court for the District of New Jersey. Finding no error, we will affirm.

I.

The facts are well-known to the parties, so we will only recount those necessary to our decision. On July 31, 2006, Joseph Lau executed a note in favor of Countrywide Bank, N.A. (the " Note" ) to purchase a home. Along with the Note, Joseph and Raquel Lau (the " Laus" ) executed a mortgage to secure the amounts due (the " Mortgage" ). The Mortgage named Mortgage Electronic Registration Services, Inc. (" MERS" ) as mortgagee and nominee for Countrywide Bank, N.A. and its successors and assigns. Countrywide Bank, N.A. indorsed the Note to Countrywide Home Loans, Inc., who indorsed the Note in blank. On December 3, 2012, MERS assigned the Mortgage to Bank of America, N.A. (" BOA" ), successor by merger to BAC Home Loan Servicing, L.P. (" BAC" ) f/k/a Countrywide Home Loans Servicing, LP. According to public records adduced in the bankruptcy court adversary proceeding, BOA is the current holder, assignee, and servicer of the loan documents, while Federal National Mortgage Association (" Fannie Mae" ) is the current owner (or " investor" ) of the loan documents.1

On October 6, 2009, the Laus filed a Chapter 13 bankruptcy. On December 30, 2009, BAC filed a proof of claim (" POC" ) in the Laus' bankruptcy case. The Bankruptcy Court confirmed the Laus' plan (the " Plan" ) on June 24, 2010, they made their payments of $71,926.57, in full, in accordance with the Plan, and they received their discharges. Shortly after making their final Plan payments, the Laus instituted an adversary proceeding against (1) BOA and its subsidiaries including BAC Home Servicing, L.P., Bank of America Home Loans, f/k/a Countrywide Home Loans, d/b/a under trade name America's Wholesale Lender, etc.; (2) Merscorp Holdings, Inc. (" MHI" ) and its subsidiary MERS; and (3) FannieMae. The underlying basis of the adversary proceeding was several categories of documents filed or sent to the Laus during the bankruptcy.2

The Appellees filed a first Motion to Dismiss the Adversary Proceeding on November 24, 2014. The Bankruptcy Court granted it in part and denied it in part. The Order, entered on January 5, 2015, stated that the causes of action for slander of title, perjury, and automatic stay violations were dismissed with prejudice. The Laus' slander of title claims had alleged an incurable chain of broken title, an irreparable bifurcation of the Laus' instruments, violation of the recording statutes, violation of the statute of frauds, and also the claim that clear title may not derive from fraud. Additionally, the January 5, 2015

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Order dismissed with prejudice the claims of fraud based upon 18 U.S.C. § § 152, 157, 371, 513, 514, 1343 and 31 U.S.C. § 3729, because those sections do not provide for a private right of action, and, further, dismissed all claims against MHI. Critically, the Laus never appealed the January 5, 2015 Order to the District Court. In the process of arguing the first motion to dismiss, the Laus admitted to borrowing the money at issue, promising to pay it back, and falling behind on monthly mortgage payments. However, the Bankruptcy Court gave the Laus an opportunity to amend their complaint to more precisely plead their causes of action for fraud.

Thereafter, the Laus filed an Amended Complaint containing twenty-five causes of action. Ten are styled as " Fraud on the Plaintiffs, Fraud on the Federal Bankruptcy Court/Trustee" for various filings throughout the course of the bankruptcy and written and oral arguments related to the first motion to dismiss. Two causes of action are " Fraud on the Plaintiffs" for the pre-foreclosure letter and the Notice of Intent to Foreclose.3 The gravamen of the Amended Complaint was that the defendants had fraudulently misrepresented their status in bankruptcy and conspired to hide a securitization of the Laus' instruments by multiple parties in interest who had engaged in slander of title, and that none of the Appellees is a real party in interest to the Laus' instruments. The Laus sought, among other things, to be given their home free and clear of any instrument and be awarded punitive damages.

The Appellees filed a second motion to dismiss, which was granted in full by the Bankruptcy Court on August 10, 2015. The Bankruptcy Court found that the Laus had failed to meet the requirements of Federal Rules of Civil Procedure 8(a), 9(b), and 12(b)(6). The Laus appealed to the District Court, which held argument before affirming the Bankruptcy Court in full on February 19, 2016. The Laus filed a motion for rehearing, which the District Court denied on April 5, 2016. This appeal followed.

II.

The Bankruptcy Court had jurisdiction under 28 U.S.C. § § 157 and 1334. The District Court had jurisdiction over the appeal of the Bankruptcy Court's decision under 28 U.S.C. § 158(a). We have jurisdiction under 28 U.S.C. § 1291. Our standard of review is clear: " We review the bankruptcy court's findings of fact under a clearly erroneous standard, and its conclusions of law under a plenary standard. Because the district court sits as an appellate court in bankruptcy cases, our review of its decision is plenary." Cinicola v. Scharffenberger, 248 F.3d 110, 115 n.1 (3d Cir. 2001) (citations omitted). In order to survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), " a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).

III.

On appeal, the Laus challenge the District Court's affirmance of the Bankruptcy Court's dismissal of their fraud causes of action. The elements of intentional fraud in New Jersey are, " 1) a material misrepresentation of presently existing or

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past fact; 2) knowledge or...

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