Rinaldi v. HSBC Bank USA, N.A.
487 B.R. 516
| Bankr. E.D. Wis. | 2013Background
- Note signed June 10, 2005 by Mr. Rinaldi in favor of Wells Fargo; Mortgage on Debtors’ Wisconsin residence to secure the Note; Note endorsed in blank; foreclosure action in Kenosha County 2009–2010 culminating in a state-court foreclosure judgment in HSBC’s favor; loan modification vacated the foreclosure judgment in 2011; Debtors filed bankruptcy Chapter 7 in 2011 later converted to Chapter 13 in 2012; Debtors filed an adversary proceeding asserting fraud, FDCPA, RICO, and related claims against Wells Fargo entities, HSBC, and law firms; Court consolidated related motions and claims for scheduling and disposition; Court grants motions to dismiss and resolves core vs non-core issues, allowing HSBC’s claim and staying other relief; Debtors’ objections to HSBC’s claim and standing are rejected; Court indicates it has authority to enter final order on core claims and to issue recommendations on non-core related claims; decision is proposed findings and conclusions for district court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing and validity of HSBC’s claim | Rinaldi contends HSBC lacks standing and the Note/mortgage assignments are invalid. | Wells/HSBC argue HSBC is holder of the Note endorsed in blank and may enforce the Mortgage. | HSBC’s claim valid and HSBC has standing to seek relief from stay. |
| RICO viability | Debtors allege a nationwide scheme; multiple predicate acts and pattern of racketeering. | Allegations are too vague; single transaction; no identifiable pattern or specific acts. | RICO claims dismissed. |
| FDCPA applicability | Defendants are debt collectors under FDCPA and violated §1692e. | Law firms/attorneys enforcing security interests are not debt collectors under FDCPA. | FDCPA claims dismissed; defendants not subject to FDCPA. |
| Common law fraud claims | Fraud in loan origination, PSA/trust issues, and forged pleadings. | Statements in litigation are privileged; lack of particularity; claims barred by res judicata. | Fraud claims dismissed. |
| Abuse of process | Defendants used forged documents to coerce settlement. | Litigation privilege protects statements; no definite act outside process; insufficient showing. | Abuse of process claims dismissed. |
Key Cases Cited
- Stern v. Marshall, 131 S. Ct. 2594 (2011) (bankruptcy court authority in core vs non-core matters; final order limitations)
- Knapper v. Bankers Trust Co. (In re Knapper), 407 F.3d 573 (3d Cir. 2005) (Rooker-Feldman applicability in bankruptcy adversaries; foreclosure context)
- Great Western Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159 (3d Cir. 2010) (Rooker-Feldman and related jurisdictional considerations in bankruptcy matters)
- Grella v. Salem Five Cent Sav. Bank, 42 F.3d 26 (1st Cir. 1994) (standing to seek relief from stay; colorable claim standard)
- Ortiz v. Aurora Health Care, Inc., 665 F.3d 906 (7th Cir. 2011) (non-core proceedings and consent to final order; bankruptcy jurisdiction)
- In re Bellingham Insurance Agency, 702 F.3d 558 (9th Cir. 2012) (consent of parties to bankruptcy court final order in non-core proceedings)