Kayser v. Ocwen Loan Servicing, LLC

MICHAEL KAYSER and BARBARA KAYSER, Plaintiffs, v. OCWEN LOAN SERVICING, LLC,MORGAN STANLEY CAPITAL HOLDING, LLC,and HSBC BANK USA as Trustee for the Morgan Stanley Mortgage Loan Trust,2004-2AR, Mortgage Pass-Through Certificates, Series 2004-2AR, Defendants.

Civ. No. 13-5999 (KM)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

August 18, 2017

OPINION

KEVIN MCNULTY, U.S.D.J.:

Plaintiffs Michael and Barbara Kayser (for simplicity, "Kayser") are homeowners/mortgagors of a property at 9 Autumn Drive, Scotch Plains, New Jersey (the "Property"). Kayser has filed an Amended Complaint alleging three state law causes of action: "Count One - Wrongful Collection Practice"; "Count Two - Quiet Title"; and "Count Three - Fraud." (ECF no. 44) The defendants are Morgan Stanley Capital Holding, LLC, the mortgagee bank; Ocwen Loan Servicing, LLC, which services the loan; and HSBC Bank USA as trustee and assignee of the mortgage and holder of the note (although Kayser denies this). The common feature of all of Kayser's causes of action is a factual claim that the defendants are not the true owners of the underlying mortgage and note. Now before the Court is the defendants' motion for summary judgment pursuant to Fed. R. Civ. P. 56. For the reasons stated herein, the motion will be granted.

I. FACTS

Kayser entered into an adjustable rate promissory note dated June 10, 2003, in the original principal amount of $396,000 in favor of Morgan Stanley Dean Witter Credit Corporation. (DSMF ¶1, citing Note; Lucas Decl. ¶ 4, citing Note; Pl. Opp. 5)¹ To secure the note, Kayser entered into a mortgage dated June 10, 2003. (Lucas Decl. ¶¶ 4-5; M. Kayser Dep. 25-26) The original mortgagee was Morgan Stanley Dean Witter Credit Corporation, which became known as Morgan Stanley Credit Corporation; by merger, that corporation's successor is Morgan Stanley Private Bank, National Association ("MSPBNA"). (Lucas Decl. ¶ 6)

By the First Assignment, dated October 18, 2012, MSPBNA assigned its entire interest in the loan to Morgan Stanley Capital Holdings, LLC ("MSCH"). The First Assignment was recorded in the Recorder's Office of Union County, New Jersey, at Book 1402, page 0249. (Lucas Decl. ¶ 6, citing First Assignment)

By the Second Assignment, dated September 19, 2013, MSCH assigned its entire interest in the loan to HSBC Bank USA, as Trustee ("HSBC as Trustee") for Morgan Stanley Mortgage Loan Trust 2004-2AR, Mortgage Pass-Through Certificates, Series 2004-2AR (the "2004-2AR Trust"). The Second Assignment was recorded in the Recorder's Office of Union County, New Jersey, at Book 1411, page 0767, Instrument no. 154238. (Lucas Decl. ¶ 7, citing Second Assignment)

It is undisputed that Kayser is not current on the loan, although there may be a dispute as to the dollar amount of the delinquency.² (Lucas Decl. ¶ 10; see Pl. Opp. 8-9) According to Ocwen, the servicer, no monthly payment was made on October 11, 2011, or thereafter. (Id.) At his deposition on May 7, 2015, Michael Kayser stated that he had last made a monthly mortgage payment in March 2012. (DSMF ¶¶ 6-7, citing Kayser Dep. 26) No foreclosure action has been instituted, however. (Lucas Decl. ¶ 11)

Ocwen began servicing the loan on April 2, 2012. (Lucas Decl. ¶¶ 2, 8, citing Servicing Transfer Notice, a/k/a "Hello/Goodbye Letter"). A qualified affiant of Ocwen, Kyle Lucas, attests that the original note and mortgage are in the collateral file for Kayser's loan, now in the custody of counsel for defendants in this action, and counsel attaches a copy of the Collateral File. (Lucas Decl. ¶ 9; Collateral File)

I. LEGAL STANDARDS

A. Motion to Dismiss for Lack of Subject Matter Jurisdiction

Motions to dismiss for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1) may be raised at any time. Iwanowa v. Ford Motor Co., 67 F. Supp. 2d 424, 437-38 (D.N.J. 1999). "[B]ecause subject matter jurisdiction is non-waivable, courts have an independent obligation to satisfy themselves of jurisdiction if it is in doubt. See Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 278, 97 S. Ct. 568, 50 L.Ed.2d 471 (1977). A necessary corollary is that the court can raise sua sponte subject-matter jurisdiction concerns." Nesbit v. Gears Unlimited, Inc., 347 F.3d 72, 76-77 (3d Cir. 2003).

Rule 12(b)(1) challenges may be either facial or factual attacks. See 2 Moore's Federal Practice § 12.30[4] (3d ed. 2007); Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). A facial challenge asserts that the complaint does not allege sufficient grounds to establish subject matter jurisdiction. Iwanowa, 67 F. Supp. 2d at 438. A court considering such a facial challenge assumes that the allegations in the complaint are true. Cardio-Med. Assoc., Ltd. v. Crozer-Chester Med. Ctr., 721 F.2d 68, 75 (3d Cir. 1983); Iwanowa, 67 F. Supp. 2d at 438. A factual attack, on the other hand, permits the Court to consider evidence extrinsic to the pleadings. Gould Elecs. Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 2000), holding modified on other grounds by Simon v. United States, 341 F.3d 193 (3d Cir. 2003). Thus "Rule 12(b)(1) does not provide plaintiffs the procedural safeguards of Rule 12(b)(6), such as assuming the truth of the plaintiff's allegations." CNA v. United States, 535 F.3d 132, 144 (3d Cir. 2008).

The burden of establishing federal jurisdiction rests with the party asserting its existence. [citing DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n. 3, 126 S. Ct. 1854, 164 L.Ed.2d 589 (2006).] "Challenges to subject matter jurisdiction under Rule 12(b)(1) may be facial or factual." [citing Common Cause of Pa. v. Pennsylvania, 558 F.3d 249, 257 (3d Cir. 2009) (quoting Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181, 188 (3d Cir. 2006)).] A facial attack "concerns 'an alleged pleading deficiency' whereas a factual attack concerns 'the actual failure of [a plaintiff's] claims to comport [factually] with the jurisdictional prerequisites.' " [citing CNA v. United States, 535 F.3d 132, 139 (3d Cir. 2008) (alterations in original) (quoting United States ex rel. Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506, 514 (3d Cir.2007)).]

"In reviewing a facial attack, the court must only consider the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff." [citing Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000).] By contrast, in reviewing a factual attack, "the court must permit the plaintiff to respond with rebuttal evidence in support of jurisdiction, and the court then decides the jurisdictional issue by weighing the evidence. If there is a dispute of a material fact, the court must conduct a plenary hearing on the contested issues prior to determining jurisdiction." [citing McCann v. Newman Irrevocable Trust, 458 F.3d 281, 290 (3d Cir. 2006) (citations omitted).]

Lincoln Ben. Life Co. v. AEI Life, LLC, 800 F.3d 99, 105 (3d Cir. 2015) (footnotes omitted; case citations in footnotes inserted in text).

Here, the crux of the defendants' jurisdictional challenge is that no defendant has commenced a foreclosure action in state court against Kayser. The defendants submit a declaration of a suitable person with knowledge to that effect (Lucas Decl. ¶ 11), and Kayser submits nothing showing even the imminent threat of a foreclosure action. There is likewise no allegation that any defendant has initiated foreclosure proceedings in Kayser's Amended Complaint. Accordingly, no extrinsic proofs are proffered or required to resolve the jurisdictional question; whether I consider the defendants' 12(b)(1) attack to be facial or factual, my analysis is the same.

B. Summary Judgment Standard and Procedures

Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Kreschollek v. S. Stevedoring Co., 223 F.3d 202, 204 (3d Cir. 2000). In deciding a motion for summary judgment, a court must construe all facts and inferences in the light most favorable to the nonmoving party. See Boyle v. County of Allegheny Pa., 139 F.3d 386, 393 (3d Cir. 1998). The moving party has the burden of establishing that no genuine issue of material fact remains. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). "[W]ith respect to an issue on which the nonmoving party bears the burden of proof ... the burden on the moving party may be discharged by 'showing'—that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325.

Once the moving party has met that threshold burden, the non-moving party "must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The opposing party must present actual evidence that creates a genuine issue as to a material fact for trial. Anderson, 477 U.S. at 248; see also Fed. R. Civ. P. 56(c) (setting forth types of evidence on which nonmoving party may rely to support its assertion that genuine issues of material fact exist); see also Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 138 (3d Cir. 2001) ("A nonmoving party has created a genuine issue of material fact if it has provided sufficient evidence to allow a jury to find in its favor at trial."). If the nonmoving party has failed "to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial, ... there can be 'no genuine issue of material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts...