Khawaja et al v. The Bank of New York Mellon

Filing 10

///ORDER granting 5 Motion to Dismiss for Failure to State a Claim. So Ordered by Judge Paul J. Barbadoro.(jna)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE

Azmat Khawaja, et al.
v.

Case No. 14-cv-00117-PB
Opinion No. 2014 DNH 195

The Bank of New York Mellon
MEMORANDUM AND ORDER
Bank of New York Mellon (“BNY Mellon”) foreclosed on the
property of Azmat and Dawn Khawaja.

After BNY Mellon sought to

evict the Khawajas from the property, they brought a plea of
title action against BNY Mellon in state court.

BNY Mellon

removed the action to this Court and now moves to dismiss the
Khawajas’ complaint under Federal Rule of Civil Procedure
12(b)(6).

For the reasons that follow, I grant BNY Mellon’s

motion and dismiss the Khawajas’ complaint.

I.

BACKGROUND

I draw the following factual background from the
plaintiffs’ complaint and its attached exhibits (Doc. No. 1-1).
See In re Lane, 937 F.2d 694, 696 (1st Cir. 1991) (exhibits
attached to a complaint are “properly considered part of the

pleadings for rule 12(b)(6) purposes”).1
In March 2007, the Khawajas granted a mortgage on their
property to Mortgage Electronic Registration Systems, Inc., or
“MERS,” acting as nominee for First Horizon Home Loan
Corporation.

The mortgage was later assigned to BNY Mellon in

its capacity as trustee of a securitized mortgage trust.
On February 10, 2011, BNY Mellon completed a foreclosure
sale of the Khawajas’ property.

On April 19, 2011, the Khawajas

brought an action for both wrongful foreclosure and plea of
title against BNY Mellon in the Hillsborough County Superior
Court.

Because BNY Mellon failed to appear before the court to

defend against the Khawajas’ action, the court issued an order
on November 4, 2011 invalidating the foreclosure sale (the “2011
Order”).

In that order, the court “declare[d] the foreclosure

sale of the [Khawajas’] property void” and ordered the Khawajas

1

In an exhibit attached to their complaint, the plaintiffs also
extensively discuss a foreclosure deed filed with the
Hillsborough County Registry of Deeds. See Doc. No. 1–1 at 10.
Although the plaintiffs did not attach the foreclosure deed to
their complaint, the defendants have produced a copy of the deed
with their objection. See Doc. No. 5–8. Because the plaintiffs
relied on the foreclosure deed in their complaint and the deed’s
authenticity is not in dispute, I may consider it in deciding
this motion to dismiss. See Beddall v. State St. Bank & Trust
Co., 137 F.3d 12, 16-17 (1st Cir. 1998) (where a document of
undisputed authenticity was “discusse[d] . . . at considerable
length” in complaint but not attached, document “effectively
merge[d] into the pleadings and the trial court [could] review
it in deciding a motion to dismiss”).
2

to “record a copy” of the order with the Registry of Deeds “to
give notice to any potential purchasers” of the property.

Doc.

No. 1–1 at 14-15.
In October and November 2012, BNY Mellon published three
notices in a Manchester, N.H. newspaper announcing that it
planned to conduct a second foreclosure sale of the Khawajas’
property.

On October 21, 2012, BNY Mellon delivered a copy of

the foreclosure notice directly to the Khawajas.

In response,

the Khawajas sent a letter to counsel for BNY Mellon in November
2011 objecting to the planned sale and arguing that the 2011
Order precluded BNY Mellon from foreclosing on the property.
See id. at 20–21.

The Khawajas, however, did not seek to enjoin

the sale before it occurred.
After multiple continuances, BNY Mellon completed the
second foreclosure sale on April 2, 2012 (the “Second Sale”).
The foreclosure deed resulting from the Second Sale was executed
in November 2012 and recorded in April 2013.

In August 2013,

BNY Mellon brought a possessory action against the Khawajas in
Manchester District Court.
The Khawajas moved to dismiss the possessory action,
arguing that the 2011 Order, which invalidated the first
foreclosure, also precluded BNY Mellon from conducting the
Second Sale.

See id. at 10-12.

Because their argument brought
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title to the property into question, however, New Hampshire law
required the Khawajas to litigate their claim in a plea of title
action before the superior court rather than in the pending
possessory action before the district court.

See N.H. Rev.

Stat. Ann. §§ 540:16 – 540:18.
Thus, on September 25, 2013, the Khawajas brought a plea of
title action against BNY Mellon in the Hillsborough County
Superior Court.

Doc. No. 1-1 at 2-5.

removed the action to this Court.

In March 2014, BNY Mellon

Doc. No. 1.

BNY Mellon now

moves to dismiss the complaint for failure to state a claim upon
which relief can be granted.

II.

Doc. No. 5.

STANDARD OF REVIEW

To survive a Rule 12(b)(6) motion, a plaintiff must make
factual allegations sufficient to “state a claim to relief that
is plausible on its face.”

Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)).

A claim is facially plausible when it pleads “factual

content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.

The

plausibility standard is not akin to a ‘probability
requirement,’ but it asks for more than a sheer possibility that
a defendant has acted unlawfully.”
4

Id. (citations omitted).

In deciding a motion to dismiss, I must “accept as true the
well-pleaded factual allegations of the complaint, draw all
reasonable inferences therefrom in the plaintiff’s favor and
determine whether the complaint, so read, sets forth facts
sufficient to justify recovery on any cognizable theory.”
Martin v. Applied Cellular Tech., Inc., 284 F.3d 1, 6 (1st Cir.
2002).

In addition to the facts set forth in the complaint, I

consider “documents incorporated by reference into the
complaint, matters of public record, and facts susceptible to
judicial notice.”

Haley v. City of Boston, 657 F.3d 39, 46 (1st

Cir. 2011) (citing In re Colonial Mortg. Bankers Corp., 324 F.3d
12, 15 (1st Cir. 2003)).

III. ANALYSIS
The Khawajas seek to both invalidate the Second Sale and
enjoin BNY Mellon from bringing any further possessory actions
against them.

See Doc. No. 1-1 at 4.

They argue that they are

entitled to this relief because the 2011 Order stripped BNY
Mellon of both title to the property and any further power to
foreclose.

See id. at 2-5.

For that reason, they argue, the

Second Sale is invalid because BNY Mellon lacked authority to
conduct it.

See id. at 2-5.

In its motion to dismiss, BNY

Mellon argues that this claim fails because, under § 479:25, II
5

of the New Hampshire Revised Statutes, the Khawajas were
required to raise it before the Second Sale took place.
Doc. No. 5–1 at 6.

See

Because the Khawajas failed to do so, BNY

Mellon contends, this claim is now forfeited as a matter of law,
regardless of its substantive merits.

See id. at 6.

Section 479:25, II requires mortgagees to provide notice to
mortgagors prior to foreclosing on mortgaged property.

The

notice must inform mortgagors of their right to “petition the
superior court . . . to enjoin the scheduled foreclosure sale.”
N.H. Rev. Stat. Ann. § 479:25, II.

Critically, however, §

479:25, II further provides that a mortgagor’s “[f]ailure to
institute such petition . . . prior to sale shall thereafter bar
any action or right of action of the mortgagor based on the
validity of the foreclosure.”

N.H. Rev. Stat. Ann. § 479:25,

II.
In applying § 479:25, II, the New Hampshire Supreme Court
has explained that a mortgagor forfeits any right to challenge a
completed foreclosure “based on facts which the mortgagor knew
or should have known soon enough to reasonably permit the filing
of a petition prior to the sale.”

Murphy v. Fin. Dev. Corp.,

495 A.2d 1245, 1249 (N.H. 1985); see also Gordonville Corp. v.
LR1-A Ltd. P’ship, 856 A.2d 746, 752 (N.H. 2004) (holding that
“to preserve a challenge to the validity of the foreclosure
6

sale,” a mortgagor must raise that challenge prior to the
foreclosure sale).

In keeping with this well established rule,

this Court has also repeatedly held that § 479:25, II bars any
challenge to a foreclosure sale based on facts that the
mortgagor knew about, or should have known about, before the
sale.

See, e.g., Neenan v. CitiMortgage, Inc., 2013 D.N.H. 163,

2013 WL 6195579, at *3 (D.N.H. Nov. 26, 2013); Magoon v. Fed.
Nat’l Mortg. Ass’n, No. 13-cv-250-JD, 2013 WL 4026894, at *1
(D.N.H. Aug. 6, 2013); Calef v. Citibank, N.A., 2013 D.N.H. 23,
2013 WL 653951, at *3–*4 (D.N.H. Feb. 21, 2013).
The Khawajas have not disputed that they received prior
notice of the Second Sale.

Furthermore, their November 2011

letter to BNY Mellon confirms that they had actual knowledge of
both the 2011 Order and the impending Second Sale, which
constitute the essential facts that underlie this claim, more
than four months before the Second Sale occurred.
1–1 at 20–21.

See Doc. No.

Thus, the Khawajas’ complaint itself establishes

that they both “knew” and “should have known” of the facts
supporting their claim well before the Second Sale took place.
See Murphy, 495 A.2d at 1249.

Because they failed to raise that

claim in a petition to enjoin the Second Sale before the sale
occurred, they have now forfeited the claim under § 479:25, II.
See Gordonville Corp., 856 A.2d at 752.
7

The Khawajas do not directly respond to BNY Mellon’s
forfeiture argument.

Instead, and with little explanation, they

offer three further bases to support their claim: claim and
issue preclusion, the New Hampshire Supreme Court’s decision in
Deutsche Bank Nat. Trust Co. v. Kevlik, 20 A.3d 1002 (2011), and
§ 540:18 of the New Hampshire Revised Statutes.2
1 at 12; Doc. No. 6 at 1-2; Doc. No. 9 at 2.

See Doc. No. 1-

These arguments,

however, at best amount to variations of the Khawajas’
substantive claim.

Because that claim is forfeited under §

479:25, II, its substantive merits are immaterial, however the
Khawajas choose to characterize them.

The Khawajas do not

contend that any of their arguments qualify as an exception to
the § 479:25, II bar, and I am not otherwise aware of any reason
why § 479:25, II should not bar their claim as a matter of law.

2

Even if the preclusion argument were not forfeited under §
479:25, II, it is doubtful that the 2011 Order would preclude
BNY Mellon’s possessory action. The Khawajas effectively argue
that the 2011 Order extinguished any property interest BNY
Mellon may have ever held in the property. See Doc. No. 1–1 at
1–2. The 2011 Order, however, only “declare[d] the foreclosure
sale of the subject property void”—that is, the first
foreclosure sale that occurred on February 10, 2011. Id. at 14–
15. It did not purport to enjoin any future foreclosure sales,
and it did not address title to the property except to
invalidate the February 10, 2011 sale. See id.
8

IV.

CONCLUSION

For these reasons, I grant BNY Mellon’s motion to dismiss
the Khawajas’ complaint for failure to state a claim upon which
relief can be granted.

Doc. No. 5.

The clerk shall enter

judgment accordingly and close the case.
SO ORDERED.
/s/Paul Barbadoro________
Paul Barbadoro
United States District Judge
September 18, 2014
cc:

Azmat Khawaja, pro se
Dawn Khawaja, pro se
Jennifer Turco Beaudet, Esq.
Thomas J. Pappas, Esq.

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