United States District Court, E.D. North Carolina, Eastern Division
ORDER AND MEMORANDUM AND RECOMMENDATION
E. Gates United States Magistrate Judge
pro se case is before the court on the motion to proceed
in forma pauperis under 28 U.S.C. § 1915(a)(1)
(D.E. 1) by plaintiff Nellie Newsom ("plaintiff) and for
a frivolity review pursuant to 28 U.S.C. §
1915(e)(2)(B). Plaintiff has also filed a motion for a
temporary restraining order and other injunctive relief. D.E.
1-6 ("TRO Motion"). The motion to proceed in
forma pauperis was referred to the undersigned
Magistrate Judge for determination pursuant to 28 U.S.C.
§ 636(b)(1)(A) and the other matters for issuance of a
memorandum and recommendation pursuant to 28 U.S.C. §
636(b)(1)(B). See Public D.E. dated 23 Oct. 2018. As
set out below, the motion to proceed in forma
pauperis will be allowed; and it will be recommended
that the TRO motion be denied and all but one of plaintiffs
claims-the fifth cause of action-be dismissed for lack of
subject matter jurisdiction pursuant to the
Rooker-Feldman and Younger doctrines and/or
failure to state a claim upon which relief can be granted.
ON IN FORMA PAUPERIS MOTION
court finds that plaintiff has adequately demonstrated her
inability to prepay the required court costs. Her motion to
proceed in forma pauperis is therefore GRANTED.
AND RECOMMENDATION ON FRIVOLITY REVIEW AND TRO
PLAINTIFF'S ALLEGATIONS, CLAIMS, AND TRO MOTION
action, commenced on 25 June 2018, plaintiff alleges
improprieties in lending practices and foreclosure
proceedings relating to her real property located at 544 Pine
Ridge Road, Roanoke Rapids, Halifax County, North Carolina
("the property"). See Compl. (D.E. 1-1)
¶¶ 2, 19. She contends that defendants, who are
originators, servicers, or holders of the mortgage loan on
the property, have violated state and federal regulations.
See Id. ¶¶ 2-18. The alleged violations
are grounded, in part, on the purported fact that defendants
have no ownership interest in the property in question and
should not be permitted to sell, auction off, foreclose on,
or otherwise transfer ownership of it. Id. ¶
in her complaint, plaintiff alleges as follows: On 7 July
2005, plaintiff executed a negotiable promissory note and
security interest in the form of a deed of trust for $249,
000 with defendant Branch Banking and Trust Company
("BBT") as the original lender. Id.
¶¶ 3; 36-38. Plaintiff alleges that on or around 31
October 2005 the promissory note was sold, transferred,
assigned, and securitized to Morgan Stanley Mortgage Loan
Trust 2005-7 ("Morgan Stanley Trust"). Id.
¶ 42. Defendant Mortgage Electronic Registration
Services, Inc. ("MERS") acted as the electronic
agent and as a purported beneficiary for BBT under the deed
and in a capacity as bailor/bailee for each successor
defendant of the Morgan Stanley Trust. Id.
¶¶ 9, 28.
Deutsche Bank National Trust Company ("Deutsche
Bank") is the Trustee of the Morgan Stanley Trust and
defendant Morgan Stanley Mortgage Capital, Inc. ("Morgan
Stanley Mortgage Capital") is the sponsor of the Morgan
Stanley Trust. Id. ¶¶ 4, 7. Defendant
Morgan Stanley Capital I, Inc. ("Morgan Stanley
Capital") is the depositor. Id. ¶ 8.
Defendant Wells Fargo Bank, National Association ("Well
Fargo") is the master servicer of plaintiffs loan.
Id. ¶ 5.
Specialized Loan Servicing, LLC ("Specialized Loan
Servicing") and defendant SN Servicing Corporation
("SN") are servicers of the loan. Id.
¶¶ 6, 10. Defendants FV-I, Inc. ("FV-I"),
Morgan Stanley Mortgage Capital Holdings, LLC ("Morgan
Stanley Mortgage Capital Holdings"), U.S. Bank Trust
National Association ("U.S. Bank Trust"), and Igloo
Series II Trust ("Igloo Trust") are holders of the
loan. Id. ¶¶ 11, 12, 13, 15. Defendant
Hutchens Law Firm ("Hutchens") is the firm
representing SN and a substitute trustee of the loan.
Id. ¶¶ 15, 16. John Does 1-100 are unnamed
defendants who claim any right, title, or interest in
plaintiffs property. Id. ¶ 17.
February 2014, an assignment deed of trust to FV-I, Inc. in
trust for Morgan Stanley Mortgage Capital Holdings was
recorded in Halifax County. Id. ¶ 43. The 24
February 2014 assignment of deed of trust was fraudulently
signed and was an unlawful and void transfer. Id.
November 2016, an assignment of deed of trust to Morgan
Stanley Capital Holdings recorded in Halifax County was
fraudulently signed and was an unlawful and void transfer.
Id. ¶¶ 48-52. Also on 8 November 2016,
another assignment of deed of trust to U.S. Bank Trust as
Trustee of the Igloo Trust was recorded in Halifax County.
Id. ¶ 53. This additional assignment of deed of
trust on 8 November 2016 was also fraudulently signed and was
an unlawful unilateral transfer that is void on its face.
Id. ¶¶ 54-57. Only the depositor, Morgan
Stanley Capital, has the right to convey the asset into the
trust. Id. ¶ 58.
June 2018, defendants fraudulently foreclosed on the
property. Id. ¶ 121.
asserts the following claims or, as she refers to them,
causes of action, each sequentially numbered in the complaint
as indicated: (1) lack of standing to foreclose and wrongful
foreclosure, id. ¶¶ 60-73; (2)
unconscionable contract, id. ¶¶ 74-80; (3)
breach of contract, id. ¶¶ 81-85; (4)
breach of fiduciary duty, id. ¶¶ 86-90;
(5) violations of the Truth in Lending Act
("TILA"), 15 U.S.C. § 1601, et seq.,
id. ¶¶ 91-97; (6) violations of the Real
Estate Settlement Procedures Act ("RESPA"), 1
U.S.C. § 2601, et seq., id. ¶¶
98-103; (7) fraud in the concealment, id.
¶¶ 104-112; (8) fraud in the inducement,
id. ¶¶ 113-119; (9) intentional infliction
of emotional distress, id. ¶¶ 120-130;
(10) slander of title, id. ¶¶ 131-141;
(11) quiet title, id. ¶¶ 142-149; (12)
rescission, id. ¶¶ 150-154; (13)
declaratory relief, id. ¶¶ 155-158; and
(14) a temporary restraining order and other injunctive
relief enjoining sale of the property pending trial,
id. ¶¶ 159-164. In addition to the
injunctive relief noted, plaintiff seeks declaratory relief,
monetary relief between $100, 000 and $2 million (including
compensatory and punitive damages), pre- and post-judgment
interest, the refund of wrongfully paid sums, costs, and such
other relief to which she is entitled. See, e.g.,
Id. at 36-37 ¶¶ A-D, F, G.
complaint, plaintiff references the following exhibits she
purports to attach to her complaint: the deed of trust,
id. ¶ 21; an internet article, id.
¶ 23; an asset securitization manual, id.
¶ 24; a MERS procedural manual, id. ¶ 28;
a MERS patent, id. ¶ 28; a Morgan Stanley
prospectus supplement, id. ¶ 30; and an
affidavit of a forensic expert, id. ¶ 34. But
none of these documents are included anywhere in her filings.
The documents that are attached to the complaint are: an
affidavit by plaintiff (D.E. 1-2), a lis pendens (D.E. 1-3),
and the TRO motion (D.E. 1-6) and a proposed order (D.E. 1-7)
motion seeks essentially the same relief sought by plaintiff
in her fourteenth cause of action-that is, enjoining
defendants from selling the property pending trial on her
APPLICABLE LEGAL STANDARDS FOR FRIVOLITY REVIEW
allowing a party to proceed in forma pauperis, as
here, the court must conduct a frivolity review of the case
pursuant to 28 U.S.C. § 1915(e)(2)(B). The court must
dismiss the if it determines that the action is frivolous or
malicious, 28 U.S.C. § l9l5(e)(2)(B)(i); fails to state
a claim upon which relief can be granted, id. §
l9l5(e)(2)(B)(ii); or seeks monetary relief from an immune
defendant, id § l9l5(e)(2)(B)(ii). 28 U.S.C.
§ 1915(e)(2)(B); see Denton v. Hernandez, 504
U.S. 25, 27 (1992) (standard for frivolousness).
Rule 8 of the Federal Rules of Civil Procedure, a pleading
that states a claim for relief must contain "a short and
plain statement of the grounds for the court's
jurisdiction... [and] a short and plain statement of the
claim showing that the pleader is entitled to relief."
Fed.R.Civ.P. 8(a)(1), (2). Case law explains that the
complaint must '"state[ ] a plausible claim for
relief that 'permit[s] the court to infer more than the
mere possibility of misconduct' based upon 'its
judicial experience and common sense.'" Coleman
v. Md. Court of Appeals, 626 F.3d 187, 190 (4th Cir.
2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679
(2009)). Likewise, a complaint is insufficient if it offers
merely "labels and conclusions," "a formulaic
recitation of the elements of a cause of action," or
"naked assertion[s]" devoid of "further
factual enhancement." Iqbal, 556 U.S. at 678
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007) (internal quotation marks omitted)).
evaluating frivolity specifically, a pro se plaintiffs
pleadings are held to "less stringent standards"
than those drafted by attorneys. White v. White, 886
F.2d 721, 722-23 (4th Cir. 1989). Nonetheless, the court is
not required to accept a pro se plaintiffs contentions as
true. Denton, 504 U.S. at 32. Instead, the court is
permitted to "pierce the veil of the complaint's
factual allegations and dismiss those claims whose factual
contentions are clearly baseless." Neitzke v.
Williams, 490 U.S. 319, 327 (1989). Provided that a
plaintiffs claims are not clearly baseless, the court must
weigh the factual allegations in plaintiffs favor in its
frivolity analysis. Denton, 504 U.S. at 32. The
court must read the complaint carefully to determine if a
plaintiff has alleged specific facts sufficient to support
the claims asserted. White, 886 F.2d at 724.
may consider subject matter jurisdiction as part of the
frivolity review. See Lovern v. Edwards, 190 F.3d
648, 654 (4th Cir. 1999) (holding that "[determining the
question of subject matter jurisdiction at the outset of the
litigation is often the most efficient procedure");
Cornelius v. Howell, No. 3:06-3387-MBS-BM, 2007 WL
397449, at *2-4 (D.S.C. 8 Jan. 2007) (discussing the lack of
diversity jurisdiction during frivolity review as a basis for
dismissal). "Federal courts are courts of limited
jurisdiction and are empowered to act only in those specific
situations authorized by Congress." Bowman v.
White, 388 F.2d 756, 760 (4th Cir. 1968). The
presumption is that a federal court lacks jurisdiction in a
particular case unless it is demonstrated that jurisdiction
exists. Lehigh Min. & Mfg. Co. v. Kelly, 160
U.S. 327, 336 (1895). The burden of establishing subject
matter jurisdiction rests on the party invoking jurisdiction,
here plaintiff. Adams v. Bain, 697 F.2d 1213, 1219
(4th Cir. 1982) ("The burden of proving subject matter
jurisdiction ... is on the plaintiff, the party asserting
jurisdiction."). The complaint must affirmatively allege
the grounds for jurisdiction. Bowman, 388 F.2d at
760. If in a frivolity review the court determines that it
lacks subject matter jurisdiction, it must dismiss the action
pursuant to 28 U.S.C. § 1915(e)(2)(B)(i). More
generally, "[i]f the court determines at any time that
it lacks subject-matter jurisdiction, the court must dismiss
the action." Fed.R.Civ.P. 12(h)(3).
basis for subject matter jurisdiction, so-called federal
question jurisdiction, is that a claim arises under the
Constitution, laws, or treaties of the United States. 28
U.S.C. § 1331. Another basis is diversity of citizenship
or so-called diversity jurisdiction, which requires that the
citizenship of each plaintiff be different from that of each
defendant. Id. § 1332; see Owen Equip.
& Erection Co. v. Kroger, 437 U.S. 365, 372-74
(1978). There are also statutes conferring jurisdiction for
particular types of cases.
Injunctive Relief Enjoining Foreclosure Proceedings
(Fourteenth Cause of Action) (Compl. ¶¶ 159-64) and
fourteenth cause of action and TRO motion-both seeking, as
indicated, to enjoin state court proceedings regarding the
property pending resolution of plaintiff s claims in this
court-should be dismissed and denied, respectively, for lack
of subject matter jurisdiction because they implicate the
Rooker-Feldman doctrine and the Younger
doctrine. Each doctrine is discussed in turn below.
Rooker-Feldman doctrine bars federal courts from
sitting "in direct review of state court
decisions." District of Columbia Court of Appeals v.
Feldman, 460 U.S. 462, 482-84 (1983). "[T]he
Rooker-Feldman doctrine applies only when the loser
in state court files suit in federal district court seeking
redress for an injury allegedly caused by the state
court's decision itself." Davani v. Virginia
Dep't of Transp., 434 F.3d 712, 713 (4th Cir. 2006)
(citing Exxon Mobil Corp. v. Saudi Basic Indus.
Corp., 544 U.S. 280 (2005)). This doctrine also
prohibits a district court from reviewing constitutional
claims that are "inextricably intertwined" with a
state court decision. Shooting Point, LLC v.
Cumming, 368 F.3d 379, 383 (4th Cir. 2004). A
constitutional claim is "inextricably intertwined"
with a state court decision if'"success on the
federal claim depends upon a determination that the state
court wrongly decided the issues before it.'"
Id. (quoting Plyler v. Moore, 129 F.3d 728,
731 (4th Cir. 1997)); see also Curley v. Adams Creek
Assocs., 409 Fed.Appx. 678, 680 (4th Cir. 2011) (holding
that Rooker-Feldman precluded subject matter
jurisdiction over plaintiffs claim that the state court
violated her due process rights by failing to give her notice
before disposing of real property owned by her); Jordahl
v. Democratic Party of Va., 122 F.3d 192, 202 (4th Cir.
1997) (holding that a federal claim is
'"inextricably intertwined" where "in
order to grant the federal relief sought, the federal court
must determine that the [state] court judgment was
erroneously entered or must take action that would render the
judgment ineffectual'" (quoting Ernst v. Child
and Youth Servs., 108 F.3d 486, 491 (3d Cir. 1997))).
other words, Rooker-Feldman applies "when the
federal action 'essentially amounts to nothing more than
an attempt to seek review of [the state court's] decision
by a lower federal court.'" Davis v. Durham
Mental Health Devel. Disabilities Substance Abuse Area
Auth, 320 F.Supp.2d 378, 388 (M.D. N.C. 2004) (quoting
Plyer v. Moore, 129 F.3d 728, 733 (4th Cir. 1997)).
"The key inquiry is not whether the state court ruled on
the precise issue raised in federal court, but whether the
'state-court loser who files suit in federal court seeks
redress for an injury caused by the state-court decision
itself" Willner v. Frey, 243 Fed.Appx. 744, 747
(4th Cir. 2007) (quoting Davani, 434 F.3d at 718).
'" [A] party losing in state court is barred from
seeking what in substance would be appellate review of the
state judgment in a United States district court, based on
the losing party's claim that the state judgment itself
violates the loser's federal rights.'" Brown
& Root, Inc. v. Breckenridge, 211 F.3d 194, 198 (4th
Cir. 2000) (quoting Johnson v. De Grandy, 512 U.S.
Smalley v. Shapiro & Burson, LLP, 526 Fed.Appx.
231 (4th Cir. 2013), the Fourth Circuit ruled that the claims
of borrowers challenging practices engaged in by defendants
during foreclosure proceedings were barred by
Rooker-Feldman. Specifically, in that case, the
borrowers instituted a federal suit charging the substitute
trustees with claims under the Racketeer Influenced and
Corrupt Organizations Act, the Fair Debt Collection Practices
Act, Fair Housing Act, and Civil Rights Act, arising from
their practices of supporting foreclosures with false
affidavits. 526 Fed.Appx. at 235. The Fourth Circuit held
that even though the plaintiffs were not seeking to
"undo" the state court judgments foreclosing on
their homes, their success would necessitate a determination
that the judgments, which awarded legal fees and commissions
in reliance on allegedly false affidavits, were erroneous.
Id. at 236. In short, because it was the state court
judgments that were the cause of plaintiffs' harm, the
court held that the federal court action was barred by
Rooker-Feldman. Id. at 237.
the basis for plaintiffs fourteenth cause of action and the
TRO motion is the state court foreclosure proceedings.
Determination of the fourteenth cause of action and the TRO
motion in her favor could well require this court to find
that completed state court foreclosure proceedings were
conducted in an improper manner, produced an improper result,
or both. The Rooker-Feldman doctrine prohibits this
court from making such a determination. Plaintiff, of course,
retains access to the state courts for pursuit of the relief
court concludes that the Rooker-Feldman doctrine is
implicated by plaintiffs fourteenth cause of action and TRO
motion and, consequently, that this court lacks subject
matter jurisdiction over them to the extent that the
Rooker-Feldman doctrine does apply. To the extent
that the Rooker-Feldman doctrine does apply to them,
the fourteenth cause of action is subject to dismissal and
the TRO motion subject to denial on this ground. See,
e.g., Jones v. Wells FargoBank, N.A., No. CV
6:17-2486-BHH, 2018 WL 4203672, at *2 (D.S.C. 4 Sept. 2018)
("It is abundantly clear both that Plaintiffs instant
claims are "inextricably intertwined" with the
state court foreclosure matters, and that the vast majority
of specific issues he raises have already been 'actually
decided' in the state court cases."); Carmichael
v. Irwin Mort. Corp., No. 5:14-CV-122-D, 2014 WL
7205099, at *3 (E.D. N.C. 17 Dec. 2014) ("This court,
however, lacks subject-matter jurisdiction to sit in direct
review of a North Carolina state foreclosure action.");
Everette v. Peele, No. 5:14-CV-213-BO, 2014 WL
4961099, at *3 (E.D. N.C. 28 July 2014) ("Although
Plaintiff is not explicitly requesting that the court vacate
or 'undo' the state court's judgment of
foreclosure, to grant relief on this claim would require a
finding that the state court's judgment was in error. As
such, this claim should be dismissed as barred by the
Rooker-Feldman doctrine."), mem. &
recomm. adopted, 2014 WL 4961102, at *1 (3 Oct. 2014);
Ruiz v. Nationstar Mortg. LLC, No. 1:12CV272, 2013
WL 4519180, at *3 (M.D. N.C. 26 Aug. 2013) ("Plaintiffs
remedy for these and the other alleged defects in the state
foreclosure proceeding was to appeal through the state
judicial system ...