Quiroz et al v. U.S. Bank National Association et al

Filing 60

ORDER ADOPTING 50 REPORT AND RECOMMENDATIONS as to 34 Motion to Dismiss & 40 Motion to Dismiss. For the reasons set forth in the attached Order, Judge Azrack's well-reasoned and thorough Report & Recommendation is incorporated by referen ce and adopted in its entirely as the opinion of the court, and plaintiffs' objections are overruled. The Bank Defendants' and the Baum Firm's motions to dismiss are granted in their entirety and plaintiffs' complaint is dismisse d with prejudice. The Bank Defendants shall serve a copy of this Order on plaintiffs and file a Certificate of Service on the electronic docket by no later than August 8, 2011. The Clerk of the Court is respectfully requested to enter judgment in accordance with this Order and to close this case. Ordered by Judge Kiyo A. Matsumoto on 8/5/2011. (Iguina, Carmen)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-----------------------------------X
RAMON QUIROZ, HELEN QUIROZ, and
JESSICA ANGEL QUIROZ,

NOT FOR PUBLICATION
ORDER ADOPTING REPORT &
RECOMMENDATION

Plaintiffs,
-againstU.S. BANK NATIONAL ASSOCIATION as
Trustee, NEW CENTURY MORTGAGE CORP.,
HOMECOMINGS FINANCIAL a/k/a
HOMECOMINGS FINANCIAL GMAC
MORTGAGES, STEVEN J. BAUM, P.C., and
GMAC MORTGAGES,

10-cv-2485(KAM)(JMA)

Defendants.
-----------------------------------X
MATSUMOTO, United States District Judge:
Plaintiffs Ramon Quiroz, Helen Quiroz, and Jessica
Angel Quiroz (collectively, the “plaintiffs”), proceeding pro
se, commenced this action on June 1, 2010 against U.S. Bank
National Association (“U.S. Bank”), New Century Mortgage
Corporation, Homecomings Financial a/k/a Homecomings Financial
GMAC Mortgages (“Homecomings”), and GMAC Mortgages (“GMAC”),
(collectively, the “Bank Defendants”), as well as Steven J.
Baum, P.C. (“Baum Firm”) (collectively, the “defendants”).
ECF No. 1, Complaint (“Compl.”).)

(See

In light of plaintiffs’ pro

se status, their complaint is read liberally 1 to allege the
following: (1) violations of plaintiffs’ Fifth and Fourteenth
1

See Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 474 (2d Cir. 2006)
(noting that pro se submissions are “construed liberally and interpreted ‘to
raise the strongest arguments that they suggest’” (quoting Pabon v. Wright,
459 F.3d 241, 248 (2d Cir. 2006))).

Amendment Due Process rights; (2) fraud claims related to
defendants’ misrepresentations in the state court proceedings; 2
(3) violations of the Fair Debt Collection Practices Act
(“FDCPA”); (4) violations of the Truth in Lending Act (“TILA”);
(5) breach of contract; (6) fraud claims relating to the
inducement and assignment of the mortgage agreement; (7) a
private cause of action under the Racketeer Influenced Corrupt
Organizations Act (“RICO”); 3 and (8) an allegation that the Bank
Defendants’ efforts to enforce the mortgage agreement resulted
in psychological harm to plaintiff Ramon Quiroz.
Plaintiffs request the following relief: (1) a
declaratory judgment to quiet title to the property in their
favor; (2) $73,534.34 in damages for the aggregated amounts of
secondary loans with interest; (3) $500,000 in damages for
unjust enrichment; (4) $50,000,000 in punitive damages in
connection with Ramon Quiroz’s psychological condition; (5) that
the court “withhold” several rulings by the New York State
courts, and compel the Bank Defendants to produce discovery not
provided in previous state court proceedings; and (6) that the
court compel the United States Attorney’s Office to bring
2
Plaintiffs clearly state in their objections to Judge Azrack’s Report &
Recommendation that the fraud claims are asserted against all defendants,
including the Baum Firm. (See ECF No. 52, Plaintiffs’ Objections to R&R
dated 5/23/2011 at 2.)
3

Plaintiffs also state in their objections that they intended to assert a
civil RICO claim against the defendants. (Id. at 4-5.)

2

criminal charges against all defendants under RICO.

(Compl. at

5-6, 14.)
Defendants moved to dismiss the complaint pursuant to
Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).

(See

ECF No. 34, Notice of Motion to Dismiss by Baum Firm (“Baum Firm
Mot.”); ECF No. 40, Motion to Dismiss by Bank Defendants (“Bank
Defs. Mot.”).)

The court referred the motions to Magistrate

Judge Joan M. Azrack, who has issued a Report and Recommendation
(“Report & Recommendation” or “R&R”) recommending that
defendants’ motions to dismiss be granted.
& Recommendation dated 5/16/2011.)
objected to the R&R.

(ECF No. 50, Report

Plaintiffs have timely

(See ECF No. 52, Plaintiffs’ Objections to

R&R dated 5/23/2011 (“Obj.”).)

The Bank Defendants filed an

untimely 4 opposition to plaintiffs’ objections to the R&R.

(See

ECF No. 54, Bank Defendants’ Reply in Opposition to Plaintiffs’
Objections to R&R dated 6/10/2011 (“Obj. Reply”).)

Plaintiffs

filed a reply to the Bank Defendants’ opposition.

(See ECF No.

58, Plaintiffs’ Reply Memorandum in Opposition dated 6/30/2011
(“Reply”).)

The court is not required to consider the Bank

Defendants’ untimely opposition or plaintiffs’ reply, which is
4

Defendants were served with a copy of plaintiffs’ objections to the R&R via
the court’s electronic case filing system on May 26, 2011. (See Notice of
Electronic Filing dated 5/25/2011.) Pursuant to Federal Rule of Civil
Procedure 72(b)(2), defendants had 14 days after being served with the
objections, or until June 9, 2011, to file any response. Fed. R. Civ. P.
72(b)(2). The Bank Defendants did not file their response until June 10,
2011. Therefore, their response to plaintiffs’ objections is untimely.

3

not provided for in Federal Rule of Civil Procedure 72.

For

purposes of having a complete record, however, the court will
consider these submissions.

Having undertaken a de novo review

of the record in light of the plaintiffs’ timely objections
pursuant to 28 U.S.C. § 636(b)(1), the court incorporates the
thorough and well-reasoned R&R by reference and adopts it in its
entirety.
STANDARD OF REVIEW
I.

Review of Report & Recommendation
To the extent that a party makes specific and timely

written objections to a magistrate judge’s findings, the
district court must apply a de novo standard of review.

See

United States v. Male Juvenile, 121 F.3d 34, 38 (2d Cir. 1997);
see also 28 U.S.C. § 636(b)(1).

Upon such de novo review, the

district court “may accept, reject, or modify, in whole or in
part, the findings or recommendations made by the magistrate
judge.”
II.

28 U.S.C. § 636(b)(1).
Underlying Dispute
The relevant facts in this action are set out in

detail in Judge Azrack’s R&R.

(R&R at 4-6.)

Those facts are

repeated here only to the extent necessary to support the
court’s conclusions.

4

a. Facts
In 2004, Helen Quiroz and Jessica Angel Quiroz
purchased a home at 89-37 Metropolitan Avenue in Rego Park, New
York (“the property”). (Compl. at apps. G, J.)

They refinanced

the property in July 2005, obtaining a mortgage of $522,000 from
Homecomings.

(Compl. at 10–11.)

Plaintiffs allege that the

Homecomings loan officer represented that the interest rate on
the new mortgage would be fixed at 5.5 percent for the first
five years, and that the monthly payments would be $2,392.50.
(Id.)

In reality, however, the loan agreement provided for an

adjustable rate, rather than a fixed rate.

(Id.)

From the beginning, plaintiffs were charged more than
the amount represented to them by the Homecomings loan officer.
(Id. at 10.)

Moreover, in 2007, plaintiffs were notified that

the interest rate on their mortgage would be adjusted to seven
percent.

(Id.)

In the fall of 2008, plaintiffs attempted to

rescind the mortgage, but Homecomings refused.

(Id. at app. H.)

The interest rate on plaintiffs’ mortgage increased again in
early 2009, to more than eight percent.

(Id. at 11.)

Plaintiffs allege that, in order to keep up with the increasing
mortgage payments, they obtained additional loans from
Countrywide Financial and Bank of America totaling $60,000 (the
“secondary loans”).

(Id. at 12.)

5

b. State Court Proceedings
On October 8, 2007, after plaintiffs defaulted on
their mortgage payments, U.S. Bank initiated an action in New
York State Supreme Court, Queens County, against Jessica Angel
Quiroz and Helen Quiroz, seeking an order of foreclosure and
sale (“Quiroz I”).

(See generally ECF No. 34-3, Baum Firm Mot.,

Ex. B, Quiroz I Complaint (“Quiroz I Compl.”).)
represented U.S. Bank as Trustee in Quiroz I.

The Baum Firm
(Id.)

Finding

that service of the summons and complaint was proper, and that
no defendant filed an answer or requested an extension of time
in which to file an answer, the Honorable Lawrence V. Cullen
ruled in favor of U.S. Bank and ordered that the property be
foreclosed upon and sold.

(See generally ECF No. 34-4, Baum

Firm Mot., Ex. C, Decision by Hon. Lawrence V. Cullen (“Quiroz I
Decision”).)

The Quiroz family contested this decision, and

their opposition ultimately reached the New York Court of
Appeals, which, on May 6, 2010, declined review of the matter.
(See ECF No. 34-5, Baum Firm Mot., Ex. D, Opposition to
Foreclosure Order (“Quiroz I Opp’n”); Compl. at apps. 1, C, E,
I.)
On February 2, 2009, while their opposition to the
foreclosure order was pending, Jessica Angel Quiroz and Helen
Quiroz initiated an action in New York State Supreme Court,
Queens County, against U.S. Bank (“Quiroz II”).
6

(See generally

ECF Nos. 34-6, 34-7, 34-8, Quiroz II Complaint (“Quiroz II
Compl.”).)

In Quiroz II, the Quiroz family alleged violations

of TILA, various related Federal Reserve regulations, and statelaw fraud and contract claims.

(Id.)

Although the Quiroz II

complaint refers to the Baum Firm, the firm is not explicitly
included in the caption.

(Id.)

The Quiroz family requested

that the court award rescission of the mortgage agreement,
damages corresponding to the loan amounts, statutory damages,
punitive damages, and a declaratory judgment to quiet title to
the property in their favor.

(See generally id.)

On July 1,

2009, the Honorable Bernice D. Siegal dismissed the Quiroz II
complaint on res judicata grounds, concluding that Quiroz I was
a final adjudication of all claims arising from the mortgage
transaction.

(See ECF No. 34-9, Baum Firm Mot., Ex. F, Decision

by Hon. Bernice D. Siegal (“Quiroz II Dismissal”).)
III. Report & Recommendation
Judge Azrack first recommended that the court dismiss
plaintiffs’ Fifth and Fourteenth Amendment Due Process claims,
the FDCPA claim, and the fraud claims against the Bank
Defendants under the Rooker-Feldman doctrine.

(R&R at 8.)

Judge Azrack correctly noted that “[t]he Rooker-Feldman doctrine
designates the United States Supreme Court as the only federal
court that may hear an appeal from a state-court judgment, and
denies all other federal courts jurisdiction over claims that
7

are inextricably intertwined with a prior determination issued
by a state court.”
omitted).)

(Id. (internal quotations and citation

The doctrine, as explained in the R&R, is limited to

cases “‘brought by state-court losers complaining of injuries
caused by state-court judgments rendered before the district
court proceedings commenced and inviting district court review
of those judgments.’”

(Id. at 8-9 (quoting Exxon Mobil Corp. v.

Saudi Basic Indus. Corp., 544 U.S. 280, 283-84 (2005)).)

In the

Second Circuit, four requirements must be met for application of
the Rooker-Feldman doctrine:
First, the federal-court plaintiff must have
lost in state court.
Second, the plaintiff
must complain of injuries caused by a statecourt judgment.
Third, the plaintiff must
invite district court review and rejection
of that judgment.
Fourth, the state-court
judgment must have been rendered before the
district court proceedings commenced.
(Id. at 9 (quoting Hoblock v. Albany Cnty. Bd. of Elections, 422
F.3d 77, 85 (2d Cir. 2005)).)
Reviewing plaintiffs’ complaint, Judge Azrack
correctly concluded that the first and fourth “procedural
requirements” outlined above “are satisfied in this case”
because plaintiffs lost in the state court proceedings, Quiroz I
and Quiroz II, and the instant federal action was commenced
after the decisions in those cases.

(Id.)

Judge Azrack further

correctly determined that the second and third “substantive
8

requirements” for application of the Rooker-Feldman doctrine
“are also met here,” noting that “plaintiffs go so far as to
explicitly state their dissatisfaction with the state court
proceedings, and to petition this Court to review and modify, or
to vacate entirely, those decisions.”

(Id. at 10.)

The R&R

concluded that “[t]o the extent plaintiffs explicitly ask for
review and rejection of the state courts’ orders, . . . those
claims are barred by [the] Rooker-Feldman doctrine.”

(Id. at

10-11.)
Judge Azrack then went on to analyze the specific
causes of actions raised by the plaintiffs, and determined that
they “similarly fail to surpass the Rooker-Feldman bar.”
at 11.)

(Id.

Specifically, Judge Azrack found that plaintiffs’ claim

that they were denied due process when Judge Cullen declined to
compel discovery from the Bank Defendants in Quiroz I
“explicitly seeks the review and reversal of a particular
decision made in state court” and is “inextricably intertwined
with orders that have issued from a state court, and [is] thus
barred by the Rooker-Feldman doctrine.”

(Id.)

Similarly,

because plaintiffs’ fraud claims concerning the Bank Defendants’
conduct in state court would require the court to “‘effectively
declare the state court judgment fraudulently procured and thus
void,’” the claims are “inextricably intertwined with the state
court proceedings, . . . [and] barred by [the] Rooker-Feldman
9

doctrine.”

(Id. (quoting Swiatkowski v. Citibank, No. 10-CV-

114, 2010 WL 3951212, at *10 (E.D.N.Y. Oct. 7, 2010)).)
Judge Azrack also correctly found that plaintiffs’
FDCPA claim was barred by the Rooker-Feldman doctrine.
12.)

(Id. at

The R&R explains that plaintiffs’ only allegation

regarding the collection is “their belief that the debt being
collected was false,” and thus “any FDCPA claim based on the
falsity of the debt is barred by Rooker-Feldman because it would
be inextricably intertwined with Quiroz I.”

(Id.)

Finally,

Judge Azrack notes that plaintiffs’ request for “restoration of
title” to the property and “rescission of the mortgage
essentially asks this court to vacate Quiroz I in clear
violation of Rooker-Feldman.”

(Id.)

In the R&R, Judge Azrack also found that most of
plaintiffs’ claims were barred by the doctrine of res judicata.
(Id. at 14.)

The R&R correctly noted that, in New York, the

doctrine of res judicata will bar relitigation of issues in a
subsequent litigation if three requirements are met: “‘(1) the
previous action involved an adjudication on the merits; (2) the
previous action involved the plaintiffs or those in privity with
them; [and] (3) the claims asserted in the subsequent action
were, or could have been, raised in the prior action.’”

(Id. at

13 (quoting Monahan v. New York City Dept. of Corrections, 214
F.3d 275, 285 (alteration in original) (2d Cir. 2000)).)
10

Here,

Judge Azrack found that the first requirement was satisfied
because “Quiroz I is a final adjudication on the merits.”
at 14.)

(Id.

Second, Judge Azrack found that “the requirement of

privity is similarly met.”

(Id.)

Plaintiffs Helen Quiroz and

Jessica Angel Quiroz “were [parties] in Quiroz I” and Quiroz II,
and “Ramon Quiroz, though not a named party, was in privity with
Helen and Jessica” because his “interests in both prior actions
were identical to those of his wife and daughter” and he was
“intimately involved with the prior state court proceedings.”
(Id.)
Lastly, Judge Azrack found that “the majority of
plaintiffs’ present claims arise from the same factual grouping
at the center of both prior state court proceedings — namely,
issues surrounding whether the lender misrepresented or failed
to disclose material terms of the mortgage agreement, and
whether [U.S. Bank] had a valid right to enforce that
agreement,” and thus are barred from relitigation.

(Id. at 15.)

Specifically, the R&R concludes that because the TILA claims
“pertains to alleged improprieties during the formation and
signing of the mortgage agreement,” it is “precisely the type of
issue that should have been raised in Quiroz I” and thus the
claim is now barred by res judicata.

(Id.)

Similarly, because

plaintiffs’ breach of contract claim “concerns whose conception
of the contract—plaintiffs’ or defendants’—is valid” the claim
11

“should have been raised during Quiroz I” and is thus also
barred by res judicata.

(Id. at 16.)

Finally, the R&R

concluded that because plaintiffs’ various fraud claims in this
action “pertain to the formation and validity of the contract,
and whether various defendants possessed documentation,” the
claims “should have been raised in the initial foreclosure
proceeding and are barred by res judicata.”

(Id.)

Although Judge Azrack concluded that “plaintiffs did
not intend to raise a private cause of action under RICO” in
their complaint (see id. at 3 n.3.), the R&R concluded that
“even if plaintiffs do attempt to bring a RICO claim, it would
fail under Federal Rule of Civil Procedure 12(b)(6)” as the
complaint is “bereft of any allegations of a RICO enterprise or
a pattern of racketeering activity.”

(Id.)

Further, Judge

Azrack concluded that “there is no reason to grant plaintiffs
leave to amend the complaint” as “there is no indication that a
valid RICO claim could be stated.”

(Id.)

Judge Azrack recommended “that the Court decline to
exercise supplemental jurisdiction over” plaintiffs’ negligence
claim for the alleged “serious Physical Impairment and
Psychological Harm” suffered by Ramon Quiroz as a result of
defendants’ actions.

(Id. at 17.)

The R&R noted that the

negligence claims “rely on no federal law” and that there is no
diversity jurisdiction because plaintiffs and the Baum Firm are
12

all citizens of New York.

(Id.)

Moreover, the R&R recommends

that “even if this Court were to exercise supplemental
jurisdiction over the negligence claim, the allegations of
liability for Ramon Quiroz’s injuries are merely legal
conclusions, insufficient to survive a motion to dismiss under
Rule 12(b)(6).”

(Id.)

Finally, although the R&R concluded that

“plaintiffs do no attempt to bring a fraud claim specifically
against the Baum Firm,” Judge Azrack recommended that “even if
such a claim were pleaded, . . . the Court [should] decline to
exercise supplemental jurisdiction over [that] claim” as well.
(Id. at 2 n.2.)
DISCUSSION
In light of defendants’ timely objections, the court
has undertaken a de novo review of the full record, including
the applicable law, the pleadings, the underlying record, the
parties’ submissions on the motions to dismiss, the R&R, the
plaintiffs’ objections to the R&R and reply, and the Bank
Defendants’ untimely reply in opposition to plaintiffs’
objections to the R&R.

See 28 U.S.C. § 636(b)(1).

In their objections, plaintiffs argue that “[t]he
causes of action pleaded by plaintiffs demanded in the complaint
are valid.”

(Obj. at 2.)

Plaintiffs clarify that “[i]t is very

clear plaintiffs asserted a fraud claim specifically against the
‘Baum Firm’” and that “[i]t is now entirely clear plaintiffs
13

demand[] [a] cause of action under RICO.”

(Id. at 2 n.2, 4.)

Consequently, plaintiffs ask that the court allow them to
“adequately plead a RICO claim.”

(Id. at 5.)

Moreover,

plaintiffs now argue that “U.S. Bank National Association as
trustee is not the party in question and not involved in this
matter.”

(Id. at 4.)

In addition, plaintiffs “specifically ask

this Court to reverse [the] rulings by New York State courts,
. . . to compel defendants to produce discovery material not
provided in a previous state court proceeding,” and “to compel
the United States Attorney’s Office to bring criminal charges
against” the Baum Firm and GMAC.

(Id. at 4 (internal quotations

and footnote omitted); see also id. at 5.)

Finally, plaintiffs

provide the court with an excerpt from a discussion regarding
“facts that caused the financial crash in the UNITED STATES OF
AMERICA.”

(Id. at 8-25.)
The Bank Defendants oppose plaintiffs’ objections,

arguing that “plaintiffs again proffer disjointed and
incomprehensible ‘arguments.’”

(Obj. Reply at 2.)

Arguing that

the R&R should be adopted in its entirety, the Bank Defendants
argue that “the Report reviewed each discrete claim in
plaintiffs’ Complaint and determined that each and every one of
them should be dismissed under one or more grounds.”
3.)

(Id. at

Moreover, the Bank Defendants argue that the R&R correctly

determined that “certain of the Complaint’s claims were
14

explicitly offered as claims in the State Court Actions, and
thus should be dismissed under the doctrine of res judicata.”
(Id. at 5.)

Finally, the Bank Defendants contend that “the

Report correctly determined that, to the extent it is alleged at
all . . ., no viable claim for RICO is made in the Complaint.”
(Id. at 6.)
In their reply, plaintiffs argue that, under the Due
Process Clause and the Constitution of the United States,
“Magistrate Azrack can not [sic] recommend dismissing
plaintiff[s’] complaint.”

(Reply at 8.)

Plaintiffs argue that

the Bank Defendants “are not the real party in interest” in this
case, and thus their motion to dismiss should be denied.
at 5, 8-9.)

(Id.

Plaintiffs also “demand to appoint . . . Eric

Schneiderman” to prosecute claims against the defendants for
their violations of the False Claims Act and RICO.

(Id. at 5.)

The plaintiffs “again admit that their action is an appeal from
the State Court decisions” and “plead to discovery in this
court.”

(Id. at 6, 8.)

Moreover, plaintiffs argue that because

of the disability suffered by Ramon Quiroz as a result of
defendants’ practices, they are entitled to the defense of
laches.

(Id. at 11.)

Finally, plaintiffs incorporate into

their reply what appears to be a Huffington Post article
regarding federal audits of the nation’s five largest mortgage
lenders.

(Id. at 12-18.)
15

The court has considered the foregoing objections and
undertaken a de novo review of the R&R, the underlying pleadings
and factual record upon which it is based, and the relevant
legal authorities.

Having conducted such review, and upon

careful consideration of the plaintiffs’ objections, the
objections are overruled.

This court, fully concurring with

Judge Azrack’s R&R in all material respects, hereby adopts, in
its entirety, the rationale articulated in the detailed,
thorough and well-reasoned R&R, which embodies a correctly
grounded analysis of the factual record and legal authorities.
Specifically, the court agrees with and fully adopts Judge
Azrack’s findings that: (1) the Rooker-Feldman doctrine bars
review of plaintiffs’ Fifth and Fourteenth Amendment Due Process
claims, FDCPA claim, and fraud claims; (2) the doctrine of res
judicata bars relitigation of plaintiffs’ TILA and predatory
lending claims, breach of contract claim, and fraud claims;
(3) that plaintiffs have not alleged sufficient facts to
plausibly state a RICO claim, that there is no indication that a
RICO claim could be stated, and that thus plaintiffs are denied
leave to amend their complaint; and (4) that the court declines
to exercise supplemental jurisdiction over plaintiffs’ remaining
state-law fraud and negligence claims.

Consequently,

defendants’ motions to dismiss the complaint pursuant to Federal
Rules of Civil Procedure 12(b)(1) and 12(b)(6) are granted.
16

CONCLUSION
For the reasons set forth above, Judge Azrack’s wellreasoned and thorough Report & Recommendation is incorporated by
reference and adopted in its entirely as the opinion of the
court, and plaintiffs’ objections are overruled.

The Bank

Defendants’ and the Baum Firm’s motions to dismiss are granted
in their entirety and plaintiffs’ complaint is dismissed with
prejudice.
The Bank Defendants shall serve a copy of this Order
on plaintiffs and file a Certificate of Service on the
electronic docket by no later than August 8, 2011.

The Clerk of

the Court is respectfully requested to enter judgment in
accordance with this Order and to close this case.
SO ORDERED.
Dated:

August 5, 2011
Brooklyn, New York
/s/
Kiyo A. Matsumoto
United States District Judge
Eastern District of New York

17