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Scarr v. JPMorgan Chase Bank N.A.

United States District Court, S.D. Indiana, Indianapolis Division

March 14, 2018

KIMBALL RUSTIN ROY SCARR, Plaintiff,
v.
JPMORGAN CHASE BANK NATIONAL ASSOCIATION, LSF9 MORTGAGE HOLDINGS LLC, LSF9MASTER PARTICIPATION TRUST d/b/a CALIBER HOME LOANS, INC., MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., FEIWELL AND HANNOY PC, BRYN REDMOND attorney, LEANNE TITUS attorney, BENJAMIN S. CARSON, SR. Secretary of the United States Department of Housing and Urban Development, CAROL J. GALANTE Assistant Secretary for Housing, Federal Housing Commissioner, JOHN W. LUCY Director of Asset Sales, HUD, CALIBER HOME LOANS, INC., Defendants.

          ORDER ADOPTING REPORT AND RECOMMENDATION

          TANYA WALTON PRATT, JUDGE

         This matter is before the Court on Plaintiff, Kimball Rustin Roy Scarr's (“Scarr”), Objections to the Magistrate Judge's Report and Recommendation (Filing No. 147, Filing No. 152). Scarr filed this action against multiple defendants alleging each fraud and violation of numerous statutes. The Defendants each filed Motions to Dismiss the Amended Complaint. Defendant Feiwell and Hannoy PC filed a Motion to Dismiss (Filing No. 77) pursuant to Federal Rules of Civil Procedure 8(a), 12(b)(1), and 12(b)(6); Defendants Secretary of Housing and Urban Development filed a Motion to Dismiss (Filing No. 79); Defendants Mortgage Electronic Registration Systems, Inc. and JP Morgan Chase Bank, N.A. filed a Motion to Dismiss Pursuant to Federal Rules of Civil Procedure 8(a), 12(b)(1), and 12(b)(6) (Filing No. 89), and Defendants Caliber Home Loans, Inc., LSF9 Mortgage Holdings LLC, LSF9 Master Participation Trust filed a Motion to Dismiss Plaintiff's New Amended Complaint (Filing No. 91). The Motions were referred to the Magistrate Judge for a Report and Recommendation (Filing No. 136). On January 25, 2018, the Magistrate Judge submitted her Report and Recommendation that each of the Motions to Dismiss be granted. In addition, the Magistrate Judge denied all pending non-dispositive motions (Filing No. 109, Filing No. 127, Filing No. 132, Filing No. 137 and Filing No. 138). Scarr filed a timely objection. For the reasons stated below, the Court overrules Scarr's Objections and adopts the Magistrate Judge's Report and Recommendation.

         I. BACKGROUND

         The following facts are accepted as true for purposes of the Motions to Dismiss and all reasonable inferences are drawn in a light most favorable to Scarr as the non-moving party. See Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008). Scarr raised no objections to the Magistrate Judge's detailed and thorough recitation of the facts, (Filing No. 137 at 1-6), therefore the facts will only be summarized in this Entry.

         Scarr executed a mortgage on his home in Connersville, Fayette County, Indiana, with SurePoint Lending (“SurePoint”) in 2008. The mortgage was later assigned to JPMorgan Chase Bank, N.A. (“Chase”). In June 2013, after making mortgage payments for almost five years, Scarr stopped making mortgage payments and Chase commenced a mortgage foreclosure action in Fayette County Superior Court against Scarr, which was assigned Cause No. 21D01-1312-MF-00873. Scarr challenged the validity of the promissory note and mortgage and the state trial court granted Chase a summary judgment award in the amount of $200, 649.11 and ordered foreclosure of the mortgage. Scarr challenged the grant of summary judgment and asserted Chase lacked standing to foreclose on the mortgage. The Indiana Court of Appeals affirmed the grant of summary judgment and denial of the motion to correct error. See Scarr v. JPMorgan Chase Bank Nat. Ass'n., 40 N.E.3d 531 (Ind.Ct.App. 2015) (unpublished), trans. denied, 49 N.E.3d 107 (Ind. 2016).

         On March 9, 2017, Scarr filed the operative Amended Complaint in this case alleging in Count 1 that Defendants SurePoint and Chase engaged in fraud in originating a mortgage loan without a note and making inaccurate and incomplete disclosures, and engaged in a conspiracy to prevent Scarr's rescission of that loan. Count 2 alleges that in connection with the mortgage loan, Chase and LSF9 Mortgage Holdings, LLC violated the Truth in Lending Act, 15 U.S.C. §§ 1631- 1651; Regulation X, 12 C.F.R. § 1024; and the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601-2617, by withholding information about the assignment of the mortgage loan and withholding RESPA notifications. Count 3 alleges that SurePoint, Chase, LSF9 Mortgage Holdings and LSF9 Master Participation Trust, 2 and Caliber Home Loans, Inc. engaged in fraud and conspiracy to commit fraud to prevent rescission and obtain a judgment of foreclosure, obstruction of justice, and money laundering. Count 4 claims inadequate management and oversight by the United States Department of Housing and Urban Development (“HUD”) of its Federal Housing Administration (“FHA”) insurance programs. The complaint contains a fifth count alleging injuries to Scarr and his family, namely, the mortgage loan, the state court foreclosure action, the loss of FHA insurance protections, the personal judgment against Scarr in the foreclosure action, the order of a sheriff's sale of his home, and emotional distress.

         In a thoughtful and detailed Order, the Magistrate Judge recommended that the Court grant each Defendant's motion to dismiss. To the extent the Amended Complaint challenged the state court foreclosure judgment or sought rescission of Scarr's mortgage loan, the Magistrate Judge recommended dismissal of those claims without prejudice for lack of subject matter jurisdiction. To the extent that any of Scarr's claims are not barred by the Rooker-Feldman doctrine[1], the Magistrate Judge recommended dismissal with prejudice for failure to state a claim based on claim preclusion or issue preclusion.

         II. LEGAL STANDARD

         A. Objection to Dispositive Matters

         A district court may assign dispositive matters to a magistrate judge, in which case the magistrate judge may submit to the district judge only a report and recommended disposition, including any findings of fact. 28 U.S.C. § 636(b)(1)(B) (2012); Fed.R.Civ.P. 72(b)(1). See also Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 760 (7th Cir. 2009). The magistrate judge's recommendation on a dispositive matter is not a final order, and the district judge makes the ultimate decision to “accept, reject, or modify” the findings and recommendations, and the district court need not accept any portion as binding. 28 U.S.C. § 636(b)(1) (2012); Fed.R.Civ.P. 72(b)(3). See also Schur, 577 F.3d at 760-61.

         After a magistrate judge makes a report and recommendation, either party may object within fourteen days of being served with a copy of the same. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b)(2). When a party raises specific objections to findings and recommendations made within the magistrate judge's report, the district court is required to review those objections de novo, determining for itself whether the magistrate judge's decisions as to those issues are supported by substantial evidence or were the result of an error of law. 28 U.S.C. § 636(b)(1) (2012); Fed.R.Civ.P. 72(b)(3). See also Johnson v. Zema Sys. Corp., 170 F.3d 734, 739 (7th Cir. 1999). The court may, however, defer to those conclusions to which timely objections have not been raised by a party. Schur, 577 F.3d at 760-61. Further, if a party fails to object to a magistrate judge's report and recommendation, or objects on some issues and not others, the party waives appellate review of the issues to which the party has not objected. Johnson, 170 F.3d at 739.

         B. Objection to Non-Dispositive Matters

         A district court may refer a non-dispositive pretrial motion to a magistrate judge under Federal Rule of Civil Procedure 72(a). Rule 72(a) provides:

When a pretrial matter not dispositive of a party's claim or defense is referred to a magistrate judge to hear and decide, the magistrate judge must promptly conduct the required proceedings and, when appropriate, issue a written order stating the decision. A party may serve and file objections to the order within 14 days after being served ...

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