DiMaria et al v. Accredited Home Lenders, Inc. et al
MEMORANDUM & ORDER: The defendant's motion ]17] to dismiss is GRANTED. Ordered by Judge Frederic Block on 7/27/2016. (Innelli, Michael)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
JOSEPH DIMARIA and FRANK
MEMORANDUM AND ORDER
-againstACCREDITED HOME LENDERS, INC.;
SELECT PORTFOLIO SERVICING,
INC.; MORTGAGE ELECTRONIC
RECORDING SYSTEMS, INC.;
DEUTSCHE BANK NATIONAL TRUST
COMPANY; JOHN DOES 1-5,
For the Plaintiffs:
ADAM MICHAEL SWANSON
SHANE MATTHEW BIFFAR
Blank Rome LLP
405 Lexington Ave.
New York, NY 10174
For the Defendants:
88-18 Sutphin Blvd.
Jamaica, NY 11435
BLOCK, Senior District Judge:
Joseph and Frank DiMaria bring this action against Accredited Home Lenders, Inc.
(“Accredited”), Select Portfolio Servicing, Inc. (“Select”), Mortgage Electronic Recording
Systems, Inc. (“MERS”), and Deutsche Bank National Trust Company (“Deutsche
Bank”). They seek a declaration of quiet title under New York law, and damages under
the Real Estate Settlement Procedures Act (“RESPA”) and the Truth in Lending Act
(“TILA”). The defendants move to dismiss under Federal Rules of Civil Procedure
12(b)(1) and 12(b)(6). The motion is granted.
On September 22, 2006, the DiMarias obtained a $600,000 loan from Accredited
to purchase a property in Whitestone, New York. Accredited originally held the
promissory note, which was secured by a mortgage on the property.
The mortgage agreement provided that “for purposes of recording this mortgage,
MERS is the mortgagee of record,” although Accredited retained the substantive rights
of the mortgagee. Swanson Aff., Ex. B at 3. MERS provides mortgage-recording services
to its member financial institutions, which agree to note MERS as the mortgagee of record
on their agreements. This helps facilitate transfers of mortgages between member
institutions because the transferred mortgage need not be re-recorded with the county
clerk. See MERSCORP, Inc. v. Romaine, 8 N.Y.3d 90, 96 (2006).
Eventually, Accredited sold its rights under the DiMarias’ promissory note to
Deutsche Bank. Because Deutsche Bank is a MERS member, the promissory note was
transferred to Deutsche Bank without having to re-record the mortgage to note Deutsche
Bank as the mortgagee. The promissory note is now held in a Real Estate Mortgage
Investment Conduit (“the Trust”), which is governed by a Pooling and Servicing
Agreement to which the DiMarias are not parties. Through the Trust, Deutsche Bank
markets mortgages—including the DiMarias’—“en masse” as
components of a
securitized investment vehicle. Complaint ¶ 43.
The DiMarias acknowledge the validity of the promissory note and mortgage at the
time the agreement was first made; however, they complain that because of the transfer
and securitization of their mortgage, they are unable to determine who the current owner
of the note and mortgage is.
The DiMarias seek a declaration of quiet title under New York law—which would
terminate their obligation to make any future mortgage payments—for three reasons:
(1) by making MERS the mortgagee of record but retaining ownership of the promissory
note, Accredited rendered the note unsecured by the mortgage, (2) the use of MERS to
record the mortgage clouded the property’s title and rendered any transfer of the mortgage
unenforceable, and (3) Deutsche Bank’s inclusion of the mortgage in the Trust voided the
First, the fact that MERS—not Accredited—was the mortgagee of record does not
render the note unsecured. It is longstanding New York law that a mortgage cannot be
separated from a promissory note it secures. Merritt v. Bartholick, 36 N.Y. 44 (1867)
(“The security cannot be separated from the debt and exist independently of it.”). Since
Merritt, this rule has been applied “faithfully, and consistently . . . by the Courts of the
State of New York.” Ruiz v. MERS, 15 N.Y.S.3d 376, 377 (2d Dep’t 2015).
In Ruiz, the plaintiff claimed, as the DiMarias do here, “that the naming of MERS
as the mortgagee, even though [the bank] was the payee designated on the note,” rendered
the mortgage “null and void.” Id. The Second Department rejected this claim because of
the longstanding rule from Merritt. Id. Likewise, the DiMarias’ theory that naming
MERS as the mortgagee separated the mortgage from the promissory note fails.
Second, the practice of designating MERS as the mortgagee of record does not
cloud title under New York law. The New York Court of Appeals has held that despite
not having an interest in a loan, MERS can validly record a mortgage. Romaine, 8 N.Y.3d
at 97. It has also upheld the standing of an assignee to foreclose on a mortgage despite
MERS acting as nominee. See Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d 355, 359,
Additionally, the DiMarias expressly agreed that MERS would be the
mortgagee of record, a fact the Second Department found to support MERS’s standing to
bring a foreclosure action. MERS v. Coakley, 838 N.Y.S.2d 622, 623 (2d Dep’t 2007). It
is thus clear under New York law that the recording and transferring of mortgages through
MERS is a proper and acceptable method for doing so. Accordingly, the DiMarias’ theory
that MERS’s designation as the nominee clouds the property’s title fails as a matter of
Finally, the DiMarias allege that the defendants transferred the mortgage into the
Trust in violation of the Pooling and Servicing Agreement, rendering the Mortgage
unenforceable. The defendants argue that the DiMarias lack standing to advance this
claim, and thus, the Court lacks subject matter jurisdiction to address it.
In Rajamin v. Deutsche Bank, the plaintiffs brought claims akin to the ones
advanced by the DiMarias here. 757 F.3d 79, 82 (2d Cir. 2014). They sued Deutsche
Bank for securitizing their mortgage and asserted that it did not validly acquire their loans
because the Pooling and Service Agreement was not complied with. Id. at 87. The
plaintiffs complained they suffered damage with every mortgage payment made because
they believed the payments were not going to a proper party. Id. at 85.
because the plaintiffs “acknowledge[d] that they took out the loans . . . and were obligated
to repay them, with interest; and they ha[d] not pleaded or otherwise suggested that they
ever paid defendants more than the amounts due, or that they ever received a bill or
demand from any entity other than defendants,” the Second Circuit held that the plaitiffs
had not “allege[d] injuries sufficient to show constitutional standing.” Id. at 85-86. The
Second Circuit also rejected the plaintiffs’ attempt to enforce the Pooling and Service
Agreement because they were not parties or intended beneficiaries of the agreement, and
thus lacked standing to do so. Id. at 87.
The DiMarias complain that the transfer of the mortgage to the trust makes it such
that they do not know what entity holds their mortgage and receives their payments.
However, just as the plaintiffs in Rajamin, the DiMarias have not alleged that they have
been required, or even asked, to make any payment beyond what they originally agreed
in the mortgage agreement. Moreover, because the DiMarias are not parties or intended
beneficiaries of the Pooling and Service Agreement, they lack standing to enforce it.
The DiMarias do not attempt to distinguish Rajamin, but instead “ask this Court to
consider the doctrine of estoppel in its many forms.” Pl.’s Opp., at 9. But the DiMarias
provide no citation or clarification, and it is thus unclear what they would have this Court
consider, other than the purportedly multifarious nature of estoppel.
The defendants provided extensive—and persuasive—briefing on why the
DiMarias’ claims under RESPA and TILA fail as a matter of law; but the DiMarias did
not respond to their arguments nor advance other theories by which these claims should
survive. Accordingly, the Court deems them abandoned. See Raffaele v. City of New York,
144 F. Supp. 3d 365, 373 n.2 (E.D.N.Y. 2015) (concluding undefended claims were
abandoned because plaintiff failed to oppose motion to dismiss); cf. Jackson v. Fed.
Express, 766 F.3d 189, 198 (2d Cir. 2014) (“[I]n the case of a counseled party, a court
may, when appropriate, infer from a party’s partial opposition that relevant claims or
defenses that are not defended have been abandoned.”).
The motion to dismiss is GRANTED.
/S/ Frederic Block________
Senior United States District Judge
Brooklyn, New York
July 27, 2016
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