Gallaher v. U.S. Bank Nat'Lass'N
| Decision Date | 22 March 2016 |
| Docket Number | CIVIL ACTION NO. 3:14-cv-1877 (VLB) |
| Court | U.S. District Court — District of Connecticut |
| Parties | JEFFREY GALLAHER AND ROSA GALLAHER Plaintiffs, v. US BANK NATIONAL ASSOCIATION, WELLS FARGO BANK, AND AMERICAN SERVICING COMPANY, Defendants. |
Plaintiffs Jeffrey and Rosa Gallaher (the "Gallahers"), proceeding pro se, bring claims under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq., the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681, et seq., the Connecticut Consumer Collection Agency Act ("CCCAA"), Conn. Gen. Stat. § 36a-885, et seq., the Connecticut Unfair Trade Practices Act ("CUTPA"), Conn. Gen. Stat. § 42-110a, et. seq., and a state law invasion of privacy claim against Defendants US Bank, National Association ("US Bank"), Wells Fargo Bank ("Wells Fargo"), and American Servicing Company ("ASC").1 For the reasons that follow, the Defendants' Motion to Dismiss is GRANTED in part and DENIED in part.
This case is related to a state court foreclosure action in the Superior Court for the Judicial District of Stamford/Norwalk at Stamford, Connecticut, captioned US Bank National Association, As Trustee For the Structured Asset Investment Loan Trust, 2006-BNC3 v. Rosa Davis Gallaher, et al., No. FSTCV106003384S (the "Foreclosure Action").2 In 2006, Plaintiffs borrowed $579,500.00 from BNC Mortgage, Inc. ("BNC") to purchase real estate. [Dkt. #19-2, Ex. B. to Defs'. Mot. at ¶ 3]. Incident to the financing, Plaintiffs executed and delivered a note in consideration for a loan in the amount of $579,500.00 to BNC. [Id.]. In further consideration for the loan by BNC, Plaintiffs executed a mortgage to BNC to secure the note, which they delivered to Mortgage Electronic Registration Systems, Inc. ("MERS"), as nominee for BNC. [Id. at ¶ 4]. At some point, the mortgage was assigned to US Bank, National Association, as Trustee for the Structured Asset Investment Loan Trust, 2006-BNC3 ("US BANK 2006-BNC3").[Id.]. This assignment suggests that the note and mortgage were securitized, meaning they were sold together with other loans to create a synthetic investment security. The assignment was to be recorded on the Stamford Land Records. [Id.].
On or about January 21, 2010, US Bank 2006-BNC3 commenced the Foreclosure Action, asserting that the note was in default and seeking a foreclosure of the mortgage. [Id. at 1]. Neither of the Wells Fargo Defendants was a party to the Foreclosure Action.3 That same day, US Bank 2006-BNC3 filed a notice of lis pendens, which stated that the mortgage was assigned to US Bank 2006-BNC3 by virtue of an assignment of mortgage to be recorded on the Stamford Land Records. [Id. at 9].
After the commencement of the Foreclosure Action, on April 25, 2012, MERS assigned the mortgage to US Bank National Association, as Trustee for Structured Asset Investment Loan Trust Mortgage Pass-Through Certificates, Series 2006-BNC3 ("US Bank Mortgage Pass-Through"). . On July 5, 2013, US Bank 2006-BNC3 filed a motion to substitute US Bank Mortgage Pass-Through as plaintiff in the foreclosure proceeding, and in support of the motion, it attached the April 25, 2012 assignment. . On July 23, 2013, absent objection from the Gallahers, the court granted the motion. [Dkt. #19-1, Ex. A to Defs.' Mot. at 5]; US Bank NationalAssociation, As Trustee For the Structured Asset Investment Loan Trust, 2006-BNC3 v. Rosa Davis Gallaher, et al., No. FSTCV106003384S, Dkt. No 130.86.
On November 1, 2013, Kelly Cornelious prepared an affidavit of debt on behalf of US Bank Mortgage Pass-Through. [Dkt. #1, Ex. C to Compl. at 23]. The affidavit stated that US Bank Mortgage Pass-Through "was in possession of the [promissory] [n]ote prior to 1/21/2010." [Id. at 23, ¶ 4]. As for the outstanding balance on the mortgage, the affidavit stated that the total amount owed was $793,950.04. [Id. at 24]. This figure included the total remaining principal amount of $571,308.72, and unpaid interest which accrued at a rate of 7.5% between September 1, 2009 and October 15, 2013, totaling $176,606.81. [Id.]. The original principal amount of the mortgage was $579,500. [Id. at 23, ¶ 2].
The Superior Court conducted a foreclosure hearing, granted the plaintiff's motion for and entered an order of strict foreclosure on December 16, 2013, vesting title in the property to the mortgagee upon the expiration of the law day. [Dkt. #19-3, Ex. C to Defs.' Mot. at 2]. The foreclosure judgment set March 11, 2014 as the first law day. [Id.]. The court also found that the mortgage debt due and owing equaled $571,308.72, the amount averred by US Bank Mortgage Pass-Through in its affidavit of debt. [Id.]. Nowhere do the Gallahers contend that this judgment was provisional, tentative, or anything other than a final judgment on the merits for the purposes of appeal.
The Gallagers unsuccessfully sought vacatur of the judgment of strict foreclosure. Approximately three weeks after the Superior Court entered the judgment, on January 29, 2014, the Gallahers filed with the foreclosure court anotice of dispute of debt, pursuant to the FDCPA. See [Dkt. #1, Ex. B to Compl. at 20-21; Dkt. #23, Ex. B to Pl.'s Opp. at 11-12; Dkt. #19-1, Ex. A to Defs.' Mot. at 6, Dkt. No. 146.00]. In it, the Gallahers requested that US Bank Mortgage Pass-Through provide "'verification' and debt validation as defined by 15 U.S.C. [§] 1692," and they challenged, inter alia, "the identity of the true owner (if any) of the alleged debt, the alleged amount due and owing . . . and [US Bank Mortgage Pass-Through]'s authority and capacity to collect and or sue on behalf of the same." [Dkt. #1, Ex. B to Compl. at 20; Dkt. #23, Ex. B to Pl.'s Opp. at 11]. The Gallahers also contended that the Wells Fargo Defendants (non-parties to the Foreclosure Action) reported a mortgage debt on their consumer credit reports, which they claimed was inaccurate, and sought an order requiring them "to delete the inaccurate information immediately pursuant to 15 U.S.C. § 1681, et al." [Dkt. #1, Ex. B to Compl. at 21; Dkt. #23, Ex. B to Pl.'s Opp. at 12]. The Gallahers stated that in the event Wells Fargo and ASC did not delete this information, they intended to file a counterclaim for damages incurred as a result. [Id.]. In addition, the day before the first law day, on March 10, 2014, the Gallahers filed a motion to open judgment and extend the law day. ]. The following month, on April 7, 2014, US Bank Mortgage Pass-Through filed a timely motion for deficiency judgment. [Id. at Dkt. No. 151.00]. On November 14, 2014, the Superior Court conducted a hearing on the Plaintiffs' motions. See [Dkt. #19-4, Ex. D to Defs.' Mot. at 1]. On November 18, 2014, the Superior Court entered an order denying the Gallahers' motions. [Id. at Dkt. Nos. 146.01, 147.88, 148.86]. In its orders denying the motions, the courtstated only that US Bank National Association, As Trustee For the Structured Asset Investment Loan Trust, 2006-BNC3 v. Rosa Davis Gallaher, et al., No. FSTCV106003384S, Dkt. Nos. 146.01, 147.88, 148.86.
On December 1, 2014, after title vested with US Bank, the Gallahers filed a second motion to open and vacate the judgment. [Id.]. On December 31, 2014, the court denied this motion as well. See [Dkt. #19-4, Ex. D to Defs.' Mot. at 2]. In its memorandum of decision, the court noted that the Gallahers' motion was "premised on two inter-related propositions - plaintiff [US Bank Mortgage Pass-Through] is not properly characterized as a creditor but rather is a debt collector within the meaning of 15 U.S.C. § 1692(a)(6), and the court lacked jurisdiction to entertain the foreclosure action brought by plaintiff in that capacity." [Id. at 3]. Upon reviewing the record, the court concluded that there was "no evidence . . . to support the claim that plaintiff, as assignee/transferee of the loan documents, is merely a debt collector." [Id. at 4]. Thus, the court "reject[ed] this contention on the merits." [Id. at 5].
The court reviewed the December 16, 2013 proceedings, and noted that on that date:
[The Gallahers] also claimed that [US Bank Mortgage Pass Through] was simply a debt collector and therefore not entitled to bring a foreclosure action. That issue was rejected by the court . . . [T]he court was presented with the original note, mortgage, and assignment, and accepted them over the objection of [the Gallahers]. Implicitly, then, the court found the assignment to be valid, inordering a judgment of strict foreclosure. By refusing to acknowledge the validity of the paperwork being presented to the court, the status of the plaintiff as a property party to the action was at least partially placed in issue by [the Gallahers], and adjudicated by the court.
[Id. at 5-6].
Indeed, during the December 16, 2013 proceedings, the Gallahers "acknowledged that [US Bank Mortgage Pass-Through] was the current holder of the note and mortgage." [Id. at 6]. The Court then held that, "[i]n the absence of any evidence that might undermine the validity of the assignment or [US Bank Mortgage Pass-Through]'s otherwise proper status as a party with standing to pursue this matter, the court declines to revisit the issue." [Id.].
On January 16, 2015, the Gallahers filed a motion for reconsideration. See [Dkt. #19-5, Ex. E to Defs.' Mot. at 2]. However, with this motion still pending, on January 20, 2015, the Gallahers filed an appeal with the Connecticut Appellate Court. See [Dkt. #19-6, Ex. F at 2]....
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