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Nials v. Bank of America

United States District Court, S.D. New York

March 21, 2014



ALISON J. NATHAN, District Judge.

The Court has before it four motions to resolve in this matter. First, the Defendant Federal Deposit Insurance Corporation, as Receiver for Washington Mutual Bank, ("FDIC") moves to dismiss the claims against it based on this Court's lack of jurisdiction. Second, Defendant Bank of America, N.A., moves to dismiss the Complaint for failure to state a claim upon which relief can be granted. Third, Defendants JPMorgan Chase Bank, N.A. ("JPMorgan"), Federal National Mortgage Association, and Mortgage Electronic Registrations Systems, Inc. (collectively, the "JP Morgan Defendants") have filed a copy of their state court motion to dismiss, and Plaintiffs' opposition to that motion, and ask that it be considered in this matter. Finally, Plaintiffs, proceeding pro se, move to remand this matter to the Supreme Court of New York, County of Orange.


A. Allegations in Plaintiff's Complaint

1. Factual Allegations

This litigation concerns certain real property located in Middletown, New York, to which Plaintiffs claim title. (Compl. ¶¶ 3-4). In general terms, Plaintiffs contend that they are the "lawful homeowners" of this property (Compl. ¶ 11) and that the various Defendants have unlawfully asserted ownership interests in the property.

The exact alleged roles and activities of the Defendants in this litigation are difficult to discern from the allegations of the Complaint, but the crux of Plaintiffs' claims is that one or more mortgages to their property have been issued by or are held by one or more of the Defendants and subsequently "securitized, " resulting into a note' bearing the MIN #: XXXXXXX-XXXXXXXXXX-X." (Compl. ¶¶ 5, 11, 17-18). Specifically, Plaintiffs assert that the "alleged originating mortgage lender' and others alleged to have ownership of plaintiffs mortgage and note have unlawfully sold, assigned and/or transferred their ownership and security interests in the Promissory Note and Mortgage related to the property in a secretive securitization bargain/arrangement, and thus no longer have any cognizable legal or equitable interest in plaintiffs home." (Compl. ¶ 11). Plaintiffs describe "[s]ecuritization' [a]s the process whereby mortgage loans' are turned into securities, or bonds, and sold to investors by parties participating in different capacities defined in a document known as [a] pooling and servicing agreement" and characterize it as a "deceptive venture" intended to provide a "gigantic pool of money to the parties participating" and those who buy into the venture. (Compl. ¶¶ 17-18).

To the extent that the Complaint provides a specific theory as to how the securitization of Plaintiffs' mortgage loans divested the Defendants of an interest in the property, Plaintiffs allege that "[t]he loans... were pooled together and then dumped inside a tax-free arrangement which must remain bankruptcy remote' more specifically known as Real Estate Investment Conduct (herein after, REMIC')." (Compl. ¶ 19). They claim that, for the IRS to recognize this tax-free status, "the pooling parties must strictly adhere to the procedure of selling the loans' by conveying without recourse' wherein the party who conveys any alleged interest it held to the REMIC TRUST was forbidden from returning to assert any claims legal or equitable in the said security interest in a process of false recoupment." (Compl. ¶ 20; see also Compl. ¶¶ 29-30). They further allege, for example, that Defendants

[swore] under oath with the Securities and Exchange Commission ("SEC") and the Internal Revenue Service ("IRS"), that defendants... as mortgage asset pass through' entities, ' wherein they can never own the mortgage loan assets in the MBS, allows them to qualify as a Real Estate Mortgage Investment Conduit ("REMIC") rather than an ordinary Real Estate Investment Trust ("REIT").

(Compl. ¶ 56). In short, it appears that Plaintiffs allege that, by virtue of being pooled in a REMIC, the Defendants sold these mortgage loans or otherwise surrendered their interest in them.

2. Claims

Plaintiffs' Complaint distinctly brings four causes of action. As their First Cause of Action, Plaintiffs assert a claim for "Predicate/overt acts within the civil RICO laws" and "Violations of Civil RICO, 18 U.S.C. § 1961 et seq." (Complaint at 10, 17). Plaintiffs' three other causes of action are for, respectively, "Defamation of Credit, " "Violations of New York State Consumer Fraud Act, " and "Conspiracy to Defraud." (Compl. at 14-15). Construing the Complaint liberally, the Court understands Plaintiffs to be asserting causes of action for a civil violation of the Racketeer Influenced Corrupt Organizations Act, particularly under 18 U.S.C. § 1962(a); a violation of the Fair Credit Reporting Act ("FCRA"); violations of New York General Business Law § 349; and conspiracy to defraud. ( See Compl. at 5, 10, 14-15, 17).

In addition to these four claims, Plaintiffs also recite a laundry list of other alleged legal violations by the Defendants:

Quiet Title to property named in this action, Fraudulent/Unconscionable bargain, Fraud in factum, Fraud in the Concealment, Fraud in the Inducement, Intentional Infliction of Emotional Stress, Asserting claims to the title of property in this action by false pretenses, slander of title, malicious dispossession of private property, Declaratory Relief, Violations of TILA, Violations of RESPA, Re[s]cission, Deceptive Bargaining & Fiduciary Malfeasance, Deceptive trade practices in violation of N.Y. GBS § 349.

(Compl. at 5). Subsequent portions of Plaintiffs' Complaint suggest that they intend to assert at least some of these causes of action, notwithstanding that they have not pleaded them with the utmost clarity. For example, Plaintiffs allege that they "bring causes of action against all named defendants for fraud, intentional infliction of emotional stress, rescission, declaratory relief and violations of T.I.L.A. and R.E.S.P.A., upon the facts and circumstances surrounding Plaintiffs original loan transactions [and] its subsequent securitization." (Compl. ¶ 12). Likewise, due to these alleged violations they ask the Court to "quiet title" in their property and award other relief. (Compl. ¶ 13). Beyond listing these causes of action and referring generally to the allegations discussed above, however, Plaintiffs do little to suggest the basis for these claims.

3. Procedural History

Plaintiffs filed this litigation in the Supreme Court of New York, County of Orange. On August 15, 2013, the FDIC removed the case to this Court pursuant to 12 U.S.C. § 1819(b)(2)(B) and 28 U.S.C. §§ 1331, 1441(a) and, on August 22, 2013, the FDIC and Bank of America filed the motions to dismiss referenced above. In response, the Court ordered that Plaintiffs would be allowed to amend their Complaint to correct any deficiencies raised by the motions to dismiss and that, if they failed to do so, they would not be provided a further opportunity to amend to address the issues raised in those motions. (Dkt. No. 17). On September 3, 2013, the JPMorgan Defendants submitted a letter attaching briefing that they had submitted in New York State Court, and a copy of Plaintiffs' opposition to that motion. (Dkt. No. 20). They asked that the Court consider these papers as a fully briefed motion to dismiss. (Dkt. No. 20).

Rather than amend their Complaint or respond directly to the motions to dismiss, Plaintiffs elected to file a motion to remand on September 11, 2013. (Dkt. No. 22). To ensure that Plaintiffs were aware of the motions to dismiss and had an opportunity to amend their Complaint or otherwise respond to these motions, the Court issued an order on October 15, 2013, extending their time to respond. (Dkt. No. 28). Plaintiffs did not amend their Complaint, but did submit a reply brief in support of their request that the case be remanded. (Dkt. No. 29). Because Plaintiffs ...

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