Burke v. Wells Fargo Bank

2015 DNH 091

• Court: District Court, D. New Hampshire
• Decided: May 5, 2015
• Docket: 14-cv-326-LM
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

John C. Burke, III

v. Civil No. 14-cv-326-LM Opinion No. 2015 DNH 091 Wells Fargo Bank, N.A., as Trustee on behalf of the holders of Harborview Mortgage Loan Pass- Through Certificates 2006-12

ORDER

The above-captioned matter involves a foreclosure dispute

between the plaintiff, John C. Burke, III, and the defendant,

Wells Fargo Bank, N.A. (“Wells Fargo”). Wells Fargo has filed a

motion to dismiss pursuant to Federal Rule of Civil Procedure

12(b)(6). For the reasons that follow, Wells Fargo’s motion is

granted, and the case is dismissed with prejudice.

Background

I. Factual Allegations1

Pursuant to a 2006 loan agreement, Mr. Burke granted a

mortgage on his home in Derry, New Hampshire to Mortgage

1 The facts are summarized from Mr. Burke’s Amended Complaint in Plea of Title and for Other Equitable Relief and Damages (doc. no. 10), as well as the exhibits attached thereto. See Trans-Spec Truck Serv. v. Caterpillar, Inc., 524 F.3d 315, 321 (1st Cir. 2008) (noting that “[e]xhibits attached to the complaint are properly considered part of the pleading”). Mr. Burke is proceeding pro se, and thus the court construes his Amended Complaint liberally. Erikson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam). 1 Electronic Registration Systems, Inc. (“MERS”).2 At some point

after 2006, MERS assigned the mortgage to Bank of America.

Then, on March 7, 2012, Bank of America assigned it to Wells

Fargo.

After Mr. Burke defaulted on the loan agreement, Wells

Fargo foreclosed on the property and sold it to itself at a

public auction in February of 2013. Approximately a year later,

Wells Fargo recorded the foreclosure deed in the Rockingham

County Registry of Deeds, along with an affidavit, as required

by New Hampshire law. See N.H. Rev. Stat. Ann. § 479:26(I).

Both the foreclosure deed and the accompanying affidavit

were executed by Select Portfolio Servicing, Inc. (“Select

Portfolio”), which the documents describe as Wells Fargo’s

attorney-in-fact. The foreclosure deed and the affidavit both

reference a power of attorney “recorded herewith.”

Mr. Burke lodges what seem to be contradictory allegations

with respect to the referenced power of attorney. In paragraphs

five and seven of his Amended Complaint, Mr. Burke alleges that

no power of attorney was filed with the foreclosure deed or the

affidavit. Then, in paragraph nine, he alleges that

“notwithstanding [his previous] factual allegations,” a power of

2 Mr. Burke’s wife, Derika Burke, was also listed on the mortgage. The record indicates that she has not lived at the property for some time, and she is not a party to this case. 2 attorney authorizing Select Portfolio to act on Wells Fargo’s

behalf was filed with the Registry of Deeds on the two pages

immediately preceding the foreclosure deed.

Mr. Burke lodges a second allegation regarding the power of

attorney. He alleges that, at the time Bank of America conveyed

the mortgage to Wells Fargo, Select Portfolio was serving as

attorney-in-fact for both entities.

Based on these allegations – the purported failure to file

a referenced power of attorney, and the fact that Select

Portfolio engaged in “simultaneous co-representation of

successive title-holders” – Mr. Burke alleges in his Amended

Complaint that he was irreparably harmed. The Amended Complaint

asserts claims for: (1) wrongful foreclosure; (2) plea of title

and wrongful commencement of eviction proceedings; (3) violation

of New Hampshire consumer protection law, N.H. Rev. Stat. Ann.

§ 358-A; (4) breach of the implied covenant of good faith and

fair dealing; and (5) fraud.

II. Procedural Backdrop

Mr. Burke originally brought this suit in the Rockingham

County Superior Court in June of 2014, seeking to invalidate the

foreclosure and to enjoin a separate eviction proceeding that

Wells Fargo had commenced. Wells Fargo then removed the suit to

this court based on diversity jurisdiction.

3 In a prior order dated December 16, 2014, this court

dismissed Mr. Burke’s complaint, but did so without prejudice

because Mr. Burke was proceeding pro se, and because he had

sought leave to “include additional claims and/or defendants.”

The court granted Mr. Burke time to file an amended complaint,

and he did so, prompting Wells Fargo to again move for

dismissal.

Legal Standard

Under Rule 12(b)(6), the court must accept the factual

allegations in the complaint as true, construe reasonable

inferences in the plaintiff’s favor, and “determine whether the

factual allegations in the plaintiff’s complaint set forth a

plausible claim upon which relief may be granted.” Foley v.

Wells Fargo Bank, N.A., 772 F.3d 63, 71 (1st Cir. 2014)

(citations omitted) (internal quotation marks 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.” Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009). Analyzing plausibility is “a

context-specific task” in which the court relies on its

“judicial experience and common sense.” Id. at 679.

4 Discussion

Mr. Burke’s Amended Complaint, construed liberally in his

favor, asserts that Wells Fargo committed the following wrongful

acts: (1) it failed to record a power of attorney with the

foreclosure deed and the affidavit, despite reference in those

documents to an accompanying power of attorney; and (2) it

engaged Select Portfolio as its attorney-in-fact while Select

Portfolio was simultaneously acting as attorney-in-fact for Bank

of America, the entity that previously held the mortgage on Mr.

Burke’s home. Based on these allegations, the Amended Complaint

asserts that Wells Fargo lacked standing to foreclose, and that

Wells Fargo engaged in unfair and deceptive practices.

I. Failure to File Referenced Power of Attorney

Wells Fargo is entitled to dismissal of the Amended

Complaint insofar as it alleges that Wells Fargo failed to file

a power of attorney with the foreclosure deed and the affidavit

in the Rockingham County Registry of Deeds. As an initial

matter, Mr. Burke’s allegations that Wells Fargo failed to file

a power of attorney are directly refuted by a subsequent

allegation which plainly states that Wells Fargo did, in fact,

file a power of attorney. See Am. Compl. (doc. no. 10) ¶ 9

(“Notwithstanding the factual allegations in the above

paragraphs . . . a Power of Attorney authorizing [Select

5 Portfolio] to act on behalf of Wells Fargo . . . was recorded in

the Rockingham County Registry of Deeds on the two pages

immediately prior to . . . the subject foreclosure deed.”).

Even if the court were to overlook this contradiction,

Wells Fargo would nevertheless be entitled to dismissal of these

allegations. In the court’s December 16, 2014 order, it

dismissed identical allegations on the grounds that New

Hampshire law permits, but does not require, that a mortgagee

record a power of attorney. As the court noted, “New Hampshire

law provides that a power of attorney may be recorded . . . but

does not require recording.” Calef v. Citibank, N.A., No. 11-

cv-526-JL, 2013 U.S. Dist. LEXIS 23881, at *17-18 (D.N.H. Feb.

21, 2013) (citations omitted) (internal quotation marks

omitted); see also N.H. Rev. Stat. Ann. § 477:9 (“Every power of

attorney to convey real estate must be signed and acknowledged,

and may be recorded . . . .”) (emphasis added).

In the December 16, 2014 order, the court granted Mr. Burke

leave to amend his original complaint to add additional claims

or defendants, but instead the Amended Complaint merely rehashes

these same allegations. As the court concluded in its prior

order, Wells Fargo’s decision not to file a power of attorney

does not amount to actionable conduct because Wells Fargo was

6 under no obligation to do so.3 In other words, even if Wells

Fargo did fail to file a power of attorney with the foreclosure

deed and the affidavit, this omission could not give rise to any

of the five claims for relief that Mr. Burke asserts.

Therefore, Mr. Burke’s allegations regarding the power of

attorney have failed to state a plausible claim upon which

relief may be granted.

II. Simultaneous Co-Representation by Select Portfolio

The Amended Complaint next alleges that Wells Fargo acted

improperly be engaging Select Portfolio to act as its attorney-

in-fact. Mr. Burke asserts that Select Portfolio was

simultaneously engaged as attorney-in-fact by Bank of America,

and he implies that a conflict of interest arose because Bank of

America held the mortgage before assigning it to Wells Fargo.

Wells Fargo is entitled to dismissal of these allegations

because Mr. Burke lacks standing to assert them. “New Hampshire

law recognizes the general rule that a debtor cannot interpose

defects or objections [to an assignment] which merely render the

assignment voidable at the election of the assignor or those

standing in his shoes. And it has long been recognized that a

conflict of the nature alleged here – i.e., the signatory’s

3Of course, given the contrary allegations, it is an open question whether or not the power of attorney was filed. 7 employment by both the assignor and assignee – at most makes an

assignment voidable by the assignor.” Castagnaro v. Bank of

N.Y. Mellon, No. 13-cv-455-JD, 2014 U.S. Dist. LEXIS 7719, at

*6-7 (D.N.H. Jan. 21, 2014) (quoting Galvin v. EMC Mortg. Corp.,

No. 12-cv-320-JL, 2013 U.S. Dist. LEXIS 48961, at *28-29 (D.N.H.

Apr. 2, 2013)); see also Bradley v. Wells Fargo Bank, N.A., No.

12-cv-127-PB, 2014 U.S. Dist. LEXIS 26750, at *7-8 (D.N.H. Mar.

3, 2014) (“A mortgagor may not challenge an assignment of the

mortgage to a third party based on alleged deficiencies that

merely make the assignment voidable at the election of a party

to the assignment. . . . Because [plaintiff] was not a party to

[the] assignment, he lacks standing to challenge the foreclosure

based on [] the alleged deficiencies.”).

The rule denying standing to a mortgagor who seeks to

challenge the validity of an assignment of his mortgage from one

third party to another applies here. In his Amended Complaint,

Mr. Burke merely identifies a potential conflict of interest

that might have arisen because Select Portfolio represented both

Bank of America and Wells Fargo. At most, this conflict of

interest would have affected those entities, the assignor and

assignee respectively. However, Mr. Burke has not alleged facts

explaining how the potential conflict of interest might have

adversely affected him as the mortgagor. It is for this reason

that Mr. Burke does not have standing to contest the validity of

8 the assignment from Bank of America to Wells Fargo. Thus, these

allegations do not state a plausible claim for relief and are

dismissed.

Conclusion

The court need go no further. Mr. Burke has asserted five

claims (wrongful foreclosure, wrongful eviction, violation of

state consumer protection law, breach of the implied covenant,

and fraud), but they are each premised only on the allegations

regarding the power of attorney and the simultaneous

representation by Select Portfolio. For the reasons described,

Mr. Burke has not stated a plausible claim entitling him to

relief, despite having been granted an opportunity on the basis

of his pro se status to amend his original complaint. Thus, the

court grants Wells Fargo’s motion to dismiss (doc. no. 11) with

prejudice. The clerk of the court is directed to enter judgment

in favor of Wells Fargo and to close the case.

SO ORDERED.

__________________________ Landya McCafferty United States District Judge

May 5, 2015

cc: John C. Burke, III, pro se Nathan Reed Fennessy, Esq.