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Cline v. HSBC Bank USA, N.A.

United States District Court, S.D. West Virginia, Huntington Division

March 28, 2018

HSBC BANK USA, N.A., et. al., Defendants.



         Proceeding pro se, Plaintiff Santana Cline (“Cline” or “Plaintiff”), filed suit in this Court on May 18, 2017. Plaintiff asserted a variety of claims, all touching upon the alleged malfeasance by HSBC Bank USA, N.A. (“HSBC”), Reisenfeld & Associates (“Reisenfeld”), and Christopher A. Dawson (“Dawson”) (all three jointly referred to as “Defendants”) regarding a promissory note in Plaintiff's name, and the foreclosure of her property. Specifically, Plaintiff claims Defendants forged her name on a promissory note, and that they used that note to defraud her by securing mortgage liens on the real property, which Defendants allegedly sought to obtain via a foreclosure sale. Compl., ECF No. 2. Per standing order, the Court referred this case to Magistrate Judge Eifert for Proposed Findings and Recommendations (“PF&R”). Standing Order, ECF No. 4.

         On December 12, 2017, Magistrate Judge Eifert issued a PF&R that addressed both Defendants' Motions to Dismiss (ECF No. 15 & 29) and Plaintiff's Motion to Strike (ECF No. 33). Defendants moved for dismissal under Rule 12(b)(6), claiming that Plaintiff has failed to state a claim, and that to the extent she has stated a claim, her claims are res judicata. Reisenfeld Mem. in Supp. of Mot. to Dismiss, ECF No. 16, at 8-17; HSBC Mem. in Supp. of Mot. to Dismiss, ECF No. 30, at 4. Plaintiff requested the striking of “all Defendant's [sic] pleadings” based, generally, upon her contention that the pleadings contained all manner of falsehoods. Magistrate Judge Eifert recommends that this Court grant Defendants' Motions to Dismiss, deny Plaintiff's Motion to Strike, and dismiss this case. PF&R, ECF No. 43, at 17.

         On December 29, 2017, Plaintiff filed objections to this PF&R.[1] Pl.'s Obj. to PF&R, ECF No. 44. As permitted under Fed.R.Civ.P. 72(b)(2), Reisenfeld and Dawson responded to Plaintiff's objections. Reisenfeld Resp. to Pl.'s Obj., ECF No. 45. Having reviewed Plaintiff's objections under a de novo review, the Court does not agree with them.

         As explained below, the Court ADOPTS Magistrate Judge Eifert's findings and recommendations in the PF&R (ECF No. 43), to the extent they are not contradicted by this Memorandum Opinion and Order. Accordingly, the Court GRANTS Defendants' Motions to Dismiss (ECF Nos. 15 & 29), and DENIES Plaintiff's Motion to Strike (ECF No. 33).

         I. Background

         The background of this case reads as an extended, multi-jurisdictional attempt by Plaintiff to litigate her way toward a fix to a persistently held, perceived wrong. Although this Court first encountered the facts at the heart of this matter in May 2017, Plaintiff has been crisscrossing the country for nearly a decade, airing her grievances before a litany of courts.[2]

         This saga began with the purchase of a house in Dublin, Ohio (“Dublin House”). PF&R, at 2.[3] In April 2006, Cline purchased the residence, taking out a mortgage loan for $433, 200, by executing a promissory note. Id. at 3. To secure the promissory note, Cline also executed and delivered a mortgage deed on the residence, which was subsequently recorded by the Recorder of Franklin County, Ohio. Id. Although she made the first four payments, as laid out in the promissory note and its addenda, Cline soon began missing payments and defaulted. Id. But Cline did not vacate the property.

         In 2007, shortly after having been assigned lender's rights under the promissory note and mortgage deed, HSBC initiated the first of many judicial actions between these parties. On March 13, 2007, HSBC filed a foreclosure complaint against Cline in the Court of Common Pleas of Franklin County, Ohio (“2007 Foreclosure Action”). Id. The Court of Common Pleas entered an order finding that HSBC had a valid mortgage lien on Plaintiff's Dublin House. Id. The court also found that Plaintiff was in default according to the terms of the promissory note, and awarded HSBC “the equity of redemption and dower” in the Dublin House. Id. To permit a quick liquidation of the asset, the court ordered an appraisal and sale in a sheriff's foreclosure sale. Id. 3-4.

         However, in April 2008, before the sheriff's sale could take place, Cline filed her first of five bankruptcy actions. Filed under Chapter 13 of the Bankruptcy Code, and in the United States Bankruptcy Court for the Southern District of Ohio, the petition automatically stayed the sheriff's sale. Id. at 4. The stay permitted Cline to remain in the Dublin House. However, the court dismissed the bankruptcy petition in July 2008 based upon the failure of Cline to present an acceptable plan for confirmation. Id. Since the dismissal removed the stay, the sheriff's sale was rescheduled. Id.

         But the sale would, once again, not happen. Cline filed her second bankruptcy petition in the same court as her first. This time, Cline petitioned under Chapter 7 of the Bankruptcy Code. Id. In her filings, Cline listed the Dublin House as an asset and scheduled the mortgage loan as a secured debt. Id. Importantly, Cline filed a statement of intention to surrender the Dublin House under the bankruptcy plan. Id. Unlike in her first bankruptcy, Cline received a discharge of her debt in February 2009. Id. Despite stating that she would vacate the property as part of the granted bankruptcy, Cline did not leave the Dublin House. Instead, she continued to live there, payment-free. Id.

         After the debt discharge, a third sheriff's sale was scheduled. Id. However, in May 2010, roughly a month before the sheriff's sale was to take place, Cline filed a motion for relief from the 2007 Foreclosure Action judgment in the Court of Common Pleas in Franklin County, Ohio, and asked the court to stay the sale. Id. In that motion, Cline, echoing the allegations made in this matter, claimed that HSBC lacked standing to foreclose upon the Dublin House because the assignment of the mortgage was fraudulent. Id. Regardless of Cline's assertions, on June 29, 2010, the court denied her motion as untimely. Id., 4-5.

         On July 7, 2010, repeating a so-far successful maneuver, Cline filed yet another bankruptcy petition, her third. Id. at 5. This petition, filed two days before the sheriff's sale, automatically stayed that sale. Id. As part of this third bankruptcy, Cline filed two adversary proceedings. Cline v. HSBC, et al, No. 2:10-ap-2482 (Bankr. S.D. Ohio); Cline v. HSBC, et al, No. 2:10-ap-2618 (Bankr. S.D. Ohio). In the adversary proceedings, Cline admitted signing the promissory note and mortgage deed on the Dublin House, however, Cline contended that HSBC's assignment was fraudulent. Id. This was the second time Cline had implored a court to review the authenticity of the mortgage assignment. As part of this effort, Cline requested that the Ohio bankruptcy court cancel the mortgage. Id. And Cline claimed that, due to HSBC's fraud, she should also be awarded costs, and both compensatory and punitive damages. Id. The court apparently disagreed, however, and dismissed the adversary proceedings.

         Having scheduled and canceled three sales, the fourth attempt to conduct the sheriff's sale was set for May 6, 2011. True to form, Cline once again filed another motion for relief from judgment and stay of sale in the 2007 Foreclosure Action. PF&R, at 5. In that motion, Cline repeated her claim that HSBC had no legal interest in the Dublin House, due to the allegedly fraudulent assignment. Id. But the court found that Cline has sowed this ground before, “and did not present any new evidence” to support her claims. Ex. C to HSBC's Mot. to Dismiss, ECF No. 29-2, at 6. Although the court denied the motion as meritless, it delayed the sheriff's sale, and forced a fifth scheduled date. PF&R, at 5.

         One day before that fifth date for the sheriff's sale, Cline filed her fourth bankruptcy action. Id. She returned to the Bankruptcy Court for the Southern District of Ohio, filing under Chapter 13. In re Cline, No. 2:11-bk-5493 (Bankr. S.D. Ohio). Of course, the automatic stay prevented the impending sale of the Dublin House. Id. In that action, Cline filed another adversary proceeding, which reiterated her contentions that the HSBC assignment was fraudulent and forged. Cline v. HSBC, No. 2:11-ap-2336 (Bankr. S.D. Ohio). Both the adversary proceedings and the bankruptcy were dismissed.

         A sixth attempt was made at conducting the sheriff's sale; this time it was set for March 30, 2012. PF&R, at 6. For nearly six years, Cline had remained in the Dublin House, without making payments. Instead of allowing the sale to continue, Cline filed yet another judicial action. This time, falling back upon the Court of Common Pleas of Franklin County, Ohio, she brought a “quiet title” action for the Dublin House. Id. She based the action upon the same allegations of a fraudulent and forged assignment. Id. Granting summary judgment in favor of HSBC on Cline's claims, the court found that claim and issue preclusion barred Cline's attempt at re-litigating matters that had been, or should have been raised, during the 2007 Foreclosure Action. Id.

         But this did not cease Cline's attempt to litigate the issue. In 2013, Cline filed a civil action in the District Court for the Southern District of Ohio. Cline v. Mortg. Elec. Registration Sys., Inc., No. 2:13-cv-401, 2013 WL 6687257 (S.D. Ohio Dec. 18, 2013). Cline again relied upon her refrain that HSBC's mortgage assignment was fraudulent and forged. Id. at *5. Further, she asserted claims similar to those she has brought before this Court. Id. at *1. But the court rejected Cline's arguments. Id. *2. Focusing upon the 2007 Foreclosure Action, the court noted that the Court of Common Pleas had found that the mortgage was properly recorded and validly assigned to HSBC, and that Cline had defaulted. Id.

         Ultimately, the district court dismissed Cline's claims. Id. at *6. The court found that multiple legal frameworks required the dismissal of Cline's complaint. Relevantly, the court found that claim and issue preclusion “prevent this Court from re-examining the issues resolved on summary judgment by the state court in the foreclosure action and from relitigating the claims that were raised or could have been raised.” Id. at *5.

         Roughly six months after she filed the civil action in the Southern District of Ohio, Cline filed another civil action, but this time her complaint traveled across the country. On November 1, 2013, Cline filed a complaint in the Central District of California, making similar allegations to what she has made in this case. Cline v. CBSK, No. SACV 13-1720-JLS(JPRx), 2015 WL 1005520, at *1-2 (C.D. Cal. Mar. 5, 2015). Again, Cline argued that HSBC had benefited from a fraudulent assignment of the mortgage on the Dublin House, and that the foreclosure sale should be invalidated upon this ground. Id. at *2. However, the court found that res judicata barred the suit. Id. at *6. According to the court, the complaint filed in the District Court for the Southern District of Ohio in 2013 arose from the same “transactional nucleus of facts.” Id. at *4. Cline, said the court, had already addressed the same claims, between the same parties, and the Southern District of Ohio court had reached a final judgment on the merits. Id. at *6. Based upon that, the court granted HSBC's motion to dismiss. Id.

         In the same year that the California federal court dismissed her complaint, Cline turned back to the protections offered by the bankruptcy code. She filed a proceeding under Chapter 11 in the Bankruptcy Court for the District of Nevada, constituting her fifth bankruptcy action. PF&R, at 6-7. The bankruptcy court found that Cline had improperly included the Dublin House in her list of assets. Id. at 8. The court noted that the 2007 Foreclosure Action had extinguished any interest Cline held in the Dublin House. Id. Further, the bankruptcy court found that Cline had filed for bankruptcy in bad faith in an effort to “delay, hinder, and defraud creditors.” Ex G to Reisenfeld Mot. to Dismiss, ECF No. 15-1, at 178-79. Consequently, the court barred Cline “from filing another bankruptcy anywhere in the United States for one calendar year.” Id. at 179.

         On same day that the Nevada bankruptcy judge found that Cline had no interest in the Dublin House, Cline brought the Dublin House dispute to West Virginia. Cline executed a quitclaim deed, transferring any interest she may have had to her stepfather, Timothy Dials (“Dials”), who lives in Scott Depot, WV. PF&R, at 9; Ex H to Reisenfeld Mot. to Dismiss, ECF No. 15-1, at 181-82. In exchange, Dials reportedly gave Cline five dollars. Id. According to the quitclaim deed, the transfer was made subject to any encumbrances, restrictions, liabilities, or liens. Id.

         Soon thereafter, Dials filed a Chapter 13 bankruptcy petition in the Bankruptcy Court for the Southern District of West Virginia. See In re Dials, No. 6:16-bk-60085, 575 B.R. 137 (Bankr. S.D. W.Va. 2017). In the filing, Dials listed the Dublin House as an asset valued at $600, 000, but failed to disclose HSBC's mortgage lien as a debt. Id. at 137. After discovering the bankruptcy action, HSBC filed an objection stating its interest, and notified the Court that the mortgage had long been in default. Id. Defendants Reisenfeld and Dawson ...

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