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Klimowicz v. Deutsche Bank National Trust Company

United States District Court, D. Massachusetts

August 31, 2017





         Plaintiff, Jeanne M. Klimowicz (“Plaintiff”) has filed suit against Deutsche Bank National Trust Company as Indenture Trustee For New Century Home Equity Loan Trust 2005-1 (“Deutsche Bank”), and Carrington Mortgage Services, LLC (“Carrington”) alleging claims for wrongful foreclosure, violation of the Massachusetts Consumer Protection Act, Mass.Gen.L. ch. 93A, breach of the covenant of good faith and fair dealing and negligent infliction of emotional distress. More specifically, Plaintiff asserts that “Deutsche Bank wrongfully acquired title to the mortgage of the subject property through a pattern of intentional fraudulent conduct[, i.e.] the [a]ssignment of a mortgage from a company no longer in existence, to a mortgage [t]rust that had closed to new mortgages years before the [a]ssignment.” Complaint, at ¶42. Among the relief sought by the Plaintiff is that this Court vacate and set aside the Final Judgment of Foreclosure which was entered by the Massachusetts Land Court on the grounds that the judgment was obtained by fraud and because, under the circumstances, vacating the judgment is appropriate to accomplish the ends of justice. Plaintiff seeks this relief in accordance with Massachusetts state law, Mass. R.Civ. P. 60(b). Plaintiff also seeks the entry of an injunction prohibiting any further post-foreclosure proceedings by any party, the entry of an injunction prohibiting any further post-foreclosure proceedings including any eviction or other proceedings related to the property by the Massachusetts Housing Court or any other court which would command any action on the part of the Plaintiff. Lastly, Plaintiff seeks to be fully reimbursed for the cost of her home and other compensatory and punitive damages.

         On June 23, 2016, this Court entered an Order denying Plaintiff's request for a TRO after finding that she had failed to establish a likelihood of success on the merits. See Order on Motion for TRO (Docket No. 13). This Order addresses Defendants' motion to dismiss Klimowicz's Complaint for failure to state a claim. See Defendants Deutsche Bank National Trust Company As Indenture Trustee for New Century Home Equity Loan Trust, 2005-1, And Carrington Mortgage Services, LLCs' Motion To Dismiss Plaintiff's Complaint (Docket No. 15)(“Motion to Dismiss”). More specifically, Defendants assert that the claims are barred by the doctrines of res judicata, judicial estoppel and/or that she voluntarily surrendered the property as part of the Bankruptcy (as hereafter defined). For the reasons set forth below, the Motion to Dismiss is granted.

         Standard Of Review

         On a Rule 12(b)(6) motion to dismiss, the Court “must assume the truth of all well-plead[ed] facts and give plaintiff the benefit of all reasonable inferences therefrom.” Ruiz v. Bally Total Fitness Holding Corp., 496 F.3d 1, 5 (1st Cir. 2007) (citing Rogan v. Menino, 175 F.3d 75, 77 (1st Cir. 1999)). To survive a motion to dismiss, the plaintiff must state a claim that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955 (2007). That is, “[f]actual allegations must be enough to raise a right to relief above the speculative level, ... on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. at 555 (internal citations omitted). “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937 (2009) (quoting Twombly, 550 U.S. at 556). Dismissal is appropriate if plaintiff's well-pleaded facts do not “possess enough heft to show that plaintiff is entitled to relief.” Ruiz Rivera v. Pfizer Pharm., LLC, 521 F.3d 76, 84 (1st Cir. 2008) (internal quotations and original alterations omitted). “The relevant inquiry focuses on the reasonableness of the inference of liability that the plaintiff is asking the court to draw from the facts alleged in the complaint.” Ocasio-Hernàndez v. Fortuño-Burset, 640 F.3d 1, 13 (1st Cir. 2011).


         The Mortgage and its Assignment To Deutsche

         Deutsche Bank acquired title to 32 Mary Heights, Fitchburg, Massachusetts (the “Property”), as the high bidder at the foreclosure sale of the Property. Klimowicz is the former owner of the Property. On December 23, 2004, she had granted a mortgage to the Property to New Century Mortgage Company (“New Century”) to secure her obligations under a promissory note in the amount of $297, 500. The mortgage was recorded in the Worcester County Registry of Deeds (Northern District), on or about January 3, 2005 (the “Mortgage”)[1].

         New Century filed for bankruptcy in the Delaware Bankruptcy Court on April 2, 2007. Later, on August 1, 2008, the corporation was liquidated and its assets were transferred to New Century Liquidating Trust. On August 7, 2008, New Century-- despite its earlier dissolution--executed a purported assignment of mortgage to Deutsche Bank National Trust, as trustee of an investment loan trust-New Century Home Equity Loan Trust 2005-1. The assignment of mortgage was recorded on August 18, 2008, at the Worcester County Registry of Deeds (Northern District) (“Assignment”). The Assignment states it was prepared by Carrington Mortgage Services, LLC (“Carrington”), which is listed as the attorney-in-fact for New Century.

         The Assignment was signed by Dave S. Gordon, who is identified as, “President of Carrington Mortgage Services, LLC.” With permission of the Delaware Bankruptcy Court granted on May 23, 2007, Carrington purchased servicing rights from New Century. The appointment of Carrington as Attorney-in-fact for New Century is dated June 18, 2007, and recorded in the North Worcester Registry of Deeds. Additionally, the appointment of Carrington as Attorney-in-fact for Deutsche Bank is dated April 26, 2011. Consequently, Carrington is- with regard to relevant times in the case at hand-both the Attorney-in-fact for the Assignor (New Century), and Attorney-in-fact for the Assignee (Deutsche Bank).

         The investment trust (“Trust”) to which the Mortgage was purportedly assigned on August 7, 2008, had a closing date-- the date by which all loans and mortgages must have been transferred into the investment pool-- of February 25, 2005. The Trust is governed by a Pooling and Servicing Agreement. “(PSA”). By the terms of the PSA, the parties agree to be governed by the laws of New York: “This Agreement shall be governed by and construed in accordance with the laws of the State of New York and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws.”

         Foreclosure Proceedings

         In or about May 24, 2006, Klimowicz filed for protection under the United States Bankruptcy Code, docket number 06-40851 (the “Bankruptcy”). The case was converted to a case under Chapter 7, of the Bankruptcy Code on May 25, 2007. As part of the Bankruptcy, Klimowicz commenced Adversary Proceeding number07-04093, challenging the validity of the underlying mortgage, (the “Adversary Proceeding”). The Adversary Proceeding was dismissed due to her failure to properly serve New Century Mortgage Company. During the Bankruptcy, and prior to the conversion to a case under Chapter 7, New Century Mortgage Company filed a motion for relief from the automatic stay, in order to begin foreclosure proceeding. Klimowicz entered into a stipulation ...

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