Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Deutsche Bank National Trust v. Moynihan

United States District Court, D. Massachusetts

July 28, 2016

DEUTSCHE BANK NATIONAL TRUST, AS TRUSTEE FOR IXIS 2006-HE3, Plaintiff,
v.
JAMES P. MOYNIHAN and DURHAM COMMERCIAL CAPITAL CORP., Defendants.

          MEMORANDUM AND ORDER RE: DEFENDANT JAMES P. MOYNIHAN’S MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION (DOCKET ENTRY # 9); DEFENDANT JAMES P. MOYNIHAN’S MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM (DOCKET ENTRY # 11)

          MARIANNE B. BOWLER UNITED STATES MAGISTRATE JUDGE

         Pending before this court are two motions to dismiss filed by defendant James P. Moynihan (“Moynihan”). Moynihan moves to dismiss the complaint under Fed.R.Civ.P. 12(b)(1) (“Rule 12(b)(1)”) on the basis of lack of subject matter jurisdiction. (Docket Entry # 9). Moynihan also moves to dismiss the complaint under Fed.R.Civ.P. 12(b)(6) (“Rule 12(b)(6)”) on the basis of failure to state a claim. (Docket Entry # 11). Plaintiff Deutsche Bank National Trust, as Trustee for IXIS 2006-HE3, (“plaintiff”) opposes both motions. (Docket Entry ## 21, 25). Defendant Durham Commercial Capital Corp. (“Durham”) did not join or oppose Moynihan’s motions. After conducting a hearing on April 22, 2016, this court took both motions under advisement. (Docket Entry # 38).

         PROCEDURAL BACKGROUND

         The parties’ dispute arises out of a promissory note executed by Moynihan and secured by a mortgage on property in Lowell, Massachusetts, where Moynihan resides (“the property”). (Docket Entry # 1). Plaintiff filed this action on December 16, 2015 to establish the terms of the note. (Docket Entry # 1). The complaint states that this court has original jurisdiction because there is complete diversity between plaintiff and Moynihan and Durham (“defendants”) and the amount in controversy is more than $75, 000 because the outstanding balance due on the note and the mortgage from Moynihan to plaintiff exceeds $688, 000. (Docket Entry # 1, ¶ 4).

         The complaint sets out two counts against defendants. (Docket Entry # 1, p. 8). Count I requests a declaratory judgment in favor of plaintiff against both Durham and Moynihan establishing that plaintiff rightfully owns the note and is “entitled to immediate physical possession of the original [of the note].” (Docket Entry # 1, ¶ 40). Count II requests a declaratory judgment in favor of plaintiff against Moynihan establishing that plaintiff, under section one of Massachusetts General Laws chapter 231A and section 3-301(iii) of Massachusetts General Laws chapter 106 (“chapter 106”), is entitled to enforce the terms of the note and the mortgage granting plaintiff a security interest in the property and may exercise the “default remedies provided for in the mortgage including exercise of the statutory power of sale.” (Docket Entry # 1, ¶ 45).

         Moynihan moves for dismissal of the complaint for lack of subject matter jurisdiction due to the absence of the $75, 000 threshold and for failure to state a claim upon which relief can be granted. (Docket Entry ## 9, 11). Conversely, plaintiff contends that Moynihan’s motion should be denied because the facts establish the necessary $75, 000 and the complaint includes factual allegations that demonstrate a plausible claim to relief. (Docket Entry ## 21, 25).

         I. Rule 12(b)(1) Motion to Dismiss

         STANDARD OF REVIEW

         Where, as here, a district court considers a Fed.R.Civ.P. 12(b)(1) (“Rule 12(b)(1)”) motion, it must credit the plaintiff’s well-pled factual allegations and draw all reasonable inferences in the plaintiff’s favor. Merlonghi v. United States, 620 F.3d 50, 54 (1st Cir. 2010) (citing Valentin v. Hospital Bella Vista, 254 F.3d 358, 363 (1st Cir. 2001)); Sánchez ex rel. D.R.-S. v. United States, 671 F.3d 86, 92 (1stCir. 2012) (“‘credit[ing] the plaintiff’s well-pled factual allegations and draw[ing] all reasonable inferences in the plaintiff’s favor’” under Rule 12(b)(1) (internal citation omitted)). “The district court may also ‘consider whatever evidence has been submitted, such as the depositions and exhibits submitted.’” Merlonghi v. United States, 620 F.3d at 54 (quoting Aversa v. United States, 99 F.3d 1200, 1210 (1st Cir. 1996)).

         Moreover, “‘Federal courts are courts of limited jurisdiction’” and “[t]he existence of subject-matter jurisdiction [is therefore] ‘never presumed.’” Fafel v. Dipaola, 399 F.3d 403, 410 (1st Cir. 2005) (internal citations omitted). When a defendant challenges subject matter jurisdiction, the plaintiff bears the burden of proving jurisdiction. Johansen v. United States, 506 F.3d 65, 68 (1stCir. 2007).

         Rule 12(b)(1) is “[t]he proper vehicle for challenging a court’s subject matter jurisdiction.” Valentin v. Hospital Bella Vista, 254 F.3d at 362. Because federal courts are courts of limited jurisdiction, federal jurisdiction is never presumed. See Viqueira v. First Bank, 140 F.3d 12, 16 (1st Cir. 1998). “A court should treat all well pleaded facts as true and provide plaintiff the benefit of all reasonable inferences.” Lindsay v. Wells Fargo Bank, N.A., 2013 WL 5010977, at *2 (D.Mass. Sept. 11, 2013) (citing Fothergill v. United States, 566 F.3d 248, 251 (1st Cir. 2009)). Dismissal is only appropriate when the facts alleged in the complaint, taken as true, do not support a finding of federal subject matter jurisdiction. Fothergill v. United States, 566 F.3d at 251. Adhering with this framework, the record sets out the following facts.

         FACTUAL BACKGROUND

         In a deed dated August 28, 2003 and recorded at the Middlesex North Registry of Deeds in book 16104, page 44, Moynihan acquired the property located at 619-621 Stevens Street in Lowell. (Docket Entry # 1, ¶ 6). Moynihan, as borrower, gave the promissory note to New Century Mortgage Corporation (“New Century”), as lender, in the original principal amount of $360, 000 dated May 1, 2006. (Docket Entry # 1, ¶ 7) (Docket Entry # 1-3) (Docket Entry # 24, ¶ 6). The note bore a single indorsement payable “to the order of” New Century “without recourse.” (Docket Entry # 1, ¶ 8) (Docket Entry # 1-3) (Docket Entry # 24, ¶ 6). Moynihan was the only borrower on the note. (Docket Entry # 1-3). The note expressly allows “the Lender” to transfer the note and states that, “The Lender or anyone who takes [the note] by transfer and who is entitled to receive payments under [the note] is called the ‘Note Holder.’” (Docket Entry # 1-3).

         Moynihan agreed to make monthly payments of $2, 703.90 on the first day of each month starting on June 1, 2006. (Docket Entry # 1-3). The note also warranted that the monthly payments applied to interest before principal. (Docket Entry # 1-3). The note further contained a flexible index-based interest rate that adjusted every six months after the first day of May 2008. (Docket Entry # 1-3). The interest rate on the principal in the note would range between 9.013% and 10.513% at the first adjustment date and would not drop below 9.013% nor exceed 16.013%. (Docket Entry # 1-3). The note also represented that Moynihan would default if he failed to make his monthly payments in full. (Docket Entry # 1-3). As stated in the note, the “Note Holder may enforce its rights under this [n]ote against each [borrower] individually or against all of [the borrowers] together.” (Docket Entry # 1-3). The note was “governed by federal law and the law of the jurisdiction in which the property encumbered by the Security Instrument . . . [was] located.” (Docket Entry # 1-3).

         On May 1, 2006, to secure the repayment and other obligations contained in the note, Moynihan granted a mortgage encumbering the property to New Century. (Docket Entry # 1, ¶ 10) (Docket Entry # 1-4). The mortgage is recorded at the Middlesex North Registry of Deeds in book 20067, page 159. (Docket Entry # 1, ¶ 10) (Docket Entry # 1-4). The mortgage provides notice to Moynihan that “one or more changes of the Loan Servicer [might occur] unrelated to a sale of the [note]” during the life of the mortgage. (Docket Entry # 1-4, ¶ 20). Under the terms of the mortgage, Moynihan conveyed and granted New Century and its “successors and assigns” the “power of sale.” (Docket Entry # 1-4, pp. 4, 14).[1]

         Plaintiff acquired physical possession of the original of the note on or about May 12, 2006. (Docket Entry # 1, ¶ 9). Thereafter, New Century sold the note to NC Capital Corporation (“NC Capital”) under a Mortgage Loan Purchase and Servicing Agreement (“MLPSA”) dated as of December 1, 1998. (Docket Entry # 1, ¶ 11).[2] NC Capital then sold the note to IXIS Real Estate Capital, Inc. (“IXIS”) under a Third Amended and Restated Mortgage Loan Purchase and Warranties Agreement dated April 1, 2006. (Docket Entry # 1, ¶ 12).[3] IXIS then sold the note to Morgan Stanley ABS Capital I Inc. (“Morgan Stanley”) effective September 29, 2006. (Docket Entry # 1, ¶ 13).[4]

         Morgan Stanley then sold the note to plaintiff, as trustee and custodian, pursuant to a pooling and servicing agreement establishing IXIS Real Estate Capital Trust 2006-HE (“the PSA”) dated September 1, 2006 and effective September 29, 2006. (Docket Entry # 1, ¶ 14).[5] The PSA also established Saxon Mortgage Services, Inc. (“Saxon”) as a loan servicer. (Docket Entry # 1, ¶ 14).

         Before January 1, 2008, Moynihan defaulted on his monthly payments. (Docket Entry # 24, ¶ 11) (Docket Entry # 24-2). On June 23, 2008, Moynihan filed for bankruptcy in the United States Bankruptcy Court for the District of Massachusetts (“the bankruptcy court”). (Docket Entry # 1, ¶ 19). On October 7, 2008, the bankruptcy court granted Moynihan a chapter seven discharge. (Docket Entry # 1, ¶ 19) (Docket Entry # 10-1).

         In the assignment dated November 11, 2008 and effective May 7, 2008, New Century transferred the mortgage to plaintiff, as trustee, in care of Saxon as servicer. (Docket Entry # 1, ¶ 15) (Docket Entry # 1-5, p. 2) (Docket Entry # 24, ¶ 8). The assignment was recorded at the Middlesex North Registry of Deeds in book 22959, page 228. (Docket Entry # 1, ¶ 15) (Docket Entry # 1-5).

         Effective April 16, 2010, Ocwen Loan Servicing, LLC (“Ocwen”) obtained the servicing rights on the loan from Saxon. (Docket Entry # 24, ¶ 10) (Docket Entry # 24-1). Ocwen’s obligations as plaintiff’s servicer included:

sending statements or coupons to the borrower to facilitate payment, collecting payments from the borrower and making scheduled disbursements of principal and interest to accounts making disbursements from such account[s] to pay real estate taxes and or hazard insurance premiums due in connection with the [p]roperty and to perform other usual and customary residential loan servicing functions.

(Docket Entry # 24, ¶ 3). In a document dated May 21, 2010, plaintiff granted a limited power of attorney (“the LPOA”) to Ocwen. (Docket Entry # 21-2). The LPOA was recorded at the Middlesex North Registry of Deeds in book 25043, page 286. (Docket Entry # 21-2). The LPOA authorized Ocwen to execute various documents on behalf of plaintiff regarding foreclosure proceeding for loans held by plaintiff. (Docket Entry # 21-2).

         On August 16, 2010, Moynihan filed a complaint in the Massachusetts Land Court Department of the Trial Court (“the land court”) seeking a determination that plaintiff did not hold the mortgage encumbering the property. (Docket Entry # 1, ¶ 16) (Docket Entry # 1-6). During this proceeding, Ablitt Scofield, P.C. (“Ablitt”), a law firm located in Woburn, Massachusetts, represented plaintiff. (Docket Entry # 21-1, p. 5) (Docket Entry # 10-2, p. 2).

         On or about July 20, 2011, plaintiff temporarily gave the original of the note to Ocwen “to facilitate Ocwen’s . . . foreclosure of the mortgage on behalf of plaintiff.” (Docket Entry # 1, ¶ 20). On or about August 16, 2011, Ocwen returned the file, which contained the original of the note, to plaintiff. (Docket Entry # 1, ¶ 21). On October 18, 2011, plaintiff again temporarily gave the file, which included the original of the note, to Ocwen to facilitate conducting the foreclosure of the property. (Docket Entry # 1, ¶ 22). On or about November 21, 2011, Ocwen gave the original of the note to Ablitt to commence and proceed with foreclosure of the property. (Docket Entry # 1, ¶ 23). Plaintiff alleges that it possessed “the original Note directly or indirectly through its attorney, agent and/or custodian and [is] entitled to enforce the terms of such Note, when, at some point . . . [after] Ocwen transmitted the original note to Ablitt . . . in November 2011, loss of possession of the note occurred.” (Docket Entry # 1, ¶ 42).

         On December 30, 2011, the land court entered a judgment that, by virtue of the November 2008 assignment of the mortgage, plaintiff was “the current record holder of the Mortgage, entitled to exercise the power of sale contained in the Mortgage.” (Docket Entry # 1-6). The judgment also declared that plaintiff “may exercise the power of sale contained in the Mortgage to foreclose it without regard to whether or not plaintiff is the current holder of the Note.”[6](Docket Entry # 1-6). Neither plaintiff nor Moynihan filed an appeal in of the land court’s judgment. (Docket Entry # 1, ¶ 17).

         Sometime in 2012 or earlier, Ablitt began having cash-flow issues. (Docket Entry # 1, ¶ 24). On or about November 7, 2012, Ablitt entered into a factoring agreement titled “Nonrecourse Receivables Purchase Contract and Security Agreement” (“the factoring agreement”) with Durham. (Docket Entry # 1, ¶ 25). Under the factoring agreement, Durham agreed to purchase “certain of [Ablitt]’s receivables at terms specified therein up to a maximum advance for such receivables at any given time of $1, 200, 000.” (Docket Entry # 1, ¶ 25). In the factoring agreement, Ablitt also gave Durham a security interest in Ablitt’s accounts, “‘promissory notes, chattel paper’ . . . [and] ‘general intangibles.’” (Docket Entry # 1, ¶ 27). The security interest also included “custody and control over [Ablitt]’s assets, files, records, electronically stored data, hard drives and/or case management systems, not otherwise identified and retrieved by [Ablitt]’s former clients.” (Docket Entry # 1, ¶ 35). Ablitt continued to deteriorate in 2013 and early 2014. (Docket Entry # 1, ¶ 28). As a result, Durham “began to exert a level of managerial control over [Ablitt’s] affairs.” (Docket Entry # 1, ¶ 28).

         On or about March 4, 2014, Ablitt changed its name to Connolly, Geaney, Ablitt and Willard, P.C. (“CGAW”). (Docket Entry # 1, ¶ 29). Sometime in late July or August 2014, CGAW ceased operations. (Docket Entry # 1, ¶ 30). In August 2014, Ocwen’s personnel visited CGAW’s office to collect Ocwen’s “ongoing foreclosure, eviction, bankruptcy and litigation files” then held by CGAW. (Docket Entry # 1, ¶ 31). On or about September 3, 2014, three or more creditors of CWAG filed on CWAG’s behalf “[a]n involuntary chapter 7 bankruptcy petition” in the bankruptcy court. (Docket Entry # 1, ¶ 32). CGAW never returned the original of the note to plaintiff or Ocwen. (Docket Entry # 1, ¶ 33). “Despite [a] diligent search, ” plaintiff and Ocwen have not been able to locate the original note. (Docket Entry # 33). Neither plaintiff nor Ocwen know the present location of the original of the note. (Docket Entry # 1, ¶¶ 33-34). Plaintiff believes that the missing original of the note “is amongst the assets, files and/or records obtained and retained by Durham at or about the time [CGAW] ceased active operations.” (Docket Entry # 1, ¶ 36).

         In November 2014, Ocwen obtained an estimated fair market valuation of the property of $264, 000. (Docket Entry # 24, ¶ 13) (Docket Entry # 24-3). In December 2015, Ocwen obtained an estimated fair market valuation of the property of $268, 000. (Docket Entry # 24, ¶ 14) (Docket Entry # 24-4). As of February 25, 2016, the property had an assessed valuation of $282, 900. (Docket Entry # 10-3).

         The “mortgage account with Ocwen is now due for the January 1, 2008 payment together with all subsequently accrued but unpaid installments.” (Docket Entry # 24, ¶ 11) (Docket Entry # 24-2). The principal balance due is $359, 944.32. (Docket Entry # 24, ¶ 12) (Docket Entry # 24-2). This amount does not include “accrued interest, late charges, escrow advances, attorney’s fees and other charges assessed to the account in accordance with the terms and conditions of the [note] and [mortgage].” (Docket Entry # 24, ¶ 12) (Docket Entry # 24-2). Plaintiff now seeks to foreclose the mortgage “pursuant to the power of sale contained therein but cannot until the terms of the lost note and [p]laintiff’s ownership thereof are established.” (Docket Entry # 1, ¶ 18).

         DISCUSSION

         Moynihan moves to dismiss both counts in the complaint on the basis that plaintiff failed to allege enough facts to meet the amount in controversy of $75, 000. (Docket Entry # 9). Plaintiff opposes dismissal submitting that it pled enough facts to establish the amount in controversy. (Docket Entry # 23).

         Diversity jurisdiction has two components: (1) a dispute between citizens of different states; and (2) an amount in controversy in excess of $75, 000. 28 U.S.C. § 1332. Moynihan has not challenged the citizenship of the parties and this court is satisfied that the parties are diverse in terms of citizenship as defined under 28 U.S.C. § 1332. The dispositive issue is therefore the amount in controversy requirement.

         A. Whether the Claims have ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.