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Goodman v. Wells Fargo Bank, N.A.

United States District Court, D. New Hampshire

September 17, 2018

Brian Goodman, Sr.
Wells Fargo Bank, N.A. and Golden West Financial Corp.

          Brian J. Goodman, Sr., pro se

          Joseph Patrick Kennedy, Esq.


          Joseph N. LaPlante United States District Judge

         This mortgage-fraud case involves two properties in Concord, New Hampshire that have been sold at foreclosure. Pro se plaintiff Brian Goodman, Sr. alleges that two mortgage refinancing transactions in 2007 were the product of fraud committed by defendants or their predecessors in interest. His Amended Complaint[1] contains seven counts against two defendants: 1) fraudulent misrepresentation; 2) fraudulent concealment; 3) fraudulent inducement; 4) conversion; 5) common law fraud; 6) unjust enrichment; and 7) a request for injunctive relief. The court's jurisdiction is based on diversity of citizenship. 28 U.S.C. § 1332(a).

         Before the court are defendants' motions to dismiss.[2]Defendant Golden West argues that it merged out of legal existence prior to the transactions at issue in this case and thus can not be sued. Defendant Wells Fargo Bank, N.A. advances several grounds for dismissal. After reviewing the parties' submissions and state court litigation involving the same parties and properties, and conducting oral argument, the court grants both defendants' motions. First, Golden West lacks the capacity to be sued. See Fed.R.Civ.P. 17(b). Next, plaintiff's claims against Wells Fargo are barred, in whole or part, by: 1) the doctrines of res judicata and collateral estoppel; and 2) the applicable statutes of limitations. Defendants' motions are therefore granted. See Fed. R. Civ. P. 12(b)(6) .

         I. Applicable legal standard

         To withstand a motion to dismiss, the plaintiff must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Martinez v. Petrenko, 792 F.3d 173, 179 (1st Cir. 2015). In ruling on such a motion, the court accepts as true all well-pleaded facts set forth in the complaint and draws all reasonable inferences in the plaintiff's favor. See, e.g., Martino v. Forward Air, Inc., 609 F.3d 1, 2 (1st Cir. 2010).

         The court “may consider not only the complaint but also facts extractable from documentation annexed to or incorporated by reference in the complaint and matters susceptible to judicial notice.” Rederford v. U.S. Airways, Inc., 589 F.3d 30, 35 (1st Cir. 2009) (internal quotations omitted). The court “need not, however, credit bald assertions, subjective characterizations, optimistic predictions, or problematic suppositions, ” and “[e]mpirically unverifiable conclusions, not logically compelled, or at least supported, by the stated facts, deserve no deference.” Sea Shore Corp. v. Sullivan, 158 F.3d 51, 54 (1st Cir. 1998) (internal quotations omitted). In addition to relating the allegations in the Amended Complaint, the court also culls background facts from the judicial findings during the parties' prior proceedings. See Kowalski v. Gagne, 914 F.2d 299, 305 (1st Cir. 1990) (“It is well-accepted that federal courts may take judicial notice of proceedings in other courts if those proceedings have relevance to the matters at hand.”). Finally, a motion to dismiss is an appropriate vehicle for raising and deciding a statute of limitations defense. See, e.g., Abdallah v. Bain Capital LLC, 752 F.3d 114, 119 (1st Cir. 2014). Guided by these standards, the court turns first to plaintiff's allegations and the prior proceedings.

         II. Background

         A. The properties

         In November 2007, plaintiff refinanced two income properties he owned in Concord, New Hampshire. First, he executed a note and mortgage in connection with his property at 26-28 Palm Street.[3] The note had a face value of $185, 000, payable to “World Savings Bank, FSB, a Federal Savings Bank, its successors and/or assigns, or anyone to whom this Note is transferred.”[4] It was secured by a mortgage granted to “World Savings Bank, FSB, its successors and assigns.”[5] The mortgage was recorded at the Merrimack County Registry of Deeds.[6]

         A few days later, plaintiff executed a note and mortgage in connection with his property at 14-16 Pinecrest Circle. This note had a face value of $217, 000, also payable to “World Savings Bank . . . its successors and/or assignees, or anyone to whom this note is transferred.”[7] Plaintiff granted a mortgage to secure the note to “World Savings Bank, its successors and/or assigns.”[8] This mortgage was also recorded in the Rockingham County Registry of Deeds.[9]

         Plaintiff “disclaims both the authenticity and legitimacy” of the notes and mortgages “derived through deceitful means and filed in deceit with a state agency for purposes of legitimizing” them.[10]

         B. World Savings Bank merger

         Effective December 31, 2007, World Savings Bank changed its name to Wachovia Mortgage, FSB. In 2009, Wachovia Mortgage, FSB changed its name to Wells Fargo Southwest, N.A. and subsequently merged with Wells Fargo Bank, N.A. Both parties acknowledge that defendant Wells Fargo Bank, N.A. is therefore the successor in interest to World Savings Bank.[11] See Park v. Wells Fargo Bank, No., C 12-2065-PJH, 2012 WL 3309694, at *2 (N.D. Cal. Aug. 13, 2012) (“Numerous courts have . . . concluded that Wells Fargo is the successor to Wachovia and World Savings.”); Nguyen v. Wells Fargo Bank, N.A., 749 F.Supp.2d 1022, 1035 (N.D. Cal. 2010) (“[T]he original lender, World Savings Bank, FSB, simply changed its name to Wachovia Mortgage, FSB, and is now a division of Wells Fargo Bank, N.A. . . .”); DeLeon v. Wells Fargo Bank, N.A., 729 F.Supp.2d 1119, 1121 (N.D. Cal. 2010) (“World Savings had changed its name to Wachovia Mortgage, FSB and then merged into Wells Fargo Bank, N.A.”).

         C. State court litigation

         In 2010 or 2011, Wells Fargo began the process of foreclosure of the two properties after plaintiff fell behind on his mortgage payments. After several years of litigation which will be discussed in more detail below, the properties were sold at foreclosure in 2017.[12]

         1. Pinecrest Circle

         In February 2011, plaintiff, represented by counsel, sued Wells Fargo in state court to permanently enjoin the impending foreclosure sale of the Pinecrest Circle property.[13] The Court granted plaintiff temporary injunctive relief and plaintiff began making mortgage payments pursuant to an agreement with Wells Fargo.[14] Eventually, the payments stopped and foreclosure proceedings resumed.[15]

         In his state court Amended Complaint, filed in January 2015, plaintiff accused Wells Fargo of, inter alia, fraud.[16] He specifically alleged that Wells Fargo used false statements to support its foreclosure efforts and that it was not the true holder of the mortgage.[17] The Superior Court found that plaintiff's defenses to foreclosure were factually unsupported and granted summary judgment in Wells Fargo's favor.[18]

         In a three-paragraph order, the New Hampshire Supreme Court affirmed the trial court's summary judgment ruling.[19] It rejected, among others, the arguments that the Superior Court erroneously concluded that “he defaulted on his mortgage loan to the bank” and “that there were no genuine issues of material fact regarding whether he had defaulted, the bank had a loan in his name, the bank held the original note, and the note had passed to it by operation of law.”[20] The Supreme Court later denied plaintiff's motion for reconsideration.[21]

         2. Palm Street

         In March 2011, plaintiff, again represented by counsel, sued Wells Fargo to enjoin the scheduled foreclosure on the Palm Street property.[22] The Court temporarily enjoined the foreclosure.[23] In addition to seeking the injunction, plaintiff alleged in his five-count Amended Complaint[24] that, inter alia, Wells Fargo failed to create a valid mortgage because it failed to pay off plaintiff's previous mortgage and because it “securitized” plaintiff's mortgage and note.[25] The latter actions, according to plaintiff, “destroyed” the mortgage and note.[26] Plaintiff also alleged that Wells Fargo violated New Hampshire's Consumer Protection Act, N.H. Rev. Stat. Ann. § 358-A, by fraudulently misrepresenting various terms of the mortgage agreement.[27]

         On the same day that it granted summary judgment in the Pinecrest suit, the Superior Court granted Wells Fargo's motion to dismiss the Palm Street suit. As particularly relevant to this lawsuit, the Court held that “even if the note and mortgage were securitized, their validity would not be destroyed as the plaintiff suggests . . . . [S]ecuritization of the mortgage and note does not relieve the plaintiff of his obligation to pay under their terms and conditions.”[28] The Court further found that plaintiffs' fraud allegations were barred by New Hampshire's three-year statute of limitations, N.H. Rev. Stat. Ann. § 508:4.[29] And even if timely, the Court ruled that plaintiff's Amended Complaint failed to plead facts that amounted to fraud.[30]

         The New Hampshire Supreme Court affirmed the dismissal of the Palm Street suit in a brief order.[31] As particularly relevant here, the Court rejected plaintiff's arguments that the trial court erred in dismissing his fraud claim, his securitization-related claim and his claim that Wells Fargo did not hold the original note and mortgage.

         III. Analysis

         A. Golden West

         In his Amended Complaint in this action, plaintiff added Golden West Financial Corp. as a defendant.[32] Golden West seeks dismissal on the basis that it lacks the capacity to be sued, having merged out of existence in 2006.[33]

         The precise contours of plaintiff's claims against Golden West are difficult to discern, beyond his noting that it was a participant in securitizing mortgages, an act which, he claims, forms the basis of his fraud allegations. Golden West seeks dismissal because it merged with Wachovia Corp. (and out of existence) in October 2006, long before plaintiff filed this lawsuit, and more than one year before the parties executed the mortgages at issue in this case.[34] Thus, Golden West argues, it lacks the capacity to be sued. See Fed.R.Civ.P. 17(b).

         Pursuant to Fed.R.Civ.P. 17(b)(2), a corporation's capacity to be sued is determined pursuant to the “law under which it was organized.” Similarly, “[t]he federal courts have held that the capacity of a dissolved corporation to sue and be sued is determined by the law of the state in which it was organized.” 6A Charles Allen Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1563 (2010) (and cases cited therein). Golden West asserts, without objection, that it was organized under the laws of California.[35] Under California law, following a merger, “the separate existence of the disappearing corporation ceases and the surviving corporation shall . . . be subject to all the debts and liabilities of each in the same manner as if the surviving corporation had itself incurred them.” Cal. Corp. Code § 1107 (a) .[36]

         Plaintiff does not dispute that Golden West merged out of existence before he filed this lawsuit. Indeed, he acknowledges that the mergers of Golden West with Wachovia and Wachovia with Wells Fargo means that “all allegations and claims made against World Savings Bank . . . Golden West and Wachovia are hereby consolidated and directly lodged against Wells Fargo Bank, N.A., as successor in interest.”[37] Rather than disputing the fact that Golden West merged out of existence prior to the relevant events in this case, plaintiff asserts that counsel's act of filing the instant motion somehow resurrects the putative defendant.[38] But plaintiff cites no authority for this position, nor can the court locate any.[39] Accordingly, the entity formerly known as Golden West lacks the capacity to be sued and its motion to dismiss must be granted.

         B. Wells Fargo

         Wells Fargo asserts several grounds for dismissal. The court addresses them in turn.

         1. Res judicata

         Wells Fargo first argues that all of plaintiff's claims in this lawsuit are barred by the doctrine of res judicata, based on the two prior state court judgments. As discussed in more detail below, the state court rulings conclusively established the non-fraudulent validity of both the Pinecrest and Palm Street transactions. Plaintiff's claims are therefore barred.

         “Under federal law, a state court judgment receives the same preclusive effect as it would receive under the law of the state in which it was rendered.” Dillon v. Select PortfolioServicing ...

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