Grimes v. Fremont Gen. Corp.

Decision Date22 March 2013
Docket NumberCase No. 08–CV–1024 (KMK).
PartiesDarrick GRIMES and Yolanda Grimes, on behalf of themselves and a class of others similarly situated, Plaintiffs, v. FREMONT GENERAL CORPORATION, Fremont Investment and Loan, WCS Lending LLC, Jonathan Tanenbaum, Nadene McBean, America's Servicing Company, U.S. Bancorp and U.S. Bank, National Association, as Trustee for Master Asset Backed Securities Trust 2006–FRE–1, “John Doe” and “Jane Doe,” the last two names being fictitious said parties being individuals, if any, having any involvement in the fraud perpetrated on Plaintiffs, and XYZ–1 Corporation and XYZ–2 Corporation, the last two names being fictitious, it being the intention of Plaintiffs to designate any corporation or entity having any involvement in the fraud perpetrated on Plaintiffs described herein, Defendants.
CourtU.S. District Court — Southern District of New York


Darrick Grimes and Yolanda Grimes, Newburgh, NY, pro se.

Kenneth J. Flickinger, Esq., Knuckles, Komosinski & Elliot, LLP, Elmsford, NY, for Defendants Fremont General Corporation and Fremont Investment and Loan.

Matthew J. Bizzaro, Esq., Noah Nurnberg, Esq., L'Abbate, Balkan, Colavita & Conti, Garden City, NY, for Defendant WCS Lending, LLC.

Steven M. Hecht, Esq., Lowenstein Sandler PC, New York, NY, for Defendant U.S. Bank, National Association, as Trustee for Master Asset Backed Securities Trust 2006–FRE–1.


KENNETH M. KARAS, District Judge.

Pro se Plaintiffs Darrick and Yolanda Grimes originally filed this action in 2008 against Fremont General Corporation and Fremont Investment and Loan (collectively “FGC” or “the Fremont Defendants); WCS Lending LLC (“WCS”); several other identified corporate entities and named individuals; and multiple John/Jane Does and XYZ–Corporations. Plaintiffs asserted a variety of federal and state law claims against Defendants, arising out of Plaintiffs' purchase of a home in Newburgh, New York on October 12, 2005. WCS served as Plaintiffs' mortgage broker for the purchase and helped Plaintiffs secure two loans from the Fremont Defendants.

Plaintiffs are now on their Second Amended Complaint, having twice been granted leave to amend and replead certain causes of action. Defendants WCS and FGC have once again moved to dismiss pursuant to Federal Rules of Civil Procedure 8(a)(2) and 12(b)(6). After reviewing the Parties' submissions, the Court is disappointed to find that Plaintiffs squandered their latest (and last) opportunity to submit a meaningful complaint based on good-faith allegations and viable causes of action. Instead, they filed a legal mirage—an instrument that is superficially plausible but is actually based on incoherent and misleading allegations and vacuous legal claims. The Court accordingly grants Defendants' motions and dismisses the action with prejudice.

I. Background
A. Facts

The Court has described the history of this matter in a prior published Opinion and Order. See Grimes v. Fremont General Corp., 785 F.Supp.2d 269, 276 (S.D.N.Y.2011). The Court therefore assumes familiarity with the dispute and will provide only a brief summary of the factual and procedural history as relevant to the instant Motions.

Plaintiffs are African Americans, (Second Am. Compl. (“SAC”) ¶ 2), who, in the summer of 2005, purchased a home in Newburgh, New York for $435,000. See Grimes, 785 F.Supp.2d at 276–77. Defendant WCS is a licensed mortgage broker that is based in Florida. (SAC ¶ 2.) WCS, through an employee, Defendant Joseph Tanenbaum, ( id.), helped Plaintiffs obtain two loans from FGC, which loans Plaintiff used to purchase the Newburgh home. See Grimes, 785 F.Supp.2d at 277–79. Defendant FGC is a financial services holding company that engages in real estate lending through its subsidiary, Defendant Fremont Investment and Loan, a lender that obtains its loans through a network of independent mortgage brokers like WCS, (SAC ¶ 2). See Grimes, 785 F.Supp.2d at 277.

Documentary evidence attached to Plaintiffs' original complaint—and which is incorporated both directly and by reference into the Second Amended Complaint, (SAC ¶¶ 941–47 (requesting incorporation of previously submitted exhibits))—demonstrates that on September 14, 2005, Plaintiffs received an offer through WCS for a floating, adjustable-rate loan, as opposed to a fixed-rate loan, from FGC to purchase the Newburgh home. See id. at 278 (Plaintiffs admit that they signed [a mortgage application and disclosure documents from WCS for a potential Fremont Loan] ... [which] clearly and repeatedly stated that the loan was not a fixed rate, but instead was a 2/28 ARM mortgage.”).1 Indeed, these documents, which Plaintiffs admitted to signing, describe the terms of the loan and expressly note that Plaintiffs' “interest rate was ... floating and was subject to daily changes based upon market fluctuations.” Id. (brackets and internal quotation marks omitted). Plaintiffs previously admitted to the Court, both in the First Amended Complaint and during oral argument, that from September 14, 2005 through the closing on October 12, 2005, they were in contact with FGC and WCS, as well as their attorney, regarding FGC's loan offer, (First Am. Compl. ¶ 187). See Grimes, 785 F.Supp.2d at 279.2 And at the closing, Plaintiffs accepted two loans from FGC—one of which was an adjustable-rate mortgage, the other of which was fixed rate—and purchased the home.

Plaintiffs stopped making payments on their first mortgage in September 2006. On December 26, 2006, U.S. Bank[,] [the trustee and custodian of a trust holding Plaintiffs' securitized mortgage,] filed a foreclosure action against Plaintiffs in the Supreme Court of the State of New York, County of Orange County.” Id. at 280–81 (citation omitted). That proceeding is on hold, pending this litigation. Id. at 281, n. 17. Plaintiffs have thus been living in the Newburgh home without making a mortgage payment since 2006. See id.

B. Procedural History

Plaintiffs originally brought this action on January 31, 2008 before the Honorable Judge John G. Koetl. (Dkt. No. 1.) Pursuant to an order of Judge Koetl, (Dkt. No. 47), Plaintiffs filed an Amended Complaint on December 12, 2008, (Dkt. No. 48). The matter was then referred to the undersigned. (Dkt. No. 89.) The Amended Complaint was “161 pages long and contain[ed] 722 paragraphs. It sometimes contain[ed] conflicting dates and descriptions of events, and Plaintiffs [were] not always clear about which Defendants purportedly took which actions.” Grimes, 785 F.Supp.2d at 276. Defendants WCS, FGC, and U.S. Bank moved to dismiss the Amended Complaint, and on March 31, 2011, the Court granted their motions in part:

The motions to dismiss of Fremont, WCS, and U.S. Bank are granted in part.... Plaintiffs' TILA, HOEPA, RESPA, FHA, ECOA, and Civil RICO claims are dismissed with prejudice as to all Moving Defendants. However, given Plaintiffs' pro se status, the Court will allow Plaintiffs to amend their Civil Rights Act claims to attempt to cure the deficiencies in the Amended Complaint as to Fremont and WCS. Therefore, Plaintiffs' Civil Rights Act claims are dismissed without prejudice as to Fremont and WCS, but with prejudice as to U.S. Bank.... The Moving Defendants' motions to dismiss Plaintiffs' state law claims are denied without prejudice to renewal at a later date[, if Plaintiffs amend to adequately plead a federal cause of action].

Id. at 302–03 (emphasis added).

Plaintiffs filed their Second Amended Complaint on October 3, 2011. (Dkt. No. 138.) In disregard of the Court's instructions in its March 31, 2011 Opinion and Order, the Second Amended Complaint is 341 pages in length (over twice the length of the First Amended Complaint), contains 1,215 numbered paragraphs (many of which contain un-numbered subparagraphs), and carries 237 pages of attachments. Furthermore, in addition to repleading the Civil Rights Act claims, Plaintiffs attempted to reassert several of the dismissed causes of action, asserted dozens of new claims, and seem to have identified several new Defendants—all without seeking or receiving Defendants' or the Court's permission to amend in this matter.3

To make matters worse, and as the Court will explain at greater length below, hundreds of paragraphs in the Second Amended Complaint have been copied and pasted virtually verbatim, without citation or explanation, from complaints in separate court proceedings—complaints which were, for the most part, filed by other plaintiffs against parties entirely unrelated to the instant litigation. And the Court uses the phrase “virtually verbatim,” because Plaintiffs did deem it appropriate to alter the lifted language by substituting in party names, locations, and other relevant proper nouns in an apparent effort to make the allegations in these other, unrelated actions appear to be applicable here and to survive potential motions to dismiss.

Defendants requested a premotion conference in late 2011, seeking to file motions to dismiss the Second Amended Complaint. On January 30, 2012, the Court held the conference, during which Plaintiffs conceded that they did not have a viable cause of action against Defendant U.S. Bank, and admitted that they were merely asserting potential defenses that might bear on the state court foreclosure proceeding. At the Court's suggestion, Plaintiffs and Defendant U.S. Bank attempted to reach a stipulation, dismissing Plaintiffs' claims against U.S. Bank here, but preserving those claims as defenses in the foreclosure proceeding. (Dkt. No. 147.) The Parties could not reach an agreement, however, and the Court accordingly dismissed all of Plaintiffs' claims against U.S. Bank with prejudice on February 28, 2012.4 (Dkt. No. 148.) Also at the January 30, 2012 premotion conference, the Court pressed Plaintiffs to articulate a theory of their claims based on 42 U.S.C. §§ 1981 and 1982 (“the Civil Rights Act claims) as to Defendant WCS. After an extended...

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