Muhammad v. Option One Mortgage Corporation et al

Filing 96

MEMORANDUM AND OPINION re: 60 , 58 , 56 , 48 , 47 , 52 , 55 , 62 , 66 , 65 , 75 , 76 Motions to Dismiss & 74 Suggestion of Death of Dft Scott J. Humphrey. Plf's claims against all named dfts are due to be dismissed for failure to state a claim as set out. Signed by District Judge L. Scott Coogler on 7/6/10. (copy mailed to Plf on 7/6/10) (tot)

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Muhammad v. Option One Mortgage Corporation et al Doc. 96 UNITED STATES DISTRICT COURT S O U T H E R N DISTRICT OF ALABAMA S O U T H E R N DIVISION B E R N IC E MUHAMMAD, P la in t if f, vs. O P T IO N ONE MORTGAGE CORP., e t al., D e fe n d a n ts. ) ) ) ) ) ) ) ) ) ) 1:10-CV-00096-SC M E M O R A N D U M OF OPINION I. In t r o d u c t io n . T h e Court has for consideration motions to dismiss filed by defendants O p tio n One Mortgage Corporation ("Option One Mortgage") (Doc. 60); Ada S e rv ic e s Corporation, formerly known as H&R Block Mortgage Corporation ( " H & R Block Mortgage") (Doc. 58); Merrill Lynch Mortgage Investors, Inc., in c o rre c tly named in the second Amended Complaint as "Merrill Lynch M o rtg a g e Loan Investore, Inc." (Doc. 56); Bank of America, N.A., incorrectly n a m e d as "Bank of American for Merrill Lynch Mortgage Loan Investor, Inc.," " M o rtg a g e Loan Asset-Backed Certificates, Series 2002 HEI," "Bank of A m e ric a for Mortgage Loan Asset-Backed Certificates, Series 2002 HEI," and Page 1 of 16 "Bank of America for Merrill Lynch" (Doc. 56); Daniel O'Brien, incorrectly n a m e d as "U.S. Bankruptcy Trustee, Danny O'Brian" (Doc. 48); Prince, M c K e a n , McKenna & Broughton, LLC (Doc. 47); American Home Mortgage S e rv ic in g , Inc. (Doc. 52); HSBC Bank USA, National Association, as Trustee for M e rrill Lynch Mortgage Investors, Inc., Mortgage Loan Asset-Backed C e rtifica te s, Series 2002-HE1 Trust, incorrectly named as "Bank of AmericaM e rrill Lynch," "HSBC Bank USA, N.A.," "Merrill Lynch Mortgage Loan In v e s to rs , Inc.," and "Mortgage Loan Asset-Backed Certificates, Series 2002 H E I" (Doc. 52); James H. Greer (Doc. 55); Phillip M. Leslie (Docs. 62, 66); J o h n s o n & Freedman, LLC (Doc. 65); Dan Feinstein (Doc. 65); Barry Friedman ( D o c. 75); U.S. District Judge William H. Steele (Doc. 76); U.S. District Judge K ris ti K. DuBose (Doc. 76); U.S. Chief Bankruptcy Judge William S. Shulman ( D o c. 76); U.S. Magistrate Judge William E. Cassady (Doc. 76); and U.S. M a g is tra te Judge Katherine P. Nelson (Doc. 76). A Suggestion of Death has b e e n filed, notifying the Court of the death of the remaining defendant, S c o tt J. Humphrey. (Doc. 74.) 1 Plaintiff names Gregory M. Deitsch in the style of the Second Amended Complaint. However, Plaintiff does not make any factual allegations against Mr. Deitsch in the body of the complaint, nor has she made any effort to effect service on Mr. Deitsch. Accordingly, Plaintiff's claims against Mr. Deitsch will be dismissed for failure Page 2 of 16 1 Plaintiff Bernice Muhammad, proceeding pro se, sued the defendants fo r violations of the Racketeer Influenced and Corrupt Organizations Act ( " R IC O " ) , 18 U.S.C. 1961-1968; 11 U.S.C. 362; 42 U.S.C. 1985(3); and 4 2 U.S.C. 1986. (Doc. 44.)2 Specifically, Plaintiff contends that D e fe n d a n ts engaged in a conspiracy to defraud her of her home through to state a claim. Plaintiff also references violations of 18 U.S.C. 1692; 15 U.S.C. 1641; and 18 U.S.C. 152 in the Second Amended Complaint. (Doc. 44 at 6.) To the extent these claims are actionable, they were not included in separate counts. "Federal Rule of Civil Procedure 8(a)(2) requires that a pleading contain a `short and plain statement of the claim' showing that the pleader is entitled to relief." Washington v. Bauer, 149 Fed. Appx. 867, 869 (11th Cir. 2005). "Further, Federal Rule of Civil Procedure 10(b) requires that the averments of a claim `shall be made in numbered paragraphs, the contents of each of which shall be limited as far as practicable to a statement of a single set of circumstances . . . and each claim found upon a separate transaction or occurrence . . . shall be stated in a separate count.'" Id. (quoting Fed. R. Civ. P. 10(b)) (emphasis added). While courts "do and should show a leniency to pro se litigants not enjoyed by those with the benefit of a legal education," "this leniency does not give a court license to serve as defacto counsel for a party . . . or to rewrite an otherwise deficient pleading in order to sustain an action." GJR Invs., Inc. v. County of Escambia, Florida, 132 F.3d 1359, 1369 (11th Cir. 1998) (internal citations omitted). Even pro se complaints "must comply with the procedural rules governing the proper form of pleadings." Bauer, Fed. Appx. at 869 (citing McNeil v. United States, 508 U.S. 106, 113 (1993)). Moreover, Fed. R. Civ. P. 10(b) was explained to the plaintiff in the Court's March 24th Order. (Doc. 22.) Plaintiff's failure to comply with Fed. R. Civ. P. 10(b) in particular makes it very difficult for this Court to determine exactly what authority is being relied upon in this action, which defendants are being sued under which laws, and which facts support each of Plaintiff's claims. Citing statutes in the initial portion of a complaint is not sufficient to state a claim upon which relief can be granted. Therefore, if Plaintiff intended to assert claims under 18 U.S.C. 1692; 15 U.S.C. 1641; 18 U.S.C. 152; or any other statutes referenced in the Second Amended Complaint that are not set forth in separate counts, those claims are dismissed. Page 3 of 16 2 assorted violations of the law and judicial process. In response to Plaintiff's motion for leave to file an amended complaint o n March 19, 2010 (Doc. 17), the Court issued an Order generally s u m m a riz in g rules of civil procedure and the factual requirements for a w e ll-p le d complaint (Doc. 22). Plaintiff was also directed to submit a s e p a ra te RICO case statement or include such information in her proposed a m e n d e d complaint. (Doc. 22 at 3-7.) Acknowledging that Plaintiff made a n attempt to comply with the requirements set forth in the Court's Order, th e Court allowed Plaintiff's subsequent proposal to be filed as a Second A m e n d e d Complaint (Doc. 44) on April 16, 2010. However, the Court noted t h a t it should not be inferred from its ruling that the Second Amended C o m p la in t complied with the Federal Rules of Civil Procedure and/or was s u fficie n tly pled to survive motions to dismiss. (Doc. 43.) D e fe n d a n t' s motions to dismiss the Second Amended Complaint have b e e n fully briefed and are now ripe for decision. Upon full consideration, D e fe n d a n ts ' motions to dismiss will be granted in all respects. I I. S ta n d a rd . A defendant may move to dismiss a complaint pursuant to Federal Rule Page 4 of 16 of Civil Procedure 12(b)(6) if the plaintiff has failed to state a claim upon w h ich relief may be granted. "The standard of review for a motion to dismiss is the same for the appellate court as it [is] for the trial court." Stephens v . Dep't of Health & Human Servs., 901 F.2d 1571, 1573 (11th Cir. 1990). "When considering a motion to dismiss, all facts set forth in the plaintiff's c o m p la in t `are to be accepted as true and the court limits its consideration to the pleadings and exhibits attached thereto.'" Grossman v. Nationsbank, N . A ., 225 F.3d 1228, 1231 (11th Cir. 2000)(quoting GSW, Inc. v. Long County, 9 9 9 F.2d 1508, 1510 (11th Cir. 1993)). All "reasonable inferences" are drawn in favor of the plaintiff. St. George v. Pinellas County, 285 F.3d 1334, 1337 ( 1 1 th Cir. 2002). To survive a 12(b)(6) motion to dismiss for failure to state a claim, the c o m p la in t "does not need detailed factual allegations"; however, the " p la in tiff' s obligation to provide the `grounds' of his `entitle[ment] to relief' re q u ire s more than labels and conclusions, and a formulaic recitation of the e le m e n ts of a cause of action will not do. Factual allegations must be e n o u g h to raise a right to relief above the speculative level, on the a s s u m p tio n that all the allegations in the complaint are true (even if Page 5 of 16 doubtful in fact)." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 ( 2 0 0 7 ) ( in te rn a l citations omitted).3 The plaintiff must plead "enough facts to state a claim that is plausible on its face." Id. at 570. Unless a plaintiff h a s "nudged [his] claims across the line from conceivable to plausible," the c o m p la in t "must be dismissed." Id. " [ U ] n s u p p o rte d conclusions of law or of mixed fact and law have long b e e n recognized not to prevent a Rule 12(b)(6) dismissal." Dalrymple v. R e n o , 334 F.3d 991, 996 (11th Cir. 2003) (quoting Marsh v. Butler County, A la . , 268 F.3d 1014, 1036 n.16 (11th Cir. 2001)). And, "where the wellp le a d e d facts do not permit the court to infer more than the mere possibility o f misconduct, the complaint has alleged--but it has not `show[n]'--that the p le a d e r is entitled to relief." Ashcroft v. Iqbal, --- U.S. ----, 129 S. Ct. 1937, 1 9 5 0 (2009) (quoting Fed. R. Civ. P. 8(a)(2)). The U.S. Supreme Court has s u g g e s te d that courts adopt a "two-pronged approach" when considering In Bell Atlantic Corp. v. Twombly, the U.S. Supreme Court abrogated the oft-cited standard that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief" set forth in Conley v. Gibson, 355 U.S. 41 (1957). Bell Atl. Corp., 550 U.S. at 560-63. The Supreme Court stated that the "no set of facts" standard "is best forgotten as an incomplete, negative gloss on an accepted pleading standard: once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Id. at 563. Page 6 of 16 3 motions to dismiss: "1) eliminate any allegations in the complaint that are m e re ly legal conclusions; and 2) where there are well-pleaded factual a lle g a tio n s , `assume their veracity and then determine whether they p la u s ib ly give rise to an entitlement to relief.'" American Dental Ass'n v. C ig n a Corp., 605 F.3d 1283, 1290 (11th Cir. 2010) (quoting Iqbal, 129 S. Ct. a t 1950). Importantly, "courts may infer from the factual allegations in the com p la int `obvious alternative explanation[s],' which suggest lawful conduct ra th e r than the unlawful conduct the plaintiff would ask the court to infer." Id. (quoting Iqbal, 129 S. Ct. at 1951-52). H o w e v e r, "[a] complaint may not be dismissed because the plaintiff's c la im s do not support the legal theory he relies upon since the court must d e te rm in e if the allegations provide for relief on any possible theory." Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364 (11th Cir. 1 9 9 7 ) . Moreover, a court must be particularly liberal in interpreting the " in a rtfu l pleading" of a pro se plaintiff. See Hughes v. Rowe, 449 U.S. 5, 9 (1 9 8 0 ). Page 7 of 16 III. A n a ly s is . A. R IC O Claims. In the Second Amended Complaint, Plaintiff contends that Defendants v io la te d sections 1962(a)-(d) of the RICO statutes, and seeks damages p u rs u a n t to the civil remedies provision, 18 U.S.C. 1964(c). "Section 1962 o f Title 18 of the United States Code criminalizes the following activities: ( a ) It shall be unlawful for any person who has re c e iv e d any income derived, directly or indirectly, fro m a pattern of racketeering activity . . . to use or in v e s t, directly or indirectly, any part of such in c o m e , or the proceeds of such income, in a c q u is itio n of any interest in, or the establishment or o p e ra tio n of, any enterprise which is engaged in, or th e activities of which affect, interstate or foreign com m e rce . ( b ) It shall be unlawful for any person through a p a tte rn of racketeering activity . . . to acquire or m a in ta in , directly or indirectly, any interest in or c o n tro l of any enterprise which is engaged in, or the a c tiv itie s of which affect, interstate or foreign com m e rce . ( c ) It shall be unlawful for any person employed by or a s s o cia te d with any enterprise engaged in, or the a c tiv itie s of which affect, interstate or foreign commerce, to conduct or participate, directly or in d ire c tly , in the conduct of such enterprise's affairs th ro u g h a pattern of racketeering activity. Page 8 of 16 (d) It shall be unlawful for any person to conspire to v io la te any of the provisions of subsection (a), (b), or ( c ) of this section. J o h n so n Enters. of Jacksonville, Inc. v. FPL Group, Inc., 162 F.3d 1290, 1316 ( 1 1 th Cir. 1998). 1. 1 8 U.S.C. 1962(a), 1962(b), and 1962(c). S u b se c tio n s (a), (b), and (c) of section 1962 "require proof of a ` p a tte rn of racketeering activity,' which is defined in 18 U.S.C. 1961(5) as ` a t least two acts of racketeering activity.'" Id. "Racketeering activity" in c lu d e s "any act `chargeable' under several generically described state c rim in a l laws, any act `indictable' under numerous specific federal criminal p ro v is io n s , including mail and wire fraud, and any `offense' involving b a n k ru p tc y or securities fraud or drug-related activities that is `punishable' u n d e r federal law." Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 4818 2 (1985). "In order to prove a pattern of racketeering in a civil or criminal R IC O case, a plaintiff must show at least two racketeering predicates that a re related, and that they amount to or pose a threat of continued criminal a c tiv ity . " Cigna Corp., 605 F.3d at 1290-91 (citing H.J. Inc. v. Nw. Bell Tel. C o . , 492 U.S. 229, 240 (1989)). "A party alleging a RICO violation may Page 9 of 16 demonstrate continuity over a closed period by proving a series of related p re d ic a te s extending over a substantial period of time." Id. at 1291 (quoting H . J . Inc., 492 U.S. at 242). In the Second Amended Complaint, Plaintiff's contentions include the f o llo w in g : - H & R Block Mortgage and Option One Mortgage violated b a n k ru p tc y law 11 U.S.C. 362 by incorrectly claiming in a letter th a t they had been granted relief from an automatic bankruptcy s ta y4 (Doc. 44 at 7); - A tto r n e y James Greer represented H&R Block Mortgage and O p tio n One Mortgage when they made the assertion regarding re lie f from the stay (Id. at 7-8); -Option One Mortgage filed an incorrect proof of claim in N o v e m b e r 2004, because it did not credit Plaintiff with certain p a y m e n ts (Id. at 9); - A tto rn e y Dan Feinstein represented H&R Block Mortgage and O p tio n One Mortgage when they filed the incorrect proof of claim ( Id . at 10); Plaintiff attaches an Order by U.S. Chief Bankruptcy Judge William Shulman, which conditionally denies Option One Mortgage's motion for relief from stay, but provides: If the debtor fails to pay a complete monthly mortgage payment in bankable funds to Option One beginning in August 2003 by the 15th day of each month, Option One shall mail, by regular mail, a written (15) fifteen day notice of default to the debtor and debtor[']s attorney at their addresses listed in the petition. If the default is not cured within fifteen (15) days of the letter, the automatic stay provided under 11 U.S.C. 362 will terminate automatically without further notice or Order of this court. (Doc. 44, Ex. A at 2.) 4 Page 10 of 16 -Plaintiff's bankruptcy attorney, Phillip Leslie, "act[ed] c o n tra ry " to Plaintiff's interest by "ignoring significant aspects o f [the] proper approach" to Option One Mortgage's alleged v io la tio n s, and "walk[ing] away from Plaintiff's case when no o th e r attorney would take the case (Id. at 12-13); - U . S . Bankruptcy Trustee Daniel O'Brien allowed the alleged v io la tio n s to take place (Id. at 14); -U.S. Chief Bankruptcy Judge William Shulman allowed the a lle g e d violations to take place and facilitated the alleged v io la tio n s by misstating the law in his orders (Id. at 15-16); - U . S . District Judge William Steele, U.S. District Judge Kristi D u B o s e , U.S. Magistrate Judge William Cassady, and U.S. M a g is tra te Judge Katherine Nelson "looked the other way" and " re fu s [ e d ] to prevent" the alleged violations (Id. at 23). A s s u m in g these allegations are true, they do not state a plausible claim a g a in s t any of the defendants for any of the predicate acts that constitute " ra c k e te e rin g activity," let alone a "pattern of racketeering activity." Plaintiff has not "allege[d] facts that support each statutory element of a v io la t io n of one of the state or federal laws described in 18 U.S.C. 1 9 6 1 ( 1 ) . " Raney v. Allstate Ins. Co., 370 F.3d 1086, 1087 (11th Cir. 2004.) And, while Plaintiff makes general allegations of "fraud" against various d e fe n d a n ts in her Second Amended Complaint and legal memoranda, the f a c t s alleged do not meet the Twombly and Iqbal plausibility standard, or th e heightened pleading standard required for claims of fraud or mistake. "[I]n alleging fraud or mistake, a party must state with particularity the Page 11 of 16 circumstances constituting fraud or mistake." Cigna Corp., 605 F.3d at 1 2 9 1 . "[P]ursuant to [Federal Rule of Civil Procedure] 9(b), a plaintiff must a lle g e : `(1) the precise statements, documents, or misrepresentations made; ( 2 ) the time, place, and person responsible for the statement; (3) the c o n te n t and manner in which these statements misled the Plaintiffs; and (4) w h a t the defendants gained by the alleged fraud.'" Id. (quoting Brooks v. B lu e Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1380-81 (11th Cir. 1 9 9 7 )). "The plaintiff must [also] allege facts with respect to each d e fe n d a n t' s participation in the fraud." Id. (citing Brooks, 116 F.3d at 1381) ( e m p h a s is added). Plaintiff's allegations of "fraud" are "labels and c o n clu s io n , " insufficient to survive a motion to dismiss her claims under 18 U . S . C . 1962(a), 1962(b), and 1962(c). Twombly, 550 U.S. at 555. 2. 1 8 U.S.C. 1962(d). " S e c tio n 1962(d) of the RICO statutes makes it illegal for anyone to c o n sp ire to violate one of the substantive provisions of RICO." Cigna Corp., 6 0 5 F.3d at 1293. "A plaintiff can establish a RICO conspiracy claim in one o f two ways: (1) by showing that the defendant agreed to the overall o b j e c tiv e of the conspiracy; or (2) by showing that the defendant agreed to Page 12 of 16 commit two predicate acts." Id. (quoting Republic of Panama v. BCCI "A H o ld in g s (Luxembourg) S.A., 119 F.3d 935, 950 (11th Cir. 1997)). p la in tiff need not offer direct evidence of a RICO agreement; the existence o f conspiracy `may be inferred from the conduct of the participants.'" Id. ( c itin g Republic of Panama, 119 F.3d at 950). When Plaintiff's conclusory a lle g a tio n s of "conspiracy" and "cooperation" are set aside, as instructed in Iq b a l, the facts do not support an inference of any agreement by any d e fe n d a n t (1) to an overall objective of conspiracy or (2) to commit two p re d ic a te acts. Plaintiff's RICO conspiracy claim will also be dismissed. B. 1 1 U.S.C. 362. T o the extent Plaintiff's Second Amended Complaint seeks to assert a s e p a ra te claim against Defendants under 11 U.S.C. 362 for willful violation o f a bankruptcy stay, that claim is not properly before this Court. By G e n e ra l Order on July 20, 1984, the United States District Court for the S o u th e rn District of Alabama referred all proceedings arising under Title 11 to the bankruptcy judges of the district. Therefore, all proceedings arising u n d e r Title 11 must be filed with the Bankruptcy Court. H o w e v e r, even if Plaintiff's Title 11 claim was properly before this Page 13 of 16 Court, it would be dismissed. In order to recover damages under 362, a p la in tiff must show: "(1) a violation of the automatic stay has occurred; (2) th e violation was willful; and (3) the willful violation has caused injury to the d e b to r[ . ] " In re Lightfoot, 399 B.R. 141, 148 (Bankr. E.D. Pa. 2008); see a ls o , e.g., In re Wiley, 315 B.R. 682 (Bankr. E.D. La. 2004); Bell v. SanfordC o rb it t - B ru k e r, Inc., 1987 WL 60286 (S.D. Ga. 1987). Assuming Plaintiff has s u ffic ie n t ly alleged an actual violation of a bankruptcy stay by H&R Block M o rtg a g e and Option One Mortgage, she has not alleged any facts from which a court can infer the violation was willful or caused her any injury. Furthermore, there are no facts supporting a plausible claim that any other d e fe n d a n ts in this action violated a bankruptcy stay. C. 4 2 U.S.C. 1985(3). P la in tiff' s claim under 42 U.S.C. 1985(3) also fails. In order to state a claim under 1985(3): a plaintiff must allege: (1) defendants engaged in a c o n s p ira c y ; (2) the conspiracy's purpose was to d ire c tly or indirectly deprive a protected person or c la s s the equal protection of the laws, or equal p riv ile g e s and immunities under the laws; (3) a c o n s p ira to r committed an act to further the c o n s p ira c y ; and (4) as a result, the plaintiff suffered in j u ry to either his person or his property, or was Page 14 of 16 deprived of a right or privilege of a citizen of the U n ite d States. Jimenez v. Wellstar Health System, 596 F.3d 1304, 1312 (11th Cir. 2010). Plaintiff has not alleged any facts from which an inference can be made that a n y defendants agreed to deprive Plaintiff of equal protection of the laws, o r equal privileges and immunities under the laws. There are no facts to s u p p o rt an allegation that Defendants acted against Plaintiff because she was a member of a protected class. Lucero v. Operation Rescue of Birmingham, 9 5 4 F.2d 624, 628 (11th Cir. 1992). Because Plaintiff has not alleged any fa c ts that support a plausible claim for civil conspiracy, her 1985(3) claim w ill be dismissed. D. 4 2 U.S.C. 1986. F in a lly , it appears that Plaintiff contends Defendants have violated 42 U . S . C . 1986. "Section 1986 provides a cause of action against anyone who h a s `knowledge that any of the wrongs conspired to be done, and mentioned in section 1985 of this title, are about to be committed, and having the p o w e r to prevent or aid in preventing the commission of the same, neglects o r refuses so to do.'" Park v. City of Atlanta, 120 F.3d 1157, 1159 (11th Cir. Page 15 of 16 1997). "Section 1986 claims are therefore derivative of 1985 violations." Id. at 1159-60. Section 1986 "requires a violation of 1985," though the in d iv id u a ls held liable under 1986 do not have to be involved in the 1985 c o n sp ira c y . Id. at 1160. Because Plaintiff has not alleged sufficient facts to s u p p o rt an inference that a 1985 violation occurred, let alone that any of th e defendants had knowledge of such a conspiracy, her 1986 claim will a lso be dismissed. IV . C o n c lu s io n . For the reasons outlined above, Plaintiff's claims against all named d e fe n d a n ts are due to be dismissed for failure to state a claim. A separate o rd e r will be entered. D o n e this 6th day of July 2010. ____________ L. SCOTT COOGLER U N IT E D STATES DISTRICT JUDGE 139297 Page 16 of 16

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