Rountree v. U.S. Bank Na

DAVID ROUNTREE, Plaintiff, v. US BANK NA; US BANK NA as Trustee for Harborview Mortgage Loan Trust 2006-1;SELECT PORTFOLIO SERVICING, INC; BANK OF AMERICA NAas successor to Countrywide Home Loans Servicing LP; and Does 1 through 100 inclusive, Defendants.

15 Civ. 9018 (KPF)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

January 3, 2017

OPINION AND ORDER

KATHERINE POLK FAILLA, District Judge:

This case is Plaintiff David Rountree's third attempt to nullify the foreclosure of real property he purchased in Boise, Idaho. His two prior actions proceeded in Idaho's District Court for the Fourth Judicial District. Both suits pitted Plaintiff, who represented himself, against a constellation of entities involved in the foreclosure. Plaintiff, now represented by counsel, sues several of those same entities here, bringing substantially the same claims he raised in Idaho state court.

Pending before this Court are two motions to dismiss Plaintiff's Complaint: one filed by US Bank NA, individually and as Trustee for Harborview Mortgage Loan Trust 2006-1 ("US Bank"), and Select Portfolio Servicing, Inc. ("SPS"); and another filed by Bank of America, N.A. as successor to Countrywide Home Loans Servicing LP ("BANA") (collectively, "Defendants"). Defendants all raise similar defenses. They argue that the Rooker-Feldman doctrine (discussed further herein) divests this Court of subject-matter jurisdiction to entertain Plaintiff's suit; that res judicata precludes Plaintiff from bringing the claims in his Complaint; and that, in any event, Plaintiff's causes of action are meritless. The Court agrees that this combination of arguments defeats all of Plaintiff's claims. Plaintiff's Complaint is dismissed accordingly.

That conclusion should resolve this case. But one month after Defendants filed their motions to dismiss, and two months after the deadline for amending his Complaint had passed, Plaintiff requested leave to amend. Pursuant to the Court's instructions, Plaintiff attached a proposed Amended Complaint as an exhibit to his response to Defendants' motions to dismiss. Defendants argue that granting Plaintiff leave to amend would cause undue delay, work prejudice against Defendants, and be futile. Here again, the Court agrees with Defendants.

This Opinion thus answers two questions. First, does Plaintiff's Complaint withstand Defendants' motions to dismiss? And second, should Plaintiff be granted leave to amend his Complaint? Because the Court answers both questions "no," Defendants' motions to dismiss are granted in full, and Plaintiff's request for leave to amend his Complaint is denied.

BACKGROUND¹

A. Factual Background

Plaintiff's Complaint provides little in the way of background. Notably, it glosses over Plaintiff's default of the promissory note (the "Promissory Note") underlying his mortgage loan, which precipitated years of litigation culminating in this lawsuit. And the Complaint provides almost no dates to aid the Court in crafting a coherent timeline of the operative events in this case. With these prefatory caveats in mind, the Court can discern the following:

In December 2005, Plaintiff obtained a mortgage loan from Countrywide Home Loans Servicing LP ("Countrywide"). (Compl. ¶ 15). BANA is Countrywide's successor in interest. (Id. at ¶ 8). In order to obtain his mortgage, Plaintiff executed the Promissory Note and a deed of trust (the "Deed of Trust"). (Id. at ¶ 19). Mortgage Electronic Registration Systems, Inc. ("MERS"), which is not a party to this action, was "[t]he original beneficiary and nominee of the Promissory Note." (Id. at ¶ 15; Notice of Assignment).

Plaintiff's loan was in the amount of $503,920.00, which Plaintiff used to purchase real property at 4750 N. Rivervista Place, Boise, Idaho (the "Property"). (Compl. ¶ 15). Pursuant to the Deed of Trust, Plaintiff conveyed the Property to Trustee Fidelity National Title Insurance Company (also a non-party here). (Deed of Trust 1-3). Plaintiff alleges that he was unqualified for his loan, and that Countrywide committed fraud by selling "Plaintiff a deceptive loan product." (Compl. ¶ 13).

On September 1, 2009, Plaintiff failed to make a payment due under the Promissory Note. (Notice of Trustee's Sale). Consequently, on August 8, 2011,then-Trustee Recontrust Company, N.A. ("Recontrust"), yet another non-party, published a Notice of Trustee's Sale indicating that the Property would be sold at a non-judicial foreclosure auction on December 16, 2011. (Id.).

Plaintiff appears to allege that the Promissory Note and Deed of Trust were assigned to US Bank in December 2005. (Compl. ¶¶ 15, 22). But the Notice of Assignment attached as an exhibit to Plaintiff's Complaint provides that on October 1, 2013, BANA, through SPS, assigned the Deed of Trust to US Bank. (Notice of Assignment). And in his opposition to Defendants' motions to dismiss, Plaintiff indicates that US Bank has purported to own the Promissory Note since 2007. (Pl. Opp. 9).

In any case, Plaintiff alleges that the securitization of the Deed of Trust was invalid for a host of reasons — among them, (i) that US Bank violated the terms of its Pooling and Servicing Agreement (Compl. ¶¶ 16, 22-23); (ii) that neither SPS nor US Bank can establish a satisfactory chain of title (id. at ¶ 19); and (iii) that the individual who executed the 2013 assignment lacked authority to do so (id. at ¶¶ 28-29). (See also id. at ¶ 26). Plaintiff alleges that, as a result of these deficiencies, no defendant in this case "hold[s] a perfected and secured claim in the Property," and further that "Defendants are estopped and precluded from asserting an unsecured claim against Plaintiff's estate." (Id. at ¶ 27).

On July 18, 2014, US Bank purchased the Property at a Trustee's Sale. (10/29/15 Idaho Order 2; see also Trustee's Deed).

B. Procedural Background

This case's procedural history gives more shape to Plaintiff's dispute with Defendants. Again, Plaintiff has twice before attempted to forestall or prevent foreclosure of the Property. First, in 2011, Plaintiff sued BANA, SPS, MERS, and Recontrust in Idaho's Fourth Judicial District (the "Idaho Foreclosure Action"), bringing many of the same claims he raises in the instant Complaint. Second, in 2015, Plaintiff unsuccessfully defended against an eviction action that US Bank initiated in that same court (the "Idaho Eviction Action"). Finally, Plaintiff filed his instant Complaint against Defendants. The Court considers all three suits in turn.

But first, a primer on Idaho foreclosure law. In Idaho, foreclosure "is not a judicial proceeding." Trotter v. Bank of N.Y. Mellon, 275 P.3d 857, 861 (Idaho 2012). Instead, Idaho Code §§ 45-1502 through 45-1515 "provide[] a comprehensive regulatory scheme for non-judicial foreclosure of deeds of trust." Spencer v. Jameson, 211 P.3d 106, 115 (Idaho 2009). Accordingly, in Idaho, foreclosure occurs "outside of the judicial process," and thus "provide[s] [an] express-lane alternative to foreclosure in the judicial system and strip[s] borrowers of protections embedded in a judicial foreclosure." Fed. Home Loan Mortg. Corp. v. Appel, 137 P.3d 429, 433 n.1 (Idaho 2006). Therefore, no foreclosing entity in this case was required to obtain a foreclosure judgment from an Idaho court before foreclosing on the Property.

1. The Idaho Foreclosure Action

On December 12, 2011, Plaintiff filed a pro se complaint and a notice of lis pendens against BANA, SPS, MERS and Recontrust. (Idaho Compl.; Idaho Notice of Lis Pendens). Plaintiff's Idaho complaint is difficult to follow, but its thrust is that the named defendants lacked authority to foreclose on the Property. (Idaho Compl. 2, 9-14). Central to this contention were Plaintiff's allegations that the defendants (i) had failed to produce the "wet ink" (i.e., original) version of the Promissory Note (id. at 10-11, 15), and (ii) lacked standing to foreclose on the Property (id. at 13-15). Although styled as a complaint seeking "Declaratory Judgement [sic] of Verification of Debt," the complaint also sought coercive relief, such as removal of "all derogatory reporting with the credit bureaus" and "full reconveyance o[f] the Deed of Trust." (Id. at 1, 16).

On July 10, 2012, Plaintiff voluntarily dismissed with prejudice BANA and Recontrust from the Idaho Foreclosure Action. (Idaho Stipulation). On July 12, 2012, the Fourth Judicial District entered an order (the "July 12, 2012 Order") granting that stipulation. (7/12/12 Idaho Order). That order provides: "[BANA] and Recontrust ... shall be dismissed with prejudice, for the reason that the parties have resolved the differences between them." (Id.).

MERS and SPS then moved for judgment on the pleadings on November 2, 2012. (3/11/13 Idaho Order 1). The Fourth Judicial District granted that motion in an order dated March 11, 2013 (the "March 11, 2013 Order"), and entered a judgment dismissing with prejudice Plaintiff's Idahocomplaint on April 1, 2013. (Id. at 5; 4/1/13 Idaho Judgment). In the March 11, 2013 Order, the Fourth Judicial District rejected Plaintiff's argument that MERS and SPS lacked standing to foreclose on the Property. (3/11/13 Idaho Order 2-3). And in reaching that conclusion, the court held that Idaho law did not require a foreclosing entity to produce a "wet ink" promissory note before initiating a non-judicial foreclosure. (Id. at 3).

2. The Idaho Eviction Action

Because Plaintiff refused to leave the Property, on October 9, 2014, US Bank filed a complaint for eviction in the Fourth Judicial District. (10/29/15 Idaho Order 1-2). On March 10, 2015, Plaintiff filed a pro se answer and counterclaim. (Idaho Answer and Countercl.). Plaintiff brought six counterclaims in total; they tracked, and supplemented, the claims he raised in his Idaho complaint. (Id. at 5-23). Plaintiff sought (i) a declaratory judgment that, inter alia, US Bank could not foreclose on the Property, because the assignment of the Deed of Trust to US Bank was invalid (...