Navin et al v. Wells Fargo Bank, N.A. et al
ORDER. For the reasons set forth in the attached, the 114 Motion to Amend is DENIED, and the 116 Motion to Substitute Party is DENIED. The Clerk is directed to close this case. Signed by Judge Michael P. Shea on 9/29/2017. (Taykhman, N.)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
JEFFREY NAVIN and JOHN O’REILLY
on behalf of themselves and of all others
No. 3:15-cv-671 (MPS)
WELLS FARGO BANK, N.A., WELLS FARGO
INSURANCE, INC., ASSURANT INC.,
AMERICAN SECURITY INSURANCE
COMPANY, AMERICA’S SERVICING
COMPANY and HSBC BANK USA,
MEMORANDUM AND ORDER
Plaintiff Jeffrey Navin—who died in 2015—and pro se plaintiff John O’Reilly
(collectively, “Plaintiffs”) brought this lawsuit against the following Defendants: HSBC Bank
USA, N.A. (“HSBC”); Wells Fargo Bank, N.A., America’s Servicing Company, and Wells Fargo
Insurance, Inc. (collectively, the “Wells Fargo Defendants”); and Assurant Inc. (“Assurant”) and
its subsidiary American Security Insurance Company (“ASIC”) (collectively, the “Assurant
Defendants”). (First Amended Complaint (“FAC”), ECF No. 8 at 1.)
On August 8, 2016, the Court dismissed Plaintiffs’ claims challenging Defendants’ practice
of forcing residential borrowers, such as Navin, to pay for homeowners’ insurance that lenders
obtained to protect their interest when the homeowners failed to maintain their own insurance.
(ECF No. 113.) Plaintiff O’Reilly now moves to amend the First Amended Complaint (ECF No.
114) by filing the proposed Second Amended Complaint (ECF No. 117), and to substitute
Christopher Carveth, Esq., administrator of the estate of Jeffrey Navin, as the proper plaintiff in
this action. (ECF No. 116.)
For the reasons discussed below, the motions are DENIED.
I assume familiarity with the underlying facts and the decision rendered on August 8, 2016.
(ECF No. 113.) I recount certain relevant procedural facts below.
Plaintiffs filed their Complaint on May 5, 2015. (ECF No. 1.) On June 19, 2015, Plaintiffs
amended their pleading and filed the FAC. (ECF No. 8.) On or about October 30, 2015, Navin was
declared to have died. (ECF No. 116 at 1.) Defendants filed a Suggestion of Death on November
20, 2015. (ECF No. 97.) On December 1, 2015, Christopher Carveth, Esq. was appointed by the
Trumbull Probate Court to be the administrator of Navin’s estate. (ECF No. 115-1 at 9.)
On August 8, 2016, the Court dismissed the FAC and denied O’Reilly’s motion to
substitute himself for Navin. (ECF No. 113.) The Court ruled that O’Reilly’s motion to substitute
himself for Navin failed under Connecticut’s Survival Statute, Conn. Gen. Stat. § 52-599(a), which
made the proper party for substitution the executor or the administrator of Navin’s estate. (ECF
No. 113 at 11.) The Court also ruled that, for his own part, O’Reilly failed to state a claim on which
relief could be granted. The Court provided O’Reilly thirty days within which to file a motion to
amend or supplement the FAC, a statement explaining why the Court should grant him leave to
amend or supplement the FAC given the potential obstacles of futility, bad faith, and prejudice,
and a copy of his proposed supplemental or amended pleading. (ECF No. 113 at 24.)
On September 6, 2016, O’Reilly filed a motion to amend the FAC and a motion to
substitute Christopher Carveth for Navin as the proper plaintiff. (ECF Nos. 114, 116.) O’Reilly
filed a proposed Second Amended Complaint on September 7, 2016. (ECF No. 117.) Defendants
filed a joint opposition to both of O’Reilly’s motions on October 6, 2016 (ECF No. 118.) Carveth
also filed a memorandum in opposition to O’Reilly’s motion to substitute, representing that he had
decided not to pursue the claims belonging to Navin’s estate. (ECF No. 121.)
Rule 25 provides that “[i]f a party dies and the claim is not extinguished, the court may
order substitution of the proper party. A motion for substitution may be made by any party or by
the decedent’s successor or representative. If the motion is not made within 90 days after service
of a statement noting the death, the action by or against the decedent must be dismissed.” Fed. R.
Civ. P. 25(a)(1). Whether a person is “the proper party” is “a question of state law.” Coleman v.
Sys. Dialing LLC, No. 15 CV 3868 (DLC), 2016 WL 1169518, at *2 (S.D.N.Y. Mar. 22, 2016);
Falls v. Novartis Pharm. Corp., No. 3:13-CV-270 (JBA), 2014 WL 3810246, at *2 n.3 (D. Conn.
Aug. 1, 2014) (noting that “state substantive law determines whether a claim survives death”).
Connecticut’s Survival Statute provides that “[a] cause or right of action shall not be lost or
destroyed by the death of any person, but shall survive in favor of or against the executor or
administrator of the deceased person.” Conn. Gen. Stat. § 52-599(a).
Before trial, “a party may amend its pleading only with the opposing party’s written
consent or the court’s leave,” which the Court should “freely give . . . when justice so requires.”
Fed. R. Civ. P. 15(a)(2). In addition, “the court may, on just terms, permit a party to serve a
supplemental pleading setting out any transaction, occurrence, or event that happened after the
date of the pleading to be supplemented.” Fed. R. Civ. P. 15(d). Despite the liberal standard for
amending or supplementing pleadings, “[a] district court has discretion to deny leave for good
reason, including futility, bad faith, undue delay, or undue prejudice to the opposing party.”
McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007) (citing Foman v. Davis,
371 U.S. 178, 182 (1962)). See also Quaratino v. Tiffany & Co., 71 F.3d 58, 66 (2d Cir. 1995)
(holding that a motion to supplement will be granted “[a]bsent undue delay, bad faith, dilatory
tactics, undue prejudice to the party to be served with the proposed pleading, or futility”). “In this
Circuit, it is well settled that an amendment is considered futile if the amended pleading fails to
state a claim or would be subject to a motion to dismiss on some other basis.” Gilbert, Segall &
Young v. Bank of Montreal, 785 F. Supp. 453, 457 (S.D.N.Y. 1992); see also Kalimantano GmbH
v. Motion in Time, Inc., 939 F. Supp. 2d 392, 403 (S.D.N.Y. 2013) (“‘Futility’ under Rule 15 turns
on whether the proposed pleading would state a claim upon which relief could be granted.”)
(quoting Dougherty v. N. Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 87-88 (2d Cir. 2002)).
A. Motion for Substitution
O’Reilly moves to substitute Carveth, an attorney and administrator of Navin’s estate, as
the proper plaintiff in this suit. As a party to the action, O’Reilly was entitled to file the motion for
substitution. Under Connecticut law, Carveth is a proper party for substitution. However,
Defendants argue that O’Reilly has not demonstrated that Carveth consents to the substitution. For
his part, Carveth states both that he does not consent and that neither O’Reilly nor Navin’s former
attorney Kenneth Davis has authority to speak for the estate or direct the disposition of the estate’s
claims.1 Carveth argues that as the Administrator of the estate, he has “sole authority to pursue or
abandon the claims brought by Navin prior to his death.” (ECF No. 121 at 2.)
Attorney Kenneth Davis, former attorney to Navin, co-signed O’Reilly’s motion, but no longer
represents a party in this action, as any attorney-client relationship that Attorney Davis had with
Navin neither survived Navin’s death nor transferred to the estate. See Gothberg v. Town of
Plainville, 305 F.R.D. 28, 31 (D. Conn. 2015) (“[A]n attorney-client relationship terminates upon
the death of the client . . . and extinguishes any notion that an attorney-client relationship
Courts applying Rule 25(a) have suggested that consent of the person identified as the party
for substitution is a baseline requirement. See Atkins v. City of Chicago, 547 F.3d 869, 874 (7th
Cir. 2008) (Rule 25 “protects the nonparty from finding himself . . . in a situation in which a lawyer
for someone else . . . has thrust him into a case that he would rather not be in . . . .); see also
Hendricks v. Liberty Nat. Life Ins. Co., 2013 WL 4544299, at *2 (N.D. Okla. Aug. 27, 2013)
(denying motion to substitute party where the decedent’s attorney failed to identify the personal
representative of the decedent’s estate); Rocco v. Bickel, No. No. 1:12-CV-829, 2013 WL
4000886, at *3 (M.D. Pa. Aug. 5, 2013) (denying motion to substitute where “no substitute party
has come forward volunteering to prosecute [the] case”); Escareno v. Noltina Crucible &
Refractory Corp., 172 F.R.D. 517, 521 (N.D. Ga. 1994) (indicating that if plaintiff “had identified
a proper substitute and obtained that substitute’s consent to becoming a party,” the court likely
would have permitted the substitution, despite plaintiff’s untimeliness).
Here, the party O’Reilly seeks to substitute—and the only proper party for substitution
under the governing law—does not consent on the grounds that he has “deemed it in the best
interests of the Estate to allow Navin’s claims to be dismissed.” (ECF No. 121 at 3.) O’Reilly
points out that Carveth has consented to substitution in other actions involving Navin’s estate.
(ECF No. 123 at 1-2.)2 But as fiduciary of Navin’s estate, Carveth has authority to determine which
automatically vests between the attorney and the estate of the deceased client.”); Morales v. CT
Holdings, Inc., No. 01 CIV. 1303 KMW KNF, 2001 WL 1204011, at *1 (S.D.N.Y. Oct. 10, 2001)
(“A decedent’s attorney is not a party to the action and, perforce of the decedent’s death, ceases to
represent him . . . .). Attorney Davis is warned that signing pleadings in a matter in which he is
neither a party nor an attorney representing a party is not authorized.
On Defendants’ motion, the Court takes judicial notice of Carveth’s withdrawal on behalf of
Navin’s estate of the appeal in the state court action, HSBC Bank, N.A. v. Navin, Docket No.
AC38687 (Conn. App. July 22, 2016). (ECF No. 119-1 at 2.) See Global Network Comms., Inc. v.
City of New York, 458 F.3d 150, 157 (2d Cir. 2006) (“A court may take judicial notice of a
document filed in another court . . . to establish the fact of such litigation and related filings.”)
(internal citation omitted).
claims to pursue or abandon on behalf of the estate. See Conn. Gen. Stat. § 45a-234 (providing
that fiduciaries may “compromise . . . sue on or defend, abandon, or otherwise deal with and settle
claims in favor of or against the estate . . . as the fiduciary shall deem advisable . . . .”).
Even construed as a motion for compulsory joinder of Navin’s estate as a plaintiff in this
action, the motion similarly fails. See Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 474 (2d
Cir. 2006) (“[T]he submissions of a pro se litigant must be construed liberally and interpreted to
raise the strongest arguments that they suggest.”) (internal quotations and citations omitted). Rule
19 of the Federal Rules of Civil Procedure provides:
A person who is subject to service of process and whose joinder will not deprive
the court of subject-matter jurisdiction must be joined as a party if: (A) in that
person’s absence, the court cannot accord complete relief among existing parties;
or (B) that person claims an interest relating to the subject of the action and is so
situated that disposing of the action in the person’s absence may . . . as a practical
matter impair or impede the person’s ability to protect the interest . . . leave an
existing party subject to a substantial risk of incurring double, multiple, or
otherwise inconsistent obligations because of the interest.
Fed. R. Civ. P. 19(a). None of the bases for compulsory joinder exist here. The Court’s prior
decision dismissing the claims brought by O’Reilly in his own right demonstrates that the Court
may accord complete relief in this action without joinder of Navin’s estate. The administrator of
the estate has decided not to pursue any claims related to this action, making it clear that denying
the motion will not in any way impair or impede his ability to protect the estate’s interests. This is
also not a case in which nonjoinder will cause the parties to be subject to a substantial risk of
incurring double, multiple, or inconsistent obligations. Moreover, “[j]oinder of an involuntary
plaintiff is ‘disfavored’” under Rule 19. JMF Grp., LLC v. Majestic Foods, Inc., No. 3:05-CV00484 (CFD), 2006 WL 2587798, at *2 (D. Conn. Sept. 6, 2006).
Because I decline to compel the administrator of Navin’s estate—the only proper party for
substitution for Navin—to pursue claims against his determination that doing so would not be in
the best interest of the estate, the motion for substitution is DENIED.3 As a result, Navin’s claims
are dismissed with prejudice.
B. Motion to Amend
O’Reilly argues that he should have an opportunity to file the proposed Second Amended
Complaint because the proposed amendment is not in bad faith, and because he is not precluded
from bringing his claims by the foreclosure judgment rendered by the state trial court and affirmed
by the Connecticut Appellate Court,4 such that an amendment would not be futile. O’Reilly makes
the following relevant changes from the First Amended Complaint to the proposed Second
O’Reilly states that “Navin was the Owner of the property at the time up until the
filing of this lawsuit,” and that “O’Reilly now holds title to the property” (ECF No.
117 at 16);
O’Reilly adds allegations that the mortgage and assignment at issue are void
because American Brokers’ Conduit is a fictitious entity, and that use of a fictitious
entity in foreclosure actions brought by Defendants was fraudulent, and therefore
supportive of O’Reilly’s RICO claims (ECF No. 117 at 6-9, 39-40);
Defendants also argue that O’Reilly has not demonstrated excusable neglect in his failure to move
for substitution of a proper party within 90 days after service of the Suggestion of Death, as
required under Rule 25. (ECF No. 118 at 5-6.) See also Falls v. Novartis Pharm. Corp., 2014 WL
3810246, at *4 (D. Conn. Aug. 1, 2014) (denying motion for substitution where plaintiff did not
demonstrate excusable neglect). Because I decline to substitute the administrator of Navin’s estate
without his consent, I need not consider whether O’Reilly’s delay in moving for substitution of a
proper party is excusable.
See HSBC Bank, N.A. v. Navin, 129 Conn. App. 707 (2011) (affirming the Superior Court’s
foreclosure judgment). The Connecticut Supreme Court denied certification. HSBC Bank, USA,
N.A., v. Navin, 302 Conn. 948 (Nov. 1, 2011).
O’Reilly adds allegations regarding the two classes he seeks the Court to certify
(ECF No. 117 at 52-53).
1. Bad Faith/Prejudice
In the Court’s prior order, the Court gave O’Reilly an opportunity to demonstrate
circumstances that would explain why he waited until after Defendants’ three motions to dismiss
were fully briefed and he had filed the motion to substitute to ask the Court to take judicial notice
of the quitclaim deed transferring title of the Property from Navin to O’Reilly (ECF No. 101 at 2),
which he had recorded less than a week before the motion to substitute was filed. (ECF No. 113 at
21.) The Court also gave O’Reilly an opportunity to demonstrate why the Court should not infer
bad faith both from O’Reilly’s delay in recording the deed or disclosing its existence and from the
possibility that the transfer of the deed was a fraudulent conveyance under Connecticut’s Uniform
Fraudulent Transfer Act, Conn. Gen. Stat. Ann. § 52-552 et seq.
O’Reilly states in his motion to amend that “[t]he only reason . . . O’Reilly filed the
[quitclaim] Deed was because Mr. Navin had been murdered.” (ECF No. 115 at 7.) O’Reilly
further states that although he held the quitclaim deed since 2008, as Navin and O’Reilly were
family and both in good health, and as Navin allowed O’Reilly’s family to live on the property,
O’Reilly saw no reason to record the deed. (Id.) While delay in recording a deed is not necessarily
evidence of bad faith, the Connecticut Supreme Court has recognized that “delays in the
recordation of deeds necessarily impair the integrity of our recording system.” Farmers and
Mechanics Sav. Bank v. Garofalo, 219 Conn. 810, 822 (1991). But, as discussed below, because
O’Reilly’s proposed amendments are futile, I need not resolve whether his delay in recording the
deed and supplementing his pleadings to reflect the fact that he is an alleged owner of the Property
was in bad faith.
As the Court has already determined that the allegations set forth in the First Amended
Complaint failed to state a claim on which relief may be granted, the Court need only consider
whether the proposed changes would now enable O’Reilly to state a claim, or whether amending
or supplementing the complaint would be futile. Nothing in the proposed Second Amended
Complaint affects the Court’s earlier ruling that O’Reilly’s claims regarding Defendants’ lenderplaced insurance practices and the servicing of Navin’s mortgage fail as a matter of law. (See ECF
No. 113 at 13-20.) More specifically, as the Court previously ruled, O’Reilly’s breach of contract
and breach of the implied covenant of good faith and fair dealing claims (Count One) fail because
O’Reilly does not allege that he was a party to or a contemplated beneficiary of the mortgage (ECF
No. 113 at 13); his unjust enrichment claim (Count Two) fails because he does not allege that he
was an insured or a policyholder of a lender-placed insurance policy, or that he made any payments
as a result of such a policy (id. at 14); his RICO claims (Counts Three and Four) fail because he
does not allege that he suffered injuries to business or property as a result of Defendants’ conduct
and because he does not plead circumstances of fraud with particularity (id. at 15); his aiding and
abetting breach of fiduciary duty claim (Count Five) fails because O’Reilly does not allege that he
had a fiduciary relationship with any of the Defendants (id. at 17); his CUTPA and CUIPA claims
(Count Six) fail because O’Reilly neither alleges that Defendants’ conduct proximately caused his
injuries, nor that he was a consumer, competitor, or some other businessperson affected by
Defendants’ conduct (id. at 18-19); and his claim for declaratory and injunctive relief (Count
Seven) fails in the absence of another plausible claim. (Id. at 20.) Nothing in the proposed Second
Amended Complaint cures these fundamental defects.
As I suggested in the previous ruling, the question here is whether O’Reilly’s new
allegation regarding his ownership of the Property “helps his claim that the mortgage agreement
is invalid . . . .” (ECF No. 113 at 22.) The relevant proposed changes in the Second Amended
Complaint fall into two categories: 1) O’Reilly’s disclosure that he is now the owner of the
Property; and 2) O’Reilly’s added allegations that Defendants used “fictitious entities” such as
American Brokers’ Conduit to bring “illegal foreclosure actions” using “false and fraudulent
documents.” The Court previously observed that such amendments or supplements to the First
Amended Complaint likely would be futile, as O’Reilly’s ownership of the Property—to the extent
it confers standing on O’Reilly to contest the validity of the mortgage as a successor to Navin—
would likely make his claims subject to the doctrine of res judicata based on the mortgage
foreclosure judgment against Navin. However, as the parties had not briefed the issue in detail, the
Court gave O’Reilly an opportunity to demonstrate that he would not be precluded by the state
court foreclosure judgment from raising his claims of invalidity in this action. In response,
O’Reilly argues that the foreclosure action is ongoing in state court, such that the state court has
not rendered a final judgment that would have preclusive effect. (ECF No. 115 at 10.)
Federal courts considering the preclusive effect of a state court judgment on a subsequent
federal action “consult the preclusion laws of the state in which the judgment was issued.” Nestor
v. Pratt & Whitney, 466 F.3d 65, 71 (2d Cir. 2006) (citing Migra v. Warren City Sch. Dist. Bd. of
Educ., 465 U.S. 75, 81 (1984)). Connecticut law on res judicata therefore applies to whether the
foreclosure judgment is preclusive of O’Reilly’s claims. See In re Devlin, No. 06-30195 ASD,
2010 WL 122850, at *1 (Bankr. D. Conn. Jan. 5, 2010) (applying Connecticut preclusion law).
“Generally, for res judicata to apply, four elements must be met: (1) the judgment must
have been rendered on the merits of a court of competent jurisdiction; (2) the parties to the prior
and subsequent actions must be the same or in privity; (3) there must have been an adequate
opportunity to litigate the matter fully; and (4) the same underlying claim must be at issue.”
Wheeler v. Beachcroft, LLC, 320 Conn. 146, 156-57 (2016). “Under Connecticut law, a judgment
is final not only as to every matter which was offered to sustain the claim, but also as to any other
admissible matter which might have been offered for that purpose.” In re Devlin, 2010 WL 122850,
at *2 (quoting Conn. Natural Gas Corp. v. Miller, 239 Conn. 313, 322 (1996)).
First, the Connecticut state court, a court of general jurisdiction, had jurisdiction to enter
judgment on the foreclosure action. O’Reilly argues that “strict foreclosure is not a final judgment
until the law days have passed and redemption has not taken place” (ECF No. 15 at 10), citing no
authority in support of this proposition. In any event, Navin appealed the foreclosure judgment
and the Appellate Court affirmed it—all years before this lawsuit was filed, see HSBC Bank USA,
N.A. v. Navin, 129 Conn. App. 707 (2011)—which is enough to make it final for purposes of res
judicata. Knoblaugh v. Marshall, 64 Conn. App. 32, 36 (2001) (“[T]he traditional standard of
finality for purposes of appeal will generally also provide the standard of finality for purposes of
preclusion.”) (internal quotation marks omitted).
Second, as O’Reilly now claims to be the owner of the Property via the quitclaim deed,
O’Reilly was in privity with Navin. Privity “is, in essence, a shorthand statement for the principle
that res judicata should be applied only when there exists such an identification in interest of one
person with another as to represent the same legal rights so as to justify preclusion.” Wheeler, 320
Conn. at 166 (internal quotations and alterations omitted). “The crowning consideration is that the
interest of the party to be precluded must have been sufficiently represented in the prior action so
that the application of res judicata is not inequitable.” Id. (internal quotations and alterations
omitted). “[A] successor in interest of property that is the subject of a pending action to which his
transferor is a party is bound by and entitled to the benefits of the rules of res judicata to the same
extent as his transferor, unless (1) a procedure exists for notifying potential successors in interest
of pending actions concerning property, the procedure was not followed, and the successor did not
otherwise have knowledge of the action; or (2) the opposing party in the action knew of the transfer
to the successor and knew also that the successor was unaware of the pending action.” Comm’r of
Envtl. Prot. v. Farricielli, 307 Conn. 787, 813 n.20 (2013) (quoting Restatement (Second) of
Judgments § 44 (1982)). O’Reilly does not allege that he was unaware that Navin was a party to
the foreclosure action when the transfer of the Property occurred in 2008. O’Reilly also does not
allege that Defendants were aware of the quitclaim deed, which was recorded on December 10,
2015, six days before O’Reilly filed his first motion to substitute himself for Navin. (ECF No. 101;
ECF No. 101-1 at 4.) Thus, as a successor in interest, O’Reilly is in privity with Navin and bound
by the foreclosure judgment.
Third, Navin had the opportunity to litigate fully the matters raised by the new allegations
in the state foreclosure action. “The rule of claim preclusion prevents reassertion of the same claim
regardless of what additional or different evidence or legal theories might be advanced in support
of it.” Girolametti v. Michael Horton Assoc., Inc., 173 Conn. App. 630 (2017). “Under Connecticut
law, a defendant in a foreclosure proceeding can only raise defenses relating to the making,
validity, and enforceability of the mortgage.”5 Packer v. SN Servicing Corp., No. 3:04-CV-1506,
A split of authority exists among the Connecticut courts regarding which special defenses may
be raised in a foreclosure action. “There have been many and varied interpretations of the ‘making,
validity and enforcement’ requirement by Connecticut Superior Court decisions. There is a line of
cases which interprets the phrase very strictly to mean the execution and delivery of an enforceable
instrument, and not the occurrences that may arise between the parties during the course of their
loan relationship . . . . A second line of cases, however, interprets the ‘making, validity, and
enforcement’ requirement less rigidly.” Bayview Loan Serv., LLC v. Yoney Realty Corp., No.
CV116016983S, 2012 WL 1509945, at *3 (Conn. Super. Ct. Apr. 4, 2012) (collecting cases). I
need not take sides in this debate, because the challenge O’Reilly seeks to make—that the original
2008 WL 359411, at *3 (D. Conn. Feb. 8, 2008) (citing Fidelity Bank v. Krenisky, 72 Conn. App.
700, 705-06 (2002)). “Where the plaintiff’s conduct is inequitable, a court may withhold
foreclosure on equitable considerations and principles.” Bank of Am., N.A. v. Groton Estates, LLC,
No. CV096001697, 2010 WL 3259815, at *2 (Conn. Super. Ct. July 13, 2010) (internal quotations
omitted). O’Reilly’s new allegations regarding Defendants’ use of a “fictitious entity” and “robosigned documents” ultimately concern the validity of Navin’s mortgage, the assignment of his
mortgage to HSBC, and the enforceability of the mortgage through the foreclosure action. Navin
already vigorously litigated HSBC’s standing to bring the foreclosure action, and took his case to
the Connecticut Appellate Court on this issue. See HSBC Bank, N.A. v. Navin, 129 Conn. App.
707, 710 (2011) (concluding that HSBC had standing to initiate suit). Though based on a different
theory, O’Reilly’s new allegations are similar and in any event assert matters Navin could have
raised in that action—that the original mortgagee did not exist and thus that HSBC did not have
standing to bring, or otherwise should not have prevailed, in the foreclosure action.6
mortgagee did not exist as a legal entity—would fit even the narrow definition of the “making,
validity, and enforcement” requirement.
O’Reilly’s statement in support of his motion to amend reveals another problem with his
proposed amendments: O’Reilly is inviting the Court to weigh in on the Connecticut Appellate
Court’s ruling affirming the foreclosure judgment, in light of the fact that he allegedly recently
discovered that American Brokers’ Conduit is a “fictitious entity.” (ECF No. 115 at 11 (“The
problem is and remains that the Appellate Court was unaware of the fact that Defendants had
provided the Court with an American Brokers’ Conduit Note, which was a nullity from a fictitious
entity. It could well be assumed that if this fact was known, by the Appellate Court at the time, the
decision would have been quite different.”).) To the extent the new allegations are challenging the
validity of the foreclosure judgment, they are likely also barred by the Rooker-Feldman doctrine,
which aims to prevent a plaintiff who lost in state court from attempting to have his claims reheard
in federal court. See Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005).
“Rooker-Feldman directs federal courts to abstain from considering claims when four
requirements are met: (1) the plaintiff lost in state court, (2) the plaintiff complains of injuries
caused by the state court judgment, (3) the plaintiff invites district court review of that judgment,
and (4) the state court judgment was entered before the plaintiff’s federal suit commenced.”
McKithen v. Brown, 626 F.3d 143, 154 (2d Cir. 2010). Judge Underhill concluded that where
Navin brought a variety of claims alleging that several of the same defendants as in this action
O’Reilly’s allegations also might be read to imply that Defendants obtained the foreclosure
judgment fraudulently by use of a fictitious entity. (ECF No. 117 at 39, 45 (including in the
proposed Second Amended Complaint allegations that Defendants brought “fraudulent and illegal
foreclosure actions” and “deceived the Court as to the manner or preparation of the documents
used for foreclosure,” amounting to a “fraud on the court”).) “Res judicata does not apply to
judgments obtained through fraud or collusion . . . . A party may not, however, circumvent the
doctrine by merely alleging fraud.” Weiss v. Weiss, 297 Conn. 446, 470 (2010) (affirming grant of
summary judgment and holding that res judicata precluded plaintiff’s fraud claim where plaintiff
had not offered any evidence in support of her claim) (citations omitted) (emphasis in original).
“Additionally, unless a defendant had fraudulently concealed the relevant facts, the discovery of
additional facts following judgment does not block the application of res judicata when the facts
and events themselves arose prior to the filing of the original complaint and it was only the
plaintiff’s awareness of these facts that came later.” Girolametti, 173 Conn. App. at 652-53
(finding that plaintiff’s fraud claims related to defective building parts were barred by res judicata,
as plaintiff had an opportunity to bring the claims in prior litigation concerning construction project
contracts) (internal quotation marks omitted). O’Reilly does not plead facts suggesting that the
committed unfair and deceptive practices in connection with the servicing of Navin’s mortgage,
Navin had presented a “direct invitation for this court to review the final judgment of the state
courts with which he disagrees,” which the Court declined to do. Navin v. HSBC Bank USA, No.
3:12-CV-00752, 2013 WL 3961523, at *2 (D. Conn. Aug. 2, 2013). “[C]ourts in this circuit have
consistently held that any attack on a judgment of foreclosure is clearly barred by the RookerFeldman doctrine.” Gonzales v. Ocwen Home Loan Serv., 74 F. Supp. 3d 504, 514 (D. Conn. 2015)
reconsideration denied, No. 3:14-CV-53 (CSH), 2015 WL 2124365 (D. Conn. May 6, 2015), aff’d
sub nom. Gonzalez v. Deutsche Bank Nat. Trust Co., 632 Fed. Appx. 32 (2d Cir. 2016). But see
Tanasi v. CitiMortgage, Inc., -- F. Supp. 3d --, 2017 WL 2837477, at *9-10 (D. Conn. June 30,
2017) (finding that plaintiffs did not invite federal review of state foreclosure judgment by bringing
claim that mortgage servicer improperly handled mortgage modification requests, such that claims
were not barred by Rooker-Feldman doctrine).
Defendants fraudulently concealed the alleged fact that the original mortgagee did not exist as a
valid corporate entity.
Fourth, the same underlying claim is at issue. Connecticut uses a “transactional test as a
guide to determining whether an action involves the same claim as an earlier action so as to trigger
operation of the doctrine of res judicata.” Girolametti, 173 Conn. App. at 649. “The claim that is
extinguished by the judgment in the first action includes all rights of the plaintiff to remedies
against the defendant with respect to all or any part of the transaction, or series of connected
transactions, out of which the action arose.” Id. at 650-51. “What factual grouping constitutes a
transaction, and what groupings constitute a series, are to be determined pragmatically, giving
weight to such considerations as whether the facts are related in time, space, origin, or motivation,
whether they form a convenient trial unit, and whether their treatment as a unit conforms to the
parties’ expectations or business understanding or usage . . . . In applying the transactional test, we
compare the complaint in the second action with the pleadings and the judgment in the earlier
action.” Id. at 651. In foreclosure actions, a “counterclaim must simply have a sufficient
relationship to the making, validity or enforcement of the subject note or mortgage in order to meet
the transaction test.” Tanasi v. CitiMortgage, Inc., --- F. Supp. 3d ---, No. 3:16-CV-00727 (VAB),
2017 WL 2837477, at *13 (D. Conn. June 30, 2017) (quoting CitiMortgage, Inc. v. Rey, 150 Conn.
App. 595, 605 (2014)). “Claims questioning the validity of the plaintiff’s right to seek foreclosure
are sufficiently connected to the foreclosure action.” Id. On the other hand, “[c]laims relating to a
broad range of conduct, or to an extrinsic agreement between the parties, rather than ‘narrowly
bearing on the mortgage note itself or its enforcement,’ do not pass the transaction test.” Tanasi,
2017 WL 2837477, at *13 (quoting JP Morgan Chase Bank v. Rodrigues, 109 Conn. App. 125,
Here, O’Reilly’s claims arise out of the same transaction or series of transactions as the
foreclosure action, as his claims concern the mortgage agreement entered into between Navin and
Defendants, the validity of that mortgage, and Defendants’ right to enforce the mortgage through
foreclosure. See Omotosho v. Freeman Investment & Loan, 136 F. Supp. 3d 235, 249 (D. Conn.
2016) (holding that plaintiff mortgagor’s claims against mortgagee bank and assignor concerning
the validity of loan documents or their enforcement in a prior foreclosure action were barred by
res judicata); Tanasi, 2017 WL 2837477, at *15 (holding that plaintiffs’ claims involving
defendants’ failure to respond to loan modification or loss mitigation applications, as well as
claims that defendants improperly processed plaintiffs’ requests were related to the foreclosure
action and precluded, while claims arising from interactions among the parties unrelated to the
foreclosure action, including claims that defendants misled consumers about its policies and failed
to comply with RESPA notice requirements were not). Accordingly, res judicata bars O’Reilly’s
proposed new claims.
Even if O’Reilly’s proposed new allegations were not precluded, they would fail on the
merits and could not withstand a motion to dismiss under Rule 12(b)(6). First, as noted above, the
proposed changes do not cure the defects the Court identified in its prior order. Second, the
additional allegation that Defendants used a fictitious corporate entity, American Brokers’ Conduit
(ECF No. 117 at 39-40), would not affect the validity of the mortgage or the foreclosure judgment.
As the Connecticut Appellate Court already noted, regardless of the validity of the assignment of
the mortgage (or the corporate existence of the original mortgagee), under Connecticut law, HSBC
was entitled to bring a foreclosure action as the holder of the note. See HSBC Bank N.A. v. Navin,
129 Conn. App. 707, 711 n.5 (2011) (“mak[ing] no determination as to the validity of the
assignment of the mortgage to the plaintiff . . . . [but] establish[ing] that the plaintiff, as the holder
of the note, had standing to bring the present foreclosure action”). Thus, O’Reilly’s proposed
allegations aimed at the validity of the mortgage and the assignments would not state a claim even
if they were not barred by res judicata.
Because O’Reilly’s proposed new claims lack merit, granting O’Reilly leave to file the
Second Amended Complaint would be futile.
For the reasons discussed herein, the Motion for Substitution is DENIED. The Motion to
Amend is DENIED. The Clerk is directed to close this case.
IT IS SO ORDERED.
Michael P. Shea, U.S.D.J.
September 29, 2017
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