Bodmann et al v. JP Morgan Chase Bank, N.A. et al
Filing
23
ORDER granting 12 Motion to Dismiss for Failure to State a Claim; granting 15 Motion to Dismiss for Failure to State a Claim. For the reasons set forth herein, plaintiffs have failed to state a plausible federal claim upon which relief may be granted, and the Court thus grants defendants' motions to dismiss in their entirety. To the extent plaintiff attempts to assert a state law claim, the Court declines to exercise supplemental jurisdiction over any such claim. The Clerk of the Court shall enter judgment accordingly and close the case. SO ORDERED. Ordered by Judge Joseph F. Bianco on 7/7/2014. (Gibaldi, Michael)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_____________________
No 14-CV-833 (JFB) (WDW)
_____________________
JAMES J. BODMANN AND LUCILLE BODMANN,
Plaintiffs,
VERSUS
JPMORGAN CHASE BANK, N.A. AND SUNTRUST MORTGAGE INC.,
Defendants.
___________________
MEMORANDUM AND ORDER
July 7, 2014
___________________
JOSEPH F. BIANCO, District Judge:
provides context to the allegations in this
action. See, e.g., Kramer v. Time Warner,
Inc., 937 F.2d 767, 774 (2d Cir. 1991)
(“[C]ourts routinely take judicial notice of
documents filed in other courts, . . . not for
the truth of the matters asserted in the other
litigation, but rather to establish the fact of
such litigation and related filings.”); Vaughn
v. Consumer Home Mortg. Co., Inc., 470 F.
Supp. 2d 248, 256 n.8 (E.D.N.Y. 2007) (“It
is . . . well established that courts may take
judicial notice of court records”), aff’d, 297
F. App’x 23 (2d Cir. 2008). These are not
findings of fact by the Court. Instead, the
Court assumes these facts to be true for
purposes of deciding the present motions
and construes them in the light most
favorable to plaintiffs, the non-moving
parties.
In this civil rights action brought under
42 U.S.C. § 1983, pro se plaintiffs James J.
Bodmann
and
Lucille
Bodmann
(collectively, “plaintiffs”) allege that
JPMorgan Chase Bank, N.A. (“JPMC”) and
SunTrust Mortgage Inc. (“SunTrust”)
(collectively, “defendants”) violated their
civil rights by securitizing a promissory note
executed and delivered by plaintiffs to
SunTrust. Defendants have moved to
dismiss the complaint under Federal Rule of
Civil Procedure 12(b)(6). For the reasons
that follow, the Court grants the motions to
dismiss.
I. BACKGROUND
A. Facts
On May 20, 2013, JPMC commenced a
mortgage foreclosure action against
plaintiffs in the Supreme Court of the State
of New York, County of Nassau. (See Dekar
The following facts are taken from
plaintiffs’ complaint and the complaint in a
related foreclosure action, of which the
Court may take judicial notice, and which
1
Decl., Apr. 25, 2014, Ex. B.) In that action,
JPMC alleges that, on or about October 10,
2006, plaintiffs executed and delivered to
SunTrust a note promising to pay SunTrust
$360,000.00 plus annual interest at a rate of
6.75% over thirty years (the “note”). (Id.) As
collateral, plaintiffs allegedly gave a
mortgage on their home to Mortgage
Electronic Registration System, Inc.
(“MERS”), as nominee for SunTrust, its
successors and assigns. (Id.) JPMC claims
that MERS assigned the mortgage to JPMC
on April 3, 2013, and that JPMC is the
current holder of the note and mortgage.
(Id.) According to JPMC, plaintiffs are in
default, which prompted the mortgage
foreclosure action. (Id.)
As redress for these alleged violations of
their constitutional rights, plaintiffs seek to
quiet title to the property located at 228 N.
Kings Avenue in Massapequa, New York
(the property they mortgaged to SunTrust
that is now the subject of the foreclosure
action). (Id.) They also seek $800,000.00 in
punitive damages. (Id. ¶ V.)
B. Procedural History
Plaintiffs commenced this action on
February 6, 2014. Defendants filed their
respective motions to dismiss on April 25,
2014. Plaintiffs filed their opposition to the
motions on May 27, 2014, and defendants
filed their replies on June 5, 2014. The Court
has fully considered the submissions of the
parties.
In this action, plaintiffs allege that they
first discovered “some defects” in the note
and mortgage on or about September 16,
2012. (Compl. ¶ IV.) Specifically, they
claim that SunTrust assigned the note to
JPMC, and that the note was securitized in
the form of either a mortgage-backed
security, bond certificate, or multi-level
securities offering. (Id.) Somewhere along
the way, they claim that the note and the
mortgage were split. (Id.) Plaintiffs further
allege that neither defendant informed them
that the note would be placed in a “private
bond offering in which there was risk of loss
of their home as a result of the movement of
the market and the economy.” (Id.) They
assert that the securitization of the note “was
in violation of [their] due process rights
concerning the chain of custody of their
mortgage and note, and it would be in
violation of Plaintiff’s rights to equal
protection of the law for this issue.” (Id.)
They also claim that “the separation of the
mortgage and note was in violation of
Plaintiff’s equal protection rights to his
contract of mortgage and note,” and that the
separation of the mortgage and note renders
the instruments unenforceable. (Id.)
II. STANDARD OF REVIEW
In reviewing a motion to dismiss
pursuant to Rule 12(b)(6), the Court must
accept the factual allegations set forth in the
complaint as true and draw all reasonable
inferences in favor of the plaintiff. See, e.g.,
Cleveland v. Caplaw Enters., 448 F.3d 518,
521 (2d Cir. 2006); Nechis v. Oxford Health
Plans, Inc., 421 F.3d 96, 100 (2d Cir. 2005).
“In order to survive a motion to dismiss
under Rule 12(b)(6), a complaint must
allege a plausible set of facts sufficient ‘to
raise a right to relief above the speculative
level.’” Operating Local 649 Annuity Trust
Fund v. Smith Barney Fund Mgmt. LLC, 595
F.3d 86, 91 (2d Cir. 2010) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555
(2007)). This standard does not require
“heightened fact pleading of specifics, but
only enough facts to state a claim to relief
that is plausible on its face.” Twombly, 550
U.S. at 570.
The Supreme Court clarified the
appropriate pleading standard in Ashcroft v.
Iqbal, setting forth two principles for a
2
district court to follow in deciding a motion
to dismiss. 556 U.S. 662 (2009). The Court
instructed district courts first to “identify[ ]
pleadings that, because they are no more
than conclusions, are not entitled to the
assumption of truth.” Id. at 679. “While
legal conclusions can provide the framework
of a complaint, they must be supported by
factual allegations.” Id. Second, if a
complaint contains “well-pleaded factual
allegations, a court should assume their
veracity and then determine whether they
plausibly give rise to an entitlement to
relief.” Id.
relied on it in framing the complaint; (4)
public disclosure documents required by law
to be, and that have been, filed with the
Securities and Exchange Commission; and
(5) facts of which judicial notice may
properly be taken under Rule 201 of the
Federal Rules of Evidence. E.g. Jones v.
Nickens, 961 F. Supp. 2d 475, 483
(E.D.N.Y. 2013); David Lerner Assocs., Inc.
v. Phila. Indem. Ins. Co., 934 F. Supp. 2d
533, 539 (E.D.N.Y. 2013), aff’d, 542 F.
App’x 89 (2d Cir. 2013); SC Note
Acquisitions, LLC v. Wells Fargo Bank,
N.A., 934 F. Supp. 2d 516, 524 (E.D.N.Y.
2013), aff’d, 548 F. App’x 741 (2d Cir.
2014).
Where, as here, plaintiffs are proceeding
pro se, courts must construe the complaint
liberally in their favor. See, e.g., McEachin
v. McGuinnis, 357 F.3d 197, 200 (2d Cir.
2004); McCluskey v. N.Y. State Unified
Court Sys., No. 10-CV-2144 (JFB)(ETB),
2010 WL 2558624, at *8 (E.D.N.Y. June 17,
2010) (citing Sealed Plaintiff v. Sealed
Defendant, 537 F.3d 185, 191 (2d Cir.
2008)). Nonetheless, even though the Court
construes a pro se complaint liberally, the
complaint must still “state a claim to relief
that is plausible on its face” to survive a
motion to dismiss. Mancuso v. Hynes, 379
F. App’x 60, 61 (2d Cir. 2010) (summary
order) (quoting Iqbal, 556 U.S. at 678); see,
e.g., Harris v. Mills, 572 F.3d 66, 71–72 (2d
Cir. 2009) (applying Iqbal and Twombly
standard to pro se complaint).
III. DISCUSSION
A. Legal Standard
As noted supra, plaintiffs bring this
action under 42 U.S.C. § 1983. “Section
1983 itself creates no substantive rights; it
provides only a procedure for redress for the
deprivation of rights established elsewhere.”
Sykes v. James, 13 F.3d 515, 519 (2d Cir.
1993). To state a claim under Section 1983,
a plaintiff must allege (1) the deprivation of
any rights, privileges, or immunities secured
by the Constitution and its laws, (2) by a
person acting under the color of state law.
42 U.S.C. § 1983.
“‘Because the United States Constitution
regulates only the Government, not private
parties, a litigant claiming that his
constitutional rights have been violated must
first establish that the challenged conduct
constitutes state action.’” Fabrikant v.
French, 691 F.3d 193, 206 (2d Cir. 2012)
(quoting Flagg v. Yonkers Sav. & Loan
Ass’n, 396 F.3d 178, 186 (2d Cir. 2005)).
Thus, as the plain language of Section 1983
indicates, Section 1983 liability may be
imposed only upon wrongdoers “who carry
a badge of authority of a State and represent
Finally, the Court notes that, in
adjudicating a motion to dismiss under Rule
12(b)(6), it is entitled to consider the
following: (1) facts alleged in the complaint
and documents attached to it or incorporated
in it by reference; (2) documents integral to
the complaint and relied upon in it, even if
not attached or incorporated by reference;
(3) documents or information contained in
defendant’s motion papers if plaintiff has
knowledge or possession of the material and
3
it in some capacity, whether they act in
accordance with their authority or misuse
it.” Nat’l Collegiate Athletic Ass’n v.
Tarkanian, 488 U.S. 179, 191 (1988)
(citation omitted); see, e.g., Singletary v.
Chalifoux, No. 13-CV-4205 (JG), 2013 WL
5348306, at *2 (E.D.N.Y. Sept. 23, 2013)
(“Section 1983 ‘constrains only state
conduct, not the acts of private persons or
entities.’” (quoting Hooda v. Brookhaven
Nat’l Lab., 659 F. Supp. 2d 382, 393
(E.D.N.Y. 2009))).
willful participant in joint activity with the
state, or the entity’s functions are entwined
with state policies (‘the joint action test’ or
‘close nexus test’)”; or (3) whether “the
entity has been delegated a public function
by the state (‘the public function test’).” Id.
(internal citations omitted). In determining
whether a private party has acted under
color of state law, the Second Circuit
considers “the specific conduct of which the
plaintiff complains, rather than the general
characteristics of the entity.” Id. (internal
citations omitted).
The conduct of a private party may
constitute state action if it is “‘so entwined
with governmental policies or so
impregnated with a governmental character
that it can be regarded as governmental
action.’” Fabrikant, 691 F.3d at 206–07
(quoting Rendell-Baker v. Kohn, 457 U.S.
830, 847 (1982)); see, e.g., Filarsky v. Delia,
132 S. Ct. 1657, 1661 (2012) (“Anyone
whose conduct is fairly attributable to the
state can be sued as a state actor under
§ 1983.”
(internal
quotation
marks
omitted)). However, “a private entity does
not become a state actor for purposes of
§ 1983 merely on the basis of ‘the private
entity’s creation, funding, licensing, or
regulation by the government.’” Fabrikant,
691 F.3d at 207 (quoting Cranley v. Nat’l
Life Ins. Co. of Vt., 318 F.3d 105, 112 (2d
Cir. 2003)). “Rather, ‘there must be such a
close nexus between the [s]tate and the
challenged action’ that the state is
‘responsible for the specific conduct of
which the plaintiff complains.’” Id. (quoting
Cranley, 318 F.3d at 111) (brackets and
emphasis in original). In particular, the
Second Circuit has recognized “[t]hree main
tests” to determine whether the conduct of a
private party constitutes state action: (1)
whether “the entity acts pursuant to the
coercive power of the state or is controlled
by the state (‘the compulsion test’)”; (2)
whether “the state provides significant
encouragement to the entity, the entity is a
B. Application
1. State Action
Plaintiffs have failed entirely to allege
any conduct of either JPMC or SunTrust that
could be considered state action. Although
plaintiffs are correct that private actors may,
in certain circumstances, be considered state
actors, they allege no facts supporting such a
conclusion in this case. Specifically,
defendants’
participation
in
the
securitization of plaintiffs’ mortgage loan
does not constitute state action. See, e.g.,
Caple v. Parman Mortg. Assocs. L.P., No.
11-CV-3268 (NGG) (RER), 2012 WL
4511445, at *5 (E.D.N.Y. Oct. 1, 2012);
Chestnut v. Wells Fargo Bank, N.A., No. 11CV-5369 (JS) (ARL), 2012 WL 1657362, at
*4 (E.D.N.Y. May 7, 2012). As noted supra,
defendants’ alleged actions did not
constitute state action merely because their
conduct was regulated by state law.
Fabrikant, 691 F.3d at 207; see, e.g., Caple,
2012 WL 4511445, at *5 (citing cases).
Moreover, plaintiffs offer no authority for
the proposition that JPMC’s act of
commencing a foreclosure action constitutes
state action, and the Court rejects that theory
to the extent plaintiffs have raised it in their
opposition. See, e.g., O’Bradovich v. Vill. of
Tuckahoe, 325 F. Supp. 2d 413, 424
(S.D.N.Y. 2004) (“Because Maron’s filing
4
of the defamation lawsuit did not constitute
state action, it is not actionable under
§ 1983.”). Accordingly, the Court concludes
that plaintiffs’ Section 1983 claim must be
dismissed for the failure to allege state
action.1
process, as plaintiffs allege. 2 Accordingly,
the Court dismisses the Section 1983 claim
for the failure to allege a constitutional
violation.3
2. Constitutional Violation
Having concluded that plaintiffs have
failed to state a plausible claim under
Section 1983, the Court considers whether
pro se plaintiffs should be afforded an
opportunity to amend their complaint. See,
e.g., Cuoco v. Moritsugu, 222 F.3d 99, 112
(2d Cir. 2000) (holding that, where plaintiff
proceeds pro se, “the court should not
dismiss without granting leave to amend at
least once when a liberal reading of the
complaint gives any indication that a valid
claim might be stated” (internal citations and
quotation marks omitted)). Rule 15(a)(2) of
the Federal Rules of Civil Procedure
provides that a party shall be given leave to
amend “when justice so requires.”
Nevertheless, “[l]eave to amend, though
liberally granted, may properly be denied
for: ‘undue delay, bad faith or dilatory
motive on the part of the movant, repeated
failure to cure deficiencies by amendments
previously allowed, undue prejudice to the
opposing party by virtue of allowance of the
amendment, futility of amendment, etc.’”
Ruotolo v. City of New York, 514 F.3d 184,
191 (2d Cir. 2008) (quoting Foman v. Davis,
IV. LEAVE TO AMEND
Even assuming arguendo that plaintiffs
have sufficiently alleged the state action
element of a Section 1983 claim, the Court
concludes that plaintiffs have failed to allege
any violation of their constitutional rights. In
short, “courts have uniformly rejected the
argument that securitization of a mortgage
loan provides the mortgagor a cause of
action” under Section 1983 or any other
statute. Rodenhurst v. Bank of Am., 773 F.
Supp. 2d 886, 898 (D. Haw. 2011) (citing
cases); see, e.g., Fontaine v. JPMorgan
Chase Bank, N.A., No. 13-CV-1892 (KBJ),
2014 WL 2000346, at *5 (D.D.C. May 16,
2014) (rejecting due process claim based on
alleged securitization of loan and allegation
that defendants did not have physical
possession of original note documents);
Nials v. Bank of Am., No. 13-CV-5720
(AJN), 2014 WL 1174504, at *8 n.4
(S.D.N.Y. Mar. 21, 2014) (holding that
securitization of mortgage loans is not
unlawful). There is nothing unconstitutional
about securitizing a mortgage loan or
separating the mortgage from the note. Nor
did defendants violate plaintiffs’ due process
or equal protection rights by failing to
inform plaintiffs about the securitization
2
To be clear, the Court takes no position on whether
there is any defect in JPMC’s claim to the property at
issue in the foreclosure action. This Court holds only
that defendants’ alleged actions do not amount to
constitutional violations that are actionable under
Section 1983.
3
To the extent plaintiff also brings a separate claim
to quiet title under New York law, the Court declines,
in its discretion, to exercise supplemental jurisdiction
over that claim because the Court is dismissing the
only federal claim in this case. 28 U.S.C.
§ 1367(c)(3); see, e.g., DeFina v. Meenan Oil Co.,
Inc., 924 F. Supp. 2d 423, 439 (E.D.N.Y. 2013)
(citing cases).
Given plaintiffs’ pro se status, the Court has also
considered whether the complaint alleges a plausible
claim that defendants acted in concert with a state
actor to commit an unconstitutional act. See, e.g.,
Ciambriello v. Cnty. of Nassau, 292 F.3d 307, 324
(2d Cir. 2002). However, plaintiffs do not allege any
facts that could support such a claim.
1
5
371 U.S. 178, 182 (1962)); see also Burch v.
Pioneer Credit Recovery, Inc., 551 F.3d
122, 126 (2d Cir. 2008).
V. CONCLUSION
For the reasons set forth herein,
plaintiffs have failed to state a plausible
federal claim upon which relief may be
granted, and the Court thus grants
defendants’ motions to dismiss in their
entirety.4 To the extent plaintiff attempts to
assert a state law claim, the Court declines
to exercise supplemental jurisdiction over
any such claim. The Clerk of the Court shall
enter judgment accordingly and close the
case.
Here, plaintiffs’ complaint is premised
on an inaccurate view of the law, namely,
that the securitization of loans or the
initiation of foreclosure proceedings by
private entities constitutes state action.
Accordingly, better pleading would not cure
the defects in plaintiffs’ complaint, and
leave to amend is therefore denied. See, e.g.,
Cuoco, 222 F.3d at 112 (holding that leave
to amend should be denied where “better
pleading will not cure” the defects in a
plaintiff’s complaint); Knox v. Countrywide
Bank, --- F. Supp. 2d ----, No. 13-CV-3789
(JFB) (WDW), 2014 WL 946635, at *10
(E.D.N.Y. Mar. 12, 2014) (denying leave to
amend where plaintiffs’ theory of liability
was “premised on an inaccurate view of the
law”).
SO ORDERED.
_______________________
JOSEPH F. BIANCO
United States District Judge
Dated: July 7, 2014
Central Islip, NY
*
*
*
Plaintiffs proceed pro se. Defendant
JPMorgan Chase Bank, N.A. is represented
by Mary Claire Dekar, Morgan Lewis &
Bockius LLP, 101 Park Avenue, New York,
NY 10178. Defendant SunTrust Mortgage
Inc. is represented by Laura M. Greco,
McGlinchey
Stafford
PLLC,
194
Washington Avenue, Suite 600, Albany, NY
12210.
4
Because the Court concludes that plaintiffs have
failed to state a plausible claim upon which relief
may be granted, the Court need not consider JPMC’s
additional argument that this Court should abstain
from adjudicating the merits of this case because of
the pending foreclosure action in state court.
6
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