Mains v. Citibank, N.A.

ERIC P. MAINS, Plaintiff, v. CITIBANK, N.A. As Trustee for the WAMU-HE2 Trust,CHASE BANK, N.A., CYNTHIA RILEY,NELSON & FRANKENBERGER, P.C., BLACK KNIGHT FINANCIAL SERVICES,LLC formerly doing business as LENDER PROCESSING SERVICES,BOSE MCKINNEY & EVANS, LLP, JOHN DOES (Unknown),WYATT, TARRANT & COMBS LLP, Defendants.

4:15-cv-00036-SEB-WGH

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF INDIANA NEW ALBANY DIVISION

March 31, 2016

ORDER ON PENDING MOTIONS TO DISMISS

This matter comes before the court on the following motions to dismiss:

• Docket Number ("Dkt. No.") 29 - Defendant Black Knight Financial Services, LLC ("Black Knight")

• Dkt. No. 38 - Defendant Bose McKinney & Evans, LLP ("Bose McKinney")

• Dkt. No. 41 - Nelson & Frankenberger, P.C. ("N&F")¹

• Dkt. No. 86 - Wyatt, Tarrant & Combs LLP ("Wyatt")²• Dkt. No. 102 - Chase Bank, N.A. ("Chase") and Citibank, N.A. ("Citibank")³

Collectively, Black Knight, Bose McKinney, N&F, Wyatt, Chase, and Citibank are referred to herein as "Defendants". Bose McKinney, N&F, Wyatt, and Citibank joined in Black Knight's Motion to Dismiss and Memoranda in support thereto, and shall be referred to as the "Joinder Defendants." The motions have been fully briefed. For the following reasons, we GRANT Defendants' Motions to Dismiss. [Docket No. 29, 38, 41, 86, 102.]

Background and Facts

Despite the hundreds of pages dedicated to seeking dismissal of the 90 page, ten count amended complaint with its accompanying 100 pages of exhibits brought against nine named defendants and an unknown number of "John Does", this case is a simple, straightforward foreclosure action based on a $200,000 mortgage and note secured by Plaintiff's home in Clark County, Indiana. This litigation has proceeded through an Indiana trial court, the Indiana Court of Appeals, the Indiana Supreme Court, and now has found its way onto our docket. It is more than time to bring some finality to these issues and claims.

According to the First Amended Complaint, Docket Number 23 ("FAC"),⁴ on December 19, 2006, with the help of a loan officer for First Meridian Mortgage ("FMM"), Plaintiff Eric Mains⁵ executed a promissory note and mortgage in favor of Washington Mutual Bank ("WAMU") as the lender thereby encumbering as collateral his primary residence, 2635 Darien Drive, Jeffersonville, Indiana. [FAC ¶ 20.] Two years later WAMU failed as a banking institution, on September 25, 2008, and the FDIC became the receiver. [Id. ¶ 35.] Chase purchased and was assigned WAMU's loans and loan commitments, including Mains's mortgage and note. Black Knight, whom Mains alleges to have been an undisclosed agent for Chase, provided Chase with computer software and forms, contracted on behalf of Chase, and directed the debt collection attempts of law firms hired by Chase, in this instance, N&F and Bose McKinney. [Id. ¶ 184.] In May of 2009, Mains received correspondence sent by Chase indicating that it had become the servicer of his loan. [Id. ¶ 38.] Chase later assigned Mains's mortgage and note to Citibank. Mains v. Citibank, NA, 18 N.E.3d 319, at *2 (Ind. Ct. App. 2014).

Mains alleges that on three separate occasions he attempted to request a loan modification, but was told each time that his request was "incomplete" or "lost." [FAC ¶ 36.] Because Mains failed to make a mortgage payment for 90 days, an "acceleration notice" was generated by Chase notifying Mains that his loan payments had increased. Mains notes that despite his lack of payment, his loan statements inexplicably reflected an overall decrease in his loan balance. [Id. ¶¶ 39-40.] In 2009, Mains received a notice of default issued by Chase's attorney, N&F. [Id. ¶ 41.] On April 20, 2010, Citibank filed a mortgage foreclosure action against Eric and Anna Mains in the Clark Circuit Court ("State Court"), cause number 10C01-1004-MF-000248 ("State Foreclosure Action" or "State Court Judgment"). [Id.]

After a failed pre-foreclosure settlement conference in the State Foreclosure Action, Citibank filed a motion for summary judgment on August 30, 2010, which it later withdrew on November 1, 2010 because, as alleged in the FAC, Citibank was under investigation for its alleged improper foreclosure practices. [FAC ¶¶ 45, 47.] Mains avers that Citibank agreed to consent orders which deferred foreclosure actions between 2009 to 2010 to allow time to identify any procedural defects and/or insufficiencies in the documentation. [Id. ¶ 48.] Citibank re-filed its motion for summary judgment on February 11, 2013, and Mains responded on March 11, 2013. [Id. ¶¶ 50, 51.] Following oral argument on April 30, 2013, the State Court granted summary judgment in favor of Citibank on May 3, 2013. [Id. ¶ 52.] Mains's motion to correct errors was denied on August 8, 2013, after briefing and another hearing. [Id. ¶ 53.]

Mains filed an appeal of the trial court's foreclosure decision with the Indiana Court of Appeals on September 12, 2013, contending, inter alia, that Citibank was not the proper party to foreclose the loan and that the equitable doctrine of "unclean hands" should have precluded the foreclosure. [Dkt. No. 103-3 at 21.] Mains argued that Defendants "instructed employees to fraudulently sign documents to prove ownership" and that Citibank committed fraud by attending a pre-foreclosure settlement conference when it was not the real party in interest. [Dkt. No. 103-3 (Mains's Appellant Brief to the Indiana Court of Appeals) at 42; FAC ¶ 54 (stating that he "brought up" on appeal Citibank's HDC (holder in due course) status); Dkt. No. 30-1 (Mains's June 17, 2010 Answer to Citibank's State Foreclosure Action) at Affirmative Defense No. 1 ("The Plaintiff [Citibank] may not be the real party in interest, the true owner of the obligation, and may have failed to name necessary parties that are entitled to enforce the terms and obligations of the Note and Mortgage).]⁶ Rejecting Mains's arguments, the Indiana Court of Appeals affirmed the trial court's order, ruling that Citibank was entitled to enforce the note and mortgage and that "[t]he trial court correctly concluded as a matter of law that Citibank was entitled to summary judgment." Mains, 18 N.E.3d at *3. On October 4, 2014, Mains sought totransfer to the Indiana Supreme Court, which was denied on January 22, 2015 ("State Court Judgment"). [FAC ¶¶ 55-56.]

Mains alleges in the action before us that while reviewing loan documents in December 2014, he discovered "incontrovertible evidence of fraud and forgery, and possibl[e] backdating" knowingly withheld from the State Court by Defendants. [FAC ¶ 61.] He recounts an example involving his having signed his note and mortgage on December 19, 2006, which documents were endorsed by Defendant Cynthia Riley on behalf of WAMU. However, according to Ms. Riley's 2013 deposition in another case, Ms. Riley's employment with WAMU had been terminated in November 2006, so she was not employed with WAMU or Chase between November 2006 and the time of her deposition. [Id. ¶¶ 62-64.] Mains concludes from this that the means by which his note was transferred and assigned contained errors and evinced fraud. [Id. ¶¶ 65-77.] It is his position that the January 5, 2007 assignment by WAMU via a "Deed of Trust" was also defective. [Id. ¶ 65.] Mains further claims that the assignment of his note from Chase to the WAMU HE-2 Trust (i.e., Citibank) on June 14, 2010 was "fraudulent" on the grounds that it was robo-signed by a processing party, and not the lender. [Id. ¶¶ 66-67.] Consequently, Mains insists that his mortgage was legally flawed/deficient and thus could not be foreclosed.

Mains asserts in this case various claims for violations of the Real Estate Settlement Procedures Act ("RESPA"), violations of the Truth In Lending Act ("TILA"), violations of Indiana Code § 32-30-10.5 (Indiana Foreclosure Prevention Agreements for Residential Mortgages), Negligent and/or Intentional Infliction of Emotional Distress, NegligentMisrepresentation, Common Law Fraud, Negligence, violations of the Fair Debt Collection Practices Act ("FDCPA"), and Racketeer Influenced and Corrupt Organizations Act ("RICO) violations. Defendants move to dismiss Mains's FAC on the grounds that his claims seek to undo the State Court Judgment and thus are barred by the Rooker-Feldman doctrine.

Analysis

I. Subject Matter Jurisdiction - The Rooker-Feldman Doctrine

At the core of Mains's FAC are his allegations that Defendants: (1) improperly transferred and assigned the note, (2) were not the real parties in interest in seeking to foreclose the mortgage, and (3) committed fraud on Mains and the State Court in their efforts to foreclose the mortgage and note. A thorough review of the FAC and the parties' arguments convinces us that we lack jurisdiction to adjudicate Mains's claims because they seek an adjudication in this court that would, if granted, substantively nullify the State Court Judgment.

A. The Rooker-Feldman Doctrine.

The Rooker-Feldman doctrine, named after the Supreme Court's decisions in Rooker v. Fidelity Trust Co.⁷ and District of Columbia Court of Appeals v. Feldman,⁸ provides that the federal district courts must decline to entertain "cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before thedistrict court proceedings commenced and inviting district court review and rejection of those judgments." Lance v. Dennis, 546 U.S. 459, 464 (2006); Kelley v. Med-1 Solutions LLC, 548 F.3d 600, 603 (7th Cir. 2008). The doctrine stems from the Supreme Court's exclusive jurisdiction over appeals from state high-court judgments, see 28 U.S.C. § 1257; it thus requires district courts to steer away from cases in which a plaintiff's claimed injury directly results from, or is "inextricably intertwined" with, a state court judgment. See Garry v. Geils, 82 F.3d 1362, 1365-66 (7th Cir. 1996). Even if it concludes that a decision by the state court was clearly misguided or unconstitutional, a district court...