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Nath v. Select Portfolio Servicing, Inc.

United States District Court, S.D. New York

February 28, 2017

PREM NATH, Plaintiff,
v.
SELECT PORTFOLIO SERVICING, INC.; U.S. BANK N.A., as Indenture Trustee for C.S.F.B. Trust 2002-NP14; and LOCKE LORD LLP, Defendants.

          Prem Nath Blauvelt, NY Pro Se Plaintiff

          Casey B. Howard, Esq. R. James DeRose, III, Esq. Locke Lord LLP New York, NY Counsel for Defendants

          OPINION & ORDER

          KENNETH M. KARAS, District Judge

         Prem Nath (“Nath” or “Plaintiff”) brings this Action against Select Portfolio Servicing, Inc. (“SPS”), U.S. Bank, N.A., as indenture trustee for C.S.F.B. Trust 2002-NP14 (“U.S. Bank”), and Locke Lord LLP (“Locke Lord, ” and collectively, “Defendants”), seeking compensatory and punitive damages for allegedly fraudulent conduct involving various assignments and agreements related to a mortgage encumbering real property located at 12 John Calvin Street, Blauvelt, New York (the “Subject Property”). (See Am. Compl. (Dkt. No. 9).)[1] Before the Court is Defendants' Motion To Dismiss (the “Motion”). (See Dkt. No. 13.) For the following reasons, Defendants' Motion is granted.

         I. Factual and Procedural Background

         On September 4, 1998, Plaintiff executed a note (the “Note”) and mortgage (the “Mortgage”) with Long Beach Mortgage Company (“LBMC”) to secure a loan (the “Loan”) for purchase of the Subject Property. (See Att'y Decl. of Casey B. Howard in Supp. of Defs.' Mot. To Dismiss Pl.'s Am. Compl. (“Howard Decl.”) Ex. 10 at ¶¶ 4-5 (Dkt. No. 15); see also Am. Compl. 4.)[2]

         On or around June 19, 2001, a foreclosure action was brought in New York Supreme Court, Rockland County, captioned The Chase Manhattan Bank v. Prem Nath, et al., Index No. 3532/2001 (the “Foreclosure Action” brought in the “State Court”). (See Am. Compl. 4.)

         On October 16, 2005, Plaintiff filed a bankruptcy petition under Chapter 7 in the United States Bankruptcy Court for the Southern District of New York (the “First Bankruptcy”). (See Dkt. No. 1 (05-BK-25603 Dkt.).) Plaintiff received a discharge on March 17, 2006, (see Dkt. No. 12 (05-BK-25603 Dkt.)), and shortly thereafter, the Bankruptcy Court entered an order lifting the automatic stay to allow foreclosure to proceed on the Subject Property, (see Dkt. No. 20 (05-BK-25603 Dkt.)).

         On March 18, 2010, Plaintiff executed a Settlement Agreement and Release (the “Settlement Agreement”) with LaSalle Bank (“LaSalle”) as Trustee for the CSFB Trust 2002-NP14. (See Howard Decl. Ex. 2 (“Settlement Agreement”); see also Am. Compl. 5.)[3] The Settlement Agreement states that Chase Manhattan Bank (“Chase”) “assigned all right, title and interest in the subject Note and Mortgage” to LaSalle, as trustee. (Settlement Agreement 1.) The Settlement Agreement also contained a loan modification agreement (the “Loan Modification Agreement”), and stated that, in the event Plaintiff failed to make the first three timely payments, he agreed, among other things, “to waive any and all defenses” to the Foreclosure Action. (Id. ¶ 6.)[4]

         On December 9, 2010, the State Court issued a Decision and Order granting summary judgment against Nath in the Foreclosure Action. (See Howard Decl. Ex. 4 (“State Court Dec. 2010 Decision”).) The State Court found that Chase “ha[d] established prima facie entitlement to a judgment of foreclosure and sale and [Nath] ha[d] failed to raise a material issue of fact.” (Id. at 5.)[5] In the same decision, the State Court rejected Plaintiff's request to rescind the Loan Modification Agreement on the grounds of mutual mistake. (Id. at 2-3.)[6] The decision led to a Judgment of Foreclosure and Sale (“State Court Foreclosure Judgment”), dated February 4, 2011, and entered on March 2, 2011, directing that the Subject Property be sold at public auction and that the proceeds of the sale be deposited with Chase. (Howard Decl. Ex. 1 (“State Court Foreclosure Judgment”).)

         On or around February 8, 2011, after the State Court Foreclosure Judgment was signed, but before it was entered, Plaintiff, represented by counsel at the time, filed an order to show cause (the “Order to Show Cause”) seeking, among other things, leave to renew Plaintiff's motion for summary judgment and vacatur of both (1) the State Court's December 9, 2010 Decision and (2) the Settlement Agreement and Loan Modification Agreement. (Howard Decl. Ex. 5 (“Order to Show Cause”).) The following arguments were raised: (1) the Tolman Affidavit lacked a “certificate of conformity, ” (2) the Tolman Affidavit stated that Chase was the holder of the Note and Mortgage, but the Settlement Agreement and Loan Modification Agreement stated that the Loan was assigned to LaSalle, (3) Chase was a non-existent entity when it commenced the foreclosure proceedings in June 2001, thus it lacked the capacity to commence the proceedings, to accept the assignment of the Note and Mortgage in July 2001, or to assign it to LaSalle in June 2010, (4) Chase's initial complaint filed in June 2001 contained the material misrepresentation that Chase had been assigned the Loan prior to commencement of the action, when, in fact, the purported assignment from LBMC to Chase was dated July 19, 2001, (5) the July 19, 2001 assignment (“2001 Assignment”) from LMBC to Chase was invalid because it lacked a certificate of conformity, lacked a power of attorney, and was signed by an agent of the assignee, rather than by the assignor, and (6) LaSalle is a non-existent entity, because it merged into another corporation as of October 17, 2008, and thus it lacked the capacity to accept assignment of the Loan from Chase and to enter into the Settlement Agreement and Loan Modification Agreement in March 2010. (Howard Decl. Ex. 5 (“Aff'n in Supp. of Order to Show Cause”) ¶ 9.)

         In a Decision and Order dated July 20, 2011, the State Court denied Nath's Order to Show Cause. (Howard Decl. Ex. 7 (“Vacatur Denial”).) The State Court determined that Nath “ha[d] failed to offer a valid excuse for failing to submit the additional facts [relied upon in his Order to Show Cause] with the original application.” (Id. at 3.) Because “[a]ll of [Nath's] ‘newly' discovered facts were available at the time of the prior motion and appear[ed] to have been discoverable with appropriate diligence, ” Nath's motion to renew was denied. (Id.)

         On August 30, 2011, Plaintiff filed a bankruptcy petition under Chapter 13 in the United States Bankruptcy Court for the Southern District of New York (the “Second Bankruptcy”). (See Dkt. No. 1 (11-BK-23730 Dkt.).) By that time, U.S. Bank had taken over as Trustee for the CSFB Trust 2002-NP14, and filed a proof of claim with the Bankruptcy Court on October 24, 2011, in the amount of $1, 211, 193.90, including an unpaid principal balance of $492, 260.67, for the secured debt on the Subject Property, (see Dkt. No. 17-2 (11-BK-23730 Dkt.)). Plaintiff, through counsel, objected to U.S. Bank's proof of claim. (Dkt. No. 17 (11-BK-23730 Dkt.).) On March 21, 2014, the Bankruptcy Court granted U.S. Bank's motion for summary judgment on two independent grounds. First, because U.S. Bank was the holder of the Note with a valid endorsement in blank, it had standing to file and pursue the proof of claim. (See Tr. of Hr'g on Mot. for Summ. J. at 92, 98 (Dkt. No. 98) (11-BK-23730 Dkt.).) Second, the Bankruptcy Court held that the Rooker-Feldman doctrine barred it from granting Nath's claim objection, because such a ruling would “serve as a de facto reversal of the Rockland County Orders” that recognized and enforced U.S. Bank Trustee's rights under the Settlement Agreement. (Id. at 96 (italics omitted).) In an order dated April 14, 2014, the Bankruptcy Court granted the Chapter 13 Trustee's motion to dismiss the case for failure to comply with certain provisions of the Bankruptcy Code. (See Dkt. No. 93 (11-BK-23730 Dkt.).)[7]

         On June 11, 2014, Plaintiff filed an order to show cause in this Court seeking an emergency stay of the sale of the Subject Property, (see Dkt. Nos. 5-6 (14-CV-3871 Dkt.)), which this Court denied in a bench ruling on June 27, 2014, (see Dkt. No. 14 (14-CV-3871 Dkt.)). This Court eventually affirmed the Bankruptcy Court's decision granting U.S. Bank's motion for summary judgment on its proof of claim in a bench ruling on September 25, 2015. (See Dkt. No. 25 (14-CV-3871 Dkt.).)[8]

         Plaintiff filed a so-called quiet title action against SPS, U.S. Bank, JPMorgan Chase and the Internal Revenue Service (the “IRS”) in this Court, captioned Nath v. JPMorgan Chase Bank, N.A. (See Dkt. No. 1 (15-CV-3937 Dkt.).) On September 11, 2015, the defendants filed a motion to dismiss the complaint. (See Dkt. No. 18 (15-CV-3937 Dkt.).)

         With the above civil action pending, Plaintiff filed the instant Action against Defendants, seeking an order to show cause for a preliminary injunction and temporary restraining order, (see Dkt. No. 1), along with an emergency motion for a temporary restraining order to prevent the sale of the Subject Property, scheduled on October 26, 2015, (see Dkt. No. 2). On October 22, 2015, the Court denied Plaintiff's application. (See Dkt. No. 5.) Plaintiff subsequently filed the original Complaint in the instant Action on October 26, 2015. (See Dkt. No. 6.)

         Despite Plaintiff's filing of a fourth bankruptcy petition the week of the scheduled foreclosure sale, and the subsequent motion practice before the Bankruptcy Court for the Southern District of New York, (see 15-BK-23531 Dkt.), the foreclosure sale occurred as scheduled on October 26, 2015. The Subject Property was sold to U.S. Bank. (See Letter from Casey B. Howard, Esq. to Court (Mar. 25, 2016) Ex. B (Dkt. No. 23) (attaching a copy of the referee's deed transferring ownership of the Subject Property to U.S. Bank).)

         On September 30, 2016, the Court dismissed with prejudice Plaintiff's claims against the defendants in the quiet-title action, with the exception of the claim against the IRS challenging the procedural validity of the tax liens issued against the Subject Property. See Nath v. JPMorgan Chase Bank, N.A., No. 15-CV-3937, 2016 WL 5791193, at *13 (S.D.N.Y. Sept. 30, 2016). With respect to that claim, and that claim only, Plaintiff was granted leave to file an amended complaint within 30 days. See id. Plaintiff filed an amended complaint on October 28, 2016, (see Dkt. No. 71 (15-CV-3937 Dkt.)), and on December 19, 2016, defendant IRS filed a motion to dismiss as to the remaining claim, (see Dkt. No. 76 (15-CV-3937 Dkt.)).[9]

         Defendants filed the instant Motion and accompanying papers on December 28, 2015, (see Dkt. Nos. 13-15), and on January 29, 2016, Plaintiff filed his opposition, (see Dkt. No. 16).[10] Defendants' filed their reply on February 26, 2016. (See Dkt. No. 17.)

         II. Discussion

         A. Standard of Review

         The Supreme Court has held that although a complaint “does not need detailed factual allegations” to survive a motion to dismiss, “a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (alteration and internal quotation marks omitted). Indeed, Rule 8 of the Federal Rules of Civil Procedure “demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement.” Id. (alteration and internal quotation marks omitted). Rather, a complaint's “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. Although “once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint, ” id. at 563, and a plaintiff must allege “only enough facts to state a claim to relief that is plausible on its face, ” id. at 570, if a plaintiff has not “nudged [his] claims across the line from conceivable to plausible, the[] complaint must be dismissed, ” id.; see also Iqbal, 556 U.S. at 679 (“Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” (second alteration in original) (citation omitted) (quoting Fed.R.Civ.P. 8(a)(2))); id. at 678-79 (“Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.”).

         “[W]hen ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint, ” Erickson v. Pardus, 551 U.S. 89, 94 (2007), and “draw[] all reasonable inferences in favor of the plaintiff, ” Daniel v. T & M Prot. Res., Inc., 992 F.Supp.2d 302, 304 n.1 (S.D.N.Y. 2014) (citing Koch v. Christie's Int'l PLC, 699 F.3d 141, 145 (2d Cir. 2012)). Additionally, “[i]n adjudicating a Rule 12(b)(6) motion, a district court must confine its consideration to facts stated on the face of the complaint, in documents appended to the complaint or incorporated in the complaint by reference, and to matters of which judicial notice may be taken.” Leonard F. v. Isr. Disc. Bank of N.Y., 199 F.3d 99, 107 (2d Cir. 1999) (internal quotation marks omitted); see also Wang v. Palmisano, 157 F.Supp.3d 306, 317 (S.D.N.Y. 2016) (same).

         Because Plaintiff is proceeding pro se, the Court construes his “submissions . . . liberally” and interprets them “to raise the strongest arguments that they suggest.” Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 474 (2d Cir. 2006) (internal quotation marks omitted). Furthermore, for the same reason, it is appropriate to consider “materials outside the complaint to the extent that they are consistent with the allegations in the complaint, ” Alsaifullah v. Furco, No. 12-CV-2907, 2013 WL 3972514, at *4 n.3 (S.D.N.Y. Aug. 2, 2013) (internal quotation marks omitted), including “documents that a pro se litigant attaches to his opposition papers, ” Agu v. Rhea, No. 09-CV-4732, 2010 WL 5186839, at *4 n.6 (E.D.N.Y. Dec. 15, 2010) (italics omitted); see also Walker v. Schult, 717 F.3d 119, 122 n.1 (2d Cir. 2013) (noting that a court may consider “factual allegations made by a pro se party in his papers opposing the motion” (italics omitted)); Rodriguez v. Rodriguez, No. 10-CV-891, 2013 WL 4779639, at *1 (S.D.N.Y. July 8, 2013) (“Although the Court is typically confined to the allegations contained within the four corners of the complaint, when analyzing the sufficiency of a pro se pleading, a court may consider factual allegations contained in a pro se litigant's opposition papers and other court filings.” (citation and internal quotation marks omitted)).

         B. Analysis

         In the Amended Complaint, Plaintiff asserts thirty-nine causes of action against Defendants, the majority of which purport to sound in fraud or pertain to Plaintiff's claimed interest in the Subject Property. (See generally Am. Compl.) Defendants seek dismissal on the grounds that the majority of Plaintiff's claims are barred by the Rooker-Feldman doctrine, collateral estoppel, and res judicata, and Plaintiff's remaining allegations fail to state a claim. (See generally Mem. of Law in Supp. of Defs.' Mot. To Dismiss Pl.'s Am. Compl. (“Defs.' Mem.”) (Dkt. No. 14).) The Court agrees that some substantively indistinguishable iteration of the majority of the claims Plaintiff raises has been heard and rejected by the State Court, Bankruptcy Court, or this Court, and that Plaintiff's new allegations fail to state a claim.

         1. Rooker-Feldman

         “Under the Rooker-Feldman doctrine, federal district courts lack jurisdiction over suits that are, in substance, appeals from state-court judgments.” Phillips ex rel. Green v. City of New York, 453 F.Supp.2d 690, 712 (S.D.N.Y. 2006) (internal quotation marks omitted). In Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S. 280 (2005), the Supreme Court emphasized that the doctrine is “narrow” and applies only to federal lawsuits brought by “state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.” Id. at 284. After Exxon Mobil, the Second Circuit re-examined Rooker-Feldman and laid out four conditions that, if met, require the Court to dismiss a plaintiff's claims for lack of subject matter jurisdiction: (1) “the federal-court plaintiff must have lost in state court”; (2) “the plaintiff must complain of injuries caused by a state-court judgment”; (3) “the plaintiff must invite district court review and rejection of that judgment”; and (4) “the state-court judgment must have been rendered before the district court proceedings commenced.” Hoblock v. Albany Cty. Bd. of Elections, 422 F.3d 77, 85 (2d Cir. 2005) (alterations and internal quotation marks omitted); see also Vossbrinck v. Accredited Home Lenders, Inc., 773 F.3d 423, 426 (2d Cir. 2014) (same). “The Second Circuit has classified the first and fourth requirements as ‘procedural' and the second and third as ‘substantive.'” Done v. Wells Fargo, N.A., No. 12-CV-4296, 2013 WL 3785627, at *6 (E.D.N.Y. July 18, 2013) (citing Hoblock, 422 F.3d at 85).

         Rooker-Feldman would not prevent Plaintiff from “raising federal claims based on the same facts as a prior state case, . . . so long as . . . [P]laintiff complains of an injury independent of an adverse state court decision.” Scott v. Capital One, Nat'l Assocs., No. 12-CV-183, 2013 WL 1655992, at *3 (S.D.N.Y. Apr. 17, 2013). “[T]he applicability of the Rooker-Feldman doctrine turns not on the similarity between a party's state-court and federal-court claims . . ., but rather on the causal relationship between the state-court judgment and the injury of which the party complains in federal court.” McKithen v. Brown, 481 F.3d 89, 97-98 (2d Cir. 2007). Rooker-Feldman does not bar independent claims, even if those claims “den[y] a legal conclusion that a state court has reached in a case to which [the plaintiff] was a party.” Exxon, 544 U.S. at 293 (internal quotation marks omitted); see also Hoblock, 422 F.3d at 86 (“‘[I]ndependent claims' . . . are outside Rooker-Feldman's compass even if they involve the identical subject matter and parties as previous state-court suits.”).

         “Courts in this Circuit have consistently held that any attack on a judgment of foreclosure is clearly barred by the Rooker-Feldman doctrine.” Webster v. Wells Fargo Bank, N.A., No. 08-CV-10145, 2009 WL 5178654, at *5 (S.D.N.Y. Dec. 23, 2009) (internal quotation marks omitted), aff'd sub nom. Webster v. Penzetta, 458 F. App'x 23 (2d Cir. 2012). Despite Plaintiff's assertions that he “is not requesting [that] the [C]ourt . . . overturn any state court judgment of foreclosure” and that his “federal claims are for separate[, ] independent ca[u]ses of action[], ” (Am. Compl. 29), it is clear that Plaintiff's claims are barred under Rooker-Feldman. As noted in the Court's Opinion in Nath v. JPMorgan Chase Bank N.A, both the judgment in the State Court Foreclosure Action and the July 20, 2011 Vacatur Denial make Plaintiff “a state-court loser” prior to the commencement of this Action. See 2016 WL 5791193, at *6. Therefore, to the ...


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