United States District Court, S.D. New York
DAVID OBAL, Henderson, NV, Pro Se.
Lisa J. Fried, Esq., Adam R. Feeney, Esq., HOGAN LOVELLS U.S. LLP, New York, NY, Attorneys for Defendants.
ROBERT W. SWEET, District Judge.
Defendants Deutsche Bank National Trust Company as Trustee for the Morgan Stanley Mortgage Loan Trust 2004-9, Mortgage Pass-Through Certificates, Series 2004-9 (the "Trust") and Mortgage Electronic Registration Systems, Inc. ("MERS" and, together with the Trust, "Defendants") moved pursuant to Rules 12 (b) (1) and 12 (b) (6) of the Federal Rules of Civil Procedure ("FRCP") to dismiss with prejudice the claims asserted against them by Plaintiff, pro se, David Obal ("Obal" or "Plaintiff") in his Verified Amended Complaint (the "AC") or, in the alternative, to transfer the matter to the District Court for the District of Nevada, pursuant to 28 U.S.C. § 1404(a). Based on the conclusions set forth below, Defendants' motions are granted and the AC is dismissed with prejudice.
Obal filed his initial complaint on April 8, 2014 and the AC on July 28, 2014. In the AC, Obal has named the following defendants:
The Trust; The Morgan Stanley Loan Trust 2004-9, Mortgage Pass-Through Certificates Series 2004-9, a "common law trust formed under the law of the state of New York administered by Defendant Deutsche Bank National Trust Company;" the Certificateholders of the Morgan Stanley Loan Trust 2004-9, Mortgage Pass-Through Certificates Series 2004-9; Morgan Stanley Capital 1 Inc., which "is organized and maintains its address at 1585 Broadway, New York, NY 10036;" MERS; Certain "Roes" and "Does, " including "unknown persons who claim or have the right to claim an interest in certain real property located in Henderson, Nevada"
See AC ¶¶ 20-30.
The AC sets forth the following allegations. Certain defendants "have unlawfully attempted transfers, assignments and endorsements of the note and the deed of trust [on Plaintiff's Property, ] to which the Defendants [falsely] claim the beneficial rights and interests." Id. Obal obtained the loan on his property from Metrocities Mortgage, LLC ("Metrocities") (the "Loan"), memorialized by a note (the "Note") and gave a mortgage on his Property in Metrocities' favor (the "Mortgage"). Id. ¶ 50. An assignment of the Note and Mortgage (the "Assignment") to the Trust that was recorded in the Clark County Recorder's Office in Nevada on March 27, 2012 is void; the Assignment violated the Internal Revenue Code provisions, 26 U.S.C. 860A-860G, governing Real Estate Mortgage Investment Conduits ("REMICs") such as the Trust (the "REMIC Tax Regulations"), as it occurred more than three months after the Trust's "Closing Date" of October 29, 2004 and the loan was in default at the time of the Assignment. Id. ¶¶ 4, 45, 53. The Assignment also did not comply with certain provisions of the Trust's Trust Agreement (also known as the Pooling Services Agreement or "PSA"). Id. ¶ 68. Under the New York Estates, Powers & Trusts Law (the "New York Trust Law") § 7.2-4, the Assignment was "in contravention of the trust" and was thus void. Id. ¶ 69. Notwithstanding the invalidity of the Assignment, Defendants have issued a notice of default on the loan and "have and will continue to attempt to collect mortgage payments on [the] loan and may attempt to commence foreclosure proceedings on behalf of an undisclosed principal." Id. ¶¶ 54, 81. The Assignment has prejudiced Obal's ability to negotiate a loan modification or short sale with the "true and correct beneficiary of [his] loan, " his ability to obtain new financing, and his ability to provide a clear and correct title to a potential buyer of the Property. Id. ¶ 42. The invalid Assignment also "exposes him to multiple judgments and/or demands for payment on [his] loan." Id.
The AC alleges thirteen "counts" for declaratory relief phrased as questions challenging the validity of the Assignment. Obal seeks declarations that: his loan was in default at the time of the Assignment; the Assignment does not comply with certain REMIC Tax Regulations and provisions of the New York Trust Law, with certain provisions of the PSA, and with documents the Trust recorded with the SEC, and is "void ab initio" and there is "no actual trust over [the Property];" and "Defendants do not have any legal cognizable rights as to Plaintiff's property, Plaintiff's Note, Plaintiff's Deed of Trust, or any other documents prepared by Defendants."
The AC also seeks "cancellation of instruments" (Fourteenth Cause of Action), claims "Fraud and Deceit" (Fifteenth Cause of Action), and claims violation of the New York General Business Law§ 349 (Sixteenth Cause of Action), of the Nevada professional code (Seventeenth Cause of Action), of the Federal Debt Collection Practices Act (Eighteenth Cause of Action), and of the Truth in Lending Act (Nineteenth Cause of Action). The AC seeks general and special damages of not less than $1, 000, 000, punitive damages, restitution, and his attorneys' fees and costs of this litigation. Id. at Prayer for Relief. It also seeks an order enjoining "the Defendants from continuing to violate the statutes alleged" and from "pursuing further foreclosure proceedings against Plaintiff's property." Id.
The instant motions were marked fully submitted on October 15, 2014. Plaintiff, without Defendants' written consent or this Court's leave, subsequently filed a Second Amended Complaint that Defendants request be stricken pursuant.
The Plaintiff Lacks Standing
The Second Circuit recently affirmed the dismissal, for lack of standing, of a complaint nearly identical to Obal's seeking relief in regards to an allegedly invalid assignment of a note and mortgage to a REMIC trust. See Rajamin v. Deutsche Bank Nat. Trust Co., 757 F.3d 79, 92 (2d Cir. June 30, 2014). Like Obal, the plaintiffs in Rajamin claimed that the assignments of the notes and mortgages on their property (in connection with which foreclosure proceedings were underway) were invalid because they violated the terms of the applicable PSA and New York Trust Law. See id. at 82, 89. The Second Circuit held that the plaintiffs lacked both constitutional and prudential standing to assert their claims. Id. at 86.
Obal lacks constitutional standing to assert his claims because, like the injuries alleged in Rajamin, the injuries he asserts are all "conjectural or hypothetical." See id. at 85 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). The "irreducible constitutional minimum of standing" under Article III of the Constitution includes the requirement that "the plaintiff must have suffered an injury in fact... which is (a) concrete and ...