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Server v. Nation Star Mortgage, LLC

United States District Court, D. Connecticut

July 20, 2017

RALPH SERVER, JR., Plaintiff,
v.
NATION STAR MORTGAGE, LLC, Defendant.

          MEMORANDUM OF DECISION GRANTING MOTION TO DISMISS [DKT. 7]

          Hon. Vanessa L. Bryant United States District Judge

         This case seeks relief from an order rendered in and relief obtainable in a foreclosure action currently pending in the Connecticut Superior Court. The Complaint does not allege that Plaintiff Ralph Server, Jr. (“Server, Jr.”) has sought relief from the Connecticut Appellate or Supreme Courts. See [Dkt. 1 (Compl.)]. The Connecticut Judicial Branch website does not reveal an appeal of the Superior Court decision. Server, Jr. seeks declaratory judgment and rescission of the note and mortgage under TILA and an injunction prohibiting Defendant Nation Star Mortgage, LLC (“Nation Star”) from foreclosing on his property. See Id. ¶¶ 1, 11.[1]Server, Jr. also claims to have state law claims, “including but not limited todetermination of status as holder in due course under Conn. Gen. Stat. § 47-31 on the one hand, and equitable action for quiet title in Chancery Court. . . .” Id. ¶ 2. Nation Star has moved to dismiss this case in its entirety for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) and, in the alternative, for failure to state a claim under Fed.R.Civ.P. 12(b)(6). For the following reasons, the Court GRANTS this motion for Server, Jr.'s failure to establish subject matter jurisdiction.

         I. Background

         Server, Jr. entered into a mortgage and a promissory note with the Community Home Equity Conversion Corporation (“CHECC”) on July 1, 2009. See [Dkt. 1 ¶ 1; Dkt. 7 (Mot. Dismiss) at 32-50 of PDF]. The property is located in Wallingford, Connecticut. [Dkt. 1 ¶ 1]. CHECC later endorsed the note to Bank of America, which then in 2012 assigned the note to Nation Star. Id. ¶ 4. Nation Star is a debt collector incorporated in Texas with its principle place of business located in that state. Id. ¶ 8.

         In March 2015, Nation Star instituted a foreclosure action against Server, Jr. in Connecticut state court. [Dkt. 7 at 24 of PDF].[2] Judge Cronan of the Superior Court in the Judicial District of New Haven at Meriden determined that Nation Star was the proper party in the foreclosure action as the possessor of the original promissory note. See Id. at 27 of PDF.[3] On December 2, 2015, Server, Jr. filed an Answer and Special Defenses. Id. at 25 of PDF. Then on February 25, 2016, Server, Jr. filed a Motion to Dismiss / Motion to Strike and after the parties completed briefing Judge Cronan issued a decision denying Server, Jr.'s motion. See Id. at 25. With respect to procedure, Judge Cronan ruled that Server, Jr. waived his right to file a motion to strike after filing the answer and special defenses on December 2, 2015. Id. at 30 of PDF. Judge Cronan then addressed the merits of the motion and found that under Jesinoski v. Countrywide Home Loans, Inc., 135 S.Ct. 790 (2015), rescission is effected when a borrower notifies the creditor of his or her intention to rescind so long as the notice is provided within three years of the transaction, but that in the present case Server, Jr. did not timely rescind the mortgage because he issued the notice on September 21, 2015, well over three years after the transaction in July 2009. Id. at 31 of PDF. The following week Server, Jr. filed a Motion to Reargue / Reconsider, which Judge Cronan denied on May 25, 2016. Id. at 25 of PDF. As noted above, Server, Jr. does not appear to have appealed the ruling. To date the matter remains pending.

         After receiving the Order denying Server, Jr.'s Motion to Dismiss / Motion to Strike, Server, Jr. filed the instant action with this Court in September 2016. Server, Jr. contends that any debt owed to any party is due to the presently unknown but “true holder in due course” of the note, not Nation Star as it is not in privity with Server, Jr. [Dkt. 1 ¶¶ 4, 7]. Server, Jr. also believes that he has a right to rescind the mortgage and note simply by providing notice despite having unsuccessfully litigated the issues in state court. Id. ¶ 10.

         II. Legal Standard

         “Federal courts are courts of limited jurisdiction. . . .” Gunn v. Minton, 568 U.S. 251, 256 (2013). Subject matter jurisdiction is not waivable, and a lack of subject matter jurisdiction may be raised at any time, by a party or the court sua sponte. See Gonzalez v. Thaler, 565 U.S. 134, 141 (2012); see also Sebelius v. Auburn Reg'l Med. Ctr., 568 U.S. 145, 153 (2013) (“Objections to a tribunal's jurisdiction can be raised at any time, even by a party that once conceded the tribunal's subject-matter jurisdiction over the controversy.”). If a court lacks subject matter jurisdiction, it must dismiss the action. See Fed.R.Civ.P. 12(h)(3).

         A “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). However, “where jurisdictional facts are placed in dispute, the court has the power and obligation to decide issues of fact by reference to evidence outside the pleadings. . . .” Id. “In that case, the party asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists.” Id.

         III. Analysis

         A. Rooker-Feldman Doctrine

         Under the Rooker-Feldman doctrine, federal district courts may not exercise subject matter jurisdiction over suits that are, in substance, appeals from statecourt judgments. Rooker v. Fidelity Trust Co., 263 U.S. 413, 414-15 (1923); District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983); Gonzalez v. Ocwen Home Loan Servicing, 74 F.Supp.3d 504, 513 (D. Conn. 2015) (stating the Rooker-Feldman doctrine depends on “the causal relationship between the state-court judgment and the injury of which the party complains in federal court, ” not the similarity between the claims) (quoting McKithen v. Brown, 481 F.3d 89, 97-98 (2d Cir. 2007)). The doctrine is limited to “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 Industries Corp., 544 U.S. 280, 284 (2005). There are four requirements for the application of the Rooker-Feldman doctrine: (1) the party raising the claim must have lost in state court; (2) that party's injuries must be caused by the state court judgment; (3) that party's claims must invite the district court to review and reject the state court judgment; and (4) the state court judgment must have been rendered prior to the commencement of the federal court proceedings. See Vossbrinck v. Accredited Home Lenders, Inc., 773 F.3d 423, 426 (2d Cir. 2014); Hoblock v. Albany Cty Bd. of Elections, 422 F.3d 77, 85 (2d Cir. 2005) (interpreting the requirements set forth by Exxon Mobil Corp. as a four-factor test).

         A judgment is final for Rooker-Feldman purposes where “the state proceedings [have] ended.” Exxon Mobil Corp., 544 U.S. at 291. While Rooker-Feldman's timing requirement “will usually be straightforward, ” the present case falls within the category of cases which “present difficult questions as to whether ‘the state proceedings have ‘ended' within the meaning of Rooker-Feldman on the federal questions at issue.'” Hoblock, 422 F.3d at 89 (quoting Federacion de Maestros de P.R. v. Junta de Relaciones del Trabajo de P.R., 410 F.3d 17, 25 (1st Cir. 2005)). Indeed, while the Second Circuit has traditionally applied the Rooker-Feldman doctrine to interlocutory state court orders, much of this case law has been abrogated because the Exxon Mobil Corp. ruling confined the Rooker-Feldman doctrine to a narrower set of cases than previously interpreted by many circuit courts including our own. See Green v. Mattingly, 585 F.3d 97, 101 (2d Cir. 2009).

         Here, prior to the commencement of this action, the Connecticut Superior Court made two critical rulings. First, Judge Cronan determined that Nation Star was a proper party in the action. See [Dkt. 7 at 27 of PDF]. Second, Judge Cronan denied Server, Jr.'s Motion to Dismiss / Motion to Strike for improper procedure and for failure to rescind the mortgage within the three-year statute of limitations, and thus he allowed foreclosure proceedings to go forward. See Id. at 31 of PDF. Thus, the Superior Court ruled on the holder in due course and TILA claims presented in this case. Server, Jr. filed a Motion to Reargue/Reconsider, which Judge Cronan denied on March 25, 2016. Id. at 25 of PDF. There is no indication from the docket that he appealed either ruling, the foreclosure action remains pending, and there is indeed still the possibility that Server, Jr. could raise any and all defenses which may exist against the foreclosure and prevail in state court despite these two factual ...


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