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Craig v. Saxon Mortgage Services, Inc.

United States District Court, E.D. New York

January 13, 2015

ROCHELLE CRAIG, Plaintiff,
v.
SAXON MORTGAGE SERVICES, INC.; DECISION ONE MORTGAGE COMPANY, LLC; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (

ORDER

SANDRA J. FEUERSTEIN, District Judge.

On August 9, 2013, pro se plaintiff Rochelle Craig ("Craig" or "plaintiff")[1] initiated this action against certain of the defendants. [Docket Entry No. 1 ("Complaint" or "Compl.")]. On February 4, 2014, Craig filed an amended complaint to add all current defendants. [Docket Entry No. 28 ("Amended Complaint" or "Am. Compl.")][2]. Defendants Saxon Mortgage Services, Inc. ("Saxon"), Decision One Mortgage Company, LLC ("Decision One"), Mortgage Electronic Registration Systems, Inc. ("MERS"), NS Realty Investors Group, LLC ("NSRIG"), Ira Bierman ("Bierman"), Kondaur Capital Corporation ("Kondaur"), and HDHJ Group LLC ("HDHJ") have moved to dismiss the Amended Complaint pursuant to: (1) the Rooker-Feldman doctrine; (2) the doctrines of res judicata and/or collateral estoppel; (3) untimeliness; and (4) failure to state a claim upon which relief may be granted. [Docket Entry Nos. 52 ("Kondaur MTD"), 84-1 ("MERS MTD"), 85 ("Saxon MTD"), 92 ("NSRIG and HDHJ MTD"), 100 ("Bierman MTD"), and 102 ("Decision One MTD")]. Plaintiff opposed the motions to dismiss [Docket Entry Nos. 53 ("Opp. to Kondaur MTD"), 84-2 (Consolidated Omnibus Opposition to Kondaur MTD, Saxon MTD, NSRIG and HDHJ MTD, and MERS MTD ("Pl. Omnibus Opp.")), 101 ("Opp. to Bierman MTD"), and 106 ("Opp. to Decision One MTD")] and moved for default judgment as to defendant Andrew Rieger, who has not appeared in the action. [Docket Entry No. 97 ("Motion for Default Judgment")]. For the reasons set forth below, the Court dismisses the Motion for Default Judgment and the Amended Complaint in its entirety.

I. BACKGROUND[3]

A. Factual Background

1. Craig's Mortgage Loan

This action arises from a mortgage loan issued by defendant Decision One to Craig on August 31, 2005 for real property located at 76 Neptune Avenue, Brookhaven TWP, New York, 11950 (the "Property"). Am. Compl. ¶¶ 13-14, 31-32, Exs. A, B.[4] On August 31, 2005, Craig executed an Adjustable Rate Note in favor of Decision One in the original principal amount of two hundred twelve thousand eight hundred dollars ($212, 800.00) (the "Note") and a certain mortgage (the "Mortgage") pursuant to which Craig granted a first mortgage lien upon the Property. Id.; [Docket Entry No. 86 (Declaration of Nora A. Valenza-Frost in Support of Saxon MTD ("Valenza-Frost Decl."), Ex. G, at 1]. MERS, as nominee for Decision One, assigned the Note and Mortgage to U.S. Bank, N.A., in its capacity as trustee for MLMI Surf Trust Services 2006-AB1 ("U.S. Bank") with an effective date of May 1, 2006. Am. Compl., Ex. E; Valenza-Frost Decl., Ex. G, at 1. On December 9, 2008, U.S. Bank assigned the Note and Mortgage to Saxon. Id. On April 7, 2010, Saxon assigned the Note and Mortgage to Kondaur, who assigned Note and Mortgage to North Shore Investors Realty Group on December 16, 2011. Valenza-Frost Decl., Ex. G, at 2; Am. Compl., Ex. E. North Shore Investors Realty Group subsequently assigned the Note and Mortgage to HDHJ, and HDHJ further assigned Note and Mortgage to NSRIG by Assignment of Mortgage effective January 20, 2012 and recorded on April 3, 2012. Id. [5]

2. New York State Foreclosure Proceeding Against Craig

Craig stopped making payments on her mortgage loan "on or about December 2005, " Am. Comp. ¶ 44. On August 20, 2010, Kondaur initiated a foreclosure proceeding against Craig in New York State Supreme Court, Suffolk County (Index No. 298820/2010) (the "State Court Foreclosure Action"). Wainer Aff., Ex. A. In the State Court Foreclosure Action, Craig asserted as affirmative defenses many of the same claims she brings in the instant action: (1) that Kondaur lacked standing to bring the foreclosure action; (2) that there was no proper assignment of the Mortgage; (3) that Kondaur was not in possession of the Note; (4) and that plaintiffs violated New York State Banking Law and "engaged in predatory lending." Valenza-Frost Decl., Ex. H at 1-3. Craig also filed a cross-motion for summary judgment to dismiss the complaint in the State Court Foreclosure Action for, inter alia, lack of standing. See Kondaur Capital Corp., 115 A.D.3d at 649.

On February 14, 2012, the New York State Supreme Court granted summary judgment to the plaintiff in the State Court Foreclosure Action, denied Craig's cross-motion for summary judgment, and referred the matter to a referee to compute. See id. at 650. On December 5, 2012, the New York State Supreme Court confirmed the referee's finding that three hundred sixty-six thousand four hundred six dollars and seventy-nine cents ($366, 406.79) was due upon the Mortgage, and entered a judgment of foreclosure and sale against Craig (the "Judgment of Foreclosure and Sale"). Wainer Aff., Ex. B. On August 13, 2013, the foreclosure sale of the Property was held and NSRIG became the owner of the Property. Wainer Aff. ¶ 10. On March 5, 2014, the New York State Supreme Court Appellate Division Second Department affirmed the Judgment of Foreclosure and Sale. Kondaur Capital Corp, 115 A.D.3d at 650.[6]

3. Craig's Chapter 7 Petition in Bankruptcy Court

On January 22, 2013, Craig filed a chapter 7 petition in the U.S. Bankruptcy Court for the Eastern District of New York (the "Bankruptcy Court") to obtain a stay of the foreclosure sale (Case No. 13-70307-AST). Am. Compl. ¶ 79, Ex. 0. On March 25, 2013, NSRIG filed a motion for relief from the stay, seeking to enforce the Judgment of Foreclosure and Sale. Wainer Aff., Ex. G, at 2. On May 22, 2013, the Bankruptcy Court lifted the automatic stay to allow NSRIG to "exercise all its rights and remedies under its loan documents, including, without limitation, the completion of the mortgage foreclosure action pending in New York State Court." Wainer Aff., Ex. E, at 1.

On April 23, 2013, Craig instituted an adversary proceeding against NSRIG and Bierman (the "Adversary Proceeding"), alleging that "NS Realty lack[ed] standing as a creditor because [t]here [was] no evidence of a promissory note from the real party in interest endorsed to the Defendant attached to the foreclosure complaint with regard to the mortgage, " and that NS Realty "[was] committing an act of fraud upon [Craig], The Supreme Court of The State of New York, Suffolk County, and [the Bankruptcy Court]... by representing that the real property in question [was] subject to a lien held by [NSRIG]." Wainer Aff., Ex. G, at 3 (citing Adversary Proceeding Complaint ¶¶ 20-27).

On August 13, 2013, the Bankruptcy Court dismissed the Adversary Proceeding, stating "it was undisputed that NS Really actually [held] the Note, endorsed in blank, and that it had possession of the Note at the time it sought stay relief from [the Bankruptcy] Court" and that "[u]pon obtaining physical possession of the Note, NS Realty acquired rights incident thereto, including the right to payment of the debt for which the Debtor was obligated and the right to enforce the Mortgage lien against the Property because the mortgage follows the note." Wainer Aff., Ex. G, at 11 (citations omitted).[7] The Bankruptcy Court declined to exercise jurisdiction over any claims regarding ...


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