Joseph Lau v. Bank of America NA
684 F. App'x 235
| 3rd Cir. | 2017Background
- In 2006 Joseph and Raquel Lau executed a mortgage and note; MERS was named mortgagee/nominee and the Note was indorsed in blank through Countrywide entities. MERS assigned the mortgage to Bank of America (BOA) in 2012; Fannie Mae is the loan investor per public records.
- The Laus filed Chapter 13 in 2009; BAC (servicer) filed a proof of claim (POC). The plan was confirmed, payments completed, and the Laus received discharges.
- After discharge the Laus brought an adversary action alleging fraud, slander of title, TILA and FDCPA claims, and challenges to various bankruptcy- and foreclosure-related documents (POC, copy of the Note, assignment, Notices of Mortgage Payment Change, Statements in Response to Notice of Final Cure, pre-foreclosure letter, Notice of Intent to Foreclose).
- The Bankruptcy Court partially dismissed earlier claims in January 2015 (including claims against MHI and certain title claims) — that order was not appealed. The Laus filed an Amended Complaint with 25 counts; many claims were later abandoned on appeal.
- The Bankruptcy Court dismissed the Amended Complaint in full on August 10, 2015 for failure to meet Rules 8(a), 9(b), and 12(b)(6). The District Court affirmed on February 19, 2016 and denied rehearing on April 5, 2016. The Laus appealed to the Third Circuit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the bankruptcy- and foreclosure-related documents (POC, Notices, Statements) supported fraud claims | Laus: documents and filings misrepresented defendants’ status and ownership, showing a fraudulent securitization scheme | Appellees: documents were legitimately filed by BOA as servicer/party in interest; filings authorized under Bankruptcy Rule 3001 and NJ law | Court: No material misrepresentations; documents were legitimate and BOA had authority; fraud claims fail |
| Whether BOA/servicer had standing to file POC and pursue foreclosure-related steps | Laus: servicer/nominee status does not make parties real parties in interest; defects in assignment chain render actions invalid | Appellees: servicer is a party in interest with standing to file claims and pursue foreclosure; assignment to BOA authorized foreclosure steps under NJ law | Court: Servicer/assignee had standing; NJ Fair Foreclosure Act permitted BOA’s actions |
| Whether absence of two indorsements on the copy of the Note attached to the POC established fraud/damage | Laus: missing indorsements show the Note copy is fraudulent and damages their title/rights | Appellees: BOA’s participation and the record establish its standing; Laus suffered no cognizable damage from the Note copy | Court: No damages shown from the Note copy; fraud requires damages, so claim fails |
| Whether District Court erred denying motion for rehearing (reconsideration) | Laus: rehearing appropriate due to alleged continuing viability of fraud claims, contested Fannie Mae status, and title defects | Appellees: Laus merely rehashed earlier arguments; no new facts or law; earlier unappealed orders control | Court: Rehearing properly denied—Laus presented no intervening change, new evidence, or compelling errors |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must state a plausible claim)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for complaints)
- Cinicola v. Scharffenberger, 248 F.3d 110 (3d Cir. 2001) (standard of review in bankruptcy appeals)
- Gennari v. Weichert Co. Realtors, 691 A.2d 350 (N.J. 1997) (elements of intentional fraud in New Jersey)
- Greer v. O’Dell, 305 F.3d 1297 (11th Cir. 2002) (servicer is a party in interest and may file proofs of claim)
- Bank of New York v. Raftogianis, 13 A.3d 435 (N.J. Super. Ct. Ch. Div. 2010) (MERS nominee designation does not necessarily sever note and mortgage)