Aho v. Bank of America, N.A. et al

Filing 12

///ORDER granting 5 Motion to Dismiss for Failure to State a Claim. So Ordered by Chief Judge Joseph N. Laplante.(jb)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Adam Aho
v.

Civil No. 15-cv-128-JL
Opinion No. 2015 DNH 232

Bank of America, N.A.
Deutsche Bank Nat'l Trust Co.
MEMORANDUM ORDER
In this mortgage-related case, plaintiff Adam Aho brings a
seven-count complaint for damages and declaratory and injunctive
relief against two banks whom Aho claims have no right to
foreclose on his home.

The defendants, Bank of America (“BOA”)

and Deutsche Bank National Trust Co. (“Deutsche”), moved to
dismiss, asserting that Aho’s complaint fails to state a claim
upon which relief can be granted.

Fed. R. Civ. P. 12(b)(6).

After consideration of the complaint, the parties’ written
submissions, and oral argument, the court grants defendants’
motion.
I.

Legal standard
To survive a motion to dismiss under Rule 12(b)(6), the

plaintiff’s complaint must allege facts sufficient to “state a
claim to relief.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
In ruling on such a motion, the court must accept as true all
well-pleaded facts set forth in the complaint and must draw all
reasonable inferences in the plaintiff’s favor.

See, e.g.,

Martino v. Forward Air, Inc., 609 F.3d 1, 2 (1st Cir. 2010).

The

court “may consider not only the complaint but also facts
extractable from documentation annexed to or incorporated by
reference in the complaint and matters susceptible to judicial
notice.”

Rederford v. U.S. Airways, Inc., 589 F.3d 30, 35 (1st

Cir. 2009).

With the facts so construed, “questions of law [are]

ripe for resolution at the pleadings stage.”
575 F.3d 24, 30 (1st Cir. 2009).

Simmons v. Galvin,

The following factual summary

adopts that approach.
II.

Background facts
In January 2007, Aho and his wife executed a mortgage naming

as mortgagee Mortgage Electronic Registration Systems, Inc.
(“MERS”) as nominee for New Century Mortgage Corporation, its
successors and assigns.

The mortgage secured a promissory note

for $195,000 that Aho executed in favor of New Century and
granted a security interest in property in Rindge, New Hampshire.
New Century endorsed the note in blank and undated.

New Century

filed for Chapter 11 bankruptcy in August 2008.
The mortgage was assigned from MERS to BAC Home Loans
Servicing, LP, f/k/a Countrywide Home Loan Servicing ("BAC").
That assignment was recorded in the Cheshire County (N.H.)
Registry of Deeds on August 29, 2011.
merger to BAC.

2

BOA is the successor by

In July 2012, Select Portfolio Servicing, Inc. (“SPS”) began
servicing Aho's loan.

Deutsche, as trustee for a trust into

which the note and mortgage were pooled with other mortgages and
sold to investors – known as securitizing -- holds the note.

An

assignment of the mortgage from BOA to Deutsche, as Trustee, was
recorded in the Cheshire County Registry on November 19, 2014.
By letter dated August 24, 2011, BOA notified Aho of its
intent to foreclose on the property.

Shortly thereafter, Aho

filed suit in state court to enjoin the foreclosure.

He claimed

that he was deceptively “put into this mortgage” and asked that
the bank provide the signed contract and original promissory
Note.

Roughly one month later, the Superior Court continued the

foreclosure sale for 60 days.

By February 2012, the state court

noted that the note had been produced but that Aho continued to
challenge the identity of the note holder.

After a lengthy

interregnum during which the record reflects the parties’
attempts to reach an amicable resolution, Aho was informed in
March 2015 that BOA was no longer the servicer of the note or
mortgage and that Deutsche, as trustee, held the note.

Soon

after, Aho filed a second amended complaint, adding Deutsche as a
defendant.

Deutsche subsequently removed the case to this court.

The operative complaint consists of seven counts.

Counts 1-

4 allege wrongful foreclosure against BOA based on several
different rationales:

that BOA wasn’t the note-holder when it

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sent the foreclosure notice; that the mortgage was held by a
different entity than the note, rendering it invalid; that the
2011 MERS assignment to BAC (predecessor to BOA) was invalid
because it came three years after New Century's bankruptcy; and
that BOA must demonstrate precisely when it came into possession
of the original note to validate its right to foreclose.
three counts against Deutsche follow a similar theme.

The

Aho

alleges that Deutsche lacks the authority to foreclose because
MERS did not have the right to assign the original mortgage, that
Deutsche was never assigned the mortgage and that it does not
legally own the note and mortgage due to an alleged violation of
the rules of the trust into which they were purportedly
transferred.

Aho seeks declaratory and injunctive relief, as

well as attorneys’ fees from both defendants; he also seeks
compensatory damages against BOA for wrongful foreclosure.
IV.
A.

Legal Analysis
Counts 1-4 (wrongful foreclosure against BOA)
BOA argues that Aho’s complaint fails to state a claim for

wrongful foreclosure because, as Aho concedes, BOA did not
foreclose on Aho’s property and no foreclosure by BOA is
scheduled.

Aho argues that merely by initiating the foreclosure

process, BOA is liable.

Moreover, Aho claims entitlement to an

injunction against BOA because, he alleges, BOA does not
presently hold the note and mortgage.
4

Aho’s claims fail.

“[A] necessary element of a wrongful foreclosure claim, as
the claim suggests, is that a foreclosure sale must have
occurred.”
8.

Worrall v. Fed. Nat'l Mortg. Ass'n, 2103 DNH 158 at

As Judge DiClerico observed in Worrall, New Hampshire has

recognized wrongful foreclosures claims after foreclosure sales,
based on the conduct of the sale leading to an unfair sale price.
Id. (citing Murphy v. Fin. Dev. Corp., 126 N.H. 536, 541-45
(1985)).

Like the plaintiff Worrall, Aho cited no cases

recognizing a claim for wrongful attempted foreclosure and
conceded at oral argument that he was aware of none.

To the

extent Aho asks the court to expand New Hampshire law to create
such a cause of action, the court declines.

See Quality Cleaning

Prods. R.C. v. SCA Tissue N. Am., 794 F.3d 200, 207 (1st Cir.
2015) (“A federal court sitting in diversity cannot be expected
to create new doctrines expanding state law.”).
Aho's claim for injunctive relief against BOA fares no
better.

He concedes that BOA has not foreclosed and does not

hold the note or mortgage.

As such, the court finds that Aho

cannot establish either a likelihood of success on the merits of
his wrongful foreclosure claim or the potential for irreparable
harm (as to BOA) in the absence of an injunction.

See Esso

Standard Oil Co. v. Monroig-Zayas, 445 F.3d 13, 18 (1st Cir.
2006).

Accordingly, counts 1-4 against BOA must be dismissed.

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B. Counts 5-7 (claims against Deutsche)1
Aho's claims against Deutsche are limited to seeking a
declaration that it does not validly possess the note or mortgage
and an injunction preventing Deutsche from foreclosing.

These

counts cannot survive the defendants’ motion.
The court rejects Aho's baseline argument that MERS lacked
the power to assign the mortgage to BAC, legal predecessor to
BOA, and thus BOA neither held nor assigned anything of legal
significance.

As Judge McAuliffe recently observed in Lovy v.

Fed. Nat'l Mortg. Ass'n, 2014 DNH 81, at 5, n.1, the First
Circuit Court of Appeals has “unequivocally ruled that MERS may
validly possess and assign a legal interest in a mortgage.”
(quoting Serra v. Quantum Servicing Corp., 747 F.3d 37, 40 (1st
Cir. 2014) (citing Culhane v. Aurora Loan Servs. Of Nebraska, 708
F.3d 282, 292-93 (1st Cir. 2013)).
The rest of Aho’s claims against Deutsche fare no better.
As previously explained, the note and mortgage were securitized
into a trust for which Deutsche is trustee.

The formation and

operation of the trust is controlled by a Pooling and Service
Agreement (“PSA”).

The counts against Deutsche are premised on

Aho's claim that Deutsche has no right to foreclose because any
transfer of the note and mortgage to the trust was done in

1

The court assumes, without deciding, that Deutsche’s
present posture – it has neither instituted nor threatened
foreclosure against Aho – is not a bar to declaratory judgment.
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violation of the PSA.

Deutsche argues that Aho has no standing

to pursue such a claim.

Deutsche is correct.

Essentially, Aho argues that the trust acquired the note and
mortgage after a deadline set forth in the PSA and that the
method of acquisition did not occur in the required sequence.2
Under New York law (which controls the trust), Aho argues, these
infirmities render the instruments void, as opposed to voidable,
and thus he has standing to contest the transfers.

Cf. Culhane,

708 F.3d at 291 (“[A] mortgagor does not have standing to
challenge shortcomings in an assignment that render it merely
voidable at the election of one party but otherwise effective to
pass legal title.”).
In support of his argument, Aho relies on a New York trial
court decision, Wells Fargo Bank, N.A. v. Erobobo, 972 N.Y.S.3d
147 (unpublished table decision), 2013 WL 1831799 (N.Y. Sup. Ct
2013).

Erobobo, citing New York trust law, held that such

transfers in violation of a PSA are void.

That decision,

however, was reversed before plaintiff submitted his objection to
the pending motion.

See Wells Fargo Bank, N.A. v. Erobobo, 9

2

At oral argument, Aho argued for the first time that the
transfer into the trust constituted a fraud on the Internal
Revenue Service, making any assignment void, rather than
voidable, and therefore giving him standing. But Aho conceded
that he did not brief this issue. “[T]his court generally will
not consider theories raised for the first time at oral argument,
out of fairness to adverse parties and the court.” Johnson v.
Gen. Dynamics Info. Tech., 675 F. Supp. 2d 236, 241 n.3 (D.N.H.
2009).
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N.Y.S.3d 312 (N.Y. App. Div. 2015).

As relevant here, the

appeals court stated "Erobobo, as a mortgagor whose loan is owned
by a trust, does not have standing to challenge the plaintiff's
possession or status as assignee of the note and mortgage based
on purported noncompliance with certain provisions of the PSA."
Id. at 314 (citing Bank of N.Y. Mellon v. Gales, 982 N.Y.S.2d 911
(N.Y. Ct. App. 2014); Rajamin v. Deutsche Bank Natl. Trust Co.,
757 F.3d 79, 86–87 (2d Cir. 2014); see also, Pike v. Deutsche
Bank Nat'l Trust Co., No. 2014-594, 2015 WL 4266759 (N.H. July
15, 2015) (noting Erobobo's reversal and observing that the "vast
majority" of courts have found similar analysis unpersuasive)).
This conclusion is consistent with general principles of New York
law, under which a non-party lacks standing to enforce a contract
unless the contract contains a clear indication of an intent to
allow it.

See e.g., Rajamin, 757 F.3d at 86 ("the terms of a

contract may be enforced only by contracting parties or intended
third-party beneficiaries of the contract").3
Given that MERS did have the authority to convey the
mortgage and that Aho does not have standing to challenge the
transfers to the trust, Aho's claims against Deutsche necessarily
fail.

3

This court notes that Judge McCafferty, faced with a choice
between following the Erobobo trial court ruling and Rajamin,
chose the latter, correctly forecasting the New York appellate
decision released roughly two weeks later. See Monchgesang v.
Deutsche Bank Nat. Trust Co, 2015 DNH 079.
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V.

Conclusion
In light of the foregoing, defendants' motion to dismiss

(doc. no. 5) is GRANTED.
SO ORDERED.

Joseph N. Laplante
United States District Judge
Dated: December 18, 2015
cc:

Stephen T. Martin, Esq.
William P. Breen, Esq.
Peter F. Carr, II, Esq.

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