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Salazar v. Bank of America, N.A.

United States District Court, M.D. Florida, Tampa Division

July 24, 2018

MOISES SALAZAR, Plaintiff,
v.
BANK OF AMERICA, N.A., Defendant.

          ORDER

          STEVEN D. MERRYDAY UNITED STATES DISTRICT JUDGE.

         A decade ago, the Treasury Department introduced the Home Affordable Modification Program, which allegedly requires a participating bank to use “reasonable efforts” to modify the mortgage of a person in default or reasonably likely to default.[1] After an eligible mortgagor applies for a modification, the program requires several “trial payments” before the bank approves the modification.

         THE PROCEDURAL HISTORY

         In June 2017, Moises Salazar and 118 other plaintiffs sued Bank of America in a single action.[2] No. 8:17-cv-1534-RAL (M.D. Fla. June 27, 2017). The 292-page “shotgun” complaint, which copied swaths from a qui tam complaint in the Eastern District of New York, [3] alleged fraud and the violation of Florida's Deceptive and Unfair Trade Practices Act. In the part of the complaint specific to him, Salazar alleged that in July 2011 a Bank of America employee, “Jorge, ” told Salazar that a modification requires a default. (Doc. 1 at ¶ 209 in No. 17-cv-1534) Bank of America allegedly omitted to mention that a reasonably foreseeable likelihood of default might qualify a mortgagor for a modification. Moving to dismiss the complaint, Bank of America argued misjoinder of the plaintiffs' claims, failure to plead fraud with particularity, failure to state a claim, expiration of the four-year limitation, and the absence of a private right to sue a bank for violating the requirements of the Home Affordable Modification Program.

         Before resolving the motion to dismiss, the presiding judge observed that the complaint, which alleged neither each plaintiff's citizenship nor the amount in controversy between each plaintiff and Bank of America, failed to invoke diversity jurisdiction. (Doc. 15 in No. 17-cv-1534) Ordered to amend the complaint to invoke diversity jurisdiction, Salazar and the other plaintiffs submitted a 403-page complaint. (Doc. 16 in No. 17-cv-1534) For the second time, Bank of America moved to dismiss Salazar's complaint and repeated the arguments from the earlier motion. The presiding judge in that action found misjoinder, severed the plaintiffs' claims, and ordered the plaintiffs to sue separately.

         The plaintiffs heeded the presiding judge's command. Between October 30, 2017, and November 3, 2017, more than a hundred plaintiffs sued Bank of America in the Middle District of Florida in eighty actions and alleged fraud under Florida common law. Excepting names, dates, addresses, and the like, the complaints are identical. The actions are distributed among eight district judges in the Middle District of Florida. In two actions, the presiding judges found the claims barred by the four-year limitation.[4]

         In Salazar's third complaint (but the first complaint in this case), Salazar alleged (Doc. 1) four misrepresentations by Bank of America. First, Bank of America allegedly failed to mention that a reasonably foreseeable danger of default might qualify a mortgagor for a modification; second, Bank of America stated that the mortgagor failed to provide Bank of America with the documents necessary to complete the modification; third, Bank of America orally notified the mortgagor that the bank approved the requested modification; and fourth, Bank of America charged a “fraudulent” inspection fee. For the third time, Bank of America moved (Doc. 9) to dismiss the complaint. Salazar has not moved at any moment in this action for leave to amend the complaint.

         A February 1, 2018 order (Doc. 12) dismisses each fraud claim except the claim that Bank of America omitted to mention that a reasonably foreseeable likelihood of default might qualify a mortgagor for a modification. In this claim, Salazar alleged that Bank of America instructed him on July 28, 2011, to “refrain from making his regular mortgage payments” in order to qualify for a modification. (Doc. 1 at ¶ 37) Bank of America allegedly omitted to mention that a reasonably foreseeable likelihood of default can qualify a mortgagor for a modification. (Doc. 1 at ¶ 37) Unaware of his option not to default, Salazar allegedly “refrained from” paying his mortgage and, as a result, “fell into default status.” (Doc. 1 at ¶ 39) As a “direct result” of Bank of America's alleged omission, Salazar allegedly suffered the loss of both his home and the equity in his home. (Doc. 1 at ¶ 39)

         Moving (Doc. 24) for summary judgment, Bank of America observed that Salazar defaulted in June 2008, three years before Bank of America's alleged omission. In response to the motion for summary judgment, Salazar tacitly conceded that he defaulted before the alleged misrepresentation, affirmed that Bank of America advised him not to cure the default, and argued that he suffered a foreclosure after relying on Bank of America's advice. Objecting to Salazar's maintaining two putatively irreconcilable sets of factual assertions (that is, “I was not in default” and “I was in default”), Bank of America replied (Doc. 30) that Salazar cannot in effect amend his complaint by responding to a motion for summary judgment with facts that conflict with the allegations in the complaint.

         Identifying the discrepancy between the allegations in the complaint and the argument in the response, a May 18, 2018 order (Doc. 33) permits Salazar a final opportunity to amend the complaint to clarify the facts that substantiate the fraud claim. Although nothing in the May 18 order permits Salazar to assert a new claim, Salazar attempted (Doc. 35) to allege a new claim under Florida's Deceptive and Unfair Trade Practices Act. Because Salazar never received leave to assert a FDUTPA claim, a June 5, 2018 order (Doc. 38) strikes the third amended complaint and permits Salazar a final chance to clarify the fraud claim.

         THE OPERATIVE COMPLAINT

         In the fourth amended complaint (Doc. 39), Salazar tacitly concedes that he defaulted before the misrepresentation. For the fourth time, Bank of America moves (Doc. 41) to dismiss the complaint. This order will not repeat or resolve all of the arguments in the motion to dismiss, but several arguments merit discussion.

         First, Bank of America argues persuasively that Rooker-Feldman bars the fraud claim.[5] Responding that Bank of America “gross[ly] misappl[ies]” Rooker-Feldman, the plaintiff argues that the fraud claim “do[es] not require a determination that the state court erroneously entered the foreclosure judgment.” (Doc. 46 at 4) According to the plaintiff, the fraud claim amounts not to an indirect attack on the foreclosure judgment but rather a claim that Bank of America's “fraudulent actions resulted in a wrongful denial of a HAMP modification.”[6] The plaintiff concludes, “It is because of this denial that Plaintiff faced foreclosure.”

         The weight of authority strongly supports Bank of America's argument that Rooker-Feldman bars the fraud claim. In Figueroa v. Merscorp, Inc., 766 F.Supp.2d 1305 (S.D. Fla. 2011) (Altonaga, J.), aff'd, 477 Fed.Appx. 558 (11th Cir. May 11, 2012), a bank sued in state court to foreclose a mortgagor's property, and the state court entered judgment for the bank and ordered a foreclosure sale. Moving in state court to vacate the judgment, the mortgagor argued that the bank secured the foreclosure judgment through fraud. After the state court denied the motion, the mortgagor sued the bank in federal court under RICO and “[sought] damages arising out of the loss of his home.” After thoroughly surveying the authority, Judge Altonaga found the claim “inextricably intertwined” with the foreclosure judgment. 766 F.Supp.2d at 1315-25. Affirming the dismissal under Rooker-Feldman, the Eleventh Circuit concluded, “The state court ...


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