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Holt v. BSI Financial Services

United States District Court, N.D. Indiana, South Bend Division

August 10, 2017

KYLE O. HOLT, Plaintiff,
BSI FINANCIAL SERVICES, et al., Defendants.



         Plaintiff Kyle Holt fought a foreclosure proceeding in state court for many years. When he finally lost in that action and the property was sold at auction, he turned to federal court, asking this Court to vacate the foreclosure and give him back the deed to the property. He also argues that the defendants should not have taken possession of the property while he was still trying to contest the foreclosure, and that some of his belongings were lost or damaged after they were removed from the property. In his amended complaint, Mr. Holt sued three defendants, each of which have moved to dismiss. Mr. Holt's claims face a number of jurisdictional and substantive impediments. First, one of the defendants moves to dismiss for lack of personal jurisdiction and for improper service, as it is an entity based in Luxembourg that has no contacts with Indiana. All of the defendants also move to dismiss for lack of subject matter jurisdiction under the Rooker-Feldman doctrine, as this Court has no jurisdiction to review a judgment from a state court, and thus cannot vacate the foreclosure judgment or return the property to Mr. Holt. Finally, the defendants argue that the claims fail even on their merits. The Court addresses each of the arguments in turn, and grants the motions to dismiss for the reasons explained below.

         A. Factual Background

         Plaintiff Kyle Holt owned property in Granger, Indiana, that was secured by a mortgage. Mr. Holt fell behind on his mortgage payments, so his lender at the time, Countrywide Home Loans, initiated foreclosure proceedings in state court in St. Joseph County, Indiana. A judgment of foreclosure was entered in April 2009. Years of delays then ensued. At some point, Countrywide assigned its interest in the foreclosure judgment to “Christiana Trust, a division of Wilmington Savings Fund Society, FSB, not in its individual capacity but as Trustee of ARLP Trust 4” (“Christiana Trust”), and BSI Financial Services took over as the mortgage servicer. Finally, in June 2015, the state court ordered that the property be sold at a sheriff's auction, and the sale took place in August 2015, after the state court denied an emergency motion to vacate the sale. The property was sold to Christiana Trust, and the sheriff granted Christiana Trust the deed to the property on August 20, 2015.

         In the meantime, Mr. Holt purported to send a notice of rescission under the Truth in Lending Act to BSI Financial in July 2015 (even though the mortgage had already been foreclosed and the deadline for a notice of rescission had passed years before, see Mains v. Citibank, N.A., 852 F.3d 669, 677 (7th Cir. 2017)). Though the property was sold and transferred to Christiana Trust in August 2015, Mr. Holt did not vacate the property. Accordingly, in October 2015, Christiana Trust moved in the state court for a writ of assistance in order to take possession of the property. Mr. Holt did not respond. On November 16, 2015, the state court granted the writ of assistance. The order declared that Christiana Trust “is entitled to the immediate possession” of the property. [DE 51-8]. It also directed the sheriff “to enter into and upon the subject real estate and remove [Mr. Holt] or any persons residing therein, together with all personal property.” Id.

         On November 24, 2015, Mr. Holt, by counsel, filed a complaint in this case, asserting a claim against Countrywide under the Truth in Lending Act, alleging that it failed to properly respond to his notice of rescission. The following week, on December 1, 2015, Mr. Holt's attorney filed a motion in state court to stay the writ of assistance, arguing that the writ should be stayed because he was asking a federal court in this case to void the judgment of foreclosure in the state court. Mr. Holt alleges that his attorney then called and spoke to an attorney for Christiana Trust, who said that they would not perform the lockout at that time. However, when Mr. Holt returned to the property that evening, his belongings were being loaded into trucks by a company called “C and S Roofing, ” which Mr. Holt alleges had been hired by an entity named “Altisource.” Mr. Holt and his attorney notified the movers that they were disputing the foreclosure and that the lockout was not supposed to be performed, but the movers went forward and moved the belongings in the property to a storage facility. Mr. Holt has since retrieved the belongings, but he alleges that some of them were lost or damaged in the process.[1] The state court later denied the motion to stay the writ of assistance.

         In this case, Countrywide moved to dismiss Mr. Holt's complaint. After that motion was fully briefed, Mr. Holt's attorney had to withdraw as counsel, and Mr. Holt began proceeding pro se. The Court held off ruling on the motion to dismiss so that Mr. Holt could consider what claims he wished to pursue and whether he wished to advance any additional arguments. Mr. Holt offered an ambiguous response, suggesting that he may wish to proceed instead against different defendants. Accordingly, the Court dismissed the complaint with leave to amend, and cautioned Mr. Holt as to some of the difficulties his claim under the Truth in Lending Act would face. Mr. Holt eventually filed an amended complaint. His amended complaint asserts a claim for negligence, arguing that the defendants negligently foreclosed on his mortgage without having the right to do so; a claim for “wrongful foreclosure, ” again arguing that the defendants improperly pursued the foreclosure; and a claim for “wrongful seizure of property, ” arguing that the defendants should not have executed the writ of assistance when they did and that some of his belongings were lost or damaged in the process.

         As defendants, Mr. Holt named BSI Financial Services, Christiana Trust, [2] and Altisource. The Court has diversity jurisdiction under 28 U.S.C. § 1332, as Mr. Holt is a citizen of Indiana [DE 41 p. 2]; BSI Financial is corporation that is incorporated in Texas [DE 41 p. 2] and has its principal place of business in Texas [DE 31 ¶ 2]; Christiana Trust is a division of Wilmington Savings Fund Society, a corporation that is incorporated in Delaware and has its principal place of business in Delaware [DE 41 p. 2]; and Altisource is a citizen of the Grand Duchy of Luxembourg, as discussed below. The amount in controversy also exceeds $75, 000, as set forth in Mr. Holt's jurisdictional supplement. [DE 41 p. 1-2]. The defendants have each moved to dismiss, and Mr. Holt, as a pro se litigant, was advised of his right to respond and of the burdens that applied to the respective bases for dismissal. Mr. Holt filed a response, and the motions are now ripe.

         B. Personal Jurisdiction as to Altisource

         First, Altisource moves to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2). Altisource indicates that there is no entity whose name is simply “Altisource, ” but that there are a number of entities, both foreign and domestic, whose name includes “Altisource.” It further indicates that the entity that Mr. Holt named in the complaint and purported to serve[3] is Altisource Solutions S.à r.l., a société à responsabilité limitée, which is headquartered in and organized under the laws of the Grand Duchy of Luxembourg.[4] Altisource submitted an affidavit stating that this entity has never done any business in Indiana, has never had an office in Indiana or anywhere in the United States, did not perform any services with respect to the property at issue, and has never interacted with Mr. Holt. [DE 56-9]. Accordingly, it argues that it is not subject to personal jurisdiction in this Court.

         A motion to dismiss for lack of personal jurisdiction argues that the Court lacks jurisdiction over an out-of-state defendant because that defendant does not have sufficient contacts with the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72 (1985) (“The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful contacts, ties, or relations.” (internal quotation omitted)). When a defendant moves to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2), the plaintiff bears the burden of making a prima facie case for personal jurisdiction over the defendant. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). On such a motion, the Court may consider affidavits and materials outside the pleadings. Id. at 782-83. The Court may also consider any allegations in the complaint, but “once the defendant has submitted affidavits or other evidence in opposition to the exercise of jurisdiction, the plaintiff must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction.” Id. at 783; see also Swanson v. City of Hammond, Ind., 411 F. App'x 913, 915 (7th Cir. 2011) (“[W]e accept [the plaintiff's] allegations relating to personal jurisdiction as true except where the defendants refute them through undisputed affidavits.”).[5]

         Here, Mr. Holt did not respond to the assertions in Altisource's affidavit, so he failed to meet his burden of establishing that Altisource is subject to personal jurisdiction in this Court. According to Altisource's affidavit, it was formed in and has its headquarters in Luxembourg, and “has never done business in Indiana and does not transact any business in Indiana.” [DE 56-9 p. 2]. It further states that it “does not have, and has never had, an office in Indiana or anywhere else in the United States, ” and “does not have, and has never had, any employees located in Indiana or anywhere else in the United States.” Id. It also states that it “does not engage in property preservation services in Indiana, ” “did not perform services with respect to [Mr. Holt's] property, ” and “did not contract with or even communicate with [Mr. Holt] concerning his property or his mortgage.” Id. These assertions are uncontradicted.

         Accordingly, Altisource is not subject to general jurisdiction in Indiana, as it does not have continuous and systematic business contacts in Indiana. Purdue Research Found., 338 F.3d at 787. Nor has it engaged in any conduct in or had contacts with Indiana relative to this suit, such that it could be subject to specific jurisdiction. Therefore, though there might be some other entity with “Altisource” in its name that could be sued in this jurisdiction, the party that Mr. Holt actually sued and served in this case-Altisource Solutions S.à r.l.-is not subject to personal jurisdiction in Indiana, so its motion to dismiss must be granted. Any claims against Altisource Solutions S.à r.l. are dismissed without prejudice for lack of personal jurisdiction.

         C. Subject Matter Jurisdiction ...

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