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Milton v. Ocwen Mortgage Servicing, Inc.

United States District Court, E.D. New York

July 14, 2017

JACOB MILTON, Plaintiff,


          MARGO K. BRODIE, United States District Judge.

         Plaintiff Jacob Milton commenced the above-captioned action on June 13, 2016, against Defendants Ocwen Mortgage Servicing, Inc., Ocwen Loan Servicing, LLC (collectively, the “Ocwen Defendants”), WMC Mortgage Corporation, Deutsche Bank National Trust Company (“DBNTC”) as trustee for WMC Mortgage Corporation, John Messer and Juris Abstraction Corporation. (Compl., Docket Entry No. 1.) The Complaint asserts causes of action under section 2607 of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2607, New York General Business Law section 349, and common law claims for fraud, conspiracy to commit fraud and “unconscionability, ” all arising from a home mortgage and the foreclosure of the mortgage. (See generally Compl.) On September 8, 2016, the Ocwen Defendants and DBNTC moved to dismiss the Complaint pursuant to Rules 12(b)(4) and 12(b)(6) of the Federal Rules of Civil Procedure.[1] (Defs. Mot. to Dismiss, Docket Entry No. 18; Defs. Mem. of Law in Supp. of Defs. Mot. to Dismiss (“Defs. Mem.”), Docket Entry No. 18-1.) On November 14, 2016, the Court referred Defendants' motion to Judge Orenstein for a report and recommendation. (Order dated Nov. 14, 2016.) By report and recommendation dated February 15, 2017 (the “R&R”), Judge Orenstein recommended that the Court grant Defendants' motion to dismiss with prejudice. (R&R 1.) No party has objected to the R&R. For the reasons discussed below, the Court adopts the R&R in part and declines to adopt it in part. The Court adopts the R&R as to the RESPA claim and declines to exercise supplemental jurisdiction over the state law claims. Accordingly, the Court grants Defendants' motion to dismiss the Complaint.

         I. Background

         a. Factual background

         The Court assumes the parties' familiarity with the facts of the case, which are set forth in greater detail in the R&R. Plaintiff obtained a mortgage on a property located at 39-12 61st Street, Woodside, New York 11377 (the “Property”). (Compl. ¶ 9.) On November 1, 2007, Plaintiff defaulted on his obligations under the mortgage, and on February 21, 2008, DBNTC commenced a foreclosure action in Queens County Supreme Court against the Property (the “Foreclosure Proceeding”). (State Foreclosure Action Compl., Docket Entry No. 18-5.) Plaintiff did not answer the complaint in the Foreclosure Proceeding, and on December 16, 2008, the state court entered a default judgment against Plaintiff and a Judgment of Foreclosure and Sale for the Property. (Judgment of Foreclosure and Sale dated Dec. 16, 2008, Docket Entry No. 18-6.) Following the entry of judgment in the Foreclosure Proceeding, Plaintiff filed several orders to show cause delaying the sale of the Property.[2] (State Court Filings, Docket Entry Nos. 18-7-18-10, 18-12-18-13.)

         On July 20, 2015, Plaintiff filed another order to show cause to vacate the Judgment of Foreclosure and Sale. (Foreclosure Proceeding Order dated July 29, 2015, Docket Entry No. 18-15.) The application was denied, and the state court held that Plaintiff could not “continue to make motions to vacate a Judgment which was rendered in 2008, ” particularly where the “applications have all been denied” and where Plaintiff “provide[d] no sufficient basis to grant any relief to [him].” (Id.) On December 11, 2015, the state court issued an order granting the Trustee's application to proceed with the sale of the Property. (Foreclosure Proceeding Order dated Dec. 11, 2015, Docket Entry No. 18-16.)

         On February 11, 2016, Plaintiff was served with a “notice of sale” notifying him that the sale was scheduled to take place on March 4, 2016. (Notice of Sale, Docket Entry No. 18-17.) On March 4, 2016, the Property was sold to DBNTC, as Trustee for Morgan Stanley ABS Capital I Inc. Trust 2004-WMC2. (Referee's Report of Sale, Docket Entry No. 18-18.) Defendants assert that the Foreclosure Proceeding is presently stayed by virtue of another order to show cause filed by Plaintiff. (Defs. Mem. 5.)

         Plaintiff alleges that Defendants (1) violated RESPA's prohibitions on kickbacks and fee sharing based on referrals for real estate settlement business, (Compl. ¶¶ 7-8), (2) violated New York General Business Law section 349 by engaging in deceptive and misleading practices during the mortgage process and the Foreclosure Proceeding, (id. ¶¶ 13-19), and (3) committed fraud, conspired to commit fraud, and acted “unconscionab[ly]” by fraudulently inducing Plaintiff to enter into the mortgage, (id. ¶¶ 20-36). Plaintiff seeks damages and alternative forms of relief from the underlying Judgement of Foreclosure and Sale, including a stay of the sale of the Property, a declaration that the mortgage and foreclosure are “null and void, ” dismissal of the foreclosure action and an order vacating the Judgment of Foreclosure and Sale, or vacatur of the default judgment so that Plaintiff can “have fair trial at the court of law.” (See generally id.; id. ¶¶ 37a-d.)

         II. Discussion

         a. Standard of review

         A district court reviewing a magistrate judge's recommended ruling “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1)(C). When a party submits a timely objection to a report and recommendation, the district court reviews de novo the parts of the report and recommendation to which the party objected. Id.; see also United States v. Romano, 794 F.3d 317, 340 (2d Cir. 2015). The district court may adopt those portions of the recommended ruling to which no timely objections have been made, provided no clear error is apparent from the face of the record. John Hancock Life Ins. Co. v. Neuman, No. 15-CV-1358, 2015 WL 7459920, at *1 (E.D.N.Y. Nov. 24, 2015). The clear error standard also applies when a party makes only conclusory or general objections, or simply reiterates its original arguments. Chime v. Peak Sec. Plus, Inc., 137 F.Supp.3d 183, 187 (E.D.N.Y. 2015) (“General or conclusory objections, or objections which merely recite the same arguments presented to the magistrate judge, are reviewed for clear error.” (citation omitted)); see also DePrima v. N.Y.C. Dep't of Educ., No. 12-CV-3626, 2014 WL 1155282, at *3 (E.D.N.Y. Mar. 20, 2014) (collecting cases).

         b. The R&R

         Judge Orenstein recommended that the Court decline to dismiss the Complaint for insufficient service of process but nevertheless grant the motion to dismiss the Complaint because Plaintiff's allegations were (1) barred by claim and issue preclusion based on prior federal and state actions, (2) barred by the respective statutes of limitations for each claim, [3] and (3) insufficient to state a claim for relief. (R&R 5-17.) Judge Orenstein also recommended that the Court sua sponte dismiss the claims against Defendants WMC Mortgage Corporation, John Messer and Juris Abstraction Corporation (the “Non-appearing Defendants”) because the “cognizable claims against them are time-barred.” (R&R 17 n.10.) No party has objected to the R&R.

         c. ...

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