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Conte v. Mortgage Electronic Regstration Systems

United States District Court, E.D. Pennsylvania

March 27, 2015



MARK A. KEARNEY, District Judge.

Plaintiffs seek to quiet title to 703 South Second Street, Philadelphia, Pennsylvania 19147 (the "Property") claiming breaches of fiduciary duty (Count I), false and misleading representations (Count II); false representation and deceptive means to collect or attempt to collect debt (Count III); and declaratory judgment and a permanent injunction against all Defendants (Count IV).[1] As this Court lacks subject matter jurisdiction, we grant the motion to dismiss of Defendants Mortgage Electronic Registration Systems, Inc. ("MERS"), Bank of New York Mellon ("BNY Mellon"), as Trustee for the Holders of the GE-WMC Asset-Backed Pass-Through Certificates, Series 2005-2 (together, the "Trust"), and Ocwen Financial Corp. ("Ocwen") (collectively, "Moving Defendants").[2]

I. Facts plausibly alleged in the Complaint.

On October 12, 2005, Conte signed a mortgage on the Property in favor of MERS, as nominee for WMC Mortgage Corporation ("WMC"). (ECF Doc. No. 1, Compl., ¶¶ 13-14.) Conte then agreed to a loan modification on April 25, 2008, recorded on January 29, 2009. (Id. ¶ 15.) On July 16, 2010, MERS recorded an assignment of the Property's mortgage to BNY Mellon. (Id. ¶ 16.) Conte alleges that this July 2010 assignment did not mention the April 2008 loan modification. (Id. ) On February 19, 2013, Conte sent BNY Mellon a "Request Regarding Statement of Account." (Id. ¶ 17.) Conte also sent BNY Mellon a "Notice to Record Mortgage Satisfaction Piece to Avoid Penalty" on February 19, 2013. (Id. ¶ 18.) BNY Mellon did not respond to Conte's requests. (Id. 19.)

On July 8, 2010, BNY Mellon filed suit in the Philadelphia Court of Common Pleas to foreclose on the Property.[3] (ECF Doc. No. 3-8, State Ct. Docket, 8.) The court entered a default judgment against Plaintiff Conte on September 2, 2010. (Id. at 10.) After postponing the sale of the Property multiple times, Conte filed a petition to open the default judgment. (Id. at 17.) The court denied Conte's petition on September 24, 2013. (Id. at 18.) On November 28, 2014, Plaintiffs commenced this action.

II. Analysis

When considering Moving Defendants' motion to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), Plaintiffs bear the burden of persuading the Court that subject matter jurisdiction exists. Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir.1991). We "may not presume the truthfulness of plaintiff's allegations, but rather must evaluate for itself the merits of the jurisdictional claims." Hedges v. United States, 404 F.3d 744, 750 (3d Cir.2005) (internal quotation marks and alteration marks omitted).

Plaintiffs plead little factual background other than Conte signed a mortgage that was subsequently modified and assigned. (ECF Doc. No. 1, Compl., ¶¶ 13-16.) Plaintiffs seek to compel Defendants to "file, record, cancel, surrender or satisfy record, or admit the validity, invalidity or discharge of, any document, obligation or deed affecting any right, lien, title or interest in [the Property]." (Id. at 4-5.) While it is difficult to understand exactly what relief the pro se Plaintiffs are requesting, the Court understands the Complaint as challenging the validity of the mortgage assignment in each count.

Moving Defendants argue that Plaintiffs' Complaint, styled as an Action to Quiet Title, should be dismissed because the claims are barred under the Rooker-Feldman doctrine, as well as res judicata. First, under the Rooker-Feldman doctrine, Plaintiffs' claims are barred because granting the relief requested would necessarily require a finding that the state court's entry of judgment in the foreclosure proceedings was erroneous. (ECF Doc. No. 3-2, Defs.' Mem., 15-18.) Second, Moving Defendants argue that even if the Rooker-Feldman doctrine does not bar Plaintiffs' claims, res judicata prevents Plaintiffs from asserting claims that were actually litigated or could have been litigated in the state court foreclosure proceeding. (Id. at 18-19.)

A. The Rooker-Feldman doctrine

"The Rooker-Feldman doctrine bars a federal court from entertaining cases 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.'" Stephens v. Zucker, Goldberg & Ackerman, Civ. A. No. 14-2483, 2014 WL 4744550, at *2 (E.D. Pa. Sept. 24, 2014) (quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005)). A plaintiff may not "seek relief that requires a predicate finding that the state court's action resulting in the entry of a judgment was wrongfully entered." Sherk v. Countrywide Home Loans, Inc., No. 08-5969, 2009 WL 2412750, at *6 (Aug. 5, 2009). To meet Rooker-Feldman, a plaintiff must show: "(1) the federal plaintiff lost in state court; (2) the plaintiff complain[s] of injuries caused by [the] state-court judgments'; (3) those judgments were rendered before the federal suit was filed; and (4) the plaintiff is inviting the district court to review and reject the state judgments." Great W. Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159, 166 (3d Cir.2010). "The factors that typically drive the inquiry are two and four, the substantive ones." Sherk, 2009 WL 24112750, at *2. On multiple occasions, our Court of Appeals has held that the Rooker-Feldman doctrine bars federal courts from providing relief that invalidates a state court foreclosure decision. See, e.g., Gage v. Wells Fargo Bank, NA AS, 521 F.Appx. 49, 51 (3d Cir. 2013); Manu v. Nat'l City Bank of Indiana, 471 F.Appx. 101, 105 (3d Cir. 2012); Laychock v. Wells Fargo Home Mortg., 399 F.Appx. 716 (3d Cir. 2010); Easley v. New Century Mortg. Corp., 394 F.Appx. 946 (3d Cir. 2010); Moncrief v. Chase Manhattan Mortg. Corp., 275 F.Appx. 149, 152 (3d Cir.2008).

i. Breach of fiduciary duty (Count I) is barred by the Rooker-Feldman doctrine.

Plaintiffs' breach of fiduciary duty claim (Count I) is barred by the Rooker-Feldman doctrine as it directly challenges the validity of the state court's foreclosure judgment and complains of injuries caused by the state court foreclosure. The breach of fiduciary duty claim alleges that Defendants failed to secure the proper endorsements before assigning the mortgage. (ECF Doc. No. 1, Compl., ¶ 26.) This allegedly puts a "cloud of [sic] the property title." (Id. ¶ 28.) Further, Plaintiffs allege that the failure to secure the proper endorsements results in only a "partial interest" for Defendants and this "partial interest" should not be used by Defendants to "gain an advantage." (Id. ¶¶ 26, 31-32.) While Plaintiffs do not expand on the advantage Defendants gained, this Court interprets that phrase to mean the obtaining of a foreclosure.

As the Court liberally reads Count I, Plaintiffs challenge the validity of the assignment to BNY Mellon arguing that BNY Mellon improperly foreclosed on the Property. It is evident that Plaintiffs are complaining about the injuries caused by the state court's judgment. The state court judgment resulted in Moving Defendants gaining an "advantage", which Plaintiffs now contest. Further, a finding that BNY Mellon did not have a proper interest in the mortgage through a valid assignment would be tantamount to a reversal of the state court's foreclosure decision. See Sherk, 2009 WL 24112750, at *6 ("Whether [defendants] had the legal right to foreclose on the mortgage loan has been ...

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