Anctil v. Ally Financial, Inc.
998 F. Supp. 2d 127
S.D.N.Y.2014Background
- Plaintiffs are former mortgagors whose homes in NY, MA, and MD were foreclosed between 2006–2010; SAC alleges a nationwide mortgage-racketeering scheme involving MERS, MBA, and FASB accounting standards; MERS functions as nominee and tracks transfers, while land-record transfers are often not updated; plaintiffs claim improper transfers and fraudulent foreclosure filings by entities that allegedly lacked valid title; the court partially grants a joint motion to dismiss, denies individual motions as moot, and dismisses claims for lack of subject-matter jurisdiction and for failure to state a federal claim.
- The SAC centers on MERS as a system that facilitates securitization and allegedly hides title transfers, which purportedly breaks the chain of title and enables foreclosures to proceed under false pretenses.
- The court notes that RICO and state-law fraud claims are pleaded in broad, conclusory terms and that detailed, pleadings showing a pattern of racketeering are lacking.
- The court addresses subject-matter jurisdiction under Rooker-Feldman, concluding plaintiffs’ injuries arise from state-court foreclosure judgments and would require review of those judgments.
- Even if jurisdiction allowed, the court would dismiss the federal RICO claims under Rule 12(b)(6) for failure to plead an RICO enterprise and a plausible pattern of predicate acts with particularity.
- The court declines to exercise supplemental jurisdiction over remaining state-law claims after dismissing the federal claims and denies further leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rooker-Feldman bars the federal claims | Plaintiffs argue federal courts may hear RICO claims notwithstanding state judgments. | Defendants maintain Rooker-Feldman divests this court of jurisdiction over claims seeking relief that would undermine state foreclosure judgments. | Yes; Rooker-Feldman bars the federal claims. |
| Whether there is a fraudulent-procurement exception to Rooker-Feldman | Plaintiffs allege the foreclosure judgments were fraudulently procured. | Courts are split; no Second Circuit-recognized exception exists. | No; no recognized fraudulent-procurement exception applies here. |
| Whether Plaintiffs plausibly plead a RICO enterprise | Defendants formed an association-in-fact enterprise through MBA/MERS. | No coherent ongoing unit or structure; mere parallel conduct and shared membership do not establish an enterprise. | Plaintiffs fail to plead a valid RICO enterprise. |
| Whether Plaintiffs plead a viable pattern of racketeering acts | The chart lists mail/wire acts as part of a fraud scheme. | Allegations are conclusory and lack particularity under Rule 9(b). | Dismissed for failure to plead predicate acts with Rule 9(b) particularity. |
| Whether state-law claims should be retained after federal claims are dismissed | State-law claims should proceed in state court. | Courts should not exercise supplemental jurisdiction. | Declined; dismiss federal claims and decline supplemental jurisdiction over state-law claims. |
Key Cases Cited
- Exxon Mobil Corp. v. Saudi Basic Indus., 544 U.S. 280 (U.S. 2005) (narrowed Rooker-Feldman doctrine limits)
- Hoblock v. Albany Cnty. Bd. of Elections, 422 F.3d 77 (2d Cir. 2005) (four requirements of Rooker-Feldman)
- McKithen v. Brown, 481 F.3d 89 (2d Cir. 2007) (causal injury analysis under Rooker-Feldman)
- Castiglione v. Papa, 423 F.App’x 10 (2d Cir. 2011) (Rooker-Feldman applicability on appeal)
- Ford v. U.S. Dep’t of Treasury, 50 F.App’x 490 (2d Cir. 2002) (fraud allegations barred under Rooker-Feldman)