Diaz v. Bank of America, N.A.
Filing
51
ORDER granting 43 --motion to dismiss; directing the clerk to TERMINATE any pending motion and to CLOSE the case. Signed by Judge Steven D. Merryday on 7/24/2018. (BK)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
WILSON A. DIAZ,
Plaintiff,
v.
CASE NO. 8:17-cv-2537-T-23MAP
BANK OF AMERICA, N.A.,
Defendant.
____________________________________/
ORDER
A decade ago, the Treasury Department introduced the Home Affordable
Modification Program, which allegedly requires a participating bank to use
“reasonable efforts” to modify the mortgage of a person in default or reasonably
likely to default.1 After an eligible mortgagor applies for a modification, the program
requires several “trial payments” before the bank approves the modification.
THE PROCEDURAL HISTORY
In June 2017, Wilson Diaz and 118 other plaintiffs sued Bank of America in a
single action.2 Case no. 8:17-cv-1534-RAL (M.D. Fla. June 27, 2017). The 292-page
1
Bank of America disputes that a “reasonably foreseeable” likelihood of default qualifies a
mortgagor for a modification and contends that a modification requires either delinquency or an
“imminent default.”
2
In October 2016, several dozen plaintiffs (but not Diaz) sued Bank of America in a single
action in the Circuit Court for Hillsborough County, and the bank invoked diversity jurisdiction and
removed the action. Case no. 8:16-cv-3384-SCB (M.D. Fla. Dec. 12, 2016). Moving to dismiss the
action, Bank of America argued misjoinder of the plaintiffs’ claims, failure to plead fraud with
particularity, failure to state a claim, expiration of the four-year limitation, and the absence of a
private right to sue a bank for violating the requirements of the Home Affordable Modification
(continued...)
“shotgun” complaint, which copied swaths from a qui tam complaint in the Eastern
District of New York,3 alleged fraud and the violation of Florida’s Deceptive and
Unfair Trade Practices Act. In the part of the complaint specific to him, Diaz alleged
that in May 2011 two Bank of America employees, “Marcia and John,” told Diaz
that a modification requires a default. (Doc. 1 at ¶ 245 in case no. 17-cv-1534) Bank
of America allegedly omitted to mention that a reasonably foreseeable likelihood of
default might qualify a mortgagor for a modification. Moving to dismiss the
complaint, Bank of America argued misjoinder of the plaintiffs’ claims, failure to
plead fraud with particularity, failure to state a claim, expiration of the four-year
limitation, and the absence of a private right to sue a bank for violating the
requirements of the Home Affordable Modification Program.
Before resolving the motion to dismiss, the presiding judge observed that the
complaint, which alleged neither each plaintiff’s citizenship nor the amount in
controversy between each plaintiff and Bank of America, failed to invoke diversity
jurisdiction. (Doc. 15 in case no. 17-cv-1534) Ordered to amend the complaint to
invoke diversity jurisdiction, Diaz and the other plaintiffs submitted a 403-page
complaint. (Doc. 16 in case no. 17-cv-1534) For the second time, Bank of America
moved to dismiss Diaz’s complaint and repeated the arguments from the earlier
2
(...continued)
Program. Before the presiding judge resolved the motion to dismiss, the plaintiffs voluntarily
dismissed the action.
3
United States ex rel. Gregory Mackler v. Bank of America, N.A., Case no. 1:11-cv-3270-SLT
(E.D.N.Y. July 7, 2011).
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motion. The presiding judge in that action found misjoinder, severed the plaintiffs’
claims, and ordered the plaintiffs to sue separately.
The plaintiffs heeded the presiding judge’s command. Between October 30,
2017, and November 3, 2017, more than a hundred plaintiffs sued Bank of America
in the Middle District of Florida in eighty actions and alleged fraud under Florida
common law. Excepting names, dates, addresses, and the like, the complaints are
identical. The actions are distributed among eight district judges in the Middle
District of Florida. In two actions, the presiding judges found the claims barred by
the four-year limitation.4
In Diaz’s third complaint (but the first complaint in this case), Diaz alleged
(Doc. 1) four misrepresentations by Bank of America. First, Bank of America
allegedly failed to mention that a reasonably foreseeable danger of default might
qualify a mortgagor for a modification; second, Bank of America stated that the
mortgagor failed to provide Bank of America with the documents necessary to
complete the modification; third, Bank of America orally notified the mortgagor that
the bank approved the requested modification; and fourth, Bank of America charged
a “fraudulent” inspection fee. For the third time, Bank of America moved (Doc. 12)
4
Torres v. Bank of America, N.A., 2018 WL 573406 (M.D. Fla. Jan. 26, 2018) (Lazzara, J.),
appeal filed (Case no. 18-10698); Paredes v. Bank of America, N.A., 2018 WL 1071922 (M.D. Fla. Feb.
27, 2018) (Chappell, J), appeal filed (Case no. 18-11337). Additionally, a district judge in California
found an identical claim barred by a limitation. Mandiosa v. Bank of America, N.A., 2:17-cv-8153 (C.D.
Cal. Mar. 15, 2018) (Walter, J.).
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to dismiss the complaint. Diaz has not moved at any moment in this action for leave
to amend the complaint.
A February 1, 2018 order (Doc. 15) dismisses each fraud claim except the
claim that Bank of America omitted to mention that a reasonably foreseeable
likelihood of default might qualify a mortgagor for a modification. In this claim,
Diaz alleges that Bank of America instructed him on May 17, 2011, to “refrain from
making his regular mortgage payments” in order to qualify for a modification.
(Doc. 1 at ¶ 37) Bank of America allegedly omitted to mention that a reasonably
foreseeable likelihood of default can qualify a mortgagor for a modification. (Doc. 1
at ¶ 37) Unaware of his option not to default, Diaz allegedly “refrained from” paying
his mortgage and, as a result, “fell into default status.” (Doc. 1 at ¶ 39) As a “direct
result” of Bank of America’s alleged omission, Diaz allegedly suffered the loss of
both his home and the equity in his home. (Doc. 1 at ¶ 39)
Moving (Doc. 32) for summary judgment, Bank of America observed that
Diaz defaulted in November 2008, two and a half years before Bank of America’s
alleged omission. In response to the motion for summary judgment, Diaz tacitly
conceded that he defaulted before the alleged misrepresentation, affirmed that Bank
of America advised him not to cure the default, and argued that he suffered a
foreclosure after relying on Bank of America’s advice. Objecting to Diaz’s
maintaining two putatively irreconcilable sets of factual assertions (that is, “I was not
in default” and “I was in default”), Bank of America replied (Doc. 40) that Diaz
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cannot in effect amend his complaint by responding to a motion for summary
judgment with facts that conflict with the allegations in the complaint.
Identifying the discrepancy between the allegations in the complaint and the
argument in the response, a June 8, 2018 order (Doc. 41) permits Diaz a final
opportunity to amend the complaint to clarify the facts that substantiate the fraud
claim.
THE OPERATIVE COMPLAINT
In the third amended complaint (Doc. 42), Diaz tacitly concedes that he
defaulted before the misrepresentation. For the fourth time, Bank of America moves
(Doc. 43) to dismiss the complaint. This order will not repeat or resolve all of the
arguments in the motion to dismiss, but several arguments merit discussion.
First, Bank of America argues persuasively that Rooker-Feldman bars the fraud
claim.5 Responding that Bank of America “gross[ly] misappl[ies]” Rooker-Feldman,
the plaintiff argues that the fraud claim “do[es] not require a determination that the
state court erroneously entered the foreclosure judgment.” (Doc. 48 at 4) According
to the plaintiff, the fraud claim amounts not to an indirect attack on the foreclosure
judgment but rather a claim that Bank of America’s “fraudulent actions resulted in a
5
Also, Bank of America contends that the four-year limitation bars the claim. The plaintiff
incorrectly states that “[t]his court previously ruled that [] Plaintiff’s claims are not barred by the
applicable statute of limitations.” (Doc. 48 at 4) On the contrary, the February 1 order (which
observes that the circumstances of this action suggest tardiness in suing) holds only that the
expiration of the limitation is not apparent from the face of the complaint.
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wrongful denial of a HAMP modification.”6 The plaintiff concludes, “It is because
of this denial that Plaintiff faced foreclosure.”
The weight of authority strongly supports Bank of America’s argument that
Rooker-Feldman bars the fraud claim. In Figueroa v. Merscorp, Inc., 766 F.Supp.2d 1305
(S.D. Fla. 2011) (Altonaga, J.), aff’d, 477 Fed.Appx. 558 (11th Cir. May 11, 2012), a
bank sued in state court to foreclose a mortgagor’s property, and the state court
entered judgment for the bank and ordered a foreclosure sale. Moving in state court
to vacate the judgment, the mortgagor argued that the bank secured the foreclosure
judgment through fraud. After the state court denied the motion, the mortgagor sued
the bank in federal court under RICO and “[sought] damages arising out of the loss
of his home.” After thoroughly surveying the authority, Judge Altonaga found the
claim “inextricably intertwined” with the foreclosure judgment. 766 F.Supp.2d
at 1315–25. Affirming the dismissal under Rooker-Feldman, the Eleventh Circuit
concluded, “The state court judgment formed the basis of or was intertwined with the
injury complained of in Figueroa’s instant complaint: that [Figureroa] lost his one
half-interest in his property and home because of an improper foreclosure
proceeding.” 477 Fed.Appx. at 560.
Similarly, Nivia v. Nation Star Mortg., LLC, 620 Fed.Appx. 822 (11th Cir.
Aug. 19, 2015), strongly suggests a bar by Rooker-Feldman. In Nivia, a bank won a
6
As explained in the February 1, 2018 order, HAMP confers no private right of action on a
borrower denied (rightfully or wrongfully) a mortgage modification. Miller v. Chase Home Fin., LLC,
677 F.3d 1113 (11th Cir. 2012).
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foreclosure judgment in December 2011. Nine months after the judgment and a
month before the foreclosure sale, the mortgagor requested a HAMP modification,
which the bank denied. After the sale, the mortgagor sued in federal court for
violations of HAMP and Florida’s Deceptive and Unfair Trade Practices Act.
Finding the HAMP claim not barred by Rooker-Feldman, Nivia explains, “The
homeowners alleged only that the lenders failed to respond adequately to their
September 2012 request for a loan modification, which could not have been at issue
in the foreclosure proceeding that concluded in December 2011.”7 620 Fed.Appx.
at 824. In contrast, Nivia finds the FDUTPA claim barred by Rooker-Feldman: “We
construe the homeowners’ allegation to extend beyond the lenders’ denial of the
September 2012 loan modification request and to include conduct before the
foreclosure judgment. In effect, the homeowners’ claim amounts to an equitable
defense to foreclosure that [the homeowners] failed to raise before the state court.”
620 Fed.Appx. at 825. Because success on the FDUTPA claim suggested error in the
foreclosure judgment, Nivia finds the FDUTPA claim barred by Rooker-Feldman.
Little or nothing appears to distinguish the fraud claim in this action from the
RICO claim in Figueroa or the FDUTPA claim in Nivia. The plaintiff alleges that
Bank of America misrepresented the eligibility requirement for a modification and
that this purported misrepresentation was “specifically designed by BOA to set
7
Although finding the HAMP claim not barred by Rooker-Feldman, Nivia affirms the
dismissal of the HAMP claim because HAMP confers no private right of action. 620 Fed.Appx.
at 825 (citing Miller v. Chase Home Fin., LLC, 677 F.3d 1113 (11th Cir. 2012)).
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Plaintiff up for foreclosure.” (Doc. 42 at ¶ 42) The majority of the complaint
chronicles a scheme in which Bank of America allegedly tricked the plaintiff into not
paying the mortgage so that Bank of America could foreclose.8 The plaintiff
complains exclusively about a misrepresentation that preceded — and ultimately
caused — the foreclosure. And the plaintiff alleges principally that the
misrepresentation resulted in the “loss of home equity,” a loss occasioned by the
state-court action, which foreclosed the plaintiff’s right of redemption and resulted in
a deficiency judgment that included not just principal and interest owing but also the
inspection fees owing under the lending agreement. Several times in the response,
the plaintiff identifies the foreclosure as the injury over which the plaintiff sues.
(Doc. 48 at 2, 3–4, 10–11) In sum, the fraud claim in this action appears a circuitous
but unmistakable attempt to impugn the validity of the foreclosure judgment.9
Second, even if not barred by Rooker-Feldman, the fraud claim warrants
dismissal for failure to state a claim. As explained elsewhere in this order, the
8
As Bank of America correctly recognizes in the motion (Doc. 44) in limine, the remainder
of the complaint appears copied from complaints and affidavits in unrelated civil actions.
9
If not barred by Rooker-Feldman, the fraud claim is barred by res judicata (which some
decisions occasionally describe in this circumstance as “merger-and-bar”). Under Florida law, a
compulsory counterclaim includes a counterclaim “logically related” to the claim. Neil v. South Fla.
Auto Painters, Inc., 397 So. 2d 1160 (Fla. 3d DCA 1981). The Florida decisions construe this
“logical-relation” test broadly. Montgomery Ward Dev. Corp. v. Juster, 932 F.2d 1378, 1381 & n.1 (11th
Cir. 1991). The fraud claim in this action relates logically to Bank of America’s claims in the
foreclosure action: Bank of America alleged in state court that the plaintiff defaulted on the
mortgage, and the plaintiff alleges in this action that the default resulted from Bank of America’s
misrepresentation of the eligibility requirement for a modification. Because the plaintiff must have
counterclaimed but failed to counterclaim in state court, res judicata prevents the plaintiff’s litigating
the claim now. (Viewed somewhat differently, the fraud claim constitutes an affirmative and
equitable defense that the plaintiff waived by failing to assert the defense in the state-court
foreclosure action. Whatever the label, the same result obtains.)
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October 30, 2017 complaint stated a claim based on Bank of America’s alleged
misrepresentation of the eligibility requirement for a modification. The plaintiff
allegedly defaulted after Bank of America both instructed him to default and stated
that a modification requires a default. Bank of America moved for summary
judgment and observed that the plaintiff defaulted in November 2008, two and a half
years before the alleged misrepresentation. Of course, a mortgagor cannot
reasonably rely in 2008 on a 2011 misrepresentation.
Perhaps recognizing the merit in Bank of America’s motion for summary
judgment, the plaintiff asserted a new and different fraud theory in response to the
motion for summary judgment. In the most recent complaint (Doc. 42), the plaintiff
persists in alleging that Bank of America omitted to mention that a “reasonably
foreseeable/imminent” default might qualify a mortgagor for a modification. Rather
than assert that the misrepresentation induced the default, the plaintiff tacitly
concedes a prior default and alleges that the misrepresentation caused the plaintiff to
“remain[] in default.” (Doc. 42 at 11) As Bank of America correctly argues (Doc. 43
at 18–19), the bank’s omitting to mention a circumstance not pertinent to the
defaulted mortgagor is immaterial.
In the penultimate paragraph of the response to the motion to dismiss, the
plaintiff requests leave to submit a sixth amended complaint. (Doc. 48 at 11) The
request warrants denial for at least three reasons. First, Rule 7(b), Federal Rules of
Civil Procedure, requires a party to move for relief, and a request buried in a response
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is not a motion. Long v. Satz, 181 F.3d 1275, 1279–80 (11th Cir. 1999). The plaintiff
submits no proposed amendment and fails to explain what the prospective
amendment might accomplish. See Long, 181 F.3d at 1280 (affirming the denial of
leave to amend where the plaintiff failed to explain the substance of a prospective
amendment). Second, a fourth amended complaint unduly prejudices Bank of
America. See Foman v. Davis, 371 U.S. 178, 182 (1962). Four complaints and three
motions to dismiss in two years of litigation are enough. Third, the plaintiff’s
conduct in this litigation reveals a “dilatory” intent. See Foman, 371 U.S. at 182. As
described in this order and in the June 8 order, the plaintiff has repeatedly and
tactically attempted to prolong this litigation.
CONCLUSION
Bank of America allegedly told the plaintiff that a mortgage modification
requires a default but omitted to mention that a “reasonably foreseeable/imminent”
default might qualify a mortgagor for a modification. The complaint alleges that
Bank of America intentionally misrepresented the requirement in an effort to trick the
plaintiff into a foreclosure, which Bank of America successfully secured after suing in
state court. Because the fraud claim is “inextricably intertwined” with the state-court
foreclosure, Rooker-Feldman bars the claim. In any event, the fraud claim fails to state
a claim. The bank’s omitting to mention a circumstance not pertinent to the
defaulted mortgagor (that is, that a “reasonably foreseeable/imminent” default might
qualify for a modification) is immaterial. The motion (Doc. 43) to dismiss is
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GRANTED, and the action is DISMISSED.10 The clerk is directed to terminate the
pending motions and to close the case.
ORDERED in Tampa, Florida, on July 24, 2018.
10
Because of the disposition of the Rooker-Feldman argument (a subject-matter jurisdiction
defect), the dismissal is without prejudice.
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