Brahmbhatt v. Ocwen Servicing Inc.

ANIL J. BRAHMBHATT, et al. v. OCWEN SERVICING INC., et al.

CIVIL ACTION No. 17-5139

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

September 28, 2018

MEMORANDUM

Juan R. Sánchez, C.J.

Defendants Ocwen Servicing Inc. and Deutsche Bank National Trust Company, in its capacity as trustee for Harborview Mortgage Loan Trust 2007-2 (Defendants), move to dismiss all claims asserted against them by pro se Plaintiffs Anil and Usha Brahmbhatt stemming from Defendants' foreclosure of their property. Defendants raise a number of jurisdictional and procedural defenses, including the Rooker-Feldman doctrine, the pertinent statutes of limitations, res judicata, and collateral estoppel. To the extent the Court must reach the merits of the Complaint, Defendants also assert that the Complaint fails to state a claim upon which relief may granted. For the reasons set forth below, the Court will grant Defendants' Motion to Dismiss.

FACTS¹

The Brahmbhatts previously owned real property located at 604 Avon Street in Philadelphia, Pennsylvania (the Property). Compl. ¶ 3. The Brahmbhatts received a $160,000 note from American Brokers Conduit (the Note) which was secured by a mortgage (the Mortgage) on the Property. Defs.' Mot. to Dismiss Ex. A. The Brahmbhatts executed both the Note and the Mortgage on October 12, 2006. Id.; Defs.' Mot. Ex. B. The Brahmbhatts' loan was securitized and assigned to Deutsche Bank National Trust Company (DBNTC), acting in its capacity as trustee for "Harborview Mortgage Loan Trust 2007-2." Ocwen Servicing, Inc. (Ocwen) appears to have serviced the loan. The Brahmbhatts allege some kind of defect in the manner in which DBNTC came to possess title to the Property during the securitization process. Compl. ¶¶ 21-22.

On September 16, 2014, DBNTC instituted a foreclosure action against the Brahmbhatts in the Philadelphia County Court of Common Pleas. Defs.' Mot. Ex. E. The Brahmbhatts answered on October 24, 2014. Id. On December 11, 2014, DBNTC moved for judgment on the pleadings. Id. The common pleas court granted the motion on January 16, 2015 and entered a judgment in DBNTC's favor and against the Brahmbhatts. The Brahmbhatts unsuccessfully sought reconsideration. Id. On February 13, 2015, DBNTC filed affidavits of service for notice of its intent to sell the Property. Id. The Brahmbhatts moved to delay the Sheriff's sale on April 27, 2015. Id. The common pleas court denied that motion, and the Property was sold on May 5, 2015. Id. ¶ 35.

Shortly after the foreclosure sale, on June 12, 2015, a fire consumed the Property. Id. ¶ 33. In the course of the fire, Anil Brahmbhatt's sister, Nanya, died. Id. Not long thereafter, Mr. Brahmbhatt's mother, Lilaben Brahmbhatt, also died from injuries she sustained in the fire. Id.

On March 1, 2017, the Brahmbhatts filed the instant action against DBNTC and Ocwen in the Supreme Court of the State of New York, County of Kings. Defs.' Notice of Removal, Ex. A. Defendants subsequently removed the action to the United States District Court for the Eastern District of New York, where it was then transferred to this Court. The Brahmbhatts' Complaint contains fourteen claims which fall into four groups.

First, the Brahmbhatts assert a number of claims questioning DBNTC's right to foreclose on the Property. This group consists of claims for: "wrongful foreclosure" (Count I), fraud in the inducement (Count III), quiet title (Count VII), slander of title (Count VIII), and "declaratory relief (Count IX).² In each of these counts, the Brahmbhatts challenge DBNTC's claim to title of the Property and standing to foreclose. In addition, Counts V and VI, although styled as claims for breach of contract (Count V) and fiduciary duty (Count VI), similarly impugn the integrity of the foreclosure proceeding. In these claims, the Brahmbhatts appear to assert that DBNTC lacked standing to foreclose because it should have released the security interest in the Property after purportedly transferring the loan to a third party. See Compl. ¶¶ 81-82, 87-89. As a result, the Court will treat Counts V and VI as claims attacking the foreclosure.

Second, the Brahmbhatts' bring claims for fraud in the inducement. See In re Allegheny Int'l, Inc., 954 F.2d 167, 178 ("Under Pennsylvania law, inducing another to enter into a contract by means of fraud or material misrepresentation, when the other party was under no duty to enter into the contract, is a key element of a claim for fraudulent inducement."). These include theBrahmbhatts' claims for fraud in the concealment (Count II), and "unconscionable contract" (Count IV). These claims allege that one or both Defendants misled the Brahmbhatts into entering the Mortgage. See Compl. ¶¶ 56, 64, 78. Therefore, the Court will construe them as claims for fraudulent inducement.

Third, the Brahmbhatts bring claims for Defendants' purported misconduct in the course of the securitization and servicing of the loan. This group includes those for violation of: the Truth in Lending Act (Count X); the California Homeowners Bill of Rights (Count XII); the Consumer Credit Protection Act (Count XIII); and Regulation X, 12 C.F.R. §1024.41(b) promulgated pursuant to the Real Estate Settlement Procedures Act (RESPA) and (Count XIV). Fourth, the Brahmbhatts seek a remedy for Defendants' alleged responsibility for the death of Lilaben J. Brahmbhatt. (Count XV).³

Defendants moved to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) on November 29, 2017. Their motion raised a number of jurisdictional, procedural, and merits defenses. The Brahmbhatts filed their opposition on January 31, 2018. Defendants filed a reply on February 6, 2018. Oral argument was held on April 30, 2018. The Brahmbhatts filed additional briefing on June 29, 2018, to which Defendants responded on July 3, 2018. The Brahmbhatts filed further briefing on July 6, 2018. The Motion, having been fully briefed and argued, is now ripe for decision.

DISCUSSION

To survive a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when the facts pleaded "allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.

In evaluating a Rule 12(b)(6) motion, a court first must separate the legal and factual elements of the plaintiff's claims. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). The court "must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions." Id. at 210-11. The court must then "determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a 'plausible claim for relief.'" Id. at 211 (quoting Iqbal, 556 U.S. at 679). Affirmative defenses that are apparent from the face of the complaint may be raised by means of a 12(b)(6) motion. See Rycocline Prods., Inc. v. C & W Unlimited, 109 F.3d 883, 886 (3d Cir. 1997). Because Plaintiffs proceed pro se, the Court construes their pleadings liberally and "will apply the applicable law, irrespective of whether [he] has mentioned it by name." Dluhos v. Strasberg, 321 F.3d 365, 369 (3d Cir. 2003). The Court will address each of the four groups of the Brahmbhatts' claims separately.

First, the Rooker-Feldman Doctrine deprives the Court of subject matter jurisdiction to hear the Brahmbhatts' first group of claims concerning DBNTC's right to foreclosure (Counts I, III, and V through IX).

Federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). The Rooker-Feldman Doctrine "prevents 'inferior' federal courts from sitting as appellate courts for state court judgments." In re Knapper, 407 F.3d 573, 580 (3d Cir. 2005). The doctrine applies when "a plaintiff asks a district court to redress an injury caused by [a] state court judgment itself—not when a plaintiff merely seeks to relitigate a claim or issue already litigated in state court." Laychock v. Wells Fargo Home Mortg., No. 07-4478, 2008 WL2890962, at *2 (E.D. Pa. July 23, 2008) (quoting Moncrief v. Chase Manhattan Mortg. Corp., 275 F. App'x 149, 153 (3d Cir. 2008)). This doctrine applies even where a plaintiff brings suit in state court and the defendant removes the action. Lewis v. Citibank, N.A., 179 F. Supp. 3d 458, 462 (E.D. Pa. 2016). Moreover, the Third Circuit has routinely held that the Rooker-Feldman doctrine prohibits relief that invalidates a state foreclosure decision. See Conte v. Mortgage Elec. Registration Sys., No. 14-6788, 2015 WL 1400997, at *2 (E.D. Pa. Mar. 27, 2015) (collecting cases).

The Third Circuit employs a four factor test to determine whether the Rooker-Feldman doctrine bars a plaintiff's claims. For the doctrine to apply, the following requirements must be met: "(1) the federal plaintiff lost in state court; (2) the plaintiff complains 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 Western Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159, 166 (3d Cir. 2010).

The first and third elements of the Great Western test are easily met in this case. Plaintiffs were the subject of an adverse foreclosure judgment that was entered prior to the filing of the instant action. See Defs.' Mot. Ex. E, at 7-8.

The second Great Western element is satisfied. Although pleaded as distinct counts, the Brahmbhatts' claims stem from the same alleged transgression—Defendant DBNTC lacked standing to foreclose on the Property. See Compl. ¶¶ 39, 49, 81, 89, 95, 105, 108. As part of the foreclosure action, however, the Court...