Ciccotelli v. Deutsche Bank AG et al

Filing 47

OPINION AND ORDER granting 18 Motion to Dismiss for Failure to State a Claim; denying 26 Motion to Amend 5 Complaint; denying 30 Motion for Default Judgment as to Deutsche Bank AG, Deutsche Bank Americas Holding Corp., Juergen Fitschen , and Anshu Jain; granting 37 Ex Parte Motion to Vacate 28 Clerk's Entry of Default; granting 32 Motion to File Under Seal Exhibit B to 31 Response in Opposition to Motion ; denying 34 Motion to Dismiss Motion to Seal. Signed by Judge William K. Sessions III on 5/4/2016. (law)

UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF VERMONT

ERNEST J. CICCOTELLI,
Plaintiff,
v.
DEUTSCHE BANK AG,
DEUTSCHE BANK AMERICAS HOLDING
CORP.,
DEUTSCHE BANK NATIONAL TRUST
CO. Trustee for the Long Beach
Mortgage Loan Trust 2006-WL2,
JUERGEN FITSCHEN, ANSHU JAIN,
& DONNA M. MILROD,
Defendants.

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Case No. 2:15-cv-105

Opinion and Order
Plaintiff Ernest J. Ciccotelli, an attorney proceeding pro
se, brings the present case against Deutsche Bank National Trust
Company, as Trustee for Long Beach Mortgage Loan Trust 2006-WL2
(“DBNTC”), and several related entities and individuals.
Ciccotelli seeks both monetary damages and a discharge of his
2005 mortgage on the grounds that Defendants have engaged in
unfair and deceptive acts, and have caused the title to his
property to become unmarketable.

Currently before the Court are (1) DBNTC’s motion to
dismiss (ECF No. 18); (2) Ciccotelli’s motion to amend the
Complaint (ECF No. 26); (3) Ciccotelli’s motion for default
judgment (ECF No. 30); (4) Defendants’ motion to vacate the
entry of default (ECF No. 37); (5) DBNTC’s motion to seal (ECF
No. 32); and (6) Ciccotelli’s motion to dismiss the motion to
seal (ECF No. 34).

For the reasons that follow, the Court

grants DBNTC’s motion to dismiss and denies Ciccotelli’s motion
to amend.

The Court also denies Ciccotelli’s motion for default

judgment and grants Defendants’ motion to vacate the entry of
default.

Finally, the Court grants DBNTC’s motion to seal and

denies Ciccotelli’s related motion.
BACKGROUND
Plaintiff Ciccotelli lives in a home that he designed and
built at 49 Tigertown Road in Norwich, Vermont (“Property”).

On

September 19, 2005, Ciccotelli executed a $165,000 promissory
note (“Note”) made payable to Long Beach Mortgage Company.

To

secure his promise to pay his obligation under the Note,
Ciccotelli executed a Mortgage on the Property on the same day.
The Mortgage, which identifies Long Beach Mortgage Company as
the lender, was recorded in the Norwich land records at Book



The following facts are taken from Ciccotelli’s Complaint and are presumed
to be true for the purposes of a Rule 12(b)(6) motion to dismiss.

2

174, Pages 514-533.

No assignments of mortgage have been

recorded.
On or about July 29, 2008, Ciccotelli filed suit against
Washington Mutual, Inc. in Vermont Superior Court.

Washington

Mutual had serviced Ciccotelli’s mortgage loan since
origination, and Ciccotelli alleged that it was liable for
consumer fraud and other wrongful acts.

In October 2008, after

JPMorgan Chase & Co. (“Chase”) acquired Washington Mutual,
Ciccotelli amended his state court complaint to include Chase
and the FDIC as defendants.

The suit was later removed to

federal court, where Ciccotelli amended his complaint for a
second time.

DBNTC was not a party to the 2008 action.

Throughout the 2008 lawsuit, Ciccotelli repeatedly
requested that Chase identify any other parties that had an
interest in his mortgage loan.

Chase did not reveal any

additional parties, however, and instead represented to the
court that it was the holder of Ciccotelli’s Note and Mortgage.
On several occasions during the pendency of the case, Chase
presented Ciccotelli with the original Note and Mortgage,
“purporting to rightfully hold and enforce those documents on
its own behalf.”

ECF No. 5 at 4.

Chase did not respond to

Ciccotelli’s requests to produce documentation of an assignment
from Long Beach Mortgage Company to Chase.

3

Ciccotelli settled the 2008 lawsuit in the end of May 2013.
Immediately thereafter, he received a letter from Select
Portfolio Servicing (“SPS”) indicating that it was replacing
Chase as the servicer of his mortgage loan.

The letter further

stated that SPS was acting “on behalf of Deutsche Bank National
Trust Co. As Trustee in trust for registered Holders of Long
Beach Mortgage Loan Trust 2006-WL2 Asset Backed Certificates,
Series 2006-WL2.”

ECF No. 5 at 5.

Prior to receiving the

letter from SPS, Ciccotelli was unaware that DBNTC was the
holder of his Note and Mortgage.
In July 2014, approximately fourteen months after settling
the 2008 lawsuit, Ciccotelli filed the present action in Vermont
Superior Court.
2015.

DBNTC removed the case to this Court in May

As alleged in the Complaint, Ciccotelli’s claims largely

stem from the assertion that there is no recorded assignment
documenting the transfer of interest in Ciccotelli’s mortgage
loan from Long Beach Mortgage Company to DBNTC.

Because such a

record does not exist, Ciccotelli submits that Defendants have
“incurably damaged [the] chain of title to [his] Property,”
rendering the title to his property unmarketable.
7.

ECF No. 5 at

Specifically, the Complaint alleges six causes of action:

(1) fraud related to the 2008 action under Vermont’s Consumer
Fraud Act; (2) fraud related to the collection of Ciccotelli’s
mortgage payments under Vermont’s Consumer Fraud Act;
4

(3) conversion; (4) embezzlement; (5) a request for a
declaration of clear title; and (6) a request to discharge the
2005 mortgage.
DBNTC now moves to dismiss the Complaint in its entirety,
and Ciccotelli moves to amend.

Motions related to an entry of

default and a request to seal are also pending.
DISCUSSION
I.

DBNTC’s Motion to Dismiss
A. Legal Standard
DBNTC seeks dismissal of the Complaint pursuant to Federal

Rule of Civil Procedure 12(b)(6).

In order to survive a Rule

12(b)(6) motion to dismiss, “a complaint must contain 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, 678 (2009) (internal quotation omitted).

A claim is

facially plausible “when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
citation omitted).

Id. (internal

Determining whether a complaint states a

plausible claim for relief is “a context-specific task that
requires the reviewing court to draw on its judicial experience
and common sense.”

Id. at 679 (internal citation omitted).

Ordinarily, in ruling on a Rule 12(b)(6) motion to dismiss,
a district court “must interpret the factual allegations of a
5

pro se complaint to raise the strongest arguments that they
suggest.”

Grullon v. City of New Haven, 720 F.3d 133, 139 (2d

Cir. 2013) (internal quotation omitted).

Here, however,

Ciccotelli is an attorney who has practiced real estate law for
a number of years.

Consequently, he does not receive “the

special consideration which the courts customarily grant to pro
se parties.”

Harbulak v. Cnty. of Suffolk, 654 F.2d 194, 198

(2d Cir. 1981); see also Holtz v. Rockefeller & Co., 258 F.3d
62, 82 n. 4 (2d Cir. 2001).
B. Fraud (Counts I & II)
DBNTC first moves to dismiss Counts I and II of the
Complaint, which allege deceptive acts and practices under
Vermont’s Consumer Fraud Act.

Vermont’s Consumer Fraud Act

declares unlawful “[u]nfair methods of competition in commerce,
and unfair or deceptive acts or practices in commerce.”
9 V.S.A. § 2453(a).

In order to establish that an act or

practice was deceptive within the meaning of the statute, a
plaintiff must show that “(1) the representation or omission at
issue was likely to mislead consumers; (2) the consumer’s
interpretation of the representation was reasonable under the
circumstances; and (3) the misleading representation was
material in that it affected the consumer’s purchasing
decision.”

Jordan v. Nissan N. America, Inc., 853 A.2d 40, 43

(Vt. 2004) (internal citations omitted).
6

Courts are to apply an

objective, reasonable consumer, standard in assessing each of
the aforementioned elements.

See id.

In addition, Federal Rule of Civil Procedure 9(b) requires
a party to “state with particularity the circumstances
constituting fraud or mistake.”

To comply with that mandate, a

plaintiff must “(1) detail the statements (or omissions) that
the plaintiff contends are fraudulent, (2) identify the speaker,
(3) state where and when the statements (or omissions) were
made, and (4) explain why the statements (or omissions) are
fraudulent.”

Fin. Guar. Ins. Co. v. Putnam Advisory Co., 783

F.3d 395, 403 (2d Cir. 2015) (internal quotation omitted).
1. Fraud Related to the 2008 Lawsuit (Count I)
Count I of the Complaint asserts that Defendants violated
Vermont’s Consumer Fraud Act by “knowingly and deliberately
collud[ing] with [Chase] in its unfair and deceptive
representation that it possessed an interest in Plaintiff’s
Mortgage or Note.”

ECF No. 5 at 6.

Ciccotelli states that on

May 26, 2011, and on two occasions thereafter, Chase showed him
the original Note and Mortgage to his property, and represented
that it was the holder of those legal documents.

Because it was

later revealed that DBNTC holds Ciccotelli’s Mortgage,
Ciccotelli contends that DBNTC must have colluded with Chase by
providing it with the original Note and Mortgage.

7

DBNTC now moves to dismiss Count I for failure to state a
claim.

According to DBNTC, although Ciccotelli’s claim expounds

on the actions of Chase, it fails to present a single factual
allegation attributing any deceptive statement or conduct to
DBNTC.

Ciccotelli disputes that claim, arguing that the

Complaint indicates that DBNTC’s acts and omissions “assist[ed]
and encourage[d] [Chase] to make false claims.”

ECF No. 21 at

15.
The Court agrees with the DBNTC that Ciccotelli has not
alleged any facts suggesting that it made a representation or
omission that was likely to mislead.

At best, the Complaint

asserts that DBNTC provided Chase with Ciccotelli’s original
Note and Mortgage.

Even accepting that claim as true, as the

Court must, that action alone cannot subject DBNTC to liability
for fraud because Chase was responsible for servicing
Ciccotelli’s mortgage loan.

The assertion that Chase used the

original loan documents to misrepresent its interest in
Ciccotelli’s Mortgage and Note does not, by itself, implicate
DBNTC.

As a result, absent a specific factual allegation

indicating how DBNTC encouraged Chase make such misstatements,
Count I cannot proceed.

The Court therefore grants DBNTC’s

motion to dismiss with respect to Count I of the Complaint.

8

2. Fraud Related to the Collection of Mortgage Payments
(Count II)
Count II of the Complaint asserts that Defendants have
violated the Vermont Consumer Fraud Act by collecting payments
on Ciccotelli’s mortgage loan because there is “no record,
notice or other evidence that the Mortgage was assigned or
transferred to Defendants from Long Beach Mortgage Company.”
ECF No. 5 at 8.

Because there is no recorded assignment

demonstrating that DBNTC is the holder of the Mortgage and Note,
Ciccotelli continues, Defendants have “maliciously
misrepresented themselves . . . to be the mortgagee . . . in
order to obtain the monthly mortgage payments due to the true
mortgagee.”

ECF No. 5 at 8.

In its motion to dismiss, DBNTC asserts that it has
provided Ciccotelli with an assignment of mortgage executed by
Long Beach Mortgage Company and endorsed in blank.

Accordingly,

DBNTC submits that it is the true holder of the loan, and
maintains that Ciccotelli has failed to allege that it has
committed a fraudulent, unfair, or deceptive act.
makes two arguments in response.

Ciccotelli

First, he claims that DBNTC is

liable for fraud under the Act by knowingly failing to record
the assignment of mortgage.

Second, he contends that the

assignment is the product of forgery.

9

Initially, the Court rejects Ciccotelli’s contention that
knowingly failing to record an assignment of mortgage
constitutes an act of fraud.

Under Vermont law, “an assignment

is not a conveyance of real estate.”
830, 833 (Bankr. D. Vt. 1995).

In re Briggs, 186 B.R.

Consequently, assignments are

not subject to the requirements of Vermont’s recording statutes.
Id. (holding that the failure to record an assignment of
mortgage had no impact on the mortgage debt because the original
recorded mortgage provided constructive notice); see also
Rajamin v. Deutsche Bank Nat. Trust Co., 757 F.3d 79, 91 (2d
Cir. 2014) (holding that under California and New York law,
“[t]he assignment of a mortgage need not be recorded for the
assignment to be valid”); Robinson v. Deutsche Bank Nat. Trust
Co., 932 F. Supp. 2d 95, 104 (D.D.C. 2013) (“District of
Colombia law does not require an assignment of a note or deed of
trust to be recorded in order for the transfer to be valid.”);
In re Cook, 457 F.3d 561, 568 (6th Cir. 2006) (holding that the
bank’s failure to record the assignment of mortgage had “no
effect on its ability to enforce the mortgage”).

Because there

is no recording requirement for assignments of mortgage,
Ciccotelli’s argument that DBNTC’s failure to record the
assignment was somehow misleading cannot succeed.
Moving next to Ciccotelli’s claim that the assignment of
mortgage provided by DBNTC is forged, the Court finds that such
10

an assertion fails to satisfy the heightened pleading
requirement of Rule 9(b).

Ciccotelli acknowledges in both his

Complaint and his response to DBNTC’s motion to dismiss that he
has seen the assignment of mortgage.

He states in his response,

however, that the assignment he has seen “had all the hallmarks
of a forgery and did not constitute proof that the Assignment
was real or valid.”

ECF No. 21 at 16.

Such a statement,

without more, does not comply with the demands of Rule 9(b)
because it provides no explanation as to how the document is
fraudulent or why Ciccotelli believes it to be forged.
Ciccotelli has not presented any facts suggesting that more than
one entity claims to hold his Note and Mortgage.

Nor has he

alleged that more than one servicer seeks to collect his monthly
mortgage payment.

Simply put, Ciccotelli has given the Court no

reason to believe that his claim is anything more than pure
speculation.

Because vague and conclusory statements are

insufficient to satisfy the pleading standard of Rule 9(b),
Ciccotelli’s claim cannot go forward.

See Decker v. Massey-

Ferguson, Ltd., 681 F.2d 111, 114 (2d Cir. 1982) (“To pass
muster in this Circuit a complaint must allege with some
specificity the acts constituting the fraud; conclusory
allegations that defendant’s conduct was fraudulent or deceptive
are not enough.”).

The Court therefore grants DBNTC’s motion to

dismiss with respect to Count II of the Complaint.
11

C. Conversion (Count III)
DBNTC also moves to dismiss Ciccotelli’s claim of
conversion.

“To establish a claim for conversion, the owner of

property must show only that another has appropriated the
property to that party’s own use and beneficial enjoyment, has
exercised dominion over it in exclusion and defiance of the
owner’s right, or has withheld possession from the owner under a
claim of title inconsistent with the owner’s title.”

Montgomery

v. Devoid, 915 A.2d 270, 275 (Vt. 2006) (internal citations
omitted).

“The key element of conversion, therefore, is the

wrongful exercise of dominion over property of another.”

Id.

In his Complaint, Ciccotelli asserts that Defendants have
wrongfully exercised dominion over his property “[b]y not
recording the holding party or parties’ interest” and “[b]y
deliberately and knowingly hiding the identification of the
holder of [the] mortgage.”

ECF No. 5 at 10.

Such actions

amount to conversion, Ciccotelli submits, because they cause
“the title to the Property to become incurably clouded,” thereby
preventing him from gaining access to his equity.
10.

ECF No. 5 at

DBNTC contests the conversion claim on multiple grounds,

arguing that Ciccotelli has failed to show that there is a cloud
on title, and that consequently, he has not identified how DBNTC
has exercised dominion over the Property.

12

As stated above, there is no recording requirement for
assignments of mortgage under Vermont law.

In re Briggs, 186

B.R. at 833; see also Rajamin, 757 F.3d at 91.

It follows from

that policy that the failure to record an assignment does not
create a cloud on title.

See, e.g., Ill. Dist. of American

Turners, Inc. v. Rieger, 770 N.E.2d 232, 239 (Ill. App. Ct.
2002) (“A valid interest in property cannot be a cloud on
title.”).

Here, Ciccotelli’s claim of conversion is premised on

the assertion that DBNTC has prevented him from accessing the
equity in his property.

Because there is no cloud on title,

however, Ciccotelli has failed to allege facts suggesting that
his equity is inaccessible.

Moreover, Ciccotelli has not

asserted any other facts indicating how DBNTC, as the holder of
his mortgage loan, has wrongfully exercised dominion over his
property.

For both of those reasons, Ciccotelli has failed to

state a plausible claim for conversion.

The Court therefore

grants DBNTC’s motion to dismiss with respect to Count III of
the Complaint.
D. Embezzlement (Count IV)
DBNTC next moves to dismiss Ciccotelli’s claim for
embezzlement.

As Ciccotelli acknowledges in his response to

DBNTC’s motion, there is no private cause of action for
embezzlement under Vermont law.

See 13 V.S.A. § 2531.

13

Accordingly, the Court grants DBNTC’s motion to dismiss with
respect to Count IV of the Complaint.
E. Clear Title (Count V)
DBNTC also moves to dismiss Count V of the Complaint.

In

Count V, Ciccotelli seeks a declaratory judgment from the Court
discharging his mortgage and clearing title to his property on
the grounds that DBNTC’s failure to record the assignment of
mortgage has “caused the title to [his] Property to become
incurably clouded.”

ECF No. 5 at 14.

As explained above, the

failure to record an assignment does not create a cloud on
title.

Moreover, a recorded mortgage may not be discharged

merely because an assignment was not recorded.
186 B.R. at 833.

In re Briggs,

For both of those reasons, the Court grants

DBNTC’s motion to dismiss with respect to Count V of the
Complaint.
F. Mortgage Discharge (Count VI)
Finally, DBNTC moves to dismiss Count VI of the Complaint.
In Count VI, Ciccotelli requests an order discharging his
mortgage and clearing title to his property pursuant to
27 V.S.A. § 469.

Under § 469, a judge may grant a mortgagor’s

request to discharge his or her recorded mortgage where (1) “the
mortgagee . . . , or the assignee of such mortgage, is a private
corporation whose charter has expired by its own limitation, or
has been dissolved by operation of law, forfeiture, or for any
14

other reason;” (2) the judge “is satisfied that the conditions
of such mortgage have been complied with, and have no force in
law;” and (3) the judge “is further satisfied that there is no
person within the state having authority to discharge such
mortgage.”

27 V.S.A. § 469.

In his response to DBNTC’s motion, Ciccotelli argues that
he is entitled to relief under the statute because Long Beach
Mortgage Company, the mortgagee listed on the recorded mortgage,
has dissolved, and there is no assignment of mortgage on record.
Ciccotelli further submits that “[t]he conditions of the
Mortgage have been complied with as best as can be ascertained
by Plaintiff, given that there is no reliable evidence that the
mortgagee of record has an assignee.”

ECF No. 21 at 24.

Once again, Ciccotelli fails to state a plausible claim for
relief because an assignment of mortgage need not be recorded
for the assignment to be valid.
833.

See In re Briggs, 186 B.R. at

Consequently, Ciccotelli has not adequately alleged the

first element under the statute because he has not pleaded any
facts suggesting that DBNTC, as the assignee, has been
dissolved.

Moreover, Ciccotelli’s claim fails for the added

reason that the Court is not satisfied that he has complied with
the conditions of his mortgage.

Ciccotelli acknowledges that he

has a mortgage loan, and he makes no claim that he has paid off
the Note.

Although the Court sympathizes with the frustration
15

that many borrowers have experienced throughout our nation’s
foreclosure crisis, that frustration alone cannot relieve
mortgagors of their debt obligations.

Accordingly, the Court

grants DBNTC’s motion to dismiss with respect to Count VI of the
Complaint.
II.

Ciccotelli’s Motion to Amend
The Court next addresses Ciccotelli’s motion for leave to

file an amended complaint.

Pursuant to Federal Rule of Civil

Procedure 15(a)(2), a court should freely grant leave to amend
“when justice so requires.”

Nonetheless, “[a] district court

has the discretion to deny leave for good reason, including
futility, bad faith, undue delay, or undue prejudice to the
opposing party.”

McCarthy v. Dun & Bradstreet Corp., 482 F.3d

184, 200 (2d Cir. 2007) (internal citation omitted).

“An

amendment to a pleading will be futile if a proposed claim could
not withstand a motion to dismiss pursuant to Rule 12(b)(6).”
Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282
F.3d 83, 88 (2d Cir. 2002) (internal citation omitted).
Accordingly, the Court will reject as futile any proposed claim
that does not “contain 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, 678 (2009) (internal quotation
omitted).

16

In the present motion, Ciccotelli seeks to amend his
Complaint in two ways.

First, he wishes to assert the

additional factual allegation that the Long Beach Mortgage Loan
Trust 2006-WL2 (“Trust”) does not exist.

Ciccotelli supports

his assertion with statements indicating that he was unable to
locate the Trust on the websites for the Secretaries of State
for Delaware, New York, and California, and that he found
certain documents related to the Trust on the website for the
Securities and Exchange Commission.

Based on his allegation

that the Trust does not exist, Ciccotelli hopes to contend that
he “cannot be assured that he has actually been credited by the
proper party or parties for his payments, or that his mortgage
will be able to be discharged regardless of whether he has made
every scheduled payment.”

ECF No. 26-2 at 6.

Second,

Ciccotelli requests to add Select Portfolio Servicing, Inc.
(“SPS”) as a defendant to this case, alleging that it has
engaged in fraud by “pretending that the Trust exists.”
33 at 4.

ECF No.

DBNTC opposes Ciccotelli’s motion to amend on the

grounds that he lacks standing to assert the proposed claims.
“The ‘irreducible constitutional minimum of standing’ under
Article III of the Constitution includes the requirement 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.”
17

Rajamin v. Deutsche

Bank Nat. Trust Co., 757 F.3d 79, 85 (2d Cir. 2014) (quoting
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)).

“The

plaintiff bears the burden of establishing such standing.”

Id.

at 84.
Here, as DBNTC argues, Ciccotelli has failed to establish
Article III standing because the proposed amendments to the
Complaint allege only hypothetical injuries.

In the Complaint,

Ciccotelli acknowledges that he took out a mortgage loan in the
amount of $165,000.

He has not pleaded that he has paid off the

loan, or that he has ever paid Defendants more than the amount
due under the terms of the Note.

Thus, Ciccotelli makes no

allegation that he has paid, or been asked to pay, more than he
owes.

In addition, Ciccotelli does not assert that another

creditor has ever asked him to make payments on his loan.

His

claim that the Trust does not exist is therefore highly
implausible, for it suggests that since 2005 there has been no
collection effort by the true owner of his loan.

For both of

those reasons, the assertion that Ciccotelli has suffered an
injury by having to make monthly payments to an entity that does
not exist is wholly hypothetical.

See Rajamin, 757 F.3d at 85

(affirming dismissal of plaintiffs’ claims that defendants did
not own their loans and were therefore improperly collecting
their monthly payments on the grounds that such claims were
“entirely hypothetical.”).
18

Similarly, Ciccotelli’s allegations that he will improperly
lose his property in foreclosure because “he is statistically
guaranteed to become either incapacitated or die before
completing payments,” ECF No. 33 at 11, and that he “cannot be
assured . . . that his mortgage will be able to be discharged
regardless of whether he has made every scheduled payment,” ECF
No. 26-2 at 6, do not indicate anything more than a conjectural
or hypothetical injury.

See Rajamin, 757 F.3d at 86 (holding

that plaintiffs’ purported injury that alleged defects in the
assignments of their mortgages would prevent the bank from
reconveying clear title to plaintiffs when they paid off their
mortgages was conjectural and hypothetical).

At present,

Ciccotelli has not pleaded any facts suggesting that he is in
default on his mortgage or that he is at imminent risk of
foreclosure.

Nor has he made assertions indicating that he has

satisfied in full the terms of his Note.

Thus, because

Ciccotelli’s proposed allegations fail to aver actual or
imminent injuries sufficient to establish constitutional
standing, the Court finds that such amendments would be futile.
Accordingly, the Court denies Ciccotelli’s motion for leave to
amend the Complaint with respect the assertion that the Trust
does not exist.
With regard to Ciccotelli’s request to add SPS as a
defendant in this case, DBNTC asserts that such an amendment
19

would also be futile, as Ciccotelli released all claims against
SPS as a condition of settlement of the 2008 lawsuit.
Ciccotelli disagrees, arguing that the settlement agreement did
not release SPS from liability for future acts.
Having reviewed the settlement agreement from the 2008
lawsuit, the Court agrees with Ciccotelli that the agreement
does not release SPS from liability for acts committed after May
29, 2013.

See ECF No. 31-2.

Nonetheless, Ciccotelli’s proposed

claim that SPS has been “misappropriating [his] payments” relies
on his assertion that the Trust does not exist.
6.

ECF No. 26-2 at

As discussed above, such a claim is entirely hypothetical

and does not establish constitutional standing.

The Court

therefore denies Ciccotelli’s motion to add SPS as a defendant
to the case on the grounds of futility.
III. Defendants’ Motion to Vacate the Entry of Default &
Ciccotelli’s Motion for Default Judgment
The Court now considers Defendants’ motion to vacate the
entry of default and Ciccotelli’s motion for default judgment.
On February 3, 2016, Ciccotelli applied to the Court to enter
default against Defendants Deutsche Bank AG, Deutsche Bank
Americas Holding Corp., Juergen Fitschen, and Anshu Jain
pursuant Federal Rule of Civil Procedure 55.

See ECF No. 27.

In support of his application, Ciccotelli submitted an affidavit
in which he stated that he “served a Summons, together with a

20

copy of the Complaint and a Waiver of Service, on [said
defendants] by first class mail, postage prepaid, on September
26, 2014.”

ECF No. 27-1 at 1.

Finding that those Defendants

had “failed to plead, file a verified answer or otherwise
defend,” the Court entered a default against them on February 4,
2016.

ECF Nos. 28 & 29.
On March 11, 2016, the defaulted Defendants filed the

present motion to vacate the entry of default on the grounds
that Ciccotelli failed to properly serve them under Vermont law,
and that they have presented other meritorious defenses.
Ciccotelli submitted a response opposing the motion, arguing
that service was adequate and that the default was willful.
Ciccotelli also filed a motion of his own seeking a default
judgment in the amount of $450,000.
A “court may set aside an entry of default for good cause.”
Fed. R. Civ. P. 55(c).

In determining whether good cause to

relieve a party from default exists, the Second Circuit has
directed courts to assess three factors: “(1) whether the
default was willful; (2) whether setting aside the default would
prejudice the adversary; and (3) whether a meritorious defense
is presented.”
Cir. 1993).

Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2d

Because there is a strong preference for resolving

disputes on the merits, New York v. Green, 420 F.3d 99, 104 (2d
Cir. 2005), the Rule 55(c) standard is lenient, Meehan v. Snow,
21

652 F.2d 274, 277 (2d Cir. 1981).

Accordingly, “when doubt

exists as to whether a default should be granted or vacated, the
doubt should be resolved in favor of the defaulting party.”
Enron Oil Corp., 10 F.3d at 96.
Here, the defaulted Defendants have presented multiple
meritorious defenses.

First, as both parties agree, Ciccotelli

attempted to serve the Defendants pursuant to Vermont Rule of
Civil Procedure 4(l).

Under that provision, a plaintiff may

seek waiver of service by mailing the defendant a notice of suit
and request for waiver, along with a copy of the complaint.
V.R.C.P. 4(l)(3).

See

If the defendant refuses to waive service, he

may be liable for the costs subsequently incurred in effecting
service, but that does not relieve the plaintiff from his or her
duty to properly serve the summons and complaint.
4(l)(6).

See V.R.C.P.

Although there was initially some dispute over the

facts in the present case, Ciccotelli recently filed an amended
affidavit acknowledging that he never served Defendants with a
copy of the summons.

See ECF No. 41.

Moreover, Ciccotelli

makes no claim that the defaulted Defendants waived service in
response to his request under Rule 4(l).

Accordingly, the

defaulted Defendants have adequately alleged insufficiency of
service of process.
Second, in his Complaint, Ciccotelli does not present any
factual allegations regarding the actions or omissions of
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Deutsch Bank AG, Deutsche Bank Americas Holding Corp., Juergen
Fitschen, or Anshu Jain.

Rather, in his response to Defendants’

motion to vacate the entry of default, he claims that the
defaulted Defendants are vicariously liable for the actions of
DBNTC.

As explained above, the Court grants in full DBNTC’s

motion to dismiss on the grounds that Ciccotelli has failed to
state a plausible claim for relief.1

Accordingly, Ciccotelli’s

claims against the defaulted Defendants cannot survive.
Although the Court recognizes Ciccotelli’s argument that
the default in this case may have been willful, the defaulted
Defendants’ plain defenses to this action, coupled with a lack
of prejudice to Ciccotelli, serve to satisfy the lenient
standard for establishing good cause to vacate the entry of
default.

Accordingly, the Court grants Defendants’ motion to

vacate the entry of default and denies Ciccotelli’s motion for
default judgment.
IV.

DBNTC’s Motion to Seal & Ciccotelli’s Motion to Dismiss the
Motion to Seal
Finally, the Court addresses DBNTC’s motion to seal and

Ciccotelli’s request to dismiss the same.

In its response to

Ciccotelli’s motion for leave to file an amended complaint,
DBNTC references the settlement agreement entered into by
Ciccotelli and Chase at the conclusion of the 2008 lawsuit.

1

As indicated in their motion to vacate the entry of default, the defaulted
Defendants join in DBNTC’s motion to dismiss. See ECF NO 37 at 9.

23

DBNTC cites the agreement in support of its argument that adding
SPS as a defendant to the present case would be futile because
Ciccotelli released SPS from liability for all claims related to
his Note and Mortgage.

A copy of the agreement is attached to

DBNTC’s response.
DBNTC now moves to seal the settlement agreement on the
grounds that it is confidential.

Specifically, DBNTC points to

Section 5 of the agreement, which provides that “[t]he parties
shall keep each and every term of this Settlement Agreement
confidential, provided, however, that Ciccotelli may reveal the
terms of this Settlement Agreement to his financial or legal
advisors, to any federal or state taxing authority, or as
otherwise required by law.”

ECF No. 31-2 at 2.

Ciccotelli

opposes the motion, arguing that because DBNTC was not a party
to the settlement agreement, it lacks standing to request that
the agreement be sealed.
In determining whether documents relating to a lawsuit must
be made available to the public, the Second Circuit has directed
courts to engage in a three-step analysis.

Lugosch v. Pyramid

Co. of Onondaga, 435 F.3d 110, 119-20 (2d Cir. 2006) (internal
citation omitted).

First, a court must decide whether the

documents are “judicial documents,” to which the public has a
presumptive right of access.

Id. at 119.

“In order to be

designated a judicial document, the item filed must be relevant
24

to the performance of the judicial function and useful in the
judicial process.”

Id. (internal quotation omitted).

Second,

if the documents are indeed judicial documents, the court “must
determine the weight of th[e] presumption.”

Id.

“The weight to

be given the presumption of access must be governed by the role
of the material at issue in the exercise of Article III judicial
power and the resultant value of such information to those
monitoring the federal courts.”

United States v. Amodeo, 71

F.3d 1044, 1049 (2d Cir. 1995).

Third, “[o]nce the weight of

the presumption is determined, a court must balance competing
considerations against it.”

Id. at 1050.

Competing

considerations “include but are not limited to ‘the danger of
impairing law enforcement or judicial efficiency’ and ‘the
privacy interests of those resisting disclosure.’”

Lugosch, 435

F.3d at 120 (citing Amodeo, 71 F.3d at 1050).
Here, the Court finds that the settlement agreement is
properly designated as a judicial document because it was
attached to a motion that was dispositive of several of
Ciccotelli’s claims.

See Nycomed US, Inc. v. Glenmark Generics,

Inc., 2010 WL 889799, at *4 (E.D.N.Y. Mar. 8, 2010) (holding
that two documents filed in support of a motion to amend
“clearly constitute ‘judicial documents’” because they “relate
to a motion that, if denied, might be dispositive of at least
some of the parties’ claims and defenses.”).
25

As to the weight

to be afforded to the presumption of access, the Second Circuit
clarified in Lugosch that documents do not “receive different
weights of presumption based on the extent to which they were
relied upon in resolving the motion.”

435 F.3d at 123.

Thus,

even though the Court does not base its decision to deny
Ciccotelli’s motion to amend on the information presented in the
settlement agreement, the presumption of access remains strong
because the agreement was submitted to the Court for the purpose
adjudicating several of Ciccotelli’s claims.

See id.

Nonetheless, upon consideration of the countervailing
factors favoring nondisclosure, the Court ultimately finds that
Chase’s privacy interest is sufficient to overcome the
presumption of access in this case.
present suit.

Chase is not a party to the

Roberts v. Lederman, 2004 WL 2238564, at *7

(E.D.N.Y. Oct. 4, 2004) (“[T]he presence of innocent third
parties who would suffer serious harm by disclosure of
information contained in the motions militates in favor of
keeping them under seal.”).

In agreeing to settle the 2008

case, Chase sought to limit the publicity of the settlement
agreement through the use of an explicit confidentiality clause.
Chase has a plain privacy interest in maintaining the
confidentiality of its settlement terms, and disclosure of the
agreement at this juncture would be highly detrimental to that
interest.

Accordingly, if Ciccotelli would like to challenge
26

the settlement agreement’s confidentiality provision, he should
do so in the 2008 case so as to afford Chase an adequate
opportunity to represent its interests.

The Court therefore

grants DBNTC’s motion to seal and denies Ciccotelli’s motion to
dismiss the same.2
CONCLUSION
As explained above, the Court grants DBNTC’s motion to
dismiss (ECF No. 18) and denies Ciccotelli’s motion to amend the
Complaint (ECF No. 26).

The Court also denies Ciccotelli’s

motion for a default judgment (ECF No. 30) and grants
Defendants’ motion to vacate the entry of default (ECF No. 37).
Finally, the Court grants DBNTC’s motion to seal (ECF No. 32)
and denies Ciccotelli’s motion to dismiss DBNTC’s motion to seal
(ECF No. 34).

Because the defaulted Defendants joined in

DBNTC’s motion to dismiss, the present suit is now dismissed in
its entirety.
Dated at Burlington, in the District of Vermont, this 4th
day of May, 2016.
/s/ William K. Sessions III
William K. Sessions III
District Court Judge

2

Ciccotelli’s argument that DBNTC lacks standing to request that the
settlement agreement be sealed is misguided. As explained above, in ruling
on the motion to seal, the Court is not enforcing the terms of the settlement
agreement, but rather making a determination regarding the public right of
access.

27