Castagnaro v. The Bank of New York Mellon
Filing
15
///ORDER granting 13 Motion to Dismiss for Failure to State a Claim. Clerk is directed to enter judgment and close the case. So Ordered by Judge Joseph A. DiClerico, Jr.(gla)
UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEW HAMPSHIRE
Joseph Castagnaro
v.
Civil No. 13-cv-455-JD
Opinion No. 2014 DNH 008
The Bank of New York Mellon
O R D E R
Joseph Castagnaro brought a petition in state court to
enjoin the foreclosure sale of his home by Bank of New York
Mellon (“BNYM”).
The state court enjoined the foreclosure
proceeding, and BNYM removed the case to this court.
filed an amended complaint.
Castagnaro
BNYM moves to dismiss the amended
complaint, and Castagnaro objects.
Standard of Review
Federal Rule of Civil Procedure 12(b)(6) allows a defendant
to move to dismiss on the ground that the plaintiff’s complaint
fails to state a claim on which relief can be granted.
In
assessing a complaint for purposes of a motion to dismiss, the
court “separate[s] the factual allegations from the conclusory
statements in order to analyze whether the former, if taken as
true, set forth a plausible, not merely conceivable, case for
relief.”
Juarez v. Select Portfolio Servicing, Inc., 708 F.3d
269, 276 (1st Cir. 2013) (internal quotation marks omitted).
“If
the facts alleged in [the complaint] allow the court to draw the
reasonable inference that the defendants are liable for the
misconduct alleged, the claim has facial plausibility.”
Id.
(internal quotation marks omitted).
With its motion to dismiss, BNYM submitted copies of
Castagnaro’s note, the mortgage, and two assignments of the
mortgage.
When the moving party presents matters outside the
pleadings to support a motion to dismiss, the court must either
exclude those matters or convert the motion to one for summary
judgment.
Fed. R. Civ. P. 12(d).
An exception to Rule 12(d)
exists “for documents the authenticity of which [is] not disputed
by the parties; for official public records; for documents
central to the plaintiffs’ claim; or for documents sufficiently
referred to in the complaint.”
Rivera v. Centro Medico de
Turabo, Inc., 575 F.3d 10, 15 (1st Cir. 2009) (internal quotation
marks omitted).
In addition, the court may consider documents
that are susceptible to judicial notice.
Jorge v. Rumsfeld, 404
F.3d 556, 559 (1st Cir. 2005).
With his objection, Castagnaro also filed the note and the
two assignments of the mortgage, as well as a purported copy of a
note with a different endorsement, a notice of the foreclosure
sale, and a “Purported copy of allonge to promissory note.”
The
documents attached to BNYM’s motion to dismiss and Castagnaro’s
objection are central to Castagnaro’s claim against BNYM.
Therefore, the additional documents submitted by the parties may
be considered without converting the motion to one for summary
judgment.
2
Background1
Joseph Castagnaro bought property at 40 Mountain Drive in
Gilford, New Hampshire, with a mortgage and a promissory note
both dated April 24, 2007.
The mortgage states that Mortgage
Electronic Registration Systems, Inc. (“MERS”) is the mortgagee
as nominee for the lender, Regency Mortgage Corporation
(“Regency”).
On December 3, 2010, MERS, acting as nominee for Regency,
assigned the mortgage to BAC Home Loans Servicing, LP (“BAC”).
The assignment was signed by Mark Lamper, who is listed on the
assignment as the “Assistant Secretary” of MERS.
On February 18, 2011, BAC, acting as nominee for Regency,
assigned the mortgage to BNYM.
Mark Lamper also signed the
second assignment, as “Attorney In Fact” for BAC.
With regard to the note, Castagnaro alleges that it “appears
to have three endorsements.”
Compl. ¶ 13.
He claims that the
first endorsement assigns the note from Regency to American
Residential Mortgage (“American Residential”), and the second
endorsement assigns the note from American Residential to
Countrywide Bank, FSB (“Countrywide Bank”).2
He also alleges
that “[t]he third endorsement, which appears on a photocopy of an
1
The background information is taken from the factual
allegations in the amended complaint and the documents submitted
with the motion to dismiss and with the objection.
2
The note with the first endorsement was attached as Exhibit
D to Castagnaro’s objection. The note with the second
endorsement was attached as Exhibit E to the objection.
3
allonge which is not attached to any note, purports to create an
assignment in blank from Countrywide Bank, FSB.”3
Id. at ¶ 16.
With its motion to dismiss, BNYM attached one copy of the note,
which contains the second endorsement and the attached allonge.
See Ex. A to Mot. to Dismiss (document no. 13-2).
At some point, Castagnaro stopped making his monthly
mortgage payments.4
On August 9, 2013, Castagnaro received a
notice of foreclosure sale from BNYM.
The notice was attached to
a letter from Lamper.
The foreclosure sale was scheduled for September 16, 2013.
Castagnaro obtained an order in state court on September 12,
enjoining the foreclosure.
BNYM then removed the case to this
court, and Castagnaro filed an amended complaint.
Discussion
In his amended complaint, Castagnaro alleges that BNYM does
not have standing to foreclose because it “is not the lawful
holder of the note as there are inconsistencies between the
assignments of the mortgage and assignments of the original
3
The allonge was attached as Exhibit F to Castagnaro’s
objection. Although Castagnaro refers to the allonge as
containing one endorsement from Countrywide Bank in blank, it
appears to have two endorsements. The first appears to be from
Countrywide Bank to Countrywide Home Loans, Inc. (“Countrywide
Loans”), and the second from Countrywide Loans in blank.
4
The complaint does not allege when Castagnaro stopped
making his payments but states that “he has been unable to pay
his mortgage for a considerable period of time . . . .” Compl. ¶
6.
4
note.”
Compl. ¶ 12.
Castagnaro asks for “a permanent injunction
enjoining [BNYM] from foreclosing on [his] property unless a
proper determination of [BNYM’s] status as a holder of the note
and of its right to foreclose is established.”
Id. at p.5.
BNYM
moves to dismiss, arguing that Castagnaro does not have standing
to challenge the assignments of the mortgage or the note, that it
holds the original note, and that it does not need to prove that
it holds the original note in order to foreclose.
A.
Mortgage
Castagnaro alleges that the same individual who executed the
assignment of the mortgage from MERS to BAC on behalf of MERS,
Lamper, also executed the assignment of the mortgage from BAC to
BNYM on behalf of BAC.
Castagnaro also alleges that Lamper
currently represents BNYM, because Lamper sent him the notice of
foreclosure.
Castagnaro alleges that Lamper’s representation of
MERS, BAC, and BNYM “suggest[s] a conflict of interest.”
¶ 24.
Compl.
BNYM argues that Lamper’s alleged conflict of interest
during the assignments of the mortgage does not give Castagnaro,
a mortgagor, standing to assert that the assignments are invalid.
Even if Lamper had a conflict of interest at the time of the
assignments, such a conflict does not give Castagnaro standing to
challenge the assignments.
“New Hampshire law recognizes the
general rule that a debtor cannot interpose defects or objections
[to an assignment] which merely render the assignment voidable at
the election of the assignor or those standing in his shoes.
5
And
it has long been recognized that a conflict of the nature alleged
here-i.e., the signatory’s employment by both the assignor and
assignee-at most makes an assignment voidable by the assignor.”
Galvin v. EMC Mortg. Corp., 2013 WL 1386614, at *9 (D.N.H. Apr.
4, 2013) (internal quotation marks and citation omitted).
Accordingly, Castagnaro does not have standing to challenge the
validity of the assignments of the mortgage.
B.
Note
Castagnaro alleges that there are multiple versions of the
promissory note, as well as an allonge which may or may not be
attached to the note.
He alleges, therefore, that if BNYM
“cannot produce the original, ‘blue inked’ mortgage note with an
attached allonge endorsed in blank, then it is not a holder and
may not foreclose.”
Compl. ¶ 27.
BNYM argues that because it
holds the mortgage, it does not need to hold the note in order to
foreclose.
It further argues that it is in possession of the
original note with the attached allonge, and that Castagnaro does
not have standing to challenge the assignments of the note.
Cases from this district have recently addressed the
argument that a party cannot foreclose on a property unless it
holds both the mortgage and the note.
For example, in Galvin,
the court discussed a series of recent cases from the New
Hampshire Superior Court which have “lent credence to [the]
argument . . . that a foreclosing entity must acquire ownership
of the note before commencing foreclosure proceedings.”
6
2013 WL
1386614, at *7.
The court noted, however, that “the intention of
the parties to the transaction can override the common law
principle that the debt and mortgage are inseparable.”
(internal quotation marks and citation omitted).
Id. at 8
The court
concluded that it “must consider the intention of the parties . .
. when the original debt and mortgage were formed to determine
whether a mortgage is alienable from the associated promissory
note.”
Id. (internal quotation marks and citation omitted); see
also Worrall v. Fed. Nat. Mortg. Ass’n, 2013 WL 6095119, at *4
(D.N.H. Nov. 20, 2013).
Here, the language in the mortgage shows that the parties
intended that the mortgage would not follow the note.
As in
Galvin, the “note and mortgage were held by different entities
from the very beginning,” Galvin, 2013 WL 1386614, at *8,: the
note by Regency and the mortgage by MERS as nominee.
The
mortgage defines MERS as “a separate corporation” from Regency.
Mortg. at 1 (document no. 13-3).
The mortgage also states that
MERS and its successors or assignees have the power to “exercise
any or all of [the interests granted by Castagnaro], including,
but not limited to, the right to foreclose and sell the
property.”
Id. at 3.
Therefore, the holder of the mortgage can
foreclose without also holding the note.
Because, as discussed above, BNYM holds the mortgage by
assignment, it does not need to show that it holds the note in
7
order to foreclose.5
See Worrall, 2013 WL 6095119, at *4.
Accordingly, BNYM’s motion to dismiss is granted.
Conclusion
For the foregoing reasons, the defendant’s motion to dismiss
the complaint (document no. 7) is granted.
The clerk of court is
directed to enter judgment accordingly and close the case.
SO ORDERED.
____________________________
Joseph A. DiClerico, Jr.
United States District Judge
January 21,
cc:
2014
Thomas J. Pappas, Esq.
Peter S. Wright, Jr., Esq.
5
Because BNYM does not need to have possession of the note
to foreclose, the court does not address BNYM’s contentions that
Castagnaro does not have standing to challenge the assignments of
the note and that it has sufficiently demonstrated that it holds
the original note.
8
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