Frangos v. The Bank of New York Mellon, et al.

2017 DNH 216

• Court: District Court, D. New Hampshire
• Decided: October 5, 2017
• Docket: 16-cv-436-LM
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Thomas Frangos

v. Civil No. 16-cv-436-LM Opinion No. 2017 DNH 216 The Bank of New York Mellon, as Trustee for the Certificateholders of CWABS, Inc., Asset Back Certificates, Series 2005-AB2, et al.

O R D E R

Plaintiff Thomas Frangos brought suit in state court

against Defendants The Bank of New York Mellon, as trustee for

the Certificateholders of CWABS, Inc., Asset Back Certificates,

Series 2005-AB2 (“BNY”), and New Penn Financial, LLC d/b/a

Shellpoint Mortgage Servicing (“Shellpoint”), seeking to enjoin

the foreclosure sale of his home. BNY and Shellpoint removed

the case to this court. Plaintiff subsequently amended his

complaint to include additional allegations and claims, and to

add Bank of America, N.A. (“BOA”) as a defendant. Plaintiff has

filed a motion to stay proceedings and a motion to join the

Frances Ann Frangos 2002 Revocable Trust u/t/d March 12, 2002

(“Trust”) as an indispensable party. Defendants object. For

the reasons that follow, the court denies both of plaintiff’s

motions. BACKGROUND

In late April 2005, plaintiff executed a promissory note in

favor of Optima Mortgage Corporation (“Optima”) in exchange for

a loan of $599,000. The note was secured by a mortgage, which

plaintiff and Frances Frangos, his wife, executed in favor of

Mortgage Electronic Registration Systems, Inc. (“MERS”), as

nominee for Optima. The mortgaged property is located in

Portsmouth, New Hampshire.

The parties disagree over the chain of title to the

property. In his complaint, plaintiff alleges that, by virtue

of an April 2003 deed, the Trust holds title to the property.

Disputing this allegation, BNY and Shellpoint point to a

quitclaim deed dated May 2, 2005, in which plaintiff, as trustee

of the Trust, conveys the property to plaintiff, “a married

man.” Doc. no. 27-6 at 2 of 5. Based on this quitclaim deed,

it appears that plaintiff obtained title to the property shortly

after the mortgage was executed. In response, however,

plaintiff claims that (1) he was never trustee of the Trust, so

the May 2, 2005 deed is invalid; and (2) regardless, there is a

third deed, dated May 15, 2005, “return[ing] the real estate

from [plaintiff] individually to himself as trustee of the

Trust.” Doc. no. 46 at 2.

In any case, in November 2007, plaintiff filed for Chapter

7 bankruptcy. During that proceeding, plaintiff and Countrywide

2 Home Loans, Inc. (“Countrywide”), then the servicer of

plaintiff’s loan, executed a reaffirmation agreement. In the

agreement, plaintiff reaffirmed the outstanding debt on his

mortgage loan. The bankruptcy proceeding closed in January

2009. At some point in 2009, plaintiff stopped making mortgage

payments. See Frangos v. Bank of America, N.A., 826 F.3d 594,

595 (1st Cir. 2016).

In 2011, BNY came to hold both the note and mortgage.

Meanwhile, the servicer of plaintiff’s loan changed from

Countrywide to BOA, and then, finally, to Shellpoint. In 2013,

after negotiations over loan restructuring failed, BNY attempted

to foreclose on the property. Id. In response, plaintiff and

Frances Frangos filed suit against defendants in state court and

obtained a preliminary injunction barring the sale. Id.

Defendants removed the case to this court, and Judge Barbadoro

granted summary judgment in favor of defendants. See id. at

595-96. In June 2016, the First Circuit affirmed the grant of

summary judgment. Id. at 594, 597-98. The court refers to this

first action as “Frangos I.”

In August 2016, BNY and Shellpoint notified plaintiff that

a foreclosure sale was scheduled for September 23. Plaintiff

again filed suit in state court and obtained an ex parte

injunction barring the sale. Defendants removed the case to

this court and then filed motions to dismiss. Plaintiff

3 thereafter filed the instant motions to stay and to join the

Trust as an indispensable party.

DISCUSSION

Both of plaintiff’s motions are founded on his argument

that the mortgage is void because the Trust held title to the

property at the time the mortgage was executed. He moves to

stay proceedings so that, in the bankruptcy court, he can seek

to invalidate the mortgage and reaffirmation agreement. He

notes that the bankruptcy court has already granted his motion

to reopen his 2007 case on this ground. Plaintiff further moves

to join the Trust as an indispensable party under Rule 19 of the

Federal Rules of Civil Procedure. The court considers each

motion in turn.

I. Motion to Stay Proceedings

Federal courts “possess the inherent power to stay [a case]

for prudential reasons.” Microfinancial, Inc. v. Premier

Holidays Int’l, Inc., 385 F.3d 72, 77 (1st Cir. 2004). The

pendency of related proceedings “can constitute such a reason.”

Id. A district court’s discretionary power to stay “should be

invoked when the interests of justice counsel in favor of such a

course.” Id. at 78. Relevant factors include “(1) potential

prejudice to the non-moving party; (2) hardship and inequity to

the moving party without a stay; and, (3) judicial economy.”

4 Good v. Altria Grp., Inc., 624 F. Supp. 2d 132, 134 (D. Me.

2009); see also Microfinancial, Inc., 385 F.3d at 78. The

movant bears the burden of demonstrating that “a stay is

appropriate.” Emseal Joint Sys., Ltd. V. Schul Int’l Co., LLC,

No. 14-cv-358-SM, 2015 WL 1457630, at *1 (D.N.H. Mar. 27, 2015);

see also Microfinancial, Inc., 385 F.3d at 77.

Plaintiff has failed to establish that a stay is

appropriate under these circumstances. He has not argued that

he will suffer either hardship or inequity in the absence of a

stay. His sole argument is one of judicial economy. He asserts

that if the bankruptcy court determines that “the reaffirmation

agreement and the mortgage are invalid, many of [his] claims in

this litigation will be or could be affected.” Doc. no. 34 at

¶ 3. However, plaintiff does not explain how the bankruptcy

court’s determination on the invalidity of the reaffirmation

agreement will resolve any of his claims before this court. Nor

does plaintiff provide any reason why the bankruptcy court is

the more appropriate or convenient forum in which to litigate

the validity of the mortgage, especially given that BNY and

Shellpoint are actively litigating that very issue as part of

their pending motion to dismiss, see doc. no. 27-1 at 13-19.

Plaintiff’s argument regarding judicial economy is conclusory

and therefore unpersuasive.

5 Moreover, there is a potential for a stay to cause

prejudice to defendants, each of whom asserts an interest in the

expeditious resolution of the action. Plaintiff has apparently

not made a mortgage payment since 2009. See Frangos, 826 F.3d

at 595. When BNY attempted to foreclose in 2013, plaintiff

instituted Frangos I. See id. Defendants waited until June

2016 to receive a favorable decision from the First Circuit.

Because defendants have already proceeded through a full round

of litigation relating to the same loan obligation, their desire

to reach the merits and to avoid further delay weighs against

the issuance of a stay.

In contrast, the record shows that plaintiff has had

approximately eight years since his discharge to seek relief in

the bankruptcy court. Yet he only sought such relief after

defendants filed their motions to dismiss. Considering this

history, the court is disinclined to prolong this action while a

new, parallel proceeding takes its course. Cf. Microfinancial,

Inc., 385 F.3d at 79 (noting that “the foot-dragging that

already had occurred gave the [district] court good reason for

skepticism about the requested stay”). Because the interests of

justice do not favor a stay, plaintiff’s motion is denied.

6 II. Motion to Join the Trust under Rule 19

Rule 19 of the Federal Rules of Civil Procedure governs the

joinder of required parties. See Picciotto v. Continental Cas.

Co., 512 F.3d 9, 15 (1st Cir. 2008). “The Rule provides for

joinder of required parties when feasible, Fed.R.Civ.P. 19(a),

and for dismissal of suits when joinder of a required party is

not feasible and that party is indispensable, Fed.R.Civ.P.

19(b).” Bacardi Int’l Ltd. v. Suarez & Co., Inc., 719 F.3d 1, 9

(1st Cir. 2013). “In a Rule 19 analysis, a court must first

determine if an absent party is a ‘required party’ under Rule

19(a).” Id. at 10. The moving party bears the burden on this

issue. See McCann v. Ruiz, 788 F. Supp. 109, 121 (D.P.R. 1992)

(quotation omitted)); cf. J & J Sports Prods. Inc. v. Cela, 139

F. Supp. 3d 495, 499 (D. Mass. 2015) (stating that party moving

to dismiss claim under Rule 12(b)(7) for failure to join a

required party bears the burden of proving that absent party

should be joined).

Here, plaintiff invokes two provisions of Rule 19(a) to

argue that the Trust is a required party. Plaintiff first

argues that in the Trust’s absence, “the court cannot accord

complete relief among existing parties.” Fed. R. Civ. P.

19(a)(1)(A). Plaintiff next argues that the Trust claims an

interest relating to the subject of this action such that

disposing of the action without the Trust may “impair or impede

7 the [Trust’s] ability to protect [its] interest.” Fed. R. Civ.

P. 19(a)(1)(B)(i).

With respect to Rule 19(a)(1)(A), “[r]elief is

complete when it meaningfully resolves the contested matter

as between the affected parties.” Watchtower Bible & Tract

Soc’y of N.Y., Inc. v. Municipality of San Juan, 773 F.3d

1, 13 (1st Cir. 2014). Put differently, if relief can be

effectuated between the existing parties without the

involvement of the absent party, the absent party is not

required under Rule 19(a)(1)(A). Id. (citing Williams v.

Fanning, 332 U.S. 490, 494 (1947)).

Although not entirely clear, plaintiff appears to be

arguing that, because the Trust owned the property at the

time the mortgage was executed, the court cannot

definitively resolve the issue of the mortgage’s validity

without the Trust. But regardless of how that issue is

ultimately resolved, the remedies that plaintiff requests—

from the injunctive and declaratory relief to the requested

money damages—can be implemented without the Trust’s

involvement. See id. at 14 (concluding that, because

remedial scheme crafted by court to address municipalities’

constitutional violations could be accomplished without

involvement of certain defendants, those defendants were

8 not required under Rule 19). The Trust is therefore not a

required party under Rule 19(a)(1)(A).

Likewise, with respect to plaintiff’s argument under

Rule 19(a)(1)(B)(i), the court does not agree that

disposing of the action in the Trust’s absence would, as a

practical matter, impair or impede the Trust’s ability to

protect its interest in the property. The First Circuit

has held that “an absent party's interests cannot be harmed

or impaired if they are identical to those of a present

party.” Bacardi Int’l Ltd., 719 F.3d at 11. “In other

words, an absentee is unlikely to be a [required] party if

there is another party in the suit with virtually identical

interests who would be advancing virtually the same legal

and factual positions.” Fed. Ins. Co. v. SafeNet, Inc.,

758 F. Supp. 2d 251, 258 (S.D.N.Y. 2010); see, e.g.,

Bacardi Int’l Ltd., 719 F.3d at 11 (absent party not

required because present party had identical interest in

the confirmation of arbitration award); Charest v. Fed.

Nat’l Mortg. Ass’n, 9 F. Supp. 3d 114, 132 (D. Mass. 2014)

(mortgage servicer not required party under Rule

19(a)(1)(B)(i) where present party—the holder of the

mortgage—had same interest “in avoiding Chapter 93A

liability”).

9 This principle applies here. As plaintiff’s

allegations suggest, the Trust’s interest would be in

proving that the mortgage is invalid and that it holds

title to the property. Plaintiff shares the same interest:

he seeks to invalidate the mortgage and avoid foreclosure

by arguing that he did not, and does not, own the property.

Plaintiff offers no other evidence or argument that

indicates that his interests diverge materially from those

of the Trust.

Accordingly, the Trust is not a required party under

either provision of Rule 19.

CONCLUSION

For the reasons stated herein, plaintiff’s Motion to Stay

Proceedings Pending a Resolution in the Bankruptcy Court (doc.

no. 34) and his Motion to Join Frances Ann Frangos 2002

Revocable Trust U/T/D March 12, 2002 (doc. no. 40) are denied.

SO ORDERED.

__________________________ Landya McCafferty United States District Judge

October 5, 2017 cc: Kristina Cerniauskaite, Esq. Jonathan M. Flagg, Esq. Mary Ellen MacDonald, Esq. John Harold McCann, Esq. Joseph J. Patry, Esq. Michael P. Trainor, Esq.