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Nationstar Mortgage, LLC v. Dadi

United States District Court, D. Connecticut

August 24, 2017

NATIONSTAR MORTGAGE LLC d/b/a CHAMPION MORTGAGE COMPANY, Plaintiff,
v.
AHMED A. DADI and SECRETARY OF HOUSING AND URBAN DEVELOPMENT, Defendants. AHMED A. DADI, Counterclaimant,
v.
NATIONSTAR MORTGAGE LLC, d/b/a CHAMPION MORTGAGE COMPANY, Counterclaim Defendant.

          RULING ON MOTION TO DISMISS COUNTERCLAIMS AND STRIKE DEFENSES

          Michael P. Shea, U.S.D.J.

         Plaintiff Nationstar Mortgage LLC (“Nationstar”) has moved under Rule 12(b)(6) to dismiss defendant Ahmed A. Dadi's (“Dadi”) counterclaim and under Rule 12(f) to strike Dadi's affirmative defenses. (ECF No. 49.)[1] For the reasons discussed below, I GRANT Nationstar's motion to dismiss Dadi's counterclaim and GRANT Nationstar's motion to strike Dadi's affirmative defenses.

         I. Background

         a. Factual Background

         The following facts are taken from Dadi's amended answer/cross-claim and counter-claim complaint and the admitted facts in plaintiff Nationstar's complaint.

         Dadi is the owner of the property located at 269 Mountain Road, West Hartford, Connecticut. (ECF No. 47-2.) On July 31, 2009, he entered into a Home Equity Conversion Mortgage (“HECM”) with Webster Bank, N.A., for $796, 500.00, which was recorded on the land records. (Id. at ¶ 1.) Webster Bank, N.A. assigned Dadi's HECM to Nationstar. (Id. at ¶ 4.) Dadi did not pay the installment of principal and interest that was due on July 16, 2014 or any of the payments due for following months. (Id. at ¶ 6.) On November 2, 2015, Nationstar exercised its option to declare the entire balance due on the note due and payable, filing suit in the Superior Court, Judicial District of Hartford. (Id. at ¶ 5.)

         Nationstar's complaint requests foreclosure of Dadi's mortgage, immediate possession of the mortgaged premises, a deficiency judgment against Dadi, the appointment of a receiver to collect rents and profits accruing from the premises, and costs and fees. (Id. at 4.) The complaint names the Secretary of Housing and Urban Development (“HUD”) as a defendant on the grounds that it “may claim an interest in the property by virtue of a reverse mortgage” in the original principal amount. (Id. at 2, ¶ 7.) Dadi filed an answer with affirmative defenses, as well as counterclaims and cross-claims against both Nationstar and HUD. (ECF No. 1-1.) HUD removed this case to this Court on February 2, 2017 under 28 U.S.C. § 1442(a)(1) as a suit against a federal agency. (ECF No. 1.)

         After HUD removed, it filed a motion to dismiss the cross-claims. (ECF No. 9.) Nationstar filed a motion to dismiss the counterclaims and strike Dadi's affirmative defenses on June 16, 2017. (ECF No. 31.) In response, Dadi filed an amended answer on August 8, 2017, including amended defenses, cross-claims, and counterclaims. (ECF No. 37.) Dadi sought leave to amend his complaint again on August 21, 2017, which this Court denied. (ECF Nos. 39, 42.) Both Nationstar and HUD renewed their motions to dismiss, asserting that Dadi's claims fail under both Rule 12(b)(1) and 12(b)(6). (ECF Nos. 47, 49.)

         On November 1, 2017, I granted HUD's motion to dismiss Dadi's cross-claims. (ECF No. 63.) In an oral decision, I held that the Court lacked jurisdiction over Dadi's cross-claims because Dadi did not satisfy the requirements of Article III standing and because HUD is protected from suit by sovereign immunity. However, I reserved decision on Nationstar's instant motion to dismiss Dadi's counterclaims and its motion to strike Dadi's affirmative defenses. On January 5, 2018, I noted that my dismissal of the cross-claims against HUD had raised a potential issue with the Court's continued subject matter jurisdiction over the case, and sua sponte ordered additional briefing from HUD and Nationstar on that issue. (ECF No. 69.) Nationstar filed its jurisdictional brief on January 26, 2018, and HUD filed its brief on February 2, 2018. (ECF Nos. 74, 77.)

         b. Dadi's Remaining Counterclaims and Defenses

         Dadi's amended counterclaim complaint alleges in relevant part that: (1) “Nationstar [] never provided the required documents necessary to have [HUD] accept assignment of the mortgage subject of this litigation” (ECF No. 37 at 4, ¶ 1); (2) Dadi “attempted to negotiate and settle any and all outstanding alleged delinquencies under the Federal Guidelines” (id. at 5, ¶ 5); (3) Nationstar “was properly notified of the hardships and medical condition of [Dadi] as with the claimed self-employment declined as a result of his medical conditions and failed to properly inform [him] of his options as required by any lender, ” (id. at ¶ 6); (4) Nationstar violated the Truth in Lending Act (“TILA”) “by not properly informing Mr. Dadi of all options available to him as required prior to initiating foreclosure proceedings, ” which was “predatory, ” and that Dadi being “elderly and sickly was entitled to relief and alternative options not properly afforded to him” by Nationstar (id. at 6, ¶ 8); and (5) Nationstar violated the Dodd-Frank Act by “not properly notifying, informing Mr. Dadi of all options and alternative [sic] available to him and his family to prevent foreclosure, ” “failed to properly work with Mr. Dadi as required to prevent foreclosure, ” “failed to follow mortgage servicing rules as required, ” “failed to follow each and every HUD guideline, regulation, and process prior to initiating foreclosure proceedings, ” and violated “Public Act 83-547 as amended.” (Id. at 7, ¶ 11.)

         Dadi's amended answer also asserts nine special defenses, specifically that: (1) HUD “should accept assignment of mortgage and consider all applicable law” due “to the medical conditions of the Defendant Ahmed Dadi” and “the poor health of both Adhmed Dadi and spouse Mrs. Dadi under 12 U.S.C.A. § 1712u(b)”; (2) HUD “should accept assignment of mortgage and consider all applicable law conditions allowed, requirements including but not limited to the down turn in self-employment conditions for Mr. Ahmed Dadi pursuant to 12 U.S.C.A. § 1712u(b), ” (3) “[t]he Property subject of this civil action is the Principal Residence of Mr. Ahmed Dadi and his family, ” citing Lamison v. United States HUD, C.A. No. 83-766, 1983 U.S. Dist. LEXIS 18037 (W.D. Pa. Apr. 1, 1983); (4) Dadi “has ability to maintain future payments”; (5) HUD should “accept assignment of said mortgage and provide the proper application to [Dadi], ” “assist [Dadi] with the application process which would enable HUD to accept assignment of the mortgage subject of this litigation, ” and that HUD “has not assisted nor provided the required documents, protection or assistance under their own Guidelines and Federal Law”; (6) “Real Estate Property Tax Increases”; (7) Nationstar violated TILA and the Dodd-Frank Act by “not properly notifying, informing or offering Mr. Dadi all options and remedies available to him surrounding alleged defaults and the options available to cure the alleged defaults of the mortgage subject of this litigation”; (8) HUD violated TILA and the Dodd-Frank Act by “not properly notifying, informing or offering Mr. Dadi all options and remedies available to him surrounding alleged defaults and the options available to cure the alleged defaults”; and (9) “[Dadi] is entitled to relief provisions under the Connecticut Public Act 83-547 as amended by Public Act 83-29.” (ECF No. 37 at ¶¶ 9- 17.)

         II. Standard of Review

         “To survive a [Rule 12(b)(6)] motion to dismiss, a [counterclaim] 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) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has 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.” Id. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. The Court must accept the well-pleaded factual allegations of the complaint as true and draw all reasonable inferences in the plaintiff's favor. See Warren v. Colvin, 744 F.3d 841, 843 (2d Cir. 2014). The Court must then determine whether those allegations “plausibly give rise to an entitlement to relief.” Hayden v. Paterson, 594 F.3d 150, 161 (2d Cir. 2010).

         In deciding the motion, the Court must limit itself “to facts stated in the complaint or in documents attached to the complaint as exhibits or incorporated in the complaint by reference, ” as well as matters of which judicial notice may be taken. Kramer v. Time Warner Inc., 937 F.2d 767, 773 (2d Cir. 1991). Because Dadi is pro se, the Court must “construe his pleadings liberally to raise the strongest arguments they suggest.” Warren, 744 F.3d at 843. However, “the Court need not engage in ‘rank speculations' to manufacture a federal claim for pro se plaintiffs, ” and the “court may dismiss a complaint if it appears beyond doubt that no set of facts could be proven that would establish an entitlement to relief.” Gonzalez v. Option One Mortg. Corp., No. 3:12-CV-1470 CSH, 2014 WL 2475893, at *5 (D. Conn. June 3, 2014).

         Under Fed R. Civ. P. 12(f), the court may strike from any pleading “an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed R. Civ. P. 12(f). To prevail on its motion to strike Dadi's affirmative defenses, Nationstar “must establish that: “(1) there is no question of fact that might allow the defense to succeed; (2) there is no substantial question of law that might allow the defense to succeed; and (3)[it] would be prejudiced by the inclusion of the defense.” Vallecastro v. Tobin, Melien & Marohn, No. 313-CV-1441SRU, 2014 WL 7185513, at *7 (D. Conn. Dec. 16, 2014) (citing New England Health Care Emps. Welfare Fund v. iCare Mgmt., LLC, 792 F.Supp.2d 269, 288 (D. Conn. 2011)).[2] The first two prongs “examine the legal sufficiency of the asserted defense” and are determined “solely upon the face of the pleading” under the same standards applicable to a Rule 12(b)(6) motion to dismiss. Walters v. Performant Recovery, Inc., 124 F.Supp.3d 75, 78 (D. Conn. 2015) (citing Coach, Inc. v. Kmart Corps., 756 F.Supp.2d 421, 425 (S.D.N.Y. 2010)). “A motion to strike an affirmative defense . . . for legal insufficiency is not favored . . . .” and will not succeed unless the defense is plainly legally insufficient. Fed. Hous. Agency v. Royal Bank of Scotland Grp. PLC, 204 F.Supp.3d 426, 428 (D. Conn. 2016). However, if the court does determine that a defense is legally insufficient, the prejudice that results from needlessly increasing the duration and expenses of litigation requires the court to strike the defense. See Coach, 756 F.Supp.2d at 425 (“[I]nclusion of a defense that must fail as a matter of law prejudices the plaintiff because it will needlessly increase the duration and expense of litigation”).

         III. Discussion

         a. Subject Matter Jurisdiction

         As noted above, Nationstar named HUD, as a party that may claim an interest in Dadi's home, as a defendant, and Dadi later asserted cross-claims against HUD, at which point HUD removed the case to this Court under the federal officer removal statute, 28 U.S.C. § 1442(a). After I dismissed Dadi's cross-claims against HUD, I asked the parties to submit briefs on the question whether the Court still has, or should continue to exercise, subject matter jurisdiction.[3] “[A] court must satisfy itself that it has subject matter jurisdiction and may at any time in the course of litigation consider whether such jurisdiction exists.” Mitskovski v. Buffalo & Fort Erie Pub. Bridge Auth., 435 F.3d 127, 133 (2d Cir. 2006); see also Gonzalez v. Thaler, 565 U.S. 134, 141 (2012) (“When a requirement goes to subject-matter jurisdiction, courts are ...


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