Terzneh v. Fed. Nat'l Mortg. Ass'n

JURY DEMAND

ORDER DENYING PLAINTIFF'S MOTION TO AMEND AND GRANTING DEFENDANTS' MOTIONS TO DISMISS

THOMAS L. PARKER UNITED STATES DISTRICT JUDGE

Plaintiff Messeret Terzneh sued Federal National Mortgage Association (“Fannie Mae”) and Defendant Jacob Tigert (collectively “Defendants”). (ECF No. 1.) Defendants move to dismiss. (ECF Nos. 10 & 25.) Plaintiff has responded and now seeks to amend her complaint.^[1](ECF Nos. 11 & 28.) Defendants have responded. (ECF Nos. 30 & 33.) For the reasons below, the Court DENIES Plaintiff's motion to amend and GRANTS Defendants' motions to dismiss.

BACKGROUND

This is the latest suit in a seemingly endless effort to keep possession of a house. Plaintiff Messeret Terzneh sued Defendant Fannie Mae and Defendant Tigert, asserting claims related to the sale and possession of property located at 8878 Forest Glade Cove, Germantown, Tennessee 38139 (the “Property”). (ECF No. 1.) Plaintiff's husband, Fasil Kebede, brought

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three earlier lawsuits related to the foreclosure and sale of the same property.^[2] See Kebede v. SunTrust Mortgage, Inc., No. 2:11-cv-2700-SHL-dkv, 2014 WL 11515884 (W.D. Tenn. Dec. 30, 2014) (“Kebede I”); Kebede v. SunTrust Mortgage, Inc., 2:16-cv-2227-SHL-dkv (W.D. Tenn. Sept. 27, 2016) (“Kebede II”); Kebede v. SunTrust Mortgage, Inc., 2:17-cv-2684-SHL-dkv (W.D. Tenn. June 11, 2018) (“Kebede III”). Fannie Mae also sued Kebede in state court seeking possession of the Property. Fed. Nat'l Mortg. Ass'n v. Kebede, No. W2019-00227-COA-R3-CV, 2020 WL 7060019 (Tenn. Ct. App. Dec. 2, 2020) (“Kebede IV”). For more background, the Court will summarize the other cases about the Property.^[3]

I. Kebede I

In May 2008, Kebede obtained a mortgage loan to buy the Property, after which SunTrust Mortgage, Inc (“SunTrust”) took over the servicing rights of the loan. Kebede I, 2014 WL 11515884, at *2. Later, Kebede fell behind on his mortgage payments, and SunTrust started its first attempt to foreclose on the Property in June 2011. Id. Kebede sued SunTrust in July 2011, asserting claims for wrongful foreclosure and slander of title, and seeking to quiet title. Id. at *2-3. At first, Kebede also alleged fraud, but abandoned it in his amended complaint. Id. In December 2014, the court dismissed Kebede's complaint with prejudice for failure to state a claim. Id. at *1, *7. The Sixth Circuit affirmed. Kebede v. SunTrust Mortgage, Inc., 612 Fed.Appx. 839 (6th Cir. 2015).

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II. Kebede II

After the dismissal of Kebede I, SunTrust sent another notice of foreclosure for the Property to Kebede (and Plaintiff) in February 2016. Kebede II, 2:16-cv-2227-SHL-dkv, ECF No. 32 at 3 (W.D. Tenn. Sept. 27, 2016). In March 2016, Kebede sued a second time seeking to enjoin SunTrust from holding the foreclosure sale, alleging fraud and unclean hands. Id. About six months later, the court dismissed Kebede's complaint because res judicata barred his claims. Id. at 6-8. The court held in its order that “any claims relating to enjoining the foreclosure of the Property are part of a ‘series of transactions' occurring throughout the litigation of Kebede I that either were, or should have been, brought in the previous litigation.” Id. at 8. Despite the court's admonition, the lawsuits continue.

III. Kebede III

After the dismissal of Kebede II, SunTrust sent Kebede a notice advising him that it would hold a foreclosure sale of the Property in February 2017. Kebede III, 2:17-cv-2684-SHL-dkv, ECF No. 30 at 1, 4 (W.D. Tenn. June 11, 2018). SunTrust also published the advertisement in a newspaper of general circulation. Id. at 4. After the Property sold at the foreclosure sale, Kebede filed yet another lawsuit in state court against SunTrust, this time adding Fannie Mae^[4] as a defendant, alleging that the notice SunTrust used to advertise the foreclosure sale was defective. Id. at 5. Kebede sought to set aside the sale and enjoin SunTrust and Fannie Mae from bringing a forcible entry and detainer action. Id. The court also noted that Kebede seemed to assert claims for retaliatory foreclosure and fraud. Id. at 1, 5. SunTrust and Fannie Mae

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removed the case to federal court in September 2017. Id. Kebede moved to remand, and SunTrust and Fannie Mae moved for sanctions and to dismiss. Id. at 2.

The court denied Kebede's motion to remand, finding that subject-matter jurisdiction based on diversity existed. Id. at 6. The court also granted SunTrust and Fannie Mae costs and attorneys' fees under 28 U.S.C. § 1927 related to the motion, because Kebede lacked a reasonable basis for seeking remand. Id. at 7. Lastly, the court granted SunTrust's and Fannie Mae's motions to dismiss, finding that Kebede did not plead any facts showing noncompliance with Tennessee's notice of foreclosure requirements or provide any factual assertions to support his fraud claim. Id. at 9, 11. Finally, the court noted (again) that “to the extent [Kebede's] fraud claim relates back to either [Kebede I or Kebede II], it is barred by res judicata.” Id. at 12 n.10.

IV. Kebede IV

In May 2017, seeking to end the litigation, Fannie Mae brought a forcible entry and detainer action against Kebede in the Shelby County General Sessions Court. Kebede IV, 2020 WL 7060019, at *1. That court ruled in Fannie Mae's favor and issued a detainer warrant in August 2018. Id. Kebede then appealed timely to the Circuit Court of Shelby County, and Fannie Mae moved for summary judgment. Id. at *1-2. In responding to the motion for summary judgment, Kebede submitted “correspondence from August 2018 concerning purchasing the home and an August 15, 2018 letter from a mortgage company stating that [Messeret Terzneh] met the financial requirements for a $610, 000.00 loan; the letter noted, however, that it did not constitute final approval of a loan.” Id. at *2 (footnote omitted).

The Shelby County Circuit Court granted summary judgment for Fannie Mae, finding “that the foreclosure was valid, that the Substitute Trustee's Deed granted title to Fannie Mae, and that Mr. Kebede was unlawfully in possession of the property.” Id. That court then issued a

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writ of possession in favor of Fannie Mae, and Kebede appealed that order in early 2019.^[5] Id. The Court of Appeals of Tennessee affirmed in late 2020, stating that “the undisputed material facts demonstrate that Fannie Mae is entitled to summary judgment on its claim of possession to the subject property.” Id. at *6. A few months later, the Supreme Court of Tennessee denied Kebede's application for permission to appeal. Fed. Nat'l Mortg. Ass'n v. Kebede, No. W2019-00227-SC-R11-CV (Tenn. Apr. 8, 2021). Not wanting to let go, Ms. Terzneh sued here five days later.

V. The Present Lawsuit

In a last-ditch effort to stop Defendants from taking possession of the Property, Plaintiff sued here, less than a week after the Supreme Court of Tennessee denied Kebede's application to appeal in Kebede IV. (ECF No. 1.) Beyond describing the litigation addressed above, the complaint has sparse factual allegations. Plaintiff alleges that in August 2018, Defendant Fannie Mae received “offers from [Plaintiff] to buy the Forest Glade Property” and “proof of funds and a financing letter.” (Id. at PageID 6.) Plaintiff alleges that Defendant Fannie Mae ignored her offers and sold the Property to Defendant Tigert for about $526, 000. (Id.) According to the complaint, “Fannie Mae sold the Forest Glade property . . . on January 25, 2019 to Defendant Tigert for Five Hundred Twenty Six thousand fifty dollars, almost one hundred thousand dollars less than the African Americans who had lived there and paid a second mortgage for ten years.” (Id.) Plaintiff alleges civil conspiracy, race discrimination under 42 U.S.C. § 2000d, race discrimination under equal protection, race discrimination under 42 U.S.C. § 1983, and RICO violations under 18 U.S.C. §§ 1962(b)-(d). (Id. at PageID 10-13, 16, 21.) Plaintiff asserts all

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claims against both Defendant Fannie Mae and Defendant Tigert. (Id.) Plaintiff seeks money damages and to enjoin Defendants from “attempting to evict or in any way remove [Plaintiff] from the real property.” (Id. at PageID 26.)

Plaintiff now moves to amend her complaint. (ECF No. 28.) Plaintiff attached to her motion a proposed amended complaint, which seeks to add Kebede as a plaintiff.^[6] (ECF No. 28-1.) The proposed amendment adds few factual allegations to the original complaint. But unlike the original complaint, the proposed amendment alleges that Defendant Tigert is white. (Id. at PageID 218.) The proposed amendment also abandons the RICO claims and adds claims for race discrimination under 42 U.S.C. §§ 1981, 1982 against both Defendant Fannie Mae and Defendant Tigert.^[7] (Id. at PageID 217, 219.) The proposed amendment also claims civil conspiracy under 42 U.S.C. § 1985(3). (Id. at PageID 226.) The request for relief is unchanged in the proposed amendment. (Id. at PageID 239.)

LEGAL STANDARDS

Rule 15 of the Federal Rules of Civil Procedure permits amendment as a matter of course-if the pleading is one to which a responsive pleading is required-within twenty-one days after service of a responsive pleading. See Fed. R. Civ. P. 15(a)(1)(B). In all other scenarios, a party seeking to amend must obtain written consent from the opposing party or the court's leave. Fed.R.Civ.P. 15(a)(2). Courts may freely give leave to amend “when justice so requires.” Id.

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But courts may deny leave to amend on many grounds, including “futility of amendment.” Banerjee v. Univ. of Tenn., 820 Fed.Appx. 322, 328 (6th Cir. 2020). “A motion to amend is futile where a proposed amendment would not survive a motion to dismiss.” Id. at 329 (internal quotation...