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Carideo v. PennyMac Loan Services, LLC

United States District Court, D. New Hampshire

February 14, 2019

Robert and Debra Carideo, Plaintiffs
PennyMac Loan Services, LLC, Defendant

          John F. Skinner, III, Esq. Michael Joseph Reed, Esq. Kevin P. Polansky, Esq.



         In January of 2018, defendant, PennyMac Loan Services, LLC (“PennyMac”) foreclosed the mortgage deed to plaintiffs' home. Seven months later, plaintiffs, Robert and Debra Carideo, brought this action seeking to recover for various injuries and harms they say PennyMac inflicted upon them. PennyMac moves the court to dismiss all claims advanced against it, asserting that none states a viable cause of action. For the reasons given, that motion is granted in part and denied in part.

         Standard of Review

         When ruling on a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the court must “accept as true all well-pleaded facts set out in the complaint and indulge all reasonable inferences in favor of the pleader.” SEC v. Tambone, 597 F.3d 436, 441 (1st Cir. 2010). Although the complaint need only contain “a short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), it must allege each of the essential elements of a viable cause of action and “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face, ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation and internal punctuation omitted).

         In other words, “a plaintiff's obligation to provide the ‘grounds' of his ‘entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Instead, the facts alleged in the complaint must, if credited as true, be sufficient to “nudge[] [plaintiff's] claims across the line from conceivable to plausible.” Id. at 570. If, however, the “factual allegations in the complaint are too meager, vague, or conclusory to remove the possibility of relief from the realm of mere conjecture, the complaint is open to dismissal.” Tambone, 597 F.3d at 442.


         The pertinent facts, as stated in plaintiffs' amended complaint and as they appear in recorded, publicly-available documents, are largely undisputed. In April of 2012, plaintiffs obtained a loan in the principal amount of $192, 632. As security for that loan, they conveyed a first mortgage deed to Mortgage Electronic Registration Systems, Inc., as nominee for the lender, Alpine Mortgage, LLC. That mortgage deed was duly recorded in the Hillsborough County Registry of Deeds. Three years later, in May of 2015, that mortgage was assigned to PennyMac. The assignment was also duly recorded in the registry of deeds.

         After plaintiffs defaulted on the promissory note, PennyMac instituted foreclosure proceedings. Plaintiffs did not seek to enjoin those proceedings. See generally N.H. Rev. Stat. Ann. (“RSA”) 479:25, II(c). On January 11, 2018, PennyMac (through a licensed auctioneer) conducted a foreclosure sale, at which PennyMac was the high bidder. It purchased the property for $197, 019.70 and recorded the foreclosure deed in the registry of deeds. At the time, the town of Pelham, New Hampshire, assessed the value of the property at $269, 000. Amended Complaint at para. 19. Thus, the sale price at the foreclosure auction was approximately 73 percent of assessed value.[1]

         Seven months after the foreclosure sale, plaintiffs instituted this action in state court. Defendant removed the proceeding to this forum, invoking the court's diversity jurisdiction. See 28 U.S.C. §§ 1441 and 1446. See also 28 U.S.C. § 1332.

         The parties engaged in informal settlement discussions, during which former counsel to PennyMac agreed that his client would review plaintiffs' application for a “post-foreclosure loan modification.” Plaintiffs completed and submitted such an application. Approximately two weeks later, however, current counsel for PennyMac informed plaintiffs that, “we have discussed your proposal with our client, but they are not inclined to review the Plaintiffs for a loan mod post-foreclosure.” After it became clear that settlement was unlikely, plaintiffs filed an Amended Complaint. In turn, PennyMac filed the pending motion to dismiss.


         As a preliminary matter, the court notes that Plaintiffs' Amended Complaint contains a count captioned “Fraud, Conversion, Theft by Deception, Civil RICO, ” in which they advance claims against several individuals and one limited liability company (the “California Entities”). But, plaintiffs acknowledge that they never attempted to serve any of those individuals or the corporation. See Suggestion of Bankruptcy (document no. 17) (“[I]t would not make economic sense for the beleaguered plaintiffs in this case to spend additional money attempting to serve [the California Entities].”). Plaintiffs have also informed the court that the California Entities have filed for bankruptcy protection, in a proceeding currently pending in the Central District of California. Those parties were never properly joined as defendants in this proceeding and, should plaintiffs wish to pursue any claims against them, plaintiffs must, of course, first seek leave of the bankruptcy court and obtain relief from the automatic stay in that case. Because the California Entities were never properly served, all claims against them are dismissed without prejudice.[2]

         As for PennyMac, plaintiffs' Amended Complaint (document no. 9), advances six state common law causes of action. The court will address each in turn.

         I. Count 1 - “Plea of Title”

         Plaintiffs' first claim is that PennyMac lacked the legal authority to foreclose the mortgage. Plaintiffs' reasoning is, however, somewhat confusing. They claim that more than three months after the foreclosure sale occurred, they “received paperwork [from one of the California Entities] indicating that the Mortgage was Assigned and [the] Note was and [sic] endorsed over to West H&A and no longer held by the Defendant PennyMac.” Amended Complaint at para. 29. See also Exhibit C to Amended Complaint, “Assignment of Mortgage” (document no. 9-3) (purporting to have been executed on March 19, 2018 - well after the foreclosure sale). Perhaps not surprisingly, however, the Amended Complaint fails to describe how a mortgage assignment, prepared (but never recorded) after the foreclosure sale, could have affected PennyMac's authority to foreclose the mortgage deed. Moreover, plaintiffs appear to acknowledge that the untimely mortgage assignment was prepared without lawful authority as part of the fraud scheme to which they say they fell victim (as discussed in their claims against the California entities). See, e.g., Amended Complaint at para. 73 (“The [California Entities] lied to the Carideos, took their money, took their mortgage payments, gave them false hope, false promises, and also, although it remains to be proved, it appears that they also provided fraudulent mortgage and note documents and caused the Carideos' home to be taken by PennyMac.”) (emphasis supplied).

         As PennyMac points out: (1) the documents of record make clear that PennyMac was the lawful holder of the mortgage deed to plaintiffs' home when it conducted the foreclosure sale; and (2) a post-foreclosure, fraudulent effort to transfer that mortgage deed (or the ...

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