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Nevada First Federal, LLC v. MacCiocca

United States District Court, E.D. Pennsylvania

July 21, 2015

ARNOLD MACCIOCCA et al., Defendants.


MICHAEL M. BAYLSON, District Judge.

Plaintiff Nevada First Federal, LLC ("Plaintiff" or "Nevada First") filed this action for mortgage foreclosure against Defendants Arnold and Mary Ann Macciocca ("Defendants") on March 11, 2015. Presently before the Court is Defendants' Motion Pursuant to Rule 12(b)(1) to Dismiss Complaint for Lack of Subject Matter Jurisdiction. Defendants argue that this Court lacks subject-matter jurisdiction under the Rooker-Feldman doctrine because Plaintiff had lost a previous foreclosure action against Defendants in state court. For the following reasons, Defendants' Motion to Dismiss is GRANTED in part and DENIED in part.

I. Factual and Procedural Background

A. The Mortgage

On November 15, 2006, Defendants secured a $2, 320, 000 mortgage from Sovereign Bank for a property in Broomall, Pennsylvania. ECF 1 ¶¶ 6, 9; ECF 1 Ex. A. As part of the loan agreement, Defendants agreed to make monthly payments of principal plus interest, and adhere to several affirmative covenants that required them to furnish the lender with financial statements, maintain a minimum debt service coverage ratio of 1.25 to 1, and pay all taxes when due. ECF 1 Ex. B. On April 8, 2011, Sovereign Bank sent a letter to Defendants stating that Defendants were in default because they had failed to comply with the affirmative covenants. ECF 4 Ex. C.

On November 15, 2011, First Commerce, servicer for Plaintiff, which had acquired the rights to the mortgage, adjusted the interest rate on Defendants' loan as planned for in the loan documents.[1] ECF 4 Ex. E, at 24:9-20, 97:21-98:4. However, First Commerce calculated the new rate incorrectly; instead of adding 2.5 basis points to the U.S. Treasury Securities Rate, First Commerce added 2.5 percentage points to the Treasury Securities Rate, which was over 100 times the appropriate amount (a basis point is 1/100th of a percent of interest).[2] ECF 4, at 3; ECF 4 Ex. E, at 98:5-24. Despite being charged an overly high interest rate, Defendants made monthly payments on the loan through November 2012. ECF 4 Ex. E, at 79:18-80:4. In December 2012, however, Defendants failed to make their payment, and they again missed their monthly payments in April through November 2013. Id.

B. The State Foreclosure Action

On April 3, 2013, Plaintiff filed a complaint in mortgage foreclosure in the Court of Common Pleas of Delaware County, Pennsylvania. ECF 4 Ex. C. Plaintiff alleged that the Promissory Note and Mortgage entered into by Defendants were in default in virtue of: (a) Defendants' failure to make payments when due; (b) Defendants' failure to maintain a debt service coverage ratio of not less than 1.25 to 1, as required by an affirmative covenant in the Business Loan Agreement; and (c) Defendants' failure to provide requested financial information. Id . ¶ 10. According to the complaint, Defendants had been in default since April 8, 2011. Id . ¶ 11. Plaintiff alleged that at the time of the filing, $2, 282, 286.45 in unpaid principal, interest, and fees was due and payable, and that interest would continue to accrue at the default rate of $381.41 per day. Id . ¶¶ 12-13. Plaintiff requested judgment for foreclosure of the mortgaged premises in the amount of $2, 282, 286.45 plus per diem interest of $381.41, costs, and any further relief that the court deemed just and appropriate. Id . ¶ 15.

On August 8, 2014, a bench trial on the matter was held before the Honorable Charles B. Burr of the Court of Common Pleas of Delaware County. ECF 4, at 3. On August 12, Judge Burr entered a nonsuit and dismissed Plaintiff's foreclosure action with prejudice. Id .; ECF 4 Ex. F. As indicated in the trial transcript, Judge Burr's decision to grant a nonsuit was based on his finding that there was a significant gap in proof. ECF 4 Ex. E, at 120:19-121:24. The court agreed that there was something outstanding on the loan but was not sure what the correct amount was or whether Plaintiff's numbers had been calculated properly in accordance with GAAP. ECF 4 Ex. E, at 120:19-21:24. Judge Burr reasoned:

"[A]ssuming there's a default'... for failure to provide this financial information, that gets you halfway up the football field. You're at the 50 yard line. I don't think you can cross the goal line though because assuming that to be true, we don't know what the proper calculation under GAAP, that is the Generally Accepted Accounting Principles doctrine, applies in this case and calculating the amount due under that procedure, what that would be. We don't know."


Following post-trial motion practice, Judge Burr denied Plaintiff's motion for post-trial relief. ECF 4 Ex. A. Around the same time, Defendants made several offers to Plaintiff to make payments on the mortgage at the correct interest rate. ECF 4, at 4; ECF 4 Ex. D. However, Plaintiff did not accept these payments. ECF 4, at 4.

C. The Federal Foreclosure Action

Plaintiff filed the current federal action for mortgage foreclosure on March 11, 2015. ECF 1. In this suit, Plaintiff alleges that the Promissory Note and Mortgage are in default by virtue of: (a) Defendants' failure to make payments when due since December 15, 2012; and (b) Defendants' failure to "pay outstanding real estate taxes related to the property at issue serving as security for the Promissory Note totaling $37, 150.69." Id . ¶ 13. As a result of the alleged default, Plaintiff claims that Defendants owed $2, 859, 454.70 in principal, accrued interest, charges and fees, and real estate taxes as of January 5, 2015. Id . ¶ 15. Plaintiff seeks a judgment fixing the amount due on the mortgage; directing that Defendants pay the amount due plus ...

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