Peralta et al v. Bank of America, N.A.
Filing
56
ORDER granting 44 --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
GABINO C. PERALTA
and ARELY M. RAMIREZ,
Plaintiffs,
v.
CASE NO. 8:17-cv-2580-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, Gabino Peralta and Arely Ramirez and 117 other plaintiffs sued
Bank of America in a single action.2 Case no. 8:17-cv-1534-RAL (M.D. Fla. June 27,
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 the Peralta and Ramirez) 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 Program. Before the presiding judge resolved the motion to dismiss, the plaintiffs
voluntarily dismissed the action.
2017). The 292-page “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 them, Peralta and Ramirez alleged that in January 2011 a Bank of
America employee, “Angela,” told them that a modification requires a default.
(Doc. 1 at ¶ 521 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, the plaintiffs submitted a 403-page complaint. (Doc. 16
in case no. 17-cv-1534) For the second time, Bank of America moved to dismiss the
complaint and repeated the arguments from the earlier motion. The presiding judge
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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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 Peralta and Ramirez’s third complaint (but the first complaint in this case),
Peralta and Ramirez 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 mortgagors failed to provide Bank of America with the
documents necessary to complete the modification; third, Bank of America orally
notified the mortgagors that the bank approved the requested modification; and
fourth, Bank of America charged a “fraudulent” inspection fee. For the third time,
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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Bank of America moved to dismiss the complaint. Peralta and Ramirez have not
moved at any moment in this action for leave to amend the complaint.
A February 1, 2018 order (Doc. 17) 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,
Peralta and Ramirez allege that Bank of America instructed them on January 5,
2011, to “refrain from making their 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 their option not to default, Peralta and
Ramirez allegedly “refrained from” paying their mortgage and, as a result, “fell into
default status.” (Doc. 1 at ¶ 39) As a “direct result” of Bank of America’s alleged
omission, Peralta and Ramirez allegedly suffered the loss of both their home and the
equity in their home. (Doc. 1 at ¶ 39)
Moving (Doc. 30) for summary judgment, Bank of America observed that the
plaintiffs defaulted in October 2007, more than three years before Bank of America’s
alleged omission. In response to the motion for summary judgment, the Mosqueas
tacitly conceded defaulting before the alleged misrepresentation, affirmed that Bank
of America advised them not to cure the default, and argued that they suffered a
foreclosure after relying on Bank of America’s advice. Bank of America objected to
the plaintiffs’ maintaining two putatively irreconcilable sets of factual assertions (that
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is, “I was not in default” and “I was in default”) and argued that the plaintiffs cannot
in effect amend their 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 May 18, 2018 order (Doc. 38) permits the plaintiffs a
final opportunity to amend the complaint to clarify the facts that substantiate the
fraud claim. Although nothing in the May 18 order permits the plaintiffs to assert a
new claim, the plaintiffs attempted (Doc. 39) to allege a new claim under Florida’s
Deceptive and Unfair Trade Practices Act. Because the plaintiffs never received
leave to assert a FDUTPA claim, a June 5, 2018 order (Doc. 41) strikes the third
amended complaint and permits the plaintiffs a final chance to clarify the fraud
claim.
THE OPERATIVE COMPLAINT
In the fourth amended complaint (Doc. 42), the plaintiffs tacitly concede
defaulting before the misrepresentation. For the fourth time, Bank of America moves
(Doc. 44) 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,
5
Also, Bank of America contends that the four-year limitation bars the claim. The plaintiffs
incorrectly state that “[t]his court previously ruled that [] Plaintiff’s claims are not barred by the
applicable statute of limitations.” (Doc. 52 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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the plaintiffs argue that the fraud claim “do[es] not require a determination that the
state court erroneously entered the foreclosure judgment.” (Doc. 52 at 4) According
to the plaintiffs, 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
wrongful denial of a HAMP modification.”6 The plaintiffs conclude, “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
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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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
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.
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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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 plaintiffs allege that
Bank of America misrepresented the eligibility requirement for a modification and
that this purported misrepresentation was “specifically designed by BOA to set
Plaintiffs up for foreclosure.” (Doc. 42 at ¶ 42) The majority of the complaint
chronicles a scheme in which Bank of America allegedly tricked the plaintiffs into not
paying the mortgage so that Bank of America could foreclose.8 The plaintiffs
complain exclusively about a misrepresentation that preceded — and ultimately
caused — the foreclosure. And the plaintiffs allege principally that the
misrepresentation resulted in the “loss of home equity,” a loss occasioned by the
state-court action, which foreclosed the plaintiffs’ 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 plaintiffs identify the foreclosure as the injury over which the plaintiffs sue.
(Doc. 52 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
8
As Bank of America correctly recognizes in the motion (Doc. 48) 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 plaintiffs defaulted on the
(continued...)
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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
November 1, 2017 complaint stated a claim based on Bank of America’s alleged
misrepresentation of the eligibility requirement for a modification. The plaintiffs
allegedly defaulted after Bank of America both instructed them to default and stated
that a modification requires a default. Bank of America moved for summary
judgment and observed that the plaintiffs defaulted in October 2007, more than three
years before the alleged misrepresentation. Of course, a mortgagor cannot
reasonably rely in 2007 on a 2011 misrepresentation.
Perhaps recognizing the merit in Bank of America’s motion for summary
judgment, the plaintiffs asserted a new and different fraud theory in response to the
motion for summary judgment. In the most recent complaint (Doc. 42), the plaintiffs
persist 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 plaintiffs tacitly
concede a prior default and allege that the misrepresentation caused the plaintiffs to
“remain[] in default.” (Doc. 42 at 11) As Bank of America correctly argues (Doc. 44
(...continued)
mortgage, and the plaintiffs allege in this action that the default resulted from Bank of America’s
misrepresentation of the eligibility requirement for a modification. Because the plaintiffs must have
counterclaimed but failed to counterclaim in state court, res judicata prevents the plaintiffs’ litigating
the claim now. (Viewed somewhat differently, the fraud claim constitutes an affirmative and
equitable defense that the plaintiffs waived by failing to assert the defense in the state-court
foreclosure action. Whatever the label, the same result obtains.)
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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
plaintiffs request leave to submit a fifth amended complaint. (Doc. 52 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
is not a motion. Long v. Satz, 181 F.3d 1275, 1279–80 (11th Cir. 1999). The plaintiffs
submit no proposed amendment and fail 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 fifth amended complaint unduly prejudices Bank of America. See Foman v.
Davis, 371 U.S. 178, 182 (1962). Five complaints and four motions to dismiss in two
years of litigation are enough. Third, the plaintiffs’ conduct in this litigation reveals a
“dilatory” intent. See Foman, 371 U.S. at 182. As described in this order and in the
May 18 order, the plaintiffs have repeatedly and tactically attempted to prolong this
litigation.
CONCLUSION
Bank of America allegedly told the plaintiffs 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
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plaintiffs 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. 44) to dismiss is
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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