Ozuzu v. Greenpoint Mortg. Funding

JUDE E. OZUZU, Plaintiff, v. GREENPOINT MORTGAGE FUNDING, CAPITAL ONE (USA), NA,VFC PARTNERS 26, LLC, FIRST CITY SERVICING CORPORATION,BNH CALEB 14, LLC, R.B. DIFFENDERFFER, JEFFREY M. JULIANE,STEPHEN DAMORE, KATHY MCNAIR, DWAIN MOSS,STEVE HACKEL, HARRY ZUBLI, Defendants.

19-CV-03783 (AMD) (SMG)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

September 23, 2020

MEMORANDUM DECISION AND ORDER

ANN M. DONNELLY, United States District Judge:

On June 28, 2019, the plaintiff filed this action pro se alleging that the defendants committed multiple acts of "fraud and theft" while conspiring to foreclose unlawfully the mortgage on his residential property located at 2846 West 36th Street, Brooklyn, NY 11236. (ECF No. 1 ¶ 1.) These allegations stem, in part, from two foreclosure actions filed in the Supreme Court of Kings County, one of which is still pending (Index No. 505322/2016). In November of 2019, the plaintiff retained counsel and on December 2, 2019, filed an Order to Show Cause seeking a temporary restraining order, a preliminary injunction and a stay of the state court proceedings. (ECF Nos. 35-37.) After a hearing on December 4, 2019, I granted the TRO, which restrained and enjoined the defendants from proceeding with the sale of the plaintiff's property until my decision on the preliminary injunction and motion to stay.

On December 20, 2019, the plaintiff filed his second amended complaint alleging that the defendants committed fraud and conspiracy in violation of the New York General Business Law § 349, the Civil RICO Act, 18 U.S.C. § 1964, the Emergency Disaster Relief Act, 42 U.S.C. § 5170(a), the Fair Housing Act, 42 U.S.C. § 3631, and 18 U.S.C. §§ 241-42. (ECF No. 43 ("SAC") ¶ 1.) The defendants have moved to dismiss the SAC. (ECF. Nos. 50, 55, 57.) For the reasons that follow, the defendants' motions are granted, and the plaintiff's motion for a preliminary injunction is denied.

BACKGROUND¹

On April 18, 2006, the Plaintiff purchased a six-family commercial residential dwelling at 2846 West 36th Street on Coney Island and executed a promissory note for $525,000.00 with defendant Greenpoint Mortgage Funding ("Greenpoint") secured by a mortgage on the property. (SAC ¶ 21.) In 2007, Greenpoint closed its mortgage business and defendant Capital One, USA, N.A. ("Capital One"), took over as servicer of the plaintiff's mortgage. (Id. ¶ 22.)

On October 29, 2012, Hurricane Sandy destroyed the property. (SAC ¶ 24.) The plaintiff had "current flood and hazard insurance policies" and "filed claims with the insurance providers for funds to rehabilitate the damaged property." (Id.) He alleges that he also was entitled to receive "emergency funds" as a result of the storm damage. (Id. ¶ 25)

On June 6, 2013, defendant R.B. Diffenderffer, a Vice President at Capital One with authority to transfer non-performing loans in the Greenpoint portfolio, assigned the plaintiff's mortgage to defendant VFC Partners 26 ("VFC Partners"). (SAC ¶¶ 25-26.) The plaintiffcontends that his loan should not have been classified as "non-performing" because he had made all his mortgage payments. (Id. ¶ 26.) According to the plaintiff, "Greenpoint and Diffenderffer were aware that [the] [p]laintiff and the Property were entitled to emergency funds from Hurricane Sandy, which would be interfered with to the benefit of any new owner if the mortgage were falsely labeled as non-performing." (Id. ¶ 25.)

The plaintiff continued to make payments on his mortgage after the assignment to VFC Partners. (Id. ¶ 27.) On July 31, 2013, defendant Kathy McNair, a Vice President at defendant First City Servicing Corporation ("First City"), the parent company of VFC Partners, assigned the plaintiff's mortgage to defendant BNH Caleb 14 ("BNH"). (Id. ¶¶ 8, 28.) Two days later, on August 2, 2013, defendant Harry Zubli, a licensed attorney and a principal of BNH, sent a letter to the plaintiff informing him that his mortgage was in default as of May 1, 2013. (Id. ¶¶ 16, 29.) By letter dated August 19, 2013, Zubli informed the plaintiff that he had accelerated the mortgage and demanded immediate payment in full—over $500,000; the plaintiff argues that this acceleration was unwarranted because his payments were current and up to date. (Id.) Although Zubli accepted the plaintiff's mortgage payments for August and September of 2013, he refused the plaintiff's October payment. (Id. ¶¶ 16, 32.)

The plaintiff alleges that he "stopped receiving the insurance proceeds for repairs and restoration" of the property because the defendants represented his mortgage as "non-performing." (SAC ¶ 30.) Moreover, Zubli represented to District Judge Shira Scheindlin at a bond hearing on October 1, 2013, that the plaintiff's mortgage was in default and that he hadcommenced foreclosure proceedings in the state court. (Id. ¶ 31.)² As a result, the plaintiff could not use his property as collateral for a surety bond for a family member. (Id.)

On June 9, 2014, BNH commenced a foreclosure action against the plaintiff in the Supreme Court for Kings County, Index No. 505312/2014. (SAC ¶ 34.) BNH moved for summary judgment, which the court denied on April 22, 2015, because BNH had not established any basis for accelerating the mortgage note. (Id. ¶ 38.) On August 10, 2015, BNH moved to dismiss the action without prejudice, to cancel the prior acceleration of the plaintiff's mortgage and to reinstate the mortgage loan. (Id.) The motion was granted over the plaintiff's objections to the reinstatement of the mortgage. (Id. ¶ 39-40.) The plaintiff alleges that he was denied the right to appeal this decision after Zubli "manufactured" the plaintiff's default. (Id. ¶ 40.)

After dismissing the first foreclosure action, BNH offered to reinstate the plaintiff's loan if he could make the missed payments of principal and interest that had accrued since October of 2013. Memorandum and Order, BNH Caleb 14 v. Jude E. Ozuzu, et al., Index No. 505322/2016, at 5 (Sup. Ct. N.Y. July 27, 2018) (ECF No. 50-14). The plaintiff did not make any payments, and, on February 5, 2016, BNH again accelerated the mortgage. Id.

On April 7, 2016, BNH filed a new foreclosure action against the plaintiff. (SAC ¶ 40.) The plaintiff moved to dismiss that action; he argued that BNH had not adequately alleged its ownership of the mortgage and had not established that the loan was in default when it filed the second foreclosure action. (ECF No. 49-9 ¶¶ 8, 10.) According to the plaintiff, BNH was "using the signatory of this honorable court to perfect an illegal foreclosure action," as evidenced by thefact that the signature on the mortgage assignment from Greenpoint to VFC Partners "is forged and fraudulent," there was an "irregularity as to the mode of acquisition of this mortgage loan" by BNH and Zubli, and that BNH "has no intention of being a private lender, never intended to service loans, but acquire[s] [loans] for the purpose of foreclosure to make profit." (ECF No. 49-9 ¶¶ 20, 25-28, 36-37.) The plaintiff further argued that the amount that BNH claimed was owed on the loan was "inconsistent with Greenpoint financial records, dates, mortgage payments," and that BNH filed the second foreclosure action while the first was still pending. (ECF No. 49-9 at 19-20.) On October 28, 2016, the court denied the motion without prejudice because the plaintiff did not establish that the loan he cited in his exhibits was the same loan referenced in the Note and mortgage. Order, BNH Caleb 14 v. Jude E. Ozuzu, et al., Index No. 505322/2016 (Sup. Ct. N.Y. Oct. 28, 2016); (ECF No. 50-2 ¶ 20).

The plaintiff then answered and filed a counterclaim against BNH. (ECF No. 50-12.) As affirmative defenses, the plaintiff alleged that BNH did not present "lawful documentary proof that [it] is the legal owner and holder of the Note and mortgage," nor did it establish that the loan was in default. (ECF No. 50-12 ¶¶ 6-7.) According to the plaintiff, BNH willfully "refused to accept payment despite the fact that payment was offered," and as a result, "the mortgage [was] forfeited and no further monies are owed." (Id. ¶ 8.) The plaintiff described BNH's multiple accelerations of the mortgage as "unlawful" (Id. ¶ 9), and asserted that the "alleged mortgage should be forfeited and title declared free of the mortgage" because of BNH's "fraudulent activities." (Id. ¶ 12.) In addition, the plaintiff alleged that BNH lacked standing to bring the foreclosure action because Greenpoint's assignment of the mortgage was "invalid and void." (Id. ¶ 13.) The plaintiff also brought a counterclaim alleging that "[t]he Property was obtained by fraud and deceit by [BNH] and a scheme to defraud the [plaintiff] by false andmisrepresentation;" the plaintiff sought $1.5 million in damages "for the intentional conduct of [BNH] in default of this loan, causing adverse credit reporting and smear to integrity and reputation of the [plaintiff]." (Id. ¶ 24.)

The parties cross-moved for summary judgment, and on July 27, 2018, the court granted BNH's motion and denied the plaintiff's motion. (ECF No. 50-14.) The Honorable David B. Vaughan held that BNH had standing to bring the foreclosure action and had established the prima facie elements of a foreclosure claim, including that Ozuzu was in default when BNH commenced the action. (Id. at 6.) The burden then shifted to Ozuzu to raise a triable issue of fact. (Id. at 7.) Judge Vaughan determined that Ozuzu did not offer "any competent proof to demonstrate that the assignments and/or indorsements were defective or that [BNH] did not otherwise possess the note at the time the action was commenced." (Id. at 7-8.) Moreover, Ozuzu did not "submit proof to show that he was current on the loan at the time of the commencement of the instant action on April 7, 2016;" instead he "only submit[ted] copies of cancelled checks for the period of January 2013 through September 2013." (Id. at 8.) Judge Vaughan granted BNH's motion to strike the...