UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK
April 30, 2013
JAMAINE KINGSTON, PLAINTIFF,
DEUTSCH BANK NATIONAL TRUST COMPANY F/K/A BANKERS TRUST COMPANY OF CALIFORNIA, N.A., FIRST UNITED MORTGAGE BANKING CORP., AMERICA'S SERVICING COMPANY, DEFENDANTS.
The opinion of the court was delivered by: John Gleeson, United States District Judge:
FOR ONLINE PUBLICATION ONLY
MEMORANDUM AND ORDER
Jamaine Kingston brings a pro se civil action pursuant to 42 U.S.C. § 1983 and § 1985 seeking damages and/or declaratory and injunctive relief against Deutsch Bank National Trust Company f/k/a Bankers Trust Company of California, N.A. ("Deutsch Bank"), First United Mortgage Banking Corp. ("First United"), and America's Servicing Company ("ASC"). On January 14, 2013, defendant Wells Fargo Bank, successor by merger to Wells Fargo Mortgage d/b/a/ America's Servicing Company, moved to dismiss all claims against it pursuant to Federal Rules of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. In the alternative, ASC contends that the claims are barred by res judicata or that the complaint fails to state a claim and must be dismissed with prejudice pursuant to Federal Rule of Civil Procedure 12(b)(6).
Kingston did not submit an opposition to the present motion and did not appear for oral argument on either of two dates scheduled: February 20 and March 27, 2013.*fn1 For the reasons stated below, defendant's motion is granted, and all claims are dismissed against ASC with prejudice.
ASC is a "servicing division of Wells Fargo Bank, N.A. and was the servicer of the mortgage loan at issue in this case." Def.'s Mem. of Law in Supp. of Mot. to Dismiss 2, Jan. 14, 2013, ECF No. 10. The loan at issue was part of a mortgage loan trust: Nomura Asset Acceptance Corporation, Mortgage Pass-Through Certificates, Series 2007-1. See Muir Decl. in Supp. of Mot. to Dismiss, Ex. 1, ECF No. 11-1. ASC acts as the servicer of loans in this trust.
B. Factual Allegations
The following facts are drawn from the complaint and from the judicially-noticed record of related state court proceedings.*fn2 On September 20, 2006, in connection with the purchase of real property located at 720 Marcy Avenue, Brooklyn, NY 11216 (the "property"), Kingston obtained a mortgage loan in the principal amount of $796,000.00 from First United Mortgage Lending Corporation.*fn3 Note, ECF No 11-2. Kingston alleges that he was "not employed nor were there income verifications in order to assure that the loan would be paid back," and he was issued a "high interest bearing loan." Compl. ¶ 12, ECF No. 1. He alleges that the defendants*fn4 "inflated[ed] the true value of the property . . . over 200%," id. ¶ 46.
On September 13, 2007, First United named Kingston as a defendant in a foreclosure action brought in the Supreme Court of the State of New York, Kings County (the "state court"). In his complaint in this Court, Kingston alleges that he did not receive proper service of a summons. Id. ¶ 14-15. First United moved for default judgment when no one appeared in the foreclosure action. The state court entered a judgment of foreclosure and served Kingston with a Notice of Sale advising him that the property would be sold at auction. Affirmation in Supp. of Order to Show Cause ¶¶ 3-4, ECF No 11-7. Kingston alleges that the state court did not request proof of the note and mortgage prior to foreclosing, Compl. ¶ 18, and that the state court entered the foreclosure order even though the "moving party" did not "legally own the property . . . [or] have legal standing" to foreclose. Id. ¶ 47.
On March 24, 2010, Kingston -- though counsel -- moved in state court to vacate the judgment of foreclosure and sale and to dismiss the foreclosure action on the ground of lack of standing to foreclose. Order to Show Cause 2-3, ECF No 11-7. In support of the motion, Kingston's counsel filed an affirmation stating: "[a] review of the file in this matter reveals substantial irregularities in the manner in which the Judgment of Foreclosure was obtained" and requesting "that the Judgment be vacated and the action dismissed." Id. ¶¶ 6, 11-13, 21-23.
The Honorable Robert J. Miller of the Supreme Court of the State of New York held oral argument on Kingston's order to show cause. On November 5, 2010, Judge Miller denied Kingston's motion and lifted the stay on the sale of the property. Order, ECF No. 11-8. On July 11, 2011 Kingston filed a pro se emergency application to show cause why the sale should not be stayed and a Temporary Restraining Order be issued, but the state court again denied his application, noting "[the] defendant's affidavit misstates the absence of a prior application for the same relief." Order, ECF No. 11-9. On December 13, 2012, Kingston attempted to make a second emergency application to vacate the judgment of foreclosure and sale and dismiss the foreclosure action. The state court again refused to sign this order, indicating that it was the third "motion for the same relief . . . . [Judge Miller] denied the first one on the merits, after oral argument, when [Kingston] had counsel . . . . That is the law of the case." Order 4, ECF No. 11-10.
A few days later, on December 20, 2012, Kingston commenced this pro se action seeking an "order to show cause to dismiss the complaint and cancel the lis pend[ens] and to discharge the mortgage along with vacating the judgment of foreclosure and sale." Compl. ¶ 2. Specifically, Kingston alleges that he was "pressured to purchase more than five different loans from the same lender despite the fact that [he] had no real income verification," id. ¶ 44; the defendants "inflat[ed] the true value of the property;" and the defendants "do not legally own the property nor do [they] have legal standing to commence such an action." Compl. ¶¶ 44, 46-47. He also alleges that the foreclosure and sale was obtained in violation of plaintiff's constitutional rights and through "predatory lending fraud." Id. ¶ 2.
C. Scope of Dispute
Since Kingston is a pro se litigant, his pleadings are held "to less stringent standards than formal pleadings drafted by lawyers." Estelle v. Gamble, 429 U.S. 97, 106 (1976) (internal quotation marks omitted); accord Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) ("Even after Twombly, . . . we remain obligated to construe a pro se complaint liberally."). His complaint is "construed liberally and interpreted 'to raise the strongest arguments' possible." Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 474 (2d Cir. 2006) (quoting Pabon v. Wright, 459 F.3d 241, 248 (2d Cir. 2006)). Applying this principle, I interpret Kingston's complaint to allege the following causes of actions against this Defendant: (1) violations of the Fifth and Fourteenth Amendments' due process clause; (2) common law fraud; and (3) a challenge to the defendants' lending practices as violative of the Home Ownership and Equity Protection Act ("HOEPA"), 15 U.S.C. § 1639 et seq. and the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq.*fn5
Kingston seeks an injunction preventing sale of the real property and a "declaratory judgment pursuant to [§] 1921 [of the N.Y. Real Property Actions and Proceedings Law] . . . [to] declare the mortgage . . . to be predatory lending and to discharge the loans in its totality . . ." Compl. ¶ 48. In the alternative, he seeks $1.3 million in damages "for the entire balance of [the] interest in the property including maintenance and restoration and repairs," id. ¶ 29. Finally, he seeks a "stay of the proceedings . . . because the defendant herein was not present at the premises on the day of service." Id. ¶ 13.
A. Federal Due Process Claims
In the complaint, Kingston brings a claim for due process violations and invokes 42 U.S.C. § 1983 ("Section 1983") and 42 U.S.C. § 1985 ("Section 1985"). Compl. ¶¶ 1-2. The defendant argues that this Court lacks subject matter jurisdiction over the plaintiff's due process claims pursuant to the Rooker--Feldman doctrine. For the reasons that follow, I agree.
1. Legal Standard
Subject matter jurisdiction is the legal authority of a court to hear and decide a particular type of case. Federal courts are courts of limited subject matter jurisdiction; they may exercise jurisdiction only if it is specifically authorized. "The party invoking federal jurisdiction bears the burden of establishing that jurisdiction exists." Sharkey v. Quarantillo, 541 F.3d 75, 82-83 (2d Cir. 2008) (internal quotation marks omitted). A court also has an independent responsibility to sua sponte dismiss an action pursuant to Rule 12(h)(3) of the Federal Rules of Civil Procedure where no subject matter jurisdiction exists.
The Rooker-Feldman doctrine provides that United States distrct courts may not sit in direct review of state court decisions unless Congress has specifically authorized such relief. See Dist. of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983); Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923). The Supreme Court has authority to hear appeals of final decisions of state court judgments. The Rooker-Feldman doctrine bars a losing party from bringing an appeal of a state court judgment in a United States district court instead of the Supreme Court.*fn6 A federal district court also lacks jurisdiction over all claims that are "inextricably intertwined" with a prior determination issued by a state court. Feldman, 460 U.S. 462, 483 n. 16. However, a district court retains jurisdiction to hear a case that presents an "independent claim" even if the effect of raising this "independent claim" will challenge or deny some conclusion reached by the state court. Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 283-84 (2005); see also id. at 292 ("If a federal plaintiff presents some independent claim, albeit one that denies a legal conclusion that a state court has reached in a case to which he was a party. . . then there is jurisdiction and state law determines whether the defendant prevails under principles of preclusion') (internal quotation marks and brackets omitted).
Four requirements must be met for the Rooker--Feldman doctrine to apply: "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." Hoblock v. Albany Cnty. Bd. of Elections, 422 F.3d 77, 85 (2d Cir. 2005) (internal quotation marks and brackets omitted).
Looking to the requirements of Rooker--Feldman test outlined by the Second Circuit in Hoblock, I find that all four requirements are satisfied with respect to Kingston's due process claims. First, Kingston's complaint alleges that the state court judgment of foreclosure resulted in an unfavorable decision. Second, the last state court action relating to this matter is a New York state court decision on December 12, 2012 denying an emergency stay. Since that decision predates the December 20, 2012, filing of the instant complaint, I conclude that all pertinent state-court decisions were issued before proceedings in this Court were commenced.*fn7
The substantive requirements of Rooker--Feldman also are met here. Kingston's due process claims -- alleging that "process was not served upon" him or any other person, see Compl. ¶ 14, and that the bank lacked "legal standing" to foreclose, id. ¶ 27, 52 -- explicitly challenge the validity of the state judgment of foreclosure and ask this Court to engage in an impermissible review of the state court judgment. Kingston's alleged injury -- the loss of his home -- is caused by a state-court judgment and he invites this Court to reject the state court conclusions. "Courts in this Circuit have consistently held that a plaintiff who lost possession of his home in a state court foreclosure proceeding is barred by the Rooker-- Feldman doctrine from attacking the state court judgment in federal district court." See Gray v. Americredit Fin. Servs., Inc., No. 07 Civ 4039, 2009 WL 1787710, at *4 (S.D.N.Y. June 23, 2009) (listing cases). I have no jurisdiction to reverse the state court, as the Supreme Court is the sole court authorized to hear appeals of state court judgments. Accordingly, I conclude that Kingston's due process claims are barred by the Rooker-Feldman doctrine. See Hoblock, 422 F.3d at 86-87. It follows that his claims for a declaratory judgment and injunctive relief are also barred by Rooker-Feldman since both would require this Court to invalidate a state court judgment.*fn8 Since I conclude that the due process claims are barred by the Rooker-Feldman doctrine, I need not -- and do not -- consider whether the due process claims also are barred under the doctrine of res judicata.*fn9
B. Common Law Fraud and Predatory Lending
In contrast to his due process claims, Kingston's allegations of "fraud" and "predatory lending" allege injuries caused in the formation of the underlying mortgage agreement. These allegations originate from actions that precede a state cou rt judgment; accordingly, they are not caused by the state court judgment and, thus, are not barred by the Rooker-Feldman doctrine. See McKithen v. Brown, 481 F.3d 89, 97-98 (2d Cir. 2007) ("[A] party is not complaining of an injury caused by a state-court judgment when the exact injury of which the party complains in federal court existed prior in time to the state-court proceedings, and so could not have been caused by those proceedings.") (internal quotation marks omitted); see also Hinds v. Option One Mortg. Corp., 11 Civ 6149, 2012 WL 6827477, *4 (E.D.N.Y., Dec. 12, 2012) (finding that the Rooker--Feldman doctrine does not divest the court of jurisdiction over claims to compensate for injuries arising from fraud where the alleged injury was caused by a defendants' prior conduct, and not the state court judgment).
Although the Rooker--Feldman doctrine does not divest the Court of jurisdiction to hear claims alleging fraud and predatory lending in the formation of the mortgage, I conclude that the complaint -- even liberally construed to raise its strongest possible claims against ASC -- fails to plead a claim for relief against this defendant and, accordingly, is dismissed.*fn10 Fed. R. Civ. P. 12(b)(6).
1. Legal Standard: Fed. R. Civ. P. 12(b)(6)
Rule 8 of the Federal Rules of Civil Procedure provides that a complaint "shall contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Although courts must give pro se pleadings a liberal construction, "the basic requirements of Rule 8 apply to self-represented and counseled plaintiffs alike." Wynder v. McMahon, 360 F.3d 73, 79, n.11 (2d Cir. 2004).
To survive a motion to dismiss under Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). To survive dismissal, a complaint must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged," Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Kingston alleges that the defendant "participated in a fraud and a scheme to defraud" him. Compl. ¶ 2. To properly plead fraud, the complaint must lay out facts supporting the required elements of the cause of action. "Under New York law, to state a claim for fraud a plaintiff must demonstrate: (1) a misrepresentation or omission of material fact; (2) which the defendant knew to be false; (3) which the defendant made with the intention of inducing reliance; (4) upon which the plaintiff reasonably relied; and (5) which caused injury to the plaintiff." Wynn v. AC Rochester, 273 F.3d 153, 156 (2d Cir. 2001). A fraud claim also must "state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). Generalized fraud allegations are insufficient to state a claim against a defendant. See Eternity Global Master Fund v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 187 (2d Cir. 2004).
The present complaint pleads fraud against all defendants generally, without ascribing specific fraudulent statements or omissions to any particular defendant. The complaint does not mention or allege any facts bearing on the conduct of ASC and does not allege any facts bearing on any actions that ASC undertook (or failed to undertake), much less allege that these acts or omissions were false or misleading. Kingston fails to allege any facts on which a reasonable fact-finder could conclude that this particular defendant was involved with the alleged fraud in the formation of the underlying mortgage. Even under the most liberal reading of the complaint, I conclude that Kingston fails to allege facts raising a plausible claim for relief against this defendant. Accordingly, this fraud claim is dismissed for failure to state a claim. Fed. R. Civ. P. 12(b)(6).
To the extent that Kingston's allegations against ASC suggest a violation of TILA or HOEPA for predatory lending, I conclude that Kingston has failed to state a claim against this Defendant that is plausible on its face. Under TILA, creditors must meaningfully disclose all credit terms to consumers in order to avoid the uninformed use of credit. See 15 U.S.C. § 1601(a). Under HOEPA, creditors must make certain disclosures of financial information in connection with high cost mortgage loans. See id. §§ 1602(aa)(1) & 1639 (describing information that must be disclosed to consumers by a creditor, including annual percentage rate and monthly payment); 12 C.F.R. § 226.32(c) ("Section 32" of Regulation Z of the Truth in Lending Regulations) (same). Even assuming ASC is a "creditor" under 15 U.S.C. § 1602 and Regulation Z, Kingston has made no allegation that it failed to comply with the statute's disclosure requirements, nor can his complaint be reasonably construed to make such an allegation. Accordingly, these federal claims are dismissed as well.
Generally, I would grant leave to amend the complaint to afford a pro se plaintiff a chance to remedy its deficiencies. But here I conclude that even a liberal reading of the complaint fails to give any indication that a valid claim might be stated against ASC. See Cuoco v. Moritsugu, 222 F.3d 99, 112 (2d Cir. 2000); see also Fed. R. Civ. P. 15(a) (The court should freely give leave [to amend the pleadings] when justice so requires."). Since I conclude that any attempt to re-plead would be futile,*fn11 plaintiff's fraud and predatory lending claims against ASC are dismissed with prejudice.
Kingston has failed to respond to the motion and failed to show up in court when the motion was heard. The motion is therefore granted as unopposed. Also, for the reasons set forth above, I conclude that the motion by ASC has merit, and, on that independent basis, the motion to dismiss is granted in its entirety and the case against ASC is dismissed with prejudice.
John Gleeson, U.S.D.J.