Finley v. Kondaur Capital Corp.

• Decision Date: 19 December 2012
• Docket Number: Civil Action Case No. 12–02197–WGY.
• Parties: Keith T. FINLEY, Plaintiff, v. KONDAUR CAPITAL CORPORATION, WMC Mortgage Corporation, BAC Home Loan Servicing LP, Shapiro & Kirsch, LLP, & Mortgage Electronic Registration Systems, Inc., Defendants.
• Court: U.S. District Court — Western District of Tennessee

909 F.Supp.2d 969

Keith T. FINLEY, Plaintiff,

v.KONDAUR CAPITAL CORPORATION, WMC Mortgage Corporation, BAC Home Loan Servicing LP, Shapiro & Kirsch, LLP, & Mortgage Electronic Registration Systems, Inc., Defendants.

Civil Action Case No. 12–02197–WGY.

United States District Court,

W.D. Tennessee,

Western Division.

Dec. 19, 2012.

Keith T. Finley, Cordova, TN, pro se.

James Bennett Fox, Jr., Adams & Reese, LLP, Edwin E. Wallis, III, Glassman Edwards Wade & Wyatt, PC, Memphis, TN, for Defendants.

MEMORANDUM AND ORDER

WILLIAM G. YOUNG ¹, District Judge.

I. INTRODUCTION

The motions to dismiss by defendants Kondaur Capital Corporation (“Kondaur”), Mortgage Electronic Registration Systems, Inc. (“MERS”), and Shapiro & Kirsch, LLP (“Shapiro & Kirsch”) stem from a seven-count complaint by plaintiff Keith T. Finley (“Finley”). Finley filed this complaint in response to foreclosure proceedings initiated by Kondaur. In December 2006, Finley executed a mortgage with WMC Mortgage Corporation (“WMC”), and MERS acted as nominee. The mortgage was securitized, placed into a real estate investment trust, and later assigned to Kondaur. Kondaur, with the aid of its attorneys at Shapiro & Kirsch, attempted to foreclose on the property in May 2010.

There are several issues for this Court to address. First, this Court must address Finley's motion for leave to amend his complaint. Next, this Court must address the timeliness of the defendants' motions to dismiss. Third, this Court must address the merits of the original complaint. Finally, this Court must address whether Finley can remove a state unlawful detainer case to this Court and whether this Court should enter default against WMC and BAC Home Loan Servicing, LP (“BAC”), who have not made any appearances or filings. Each matter is addressed in turn.

A. Procedural Posture

Finley, proceeding pro se, filed his original complaint on February 17, 2012, in state court in Shelby County, Tennessee. Notice Removal, Ex. A, Compl. (“Original Compl.”), ECP No. 1–1. Finley alleged seven causes of action relating to foreclosure proceedings on his home. Id. at 9–14. He brought these claims against five defendants:Kondaur, WMC, BAC, Shapiro & Kirsch, and MERS (collectively, the “Defendants”). Id. Kondaur filed a timely notice of removal on March 9, 2012, on the grounds of federal question jurisdiction and supplemental jurisdiction, Notice Removal (“Defs.' Removal”), ECP No. 1, to which Shapiro & Kirsch joined and consented, Notice Joinder Consent Removal, ECP No. 6. Finley objected to removal, filing his opposition on March 26, 2012. Pl.'s Reply Objection Defs.' Mot. Removal, ECF No. 10. Kondaur, joined by MERS, and Shapiro & Kirsch filed replies on April 9, 2012, and April 10, 2012, and Finley again responded on April 27, 2012. Defs.' Resp. Pl.'s Mot. Remand, ECF No. 11; Resp. Shapiro & Kirsch, LLP Pl.'s Reply Objection Defs.' Mot. Removal, ECF No. 12; Pl.'s Opp'n Def.'s Resp. Mot. Remand, ECF No. 15; Pl.'s Opp'n Defs. Shapiro & Kirsch, LLP Resp. Against Pl.'s Reply Opp'n Defs. Mot. Removal, ECF No. 16.

On March 23, 2012, Kondaur and MERS filed a joint motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Mot. Dismiss Pl.'s Compl., ECF No. 7; Mem. Supp. Defs.' Mot. Dismiss Pl.'s Compl. (“Kondaur Mem. Supp. Mot. Dismiss”), ECF No. 7–1. Shapiro & Kirsch filed its motion to dismiss on April 10, 2012. Mot. Dismiss Shapiro & Kirsch, LLP, ECF No. 13; Mem. Law Supp. Mot. Dismiss Shapiro & Kirsch, LLP, ECF No. 13–1. Finley opposed these motions on April 20, 2012. Pl.'s Opp'n Def.'s Mot. Dismiss, ECF No. 14. Kondaur and MERS replied on May 7, 2012. Reply Br. Supp. Defs.' Mot. Dismiss, ECF No. 17.

Additionally, on June 1, 2012, Kondaur filed a complaint against Finley in state court, and the Shelby County Sheriff served Finley with an unlawful detainer warrant on June 2, 2012. Notice Removal Fed. Ct. (“Finley Removal”) 1, ECF No. 20; Notice Removal Fed. Ct., Ex. A, Summons Detainer Warrant No. F 1561185 (“Detainer Warrant”), ECF No. 20–2. Finley filed a notice of removal to this Court on July 2, 2012. Finley Removal. Kondaur and MERS objected to this removal on July 16, 2012. Defs.' Resp. Objection Pl.'s Notice Removal Unlawful Detainer Case, ECF No. 21. Shapiro & Kirsch also objected on July 17, 2012. Resp./Objection Shapiro & Kirsch, LLP Pl.'s Notice Removal Unlawful Detainer Case, ECF No. 23. Finley responded to these objections on July 30, 2012. Pl.'s Opp'n Defs. Resp. Objection Notice Removal Unlawful Detainer Case, ECF No. 25.

Finally, on July 13, 2012, Finley moved for leave to amend his original complaint and attached the amended complaint to this motion. Mot. Leave Amend Compl., ECF No. 22; First Am. Compl. Pl. Against Defs.' Fraud Under FRCP 15(a) (“First Am. Compl.”), ECF No. 22–2. Kondaur, MERS, and Shapiro & Kirsch all opposed this motion. Resp. Br. Shapiro & Kirsch, LLP Pl.'s Mot. Amend Compl., ECF No. 24; Defs.' Resp. Pl.'s Mot. Amend Compl., ECF No. 26. Finley responded to each opposition on August 13, 2012, and August 20, 2012. Pl.'s Opp'n Defs. Resp. Requesting Ct. Den. Grant Leave Amend Compl., ECP No. 27; Pl.'s Opp'n Defs. Resp. Requesting Ct. Den. Grant Leave Amend Compl., ECF No. 28.

To date, this Court has received no filings or appearances on behalf of WMC or BAC.

B. Facts as Alleged

The following facts are drawn from Finley's original complaint. Finley executed a mortgage note with WMC on November 20, 2006, for $107,200. ² Original Compl. ¶¶ 16–17. MERS acted as WMC's nominee on the mortgage. Id. ¶ 21. The mortgage was then sold and securitized as a Real Estate Mortgage Investment Conduit Trust (“REMIC”), and Kondaur and BAC acted as trustees. Id. ¶¶ 22, 25, 27. At some time prior to the foreclosure, MERS assigned the mortgage to Kondaur. Id. ¶¶ 63–66. Eventually, Finley defaulted on the mortgage. Id. ¶ 44. Kondaur then allegedly assigned the mortgage to Shapiro & Kirsch for the latter to take foreclosure action. Id. ¶ 70. None of the alleged transfers were ever disclosed to Finley. Id. ¶¶ 13(IV), 24, 59, 64. After he learned of the foreclosure proceedings, Finley sent several letters to the Defendants requesting more information but received no response. Id. ¶ 20.

C. Federal Jurisdiction

This Court has jurisdiction pursuant to 28 U.S.C. § 1441, 28 U.S.C. § 1331, and 28 U.S.C. § 1367, because three of the claims in the action are made pursuant to federal law, and the four state law claims are drawn from the same case or controversy.

II. ANALYSISA. Finley's Motion for Leave to Amend His Complaint

Finley moved for leave to amend his complaint on July 13, 2012. Mot. Leave Amend Compl. Under Federal Rule of Civil Procedure 15(a)(2), “[t]he court should freely give leave [to amend the complaint] when justice so requires.” See Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962) (“[O]utright refusal to grant the leave without any justifying reason appearing for the denial is not an exercise of discretion; it is merely abuse of that discretion.”). What justice does not require, however, is leave to amend the complaint where such “amendment would be ‘futile.’ ” Miller v. Calhoun Cnty., 408 F.3d 803, 817 (6th Cir.2005) (quoting Foman, 371 U.S. at 182, 83 S.Ct. 227). “Amendment of a complaint is futile when the proposed amendment would not permit the complaint to survive a motion to dismiss.” Id. at 817 (quoting Neighborhood Dev. Corp. v. Advisory Council on Historic Pres., 632 F.2d 21, 23 (6th Cir.1980)).

1. Finley's Amended Complaint as Compared to His Original Complaint

Finley's amended complaint differs from his original complaint in two ways. First, it lists six counts, only one of which is a federal claim: (1) securitization, (2) discovery, (3) fraud, (4) implied acceptance, (5) common law fraud and injurious falsehood, and (6) violations of the Fair Debt Collection Practices Act (“FDCPA”) under 15 U.S.C. § 1692. First Am. Com pl. 9–27. Finley's original complaint, however, listed seven counts, three of which are federal claims: (1) disclosure violations pursuant to 15 U.S.C. § 1635, (2) fraud and misrepresentation under the Tennessee Unfair Trade Practices Act, (3) negligent supervision (4) common law fraud and injurious falsehood, (5) disclosure violations under 12 C.F.R. § 226, (6) violations of the FDCPA, and (7) slander of title and quiet title. Original Compl. 9–14.

Second, the amended complaint alleges several new facts. Finley provides this Court with the date of the original mortgage, December 20, 2006, the date of the assignment to BAC, May 10, 2010, and the date on which foreclosure proceedings began, originally May 7, 2010. First Am. Compl. 7. Finley also notes that the notice of default wag re-recorded on May 10, 2010. Id. He also provides some facts with respect to the severance of the note and the mortgage. Id. at 8.

2. Amendment Is Futile

None of the allegations contained in Finley's amended complaint would survive a motion to dismiss in this Court. See Miller, 408 F.3d at 817. As discussed above, if an amendment to a complaint is futile, this Court need not grant leave to amend that complaint even under the lenient standard set forth in Federal Rule of Civil Procedure 15(a)(2). Id. Further, while this Court holds Finley's complaint to “less stringent standards than formal pleadings drafted by lawyers” because he proceeds pro se, Jourdan v. Jabe, 951 F.2d 108, 110 (6th Cir.1991), this leniency “has limits.” Pilgrim v. Littlefield, 92 F.3d 413, 416 (6th Cir.1996). The complaint must still satisfy the pleading Standards of Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), which hold that a complaint must state a claim that is plausible on its face. 550 U.S. at 564, 127 S.Ct. 1955.

Finley's amended complaint fails to meet this standard. Counts I, II, and IV are not actionable claims under Tennessee state law or federal law. Counts III and V, the fraud and injurious falsehood claims, have not...