KAYSER et al v. OCWEN LOAN SERVICING, LLC et al
OPINION. Signed by Judge Kevin McNulty on 8/18/2017. (JB, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
MICHAEL KAYSER and BARBARA
Civ. No. 13-5999 (KM)
OCWEN LOAN SERVICING, LLC,
MORGAN STANLEY CAPITAL
HOLDING, LLC, and HSBC BANK
USA as Trustee for the Morgan
Stanley Mortgage Loan Trust,
2004-2AR, Mortgage PassThrough Certificates, Series
KEVIN MCNULTY, U.S.D.J.:
Plaintiffs Michael and Barbara Kayser (for simplicity, “Kaser”) are
homeowners/mortgagors of a property at 9 Autumn Drive, Scotch Plains, New
Jersey (the “Property”). Kayser has filed an Amended Complaint alleging three
state law causes of action: “Count One
Quiet Title”; and “Count Three
Wrongful Collection Practice”; “Count
Fraud.” (ECF no. 44) The defendants are
Morgan Stanley Capital Holding, LLC, the mortgagee bank; Ocwen Loan
Servicing, LLC, which services the loan; and HSBC Bank USA as trustee and
assignee of the mortgage and holder of the note (although Kayser denies this).
The common feature of all of Kayser’s causes of action is a factual claim that
the defendants are not the true owners of the underlying mortgage and note.
Now before the Court is the defendants’ motion for summary judgment
pursuant to Fed. R. Civ. P. 56. For the reasons stated herein, the motion will
Kayser entered into an adjustable rate promissory note dated June 10,
2003, in the original principal amount of $396,000 in favor of Morgan Stanley
Dean Witter Credit Corporation. (DSMF
Note; P1. Opp.
citing Note; Lucas Decl.
To secure the note, Kayser entered into a mortgage dated
Citations to record items are abbreviated thus:
Amended Complaint (ECF nos. 44 & 69-1)
Defendants’ brief in support of motion for summary judgment (ECF
DSMF = Defendants’ Statement of Material Facts, submitted in connection with
prior motion for summary judgment, filed Sept. 14, 2015 (ECF no. 46-4)
The defendants have not filed a new Rule 56.1 statement of
material facts in connection with their combined renewed motion for
summai judgment; they rely on the statement submitted in connection
with a prior motion for summary judgment, filed Sept. 14, 2015, which
was administratively terminated.
The parties do not raise different facts on this motion; Kayser did
not respond to the defendants’ previous statement of material facts; and
Kayser does not now protest the defendants’ direct reliance on
declarations and exhibits without submission of a new statement of
material facts. Therefore, I occasionally refer to the Sept. 14, 2015
Statement of Material Facts for purposes of background information and
placing the parties’ exhibits in context.
Lucas Deci. = Declaration of Kyle Lucas, Senior Loan Analyst for Ocwen
Financial Corporation (ECF no. 68-5)
Adjustable rate promissory note made June 10, 2003 (ECF no. 68-6)
Mortgage dated June 10, 2013 (ECF no. 68-7)
First Assignment = Assignment of Mortgage from Morgan Stanley Private Bank,
National Association to Morgan Stanley Mortgage Capital Holdings LLC, dated
Oct. 18, 2012 (ECFn0. 68-8)
Second Assignment = Assignment of Mortgage from Morgan Stanley Mortgage
Capital Holdings LLC to HSBC Bank USA, as Trustee, dated Sept. 19, 2013
(ECF no. 68-9)
Servicing Transfer Notice = Notice of Servicing Transfer Real Estate Settlement
Procedures Act (RESPA) and Welcome to Ocwen Loan Servicing LLC, effective
Apr. 2,2012 (ECFno. 68-10)
M. Kayser Dep.
Excerpt of transcript of deposition of Michael Kayser (ECF no.
June 10, 2003. (Lucas Deci.
4—5; M. Kayser Dep. 25—26) The original
mortgagee was Morgan Stanley Dean Witter Credit Corporation, which became
known as Morgan Stanley Credit Corporation; by merger, that corporation’s
successor is Morgan Stanley Private Bank, National Association (“MSPBNA”).
By the First Assignment, dated October 18, 2012, MSPBNA assigned its
entire interest in the loan to Morgan Stanley Capital Holdings, LLC (“MSCH”).
The First Assignment was recorded in the Recorder’s Office of Union County,
New Jersey, at Book 1402, page 0249. (Lucas Decl.
6, citing First
By the Second Assignment, dated September 19, 2013, MSCH assigned
its entire interest in the loan to HSBC Bank USA, as Trustee (“HSBC as
Trustee”) for Morgan Stanley Mortgage Loan Trust 2004-2AR, Mortgage PassThrough Certificates, Series 2004-2AR (the “2004-2AR Trust”). The Second
Assignment was recorded in the Recorder’s Office of Union County, New Jersey
at Book 1411, page 0767, Instrument no. 154238. (Lucas Decl.
2004-AR Prospectus Cover = Cover page of Prospectus Supplement to a
prospectus dated Jan. 28, 2004 for the Morgan Stanley Mortgage Loan Trust
2004-2AR (ECF no. 68-16)
Collateral file for the mortgage loan (ECF no. 68-17)
M. Kayser Interrog.
Plaintiff’s First Response to Interrogatories (ECF no. 68-
P1. Opp. = Plaintiffs’ brief in response to defendants’ motion for summary
judgment (ECF no. 69)
PSA = Pooling and Serving Agreement, Dated Feb. 1, 2004 for the Morgan
Stanley Mortgage Loan Trust 2004-2AR Mortgage Pass-Through Certificates,
Series 2004-2AR (ECF no. 69-3)
Def. Reply = Reply brief in support of defendants’ combined renewed motion for
summary judgment (ECF no. 72)
It is undisputed that Kayser is not current on the loan, although there
may be a dispute as to the dollar amount of the delinquency.2 (Lucas Decl.
10; see P1. Opp. 8—9) According to Ocwen, the servicer, no monthly payment
was made on October 11, 2011, or thereafter. (Id.) At his deposition on May 7,
2015, Michael Kayser stated that he had last made a monthly mortgage
payment in March 2012. (DSMF
6—7, citing Kayser Dep. 26) No foreclosure
action has been instituted, however. (Lucas Decl.
Ocwen began servicing the loan on April 2, 2012. (Lucas Decl. ¶jJ 2, 8,
citing Servicing Transfer Notice, a/k/a “Hello/Goodbye Letter”). A qualified
affiant of Ocwen, Kyle Lucas, attests that the original note and mortgage are in
the collateral file for Kayser’s loan, now in the custody of counsel for
defendants in this action, and counsel attaches a copy of the Collateral File.
9; Collateral File)
A. Motion to Dismiss for Lack of Subject Matter Jurisdiction
Motions to dismiss for lack of subject matter jurisdiction pursuant to
Fed. R. Civ. P. 12(b)(1) may be raised at any time. Iwanowa v. Ford Motor Co.,
67 F. Supp. 2d 424, 437-38 (D.N.J. 1999). “jBjecause subject matter
jurisdiction is non-waivable, courts have an independent obligation to satisfy
themselves of jurisdiction if it is in doubt. See Mt. Healthy City Sch. Dist. Bd. of
Educ. v. Doyle, 429 U.S. 274, 278, 97 S. Ct. 568, 50 L.Ed.2d 471 (1977). A
necessary corollary is that the court can raise sua sponte subject-matter
jurisdiction concerns.” Nesbit v. Gears Unlimited, Inc., 347 F.3d 72, 76—77 (3d
Rule 12(b)(1) challenges may be either facial or factual attacks. See 2
Moore’s Federal Practice
12.30[41 (3d ed. 2007); Mortensen v. First Fed. Sat,’. &
Loan Ass’n, 549 F.2d 884, 891 (3d Cir. 1977). A facial challenge asserts that
the complaint does not allege sufficient grounds to establish subject matter
For reasons explained infra, any dispute as to the extent of delinquency is
immaterial to Kayser’s claims and therefore will not preclude summary judgment.
jurisdiction. Iwanowa, 67 F. Supp. 2d at 438. A court considering such a facial
challenge assumes that the allegations in the complaint are true. Cardio—Med.
Assoc., Ltd. v. Crozer—Chesterlvied. Ctr., 721 F.2d 68, 75 (3d Cir. 1983);
Iwanowa, 67 F. Supp. 2d at 438. A factual attack, on the other hand, permits
the Court to consider evidence extrinsic to the pleadings. Gould Elecs. Inc. v.
United States, 220 F.3d 169, 178 (3d Cir. 2000), holding modified on other
grounds by Simon v. United States, 341 F.3d 193 (3d Cir. 2003). Thus “Rule
12(b)(1) does not provide plaintiffs the procedural safeguards of Rule 12(b)(6),
such as assuming the truth of the plaintiffs allegations.” CNA v. United States,
535 F.3d 132, 144 (3d Cir. 2008).
The burden of establishing federal jurisdiction rests
with the party asserting its existence. [citing
DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n. 3,
126 5. Ct. 1854, 164 L.Ed.2d 589 (2006).] “Challenges
to subject matter jurisdiction under Rule 12(b)(1) may
be facial or factual.” [citing Common Cause of Pa. v.
Pennsylvania, 558 F.3d 249, 257 (3d Cir. 2009)
(quoting Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d
181, 188 (3d Cir. 2006)).] A facial attack “concerns ‘an
alleged pleading deficiency’ whereas a factual attack
concerns ‘the actual failure of [a plaintiffs] claims to
comport [factually] with the jurisdictional
prerequisites.’” [citing CNA v. United States, 535 F.3d
132, 139 (3d Cir. 2008) (alterations in original)
(quoting United States at rel. Atkinson v. Pa.
Shipbuilding Co., 473 F.3d 506, 514 (3d Cir.2007)).]
“In reviewing a facial attack, the court must only
consider the allegations of the complaint and
documents referenced therein and attached thereto, in
the light most favorable to the plaintiff.” [citing Gould
Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir.
2000).] By contrast, in reviewing a factual attack, “the
court must permit the plaintiff to respond with
rebuttal evidence in support of jurisdiction, and the
court then decides the jurisdictional issue by weighing
the evidence. If there is a dispute of a material fact, the
court must conduct a plenary hearing on the contested
issues prior to determining jurisdiction.” [citing
McCann v. Newman Irrevocable Trust, 458 F.3d 281,
290 (3d Cir. 2006) (citations omitted).]
Lincoln Ben. Life Co. v. AFI Life, LLC, 800 F.3d 99, 105 (3d Cir. 2015) (footnotes
omitted; case citations in footnotes inserted in text).
Here, the crux of the defendants’jurisdictionaj challenge is that no
defendant has commenced a foreclosure action in state court against Kayser.
The defendants submit a declaration of a suitable person with knowledge to
that effect (Lucas Deci.
¶ 11), and Kayser submits nothing showing even the
imminent threat of a foreclosure action. There is likewise no allegation that any
defendant has initiated foreclosure proceedings in Kayser’s Amended
Complaint. Accordingly, no extrinsic proofs are proffered or required to resolve
the jurisdictional question; whether I consider the defendants’ 12(b)(1) attack
to be facial or factual, my analysis is the same.
B. Summary Judgment Standard and Procedures
Federal Rule of Civil Procedure 56(a) provides that summan’ judgment
should be granted “if the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. p. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986); Kreschoflek u. S. Stevedoring Co., 223 F.3d 202, 204 (3d Cir. 2000).
In deciding a motion for summary judgment, a court must construe all facts
and inferences in the light most favorable to the nonmoving party. See Boyle v.
County of Allegheny Pa., 139 F.3d 386, 393 (3d Cir. 1998). The moving party
has the burden of establishing that no genuine issue of material fact remains.
See Celotex Corp. v. Catrett, 477 U.S. 317, 322—23 (1986). “[Wjith respect to an
issue on which the nonmoving party bears the burden of proof
on the moving party may be discharged by ‘showing’—that is, pointing out to
the district court—that there is an absence of evidence to support the
nonmoving party’s case.” Celotex, 477 U.S. at 325.
Once the moving party has met that threshold burden, the non-moving
party “must do more than simply show that there is some metaphysical doubt
as to material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475
U.S. 574, 586 (1986). The opposing party must present actual evidence that
creates a genuine issue as to a material fact for trial. Anderson, 477 U.S. at
248; see also Fed. R. Civ. P. 56(c) (setting forth types of evidence on which
nonmoving party may rely to support its assertion that genuine issues of
material fact exist); see also Gleason v. Nonvest Mortg., Inc., 243 F.3d 130, 138
(3d Cir. 2001) (“A nonmoving party has created a genuine issue of material fact
if it has provided sufficient evidence to allow a jury to find in its favor at trial.”).
If the nonmoving party has failed “to make a showing sufficient to establish the
existence of an element essential to that party’s case, and on which that party
will bear the burden of proof at trial,
there can be ‘no genuine issue of
material fact,’ since a complete failure of proof concerning an essential element
of the nonmoving party’s case necessarily renders all other facts immaterial.”
Katz v. Aetna Cas. & Stir. Co., 972 F.2d 53, 55 (3d Cir. 1992) (quoting Celotex,
477 U.S. at 322—23).
In deciding a motion for summan’ judgment, the court•’s role is not to
evaluate the evidence and decide the truth of the matter, but to determine
whether there is a genuine issue for trial. Anderson, 477 U.S. at 249, 106 S.
Ct. 2505. Credibility determinations are the province of the fact finder. Big
Apple BMW, Inc. u. BMWof N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir.1992).
Rule 56 and the case law interpreting it, then, require that a party
submit affidavits and evidence sufficient to persuade the court that there is or
is not an issue of fact. Defendants, as movants, have done so. Their papers
include two declarations, as well as properly sponsored mortgage documents,
assignments, deposition and interrogatory answers. Defendants also previously
submitted the Statement of Undisputed Material Facts, citing to the supporting
evidence, that is required by the Local Rules of this District. Loc. R. 56.1(a).
(See DSMF; discussion of DSMF at n. 1)
Kayser, however, has made little effort to comply with the requirements
of Rule 56. He has submitted a brief in opposition, accompanied by: (A) a copy
of the Amended Complaint (ECF no. 69-1); (B) a letter from defendants’ counsel
responding to a revised interrogatory request;3 and (C) a Pooling and Servicing
Agreement for the 2004-2AR Trust (the “PSA”) (ECF no. 69-3). Kayser has not
submitted any affidavit, declaration, or certification. Instead, Kayser’s brief
cites repeatedly to the unsupported allegations of his Amended Complaint.
(See, e.g., P1.
4 (“The relevant facts are gleamed [sic] from the Amended
Complaint.”) The complaint, he says, complies with the pleading requirements
“set forth by the Supreme Court in Bell At!. Corp. v. Twombly, 550 U.S. 544,
570 (2007).” Because, Kayser continues, “[n]othing in the Deposition or
document discovery contradict[s] any of the allegations in the Amended
the Amended Complaint is not merely a matter of law, but has
all of the facts alleged that remain undisputed by Defendants’ Discovery
responses.” (P1. Opp. 10) That is a patently incorrect application of the relevant
standards on a summary judgment motion.
The defendants’ merits-based arguments are brought on a motion for
summary judgment—not a motion to dismiss. Such a motion requires
evidence. A plaintiff cannot beat back a defendant’s motion for summary
judgment by repeating the allegations of the complaint. “[Ujnsupported
and pleadings are insufficient to repel summary judgment.”
Schoch v. First Fid. Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990).
Nevertheless, I review the entire record of the case and view Kavser’s
limited submissions in the context of the overarching command of Rule 56 that
the Court, if it is to grant
judgment, must satisfy itself based on the
record of the case that there exists no genuine, material issue of fact. See, e.g.,
Anchorage Assocs. v. Virgin Islands Bd. of Tax Review, 922 F.2d 168, 175 (3d
Cir. 1990) (holding that even where a local rule deeming unopposed motions to
be conceded, the court was still required to analyze the movant’s summary
judgment motion under the standard prescribed by Fed. R. Civ. P. 56(e)); see
record to indicate
In this letter, the defendants simply deny possession of
of the defendants or
than an insurer has “paid out on a Kayser loan” to
previous holder of Kayser’s note or mortgage. (ECF no. 69-2) The letter has no
probative value for purposes of Kayser’s claims.
Randolph Twp., 934 F. Supp. 2d 711, 723 (D.N.J. 2013), aff’d,
559 F. App5c 139 (3d Cir. 2014).
As I have not previously written on this case,4 I review the causes of
Kayser alleges in Count One—”wrongful collection practice”— that the
“Note and Mortgage in this matter never legally transferred to the Trust.” (AC
60) Therefore, Kayser alleges that defendant MSCH “has no rights to enforce
collection,” and “cannot sue Plaintiff for foreclosure or collect on the note or
authorize Defendant Ocwen to do so.” (AC
62, 63). I understand Count One
to challenge the defendants’ standing to enforce the note and mortgage through
collection efforts or in foreclosure proceedings.
Count Two asks for an injunction to quiet title on the note and mortgage.
Kayser alleges that “[a]s the Trust closed in 2004 and/or 2005 years before the
Note and mortgage were created, the question about legal title remains.” (AC
65) Therefore, Kayser concludes, title “never transferred to Defendants.” (AC
66) Moreover, Kayser says, “Defendants cannot produce the physical and
original Note and Mortgage.” (AC
65) Kayser also contends that because the
2004-2 AR-Trust had a February 2004 closing date, his note and mortgage
could not have been assigned to the 2004-2AR Trust in 2013. (AC
Of the defendants, only MSPBNA moved to dismiss. Kayser consented, and by
order dated March 3, 2014, I ordered the complaint dismissed against MSPBNA and
held its motion to dismiss moot. (ECF no. 21)
I dismiss this particular allegation without further consideration, as it seems to
be based on Kayser’s failure to appreciate that mortgage loans can be allocated to
mortgage loan trusts even after the “closing date” of the trusts. See, e.g., PSA at 17
(defining “Mortgage Loan Schedule”, noting “such schedule may be amended
addition of Replacement Mortgage Loans to, or the deletion
time to time to reflect the
of Deleted Mortgage Loans from, the Trust Fund.”); id. 25 (defining “Replacement
for a Deleted Mortgage Loan
Mortgage Loan” as “[aJ mortgage loan substituted
Id. 39—40 § 2.04 (rep and warranty requiring repurchase or substitution of
mortgage loans, upon discovery of breach post-closing date).
Count Three alleges that “Defendant knew or should have known it does
not possess true, legal title to the collection on the subject mortgage,” but
nevertheless made telephone calls and sent letters pressing Kayser to pay. (AC
¶1 67—69) Kavser alleges this amounts to fraud. Within Count Three, Kayser
also alleges that Ocwen made “false promises in regards to modifying the
mortgage,” which led Kayser to spend “more than $100,000,,, and that these
actions violated the Federal Debt Collection Practices Act (“FDCPA”), 15 U.S.C.
§ 1692 et seq. (AC ¶j 73—74) Kayser does not indicate which provisions of the
FDCPA he seeks to enforce, so I will consider the most likely candidates:
Section 1692e, which prohibits various forms of false or misleading
representations, such as falsely representing the “character, amount or legal
status of any debt” “with the collection of any debt,” 15 U.S.C.
§1692e(2)(a), and Section 1692f, which prohibits a debt collector from using
“unfair or unconscionable means to collect or attempt to collect any debt,” 15
Finally, Kayser contends in his brief that he has brought claims for
misapplication of funds and unjust enrichment. (P1.
10) These theories
are mentioned in the Amended Complaint only in passing. Only the three
counts described supra contain factual allegations even potentially sufficient to
satisfy federal pleading standards. Attempting to raise new claims in a brief in
opposition to summary judgment is procedurally impermissible. See Fed. R.
Civ. P. 15(a). Therefore, I set aside these two miscellaneous state-law claims.
Article III Jurisdiction Analysis
1. Claims Concerning Foreclosure
Defendants initially contend that this Court lacks subject matter
jurisdiction because there is no actual case or controversy, as Article III of the
United States Constitution requires. U.S. Const. Art. III; see Rodriquez u. 32nd
Legislature of Virgin Islands, 859 F.3d 199, 207 (3d Cir. 2017) (“Under Article
III of the Constitution, a federal court may exercise
actual, ongoing cases or controversies
judicial power over only
(internal quotation marks and
citations omitted)). The defendants argue Kayser is preemptively defending
against a mortgage foreclosure action not yet flied, effectively seeking
declaratory judgment and injunctive relief to prevent foreclosure. But “[t]o
satisfy the Article III case or controversy requirement, a plaintiff must establish
that he or she has suffered an ‘injury in fact’ that is both ‘concrete and
particularized’ and ‘actual or imminent, not conjectural or hypothetical.”’ Doe
exrel. Doe v. Lower Merion Sch. Dist., 665 F.3d 524, 542 (3d Cir. 2011) (quoting
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S. Ct. 2130 (1992)).
As the defendants point out, other judges in this district have
consistently dismissed claims that preemptively challenge mortgagees’ ability to
foreclose on the basis of invalid title where no foreclosure proceedings have
been initiated, whether under a Rule 12(b)(6) standard (with respect to claims
for injunctive relief) or for lack of an “actual controversy” under the Declaratory
Judgment Act, 28 U.S.C.
§ 220 1(a).6 See, e.g., Espaillat v. Deutsche Bank Nat.
Ti-. Co., No. 2:l5-CV-00314-SDW-SC, 2015 WL 2412153, at *2 (D.N.J. May 21,
2015) (“[Djeclaratory relief requires a live controversy of sufficient immediacy
between the parties. In contrast, here, there is no pending foreclosure action to
make these allegations relevant.
Further, there is no foreclosure action for
this Court to enjoin.” (citing Zimmerman u. HBO Affiliate Qrp., 834 F.2d 1163,
1170 (3d Cir. 1987)); Coleman u. Deutsche Bank Nat. Tr. Co., No. CIV.A. 151080 JLL, 2015 WL 2226022, at *3 (D.N.J. May 12, 2015) (reasoning “there is
no immediate controversy warranting declaratory judgment as there is no
active foreclosure action” and also noting the lack of an active foreclosure
action in assessing likelihood of success for injunctive relief); accord Andujar v.
Deutsche Bank Nat. Tr. Co., No. CIV.A. 14-7836, 2015 WL 4094637, at *2_s
held that the Declaratory Judgment Act
“The jU.S. Supremel Court has
requirement of an “actual controversy” is identical to the constitutional requirement of
‘cases’ and ‘controversies.”’ Cutaiar u. Marshall, 590 F.2d 523, 527 (3d Cir. 1979)
(citing AetnaLife Insurance Co. v. Haworth, 300 U.S. 227, 239-40, 57S. Ct. 461
(D.N,J. July 7, 2015); Gonzalez v. US. Bank Nat. Ass’n, No. CIV.A. 14-7855,
2015 WL 3648984, at *3_4 (D.N.J. June 11,2015).
To the extent Kayser challenges the defendants’ ability to foreclose on his
mortgaged property (and Count One appears to contain such an attempt), I join
the other judges in this district and find that this particular claim fails.
I understand Kayser’s claims to concern more than just the threat of
foreclosure, however. Indeed, aside from requesting “an injunctive Order of
Quiet Title of the Note and Mortgage” (AC
67), Kayser never asks for relief in
relation to an anticipated foreclosure. Rather, the primary purpose of Counts
One and Three, as I see it, is to stop the defendants from trying to collect
mortgage payments or to penalize them for doing so. I understand Count Two
as Kayser’s attempt to have his mortgage debt discharged entirely. (See P1.
2. Claims Concerning Collection and Title
Kayser’s claims, so understood, are nevertheless jurisdictionally infirm.
Counts One and Three allege injury by way of the defendants’ unlawful
collection (or attempted collection) of loan payments. Kayser, however, does not
dispute that he owed loan payments to some party. He alleges only that certain
assignments were invalid, and that the purported assignees therefore do not
possess the rights of creditors under the note and mortgage. That allegation,
without more, is not enough to confer standing. A rule often applied by courts
in this district is that “a mortgagor, or borrower, does not have standing to
allege that an assignment between two third parties is invalid.” English v. Fed.
Nat. Mong. Ass’n, No. CIV.A. 13-2028 CCC, 2013 WL 6188572, at
Nov. 26, 2013) (dismissing quiet title claim on 12(b)(6) motion but also finding
no “injury in fact” for standing); see also, e.g., Perez v. Jpmorgan Chase Bank,
N.A., No. CA 14-2279 (CCC), 2016 WL 816752, at *3 (D.N.J. Feb. 29, 2016)
(“Plaintiffs do not claim they are parties to or third-party beneficiaries of the
PSA or assignments of their Note or Mortgage. Accordingly, the Court finds
Plaintiffs lack standing to bring claims on those bases.”), appeal dismissed
(June 6, 2016); In re: 5th, No. AP 11-1436, 2015 WL 9462089, at *9 (D.N.J.
Dec. 28, 2015) (obligors did not have standing to challenge the validity of the
assignment of an obligation between two third parties); Andujar, 2015 WL
that the loan documents are invalid or
4094637, at *5 (“Merely alleging.
improperly assigned does not state a claim for an action to quiet title.” (citation
omitted)); Schiano v. MBNA, No. CIV.A. 05-1771 JLL, 2013 WL 2452681, at *26
(D.N.J. Feb. 11, 2013) (finding no injury in fact, also noting that plaintiff failed
to explain how “alleged irregularities in the assignments between third parties
somehow cloud title in the mortgage itself’), affd, No. CIV.A. 05-177 1 ILL,
2013 WL 2455933 (D.N.J. June 3, 2013).
That rule draws on the “fundamental principle that assignment of a
mortgage generally has no impact on the borrower’s rights or obligations.”
Aliperio u. Bank of Am., N.A., No. 2:16-CV-01008-KM-MAH, 2016 WL 7229114,
at *14 (D.N.J. Dec. 13, 2016); see also Gilanno u. US. Bank NA at reL CSAB
Motig. Backed Tr. 2006-1, 643 F. App’x 97, 101 (3d Cir. 2016) (non
precedential) (“(Plaintiff] is not a party to the PSA nor a third-party beneficiary
of the PSA, and her injuries are hypothetical. She admits that she took out the
loan, that she is in default, and she does not argue that she ever paid more
than the amount due on her loan, or that she received a bill or demand from
any entity other than the defendants.”); Bauer u. Mong. Elec. Registration Sys.,
Inc., 618 F. App’x 147, 149 (3d Cir. 2015) (non-precedential) (no standing to
challenge transfer of mortgage for same reasons); Marchi v. Hudson City Say.
Bank, No. CV 15-5725 (KM), 2017 WL 628476, at *5 (D.N.J. Feb. 15, 2017) (“In
short, the complaint fails to plead that the merger has had any real-world
consequences at all, from [plaintiff’s} point of view. It sets forth no factual basis
for a fraud claim for damages.”); U.S. Bank Nat. Ass’n v. Radisic, No. A-416013T3, 2015 WL 4275977, at *4 (N.J. Super. Ct. App. Div. July 16, 2015)
(“Defendants do not deny the debt and do not assert that they face conflicting
claims as to whom they owe the money. Therefore, they have no standing to
challenge the assignment.”).
The same principle applies to the extent Kayser is attempting to
challenge the assignments or contest ownership of the note and mortgage
based on the defendants’ breach of the PSA, as to which Kayser is not a party
or beneficiary (see PSA; P1.
8 & AC
34—38 (suggesting Defendants’
noncompliance with PSA by failing to register a trust with the Securities and
Exchange Commission)). See, e.g., Gilanno, supra; In re: 5th, 2015 WL
9462089, at *9 (“[T]he bankruptcy court correctly held that Debtors did not
have standing. They were neither a party to the PSA nor third party
beneficiaries of the agreement.”); In re Walker, 466 B.R. 271, 285 (Bankr.
E.D.Pa. 2012) (“[Ijt appears that a judicial consensus has developed holding
that a borrower lacks standing to (1) challenge the validity of a mortgage
securitization or (2) request a judicial determination that a loan assignment is
invalid due to noncompliance with a pooling and sen’icing agreement, when the
borrower is neither a party to nor a third party beneficiary of the securitization
agreement.”); DeL Reply 11—12 (collecting cases applying this principle).7
Where a plaintiff has not even alleged that errors in assignment caused it
to overpay or that the defendants failed to credit mortgage payments,8 or “that
Even if Kayser is merely submitting the PSA as evidence that, for example, the
Plaintiffs do not know which trust the note and mortgage are in and thus cannot
possess the original documents (P1. Opp. 8, 12) or that an insurer has already satisfied
Kayser’s debt (Id. 12), his effort is premised on a fundamental misunderstanding of
PSAs and the residential mortgage backed securities (“RMBS”) they govern.
PSAs govern the rights and responsibilities between parties involved in the
creation and maintenance of a trust comprised of mortgage loans, pooled for the
purpose of packaging cash flows generated by mortgage payments. See generally PSA;
Investopedia, Residential Mortgage-Backed Security, available at
http://www.investopedia.com/terms/r/rmbs.asp. By their nature, PSAs do not grant
rights to the individual mortgagors whose properties collateralize the loan pool and
they do not impact the contractual relationships between mortgagees and individual
Kayser does dispute the defendants’ calculation of missing payments but claims
Lost Assignment and the recorded Assignments in
only that “[tihe timing of the
2013 suspiciously coincide” with Kayser’s request for “payoff and reinstatement
figures from Ocwen.” (P1. Opp. 69) These statements lack evidentiwy support and at
any rate do not plausibly connect the alleged errors in assignment to Kayser’s alleged
any entities other than the defendants have ever tried to collect payment or to
institute foreclosure proceedings,” I have declined to find Article III injury-in
fact. Aliperio, 2016 WL 7229114, at *13_16; see also Gilanno, 643 F. App’x at
101; cf Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549, 194 L. Ed. 2d 635
(2016), as revised May 24, 2016 (a plaintiff cannot “allege a bare procedural
violation, divorced from any concrete harm, and satisfy the injury-in-fact
requirement of Article III.”). Kayser fails even to allege, let alone create a triable
issue, that he has been subjected to conflicting demands or that his mortgage
payments (which at any rate he ceased making in 2011 or 2012) were not
credited to his account.
Accordingly, I agree with Defendants that this Court lacks subject matter
jurisdiction over Kayser’s claims.
B. Merits Analysis
In the alternative, however, and to facilitate appellate review, I consider
the arguments on the merits. Defendants also contend that the claims asserted
in the Amended Complaint are contrary to the evidence they have submitted,
and are not supported by any independent evidence, and I agree. Essential to
each of the four causes of action before me ((1) wrongful collection practice, (2)
quiet title, (3) fraud, and (4) violation of the FDCPA) is one factual contention:
that the defendants are not the true owners of the note and mortgage and
therefore cannot collect on it. Defendants have set forth a well-documented
Similarly, Kayser’s unsupported allegations that Ocwen made “false promises in
regards to modifying the mortgage,” which led Kayser to spend “more than $100,000”
(AC ¶ 73 ; P1. Opp. 9) may be a reference to paying off a second mortgage, not the
subject of this action. At any rate, these non-specific allegations would fail under a
Rule 8 pleading standard, let alone a Rule 56 summary judgment standard. Therefore,
I set them aside.
Count I (“wrongful collection”) alleges little more than this.
Pursuant to New Jersey’s quiet title statute (Count II), “a plaintiff may maintain
an action to ‘clear up all doubts and disputes concerning’ competing claims to land.”
Coleman, 2015 WL 2226022, at *3 (quoting N.J. Stat. Ann. 2A:62—1); see also
Espaillat, 2015 WL 2412153, at *3 (“The purpose of an action to quiet title is to put
within the power of a person, who is in peaceable possession of realty as an owner, a
means to compel any other person, who asserts a hostile right or claim, or who is
case which, if unrebutted, establishes as a matter of law that that they are the
owners by assignment of the note and mortgage.
Kayser does not dispute that on June 10, 2003, he entered into the note
and mortgage, secured by the Scotch Plains property. (Lucas Dccl. ¶)4, 5,
citing note and Mortgage, M. Kayser Dep. 25—26)
In addition to a copy of the mortgage, Defendants have produced a copy
of the note, signed by Kayser on June 10, 2003, which states: “I understand
that the Lender may transfer this Note. The Lender or anyone who takes this
Note by transfer and who is entitled to receive payments under this Note is
called the ‘Note Holder.”’ (Note
1) Appended to the note is an “Endorsement
Allonge” (Note p. 5), which contains the words “Pay To The Order or at the
bottom of the page, followed by a blank field. Just below “Pay To The Order Of’
is the signature of a Senior Vice President of Morgan Stanley Dean Witter
Credit Corporation, the original mortgagee. This is a “blank indorsement,”
which carries a special legal significance. See N.J. Stat. Ann.
id. Comment 2 (if “the holder of an instrument,
writes the words ‘Pay to the
order of without completing the indorsement by writing the name of the
indorsee[, and] [t]he holder’s signature appears under the quoted words,” the
indorsement “is a blank indorsement and the instrument is payable to
reputed to hold such a right or claim, to come forward and either disclaim or show his
right or claim, and submit it to judicial determination.” (quoting English v. Federal Nat.
Mong. Ass’n, No. 13—2028, 2013 WL 6188572, *3 (D.N.J. Nov.26, 2013)). If the
defendants are the rightful owners of the note and mortgage, then there is no
competing claim to Kayser’s encumbered property.
The elements of a fraud claim under New Jersey common law are “(1) a material
misrepresentation of a presently existing or past fact; (2) knowledge or belief by the
defendant of its falsity; (3) an intention that the other person rely on it; (4) reasonable
reliance thereon by the other person; and (5) resulting damages.” Gennari u. Weiched
Co. Realtors, 148 N.J. 582, 610, 691 A.2d 350, 367 (1997). The material
misrepresentation Kayser alleges here concerns the defendants’ title to the note and
mortgage and thereby their legai basis for seeking to collect mortgage payments; this
is the sante allegation at the heart of Kayser’s FDCPA Sections 1692e and 1692f
Defendants have also produced a recorded First Assignment, dated
October 18, 2012. By that assignment, the mortgagee’s corporate successor,
MSPBNA, conveyed its entire interest in the loan to MSCH. (DSMF
First Assignment with stamp showing recordation)
Additionally, Defendants have produced a recorded Second Assignment,
dated September 19, 2013. By that assignment, MSCH assigned its entire
interest in the loan to HSBC as Trustee for the 2004-2AR Trust. (Lucas Decl.
¶ 7, citing Second Assignment with stamp showing recordation)
Further, Defendants have introduced affidavit and documentary evidence
that Ocwen began servicing the loan on April 2, 2012. (DSMF
“Hello/Goodbye Letter”; Lucas Decl.
¶ 12, citing
This evidence sufficiently establishes Defendants’ ability to enforce the
note and mortgage. Mortgages on real estate in New Jersey, including all of
their stipulations and covenants, are “assignable at law by writing, whether
sealed or not, and any such assignment shall pass and convey the estate of the
assignor in the mortgaged premises, and the assignee may sue thereon in his
N.J. Stat. Ann.
§ 46:9-9. Still, “[a]s a general proposition, a
party seeking to foreclose a mortgage must own or control the underlying debt.”
Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597, 15 A.3d 327, 329—30
(App. Div. 2011) (quoting Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323, 327—
28, 13 A.3d 435 (Ch. Div. 2010)). Ownership or control of the underlying debt
equates to the ability to enforce the underlying note. New Jersey’s version of
the Uniform Commercial Code (the “NJUCC”) governs the transfer of negotiable
instruments, including mortgages, and thus determines whether the
defendants can enforce the note. HSBC USA, N.A. v. Dennis, No. A-5522-l4T2,
2017 WL 541463, at *5 (N.J. Super. Ct. App. Div. Feb. 9, 2017) (unpublished)
(citing N.JS.A. 12A:3—104).
Kayser was notified pursuant to the Real Estate Settlement Procedures Act
(“RESPA”), 12 U.S.C.A. § 2605(b), that Ocwen was made the servicer for Kayser’s
mortgage loan (See Servicing Transfer Notice). Kayser does not allege any RESPA
violation or ineffective transfer of servicing rights.
There are three categories of persons entitled to
enforce negotiable instruments: (1) “the holder of the
instrument,” (2) “a nonholder in possession of the
instrument who has the rights of a holder,” or (3) “a
person not in possession of the instrument who is
entitled to enforce the instrument pursuant to
[N.JS.A. 12A:3—3091 or [N.JS.A. 12A:3—418].” N.JS.A.
12A:3—301. See Mitchell, supra, 422 N.J Super. at
222—23. Under category one, the statute provides “that
for a person other than the one to whom a negotiable
instrument is made payable to become a ‘holder,’ there
must be a ‘negotiationj.j’” Mitchell, supra, 422 N.J
Super. at 223 (quoting Ford, supra, 418 N.J Super. at
Id.; N.J. Stat. Ann.
12A:3-301; see also In re: Sia, 2015 WL 9462089, at *10;
U.S. Bank Nat’l Ass’n v. Paragon 150 Pierce St., L.L.C., No. CV 09-5717 (ES),
2012 WL 12904679, at *5 (D.N.J. Oct. 19, 2012); Ford, 418 N.J. Super. at 597—
599; Raftogianis, 418 N.J. Super. at 331—32.
Where, as here, the ownership of an instrument is
transferred, the transferee’s attainment of the status of
“holder” depends on the negotiation of the instrument
to the transferee. In re Kemp, 440 B.R. 624, 630
(Bankr. D.N.J. 2010) (citing N.J.S.A. 12A:3—20 1(a)).
The two elements required for negotiation are the
transfer of possession of the instrument to the
transferee, and its indorsement by the holder. Id.
(citing N,J.S.A. 12A:3—201(b)).
In re: Sia, 2015 WL 9462089, at *10.
Kayser claims “the note produced in discovery is unsigned and
unendorsed rn-id therefore has no probative value,” (91. Opp. 7) but the note
clearly contains a signed-in-blank indorsement, which means it is payable to
the bearer. N.J. Stat. Ann.
12A:3-205(b); see also Potoczny v. Aurora Loan
Sews., 636 F. App’x 115, 119 (3d Cir. 2015) (under analogous Pennsylvania
UCC, “[Defendant] was the holder of the indorsed-in-blank note, and thus was
entitled to enforce it in foreclosure proceedings even if there were defects in the
chain of assignment.”); HSBC USA, NA. u. Dennis, 2017 WL 541463, at
(acknowledging lower court’s finding that note was indorsed in blank and
finding that defendant became “the holder of the instrument” upon assignment
of the mortgage and transfer of possession of the original note); cf Wells Fargo
Bank, N.A. v. Vesprey, No. A-1863-14T4, 2016 WL 6833199, at *2 & n.3 (N.J.
Super. Ct. App. Div. Nov. 21, 2016) (“[T]o have standing, a foreclosing plaintiff
either must have possession of the promissory note or an assignment of the
mortgage that predated the original complaint.” (citing Mitchell, 422 N.J. Super.
at 216) (also noting that note was indorsed in blank)).
Kayser also contends that “the Original Note is “clearly not in [thej
possession of any of the Defendants.” (P1. Opp. 7) This bare contention is not
supported by any evidence, and by its nature, it is not made on Kayser’s
personal knowledge. In contrast, Kyle Lucas, the servicer Ocwen’s qualified
affiant, attests that the original note and mortgage are in the collateral file for
the Kayser loan, now in the custody of counsel for defendants in this action.
¶1 1—3, 9) Counsel have submitted a properly-sponsored copy of
that collateral file. (See Collateral File 2 (indicating original note is included); id.
6—9 (Note and “Endorsement Allonge”))
The only “evidence” Kayser submits to the contrary is not evidence at all;
it consists solely of allegations in the complaint—e.g., that the assignments
never validly took place or that the Trust did not exist at the time. The
confusing welter of nearly unintelligible allegations as to problems in the chain
of assignments seem to be based largely on speculation, with no supporting
facts or evidence, that certain of the involved entities ceased to exist before the
dates of the assignments. There is no testimony or exhibit establishing
anything of the kind. In short, Kayser has raised no issue of fact as to the
validity of the assignments or who has title to the note and mortgage.
There being no issues of material fact raised as to the assignment of the
mortgage, the transfer of the note, or the defendants’ possession of the original
note, I find that the defendants are the proper owners of Kayser’s note and
mortgage. Therefore, they would be authorized to collect mortgage payments
and should they choose, foreclose. Accordingly, even assuming the court
possessed jurisdiction, all four of Kayser’s causes of action would be dismissed
for failure to submit evidence sufficient to raise a genuine, material issue of
For the reasons set forth above, the defendants’ motion for summary
judgment is GRANTED and the Amended Complaint is dismissed. An
appropriate Order follows.
Dated: August 18, 2017
HON. KEVIN MCNULTY, U.S.D.J.
Kayser’s FDCPA claim would face further obstacles, such as proof that the
defendants are “debt collectors” subject to the Act. See 15 U.S.C. § l692a(6)(fl;
Humphrey v. FennyMac Holdings, LLC, No. CV1S3622KMMAH, 2017 WL 3184467, at
*4 (D.N.J. July 26, 2017) (where defendant held note and mortgage securing plaintiffs
property by assignment, its attempts to collect the loan did not violate the FDCPA,
which “does not apply to persons or businesses collecting debts on their own behalf.’”
(quoting Staub v. Harris, 626 F.2d 275, 277 (3d Cir. 1980fl; Schiano u. MBNA, No.
CIV.A. 05-1771 JLL, 2013 WL 2452681, at *12 (D.N.J. Feb. 11,2013) (collecting cases
are exempt from the FDCPA if the mortgage was
holding that “mortgage sen’icers
not in default at the time they began servicing the loan.”), affd, No. CIV.A. 05-177 1
ILL, 2013 XML 2455933 (D.N.J. June 3, 2013); see also See Douglass v. Convergent
Outsoureing, 765 F.3d 299, 303 (3d Cir. 2014) (“To prevail on an FDCPA claim, a
plaintiff must prove that (1) she is a consumer, (2) the defendant is a debt collector, (3)
the defendant’s challenged practice involves an attempt to collect a ‘debt’ as the Act
defines it, and (4) the defendant has violated a provision of the FDCPA in attempting to
collect the debt.”).
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