Fraize v. Gov't Nat'l Mortg. Ass'n

• Decision Date: 14 March 2016
• Docket Number: Civ. No. 14-cv-7152 (KM)
• Parties: GEOFFREY FRAIZE, Plaintiff, v. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION AS TRUSTEE, et al., Defendants
• Court: U.S. District Court — District of New Jersey

GEOFFREY FRAIZE, Plaintiff, v. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ASTRUSTEE, et al., Defendants

Civ. No. 14-cv-7152 (KM)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

March 14, 2016

MEMORANDUM OPINION

KEVIN MCNULTY, U.S.D.J.:

I. Introduction

This action arises from a state court mortgage foreclosure action which went to final judgment in 2014. Geoffrey Fraize, as borrower and property owner, brings this action against the Government National Mortgage Association as Trustee for Securitized Trust Ginnie Mae REMIC Trust 2009-127 ("Ginnie Mae"), Wells Fargo Bank, N.A. ("Wells Fargo"), and the Mortgage Electronic Registration System, Inc. ("MERS"). Defendants move under Fed. R. Civ. P. 12(b)(1) to dismiss the complaint on Rooker-Feldman jurisdictional grounds, and under Rule 12(b)(6) to dismiss it for failure to state a claim. (ECF nos. 25, 29) For the reasons stated below, the motion will be granted and the complaint will be dismissed with prejudice.

A. The state foreclosure action

The state foreclosure complaint was filed in Superior Court, Bergen County, under docket number F-021743-12. (ECF no. 25-3) It alleges that on October 23, 2009, Fraize entered into a $503,270 note with Wells Fargo. The note was secured by a mortgage with Wells Fargo on Fraize's property at 245 Ridge Street, Milford, New Jersey. The Mortgage was recorded on November 9, 2009, in the Bergen County Clerk's Office. (See also ECF no. 25-7 (copy of recorded mortgage).)

The foreclosure complaint alleges that Wells Fargo is the mortgagee and owner of the note. Fraize failed to make monthly mortgage payments, and that the loan went into default on February 1, 2011. The note allows for acceleration of the debt upon default. The complaint states that proper notice of intention to foreclose was given, and attaches a copy.

The answer filed by Fraize was stricken and deemed non-contesting by order dated December 3, 2013.¹ (ECF nos. 25-4, 25-5) A final judgment of foreclosure was entered on July 23, 2014. (ECF nos. 25-4, 25-5) Judgment was entered in the amount of $617,306.67, and a sheriff's sale was ordered. (ECF no. 25-5)

On February 4, 2015, Fraize filed a petition in bankruptcy. (ECF no. 25-6) This had the effect of staying the sheriff's sale of the property.

B. This federal complaint

On November 10, 2014, Fraize filed this, his federal complaint. ("Cplt.," ECF no. 1) The allegations of the federal complaint are as follows:

The note and mortgage were entered into on October 23, 2009. On December 30, 2009, the loan was sold and bundled for sale to investors as a mortgage backed security, issued by Ginnie Mae, entitled Securitized Trust Ginnie Mae REMIC Trust 2009-127. It is alleged that, as a result, the chain of assignments is void, and that defendants have no interest in the note or mortgage and had no right to declare a default or bring a foreclosure action. The complaint alleges violations of the Pooling and Servicing Agreement ("PSA") governing the Trust.

The counts of the complaint are as follows:

• Count 1 of the complaint seeks a declaratory judgment that the defendants "do not have authority to foreclose upon and sell the Subject Property." (Cplt. ¶ 144) It alleges that Defendants lack standing, because the chain of assignments and securitization were faulty.

• Count 2 seeks an injunction stopping any Sheriff's sale.

• Count 3 seeks to "quiet title," i.e., to declare Fraize to the owner of the property, lien-free.

• Count 4 alleges negligence per se based on the alleged deficiencies in the loan records.

• Count 5 seeks an accounting. (The theory is that because the mortgage is invalid, all payments were unwarranted.)

• Count 6 alleges breach of the implied covenant of good faith and fair dealing. The underlying contract is alleged to consist of the note and deed of trust.

• Count 7 alleges breach of fiduciary duty.

• Count 8 alleges "wrongful foreclosure" in that the lender did not explore other options, that it proceeded to foreclose despite lacking standing to do so, and so forth.

• Count 9 alleges violation of the Real Estate Settlement Procedures Act (RESPA), based on unspecified "settlement services" that were billed but not performed.

• Count 10 alleges violation of the Home Ownership Equity Protection Act (HOEPA) in that certain required disclosures were not made in connection with the original contract of sale. It demands rescission of the mortgage.

• Count 11 alleges fraud in the concealment. It refers to the failure to notify plaintiff of the securitization of the loan.

• Count 12 alleges intentional infliction of emotional distress.

• Count 13 alleges slander of title.

Standard on a motion to dismiss

Defendants have moved to dismiss the Complaint for lack of jurisdiction, citing the Rooker-Feldman doctrine (see infra). Rule 12(b)(1) governs jurisdictional challenges to a complaint. These may be either facial or factual attacks. See 2 Moore's Federal Practice § 12.30[4] (3d ed. 2007); Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). A facial challenge asserts that the complaint does not allege sufficient grounds to establish subject matter jurisdiction. Iwanowa v. Ford Motor Co., 67 F. Supp. 2d 424, 438 (D.N.J. 1999). A court considering such a facial challenge assumes that the allegations in the complaint are true, and may dismiss the complaint only if it nevertheless appears that the plaintiff will not be able to assert a colorable claim of subject matter jurisdiction. Cardio-Med. Assoc., Ltd. v. Crozer-Chester Med. Ctr., 721 F.2d 68, 75 (3d Cir. 1983); Iwanowa, 67 F. Supp. 2d at 438.

Defendants have also moved to dismiss the Complaint for failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6). Rule 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if it fails to state a claim upon which relief can be granted. The defendant, as the moving party, bears the burden of showing that no claim has been stated. Hedges v. United States, 404F.3d 744, 750 (3d Cir. 2005). In deciding a Rule 12(b)(6) motion, a court must take the allegations of the complaint as true and draw reasonable inferences in the light most favorable to the plaintiff. Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (traditional "reasonable inferences" principle not undermined by Twombly, see infra).

Federal Rule of Civil Procedure 8(a) does not require that a complaint contain detailed factual allegations. Nevertheless, "a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the complaint's factual allegations must be sufficient to raise a plaintiff's right to relief above a speculative level, so that a claim is "plausible on its face." Id. at 570; see also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). That facial-plausibility standard is met "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). While "[t]he plausibility standard is not akin to a 'probability requirement' . . . it asks for more than a sheer possibility." Iqbal, 556 U.S. at 678.

In connection with the motions, defendants have attached records of the state court foreclosure proceeding. These are cited, not for the facts contained therein, but only in order to establish the nature and scope of prior proceedings between the parties, and the rulings of the state court. Such records are subject to judicial notice:

[O]n a motion to dismiss, we may take judicial notice of another court's opinion—not for the truth of the facts recited therein, but for the existence of the opinion, which is not subject to reasonable dispute over its authenticity. See Kramer v. Time Warner Inc., 937 F.2d 767, 774 (2d Cir. 1991); United States v. Wood, 925 F.2d 1580, 1582 (7th Cir. 1991); see also Funk v. Commissioner, 163 F.2d 796, 800-01 (3d Cir. 1947) (whether a court may judicially notice other proceedings depends on what the court is asked to notice and on the circumstances of the instant case).

S. Cross Overseas Agencies, Inc. v. Wah Kwong Shipping Grp. Ltd., 181 F.3d 410, 426-27 (3d Cir. 1999). See generally Fed. R. Evid. 201.

Even setting aside judicial notice, certain records of the foreclosure action may be considered without converting a facial Rule 12(b)(1) challenge into a factual one, or a Rule 12(b)(6) motion into one for summary judgment. See Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014) ("However, an exception to the general rule is that a 'document integral to or explicitly relied upon in the complaint' may be considered 'without converting the motion to dismiss into one for summary judgment.' ") (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)); Pension Ben. Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993).²

Where the plaintiff is proceeding pro se, the complaint is "to be liberally construed," and, "however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers." Erickson v. Pardus, 551 U.S. 89, 93-94 (2007). Nevertheless, "pro se litigants still must allege sufficient facts in their complaints to support a claim." Mala v. Crown Bay Marina, Inc., 704 F.3d 239, 245 (3d Cir. 2013). "While a litigant's pro se status requires a court to construe the allegations in the complaint liberally, a litigant is notabsolved from complying with Twombly and the federal pleading requirements merely because s/he proceeds pro se." Thakar v. Tan, 372 F. App'x 325, 328 (3d Cir. 2010) (citation omitted).

Analysis

1. Rooker-Feldman

Defendants first move, pursuant to Fed. R. Civ. P. 12(b)(1), to dismiss the complaint for lack of...