Scott v. American Security Insurance Co. (In re Scott)Scott v. American Security Insurance Co. (In re Scott)
MEMORANDUM DECISION AND ORDER RESOLVING MOTIONS TO DISMISS COMPLAINT AND CROSS-COMPLAINTS
INTRODUCTION
Philip Michael Scott, the plaintiff and chapter 13 debtor herein (the “Debtor”), is party to a Mortgage (defined below) on certain real property located in Scarsdale, New York. In 2014, Ocwen Loan Servicing LLC (“Ocwen”), as servicer for Bank of New York Mellon (“BNY”), as mortgagee, purchased an insurance policy covering the property from American Security Insurance Company (“ASIC”). On December 31, 2014, a fire destroyed the property. The Debtor contends that thereafter, ASIC paid the insurance proceeds (the “Insurance Proceeds”) to Ocwen, as BNY’s servi-cer, in full satisfaction of the underlying Note (defined below) and Mortgage, but that BNY and/or Ocwen have wrongfully failed to credit those instruments for the amounts paid and to issue a satisfaction of the Mortgage.
In Counts One and Two of the Complaint, the Debtor has aggregated damage claims against ASIC, BNY and/or Ocwen predicated on alleged: (i) conversion; (ii) embezzlement; (iii) breach of contract; (iv) constructively fraudulent conveyances (under the New York Debtor and Creditor Law (the “NY DCL”)); (v) violations of the New York General Business Law (New York’s Unfair and Deceptive Trade Practices law) (the “NY GBL”); and (vi) violations of the Fair Debt Collection Practices Act (15 U.S.C. §§ 1692a, et seq.) (the “FDCPA”). In Count Three, he seeks money damages against Ocwen based upon Ocwen’s alleged failure to credit the loan balance with the insurance proceeds, and against BNY based upon, among other things, its failure to record a satisfaction of mortgage and satisfaction of judgment as allegedly mandated by section 1921 of the New York Real Property Actions and Proceedings Law (the “NY RPAPL”) and section 5020 of the New York Civil Practice Law and Rules (the “NY CPLR”). Finally, in Count Four he asserts damage claims against Veneer and McCabe under the FDCPA.
Only ASIC answered the Complaint. None of the Defendants answered the Cross-Complaints. BNY and Ocwen (collectively, the “Mortgagee Defendants”) jointly moved to dismiss the Complaint and Cross-Complaints pursuant to Rule 12(b)(6)
The Debtor, Campbell and Gaethers-Langley oppose all of the motions. The
As set forth below, the Court finds that the Debtor, Campbell and Gaethers-Lang-ley lack standing to assert claims against the Defendants under the NY DCL. Accordingly, the Court dismisses those claims for relief in Count One of the Complaint and in Count One of each of the Campbell Cross-Complaint and Gaethers-Langley Cross-Complaint, without leave to amend, for lack of subject matter jurisdiction. The Court dismisses the balance of the claims asserted against the Defendants by Campbell and Gaethers-Langley in their Cross-
LEGAL STANDARD AND SCOPE OF RECORD
Rule 12(b)(6) provides in relevant part:
(b) Every defense to a claim for relief in any pleading must be asserted in the responsive pleading if one is required. But a party may assert the following defense[ ] by motion ... (6) failure to state a claim upon which relief can be granted ....
Fed. R. Civ. P. 12(b)(6). As noted, ASIC joins the Mortgagee Defendants and the McCabe Defendants in urging the Court to dismiss the Cross-Complaints pursuant to Rule 12(b)(6). However, since it answered the Complaint, it is seeking a judgment on the pleadings dismissing the Complaint pursuant to Rule 12(c). Under that rule, “[ajfter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings.” Fed. R. Civ. P. 12(c). In resolving ASIC’s motion under Rule 12(c), the Court will apply the same standard applicable to a motion under Rule 12(b)(6). See Hayden v. Paterson,
To survive a Rule 12(b)(6) motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal,
In opposing the motions, the Debtor and Cross-Claimants argue facts not alleged in the Complaint or Cross-Complaints
The McCabe Defendants submitted an affirmation of Charles Higgs, an attorney with McCabe, in support of their original motion to dismiss the Complaint [ECF No. 9-1], but did not include it with the McCabe Motion to Dismiss Complaint,
In resolving these motions, the Court can consider all the documents annexed to the Aiello Certifications since they consist of the Complaint, documents referenced in or integral to the Complaint and the Cross-Complaints and documents filed of record in this Court, the federal District Court and New York state court. See, e.g., Sira v. Morton,
ASIC and the Mortgagee Defendants deny that ASIC paid the insurance proceeds to any party, let alone BNY or Ocwen, and that the Mortgage has been satisfied. ASIC submitted the declaration
Subject to the application of Rule 12(d), in assessing the merits of a motion under Rule 12(b)(6) or 12(c), the court “is generally limited to the facts as presented within the four corners of the complaint, to documents attached to the complaint, or to documents incorporated into the complaint by reference.” Taylor,
FACTS
On or about July 15, 2005, the Debtor, together with Campbell and Gaethers-Langley, purchased certain real property located at 12 Inverness Road, Scarsdale, New York (the “Property”)- Compl. ¶ 15.
This is the Debtor’s third bankruptcy filing. On May 3, 2013, he filed a chapter 13 petition in this Court,
The Complaint focuses on matters arising after the entry of the Judgement of Foreclosure. According to the Debtor, “[o]n or about September 4, 2013, Camp
On or about December 31, 2014, a fire destroyed the Property. Id. ¶ 17. The Debtor alleges that thereafter, “upon information and belief’: (i) Ocwen made a claim for the fire loss to ASIC; (ii) ASIC cut a check (the “Insurance Check”) made payable to Ocwen and Campbell in an amount equal to the balance due under the Mortgage, as determined by ASIC; and (iii) Ocwen, not Campbell, took possession of the Insurance Check, “apparently” forged Campbell’s signature onto the check and realized payment under the Policy. Id. ¶¶ 18, 30-31. The Debtor contends that by charging the Mortgage for the forced placed insurance, ASIC contracted to insure the Debtor, Campbell and Gaeth-ers-Langley in the amount of the Mortgage, in the event of a casualty loss. Id. ¶35. He says that ASIC breached that contract and its legal duty to pay the Insurance Proceeds to them. Id. ¶¶ 34, 36. The Debtor asserts that NY RPAPL § 1921 mandates that a mortgagee that receives full payment must timely file a mortgage satisfaction; and that NY CPLR § 5020 requires a judgment lien holder that receives payment in full to file a satisfaction of judgment. Id. ¶¶20, 21. He maintains that, although Ocwen received payment in full on the Mortgage—as allegedly determined by ASIC—neither Ocwen nor BNY filed “satisfactions of the [Mortgage and the [J]udgment,” (id. ¶¶ 19, 22) and “Ocwen did not conform the loan balance to the ASIC determination, and did not credit the loan account with the amount Ocwen received.” Id. ¶ 33. Moreover, the Debtor contends that although New York State law prohibits a judgment lien creditor from executing on the judgment lien after being paid in full, BNY nonetheless filed its Notice of Sale in the state court. Id. ¶¶ 23, 24. Further, he contends, in any event, that the notice was defective because: (i) BNY served the parties at old addresses, notwithstanding that it had notice of the correct addresses; (ii) Campbell did not receive the Sale Notice; and (iii) BNY did not comply with any of the statutory requirements to serve notice by local newspaper. Id. The Debtor also alleges that the Sale Notice served on parties “contained different information than that annexed to the affidavit of service filed with the [State Court].” Id.
The Debtor asserts that his action “qualifies as an adversary proceeding pursuant to [Bankruptcy Rule] 7001(2) as an action to determine the validity of a lien,” and “to obtain a declaratory judgment relating [thereto]” in accordance with Bankruptcy Rule 7001(9). Id. ¶ 12. The Debtor asks for a declaratory judgment “establishing that the mortgage lien, and the Judgment of Foreclosure and Sale, are paid in full and said mortgage and judgment are null and void[,]” and damages from the Defendants based on miscellaneous legal theories founded on state, federal and common law. Id. He alleges that pursuant to 28 U.S.C. §§ 157(b)(2)(E) and 157(b)(2)(0), the Court has core jurisdiction to finally resolve the
Count One
The Debtor seeks money damages against ASIC, BNY and/or Ocwen predicated on alleged: (i) conversion; (ii) embezzlement; (iii) constructively fraudulent conveyances (under the NY DCL); (iv) violations of the NY GBL; and (v) violations of the FDCPA. Id. ¶¶ 28-31, 40.
Count Two
The Debtor seeks money damages against ASIC for alleged breaches of contract. In addition, he seems to be seeking a determination that § 509(b)(2) of the Bankruptcy Code bars ASIC from being subrogated to Oewen’s rights against the Debtor. Id. ¶¶ 32-36, 40.
Count Three
The Debtor seeks money damages against Ocwen and BNY occasioned by their alleged (i) conversion; (ii) embezzlement; (iii) violations of the FDCPA, and (iv) failure to record a satisfaction of mortgage and a satisfaction of a judgment as allegedly mandated under NY RPAPL § 1921 and NY CPLR § 5020, respectively. Id. ¶¶ 37-40.
Court Four
The Debtor seeks money damages from the McCabe Defendants, as counsel to BNY and Ocwen, based upon their alleged violations of the FDCPA. Id. ¶¶ 41-42. The Debtor requests money judgments against Ocwen, BNY and ASIC in the sum of $2,195,260, and against Veneer and McCabe in the sum of $2,207,260.37. Id. ¶ 40.
In her Cross-Complaint, Gaethers-Langley purports to incorporate all of the allegations in paragraphs 1 through 41 of the Complaint and the demands for relief in the Complaint’s “WHEREFORE” clauses, and “respectfully requests the court grant any relief to Plaintiff/Debtor Phillip Michael Scott in the name of Co-debtor Marlene Gaethers-Langley as well.” Gaethers-Langley Cross-Complaint ¶ 11(a)—(c).
SUBJECT MATTER JURISDICTION AND AUTHORITY TO ENTER FINAL ORDERS
The Court has an independent obligation to determine the scope of its jurisdiction over the claims in the Complaint and the Cross-Complaints. See Walker, Truesdell, Roth & Assocs. v. Blackstone Grp., L.P. (In re Extended Stay, Inc.),
Core proceedings are those that either “arise under” title 11, or “arise in” cases under title 11. See 28 U.S.C. § 157(a), (b). See also Stern,
Non-core proceedings are those that are not core “but that [are] otherwise related to a case under title 11.” See 28 U.S.C. § 157(c)(1). See also Stern,
Bankruptcy judges may “hear and determine” core matters and, in doing so, “enter appropriate orders and judgments, subject to [appellate review].” 28 U.S.C. § 157(b)(1). See also Executive Benefits Ins. Agency v. Arkison, — U.S. -,
Put simply: If a matter is core, the statute empowers the bankruptcy judge to enter final judgment on the claim, subject to appellate review by the district court. If a matter is non-core, and the parties have not consented to final adjudication by the bankruptcy court, the bankruptcy judge must propose findings of fact and conclusions of law. Then, the district court must review the proceeding de novo and enter final judgment.
Arkison,
Against this framework, the Court analyzes each of the claims and cross-claims asserted against the Defendants to ascertain the scope of its jurisdiction and its authority to enter final orders resolving the motions to dismiss. Cf. Halper,
The Debtor’s Claims Under the Complaint
The Court first considers whether it has subject matter jurisdiction over the claims asserted by the Debtor against the Defendants in the Complaint. As noted, in Count One, the Debtor asserts that he is seeking damages for alleged violations of the NY DCL. The Complaint does not identify particular sections of the NY DCL and fails to allege the elements of any such claim. In fact, the only mention of the statute is in the caption of Count One of the Complaint. That pleading defect cannot be cured since, as explained below, the Debtor lacks standing to bring claims under the NY DCL and, as such, the Court lacks subject matter jurisdiction to adjudicate them.
Section 544(b)(1) of the Bankruptcy Code permits a
trustee [to] avoid any transfer of an interest of the debtor in property of any obligation incurred by the debtor that is voidable under applicable law by a creditor holding an unsecured claim that is allowable under section 502 of this title or that is not allowable only under section 502(e) of this title.
11 U.S.C. § 544(b)(1). That provision’s reference to interests “voidable under applicable law” includes claims avoidable under state law including the NY DCL. See Geron v. Schulman (In re Manshul Const. Corp.), No. 96B44080,
However, § 544 speaks to a “trustee’s” resort to avoidance powers under state or applicable non-bankruptcy law; it makes no allowance for a chapter 13 debtor to do so.'See 11 U.S.C. § 644(b). Neither does § 1303 of the Bankruptcy Code. That provision vests chapter 13 debtors with certain powers that are otherwise reserved for trustees, as follows:
Subject to any limitations on a trustee under this statute, the debtor shall have, exclusive of the trustee, the rights and powers of the trustee under sections 363(b), 363(d), 363(e), 363(f) and 363(Z) of [Title 11],
11 U.S.C. § 1303.
In considering whether the Debtor nonetheless has standing to invoke NY DCL in the Complaint, the case of Hartford Underwriters Ins. Co. v. Union Planters Bank,
Petitioner’s primary argument from the text of § 506(c) is that “what matters is that section 506(c) does not say that ‘only’ a trustee may enforce its provisions.” ... Petitioner argues that in the absence of such restrictive language, no party in interest is excluded. This theory-that the expression of one thing indicates the inclusion of others unless exclusion is made explicit-is contrary to common sense and common usage. Many provisions of the Bankruptcy Code that do not contain an express exclusion cannot sensibly be read to extend to all parties in interest.
Hartford,
The majority of courts that have considered this matter, including courts in this district, have come to the same conclusion.
The remaining claims asserted by the Debtor in the Complaint (the “Non-NY DCL Claims”) are prepetition claims predicated on state law, non-bankruptcy federal law and/or common law.
The Court finds no merit to the Debtor’s assertions to the contrary. As noted, the
Although he does not allege it in the Complaint, the Debtor also seems to contend that § 157(b)(2)(C) provides a predicate for the Court to assert core jurisdiction over the claims in the Complaint because the damage claims that he is asserting against BNY and Ocwen are “counterclaims” to the Surrogate Claims. Specifically, in his Statement of Consent, the Debtor asserts, as follows:
The court [in Stern v. Marshall] therefore concluded that “a counterclaim under § 157(b)(2)(0) is properly a ‘core’ proceeding ‘arising in a case under’ the [Bankruptcy] Code only if the counterclaim is so closely related to [a creditor’s] proof of claim that the resolution of the counterclaim is necessary to resolve the allowance or disallowance of the claim itself.
This is precisely the situation in the instant case. Debtor filed [Surrogate Claims] for duplicates [sic] notes on the same underlying note. When Ocwen Loan Servicing, LLC failed to file a Proof of Claim within the statutory period, [Debtor] filed the [Surrogate Claims] for them, allowing a setoff for the amount of the claim in the adversary proceeding, and in anticipation of “cram down” of the remaining balance. Allowance of the claim, and the subsequent“cram down” addresses the exact issue raised in the adversary proceeding.
Statement of Consent at 11-12 (footnote omitted). Section 157(b)(2)(C) provides that “core proceedings” include “counterclaims by the estate against persons filing claims against the estate.” 28 U.S.C. § 157(b)(2)(C). However, the Debtor is misplacing his reliance on the Surrogate Claims as the predicate for establishing this Court’s core jurisdiction under that section. “A surrogate claim filed under § 501(c) should not be construed as the equivalent of a creditor consenting to bankruptcy court jurisdiction over its claim.” In re Nat’l Cattle Congress,
Finally, the Debtor contends that under 28 U.S.C. § 157(b)(2)(0), the Court has core jurisdiction over the claims in the Complaint because the “Plaintiff-Debtor seeks to address concerns of liquidation of assets of the estate because it seeks to address an improperly attempted mortgage foreclosure sale of vacant residential real [property] which appears as property of the estate on the bankruptcy petition.” Statement of Consent at 5, 11. Under that section “core proceedings” include “other proceedings affecting the liquidation of the assets of the estate or the adjustment of the debtor-creditor or the equity security holder relationship, except personal injury tort or wrongful death claims.” 28 U.S.C. § 157(b)(2)(0). As such, it is commonly referred to as one of the two “catch-all” provisions in § 157(b)(2). See In re Castlerock Properties,
The Debtor’s successful prosecution of the claims alleged against the Defendants might “affectf ] the liquidation of the assets of the [Debtor’s] estate.” See Brandt v. 47-49 Charles Street, Inc. (In re 47-49 Charles Street), No. 98 CIV 4669,
Although the Court lacks core jurisdiction over the Non-NY DCL Claims, the Court finds that it can exercise its non-core, “related to” jurisdiction over those claims because they constitute “causes of action owned by the debtor which become property of the estate pursuant to 11 U.S.C. § 541.." Celotex Corp. v. Edwards,
Through their respective counsel, ASIC, Ocwen, and BNY consented to this Court’s
The Claims Under the Cross Complaints
Like the Debtor, the Cross-Claimants lack standing to assert claims under the NY DCL against BNY and Ocwen. See, e.g., Carey v. Ernst,
“[a]t bottom, the insurance claim in this case asserts that property which is part of the estate, and therefore available for distribution to the creditors pursuant to Title 11 is improperly not included. That sort of claim is ‘related to a case under title 11’, because they are suits between third parties that have an effect on the bankruptcy estate.”
See Statement of Consent at 17. The Court understands the Debtor to be asserting that the Court has non-core related to jurisdiction over the Non-NY DCL Cross Claims because a determination of the Cross-Claimants’ request for a declaration that the Note and Mortgage have been satisfied would impact the size of the estate available for distribution to the Debt- or’s creditors. That argument fails because the Court lacks jurisdiction over those cross-claims. The source of the Court’s power to issue a declaratory judgment is the Declaratory Judgment Act. See 28 U.S.C. § 2201 (the “Declaratory Judgment Act”). See also Sears, Roebuck and Co. v. O’Brien,
DISCUSSION
As a preliminary matter, and before considering the adequacy of the pleadings relating to the Non-NY DCL Claims, the Court notes that the Debtor cited no case law in the Scott Opposition to ASIC/Ocwen/BNY Motion to Dismiss Complaint, and made only the following incomplete references to the standards governing a Rule 12(b)(6) motion:
The standard for dismissal of the complaint is granting the pleader every favorable inference as to the- matters plead, does the complaint set forth a cause of action; and
The standard for the remedy if the court rules that pleader failed to state a cause action, is to permit the pleader to amend the complaint.
See Scott Opposition to ASIC/Ocwen/BNY Motions to Dismiss Complaint ¶¶ 3, 5. He did not respond to ASIC’s and the Mortgagee Defendants’ contentions that the Complaint fails to state claims for (i) conversion; (ii) embezzlement; (iii) violations of NY RPAPL § 1921 and NY CPLR § 5020; and (iv) breach of contract.
In any event, the many pleading defects doom the Complaint. Rule 8(a)(2) mandates that a complaint contains “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).
The Court construes the Debtor’s opposition to the motions to include a request for leave to amend the Complaint, should the Court find that the Debtor has failed to state claims for relief. See Scott Opposition to ASIC/Ocwen/BNY Motions to Dismiss Complaint ¶ 5 (noting that “[t]he standard remedy if the court rules that pleader fails to state a cause of action, is to permit the pleader to amend the complaint.”); Scott Opposition to McCabe Defendants Motion to Dismiss ¶ 3 (same). Although Rule 15(a)(2) states that a court should “freely give leave [to amend] when justice so requires,” whether to grant that relief is within the Court’s sound discretion. McCarthy v. Dun & Bradstreet Corp.,
BNY and Ocwen are correct that the Debtor’s claims under the FDCPA, as well as his claims for conversion, embezzlement, and unfair and deceptive trade practices under the NY GBL in Counts One and Three must be' dismissed since the Debtor failed to plead any of the elements
As discussed below in a claim-by-claim review of the Complaint, the Debtor’s problem is not merely that his pleadings are defective and that he has failed to state claims for relief against the Defendants. It is that as a matter of law, he cannot do so. See Cuoco v. Moritsugu,
Below, the Court reviews the claims underlying each of the Counts in the Complaint.
Count One: Conversion, Embezzlement, Constructive Fraudulent Conveyance (NY Debtor and Creditor Law), Unfair and Deceptive Trade Practices (NT General Business Law), and Fair Debt Collection Practices (15 U.S.C. §§ 1692a et seq.)
Conversion
Under New York law, “Mon-version is the unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner’s rights.” Thyroff v. Na
It is settled that money, including the proceeds of an insurance policy, can be the subject of a claim for conversion, but only if that money is “specifically identifiable and segregated.” See Lan v. Time Warner, Inc., No. 11 CIV. 2870,
There is no point in granting the Debtor leave to replead his conversion claim. He did not name any fund or trust in which the Insurance Proceeds were deposited, and there was none. Since the proceeds were not held in trust or in “specifically identifiable fund,” they cannot be the subject of a conversion action. See Lan,
Accordingly, the Court recommends dismissing the claim for conversion, without leave to amend.
Federal law defines “embezzlement” as the “fraudulent appropriation of property by a person to whom such property has been entrusted, or into whose hands it has lawfully come.” Moore v. United States,
The Debtor alleges that Ocwen embezzled the Insurance Proceeds when it failed to apply them in satisfaction of the Loan balance, and that BNY embezzled them when it failed to issue a satisfaction of the Mortgage and the Judgement of Foreclosure. Compl. ¶¶37-38.
Accordingly, the Court recommends dismissing the embezzlement claim, without leave to amend.
Fair Debt Collection Practices
“Congress enacted the FDCPA ’to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” Vincent v. The Money Store,
Under the FDCPA, a “consumer” is “any natural person obligated or allegedly obligated, to pay any debt.” 15 U.S.C. § 1692a(3).
Under the FDCPA, a “debt collector” is “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” See 15 U.S.C. § 1692a(6). That otherwise broad definition is subject to a significant limitation. It excludes “any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity .... concerns a debt which was not in default at the time it was obtained by such person.” Id. § 1692a(6)(F). According to the report of the United States Senate, Committee on Banking, Housing, and Urban Affairs on the FDCPA, “[t]he committee does not intend the definition [of debt collector] to cover ... mortgage service companies and others who service outstanding debts for others, so long as the debts were not in default when taken for servicing.” See S. Rep. No. 95-382, at 2 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1696. BNY acquired the Loan before it went into default. See Scott,
Accordingly, for all of those reasons, the Debtor has not and cannot state a claim for relief under the FDCPA against either BNY or Ocwen. The Court recommends dismissing that claim, without leave to amend.
Unfair and Deceptive Trade Practices
The Complaint only mentions the NY General Business Law in the caption of Count One. Thus, it does not allege the elements of a claim under the NY GBL. However, in his opposition, the Debtor argues that the Complaint states a claim for relief against the Defendants under NY GBL § 349. See Scott Opposition to ASIC/ Ocwen/BNY Motions to Dismiss Complaint ¶ 24. “Section 349 of the New York General Business Law was intended to be a consumer protection statute.” Teller v. Bill Hayes, Ltd.,
To state a claim under NY GBL § 349, a plaintiff must allege that: (1) the defendant’s deceptive acts were directed at consumers, (2) the acts are misleading in a material way, and (3) the plaintiff has been injured as a result thereof. See PB Americas Inc. v. Cont’l Cas. Co.,
The Debtor does not mention BNY at all in support of his claim under the NY GBL, and merely states in a con-clusory fashion that “Ocwen engages in a pattern, course, and conduct of unfair and deceptive trade practices, including, but not limited to, failing to credit consumer (borrowers) with amounts which should properly offset the balance on the account.” Compl. ¶ 29. He has failed to allege “facts from which a reasonable inference can be drawn that [Ocwen’s] practices impact consumers at large, or indeed a single consumer other than himself.” Frederick v. Capital One Bank (USA), N.A., No. 14-CV-5460,
ASIC engages in a pattern, course, and conduct of unfair and deceptive trade practices, including, but not limited to, charging consumers for forced placed insurance for policies (1) which name as the consumer (borrower) beneficiary, in-dividuales) who do not own any right, title, or interest in the “insured” premises and (2) which fail to name as the consumer (borrower) beneficiary, indi-viduales) who were party to the underlying indebtedness and/or who held right, title, and interest in the property by reason of the underlying indebtedness.
Compl. ¶ 26. The Complaint plainly fails to state a claim against ASIC that is plausible on its face, or otherwise. See, e.g., Ashcroft v. Iqbal,
Count Two: Breach of Contract, Violation of 11 U.S.C. § 509(b)(2) Prohibiting Subro-gation To Compensated Insurer
In Count Two, the Debtor asserts that by charging the forced placed insurance premium to the Mortgage, ASIC contracted with the Debtor, Campbell and Gaeth-ers-Langley to insure them against casualty losses and had a “legal duty” to pay the Insurance Proceeds to them. He says ASIC breached that contract by failing to ensure the security of the “payout check,” and by failing to provide them with the benefits of the Policy.
11 U.S.C. 509 [sic] provides that the debtor [in this context, American Security Insurance Company] would otherwise be subrogated to the right of “such creditor: [in this context, Ocwen Loan Servicing, LLC], but 11 U.S.C. 509(2) [sic] prohibits such treatment because American Security Insurance Company received compensation for providing security. [sic] (for $5,998 forced placed lending fee for single year of coverage, please see invoice included in Exhibit B).
Compl. ¶ 32 (bracketed language in original). The Debtor misplaces his reliance on § 509; it has no application to the claims in the Complaint. In relevant part, § 509(a) of the Bankruptcy Code states that “an entity that is liable with the debt- or on ... a claim of a creditor against the debtor, and that pays such claim, is subro-gated to the rights of such creditor to the extent of such payment.” 11 U.S.C. § 509(a). Thus, it codifies the common law doctrine of equitable subrogatipn for a co-obligor of a debtor who pays a creditor’s claim post-petition. See Aetna Cas. & Sur. Co. v. Clerk, U.S. Bankruptcy Court (In re Chateaugay Corp.),
In New York, a breach of contract action requires proof by the plaintiff of: (i) a contract; (ii) performance of that contract by one party; (iii) breach of the contract by the other party; and (iv) damages resulting from that breach. See Rexnord Holdings, Inc. v. Bidermann,
ASIC argues that the Debtor has not established and cannot establish the existence of a contract between ASIC and the Debtor, and that this lack of contractual privity bars the Debtor’s breach of contract claim. See ASIC Rule 12(c) Motion at 14. The Debtor is not party to the Policy and cannot point to any agreement with ASIC obligating ASIC to pay him the Insurance Proceeds. Indeed, the Debtor’s premise that ASIC charged the premium to the amount due under the Note and thus obligated itself to provide insurance to the Debtor, Campbell and Gaethers-Langley is simply wrong. Under the Mortgage, at its option and at the borrower’s expense, the lender can, but is not required to, obtain Property insurance coverage in an amount it determines in its sole discretion. See Aiello Cert., Ex. B, Mortgage ¶ 5,
Count 3: Violation of NY Real Property Actions and Proceedings Law § 1921 Requiring Timely Filing of Discharge of Mortgage, Violation of NY Civil Practice Law an Rules Requiring Timely Filing of Discharge of Judgment Lien, and Unfair Debt Collection Practices (15 U.S.C. §§ 1692a et seq.)
In Count Three, the Debtor focuses on Ocwen’s alleged receipt of the Insurance Proceeds that, according to the Debtor, were sufficient to satisfy the Loan in full thereby triggering an obligation under NY RPAPL § 1921 and/or NY CPLR § 5020 to record satisfactions. The Debtor alleges that: (i) after fire destroyed the Property, Ocwen made a claim under the Policy; (ii) ASIC paid Ocwen the sum of $712,908.00, which was the “face value on the [P]olicy;” and (iii) the “Defendants did not file satisfactions of the mortgage and the judgment.” Compl. ¶¶ 18, 22.
Section 1921(a) mandates that “[a]fter payment of authorized principal, interest and any other amounts due” under a mortgage, the mortgagee “must execute and acknowledge ... a satisfaction of mortgage” and record it in “the county where the mortgage is recorded .... ” NY RPAPL § 1921(a). Section 5020 of the NY CPLR provides for the imposition of penalties if a creditor fails to execute and file a satisfaction of judgment “when the judgment is finally satisfied.” NY CPLR § 5020. Even accepting as true the disputed assertion that Ocwen received Insurance Proceeds totaling $712,908, and applied them to the Loan, the proceeds were insufficient to satisfy the Loan. The Judgement of Foreclosure states that the obligation under the Loan as of its entry on March 25, 2009 was no less than $881,774.84. See Compl. Ex. A, Judgment
Count 4: Violation of FDCPA with Special Damages (15 U.S.C. §§ 1692a et seq.) '
In support of Count Four, the Debtor alleges that he is entitled to awards of “actual” and “statutory” damages (Compl. ¶ 42) on the grounds that “in the process of representing BNY and Ocwen, McCabe, by and through, Veneer” violated the FDCPA by:
(a)Failing to confirm whether the Judgment of Foreclosure and Sale had been paid off, prior to serving the Notice of Sale;
(b) Failing to file a discharge of judgment;
(c) Failing to file a discharge of mortgage;
(d) Serving the Notice of Sale to obviously incorrect or obsolete addresses, and failing utterly to comply with statutory requirement to post Notice of the Sale in the newspaper for consecutive weeks;
(e) Serving a different Notice of Sale on [the Debtor, Campbell, and Gaethers-Langley], than as filed with the court (the notice to the borrowers included a “Mortgage Account Sheet” of Ocwen Loan Servicing, LLC showing the amount “due now” as $1,481,352.37, whereas the notice file [sic] with the court did not include the “Mortgage Account Sheet” and showed the ‘amount of the judgment’ as $881,774.84 plus interest and costs;
(f) Filing a false Notice of Sale with the court; and
(g) Demanding payment of debt not actually owed.
Even with that modification to the pleadings, the Debtor has not, and cannot state a claim for relief under § 1692f(6). Section 1692f bars “debt collector[s]” from using “unfair or unconscionable means to collect or attempt to collect any debt.” 11 U.S.C. § 1692f. That “prefatory clause is followed by a list of specific examples of ... conduct that constitutes a violation of this section.” Sutton v. Financial Recovery Servs., Inc.,
The Court previously recommended dismissing the Debtor’s FDCPA claims against the Mortgagee Defendants in Count One, with prejudice, because, among other things, the Debtor did not, and cannot, plead that he is a “consumer” under the FDCPA. That rationale holds true for Count Four. The Debtor cannot qualify as a “consumer” because, as previously discussed, he is not obligated to pay the debt at issue herein. See 15 U.S.C. § 1692a(3) (a “consumer” is “any natural person obligated to pay a debt.”).
The McCabe Defendants also contend that Veneer does not qualify as a “debt collector” under the FDCPA because (i) he is simply an attorney at McCabe and is not an owner or partner of the firm; (ii) the Debtor’s obligations under the Note were discharged prior to the publication of the Notice of Sale; and (iii) McCabe was foreclosing on the Property. See McCabe Motion to Dismiss Complaint at 6. There is no merit to the first contention because an attorney in a law firm who otherwise qualifies as a “debt collector” is not shielded from liability under the FDCPA simply because the attorney is an associate at the law firm. Cf. Teng v. Metropolitan Retail Recovery Inc.,
Under § 1692f(6), a debt collector will be deemed to have employed “unfair and unconscionable” means to collect a debt if it takes, or threatens to take, “nonjudicial action to effect disposition or disablement of property” at a time that (i) the debtor does not have a present right to possession of the property claimed as collateral through an enforceable security agreement; (Ü) the debtor does not have a present intention to take possession of the property; or (iii) the property is exempt by law from such dispossession or disablement. 15 U.S.C. § 1692f(6). The Debtor argues that by failing to comply with the statutory requirement to post the Notice of Sale in a newspaper for consecutive weeks, Veneer utilized “unfair and unconscionable” means in attempting to collect a debt from the Debtor. He put a finer point on that contention in his opposition, arguing:
[Veneer’s] conduct, which consisted of filing a Notice of Sale with the Court, but not publishing the Notice of Sale with the local newspaper as required pursuant to New York State Real Property Actions and Proceedings Law § 231 violated 15 U.S.C. § 1692(e)(4), 15 U.S.C. § 1692(e)(10), and 15 U.S.C. § 1692(f)(6)(A). Because Defendant did not publish in the paper he had no present right to attempt to sell the premises, and therefore any action that he took was unlawful, and an abuse of process.
Debtor Opposition to McCabe Motion to Dismiss Complaint ¶¶ 17-18. However, even if true, those allegations do not support the Debtor’s claim for relief under § 1692f(6) because the Notice of Sale is part of BNY’s judicial proceeding, not a non-judicial proceeding. See Estep v. Manley Deas Kochalski, LLC,
As clarified during the hearing on December 22, 2016, the Debtor does not seek relief against McCabe under the FDCPA. Rather, he rests his claim against McCabe exclusively on the doctrine of re-spondeat superior. It is hornbook law that “the doctrine of respondeat superior renders a master vicariously liable for a tort committed by his servant while acting within the scope of his employment[.]” Riviello v. Waldron,
The Court recommends dismissing Count Four as to Veneer and McCabe, without leave to amend.
CONCLUSION
Based upon the foregoing, the Court determines and recommends as follows:
1. The objections filed on behalf of the Debtor, Campbell and Gaethers-Langley to the motions to dismiss the Complaint and Cross-Complaints are OVERRULED, in their entirety.
2. The respective Rule 12(b)(6) Motions to Dismiss 69 filed on behalf of ASIC, Ocwen, BNY, McCabe, and Veneer, and the ASIC Rule 12(c) Motion are each GRANTED, in part, and RECOMMENDED TO BE GRANTED, in part, as follows:
a. The claims for relief asserted by Campbell and Gaethers-Langley in Count One of their respective Cross-Complaints (that is, Count One of the Complaint, as incorporated in the Cross-Complaints by reference) under the NY DCL are DISMISSED, pursuant to Rule 12(b)(1), for lack of subject matter jurisdiction, without leave to amend, as Campbell and Gaeth-ers-Langley lack standing under § 544(b)(2) of the Bankruptcy Code to assert such claims.
b. The balance of the claims asserted by Campbell and Gaethers-Lang-ley in support of their claims for money damages and declaratory relief in their Cross-Complaints (that is, under Counts One through Four of the Complaint, as incorporated in the Cross-Complaints by reference, and in Counts Five and Six of Campbell’s Cross-Complaint) are DISMISSED, pursuant to Rule 12(b)(1), for lack of subject matter jurisdiction, without leave to amend, since those claims do not fall within the Court’s “core” or “non-core related to” jurisdiction, see 28 U.S.C. § 1334(b), and because the Court declines to exercise supplemental jurisdiction over those claims. See 28 U.S.C. § 1367(c).
c. The claims for relief asserted by the Debtor in support of Count One of the Complaint under NY DCL are dismissed pursuant to Rule 12(b)(1), for lack of subject matter jurisdiction, without leave to amend, since the Debtor lacks standing under § 544(b)'(2) of the Bankruptcy Code to assert such claims.
d. The Court has non-core, related to, jurisdiction over the Non-NY DCL Claims, and all of the parties to the Complaint have not consented to this Court’s entry of a final order resolving the motions to dismiss those claims. See 28 U.S.C. § 157(c)(2). Accordingly, under § 157(c)(1) the Court recommends that the District Court:
i. dismiss, without leave to amend, all other claims asserted by the Debtor in the Complaint against Defendants ASIC, Ocwen and BNY in Counts One through Four, namely, conversion, embezzlement, violations of NY GBL § 349, breach of contract, violation of 11 U.S.C. 509(b)(2), violations of the FDCPA, and the failure to comply with NY RPAPL § 1921 and CPLR § 5020, pursuant to Fed. R. Civ. P. 12(b)(6), for failing to state a claim upon which relief may be granted; and
ii. dismiss, without leave to amend, all causes of action asserted in Count Four of the Complaint against Defendants McCabe and Veneer, pursuant to Fed. R. Civ. P. 12(b)(6), for failing tostate a claim upon which relief may be granted.
3 In accordance with Fed. R. Bankr. P. 9033, the Clerk shall serve forthwith copies of this Memorandum Decision and Proposed Findings of Fact and Conclusions of Law on all parties by mail and note the date of mailing on the docket.
IT IS SO ORDERED.
Notes
. See Complaint to Null and Void Mortgage and Judgment Liens Already Paid in Full, and for Money Judgment [AP ECF No. 1],
. See Answer by Defendant Barbara Campbell, Counterclaim against Plaintiff/Debtor Phillip Michael Scott, and Cross-Complaint Against American Security Insurance Company, Ocwen Loan Servicing, Bank of New York Mellon, Erwin Veneer, Esq., McCabe, Weisberg & Conway, P.C. [AP ECF No. 3] (the "Campbell Cross-Complaint’’); Answer by Defendant/Marlene Gaethers-Langley, Counterclaim against Plaintiff/Debtor Phillip Michael Scott, and Cross-Complaint Against Defendants American Security Insurance Company, Ocwen Loan Servicing, Bank of New York Mellon, Erwin Veneer, Esq., McCabe, Weisberg & Conway, P.C. [AP ECF No. 8] (the "Gaethers-Langley Cross-Complaint,” and collectively with the Campbell Cross-Complaint, the "Cross-Complaints”).
.As relevant, Bankruptcy Rule 7012 states that "Rule 12(b)—(i) F.R.Civ.P. applies in ad
. See Motion to Dismiss Adversary Proceeding by BNY and Ocwen, dated August 31, 2016 [AP ECF No. 10] (the "Mortgagee Defendants Motion To Dismiss Complaint”); Motion to Dismiss Defendant Marlene Gaeth-ers-Langley's Cross-Complaint, dated September 22, 2016 [AP ECF No. 21] (the "Mortgagee Defendants Motion To Dismiss Gaethers-Langley Cross-Complaint”); and Motion to Dismiss Defendant Barbara Campbell's Cross-Complaint, dated September 23, 2016 [AP ECF No. 27] (the "Mortgagee Defendants Motion To Dismiss Campbell Cross-Complaint,” and collectively with the Mortgagee Defendants Motion to Dismiss Complaint and Mortgagee Defendants Motion To Dismiss Gaethers-Langley Cross-Complaint, the "Mortgagee Defendants Motions to Dismiss”), respectively.
Furthermore, the Mortgagee Defendants filed replies in further support of their motions to dismiss. See Reply Memorandum in Further Support of Defendants’ Motion to Dismiss [Responding to the Scott Opposition], dated November 2, 2016 [AP ECF No. 36]; Reply Memorandum of Law in Further Support of Defendants’ Motion to Dismiss Cross-Complaint Filed by Co-Defendant Barbara Campbell, dated November 29, 2016 [AP ECF No. 49]; and Reply Memorandum of Law in Further Support of Defendants’ Motion to Dismiss Cross-Complaint Filed by Co-Defendant Marlene Gaethers-Langley, dated November 29, 2016 [AP ECF No. 50], respectively.
. See Motion for Judgment on the Pleadings, dated October 12, 2016 [AP ECF No. 32] (the "ASIC Rule 12(c) Motion”); Motion to Dismiss Defendant Barbara Campbell’s Cross-Complaint, dated September 23, 2016 [AP ECF No. 28] (the "ASIC Motion to Dismiss Campbell Cross-Complaint”); and Motion to Dismiss Defendant Marlene Gaethers-Lang-ley’s Cross-Complaint, dated September 23, 2016 [AP ECF No. 29] (the "ASIC Motion to Dismiss Gaethers-Langley Cross-Complaint,” and collectively with the ASIC Motion to Dismiss Campbell Cross-Complaint, the “ASIC Motions to Dismiss Cross-Complaints”).
. See Amended Motion for an Order Dismissing Adversary Proceeding Pursuant to Federal Rule of Civil Procedure 12(b)(6) or 12(c) and Federal Rule of Bankruptcy Procedure 7012(b) or in the Alternative Motion for Summary Judgment Under to [sic] Federal Rule of Civil Procedure 56 and Federal Rule of Bankruptcy Procedure 7056 [AP ECF No. 19] (the "McCabe Motion to Dismiss Complaint”).
. See Motion for an Order Dismissing Cross-Complaint by Co-Defendant Marlene Gaeth-ers-Langley Pursuant to Federal Rule of Civil Procedure 12(b)(6) or 12(c) and Federal Rule of Bankruptcy Procedure 7012(b) or in the Alternative Motion for Summary Judgment Under Federal Rule of Civil Procedure 56 and Federal Rule of Bankruptcy Procedure 7056 [AP ECF No. 20] (“McCabe Motion to Dismiss Gaethers-Langley Cross-Complaint”); and Motion for an Order Dismissing Cross-Complaint by Co-Defendant Barbara Campbell Pursuant to Federal Rule of Civil Procedure 12(b)(6) or 12(c) and Federal Rule of Bankruptcy Procedure 7012(b) or in the Alternative Motion for Summary Judgment Under Federal Rule of Civil Procedure 56 and Federal Rule of Bankruptcy Procedure 7056 [AP ECF No. 30] (the “McCabe Motion to Dismiss Campbell Cross-Complaint,” and collectively with the McCabe Motion to Dismiss Complaint and the McCabe Motion to Dismiss Gaethers-Langley .Cross-Complaint, the "McCabe Motions to Dismiss”), respectively.
. See Opposition of Phillip Michael Scott Against Motion for Judgment on the Pleadings by American Security Insurance Company and Motion to Dismiss by Ocwen Loan Servicing, LLC and Bank of New York Mellon [AP ECF No. 34] (the "Scott Opposition to ASIC/Ocwen/BNY Motions to Dismiss Complaint”).
. See Opposition of Codebtor Phillip Michael Scott Against Motion to Dismiss Complaint by McCabe, Conway, Weisberg PC and Edwin Veneer and Memorandum of Law [AP ECF No. 33] (the "Scott Opposition to McCabe Motion to Dismiss Complaint”).
. See Opposition filed by Marlene Gaethers-Langley against Ocwen Loan Servicing, LLC, Bank of New York Mellon Trust Company, N.A., and American Security Insurance Company [AP ECF No. 46] (the "Gaethers-Lang-ley Opposition to ASIC/Ocwen/BNY Motions to Dismiss Cross-Complaints”); and Opposition filed by Barbara Campbell Cross-Claimant against Motion to Dismiss by Ocwen Loan Servicing LLC, Bank of New York Mellon Trust Company, N.A. and American Security Insurance Company [AP ECF No. 47] (the "Campbell Opposition to ASIC/Ocwen/BNY Motions to Dismiss Cross-Complaints,” and collectively with the Gaethers-Langley Opposition to ASIC/Ocwen/BNY Motions to Dismiss Cross-Complaints, the "Non-Debtor Mortgagors Oppositions"), respectively. See also Opposition of Codebtor Barbara Campbell Against Motion to Dismiss Cross Claim by McCabe, Conway, Weisberg PC and Edwin Vencer and Memorandum of Law [AP ECF No. 45] (the "Campbell Opposition to McCabe Motion to Dismiss Campbell Cross-Complaint”); Opposition of Codebtor Marlene Gaethers-Langley Against Motion to Dismiss Cross Claim by McCabe, Conway, Weisberg PC and Edwin Veneer and Memorandum of Law [AP ECF No. 43] (the "Gaethers-Langley Opposition to McCabe Motion to Dismiss Gaethers-Langley Cross-Complaint”).
. Compare Scott Opposition to ASIC/ Ocwen/BNY Motions to Dismiss Complaint [AP ECF No. 34] with Non-Debtor Mortgagors Oppositions [ECF Nos. 46, 47]. The Court notes that the Non-Debtor Mortgagors Oppositions appear to be virtually word-for-word identical to each other, and more particularly to the Scott Opposition to ASIC/ Ocwen/BNY Motions to Dismiss Complaint, except that both of the Non-Debtor Mortgagors Oppositions do not include paragraph 77 from the Scott Opposition to ASIC/ Ocwen/BNY Motions to Dismiss Complaint, and the Gaethers-Langley Opposition to ASIC/Ocwen/BNY Motions to Dismiss Cross-Complaints omits footnotes 3 and 5 from the Scott Opposition to ASIC/Ocwen/BNY Motions to Dismiss Complaint.
. Those hearings were held on; December 8, 2016 (as to ASIC); December 15, 2016 (as to the Mortgagee Defendants); and December 22, 2016 (as to the McCabe Defendants). The Debtor failed to appear at the hearing on December 8, 2016. See AP ECF No. 55.
. See, e.g., Scott Opposition to ASIC/ Ocwen/BNY Motions to Dismiss Complaint ¶ 23 (contending Ocwen only became servicer for BNY after the Loan went into default); ¶ 22 (arguing Ocwen directed McCabe to conduct the anticipated foreclosure without publishing a notice of sale and not to actually serve required parties); ¶¶ 25-27 (alleging that ASIC was the subject of multiple investigations over forced placed insurance policy sales in various states and assessed substantial penalties in some of them, including an alleged multi-million fine in Florida, and $565,000 in Massachusetts); ¶31 (theorizing about possible existence of a settlement between ASIC and Ocwen over the putative proceeds from the Policy); ¶¶ 49 n. 5 (alleging that Ocwen knew of ASIC’s "reputation” in the forced placed insurance market); and ¶ 51 n.7 (indicating that Ocwen’s representative contacted Campbell to advise that issues over the Policy had been settled, and confirming ASIC had sent an agent to the Property to investigate the claim). The opposition to the McCabe Motions to Dismiss contain a more robust description of why the McCabe Defendants are “debt collectors under the Federal Debt Collection Practices Act (see Scott Opposition to McCabe Motion to Dismiss Complaint ¶ 18) and a slightly expanded set of facts concerning the McCabe Defendants, including that Ocwen was the party that directed the McCabe Defendants to improperly serve and publish notice of the proposed sale (id. at 17); and they “engaged in sewer service.” (see Gaethers-Langley Opposition to McCabe Motion to Dismiss Gaethers-Langley Cross-Complaint ¶ 14(f)).
. Those documents include unauthenticated print-outs from state government websites concerning ASIC (see, e.g., Scott Opposition to McCabe Motion to Dismiss Complaint, Exs. A and B); amicus briefs from the Consumer Finance Protection Bureau filed in several cases in different Circuit Courts of Appeal (id. at Exs. B and C); a letter from Ocwen to Campbell, dated May 18, 2016, concerning new force placed insurance (see Scott Opposition to ASIC/Ocwen/BNY Motions to Dismiss Complaint, Ex. C); and emails from an Ocwen representative to Campbell (id. at Ex. E).
. See Defendants’ Attorney Certification of Jacqueline M, Aiello, which Certification accompanied each of the Mortgagee Defendants Motions to Dismiss [ECF Nos. 10-1 (dated August 31, 2016), 21-3 (dated September 22, 2016), and 27-3 (dated September 23, 2016), respectively]. The only difference between those three Certifications is that the Certification submitted with the Mortgagee Defendants Motion to Dismiss Campbell Cross-Complaint includes a copy of the Campbell’s Cross-Complaint, and the Certification submitted with the Mortgagee Defendants Motion to Dismiss Gaethers-Langley Cross-Complaint includes a copy of the Gaethers-Lang-ley's Cross-Complaint.
. To that end, in resolving the motions, the Court will also take judicial notice of, and refer to, a Memorandum Decision of the United States District Court for the Southern District of New York, dated October 21, 2015. See Scott v. The Bank of New York Trust Co., N.A. (In re Scott), 15 CV 755,
. See Declaration of James Kroll in Support of Defendant American Security Insurance Company's Motion to Dismiss Cross-Complaint, dated September 16, 2016, which Declaration accompanied the ASIC Rule 12(c) Motion and each of the ASIC Motions to Dismiss [AP ECF Nos. 22-1, 24-1, and 32-2, respectively].
. See Affidavit in Support of Motion to Dismiss of Kyle Lucas, dated August 29, 2016, which Affidavit accompanied each of the Motions to Dismiss. [AP ECF Nos. 10-12, 21-2, and 27-2, respectively],
. See Affidavit in Support of Opposition to Defendant’s Motion to Dismiss, dated October 26, 2016 [AP ECF Nos. 34-4, 46-1, and 47-1, ■ respectively],
. See AP ECF No. 34-4 at 20-22; AP ECF No. 46-1 at 20-22; AP ECF No. 47-1 at 20-22.
. Separately, the McCabe Defendants ask the Court to grant it summary judgment dismissing the Complaint, but rely solely on the Complaint in support of that request. See McCabe Motion to Dismiss the Complaint ¶¶ 7, 14-17. The Court declines to do so.
. The Complaint states that the borrowers purchased the Property "[i]n, or about July 16, 2016.” Compl. ¶ 15. It is cjear from the record that the reference to 2016 was a typographical error, since the Property was acquired in 2005.
. That was the third state court action brought to foreclose the Mortgage. Earlier, Campbell defaulted under the Note, and in 2006 Chase brought an action in state court to foreclose on the Property. On November 8, 2006, the state court issued a judgment of foreclosure and sale, and on January 8, 2007, Chase conducted a foreclosure sale. See In re Scott,
.Following entry of that judgment, the parties engaged in unsuccessful settlement negotiations, and the state court scheduled a foreclosure sale for March 10, 2010. See In re Scott,
The inescapable fact is that this mortgage has not been paid since May 1, 2007. Numerous conferences have been held herein and there simply exists no reason in law or equity for this action to not forthwith proceed to its logical conclusion.
Defendant is hereby advised that no future Order to Show Cause or any other motion relief seeking vacature of this judgment will be entertained by the Court. In the event that defendant inadvisably nevertheless moves for such relief, he is hereby advised the Court shall deem such motion practice frivolous with the meaning of 22 N.Y.N.R.R. 130-1.1, and the Court may impose upon him an award of costs and/or sanctions.
2012 State Court Decision (Aiello Cert., Ex. E) [AP ECF No. 10-6],
The Debtor also brought two actions in the United States District Court for the Southern District of New York. Acting pro se, Debtor, Campbell, and Gaefliers-Langley filed an action against BNY and Chase, seeking monetary damages and to void the Judgment of Foreclosure. See Campbell v. Bank of N.Y. Trust Co., N.A., No. 11 CV 1588 (CS) (S.D.N.Y.), Debtor brought a separate action seeking similar relief against BNY, Mortgage Electronics Registration Systems, Inc., and Residential Capital, LLC. See Scott v. Bank of N.Y. Trust Co., N.A., No. 12 CV 2607 (CS) (S.D.N.Y.). Both actions asserted numerous federal and state law claims, in essence alleging appellee's foreclosure action was fraudulent because Chase never actually assigned appellant’s mortgage to BNY. Both actions were eventually dismissed in their entirety. See In re Scott,
. The Complaint states that "[o]n, or about June 22, 2014, after Ocwen received payment in full as determined by ASIC, on the mortgage note," BNY and Ocwen filed a Notice of Foreclosure and Sale. Compl. ¶ 19. However, this is clearly a typographical error, as the Notice of Foreclosure and Sale (attached as Ex. A to the Complaint) is dated June 22, 2016.
. In paragraph 9 of the Complaint, the Debt- or alleges he filed his chapter 13 petition on July 20, 2016. However, in paragraph 25 of the Complaint, he alleges that he filed the petition on July 20, 2014. Compare Compl. ¶ 9 with Compl. ¶ 25. The Court’s docket reflects that the Debtor filed his chapter 13 case on July 20, 2016.
. See In re Phillip Michael Scott, Case No. 13-22714 (RDD) [ECF No. 1].
. Id. [ECF No. 9],
. See In re Phillip Michael Scott, Case No. 13-23312 (RDD) [ECF No. 1].
. Id. [ECF No. 11],
. Id. [ECF No. 39].
. Id. [ECF entry dated April 18, 2014].
. Thus, Gaethers-Langley requests:
A) Declaratory judgment establishing that the mortgage lien, and the Judgment of Foreclosure and Sales, are paid in full and said mortgage and judgment are null and void, and/or
B) Money judgment in favor of Phillip Michael Scott and Marlene Gaethers-Langley, and against American Security Insurance Company, Ocwen Loan Servicing, LLC and Bank of New York Mellon, in the amount of $2,195,260.37, and/or
C) Money judgment in favor of Phillip Scott and Marlene Gaethers-Langley, and against Erwin Veneer, Esq. and McCabe, Weisberg & Conway, P.C. in the amount of $2,207,260.37, and/or
D)Such other and further relief as the court deems just, proper, and equita- • ble.
. Thus, Campbell requests:
A) Declaratory judgment establishing that the mortgage lien, and the Judgment of Foreclosure and Sales, are paid in full and said mortgage and judgment are null and void, and/or
B) Money judgment in favor of Phillip Michael Scott and Barbara Campbell, and against American Security Insurance Company, Ocwen Loan Servicing, LLC and Bank of New York Mellon, in the amount of $2,195,260.37, and/or
C) Money judgment in favor of Phillip Scott and Barbara Campbell, andagainst Erwin Veneer, Esq. and McCabe, Weisberg & Conway, P.C. in the amount of $2,207,260.37, and/or
D) Such other and further relief as the court deems just, proper, and equitable.
.Briefly, in support of that claim, Campbell asserts that: (i) Ocwen procured the Policy in her name and charged the cost of the Policy to the Note and Mortgage; (ii) in 2016, she received a telephone call from an Ocwen representative who advised her that (a) provision for payment in full of the Note and Mortgage had been achieved by settlement agreement, (b) the insurance company had determined that amount of the Mortgage to be $712,908.00 which amount would constitute payment in full of the Note and Mortgage, and (c) she would receive a check in the mail for that amount made out to her, among others, and that she should sign the check and mail it to Ocwen; and (iii) she never received the check and believes that ASIC never sent it to her. Campbell Cross-Complaint ¶¶ 12-18. Campbell alleges that she suffered “actual damages for the check she did not receive in the amount of $712,908.00, plus for what Ocwen. Loan Servicing LLC continues to demand in the amount of $1,481,352,37, for total damages of $2,193,260.37.” Id. ¶ 19.
. In support of that count, Campbell alleges that; (i) after the "purported date of default” on the Note and Mortgage, Ocwen, Veneer and McCabe, all of whom qualify as “debt collectors” under the FDCPA, each undertook to collect on the Note; (ii) she believes that (a) Ocwen caused ASIC to send her settlement insurance payment check directly to Ocwen, (b) Ocwen signed her name to the check without her consent, and (c) Ocwen collected the amount of the insurance settlement payment intended to satisfy in full the Judgement and Mortgage; and (iii) asserts that, nonetheless, Ocwen has demanded payment from her of $1,481,352,37. Campbell Cross-Complaint ¶¶ 20-24, 26.
. The McCabe Defendants challenged tire Court’s subject matter jurisdiction to adjudicate the matters raised in the Complaint an4 Cross-Complaints. See McCabe Motion to Dismiss Complaint ¶¶ 9, 11; McCabe Motion to Dismiss Campbell Cross-Complaint ¶¶ 5, 9-10; McCabe Motion to Dismiss Gaethers— Langley Cross-Complaint ¶¶ 18-23.
. In contrast, chapter 11 debtors-in-possession have standing to exercise avoidance powers as trustees. See 11 U.S.C. § 1107, See also Bruce v. RepublicBank-South Austin (In re Bruce),
. Section 522(h) of the Bankruptcy Code specifically grants debtors standing to avoid a transfer of property of the debtor or recover a setoff pursuant to section 544 of the Bankruptcy Code, to the extent the debtor could have exempted such property if the trustee had avoided the transfer. 11 U.S.C § 522(h), That right is available to chapter 13 debtors. See, e.g., Realty Portfolio, Inc. v. Hamilton (In re Hamilton),
. In Olick v. Parker & Parsley Petroleum Co., the Second Circuit considered whether a chapter 13 debtor generally had standing to “litigate causes of action that are not part of a case under title 11,” finding that such standing exists.
. The minority position that chapter 13 debtors have the ability to assert trustee avoidance powers is predicated on: (i) § 103(a) of the
. The Debtor’s reference to § 509 of the Bankruptcy Code in Count Two of the Complaint does not give the Court core jurisdiction over that claim. As explained below, § 509 has no application to the claims asserted in the Complaint.
. "Statement of Consent” refers to the Debt- or’s Statement of Consent Concerning the Court’s Jurisdiction to Enter a Final Order ,,. Pursuant to Federal Rule of Bankruptcy Procedure 7008(a) and the Local Bankruptcy Rule 7008-1 and Memorandum of Law, dated December 2, 2016. [AP ECF No. 54], The Debtor submitted it in response to the Court’s scheduling order dated November 22, 2016 [AP ECF No. 42].
. At issue in Marathon was the scope of the - judicial power vested by Congress in bankruptcy courts under the Bankruptcy Act of 1978 (the "1978 Act”). A " 'judicial [p]ower’ is one to render dispositive judgments.” Plaut v. Spendthrift Farm, Inc.,
The 1978 Act vested district courts with subject matter jurisdiction over all "cases under title 11,” 28 U.S.C. § 1471(a), and all "civil proceedings arising under title 11 or arising in or related to cases under title 11.” Id. § 1471(b). The 1978 Act also established bankruptcy courts as adjuncts to the district court. Id. § 151(a). Judges of the bankruptcy courts were appointed to office for 14-year terms by the President, with the advice and consent of the Senate. Id. §§ 152, 153(a). They were subject to removal by the "judicial council of the circuit” on account of "incompetency, misconduct, neglect of duty or physical or mental disability,” id. § 153(b), and their salaries were set by statute and were subject to adjustment under the Federal Sala
The issue before the Marathon court was "whether the assignment by Congress to bankruptcy judges of the jurisdiction granted in 28 U.S.C. § 1471 ... by the [1978] act violates Art. Ill of the Constitution.”
the restructuring of debtor-creditor relations, which is at the core of the federal bankruptcy power, must be distinguished from the adjudication of state-created private rights, such as the right to recover contract damages that is at issue in this case. The former may well be a ‘public right,’ but the latter obviously is not. Appellant Northern’s right to recover contract damages to augment its estate is ‘one of private right, that is, of the liability of one individual to another under the law as defined.’
Marathon,
. Although not raised by any of the parties, the Court considers whether to exercise supplemental jurisdiction over the claims at issue in the Cross-Complaints. Section 1367 of Title 28 states, in relevant part:
Except as provided in subsections (b) and (c) or as expressly provided otherwise, by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties.
28 U.S.C. § 1367(a). “This section allows a district court that has original jurisdiction over some claims in an action to exercise supplemental jurisdiction over additional claims that are part of the same case or controversy.” In re Enron Corp.,
A district court is not required to exercise supplemental jurisdiction over state law claims in all cases. It may decline to do so when “[it] has dismissed all claims over which it has original jurisdiction.” 28 U.S.C. § 1367(c)(3). In those circumstances, in determining whether to exercise supplemental jurisdiction, the court must “balance[] the traditional values of judicial economy, convenience, fairness, and comity.” Kolari v. New York-Presbyterian Hosp.,
. Instead, the Debtor focused his opposition on the merits of certain of his claims and the lack of merit to certain of the matters raised in the Mortgagee Defendants Motion To Dismiss Complaint and ASIC Rule 12(c) Motion. See generally, Scott Opposition to ASIC/ Ocwen/BNY Motions to Dismiss Complaint. As relevant to his claims against the Mortgagee Defendants and ASIC, and among other things, he argues that through the Lucas and Kroll Affidavits, ASJC and the Mortgagee Defendants have introduced triable issues of fact {id. ¶¶ 14-16), and that the statute of limitations is no defense to Ocwen and the McCabe Defendants' violations of the FDCPA. Id. ¶¶ 17-23. Although the Debtor asserts that "New York grants relief for Unfair and Deceptive Practices pursuant to New York General Business Law § 349[,]” id. ¶ 24, he failed to address the Mortgagee Defendants’ and ASIC’s assertions that he did not allege a claim for relief against any of them under that section. Rather, he argues in support of his claim that ASIC violated NY General Business Law § 349 by introducing new allegations of alleged wrongdoing supported by documents annexed to his Opposition. See id. ¶¶ 24-39; Exs. A, B. The Debtor did not address ASIC's contention that Count Two fails to state a claim for breach of contract. Rather, he introduces new allegations that (i) ASIC’s charge of the insurance premium to the mortgage account balance constituted a contractual offer and acceptance by the Debtor, Campbell and Gaethers-Langley {id. ¶¶ 39-48); and (ii) that ASIC charged forced placed insurance with the intent that consumer borrowers would have no possibility of benefitting from it. Id. ¶¶ 28-38. The Debtor’s opposition also introduces allegations not found in the Complaint that ASIC has engaged in myriad deceptive practices. See id. ¶¶ 50-52 (deception as to existence of policy); ¶¶ 53-55 (deception as to existence of claim); and ¶¶ 56-61 (deception as to payment). Finally, the Debtor argues the merits of the remedies he seeks in the Complaint against BNY, Ocwen and ASIC. See id. ¶¶ 62-78.
. Bankruptcy Rule 7008 makes Rule 8 applicable herein.
. At the hearing on the McCabe Motions to Dismiss on December 22, 2016, the McCabe Defendants withdrew their defenses to the Complaint asserted under Rules 12(b)(2), (4), and (5).
. The Debtor has not included ASIC in the conversion claim.
. The Policy provides in the event of paying out on a loss that "[l]oss will be made payable to you and mortgagee as their interests appear, either by a single instrument so worded or by separate instruments payable respectively to you and the mortgagee, at the Company’s option.” See Compl. Ex. B, Policy, Conditions, ¶ 12 (emphasis added). The Policy further provides in the Mortgage Clause that: (i) "[i]f a mortgagee is named in this policy, any loss payable under the policy shall be paid to the mortgagee and you, as interests appear," and (ii) the insurer may still pay the mortgagee even if it denies a claim by the insured. Id. at ¶ 15 (emphasis added).
. In relevant part, the Mortgage addresses the disposition of Insurance Proceeds, as follows:
Unless Lender and [the mortgagor] otherwise agree in writing, any Insurance Proceeds, whether or not the underlying insurance was required by Lender will be used to repair or restore the damaged Property... During the period that any repairs or restorations are being made, Lender may hold any Insurance Proceeds until it has had an opportunity to inspect the Property to verify that the repair work has been competed to Lender's satisfaction. ... If the repair or restoration is not economically feasible or if it would lessen Lender’s protection under this Security Instrument, then the Insurance Proceeds will be used to reduce the amount that I owe to Lender under this Security Instrument. Such Insurance Proceeds will be applied in the order provided for in Section 2. If any of the Insurance Proceeds remain after the amount that I owe to Lender has been paid in full, the remaining Insurance Proceeds will be paid to me.
Aiello Cert. Ex. B, Mortgage ¶ 5.
.The Court accords no weight to the Debt- or’s unsupported allegation that "[ajpparently, Oewen forged the signature of Barbara Campbell onto the check.” Compl. ¶31. The statement is entirely speculative. See Twombly,
.The Court assumes that the Debtor is asserting the claim of embezzlement under common law because the Complaint did not indicate which state's law is applicable. New York does not recognize a private claim for embezzlement; rather, New York's penal law codifies embezzlement as grand larceny. See New York Penal Law § 155.05-Larceny; defined. It is instructive to note that in New York, the crime of grand larceny by embezzlement does not generally include a “refusal to pay a valid debt.” See People v. Yannett,
. The Debtor did not include ASIC or the McCabe Defendants in the embezzlement claim and it plainly has no application to them.
. Section 1692e(2) of the FDCPA states, as follows:
A debt collector may not use false, deceptive, or misleading representations ormeans in connection with the collecting of any debt. Without limitation the general application of the foregoing, the following conduct is a violation of this section:
(2) the false representation of—
(A) The character, amount or legal status of any debt ....
. Not all provisions of the FDCPA require the offending action to be against a "consumer.” See Sibersky v. Borah, Goldstein, Altschuler & Schwartz, P.C., No. 99-3227,
. The FDCPA has a one-year statute of limitations. See 15 U.S.C, § 1692k(d). The Mortgagee Defendants contend that since the claims in the Complaint stem from their alleged receipt of the Insurance Proceeds and since the Complaint alleges that Ocwen received those proceeds on June 22, 2014 (Compl. ¶ 19), it follows that the Complaint is time barred because the statute of limitations lapsed on “July 22, 2016.” See Mortgagee Defendants Motibn To Dismiss Complaint at 6. The Mortgagee Defendants’ reference to "July 22, 2016” is erroneous since it is more than two years after June 22, 2014. The Court understands the Mortgagee Defendants to assert that the statute of limitations lapsed on Jun 22, 2015. The Court does not credit that argument since the reference in the Complaint to June 22, 2014 is clearly a typographical error. It is undisputed that the fire occurred on December 31, 2014. The Mortgagee Defendants’ reference to a FDCPA statute of limitations claim expiration in 2016 for an act the Debtor contended occurred in 2014 is clearly a typographical error,
. The Debtor does not allege that ASIC violated the FDCPA. Nor could he, as it is undisputed that ASIC only acted as the insurer of the Property. As discussed below, in Count Four of the Complaint, he alleges that the McCabe Defendants violated the FDCPA.
. The term "debt” means "any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the .money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.” Id. § 1692a(5). "Debt” can include ”[a]n obligation to make mortgage payments, as well as fees, penalties, and interest on that mortgage” under the FDCPA. In re Yarney v. Ocwen Loan Servs., LLC, 929 F.Supp.2d 569, 575 (W.D. Va. 2013).
. The terms of the Judgment of Foreclosure make clear that it is not a money judgment as against the Debtor or either of the Cross-Claimants. It specifically states that BNY may file a motion to seek a deficiency judgment. See Compl. Ex. A, Judgment of Foreclosure p. 4. The Debtor has not pleaded that such motion has been filed in the State Court Action. Even if it had been, the Debtor's discharge in his prior case would absolve him of any personal liability regardless.
. In his opposition, the Debtor, for the first time, asserts that Ocwen became the loan servicer for BNY after the Loan was in default, and, as such, is a "debt collector” under the FDCPA. See Scott Opposition to ASIC/ Ocwen/BNY Motion to Dismiss ¶ 23. He provided no support for that assertion, and the
. The Notice of Sale does not contain any request or demand for the payment of any sum of money by the Debtor, or any other party. It merely provides information about the date and time of a scheduled foreclosure sale and advises that the sale be conducted in accordance with the terms of the Judgment of Foreclosure. Accord Carlin v. Davidson Fink LLP,
. Sections 349(a) and (h) of the NY GBL state, as follows:
a) Deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state are hereby declared unlawful..
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h) Jn addition to the right of action granted to the attorney general pursuant to this section, any person who has been injured by reason of any violation of this section may bring an action in his own name to enjoin such unlawful act or practice, an action to recover his actual damages or fifty dollars, whichever is greater, or both such actions. The court may, in its discretion, increase the award of damages to an amount not to exceed three times the actual damages up to one thousand dollars, if the court finds the defendant willfully or knowingly violated this section. The court may award reasonable attorney’s fees to a prevailing plaintiff.
N. Y. Gen. Bus. Law § 349(a), (h).
. In support of Count Two, the Debtor asserts:
ASIC had a legal duly to pay out on the insurance proceeds to the Debtor and the Co-Debtors, which duty ASIC breached, damaging Debtor thereby; and
By reason of charging the premium against Barbara Campbell, Marlene Gaethers-Langley, and Phillip Scott for the forced placed insurance, ASIC contracted to insure them in the amount of the mortgage in the event of a casualty loss.
Compl. ¶¶ 34, 35. From that he further contends:
By reason of issuing the forced insurance policy in fewer than every one of the consumer (borrowers), by failing to take adequate steps to ensure the security of the payout check; and by failing to provide any of the consumer (borrowers) with the benefit for which the policy otherwise should have entitled the consumer (borrowers), ASIC breached its contract to each of Barbara Campbell, Marlene Gaethers-Langley, and Phillip Scott to the possibility of future damages in the form of demand for contribution and/or indemnification by his Co-Debtors.
. In part, paragraph 5 of the Mortgage states, as follows:
5. Borrower's Obligation to Maintain Hazard Insurance or Property Insurance. I will obtain
hazard or property insurance to cover all buildings and other improvements that now are, or in the future will be, located on the Property. The insurance will cover loss or damage caused by fire, hazards normally covered by "Extended Coverage" hazard insurance policies, and any other hazards for which Lender requires coverage, including, but not limited to earthquakes and floods.
If I fail to maintain any of the- insurance coverages described above, Lender may obtain insurance coverage, at Lender’s option and my expense Lender. Lender is under no obligation to purchase any particular type or amount of coverage. Therefore, such coverage will cover Lender, but might or might not protect me, my equity in the Property, or the contents of the Property, against any risk, hazard or liability and might provide greater or lesser coverage than was previously in effect. I acknowledge that the cost of the insurance coverage so obtained might significantly exceed the cost of insurance that I could have obtained. Any amounts disbursed by Lender under this Section 5 will become my additional debt secured by this Security Instrument. These amounts will bear interest at the interest rate set forth in the Note from the date of disbursement and will be payable with such interest, upon notice from Lender to me requesting payment.
. The correspondence from Ocwen to Campbell enclosing a copy of the Policy makes this very clear:
Enclosed is an insurance policy we have obtained in accordance with your mortgage documents and/or Deed of Trust. Since proof of acceptable insurance coverage has not been provided, Ocwen has obtained the enclosed policy, The annual premium is shown on the policy. This premium will be charged to your escrow account, If you do not have an escrow account, one may be established, or you will be billed directly. Your monthly mortgage payment may be increased to include the cost of this policy. Please read the important information and instructions contained in this letter,
In the mortgage documents you signed, you agreed to keep insurance on your property at all times.
Failure to do so is a breach of those requirements. We have issued this policy for you because we did not receive timely proof that you have obtained insurance. ..,
Compl. Ex. B.
. The Debtor makes the allegations in support of his claims for conversion, embezzlement and violations of the FDCPA in Count Three, although, as already discussed, he seeks relief on account of those claims in Count One. For the reasons discussed above, the Debtor has failed to state claims for conversion, embezzlement or for violations of FDCPA, and, as a matter of law, cannot do so. Accordingly, to the extent that the Complaint could be construed as asserting those claims in Count Three, the Court recommends dismissing them, with prejudice.
. This is so notwithstanding the Debtor’s assertion that ASIC determined that the sum of $712,908 was sufficient to satisfy the Loan. See Compl. ¶¶ 18, 19, 30. The Court gives no credence to that contention for several reasons. The Court finds it simply implausible that ASIC, rather than Ocwen or BNY, would be the party to determine the total amount owed on the Loan. Cf. Grady v. Utica Mut. Ins. Co., 69 A.D.2d 668,
Furthermore, at best, the Policy provided ASIC the option, in the event it denies payment to Campbell, but pays Ocwen, to pay “the whole principal on the mortgage plus any accrued interest.” Id. ¶ 15, ECF p. 14 of 20. Such language, however, actually further contradicts several of the Debtor's assertions. First, the Policy clearly provides a mechanism for the mortgagee, in this case Ocwen, to receive payment under the Policy, but have payment denied to the insured, in this case Campbell. That.undercuts the Debtor’s wholly speculative and unsupported contention that Ocwen forged Campbell's name on the purported Insurance Check. Second, even if Debtor’s allegation that it was ASIC that made any determination concerning paying off the total amount owed on the Loan balance, the language of the Policy clearly indicates that the most that would occur would be ASIC taking an assignment of the loan debt if it pays the total amount outstanding. It would not actually satisfy the debt.
. The "Rule 12(b)(6) Motions to Dismiss” are comprised of (i) the Mortgagee Defendants Motions to Dismiss; (ii) the ASIC Motions to Dismiss Cross-Complaints; and (iii) the McCabe Motions to Dismiss.