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Dean-Richard v. Planet Home Lending LLC

United States District Court, E.D. Wisconsin

March 21, 2019




         The plaintiff is representing himself. On January 29, 2018, the court dismissed the plaintiff's original complaint at the screening stage, finding that he had not stated a claim for federal relief. Dkt. No. 52. The court ordered the plaintiff to file an amended complaint by March 30, 2018. Id. The plaintiff did so on February 27, 2018. Dkt. No. 60. Before the court could screen the amended complaint, the plaintiff filed numerous notices, letters and motions. See Dkt. Nos. 62-95. This order screens the amended complaint, denies the outstanding motions and discusses next steps.

         I. BACKGROUND

         A. Original Complaint

         The plaintiff filed his original complaint on February 6, 2017. Dkt. No. 1. While the complaint awaited screening, the only defendant-Planet Home Lending, LLC-filed a motion to dismiss the case for failure to state a claim. Dkt. No. 13. The plaintiff responded with a motion for summary judgment, dkt. no. 19, and other documents, see dkt. nos. 21-51.

         The court screened the original complaint on January 29, 2018 and addressed the outstanding motions on the docket. Dkt. No. 52. In finding that the complaint did not state a claim, the court stated that

[e]ven construing the plaintiff's complaint liberally, the court finds that the complaint does not state a cause of action for which a federal court may grant relief. On page five of the complaint form, under section C., “Jurisdiction, ” the plaintiff marked the box that says, “I am suing for a violation of federal law under 28 U.S.C. §1331.” Dkt. No. 1 at 5. But nowhere in the complaint does he mention any federal laws. In the letter he attached to the complaint-the letter he wrote to the defendant-the plaintiff mentions RESPA, the FDCPA, and TILA, but his complaint does not refer to any of those statutes. The complaint does not explain which of those statutes this particular defendant violated, or what actions this particular defendant took that violated any provisions of any of those statutes (or any others). Rather, he makes general assertions that he has learned that “banks”-in general-are engaging in certain lending practices. He also states that he has “reason to believe” that the defendant is not a bona fide creditor; the court suspects that he means that while he may owe money to someone on his loan, he doesn't believe the defendant can prove that he owes that money to the defendant.
In fact, the plaintiff does not ask this court to decide whether the defendant violated a federal law at all. Instead, he asks the court to conduct a “civil administrative process, ” to assist him in obtaining proof that the defendant owns his mortgage debt. He asks that, if the defendant is not able to prove “via requested documents that they are a qualified creditor to whom [his] mortgage loan is owed, ” the court issue an order requiring the defendant to “cease & desist all collection activity immediately, including any/all threat of foreclosure, ” to prohibit the defendant from selling the loan and to declare him the free and clear owner of the home. Dkt. No. 1 at 5.
Federal courts decide disputes between parties. If a person with a mortgage loan believes a lender has violated some specific provision of RESPA or the FDCPA or TILA, that person may file a lawsuit making that allegation (and the lender may defend against it). But without a specific dispute between this plaintiff and this defendant over a specific violation of federal law, the federal district court does not have the authority to open up an administrative proceeding to decide whether the defendant owns the plaintiff's loan. The plaintiff asserts that he has been making his mortgage payments and that his loan is in good standing. He seems to have brought this lawsuit solely because he came across information that leads him to believe that there are some lenders who claim to own loans that they don't own, and he wants to make sure that isn't the case with his loan. That is not a “dispute” that the federal court system can resolve.
There are procedures that give borrowers the ability-even the right-to find out who owns a mortgage loan. The plaintiff appears to be familiar with at least some of those procedures. He knows about the QWR (“qualified written request”) procedure under RESPA, because he attempted to make a QWR, dated January 18, 2017, to the defendant. The certified mail receipt he attached to the complaint shows that the lender received that request at its office in Dallas, Texas on January 22, 2017, dkt. no. 1-1 at 7, and he attaches a letter from the defendant, dated January 24, 2107, in which the defendant acknowledges receipt of the request and informs him that they are reviewing his loan file, dkt. no. 1-1 at 8. Rather than waiting for the QWR process to play out, the plaintiff filed this federal complaint on February 6, 2017-less than two weeks after the defendant wrote to him that it was reviewing his loan file.
On March 17, 2017, the court received a letter from the plaintiff. Dkt. No. 7. In it, he told the court that the administrative process he'd asked the court to preside over was finished and that the defendant had not provided him “any documentation as required by law to prove or establish themselves as a bonafide creditor.” Id. Based on this alleged failure, he asked the court to order the defendant to stop “all further collection matters, ” order the defendant to return all his payments to him, grant him damages for “violating Fair Credit Lending Practices” and order the defendant to grant him free and clear title to the property. Id. Oddly, he attached to this letter a letter from the defendant, dated March 3, 2017-two weeks earlier-in which the defendant informed him that it was still reviewing his loan file, and that it would respond to him once it had finished. Dkt. No. 7-1 at 5.
On the same day-March 17, 2017-the court received a second letter from the plaintiff. Dkt. No. 8. In this letter, he informed the court that the defendant had responded to his request and offered to make the note available for him to inspect, but the plaintiff stated that the terms of inspection the defendant had offered were not acceptable to him. Id. In this letter, he asked the court to order the defendant to “send wet ink promissory note to Racine County Clerk.” Id. The plaintiff has filed numerous other documents in the ensuing months-some of them motions, some simply copies of documents or correspondence.
It is possible that since filing his complaint on February 6, 2017, the plaintiff has identified a violation of one of the statutes he referenced in his letters to the defendant. The court will give the plaintiff an opportunity to amend his complaint, to allege some specific violation of federal law that he believes this defendant has committed.

Dkt. No. 52 at 6-10. The court warned the plaintiff that his amended complaint must stand on its own-in other words, it would take the place of the original complaint. Id. at 10. The court explained that there was nothing more for the plaintiff to file at that point but the amended complaint. Id. at 11.

         B. Amended Complaint

         The amended complaint is twenty-one pages long. Dkt. No. 60. The plaintiff added three defendants to the caption: Michael Dubeck, Jeffrey Bergida and Mark Clauss. Id. at 1. The plaintiff appears to allege that Michael Dubeck is the CEO of Planet Home Lending, LLC, and that both he and the corporation reside in Connecticut. Id. The plaintiff alleges that defendant Bergida resides in Florida, but does not explain who Bergida is or what position he holds.[1] Id. The plaintiff alleges that defendant Clauss resides in Wisconsin.

         Id. The amended complaint does not explain the role that Clauss played in the plaintiff's allegations, but the docket indicates that defendant Mark Clauss is the attorney who has represented Planet Home Lending in this case since it filed a motion to dismiss in May of 2017. See Dkt. No. 13.

         As recounted above, the court's previous screening order required the plaintiff to cite specific provisions of federal law that he believed the defendants had violated. Pages two through five of the amended complaint appear to be his attempt to do so. The plaintiff starts with this declaration:


Dkt. No. 60 at 2. He follows this declaration with a “relevant statutes” section. Id. The plaintiff reproduces the text of various federal statutes: “18 U.S. Code §1005 - Bank Entries, reports and transactions, ” “§1341 Frauds and swindles, ” “§1346 (2011) Definition of ‘scheme or artifice to defraud, '” “18 U.S. Code §1349 - Attempt and conspiracy, ” “Mail Fraud (18 USC 1341, 1342, & 1345; 39 USC 3005 & 3007), ” “31 U.S. Code § 1341(a)(1)(A) & (B) - Limitations on expending and obligating amounts, ” “18 USC §1961 (RICO), ” “15 U.S. Code §1641(e)(2), ” “15 U.S. Code §1641(f)(1)(f), ” “12 CFR §230.4(a)(1) Disclosure of Account opening, ” “18 U.S. Code §1831n - Accounting objectives, standards, and requirements (GAAP), ” “15 U.S. Code §1692(f) - Unfair practices, ” “15 USC 1692e(2)(A)- False or misleading representations, ” “12 USC 2605(k) RESPA, ” and “WI 428.103.” Id. at 3-5.

         Next comes what appears to be the facts section. The plaintiff alleges that he “began QWR inquiry on January 18, 2017 to determine defendant's status as bonafide payee to mortgage documents via QWR per 12 U.S.C. Section 2605(e)[.]” Id. at 5. He says that the defendant sent “a letter of March 3” but that he had not given license to “exceed the statutory window of an administrative process, max 45 days per Dodd-Frank Act, Section 1463(c).” Id. The amended complaint states, “Ability to actually view alleged original note did not take place until late June 20, 2017(1), a full 5 months, far exceeding the 45 days for meaningful disclosure required by law.” Id.

         Next, the amended complaint alleges that the plaintiff's QWR request asked “who the owner of the obligation was, ” but that the defendant “treated” that as “irrelevant.” Id. The plaintiff alleges that the defendant was obligated to respond “per 15 U.S. Code §1641(a)” and that “Disclosures should have occurred under 15 U.S. Code §1641(e)(2)(A).” Id. He says that he asked the defendant to “prove their standing with legal right to demand debt payment as creditor, ” and that, to do so, he had requested to see a “wet-ink signature of the original note.” Id. The plaintiff alleges that he eventually viewed “a document alleged to be the original” at Gray & Associates, LLP in New Berlin, Wisconsin, but that he “challenges the validity of the notice to be proved by Affidavit under penalty of perjury and forensic examination.” Id. at 7.

         Next, the plaintiff alleges that attorney's fees are being added to his monthly billing statements and that “no contract offer or acceptance to pay attorney fees was entered into by Plaintiff.” Id. at 7. He points to paragraphs seven and twenty-one of the mortgage security agreement and alleges that “Par. 21 citation of WI 428 is limited and does not allow defendant to attach legal fees to a monthly mortgage statement or even bill for services.”[2] Id. at 8. He states that he did not agree to pay the fees for legal services and that his contract is unconscionable under Wis.Stat. §428.106. Id. at 9-10. He says that adding attorney's fees to his monthly mortgage statements violates 15 U.S.C. §1692f and §1692e(2)(A) because it is a false representation of the amount of the debt; he alleges that the defendant is trying to collect an amount not authorized by the agreement creating the debt. Id. at 9.

         Amidst his allegations that the defendant has improperly added attorney's fees to his statement, the plaintiff also asserts that because “Defendant and legal counsel work as a team, ” their behavior toward the plaintiff “constitute[s] a pattern of RICO violation[s] where parties in this case conspire to deprive Plaintiff of his property using predatory, bully billing and collection tactics.” Id. at 9. He says this practice is also a “misuse of the mails.” Id. He cites criminal mail fraud statutes. Id.

         The plaintiff then “challenges the veracity of the alleged original note held by defendant[.]” Id. at 10. He says that the mortgage documents were “robo-signed, never sealed in Plaintiff's presence, evidenced by unnotarized copies in plaintiff's possession.” Id. He states that “there existed fraudulent concealment and in the factum and inducement in the original local documents” because, he alleges, certain facts were not disclosed to him. Id. He “demands to see a chain of custody that incorporates defendant's standing with all relevant parties, assignments, owner(s), beneficiaries, payments and conveyances.” Id.

         Finally, the plaintiff notifies the court-as he did in his original complaint-that “[i]t has come to Plaintiff's attention that banks and servicers are engaging in economic practices of deceptive accounting (4, 5), similar to stealing or swindling.” Id. at 11. In support of this argument, the plaintiff references a single paragraph from the 1961 version of a publication from the Federal Reserve Bank of Chicago called “Modern Money Mechanics: a workbook on deposits, currency and bank reserves” authored by Dorothy M. Nichols. Id. at 12, Dkt. No. 60-1 at 6. He says that he offered to settle with “defendant”-he does not say which one-by “offering a novation dated June 22, 2017 to overlook systemic fraud of defendant's industry, granting permission to leverage the note in exchange for defendant returning free and clear title and to stop billing plaintiff.” Dkt. No. 60 at 13. He says the defendant did not respond, and has “refused to honor that agreement.” Id. He also says that he sent the defendant a “lawful Bill-of-Exchange dated July 18, 2017 for full pay-off of said alleged ‘loan' as a tax credit which defendant retained and did not return for cause or cure, which under UCC 4-603 qualifies as an acceptance, ” but the defendant did not respond to this, either. Id.

         The amended complaint concludes by saying that its intent “is recovery of damages, settlement and closure of said alleged mortgage ‘loan,' attendant fees and charges.” Id. at 14.

         C. Other Filings

         Between the time the court issued the January 29, 2019 screening order and the time the plaintiff filed his signed amended complaint, he filed six documents (including an unsigned amended complaint). Since the court received the signed amended complaint on February 27, 2018, the plaintiff has filed thirty-one letters, motions, affidavits and other documents.

         On the day that the court issued its January 29, 2018 screening order, the plaintiff filed a motion for declaratory judgment asking the court to prevent the defendant from attaching attorney fees to his billing statements. Dkt. No. 53. Along with the motion, the plaintiff filed an affidavit attesting that all his accounts are prepaid. Dkt. No. 54.

         Two days later, the plaintiff filed a fourteen-page “Response to Defendant's Original Request for Declaratory Judgement and Motion to Dismiss.” Dkt. No. 55. This document appears to be a response to Planet Home Lending's motion to dismiss, dkt. no. 13, which the defendant had filed eight months earlier and which the court had decided in the January 29, 2018 order, dkt. no. 52 at 13.

         On February 12, 2018, the plaintiff filed an unsigned complaint. Dkt. No. 56. The February 27, 2018, signed amended complaint supersedes that document (and his original complaint).

         On February 13, 2018, the court received a letter from the plaintiff. Dkt. No. 57. The letter did not ask the court to do anything. It contained statements. The next day, the court received from the plaintiff a document entitled “UCC FINANCING STATEMENT.” Dkt. No. 58.

         A little over two weeks after the court received the signed, amended complaint, defendant Planet Home Lending filed a motion for sanctions under Fed.R.Civ.P. 37. Dkt. No. 61. The motion alleged that the plaintiff violated the court's January 29, 2018 order by filing a state court case and by filing tax form 1099-A's with the IRS. Id. OnMarch 20, 2018, the court received from the plaintiff a motion to quash the defendant's motion for sanctions. Dkt. No. 63.

         Between March 23 and August 27 of 2018, the court received seventeen filings from the plaintiff. Dkt. Nos. 64-80. Several the filings are letters, like the letter the court received on February 13, 2018-they consist of declarations. In one letter, dated March 21, 2018, the plaintiff stated that he “solicit[ed] the court's assistance to effect [a] set-off;” the plaintiff appeared to be asking the court to order that the mortgage and promissory notes be treated as debt instruments/government obligations to be applied to any tax liabilities he may have had. Dkt. No. 64. Other letters made no requests, simply stating long lists of declaratory facts or citing statutes or regulations; still others were not addressed to the court. Dkt. Nos. 65-67, 77. Almost all the letters had pages of attachments-one as long as ninety-four pages.

         Several of the filings are affidavits of various sorts-an affidavit of mailing, an affidavit stating various laws, an affidavit acknowledging and accepting a warranty deed. Dkt. Nos. 70, 71, 74, 78, 79. One filing is nothing but documents (accompanied by a request for a hearing, which the plaintiff included in many of his filings). Dkt. No. 68. One filing is a notice to the court that the plaintiff had received a billing statement. Dkt. No. 72. One document is titled, “Final Notice of Default with Opportunity to Cure;” it is addressed to defendants Dubeck and Clauss. Dkt. No. 80.

         Four of the documents the plaintiff filed are motions, seeking action from the court: Motion for Settlement and Closure of Case and Account, dkt. no. 69, and three motions “For a Court of Special Equity Via Security Deposit, ” dkt. nos. 73, 75, 76. On September 24, 2018, the defendant filed a single response to all these motions. Dkt. No. 81. On February 27, 2019, the defendant supplemented that omnibus response. Dkt. No. 91. While it is docketed as a letter, the plaintiff filed a reply to the defendant's response on March 4, 2019. Dkt. No. 92.

         The plaintiff has filed eleven other documents since October 1, 2018. There are more letters-one relating to an indemnity bond, dkt. no. 85, and two relating to a postal money order the plaintiff says he sent to Planet Home Lending to settle the case, dkt. nos. 86, 88. There is a letter addressed to defendant Clauss. Dkt. No. 90. There is a notice to Planet Home Lending, containing the plaintiff's allegation that Planet's continuing to bill him is “false billing” that could “incur additional charges.” Dkt. No. 93. He has filed four more motions: a Motion to Quash Response, dkt. no. 82; a Motion for Immediate Injunctive Relief and Notice of Contract Violation, dkt. no. 87; a Motion for Judgment and Notice of Administrative Default, dkt. no. 89; and a Motion for Defendants to Produce Accounting Evidence and Mandatory Counter-Claim to Defendants Motion Per FRCP 13, dkt. no. 95.

         Not surprisingly, the defendant has filed another motion for sanctions, and has requested a hearing. Dkt. No. 94.

         II. ANALYSIS

         A. Screening

         1. Standard

         Section 1915(e)(2)(B) of Title 28 requires a court to dismiss a case filed by an unrepresented plaintiff at any time if the court determines that it “(i) is frivolous or malicious; (ii) fails to state a claim upon which relief may be granted; or (iii) seeks monetary relief against a defendant who is immune from such relief.”

         A claim is legally frivolous when it lacks an arguable basis either in law or in fact. Denton v. Hernandez, 504 U.S. 25, 31 (1992); Felton v. City of Chi., 827 F.3d 632, 635 (7th Cir. 2016). At this stage, the court accepts the factual allegations in the complaint as true and draws all reasonable inferences in favor of the plaintiff. Hotchkiss v. David, 713 Fed.Appx. 501, 505 (7th Cir. 2017). The Supreme Court has explained that a court may dismiss a claim as factually frivolous if it is “clearly baseless, ” “fanciful, ” “fantastic, ” delusional, ” “irrational, ” or “wholly incredible.” Felton, 827 F.3d at 635 (citing Denton, 504 U.S. at 32-33). A court may dismiss a claim as legally frivolous if it is “based on an indisputably meritless legal theory.” Id. The court, however, may not dismiss a claim as frivolous simply because it finds that “the plaintiff's allegations are unlikely.” Johnson v. Stovall, 233 F.3d 486, 489 (7th Cir. 2000) (citing Denton, 504 U.S. at 33).

         To state a claim under the federal notice pleading system, the plaintiff must provide a “short and plain statement of the claim showing that [he] is entitled to relief[.]” Fed.R.Civ.P. 8(a)(2). A plaintiff does not need to plead specific facts, but his statement must “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A complaint that offers “labels and conclusions” or “formulaic recitation of the elements of a cause of action will not do.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). To state a claim, a complaint must contain sufficient factual matter, accepted as true, “that is plausible on its face.” Id. (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable ...

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