United States District Court, D. Columbia.
For JUNIUS LANCASTER, JUNIUS LANCASTER, Plaintiffs: Patrick C. Horrell, LEAD ATTORNEY, ROSENAU & ROSENAU, Washington, DC; Kimberly K. Fahrenholz, PRO HAC VICE, ROSENAU LLP, Washington, DC.
For HSBC BANK USA, INC., MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., LITTON LOAN SERVICING, LP, NOMURA HOME EQUITY LOAN, INC., Defendants: Christopher M. Corchiarino, LEAD ATTORNEY, GOODELL, DEVRIES, LEECH & DANN, LLP, Baltimore, MD.
For OCWEN LOAN SERVICING, LLC., Defendant: Christopher M. Corchiarino, GOODELL, DEVRIES, LEECH & DANN, LLP, Baltimore, MD.
JAMES E. BOASBERG, United States District Judge.
This is the kind of case that no prospective homeowner wants to read about. Its tortured narrative of quitclaim deeds, foreclosure-rescue schemes, and forged instruments just goes to prove the old adage: you should look -- and when it comes to real estate, look closely -- before you leap. The story revolves around Plaintiff Junius Lancaster, who in 2006 bought a house in the District under dubious circumstances. Eight years later, Lancaster filed this action against fourteen Defendants, seeking to quiet title to the property. Defendants, invoking this Court's diversity jurisdiction, then removed the case. Four Defendants -- HSBC Bank, USA; Mortgage Electronic Registration Systems, Inc. (MERS); Ocwen Loan Servicing, LLC; and Litton Loan Servicing, LP -- now move to dismiss. Because the Court finds that Plaintiff has failed to state a claim against Litton and Ocwen, it will grant the Motion as to these Defendants but deny it as to the other two.
According to the Complaint -- which at this juncture the Court must credit -- Lancaster was involved in a foreclosure-rescue scheme in 2006 related to property located at 1125 Allison Street Northwest. See Compl., ¶ ¶ 2, 15-19. Then-owner Lillie Fox entered into an arrangement with Plaintiff, who believed he was serving as an " investor" who volunteered his " good credit" to aid Fox in avoiding foreclosure.
Id., ¶ 18. In fact, the Metropolitan Money Store, the entity that structured the agreement, arranged for Fox to deed the property to Lancaster.
See id., ¶ ¶ 16-18. Through this transaction, Plaintiff received the title deed and assumed two deeds of trust -- the first for $288,000 and the second for $72,000 -- which were recorded by Freemont Investment and Loan, Inc.
The mortgages went into default almost immediately.
Id., ¶ 21. The problem, according to Lancaster, was that he did not fully understand that he had purchased the property through these transactions, nor was he aware of his assumption of the two deeds of trust, because his name was signed on them without his knowledge or consent.
Id., ¶ ¶ 18, 20. Lancaster was first alerted to his indebtedness when he began to receive collection calls.
Id., ¶ 22. Metropolitan assured him, however, that payments would be made on the loan. Id. They never were.
Id., ¶ 23. The first deed of trust, totaling $288,000, was then assigned to HSBC in September 2009. See Mot., Exh. B (Assignment Deed).
In August 2007, meanwhile, the District of Columbia brought suit against Metropolitan for its role in the scheme, naming, among others, Lancaster and HSBC as " Relief-Defendants." See Metropolitan Complaint, ¶ ¶ 19, 39. According to the District's complaint, Metropolitan had targeted financially distressed homeowners like Lillie Fox and represented to them that it would temporarily put their homes in the names of third parties, pay the mortgages for them, and afterward return title to the homeowners.
Id., ¶ ¶ 41-43. These were lies. Id., ¶ 46. In fact, the whole thing was a scam concocted to strip the properties of equity. Id.
Around the same time, Fox filed a quiet-title action against Lancaster, alleging that he had acquired title to the property through fraud. See Compl., ¶ 24. In response, Plaintiff claimed, as he does here, that his signature on the deeds of trust, but not the title deed, were forgeries.
Id., ¶ 25. Fox subsequently passed away in May 2009. Id., ¶ 27. Her son, Beverly Fox, became the personal representative of her estate and inherited the quiet-title action in the process. Id. In April 2010, Fox's action was dismissed on Motion of HSBC when he failed to comply with court orders.
Id., ¶ 28.
In May 2010, Plaintiff filed his own suit -- an eviction action against Beverly Fox -- and in October 2010, Lancaster and Fox entered into a contract through which Plaintiff would sell the property to Fox.
Id., P 31. According to the terms of the contract, Plaintiff would deliver a quitclaim deed to Fox upon total payment of the purchase price. See Contract for Deed, ¶ 10. The contract also contained some curious terms. For example:
Both parties agree not to contact Freemont, Litton, its successors or assigns or Chicago Title Insurance or any other holder of the mortgage allegedly taken on the property by which it was conveyed to Junius Lancaster. Parties anticipate a quiet title action or adverse possession case being required by buyer (at Purchaser's expense) in the future to quiet title or secure valid title as against third parties. Any action by those third parties is not a default by either party to this contract.
Id., ¶ 25. The parties also agreed that " [n]either party shall contact the former mortgage holder or any entity or insurer taking from them, or investigator, agent or employee or counsel, without first getting advance written permission of the other party." Id. Fox ultimately breached the contract when he failed to render payments to Lancaster. See Compl., ¶ 31.
Although he is currently in possession of the property, it appears from the Complaint that Plaintiff has not paid taxes on it since 2010.
Id., ¶ ¶ 32-33. In 2013, the District declared the property vacant, and Lancaster cannot afford to cure the deficiencies.
Id., ¶ 34. Since ...