Kelly v. Wells Fargo Bank National Association Securitized Asset Backed Receivable Mortgage Pass-Though Certificate - Wells Fargo 101

NORTHERN DISTRICT OF NEW YORK

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

HEATHER KELLY,

Plaintiff,

v.

WELLS FARGO BANK NATIONAL 3:19-CV-1366

ASSOCIATION SECURITIZED ASSET (MAD/ATB)

BACKED RECEIVABLE MORTGAGE

PASS THROUGH CERTIFICATE - WELLS

FARGO 101, et al.,

Defendants.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

HEATHER KELLY, Plaintiff, pro se

ANDREW T. BAXTER, United States Magistrate Judge

ORDER and REPORT-RECOMMENDATION

The Clerk has sent to the court a civil complaint, together with an amended

application to proceed in forma pauperis (“IFP”), filed by pro se plaintiff, Heather

Kelly.1 (Dkt. Nos. 1, 8). The court has reviewed the plaintiff’s amended IFP application

and finds that plaintiff has demonstrated sufficient economic need. Therefore, plaintiff

has met the financial criteria for proceeding IFP.

However, in addition to determining whether plaintiff meets the financial criteria

to proceed IFP, the court must also consider the sufficiency of the allegations set forth in

the complaint in light of 28 U.S.C. § 1915, which provides that the court shall dismiss

the case at any time if the court determines that the action is (i) frivolous or malicious;

(ii) fails to state a claim on which relief may be granted; or (iii) seeks monetary relief

1 Plaintiff’s original motion to proceed IFP, (Dkt. No. 2), was incomplete. On November 13,

2019, I stayed her motion and allowed her to submit additional information regarding her income.

In determining whether an action is frivolous, the court must consider whether the

complaint lacks an arguable basis in law or in fact. Neitzke v. Williams, 490 U.S. 319,

325 (1989). Dismissal of frivolous actions is appropriate to prevent abuses of court

process as well as to discourage the waste of judicial resources. Neitzke, 490 U.S. at

327; Harkins v. Eldridge, 505 F.2d 802, 804 (8th Cir. 1974). Although the court has a

duty to show liberality toward pro se litigants, and must use extreme caution in ordering

sua sponte dismissal of a pro se complaint before the adverse party has been served and

has had an opportunity to respond, the court still has a responsibility to determine that a

claim is not frivolous before permitting a plaintiff to proceed. Fitzgerald v. First East

Seventh St. Tenants Corp., 221 F.3d 362, 363 (2d Cir. 2000) (finding that a district court

may dismiss a frivolous complaint sua sponte even when plaintiff has paid the filing

fee).

To survive dismissal for failure to state a claim, the complaint must contain

sufficient factual matter, accepted as true, to state a claim that is “plausible on its face.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550

U.S. 544, 570 (2007)). “Threadbare recitals of the elements of a cause of action,

supported by mere conclusory statements, do not suffice.” Id. (citing Bell Atl. Corp.,

550 U.S. at 555).

II. Complaint

In her complaint, plaintiff sues Wells Fargo Bank (“Wells Fargo”); Fremont

Investment and Loan (“Freemont”); and Hon. Joseph F. Cawley, Supreme Court Judge

in Broome County, New York. (Complaint (“Compl.”) at 1). Plaintiff alleges that she

Fremont “sold” the loan to Wells Fargo. Plaintiff states that Wells Fargo initiated a

foreclosure proceeding in Supreme Court, Broome County, which was still pending at

the time plaintiff filed this action. (Compl. ¶ 1, 16).

Plaintiff states several convoluted reasons why the state court lacks jurisdiction

and why defendant Cawley has acted “negligently” in presiding over the New York

State Court action. (Compl. generally). Plaintiff asserts that the foreclosure is “illegal.”

(See Compl. ¶ 39). Plaintiff asserts four “Causes of Action:” (1) Negligence; (2) Gross

Negligence; (3) Wilful Misconduct; and (4) Conspiracy to Fraudulently Transfer Assets.

(Compl. ¶¶ 35-62). Plaintiff seeks substantial monetary relief.

III. Judicial Immunity

A. Legal Standards

With minor exceptions, judges are entitled to absolute immunity for actions

relating to the exercise of their judicial functions. Mireles v. Waco, 502 U.S. 9, 9-10

(1991). Judicial immunity has been created for the public interest in having judges who

are “at liberty to exercise their functions with independence and without fear of

consequences.” Huminski v. Corsones, 396 F.3d 53, 74 (2d Cir. 2004). Judicial

immunity applies even when the judge is accused of acting maliciously or corruptly.

Imbler v. Pachtman, 424 U.S. 409, 419 n.12 (1976) (citing Pierson v. Ray, 386 U.S.

547, 554 (1967)). Judicial immunity is immunity from suit, not just immunity from the

assessment of damages. Mitchell v. Forsyth, 472 U.S. 511, 526 (1985). The only two

circumstances in which judicial immunity does not apply is when he or she takes action

“outside” his or her judicial capacity and when the judge takes action that, although

B. Application

Even though plaintiff has named Fremont and Wells Fargo as defendants, her

primary issues involve Judge Cawley’s handling of the foreclosure action, which

plaintiff alleges is still pending in New York State Supreme Court. In her first cause of

action, she states that she “declared the disparities of issue to Defendant,” but that the

defendant “presided [over], operated, and continued proceedings after plaintiff’s

articulation of disparities.” (Compl. ¶ 36). Clearly, plaintiff is angry because defendant

Cawley continued to “preside” over the case even after plaintiff declared that the case

should be dismissed. Plaintiff further states that defendant Cawley “breached his duty

to Plaintiff [by] failing to exercise ordinary care and due diligence in negligently

permitting the circumstances to exist that would foreseeably [sic] lead to an illegal

eviction.”2 (Compl. ¶ 38). Plaintiff claims that Judge Cawley is “guilty of prejudicial

and bias behavior pursuant to 28 U.S.[C. § 144].”3

Plaintiff’s second, third, and fourth causes of action similarly focus on the actions

of defendant Cawley, stating inter alia, that on October 22, 2019, “Defendant continued

to supervise proceedings that were and are improper.” (Compl. ¶ 45 - Second Cause of

Action). “Defendant knew that ignoring Plaintiff’s motions would result in an illegal

foreclosure.” (Compl. ¶ 50 - Third Cause of Action). In her fourth cause of action,

2 Plaintiff is also concerned that the tenants in her rental property will be evicted and “face

destitution.” (Compl. ¶ 41).

3 28 U.S.C. § 144 provides that whenever a party to a proceeding makes and files a timely and

sufficient affidavit that the judge before whom the matter is pending has a personal bias or prejudice

against him or in favor of any adverse party, the judge will recuse him or herself. This section applies

to federal judges.

property that she [sic] cannot legally rule on” and accused the defendant of “bias[ed]

behavior.” (Compl. ¶ 60).

Defendant Cawley would be entitled to judicial immunity for all the acts alleged

by plaintiff. In the “Background” section of her complaint, plaintiff describes actions

taken by defendant Cawley and his staff in court. (Compl. ¶¶ 6-13). After describing

the scene in the courtroom and claiming that plaintiff overheard one of the staff tell the

“Court Officer” that the case was “‘off the record,’” plaintiff stated that defendant

Cawley told plaintiff that he did not “need” to see her paperwork. (Id.)

There is no plausible basis for plaintiff’s allegations that defendant Cawley

should not have been presiding over the foreclosure action, apparently brought by Wells

Fargo. Rather, she is just unhappy because defendant Cawley did not accept her

arguments. In her federal complaint, plaintiff lists the arguments that she wished to

make before defendant Cawley. (Compl. ¶ 20). She cites laws from Michigan, and

appears to have wished to argue for dismissal of Well’s Fargo’s foreclosure action in

Broome County Supreme Court because the “District Court”4 is an “improper venue”

for a “trust matter,” the defendant failed to serve all parties in the matter, the court lacks

jurisdiction over the property, and the court lacked jurisdiction over the subject matter.

(Compl. ¶ 20) (citing MI Rules (“MCR”) § 2.116(C)(1), (C)(2), (C)(3), and (C)(4)).5

4 Plaintiff presumably means the New York State Court in this action. The “District Court,” to

which plaintiff referred in New York State Supreme Court, is the trial-level state court in Michigan.

The is court is unsure why plaintiff is relying upon inapplicable Michigan law.

5 The court notes that these sections of the Michigan Court Rules are entitled “Summary

Disposition.”

the foreclosure action in the absence of jurisdiction. Plaintiff may not pursue this action

against defendant Cawley because he is entitled to absolute immunity for the judicial

conduct that plaintiff is alleging against him.

IV. Wells Fargo and Fremont

Plaintiff makes absolutely no claims against defendant Fremont. Plaintiff states

that her mortgage was originally with Fremont, and that the mortgage was sold at some

unidentified time, to Wells Fargo. (Compl. ¶ 4). Plaintiff states that the sale was

“allegedly . . . agreed upon,” and never mentions Fremont again. Plaintiff does not

claim that Fremont was involved in the foreclosure or any “illegal” activities. Thus, this

court must recommend dismissing the action without prejudice against Fremont because

there is no allegation of wrongdoing by this defendant, and therefore, no subject matter

jurisdiction has been alleged.

A. Abstention

1. Legal Standards

In Carty v. Wells Fargo Bank, No. 8:18-CV-1165, 2019 WL 2475953, at *3-4

(N.D.N.Y. June 13, 2019), the court held that a federal court should abstain from

exercising jurisdiction when (1) there is a pending state proceeding; (2) the state

proceeding implicates an important state interest; and (3) the state proceeding affords

the federal plaintiff an adequate opportunity for review of his or her federal

constitutional claims. This form of abstention is based on Younger v. Harris, 401 U.S.

37, 53-54 (1971) and applies to bar federal courts from exercising jurisdiction over

“pending state court foreclosure actions.” Id. at *4 (citing inter alia Santana v. Fed.

(collecting cases)).

2. Application

There is a pending state foreclosure proceeding. A foreclosure action qualifies as

a civil proceeding that implicates the State’s interest in enforcing its orders and the

judgments of its courts, and plaintiff has the opportunity for review of her claims in

state court.6 Newman v. Wells Fargo Bank, N.A., No. 18-CV-2175, 2019 WL 5694334,

at *4 (E.D.N.Y. July 10, 2019) (Rep’t-Rec) (citing Plotch v. Wells Fargo Bank, N.A.,

No. 2018 WL 344967, at *2 (E.D.N.Y. Jan. 9, 2019), aff’d, 758 F. App’x 221 (2d Cir.

2019)).

Plaintiff’s claims against Wells Fargo are that the bank should not have initiated

the foreclosure proceeding and perhaps that, after doing so, Wells Fargo “conspired” or

is “conspiring” with defendant Cawley to “Fraudulently Transfer Assets.” with “actual

intent” to defraud plaintiff. (Compl. ¶¶ 58-62). It does not appear that plaintiff is asking

the court to enjoin the state court proceeding because her prayer for relief asks only for

damages. However, if plaintiff were asking for such relief, the court would have to

abstain from considering her claims.

6 Plaintiff claims that the court would not accept her “paperwork,” but plaintiff may raise any

issues that she has with the court’s handling of her case on appeal if necessary. In any event, to the

extent that the foreclosure action has become final, this action would be barred by the Rooker-Feldman

doctrine which precludes federal courts from hearing cases brought by those who lost in state court and

invite the federal court to review and reject those judgments. Carty, supra. 2019 WL 2475953, at *5

(citations omitted). See Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923); District of Columbia Court

of Appeals v. Feldman, 460 U.S. 462 (1983). In Carty, the court stated that courts in this Circuit have

“consistently” held that any attack on a judgment of foreclosure is clearly barred by the Rooker-

Feldman doctrine. Id. (quoting Feinstein v. The Chase Manhattan Bank, No. 06-CV-1512, 2006 WL

898076, at *2 (E.D.N.Y. Apr. 5, 2006) (additional citations omitted).

for monetary damages. If plaintiff stated a damage claim, the court would have to stay

the plaintiff’s claims for damages. Santana, 2016 WL 3149731, at *2 (citing Kirschner

v. Klemons, 225 F.3d 227, 238 (2d Cir. 2000). The court will proceed to consider this

plaintiff’s damage claims to determine whether a stay would be appropriate.

B. Subject Matter Jurisdiction

1. Legal Standards

a. Federal Question

The federal district courts have original jurisdiction over all civil actions arising

under the Constitution, laws or treaties of the United States. 28 U.S.C. § 1331. This is

referred to as “Federal question jurisdiction.” Id.

b. Diversity

Diversity jurisdiction is based upon 28 U.S.C. § 1332 and requires that the

plaintiff and defendant(s) be citizens of different states and that there be at least $75,000

in controversy.

2. Application

Plaintiff has asserted “federal question” jurisdiction under 28 U.S.C. § 1331.

However, there is no federal claim asserted against Wells Fargo. The plaintiff alleges

no constitutional claims against Wells Fargo and cites no federal law that the defendant

has allegedly violated.

Plaintiff’s fraud claim is a state court cause of action which the court could

review under diversity jurisdiction. While plaintiff has listed Wells Fargo's address as

Judge Cawley is a citizen of New York. In order to properly assert diversity

jurisdiction, diversity must be complete. None of the defendants may be a citizen of the

same state as the plaintiff. Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546,

553 (2005). Thus, the court does not have diversity jurisdiction over this action.7

V. Opportunity to Amend

A. Legal Standards

Generally, when the court dismisses a pro se complaint sua sponte, the court

should afford the plaintiff the opportunity to amend at least once; however, leave to

re-plead may be denied where any amendment would be futile. Ruffolo v. Oppenheimer

& Co., 987 F.2d 129, 131 (2d Cir. 1993).

B. Application

The court finds that any attempt by the plaintiff to amend this complaint for

damages as against the state court judge would be futile. The court will recommend

dismissing with prejudice as against Judge Cawley based on judicial immunity, without

7 The court notes that, even if the court had diversity jurisdiction, the only cause of action that

includes alleged conduct by defendant Wells Fargo is plaintiff’s fourth cause of action in which

plaintiff’s claims conspiracy to “fraudulently transfer assets.” In order to properly assert a fraud claim

under New York law, plaintiff would have to show that defendant made a representation or omission

of material fact, which was false and known by the defendant to be false, made for the purpose of

inducing the other party to rely on it, justifiable reliance by the plaintiff, and injury. Lama Holding Co.

v. Smith Barney, Inc., 88 N.Y.2d 413, 421 (1996) (citations omitted). In this case, in addition to

plaintiff’s claims that the judge refused to accept her paperwork, plaintiff has only alleged that the

state court was an “improper venue” for the proceeding, that the “Defendant” failed to properly serve

all the parties, that the court lacked jurisdiction over the property, and the court lacked jurisdiction

over the subject matter. (Compl. ¶ 20). Plaintiff’s allegations do not state a claim of fraud. As stated

above, plaintiff is simply upset with the state court proceeding and believes that it was improperly

brought and the judge is biased against her. Thus, to the extent that the court had “diversity

jurisdiction,” plaintiff has failed to state a claim under New York law.

request to stay the state court action, the court should abstain from exercising

jurisdiction under Younger, and no amendment would change that outcome. The court

will recommend dismissing plaintiff’s damage claims as against Wells Fargo and

Fremont without prejudice, but without the opportunity to amend, for lack of subject

matter jurisdiction.

WHEREFORE, based on the findings above it is

ORDERED, that plaintiff’s amended motion to proceed IFP (Dkt. No. 8) is

GRANTED FOR PURPOSES OF FILING ONLY, and it is

RECOMMENDED, that plaintiff’s complaint be DISMISSED WITH

PREJUDICE pursuant to 28 U.S.C. § 1915(e)(2)(B)(iii) as barred by absolute

immunity as against Judge Cawley, and it is

RECOMMENDED, that to the extent the complaint may be interpreted as a

request to stay the state court proceedings, the court abstain from doing so under

Younger, and the action be DISMISSED, and it is

RECOMMENDED, that the plaintiff’s claims for damages be DISMISSED

WITHOUT PREJUDICE, but without the opportunity to amend as against Wells

Fargo and Fremont, for lack of subject matter jurisdiction.

Pursuant to 28 U.S.C. § 636(b)(1) and Local Rule 72.1(c), the parties have

fourteen (14) days within which to file written objections to the foregoing report. Such

objections shall be filed with the Clerk of the Court. FAILURE TO OBJECT TO

THIS REPORT WITHIN FOURTEEN DAYS WILL PRECLUDE APPELLATE

REVIEW. Roldan v. Racette, 984 F.2d 85, 89 (2d Cir. 1993) (citing Small v. Secretary

of Health and Human Services, 892 F.2d 15 (2d Cir. 1989)); 28 U.S.C. § 636(b)(1); Fed.

R. Civ. P. 6(a), 6(e), 72.

Dated: January 10, 2020 Yneloork Bate

Andrew T. Baxter

U.S. Magistrate Judge

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