Hourani v. Wells Fargo Bank, N.A.
Decision Date | 01 February 2016 |
Docket Number | CV 15–2561(LDW)(SIL) |
Citation | 158 F.Supp.3d 142 |
Parties | George Hourani, Plaintiff, v. Wells Fargo Bank, N.A., Defendant. |
Court | U.S. District Court — Eastern District of New York |
Montell Figgins, Law Offices of Montell Figgins, Newark, NJ, for Plaintiff.
Lisa Fried, Jeffrey Anthony Dougherty, Hogan Lovells, U.S. LLP, New York, NY, for Defendant.
Plaintiffs George Hourani (“Hourani”) brings this diversity action against defendant Wells Fargo Bank, N.A. (“Wells Fargo”), asserting various claims stemming from a foreclosure action brought by Wells Fargo against Hourani in state court.
Wells Fargo moves to dismiss under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure (“FRCP”). Hourani opposes the motion.
For purposes of this decision, the relevant background can be summarized as follows. Hourani resides at 23 West Avenue, Lawrence, New York (the “Property”). The Property was subject to a note, for $400,000, secured by a mortgage held by Wells Fargo. On July 28, 2011, following Hourani's default in making required payments, Wells Fargo commenced a foreclosure action in Supreme Court, Nassau County (the “Foreclosure Action”). On March 5, 2014, Wells Fargo obtained a judgment of foreclosure and sale in the amount of $519,315.68, plus additional interest through the date of sale (the “Foreclosure Judgment”). The Property was sold to a non-party on October 21, 2014 (the “Foreclosure Sale”). Hourani alleges that he first learned of the Foreclosure Sale on October 22, 2014.
On or about October 29, 2014, Hourani filed a motion in the Foreclosure Action to set aside the Foreclosure Sale on the grounds of fraud, bad faith, and breach of agreement, alleging that he did not receive a notice of the Foreclosure Sale and that Wells Fargo had misrepresented that it would adjourn the Foreclosure Sale while Hourani completed an application to modify the mortgage loan (the “Motion to Vacate”). On December 5, 2014, Wells Fargo filed opposition to the Motion to Vacate. In its opposition, Wells Fargo submitted a “Notice of Sale,” with an “Affidavit of Service,” indicating that the notice was served on Hourani on September 22, 2014 by Wells Fargo's counsel. By order dated April 1, 2015, the state court denied Hourani's Motion to Vacate, ruling that (the “Order Denying Motion to Vacate”). Hourani did not file an appeal in the Foreclosure Action.
On May 5, 2015, Hourani commenced this action. In the complaint, he asserts seven claims: (1) Count One, “Deceptive Advertising and Other Unfair Business Practices”; (2) Count Two, “Breach of Fiduciary Duty by Fraudulent Concealment”; (3) Count Three, “Common Law Fraud”; (4) Count Four, “Unjust Enrichment”; (5) Count Five, “Breach of the Implied Covenant of Good Faith and Fair Dealing”; (6) Count Six, “Equitable Estoppel”; and (7) Count Seven, “Intentional Infliction of Emotional Distress.” For each claim, Hourani requests “compensatory damages” and a judgment “vacating the foreclosure sale.”
Wells Fargo moves to dismiss, arguing, inter alia, that Hourani's claims are barred by: (1) the Rooker–Feldman doctrine, and (2) res judicata and collateral estoppel. Alternatively, Wells Fargo argues that the complaint fails to state a claim.
On a motion to dismiss under FRCP 12(b)(1), the court should dismiss the action when it “lacks the statutory or constitutional power to adjudicate it.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000). The court must accept as true all allegations in the complaint, but it may refer to evidence outside the pleadings to resolve disputed issues of jurisdiction. Kamen v. American Tel. & Tel. Co., 791 F.2d 1006, 1011 (2d Cir.1986) ; Woodcock v. Montefiore Med. Ctr., 48 F.Supp.2d 231, 233–34 (E.D.N.Y.1999).
On a motion to dismiss under FRCP 12(b)(6), the court must assume that all allegations in the complaint are true and draw all reasonable inferences in favor of the nonmoving party. Plair v. City of New York, 789 F.Supp.2d 459, 463 (S.D.N.Y 2011). Moreover, the plaintiff is required to “set forth enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; see also Ashcroft v. Iqbal, 556 U.S. 662, 678–80, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A pleading that does nothing more than recite the elements of a claim, supported by mere conclusory statements, is insufficient to “unlock the doors of discovery.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Rather, “only a complaint that states a plausible claim for relief survives a motion to dismiss.” Id. at 679, 129 S.Ct. 1937.
The Second Circuit has established a four-part test for determining whether the Rooker–Feldman doctrine deprives a federal district court of subject matter jurisdiction. See Vossbrinck v. Accredited Home Lenders, Inc., 773 F.3d 423, 426 (2d Cir.2014) ; Hoblock v. Albany Cnty. Bd. of Elections, 422 F.3d 77, 85 (2d Cir.2005). Under this test, Rooker–Feldman applies only if four conditions are met: (1) the federal-court plaintiff must have lost in state court; (2) the plaintiff must complain of injuries caused by a state-court judgment; (3) the plaintiff must invite district court review and rejection of that judgment; and (4) the state-court judgment must have been rendered before the district court proceedings commenced. Vossbrinck, 773 F.3d at 426 ; Hoblock, 422 F.3d at 85.
Here, the four conditions are met, and the doctrine applies, to the extent that Hourani requests an order “vacating the foreclosure sale”—as he does in every claim of the complaint. First, Hourani lost in the state court. Second, the complained-of injury (i.e., sale of the Property) was the result of the state court's Foreclosure Judgment. Third, Hourani clearly invites this Court to review and reject the state court's Foreclosure Judgment and subsequent Order Denying Motion to Vacate. Indeed, the complaint specifically requests, in each claim, a judgment by this Court “vacating the foreclosure sale.” Hourani tellingly states that he “brings this action with the hope that this Court will grant relief of a judgment entered in the [state court],” and that he “seeks to challenge final ruling of a State Court foreclosure action.” Brief in Opposition of Defendant's Motion to Dismiss, at 1. Finally, the Foreclosure Judgment and Order Denying Motion to Vacate were rendered before this action was commenced. Accordingly, the Rooker–Feldman doctrine deprives this Court of jurisdiction to hear Hourani's claims against Wells Fargo to the extent that his claims request that this Court vacate the Foreclosure Judgment. See Posy v. HSBC Bank USA, 991 F.Supp.2d 422, 426 (E.D.N.Y.2013).
A federal court must give a state court judgment the same preclusive effect that it would have in that state's courts. Green v. Montgomery, 219 F.3d 52, 55 (2d Cir.2000) ; Colon v. Coughlin, 58 F.3d 865, 869 n. 2 (2d Cir.1995). Because the Foreclosure Action occurred in New York, this Court applies New York's res judicata and collateral estoppel doctrines. See Beckford v. Citibank N.A., No. 00 CV 205 DLC, 2000 WL 1585684, at *3 (S.D.N.Y. Oct. 24, 2000).
Henry Modell & Co. v. Minister, Elders & Deacons of Reformed Prot. Dutch Church, 68 N.Y.2d 456, 462 n. 2, 510 N.Y.S.2d 63, 502 N.E.2d 978 (1986) (citation omitted); see also Signature Bank v. Epstein, 95 A.D.3d 1199, 1200, 945 N.Y.S.2d 347 (2d Dep't 2012) .
Under New York law, collateral estoppel (or issue preclusion) “precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party...
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