828 F. App'x 788
2d Cir.2020Background
- Isaac and Ofra Levin (pro se) sued Wells Fargo, LPS/Black Knight and subsidiaries (ADS, DocX), and two ADS executives, alleging the defendants fraudulently assigned their mortgage twice and seeking a declaration that those assignments were void.
- The contested assignments were executed in 2008–2009; the Levins’ mortgage was executed in 2006. Wells Fargo was pursuing foreclosure at the time.
- The Levins also asserted claims for fraudulent misrepresentation and intentional infliction of emotional distress (IIED).
- The district court adopted the magistrate judge’s R&R: dismissed the declaratory-relief claims for lack of standing, dismissed the fraud and IIED claims for failure to state a claim, denied the Levins’ cross-motion for declaratory relief, and denied leave to amend as futile.
- On appeal the Second Circuit reviewed standing and Rule 12(b)(6) dismissals de novo and affirmed: plaintiffs lacked Article III and prudential standing to challenge assignments; fraud failed for lack of pleaded reasonable reliance and Rule 9(b) particularity; IIED failed because conduct was not extreme/outrageous and alleged distress was insufficient.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to challenge mortgage assignments | Levin: Assignments were fraudulent/void (forged or unauthorized signatures), so they can seek a declaration invalidating them | Defs: Levins lack Article III and prudential standing because assignments did not alter the Levins’ debt obligations and they are not parties/beneficiaries of the assignments | Court: No standing under Rajamin — assignments did not create cognizable injury and Levins are not parties/third‑party beneficiaries; dismissal affirmed |
| Fraudulent misrepresentation | Levin: ADS defendants conspired with Wells Fargo to create and record fraudulent assignments | Defs: Even if assignments were improper, Levins did not rely on those representations and suffered no additional debt or duplicative demand | Court: Fraud claim fails — Levins did not plausibly allege reasonable reliance or resulting damages; Rule 9(b) not satisfied; dismissed |
| Intentional infliction of emotional distress (IIED) | Levin: Fraudulent assignments and threat of foreclosure caused severe emotional distress | Defs: Conduct (assignment of debt) not extreme/outrageous; alleged fear of foreclosure insufficiently severe | Court: IIED claim fails — conduct not extreme/outrageous under NY law and alleged distress not sufficiently severe; dismissed |
| Denial of leave to amend (futility) | Levin: Could amend to add facts to support standing, reliance, and emotional harm | Defs: Additional facts cannot cure the core legal defects (no standing; no plausible reliance; conduct not extreme) | Court: Denial proper — amendment would be futile for the reasons above; affirmed |
Key Cases Cited
- Rajamin v. Deutsche Bank Nat’l Trust Co., 757 F.3d 79 (2d Cir. 2014) (mortgagors lack standing to challenge assignments that do not alter their debt obligations or create duplicative demands)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (U.S. 1992) (Article III standing requirements: concrete injury, causation, redressability)
- Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.À.R.L., 790 F.3d 411 (2d Cir. 2015) (de novo review of standing at pleading stage)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading must state a claim plausibly on its face)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (courts accept factual allegations and draw reasonable inferences but require plausibility)
- Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168 (2d Cir. 2004) (elements of fraudulent misrepresentation under New York law)
- Bender v. City of New York, 78 F.3d 787 (2d Cir. 1996) (IIED requires extreme and outrageous conduct and severe emotional distress)