Edmond v. Live Well Financial, Inc.

Background

Jeneice Edmond, who administers the estate of Clara Edmond, filed this self-represented action against various entities and individuals allegedly involved in Clara Edmond’s mortgage and a later foreclosure proceeding. The complaint asserted two claims under the Racketeer Influenced and Corrupt Organizations Act, commonly called RICO, and a third claim alleging fraud. Edmond alleged that the defendants participated in a scheme to defraud Clara Edmond by intentionally misappraising and inflating the value of the mortgaged property, causing her to agree to a loan exceeding the property’s actual value.

The court had referred the case to Magistrate Judge Sarah Netburn. Her Report and Recommendation advised the court to grant dismissal motions filed by five defendants. As to the other defendants, except Live Well Financial, Inc., the recommendation advised dismissal based on failure to serve them. Judge Netburn also directed Edmond to propose an amended complaint if the identified defects could be cured and to provide proof of service or explain why her time to serve should be extended. Edmond did not object to the recommendation or otherwise respond within the required 14 days.

Analysis

Because Edmond did not timely object, Judge Caproni reviewed the recommendation for clear error on the face of the record. She found none and adopted it in full.

For the RICO claims, Judge Netburn had recommended dismissal because Edmond did not adequately allege either a pattern of racketeering activity or an enterprise. The recommendation explained that the complaint did not allege coordination among the defendant entities or more than one instance of wrongdoing.

For the fraud claim, Judge Netburn had recommended dismissal because Federal Rule of Civil Procedure 9(b) requires fraud to be alleged with particularity. The complaint did not meet that requirement, including because it did not allege that the defendants knew the appraisal value had been inflated.

Disposition

The court granted the pending motions to dismiss at docket entries 14 and 15. It dismissed Schiller Knapp, Lefkowitz & Hertzel, LLP; Mortgage Electronic Registration Systems, Inc.; Champion Mortgage; Nationstar Mortgage LLC doing business as Champion Mortgage; and Nationstar Reo Sub 1B, LLC, with prejudice.

The court dismissed the case as to all remaining defendants without prejudice because Edmond had provided neither proof of service nor an explanation of her efforts to serve them, except for Live Well Financial, Inc. Live Well was subject to an automatic litigation stay because it had filed for bankruptcy. The court declined to grant further leave to amend, noting that Edmond had already been given an opportunity to submit a proposed amended complaint and had not done so. The clerk was directed to terminate all defendants except Live Well, and the action was stayed because the only remaining claims were subject to Live Well’s bankruptcy-related stay. Live Well was ordered to provide a status update on the first business day of every sixth month regarding whether the bankruptcy stay had been lifted, with the first report due June 1, 2020.