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Faiella v. Green Tree Servicing LLC

United States District Court, D. New Hampshire

June 23, 2016

Ralph Faiella
Green Tree Servicing LLC and Federal National Mortgage Association No. 2016 DNH 105


          Joseph A. DiClerico, Jr. United States District Judge

         Ralph Faiella brought a plea of title action in state court against the Federal National Mortgage Association ("Fannie Mae") and Green Tree Servicing LLC, now known as Ditech Financial LLC ("Ditech"), challenging the legality of a foreclosure that Ditech and Fannie Mae conducted on his residence. Fannie Mae and Ditech removed the case to this court, asserting diversity jurisdiction. Faiella moves to remand the case to state court or, in the alternative, requests that the court abstain from entertaining it. Fannie Mae and Ditech oppose Ditech's motion to remand or abstain.

         Ditech has also moved to dismiss the amended complaint against it on the grounds that it had no involvement in the foreclosure at issue. Faiella objects to this motion.


         The facts below are derived from Faiella's amended complaint (doc. no. 9) and certain documents that Ditech has filed in support of its motion to dismiss, including the relevant mortgage, the foreclosure notice, and the foreclosure deed. Because Faiella references the foreclosure notice and the mortgage in his amended complaint and does not dispute that the exhibits are authentic, the court will consider them in resolving Ditech's motion to dismiss. See Wilson v. HSBC Mortg. Servs., Inc., 744 F.3d 1, 7 (1st Cir. 2014) (considering documents referenced in plaintiff's complaint for motion to dismiss). The court will also consider the foreclosure deed because it is a public record and Faiella does not dispute its authenticity. Sykes v. RBS Citizens, N.A., 2 F.Supp. 3d 128, 142 n.14 (D.N.H. 2014)

         A. The Foreclosure

         In 2007, Ralph Faiella obtained a loan that was secured by mortgage on a condominium property ("the property") in Plaistow, New Hampshire. That mortgage was subsequently assigned to Fannie Mae. Fannie Mae hired Ditech to service Faiella's loan on its behalf during the time period relevant to this dispute. Faiella is currently residing in the property.

         In 2015, Faiella fell behind on his mortgage payments. In September of 2015, foreclosure counsel for Fannie Mae sent Faiella a letter notifying him that a foreclosure sale on the property had been scheduled for October 16, 2015. The letter attached a notice from Fannie Mae informing Faiella that it was the holder of his mortgage and that it intended to initiate a foreclosure sale based on the power of sale clause in Faiella's mortgage.

         Around the same time, Faiella spoke with a Ditech representative to arrange a payment on his mortgage that would bring his account up to date. In response to this conversation, Faiella sent a check to Ditech for the amount of unpaid debt through September. Ditech, however, returned Faiella's check with a letter requesting that Faiella contact Ditech to determine the correct reinstatement amount. Faiella contacted the same Ditech representative again, and the representative informed him that the amount of his check was correct but that the payment was rejected because it was not a cashier's check. Several days before the scheduled foreclosure, Faiella sent Ditech a cashier's check for the quoted reinstatement amount.

         Notwithstanding Faiella's efforts, Fannie Mae foreclosed on the property as scheduled. Fannie Mae then recorded a foreclosure deed in the Rockingham Registry of Deeds for the property. Pursuant to that deed, Fannie Mae as mortgagee granted the property to itself for a consideration of $106, 500.

         Faiella thought that the foreclosure had been cancelled based on his reinstatement check and did not learn about the foreclosure sale until after it took place. Faiella then received a letter from Ditech returning the second check and informing him that the amount of the check was not enough to reinstate his account. At this time, the Ditech representative that Faiella had spoken with told him that she did not know the correct reinstatement amount for his loan.

         B. State Proceedings

         Following the foreclosure sale, Fannie Mae filed a possessory action against Faiella in state district court, seeking to obtain possession of the property. In response, Faiella argued that Fannie Mae could not obtain possession because the foreclosure was not valid. Faiella's defense to the possessory action brought the title of the property into question, which the district court lacked jurisdiction to adjudicate. For that reason, the district court ordered Faiella to file a plea of title under RSA 540:17. Faiella filed a plea of title action in state superior court, alleging a claim for wrongful foreclosure against Fannie Mae and Ditech.

         C. Removal

         Fannie Mae and Ditech removed Faiella's plea of title action to this court on the basis of diversity jurisdiction. Faiella now seeks to remand the case back to state court on the grounds that the plea of title action is part of the possessory action, which was not removed. Faiella also requests, alternatively, that the court abstain from hearing its plea of title.

         D. Amended Complaint

         After the case was removed, Faiella filed an amended complaint titled "FIRST AMENDED PLEA OF TITLE SEEKING DECLARATORY RELIEF, ATTORNEYS FEES AND OTHER EQUITABLE RELIEF AS A MATTER OF RIGHT." The single cause of action named in the amended complaint is wrongful foreclosure based on the representation to Faiella of the mortgage arrearage payoff amount, which Faiella alleges was wrong due to negligence, mistake, or fraud. Although the New Hampshire Debt Collection ...

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