Bennett v. Bank of Am. Nat'l Assoc. (In re Bennett)

• Decision Date: 12 May 2015
• Docket Number: Bankruptcy No. 14–13143 ELF,Adversary No. 14–666 ELF
• Citation: 531 B.R. 68
• Parties: In re: Franklin Albert Bennett, III, Debtor. Franklin Albert Bennett, III, Plaintiff, v. Bank of America National Assoc., Bank of New York Mellon, Defendants.
• Court: U.S. Bankruptcy Court — Eastern District of Pennsylvania

531 B.R. 68

In re: Franklin Albert Bennett, III, Debtor.Franklin Albert Bennett, III, Plaintiff

v.Bank of America National Assoc., Bank of New York Mellon, Defendants.

Bankruptcy No. 14–13143 ELF

Adversary No. 14–666 ELF

United States Bankruptcy Court, E.D. Pennsylvania.

Signed May 12, 2015

Franklin A. Bennett, III, Bennett & Associates, LLC, Philadelphia, PA, for Debtor/Plaintiff.

Edward J. Hayes, Fox, Rothschild, O'Brien & Frankel, Ann E. Swartz, McCabe, Wesberg & Conway, P.C., Robert E. Warring, Reed Smith LLP, Philadelphia, PA, for Defendants.

MEMORANDUM

ERIC L. FRANK, CHIEF U.S. BANKRUPTCY JUDGE

I. INTRODUCTION

Debtor Franklin Bennett (“the Debtor”) filed a voluntary chapter 7 bankruptcy petition on April 21, 2014. Upon the Debtor's request, the case was converted to chapter 13 on May 2, 2014. (Bky No. 14–13143, Doc. # 23).

On October 22, 2014, Bank of America, N.A. (“Bank of America”) filed a proof of claim asserting a claim of $404,625.07 secured by the Debtor's interest in the real property located at 4712 Castor Avenue, Philadelphia, PA (“the Property”). On November 26, 2014, the Debtor filed an objection to Bank of America's proof of claim (“the Objection”). (Id., Doc. # 77). In the Objection, the Debtor disputed the amount of the claim. Then, on November 30, 2014, the Debtor filed this adversary proceeding against Bank of America and The Bank of New York Mellon (“BNYM”). In his multi-count Complaint, the Debtor attacked the validity of the mortgage against the Property held by each Defendant and requested a determination that the mortgages are void. By order dated January 14, 2015, I consolidated for all purposes the contested matter arising from the Objection and the adversary proceeding. (Adv. No. 14–666, Doc. # 7).

On December 29, 2014, Bank of America filed a Motion to Dismiss the Complaint (“the Motion”) (Doc. # 3) under Fed.R.Civ.P. 12(b)(6) (incorporated by Fed. R. Bankr.P. 7012 ). In the Motion, Bank of America asserts that the Complaint should be dismissed for lack of standing and legal insufficiency. Bank of America also asserts that the statute of limitations has expired on several claims. See generally Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir.2014) (statute of limitations defense may be raised in Rule 12(b)(6) motion if the facts alleged in the complaint show that the action is untimely).

On February 17, 2015, the Debtor filed his response to the Motion. (Doc. # 15).¹

As explained more fully below: (1) the Motion will be granted in part and denied in part; and (2) the dismissed counts will be dismissed without leave to amend.

II. LEGAL STANDARD

A motion under Fed.R.Civ.P. 12(b)(6) tests the legal sufficiency of the factual allegations of a complaint, see Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir.1993), and determines “whether the plaintiff is entitled to offer evidence to support the claims,” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 563 n. 8, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

A defendant is entitled to dismissal of a complaint only if the plaintiff has not pled “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 547, 127 S.Ct. 1955. A claim is facially plausible where the facts set forth in the complaint allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

In evaluating the plausibility of the plaintiff's claim, the court conducts a context-specific evaluation of the complaint, drawing from its judicial experience and common sense. See, e.g., Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir.2009) ; In re Universal Marketing, Inc., 460 B.R. 828, 834 (Bankr.E.D.Pa.2011) (citing authorities); In re Olick, 2011 WL 2565665, at *1–2 (Bankr.E.D.Pa. June 28, 2011). In doing so, the court is required to accept as true all allegations in the complaint and all reasonable inferences that can be drawn therefrom, viewing them in the light most favorable to the plaintiff. See, e.g., Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984) ; Taliaferro v. Darby Township Zoning Board, 458 F.3d 181, 188 (3d Cir.2006). But, the court is not “bound to accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ).

The Third Circuit Court of Appeals has condensed these principles into a three (3) part test:

• First, the court must take note of the elements a plaintiff must plead to state a claim.

• Second, the court should identify allegations that, because they are no more than conclusions, are not entitled to the assumption of truth.

• Third, where there are well-pled factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.

Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir.2010) (quotations and citations omitted).

Finally, in assessing a Rule 12(b)(6) motion, the court may “consider the allegations in the complaint, exhibits attached to the complaint and matters of public record ... [as well as,] ‘undisputedly authentic documents' where the plaintiff's claims are based on the documents and the defendant has attached a copy of the document to the motion to dismiss.” Unite Nat'l Ret. Fund v. Rosa Sportswear, Inc., 2007 WL 2713051, at *4 (M.D.Pa. Sept. 14, 2007) (citing Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.1993) ); see also In re Angulo, 2010 WL 1727999, at *12 n. 1 (Bankr.E.D.Pa. Apr. 23, 2010).

II. THE COMPLAINT

A.

The Complaint set out eight (8) claims as follows:

• Count I—Quiet Title

• Count II—Slander of Title

• Count III—Unjust Enrichment

• Count IV—Civil Conspiracy

• Count V—Aiding and Abetting

• Count VI—Fraud

• Count VII, RICO, 18 U.S.C. §§ 1961 –1968 ; and

• Count VIII—Valuation of Property.²

The Debtor has withdrawn Counts V and VII. (See Debtor's Am. Response at 4).

B.

In support of his claims, the Debtor makes the following factual assertions.

Dolores M. Snyder owned the real property at 4712 Caster Avenue, Philadelphia, Pennsylvania (“the Property”). (Complaint ¶¶ 5–8). Mrs. Snyder died intestate on August 16, 2004. (Compl.¶¶ 9–10). The Register of Wills for Philadelphia County granted Ms. Snyder's son, Richard M. Snyder (“Snyder”), Letters of Administration on August 30, 2004 with respect to the decedent's estate (“the Estate”). (Compl. ¶¶ 11–13; Exhibit B).

Thereafter, Snyder entered into four (4) transactions that affected title to the Property.

The first transaction was a deed transfer that occurred on October 10, 2005 (“the 1st Deed Transfer”). Snyder, acting as administrator of the Estate, deeded the property from his mother's Estate to himself, individually, for $1.00. (Compl. ¶ 15; Ex. C). In connection with the 1st Deed Transfer, Snyder filed a Philadelphia Real Estate Transfer Tax Certification. In the Tax Certification, he claimed an exemption from the real estate transfer tax based upon “Will or intestate succession,” and as “Administrator of Estate to himself.” (Compl.Ex. C). Snyder did not seek court approval of the 1st Deed Transfer. (Compl.¶ 16). See generally 20 Pa.C.S. § 3356 (requiring court approval for purchases by personal representative).

In the second transaction, Snyder encumbered the Property by executing a promissory note and mortgage in favor of America's Wholesale Lender (“the 1st Mortgage”) on October 10, 2005. (Compl.¶ 25, Ex. P). The 1st Mortgage was recorded December 1, 2005. (Id. Ex. Q). The Debtor alleges that through a series of assignments, the 1st Mortgage was assigned to Defendant Bank of America. (Id. ¶¶ 38–41). The various assignments were filed with the Philadelphia Recorder of Deeds on May 31, 2007, April 14, 2010, April 23, 2012 and July 22, 2013, with the last assignment purporting to correct the “assignor and assignee name[s]” on the April 14, 2010 assignment. (Compl. ¶¶ 38–41; Exs. L–O).³

Third, Snyder also took out a second mortgage against the Property (“the 2nd Mortgage”) on May 22, 2006 in favor of Countrywide Bank, N.A. (Id. ¶ 27). Countrywide subsequently assigned all of its rights under the 2nd Mortgage to Defendant BNYM. (Id. ¶ 28).

The final transaction affecting title to the Property occurred on July 23, 2011 (“the 2nd Deed Transfer”). Snyder, in his capacity as administrator of the Estate (and not in his individual capacity, despite the 1st Transfer), executed a deed transferring the Property to the Debtor.⁴ (Ex. K).⁵ The Debtor claims he made significant improvements to the Property with the knowledge of the Defendants. (Id. ¶¶ 53–55).

C.

The Complaint also is based, in part, on certain actions that Bank of America took in enforcing its rights as mortgagee.

Bank of America filed a foreclosure action against the Property in the Pennsylvania Court of Common Pleas, Philadelphia County (“the C.P. Court”). (Id. ¶ 56). Bank of America obtained a default judgment and the Property was sold at a sheriff's sale on July 1, 2008. (Id. ¶¶ 58–59). Fannie Mae was the purchaser at the sale. (Id. ¶ 63). However, on November 23, 2009, Bank of America sought to “undo” the sheriff's sale by filing a motion to set aside the sale and strike the sheriff's deed on the ground that it had reached an agreement with Snyder to resolve the delinquency and cure the default. (Id. ¶ 60, Ex. G).⁶ The C.P. Court granted the motion to set aside the sheriff's sale by order dated December 17, 2009. (Id. ¶ 62, Ex. H).

D.

The Debtor does not claim that he was a party to any of the Snyder transactions other than the 2nd Deed Transfer. Nonetheless, the Debtor bases some of his claims on injuries he alleges that Snyder suffered during the course of the mortgage transactions and the subsequent assignments. The Debtor asserts that the mortgage lenders charged Snyder exorbitant fees and engaged in fraudulent activity in connection with the mortgage loans. (Id. ¶¶ 30–31, 33)....