Faiella v. Green Tree Servicing LLC et al

Filing 32

ORDER: denying 25 Motion to Rescind the Foreclosure sale and Foreclosure Deed; terminating as moot 23 , 24 and 28 Discovery Plans. Plaintiff to file Amended Complaint by 9/19/16. Parties to submit new joint discovery plan by 10/31/16. So Ordered by Judge Joseph A. DiClerico, Jr.(dae)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE

Ralph Faiella
v.

Civil No. 16-cv-088-JD
Opinion No. 2016 DNH 153

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.
defendants removed the case to this court.

The

Fannie Mae moves to

rescind the foreclosure sale, rescind a related foreclosure deed
that it executed, and reinstate the mortgage with its original
priority.

Faiella objects.

The court held a hearing on the

motion on August 25, 2016.
A.

Motion for Rescission
Fannie Mae “requests that the Court exercise its equitable

powers and rescind the Foreclosure Sale and the Foreclosure Deed
and restore the Mortgage to its pre-foreclosure priority.”

At

the hearing, Fannie Mae argued that its request was justified
because Fannie Mae was merely providing Faiella the relief he
requested in his complaint.

In response, Faiella objects that

the proposed rescission would preclude certain offsets and
unasserted claims that he has against Fannie Mae arising out of
the wrongful foreclosure.

At the hearing, Faiella also asserted

that Fannie Mae’s request for relief was improper because Fannie
Mae has not filed a counterclaim for rescission.
“Rescission is an equitable remedy the granting of which is
always a matter within the sound discretion of the trial court,
depending upon the circumstances of each particular case.”
Ellis v. Candia Trailers & Snow Equip., Inc., 164 N.H. 457, 462
(2012) (internal quotations omitted).

Before a court can

rescind a transaction, however, “the court must determine that
the respective parties can be returned to the status quo.”
Derouin v. Granite State Realty, Inc., 123 N.H. 145, 147 (1983).
That determination “rests upon the relative equities of the
parties as determined by the trial court.”

Id. at 47-48.

A

court should grant rescission “only when in all the
circumstances it appears right and just to the parties to do
so.”

Mooney v. Nationwide Mut. Ins. Co., 149 N.H. 355, 357

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(2003).1

Because Fannie Mae is seeking the rescission, it bears

the burden of proving that remedy is appropriate.
Fannie Mae’s motion for the rescission seeks an affirmative
remedy.

Fannie Mae, however, has not filed a counterclaim

seeking such a remedy.

In the absence of a claim for

rescission, Fannie Mae is not entitled to the relief it
requests.

See Vermont Mut. Ins. Co. v. Zamsky, 2012 WL 6864702,

at *1 (D. Mass. Dec. 17, 2012), report and recommendation
adopted (D. Mass. Jan. 11, 2013) (“[Defendants] seek to have the
Court enter a declaratory judgment in their favor.

In my

judgment, they are not entitled to such affirmative relief
because they did not file a counterclaim seeking affirmative
relief.”).

Although the above-referenced cases concern the rescission
of contracts, the rules of equity also apply when courts grant
equitable relief from mortgage foreclosures. See Chase v.
Ameriquest Mortg. Co., 155 N.H. 19 (2007) (noting that in action
to enjoin mortgage foreclosure, “[a] court of equity will order
to be done that which in fairness and good conscience ought to
be or should have been done”); see also 59A C.J.S. Mortgages §
1167 (“The power to set aside a foreclosure sale is to be
exercised with great care, and a proper basis for invoking the
discretion of the court must be presented. A court of equity
has the power to vacate a foreclosure sale based on
considerations of equity and justice, but this power should be
used sparingly and only when necessary for cogent reasons to
correct a plain injustice or injury.”).
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Nevertheless, Fannie Mae contends that its request is
proper because Faiella requested rescission in his plea of title
action.

Importantly, however, Faiella objects to the rescission

remedy proposed by Fannie Mae.

Therefore, even though both

parties may contemplate rescission of the foreclosure, there are
material differences concerning how such relief is to be
implemented.

Without bringing and proving an affirmative claim

for rescission, Fannie Mae cannot unilaterally impose on Faiella
its version of the equitable relief underlying his plea of title
action.
Moreover, Fannie Mae fails to articulate any grounds
supporting the rescission that it seeks.

The motion only

recounts the transactional history of Faiella’s mortgage, but
contains no factual or legal argument demonstrating that Fannie
Mae is entitled to rescission.

Fannie Mae does not admit and

has not provided facts showing that a wrongful foreclosure
occurred or that the equities at issue favor the rescission.
Therefore, Fannie Mae has not met its burden of showing that it
is entitled to the rescission remedy that it proposes.
B.

Request to Amend Complaint
During the hearing on Fannie Mae’s motion to rescind,

Faiella requested an opportunity to amend his complaint to add
damages claims against Fannie Mae.

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Given the early posture of

this case, the court will grant Faiella leave to file an amended
complaint asserting his damages claims against Fannie Mae.
Conclusion
For the foregoing reasons, defendant’s motion to rescind
the foreclosure sale and foreclosure deed (doc no. 25) is
denied.
Faiella must file his amended complaint on or before
September 19, 2016.

Fannie Mae shall file a responsive pleading

within the time allowed under the Federal Rules of Civil
Procedure.

If Faiella fails to amend his complaint, Fannie Mae

is granted leave to amend its answer to the operative complaint
in this action on or before October 11, 2016.
Both parties have filed proposed discovery plans.
nos. 23-24, 28.

Doc.

Those discovery plans (doc. nos. 23-24, 28) are

terminated as moot based on Faiella’s anticipated amended
complaint.

The parties will submit a new joint discovery plan

on or before October 31, 2016.

See Fed. R. Civ. P. 26(f)(2)-

(3); L.R. 26.1.
SO ORDERED.

__________________________
Joseph A. DiClerico, Jr.
United States District Judge
August 29, 2016

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cc:

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

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