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Strong v. Caliber Home Loans, Inc.

United States District Court, D. Nebraska

July 5, 2018

MIKE K. STRONG, Plaintiff,
CALIBER HOME LOANS, INC., et al., Defendants.


          John M. Gerrard United States District Judge

         The plaintiff, Mike Strong, is a persistent litigant. Another word that might be used is "vexatious." Strong has spent the last 5 years repeatedly raising the same spurious claims in different courts. Each court has rejected his claims, and rightly so. This Court will do the same: Strong's claims remain meritless, and what's more, they're barred by res judicata. The Court will dismiss Strong's complaint with prejudice.


         The subject of this litigation is a residential property in Sarpy County, Nebraska that is allegedly the target of a nonjudicial foreclosure pursuant to the Nebraska Trust Deeds Act, Neb. Rev. Stat. § 76-1001 et seq. See filing 24 at 2-3. The named defendants are Caliber Home Loans, Inc; U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust; Kozeny & McCubbin, L.C. ("K&M") and Kerry Feld, Successor Trustee; and HSBC Mortgage Services, Inc.: all parties that, according to Strong, are involved in conspiracy and fraud with respect to the "promissory note, mortgage and deed of trust" associated with the property. See filing 24. Generally speaking, Strong's allegations revolve around the allegedly illegitimate assignment of the promissory note used to buy the property and the deed of trust that secured the note. See filing 24. Strong claims that because the assignments were invalid, so too are the ongoing attempts by the current holder of the deed of trust to foreclose on it. See filing 24. But first, it's necessary to back up a bit.

         In 2013, Strong filed a "Memorandum in Support of Declaratory Judgment" in the U.S. Bankruptcy Court for the District of Nebraska, naming HSBC Mortgage Services as the defendant.[1] Bk. No. 13-8038, filing 1 at 1. (This was before HSBC eventually assigned the deed of trust to U.S. Bank Trust.) He asserted in that adversary proceeding, "[a]t issue is who the Holder is and whether the Defendant has the authority of or from the Holder. There is no evidence that support the Defendant as having any authority to claim the position of creditor." Id., filing 1 at 1. He asserted that HSBC was required to "produce the original wet ink signature as evidence showing the true chain of title transfer leading to the Defendant, endorsing the Defendant as the Holder in Due Course." Id. at 5. He also filed a "Declaratory Judgement of Verification of Debt," in which he admitted he had signed a promissory note and deed of trust with HSBC in 2007, but still asserted that it was uncertain who actually held the note and deed of trust. Id. at 12. The adversary proceeding was dismissed after Strong failed to oppose HSBC's motion to dismiss. Id., filing 8.

         In June 2015, Strong filed a Chapter 13 bankruptcy petition, in which he listed the real estate as an asset he owned in fee simple, subject to no secured claims. Bk. No. 15-80985, filing 1 at 8. He listed HSBC, K&M, and Caliber as unsecured creditors, and described HSBC's claim as "disputed." Id. at 17. He later filed a "Memorandum in Support of Declaratory Judgment" that was, in substance, the same as his 2013 memorandum. Id., filing 13. The trustee moved to dismiss Strong's case, asserting that Strong's actual debts (as opposed to those disclosed in his petition) made him ineligible for Chapter 13 relief. Id., filing 38. The bankruptcy court granted the motion. Id., filing 42.

         Strong's 2015 memorandum was the initial pleading for an adversary proceeding against HSBC, K&M, and Caliber. Bk. No. 15-8029, filing 1. He also filed an "Affidavit of Truth" reciting the various ways in which he had demanded HSBC provide him with proof of its authority to enforce the debt, and asserting that because HSBC had refused his demands, there was "no evidence that HSBC Mortgage Services Inc. was put at risk by extending the above-referenced loan of credit[.]" Id., filing 3. So, he said, because HSBC "has not put forth any consideration in the alleged contract" it "is null and void." Id., filing 3. He followed that up with a "Declaratory Judgement Verification of Debt," again demanding the defendants "provide proof of claim of perfection of their security interest as well as claim as a creditor." Id., filing 28 at 4.

         HSBC moved to dismiss the adversary proceeding, based on the fact that the mortgage loan had been sold to Caliber, and that HSBC was not the owner of the note, holder of the deed of trust, or servicer of the loan. Id., filing 43. The bankruptcy court granted that motion. Id., filing 57. Caliber and K&M also moved to dismiss the adversary proceeding. Id., filing 51. They argued that Strong's allegations of mortgage fraud were legally insufficient, and that Strong's pleading failed to state a claim. Id., filing 52. That motion was also granted, and the adversary proceeding was dismissed. Id., filing 58.

         At some point either shortly before or during the 2015 bankruptcy proceedings, HSBC assigned the deed of trust to U.S. Bank Trust. See filing 18-3. Strong was provided with written notice of the sale of the mortgage loan. Bk No. 15-8029, filing 28 at 37. But even before the bankruptcy proceedings had been dismissed, Strong was in the District Court for Sarpy County, Nebraska, filing his "Verified Complaint Quiet Title Action Declaratory Judgment" against HSBC, "Caliber Home Loans, Inc. - U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust," K&M, and Feld. No. 8:15-cv-466, filing 1-1 at 18. He again alleged, among other things, that there was "significant controversy and clouding of the title to the property and Deed of Trust" because there was" no evidence of transfer of ownership from the true party of interest to the Defendants." Id. at 25. Strong asserted that the deed of trust and promissory note were connected, such that "[w]here the promissory note goes, the Deed of Trust must follow." Id. So, Strong concluded, because they didn't possess the note, they didn't have the right to enforce it by foreclosing on the deed of trust.[2] See Id. at 25-26.

         After the case was removed to this Court, Strong filed an amended complaint asserting the same theories. See id., filing 26 at 11. Each defendant moved to dismiss the complaint. See id., filing 37 at 1. The Court found that Strong had failed to state a plausible claim upon which relief could be granted, and dismissed his amended complaint without prejudice. Id. at 15. Judgment was entered on October 24, 2016. Id., filing 38. Strong initiated the present case back in Sarpy County district court on November 17, 2017. Filing 1-1. The case was again removed to federal court. Filing 1. Now, each defendant moves to dismiss. Filing 26; filing 32; filing 34.


         A complaint must set forth a short and plain statement of the claim showing that the pleader is entitled to relief. Fed.R.Civ.P. 8(a)(2). This standard does not require detailed factual allegations, but it demands more than an unadorned accusation. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The complaint need not contain detailed factual allegations, but must provide more than labels and conclusions; and a formulaic recitation of the elements of a cause of action will not suffice. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). For the purposes of a motion to dismiss a court must take all of the factual allegations in the complaint as true, but is not bound to accept as true a legal conclusion couched as a factual allegation. Id.

         And to survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a complaint must also contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. Iqbal, 556 U.S. at 678. A claim has facial plausibility 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. Where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but has not shown-that the pleader is entitled to relief. Id. at 679.

         Determining whether a complaint states a plausible claim for relief will require the reviewing court to draw on its judicial experience and common sense. Id. The facts alleged must raise a reasonable expectation that discovery will reveal evidence to substantiate the necessary elements of the plaintiff's claim. See Twombly, 550 U.S. at 545. The court must assume the truth of the plaintiff's factual allegations, and a well-pleaded complaint may proceed, even if it strikes a savvy judge that actual proof of those facts is improbable, and that recovery is very remote and unlikely. Id. at 556.

         When deciding a motion to dismiss under Rule 12(b)(6), the Court is normally limited to considering the facts alleged in the complaint. If the Court considers matters outside the pleadings, the motion to dismiss must be converted to one for summary judgment. Fed.R.Civ.P. 12(d). However, the Court may consider exhibits attached to the complaint and materials that are necessarily embraced by the pleadings without converting the motion. Mattes v. ABC Plastics, Inc., 323 F.3d 695, 697 n.4 (8th Cir. 2003). Documents necessarily embraced by the pleadings include those whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading. Ashanti v. City of Golden Valley, 666 F.3d 1148, 1151 (8th Cir. 2012). The Court may also take notice of public records. Levy v. Ohl, 477 F.3d 988, 991 (8th Cir. 2007).


         The defendants, for the most part, advance the same arguments. Each argues that Strong has failed to state a claim. Filing 27 at 13-15; filing 33 at 2-4; filing 35 at 8-11. In addition, each defendant argues that Strong's claims should be dismissed as precluded by res judicata. Filing 27 at 10-12; filing 33 at 5-6; filing 35 at 10. And K&M, Feld, and HSBC argue that Strong lacks standing. Filing 33 at 4-5; filing 35 at 8. The Court disagrees with the defendants on standing, but agrees with respect to res judicata and Strong's failure to state a claim.

         Standing The defendants' standing argument is premised on a reading of Strong's complaint as seeking to void the assignment from HSBC to U.S. Bank Trust: they each cite Marcuzzo v. Bank of the West for the proposition that "a borrower who is not a party to a mortgage assignment, or a party intended to benefit from the assignment, lacks standing to challenge the assignment." 862 N.W.2d 281, 290 (Neb. 2015). That's true enough, under state or federal law. See id.; see also, e.g., Brown v. Green Tree Servicing LLC, 820 F.3d 371, 372 (8th Cir. 2016). But, while Strong's complaint is certainly not a model of clarity, it does appear to the Court that he's doing more than challenging the assignment: rather, the focus of his complaint is on the purported fraud that, he says, is responsible for the current foreclosure attempts. See filing 24. And, he seems to be suggesting that the assignment was not only voidable, but void ab initio: an argument that the Marcuzzo court expressly distinguished from the plaintiffs' argument in that case that the assignment was ineffective because of deficiencies in the defendants' paperwork. 862 N.W.2d at 291-92. In other words, Strong isn't so much challenging the assignment as presuming it's invalid as a premise for his other arguments.[3] So, Marcuzzo and Brown are not precisely responsive to Strong's theory.[4]

         As a general principle, the heart of standing is that in order to invoke the power of a federal court, a plaintiff must present a "case" or "controversy" within the meaning of Article III of the Constitution. Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 591 (8th Cir. 2009). This irreducible constitutional minimum of standing requires a showing of "injury in fact" to the plaintiff that is fairly traceable to the challenged action of the defendant, and likely to be redressed by a favorable decision. Id. In most cases, a plaintiff's standing tracks his cause of action: that is, the question whether he has a cognizable injury sufficient to confer standing is closely bound up with the question of whether and how the law will grant him relief. Id.

         But it is "important not to conflate the injury and traceability requirements of a standing analysis with the plaintiff's ultimate burden of proof as to the issues of damages and causation at a trial on the merits." Brown v. Medtronic, Inc.,628 F.3d 451, 457 (8th Cir. 2010). Generally, Article III requires injury to the plaintiff's personal legal interests. Braden, 588 F.3d at 591. And here, given the theories of recovery he asserts, Strong has satisfied the requirements of Article III because he has alleged actual injury to his own interests. Cf. id. at 592. But that, of course, doesn't mean that his allegations actually warrant legal relief-while the defendant's actions have certainly ...

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