Garcia v. Bank of America, N.A.
Filing
46
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 8/8/2018. (BK)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
NORBERTO GARCIA,
Plaintiff,
v.
CASE NO. 8:17-cv-2602-T-23AAS
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 December 2016, Norberto Garcia and several dozen other plaintiffs sued
Bank of America in the Circuit Court for Hillsborough County, and Bank of America
removed the action and invoked diversity jurisdiction. Case no. 8:17-cv-238-VMC
(M.D. Fla. Jan. 1, 2017). 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
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.”
to sue a bank for violating the requirements of the Home Affordable Modification
Program. Garcia and the other plaintiffs voluntarily dismissed the action before the
presiding judge decided the motion.
Four months after the dismissal, Garcia and more than a hundred other
plaintiffs sued Bank of America again in a single action. Case no. 8:17-cv-1534-RAL
(M.D. Fla. June 27, 2017). The 292-page “shotgun” complaint, which copied swaths
from a qui tam complaint in the Eastern District of New York,2 alleged fraud and the
violation of Florida’s Deceptive and Unfair Trade Practices Act. In the part of the
complaint specific to him, Garcia alleged that in June 2011 a Bank of America
employee, Veronica Diaz, told Garcia that a modification requires a default. (Doc. 1
at ¶ 938 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. Bank of America moved to dismiss and repeated the arguments from
the previous case.
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, Garcia and the other plaintiffs submitted a 403-page
complaint. (Doc. 16 in case no. 17-cv-1534) For the third time, Bank of America
2
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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moved to dismiss the complaint and repeated the arguments from the earlier motions.
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.3
In Garcia’s fourth complaint (but the first complaint in this case), Garcia
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 fourth time, Bank of America moved (Doc. 9)
3
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. Garcia has not moved at any moment in this action for
leave to amend the complaint.
A February 1, 2018 order (Doc. 12) 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,
Garcia alleges that Bank of America instructed him on June 10, 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, Garcia 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, Garcia allegedly suffered the
loss of both his home and the equity in his home. (Doc. 1 at ¶ 39)
Moving (Doc. 30) for summary judgment, Bank of America observed that
Garcia defaulted in November 2007, more than three years before Bank of America’s
alleged omission. In response to the motion for summary judgment, Garcia tacitly
conceded defaulting 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 Garcia’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. 37) that Garcia
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cannot in effect amend the 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 July 13, 2018 order (Doc. 39) permits Garcia a final
opportunity to amend the complaint to clarify the facts that substantiate the fraud
claim.
THE OPERATIVE COMPLAINT
In the fourth amended complaint (Doc. 42), Garcia tacitly concedes that he
defaulted before the misrepresentation. For the fifth time, Bank of America moves
(Doc. 43) to dismiss the complaint.4 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. 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
4
Local Rule 3.01(b) required Garcia to respond to Bank of America’s motion to dismiss no
later than August 7, 2018. After the expiration of the time within which to respond, the plaintiff fails
to respond to Bank of America’s motion to dismiss and fails to request an extension of the time
within which to respond.
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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
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.”5 620 Fed.Appx.
at 824. In contrast, Nivia finds the FDUTPA claim barred by Rooker-Feldman: “We
5
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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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.
Nothing (or, at least, nothing consequential) 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 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.6 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. In sum, the fraud claim in this
6
As Bank of America correctly recognizes in the motion (Doc. 38) in limine, the remainder
of the complaint appears copied from complaints and affidavits in unrelated civil actions.
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action appears a circuitous but unmistakable attempt to impugn the validity of the
foreclosure judgment.7
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 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 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 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
7
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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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 17–19), the bank’s omitting to mention a circumstance not pertinent to the
defaulted mortgagor is immaterial.
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
GRANTED, and the action is DISMISSED under Rooker-Feldman for lack of
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subject-matter jurisdiction. The clerk is directed to terminate the pending motions
and to close the case.
ORDERED in Tampa, Florida, on August 8, 2018.
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