Deutsche Bank National Trust Company v. Adragna

Filing 17

MEMORANDUM (Order to follow as separate docket entry)For the reasons discussed above, Defendants FRCP Rule 12(b)(6) Motion (Doc. 13) is denied. An appropriate Order is filed simultaneously with this Memorandum. Signed by Honorable Richard P. Conaboy on 10/17/13. (cc)

UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
DEUTSCHE BANK NATIONAL TRUST
COMPANY, as Trustee for Long
Beach Mortgage Loan Trust
2006-WL2,

:
:
:CIVIL ACTION NO. 3:13-CV-1050
:
:(JUDGE CONABOY)
Plaintiff,
:
:
v.
:
:
LUCILLE ADRAGNA,
:
:
Defendant.
:
:
___________________________________________________________________
MEMORANDUM
Here we consider Defendant’s FRCP Rule 12(b)(6) Motion in
which she alleges that Plaintiff lacks standing to bring this
action and has failed to state a claim upon which relief may be
granted.

(Doc. 13.)

Defendant asserts Plaintiff lacks standing

because it is a foreign business entity not registered with the
Pennsylvania Department of State Corporation Bureau as a business
entity authorized to conduct business in the Commonwealth of
Pennsylvania and, therefore, cannot utilize the courts of the
Commonwealth to prosecute law suits.

(Doc. 14 at 3.)

Defendant

also asserts Plaintiff fails to state a claim because the
promissory note in question was discharged in bankruptcy.
4.)

(Id. at

Plaintiff refutes these assertions in its opposition brief

(Doc. 15) and supplemental opposition brief (Doc. 16).

Defendant

did not file a reply brief and the time for doing so has passed.
Therefore, this matter is ripe for disposition.

For the reasons

discussed below, we conclude Defendant’s motion is properly denied.
I. Background
On September 27, 2005, Defendant borrowed $145,530 from Long
Beach Mortgage Company to purchase a property located in Pocono
Summit, Pennsylvania.

(Doc. 14 at 1; Doc. 15 at 3.)

She executed

a promissory note (“Note”) in that amount and at the same time
granted a mortgage in favor of Long Beach Mortgage Company (the
“Mortgage”).

(Id.)

Under the Note, Defendant agreed to an initial

monthly payment of $1,119.00 on or before November 1, 2005, and to
continue making monthly payments in said amount, or such amount as
may be adjusted in accordance with the terms of the Note, until
October 1, 2035, at with time Defendant’s obligation would be
satisfied.

(Doc. 14 at 1.)

The Mortgage provides in part: “This

Security Instrument secures to Lender (a) the repayment of the debt
evidenced by the Note, with interest, and all renewals, extension
and modifications of the Note.”

(Doc. 14 at 2.)

The Mortgage was

recorded October 14, 2005, with the Monroe County Recorder of
Deeds.

(Doc. 15 at 3.)

Long Beach Mortgage Company later converted from a Delaware
corporation into a Delaware limited liability company, Long Beach
Mortgage Delaware, LLC, which was then merged into a trust where
Washington Mutual Bank was a beneficiary and trustee.
3.)

(Doc. 15 at

After the resignation of the other trustee and the dissolution

of the trust, Washington Mutual Bank became the successor in

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interest to Long Beach Mortgage, LLC.

(Id.)

Washington Mutual

Bank was later seized by the Federal Deposit Insurance Corporation
(“FDIC”) and Washington Mutual’s assets, including its mortgage
loans, were transferred to JPMorgan Bank.

(Id.)

The initial foreclosure action against Defendant was filed in
this Court on July 30, 2008--Deutsche Bank National Trust Company
v. Lucille Adragna, 3:08-CV-1424.

(Id.)

This action was later

settled, discontinued and ended when Defendant entered into a
forbearance plan with Plaintiff’s servicer, JPMorgan Chase Bank,
NA.

The alleged default at issue allegedly began on October 1,

2009.

(Doc. 14 at 2.)

Defendant filed a Chapter 7 Bankruptcy with the Middle
District of Pennsylvania United States Bankruptcy Court at docket
number 5:09-BK-08558-JJT (the “Bankruptcy Case”).
Doc. 15 at 3.)

(Doc. 14 at 2;

On or about November 5, 2009, JPMorgan Chase Bank,

National Association, as Servicer for Deutsche Bank National Trust
Company, as Trustee for Long Beach Mortgage Trust 2006-WL-2 filed a
motion for relief from the automatic stay in the Defendant’s
bankruptcy case, for leave to pursue a mortgage foreclosure action.
(Doc. 14 at 2.)

By Order dated November 25, 2009, the Bankruptcy

Court granted the motion and gave the movant leave to proceed with
a mortgage foreclosure.

(Id.)

A complaint in mortgage foreclosure was filed in this Court on
February 9, 2010–-Deutsche Bank National Trust Company as Trustee

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for Long Beach Mortgage Loan Trust 2006-WL2, 4:10-CV-300.

(Doc. 14

at 2.)
On February 22, 2010, Defendant was granted a Discharge of
Debtors in the Bankruptcy case.

(Doc. 14 at 3; Doc. 15 at 4.)

On September 8, 2010, Plaintiff filed a Praecipe to Settle,
Discontinue and End in the mortgage foreclosure action in this
Court, 4:10-CV-300.

(Doc. 14 at 3.)

As noted previously, the above-captioned matter was filed in
this Court on April 23, 2013 (Doc. 1), and Defendant filed the
motion to dismiss under consideration here on July 5, 2013.

The

motion became ripe for disposition on September 3, 2013.
II. Discussion
a. Motion to Dismiss Standard
In a motion to dismiss for failure to state a claim, the
defendant bears the burden of showing that no claim has been
presented.

Hedges v. United States, 404 F.3d 744, 750 (3d Cir.

2005) (citing Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406,
1409 (3d Cir. 1991)).
When reviewing a complaint pursuant to a defendant’s motion to
dismiss for failure to state a claim filed under Federal Rule of
Civil Procedure 12(b)(6), the court does so in the context of the
requirement of Federal Rule of Civil Procedure 8(a)(2) which
requires only “a short and plain statement of the claims showing
that the pleader is entitled to relief.”
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The “short and plain

statement” must be sufficient to “give the defendant fair notice of
what the plaintiff’s claim is and the grounds upon which it rests.”
Conley v. Gibson, 355 U.S. 41, 47 (1957), abrogated on other
grounds by Bell Atlantic Corp. v. Twombly, 550 U.S. 433 (2007).
Twombly confirmed that more is required than “labels and
conclusions, and a formulaic recitation of the elements of a cause
of action will not do.”

550 U.S. at 555 (citing Papasan v. Allain,

478 U.S. 265, 286 (1986) (on a motion to dismiss, courts “are not
bound to accept as true a legal conclusion couched as a factual
allegation”)).

“Factual allegations must be enough to raise a

right to relief above the speculative level on the assumption that
all allegations in the complaint are true (even if doubtful in
fact).”

550 U.S. at 555 (citations omitted).

In McTernan v. City of York, 577 F.3d 521, 530 (3d Cir. 2009),
the Third Circuit Court of Appeals set out the standard applicable
to a motion to dismiss in light of the United States Supreme
Court’s decisions in Twombly, 550 U.S. 433 (2007), and Ashcroft v.
Iqbal, 556 U.S. 662, 129 S. Ct. 1937 (2009).
“[T]o survive a motion to dismiss, a
complaint must contain sufficient factual
matter, accepted as true to ‘state a claim
that relief is plausible on its face.’”
Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550
U.S. at 570). The Court emphasized that
“only a complaint that states a plausible
claim for relief survives a motion to
dismiss.” Id. at 1950.
McTernan, 577 F.3d at 530.

Iqbal explained that “[a] claim has
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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.”

Iqbal, 556 U.S.

at 678.
McTernan discussed the effects of Twombly and Iqbal in detail
and provided a road map for district courts presented with a motion
to dismiss for failure to state a claim in a case filed just a week
before McTernan, Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir.
2009).
[D]istrict courts should conduct a two-part
analysis. First, the factual and legal
elements of a claim should be separated. The
District Court must accept all of the
complaint’s well-pleaded facts as true, but
may disregard any legal conclusions. [Iqbal,
129 S. Ct. at 1949.] Second, a District
Court must then determine whether the facts
alleged in the complaint are sufficient to
show that the plaintiff has a “plausible
claim for relief.” Id. at 1950. In other
words, a complaint must do more than allege a
plaintiff’s entitlement to relief. A
complaint has to “show” such an entitlement
with its facts. See Philips [v. Co. of
Alleghany], 515 F.3d [224,] 234-35 [(3d
Cir.2008 )]. As the Supreme Court instructed
in Iqbal, “[w]here the well-pleaded facts do
not permit the court to infer more than the
mere possibility of misconduct, the complaint
has alleged--but it has not ‘show[n]’--‘that
the pleader is entitled to relief.’” Iqbal,
129 S. Ct. at 1949. This “plausibility”
determination will be “a context-specific
task that requires the reviewing court to
draw on its judicial experience and common
sense.” Id.
Fowler, 578 F.3d at 210-11.
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The Circuit Court’s guidance makes clear that legal
conclusions are not entitled to the same deference as well-pled
facts.

As noted above, “the court is ‘not bound to accept as true

a legal conclusion couched as a factual allegation.’” Guirguis v.
Movers Specialty Services, Inc., No. 09-1104, 2009 WL 3041992, at
*2 (3d Cir. Sept. 24, 2009) (quoting Twombly, 550 U.S. at 555) (not
precedential).
In deciding a motion to dismiss, courts generally consider
only the allegations contained in the complaint, exhibits attached
to the complaint and matters of public record. Pension Benefit
Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d
Cir. 1993) (citations omitted).

Courts may also consider

“undisputedly authentic document[s] that a defendant attaches as an
exhibit to a motion to dismiss if the plaintiff’s claims are based
on the [attached] document[s].”

Pension Benefit, 998 F.2d at 1196.

In addition, “documents whose contents are alleged in the complaint
and whose authenticity no party questions, but which are not
physically attached to the pleading, may be considered.”

Pryor v.

Nat’l Collegiate Athletic Ass’n, 288 F.3d 548, 560 (3d Cir. 2002)
(citation omitted); see also U.S. Express Lines, Ltd. v. Higgins,
281 F.3d 383, 388 (3d Cir. 2002) (“Although a district court may
not consider matters extraneous to the pleadings, a document
integral to or explicitly relied upon in the complaint may be
considered without converting the motion to dismiss into one for
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summary judgment.”) (internal quotation omitted). The court may
not, however, rely on other parts of the record in making its
decision on a motion to dismiss.

Jordan v. Fox, Rothschild,

O’Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994).

We may also

consider matters of public record in determining whether dismissal
is appropriate.

Sands v. McCormick, 503 F.3d 263, 268 (3d Cir.

2007).
Finally, the district court must extend the plaintiff an
opportunity to amend before dismissing a complaint unless amendment
would be inequitable or futile.

See Grayson v. Mayview State

Hosp., 293 F.3d 103, 108 (3d Cir. 2002).
b. Defendant’s Motion
With this motion to dismiss, Defendant asserts that Plaintiff
lacks standing to bring this diversity action and the Complaint
fails to state a claim upon which relief may be granted.

(Doc. 13

at 1; Doc. 14 at 2-5.)
1.

Standing
Defendant first argues that Plaintiff lacks standing to bring

this action because it is not a properly registered business in the
Commonwealth of Pennsylvania.

(Doc. 14 at 3.)

We conclude

Defendant has failed to meet her burden on this issue.
Defendant contends that “[u]nder the rule of law in the
Commonwealth of Pennsylvania, a foreign business entity that is not
authorized to conduct business within the state may not utilize the
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courts of the Commonwealth to prosecute law suits.” (Doc. 14 at 3
(citing Hoffman Const. Co. v. Erwin, 200 A. 579 (Pa. 1938)).)
Defendant argues that because Plaintiff Long Beach Mortgage Loan
Trust 2006-WL2, the entity claiming possession of a mortgage upon
which the action is based, is a foreign business entity not
registered with the Pennsylvania Department of State Corporation
Bureau as a business entity authorized to conduct business in the
Commonwealth, Plaintiff may not maintain this action.

(Doc. 14 at

3.)
Plaintiff does not directly address Defendant’s argument.
Rather, Plaintiff asserts that diversity jurisdiction exists here
because the requirements of 28 U.S.C. § 1332(a)(1) are met. The
citizenship requirement is met in that JPMorgan Chase Bank, is the
servicer of the loan and its principal place of business is
Columbus, Ohio,1 while Defendant’s domicile is in Pennsylvania.
(Doc. 15 at 6.)

Plaintiff further avers that the amount in

controversy requirement of $75,000 is also met because the
Complaint alleges the outstanding amount on the loan is
$198,498.89.

(Id.)

Defendant did not file a reply brief and, therefore, did not
refute Plaintiff’s argument.

With the argument presented in her

1

The Complaint asserts that “Deutsche Bank National Trust
Company, as Trustee for Long Beach Mortgage Trust 2006-WL2 is a
corporation having a principal place of business at JPMorgan Chase
Bank, National Association, 1111 Polaris Parkway, Columbus, OH
43240.” (Doc. 1 ¶ 1.)
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supporting brief, Defendant has failed to meet her burden of
showing that Plaintiff lacks standing.

Though the language

describing the relationship between named Plaintiff Deutsche Bank,
as Trustee for Long Beach Mortgage Trust 2006-WL-2, and JPMorgan
Chase Bank, the servicer for whom Plaintiff establishes diversity
jurisdiction, is not always consistent, we conclude the allegation
in the Complaint establishing Plaintiff Deutsche Bank’s principal
place of business as Columbus, Ohio, is sufficient to defeat
Defendant’s standing challenge.

Without more, Defendant’s citation

to Hoffman, 200 A. 579, which is easily distinguishable on several
grounds, does not suffice to satisfy her burden at this stage of
the proceedings.
2.

Failure to State a Claim
Defendant next maintains that the Complaint must be dismissed

because Defendant has no obligation to Plaintiff or any other
holder of the Promissory Note.

We conclude Defendant has failed to

meet her burden on this issue.
Defendant presents the following argument in support of her
position.
At no time during the pendency of the Chapter
7, or after commencement of the mortgage
foreclosure action, did Defendant reaffirm
the obligation set forth in the Promissory
Note. Plaintiff commenced its mortgage
foreclosure action on February 9, 2010.
Plaintiff stipulated on September 8, 2010
that the mortgage foreclosure action was
settled. By so stipulating, Plaintiff
terminated whatever right it may have had by
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reason of the order of the bankruptcy court
that vacated the automatic stay and permitted
the foreclosure action to proceed. Plaintiff
could have proceeded to a judgment on the
Promissory Note and Mortgage securing the
obligation under the note, however the matter
was settled. By bringing the foreclosure
action to a termination, without having the
Defendant herein reinstate her obligations
under the Promissory Note, the Defendant’s
obligations under the Note were discharged,
by reason of the February 22, 2010 Order of
the Bankruptcy Court that granted to the
Defendant a Discharge of Debtors.
Accordingly, Defendant has no obligation to
the Plaintiff, or to any other holder of the
Promissory note.
(Doc. 14 at 4.)
Plaintiff first responds that Defendant’s assertion that the
discharge of the original debt in the bankruptcy filing is without
merit in that the discharge, while preventing Plaintiff from
pursuing an in personam action, does not prevent Plaintiff from
pursuing this in rem action asserting the right to enforce a valid
lien on real property.

(Doc. 15 at 8 (citing November 25, 2009,

Bankruptcy Court Order, (Doc. 15 at 34)).)

In its Supplemental

Brief in Opposition to Motion to Dismiss, Plaintiff addresses
Defendant’s contention that its failure to reinstate Defendant’s
obligations under the Promissory Note discharged Defendant’s debt
both personally under the Note and as to the mortgage lien as well.
(Doc. 16 at 1-2.)

Noting that it is a basic tenet of bankruptcy

law that “‘a creditor’s right to foreclose on a lien survives
bankruptcy nothwithstanding the discharge of personal liability,’”

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(Doc. 16 at 2 (quoting Johnson v. Home State Bank, 501 U.S. 78, 8283 (1991))), Plaintiff provides extensive additional support for
its position.

(Doc. 16 at 2-3.)

Defendant did not file a reply brief.

However, in her

supporting brief, Defendant anticipated Plaintiff’s in personam and
in rem distinctions.
Plaintiff may argue that it is seeking to
foreclose upon the mortgage instrument for an
In Rem judgment in excess of $75,000.00.
However, the mortgage instrument, by its own
terms and as a matter of law is only security
for an underlying obligation. 13 Pa. C.S.A. §
9102 provides in part:
“‘Mortgage.’ A consensual interest in
real property, including fixtures, which
secures payment or performance of an
obligation.”
A mortgage does not have a life of its
own independent of the underlying obligation.
The mortgage instrument annexed to the
Complaint . . . , is but a vestigial
encumbrance upon Defendant’s property. It
served as security and collateral for the
obligation Defendant had on the Promissory
Note. Discharge of Defendant’s obligation
under the Promissory Note authorized Defendant
to reclaim collateral under 13 Pa. C.S.A. §
9623.
(Doc. 14 at 5.)
We conclude this cursory summation is insufficient to refute
Plaintiff’s arguments or distinguish the authority upon which
Plaintiff relies.

While Defendant’s position set out above

provides some citation to Pennsylvania statutes, it is devoid of
authority or argument that would satisfy her burden of establishing
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that Plaintiff has failed to state a claim upon which relief may be
granted.

Therefore, Defendant’s motion to dismiss is properly

denied.
III. Conclusion
For the reasons discussed above, Defendant’s FRCP Rule
12(b)(6) Motion (Doc. 13) is denied.

An appropriate Order is filed

simultaneously with this Memorandum.

S/Richard P. Conaboy
RICHARD P. CONABOY
United States District Judge
DATED: October 17, 2013

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