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Ciccotelli v. Deutsche Bank Ag

United States District Court, D. Vermont

May 4, 2016



          WILLIAM K. SESSIONS III, District Judge.

         Plaintiff Ernest J. Ciccotelli, an attorney proceeding pro se, brings the present case against Deutsche Bank National Trust Company, as Trustee for Long Beach Mortgage Loan Trust 2006-WL2 ("DBNTC"), and several related entities and individuals. Ciccotelli seeks both monetary damages and a discharge of his 2005 mortgage on the grounds that Defendants have engaged in unfair and deceptive acts, and have caused the title to his property to become unmarketable.

         Currently before the Court are (1) DBNTC's motion to dismiss (ECF No. 18); (2) Ciccotelli's motion to amend the Complaint (ECF No. 26); (3) Ciccotelli's motion for default judgment (ECF No. 30); (4) Defendants' motion to vacate the entry of default (ECF No. 37); (5) DBNTC's motion to seal (ECF No. 32); and (6) Ciccotelli's motion to dismiss the motion to seal (ECF No. 34). For the reasons that follow, the Court grants DBNTC's motion to dismiss and denies Ciccotelli's motion to amend. The Court also denies Ciccotelli's motion for default judgment and grants Defendants' motion to vacate the entry of default. Finally, the Court grants DBNTC's motion to seal and denies Ciccotelli's related motion.


         Plaintiff Ciccotelli lives in a home that he designed and built at 49 Tigertown Road in Norwich, Vermont ("Property"). On September 19, 2005, Ciccotelli executed a $165, 000 promissory note ("Note") made payable to Long Beach Mortgage Company. To secure his promise to pay his obligation under the Note, Ciccotelli executed a Mortgage on the Property on the same day. The Mortgage, which identifies Long Beach Mortgage Company as the lender, was recorded in the Norwich land records at Book 174, Pages 514-533. No assignments of mortgage have been recorded.

         On or about July 29, 2008, Ciccotelli filed suit against Washington Mutual, Inc. in Vermont Superior Court. Washington Mutual had serviced Ciccotelli's mortgage loan since origination, and Ciccotelli alleged that it was liable for consumer fraud and other wrongful acts. In October 2008, after JPMorgan Chase & Co. ("Chase") acquired Washington Mutual, Ciccotelli amended his state court complaint to include Chase and the FDIC as defendants. The suit was later removed to federal court, where Ciccotelli amended his complaint for a second time. DBNTC was not a party to the 2008 action.

         Throughout the 2008 lawsuit, Ciccotelli repeatedly requested that Chase identify any other parties that had an interest in his mortgage loan. Chase did not reveal any additional parties, however, and instead represented to the court that it was the holder of Ciccotelli's Note and Mortgage. On several occasions during the pendency of the case, Chase presented Ciccotelli with the original Note and Mortgage, "purporting to rightfully hold and enforce those documents on its own behalf." ECF No. 5 at 4. Chase did not respond to Ciccotelli's requests to produce documentation of an assignment from Long Beach Mortgage Company to Chase.

         Ciccotelli settled the 2008 lawsuit in the end of May 2013. Immediately thereafter, he received a letter from Select Portfolio Servicing ("SPS") indicating that it was replacing Chase as the servicer of his mortgage loan. The letter further stated that SPS was acting "on behalf of Deutsche Bank National Trust Co. As Trustee in trust for registered Holders of Long Beach Mortgage Loan Trust 2006-WL2 Asset Backed Certificates, Series 2006-WL2." ECF No. 5 at 5. Prior to receiving the letter from SPS, Ciccotelli was unaware that DBNTC was the holder of his Note and Mortgage.

         In July 2014, approximately fourteen months after settling the 2008 lawsuit, Ciccotelli filed the present action in Vermont Superior Court. DBNTC removed the case to this Court in May 2015. As alleged in the Complaint, Ciccotelli's claims largely stem from the assertion that there is no recorded assignment documenting the transfer of interest in Ciccotelli's mortgage loan from Long Beach Mortgage Company to DBNTC. Because such a record does not exist, Ciccotelli submits that Defendants have "incurably damaged [the] chain of title to [his] Property, " rendering the title to his property unmarketable. ECF No. 5 at 7. Specifically, the Complaint alleges six causes of action (1) fraud related to the 2008 action under Vermont's Consumer Fraud Act; (2) fraud related to the collection of Ciccotelli's mortgage payments under Vermont's Consumer Fraud Act; (3) conversion; (4) embezzlement; (5) a request for a declaration of clear title; and (6) a request to discharge the 2005 mortgage.

         DBNTC now moves to dismiss the Complaint in its entirety, and Ciccotelli moves to amend. Motions related to an entry of default and a request to seal are also pending.


         I. DBNTC's Motion to Dismiss

         A. Legal Standard

         DBNTC seeks dismissal of the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). In order 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, 556 U.S. 662, 678 (2009) (internal quotation omitted). A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (internal citation omitted). Determining whether a complaint states a plausible claim for relief is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679 (internal citation omitted).

         Ordinarily, in ruling on a Rule 12(b)(6) motion to dismiss, a district court "must interpret the factual allegations of a pro se complaint to raise the strongest arguments that they suggest." Grullon v. City of New Haven, 720 F.3d 133, 139 (2d Cir. 2013) (internal quotation omitted). Here, however, Ciccotelli is an attorney who has practiced real estate law for a number of years. Consequently, he does not receive "the special consideration which the courts customarily grant to pro se parties." Harbulak v. Cnty. of Suffolk, 654 F.2d 194, 198 (2d Cir. 1981); see also Holtz v. Rockefeller & Co., 258 F.3d 62, 82 n. 4 (2d Cir. 2001).

         B. Fraud (Counts I & II)

         DBNTC first moves to dismiss Counts I and II of the Complaint, which allege deceptive acts and practices under Vermont's Consumer Fraud Act. Vermont's Consumer Fraud Act declares unlawful "[u]nfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce." 9 V.S.A. § 2453(a). In order to establish that an act or practice was deceptive within the meaning of the statute, a plaintiff must show that "(1) the representation or omission at issue was likely to mislead consumers; (2) the consumer's interpretation of the representation was reasonable under the circumstances; and (3) the misleading representation was material in that it affected the consumer's purchasing decision." Jordan v. Nissan N. America, Inc., 853 A.2d 40, 43 (Vt. 2004) (internal citations omitted). Courts are to apply an objective, reasonable consumer, standard in assessing each of the aforementioned elements. See id.

         In addition, Federal Rule of Civil Procedure 9(b) requires a party to "state with particularity the circumstances constituting fraud or mistake." To comply with that mandate, a plaintiff must "(1) detail the statements (or omissions) that the plaintiff contends are fraudulent, (2) identify the speaker, (3) state where and when the statements (or omissions) were made, and (4) explain why the statements (or omissions) are fraudulent." Fin. Guar. Ins. Co. v. Putnam Advisory Co., 783 F.3d 395, 403 (2d Cir. 2015) (internal quotation omitted).

         1. Fraud Related to the 2008 Lawsuit (Count I)

         Count I of the Complaint asserts that Defendants violated Vermont's Consumer Fraud Act by "knowingly and deliberately collud[ing] with [Chase] in its unfair and deceptive representation that it possessed an interest in Plaintiff's Mortgage or Note." ECF No. 5 at 6. Ciccotelli states that on May 26, 2011, and on two occasions thereafter, Chase showed him the original Note and Mortgage to his property, and represented that it was the holder of those legal documents. Because it was later revealed that DBNTC holds ...

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