Marrero v. U.S. Bank National Association

Background

Robert W. Marrero, proceeding without a lawyer, sued U.S. Bank National Association, as trustee for Citigroup Mortgage Loan Trust Inc., Asset-Backed Pass-Through Certificates, Series 2006-HE3; Citigroup Mortgage Loan Trust Inc.; Citibank, N.A.; Specialized Loan Services LLC; and Mortgage Electronic Registration Systems, Inc. Marrero sought to quiet title to his property and asserted eleven causes of action arising from defendants’ claimed interests in the property and U.S. Bank’s foreclosure efforts.

U.S. Bank had started a foreclosure case in state court in 2008. In 2021, after more than thirteen years of litigation, the state court dismissed that foreclosure action after finding that U.S. Bank had not established that it possessed the mortgage note when it started the case or that it had mailed the required notice of default. U.S. Bank later started a second foreclosure case in state court. That case and Marrero’s appeal remained pending when the federal court considered this action.

Defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), which concerns subject-matter jurisdiction, and Rule 12(b)(6), which concerns whether a complaint states a legally sufficient claim. The court had previously denied Marrero’s motion to send the case back to state court.

Standing ruling

The court held that Marrero lacked prudential standing to bring the Second, Fourth, and Ninth Causes of Action. Prudential standing limits a plaintiff to asserting his own legal rights and interests rather than the rights of third parties. These claims challenged defendants’ acquisition or transfer of the mortgage based on alleged violations of state law, MERS’s internal procedures, and federal bankruptcy law. Marrero did not allege that he was a party or beneficiary to those transactions.

The court held that Marrero did have standing for the Fifth and Sixth Causes of Action because, liberally construed, those claims sought to quiet title. A person with an interest in real property may bring such a claim, and Marrero’s interest had not been extinguished because the first foreclosure action was unsuccessful and the second foreclosure action remained pending.

Abstention from parallel state litigation

The court dismissed the Third, Fifth, Sixth, Seventh, and Eighth Causes of Action under the Colorado River doctrine. This doctrine permits a federal court, in exceptional circumstances, to refrain from deciding a case when parallel state-court litigation could resolve the dispute comprehensively and abstention would conserve judicial resources.

The court found that this federal case and the second state foreclosure case were parallel because they involved substantially the same principal parties and issues. Both concerned the validity of U.S. Bank’s interest in the property and the propriety of starting the second foreclosure case.

The Third, Fifth, and Sixth Causes of Action were construed as quiet-title claims. Abstention was appropriate because the state foreclosure case was an in rem proceeding involving the same property, the state court had assumed jurisdiction over that property, and the state case had progressed further. The federal quiet-title claims involved state law and did not implicate federal rights that the state court could not protect. Accordingly, the court dismissed those three causes of action.

The Seventh and Eighth Causes of Action were construed as requests for declarations that the second foreclosure case violated New York Civil Practice Law and Rules section 205 or was barred by the statute of limitations. The court found that these claims duplicated arguments Marrero had already raised in the state case and that deciding them in federal court would waste judicial resources and create duplicative litigation. The court therefore dismissed both causes of action.

Failure to state a claim

The court dismissed the First Cause of Action, which it treated as a claim under the Fair Credit Reporting Act. Although Marrero’s complaint referred to the Fair Debt Collection Practices Act, the court noted that he cited only Fair Credit Reporting Act provisions and alleged problems involving credit reports and defendants’ failure to investigate disputed entries.

The court explained that a private plaintiff may pursue a claim based on a furnisher’s failure to investigate disputed credit information only when the furnisher received notice of the dispute from a consumer reporting agency. Marrero alleged that he informed defendants directly that the information was inaccurate, but he did not allege that a consumer reporting agency gave defendants the required notice. To the extent he challenged the furnishing of inaccurate information itself, the court held that those claims could be enforced only by federal or state authorities. The First Cause of Action was therefore dismissed.

Marrero’s Tenth Cause of Action asserted negligent and intentional infliction of emotional distress under New York law. In his opposition, he stated that he had not asserted a claim seeking a monetary award for emotional distress. The court deemed those claims withdrawn and dismissed the Tenth Cause of Action.

The court dismissed the Eleventh Cause of Action for attorney’s fees and costs arising from the first foreclosure case. It held that New York law does not recognize an independent cause of action for sanctions under the authorities Marrero cited. The court also held that, to the extent Marrero intended to assert abuse of process, merely starting a civil action was insufficient to state that claim.

Leave to amend and disposition

The court denied leave to amend. Although courts generally allow amendment and give special consideration to complaints filed without a lawyer, amendment may be denied when it would be futile. The court concluded that Marrero could not cure the lack of standing, the overlap with the pending state foreclosure case, or the defects in his remaining claims through better pleading.

The court granted defendants’ motion to dismiss, denied leave to amend, instructed the clerk to terminate the motion, and directed the clerk to close the case. The opinion does not state that the dismissal was with or without prejudice.