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Williams v. GMAC Mortgage, Inc.

United States District Court, S.D. New York

June 6, 2014



J. PAUL OETKEN, District Judge.

Plaintiffs David and Jennifer Williams claim that Defendants GMAC Mortgage, Inc. and U.S. Bank National Association unlawfully attempted to collect on a note and unlawfully foreclosed on their property. Plaintiffs seek an order quieting title to their property, an order "expunging the debt obligations and instruments asserted by Defendants against Plaintiff[s'] subject property from the record, " money damages, and punitive damages. U.S. Bank has moved to dismiss the claims against it for failure to state a claim. For the reasons that follow, the motion is granted, and the claims against GMAC are dismissed sua sponte.

I. Background

A. Documents Integral to the Complaint

Because a motion to dismiss tests the sufficiency of the pleading, courts generally may not rely on material outside the pleading to decide the motion. Global Network Commc'ns, Inc. v. City of New York, 458 F.3d 150, 155 (2d Cir. 2006). But if a pleading relies heavily on the terms and effect of a document, that document is "integral" to the pleading, and the court may consider it. Id. at 156-57. This rule prevents plaintiffs from surviving Rule 12(b)(6) motions because of "clever drafting" alone, where "the incorporated material is a... legal document containing obligations upon which the plaintiff's complaint stands or falls, but which for some reason-usually because the document, read in its entirety, would undermine the legitimacy of the plaintiff's claim-was not attached to the complaint." Id. at 157.

Plaintiffs did not attach the relevant note or mortgage to their complaint. They allege that "the note in this matter never existed, " suggesting that their mortgage did not secure any debt. (Compl. ¶ 36.) But another allegation suggests that Bergin Financial, Inc. did loan Plaintiffs $230, 915.39, and many of Plaintiffs' allegations are premised on the existence of a note. ( Id. ¶¶ 7 (describing mortgage "in the amount of $230, 915.39"), 14 ("Further, there is a stamped indorsement on the Note."), 16 ("Then there is an alleged Allonge attached to the Note."), 23 ("It appears that Residential Funding owned the Note but then tried to assign it as a Bergin Financial."), 34 ("The Note was assigned to a trust in order to create a mortgage-backed security to trade on the New York Stock Exchange."). It is clear that Plaintiffs' claim relies heavily on the note and mortgage. They could not argue that they lacked notice or a chance to respond to these matters-U.S. Bank attached the note and mortgage to their motion to dismiss, and Plaintiffs discussed the note and mortgage in detail in their complaint. The Court therefore considers the note to be integral to the complaint.

B. Background Facts

Plaintiffs' allegations are not very clear. This section summarizes the allegations as the Court understands them, as well as information from the relevant note and mortgage.

Plaintiffs "were given a mortgage by Bergin Financial, Inc." in 2005. (Compl. ¶ 7.) The mortgage named Mortgage Electronic Registration System, Inc. (MERS) as nominee for Bergin Financial and secured a note for $230, 915.39. (Belinfanti Decl. Ex. B at 1-13 (Mortgage), 14-17 (Note), Dkt. No. 7-2.) Later, in 2011, MERS assigned the mortgage to U.S. Bank. (Compl. ¶ 8.) The assignment to U.S. Bank was executed by an assistant secretary for MERS and notarized in Pennsylvania. ( Id. ¶¶ 10, 12.) Plaintiffs' note, on the other hand, was assigned twice by endorsements in an allonge to the note.[1] The first endorsement was from Bergin Financial, Inc. to Residential Funding Corporation. (Note at 16.) The second endorsement was from Residential Funding Corporation to U.S. Bank. ( Id. )

U.S. Bank appears to have assigned the right to collect on the note to GMAC. ( See Compl. ¶ 32.) At some point, GMAC sent mortgage statements to Plaintiffs. ( Id. ¶ 30.) Plaintiffs allege that "[u]pon such reliance Plaintiff paid money to Defendant, " presumably GMAC. ( Id. ¶ 31.) Later, Plaintiffs allege that a "Defendant" (it is not clear which one) sent collection notices to Plaintiffs, despite the fact that it knew or should have known that it lacked "true, legal title to the collection on the subject mortgage." ( Id. ¶¶ 48-49.) When Plaintiffs stopped making mortgage payments, that same Defendant called Plaintiffs several times a day and sent more collection letters. ( Id. ¶¶ 50-51.) Eventually, Defendants foreclosed on Plaintiffs' property and sold it ( id. ¶ 54).[2]

Plaintiffs' complaint asserts four claims against Defendants under federal diversity jurisdiction. ( Id. ¶¶ 6, 35-56.) First, they claim that Defendants are liable for "wrongful collection practice." ( Id. at 5.) Second, they seek "an injunctive Order of Quiet Title of the Note and Mortgage." ( Id. ) Third, they claim that Defendants are liable for fraud. ( Id. ) Fourth, they claim that Defendants are liable for conversion. ( Id. at 6.) In their prayer for relief, Plaintiffs also seek damages for unjust enrichment. ( Id. )

II. Discussion

A. Legal Standard

The general pleading standard, Rule 8(a) of the Federal Rules of Civil Procedure, requires a complaint to make a short, plain statement of a plausible claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To determine whether a complaint satisfies Rule 8, a court must accept all well-pleaded factual allegations as true and draw all reasonable inferences in the plaintiff's favor. Id. But the court need not accept "[t]hreadbare recitals of the elements of a cause of action, " which are essentially legal conclusions. Id. at 678 (citing Twombly, 550 U.S. at 555). After separating legal ...

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