UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Ralph Faiella

v. Civil No. 16-cv-088-JD Opinion No.

Green Tree Servicing LLC and Federal National Mortgage Association

O R D E R

Ralph Faiella brought a plea of title action in state court

against the Federal National Mortgage Association (“Fannie Mae”)

and Green Tree Servicing LLC, now known as Ditech Financial LLC

(“Ditech”), challenging the legality of a foreclosure that

Ditech and Fannie Mae conducted on his residence. Fannie Mae

and Ditech removed the case to this court, asserting diversity

jurisdiction. Faiella moves to remand the case to state court

or, in the alternative, requests that the court abstain from

entertaining it. Fannie Mae and Ditech oppose Ditech’s motion

to remand or abstain.

Ditech has also moved to dismiss the amended complaint

against it on the grounds that it had no involvement in the

foreclosure at issue. Faiella objects to this motion. Background

The facts below are derived from Faiella’s amended

complaint (doc. no. 9) and certain documents that Ditech has

filed in support of its motion to dismiss, including the

relevant mortgage, the foreclosure notice, and the foreclosure

deed. Because Faiella references the foreclosure notice and the

mortgage in his amended complaint and does not dispute that the

exhibits are authentic, the court will consider them in

resolving Ditech’s motion to dismiss. See Wilson v. HSBC Mortg.

Servs., Inc.,

(1st Cir. 2014) (considering

documents referenced in plaintiff’s complaint for motion to

dismiss). The court will also consider the foreclosure deed

because it is a public record and Faiella does not dispute its

authenticity. Sykes v. RBS Citizens, N.A.,

,

142 n.14 (D.N.H. 2014)

A. The Foreclosure

In 2007, Ralph Faiella obtained a loan that was secured by

mortgage on a condominium property (“the property”) in Plaistow,

New Hampshire. That mortgage was subsequently assigned to

Fannie Mae. Fannie Mae hired Ditech to service Faiella’s loan

on its behalf during the time period relevant to this dispute.

Faiella is currently residing in the property.

2 In 2015, Faiella fell behind on his mortgage payments. In

September of 2015, foreclosure counsel for Fannie Mae sent

Faiella a letter notifying him that a foreclosure sale on the

property had been scheduled for October 16, 2015. The letter

attached a notice from Fannie Mae informing Faiella that it was

the holder of his mortgage and that it intended to initiate a

foreclosure sale based on the power of sale clause in Faiella’s

mortgage.

Around the same time, Faiella spoke with a Ditech

representative to arrange a payment on his mortgage that would

bring his account up to date. In response to this conversation,

Faiella sent a check to Ditech for the amount of unpaid debt

through September. Ditech, however, returned Faiella’s check

with a letter requesting that Faiella contact Ditech to

determine the correct reinstatement amount. Faiella contacted

the same Ditech representative again, and the representative

informed him that the amount of his check was correct but that

the payment was rejected because it was not a cashier’s check.

Several days before the scheduled foreclosure, Faiella sent

Ditech a cashier’s check for the quoted reinstatement amount.

Notwithstanding Faiella’s efforts, Fannie Mae foreclosed on

the property as scheduled. Fannie Mae then recorded a

foreclosure deed in the Rockingham Registry of Deeds for the

3 property. Pursuant to that deed, Fannie Mae as mortgagee

granted the property to itself for a consideration of $106,500.

Faiella thought that the foreclosure had been cancelled

based on his reinstatement check and did not learn about the

foreclosure sale until after it took place. Faiella then

received a letter from Ditech returning the second check and

informing him that the amount of the check was not enough to

reinstate his account. At this time, the Ditech representative

that Faiella had spoken with told him that she did not know the

correct reinstatement amount for his loan.

B. State Proceedings

Following the foreclosure sale, Fannie Mae filed a

possessory action against Faiella in state district court,

seeking to obtain possession of the property. In response,

Faiella argued that Fannie Mae could not obtain possession

because the foreclosure was not valid. Faiella’s defense to the

possessory action brought the title of the property into

question, which the district court lacked jurisdiction to

adjudicate. For that reason, the district court ordered Faiella

to file a plea of title under RSA 540:17. Faiella filed a plea

of title action in state superior court, alleging a claim for

wrongful foreclosure against Fannie Mae and Ditech.

4 C. Removal

Fannie Mae and Ditech removed Faiella’s plea of title

action to this court on the basis of diversity jurisdiction.

Faiella now seeks to remand the case back to state court on the

grounds that the plea of title action is part of the possessory

action, which was not removed. Faiella also requests,

alternatively, that the court abstain from hearing its plea of

title.

D. Amended Complaint

After the case was removed, Faiella filed an amended

complaint titled “FIRST AMENDED PLEA OF TITLE SEEKING

DECLARATORY RELIEF, ATTORNEYS FEES AND OTHER EQUITABLE RELIEF AS

A MATTER OF RIGHT.” The single cause of action named in the

amended complaint is wrongful foreclosure based on the

representation to Faiella of the mortgage arrearage payoff

amount, which Faiella alleges was wrong due to negligence,

mistake, or fraud. Although the New Hampshire Debt Collection

Practices Act is mentioned in the prayer for relief section of

the complaint, no claim is brought under the Act.1

1 Faiella is represented by counsel, and therefore, his pleadings are not entitled to the leniency that might be afforded pro se parties.

5 Discussion

Faiella moves to remand this plea of title action to state

court or, in the alternative, for this court to abstain from

hearing this action. Fannie Mae and Ditech object.

In addition, Ditech moves to dismiss the amended complaint

against it. Faiella objects.

A. Motion to Remand or Abstain

1. Remand

A defendant may remove any civil action brought in state

court over which the federal district court has original

jurisdiction.

(a). Fannie Mae and Ditech

removed this action on the basis of diversity jurisdiction. It

is undisputed that this action, standing alone, satisfies the

statutory requirements for diversity jurisdiction under the

federal diversity jurisdiction statute,

.

Faiella contends, however, that this case is not removable

because “it is simply a portion of [the] possessory action,”

which he argues, could not have been brought in this court. In

response, Fannie Mae and Ditech argue that this action is

independent of the possessory action.

6 Faiella cites no authority to support his assertion that

this action is merely a part of the possessory action. The

facts and governing law do not support his theory. In plea of

title actions, the plaintiff seeks title to the property, which

is different from the possession of the property at issue in a

possessory action. See Bank of New York Mellon v. Cataldo,

(2010) (rejecting argument concerning district

court’s authority to award possession because it “conflates

titles and possession”). New Hampshire district courts do not

have jurisdiction over title issues. See RSA 502-A:14; RSA

540:16. Instead, a defendant in a possessory action who intends

to challenge the validity of title to the property must “enter

his action in the superior court . . . and [] prosecute his

action in said court.” RSA 540:17 (emphasis added).

Moreover, RSA 540:18 provides, in pertinent part, that

“[a]fter the filing of . . . [a plea of title] . . . no further

proceedings shall be had before the [district] court.” The New

Hampshire Supreme Court recently explained that this provision

operates “to ensure that the district division does not rule

upon the title action, which is beyond its jurisdiction, or

proceed with the possessory action until the title action is

resolved in the superior court or . . . the federal district

court following removal.” Fed. Home Loan Mortg. Corp. v.

7 Willette,

(N.H. 2016). The possessory action

and this plea of title action are distinct and independent

proceedings. Therefore, there is no merit to Faiella’s

assertion that this action is merely a part of the possessory

action pending in state court.2

Therefore, Faiella’s motion to remand is denied.

2. Abstention

Faiella contends, in the alternative, that the court should

abstain from hearing this action based on the Wilton/Brillhard

doctrine or the Burford abstention doctrine. Fannie Mae and

Ditech object, arguing that neither doctrine is applicable to

this case.

a. Wilton/Brillhart Abstention

Faiella invokes abstention based on the Wilton/Brillhart

doctrine on the ground that he “intends to file a separate

2 Faiella also argued in his reply, for the first time, that removal is improper because Fannie Mae and Ditech are not defendants under the removal statute. That argument is improper, however, because it is not in response to any argument in the defendants’ objection. L.R. 7.1(e)(1) (restricting reply memoranda to “rebuttal of factual and legal arguments raised in the objection or opposition memorandum.”). In any event, that argument fails because it is premised on the erroneous assertion that this action and the possessory action are the same proceeding.

8 action to quiet title and for damages in the Superior Court.”

Doc. no. 7 at 5. In response, Fannie Mae and Ditech argue that

Brillhart is inapplicable here because there are no parallel

actions pending in state court.

Under Wilton/Brillhart abstention, a district court has the

discretion to stay or dismiss an action for declaratory relief

when a parallel proceeding involving the same issues is pending

in state court. Wilton v. Seven Falls Co.,

(1995). Abstention may be proper in such circumstances because

“it would be uneconomical as well as vexatious for a federal

court to proceed in a declaratory judgment suit where another

suit is pending in a state court presenting the same issues, not

governed by federal law, between the same parties.”

at 282

(quoting Brillhart v. Excess Ins. Co. of Am.,

(1942)). When assessing whether a stay or dismissal is

appropriate, a district court should “examine ‘the scope of the

pending state court proceeding and the nature of defenses open

there.’” Wilton v. Seven Falls Co.,

(1995)

(quoting Brillhart,

).

Faiella has not identified any pending state proceeding

presenting the same issues as those presented here. Rather,

Faiella asserts that he might file an action and that such an

action would involve the same issues presented here. Faiella’s

9 intent to file a state court action is not a proper basis to

stay or dismiss this declaratory action. Absent a pending state

court proceeding, the efficiency and comity concerns underlying

Wilton/Brillhart abstention are not present.

Therefore, the court will not dismiss or stay this action

on the basis of Wilton/Brillhart abstention.

b. Burford Abstention

Faiella also contends that the court should abstain from

hearing this action based on the Burford abstention doctrine.

The Burford doctrine prevents federal courts from interfering

with the proceedings or orders of state administrative agencies

when adequate state court review is available and:

(1) when there are “difficult questions of state law bearing on policy problems of substantial public import ...”; or (2) where the “exercise of federal review ... would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.”

Guillemard-Ginorio v. Contreras-Gomez,

(1st

Cir. 2009) (quoting New Orleans Pub. Serv., Inc. v. Council of

City of New Orleans,

(1989)).

“The fundamental concern in Burford is to prevent federal

courts from bypassing a state administrative scheme and

resolving issues of state law and policy that are committed in

the first instance to expert administrative resolution.”

10 Sevigny v. Employers Ins. of Wausau,

(1st Cir.

2005) (internal quotations omitted). Because of this

fundamental concern, Burford is not applicable where the state-

law issues “are not discretionary policy or administrative

judgments and could arise in any common-law action.” Sevigny,

.

Failla cites no administrative order or proceeding with

which this action will interfere. Further, a wrongful

foreclosure action does not invoke the type of administrative

and policy judgments that are relevant to Burford abstention.

Sevigny,

.

Therefore, Burford abstention is inapplicable to this

action.

B. Motion to Dismiss

Ditech moves to dismiss Faiella’s complaint against it for

wrongful foreclosure, arguing that it “neither foreclosed the

Mortgage nor took title to the Property post-foreclosure.”

Faiella objects, arguing that Ditech is liable for its own

tortious acts and that the amended complaint contains additional

claims beyond wrongful foreclosure.

11 1. Standard of Review

A motion to dismiss is reviewed under Federal Rule of Civil

Procedure 12(b)(6), which addresses whether the complaint states

a claim on which relief may be granted. See Jorge v. Rumsfeld,

(1st Cir. 2005). In conducting this

review, the court “accept[s] as true all well-pled facts alleged

in the complaint and draw[s] all reasonable inferences in the

plaintiff’s favor. Yershov v. Gannett Satellite Info. Network,

Inc., --F.3d --,

(1st Cir. Apr. 29,

2016). “A plaintiff's allegations are sufficient to overcome a

Rule 12(b)(6) motion if they contain ‘enough facts to state a

claim to relief that is plausible on its face.’”

(quoting

Bell Atl. Corp. v. Twombly,

(2007)).

2. Foreclosure Claim

Under New Hampshire law, a “mortgagee or his assignee” may

conduct a non-judicial foreclosure pursuant to a power of sale

clause contained in a mortgage. See RSA 479:25. The New

Hampshire Supreme Court has held that “a mortgagee executing a

power of sale is bound both by the statutory procedural

requirements and by a duty to protect the interests of the

mortgagor through the exercise of good faith and due diligence.”

Murphy v. Fin. Dev. Corp.,

(1985). Those

12 obligations, however, do not extend to parties other than the

foreclosing mortgagee. Gikas v. JPMorgan Chase Bank, N.A.,

, at *5 (D.N.H. Apr. 10, 2013) (granting summary

judgment for servicer on foreclosure claims because “it is the

mortgagee executing a power of sale, not the servicer” who must

comply with the foreclosure statute and common law duties).3

Therefore, to state a foreclosure claim against Ditech, Faiella

must show that Ditech was a foreclosing mortgagee.

In his amended complaint, Faiella alleges that Fannie Mae

was assigned the mortgage and that it conducted the foreclosure.

The documents that Faiella references in his complaint and the

foreclosure deed also show that Fannie Mae, not Ditech, was the

party foreclosing on the property. But for a conclusory

allegation that Ditech “wrongfully foreclosed” on the property,

doc. no. 1 at ¶ 11, there are no allegations in the amended

complaint that Ditech participated in the foreclosure

transaction or had any authority to do so. Therefore, Faiella

has not stated a plausible claim for relief against Ditech for

wrongful foreclosure.

3 Accord McDonald-Forte v. Merrill Lynch Mortg. Investors Tr., Series MLCC 2004-D,

, at *3 (N.D. Ga. Aug. 18, 2015); Ancell v. U.S. Bank Trust, N.A.,

, at *3 (W.D. Mo. May 19, 2014); Main v. Nw. Tr. Servs. Inc.,

, at *3 (W.D. Wash. May 13, 2014).

13 Faiella asserts that his claim against Ditech cannot be

dismissed because it also includes claims for violations of

federal regulations and certain duties of good faith. The

amended complaint, however, does not assert those claims. As

Ditech points out, the only claim that the amended complaint

asserts is a claim for wrongful foreclosure. Faiella may not

amend his complaint through an objection to a motion to dismiss.

See Fed. R. Civ. P. 15; L.R. 15.

Faiella also contends that Ditech is a necessary party

under Rule 19 because it has an interest in this litigation and

its absence will impede its ability to protect that

interest. See Fed. R. Civ. P. 19(a)(1)(B)(i). In support,

Faiella argues that a judgment in this case against Fannie Mae

could bind Ditech under the doctrine of collateral estoppel in a

future suit because (1) Ditech committed “the wrongful conduct

alleged” and (2) Fannie Mae “has the same interest as Ditech.”

Doc. no. 19 at ¶ 24.

Faiella’s argument is unpersuasive. Collateral estoppel

only binds parties to the original litigation or those in

privity to them. Daigle v. City of Portsmouth,

(1987). Faiella has not adequately explained how Ditech,

in its absence, would be in privity to Fannie Mae in this

14 litigation.4 Further, to the extent that Fannie Mae and Ditech

have the same interest, that interest will be protected by

Fannie Mae in this litigation. Bacardi Int'l Ltd. v. V. Suarez &

Co.,

(1st Cir. 2013). As the First Circuit

has held, “the mere fact . . . that Party A, in a suit against

Party B, intends to introduce evidence that will indicate that a

non-party, C, behaved improperly does not, by itself, make C a

necessary party.”

at 12 (quoting Pujol v. Shearson Am.

Exp., Inc.,

(1st Cir. 1989)).5

The court, therefore, dismisses Faiella’s claim against

Ditech.

4 Faiella only provides the unsubstantiated assertion that Ditech will likely “control” the litigation for Fannie Mae in its absence.

5 Faiella also contends that Ditech is a proper defendant because it is liable for its own wrongful conduct as Fannie Mae’s agent. As discussed above, however, the amended complaint only asserts a claim for wrongful foreclosure. Because the allegations in the complaint do not give rise to a plausible inference that Ditech wrongfully foreclosed on the property, Faiella has failed to allege any claim that Ditech engaged in tortious conduct. Accordingly, Ditech’s status as Fannie Mae’s agent does not avoid dismissal.

15 Conclusion

For the foregoing reasons, plaintiff’s motion to remand or

abstain is denied (doc no. 6) and defendant’s motion to dismiss

(doc. no. 14) is granted.

SO ORDERED.

__________________________ Joseph A. DiClerico, Jr. United States District Judge

June 23, 2016

cc: Amy B. Hackett, Esq. David Himelfarb, Esq. William C. Sheridan, Esq.

16