O'Hara v. Mortgageit, Inc.

          RULING ON MOTIONS TO DISMISS

          Michael P. Shea, U.S.D.J.

         Pro se plaintiff Edward J. O’Hara brought this action on October 9, 2018 against Defendants MortgageIT, Inc.; U.S. Bank National Association as Trustee for LXS 2006-12N; IndyMac Bancorp, Inc., a Unit of OneWest Bank that is now a division of CIT Bank, N.A.; Ocwen Loan Servicing, Inc.; Citibank, N.A. as Trustee for MLMI Trust Series 2006-HE5; Leopold & Associates, PLLC, a multistate law firm; and Hinshaw & Culbertson, LLP, a national law firm (together, “Defendants”). Complaint, ECF No. 1. Mr. O’Hara alleges that the Defendants improperly securitized his Note and Mortgage and then brought a fraudulent foreclosure action against him. His Complaint alleges violations of various federal and state laws, including the First, Fifth, and Fourteenth Amendments to the U.S. Constitution; 42 U.S.C. §§ 1983 and 1985–86; the Truth in Lending Act (TILA); the Fair Debt Collection Practices Act (FDCPA); the Federal Tort Claims Act (FTCA); fraudulent conveyance; abuse of process; and unfair business practices and failure to prevent deprivations of rights.

         Defendants U.S. Bank National Association as Trustee for LXS 2006-12N (“U.S. Bank”), Ocwen Loan Servicing, LLC (named “Ocwen Loan Servicing, Inc.” in the Complaint) (“Ocwen”), and Hinshaw & Culbertson LLP (“Hinshaw”) moved to dismiss the Complaint under Fed.R.Civ.P. 12(b)(1) on December 12, 2018. See U.S. Bank Mot. to Dismiss, ECF No. 10. Defendant CIT Bank, N.A. (named “IndyMac Bancorp, Inc.” in the Complaint) (“CIT Bank”) moved to dismiss under Fed.R.Civ.P. 12(b)(1) and 12(b)(6) on December 31, 2018, for substantially the same reasons. See CIT Bank Mot. to Dismiss, ECF No. 16. Mr. O’Hara filed objections to both motions. ECF Nos. 23, 27. Defendants MortgageIT, Inc. (“MortgageIT”), Citibank, N.A. as Trustee for MLMI Trust Series 2006-HE5 (“Citibank”), and Leopold & Associates PLLC (“Leopold & Associates”) have not appeared in this case.^[1]

         For the reasons below, the Court GRANTS both motions to dismiss without prejudice.

         I. BACKGROUND

         In October 2013, Defendant U.S. Bank, as Trustee, brought a foreclosure action against Mr. O’Hara in the Superior Court of Connecticut, seeking to foreclose on residential property located at 1414 King Street, Greenwich, Connecticut. U.S. Bank Nat’l Ass’n, as Trustee for the LXS 2006-12N v. O’Hara, Superior Court, Judicial District of Stamford, No. FST-CV13-6020232-S (the “State Foreclosure Action”). Mr. O’Hara appeared in that action, filed an Answer with Special Defenses, and the court entered a judgment of foreclosure by sale in December 2015. U.S. Bank Mem., ECF No. 11 at 2. The Court takes judicial notice of the court documents and rulings in the State Foreclosure Action. See Kramer v. Time Warner Inc., 937 F.2d 767, 774 (2d Cir. 1991) (“[C]ourts routinely take judicial notice of documents filed in other courts . . . not for the truth of the matters asserted in the other litigation, but rather to establish the fact of such litigation and related filings.”) (citations omitted). The state trial court opened the judgment in June 2016, and the case remains pending. U.S. Bank Mem., ECF No. 11 at 3.

         Mr. O’Hara’s Complaint makes the following allegations, which I accept as true for purposes of this motion. The complaint alleges, in sum, that the Defendants improperly securitized his Note and Mortgage, and that the foreclosure action against him was fraudulent as a consequence. On or about May 6, 2006, Mr. O’Hara signed a Note and Mortgage originated by MortgageIT, Inc. Compl., ECF No. 1 ¶¶ 21, 23. He alleges that MortgageIT sold the loan in 2006 to Lehman Brothers Holdings, Inc., which securitized the mortgage, held it in a trust (Lehman XS Trust Series 2006-12N, for which U.S. Bank was the Trustee), and then resold it to a Merrill Lynch trust (MLMI 2006-HE5). Id. ¶ 24. Because the loan was sold to a Merrill Lynch trust in 2006, Mr. O’Hara asserts that a purported 2011 Assignment of the mortgage from MortgageIT to U.S. Bank was invalid. Id. ¶¶ 24, 27. He also alleges that MortgageIT failed to document any transfer of the mortgage to U.S. Bank in the local land records. Id. ¶ 32. For these reasons, he argues that U.S. Bank is not a “true part[y] in interest who can make any claim against Plaintiff’s Mortgage transaction” and does not have standing to enforce the note or the mortgage. Id. ¶¶ 28, 37. He characterizes the mortgage documents (including the note, the mortgage, and the assignment) as “falsely made, void ab initio, and slanderous, ” Id. ¶ 33, accuses the law firm defendants of filing “fraudulent documents” in the State Foreclosure Action, Id. ¶ 35, and calls that entire action a “fraudulent proceeding, ” Id. ¶ 38.

         Mr. O’Hara makes additional allegations of fraudulent activity. He avers that U.S. Bank made misrepresentations to the plaintiff about the nature of his mortgage, telling him it was a “traditional ‘mortgage loan’ consisting of a paper note and security instrument a/k/a ‘mortgage, ’” when in fact the mortgage had been securitized and “fraudulently converted into Stock-like Bond Investment Securities.” Id. ¶¶ 26, 28. He claims that U.S. Bank “deliberately caused the original ‘Promissory Note’ . . . to be destroyed, ” and that there is no proof his brother, Francis O’Hara, “ever electronically signed the ‘electronic note’ that was made part of the ‘Mortgage.’” Id. ¶¶ 29–30. Finally, he argues that the mortgage, assignment, and three versions of the original note are “acts of forgery and counterfeiting of non-negotiable Security Instruments that are actually Investment Securities.” Id. ¶ 35.

         II. LEGAL STANDARDS

         The “pleadings of a pro se plaintiff must be read liberally and should be interpreted to ‘raise the strongest arguments that they suggest.’” Graham v. Henderson, 89 F.3d 75, 79 (2d Cir. 1996) (citing Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994)). A pro se complaint is “held to less stringent standards than formal pleadings drafted by lawyers.” Bromfield v. Lend-Mor Mortg. Bankers Corp., No. 3:15-CV-1103 (MPS), 2016 WL 632443, at *3 (D. Conn. Feb. 17, 2016).

         “A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it . . . . A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000).

         In deciding a motion to dismiss under Rule 12(b)(6), the Court must determine whether the plaintiff has alleged “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court accepts the complaint’s factual allegations as true, and “draw[s] all reasonable inferences in favor of the non-moving party.” Vietnam Ass’n for Victims of Agent Orange v. Dow Chem. Co., 517 F.3d 104, 115 (2d Cir. 2008). “However, the tenet that a court must accept a complaint’s allegations as true is inapplicable to ‘[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.’” Gonzales v. Eagle Leasing Co., No. 3:13-CV-1565 JCH, 2014 WL 4794536, at *2 (D. Conn. Sept. 25, 2014) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “When a complaint is based solely on ‘wholly conclusory allegations’ and provides no factual support for such claims, it is appropriate to grant defendants motion to dismiss. Scott v. Town of Monroe, 306 F.Supp.2d 191, 198 (D. Conn. 2004).

         III. DISCUSSION

         Defendants bring their motions to dismiss, ECF Nos. 10, 16, under Rule 12(b)(1) and Rule 12(b)(6). Both memoranda rely primarily on abstention, arguing that this Court should decline to exercise jurisdiction and dismiss the action on account of Mr. O’Hara’s pending State Foreclosure Action. I need not undertake an analysis of abstention factors, however, because Mr. O’Hara fails to state a federal cause of action in his Complaint. Without any federal question adequately pled, I dismiss the federal claims without prejudice and decline to exercise supplemental jurisdiction over the state law claims. I also provide Mr. O’Hara with an opportunity to replead the federal claims within thirty days to address the deficiencies identified herein.

         A. Constitutional and § 1983 Claims

         In Counts One, Two, and Four, Mr. O’Hara alleges violations of his constitutional rights, citing the First, Fifth, and Fourteenth Amendments as well as 42 U.S.C. §§ 1983, 1985–86. Defendants argue that these claims must be dismissed because the Defendants are not state actors for the purposes of constitutional or § 1983 liability. I agree. I also dismiss the claims under §§ 1985–86 because the facts alleged do not support them.^[2]

         “Because the United States Constitution regulates only the Government, not private parties, a litigant . . . who alleges that [his] constitutional rights have been violated must first establish that the challenged conduct constitutes ‘state action.’” Grogan v. Blooming Grove Volunteer Ambulance Corps, 768 F.3d 259, 263 (2d Cir. 2014). “Title 42 U.S.C. § 1983 provides a remedy for deprivations of rights secured by the Constitution and laws of the United States when that deprivation takes place under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory.” Lugar v. Edmondson Oil Co., Inc., 457 U.S. 922, 924 (1982). To state a claim under 42 U.S.C. § 1983, “the plaintiff must allege that the challenged conduct [] was attributable to a person acting under color of state law.” Whalen v. Cty. of Fulton, 126 F.3d 400, 405 (2d Cir. 1997). “[T]he acts of private attorneys are not deemed to be under color of state law, and an otherwise private person acts under color of state law only if he or she conspires with state officials to deprive another of federal rights.” Kash v. Honey, 38 Fed.Appx. 73, 75–76 (2d Cir. 2002).

         Mr. O’Hara makes only conclusory allegations of state action, stating that Defendants deprived him of his constitutional rights “through their Attorney Agents, who acted under Color of State Law, using their privilege as Officers of the Court to make claims against Plaintiff’s property in the foreclosure action, ” and that the action as a whole was a “fraudulent proceeding under Color of State Law.” Compl., ECF No. 1 ¶¶ 34, 38. In his objections, he reiterates the allegations in the Complaint that “the Defendants used a State authorized foreclosure proceeding under Color of Law to fraudulently deprive me of my Constitutionally protected rights.” Objection, ECF No. 27 at 8. He also argues that “[a]ttorneys admitted to the bar are officers of the Court, and pursuant to [7 C.J.S. § 4], an attorney’s first duty is to the court and the public, not to the client . . . . Therefore, attorneys, whose first duty is as officers of the Court, are effectively State Actors.” Objection, ECF No. 23 at 3–4. But the Second Circuit has made clear that- attorneys’ duties to the Court notwithstanding-“the acts of private attorneys are not deemed to be under color of state law, ” Kash, 38 Fed.Appx. at 75–76, unless plaintiff alleges “facts demonstrating that the private entity acted in concert with the state actor, ” Spear v. Town of W. Hartford, 954 F.2d 63, 68 (2d Cir. 1992). Mr. O’Hara has alleged no such facts to suggest that any of the Defendants, including any attorneys, contracted or conspired with any governmental office or official. Because a “merely conclusory allegation that a private entity acted in concert with a state actor does not suffice to state a § 1983 claim against the private entity, ” Mr. O’Hara fails to state a claim for any constitutional violation or for § 1983 liability.

         Mr. O’Hara also cites 42 U.S.C. §§ 1985–86, 1988 in his Complaint. Id. ¶¶ 1, 52 (“invok[ing] the jurisdiction and venue of this Court for violations of Civil Rights per 42 U.S.C. §§ 1983 . . ., 1985(3) . . ., 1986 and 1988” and alleging that defendants are “accountable for violations of the Plaintiff’s rights” under §§ 1983, 1985–86). The first two subsections of § 1985 are not implicated by the facts alleged. Gilliam v. Black, No. 3:18CV1740 (SRU), 2019 WL 3716545, at *16 (D. Conn. Aug. 7, 2019) (“Section 1985(1) prohibits conspiracies to prevent federal officials from performing their duties and Section 1985(2) ...