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Ludlow Scott and Barbara Mason v. Capital One

April 17, 2013

LUDLOW SCOTT AND BARBARA MASON, PLAINTIFFS,
v.
CAPITAL ONE, NATIONAL ASSOCIATES, AND JADE PENSION PLAN AND ACQUA CAPITAL, LLC, DEFENDANTS.



The opinion of the court was delivered by: Ramos, D.J.:

OPINION AND ORDER

Plaintiffs Ludlow Scott and Barbara Mason ("Plaintiffs") commenced this action against Defendants Capital One, National Associates ("Capital One" or "Defendant") and Jade Pension Plan and Acqua Capital, LLC ("Jade")*fn1 stating claims arising from a foreclosure action in Supreme Court, Westchester County (the "state foreclosure action"). Doc. 1. Before the Court is Defendant Capital One's motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Doc. 12. For the reasons set forth below, Defendant's motion is GRANTED.

I.Factual Background

The Court accepts the factual allegations in the Complaint as true for purposes of Defendant's motion to dismiss.

In 2005, Plaintiffs purchased property located at 372 North Avenue, New Rochelle, New York (the "Property") for $200,000. Compl. ¶ 11. To finance the purchase of the Property, Plaintiffs obtained a mortgage from Greenpoint Bank. Id. ¶ 12. Pursuant to a merger, Capital One subsequently became the holder of the note and mortgage. Id. ¶ 13. Defendant did not give any notice of the merger and/or assignment to Plaintiffs, who continued to pay money to Greenpoint by depositing money at a branch or by mailing in the funds. Id. ¶¶ 14-15. In 2009, Capital One contacted Plaintiffs to inform them that no money had been received for a few months. Id. ¶ 16. Plaintiffs attempted to resolve the issue with Capital One over the next few weeks, and ultimately prepared a lump sum to pay to Capital One by depositing it at a local branch. Id. ¶¶ 17-18. The local branch would not accept the funds, however, and Capital One Customer Service did not provide Plaintiffs with any help when Plaintiffs called for assistance. Id. ¶¶ 19-20.

After approximately one year of attempting to resolve the issue, Capital One verbally informed Plaintiffs that the mortgage was in the process of foreclosure. Id. ¶ 21. A judgment of foreclosure and sale was entered in the state foreclosure action on August 17, 2010. See Declaration of Ryan L. DiClemente ("DiClemente Decl.") Ex. A at 2.*fn2 A foreclosure auction was held on January 11, 2011 and the Property was subsequently transferred by referee's deed to the successful auction bidder, Jade. Id. Plaintiffs allege that they were never served with a Notice of Intent to Foreclose, the Foreclosure Sale or the Referee's Deed. Compl. ¶¶ 22-23. On May 9, 2011, Plaintiffs brought a pro se motion by Order to Show Cause in the state foreclosure action seeking an Order vacating the judgment of foreclosure and voiding the foreclosure sale and referee's deed. DiClemente Decl. Ex. A at 2-3. That motion was denied in July 2011 due to "procedural/jurisdictional errors." Id. at 3 n.2. Plaintiffs subsequently renewed their motion to vacate with the assistance of counsel, which was also denied by the state court on October 20, 2011. Id. at 2-3.

Plaintiffs' first cause of action seeks the dismissal of the state foreclosure action, on the grounds that Capital One lacked standing to foreclose on the mortgage and that the Court lacked in personam jurisdiction as a result of Capital One's failure to produce "an original deed to Title or Mortgage or Assignment or Merger." Compl. ¶¶ 25-29. Plaintiffs' second cause of action requests that the amounts owed to cure the default be reduced because of Capital One's alleged efforts in delaying Plaintiffs' attempts to cure the default, and because Capital One did not fulfill its prerequisite requirements of sending a Notice of Intent to Foreclose and an acceleration letter. Id. ¶¶ 30-34. Finally, Plaintiffs request that this Court grant a stay in the state foreclosure action because Plaintiffs allege that they and their tenants are about to be wrongfully evicted from the Property. Id. ¶¶ 35-37. In their Prayer for Relief, Plaintiffs request that the Court: (i) declare the entire state foreclosure action null and void; (ii) award damages to Plaintiffs "for suffering through foreclosure litigation, [and] losing title to their home"; (iii) grant attorneys' fees; (iv) grant a temporary injunction "stopping all efforts to remove Plaintiffs" from the Property; (v) declare that all rental income collected by Jade be put in escrow pending final determination of this matter; and (vi) grant a permanent injunction declaring title and ownership back to Plaintiffs and preventing Defendant from evicting Plaintiffs from the Property.

II.Legal Standard

When ruling on a motion to dismiss pursuant to Rule 12(b)(6), district courts are required to accept as true all factual allegations in the complaint and to draw all reasonable inferences in the plaintiff's favor. Famous Horse Inc. v. 5th Ave. Photo Inc., 624 F.3d 106, 108 (2d Cir. 2010). However, this requirement does not apply to legal conclusions, bare assertions or conclusory allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678, 681 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

In order to satisfy the pleading standard set forth in Rule 8 of the Federal Rules of Civil Procedure, a complaint must contain sufficient factual matter to state a claim to relief that is plausible on its face. Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 570). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. Accordingly, a plaintiff is required to support its claims with sufficient factual allegations to show "more than a sheer possibility that a defendant has acted unlawfully." Id. "Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. (quoting Twombly, 550 U.S. at 557) (internal quotation marks omitted).

III.Plaintiffs' Action is Barred by the Rooker-Feldman Doctrine

Although Plaintiffs generally allege in the "Nature of Action" section of the Complaint that issues of law in the case include the "Truth in Lending Act [TILA], Homeownership and Equity Protection Act [HOEPA], Real Estate Settlement Procedures Act [RESPA], Fair Housing Act [FHA], and Consumer Fraud Act [CFA]," Compl. ¶ 6, Plaintiffs have failed to include a single allegation to support any of the referenced federal statutes. Rather, Plaintiffs' action is merely an impermissible collateral attack of a state court judgment of foreclosure, and is therefore clearly barred under the Rooker-Feldman doctrine.

The Rooker-Feldman doctrine stands for the principle that federal district courts lack jurisdiction over suits that are, in substance, appeals from state court judgments. Hoblock v. Albany Cnty. Bd. of Elections, 422 F.3d 77, 84 (2d Cir. 2005). It precludes cases brought in lower federal courts "by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments." Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005). The Second Circuit has articulated four requirements for the application of the Rooker-Feldman doctrine:

First, the federal-court plaintiff must have lost in state court. Second, the plaintiff must complain of injuries caused by a state-court judgment. Third, the plaintiff must invite district court review and rejection of that judgment. Fourth, the state-court judgment must have been rendered before the district court proceedings commenced-i.e., Rooker--Feldman has no ...


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