Flagstar Bank v. Walcott
| Docket Number | Civil Action 2018-0037 |
| Decision Date | 24 August 2023 |
| Parties | FLAGSTAR BANK, FSB, Plaintiff, v. DENISE WALCOTT, DEAN C. WALCOTT, JR., wife and husband, and SECRETARY OF HOUSING AND URBAN DEVELOPMENT, Defendants. |
| Court | U.S. District Court — Virgin Islands |
A.J Stone III, Esq
St Thomas, U.S.V.I.
For Plaintiff
Denise Walcott, Pro Se
St. Croix, U.S.V.I.
Angela P. Tyson-Floyd, Esq
St. Croix, U.S.V.I.
For Defendant Secretary of Housing and Urban Development
THIS MATTER comes before the Court on the Report and Recommendation (“R&R”) (Dkt. No. 61) issued by Magistrate Judge Emile A. Henderson III regarding Defendant Denise Walcott's pro se “Emergency Motion for Temporary Restraining Order, Emergency Motion for Preliminary Injunction to Enjoin [Foreclosure] Sale Scheduled for August 17, 2023” (“Emergency Motion”) (Dkt. No. 55). For the reasons that follow, the Court will adopt the Magistrate Judge's R&R, as modified herein, and deny Plaintiff's Emergency Motion.[1]
On August 10, 2018, Plaintiff Flagstar Bank, FSB (“Flagstar”) filed a Complaint against Defendants Denise Walcott (“Ms. Walcott”), Dean C. Walcott, Jr., and the Secretary of Housing and Urban Development (“HUD”) alleging causes of action for debt and foreclosure of a mortgage on real property. (Dkt. No. 1). In the Complaint, Flagstar alleged, inter alia, that Ms. Walcott executed a Note on July 6, 2012, in which she promised to pay Flagstar the principal amount of $126,704.00, together with interest at the rate of 3.545% per annum, in equal monthly payments of $572.15. Id. at ¶¶ 8-10. The Note was secured by a Mortgage granted to Flagstar and Mortgage Electronic Registration Systems, Inc., as Nominee for Flagstar, that was executed by Ms. Walcott and Dean C. Walcott, Jr. (collectively, “the Walcotts”) on the same day. Id. at ¶ 12. The Mortgage placed a lien on real property described as:
Plot No. 32-I Estate La Grande Princesse, Company Quarter, St. Croix, U.S. Virgin Islands, consisting of 0.338 U.S. acre, more or less, as more fully shown on OLG Drawing No. 4046 dated January 9, 1981, revised May 6, 1987
(the “Property”) (Id. at ¶ 8).
Following a Loan Modification Agreement executed by the Walcotts on May 24, 2017, the new principal amount on the loan was $120,739.77 with interest accruing annually at the rate of 3.545% with monthly payments of $545.21 effective July 1, 2017. Id. at ¶ 15. Beginning on or about September 1, 2017, Ms. Walcott defaulted under the terms of the Note and the Walcotts defaulted under the terms of the Mortgage by failing to pay the monthly installments of principal and interest as they became due. Id. at ¶ 21. Flagstar sent a letter to Ms. Walcott dated October 16, 2017 at her mailing address[2] advising her of the default, and that failure to cure the default could result in the debt being accelerated with foreclosure and sale of the property. (Id. at ¶ 22; Dkt. No. 31-3). Following Ms. Walcott's failure to cure the default, Flagstar elected to declare the entire unpaid principal sum, with all accrued interest and late charges, due and immediately payable. (Dkt. No. 1 at ¶ 24).
On September 18, 2018, the summons for the instant Complaint filed on August 10, 2018 was returned unexecuted as to both Walcotts. (Dkt. Nos. 14, 14-116, 16-1, 18, 18-1).[3] On October 25, 2018, Flagstar mailed service packages to Ms. Walcott's two Florida addresses on file.[4] (Dkt. No. 26-1 at 2). After one service package was returned to Flagstar, Plaintiff then filed a Motion for Service by Publication, which was granted on November 9, 2018. (Dkt. Nos. 20, 21).[5] Thereafter, Plaintiff filed a Motion for Entry of Default against the Walcotts, attaching proofs of service by publication for a newspaper in the Virgin Islands and two Florida newspapers. (Dkt. Nos. 25, 26-1; 26-4; 26-5). Following both Walcotts' failure to appear in this action, the Clerk of Court entered default against them on July 19, 2019. (Dkt. No. 27).
On March 3, 2021, the Court entered a default judgment against the Walcotts for $137,894.07 for an unpaid promissory note. (Dkt. No. 35). In the Judgment, the Court (1) declared that, based on the Mortgage executed by the Walcotts, Flagstar held a first-priority lien against the Walcotts' property on St. Croix[6]; (2) foreclosed the Mortgage and all subsidiary liens; and (3) directed that the Walcotts' Property be sold at a Marshal's Sale, with the proceeds to be applied to the outstanding indebtedness.[7] Id. at 2-5.
On March 7, 2021, the U.S. Marshals Service attempted to serve Ms. Walcott with the Judgment at the Kissimmee, Florida address, but did not locate her there. (Dkt. No. 38). On June 21, 2022, Flagstar filed a Praecipe for Writ of Execution, which was issued by the Clerk on July 20, 2022. (Dkt. Nos. 45, 46). On April 12, 2023, a Process Receipt and Return was filed with the Court noting that Ms. Walcott had been served at the Property on April 7, 2023. (Dkt. Nos. 52, 53).[8] At that time, Ms. Walcott was served with the Writ of Execution, as well as another document that may have been the Judgment and Order that the Marshal's Service had previously attempted to serve on March 7, 2021.[9] Id.
On August 11, 2023, Ms. Walcott filed the instant Emergency Motion. (Dkt. No. 55). Requesting temporary and preliminary injunctive relief, Ms. Walcott represents that the Property is currently the primary residence for her and her minor child; she has “suffered many unforeseen hardships over the last six years”; the financial hardship suffered has affected her ability to be current with the mortgage payments; without much success, she has applied for mortgage assistance programs with Flagstar; and she is currently seeking assistance through the Virgin Islands Housing Authority's Homeowner Assistance Funds Program. Id. at ¶¶ 1-8. Ms. Walcott further states that on July 20, 2023 she learned of the upcoming Marshal's Sale and on July 25, 2023, Flagstar informed her that she needed a completed mortgage assistance package 37 days prior to the date of the Marshal's Sale in order to suspend the sale. Id. at ¶¶ 9-10. Ms. Walcott contends that despite her efforts to bring the loan into good standing, Flagstar has refused to cooperate because Flagstar “continuously refuses” to provide her with written notification of a denial of her mortgage assistance applications. Id. at ¶¶ 14-15. Further, Ms. Walcott contends that notice of default and notice of the foreclosure sale were improperly provided to her. Id. at ¶¶ 12-13. Therefore, Ms. Walcott asks that the Court halt the upcoming Marshal's Sale scheduled for August 17, 2023 and schedule a hearing in the matter within 60 days. Id. at 2.
On August 11, 2023, the same day that the Emergency Motion was filed, the Court referred the Emergency Motion to the Magistrate Judge for an R&R. (Dkt. No. 57). On August 15, 2023, the Magistrate Judge held a hearing on the Emergency Motion,[10] and issued an recommending that the Court deny the Emergency Motion. (Dkt. No. 61).[11]
Under Rule 65 of the Federal Rules of Civil Procedure, the Court may grant injunctive relief with a temporary restraining order or a preliminary injunction. Am. Tel. & Tel. Co. v. Winback & Conserve Prog. Inc., 42 F.3d 1421, 1427 (3d Cir. 1994). Injunctive relief is “‘an extraordinary remedy ... which should be granted only in limited circumstances.”' Id. (quoting Frank's GMC Truck Ctr., Inc. v. GM Corp., 847 F.2d 100, 102 (3d Cir. 1988)). The same legal standard applies to requests for a temporary restraining order and a preliminary injunction. Smith v. Litton Loan Servicing, LP, No. Civ. 04-02856, 2005 WL 289927, at *6 (E.D. Pa. Feb. 4, 2005).
To prevail on a motion for injunctive relief, the moving party must show each of the following four elements: (1) a reasonable probability of success on the merits; (2) that the movant will suffer irreparable harm if the injunction is denied; (3) that granting preliminary relief will not result in even greater harm to the nonmoving party; and (4) that the public interest favors such relief. See N.J. Retail Merchs. Ass'n v. Sidamon-Eristoff, 669 F.3d 374, 385-86 (3d Cir. 2012); Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700, 708 (3d Cir. 2004) (citing Allegheny Energy, Inc. v. DQE, Inc., 171 F.3d 153, 158 (3d Cir. 1999)). “The burden lies with the plaintiff to establish every element in its favor, or the grant of a preliminary injunction is inappropriate.” P.C. Yonkers, Inc. v. Celebrations the Party & Seasonal Superstore, LLC, 428 F.3d 504, 508 (3d Cir. 2005).
It is well established, however, that the first and second factors are “gateway factors” that the movant must establish in order for injunctive relief to be granted. Amalgamated Transit Union Loc. 85 v. Port Auth. of Allegheny Cnty., 39 F.4th 95, 102-103 (3d Cir. 2022). Thus, “[f]ailure to adequately establish at least a reasonable probability of success on the merits justifies denial of a[] [preliminary] injunction on this ground alone.” Ferraro v. Gayanich, Civil Action No 2016-0022, 2017 WL 3083655, at *3 (D.V.I. July 19, 2017) (citing Ash v. Cort, 350 F.Supp. 227, 230 (E.D. Pa. 1972), aff'd, 471 F.2d 811 (3d Cir. 1973) (citing Indus. Elecs. Corp. v. Cline, 330 F.2d 480, 482 (3d Cir. 1964)). The same is true for the ability to establish irreparable harm. Beberman v. U.S. Dep't of State, 675 Fed.Appx. 131, 133 (3d Cir. 2017) If the movant fails to demonstrate an imminent risk of irreparable harm, that is “a sufficient ground” upon which to deny a TRO/preliminary injunction. Beberman, 675 Fed.Appx. at 134; see also ACE Am. Ins. Co. v. Wachovia Ins. Agency Inc., 306 Fed.Appx. 727, 732 (3d Cir. 2009) (opining that “[a...
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