Oum v. Wells Fargo, N.A.

• Citation: 842 F.Supp.2d 407
• Decision Date: 08 February 2012
• Docket Number: Civil Action Nos. 11–11663–RGS, 11–11683–RGS.
• Parties: Chantha OUM v. WELLS FARGO, N.A., as Trustee for Option One Mortgage Loan Trust 2007–2, Asset Backed Certificates, Series 2007–2 and Sand Canyon Corporation and Joseph M. O'Brien v. Wells Fargo, N.A., as Trustee for Option One Mortgage Loan Trust 2005–2, Asset Backed Certificates, Series 2005–2 and Sand Canyon Corporation.
• Court: United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts

842 F.Supp.2d 407

Chantha OUM

v.WELLS FARGO, N.A., as Trustee for Option One Mortgage Loan Trust 2007–2, Asset Backed Certificates, Series 2007–2 and Sand Canyon CorporationandJoseph M. O'Brien

v.Wells Fargo, N.A., as Trustee for Option One Mortgage Loan Trust 2005–2, Asset Backed Certificates, Series 2005–2 and Sand Canyon Corporation.

Civil Action Nos. 11–11663–RGS, 11–11683–RGS.

United States District Court,

D. Massachusetts.

Feb. 8, 2012.

Todd S. Dion, Cranston, RI, for Joseph M. O'Brien.

Ranen S. Schechner, Jennifer S. Bunce, Maura K. McKelvey, Hinshaw & Culbertson LLP, Chad W. Higgins, Courtney L. Benson, Goodwin Procter LLP, Boston, MA, for Wells Fargo, N.A., as Trustee for Option One Mortgage Loan Trust 2005–2, Asset Backed Certificates, Series 2005–2 and Sand Canyon Corporation.

MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO DISMISS ¹

STEARNS, District Judge.

These two actions reflect a nearly identical set of facts. Both cases arise from the allegedly invalid assignment of a mortgage from defendant Sand Canyon Corporation (Sand Canyon) to Wells Fargo Bank, N.A., as Trustee for Option One Mortgage Loan Trust 2005–2, Asset Backed Certificate, Series 2005–2, with respect to Joseph O'Brien, and Wells Fargo Bank, N.A., as Trustee for Option One Mortgage Loan Trust 2007–2, Asset Backed Certificate, Series 2007–2, with respect to Chantha Oum (collectively, Wells Fargo as Trustee).

Plaintiffs contend that because the assignments of their mortgages were invalid, the foreclosures by Wells Fargo as Trustee on their homes were invalid as well. Plaintiffs ask the court, inter alia, to enjoin Wells Fargo from proceeding with any eviction action (Count I); to quiet title by declaring them the “sole owners” of the properties (Count II); and to grant appropriate relief for Wells Fargo as Trustee's breach of the duty of good faith and reasonable diligence (Count III).

PROCEDURAL BACKGROUND

Defendant Wells Fargo as Trustee removed Oum's case to federal court on September 20, 2011, and on September 27, 2011, filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). On October 21, 2011, Sand Canyon filed a motion for judgment on the pleadings pursuant to Rule 12(c). On November 1, 2011, Oum opposed the motions. O'Brien's case was removed to federal court on September 21, 2011, by former defendant American Home Mortgage Servicing, Inc. (AHMSI), which then filed a motion to dismiss on September 28, 2011. On November 22, 2011, Wells Fargo as Trustee also filed a motion to dismiss O'Brien's Complaint pursuant to Fed.R.Civ.P. 12(b)(6).

On November 23, 2011, the court held a joint scheduling conference and directed defendants to file a consolidated motion to dismiss on the issue of standing. The court also allowed AHMSI's motion to dismiss with prejudice as the Complaint failed to assert any claim against it.

FACTUAL BACKGROUND

Joseph O'Brien

In December of 2004, O'Brien granted a mortgage on a home that he owned in Bellingham, Massachusetts, to Mortgage Solutions, Inc., to secure a $235,800 loan. O'Brien Compl. ¶¶ 16–18, 21. O'Brien alleges that during the underwriting of the loan, agents of Mortgage Solutions exaggerated his earned income and inflated the fair market value of his home.²Id. ¶¶ 19–20.

O'Brien contends that Mortgage Solutions was not the actual lender, but was instead a “middle man” for Option One Mortgage Corporation (Option One). ³Id. ¶ 26. On November 23, 2009, an assignment of O'Brien's mortgage from “Sand Canyon f/k/a Option One” to Wells Fargo as Trustee was recorded in the Norfolk County Registry of Deeds. Id. ¶ 27. The assignment was executed by Cheryl Thomas, Vice President of Sand Canyon, and Chris Pendley, Assistant Secretary of Sand Canyon. Id. ¶ 31. O'Brien notes the absence of any assignment from Option One to Sand Canyon, asserting that the two companies are not the same entity. Id. ¶ 28. On February 8, 2010, Wells Fargo as Trustee filed a Servicemembers Relief Act complaint and order of notice in the Middlesex Superior Court. Id. ¶ 50. On or about March 28, 2011, Wells Fargo as Trustee foreclosed on O'Brien's property, and recorded a foreclosure deed granting Wells Fargo title on or about May 23, 2011. Id. ¶¶ 51–52.⁴

Chantha Oum

In December of 2006, Oum granted a mortgage to Option One in exchange for a loan to purchase a residential property in Lowell, Massachusetts. Oum Compl. ¶¶ 14–16. Oum alleges that “during the underwriting of said loan, Option One and its agents stated that the Plaintiff earned more income than what she actually earned”; stated that the fair market value of the property was higher than it truly was; and “induced” Oum to agree to pay interest at 9.8 percent based on representations that she would be able to refinance at a lower fixed rate prior to the January of 2009 balloon adjustment.⁵Id. ¶¶ 17–20. Oum alleges further that on page six of the mortgage document, where signature lines exist for “witnesses” to the agreement, no witness names appear. Id. ¶ 25. Moreover, the notary acknowledgment clause “fails to state how or if Chantha Oum was identified to be the person signing the mortgage.” Id. ¶ 26.⁶

On May, 28, 2010, Sand Canyon assigned Oum's mortgage to Wells Fargo as Trustee. Id. ¶ 40. On July 27, 2010, the assignment was recorded in the Middlesex County North Registry of Deeds as an assignment of the Oum mortgage from “Sand Canyon Corporation f/k/a Option One” to Wells Fargo as Trustee. Id. ¶ 28. On September 1, 2010, Wells Fargo as Trustee filed a Servicemembers Relief Act complaint and order of notice with the Middlesex Superior Court. Id. ¶ 55. Wells Fargo as Trustee subsequently conducted a foreclosure auction at which it was the high bidder.⁷ On February 19, 2011, Oum received a notice to quit from Wells Fargo, giving her seventy-two hours to leave the property. Id. ¶ 57.

DISCUSSION

“A motion to dismiss for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) is appropriate when the plaintiff lacks standing to bring the claim.” Edelkind v. Fairmont Funding, Ltd., 539 F.Supp.2d 449, 453 (D.Mass.2008). “When faced with motions to dismiss under both 12(b)(1) and 12(b)(6), a district court, absent good reason to do otherwise, should ordinarily decide the 12(b)(1) motion first.... It is not simply formalistic to decide the jurisdictional issue when the case would be dismissed in any event for failure to state a claim. Different consequences flow from dismissals under 12(b)(1) and 12(b)(6): for example, dismissal under the former, not being on the merits, is without res judicata effect.” Katz v. Pershing, LLC, 806 F.Supp.2d 452, 456 (D.Mass.2011), quoting Ne. Erectors Ass'n of the BTEA v. Sec'y of Labor, Occupational Safety & Health Admin., 62 F.3d 37, 39 (1st Cir.1995).

Standing

The doctrine of standing addresses whether a particular plaintiff has “such a personal stake in the outcome of [a] controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination....” Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962). The burden of establishing standing rests with the party invoking federal jurisdiction.⁸Bennett v. Spear, 520 U.S. 154, 167–168, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997). There are

three fundamental requisites of standing that every litigant invoking the jurisdiction of the federal courts must possess: (1) injury-in-fact—an invasion of a legally-protected interest that is both concrete and particularized, and actual or imminent; (2) causation; and (3) redressability.... Several prudential considerations also infuse standing determinations. These considerations, which militate against standing, principally concern whether the litigant (1) asserts the rights and interests of a third party and not his or her own, (2) presents a claim arguably falling outside the zone of interests protected by the specific law invoked, or (3) advances abstract questions of wide public significance essentially amounting to generalized grievances more appropriately addressed to the representative branches.

Benjamin v. Aroostook Med. Ctr., Inc., 57 F.3d 101, 104 (1st Cir.1995) (citations omitted).

In contrast to state courts, which may broaden the rules of standing in conformity with their own constitutional limitations, discretionary doctrines, or legislative directives, the federal courts must strictly abide by the prudential constraints of Article III's “case” or “controversy” requirement. Lewis v. Cont'l Bank Corp., 494 U.S. 472, 477, 110 S.Ct. 1249, 108 L.Ed.2d 400 (1990). “In part, the extent to which there is a ‘real and substantial controversy’ is determined under the doctrine of ‘standing’ by an examination of the sufficiency of the stake of the person making the claim, to ensure the litigant has suffered an actual injury which is fairly traceable to challenged action and likely to be redressed by the judicial relief requested.” Laurence H. Tribe, 1 American ConstitutionalLaw § 3–7 at 313 (3d ed.2000). See Conservation Law Found. of New England, Inc. v. Reilly, 950 F.2d 38, 41 (1st Cir.1991) (“Congress may not expand by statute the standing limitations imposed upon it by Article III.”); cf. Maine Ass'n of Interdependent Neighborhoods v. Comm'r, Maine Dep't of Human Servs., 876 F.2d 1051, 1054 (1st Cir.1989) (a party “may have standing to sue in the Maine state courts, even though it does not meet federal standing requirements, because Maine's standing rules are somewhat more liberal.”).

Defendants argue that plaintiffs lack standing to challenge the validity of the assignments Sand Canyon made to Wells Fargo as Trustee of their respective mortgages because plaintiffs were neither parties to the contractual assignments, nor were they third-party beneficiaries. Plaintiffs, for their part, argue that because they have a “claim of rightful legal ownership” to the respective properties, they have standing to contest the “cloud” on their wrongly divested...