Santana v. Federal National Mortgage Association et al

Filing 26

DECISION & ORDER that defts' 24 Motion to Dismiss is hereby GRANTED, with prejudice. Signed by Senior Judge Thomas J. McAvoy on 10/13/2016. (see)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
____________________________________
VICTOR SANTANA,
Plaintiff,
1:15-CV-1424
v.

FEDERAL NATIONAL MORTGAGE
ASSOCIATION, As Trustee for the Fannie
Mae Guaranteed Remic Pass-Through
Certificates Fannie Mae Remic Trust
2006-81, SETERUS, INC., MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS,
INC.

____________________________________
THOMAS J. MCAVOY,
Senior District Judge
DECISION AND ORDER
Before the Court is Defendants’ motion to dismiss Plaintiff’s Amended
Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). See dkt. # 24. The
parties have briefed the issues and the Court will decide the motion without oral
argument.
I. BACKGROUND
Plaintiff filed an Amended Complaint pro se on June 27, 2016, after the Court
granted Defendants’ motion to dismiss his original Complaint without prejudice as to any
claims for fraudulent misrepresentation. See dkt. # 23. The Amended Complaint

alleges that Plaintiff obtained a mortgage loan of $108,000 from First Franklin Bank on
July 24, 2006. Id. at 3. 1 Plaintiff signed a promissory note secured by a mortgage on
the subject property. Id. Defendant Mortgage Electronic Regulation Systems (“MERS”)
was First Franklin’s mortgagee as nominee. Id. at 4. On July 23, 2013, Plaintiff alleges,
Residential Credit Solutions, Inc. (“RCS”), then the holder of the mortgage loan,
commenced a “faulty” foreclosure action against Plaintiff in the Schenectady County
Supreme Court. Id. That court granted RCS’s motion for summary judgment in the
foreclosure action and substituted Fannie Mae as party plaintiff. Id.
The Amended Complaint alleges that Defendants engaged in fraudulent
misrepresentation by intentionally failing to disclose to Plaintiff that the mortgage had
been assigned to Fannie Mae. The Amended Complaint alleges that “FannieMae
intended to induce Plaintiff on the misrepresentation” concerning assignment of the
mortgage “by forcing him to make payments to a non-party on the Mortgage.” Id. at 7.
FannieMae’s late substitution in the state foreclosure case also mislead the Plaintiff and
the State Court about FannieMae’s standing to commence the action. Id. Plaintiff
seeks $250,000 in damages for this alleged fraudulent misrepresentation. Id.
Upon being served with the Amended Complaint, Defendants filed the instant
motion to dismiss. Plaintiff did not respond to the motion. Since “no response was
necessary” to a 12(b)(6) motion to dismiss, the Court will apply the appropriate legal
standard and determine whether Plaintiff’s Amended Complaint states a claim upon
which relief could be granted. Maggette v. Dalsheim, 709 F.2d 800, 802 (2d Cir. 1983).

1

The paragraphs of Plaintiff’s Amended Complaint are not numbered. The Court’s
citations are to the pages in the Amended Complaint.
2

II.

Legal Standard
Defendants have filed a motion to dismiss pursuant to Federal Rule of Civil

Procedure 12(b)(6). In addressing such motions, the Court must accept “all factual
allegations in the complaint as true, and draw all reasonable inferences in the plaintiff’s
favor.” Holmes v. Grubman, 568 F.3d 329, 335 (2d Cir. 2009). This tenet does not
apply to legal conclusions. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Threadbare
recitals of the elements of a cause of action, supported by mere conclusory statements,
do not suffice.” Id. “To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its face.”
Id. (quoting Bell Atl. v. Twombly, 550 U.S. 544, 570 (2007)).
When the Plaintiff proceeds pro se, the Court “‘construe[s] [the complaint]
broadly, and interprets [it] to raise the strongest arguments that [it] suggests.’” Weixel v.
Bd. of Educ. of N.Y., 287 F.3d 138, 146 (2d Cir. 2002) (quoting Cruz v. Gomez, 202
F.3d 593, 597 (2d Cir. 2000)). “[T]he complaint is deemed to include any written
instrument attached to it as an exhibit or any statements or documents incorporated in it
by reference.” Int'l Audiotext Network, Inc. v. Am. Tel. & Tel. Co., 62 F.3d 69, 72 (2d
Cir. 1995) (citing Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d
Cir.1991)). “[T]he court may, without converting the motion to dismiss into a motion for
summary judgment, consider . . . any documents relied on and/or referenced in the
complaint (even if those documents are not attached to the complaint, if those
documents are provided by defendants in their motion to dismiss)[.]” Pierce v. Monell,
2007 WL 2847317, at *5 & n.21 (N.D.N.Y. 2007) (citing Chambers v. Time Warner, 282
F.3d 147, 153 & n.3 (2d Cir. 2002)). “The court need not accept as true an allegation
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that is contradicted by documents on which the complaint relies.” In re Bristol-Myers
Squibb Sec. Litig., 312 F. Supp. 2d 549, 555 (S.D.N.Y. 2004).
III.

ANALYSIS
Defendants seek dismissal of Plaintiff’s sole remaining fraudulent

misrepresentation claim. “To state a claim for fraudulent misrepresentation under New
York law, ‘a plaintiff must show that (1) the defendant made a material false
representation, (2) the defendant intended to defraud the plaintiff thereby, (3) the
plaintiff reasonably relied upon the representation, and (4) the plaintif f suffered damage
as a result of such reliance.’” Eternity Global Master Fund Ltd. v. Morgan Guar. Trust
Co., 375 F.3d 168, 186-87 (2d Cir. 2004). Federal Rule of Civil Procedure 9(b) requires
that a plaintiff plead fraud with particularity. Acito v. IMCERA Group, 47 F.3d 47, 51
(2d Cir. 1995) (citing FED. R. CIV. P. 9(b)). The Plaintiff must: “‘(1) specify the
statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state
where and when the statements were made, and (4) explain why the statements were
fraudulent.’” Id. (quoting Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir.
1993)).
The Amended Complaint alleges that on June 5, 2015, Plaintiff “discovered that
his Mortgage securing the Loan ha[d] been owned by” FannieMae “for some time.”
Amend. Complt. at 5. Before that time, Plaintiff lacked sufficient information “to
substantiate his knowledge of FannieMae’s involvement.” Id. At that time, FannieMae’s
website contained information that Plaintiff was eligible to participate in government
programs that would have made his mortgage more affordable. Id. at 6. Because
Plaintiff was not aware of [FannieMae’s] involvement, he did not have an opportunity to
4

take advantage of these programs before becoming the defendant in the state
foreclosure action. Id. Plaintiff further alleges that no assignment of mortgage was
recorded in the Schenectady County Recorder’s Office. Id.
Plaintiff alleges that FannieMae committed fraud by: “failing [to] disclose,
pursuant to the terms and conditions in the Mortgage that while the Mortgage indicates
the Note and Mortgage may be sold, . . . it states that the Note and Mortgage would be
transferred together.” Id. FannieMae also failed to provide notice of this assignment as
required by the loan documents, despite FannieMae’s knowledge of the assignment. Id.
at 6-7. In this conduct, Plaintiff contends, FannieMae intended to induce Plaintif f to
make payments to a non-party on the mortgage. Id. at 7. FannieMae also had itself
substituted into the state foreclosure action at a late date, which Plaintiff contends
“[misrepresented] to Plaintiff and the State court” FannieMae’s “standing to commence
a judicial foreclosure.” Id. These actions caused Plaintiff harm because he had an
order of judgment entered against him in state court, and now suffers from “imminent
danger of losing his home.” Id.
These allegations fail to meet the particularity standard of Rule 9(b). First,
Plaintiff does not point to any particular statement. Indeed, he does not even allege
damage from any speech on which he relied; his damage came because Defendants
failed to speak and make him aware that his mortgage had been assigned. Second, to
extent that he does identify any speech, Plaintiff fails to identify any particular speaker,
but instead attributes the allegedly fraudulent speech to a corporation and a
corporation’s website. Courts in this circuit have been clear that allegations of fraud
cannot rely on generalized claims that corporations or their agents made fraudulent
5

statements. See Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir. 1993)
(dismissing complaint that failed to assign fraudulent statements to particular individuals
connected to corporate defendant because “Rule 9(b) is not satisfied where the
complaint vaguely attributes the alleged fraudulent statements to defendants.”) (internal
citation omitted); Greenspan v. Allstate Ins. Co., 937 F.Supp. 288, 291 (S.D.N.Y. 1996)
(an allegation of fraud “must link the allegedly fraudulent statement to an individual
speaker; attribution to a corporate entity or its representative is insufficient”); Lomaglio
Associates Inc. v. LBK Marketing Corp., 876 F.Supp. 41, 44 (S.D.N.Y. 1995)
(“Attributing statements to a corporate entity does not suffice to link those statements to
any individuals, be they directors or otherwise”). Third, to the extent that the speech
concerned the assignment of the mortgage, Plaintiff does not allege that the statements
were false, much less fraudulent.
Moreover, Plaintiff has not only failed to plead fraud with particularity, he has also
failed to plead the elements of a fraudulent misrepresentation claims. Plaintiff has not
alleged any materially false representation by any particular defendant; he has simply
alleged that he did not receive notice of an assignment. The Court must grant the
motion in that respect as well.
Plaintiff has therefore failed to plead fraud or fraud with particularity, despite
being given an opportunity to file an amended Complaint. The Court will therefore
dismiss the Complaint with prejudice.2
2

Defendants further claim that their motion should be granted on res judicata grounds.
They contend that a state court has entered judgment in the foreclosure action and
Plaintiff is therefore precluded from raising the issues the state court decided in this
action. “Under the doctrine of res judicata, a final judgment on the merits in an action
‘precludes the parties or their privies from relitigating issues that were or could have
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IV.

CONCLUSION
For the reasons stated above, Defendants’ motion to dismiss, dkt. # 24, is

hereby GRANTED, with prejudice.

IT IS SO ORDERED

DATED:October 13, 2016

been raised in that action.’” Computer Assocs. Int’l v. Altai, Inc., 126 F.3d 365, 369 (2d
Cir. 1997) (quoting Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981)).
The doctrine “bars the subsequent litigation of any claims arising from the transaction or
series of transactions which was the subject of the prior suit.” Id. Defendants’ attorney
filed an affidavit in conjunction with the motion to dismiss. See Affidavit of Allison J.
Schoenthal, dkt. # 24-2. Attorney Schoenthal avers that the underlying mortgage
foreclosure action “remains pending.” Id. at ¶ 6. Since the action remains pending,
there is no final judgment and the doctrine of res judicata cannot apply here.
7