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Monchgesang v. Deutsche Bank National Trust Co.

United States District Court, D. New Hampshire

April 9, 2015

Ronald Monchgesang and Marguerite Monchgesang
v.
Deutsche Bank National Trust Co., as Trustee for Morgan Stanley ABS ABS Capital 1, Inc. Trust 2006-HE5, Mortgage Pass-Through Certificates, Series 2006-HE5 Opinion No. 2015 DNH 079.

ORDER

LANDYA McCAFFERTY, District Judge.

In a case that has been removed from the Hillsborough County Superior Court, Ronald and Marguerite Monchgesang seek to enjoin Deutsche Bank National Trust Co. ("Deutsche Bank") from foreclosing on their mortgage. Before the court is Deutsche Bank's motion for judgment on the pleadings. Plaintiffs object. The court held a hearing on defendant's motion on February 13, 2015. For the reasons that follow, Deutsche Bank's motion for judgment on the pleadings is granted.

I. The Legal Standard

"The standard of review of a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) is the same as that for a motion to dismiss under Rule 12(b)(6)." Frappier v. Countrywide Home Loans, Inc., 750 F.3d 91, 96 (1st Cir. 2014) (quoting Marrero-Gutierrez v. Molina, 491 F.3d 1, 5 (1st Cir. 2007)). Under Rule 12(b)(6), the court must accept the factual allegations in the complaint as true, construe reasonable inferences in the plaintiff's favor, and "determine whether the factual allegations in the plaintiff's complaint set forth a plausible claim upon which relief may be granted." Foley v. Wells Fargo Bank, N.A., 772 F.3d 63, 71 (1st Cir. 2014) (citation 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." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Analyzing plausibility is "a context-specific task" in which the court relies on its "judicial experience and common sense." Id. at 679.

II. Background

In 2006, the Monchgesangs refinanced their home loan and gave a mortgage to their lender, New Century Mortgage Corp. ("New Century"). In late 2007, they fell behind on their mortgage payments. In early 2008, purported successor mortgagee Deutsche Bank initiated foreclosure proceedings against the mortgaged property. It did so through its mortgage servicer, Bank of America.

While conducting itself as the Monchgesangs' successor mortgagee, Deutsche Bank was also the trustee for Morgan Stanley ABS Capital 1, Inc. Trust 2006-HE5, Mortgage Pass-Through Certificates, Series 2006-HE5 ("the Trust"). The Trust is governed by a Pooling and Services Agreement ("PSA") that "is governed by the laws of the State of New York." Am. Compl. (doc. no. 6) ¶ 25. Among other things, the PSA "require[d] that all initial mortgage loans and mortgages be conveyed to the Trustee no later than... June 30, 2006." Am. Compl. ¶¶ 21-22. The Monchgesangs' note and mortgage were conveyed to Deutsche Bank after June 30, 2006.

Pursuant to New Hampshire Revised Statutes Annotated ("RSA") § 479:25, the Monchgesangs filed an action in New Hampshire state court to enjoin the 2008 foreclosure. They were unsuccessful, and Deutsche Bank acquired the mortgaged property at the ensuing foreclosure sale. Then, Deutsche Bank filed a state-court landlord-tenant action in an effort to gain possession of the property from the Monchgesangs. In response, the Monchgesangs sued Deutsche Bank in a plea of title to recover the property, and they also re-opened their petition to enjoin foreclosure.

Regarding the re-opening of plaintiffs' petition to enjoin foreclosure, a subsequent state-court order explains:

After having filed the plea of title in the district court, the Monchgesangs moved to reopen the petition to enjoin the foreclosure in this court. The court (Groff, J.) conducted a hearing on that motion, but Deutsche [Bank]... failed to appear. At a subsequent trial management conference on May 12, 2009, the parties agreed to consolidate the two matters [i.e., the 2008 motion to enjoin foreclosure and the subsequent plea of title]. This agreement is reflected in the "Assented to Motion to Consolidate."

Am. Compl., Ex. 1 (doc. no. 6-1), at 1 n.1. Without having before it either the Monchgesangs' motion to reopen or the Assented to Motion to Consolidate, this court is hard pressed to determine: (1) why the Monchgesangs moved to reopen their 2008 petition; (2) why the court re-opened it; or (3) what, precisely, was litigated in the re-opened petition to enjoin foreclosure. In the absence of any better explanation, the court presumes that the Monchgesangs wanted to reopen their 2008 petition for the purpose of enjoining some hypothetical future attempt to foreclose, as a prophylactic measure in the event that they were to: (1) prevail on their plea of title; (2) regain ownership of the mortgaged property; and (3) face once again a threat of foreclosure.[1] Similarly, given the statutory linkage between a petition to enjoin foreclosure and a subsequent plea of title, see RSA 479:25, II, this court presumes that the state court re-opened the 2008 petition so that the ruling on that petition could be harmonized with the court's decision on the plea of title.

Regardless of why plaintiffs wanted to revive their petition to enjoin foreclosure, and the reasons why it was revived, that petition, Deutsche Bank's landlord-tenant action, and plaintiffs' plea of title were consolidated into a single case in the Hillsborough County Superior Court. Following a one-day bench trial, Judge Nicolosi issued an order that included various findings of fact and rulings of law.

In the section of her order titled "Rulings of Law, " Judge Nicolosi explained that: (1) "the resolution of this case turns on Bank of America's ability to prove it was the holder of the Note at the time of the [2008] foreclosure, " Am. Compl., Ex. 1, at 8; (2) "[t]he question is whether Bank of America has established that it... acquired ownership of the Note from New Century prior to the commencement of the foreclosure proceedings, " id. (emphasis in the original); and (3) "in order to enforce the Note, [Deutsche Bank] must show that Bank of America..., as custodian for Deutsche Bank, possessed the original Note either with a blank endorsement or with a specific endorsement to Deutsche Bank at the time of the foreclosure proceedings, " id. at 9-10. Judge Nicolosi continued: "While the court finds that Bank of America did produce the original [N]ote at trial, the other evidence was insufficient to show that Bank of America held the Note with the endorsement in blank at the time the foreclosure process started." Id. at 10. Judge Nicolosi's order concludes this way:

In light of these factual findings and rulings of law, the court ORDERS the following:
1. The previous foreclosure sale is VOIDED. Legal title is restored to the Monchgesangs subject to the encumbrances of record.
2. No permanent injunction is issued. Deutsche [Bank] may restart the nonjudicial foreclosure process when and if it can marshal sufficient evidence to prove standing.
3. The landlord and tenant writ is DISMISSED.

Id. at 12.

In May 2014, Deutsche Bank notified the Monchgesangs that it had scheduled a foreclosure sale. The Monchgesangs filed another state-court petition to enjoin foreclosure, and the state court granted them a temporary injunction that remains in force. Deutsche Bank removed the Monchgesangs' action to this court. Here, the Monchgesangs filed an amended complaint in two counts. ...


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