Wenegieme et al v. Bayview Loan Servicing et al

Filing 21

OPINION re: 11 MOTION to Dismiss . filed by Bayview Loan Servicing, MERS - 1901 E. Voorhees Street Suite C, Danville IL, 61834, 6 MOTION to Dismiss . filed by Bayview Loan Servicing. The Plaintiffs' dual trackin g claim is dismissed for lack of ripeness and improper venue. The Plaintiffs' standing claim is dismissed under the Colorado River abstention doctrine and due to improper venue. The Plaintiffs' motion for a preliminary injunction is denied. It is so ordered. (Signed by Judge Robert W. Sweet on 5/6/2015) (ajs)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

--------------------------------------x
CELESTE WENEGIEME and CELESTINE
WENEGIEME, JR,
Plaintiffs,
14 Civ. 9137(RWS)
- against OPINION
BAYVIEW LOAN SERVICING, JOHN E.
DRISCOLL, III, and MERS,
Defendants.

--------------------------------------x

Plaintiffs Celeste Wenegieme and Celestine Wenegieme, Jr.
(the "Wenegiemes" or the "Plaintiffs"), proceeding pro se, have
moved pursuant to Rule 65 of the Federal Rules of Civil
Procedure to enjoin Defendants Bayview Loan Servicing ("BLS"),
John E. Driscoll, III
"Defendants")

("Driscoll"), and MERS,

(collectively, the

from prosecuting foreclosure proceedings currently

taking place in Maryland state court.

Defendants have moved

pursuant to Rule 12(b) (6) to dismiss the Plaintiffs' Complaint.
For the reasons stated below, the motion to dismiss is granted
and the motion for a preliminary injunction is denied.

Prior Proceedings

The Wenegiemes filed their Complaint on November 17, 2014.
According to the Complaint, they own a property at 2855 West

Lafayette Avenue, in Baltimore, Maryland, subject to a mortgage.
In July of 2014, BLS contacted the Wenegiemes to inform them
that it was now servicing the mortgage and that the Wenegiemes
were in default.

BLS then told the Wenegiemes that unless they

agreed to a loan modification it would bring foreclosure
proceedings on the property.

Although the Wenegiemes sent in

paperwork seeking a modification, Driscoll and BLS instead
brought a civil action in Maryland state court seeking
foreclosure.
Construing the pleadings liberally, as required in pro se
cases by "well-established" precedent, see Hemphill v. New York,
380 F.3d 680,

687

(2d. Cir. 2004), the Plaintiffs appear to make

two claims: first,

that the defendants lack standing to bring

the foreclosure action because they cannot prove that they own
the mortgage on the Wenegiemes' property, and second, that the
foreclosure action is barred by the Dodd-Frank Act's ban on
"dual tracking."
On April 6, 2015, the Wenegiemes filed an Order to Show
Cause seeking a preliminary injunction barring the Defendants
from selling their Baltimore property during the pendency of the
litigation, any related attempts at mediation, and their efforts
to modify the loan's terms.

Applicable Standard

In deciding a motion to dismiss, the Court accepts all
factual allegations in the Complaint as true and draws all
reasonable inferences in favor of the Plaintiffs, as the nonmoving party.

See In re Elevator Antitrust Litig., 502 F.3d 47,

50 (2d Cir. 2007).

The Court then determines whether the

Complaint contains "sufficient factual matter, accepted as true,
to state a claim to relief that is plausible on its face."
Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009)

(quotation omitted).

The issue "is not whether a plaintiff will ultimately prevail,
but whether the claimant is entitled to offer evidence to
support the claims."
Cir. 2001)

Todd v. Exxon Corp., 257 F.3d 191, 198

(2d

(quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974).

A preliminary injunction is used to prevent irreparable
injury to the moving party during the pendency of a case, in
order to preserve the Court's ability to render a meaningful
decision on the merits.

WarnerVision Entertainment Inc. v.

Empire of Carolina, Inc., 101 F.3d 259, 261-62

(2d Cir. 1996).

To obtain a preliminary injunction, the moving party must
demonstrate that he or she would suffer irreparable harm in the
absence of the injunction and either 1) a likelihood of success
on the merits or 2) questions regarding the merits that are
sufficiently serious to make them fair grounds for litigation,
plus a balance of hardships decidedly in his or her favor.
Oneida Nation of N.Y. v. Cuomo,

645 F.3d 154, 164

(2d Cir.

2011).

The district court has "wide discretion" in determining

whether to grant or deny such an injunction.

Wells Fargo Secs.

LLC v. Senkowsky, 512 Fed. Appx. 57, 59 (2d Cir. 2013).

Analysis

A.

The Plaintiffs' Dual Tracking Claim is Not Yet Ripe.
The Wenegiemes argue that by bringing a foreclosure action

against them after they had submitted paperwork seeking a loan
modification, the Defendants violated the Dodd-Frank Act and
rules implemented by the Consumer Financial Protection Bureau
("CFPB") . 1

According to the CFPB, dual tracking is where a

servicer moves forward with foreclosure proceedings while
simultaneously working with the borrower to avoid foreclosure.
See Press Release, Consumer Financial Protection Bureau, CFPB
Rules Establish Strong Protections for Homeowners Facing
Foreclosure (Jan. 17, 2013), available at
/newsroom/consumer financialt.cct ion-bu

-

rotections- or-

Construing the Complaint
liberally, as required in pro se cases, see McEachin v.

1

Since this claim is based on federal law, the Court has subject matter
jurisdiction under 28 U.S.C. § 1331.

McGuinnis, 357 F.3d 197, 200 (2d Cir. 2004), the Court takes the
Wenegiemes' claim to be one under 12 C.F.R. § 1024.41(f).

That

regulation prohibits a servicer from beginning a foreclosure
proceeding if a borrower has submitted a complete loss
mitigation application within 120 days of delinquency, subject
to certain exceptions not relevant here.

The Wenegiemes

attached to their Complaint a copy of a September 25, 2014
letter from Defendant BLS, acknowledging the receipt of a loss
mitigation application from Celeste Wenegieme.

(Complaint at

10.)
Although the record is silent regarding the length of the
Wenegiemes' delinquency or the completeness of their loss
mitigation application, all reasonable inferences will be taken
in the Plaintiffs' favor when deciding a motion to dismiss.
re Elevator Antitrust Litig., 502 F.3d at 50.

In

The Wenegiemes

thus appear to state a claim under§ 1024.41's dual tracking
provision.
Defendants assert, without citing to any specific case,
statute, or regulatory provision, that there is no federal cause
of action against a servicer for dual tracking.

12 C.F.R. §

1024.41(a), however, allows a borrower to enforce the provisions
of that section, including§ 1024.41(f)'s prohibition on dual
tracking, under section 6(f) of the Real Estate Settlement
Procedure Act

("RESPA"), 12 U.S.C. § 2605(f), which includes a

private right of action for damages.

Houle v. Green Tree

Servicing, No. 14-cv-14654, 2015 WL 1867526, at *3 (E.D. Mich.
Apr. 2 3, 2015)

("Borrowers have a private right of action

against lenders who evaluate a loss mitigation application while
at the same time pursuing foreclosure."); see also Kilgore v.
Ocwen Loan Servicing, LLC, No. 13-cv-5473(JFB) (SIL), 2015 WL
698108, at *9 (E.D.N.Y. Mar. 6, 2015)

(noting that the private

right of action is available for violations of 12 C.F.R.

§

1024.41(c)).
Such a claim, however, is not yet ripe.

2

The Wenegiemes

seek $200,000 in damages for illegal foreclosure and emotional
stress, but the record indicates that foreclosure proceedings
are still pending and that the Wenegiemes have not yet lost
their property. 3

Since their claim for damages is contingent on

a negative outcome in a proceeding that is currently ongoing and that they may yet win - the Wenegiemes' dual tracking claim
under 12 C.F.R.

§

1024.41(f) is premature.

Burnham Lambert Group Inc.,

See In re Drexel

995 F.2d 1138, 1146 (2d Cir. 1993)

4

2

A court may consider the issue of ripeness sua sponte.
Nat'l Park
Hospitality Ass'n v. Dept. of the Interior, 538 U.S. 803, 808 (2003).

3

The Plaintiffs cannot recover for emotional stress, as RESPA is limited by
its terms to "actual damagesu plus up to $2,000 in additional damages in the
case of "a pattern or practice of noncompliance.u 12 U.S.C. § 2605(f) (1).
Costs and attorneys' fees are also obtainable.
Id. § ( f) ( 3).
4
The Plaintiffs also seek an injunction preventing any sale of their
property, but the RESPA statute at issue only authorizes a claim for money
damages.
See 12 U.S.C. § 2605(f) (1).

-----------·---------------

The Court therefore dismisses the dual tracking claim without
prejudice.

The Wenegiemes may re-file it in Maryland in the

event that they lose the property.

B.

The Court Declines to Exercise Jurisdiction over the

Plaintiffs' Standing Claim.

The Wenegiemes' Complaint states that the Note on their property
has gone through several new Trustees and at least one
assignment, which according to them makes it "highly unclear who
owns the actual 'Note.'"

(Complaint at 3.)

The Complaint

questions whether the assignment of the note was "proper" and
whether the Defendants have the legal right to foreclose on the
property. 5
Defendants argue that the Plaintiffs' claim should be
dismissed under the prior pending action doctrine, which confers
discretionary authority on a federal court to stay or dismiss a
suit in order to avoid duplicative litigation.
Citibank, N.A., 226 F.3d 133, 138

See Curtis v.

(2d Cir. 2000).

However, the

prior pending action doctrine is limited to situations where two
overlapping lawsuits are both pending in federal court, while

5

Defendants argue that this standing-based claim is not a valid cause of
action under New York law.
Since the Court declines to exercise jurisdiction
over the claim, this opinion does not reach that argument.

the foreclosure action against the Wenegiemes is taking place in
Maryland state court.

See Id.

("As part of its general power to

administer its docket, a district court may stay or dismiss a
suit that is duplicative of another federal court suit.");
Bradley v. Kelly, 479 F.Supp.2d 281, 284

(D. Conn. 2007)

(discussing the differing procedures for duplicative actions in
federal versus state courts).

Between state and federal court

cases, on the other hand, the general rule is that "the pendency
of an action in the state court is no bar to proceedings
concerning the same matter in the federal court having
jurisdiction."

Colo. River Water Conservation Dist. v. United

States, 424 U.S. 800, 817

(1976).

However, a district court may abstain from exercising
jurisdiction over an action that is duplicative of a state court
proceeding, but only in the rare circumstances discussed by the
Supreme Court in Colorado River.

That test requires a district

court to weigh six factors, "with the balance heavily weighted
in favor of the exercise of jurisdiction."

Village of Westfield

v. Welch's, 170 F.3d 116, 121 (2d Cir. 1999).

Those factors

are:
(1)

the assumption of jurisdiction by either court over
any res or property,

(2)

the inconvenience of the federal forum,

(3)

the avoidance of piecemeal litigation,

(4)

the order in which jurisdiction was obtained,

(5)

whether state or federal law supplies the rule of
decision, and

(6)

whether the state court proceeding will adequately
protect the rights of the party seeking to invoke
federal jurisdiction.

Id.

No single factor is necessarily decisive, and the weight

given to any one factor may vary greatly from case to case,
depending on the circumstances.

See id.

Although the court's obligation to exercise jurisdiction is
"virtually unflagging," Colo. River, 424 U.S. at 817, all six of
the factors in the analysis weigh in favor of abstention,
rendering this one of the "exceptional" circumstances in which a
federal court should decline to hear a claim.

See id. At 818.

The Maryland court has already exercised jurisdiction over the
res in question, the Wenegiemes' Baltimore property, when the
foreclosure proceeding began.

(See Complaint at 3, 12.)

A

federal forum in New York is inconvenient, since most of the
relevant documents and witnesses will be based in the Baltimore
area.

Avoidance of piecemeal litigation also weighs in favor of

abstention, since the Maryland action includes claims and
defenses not present in this one, while the issue of the
ownership of the Note can be dealt with as a defense to
foreclosure.

The Maryland court obtained jurisdiction in July

-----···--··-·-------------------

2014, well before the instant case was filed.

(Complaint at 3.)

The ownership and validity of the Note on the Plaintiffs'
property is an issue of state, rather than federal,

law.

6

None

of the Plaintiffs' submissions raise any question regarding the
adequacy of their ability to enforce their rights in the
Maryland courts.
The court therefore declines to exercise jurisdiction over
the Plaintiffs' standing claim.

C.

Venue is Improper in this District.

This lawsuit, which concerns the ownership and disposition
of a property in Baltimore, does not belong in a New York court.
28 U.S.C.

§

1406 requires a district court hearing a case where

venue is inappropriate to "dismiss, or if it be in the interest
of justice, transfer such case to any district or division in
which it could have been brought."
appropriate, 28 U.S.C.

§

Even where venue is

1404(a) allows a district court to

transfer any civil action to another district where it might
have been brought if it is in the interest of justice or more
convenient for parties and witnesses.

A district court may

dismiss a case on its own motion when venue is improper.

6

See,

The Plaintiffs' dual tracking claim is based on federal law, but is dismissed
on other grounds.
(See Section A, supra.)

e.g., Richards v. W2005 Wyn Hotels, LP, No. 11 Civ. 8880 KBF,
2011 WL 7006505, at *l (S.D.N.Y. Dec. 13, 2011); Johnson v. J.P.
Morgan Chase Bank, N.A., No. 11 Civ. 662(DLC), 2011 WL 497923,
at *2 (S.D.N.Y. Feb. 10, 2011).

Such a sua sponte dismissal is

only appropriate in extraordinary circumstances, however.

See

Stich v. Rehnquist, 982 F.2d 88, 89 (2d Cir. 1992).
Venue is not proper in this district.
U.S.C.

§

Pursuant to 28

139l(b), a party may bring a civil action in:

(1) a judicial district in which any defendant resides, if
all defendants are residents of the State in which the
district is located;

(2) a judicial district in which a substantial part of the
events or omissions giving rise to the claim occurred, or a
substantial part of property that is the subject of the
action is situated; or

(3)

if there is no district in which an action may

otherwise be brought as provided in this section, any
judicial district in which any defendant is subject to the
court's personal jurisdiction with respect to such action.

In the instant case, the Defendants are not concentrated within

a single state.

The Wenegiemes list BLS as being located in

Florida, Driscoll in Maryland, and MERS in either Illinois or
Michigan.

(Complaint at 1-2.)

Since the property at issue in

this case is located in Maryland, venue is appropriate in this
district only if a substantial part of the events giving rise to
the claim occurred here.
The Complaint demonstrates little connection between this
case and the Southern District of New York.
claim to be Bronx County residents

The Wenegiemes

(although the Defendants

contend that their primary residence is the Baltimore property
in dispute).

Celeste Wenegieme signed the deed to the property

in New York, but she did so in the Eastern District.
at 8.)

(Complaint

The only notable contact between this district and the

events at issue in this case is a letter from BLS regarding the
Wenegiemes' loan modification, which was sent to an address in
Manhattan.

(Complaint at 10.)

This fails to meet §

139l(b) (2)'s substantiality threshold, which requires a "close
nexus" between the events at issue and the forum district.
Daniel v. Am. Bd. of Emergency Med., 428 F.3d 408,
2005) .

See

433 (2d Cir.

Indeed, when prompted for the location where the events

giving rise to the claim occurred, the Wenegiemes listed
Maryland alone.

(Complaint at 3.)

7

7
If venue were appropriate in New York and the Plaintiffs properly stated a
claim, the interests of justice would weigh in favor of a discretionary
transfer under 28 U.S.C. § 1404(a). Although the Wenegiernes' interest in

Based on the foregoing, venue is inappropriate in this
District under 28 U.S.C.

§

1391.

This leaves the discretionary

decision to either transfer the action to an appropriate
district or to dismiss it entirely.
Minnette v. Time Warner,

28 U.S.C.

§

1406(a);

997 F.2d 1023, 1026 (2d Cir. 1993)

Since transfer would be futile because dismissal is also
warranted on other grounds, see Sections A and B, supra, a
dismissal without prejudice is the proper outcome here.

Conclusion

The Plaintiffs' dual tracking claim is dismissed for lack
of ripeness and improper venue.

The Plaintiffs' standing claim

is dismissed under the Colorado River abstention doctrine and
due to improper venue.

The Plaintiffs' motion for a preliminary

injunction is denied.

It is so ordered.

litigating in their chosen forum is an important consideration, they would
suffer little inconvenience litigating in Maryland, where they are already a
party to the state foreclosure action. Maryland is also the location of many
of the relevant documents and witnesses and the locus of operative facts.
Additionally, the Maryland federal court's superior understanding of Maryland
property law weighs in favor of the case being adjudicated there.
See
Herbert L.P. v. Elec. Arts Inc., 325 F. Supp. 2d 282, 285 (S.D.N.Y.~04)
(listing the relevant factors in deciding whether to transfer under §
1404(a)).

New York, NY

~

'c,2015
T W. SWEET