Faiella v. Green Tree Servicing LLC et al

Filing 20

///ORDER denying 6 Motion to Remand to State Court; granting 14 Motion to Dismiss for Failure to State a Claim. So Ordered by Judge Joseph A. DiClerico, Jr.(gla)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
Ralph Faiella
v.

Civil No. 16-cv-088-JD
Opinion No. 2016 DNH 105

Green Tree Servicing LLC and
Federal National Mortgage
Association

O R D E R
Ralph Faiella brought a plea of title action in state court
against the Federal National Mortgage Association (“Fannie Mae”)
and Green Tree Servicing LLC, now known as Ditech Financial LLC
(“Ditech”), challenging the legality of a foreclosure that
Ditech and Fannie Mae conducted on his residence.

Fannie Mae

and Ditech removed the case to this court, asserting diversity
jurisdiction.

Faiella moves to remand the case to state court

or, in the alternative, requests that the court abstain from
entertaining it.

Fannie Mae and Ditech oppose Ditech’s motion

to remand or abstain.
Ditech has also moved to dismiss the amended complaint
against it on the grounds that it had no involvement in the
foreclosure at issue.

Faiella objects to this motion.

Background
The facts below are derived from Faiella’s amended
complaint (doc. no. 9) and certain documents that Ditech has
filed in support of its motion to dismiss, including the
relevant mortgage, the foreclosure notice, and the foreclosure
deed.

Because Faiella references the foreclosure notice and the

mortgage in his amended complaint and does not dispute that the
exhibits are authentic, the court will consider them in
resolving Ditech’s motion to dismiss.

See Wilson v. HSBC Mortg.

Servs., Inc., 744 F.3d 1, 7 (1st Cir. 2014) (considering
documents referenced in plaintiff’s complaint for motion to
dismiss).

The court will also consider the foreclosure deed

because it is a public record and Faiella does not dispute its
authenticity.

Sykes v. RBS Citizens, N.A., 2 F. Supp. 3d 128,

142 n.14 (D.N.H. 2014)

A.

The Foreclosure
In 2007, Ralph Faiella obtained a loan that was secured by

mortgage on a condominium property (“the property”) in Plaistow,
New Hampshire.
Fannie Mae.

That mortgage was subsequently assigned to

Fannie Mae hired Ditech to service Faiella’s loan

on its behalf during the time period relevant to this dispute.
Faiella is currently residing in the property.

2

In 2015, Faiella fell behind on his mortgage payments.

In

September of 2015, foreclosure counsel for Fannie Mae sent
Faiella a letter notifying him that a foreclosure sale on the
property had been scheduled for October 16, 2015.

The letter

attached a notice from Fannie Mae informing Faiella that it was
the holder of his mortgage and that it intended to initiate a
foreclosure sale based on the power of sale clause in Faiella’s
mortgage.
Around the same time, Faiella spoke with a Ditech
representative to arrange a payment on his mortgage that would
bring his account up to date.

In response to this conversation,

Faiella sent a check to Ditech for the amount of unpaid debt
through September.

Ditech, however, returned Faiella’s check

with a letter requesting that Faiella contact Ditech to
determine the correct reinstatement amount.

Faiella contacted

the same Ditech representative again, and the representative
informed him that the amount of his check was correct but that
the payment was rejected because it was not a cashier’s check.
Several days before the scheduled foreclosure, Faiella sent
Ditech a cashier’s check for the quoted reinstatement amount.
Notwithstanding Faiella’s efforts, Fannie Mae foreclosed on
the property as scheduled.

Fannie Mae then recorded a

foreclosure deed in the Rockingham Registry of Deeds for the

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property.

Pursuant to that deed, Fannie Mae as mortgagee

granted the property to itself for a consideration of $106,500.
Faiella thought that the foreclosure had been cancelled
based on his reinstatement check and did not learn about the
foreclosure sale until after it took place.

Faiella then

received a letter from Ditech returning the second check and
informing him that the amount of the check was not enough to
reinstate his account.

At this time, the Ditech representative

that Faiella had spoken with told him that she did not know the
correct reinstatement amount for his loan.

B.

State Proceedings
Following the foreclosure sale, Fannie Mae filed a

possessory action against Faiella in state district court,
seeking to obtain possession of the property.

In response,

Faiella argued that Fannie Mae could not obtain possession
because the foreclosure was not valid.

Faiella’s defense to the

possessory action brought the title of the property into
question, which the district court lacked jurisdiction to
adjudicate.

For that reason, the district court ordered Faiella

to file a plea of title under RSA 540:17.

Faiella filed a plea

of title action in state superior court, alleging a claim for
wrongful foreclosure against Fannie Mae and Ditech.

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C.

Removal
Fannie Mae and Ditech removed Faiella’s plea of title

action to this court on the basis of diversity jurisdiction.
Faiella now seeks to remand the case back to state court on the
grounds that the plea of title action is part of the possessory
action, which was not removed.

Faiella also requests,

alternatively, that the court abstain from hearing its plea of
title.

D.

Amended Complaint
After the case was removed, Faiella filed an amended

complaint titled “FIRST AMENDED PLEA OF TITLE SEEKING
DECLARATORY RELIEF, ATTORNEYS FEES AND OTHER EQUITABLE RELIEF AS
A MATTER OF RIGHT.”

The single cause of action named in the

amended complaint is wrongful foreclosure based on the
representation to Faiella of the mortgage arrearage payoff
amount, which Faiella alleges was wrong due to negligence,
mistake, or fraud.

Although the New Hampshire Debt Collection

Practices Act is mentioned in the prayer for relief section of
the complaint, no claim is brought under the Act.1

Faiella is represented by counsel, and therefore, his
pleadings are not entitled to the leniency that might be
afforded pro se parties.
1

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Discussion
Faiella moves to remand this plea of title action to state
court or, in the alternative, for this court to abstain from
hearing this action.

Fannie Mae and Ditech object.

In addition, Ditech moves to dismiss the amended complaint
against it.

A.

Faiella objects.

Motion to Remand or Abstain
1. Remand
A defendant may remove any civil action brought in state

court over which the federal district court has original
jurisdiction.

28 U.S.C. § 1441(a).

Fannie Mae and Ditech

removed this action on the basis of diversity jurisdiction.

It

is undisputed that this action, standing alone, satisfies the
statutory requirements for diversity jurisdiction under the
federal diversity jurisdiction statute, 28 U.S.C. § 1332.
Faiella contends, however, that this case is not removable
because “it is simply a portion of [the] possessory action,”
which he argues, could not have been brought in this court.
response, Fannie Mae and Ditech argue that this action is
independent of the possessory action.

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In

Faiella cites no authority to support his assertion that
this action is merely a part of the possessory action.
facts and governing law do not support his theory.

The

In plea of

title actions, the plaintiff seeks title to the property, which
is different from the possession of the property at issue in a
possessory action.

See Bank of New York Mellon v. Cataldo, 161

N.H. 135, 138-39 (2010) (rejecting argument concerning district
court’s authority to award possession because it “conflates
titles and possession”).

New Hampshire district courts do not

have jurisdiction over title issues.
540:16.

See RSA 502-A:14; RSA

Instead, a defendant in a possessory action who intends

to challenge the validity of title to the property must “enter
his action in the superior court . . . and [] prosecute his
action in said court.”

RSA 540:17 (emphasis added).

Moreover, RSA 540:18 provides, in pertinent part, that
“[a]fter the filing of

. . . [a plea of title] . . . no further

proceedings shall be had before the [district] court.”

The New

Hampshire Supreme Court recently explained that this provision
operates “to ensure that the district division does not rule
upon the title action, which is beyond its jurisdiction, or
proceed with the possessory action until the title action is
resolved in the superior court or . . . the federal district
court following removal.”

Fed. Home Loan Mortg. Corp. v.

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Willette, 131 A.3d 950, 953 (N.H. 2016).

The possessory action

and this plea of title action are distinct and independent
proceedings.

Therefore, there is no merit to Faiella’s

assertion that this action is merely a part of the possessory
action pending in state court.2
Therefore, Faiella’s motion to remand is denied.

2. Abstention
Faiella contends, in the alternative, that the court should
abstain from hearing this action based on the Wilton/Brillhard
doctrine or the Burford abstention doctrine.

Fannie Mae and

Ditech object, arguing that neither doctrine is applicable to
this case.

a. Wilton/Brillhart Abstention
Faiella invokes abstention based on the Wilton/Brillhart
doctrine on the ground that he “intends to file a separate

Faiella also argued in his reply, for the first time, that
removal is improper because Fannie Mae and Ditech are not
defendants under the removal statute. That argument is
improper, however, because it is not in response to any argument
in the defendants’ objection. L.R. 7.1(e)(1) (restricting reply
memoranda to “rebuttal of factual and legal arguments raised in
the objection or opposition memorandum.”). In any event, that
argument fails because it is premised on the erroneous assertion
that this action and the possessory action are the same
proceeding.
2

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action to quiet title and for damages in the Superior Court.”
Doc. no. 7 at 5.

In response, Fannie Mae and Ditech argue that

Brillhart is inapplicable here because there are no parallel
actions pending in state court.
Under Wilton/Brillhart abstention, a district court has the
discretion to stay or dismiss an action for declaratory relief
when a parallel proceeding involving the same issues is pending
in state court.
(1995).

Wilton v. Seven Falls Co., 515 U.S. 277, 289-90

Abstention may be proper in such circumstances because

“it would be uneconomical as well as vexatious for a federal
court to proceed in a declaratory judgment suit where another
suit is pending in a state court presenting the same issues, not
governed by federal law, between the same parties.”

Id. at 282

(quoting Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494
(1942)).

When assessing whether a stay or dismissal is

appropriate, a district court should “examine ‘the scope of the
pending state court proceeding and the nature of defenses open
there.’”

Wilton v. Seven Falls Co., 515 U.S. 277, 283 (1995)

(quoting Brillhart, 316 U.S. at 495).
Faiella has not identified any pending state proceeding
presenting the same issues as those presented here.

Rather,

Faiella asserts that he might file an action and that such an
action would involve the same issues presented here.

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Faiella’s

intent to file a state court action is not a proper basis to
stay or dismiss this declaratory action.

Absent a pending state

court proceeding, the efficiency and comity concerns underlying
Wilton/Brillhart abstention are not present.
Therefore, the court will not dismiss or stay this action
on the basis of Wilton/Brillhart abstention.

b. Burford Abstention
Faiella also contends that the court should abstain from
hearing this action based on the Burford abstention doctrine.
The Burford doctrine prevents federal courts from interfering
with the proceedings or orders of state administrative agencies
when adequate state court review is available and:
(1) when there are “difficult questions of state law
bearing on policy problems of substantial public
import ...”; or (2) where the “exercise of federal
review ... would be disruptive of state efforts to
establish a coherent policy with respect to a matter
of substantial public concern.”
Guillemard-Ginorio v. Contreras-Gomez, 585 F.3d 508, 523-24 (1st
Cir. 2009) (quoting New Orleans Pub. Serv., Inc. v. Council of
City of New Orleans, 491 U.S. 350, 361 (1989)).
“The fundamental concern in Burford is to prevent federal
courts from bypassing a state administrative scheme and
resolving issues of state law and policy that are committed in
the first instance to expert administrative resolution.”
10

Sevigny v. Employers Ins. of Wausau, 411 F.3d 24, 27 (1st Cir.
2005) (internal quotations omitted).

Because of this

fundamental concern, Burford is not applicable where the statelaw issues “are not discretionary policy or administrative
judgments and could arise in any common-law action.”

Sevigny,

411 F.3d at 28.
Failla cites no administrative order or proceeding with
which this action will interfere.

Further, a wrongful

foreclosure action does not invoke the type of administrative
and policy judgments that are relevant to Burford abstention.
Sevigny, 411 F.3d at 28.
Therefore, Burford abstention is inapplicable to this
action.

B. Motion to Dismiss
Ditech moves to dismiss Faiella’s complaint against it for
wrongful foreclosure, arguing that it “neither foreclosed the
Mortgage nor took title to the Property post-foreclosure.”
Faiella objects, arguing that Ditech is liable for its own
tortious acts and that the amended complaint contains additional
claims beyond wrongful foreclosure.

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1. Standard of Review
A motion to dismiss is reviewed under Federal Rule of Civil
Procedure 12(b)(6), which addresses whether the complaint states
a claim on which relief may be granted.

See Jorge v. Rumsfeld,

404 F.3d 556, 558, 564 (1st Cir. 2005).

In conducting this

review, the court “accept[s] as true all well-pled facts alleged
in the complaint and draw[s] all reasonable inferences in the
plaintiff’s favor.

Yershov v. Gannett Satellite Info. Network,

Inc., --F.3d --, 2016 WL 1719825, at *2 (1st Cir. Apr. 29,
2016).

“A plaintiff's allegations are sufficient to overcome a

Rule 12(b)(6) motion if they contain ‘enough facts to state a
claim to relief that is plausible on its face.’”

Id. (quoting

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 569 (2007)).

2. Foreclosure Claim
Under New Hampshire law, a “mortgagee or his assignee” may
conduct a non-judicial foreclosure pursuant to a power of sale
clause contained in a mortgage.

See RSA 479:25.

The New

Hampshire Supreme Court has held that “a mortgagee executing a
power of sale is bound both by the statutory procedural
requirements and by a duty to protect the interests of the
mortgagor through the exercise of good faith and due diligence.”
Murphy v. Fin. Dev. Corp., 126 N.H. 536, 540 (1985).

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Those

obligations, however, do not extend to parties other than the
foreclosing mortgagee.

Gikas v. JPMorgan Chase Bank, N.A., 2013

WL 1457042, at *5 (D.N.H. Apr. 10, 2013) (granting summary
judgment for servicer on foreclosure claims because “it is the
mortgagee executing a power of sale, not the servicer” who must
comply with the foreclosure statute and common law duties).3
Therefore, to state a foreclosure claim against Ditech, Faiella
must show that Ditech was a foreclosing mortgagee.
In his amended complaint, Faiella alleges that Fannie Mae
was assigned the mortgage and that it conducted the foreclosure.
The documents that Faiella references in his complaint and the
foreclosure deed also show that Fannie Mae, not Ditech, was the
party foreclosing on the property.

But for a conclusory

allegation that Ditech “wrongfully foreclosed” on the property,
doc. no. 1 at ¶ 11, there are no allegations in the amended
complaint that Ditech participated in the foreclosure
transaction or had any authority to do so.

Therefore, Faiella

has not stated a plausible claim for relief against Ditech for
wrongful foreclosure.

Accord McDonald-Forte v. Merrill Lynch Mortg. Investors
Tr., Series MLCC 2004-D, 2015 WL 4928715, at *3 (N.D. Ga. Aug.
18, 2015); Ancell v. U.S. Bank Trust, N.A., 2014 WL 2048200, at
*3 (W.D. Mo. May 19, 2014); Main v. Nw. Tr. Servs. Inc., 2014 WL
1923896, at *3 (W.D. Wash. May 13, 2014).
3

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Faiella asserts that his claim against Ditech cannot be
dismissed because it also includes claims for violations of
federal regulations and certain duties of good faith.

The

amended complaint, however, does not assert those claims.

As

Ditech points out, the only claim that the amended complaint
asserts is a claim for wrongful foreclosure.

Faiella may not

amend his complaint through an objection to a motion to dismiss.
See Fed. R. Civ. P. 15; L.R. 15.
Faiella also contends that Ditech is a necessary party
under Rule 19 because it has an interest in this litigation and
its absence will impede its ability to protect that
interest.

See Fed. R. Civ. P. 19(a)(1)(B)(i).

In support,

Faiella argues that a judgment in this case against Fannie Mae
could bind Ditech under the doctrine of collateral estoppel in a
future suit because (1) Ditech committed “the wrongful conduct
alleged” and (2) Fannie Mae “has the same interest as Ditech.”
Doc. no. 19 at ¶ 24.
Faiella’s argument is unpersuasive.

Collateral estoppel

only binds parties to the original litigation or those in
privity to them.
571-72 (1987).

Daigle v. City of Portsmouth, 129 N.H. 561,
Faiella has not adequately explained how Ditech,

in its absence, would be in privity to Fannie Mae in this

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litigation.4

Further, to the extent that Fannie Mae and Ditech

have the same interest, that interest will be protected by
Fannie Mae in this litigation. Bacardi Int'l Ltd. v. V. Suarez &
Co., 719 F.3d 1, 10-12 (1st Cir. 2013).

As the First Circuit

has held, “the mere fact . . . that Party A, in a suit against
Party B, intends to introduce evidence that will indicate that a
non-party, C, behaved improperly does not, by itself, make C a
necessary party.”

Id. at 12 (quoting Pujol v. Shearson Am.

Exp., Inc., 877 F.2d 132, 136 (1st Cir. 1989)).5
The court, therefore, dismisses Faiella’s claim against
Ditech.

Faiella only provides the unsubstantiated assertion that
Ditech will likely “control” the litigation for Fannie Mae in
its absence.
4

Faiella also contends that Ditech is a proper defendant
because it is liable for its own wrongful conduct as Fannie
Mae’s agent. As discussed above, however, the amended complaint
only asserts a claim for wrongful foreclosure. Because the
allegations in the complaint do not give rise to a plausible
inference that Ditech wrongfully foreclosed on the property,
Faiella has failed to allege any claim that Ditech engaged in
tortious conduct. Accordingly, Ditech’s status as Fannie Mae’s
agent does not avoid dismissal.
5

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Conclusion
For the foregoing reasons, plaintiff’s motion to remand or
abstain is denied (doc no. 6) and defendant’s motion to dismiss
(doc. no. 14) is granted.
SO ORDERED.

__________________________
Joseph A. DiClerico, Jr.
United States District Judge

June 23, 2016
cc:

Amy B. Hackett, Esq.
David Himelfarb, Esq.
William C. Sheridan, Esq.

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