Zambrano v. HSBC Bank USA, N.A. et al, No. 1:2009cv00996 - Document 57 (E.D. Va. 2010)
Court Description: MEMORANDUM OPINION in re Motion for Summary Judgment. Signed by District Judge Claude M. Hilton on 5/25/10. (klau, )
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IN THE FOR THE UNITED STATES DISTRICT EASTERN DISTRICT OF COURT VIRGINIA Alexandria Division JENNY ZAMBRANO, v. CLERK, U.S. DISTRiCT COURT ALEXANDRIA, VIRGINIA ) INC. e_t aJL_, Civil Action No.# ) MEMORANDUM This matter comes before 2009 Plaintiff OPINION the Court complaint foreclosure and sale of Virginia 20110, 01:09-cv-996 ) Defendants. Summary Judgment. rr MAY 2 5 2010 ) ) ) ) Plaintiff, HSBC BANK USA, n 8033 on Defendants' seeks Plaintiff entered into a to void the April Lomond South Drive, her residential property loan (the Motion for (the Manassas, "Property"). "Loan") on May 17, 2006 evidenced by a promissory note (the of placing a security interest on the trust (the Property. The Corporation P.C. "Deed of Trust") loan named Defendant ("Fremont") ("L&N") as as "Note") 15, Fremont the Lender, the Trustee, and secured by a deed Investment Defendant Inc. is originating mortgages. professional the corporation Commonwealth of electronic ("MERS") as existing and Virginia. & Neyhart, and Defendant Mortgage Electronic Registration Systems, in the business of Long & Loan MERS' the Beneficiary. L&N is a organized under business Fremont includes registration and transfer of mortgages, the laws the specifically of including the Property. After executing the loan payments payments as to loan documents, Fremont. Later, required under she the Note Plaintiff has not alleged that paid off, released, or canceled. against Defendants. First, claim that [a] she is Plaintiff began making stopped making her loan and Deed. the secured Note has been Instead, she asserts Plaintiff alleges two claims in her quiet title "the only party to this matter that can prove legal and equitable ownership interest in the Property." Second, Plaintiff alleges the Defendants Plaintiff in her declaratory judgment claim that "conducted a in violation of On May 17, 2006, foreclosure proceeding against the law and contract." Plaintiff entered into the Loan with Fremont evidenced by the Note and secured by the Deed of Trust. The Deed of the Note, Trust placed a Plaintiff negotiable explicitly agreed that instrument, transfer this Note. security interest on the stating Property. the Note was "I understand that In a fully the Lender may The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the agreed that 'Note Holder.'" the "Note or a partial with this Security Instrument) without prior In the Deed of Trust, notice to On or about August interest Plaintiff in the Note (together can be sold one or more times Borrower." 1, 2006, Fremont negotiated ownership and -2- possession of the Note to Defendant as evidenced by paragraph 3 Tidwell, of the HSBC Bank USA, "in blank" by stamping on "Pay to the Order of endorsement was the back of Fremont the Note without recourse." The signed by Doug Pollock, Assistant Vice President Fremont. On or about August Deed of of legal HSBC is a bank that buys and sells mortgages. endorsed the Note for ("HSBC"), Declaration of Judy A. Senior Litigation Processor for Litton's department. N.A. 1, 2006, Fremont Trust bearing Plaintiff's the Trust, delivered the original signatures HSBC retained possession of to HSBC. the original Note and Deed bearing Plaintiff's original signatures were the original transferred by Fremont until given to Glasser & Glasser, P.L.C. and trustee's in this sale at issue Plaintiff admits that she obligations under the Note. On behalf from the date they documents were in relation to the foreclosure action. "refused to pay" On August 1, 2007, her repayment Plaintiff defaulted on her loan obligations by failing to make her mortgage loan payment. Up to the date of loan payment made by Plaintiff On May 7, obligations as 2008, Fremont this opinion, was on July transferred 1, its the last mortgage 2007. rights and loan servicer for the loan at issue to Defendant Litton Loan Servicing LP ("Litton"), also buys and sells mortgages. a limited partnership that On December 4, -3- 2008, Litton gave Plaintiff notice of payment of not the her default and HSBC's Loan pursuant cure her default by Default. Litton, On March 13, the 2009, to the Note date HSBC, to 1, to the Deed of 2009, sale On April trustee's the Notice did of loan servicer substitute trustee sale and 13, of invoke the power of and Virginia foreclosure Glasser & Glasser notified Plaintiff of scheduled 6 Trust the for April 2009, 15, law. the 2009. Glasser & Glasser advertised the Property scheduled for April Washington Examiner newspaper. Glasser Plaintiff the Deed. sale pursuant trustee's in the through its HSBC instructed Glasser & Glasser to On April to accelerate and Deed. specified appointed Glasser & Glasser as pursuant intent foreclosed upon and sold On April the 15, 15, 2009, Property via a 2009 in Glasser & trustee's sale. HSBC, by and through its loan servicer, Litton, produced to Glasser & Glasser the original Note and original Deed of Trust bearing Plaintiff's original endorsement. On May 19, 2009, signatures and Fremont's blank Glasser & Glasser executed the Trustee's Deed conveying ownership of Plaintiff. in the On July 13, 2009, the Property from Glasser recorded the Trustee's Deed Prince William County Land Records. Plaintiff filed this action on July 31, three and one-half months after the -4- 2 009, approximately foreclosure and trustee's sale. Plaintiff originally for the County of September 3, Defendants 2009, (2) violation of violation of (6) accessories,-" for (1) violation of -- wrongful Court 2009. removed the action to this the Fair Debt "illegal (8) in the Circuit Virginia on July 31, On Court. to assert the Truth in Lending Collection Practices Act; the Real Estate Settlement declaratory judgment enrichment; action Plaintiff amended her complaint sixteen separate claims Act; this Prince William, 2009, On September 23, filed Procedures Act; foreclosure; (5) (3) (4) unjust gambling;" (7) "illegal gambling "pyramid scheme;" (9) violation of Virginia's false advertising statutes; (10) criminal violation of Virginia's sales (12) negligent statutes; breach of (16) (11) fiduciary duty; violation of States fraud; (14) Plaintiff's quiet Court dismissed fourteen of title; due process and Virginia Constitutions. Plaintiff's P. (13) injunction; and rights under the United claims. 2009, this Defendants' the two remaining claims title and declaratory judgment. Defendants move Civ. (15) On November 9, motion for summary judgment addresses for quiet supervision; 56(b). "who fails for summary judgment pursuant to Fed. R. Summary judgment should be entered against a party to make a showing sufficient existence of an element essential to that party's which that party will bear the burden of Corp. v. Catrett, 477 U.S. 317, 322 -5- to establish the proof (1986). at case, and on trial." Celotex In such situations, there can be complete "lno genuine issue as failure of proof nonmoving party's immaterial." Id. to any material 323. since a concerning an essential element of case necessarily renders at fact,' As all other the facts the Fourth Circuit has held: Though the burden of proof rests initially with the moving party, when a motion for summary judgment is made and supported as provided in Rule 56, the nonmoving party must produce "specific facts showing that there is a genuine issue for trial," rather than resting upon the bald assertions of his pleadings. Ross v. Comms. (internal Satellite Corp.. citations omitted) 759 Hopkins, 490 U.S. "affirmative obligation ... Humphreys Co.. 818 364 228 (1989). to prevent Trial 1128 1985) Price judges have an 'factually unsupported from proceeding to trial." F.2d 1126, (4th Cir. rev'd on other grounds. Waterhouse v. claims and defenses' F.2d 355, (4th Cir. Felty v. 1987) Graves- (citations omitted). To survive "'specific trial.'" Corp.. Fed. there at is 586. facts U.S. Civ. Cir. 574, P. 587 56(e)). Nor is the 1992). Hospital (emphasis is not enough as adequate Corp. a genuine issue for Co.. v. Zenith Radio in original) "simply [to] to defeat The non-moving party must (quoting show that facts." Id. a scintilla of evidence" of Am.. -6- Ltd. to the material "mere existence of speculation" Baber v. is Indust. (1986) It Plaintiff must present there some metaphysical doubt "unsupported motion. showing that Matsushita Electric 475 R. summary judgment, 977 "make a F. or summary judgment 2d 872, 875 (4th a showing sufficient to establish the party's case" Wildlife Motel all, existence of to avoid summary judgment. Federation, Corp., an element essential 900 497 U.S. F.2d 28, 31 is not an entitlement. minds would recognize as Communications 871, 883 (4th Cir. Luian v. (1990); 1990). to that National Davis v. "A trial, Thoman after It exists to resolve what reasonable real factual disputes." Satellite Corp.. 759 F.2d 355, 364 Ross v. (4th Cir. 1985) . Here, Plaintiff's assertions that party to this matter that can prove interest in the "Plaintiff (2) Defendants foreclosure proceeding against the Plaintiff are contradictory to Virginia's and to Defendants' this matter. Defendants' is the only legal and equitable ownership and and contract" Property", (1) verified statements "conducted a in violation of foreclosure Plaintiff has presented no evidence to call submissions into question. and equitable ownership of the Property. shows not the Defendants, Plaintiff, Indeed, are Nor can Plaintiff the only parties the Plaintiff the submit any evidence showing that Defendants violated any law or breached any contract conducting legal the evidence that can demonstrate an equitable and legal ownership of Property. laws and documents presented in Plaintiff provides no evidence disputing Defendants' that law in foreclosure. claims that she is the -7- "only party that can prove [a] legal and equitable There is no dispute ownership that interest Plaintiff in the Property." entered into the loan evidenced by the Note and secured by the Deed of Trust placing a security interest Fremont. as in the Property. After origination, trustee Fremont negotiated the Note for the Trust by endorsing the Note delivering physical possession of Persons The originating lender was entitled to enforce "holder of the instrument." Va. "in blank" the original Note a negotiable Code § instrument 8.3A-301. As and to HSBC. include the the originating lender, Fremont was entitled to enforce the debt obligation against Plaintiff. Fremont's "blank indorsement" "bearer paper." Va. an Code § the holder of to HSBC instrument becomes payable terms against At Trust the same to HSBC. possession of the negotiated by specially indorsed." and delivery of HSBC rendered HSBC a holder of into "When indorsed in blank, to bearer and may be transfer of possession alone until its and essentially converted the Note 8.3A-205(b). Fremont's blank endorsement the Note Id. the original Note instrument to entitled to enforce Plaintiff. time, Fremont delivered the original Deed of However, even if Fremont the Deed of Trust to HSBC, had not conveyed physical the negotiation of the Note from Fremont to HSBC carried with it the equitable security of the Deed of 779, 784 (1924) Trust. See, e.g., ("[I]n Virginia, Williams v. as -8- Gifford, 139 Va. to common law securities, the law is that both deeds of trust and mortgages are equity as mere securities assigned the deed of with it."); for the debt and whenever the debt is trust or mortgage is assigned or transferred Stimpson v. undoubtedly true Bishop. invoke the face of terms of sale of the Note 190, the secured and HSBC was Deed of Trust, including the Property upon Plaintiff's shows that the Note has and, simple. therefore, holder of on the HSBC enjoyed the was foreclosure is no dispute mortgage payments. that she entitled to the power to The The foreclose on the security of As a the Deed of trustee pursuant to the Deed of Trust laws. that In fact, "refused to pay" the Note. authorized to initiate the foreclosure Property through the There is carries with default. was a holder entitled to enforce therefore, and Virginia's ("It HSBC owned and possessed the original Note the Note, Trust and, (1886) a blank endorsement. issue of whether Defendants had authority to Property is 200-01 formal assignment or delivery."). The Note continued to be the 82 Va. that a transfer of a secured debt it the security without enforce regarded in Plaintiff stopped paying her Plaintiff declares her obligations under in her Complaint the Note. Plaintiff defaulted on the Note by missing the payment due on August 1, years. trustee 2007. Plaintiff has remained in default Virginia Code to § 55-59(7) states the authority of foreclose and sell property provided as -9- for over two the security for a loan after In the borrower the event secured, the in default. default or any part payment of of of is in the payment thereof, of the at maturity, interest when due, or of or debt in the the breach of any covenants entered into or imposed upon the grantor, then at the request of any beneficiary the trustee shall forthwith declare all the debts and obligations secured by the deed of trust at once due and payable and may take possession of the property and sell the same at auction .... proceed to Va. Code § 55-59(7). Furthermore, agreed that in the Deed of the note foreclosure and sell default. "If the holder would have the property if [Plaintiff's] the date specified in the option may require by this Trust, authority she did not default is not [acceleration] immediate payment Security Instrument without the power of Plaintiff explicitly invoke cure her cured on or before notice, in full to of Lender at all sums its secured further demand and may invoke sale and any other remedies permitted by Applicable Law." After the April 15, executed the Trustee's of the 2009 trustee's Deed on May 19, Property to HSBC. On July 13, recorded the Trustee's Deed in the sale, 2009 2009, Glasser & Glasser conveying ownership Glasser & Glasser land records for Prince William County. Plaintiff's claim of quiet title Plaintiff, not Defendants, is unable is without merit. Indeed, to prove any ownership interest in the Property since her interest has been properly -10- transferred to HSBC pursuant the terms of the Deed of Plaintiff a declaration from the Court foreclosure proceeding in violation of intentional." -- the The laws and Trust. seeks "initiation of 2009 foreclosure "conducted a Defendants Plaintiff to Virginia's law and contract;" foreclosure" foreclosure, was three and one-half months against and "negligent, however, ruling that (ii) the the wanton or occurred on April before (i) Plaintiff 15, filed this action. Plaintiff's declaratory judgment claim is facts. Plaintiff asserts that foreclosure proceeding against and contract." Deed of Trust the Defendants the (i.e., the Defendants were procedures in order to required to provide (a) the default; the "date, [was] cured;" and given to (d) "that default; not HSBC was (b) less sums secured by" the than 3 0 the the and Property: Prior required to notify days Trust Property." -11- from the date the by which the default must be to cure Deed of law the action required to cure her [Plaintiff], failure issue), following notices the default on or before the date specified in the notice may result the at foreclose on and sell Plaintiff of notice the in violation of law and pursuant to the "law and contract" to acceleration and foreclosure, (c) "conducted a Plaintiff Under Virginia foreclosure contrary to the and in acceleration of "sale of the Once the power of sale was invoked, HSBC or Glasser Glasser was required to give Plaintiff written notice of time, trustee's & date, 59.1(A). and place of the The notice must include a copy of notarized appointment of 59.1(A); see also § sale. substitute 55-62 Va. the trustee. (permissible Code § the 55- executed and Va. Code § 55- form for notice of sale). Glasser & Glasser was required to give public notice of foreclosure sale by advertising the successive weeks sale once a week for two in a newspaper having general Prince William County. Va. Code § the Defendants foreclosing and selling Litton, The notice to cure her default, default (45 Plaintiff the Property. did not 1, cure 2009, notified Plaintiff of 2009. included a copy of notified Plaintiff of of the action required cure and warned her that failed to cure the the Note the default. the default. Glasser & Glasser, the foreclosure sale The written notice and location of for 2008, the date by which Plaintiff must she of 55-59.3. On December 4, informed Plaintiff days after the notice), On April time, § The contents followed the proper procedures payment would be accelerated if 15, Code as HSBC's authorized loan servicer, her default. circulation in 55-59.2(A)(1). the advertisement are governed by Va. Here, the the as substitute scheduled for April informed Plaintiff trustee's sale. trustee, of the date, Furthermore, the notice the executed and notarized appointment of -12- substitute Trust, trustee. Pursuant to Virginia law and the Deed of Glasser & Glasser also gave public notice of foreclosure by advertising the sale the Washington Examiner, the for two consecutive weeks in a newspaper of general circulation in Prince William County. The Defendants procedures properly followed the required steps for foreclosing on and selling the Property. and Indeed, Plaintiff does not allege any impropriety committed by any of the Defendants claim of in foreclosing on the Property. "wrongful foreclosure" Therefore, Plaintiff's fails. Plaintiff has no factual basis for her quiet title and declaratory judgment claims. Plaintiff's Amended Complaint generally asserts a the note" must come "show me to a court of "standing" to foreclose law and prove on the "shown the note" endorsement. not own and possess the original Accordingly, their authority or foreclosure The claim is laws. Defendants to Plaintiff and confirmed their ownership and possession of bearing Plaintiff's in which Defendants secured Property. contrary to Virginia's non-judicial have now claim, the original Note signatures Plaintiff's and Deed of Trust and Fremont's blank claim that Defendants the debt obligation at issue is do contrary to facts. Plaintiff to asserts a "double recovery" incorrect understanding of credit default -13- theory based on an swaps, "credit enhancements," theory, and loan securitization. According to Plaintiff's Defendants may have upon Plaintiff's default. received a credit Therefore, "payoff" or swap the foreclosure on the Property resulted in a double recovery. Plaintiff's double recovery theory fails because it is unsupported by any factual allegations and is Finally, regarding the Note law. Plaintiff asserts "splitting" unsecured and Plaintiff's contrary to claims, of an erroneous the Note law is a note or bond secured by a deed of with it that security. ("[W]henever the debt See, is e.g.. is undoubtedly true carries with it the delivery."). factual Thus, assigned the support, there Note and the Deed, as trustee, has as received the debt 784 or mortgage 82 Va. at 200-01 a secured debt asserts without "split" the Note, any between the in this case HSBC in equity as a secured party. Plaintiff's assertions regarding simply contrary to law and must be the at formal assignment or so-called the purchaser of trust Stimpson. Plaintiff been a 139 Va. deed of that a transfer of if, the negotiation of trust or mortgage carries Williams. security without even Contrary to clear that is assigned or transferred with it."); ("It theory from the Deed rendering the the Deed unenforceable. Virginia legal "splitting" -14- a note dismissed. and deed are For these reasons, should be GRANTED. Defendants' Motion for Summary Judgment An appropriate Order shall issue. /s/ Claude M. Hilton United States District Judge Alexandria, May IS", Virginia 2010 -15-
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