Encarnacion v. RMS Asset Management LLC et al
Filing
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OPINION AND ORDER. Because this Court lacks subject matter jurisdiction over this action, Defendants' motion to dismiss is granted. This Court has considered Encarnacion's remaining arguments and concludes that they are moot or without meri t. The Clerk of Court is directed to terminate all pending motions and mark this case as closed. So ordered. re: 24 MOTION to Dismiss filed by Jeffrey S. Greene, RMS Asset Management LLC, GMAT Legal Title Trust 2014-1, et al, US National Association. (Signed by Judge William H. Pauley, III on 9/24/2018) (rjm) Transmission to Orders and Judgments Clerk for processing.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
NIURKA ENCARNACION,
Plaintiff,
-againstRMS ASSET MANAGEMENT LLC;
JEFFREY S. GREENE AS ATTORNEY IN
FACT; US NATIONAL ASSOCIATION AS
TRUSTEE; GMAT LEGAL TITLE TRUST
2014-1, et al.,
Defendants.
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17cv5299
OPINION & ORDER
WILLIAM H. PAULEY III, Senior United States District Judge:
Plaintiff Niurka Encarnacion brings this pro se action against Defendants RMS
Asset Management LLC, its attorney Jeffrey S. Greene, and GMAT Legal Title Trust 2014-1 to
challenge the foreclosure of her apartment and her subsequent eviction. Defendants move to
dismiss the Second Amended Complaint (“Complaint”) pursuant to Rule 12(b)(1) and Rule
12(b)(6). For the following reasons, Defendants’ motion is granted.
BACKGROUND
This action is the latest chapter in a dispute between Encarnacion and Defendants
arising from the foreclosure of and Encarnacion’s eviction from her apartment at 501 West 150th
Street. The relevant facts are gleaned from the Complaint and factual allegations made in
Encarnacion’s opposition papers. See Walker v. Schult, 717 F.3d 119, 122 n.1 (2d Cir. 2013).
The narrative also draws from public filings and judgments from prior state court proceedings
involving these parties.
I.
State Court Proceedings
In October 2016, RMS Asset Management (“RMS”) initiated a holdover eviction
summary proceeding as attorney-in-fact for U.S. Bank N.A. as trustee of GMAT Legal Title
Trust 2014-1 (“GMAT”) in the Landlord-Tenant Part of the New York City Civil Court. RMS
sought to remove any holdover occupants of 501 West 150th Street after it acquired ownership
of the property pursuant to a foreclosure sale. (See Declaration in Support of Motion to Dismiss
Amended Complaint, ECF No. 24 (“Greene Decl.”), Ex. A.) In relevant part, the holdover
proceedings reflect that (1) the occupants were served with a 90-day Notice to Quit and a copy of
the Referee’s Deed on July 14, 2016; and (2) Encarnacion was identified as one of the occupants
of the premises. (See Greene Decl., Exs. A & B.) By letter dated October 26, 2016,
Encarnacion sought to inspect the documents evidencing ownership of the premises and to
dismiss the holdover proceeding based on her belief that the premises were rent-stabilized.
On November 29, 2016, Defendants obtained a default judgment against
Encarnacion after an inquest by the housing court that awarded them possession of the premises
and ordered the issuance of a warrant to evict Encarnacion. (Greene Decl., Ex. B.) Encarnacion
alleges that this judgment was invalid because it—along with the underlying holdover papers—
was not made out to “Niurka Encarnacion©,” but to “NIURKA ENCARNACION.”1 She was
subsequently served with an eviction notice on December 13, 2016 but claims that this too was
invalid because it was addressed to “NIURKA ENCARNACION” and not “Niurka
Encarnacion©.”
By Decision and Order dated January 10, 2017, the housing court granted
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Because these arguments—and others made in connection with Encarnacion’s opposition to the motion to
dismiss—have been routinely rejected by courts as legally frivolous, they are not addressed herein. See Santana v.
United States, 2017 WL 2470834, at *2 (S.D.N.Y. June 6, 2017); Muhammad v. Smith, 2014 WL 3670609, at *2
(N.D.N.Y. July 23, 2014).
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Encarnacion’s motion to vacate the November 29, 2016 default judgment and scheduled a date
for trial. In vacating the default judgment, the housing court concluded in part that Encarnacion
raised a potentially meritorious defense that the apartment was rent-stabilized. (See Greene
Decl., Ex. C.) On February 21, 2017, the housing court reinstated the November 29, 2016
judgment based on Encarnacion’s failure to appear for trial, Defendants’ prior proof of its prima
facie case, and the housing court’s determination that the premises were exempt from rent
stabilization. (Greene Decl., Ex. D.) In addition to awarding possession of the premises to
Defendants and directing the issuance of a warrant of eviction, the reinstated judgment also
awarded Defendants a $6,000 money judgment reflecting Encarnacion’s use and occupancy of
the premises in the intervening period. (Greene Decl., Ex. D.) Encarnacion was initially evicted
on March 17, 2017.
Around the time of her removal, Encarnacion challenged the lawfulness of her
eviction through an order to show cause in the holdover proceeding and a separate action in New
York City Civil Court where she asserted breach of contract, personal injury, and a litany of
other claims. (Greene Decl., Ex. F.) Her efforts culminated in the execution of a stipulation of
settlement in the housing court proceeding. That stipulation provided that Encarnacion would be
reinstated to her apartment until June 30, 2017 so long as she satisfy Defendants’ money
judgment, withdraw her order to show cause, and discontinue her civil court action with
prejudice. (See Greene Decl., Ex. E.) In relevant part, the stipulation also specified that
Defendants’ judgment and warrant of eviction “remain[ed] valid and enforceable,” but stayed
execution of the warrant until June 30, 2017. (Greene Decl., Ex. E.) Despite signing the
stipulation on March 24, 2017, Encarnacion then repeatedly—but unsuccessfully—sought its
vacatur in housing court based on the purported lack of evidence of Defendants’ ownership of
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the premises. On or about July 14, 2017, Encarnacion was permanently evicted from her
apartment.
II.
Federal Court Proceeding
As an initial matter, this Court affords Encarnacion—a pro se litigant—“special
solicitude” by construing the Complaint to “raise the strongest claims that it suggests.”
Hardaway v. Hartford Pub. Works Dep’t, 879 F.3d 486, 489 (2d Cir. 2018) (quotation marks
omitted). Encarnacion invokes various constitutional provisions, federal criminal and civil
statutes, and federal case precedent. However, the gravamen of the Complaint is that the
foreclosure and eviction were fraudulent or unlawful because Defendants had not established that
they were lawful owners empowered to foreclose, initiate holdover proceedings, or evict her.
Specifically, she alleges that Defendants failed to produce the original deed with a “wet ink”
signature or evidence of the existence of GMAT Legal Title Trust 2014-1. According to
Encarnacion, Defendants’ failure to provide such evidence of ownership while demanding
payment of the money judgment award constitutes fraud and extortion, rendering the housing
court proceedings null and void. Finally, Encarnacion suggests that her laborious efforts in
maintaining her apartment would make eviction and/or payment of past-due rent inequitable.
Ultimately, Encarnacion seeks compensatory damages arising from her eviction, vacatur of the
March 24, 2017 stipulation, and reinstatement to her apartment.
DISCUSSION
A court presented with a motion to dismiss under both Rule 12(b)(1) and Rule
12(b)(6) must decide the “jurisdictional question first because a disposition of a Rule 12(b)(6)
motion is a decision on the merits, and therefore, an exercise of jurisdiction.” Chambers v.
Wright, 2007 WL 4462181, at *2 (S.D.N.Y. Dec. 19, 2007); see also Rhulen Agency, Inc. v. Ala.
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Ins. Guar. Ass’n, 896 F.2d 674, 678 (2d Cir. 1990). Because this Court concludes that it lacks
jurisdiction to entertain this action, it does not reach Defendants’ arguments that dismissal is
appropriate under Rule 12(b)(6) based on res judicata principles and the Complaint’s failure to
state a claim.
I.
Subject Matter Jurisdiction
A case is “properly dismissed for lack of subject matter jurisdiction under Rule
12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.”
Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). “In resolving a motion to dismiss
under Rule 12(b)(1), the district court must take all uncontroverted facts in the complaint . . . as
true, and draw all reasonable inferences in favor of the party asserting jurisdiction.” Tandon v.
Captain’s Cove Marina of Bridgeport, Inc., 752 F.3d 239, 243 (2d Cir. 2014). Moreover, a court
may “consider materials extrinsic to the complaint” when subject matter jurisdiction is
challenged. Phifer v. City of New York, 289 F.3d 49, 55 (2d Cir. 2002).
A. Rooker-Feldman Doctrine
Defendants’ motion to dismiss for lack of subject matter jurisdiction is principally
premised on the Rooker-Feldman doctrine. Accord Hoblock v. Albany Cty. Bd. of Elections,
422 F.3d 77, 83 (2d Cir. 2005) (explaining that “Rooker-Feldman goes to subject-matter
jurisdiction”). The Rooker-Feldman doctrine is grounded in the precept that the U.S. Supreme
Court exclusively possesses federal appellate jurisdiction to reverse or modify state court
judgments. See 28 U.S.C. § 1257. Fundamentally, it bars cases brought by “state-court losers
complaining of injuries caused by state-court judgments rendered before the district court
proceedings commenced and inviting district court review and rejection of those judgments.”
Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 287 (2005). Thus, for Rooker-
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Feldman to apply, the following four requirements must be met: “(1) the plaintiff lost in state
court, (2) the plaintiff complains of injuries caused by the state court judgment, (3) the plaintiff
invites district court review of that judgment, and (4) the state court judgment was entered before
the plaintiff’s federal suit commenced.” McKithen v. Brown, 626 F.3d 143, 154 (2d Cir. 2010).
Here, Encarnacion asserts claims that courts routinely dismiss under the RookerFeldman doctrine. See, e.g., Zapotocky v. CIT Bank, N.A., 587 B.R. 589, 596 (S.D.N.Y. 2018);
Graham v. Select Portfolio Servicing, Inc., 156 F. Supp. 3d 491, 503 (S.D.N.Y. 2016); Hourani
v. Wells Fargo Bank, N.A., 158 F. Supp. 3d 142, 146 (E.D.N.Y. 2016); Swiatkowski v. Citibank,
745 F. Supp. 2d 150, 165 (E.D.N.Y. 2010). The first and fourth prongs are clearly met and need
not detain this Court long. The housing court entered a judgment awarding possession of the
subject premises to Defendants, directing the issuance of a warrant to evict Encarnacion, and
awarding a money judgment in favor of Defendants. This judgment was entered on November
29, 2016 and reinstated on February 21, 2017. Likewise, the housing court entered the March
24, 2017 stipulation before Encarnacion commenced this action on July 13, 2017. Cf. Reyes v.
Fairfield Props., 661 F. Supp. 2d 249, 273 (E.D.N.Y. 2009) (collecting cases indicating that a
stipulation of settlement may constitute a state court judgment for Rooker-Feldman purposes).
The second and third prongs warrant a more fulsome discussion. A federal
plaintiff “complains of an injury from a state judgment ‘when [a] third party’s actions are
produced by the state-court judgment and are not simply ratified in, acquiesced in, or left
unpunished by it.’” Bd. of Managers of 195 Hudson St. Condo. v. Jeffrey M. Brown Assocs.,
Inc., 652 F. Supp. 2d 463, 469-70 (S.D.N.Y. 2009) (citing Hoblock, 422 F.3d at 87-88)). Here,
Encarnacion’s asserted injuries—i.e., her eviction from her foreclosed apartment and
Defendants’ attempts to execute their money judgment—stem directly from the housing court’s
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February 21, 2017 judgment and warrant of eviction, as amended by the March 24, 2017
stipulation entered by the housing court. Specifically, the judgment awarded possession of the
subject premises to Defendants, ordered the issuance of a warrant of eviction, and awarded
Defendants a monetary judgment. See Vossbrinck v. Accredited Home Lenders, Inc., 773 F.3d
423, 427 (2d Cir. 2014) (per curiam) (“[T]he injury of which [plaintiff] ‘complains’ . . . is the
state foreclosure judgment. This is evident from the relief [plaintiff] requests—title to and tender
of his property and . . . to have the state judgment declared ‘void.’” (citation omitted)).
Moreover, the Complaint does not simply invite review of housing court’s
judgment—it explicitly seeks the vacatur of the March 24, 2017 stipulation and reinstatement to
her apartment. In particular, Encarnacion claims that Defendants’ failure to address filings to her
copyright name or establish legal ownership of her apartment voided the housing court
proceedings, including the February 21, 2017 judgment and the March 24, 2017 stipulation.
Adjudicating Encarnacion’s claims and granting her requested relief would unavoidably and
impermissibly require overturning—or at minimum, reviewing the validity of—the housing
court’s judgment. Cf. Exxon Mobil, 544 U.S. at 293 (characterizing Rooker-Feldman’s
“paradigm situation” as where plaintiff has “repaired to federal court to undo the [state]
judgment”). And while Encarnacion intimates without explanation that the housing court was
complicit in Defendants’ fraud, this does not alter the Rooker-Feldman analysis. See Zapotocky,
587 B.R. at 596 (noting that even if “the state court judgment was wrongly procured, it is
effective and conclusive until it is modified or reversed in the appropriate State appellate or
collateral proceeding” (quoting Simpson v. Putnam Cty. Nat’l Bank of Carmel, 20 F. Supp. 2d
630, 633 (S.D.N.Y. 1998))).
The Second Circuit’s discussion of Rooker-Feldman in Vossbrinck, a factually
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analogous case, is instructive. There, the plaintiff alleged that defendants engaged in fraud in a
foreclosure proceeding by failing to demonstrate legal ownership of the subject property.
Vossbrinck, 773 F.3d at 427. The Second Circuit affirmed the district court’s determination that
Rooker-Feldman barred plaintiff’s claim for title to his foreclosed property and invalidation of
the purportedly fraudulent state foreclosure judgment. Vossbrinck, 773 F.3d at 427.
Specifically, it concluded that “asking the federal court to determine whether the state judgment
was wrongfully issued in favor of parties who . . . lacked standing to foreclose” would “require
the federal court to review the state proceedings and determine that the foreclosure judgment was
issued in error.” Vossbrinck, 773 F.3d at 427. Likewise, the Rooker-Feldman doctrine
precludes Encarnacion’s claims because she effectively seeks a determination as to whether the
housing court judgment and stipulation were issued to parties who she contends lacked standing.
B. Other Jurisdictional Issues
Even if the Rooker-Feldman doctrine did not apply, no apparent basis exists for
federal subject matter jurisdiction. See In re Tronox Inc., 855 F.3d 84, 95 (2d Cir. 2017)
(reiterating that federal courts have an “independent obligation to consider the presence or
absence of subject matter jurisdiction sua sponte”). As a threshold matter, because the
Complaint alleges that Encarnacion and one of the defendants—Jeffrey S. Greene—are both
citizens of New York, there is no diversity of citizenship as required by 28 U.S.C. § 1332.
Nor does 28 U.S.C. § 1331 furnish a basis for subject matter jurisdiction. See
Perpetual Sec., Inc. v. Tang, 290 F.3d 132, 137 (2d Cir. 2002) (explaining that in determining
whether federal question jurisdiction exists, courts “ask ‘whether the cause of action is so
patently without merit as to justify . . . the court’s dismissal for want of jurisdiction’” (citation
omitted) (emphasis and alteration in original)). First, any claim under the Fair Debt Collection
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Practices Act is meritless. Graham, 156 F. Supp. 3d at 515 (explaining that creditors and
mortgage companies collecting their own debts are not “debt collectors” under the FDCPA);
Cunningham v. Bank of N.Y. Mellon N.A., 2015 WL 4104839, at *4 (E.D.N.Y. July 8, 2015).
Second, Encarnacion’s invocation of the Fourteenth Amendment is unavailing because
Defendants are not state actors, but plainly “private entities that had a contractual interest in
Plaintiff’s mortgage.” See Cunningham, 2015 WL 4104839, at *2; Betts v. Shearman, 751 F.3d
78, 84 (2d Cir. 2014) (“[C]onstitutional torts are only actionable against state actors or private
parties ‘acting under the color of’ state law.” (citation omitted)). Finally, while Encarnacion
references 18 U.S.C. § 474, that criminal statute does not provide a private right of action.
Kloth-Zanard v. Bank of Am., 2017 WL 4927657, at *4 (D. Conn. Oct. 31, 2017).
II.
Leave to Amend
In this Circuit, courts generally do not dismiss pro se complaints without granting
leave to amend at least once if “‘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) (per curiam) (citation omitted). However, leave to amend is not warranted where it would
be futile. See Hill v. Curcione, 657 F.3d 116, 122-24 (2d Cir. 2011). Here, Encarnacion has
already amended her pleading twice. Upon consideration of the Complaint and the voluminous
materials that Encarnacion has submitted in opposition to Defendants’ motion, this Court
concludes that further amendments would not cure these jurisdictional deficiencies. See, e.g.,
Francis v. Nichols, 2017 WL 1064719, at *8 (S.D.N.Y. Mar. 21, 2017) (dismissing action on
Rooker-Feldman and res judicata grounds without leave to amend because amendment would be
futile). Accordingly, the Complaint is dismissed with prejudice.
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CONCLUSION
Because this Court lacks subject matter jurisdiction over this action, Defendants’
motion to dismiss is granted. This Court has considered Encarnacion’s remaining arguments and
concludes that they are moot or without merit. The Clerk of Court is directed to terminate all
pending motions and mark this case as closed.
Dated: September 24, 2018
New York, New York
SO ORDERED:
_______________________________
WILLIAM H. PAULEY III
U.S.D.J.
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