Abraham v. American Home Mortgage Servicing, Inc.
947 F. Supp. 2d 222
E.D.N.Y2013Background
- This action consolidates hundreds of mortgage borrowers against dozens of originators/servicers over a nine-year period.
- Plaintiffs allege misrecordation via MERS and improper transfers, leading to clouded titles and losses in equity.
- Plaintiffs claim inflated appraisals, improper underwriting, and misconduct related to securitization and TARP funds.
- MERS is portrayed as a national registry with officers authorized to act for MERS; Defendants are MERS members/participants.
- Plaintiff Leela Abraham is the first named plaintiff; the court later dismisses her claims and severes the rest.
- Plaintiff’s second amended complaint is the vehicle for asserting joint-action/conspiracy and fraud-based theories, which the court scrutinizes under Rule 20 and Rule 9(b).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether joinder under Rule 20 was proper | Plaintiffs contend common scheme justifies joinder | Defendants contend separate transactions/misjoinder | Misjoinder; severance granted and most plaintiffs dismissed |
| Whether conspiracy/ joint-action allegations justify joinder | Plaintiffs rely on a common plan to defraud across transactions | Allegations are speculative and lack particularity | Rule 9(b) heightened pleading applied; conspiracy claims insufficient for joinder |
| Whether CAFA removal affects misjoinder analysis | Removal under CAFA supposed to preserve relief for all plaintiffs | Removal does not cure misjoinder; severance appropriate | CAFA removal does not bar severance; mass-action status not controlling for joinder |
| Whether Abraham’s claims survive Rule 12(b)(6) | Abraham asserts multiple fraud-related and contract-based claims | Claims fail for lack of particularity/contract basis | Abraham’s fraud, misrepresentation, contract-based, negligence, and related claims dismissed |
| Whether amendment to add new claims would be futile | Plaintiffs seek TAC to repair joinder issues | Amendment would be futile and duplicative | Leave to amend denied; proposed amendments deemed futile |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (heightened pleading standard for fraud-based claims)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for complaint sufficiency)
- In re First Cent. Fin. Corp., 377 F.3d 209 (2d Cir. 2004) (contract-based claims; negligence precluded by contract)
- Soroof Trading Dev. Co., Ltd. v. GE Fuel Cell Sys., LLC, 842 F.Supp.2d 502 (S.D.N.Y. 2012) (constructive trust precluded by existence of contract; pleading standards)
- B & M Linen, Corp. v. Kanne-giesser, USA, Corp., 679 F.Supp.2d 474 (S.D.N.Y. 2010) (Rule 9(b) standards applied to fraud-based claims)
- McCall v. Chesapeake Energy Corp., 509 Fed.Appx. 62 (2d Cir. 2013) (concert-of-action/conspiracy requires underlying torts; no independent conspiracy claim)