Smith et al v. Bank of America Home Loans et al
Filing
190
OPINION AND ORDER denying 104 Plaintiffs' Motion for Summary Judgment; granting in part and denying in part 109 Defendants' Motion for Summary Judgment; denying as moot 132 Plaintiffs' Motion for Judgment; denying 136 Defendant s' Motion for Final Dismissal with Prejudice, or in the alternative, for the Entry of an Appropriate Spoliation Remedy. Defendants' Motion for Summary Judgement is granted as to Counts II, III, and IV. The motion is otherwise denied. The Clerk is directed to terminate defendant Mortgage Electronic Registration Systems, Inc. and enter judgment accordingly. See Opinion and Order for details. Signed by Judge John E. Steele on 3/6/2014. (MAB)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
BRIAN T.
CALIANOS
SMITH
and
JONATHAN
C.
Plaintiffs,
vs.
Case No.
2:11-cv-676-FtM-29DNF
BANK OF AMERICA, N.A., successor by
merger to BAC Home Loans Servicing,
L.P.
and
MORTGAGE
ELECTRONIC
REGISTRATION SYSTEMS, INC.,
Defendants.
___________________________________
BANK OF AMERICA, N.A.
Third
Party
Plaintiff,
vs.
SMITHCAL REALTY TRUST, BRIAN T.
SMITH and JONATHAN C. CALIANOS, in
their representative capacity as
trustees for the SMITHCAL REALTY
TRUST,
Third
Party
Defendants.
___________________________________
OPINION AND ORDER
This matter comes before the Court on Plaintiffs’ Motion for
Summary Judgment (Doc. #104) and Defendants’ Motion for Summary
Judgment (Doc. #109) filed on October 15, 2013.
Plaintiffs filed
an Objection to Defendants’ Motion for Summary Judgment (Doc. #113)
and defendants filed an Opposition to Plaintiffs’ Motion for
Summary Judgment (Doc. #114) on October 29, 2013.
Also before the
Court is Plaintiffs’ Motion for Entry of Judgment as a Matter of
Law on Third-Party Plaintiffs’ Amended Counterclaim (Doc. #132),
and Defendants’ Motion for Final Dismissal with Prejudice, or in
the alternative, for the Entry of an Appropriate Spoliation Remedy
(Doc. #136) filed on December 12, 2013.
Defendants filed a
Response to Plaintiffs’ Motion for Entry of Judgment as a Matter of
Law on Third-Party Plaintiffs’ Amended Counterclaim (Doc. #150) on
December 26, 2013, and plaintiffs filed an Objection to Defendants’
Motion for Final Dismissal (Doc. #161) on January 17, 2014.
I.
Background
On August 4, 2005, plaintiffs Brian T. Smith and Jonathan C.
Calianos1 purchased a condominium located at 28111 Tamberine Court,
Unit 1321, Bonita Springs, Florida (the property) for the sum of
$399,900.00.
(Doc. #98-1.)
In order to finance the purchase,
plaintiffs obtained a loan in the amount of $240,000.00 from MLD
Mortgage, Inc. (MLD) by executing a promissory note (the Original
Note) that granted MLD a mortgage on the property.
(Id.)
On
August 25, 2005, the mortgage was assigned to defendant Mortgage
Electronic
Registration
Systems,
Inc.
(MERS).
(Doc.
#17-3.)
Shortly thereafter, MLD sold the loan to Countrywide Home Loans,
Inc. (Countrywide) and plaintiffs were directed to make payments to
Countrywide Home Loans Servicing, LP. (Doc. #98, ¶ 14; Doc. #44-2,
1
Although plaintiffs are proceeding pro se, Calianos is a
licensed attorney in the Commonwealth of Massachusetts.
-2-
¶ 4.)
In October 2009, Countrywide Home Loans Servicing, LP,
merged into BAC Home Loans Servicing, LP, and on July 1, 2011, BAC
Home Loans Servicing, LP, merged into defendant Bank of America,
N.A. (Bank of America).
loan under its own name.
Bank of America then began servicing the
(Doc. #44-2, ¶ 4.)
On September 22, 2005, Countrywide sold the loan to the
Federal Home Loan Mortgage Corporation (Freddie Mac). (Doc. #44-1,
¶¶ 4-5.)
The Original Note, however, did not comply with Freddie
Mac’s guidelines and needed to be re-executed before the sale could
be finalized.
Countrywide and MLD asked Calianos to sign a
corrected note, but he refused to do so unless the Original Note
was returned to him prior to the execution of the corrected note.
(Id.
¶¶
6-9.)
Countrywide
was
unable
to
promptly
obtain
a
corrected note and was forced to repurchase the loan on November
29, 2005.
(Id. ¶ 9.)
Countrywide’s records state that MLD advised Countrywide that
Calianos
agreed
to
re-execute
the
note
and
that
Countrywide
received a new note that superseded and replaced the Original Note
(the Superseding Note), together with an allonge from MLD to
Countrywide, on or about April 14, 2006.
(Id. ¶¶ 11-12.)
After
receiving the Superseding Note, Countrywide released the Original
Note to MLD and sold the loan to the Federal National Mortgage
Association (Fannie Mae) on November 10, 2006.
-3-
(Id. ¶¶ 14-15.)
The Original Note was eventually stamped “VOID” and returned
to plaintiffs; however, the date on which the note was returned
remains unknown.
Sometime after receiving the Original Note,
plaintiffs began receiving payment requests from Bank of America.
Calianos, knowing that he possessed the Original Note, contacted
Bank of America to challenge the validity of the debt and asked for
a copy of the note on file.2
In response to the request, Bank of
America sent Calianos a copy of the Original Note that lacked the
“VOID” stamp.
(Doc. #98-3.)
Calianos informed Bank of America
that he was in possession of the Original Note and stated that it
could not seek payment under the note because he was in possession
of the voided note.
Bank of America maintained that they had the
Original Note on file and continued to seek payment.
Although
plaintiffs believed that Bank of America was attempting to collect
on a void note, they continued to make monthly payments under the
loan to protect their credit.
Despite their persistent challenges, plaintiffs were unable to
convince Bank of America that the debt was no longer valid.
Due to
the impasse, plaintiffs initiated this action on November 30, 2011,
and ceased making payments on the loan. As a result of plaintiffs’
failure to pay, Bank of America reported to the major credit
reporting agencies that plaintiffs were 30-days delinquent on their
2
Plaintiffs also do not recall when they began disputing the
debt, but defendants posit that it was first challenged on January
28, 2011.
-4-
December 2011 payment.
(Doc. #109-1, ¶ 5.)
In response to the
reporting, plaintiffs filed a series of disputes regarding the
negative
reporting
on
the
grounds
that
Bank
of
attempting to collect payments under a void note.
America
was
(Id. ¶ 6.)
Following the commencement of this action, Bank of America
discovered
the
Superseding
Note
in
its
plaintiffs with a copy of the document.
files
and
provided
Upon receipt of the
Superseding Note, plaintiffs informed counsel for Bank of America
that they do not recall being asked to re-execute the note and deny
doing so.
(Doc. #98-8.)
Plaintiffs subsequently amended their
complaint to dispute the validity of the note.
More specifically,
plaintiffs contend that the signatures on the Superseding Note were
forged.
Fannie Mae is the current owner of the loan and the mortgage
on the property is held by Bank of America.3
Bank of America
maintains that it managed only one account for the loan with only
one principal balance, and as of November 1, 2012, the unpaid
principal on the loan was $239,872.54.
(Doc. #44-2, ¶¶ 8, 10.)
Plaintiffs, however, believe that they paid off the loan, but have
offered nothing more than an assertion of payment.
Plaintiffs are now proceeding on their Third Amended Complaint
against Bank of America and MERS.
3
2012.
(Doc. #98.)
In Count I of the
MERS assigned the mortgage to Bank of America on February 10,
(Doc. #44-2, ¶ 6.)
-5-
Third Amended Complaint, plaintiffs seek a declaratory judgment
against Bank of America releasing and discharging the mortgage
attached to the property.
Count II asserts that Bank of America
violated the Fair Credit Reporting Act (FCRA) and Count III alleges
that Bank of America committed civil fraud.
In Count IV, the final
count of the Third Amended Complaint, plaintiffs assert a claim
against Bank of America and MERS pursuant to the federal civil
Racketeer Influenced and Corrupt Organizations Act (RICO).
On
November
2013,
Bank
of
against
counterclaim
13,
America
Smith
and
Calianos,
filed
and
a
an
amended
third-party
complaint against the SmithCal Realty Trust and Smith and Calianos
in their representative capacity as trustees for the trust.
(Doc.
#120.)
The Amended Counterclaim and Third-Party Complaint asserts
claims
for
declaratory
relief,
trust, and breach of contract.
unjust
enrichment/constructive
(Id.)
The Court will first address defendants’ motion for final
dismissal or spoliation sanctions followed by the cross-motions for
summary
judgment.
plaintiffs’ motion
II.
The
Court
will
conclude
by
addressing
for entry of judgment as a matter of law.
Motion for Final Dismissal or Spoliation Sanctions
Defendants request that the Court dismiss plaintiffs’ claims
with
prejudice,
spoliation
or
remedy
intentionally
in
the
because
destroyed
alternative,
plaintiffs
evidence
-6-
enter
an
admitted
relevant
to
appropriate
that
their
they
claims.
Spoliation is the intentional destruction of evidence or the
significant and meaningful alteration of a document or instrument.
Green Leaf Nursery v. E.I. DuPont De Nemours & Co., 341 F.3d 1292,
1308 (11th Cir. 2003).
In order to establish spoliation, the
moving party must prove that: (1) the evidence existed at one time,
(2) the alleged spoliator had a duty to preserve the evidence, and
(3) the evidence was crucial to the movant’s prima facie case or
defense.
Se. Mech. Servs., Inc. v. Brody, 657 F. Supp. 2d 1293,
1299 (M.D. Fla. 2009).
The imposition of sanctions for spoliation
is only appropriate when there is evidence of bad faith.
Flury v.
Daimler Chrysler Corp., 427 F.3d 939, 944 (11th Cir. 2005).
Mere
negligence in losing or destroying records is not enough for an
adverse inference instruction. Bashir v. AMTRAK, 119 F.3d 929, 931
(11th Cir. 1997).
Defendants assert that plaintiffs admitted during discovery
that they intentionally destroyed evidence regarding their alleged
payment of the loan.
During his deposition, Calianos testified
that he honestly thinks that the loan was paid off, but cannot
prove it one way or another because he generally endorses third
party checks to the creditor to pay off debts, a method of payment
that does not leave a paper trail.
When asked if he could look to
see what deals had closed during the time frame in which he
believes the loan was paid that might have enabled him to pay off
the debt, Calianos responded that “it’s not a paper trail I would
-7-
have.
There’s no way I would be able to do this.”
Calianos
further stated that he would have destroyed his records regarding
any deals during the relevant period after seven years.
(Doc.
#136-1, Calianos Dep. 41:1-20, Nov. 5, 2012.)
According
to
defendants,
this
testimony
establishes
that
documents relating to plaintiffs’ assertion of payment once existed
and that the document were destroyed in bad faith.
disagrees.
The Court
The testimony reveals that Calianos may have destroyed
the records of other business deals during the relevant time period
and that it may have been relevant to the issues at hand, but the
testimony does not support a finding of bad faith.
The evidence
that was allegedly destroyed is, as discussed below, vital to
plaintiffs’ case and the prejudice created by the intentional
destruction of such evidence, if it even existed, would be more
felt by plaintiffs than defendants.
Plaintiffs may have been
careless or negligent in the maintenance of their records, but this
does not amount to bad faith; therefore, defendants’ motion for
final dismissal or spoliations sanctions is denied.
III.
Cross-Motions for Summary Judgment
A.
Standard of Review
Summary
judgment
is
appropriate
only
when
the
Court
is
satisfied that “there is no genuine issue as to any material fact
and that the moving party is entitled to judgment as a matter of
law.”
Fed. R. Civ. P. 56(c).
“An issue of fact is ‘genuine’’ if
-8-
the record taken as a whole could lead a rational trier of fact to
find for the nonmoving party.”
Baby Buddies, Inc. v. Toys “R” Us,
Inc., 611 F.3d 1308, 1314 (11th Cir. 2010).
A fact is “material”
if it may affect the outcome of the suit under governing law.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The
moving party bears the burden of identifying those portions of the
pleadings, depositions, answers to interrogatories, admissions,
and/or affidavits which it believes demonstrate the absence of a
genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986); Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256,
1259-60 (11th Cir. 2004).
To avoid the entry of summary judgment,
a party faced with a properly supported summary judgment motion
must
come
forward
with
extrinsic
evidence,
i.e.,
affidavits,
depositions, answers to interrogatories, and/or admissions, which
are sufficient to establish the existence of the essential elements
to that party’s case, and the elements on which that party will
bear the burden of proof at trial.
Celotex, 477 U.S. at 322;
Hilburn v. Murata Elecs. N. Am., Inc., 181 F.3d 1220, 1225 (11th
Cir. 1999).
In ruling on a motion for summary judgment, the Court views
all evidence and draws all reasonable inferences in favor of the
non-moving party.
Scott v. Harris, 550 U.S. 372, 380 (2007); Tana
v. Dantanna’s, 611 F.3d 767, 772 (11th Cir. 2010).
However, “if
reasonable minds might differ on the inferences arising from
-9-
undisputed facts, then the court should deny summary judgment.”
St. Charles Foods, Inc. v. America’s Favorite Chicken Co., 198 F.3d
815, 819 (11th Cir. 1999) (quoting Warrior Tombigbee Transp. Co. v.
M/V Nan Fung, 695 F.2d 1294, 1296 (11th Cir. 1983) (finding summary
judgment “may be inappropriate even where the parties agree on the
basic facts, but disagree about the factual inferences that should
be drawn from these facts”)).
“If a reasonable fact finder
evaluating the evidence could draw more than one inference from the
facts, and if that inference introduces a genuine issue of material
fact, then the court should not grant summary judgment.”
Allen v.
Bd. of Pub. Educ., 495 F.3d 1306, 1315 (11th Cir. 2007).
B.
Count I - Declaratory Relief
Plaintiffs claim that they are entitled to summary judgment on
Count I of the Third Amended Complaint because Bank of America is
not the holder of a valid note nor does it represent the holder of
a valid note. In support of their position, plaintiffs assert that
they
are
in
possession
of
the
Original
Note
and
that
Superseding Note cannot be enforced because it is a forgery.
the
Bank
of America, however, contends that plaintiffs’ theory of a forged
instrument is irrelevant because the debt was neither satisfied nor
intentionally discharged.
Bank of America further asserts that it
is entitled to summary judgment on its claim for declaratory relief
because plaintiffs have failed to pay off the debt and there is no
evidence that debt was intentionally discharged.
-10-
In Florida, the enforceability of a negotiable instrument is
governed by the Uniform Commercial Code (UCC).
The UCC provides
that both the holder of an instrument and a nonholder in possession
of the instrument who has the rights of a holder are entitled to
enforce a negotiable instrument. Fla. Stat. § 673.3011. According
to plaintiffs, Bank of America is not entitled to collect on the
debt because it is no longer the holder of a valid note.
It is
undisputed that plaintiffs are in possession of the Original Note,
but a question remains as to whether the obligation to pay under
the instrument was discharged.
The obligation to pay an instrument may be discharged by
payment or by an intentional voluntary act of the person entitled
to
enforce
instrument.
673.6041(1)(a).
See
Fla.
Stat.
§§
673.6021(1),
Such voluntary acts include the surrender of the
instrument to the party, destruction, mutilation, or cancellation
of the instrument, cancellation or striking out of the party’s
signature, or the addition of words to the instrument indicating
discharge.
renunciation
Fla. Stat. § 673.6041(1)(a).
of
a
promissory
note
is
unintentional or procured by mistake.
The cancellation or
ineffective
if
it
is
All Real Estate Title
Servs., Inc. v. Minqh Quang Vuu, 67 So. 3d 260, 262 (Fla. 2d DCA
2010) (citing Gover v. Home & City Sav. Bank, 574 So. 2d 306, 306
(Fla. 1st DCA 1991)).
Accordingly, if the evidence shows that the
debt was not satisfied or intentionally discharged, plaintiffs
-11-
remain liable for the obligation and the authenticity of the
Superseding Note becomes irrelevant.
After reviewing the record
and the Amended Joint Pretrial Statement, the Court concludes that
there is a factual dispute as to whether the debt was satisfied or
intentionally discharged.
(Doc. #169, p. 9.)
Because there is a
dispute of material fact, the cross-motions for summary judgment as
to Count I are denied.
C.
Count II - Fair Credit Reporting Act
Under 15 U.S.C. § 1681s-2(b) of the FCRA, a furnisher of
credit information must conduct an investigation after receiving
notice that a consumer disputes certain credit information.
15
U.S.C. § 1681-2(b)(1). In Count II of the Third Amended Complaint,
plaintiffs allege that Bank of America reported them 30 days late
for both December 2011 and January 2012, and willfully failed to
conduct any investigation after receiving notice of their dispute.
Bank of America contends that it is entitled to summary
judgment on Count II because the undisputed evidence shows that an
investigation was completed for each dispute filed.
In support of
its contentions, Bank of America submitted the affidavit of Jane
Cashel, an operations team manager at Bank of America. (Doc. #1091.)
The affidavit states that Bank of America only reported
plaintiffs 30 days delinquent on their December 2011 loan payment
and that no further reports of delinquencies were made.
The
affidavit further states that Bank of America received six dispute
-12-
notifications challenging the validity of the debt and that it
investigated each dispute by reviewing its servicing system, the
payment history
profile
and/or
payment
rating.
On
all
such
occasions, the servicing system reflected that plaintiffs were 30
days delinquent on January 12, 2012, and the results of the
investigations were reported to the credit reporting agencies.
(Id.)
Plaintiffs contend that Ms. Cashel’s failure to address the
alleged late reporting for January 2012 in her affidavit proves
that Bank of America failed to conduct an investigation. The Court
disagrees.
Plaintiffs’ argument goes to the adequacy of the
investigation, not whether an investigation was conducted. Because
plaintiffs
limited
investigation,
investigation
any
is
Count
II
to
argument
the
failure
regarding
irrelevant.
It
is
the
also
to
conduct
adequacy
worth
any
of
noting
the
that
plaintiffs’ dispute notifications only challenged the validity of
the debt, not that the alleged reporting for January 2012 was
erroneous.
Due to the absence of any evidence showing that Bank of
America failed to conduct any investigation, the Court finds that
summary judgment in favor of Bank of America is appropriate as to
this count.
D.
Count III - Fraud
Bank of America contends that it is entitled to summary
judgment on
plaintiffs’
claim
for
-13-
fraud
because
there
is
no
evidence of an actionable misrepresentation and even if there was
an actionable misrepresentation, plaintiffs admitted that they did
not rely on any of the statements.
In response, plaintiffs simply
assert that the Court determined that they have adequately pled a
claim for fraud and that they can prove all of the alleged facts.
There is a dispute as to whether Florida law or Massachusetts
law governs the claim for fraud due to the fact that plaintiffs
live in Massachusetts.
The laws governing a claim for fraud in
both jurisdictions are nearly identical except that Florida law
allows for an award of punitive damages and Massachusetts law does
not.
After reviewing defendants’ motion for summary judgment, the
Court concludes that it does not need to resolve this issue because
summary judgment is due to be granted under the laws of both
jurisdictions.
In
order
to
prevail
on
a
claim
misrepresentation, a plaintiff must prove:
for
fraudulent
(1) a false statement
concerning a material fact; (2) the representor's knowledge that
the
representation
is
false;
(3)
an
intention
that
the
representation induce another to act on it; and (4) consequent
injury by the party acting in reliance on the representation.
See
Butler v. Yusem, 44 So. 3d 102, 105 (Fla. 2010); Twin Fires Inv.,
LLC v. Morgan Stanley Dean Witter & Co., 837 N.E.2d 1121, 1134
(Mass. 2005) (citations omitted).
Plaintiffs allege that Bank of
America’s false statements of material fact include its assertion
-14-
that it held the Original Note and could enforce it, and that it
could make negative reports to credit reporting agencies, commence
foreclosure proceedings, conduct property inspections, and charge
late fees in the event of nonpayment.
Generally, a false statement concerning a material fact is
only actionable if it is based on a past or existing fact, not a
statement of opinion or promise of future action.
See Azar v.
National City Bank, 382 F. App’x 880, 884 (11th Cir. 2010) (citing
Mejia v. Jurich, 781 So. 2d 1175, 1177 (Fla. 3d DCA 2001)); Cumis
Ins. Soc’y, Inc. v. BJ’s Wholesale Club, Inc., 918 N.E.2d 36, 49
(Mass.
2009)
(holding
that
false
statements
of
opinion,
of
conditions to exist in the future, and promises to perform an act
cannot sustain a claim of fraud). Bank of America’s statement that
it held the Original Note qualifies as a false statement of a past
or existing fact, but the remaining statements do not.
Any
statement regarding what could happen in the event of nonpayment
constitutes
a
promise
plaintiffs’
claim;
of
thus,
future
action
plaintiffs
are
and
cannot
limited
to
sustain
Bank
of
America’s statement that it held and could enforce the Original
Note.
Bank of America routinely told plaintiffs that it was in
possession
of
and
could
enforce
the
Original
Note,
but
in
retrospect, it is clear that it did not possess the Original Note.
This, however, does not necessarily mean that the representations
-15-
were false or made with the intent to deceive.
Plaintiffs assert
in their pleading that Bank of America “knew there was a serious
question” as to whether the copy of the Original Note it was
relying on was enforceable.
(Doc. #98, ¶ 110.)
However, the
undisputed evidence shows that MLD sent Countrywide the Superseding
Note with an allonge in April 2006 and that the loan was then sold
to Fannie Mae.
Under these circumstances, Bank of America was
entitled to enforce the Superseding Note because it had no reason
to question the authenticity of the instrument.
See Fla. Stat. §
673.3021(1) (a “holder in due course” is a holder who takes an
instrument without “apparent evidence of forgery or alternation”
for value, in good faith, and without notice of certain claims and
defenses); Fla Stat. § 673.3011 (the holder of an instrument and a
nonholder in possession of the instrument who has the rights of a
holder are entitled to enforce a negotiable instrument).
See also
Fla. Stat. § 673.3081(1) (“the signature [on an instrument] is
presumed to be authentic and authorized . . . .”).
Bank of America
may have been negligent in discovering the Superseding Note at such
a
late
time,
but
this
discrepancy
does
not
convert
Bank
of
America’s mistaken basis for enforcement of the debt into the
fraudulent or deceitful conduct alleged.
Because Bank of America
was in possession of a presumptively valid Superseding Note, and
there is no evidence that Bank of America knew or should have known
-16-
otherwise at the time, its statements as a matter of law do not
amount to false statements of material fact.
Plaintiffs’ claim for fraud also fails because the undisputed
evidence
shows
representations
that
plaintiffs
regarding
the
did
not
Original
rely
on
Note.
any
of
Generally,
the
“a
recipient may rely on the truth of a representation, even though
its
falsity
could
have
been
ascertained
had
he
made
an
investigation, unless he knows the representation to be false or
its falsity is obvious to him.”
Butler, 44 So. 3d at 105 (citing
Besett v. Basnett, 389 So. 2d 995, 998 (Fla. 1980)).
See also
Massachusetts Laborers’ Health & Welfare Fund v. Phillip Morris,
Inc., 62 F. Supp. 2d 236, 242-243 (D. Mass. 1999) (same) (applying
Mass. law).
The evidence undeniably shows that plaintiffs knew
they were in possession of the Original Note and even attempted to
convince Bank of America of that fact.
(See Doc. #98, ¶¶ 19-27;
Doc. #109-3: Calianos Dep. 34:24-37:1, Nov. 5, 2012.) Furthermore,
plaintiffs believed that Bank of America could not collect under
the note and acknowledged that they continued to make payments
under protest to protect their credit.
(Doc. #98, ¶ 23.) Based on
plaintiffs’ admissions, it is clear that they did not rely on the
truth of Bank of America’s statements regarding possession of the
Original Note; thus, plaintiffs are unable to prove reliance.
Because plaintiffs are unable to establish a false statement of
-17-
material fact or reliance on a false statement of material fact,
defendants’ motion for summary judgment as to Count III is granted.
E.
Count IV - Civil RICO
Defendants assert that they are entitled to summary judgment
as to Count IV because plaintiffs have failed show a single element
of a RICO claim.
In response to defendants’ argument, plaintiffs
again argue that the motion should be denied because the Court
previously determined that they have stated a plausible claim and
can prove all of the facts alleged in the complaint, but have
failed
to
come
forth
with
any
evidence
in
support
of
their
assertion.
It is unclear as to which provision of 18 U.S.C. § 1962
plaintiffs are proceeding, because Count IV cites to 18 U.S.C. §
1962(a) but sets forth the standard for a claim brought under 18
U.S.C. § 1962(c).
Despite this ambiguity, defendants contend that
plaintiffs lack the evidence to prevail under either provision.
1.
18 U.S.C. § 1962(a)
Section 1962(a) makes it “unlawful for any person who has
received any income derived, directly or indirectly, from a pattern
of racketeering activity . . . to use or invest, directly or
indirectly, any part of such income, or the proceeds of such income
. . . [in the] operation of, any enterprise which is engaged in, or
the activities of which affect, interstate or foreign commerce.”
18 U.S.C. § 1962(a).
An enterprise under § 1962(a) is “something
-18-
acquired through the use of illegal activities or by money obtained
from illegal activities.”
(1994).
NOW v. Scheidler, 510 U.S. 249, 259
See also Davis-Lynch, Inc. v. Moreno, 667 F.3d 539, 550
(5th Cir. 2012).
In other words, a § 1962(a) enterprise is “the
victim of unlawful activity,” not the vehicle through which that
activity is committed.
Id.
Here, plaintiffs allege that they are
the victims of unlawful activity, not Bank of America or MERS.
Because plaintiffs have failed present any evidence establishing an
enterprise under § 1962(a), the Court finds that defendants are
entitled to summary judgment as to a claim under § 1962(a).
2.
18 U.S.C. § 1962(c)
Section 1962(c) of the RICO Act makes it unlawful “for any
person employed by or associated with any enterprise engaged in, or
the activities of which affect, interstate or foreign commerce, to
conduct or participate, directly or indirectly, in the conduct of
such
enterprise’s
activity.”
affairs
through
18 U.S.C. § 1962(c).
a
pattern
of
racketeering
To establish a federal civil RICO
violation under § 1962(c), the plaintiff must prove (1) conduct (2)
of an enterprise (3) through a pattern (4) of racketeering activity
and (5) injury to “business or property” (6) that was “by reason
of” the substantive RICO violation. Williams v. Mohawk Indus., 465
F.3d 1277, 1282 (11th Cir. 2006), cert. denied, 549 U.S. 1260
(2007) (citing 18 U.S.C. §§ 1962(c), 1964(c)).
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To establish a
pattern of racketeering activity, plaintiffs must establish at
least two related acts of mail or wire fraud.
18 U.S.C. § 1961(5).
Defendants contend that plaintiffs claim under § 1962(c) fails
because the record is devoid of any acts of mail or wire fraud.
Plaintiffs allege that defendants were engaged in a scheme to
collect payments from plaintiffs on a promissory note knowing that
Bank of America did not hold the note and that it was void in any
event.
In order to carry out this scheme, plaintiffs allege that
Bank of America and MERS made numerous misrepresentations to
plaintiffs using both mail and wire, indicating that they held the
Original Note and forced plaintiffs to continue paying under the
Original Note through threats of economic harm.
In order to establish mail and wire fraud, a plaintiff must
establish (1) defendants’ intentional participation in a scheme to
defraud
(2)
interstate
the
mails
plaintiffs
and
wires
of
in
money
or
furtherance
property
of
the
(3)
using
scheme
(4)
resulting in plaintiffs’ injury (5) that can be quantified as a
specific amount of damages.
See 18 U.S.C. §§ 1341, 1343.
“A
scheme to defraud requires proof of a material misrepresentation,
or the omission or concealment of a material fact calculated to
deceive another out of money or property.”
United States v.
Maxwell, 579 F.3d 1282, 1299 (11th Cir. 2009) (citing United States
v. Svete, 556 F.3d 1157, 1161, 1169 (11th Cir. 2009)).
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Plaintiffs once again assert that Bank of America committed
fraud by attempting to collect a debt under a note that it did not
hold. As previously discussed, Bank of America’s assertion that it
possessed
the
Original
Note
does
not
amount
to
a
material
misrepresentation because it possessed the presumptively valid
Superseding
Note.
defendants
made
To
the
threats
extent
of
that
financial
plaintiffs
harm,
the
claim
that
statements
identified do not qualify as misrepresentations and cannot sustain
plaintiffs’ RICO claim. Plaintiffs have also failed to present any
evidence establishing that MERS engaged in any conduct supporting
their RICO claim.
The record reflects that MERS was assigned the
mortgage executed by plaintiffs on August 23, 2005, and remained in
possession of the mortgage until it was transferred to Bank of
America on February 10, 2012.
(Docs. ## 17-3, 44-2.)
Bank of
America admitted that, with respect to the loans it services, it
provides direction to MERS concerning the discharge of mortgage
liens.
(Doc. #98-9, p. 6.)
business activities.
Such conduct merely amounts to normal
Based on the foregoing, the Court finds that
plaintiffs have failed to present any evidence in support of their
RICO claim; therefore, defendants motion for summary judgment as to
Count IV is granted.
IV.
Plaintiffs’ Motion for Entry of Judgment as a Matter of Law
Plaintiffs
Counterclaim,
seek
which
judgment
alleges
as
a
to
claim
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Bank
for
of
America’s
breach
of
Third
contract,
pursuant to Fed. R. Civ. P. 12(b)(6).
Because plaintiffs move for
relief pursuant Fed. R. Civ. P. 12(b)(6), the Court will treat and
refer to the motion as a motion to dismiss, not a motion for
judgment.
On November 27, 2013, plaintiffs filed an Answer to the
Amended
Counterclaim
(Doc.
#124)
and
on
December
plaintiffs filed their motion to dismiss (Doc. #132).
12,
2013,
A motion to
dismiss is improper once a responsive pleading has been filed.
Skrtich v. Thornton, 280 F.3d 1295, 1306 (11th Cir. 2002).
An
Answer filed contemporaneously with the filing of a Motion to
Dismiss
renders
the
motion
moot
and
makes
it
“procedurally
impossible for the Court to rule on the motion to dismiss.”
See
Brisk v. City of Miami Beach, Fla., 709 F. Supp. 1146, 1147 (S.D.
Fla. 1989).
A defendant is not required to file an answer until
court disposes of the motion to dismiss.
F. App’x 873 (11th Cir. 2006).
Lockwood v. Beasley, 211
Because plaintiffs’ motion to
dismiss was filed after their answer, it will be denied as moot.
Accordingly, it is now
ORDERED:
1.
Defendants’ Motion for Final Dismissal with Prejudice, or
in the alternative, for the Entry of an Appropriate Spoliation
Remedy (Doc. #136) is DENIED.
2.
Plaintiffs’ Motion for Summary Judgment (Doc. #104) is
DENIED.
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3.
Defendants’ Motion for Summary Judgment (Doc. #109) is
GRANTED in part and DENIED in part.
to Counts II, III, and IV.
Clerk
is
directed
to
Summary judgment is granted as
The motion is otherwise denied.
terminate
defendant
Mortgage
The
Electronic
Registration Systems, Inc. and enter judgment accordingly.
4.
Plaintiffs’ Motion for Entry of Judgment as a Matter of
Law on Third-Party Plaintiffs’ Amended Counterclaim (Doc. #132) is
DENIED AS MOOT.
DONE AND ORDERED at Fort Myers, Florida, this
March, 2014.
Copies:
Pro se plaintiffs
Counsel of record
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6th
day of
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