Canen v. U.S. Bank Nat'l Ass'n

• Decision Date: 14 December 2012
• Docket Number: Case No. 3:10–cv–0081–PPS–CAN.
• Citation: Canen v. U.S. Bank Nat'l Ass'n, 913 F.Supp.2d 657 (N.D. Ind. 2012)
• Parties: Ron CANEN and Lotte Canen, Plaintiffs, v. U.S. BANK NATIONAL ASSOCIATION et al., Defendants.
• Court: U.S. District Court — Northern District of Indiana

913 F.Supp.2d 657

Ron CANEN and Lotte Canen, Plaintiffs,

v.U.S. BANK NATIONAL ASSOCIATION et al., Defendants.

Case No. 3:10–cv–0081–PPS–CAN.

United States District Court,

N.D. Indiana,

South Bend Division.

Dec. 14, 2012.

Ron W. Canen, Elkhart, IN, pro se.

Lotte Canen, Elkhart, IN, pro se.

Timothy J. Abeska, Alice J. Springer, Eric Robley Thomason, Barnes & Thornburg LLP, South Bend, IN, for Defendants.

OPINION AND ORDER

PHILIP P. SIMON, Chief Judge.

Plaintiffs Ron and Lotte Canen have brought a lawsuit asserting eight separate counts against at least eight defendants. Their specific claims vary, but they all appear to involve a 2004 transaction whereby the Canens took out a loan and secured that debt by mortgaging their house. The Canens are proceeding pro se, and their complaint is not entirely clear, but they generally seem to believe that various defendants committed wrongdoing by (a) improperly documenting and processing the loan, (b) selling it to investors, (c) paying a fee to mortgage servicing companies, and (d) even by loaning them the money in the first place.

This is not the first time that the Canens have been to court in the past several years. Most notably, they were parties to a state court foreclosure action that was commenced in 2005 and a Chapter 7 bankruptcy proceeding that began in 2009. That prior involvement in the court system is fatal to their claims here, for the reasons explained below.

First, three of the counts ask me to rescind their long-since foreclosed loan. This would have the practical effect of reversing the 2009 state court foreclosure action. As discussed below, I don't have the jurisdiction do that under the Rooker–Feldman doctrine. So those counts are dismissed for lack of subject matter jurisdiction.

Second, during the Canens' previous bankruptcy proceedings, they were asked to list all existing and potential pre-bankruptcy claims that might benefit their estate. They failed to identify any of the claims included in this lawsuit, even though all of them seem to have accrued long before 2009. And this does not appear to be the result of a post-bankruptcy discovery—in fact, the Canens themselves have pointed me to evidence suggesting that they were contemplating legal action at least as early as 2008, and certainly by May 19, 2009, when they filed for the Chapter 7 bankruptcy that was finally successful in discharging their debts.

The Defendants argue that those bankruptcy proceedings operate to strip the Canens of standing to bring their claims now. I should note that I'm not sure that's right as a technical legal matter. Although some courts appear to construe this sort of scenario ( i.e., a debtor bringing pre-bankruptcy claims that were not identified in the since-closed bankruptcy proceedings) as a standing defect, I think the better view is that their claims are barred under principles of judicial estoppel. But in any event, it's really neither here nor there; both routes lead to a dead end for the Canens.

Therefore, as explained more fully below, Defendants' Motions for Summary Judgment are GRANTED with respect to Counts III, IV, V, VI and VII. Counts I, II and VIII of the Complaint are DISMISSEDsua sponte for lack of subject matter jurisdiction. Defendants' Motions for Summary Judgment are DENIED AS MOOT with respect to those claims. Finally, the Canens' Motion to Deny Defendants Motion for Summary Judgment is DENIED as well.

BACKGROUND

The Canens are residents of Elkhart, Indiana. (DE 16 at 8.) They took out an adjustable rate mortgage on a house in April 2004. ( Id. at 9–11.) The Defendants are a collection of banks, legal entities ostensibly created for the purpose of holding mortgage-related debt, mortgage servicing companies, and private individuals. ( Id. at 3–7.) All of the Defendants have some connection—however tenuous—to the Canens' mortgage ( e.g., they issued it, bought it, sold it or serviced it). ( Id.)

It appears that the Canens stopped paying their monthly mortgage payment shortly after taking out the loan in 2004, yet incredibly, and almost beyond comprehension, it appears that the Canens remain in the home some eight years later. (DE 124 at 1.) Here's the history: the Canens' creditors initiated foreclosure proceedings in May 2005 (DE 135–4), and an Elkhart County Superior Court entered a default judgment and decree of foreclosure on October 3, 2007. (DE 135–7.) The Canens have somehow managed to avoid being removed from the home through a wily litigation strategy. First, in July 2005, the Canens filed a Chapter 13 bankruptcy petition in this district; it was ultimately dismissed without prejudice in 2007. (DE 135–5.) The Canens then filed another Chapter 13 bankruptcy petition in the same court in February 2008. (DE 135–8.) It was dismissed in June 2008. ( Id.) The Canens filed a third Chapter 13 petition in September 2008, and it was dismissed one month later. (DE 135–9.) Lotte Canen filed a Chapter 13 petition on her own behalf one month after that, in November 2008. (DE 135–10.) A few weeks later it was converted to a Chapter 7 bankruptcy proceeding. ( Id.) This case was closed in March 2009 without a discharge. ( Id.) In May 2009, the Canens jointly filed a Chapter 7 bankruptcy petition. (DE 135–12.) This one finally stuck, and the bankruptcy court entered a discharge in August 2009. (DE 135–14.) Notably, the Canens' bankruptcy petition failed to disclose the existence of any contingent or unliquidated claims. (DE 135–13.)

The Canens responded to the termination of their Chapter 7 bankruptcy proceeds by filing this case. (DE 1.) Their claims are hard to decipher, but they generally seem to allege that various of the Defendants committed wrongdoing by (1) failing to disclose to them that they couldn't afford their adjustable rate loan, (2) improperly processing or documenting the mortgage transaction, and (3) selling the mortgage after it was issued. Specifically, the Canens audacious complaint brings the following counts:

(1) A Truth in Lending Act claim, alleging that various Defendants provided noncompliant Notices of Right to Cancel and otherwise “hid” the identity of the true lender;

(2) a Quiet Title claim, alleging that the Canens have a superior title claim to anyone claiming an ownership interest in their foreclosed residence;

(3) four Real Estate Settlement Procedures Act claims against various Defendants alleging (i) that money paid to a mortgage servicing entity was an improper “kickback,” (ii) that it constitutes an unearned charge, (iii) that various Defendants failed to provide the Canens with a compliant itemized statement, and (iv) that various Defendants failed to respond to a Qualified Written Request;

(4) a Fair Debt Collection Practices Act claim alleging that various Defendants submitted a noncompliant and false notice seeking to collect debt, and that the Defendants continued to seek repayment of the debt after the Canens notified them that it was disputed;

(5) a Fair Credit Reporting Act claim against various Defendants alleging that they made false statements to credit bureaus;

(6) a conspiracy claim alleging that various Defendants conspired to commit fraud by encouraging the Canens to take out a loan that they could not service;

(7) a conspiracy claim alleging that various Defendants formed a mortgage servicing entity to shield their identities and involvement in a massive scheme to defraud mortgage customers; and

(8) a fraudulent inducement claim alleging that various Defendants misled the Canens into taking out a mortgage that they could not repay.

(DE 16 at 19–34.)

I'm not going to get further into the specifics of these individual claims, for two reasons. First, given the relative incoherence in the Canens' Complaint, I don't fully understand some of them. Second, and much more importantly, it doesn't matter for the purposes of my decision. All of these claims seem to trace back to the events surrounding the Canens' initial 2004 mortgage transaction and their (purported) immediately subsequent attempts to cancel that loan. The fact that this time period significantly predates the Canens' 2009 bankruptcy proceedings effectively bars them from bringing all of their claims now, regardless of their substance.

ANALYSIS

Summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A genuine dispute about a material facts exists only “if the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In making this determination, I must construe all facts and draw all reasonable inferences from the record in the light most favorable to the nonmoving party. Id. at 255, 106 S.Ct. 2505. But the nonmoving party is not entitled to the benefit of “inferences that are supported by only speculation or conjecture.” Argyropoulos v. City of Alton, 539 F.3d 724, 732 (7th Cir.2008) (citations and quotations omitted).

Furthermore, Defendants have asked me to dispose of at least some of the Canens' claims pursuant to the Rooker–Feldman doctrine, which generally prevents federal courts (other than the Supreme Court) from subjecting a state court judgment to appellate review. See Kamilewicz v. Bank of Boston Corp., 92 F.3d 506, 509–10 (7th Cir.1996) (applying Rooker–Feldman doctrine). This doctrine is jurisdictional in nature. See Commonwealth Plaza Condominium Ass'n v. City of Chicago, 693 F.3d 743, 745–46 (7th Cir.2012). That means that if Rooker–Feldman applies to any of the Canens' claims, I must dismiss those counts—and not grant summary judgment—because I lack the jurisdiction to hear them. See Crawford v. Countrywide Home Loans Inc., Nos. 09 CV 247, 09 CV 295, 2011 WL 3875642, at *6 (N.D.Ind. Aug. 31, 2011) (explaining the impact of the Rooker–Feldman doctrine on the...