United States District Court, D. Massachusetts
DEUTSCHE BANK NATIONAL TRUST, AS TRUSTEE FOR IXIS 2006-HE3, Plaintiff,
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
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).
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).
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, ¶
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).
Rule 12(b)(1) Motion to Dismiss
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)).
“‘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).
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
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).
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).
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).
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, ¶
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). IXIS then sold
the note to Morgan Stanley ABS Capital I Inc. (“Morgan
Stanley”) effective September 29, 2006. (Docket Entry #
1, ¶ 13).
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, ¶
The PSA also established Saxon Mortgage Services, Inc.
(“Saxon”) as a loan servicer. (Docket Entry # 1,
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).
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).
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
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).
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).
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,
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.”(Docket Entry # 1-6). Neither plaintiff nor
Moynihan filed an appeal in of the land court’s
judgment. (Docket Entry # 1, ¶ 17).
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).
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).
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).
“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).
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 #
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
Whether the Claims have ...