Massey v. Computershare Ltd.

ORDER ON PENDING MOTIONS

WILLIAM J. MARTINEZ UNITED STATES DISTRICT JUDGE

This case is before the Court on the following pending motions:

1. Defendant Specialized Loan Servicing LLC's (“SLS”) Motion for Show Cause Order and To Stay Proceedings Pending Resolution of Same (“Motion for Show Cause Order”) (ECF No. 14), pro se Plaintiff James Harrison Massey's Combined Amended Response to [SLS's Motion for Show Cause Order] and Compliance With the Court's Order to Show Cause Why This Litigation Should not Be Dismissed On Grounds of Res Judicata (ECF No. 41), and SLS's reply (ECF No. 46); and Defendant

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Bank of America, N.A.'s^[1] (“Bank of America”) Joinder to [SLS]'s [Motion for Show Cause Order] (ECF No 22)

2. Massey's Motion to Strike Notice of Related Case (ECF No. 24), which SLS addressed in a footnote in its reply in connection with the Motion for Show Cause Order (ECF No. 46 at 2 n.2)

3. Massey's Motion for Entry of Default Judgement [Against Defendant Computershare Loan Services] (ECF No. 27) Computershare Loan Services's response (ECF No. 30), and Massey's reply (ECF No. 45);

4. Computershare Loan Services's Motion to Vacate and Set Aside Clerk's Entry of Default (ECF No. 31), and Massey's response (ECF No. 39);

5. Massey's Motion For Entry of Default Judgment [Against Bank of America] (ECF No. 36), to which no response was filed; and

6. Massey's Motion for Clarification of the Court's Orders staying Proceedings (ECF No. 44), and SLS's response (ECF No. 47).

For the following reasons, SLS's Motion for Show Cause Order is granted in part and denied in part, the remainder of the motions are stricken because they violate the Court's stay order, and the Clerk's Entry of Default against Computershare Loan Services is vacated.

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I. BACKGROUND

A. Kentucky Action^[2]

On May 12, 2020, Massey, proceeding pro se, filed the Kentucky Action against one defendant, SLS, which is also a defendant in the action before this Court (“Colorado Action”). In the Kentucky Action, Massey alleged that on July 15, 2019, he learned that SLS had become the service provider for his home equity line of credit, originally held by Bank of America. See Massey v. Specialized Loan Servicing, LLC, 2021 WL 311868, at *1 (W.D. Ky. Jan. 29, 2021). (Kentucky Action ¶ 2; Colorado Action ¶ 54.) Suspicious of SLS and believing them to be unreputable, Massey requested a payoff statement on August 22, 2019, to terminate his debt. Id. (Kentucky Action ¶¶ 3-4; Colorado Action ¶¶ 55-59.)

On August 27, 2019 Massey allegedly sent through certified mail a cashier's check for $25, 849.76 in satisfaction of the statement amount. Id. (Kentucky Action ¶ 7; Colorado Action ¶ 62.) He received confirmation that his letter was received at the address listed on SLS's payoff statement on August 30, 2019. Id. (Kentucky Action ¶ 8; Colorado Action ¶ 65.)

The next day, Massey received a statement from SLS indicating an amount due

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on his account, which prompted Massey to contact SLS and inquire into the status of his check. Id. (Kentucky Action ¶¶ 9-10; Colorado Action ¶¶ 66-67.) On September 17, Massey spoke to an employee at SLS about his check, and he was told the mail room would search for it. Id. (Kentucky Action ¶ 10; Colorado Action ¶¶ 67-68.) In the Colorado Action, Massey alleges that SLS told him that the check had not been received, and thus, his home equity line of credit account remained active and delinquent. (Colorado Action ¶ 69.) On September 23, 2019, Massey called his bank, which informed him the check had not been negotiated or cashed. Id. (Kentucky Action ¶ 11.) Massey then called an SLS employee who explained that the mail room was still conducting a search for the check, and that he would receive a return call the next day. Id. (Kentucky Action ¶ 11.) After not receiving a return call, Massey called SLS on September 24 and spoke with an employee named “Ecedro”, who was allegedly “unhelpful, wily, shifty, evasive, [and] rude.” Id. (Kentucky Action ¶¶ 11-12; Colorado Action ¶¶ 72-73.)

After previous unsuccessful attempts to contact Massey, on November 14, 2019, SLS called him to explain that although they received his proof of the delivery in October, they still could not locate his check. Id. (Kentucky Action ¶ 24; Colorado Action ¶ 80.) On December 20, 2019, SLS mailed Massey a letter memorializing the November 14 phone conversation, indicating it had requested he acquire a “stop-payment” on the original cashier's check and send a replacement check for the same amount. Id. (Kentucky Action Compl. Ex. 14 at 1; Colorado Action ¶ 80.) SLS further offered to pay any fees associated with the additional check, agreed to honor the original payoff amount and date of receipt, and assured him they would adjust the credit

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reporting to reflect no adverse actions. Id. (Kentucky Action Compl. Ex. 14 at 1.)

Massey never sent a replacement check, however, and eventually defaulted on his debt. Id. at *2. (Colorado Action ¶¶ 82-83.) On April 2, 2020, he received a Notice of Default and Intent to Foreclose. Id. (Kentucky Action ¶ 30; Colorado Action ¶ 94.) On June 10, 2020, SLS, through counsel, again requested Massey execute a “stop-pay” on the check and further requested that he sign an indemnity agreement. Id. (Kentucky Action Pl.'s Voluntary Disclosures ¶ 3; Colorado Action ¶¶ 91-92.) Massey alleges he had been informed by his bank that the holder of a cashier's check can still negotiate or cash it despite a “stop-pay” and, therefore, he reasonably feared an indemnification agreement would result in his liability to SLS or his bank were the original check later used. Id. (Kentucky Action Pl.'s Voluntary Disclosures ¶¶ 4-5; Colorado Action ¶ 91.) Massey instead requested that SLS sign an indemnification agreement, which SLS refused to do. Id. (Kentucky Action Pl.'s Voluntary Disclosures ¶¶ 4-5; Colorado Action ¶ 93.) Massey's bank eventually agreed to “stop payment” on the cashier's check and transferred $25, 849.76 into his account on June 16, 2020. Id. (Colorado Action ¶ 95.)

Massey filed the Kentucky Action on May 12, 2020 (Kentucky Action, ECF No. 1), alleging claims against SLS for: (1) theft of his financial resources by fraud and deceptive practices; (2) extortion, mail fraud, malicious threats to cause him to suffer financial harm; (3) malicious, deliberate, and intentional infliction of emotional, psychological, and physical distress; (4) maliciously reporting false and derogatory credit information to credit reporting agencies with the specific intent and desire to harm his credit and negatively affect his ability to access credit; and (5) malicious and intentional harm to plaintiff's business and plaintiff's business opportunities. Id. Massey

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sought at least $10 million in damages and also requested punitive/exemplary damages. (Id.)

SLS moved to dismiss Massey's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) on July 10, 2020. (Kentucky Action, ECF No. 14 at 4.) On January 29, 2021, Judge Stivers issued an order granting SLS's motion to dismiss and entering final judgment that same day. In so holding, Judge Stivers found that Massey failed to state a claim on for each claim alleged, including theft, fraud, extortion, outrage, and punitive damages. See Massey, 2021 WL 311868, at *3-*6. The order did not specify whether dismissal was with or without prejudice.

B. Colorado Action

Without filing an amended complaint in the Kentucky Action or appealing Judge Stivers's decision to the United States Court of Appeals for the Sixth Circuit, on March 1, 2021, Massey filed his 44-page Complaint in this Court against Computershare Limited, Computershare US, Computershare Loan Services, Bank of America, and SLS. (ECF No. 1.) He alleged that this Court has subject matter jurisdiction under 28 U.S.C. § 1332(a). (See id.)

Following numerous procedural issues which the Court will not recite here, Massey filed a 47-page Amended Complaint (“AC”) on April 12, 2021, which is the operative pleading in the Colorado Action. (ECF No. 18.) The named defendants are Computershare Limited, Computershare US, Inc., Computershare Mortgage Services, Inc., Computershare, Inc., Computershare U.S. Services, Inc., Computershare Loan Services, Bank of America, and SLS (collectively, “Defendants”).^[3] (Id.) In a section

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entitled “Alter Ego Allegations, ” Massey alleges that “[SLS] was an Alter Ego of Defendant Computershare Loan Servicing [sic], who is in turn an Alter Ego of Computershare US, who in turn is an Alter Ego of Computershare Limited.” (Id. ¶ 26.) In a section entitled “AGENCY: AIDING and ABETTING and CONSPIRACY allegations, ” Massey alleges that “Defendants . . . were acting as the agents, employees, and/or representatives of each other, and were acting within the course and scope of their agency and employment . . . .” (Id. ¶ 46.)

In the AC, Massey brings eleven claims against all Defendants: (1) fraud in the inducement; (2) fraud, deceit, and fraudulent misrepresentation; (3) breach of fiduciary duty; (4) negligence, breach of duty to exercise reasonable care, breach of duty to exercise due diligence; (5) fraudulent concealment; (6) embezzlement; (7) misappropriation of funds; (8) theft; (9) extortion; (10) malicious and intentional infliction of emotional/and mental stress; and (11) defamation-libel and slander. (Id.)

In sum, the only real differences between the Kentucky Action and the Colorado Action are a breach of fiduciary claim,...