Graham v. Select Portfolio Servicing, Inc.

• Decision Date: 18 January 2016
• Docket Number: 15–cv–183 (JGK)
• Citation: 156 F.Supp.3d 491
• Parties: Clive Graham, Plaintiff, v. Select Portfolio Servicing, Inc., and U.S. Bank National Association, Individually, and as Trustee on Behalf of the Holders of the Home Equity Pass–Through Certificates, Series 2006–4, Defendants.
• Court: U.S. District Court — Southern District of New York

156 F.Supp.3d 491

Clive Graham, Plaintiff,

v.Select Portfolio Servicing, Inc., and U.S. Bank National Association, Individually, and as Trustee on Behalf of the Holders of the Home Equity Pass–Through Certificates, Series 2006–4, Defendants.

15–cv–183 (JGK)

United States District Court, S.D. New York.

Signed January 18, 2016

Kenneth S. Pelsinger, Kenneth S. Pelsinger, PC, Levittown, NY, for Plaintiff.

Morgan Ross McCord, Eckert, Seamans, Cherin & Mellott LLC, White Plains, NY, for Defendants.

OPINION & ORDER

JOHN G. KOELTL

, District Judge:

The plaintiff, Clive Graham, alleges twelve causes of action against the defendants, U.S. Bank National Association (“U.S.Bank”) and Select Portfolio Servicing, Inc. (“SPS”). SPS was the servicer for a mortgage on Graham's home. Graham claims that even though he entered into a loan modification with SPS and made payments on the modified loan, U.S. Bank, the Trustee of the Trust that held the mortgage, foreclosed on the mortgage. In his Verified Complaint, Graham alleges various claims for fraud, breach of contract, and specific performance relating to his alleged loan modification agreement with SPS as well as challenges to the validity of the foreclosure by U.S. Bank. Pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure

, the defendants moved to dismiss with prejudice Graham's claims for lack of subject matter jurisdiction and for failure to state a claim. For the reasons explained below, the motion is granted.

I.

When presented with motions under both Federal Rule of Civil Procedure 12(b)(1)

to dismiss for lack of subject matter jurisdiction and Rule 12(b)(6) to dismiss for failure to state a claim upon which relief can be granted, the first issue is whether the Court has the subject matter jurisdiction necessary to consider the merits of the action. See

Rhulen Agency, Inc. v. Alabama Ins. Guar. Ass'n, 896 F.2d 674, 678 (2d Cir.1990) ; Abrahams v. App. Div. of the Sup.Ct., 473 F.Supp.2d 550, 554 (S.D.N.Y.2007), aff'd on other grounds, 311 Fed.Appx. 474 (2d Cir.2009) ; see also

S.E.C. v. Rorech, 673 F.Supp.2d 217, 220–21 (S.D.N.Y.2009).

To prevail against a motion to dismiss for lack of subject matter jurisdiction, the plaintiff bears the burden of proving the Court's jurisdiction by a preponderance of the evidence. Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000)

. In considering such a motion, the Court generally must accept the material factual allegations in the complaint as true. See

J.S. ex rel. N.S. v. Attica Cent. Sch., 386 F.3d 107, 110 (2d Cir.2004). The Court does not, however, draw all reasonable inferences in the plaintiff's favor. Id. ; Graubart v. Jazz Images, Inc., No. 02–cv–4645 (KMK), 2006 WL 1140724, at *2 (S.D.N.Y. Apr. 27, 2006). Indeed, where jurisdictional facts are disputed, the Court has the power and the obligation to consider matters outside the pleadings, such as affidavits, documents, and testimony, to determine whether jurisdiction exists. See

APWU v. Potter, 343 F.3d 619, 627 (2d Cir.2003) ; Kamen v. Am. Tel. & Tel. Co., 791 F.2d 1006, 1011 (2d Cir.1986). In so doing, the Court is guided by that body of decisional law that has developed under Federal Rule of Civil Procedure 56. Kamen, 791 F.2d at 1011 ; see also McKevitt v. Mueller, 689 F.Supp.2d 661, 664–65 (S.D.N.Y.2010)

; Rorech, 673 F.Supp.2d at 220–21.

In deciding a motion to dismiss pursuant to Rule 12(b)(6)

, the allegations in the complaint are accepted as true, and all reasonable inferences must be drawn in the plaintiff's favor. McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir.2007). The Court's function on a motion to dismiss is “not to weigh the evidence that might be presented at a trial but merely to determine whether the complaint itself is legally sufficient.” Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir.1985). The Court should not dismiss the complaint if the plaintiff has stated “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). While the Court should construe the factual allegations in the light most favorable to the plaintiff, “the tenet that a court must accept as true all of the allegations contained in the complaint is inapplicable to legal conclusions.” Id.

When presented with a motion to dismiss pursuant to Rule 12(b)(6)

, the Court may consider documents that are referenced in the complaint, documents that the plaintiff relied on in bringing suit and that are either in the plaintiff's possession or that the plaintiff knew of when bringing suit, or matters of which judicial notice may be taken. See

Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.2002) ; see also

Rullan v. New York City, Dep't of Sanitation, No. 13–cv–5154 (JGK), 2014 WL 2011771, at *1 (S.D.N.Y. May 16, 2014), aff'd, 607 Fed.Appx. 86 (2d Cir.2015) ; Winfield v. Citibank, N.A., 842 F.Supp.2d 560, 564 (S.D.N.Y.2012).

II.

The following facts are taken from the Verified Complaint and are accepted as true for purposes of the defendants' motion to dismiss.

The plaintiff's claims arise out of a foreclosure commenced in the New York State Supreme Court, Westchester County. Verified Compl. ¶ 1. Graham resides in Westchester County, and SPS, a mortgage loan servicer, is a resident of Utah. Verified Compl. ¶¶ 2, 4. U.S. Bank resides in Minnesota and is the trustee for the Home Equity Asset Trust 2006–4 Home Equity Pass–Through Certificates, Series 2006–4. Verified Compl. ¶¶ 5–6.

The Verified Complaint alleges that on October 31, 2005, Graham executed a mortgage secured by his home in Mount Vernon and delivered the mortgage and the security instrument to Encore Credit Corp. Verified Compl. ¶ 15(2). The mortgage was recorded in Westchester County on or about February 3, 2006. Verified Compl. ¶ 16. As a result of an assignment from Encore Credit, U.S. Bank claims to be the owner and holder of the mortgage. Verified Compl. ¶ 10.

Graham became unable to make the monthly mortgage payments and defaulted on his loan payments. On or before January 2010, SPS allegedly offered Graham a loan modification for his mortgage which was allegedly held by U.S. Bank as Trustee for the Trust. Verified Compl. ¶¶ 18, 31. SPS and Graham allegedly entered into a loan modification agreement, and the agreement was recorded in Westchester County. Verified Compl. ¶¶ 19–20. Graham's monthly payments under the loan modification agreement were $2,537.00, and Graham allegedly made five mortgage payments to SPS pursuant to the loan modification agreement for a total of $12,685.00. Verified Compl. ¶¶ 21, 23. The Verified Complaint alleges that even after Graham made the loan modification payments, U.S. Bank initiated a foreclosure action against Graham on or about January 14, 2010. Verified Compl. ¶ 25. U.S. Bank obtained a judgment of foreclosure and sale, and a public auction sale was allegedly scheduled for January 23, 2015. Verified Compl. ¶ 27.

According to the Verified Complaint, the defendants never advised Graham whether the loan modification had become effective, but nevertheless continued to accept Graham's mortgage payments. Verified Compl. ¶ 35. Graham alleges that but for the fraudulent misrepresentation and concealment of material facts by the defendants or their agents, he would not have entered into the loan modification agreement nor would he have damaged his credit or faced a foreclosure action. Verified Compl. ¶¶ 39–41. The plaintiff seeks compensatory damages in an amount greater than $75,000 and punitive damages of $10 million. Verified Compl. ¶¶ 42, 45.

Graham brings the following claims against the defendants: (1) a cause of action against SPS and U.S. Bank for fraud, Verified Compl. ¶¶ 30–45 (Count 1); (2) a cause of action for breach of contract against SPS, Verified Compl. ¶¶ 46–52 (Count 2); (3) a cause of action against SPS for violation of the implied covenant of good faith and fair dealing under New York law, Verified Compl. ¶¶ 53–56 (Count 3); (4) a cause of action against SPS and U.S. Bank for unjust enrichment, Verified Compl. ¶¶ 57–59 (Count 4); (5) a cause of action against SPS and U.S. Bank for conversion, Verified Compl. ¶¶ 60–66 (Count 5); (6) a cause of action against SPS for deceptive business practices, Verified Compl. ¶¶ 67–71 (Count 6); (7) a cause of action against U.S. Bank alleging violations of the securities laws, Verified Compl. ¶¶ 72–84 (Count 7); (8) a cause of action against U.S. Bank alleging debt collection law violations, Verified Compl. ¶¶ 85–90 (Count 8); (9) a cause of action against U.S. Bank alleging violations of the False Claims Act, Verified Compl. ¶¶ 91–93 (Count 9); (10) a cause of action against U.S. Bank for aiding and abetting securities fraud, Verified Compl. ¶¶ 94–112 (Count 10); (11) a cause of action against U.S. Bank for civil rights violations, Verified Compl. ¶¶ 113–27 (Count 11); and (12) a cause of action against U.S. Bank seeking an injunction to restrain a public auction pursuant to a foreclosure action of Graham's property, Verified Comp. ¶¶ 128–33 (Count 12).

III.

The plaintiff generally has two sets of claims. In one set of claims, Counts 7–12, Graham asserts that U.S. Bank lacked standing to pursue the foreclosure action because the assignments by which it purportedly obtained its interest in the mortgage were invalid. Graham therefore contends that U.S. Bank's representations about the foreclosure and its actions in pursuing the foreclosure were invalid. The second set of claims, Counts 1–6, are asserted primarily against SPS and are based on the alleged loan modification agreement. These claims allege that SPS violated the loan modification agreement,...