Horsburgh v. Wells Fargo Bank, N.A.

Background

Iain Horsburgh brought 19 claims concerning mortgage transactions involving Bank of America, N.A. and Countrywide Home Loans, Inc. The claims included breach of contract, intentional and negligent misrepresentation, breach of the implied covenant of good faith and fair dealing, promissory estoppel, unjust enrichment, interference with prospective economic advantage, fraudulent conveyance, conversion, constructive trust, quiet title, emotional distress, violations of the Equal Credit Opportunity Act, Fair Credit Reporting Act, Real Estate Settlement Procedures Act, and Fair Debt Collection Practices Act, and a request for injunctive relief.

Horsburgh alleged that mortgage documents and assignments contained filing deficiencies and may have been improperly signed. A state-court foreclosure action was filed by U.S. Bank in 2013. A final judgment of foreclosure and sale was entered on December 7, 2016, and the property was sold on October 11, 2019. Wells Fargo had originally been named as a defendant but was voluntarily dismissed with prejudice before this opinion.

Defendants moved to dismiss for lack of subject-matter jurisdiction and failure to state a claim. The motion was unopposed by Horsburgh.

Claims barred by the state-judgment review rule

The court applied the Rooker-Feldman doctrine, a rule that generally prevents a federal district court from acting as an appeals court over a state-court judgment. The court held that Counts Six, Seven, Nine, Ten, Eleven, Twelve, and Nineteen were barred because the alleged injuries arose from the foreclosure judgment and the requested relief would require overturning that judgment.

The affected claims were unjust enrichment, intentional interference with prospective economic advantage, fraudulent conveyance, conversion, imposition of a constructive trust, quiet title, and injunctive relief. The court dismissed these claims for lack of subject-matter jurisdiction.

The court determined that the remaining claims did not clearly seek review of the state foreclosure judgment. It therefore considered other grounds for dismissing them.

Statute of limitations

The court held that Counts Thirteen, Fourteen, Sixteen, Seventeen, and Eighteen were untimely. These claims were intentional infliction of emotional distress, negligent infliction of emotional distress, Fair Credit Reporting Act, Real Estate Settlement Procedures Act, and Fair Debt Collection Practices Act claims.

The court applied a one-year limitations period to the intentional-infliction claim and a three-year period to the negligent-infliction claim. It concluded that both were untimely even using March 14, 2018—the date of the mortgage analysis and securitization audit—as the latest possible starting point. It also held that the Fair Credit Reporting Act, Real Estate Settlement Procedures Act, and Fair Debt Collection Practices Act claims were filed too late under the limitations periods applicable to those statutes.

The court dismissed these five claims with prejudice. It did not decide the limitations issue for Counts One through Five and Count Fifteen because the complaint did not make the accrual dates clear; instead, it dismissed those claims on pleading grounds.

Failure to state a claim

The court dismissed Count Eight, negligent interference with prospective economic advantage, with prejudice because New York does not recognize it as a valid cause of action.

The court dismissed the breach-of-contract claim because Horsburgh did not provide nonconclusory facts explaining what contract existed, how any defendant breached it, or what damages resulted. It dismissed the intentional and negligent misrepresentation claims because Horsburgh did not adequately identify incorrect information, detrimental reliance, or a duty requiring the defendants to provide accurate information. It dismissed the implied-covenant claim because it duplicated the breach-of-contract claim.

The court dismissed the promissory-estoppel claim because Horsburgh did not identify a clear and definite promise on which he relied. It dismissed the Equal Credit Opportunity Act claim because the complaint did not adequately allege the required elements, including that any unfavorable treatment resulted from a preference for a person outside a protected class.

Disposition

Judge Nelson S. Roman granted Defendants’ motion to dismiss. Counts Six, Seven, Eight, Nine, Ten, Eleven, Twelve, Thirteen, Fourteen, Sixteen, Seventeen, Eighteen, and Nineteen were dismissed with prejudice. Counts One, Two, Three, Four, Five, and Fifteen were dismissed without prejudice. Horsburgh was permitted to file an amended complaint addressing claims not dismissed with prejudice by April 26, 2023; otherwise, those claims would be deemed dismissed with prejudice.