Bhatti v. Federal National Mortgage Association et al
MEMORANDUM-DECISION and ORDER - That plaintiff's motion to amend (Dkt. No. 24) is DENIED. That defendants' motion to dismiss (Dkt. No. 19) is GRANTED. That the complaint is dismissed. That the Clerk close this case. Signed by Senior Judge Gary L. Sharpe on 1/10/2018. (Copy served via regular and certified mail)(jel, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
ASSOCIATION et al.,
FOR THE PLAINTIFF:
731 Western Avenue
Albany, NY 12203
FOR THE DEFENDANTS:
Federal National Mortgage Association,
Green Tree Servicing, LLC, and
Mortgage Electronic Registration
Parker Ibrahim & Berg LLC
270 Davidson Avenue - 6th Floor
Somerset, NJ 08873
Gary L. Sharpe
Senior District Judge
BRIAN W. KEATTS, ESQ.
MELINDA COLON COX,
MEMORANDUM-DECISION AND ORDER
Plaintiff Eqeel Bhatti commenced this diversity action against
defendants Federal National Mortgage Association (Fannie Mae), Green
Tree Servicing, LLC (Green), and Mortgage Electronic Registration
Systems, Inc. (MERS) alleging breach of contract and seeking declaratory
relief. (See generally Compl., Dkt. No. 1.)
Pending are defendants’ motion to dismiss for lack of subject matter
jurisdiction, (Dkt. No. 19), and Bhatti’s motion for leave to file an amended
complaint, (Dkt. No. 24). For the following reasons, defendants’ motion is
granted and Bhatti’s motion is denied.
In 2005, Bhatti executed a note promising to repay $169,200 to nonparty Countrywide Home Loans, Inc. and secured the loan’s repayment by
transferring a security interest in the parcel of real property located at 731
Western Avenue in Albany, New York to Countrywide via a mortgage.
(Compl. ¶¶ 1-2, 22-24.) Bhatti’s later search regarding the property
Unless otherwise noted, the facts are drawn from Bhatti’s complaint and presented in the light
most favorable to him.
revealed that defendant Fannie Mae owns his mortgage,2 even though
defendant Green, the current loan servicer, claims “that it is the holder in
due course.”3 (Id. ¶¶ 26, 30.) Fannie Mae never recorded its acquisition of
the mortgage,4 and Bhatti “was never notified, and is yet to see any
tangible [a]ssignment of the [m]ortgage to [d]efendant [Fannie Mae].” (Id.
¶¶ 27, 39, 42, 44) (emphasis omitted). Bhatti contends this constituted a
breach of contract and voided the note and mortgage, which entitles him to
the original property price, with interest, and other special damages to be
determined at trial. (Id. ¶¶ 45,91; id. at 13.)
Secondly, Bhatti takes issue with the process by which Fannie Mae
came to “own” the mortgage. In sum, he argues that Countrywide invalidly
assigned his loan to Fannie Mae via Countrywide’s nominee, defendant
MERS, and then Green created phony records in an attempt to validate
Although it is unclear given Bhatti’s vague and inconsistent pleadings, it appears that, at some
point, Countrywide transferred Bhatti’s loan, within a larger pool of loans, to Fannie Mae via a
securitization process. (Compl. ¶¶ 54-56; Dkt. No. 24 at 5.)
At the same time, Bhatti asserts that “the [n]ote and [m]ortgage are currently owned by at least
two separate entities; G[reen] as [l]oan [s]ervicer . . ., MERS as nominee, mortagee or agent, and
F[annie]M[ae] as investor and owner.” (Compl. ¶ 55.) It appears that Bhatti fails to understand the
difference between the owner of his loan and the loan servicer, despite the fact that the distinction is
explained in his mortgage. (Dkt. No. 19, Attach. 13 at 12.)
In seemingly-contradictory fashion, Bhatti also asserts that evidence of Fannie Mae’s
ownership of the loan is easily accessible, (Compl. ¶ 21), via a “search on [the] property,” (id. ¶ 26).
this assignment. (Id. ¶¶ 26-27, 32, 53.) As such, Bhatti contends that this
“render[s] any assignments by [d]efendant MERS a nullity . . . and utter
fraud.” (Id. ¶ 21.) Moreover, Bhatti asserts that the note was never
properly transferred or endorsed to any of the named defendants, (id.
¶ 32), and thus “none of the named [d]efendants own this loan,” (id. ¶ 28),
which “mak[es] full title insurance impossible and a difficult sale of the
home,” (id. ¶ 36). Nonetheless, Green initiated foreclosure proceedings
against Bhatti related to the subject mortgage. (Id. ¶ 21.) As such, Bhatti
also seeks a “judicial determination and declaration of the rights,
obligations[,] and interest of the parties with regard to the [s]ubject
[p]roperty.” (Id. ¶ 99.)
III. Standard of Review
To survive dismissal for failure to state a claim, a complaint must
plead enough facts to state a claim that is “plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Although Rule 8(a) of the Federal Rules of Civil Procedure “does not
require detailed factual allegations, . . . it demands more than an
unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. (internal
quotation marks and citation omitted). In determining whether a complaint
states a claim upon which relief may be granted, “the court must accept the
material facts alleged in the complaint as true and construe all reasonable
inferences in the plaintiff’s favor.” Hernandez v. Coughlin, 18 F.3d 133,
136 (2d Cir. 1994) (internal quotation marks and citation omitted).
However, this tenet “is inapplicable to legal conclusions.” Iqbal, 556 U.S.
Where a plaintiff proceeds pro se, the pleadings must be read
liberally and construed to raise the strongest arguments they suggest. See
Sealed Plaintiff v. Sealed Defendant, 537 F.3d 185, 191 (2d Cir. 2008).
Additionally, a pro se complaint should not be dismissed “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,” Gomez v. USAA Fed.
Sav. Bank, 171 F.3d 794, 795 (2d Cir. 1999) (internal quotation marks and
citation omitted), unless the problem with the pro se complaint is
substantive, such that the plaintiff’s request is futile because “better
pleading will not cure it,” Cuoco v. Moritsugu, 222 F.3d 99, 112 (2d Cir.
In determining a Rule 12(b)(6) motion to dismiss, the court may
consider the complaint, any exhibit attached to the complaint, materials
incorporated by reference, and documents that are integral to the
complaint. See Sira v. Morton, 380 F.3d 57, 67 (2d Cir. 2004). A
document is integral to the complaint if the complaint “relies heavily upon
its terms and effect.” Chambers v. Time Warner, Inc., 282 F.3d 147, 153
(2d Cir. 2002) (internal quotation marks and citation omitted).
Defendants assert that Bhatti’s complaint should be dismissed
because it fails to present a justiciable case or controversy so as to
properly invoke the court’s subject matter jurisdiction, (Dkt. No. 19, Attach.
1 at 6), and fails to state a claim, (id. at 9). Bhatti admits to the complaint’s
deficiencies in his response, but contends that, if he is granted leave to
amend, his next complaint will “go far beyond a speculative level in raising
a right to relief,” and “shall clearly state several plausible causes of action.”
(Dkt. No. 24 at 2.)5 Nonetheless, defendants insist that any amendment
The court construes Bhatti’s pro se response as a motion for leave to file an amended
complaint. (Dkt. No. 24.)
would be futile “as . . . [Bhatti] has not been damaged in any way by
[d]efendants’ conduct,” (Dkt. No. 27, Attach. 1 at 4, 6-7), and “failed to
address the necessary elements for a breach of contract claim,” (id. at 9).
Notably, defendants draw the court’s attention to a Second Circuit
decision, Rajamin v. Deutsche Bank Nat’l. Trust Co., 757 F.3d 79 (2d. Cir.
2014), that considered similar issues. (Dkt. No. 19, Attach. 1 at 8; Dkt. No.
27, Attach. 1 at 8.)
Subject Matter Jurisdiction
The “irreducible constitutional minimum of standing” under Article III
of the Constitution requires that “the plaintiff must have suffered an injury in
fact . . . which is (a) concrete and particularized . . . and (b) actual or
imminent, not conjectural or hypothetical.” Lujan v. Defenders of Wildlife,
504 U.S. 555, 560 (1992) (internal quotation marks and citation omitted).
Similar to the pleadings before the Second Circuit in Rajamin, Bhatti’s
complaint fails to meet this requirement. See generally Rajamin, 757 F.3d
Bhatti acknowledges that he took out a home loan in 2005 and was
obligated to repay it with interest. (Compl. ¶ 22.) Bhatti does not suggest
that he paid defendants more than the amount due, or that he received a
request from any other entity besides the loan servicer. Thus, Bhatti fails
to allege that he paid more than he owed or has been asked to do so,
which makes any suggestion that he was in any danger of having to make
duplicative loan payments entirely hypothetical. See Rajamin, 757 F.3d at
85. Similarly, Bhatti’s claim that obtaining title insurance or selling the
home is more difficult, (Compl. ¶ 36), is simply speculation. Additionally,
the allegation that Green initiated foreclosure proceedings against Bhatti,
(id. ¶ 21), does not demonstrate an actual or imminent injury because
Bhatti fails to allege any threat or institution of foreclosure proceedings
against him by any entity other than Green. See Rajamin, 757 F.3d at 85.
Failure to State a Claim
Even assuming that Bhatti had standing to bring this suit, he fails to
state a claim for breach of contract. Bhatti identifies the contract breached
as the 2005 mortgage between him and Countrywide. (Compl. ¶¶ 22, 84,
87; Dkt. No. 19, Attach. 13.) Because Bhatti references the mortgage in
his complaint and it is integral to the complaint, the court may, and does,
consider it even though it was provided by defendants. See Sira, 380 F.3d
at 67; Chambers, 282 F.3d at 153.
The mortgage is governed by New York law. (Compl. ¶¶ 46, 85; Dkt.
No. 19, Attach. 13 at 12.) To sustain a breach of contract claim under New
York law, the plaintiff must prove (1) the existence of a contract; (2)
adequate performance of the contract by the plaintiff; (3) breach of the
contract by the defendant; and (4) damages. See 24/7 Records, Inc. v.
Sony Music Entm’t, Inc., 429 F.3d 39, 42 (2d Cir. 2005). Where a
contract’s language is unambiguous, interpretation is determined by the
court as a matter of law. See Hartford Accident & Indem. Co. v.
Wesolowski, 33 N.Y.2d 169, 171-72 (1973).
Bhatti claims that “[d]efendants . . . breached their agreement with
[him] . . . by failing to notify [him] of the change in ownership of the [n]ote
and [m]ortgage, pursuant to the mandated language of the [m]ortgage.”
(Compl. ¶ 89.) However, the terms of the mortgage are unambiguous and
provide that the note and mortgage may be sold without providing notice to
the borrower. (Dkt. No. 19, Attach. 13 at 12.) Bhatti omits language in his
complaint, seemingly to make it appear that the contract required that he
receive written notice of “any change,” (Compl. ¶¶ 41, 43), even though the
contract clearly states that “[a]pplicable [l]aw requires that [the borrower]
be given written notice of any change of the [l]oan [s]ervicer,” (Dkt. No. 19,
Attach. 13 at 12) (emphasis added).
The contract that Bhatti alleges was breached does not confer a right
to receive prior notice if the loan changes hands. (See generally Dkt. No.
19, Attach. 13.) Instead, the mortgage explicitly states that “[t]he [n]ote, or
an interest in the [n]ote, together with this [mortgage], may be sold one or
more times” and “[the borrower] might not receive any prior notice of these
sales.” (Dkt. No. 19, Attach. 13 at 12.)6
Even assuming that Bhatti had specific instances of injury in mind,
which were not translated into his complaint, he can prove no set of facts
supporting his claim which would entitle him to relief because the contract
plainly does not require defendants to provide him notice of any transfer of
the note or mortgage. Compare Platsky v. C.I.A., 953 F.2d 26, 28 (2d Cir.
1991), with Haines v. Kerner, 404 U.S. 519, 521 (1972). Because the
problem with Bhatti’s complaint is substantive, it cannot be cured by better
pleading. See Cuoco, 222 F.3d at 112. As such, Bhatti’s futile motion to
amend is denied, defendants’ motion is granted, and the complaint is
Additionally, none of the named defendants were parties to the contract that Bhatti claims was
breached. (Compare Compl. ¶ 89 with Dkt. No. 19, Attach. 13.) MERS is the only party specifically
mentioned in the mortgage wherein it states that it serves as the nominee for Countrywide and as the
“mortgagee of record” for recording purposes. (Dkt. No. 19, Attach. 13 at 3.) Yet the complaint
affirmatively states that any assignments of the mortgage were a nullity, (Compl. ¶ 21), and “none of the
[d]efendants have standing to enforce the [m]ortgage,” (id. ¶ 75). This would support an alternative basis
for dismissal since these non-parties had no duty to perform under the contract.
WHEREFORE, for the foregoing reasons, it is hereby
ORDERED that plaintiff’s motion to amend (Dkt. No. 24) is DENIED;
and it is further
ORDERED that defendants’ motion to dismiss (Dkt. No. 19) is
GRANTED; and it is further
ORDERED that the complaint is dismissed; and it is further
ORDERED that the Clerk close this case; and it is further
ORDERED that the Clerk provide a copy of this MemorandumDecision and Order to the parties.
IT IS SO ORDERED.
January 10, 2018
Albany, New York
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