Boltz-Rubinstein v. Bac Home Loans Servicing/Bank of Am., N.A. (In re Boltz-Rubinstein), Bky. No. 10–16541 ELF
| Decision Date | 18 September 2017 |
| Docket Number | Adv. No. 16–362,Bky. No. 10–16541 ELF,Adv. No. 16–265 |
| Parties | IN RE: Susan M. BOLTZ–RUBINSTEIN, Debtor. Susan M. Boltz–Rubinstein, Plaintiff, v. BAC Home Loans Servicing/Bank of America, N.A. and National Residential Assets Corp., Defendants. Susan M. Boltz–Rubinstein, Plaintiff, v. Bank of America, N.A., United Guaranty Residential Insurance Company of North Carolina, AIG, Defendants. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
Eran Rubinstein, Law Offices of Eran Rubinstein, Furlong, PA, for Plaintiff.
Robert E. Warring, Daniel P. Wotherspoon, Reed Smith LLP, Philadelphia, PA, for Defendants.
In these adversary proceedings, Plaintiff Susan Boltz–Rubinstein ("the Debtor") seeks damages from the Defendants based upon their purported fraud, TILA and RESPA violations, and violations of certain sections of the Bankruptcy Code, including the automatic stay provision, 11 U.S.C. § 362(a). She also seeks the invalidation of the mortgage liens on her home.
All of the Defendants are alleged to be either the holder or the servicer of the Debtor's home mortgages. Bank of America, N.A. ("Bank of America:) is the successor by merger to BAC Home Loans Servicing. (Adv. No. 16–265, Complaint ¶ 6). United Guaranty Residential Insurance Company ("United Guaranty") is the mortgage subsidiary of AIG.
Presently before the court are the Defendants' motions to dismiss the complaints. The primary issue involves the court's subject matter jurisdiction.
The Debtor claims that the bankruptcy court has jurisdiction and should exercise it, because this is a proceeding "related to" the bankruptcy case. The Defendants argue that the bankruptcy court does not have jurisdiction because the issues presented in the complaint cannot affect the administration of the Debtor's now-concluded chapter 13 bankruptcy case. The Defendants alternatively argue that if the bankruptcy court has jurisdiction to hear the cases, I should abstain from doing so, dismissing these cases so they may be brought in a more appropriate, non-bankruptcy forum.
As explained below, I conclude that:
On October 8, 2010, the Debtor commenced this bankruptcy case by filing a chapter 13 petition (Bky. No. 10–16541, Doc. # 1) ("the Main Case").
Two (2) proofs of claim were filed asserting secured claims (collectively "the Mortgage Claims") against the Debtor's primary residence ("the Property"). United Guaranty filed a secured proof of claim for $114,027.24 on August 5, 2010, which it amended on July 15, 2011 ("the United Guaranty Claim"). (Claim Nos. 1–1, 1–2). Bank of America,1 as servicer for National Residential Assets Corporation ("NRAC"), filed a secured proof of claim for $587,118.56 on March 21, 2011 ("the Bank of America Claim"). (Claim No. 17–1). Each of the Mortgage Claims included a claim for prepetition arrears.
The Debtor's Third Amended Plan ("the Plan") was confirmed on January 10, 2012. (Main Case, Doc. # 167). The Plan provided primarily for the payment of priority tax claims. It did not provide for either of the Mortgage Claims. In fact, the Plan did not even mention the United Guaranty Claim. As for the Bank of America Claim, the Plan stated that "pre-petition mortgage arrears owed to Bank of America ... will not be paid through the plan ." Id. at ¶ 7(f) (emphasis added). Instead, the Plan stated that "aforesaid arrears ... will be cured through the mortgage loan modification." Id. at ¶ 7(g).2
In May of 2015, the Debtor commenced two (2) adversary proceedings (Adv. Nos. 15–176 and 15–183) (the "Prior Adversaries"). The complaints in the Prior Adversaries made the same factual allegations against roughly the same parties as the instant proceedings.3 (See Adv. No. 15–176, Doc. # 1; Adv. No. 15–183, Doc. # 1).4 Following a joint hearing on June 25, 2015, this court dismissed both Prior Adversaries, determining that it lacked subject matter jurisdiction to hear the cases and would permissively abstain from deciding the cases even if it had jurisdiction. (Adv. No. 15–176, Doc. # 27; Adv. No. 15–183, Doc. # 17).
While those Prior Adversaries were pending, NRAC filed a motion for relief from the automatic stay on May 4, 2016, alleging that its interest in the Property was not adequately protected. (Bky. No. 10–1654, Doc. # 283). The Debtor contested the motion. Following a June 23, 2016 hearing, the motion was granted. (Id., Doc. # 293).
The Debtor full performed her payment obligation under the Plan. The Trustee filed his Final Report on June 16, 2016. (Main Case, Doc. # 289). The Debtor received a chapter 13 discharge on September 15, 2016. (Id., Doc. # 306).
On August 17, 2016, about one (1) month before the entry of the discharge order, the Debtor initiated the first of the two (2) adversary proceedings presently before the court by filing a complaint against Bank of America. She later amended the complaint, adding National Residential Assets Corp. as a defendant. (See Adv. No. 16–265, Doc. # 's 1, 4).
The Debtor filed the second adversary proceeding against Bank of America and United Guaranty on October 2, 2016, about one (1) month after receiving her discharge. She later amended that complaint as well. (See Adv. No. 16–362, Doc. # 's 1,4).
The Defendants filed motions to dismiss both matters. (Adv. No. 16–265, Doc. # 10; Adv. No. 16–362 Doc. # 's 6, 7, 16, 17, 18, 19, 21, 29, 41, 42) (collectively, "the Motions"). The Debtor responded to the Motions. (Adv. No. 16–265, Doc. # 13; Adv. No. 16–362, Doc. # 's 31, 32, 34, 35, 36, 38, 39). The Motions raise issues of subject matter jurisdiction, see Fed. R. Civ. P. 12(b)(1), as well as the legal sufficiency of the claims asserted, see Fed. R. Civ. P.12(b)(6). I held a hearing on the Motions on March 2, 2017, mainly dedicated to the legal issue of subject matter jurisdiction.
A motion to dismiss pursuant to Rule 12(b)(1) challenges the existence of subject matter jurisdiction over a claim. When a motion to dismiss challenges subject matter jurisdiction, the court must distinguish between a Rule 12(b)(1) motion that attacks the complaint on its face and one that attacks the existence of subject matter jurisdiction in fact, quite apart from the allegations in the pleadings. In ruling on a Rule 12(b)(1) motion that attacks the complaint on its face, as the Motions do here, the court must consider the allegations of the complaint as true. See, e.g., In re Star Grp. Commc'ns, Inc., 568 B.R. 616, 622 (Bankr. D.N.J. 2016) ; In re Merritt, 529 B.R. 845, 858–59 (Bankr. E.D. Pa. 2015), aff'd, 2016 WL 930696 (E.D. Pa. Mar. 10, 2016) ; In re Funches, 381 B.R. 471, 483 (Bankr. E.D. Pa. 2008).
A motion to dismiss 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 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. Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ; Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.
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. Finally, 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).
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. Rosal Sportswear, Inc., 2007 WL 2713051, at *4 (M.D. Pa. Sept. 14, 2007) (citing Pension Benefit Guar. Corp. v. White Consol. Indus., Inc.,...
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