United States District Court, S.D. New York
OPINION & ORDER
A. ENGELMAYER, District Judge:
Esteban Garcia and Martha Yanet Suarez de Garcia, proceeding
pro se, bring this action under the Truth in Lending
Act, 15 U.S.C. § 1601, et seq.
("TILA"), the Real Estate Settlement Procedures
Act, 12 U.S.C. § 2601, et seq.
("RESPA"), other federal statutes, and state law.
They claim that defendants violated various statutes and
committed forms of fraud in connection with the Garcias'
mortgage and the subsequent foreclosure of their house at 167
Pelham Road in New Rochelle, New York (the
"Property"). The Garcias seek actual, statutory,
and punitive damages, as well as an injunction quieting
title, stopping foreclosure, and awarding ownership of the
Property to them, and a declaratory judgment that they own
the Property free and clear of all encumbrances and that
defendants do not have any enforceable interest in the
now move to dismiss. They argue, first, that the Court lacks
subject matter jurisdiction, requiring dismissal under
Federal Rule of Civil Procedure 12(b)(1), because the
Garcias' suit is substantively an attack on a state-court
judgment after foreclosure proceedings for which there is no
federal district court jurisdiction. They separately argue
that the Garcias' Complaint fails to state a claim upon
which relief may be granted, requiring dismissal under Rule
12(b)(6). For the reasons that follow, the Court grants the
motion to dismiss.
10, 2016, the Garcias filed a complaint. Dkt. 1
(“Complaint”). On July 8, 2016, defendants filed
a motion to dismiss, Dkt. 7, which included, in support, a
memorandum of law, Dkt. 9, and a Declaration of Natsayi
Mawere, Dkt. 8 (“Mawere Declaration”), which
attached various exhibits.
26, 2016, the Court issued an order setting a schedule for
the Garcias to either amend their complaint under Federal
Rule of Civil Procedure 15(a)(1)(B) or file an opposition to
the motion to dismiss, and gave the Garcias, as pro
se litigants, extended time to do so. Dkt. 12. The Court
ordered that any amended complaint or opposition to the
motion to dismiss would be due on August 19, 2016.
Id. On August 23, 2016, the Garcias moved for an
extension to that deadline, stating that they wished to amend
the complaint. Dkt. 13. On August 25, 2016, the Court
extended the deadline to amend or oppose to September 9,
2016. Dkt. 14. The Garcias did not, however, at any point
file an amended complaint or an opposition to the motion to
The Garcias' Allegations
Garcias' Complaint is difficult to decipher and contains
conclusory allegations. Treating the factual allegations as
true in deciding a motion to dismiss, and reading the
Complaint with solicitude to the Garcias' pro se
status, the Garcias appear to allege the following.
February 21, 2006, the Garcias obtained a loan, secured by a
mortgage on the Property. Complaint ¶ 10. The loan was
originated by non-party Fremont Investment & Loan
(“Fremont”). Id. This loan was
underwritten without proper due diligence by Fremont.
Id. ¶ 11. This lack of due diligence
contributed to Fremont qualifying the Garcias for a loan
which Fremont knew or should have known that the Garcias
could not have afforded or for which they did not qualify.
Id. ¶ 18. Fremont used the Garcias' credit
scores and their stated income in evaluating them for the
loan. Id. Instead, Fremont should have used the
Garcias' tax forms and properly analyzed their debt to
income ratio. Id. ¶¶ 11, 18. Thus,
“Fremont ignored longstanding economic principals [sic]
of underwriting and instead, knowingly, liberally, greedily
and without any regard for Plaintiff's rights sold
Plaintiff a deceptive loan product.” Id.
Garcias allege that defendant LaSalle Bank, N.A.
(“LaSalle”), was the successor in interest to
Fremont and responsible for its actions and knew of and
participated in Fremont's actions. Id.
¶¶ 19-20. The Garcias allege various errors in the
assignment of their loan and deficiencies in various notices
they allege were entitled to receive. For example, they
allege that there were no recorded assignments of their
mortgage, id. ¶ 15, and that Fremont cannot
show that it has a proper security interest in the original
note and mortgage, id. ¶ 24. And, they allege,
the securitization of the mortgage was improperly conducted,
“render[ing] invalid any security interest in the said
mortgage, ” including because there was a
“splitting or separation of title, ownership and
interest in Plaintiff's Note and Mortgage, ” and a
failure to assign and transfer the Garcia's beneficial
interest in the mortgage in accordance with the Pooling and
Servicing Agreement. Id. ¶ 32.
Garcias bring the following claims: (1) a violation of RESPA,
on the ground that Fremont's payment of “yield
spread premiums” was a proscribed
“kickback” or “referral fee” under
the statute, id. ¶¶ 39-43; (2) a violation
of RESPA's fee splitting provision, on the ground that
Fremont split charges between it, other defendants, and
“un-named brokers, ” and that these “yield
spread premiums” were illegal kickbacks, id.
¶¶ 44-48; (3) a violation of TILA, on the ground
that Fremont and LaSalle did not provide required disclosures
to the Garcias, and that their loan is therefore subject to a
right of rescission under TILA, id. ¶¶
49-58; (4) for breach of contract, on the ground that
defendants breached the covenant of good faith when they
“inaccurately and intentionally completed the Federal
Loan Application for the Plaintiffs” because “the
Plaintiff's earned income was overstated on the Federal
Loan Application, ” improperly qualifying them for a
loan they could not afford, id. ¶¶ 59-62;
(5) for breach of fiduciary duty, on the ground that
defendants “conceal[ed], receiv[ed] and/or actually
pa[id], the illegal and improper ‘kickbacks' and
‘referral fees, '” and “fail[ed] to
properly disclose other material facts as required, ”
id. ¶¶ 63-68; (6) for conspiracy, on the
ground that defendants “agreed amongst themselves to
take illegal and improper actions, ” id.
¶¶ 69-72; (7) to quiet title, on the ground that
defendants “by fraud received an [unequitable] deed of
trust to secure debt to the property for a loan that
Plaintiff should not have given or been allowed to take,
” and requesting “that the Court invalidate the
deed of trust on the property, ” id.
¶¶ 73-78; and (8) for declaratory relief, on the
ground that the defendants did “not have a valid
secured interest in the Property sufficient to foreclose
against the Property” and “do not have the right
to foreclose on the Property” because they “did
not properly comply with the terms of Defendants' own
securitization requirements (contained in the [Pooling and
Servicing Agreement]) and falsely or fraudulently prepared
documents required for Defendants . . . to foreclose as a
calculated and fraudulent business practice, ” and
requesting that “this Court find that Defendants
had/have no right to foreclosure against the Property,
” id. ¶¶ 79-86.
Garcias seek damages, statutory damages, punitive damages,
attorney's fees and costs, and ask the Court to
“award [them] exclusive possession of the Property,
” “[d]etermine that Defendants, and all persons
claiming under them, have no estate, right, title, lien, or
interest in or to the Property, ” “[d]eclare that
Defendants do not have an enforceable secured or unsecured
claim against the Property, ” and “[d]eclare that
[they] own the Property free and clear of all encumbrances
of the Defendants or anyone claiming by or through the
Defendant[s].” Id. ¶¶ a-dd. And, they
seek “injunctive relief to stop the foreclosure.”
Id. ¶ 9.
Cognizable Evidence as to the ...