Nath v. JP Morgan Chase Bank, N.A.
| Decision Date | 30 September 2016 |
| Docket Number | No. 15-CV-3937 (KMK),15-CV-3937 (KMK) |
| Parties | PREM NATH, Plaintiff, v. JP MORGAN CHASE BANK, N.A.; SELECT PORTFOLIO SERVICING, INC.; U.S. BANK N.A., as Indenture Trustee for C.S.F.B. Trust 2002-NP14; and THE INTERNAL REVENUE SERVICE, Defendants. |
| Court | New York District Court |
Appearances:
Prem Nath
Blauvelt, NY
Casey B. Howard, Esq.
Samantha A. Ingram, Esq.
Select Portfolio Servicing, Inc., and U.S. Bank, N.A.
Anthony Jan-Huan Sun, Esq.
U.S. Attorney's Office S.D.N.Y.
New York, NY
Plaintiff Prem Nath ("Nath" or "Plaintiff") brings this Action against JP Morgan Chase Bank, N.A. ("JPMorgan"), Select Portfolio Servicing, Inc. ("SPS"), U.S. Bank, N.A., as indenture trustee for C.S.F.B. Trust 2002-NP14 (), and the Internal Revenue Service (the "IRS"), seeking to quiet title to certain real property and to cancel or invalidate various assignments and agreements related to a mortgage encumbering the property. Before the Court are two Motions To Dismiss, one filed by the Private Defendants (see Dkt. No. 20), and one filed by the IRS (see Dkt. No. 43). For the following reasons, both Motions are granted.
The following facts are drawn from the Complaint, as well as the various transaction documents and state court documents attached to Private Defendants' moving papers.1
On September 4, 1998, Nath executed a note (the "Note") and mortgage (the "Mortgage") with Long Beach Mortgage Company ("LBMC") to secure a loan (the "Loan") for purchase of the real property located at 12 John Calvin Street, Blauvelt, New York (the "Subject Property"). (See Atty. Decl. of Casey B. Howard in Supp. of Defs.' Mot. To Dismiss ("Howard Decl.") Ex. 12 at ¶¶ 4-5 (Dkt. No. 22); see also Compl. ¶ 14.)
On or around June 19, 2001, a foreclosure action was brought in New York Supreme Court, Rockland County, captioned The Chase Manhattan Bank v. Prem Nath, et al., Index No. 3532/2001 (the "Foreclosure Action" brought in the "State Court"). (See Compl. ¶ 15; see also Dkt. No. 1-2 at 7 ("Foreclosure Complaint").)
On October 16, 2005, Plaintiff filed a bankruptcy petition under Chapter 7 in the United States Bankruptcy Court for the Southern District of New York (the "First Bankruptcy"). (See Compl. ¶ 17; see also Dkt. No. 1 (05-BK-25603 Dkt.).) Plaintiff received a discharge on March 17, 2006, (see Dkt. No. 12 (05-BK-25603 Dkt.)), and shortly thereafter the Bankruptcy Court entered an order lifting the automatic stay to allow foreclosure to proceed on the Subject Property, (see Dkt. No. 20 (05-BK-25603 Dkt.)).2
On March 18, 2010, Nath executed a Settlement Agreement and Release (the "Settlement Agreement") with LaSalle Bank ("LaSalle") as Trustee for the CSFB Trust 2002-NP14. (SeeHoward Decl. Ex. 2 ("Settlement Agreement"); see also Compl. ¶ 18.)3 The Settlement Agreement states that Chase Manhattan Bank ("Chase") "assigned all right, title and interest in the subject Note and Mortgage" to LaSalle, as trustee. (Settlement Agreement at unnumbered 1.) The Settlement Agreement also contained a loan modification agreement (the "Loan Modification Agreement"), and stated that, in the event Nath failed to make the first three timely payments, he agreed, among other things, "to waive any and all defenses" to the Foreclosure Action. (Settlement Agreement ¶ 6.)4 Nath concedes that he did not make any payments under the Loan Modification Agreement. (Compl. ¶ 21.)
On December 9, 2010, the State Court issued a Decision and Order granting summary judgment against Nath in the Foreclosure Action. (Howard Decl. Ex. 4 ("State Court Dec. 2010 Decision").) The State Court found that Chase "ha[d] established prima facie entitlement to a judgment of foreclosure and sale and [Nath] ha[d] failed to raise a material issue of fact." (Id. at 5.)5 In the same decision, the State Court rejected Plaintiff's request to rescind the LoanModification Agreement on the grounds of mutual mistake. (Id. at 2-3.)6 The decision led to a Judgment of Foreclosure and Sale ("State Court Foreclosure Judgment"), dated February 4, 2011, and entered on March 2, 2011, directing that the Subject Property be sold at public auction and that the proceeds of the sale be deposited with Chase. (Howard Decl. Ex. 1 ("State Court Foreclosure Judgment").)
On or around February 8, 2011, after the State Court Foreclosure Judgment was signed, but before it was entered, Nath, represented by counsel, filed an order to show cause (the "Order to Show Cause") seeking, among other things, leave to renew Chase's motion for summary judgment and vacatur of both (1) the State Court's December 9, 2010 Decision and (2) the Settlement Agreement and Loan Modification Agreement. (Howard Decl. Ex. 5 ("Order to Show Cause").) The following arguments were raised: (1) the Tolman Affidavit lacked a "certificate of conformity," (2) the Tolman Affidavit stated that Chase was the holder of the Note and Mortgage but the Settlement Agreement and Loan Modification Agreement stated that the Loan was assigned to LaSalle, (3) Chase was a non-existent entity when it commenced the foreclosure proceedings in June 2001, thus it lacked the capacity to commence the proceedings, to accept the assignment of the Note and Mortgage in July 2001, or to assign it to LaSalle in June 2010, (4) Chase's initial complaint filed in June 2001 contained the material misrepresentation that Chase had been assigned the Loan prior to commencement of the action, when, in fact, the purported assignment from LBMC to Chase was dated July 19, 2001, (5) the July 19, 2001 assignment ("2001 Assignment") from LMBC to Chase was invalid because it lacked acertificate of conformity, lacked a power of attorney, and was signed by an agent of the assignee, rather than by the assignor, and (6) LaSalle is a non-existent entity, because it merged into another corporation as of October 17, 2008, and thus it lacked the capacity to accept assignment of the Loan from Chase and to enter into the Settlement Agreement and Loan Modification Agreement in March 2010. (Order to Show Cause Aff'n in Supp. ¶ 9.)
The State Court issued a Decision and Order dated July 20, 2011 that denied Nath's Order to Show Cause. (Howard Decl. Ex. 7 ("Vacatur Denial").) The State Court determined that Nath "ha[d] failed to offer a valid excuse for failing to submit the additional facts [relied upon in his Order to Show Cause] with the original application." (Id. at 3.) Because "[a]ll of [Nath's] 'newly' discovered facts were available at the time of the prior motion and appear to have been discoverable with appropriate diligence," Nath's motion to renew was denied. (Id.)
On August 30, 2011, Plaintiff filed a bankruptcy petition under Chapter 13 in the United States Bankruptcy Court for the Southern District of New York (the "Second Bankruptcy"). (See Dkt. No. 1 (11-BK-23730 Dkt.).) By that time, U.S. Bank had taken over as Trustee for the CSFB Trust 2002-NP14, (see Howard Decl. Ex. 12 at ¶ 12), and filed a proof of claim with the Bankruptcy Court on October 24, 2011, in the amount of $1,211,193.90, including an unpaid principal balance of $492,260.67, for the secured debt on the Subject Property, (see Dkt. No. 17-2 (11-BK-23730 Dkt.)). Plaintiff, through counsel, objected to U.S. Bank's proof of claim. (Dkt. No. 17 (11-BK-23730 Dkt.).) On March 21, 2014, the Bankruptcy Court granted U.S. Bank's motion for summary judgment on two independent grounds. First, because U.S. Bank was the holder of the Note with a valid endorsement in blank, it had standing to file and pursue the proof of claim. (See Dkt. No. 98 at 92, 98 (11-BK-23730 Dkt.).) Second, the Bankruptcy Court held that the Rooker-Feldman doctrine barred it from granting Nath's claim objection,because such a ruling would "serve as a de facto reversal of the Rockland County Orders" that recognized and enforced U.S. Bank Trustee's rights under the Settlement Agreement signed by Nath. (Id. at 96 (italics omitted).) In an order dated April 14, 2014, the Bankruptcy Court granted the Chapter 13 Trustee's motion to dismiss the case for failure to comply with certain provisions of the Bankruptcy Code. (See Dkt. No. 93 (11-BK-23730 Dkt.).)7
On June 11, 2014, Plaintiff filed an order to show cause in this Court seeking an emergency stay of the sale of the Subject Property, (see Dkt. Nos. 5-6 (14-CV-3871 Dkt.)), which this Court denied in a bench ruling at oral argument held on June 27, 2014, (see Dkt. No. 14 (14-CV-3871 Dkt.)). This Court eventually affirmed the Bankruptcy Court's decision granting U.S. Bank's motion for summary judgment on its proof of claim in a bench ruling on September 25, 2015. (Dkt. No. 25 (14-CV-3871 Dkt.).)8
On May 21, 2015, Plaintiff filed a Complaint against Defendants "to [q]uiet [t]itle on the [Subject] [P]roperty, to expunge any title claimed by Defendants with respect to said property, to remove the cloud on the title held by Plaintiff, and to nullify a loan modification agreement secured by the property." (Compl. 1-2.) Private Defendants filed a Motion To Dismiss on September 16, 2015, (see Dkt. Nos. 20-22), which Plaintiff opposes, (see Dkt. No. 23; see alsoDkt. No. 53). Private Defendants replied on October 2, 2015. (See Dkt. Nos. 25-26.)9 The IRS filed a Motion To Dismiss on December 18, 2015, (see Dkt. Nos. 43-46), which Plaintiff opposes, (see Dkt. No. 52). The IRS filed its reply brief on February 26, 2016. (See Dkt. No. 54.)10
"The standards of review for a motion to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction and under 12(b)(6) for failure to state a claim are 'substantively identical.'" Gonzalez v. Option One Mortg. Corp., No....
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