Simmons v. Nationstar Mortgage, LLC

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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SYLVIA C. SIMMONS,

Plaintiff, MEMORANDUM & ORDER

20-CV-1066(EK)(SJB)

-against-

NATIONSTAR MORTGAGE, et al.,

Defendants.

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ERIC KOMITEE, United States District Judge:

Sylvia C. Simmons filed this action pro se, alleging

that she was the victim of a scheme by the Defendants to evict

her from her cooperative apartment. Her first complaint

purported to bring civil claims under various criminal statutes.

On March 25, 2020, the Court granted Plaintiff’s in forma

pauperis application, but dismissed the complaint with leave to

amend. ECF No. 5. Plaintiff has now filed an amended

complaint.1 She asserts claims under 18 U.S.C. § 1344 (Bank

Fraud) and the Racketeer Influenced and Corrupt Organizations

(“RICO”) Act, 18 U.S.C. §§ 1962 et seq. See Am. Compl. at 7-

1 Plaintiff actually filed two amended complaints on November 30, 2020,

that were mostly identical. One of these is signed; the other is not. The

Court deems the signed amended complaint (“Am. Compl.”) to be the operative

pleading and directs the Clerk of Court to strike the unsigned complaint.

See Fed. R. Civ. P. 11(a) (“[E]very pleading . . . must be signed by . . . a

party personally if the party is unrepresented.”); Aljarah v. Citigroup Glob.

Mkt., No. 16-CV-812G, 2019 WL 1642442, at *7 (W.D.N.Y. Apr. 16, 2019) (“Rule

11 requires striking an unsigned paper filed with the Court.”).

8.2 For the reasons set forth below, the Court dismisses the

amended complaint.

Background

Plaintiff is a resident of Queens, New York.

Defendants are Franklin First Financial, Ltd. (“Franklin

First”); the law firm of Frenkel Lambert Weiss Weissman &

Gordon, LLP (“Frenkel”); Bank of America, N.A. (“Bank of

America”); 175-20 Wexford Terrace Owners, Inc. (“Wexford”) (her

co-op association); Northern Management LLC (“Northern

Management”); Nationstar Mortgage LLC (“Nationstar”), the

successor in interest to Seterus, Inc. (“Seterus”); and the

Federal National Mortgage Association (“Fannie Mae”). Plaintiff

claims that the Defendants “knowingly participated in a scheme

to defraud [Plaintiff] of her 517 shares in the cooperative

corporation known as the Wexford Terrace Owners, Inc.” Am.

Compl. at 9. The following facts are alleged in the amended

complaint, unless otherwise noted, and assumed to be true for

current purposes.

The events began “[s]ometime in . . . 2006,” when

Plaintiff “was approached by Franklin First[,] offering her a

loan on her cooperative apartment at 175-20 Wexford Terrace.”

2 Because the amended complaint is not paginated, the Court refers to

the page numbers assigned by the CM/ECF docketing system.

Id. at 11. Plaintiff held 517 shares in the Wexford Terrace

Owners association (the cooperative association for the

building) and was party to a proprietary lease. Id. Despite

the fact that Plaintiff’s name and signature appear in multiple

locations on the promissory note (the “Note”) for the loan dated

January 26, 2007, see Am. Compl., Ex. A at 38-42, the Amended

Complaint asserts that Plaintiff “believed . . . that she did

not sign the documents and [that] her name on the documents

[was] forged.” Am. Compl. at 11-12. Other than this qualified

recollection, the Amended Complaint includes no additional

factual content to suggest that any loan document was forged.

The Note indicates that the loan was to be secured by

the shares Plaintiff owned in the co-op, and Franklin First

ultimately did perfect its security interest in those shares.

See Am. Compl., Ex. A at 38-50; Ex. B at 51 (New York City

Registrar Recording and Endorsement). The Complaint also

alleges that Plaintiff never received the proceeds of the

loan. Am. Compl. at 11. Thus, she claims, the loan from

Franklin First was the product of fraud at inception.

In 2012, Franklin First assigned the loan to Bank of

America, as indicated in an amended UCC financing statement

filed by the law firm Frenkel. Id. at 12; Ex. E at 75-76. In

2013, Wexford (the co-op association) sued Plaintiff in New York

Civil Court for “maintenance arrears.” Am. Compl., Ex. D at 67-

73. In June 2016, Plaintiff “was contacted by Seterus” — a

loan-servicing company — “and told her apartment was going to be

sold in a foreclosure sale” because of non-payment of the

mortgage. Id. at 13; see also Ex. G at 80-81.

A non-judicial foreclosure sale did occur some time

thereafter. See generally Am. Compl. Ex. G. In a December 6,

2018 letter to Elizabeth Diamond of the New York State

Department of Financial Services, Seterus wrote that the loan

had been transferred again, and that Fannie Mae became “the

beneficiary of the lien on the property.” Id. at 80. Seterus

went on to indicate that the loan had been delinquent since

August 2009, that the loan had been “referred for foreclosure

action on December 9, 2015,” and the co-op interest had been

“sold at a foreclosure sale on July 1, 2016.” Id.

In 2018, Plaintiff filed a lawsuit in New York State

Supreme Court, Queens County, against the purchaser in the non-

judicial foreclosure sale, as well as Frenkel, Northern

Management, and Wexford. See Am. Compl., Ex. I at 96-98

(Decision by Justice Laurence L. Love dated Feb. 14,

2019, Simmons v. Plotch, et al., Index No. 5371/18).

In the state Supreme Court action, Plaintiff alleged

that these defendants conspired to improperly transfer her co-op

shares and cancel her proprietary lease. Id. The state Supreme

Court, however, dismissed the action on February 14, 2019. Id.

Justice Love held that the “defendants . . . submitted proof

that proper procedures were observed regarding the underlying

non-judicial foreclosure.” Id. at 97. This proof, he noted,

included “a copy of a breach letter dated September 17, 2009,

informing plaintiff of her default and Bank of America’s

intention to accelerate the debt” and “an affidavit of service

showing that plaintiff was served with notice of the

auction.” Id. Contrary to Plaintiff’s position in this case,

see Am. C ompl. a

t 11-12, 19-20, Justice Love specifically noted

“that plaintiff does not deny entering into a Note and security

agreement with Franklin First Financial, Ltd, receiving the

funds described in the Note, defaulting on said Note, receiving

the September 17, 2009 acceleration letter, nor receiving notice

of the non-judicial foreclosure.” Id. at 98. “Instead,” he

went on, Ms. Simmons “objects to the form of the documents

submitted.” Id.

Plaintiff then filed another state-court lawsuit in

2019 seeking return of the 517 shares. See Am. Compl. at 15-17;

Ex. J. That action is currently pending against Nationstar (the

other defendants have since been dismissed). Am. Compl. at 15-

17; Ex. J.

In the action before this Court, Plaintiff disputes

the validity of the foreclosure sale, in addition to the

validity of the Note itself. She claims that because “Seterus

makes no reference to the 517 collateral shares” and instead

refers to a “‘lien on the property located at 17520 Wexford,

Apart. 14S, which secured the . . . Note[,]’ Seterus does not

seem to realize that coops are not real property and that it is

the 517 collateral shares that were in dispute.” Am. Compl. at

18-19. Given this purported mistake, Plaintiff alleges that it

is “unlikely that Seterus undertook any non-judicial foreclosure

procedures or even contacted Fannie Mae to see if . . . [it]

held the shares.” Id.

Legal Standard

Where, as here, a plaintiff proceeds pro se, courts

construe a complaint with “special solicitude” and interpret it

to raise the “strongest arguments that [it] suggest[s].”

Triestman v. Federal Bureau of Prisons, 470 F.3d 471, 474-76 (2d

Cir. 2006). Nevertheless, under 28 U.S.C. § 1915(e)(2)(B),

district courts are to dismiss an in forma pauperis complaint

that “(i) is frivolous or malicious; (ii) fails to state a claim

on which relief may be granted; or (iii) seeks monetary relief

from a defendant who is immune from such relief.” 28 U.S.C.

§ 1915(e)(2)(B).

The “special solicitude” in pro se cases “has its

limits”; pro se pleadings must still plead “enough facts to

state a claim to relief that is plausible on its face.”

Triestman, 470 F.3d at 474-76. A claim is facially plausible if

the plaintiff pleads enough factual detail to allow the Court to

draw the inference that the defendant is liable for the alleged

misconduct. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In

reviewing the complaint, the Court must accept all well-pleaded

factual allegations as true. Id. at 679. But it need not

accept “[t]hreadbare recitals of the elements of a cause of

action,” which are essentially just legal conclusions. Id. at

678. After separating legal conclusions from well-pleaded

factual allegations, the Court must determine whether those

facts make it plausible – not merely possible – that the pleader

is entitled to relief.

The Court “has the power to dismiss a complaint sua

sponte for failure to state a claim on which relief can be

granted.” Thomas v. Scully, 943 F.2d 259, 260 (2d Cir. 1991).

Discussion

A. Bank Fraud

Plaintiff alleges that Defendants committed bank fraud

pursuant to 18 U.S.C. § 1344. 18 U.S.C. § 1344 is a criminal

statute that creates no private right of action. E.g., Edmonds

v. Seavey, No. 08-CV-5646, 2009 WL 2949757, at *6 n.8 (S.D.N.Y.

Sept. 15, 2009) (“There is no private cause of action under

18 U.S.C. § 1344.”). Therefore, this claim is dismissed with

prejudice.

B. RICO

Plaintiff also alleges that the Defendants violated

RICO through a conspiracy to deprive her of her property. For

the reasons set forth below, Plaintiff’s RICO claims against all

parties are dismissed pursuant to 28 U.S.C. § 1915(e)(2)(B)(ii).

To establish a civil RICO claim, a plaintiff must

plausibly allege: “(1) conduct, (2) of an enterprise, (3)

through a pattern (4) of racketeering activity, as well as

injury to business or property as a result of the RICO

violation.” Lundy v. Catholic Health Sys. of Long Island, Inc.,

711 F.3d 106, 119 (2d Cir. 2013) (quotation marks omitted). The

“pattern of racketeering activity must consist of two or more

predicate acts of racketeering.” Id. Here, Plaintiff alleges

that Defendants committed — as predicate acts — mail fraud, wire

fraud and the collection of an unlawful debt. Am. Compl. at

21.

Plaintiff alleges the existence of an enterprise only

in conclusory terms. She identifies the Defendants’ roles in

the various transfers of the loan, but does not plausibly allege

the existence of an ongoing “association-in-fact” among the

various Defendants with the “purpose, relationships among those

associated with the enterprise, and longevity sufficient to

permit these associates to pursue the enterprise’s purpose.”

Boyle v. United States, 556 U.S. 938, 946 (2009). At most, she

alleges the Defendants’ “ongoing business relationships” with

one another, which is insufficient to establish a RICO

enterprise. Bonadio v. PHH Mortg. Corp., No. 12-CV-3421, 2014

WL 522784, at *3 (S.D.N.Y. Jan. 31, 2014).

Moreover, Plaintiff does not plausibly allege the

requisite predicate acts. To invoke mail or wire fraud as

predicates under RICO, a plaintiff must assert: “(1) the

existence of a scheme to defraud, (2) the defendant’s knowing or

intentional participation in the scheme, and (3) the use of

interstate mails or transmission facilities in furtherance of

the scheme.” Estate of Izzo v. Vanguard Funding, LLC, No. 15-

CV-7084, 2017 WL 1194464, at *8 (E.D.N.Y. Mar. 30, 2017)

(quotations omitted). These allegations are subject to the

heightened pleading standards of Rule 9(b), which require that

“[i]n alleging fraud or mistake, a party must state with

particularity the circumstances constituting fraud or

mistake.” Fed. R. Civ. P. 9(b); First Capital Asset Mgmt., Inc.

v. Satinwood, Inc., 385 F.3d 159, 178 (2d Cir. 2004) (plaintiffs

failed to plead predicate RICO acts with sufficient

particularity). Thus, to state a RICO claim, a plaintiff must

“delineate, with adequate particularity, the specific

circumstances constituting the overall fraudulent scheme.”

Calabrese v. CSC Holdings, Inc., 283 F. Supp. 2d 797, 808

(E.D.N.Y. 2003).

Plaintiff’s allegations do not plausibly describe a

mail or wire fraud scheme. Plaintiff alleges, based solely on

her own qualified recollection, that she “believe[s] . . . she

did not sign the documents and [that] her name on the documents

[was] forged.” Am. Compl. at 11-12. Given that Plaintiff’s

allegation of fraud is predicated almost entirely on the alleged

forgery of her signature on the operative loan documents, it is

incumbent on her to allege that fact without the qualification

as to her “belief.” Except in limited circumstances not present

here, “fraud pleadings generally cannot be based on . . .

belief.” Stern v. Leucadia Nat'l Corp., 844 F.2d 997, 1003 (2d

Cir. 1988).3 Put differently, Plaintiff’s “belief” does not

amount to a positive statement that fraud has occurred. On that

basis, therefore, she may not come forward with such “equivocal

allegations, and compel the [Defendants] to undergo the expense

and ordeal of a full trial.” Howard v. Koch, 575 F. Supp. 1299,

1304 (E.D.N.Y. 1982).

Thus, Plaintiff’s forgery allegation is insufficiently

definite on its face. And it is rendered additionally

implausible because of Plaintiff’s inconsistency on this

3 See also Granite Partners, L.P. v. Bear, Stearns & Co. Inc., 17 F.

Supp. 2d 275, 288 (S.D.N.Y. 1998) (fraud pleadings generally cannot be based

on information and belief); Estate of Izzo, 2017 WL 1194464, at *9 (same);

Wexner v. First Manhattan Co., 902 F.2d 169, 172 (2d Cir. 1990) (plaintiffs

pleading fraud cannot base their claims on “speculation”).

question. As noted above, Justice Love found that Plaintiff

“does not deny entering into a Note and security agreement with

Franklin First” – contrary to her position in this case. Am.

Compl., Ex. I at 98 (Decision by Justice Laurence L. Love dated

Feb. 14, 2019, Simmons v. Plotch, et al., Index No. 5371/18).

This Court can take judicial notice of that finding. E.g., A.I.

Trade Fin., Inc. v. Centro Internationale Handelsbank AG, 926 F.

Supp. 378, 387 (S.D.N.Y. 1996) (courts may take judicial notice

of adjudicative facts and judgments issued by other courts).

Plaintiff’s complaint fails to meet the plausibility

and particularity standards for other reasons as well. She does

not assert with specificity how the Defendants neglected to

“observe proper procedures,” beyond her generic assertion that

that the procedures they observed were unlawful. Nor does she

set out any specific misrepresentation with particularity.

Again, she relies only on her unsubstantiated sense that the

Defendants failed to observe the required legal formalities in

foreclosure. See, e.g., Am. Compl. at 19 (Plaintiff alleges

that it is “unlikely that Seterus undertook any non-judicial

foreclosure procedures or even contacted Fannie Mae to see if

. . . [it] held the shares”). Without accompanying factual

content and the requisite particularity, these allegations

(concerning the validity of the loan and any default thereof)

cannot support a predicate assertion of fraud.

Plaintiff’s other alleged predicate act is the

collection of an unlawful debt. To establish a RICO violation

based on collection of unlawful debt, a plaintiff must show that

“(1) the debt was unenforceable under state or federal usury

laws; (2) the debt carried twice the enforceable interest rate;

and (3) that the debt was incurred in connection with the

defendants’ business of lending money at a usurious rate.”

Weisel v. Pischel, 197 F.R.D. 231, 241 (E.D.N.Y. 2000); see also

18 U.S.C. § 1961(6) (defining “unlawful debt”). Under New York

law, a loan to an individual with an annual interest rate higher

than sixteen percent is unenforceable. See N.Y. General

Obligations Law § 5–501(2);N.Y. Banking Law § 14-a(1).

Here, Plaintiff does not allege that the stated

interest rate on her loan (6.375%) was usurious.4 The Court

therefore need not analyze the remaining elements of the

purported RICO law violation predicated on a claim of unlawful

debt. Plaintiff does not plausibly allege that Defendants

attempted to collect an unlawful debt in violation of RICO.

4 See Am. Compl., Ex A at 38. As set forth above, Plaintiff challenges

the lawfulness of the loan on other grounds, such as whether she actually

executed the loan documents. See, e.g., Am. Compl. at 19. But these

allegations fall short of alleging a plausible claim for the collection of

unlawful debt for the same reason they fall short in the context of the fraud

allegation — namely, because they lack sufficient factual content to be

rendered plausible.

Plaintiff’s RICO claim based on unlawful debt

collection is also, therefore, dismissed for failure to state a

claim.

Conclusion

This action, filed in forma pauperis, is dismissed for

failure to state a claim upon which relief can be granted

against each of the Defendants: Franklin First Financial, Ltd.;

Frenkel Lambert Weiss Weissman & Gordon, LLP; Bank of America,

N.A.; 175-20 Wexford Terrace Owners, Inc.; Northern Management

LLC; Nationstar Mortgage LLC; and Federal National Mortgage

Association. 28 U.S.C. § 1915(e)(2)(B). Plaintiff’s cause of

action alleged to arise under 18 U.S.C. § 1344 (Bank Fraud) is

dismissed with prejudice.

The Court grants Plaintiff thirty days to amend her

complaint to properly state a claim. If Plaintiff fails to

plead sufficient facts in her second amended complaint, or if

she fails to file a second amended complaint within thirty days,

she will not have another opportunity to re-plead, and the Court

will enter judgment.

The Clerk of Court is directed to strike the unsigned

complaint at ECF No. 12.

SO ORDERED.

/s/ Eric Komitee

ERIC KOMITEE

United States District Judge

D ated: March 12, 2021

Brooklyn, New Y ork