UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Azmat Khawaja, et al.
v. Case No. 14-cv-00117-PB Opinion No. 2014 DNH 195
The Bank of New York Mellon
MEMORANDUM AND ORDER
Bank of New York Mellon (“BNY Mellon”) foreclosed on the
property of Azmat and Dawn Khawaja. After BNY Mellon sought to
evict the Khawajas from the property, they brought a plea of
title action against BNY Mellon in state court. BNY Mellon
removed the action to this Court and now moves to dismiss the
Khawajas’ complaint under Federal Rule of Civil Procedure
12(b)(6). For the reasons that follow, I grant BNY Mellon’s
motion and dismiss the Khawajas’ complaint.
I. BACKGROUND
I draw the following factual background from the
plaintiffs’ complaint and its attached exhibits (Doc. No. 1-1).
See In re Lane, 937 F.2d 694, 696 (1st Cir. 1991) (exhibits
attached to a complaint are “properly considered part of the pleadings for rule 12(b)(6) purposes”).1
In March 2007, the Khawajas granted a mortgage on their
property to Mortgage Electronic Registration Systems, Inc., or
“MERS,” acting as nominee for First Horizon Home Loan
Corporation. The mortgage was later assigned to BNY Mellon in
its capacity as trustee of a securitized mortgage trust.
On February 10, 2011, BNY Mellon completed a foreclosure
sale of the Khawajas’ property. On April 19, 2011, the Khawajas
brought an action for both wrongful foreclosure and plea of
title against BNY Mellon in the Hillsborough County Superior
Court. Because BNY Mellon failed to appear before the court to
defend against the Khawajas’ action, the court issued an order
on November 4, 2011 invalidating the foreclosure sale (the “2011
Order”). In that order, the court “declare[d] the foreclosure
sale of the [Khawajas’] property void” and ordered the Khawajas
1 In an exhibit attached to their complaint, the plaintiffs also extensively discuss a foreclosure deed filed with the Hillsborough County Registry of Deeds. See Doc. No. 1–1 at 10. Although the plaintiffs did not attach the foreclosure deed to their complaint, the defendants have produced a copy of the deed with their objection. See Doc. No. 5–8. Because the plaintiffs relied on the foreclosure deed in their complaint and the deed’s authenticity is not in dispute, I may consider it in deciding this motion to dismiss. See Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 16-17 (1st Cir. 1998) (where a document of undisputed authenticity was “discusse[d] . . . at considerable length” in complaint but not attached, document “effectively merge[d] into the pleadings and the trial court [could] review it in deciding a motion to dismiss”). 2 to “record a copy” of the order with the Registry of Deeds “to
give notice to any potential purchasers” of the property. Doc.
No. 1–1 at 14-15.
In October and November 2012, BNY Mellon published three
notices in a Manchester, N.H. newspaper announcing that it
planned to conduct a second foreclosure sale of the Khawajas’
property. On October 21, 2012, BNY Mellon delivered a copy of
the foreclosure notice directly to the Khawajas. In response,
the Khawajas sent a letter to counsel for BNY Mellon in November
2011 objecting to the planned sale and arguing that the 2011
Order precluded BNY Mellon from foreclosing on the property.
See id. at 20–21. The Khawajas, however, did not seek to enjoin
the sale before it occurred.
After multiple continuances, BNY Mellon completed the
second foreclosure sale on April 2, 2012 (the “Second Sale”).
The foreclosure deed resulting from the Second Sale was executed
in November 2012 and recorded in April 2013. In August 2013,
BNY Mellon brought a possessory action against the Khawajas in
Manchester District Court.
The Khawajas moved to dismiss the possessory action,
arguing that the 2011 Order, which invalidated the first
foreclosure, also precluded BNY Mellon from conducting the
Second Sale. See id. at 10-12. Because their argument brought 3 title to the property into question, however, New Hampshire law
required the Khawajas to litigate their claim in a plea of title
action before the superior court rather than in the pending
possessory action before the district court. See N.H. Rev.
Stat. Ann. §§ 540:16 – 540:18.
Thus, on September 25, 2013, the Khawajas brought a plea of
title action against BNY Mellon in the Hillsborough County
Superior Court. Doc. No. 1-1 at 2-5. In March 2014, BNY Mellon
removed the action to this Court. Doc. No. 1. BNY Mellon now
moves to dismiss the complaint for failure to state a claim upon
which relief can be granted. Doc. No. 5.
II. STANDARD OF REVIEW
To survive a Rule 12(b)(6) motion, a plaintiff must make
factual allegations sufficient to “state a claim to relief that
is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). A claim is facially plausible when it pleads “factual
content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged. The
plausibility standard is not akin to a ‘probability
requirement,’ but it asks for more than a sheer possibility that
a defendant has acted unlawfully.” Id. (citations omitted). 4 In deciding a motion to dismiss, I must “accept as true the
well-pleaded factual allegations of the complaint, draw all
reasonable inferences therefrom in the plaintiff’s favor and
determine whether the complaint, so read, sets forth facts
sufficient to justify recovery on any cognizable theory.”
Martin v. Applied Cellular Tech., Inc., 284 F.3d 1, 6 (1st Cir.
2002). In addition to the facts set forth in the complaint, I
consider “documents incorporated by reference into the
complaint, matters of public record, and facts susceptible to
judicial notice.” Haley v. City of Boston, 657 F.3d 39, 46 (1st
Cir. 2011) (citing In re Colonial Mortg. Bankers Corp., 324 F.3d
12, 15 (1st Cir. 2003)).
III. ANALYSIS
The Khawajas seek to both invalidate the Second Sale and
enjoin BNY Mellon from bringing any further possessory actions
against them. See Doc. No. 1-1 at 4. They argue that they are
entitled to this relief because the 2011 Order stripped BNY
Mellon of both title to the property and any further power to
foreclose. See id. at 2-5. For that reason, they argue, the
Second Sale is invalid because BNY Mellon lacked authority to
conduct it. See id. at 2-5. In its motion to dismiss, BNY
Mellon argues that this claim fails because, under § 479:25, II 5 of the New Hampshire Revised Statutes, the Khawajas were
required to raise it before the Second Sale took place. See
Doc. No.
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Azmat Khawaja, et al.
v. Case No. 14-cv-00117-PB Opinion No. 2014 DNH 195
The Bank of New York Mellon
MEMORANDUM AND ORDER
Bank of New York Mellon (“BNY Mellon”) foreclosed on the
property of Azmat and Dawn Khawaja. After BNY Mellon sought to
evict the Khawajas from the property, they brought a plea of
title action against BNY Mellon in state court. BNY Mellon
removed the action to this Court and now moves to dismiss the
Khawajas’ complaint under Federal Rule of Civil Procedure
12(b)(6). For the reasons that follow, I grant BNY Mellon’s
motion and dismiss the Khawajas’ complaint.
I. BACKGROUND
I draw the following factual background from the
plaintiffs’ complaint and its attached exhibits (Doc. No. 1-1).
See In re Lane, 937 F.2d 694, 696 (1st Cir. 1991) (exhibits
attached to a complaint are “properly considered part of the pleadings for rule 12(b)(6) purposes”).1
In March 2007, the Khawajas granted a mortgage on their
property to Mortgage Electronic Registration Systems, Inc., or
“MERS,” acting as nominee for First Horizon Home Loan
Corporation. The mortgage was later assigned to BNY Mellon in
its capacity as trustee of a securitized mortgage trust.
On February 10, 2011, BNY Mellon completed a foreclosure
sale of the Khawajas’ property. On April 19, 2011, the Khawajas
brought an action for both wrongful foreclosure and plea of
title against BNY Mellon in the Hillsborough County Superior
Court. Because BNY Mellon failed to appear before the court to
defend against the Khawajas’ action, the court issued an order
on November 4, 2011 invalidating the foreclosure sale (the “2011
Order”). In that order, the court “declare[d] the foreclosure
sale of the [Khawajas’] property void” and ordered the Khawajas
1 In an exhibit attached to their complaint, the plaintiffs also extensively discuss a foreclosure deed filed with the Hillsborough County Registry of Deeds. See Doc. No. 1–1 at 10. Although the plaintiffs did not attach the foreclosure deed to their complaint, the defendants have produced a copy of the deed with their objection. See Doc. No. 5–8. Because the plaintiffs relied on the foreclosure deed in their complaint and the deed’s authenticity is not in dispute, I may consider it in deciding this motion to dismiss. See Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 16-17 (1st Cir. 1998) (where a document of undisputed authenticity was “discusse[d] . . . at considerable length” in complaint but not attached, document “effectively merge[d] into the pleadings and the trial court [could] review it in deciding a motion to dismiss”). 2 to “record a copy” of the order with the Registry of Deeds “to
give notice to any potential purchasers” of the property. Doc.
No. 1–1 at 14-15.
In October and November 2012, BNY Mellon published three
notices in a Manchester, N.H. newspaper announcing that it
planned to conduct a second foreclosure sale of the Khawajas’
property. On October 21, 2012, BNY Mellon delivered a copy of
the foreclosure notice directly to the Khawajas. In response,
the Khawajas sent a letter to counsel for BNY Mellon in November
2011 objecting to the planned sale and arguing that the 2011
Order precluded BNY Mellon from foreclosing on the property.
See id. at 20–21. The Khawajas, however, did not seek to enjoin
the sale before it occurred.
After multiple continuances, BNY Mellon completed the
second foreclosure sale on April 2, 2012 (the “Second Sale”).
The foreclosure deed resulting from the Second Sale was executed
in November 2012 and recorded in April 2013. In August 2013,
BNY Mellon brought a possessory action against the Khawajas in
Manchester District Court.
The Khawajas moved to dismiss the possessory action,
arguing that the 2011 Order, which invalidated the first
foreclosure, also precluded BNY Mellon from conducting the
Second Sale. See id. at 10-12. Because their argument brought 3 title to the property into question, however, New Hampshire law
required the Khawajas to litigate their claim in a plea of title
action before the superior court rather than in the pending
possessory action before the district court. See N.H. Rev.
Stat. Ann. §§ 540:16 – 540:18.
Thus, on September 25, 2013, the Khawajas brought a plea of
title action against BNY Mellon in the Hillsborough County
Superior Court. Doc. No. 1-1 at 2-5. In March 2014, BNY Mellon
removed the action to this Court. Doc. No. 1. BNY Mellon now
moves to dismiss the complaint for failure to state a claim upon
which relief can be granted. Doc. No. 5.
II. STANDARD OF REVIEW
To survive a Rule 12(b)(6) motion, a plaintiff must make
factual allegations sufficient to “state a claim to relief that
is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). A claim is facially plausible when it pleads “factual
content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged. The
plausibility standard is not akin to a ‘probability
requirement,’ but it asks for more than a sheer possibility that
a defendant has acted unlawfully.” Id. (citations omitted). 4 In deciding a motion to dismiss, I must “accept as true the
well-pleaded factual allegations of the complaint, draw all
reasonable inferences therefrom in the plaintiff’s favor and
determine whether the complaint, so read, sets forth facts
sufficient to justify recovery on any cognizable theory.”
Martin v. Applied Cellular Tech., Inc., 284 F.3d 1, 6 (1st Cir.
2002). In addition to the facts set forth in the complaint, I
consider “documents incorporated by reference into the
complaint, matters of public record, and facts susceptible to
judicial notice.” Haley v. City of Boston, 657 F.3d 39, 46 (1st
Cir. 2011) (citing In re Colonial Mortg. Bankers Corp., 324 F.3d
12, 15 (1st Cir. 2003)).
III. ANALYSIS
The Khawajas seek to both invalidate the Second Sale and
enjoin BNY Mellon from bringing any further possessory actions
against them. See Doc. No. 1-1 at 4. They argue that they are
entitled to this relief because the 2011 Order stripped BNY
Mellon of both title to the property and any further power to
foreclose. See id. at 2-5. For that reason, they argue, the
Second Sale is invalid because BNY Mellon lacked authority to
conduct it. See id. at 2-5. In its motion to dismiss, BNY
Mellon argues that this claim fails because, under § 479:25, II 5 of the New Hampshire Revised Statutes, the Khawajas were
required to raise it before the Second Sale took place. See
Doc. No. 5–1 at 6. Because the Khawajas failed to do so, BNY
Mellon contends, this claim is now forfeited as a matter of law,
regardless of its substantive merits. See id. at 6.
Section 479:25, II requires mortgagees to provide notice to
mortgagors prior to foreclosing on mortgaged property. The
notice must inform mortgagors of their right to “petition the
superior court . . . to enjoin the scheduled foreclosure sale.”
N.H. Rev. Stat. Ann. § 479:25, II. Critically, however, §
479:25, II further provides that a mortgagor’s “[f]ailure to
institute such petition . . . prior to sale shall thereafter bar
any action or right of action of the mortgagor based on the
validity of the foreclosure.” N.H. Rev. Stat. Ann. § 479:25,
II.
In applying § 479:25, II, the New Hampshire Supreme Court
has explained that a mortgagor forfeits any right to challenge a
completed foreclosure “based on facts which the mortgagor knew
or should have known soon enough to reasonably permit the filing
of a petition prior to the sale.” Murphy v. Fin. Dev. Corp.,
495 A.2d 1245, 1249 (N.H. 1985); see also Gordonville Corp. v.
LR1-A Ltd. P’ship, 856 A.2d 746, 752 (N.H. 2004) (holding that
“to preserve a challenge to the validity of the foreclosure 6 sale,” a mortgagor must raise that challenge prior to the
foreclosure sale). In keeping with this well established rule,
this Court has also repeatedly held that § 479:25, II bars any
challenge to a foreclosure sale based on facts that the
mortgagor knew about, or should have known about, before the
sale. See, e.g., Neenan v. CitiMortgage, Inc., 2013 D.N.H. 163,
2013 WL 6195579, at *3 (D.N.H. Nov. 26, 2013); Magoon v. Fed.
Nat’l Mortg. Ass’n, No. 13-cv-250-JD, 2013 WL 4026894, at *1
(D.N.H. Aug. 6, 2013); Calef v. Citibank, N.A., 2013 D.N.H. 23,
2013 WL 653951, at *3–*4 (D.N.H. Feb. 21, 2013).
The Khawajas have not disputed that they received prior
notice of the Second Sale. Furthermore, their November 2011
letter to BNY Mellon confirms that they had actual knowledge of
both the 2011 Order and the impending Second Sale, which
constitute the essential facts that underlie this claim, more
than four months before the Second Sale occurred. See Doc. No.
1–1 at 20–21. Thus, the Khawajas’ complaint itself establishes
that they both “knew” and “should have known” of the facts
supporting their claim well before the Second Sale took place.
See Murphy, 495 A.2d at 1249. Because they failed to raise that
claim in a petition to enjoin the Second Sale before the sale
occurred, they have now forfeited the claim under § 479:25, II.
See Gordonville Corp., 856 A.2d at 752. 7 The Khawajas do not directly respond to BNY Mellon’s
forfeiture argument. Instead, and with little explanation, they
offer three further bases to support their claim: claim and
issue preclusion, the New Hampshire Supreme Court’s decision in
Deutsche Bank Nat. Trust Co. v. Kevlik, 20 A.3d 1002 (2011), and
§ 540:18 of the New Hampshire Revised Statutes.2 See Doc. No. 1-
1 at 12; Doc. No. 6 at 1-2; Doc. No. 9 at 2. These arguments,
however, at best amount to variations of the Khawajas’
substantive claim. Because that claim is forfeited under §
479:25, II, its substantive merits are immaterial, however the
Khawajas choose to characterize them. The Khawajas do not
contend that any of their arguments qualify as an exception to
the § 479:25, II bar, and I am not otherwise aware of any reason
why § 479:25, II should not bar their claim as a matter of law.
2 Even if the preclusion argument were not forfeited under § 479:25, II, it is doubtful that the 2011 Order would preclude BNY Mellon’s possessory action. The Khawajas effectively argue that the 2011 Order extinguished any property interest BNY Mellon may have ever held in the property. See Doc. No. 1–1 at 1–2. The 2011 Order, however, only “declare[d] the foreclosure sale of the subject property void”—that is, the first foreclosure sale that occurred on February 10, 2011. Id. at 14– 15. It did not purport to enjoin any future foreclosure sales, and it did not address title to the property except to invalidate the February 10, 2011 sale. See id.
8 IV. CONCLUSION
For these reasons, I grant BNY Mellon’s motion to dismiss
the Khawajas’ complaint for failure to state a claim upon which
relief can be granted. Doc. No. 5. The clerk shall enter
judgment accordingly and close the case.
SO ORDERED.
/s/Paul Barbadoro________ Paul Barbadoro United States District Judge
September 18, 2014
cc: Azmat Khawaja, pro se Dawn Khawaja, pro se Jennifer Turco Beaudet, Esq. Thomas J. Pappas, Esq.