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Dernier v. U.S. Bank National Association

United States District Court, D. Vermont

June 8, 2017



          William K. Sessions III, Judge


         This case arises from Plaintiffs Peter and Nicole Dernier's attempt to identify the beneficial owner of the mortgage promissory note for the loan on their home, following their intentional failure to make payments on the note. After a lengthy procedural history before the Vermont courts, the Windsor County Superior Court granted Plaintiffs' motion to amend their complaint to permit the homeowners to bring additional claims against various defendant banking institutions. Defendant U.S. Bank National Association (“USB”) removed the case to this Court on August 22, 2016. On November 8, 2016, Defendants Mortgage Network, Inc. (“MNI”) and Robert A. McInnes (“McInnes”) moved to dismiss the Plaintiffs' sole claim against them of “Conspiracy to Commit Fraud and Fraud.” ECF 134. For the reasons outlined below, the Court grants Defendants' motion to dismiss both claims, without prejudice to future requests for leave to amend.

         Factual and Procedural Background

         Plaintiffs' Third Amended Complaint alleges irregularities in the transfer of both the note and the mortgage on their home. Plaintiffs claim that these irregularities resulted in confusion concerning who was authorized to modify the principle on their mortgage, receive payments on their note and, eventually, to foreclose on their property. After filing the original complaint in this action seeking to evidence the beneficial owner of their mortgage loan, Plaintiffs allege that they “uncovered a fraudulent scheme perpetrated by the banking industry . . . whereby they would exchange unendorsed promissory notes, hold them and only assign them to a particular trust once in default.” ECF 111-5, p. 2. According to Plaintiffs, “the trust in which their loan was eventually placed was a dumping ground for defaulted loans as a means to collect the trust's pooling insurance money for the benefit of the servicer of the trust and to allow the servicers of the trust to foreclose on the defaulted properties and keep the proceeds of any sales of the foreclosed properties.” Id.

         In relation to these allegations, Plaintiffs lay out the following facts. First, Plaintiffs purchased a home in Weston, Vermont in 2005. Kittredge Mortgage Corporation (“Kittredge”) loaned Plaintiffs $242, 250 for the purchase, and Peter Dernier executed a promissory note and a mortgage in favor of Kittredge on October 7, 2005. Kittredge immediately assigned the promissory note and mortgage to MNI. Later that fall, MNI informed the Derniers that the servicing for their loan would be transferred to Select Portfolio Servicing (“SPS”), and in April 2006, SPS notified them that it had “assigned, sold or transferred the servicing” to America's Servicing Company (“ASC”). In the spring of 2007, Plaintiffs sought a modification of the principle balance of their mortgage from ASC in response to well-water contamination discovered on their property. ASC allegedly informed Plaintiffs that they could only qualify for a modification if the loan was in default, and Plaintiffs ceased making loan payments at ASC's direction. Once the loan was in default, ASC informed Plaintiffs that the investor of the promissory note needed to agree to the modification.

         At Plaintiffs' request, ASC produced a copy of the promissory note containing a specific indorsement from MNI to USB on February 26, 2009. Id. at 5. However, “the nature and context of the purported signature on the indorsement . . . immediately raised the suspicions of the Derniers.” Id. In fact, the note that was produced purportedly bears two indorsements: one from Kittredge to MNI, and one from MNI in blank, which bears a signature mark over a stamp and the name “Chad M. Goodwin, ” below. In April 2014, Plaintiffs obtained a signed, notarized affidavit from Chad M. Goodwin, stating that he was an employee of MNI from 2000 to 2013, and that the signature superimposed over the stamp is not his own.

         In addition, after the Derniers filed their initial suit, attorney Josh Lobe, as counsel for USB, forwarded a letter to Plaintiffs with a copy of the promissory note bearing an indorsement from MNI to USB. Id. at 6. However, between late 2013 and early 2015, Plaintiffs received separate copies of the original promissory note from SPS, ASC and MNI, respectively, none of which contained either the stamp or signature indorsement in blank from MNI or the typewritten specific indorsement to USB. Id. at 10. Thus, Plaintiffs allege that “USB created the fraudulent documents as a means to show it is the holder of the note, ” Id. at 7, and that “MNI did not sell the Derniers' loan to . . . USB.” Id. at 8.

         In addition, Attorney Lobe also forwarded an assignment of the mortgage “from MERS as nominee for Kittredge to a trust with a similar name as the Trust for which USB is a trustee in this matter, ” and claimed USB had authority to foreclose on the loan. Id. at 6. However, the date of the assignment of the mortgage which allegedly provided USB with standing to foreclose (March 18, 2011) occurred after ASC forwarded its file to outside counsel to initiate foreclosure proceedings. Id. at 11. Moreover, the trust named on this assignment of the mortgage differed from the name of the trust on the note. In addition, Plaintiffs claim that ASC did not have the assignment from MERS to USB when they asked ASC for investor information on November 5, 2012. As such, the Plaintiffs claim that “upon information and belief, the March 18, 2011 Assignment of Mortgage was created and forged by Attorney Lobe's office.” Id. at 11. Finally, they allege that “in August, 2013, ASC caused an assignment of mortgage from MERS as nominee for MNI to be recorded in the Town of Weston Land Records transferring the mortgage from MNI to USB, ” even though “the mortgage was not assigned directly by MNI to USB.” Id. at 12.

         Finally, the Plaintiffs allege that “USB did not pay value for the Note and is therefore not a holder in due course of the Dernier loan.” Id. at 13. Rather, the documents provided by USB as evidence of a financial transaction underlying the transfer of the note -identified as an “MNI Wire Transfer Receipt” and documents related to a “Pooling and Servicing Agreement (PSA)” for the trust (of which USB was presumably trustee) -do not indicate that USB paid value for the note. Rather, the MNI Wire Transfer Receipt “purportedly notes the Dernier loan as part of bulk sale by MNI to an unidentified purchaser” and “shows payment from an unidentified payee” dated December 5, 2005. Id. However, the specific indorsement from MNI lists a trust that “was not established or filed with the SEC until March 1, 2006 at the earliest.” Id. at 15. Furthermore, according to the complaint, USB stated that it acquired the Dernier note from the depositor named in the PSA, which is identified in the PSA as “Credit Suisse First Boston Mortgage Securities Corp.” However, “the Derniers' note does not bear any intervening indorsements reflecting conveyance of the Note from the depositor or seller listed on the PSA.” Id. at 14.

         Finally, Plaintiffs assert that “on June 29, 2016, [McInnes], on behalf of MNI, executed a Ratification and Consent (“Ratification”) of the forged MNI stamp indorsement and forged signature of Chad M. Goodwin and attached it to the version of the Note with the specific indorsement from MNI to USB.” Id. at 15. However, they claim that in reality, “MNI did not indorse or intend to indorse the Note to USB as Trustee when it received payment from an unidentified payer in December 2005 because there was no such trust by that name at that time.” Id. Nor was the note indorsed in blank at that time. Rather, they allege that USB provided the note with the forged indorsement to MNI, and that “USB requested the Ratification from MNI for the purpose of satisfying the UCC requirement to become a holder of the Note.” Id. at 16. Thus, neither the forged indorsement stamp from MNI nor the forged signature of Mr. Goodwin were applied by another agent of MNI.

         The last allegation in Plaintiffs' complaint is that the Derniers' payments on their loan to ASC “were not deposited in a specific account for the Trust which purportedly held their Note, ” leaving them with “no expectation that payments actually were applied to the certificateholders of the trust and properly credited.” Id. at 17. In addition, Plaintiffs allege that “ASC had no right to seek collection from the Derniers for the Note on behalf of USB.” Id. at 18. Furthermore, Plaintiffs assert that USB's negative reports about the Derniers to credit bureaus were fraudulent.

         In light of the foregoing assertions, the Derniers brought claims for declaratory judgment seeking to quiet title on their property and a discharge of their mortgage. They also brought claims of unjust enrichment, common law fraud, mail fraud and RICO violations, violations of the Fair Debt Collection Practices Act and Fair Credit Reporting Act against USB. Finally, they brought a count of conspiracy to commit fraud and fraud against USB, MNI and McInnes, alleging that these Defendants “conspired to ratify a forged indorsement in order for USB to claim ownership of the Note, ” even though “USB knew the endorsement on the note was a forgery.” Id. at 21. They assert that “the fraudulent Ratification has caused injury to Plaintiffs by allowing USB to claim it's the holder of the note and seek collection on a debt for which it paid no value.” Id. at 22. Defendants McInnes and MNI moved to dismiss this last claim, arguing that (1) Plaintiffs failed to allege that MNI and McInnes acted in concert with USB to use illegal means to obtain an unlawful result, thereby precluding the conspiracy claim; and (2) Plaintiffs' ...

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