Kee v. Federal National Mortgage Association

Filing 25

ORDER AND MEMORANDUM DECISION granting 3 Motion to Dismiss With Prejudice; denying as moot 22 Motion to Strike. Signed by Judge Tena Campbell on 4/24/12 (alt)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

JEREMY KEE,
Plaintiff,

ORDER AND
MEMORANDUM DECISION

vs.

FEDERAL NATIONAL MORTGAGE
ASSOCIATION,

Case No. 2:11-cv-1114

Defendant.

Plaintiff Jeremy Kee filed this quiet title suit against Defendant Federal National
Mortgage Association (Fannie Mae) after the court declined to grant relief to Mr. Kee in two
previous lawsuits regarding the same underlying mortgage dispute.1 Because the court finds that
the issues that Mr. Kee raises in this suit have been previously adjudicated, the court GRANTS
Fannie Mae’s Motion to Dismiss (Dkt. No. 3). Accordingly, the case is dismissed with
prejudice.
BACKGROUND
On October 23, 2001, Mr. Kee took out a loan from Matrix Financial Services
Corporation (Matrix) that was secured by a Deed of Trust on real property located at 4580 South
600 East, Murray, Utah 84107 (see Notice of Removal, Dkt. No. 2 Ex. 2). Due to the low equity
value in the property, Mr. Kee was required to have private mortgage insurance (PMI) as a

1

Case numbers 2:06-cv-206 and 2:08-cv-837.

condition of the loan. (Order, at 2, Mar. 18, 2009, Dkt. No. 149 in case 2:06-cv-602.) Mr. Kee’s
attempts to later remove the PMI initiated a series of disputes between Mr. Kee and his loan
servicer, Crown Bank, and its successor in interest, Fifth Third Bank.2 In response to these
disputes, Mr. Kee stopped making his mortgage payments in April 2006. (Id. at 3.) In June
2008, a notice of default was recorded, and the property was later sold at a Trustee’s Sale on
October 31, 2008. (Id. at 3-4; Compl. ¶ 22, Dkt. No. 2-1 in case 2:11-cv-1114.)
During this time, Mr. Kee filed a number of claims against the parties involved, including
Fannie Mae. In 2006, numerous small-claims suits that Mr. Kee had filed in Small Claims Court
were removed and consolidated into case number 2:06-cv-602 in front of the Honorable Clark
Waddoups. These suits alleged Real Estate Settlement Procedures Act (RESPA) and other
violations against the Bank, as well as negligence against Matrix. (See Am. Compl., Dkt. No. 44
in 2:06-cv-602.) Mr. Kee alleged that Matrix was “not authorized to originate loans within the
State of Utah.” (Id. ¶ 58.) In August 2007, Mr. Kee, Matrix, and the Bank stipulated “to dismiss
with prejudice all the claims asserted by Kee against Matrix in this action.” (Stipulated Mot.
Dismiss, Dkt. No. 65 in 2:06-cv-602.) The court granted this motion. (Order, Aug. 31, 2007,
Dkt. No. 66 in 2:06-cv-602.)
Mr. Kee also filed suit against Fannie Mae, on the basis that Fannie Mae did not provide
him a loan payoff statement. But Judge Waddoups dismissed Fannie Mae from the suit, ruling
that Mr. Kee had “provided no authority or evidence to show why the actions of the Bank should
be imputed to Fannie Mae, who is the owner, not the servicer, of the loan.” (Id. at 26.) Judge
2

Judge Waddoups describes these conflicts in greater detail in his order of March 18,
2009 (Dkt. No. 149 in case 2:06-cv-602). Because Fifth Third Bank is Crown Bank’s successor
in interest, for ease of reference, these two entities shall be referred to collectively as the “Bank.”
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Waddoups also dismissed fifty of the fifty-one RESPA claims, as well as the breach of contract,
Fair Debt Collection Practices Act, Fair Credit Reporting Act, and defamation claims that Mr.
Kee filed against the Bank on a motion for summary judgment. (Id.) The remaining RESPA
claim was resolved at trial in the Bank’s favor on November 16, 2009. (See Minute Entry, Dkt.
No. 168 in 2:06-cv-602.)
During the course of these proceedings, Mr. Kee requested that the court issue a
preliminary injunction to prevent the sale of his property, which was scheduled to take place on
October 31, 2008. (See Dkt. No. 132 in 2:06-cv-602.) His motion was premised on the
argument that Matrix was not authorized under Utah law to originate loans. Judge Waddoups
denied Mr. Kee’s motion, stating that not only was Mr. Kee barred from re-litigating claims
against Matrix (since those claims had been dismissed with prejudice), but that “[e]ven if Kee
could overcome his burden of showing his claim of invalidity is not barred, Kee failed to present
sufficient evidence to show that Matrix failed to obtain a license in Utah or was otherwise not
exempt from that requirement.” (Order, at 3-4, Oct. 31, 2008, Dkt. No. 143.)
In his order granting the Bank summary judgment on the majority of the RESPA and
other claims, Judge Waddoups also granted injunctive relief against Mr. Kee:
Kee has threatened legal action against the Bank numerous times and has filed six
separate lawsuits—all stemming from his initial dispute with the Bank about PMI.
The court finds that Kee’s actions constitute an abuse of the court system.
Accordingly, the court hereby enjoins Kee from filing additional suits against the
Bank and its employees, agents, and counsel, but the injunction is limited in
scope. Specifically, Kee is enjoined from filing additional suits for all causes of
action that were or could have been included in this lawsuit or one of the other
five lawsuits. Kee also is enjoined from bringing any of the same causes of action
that have already been raised in his six lawsuits, provided that the event giving
rise to the cause of action occurred on or before October 30, 2008 [the date of Mr.
Kee’s last lawsuit]. If Kee believes that actions taken by the Bank, or its
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employees, agents, or counsel after October 30, 2008 have violated the law, Kee is
not enjoined from bringing suit for such new causes of action. The court cautions
Kee, however, not to abuse this right.
(Order, at 31, Mar. 18, 2009, Dkt. No. 149 in 2:06-cv-602.)
Despite this ruling, Mr. Kee filed three new small claims cases against the Bank. (See
Report and Recommendations 3, Dkt. No. 193 in 2:06-cv-602.) As a result, Judge Waddoups
ordered Mr. Kee to show cause why he should not be held in contempt, and issued a bench
warrant for his arrest when he did not appear at the hearing. (Id.) Ultimately, Judge Waddoups
withdrew the bench warrant but expanded its injunctive relief. Judge Waddoups required Mr.
Kee to “obtain prior approval for any and all future lawsuits he wishes to file against the Bank or
its employees, agents, and counsel, regardless of the date of the lawsuit, the date of the actions
underlying the lawsuit, or the causes of action contained within the lawsuit.” (Id.; Order
Adopting Report and Recommendations, Aug. 25, 2010, Dkt. No. 196 in 2:06-cv-602.)
Mr. Kee also filed a separate lawsuit, again in federal court, after Judge Waddoups denied
Mr. Kee’s request for a preliminary injunction that would have delayed the sale of his home.
This second federal suit alleged, among other claims, that the Bank had violated Utah Code Ann.
§ 57-1-31 by including attorneys’ fees in its calculation of the payment required to cure the
default on the note. (See Order, at 3, Sept. 2, 2009, Dkt. No. 87 in 2:08-cv-837.) The case was
assigned to the Honorable Dee Benson. Judge Benson dismissed all the claims raised in this case
on three separate grounds. First, he found that Mr. Kee’s “outrageous, offensive, and abusive
behavior” was grounds itself for dismissal of the case in its entirety. (Id. at 6.) Second, Judge
Benson found that none of Mr. Kee’s claims, including the alleged violation of Utah Code Ann.
§ 57-1-31, had any merit. Finally, Judge Benson found that, even though the case before him
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was pending at the time Judge Waddoups issued his order for injunctive relief against Mr. Kee,
the case was still “clearly within the spirit of that Order, and this case is dismissed on those
grounds as well.” (Id. at 10.)
Mr. Kee filed this action in 2011. Fannie Mae, the sole defendant in this suit, removed
the case from state to federal court. The suit is styled as an action for quiet title, requesting “a
judicial determination that the foreclosure was wrongful, that the original loan originator was not
authorized to conduct business in Utah making the underlying transaction void as a matter of
law, and that Plaintiff retains sole and exclusive title to the home free of any claims of
Defendants.” (Compl. ¶ 31, Dkt. No. 2-1 in 2:11-cv-1114.)
ANALYSIS
In order to succeed in an action for quiet title, Mr. Kee must “prevail on the strength of
his own claim to title and not the weakness of a defendant’s title or even its total lack of title.”
Church v. Meadow Springs Ranch Corp., 659 P.2d 1045, 1048-49 (Utah 1983). Mr. Kee cannot
prevail on the strength of his title here. He does not dispute the existence of the underlying note
and Deed of Trust, and there is no doubt that Mr. Kee stopped paying his loan in full, which
caused the loan to go into default. (See Order, at 3, Mar. 18, 2009, Dkt. No. 149 in 2:06-cv-602.)
Mr. Kee relies instead on a series of allegations, mostly stated in his opposition to Fannie
Mae’s motion to dismiss, that the foreclosure process was unlawful. But these claims have been,
or could have been, litigated in the earlier cases. For instance, Mr. Kee’s insistence that “the
original loan originator [Matrix] was not authorized to conduct business in Utah” blatantly
ignores several previous orders holding that this issue was decided when Mr. Kee’s claims
against Matrix were dismissed with prejudice. (See, e.g., Order, at 10, Sept. 2, 2009, Dkt. No. 87
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in 2:08-cv-837 (holding that “the issue of Matrix’s ability to issue loans in Utah and the validity
and enforceability of the Note and Trust Deed were resolved in the RESPA action).)
While Mr. Kee’s counsel admits that the inclusion of this particular claim in the
complaint was “inartful,” Opp’n Mem. 22, Dkt. No. 9 in 2:11-cv-1114, the other allegations that
Mr. Kee makes in his opposition are no more persuasive. Mr. Kee claims that he attempted to
pay the balance on the note to stop the foreclosure (Compl. ¶ 24, Dkt. No. 2-1); that attorney
Katherine Norman’s communications with him before she became the foreclosure trustee
violated Utah Code Ann. § 57-1-31.5 (Opp’n Mem. 14, Dkt. No. 9); that he was not properly
provided with payoff information before the October 31, 2008 foreclosure sale (id. at 15); and
that the Bank added inappropriate and excessive demands for attorneys’ fees to the balance of the
amount owed under the note (id. at 8-9). Not only do several of these claims relate to the Bank
and not to Fannie Mae (the named defendant in this case), but many have been specifically
adjudicated in previous cases. Judge Benson, for instance, dismissed Mr. Kee’s claim that the
attorneys’ fees were inappropriate and also held that the Bank had not violated § 57-1-31.
(Order, at 10, Sept. 2, 2009, Dkt. No. 87 in 2:08-cv-837.)
The court does not see any evidence that Mr. Kee has included a new variant on his old
arguments. More importantly, none of his claims relate to events that occurred after October 30,
2008. In his order, Judge Waddoups stated that Mr. Kee was not barred from filing additional
claims if those claims related to actions taken after October 30, 2008. (Order, at 31, Mar. 18,
2009, Dkt. No. 149 in 2:06-cv-602.) Mr. Kee argues that he complies with that order because the
current case relates to the sale of his house, which occurred on October 31, 2008, and therefore
escapes the deadline imposed by Judge Waddoups by one day. But all of Mr. Kee’s arguments as
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to why this foreclosure was unlawful concern events that occurred days and often months before
the date that his house was sold. These events clearly occurred before October 30, 2008, and Mr.
Kee could have included these claims in one of his many previous lawsuits. As a result, the court
finds that Mr. Kee’s current lawsuit, like his suit before Judge Benson, falls “clearly within the
spirit” of Judge Waddoups’s order of March 18, 2009, and is therefore barred.
The court declines to sanction Mr. Kee at this time. Because Fannie Mae has not
proceeded with actions to remove Mr. Kee from the house, Mr. Kee may have been legitimately
confused as to the legal status of the property. But the court finds nothing in Mr. Kee’s pleadings
that cause it to question Fannie Mae’s ownership of the property, and the court has no power to
order Fannie Mae to evict Mr. Kee. If Mr. Kee remains on the property, he does so at his own
risk.
If Mr. Kee brings any further actions relating to the foreclosure and sale of his property,
the court will recommend that sanctions be issued against him.
ORDER
The court GRANTS Defendant’s Motion to Dismiss (Dkt. No. 3) and DENIES AS
MOOT Defendant’s Motion to Strike Plaintiff’s Supplemental Documents (Dkt. No. 22).
Plaintiff’s case is dismissed with prejudice and the court orders the clerk to close the case.
SO ORDERED this 24th day of April, 2012.
BY THE COURT:

______________________________
TENA CAMPBELL
United States District Judge
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