United States District Court, D. New Hampshire
ORDER
JOSEPH
A. DICI RICO, JR.'P 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. The defendants removed the case
to this court. Fannie Mae moves to rescind the foreclosure
sale, rescind a related foreclosure deed that it executed,
and reinstate the mortgage with its original priority.
Faiella objects. The court held a hearing on the motion on
August 25, 2016.
A.
Motion for Rescission
Fannie
Mae “requests that the Court exercise its equitable
powers and rescind the Foreclosure Sale and the Foreclosure
Deed and restore the Mortgage to its pre-foreclosure
priority.” At the hearing, Fannie Mae argued that its
request was justified because Fannie Mae was merely providing
Faiella the relief he requested in his complaint. In
response, Faiella objects that the proposed rescission would
preclude certain offsets and unasserted claims that he has
against Fannie Mae arising out of the wrongful foreclosure.
At the hearing, Faiella also asserted that Fannie Mae's
request for relief was improper because Fannie Mae has not
filed a counterclaim for rescission.
“Rescission
is an equitable remedy the granting of which is always a
matter within the sound discretion of the trial court,
depending upon the circumstances of each particular
case.” Ellis v. Candia Trailers & Snow Equip.,
Inc., 164 N.H. 457, 462 (2012) (internal
quotations omitted). Before a court can rescind a
transaction, however, “the court must determine that
the respective parties can be returned to the status
quo.” Derouin v. Granite State Realty, Inc.,
123 N.H. 145, 147 (1983). That determination “rests
upon the relative equities of the parties as determined by
the trial court.” Id. at 47-48. A court should
grant rescission “only when in all the circumstances it
appears right and just to the parties to do so.”
Mooney v. Nationwide Mut. Ins. Co., 149 N.H. 355,
357 (2003).[1] Because Fannie Mae is seeking the
rescission, it bears the burden of proving that remedy is
appropriate.
Fannie
Mae's motion for the rescission seeks an affirmative
remedy. Fannie Mae, however, has not filed a counterclaim
seeking such a remedy. In the absence of a claim for
rescission, Fannie Mae is not entitled to the relief it
requests. See Vermont Mut. Ins. Co. v. Zamsky, 2012
WL 6864702, at *1 (D. Mass. Dec. 17, 2012), report and
recommendation adopted (D. Mass. Jan. 11, 2013)
(“[Defendants] seek to have the Court enter a
declaratory judgment in their favor. In my judgment, they are
not entitled to such affirmative relief because they did not
file a counterclaim seeking affirmative relief.”).
Nevertheless,
Fannie Mae contends that its request is proper because
Faiella requested rescission in his plea of title action.
Importantly, however, Faiella objects to the rescission
remedy proposed by Fannie Mae. Therefore, even though both
parties may contemplate rescission of the foreclosure, there
are material differences concerning how such relief is to be
implemented. Without bringing and proving an affirmative
claim for rescission, Fannie Mae cannot unilaterally impose
on Faiella its version of the equitable relief underlying his
plea of title action.
Moreover,
Fannie Mae fails to articulate any grounds supporting the
rescission that it seeks. The motion only recounts the
transactional history of Faiella's mortgage, but contains
no factual or legal argument demonstrating that Fannie Mae is
entitled to rescission. Fannie Mae does not admit and has not
provided facts showing that a wrongful foreclosure occurred
or that the equities at issue favor the rescission.
Therefore, Fannie Mae has not met its burden of showing that
it is entitled to the rescission remedy that it proposes.
B.
Request to Amend Complaint
During
the hearing on Fannie Mae's motion to rescind, Faiella
requested an opportunity to amend his complaint to add
damages claims against Fannie Mae. Given the early posture of
this case, the court will grant Faiella leave to file an
amended complaint asserting his damages claims against Fannie
Mae.
Conclusion
For the
foregoing reasons, defendant's motion to rescind the
foreclosure sale and foreclosure deed (doc no. 25)
is denied.
Faiella
must file his amended complaint on or before September 19,
2016. Fannie Mae shall file a responsive pleading within the
time allowed under the Federal Rules of Civil Procedure. If
Faiella fails to amend his complaint, Fannie Mae is granted
leave to amend its answer to the operative complaint in this
action on or before October 11, 2016.
Both
parties have filed proposed discovery plans. Doc. nos. 23-24,
28. Those discovery plans (doc. nos. 23-24,
28) are terminated as moot based on Faiella's anticipated
amended complaint. The parties will submit a new joint
discovery plan ...