Levin v. American Document Services, LLC ( 2020 )

19-2938
Levin v. American Document Services, LLC
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY
ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER
IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION ASUMMARY ORDER@). A PARTY CITING TO A SUMMARY
ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit,
held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of
New York, on the 6th day of October, two thousand twenty.
PRESENT:
JOHN M. WALKER, JR.,
GUIDO CALABRESI,
SUSAN L. CARNEY,
Circuit Judges.
_____________________________________
Isaac Levin, Ofra Levin,
Plaintiffs-Appellants,
v. 19-2938
American Document Services, LLC, Todd C.
Johnson, Joyce Breuninger, Lender Processing
Services, Inc., DOCX, LLC, Black Knight
Financial Services, Wells Fargo Bank, N.A., As
Trustee for Option One Mortgage Loan Trust
2007-1, Asset-Backed Certificates, Series 2007-1,
Black Knight Infoserv, LLC, FKA Lender
Processing Services, Inc.,
Defendants-Appellees.
_____________________________________
FOR PLAINTIFFS-APPELLANTS: ISAAC LEVIN, Ofra Levin, pro se, North
Woodmere, NY.
FOR DEFENDANTS-APPELLEES
AMERICAN DOCUMENT SERVICES, LLC,
BLACK KNIGHT FINANCIAL SERVICES,
BLACK KNIGHT INFOSERV, LLC, DOCX,
LLC, LENDER PROCESSING SERVICES,
INC., JOYCE BREUNINGER, TODD C.
JOHNSON: FRED O. GOLDBERG, Berger Singerman
LLP, Miami, FL.
FOR DEFENDANTS-APPELLEES BLACK
KNIGHT FINANCIAL SERVICES, BLACK
KNIGHT INFOSERV, LLC, LENDER
PROCESSING SERVICES, INC., TODD C.
JOHNSON: Mark A. Berman, Ganfer Shore Leeds &
Zauderer LLP, New York, NY.
FOR DEFENDANTS-APPELLEES
AMERICAN DOCUMENT SERVICES, LLC,
DOCX, LLC, JOYCE BREUNINGER: Terence D. Watson, Fidelity National Law
Group, New York, NY.
FOR DEFENDANT-APPELLEE WELLS
FARGO BANK, N.A.: Brian Pantaleo, Greenberg Traurig, LLP,
Florham Park, NJ.
Appeal from a judgment of the United States District Court for the Eastern District of New
York (Azrack, J.; Shields, M.J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court dated August 19, 2019, is AFFIRMED.
Plaintiffs-Appellants Ofra and Isaac Levin, proceeding pro se, sued Wells Fargo Bank;
Lender Processing Services, Inc. (“LPS”) (n/k/a Black Knight InfoServ, LLC), and two of its
subsidiaries, American Document Services, LLC (“ADS”), and DocX, LLC; Black Knight
Financial Services, an entity that acquired LPS and its subsidiaries in 2014 (collectively, the “ADS
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Defendants”); and two ADS executives, 1 related to Wells Fargo’s pending action to foreclose on
the Levins’ home. The Levins alleged that the ADS defendants worked in concert, at Wells
Fargo’s direction, to fraudulently assign their mortgage twice, and that Wells Fargo therefore had
no legal right to foreclose. As relevant to this appeal, they sought a declaration that the allegedly
fraudulent assignments are void as a matter of law, and alleged claims for fraudulent
misrepresentation and intentional infliction of emotional distress (“IIED”). Wells Fargo and the
ADS defendants moved to dismiss; the Levins opposed and cross-moved for declaratory judgment.
Adopting the Report & Recommendation of the magistrate judge, the district court
(1) dismissed for lack of standing the Levins’ claims for declaratory relief related to the validity
of the mortgage assignments; (2) dismissed for failure to state a claim the Levins’ fraudulent
misrepresentation and IIED claims; (3) denied as moot the Levins’ cross-motion for declaratory
judgment; and (4) denied the Levins leave to amend the complaint, concluding that amendment
would be futile. The Levins now appeal. We assume the parties’ familiarity with the underlying
facts, the procedural history, and the issues on appeal, to which we refer only as necessary to
explain our decision to affirm the judgment of the district court.
I. Standing
We review de novo the district court’s dismissal of a complaint for lack of standing.
Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.À.R.L., 790 F.3d 411, 417 (2d Cir. 2015).
At the pleading stage, courts must accept as true all factual allegations in a complaint and consider
standing in the light most favorable to the plaintiff. Pennell v. City of San Jose, 485 U.S. 1, 7
1
The district court initially dismissed the complaint as to the individual defendants, Joyce Breuninger and
Todd C. Johnson. On appeal, the Levins do not challenge the dismissal order as to these two defendants.
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(1988). A plaintiff must establish both constitutional and prudential standing to proceed on a
complaint. Rajamin v. Deutsche Bank Nat’l Trust Co., 757 F.3d 79, 84 (2d Cir. 2014).
To have constitutional standing, a plaintiff must show (1) that he has suffered an injury-in-
fact—“an invasion of a legally protected interest which is (a) concrete and particularized, and (b)
actual or imminent, not conjectural or hypothetical”; (2) a causal connection between the injury
and the conduct he complains of; and (3) that “it [is] likely, as opposed to merely speculative, that
the injury will be redressed by a favorable decision.” Lujan v. Defenders of Wildlife, 504 U.S.
555, 560–61 (1992) (internal quotation marks and citations omitted). For prudential standing, a
plaintiff “must assert his own legal rights and interests, and cannot rest his claim to relief on the
legal rights or interests of third parties.” Warth v. Seldin, 422 U.S. 490, 499 (1975).
In Rajamin v. Deutsche Bank National Trust Co., the plaintiff mortgagors challenged
allegedly defective assignments of their mortgages by their original mortgagee to various trusts.
757 F.3d at 81–82. We held that none of the plaintiffs suffered a cognizable injury-in-fact such
as would establish constitutional standing because, first, they did not dispute that they took out the
loans, secured them by mortgages on their homes, and were obligated to repay them; and second,
they had not pleaded that they paid more than the amounts due, that they received any demand for
a duplicative or excess payment, or that any entity other than the defendants had demanded
payment or instituted foreclosure proceedings against their properties. Id. at 85. Consequently,
the injuries that plaintiffs alleged were hypothetical and conjectural, not actual or imminent. Id.
at 85–86. We further held that the plaintiffs did not have prudential standing to challenge the
assignments because they were neither parties to nor intended third-party beneficiaries of the
assignments. Id. at 86–87.
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 We conclude that, under Rajamin, the district court correctly held that the Levins lacked
both constitutional and prudential standing to challenge the assignments of their mortgage. 2 They
did not have constitutional standing because they did not suffer an injury-in-fact, as the
assignments at issue did not affect their underlying debt obligations or the terms of their mortgage.
See id. at 85. They did not have prudential standing because they were neither parties to, nor
third-party beneficiaries of, the assignments. See id. at 86–87. Relying on nonbinding and
inapposite caselaw, the Levins counter that they have prudential standing to challenge void
assignments and that the assignments here are void because of allegedly fraudulent and
unauthorized signatures affixed to the documents. This argument fails because, under New York
law, an unauthorized signature on a negotiable instrument such as a mortgage may be ratified,
meaning the allegedly unauthorized assignments were voidable, not void. See N.Y. U.C.C. § 3-
404(2), cmt. 1 (McKinney) (unauthorized signature on negotiable instrument—including by
forgery or by agent exceeding his authority—may be ratified). Therefore, the Levins do not have
standing to seek declaratory relief on the basis of their challenge to the assignments of their
mortgage. The district court did not err by dismissing the Levins’ claim for declaratory relief and
denying the Levins’ cross-motion for declaratory judgment.
II. Failure to State a Claim
We review de novo the dismissal of a complaint for failure to state a claim. Chambers v.
Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002). On such review, we “accept[] as true all
2
The Levins made no allegation in their complaint that the behavior of the original lender and that of the
ultimate assignee differed in any important respect, so we have no occasion to decide whether, in such a
situation, there would be standing.
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factual claims in the complaint and draw[] all reasonable inferences in the plaintiff’s favor.” Fink
v. Time Warner Cable, 714 F.3d 739, 740–41 (2d Cir. 2013). A complaint must plead “enough
facts to state a claim to relief that is plausible on its face,” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007), and “allow[] the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged,” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Federal Rule of Civil
Procedure 9(b) further requires that a plaintiff alleging fraud “state with particularity the
circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). Applying these standards,
we conclude that the district court did not err in determining that the Levins failed to state claims
for fraudulent misrepresentation or IIED.
The Levins alleged that the defendants committed fraudulent misrepresentation by working
in concert with each other to execute the purportedly fraudulent assignments. To state a
fraudulent misrepresentation claim under New York law, a plaintiff must plausibly allege that “(1)
the defendant made a material false representation, (2) the defendant intended to defraud the
plaintiff thereby, (3) the plaintiff reasonably relied upon the representation, and (4) the plaintiff
suffered damage as a result of such reliance.” Eternity Global Master Fund Ltd. v. Morgan Guar.
Trust Co. of N.Y., 375 F.3d 168, 186–87 (2d Cir. 2004) (internal quotation marks omitted).
The Levins failed to allege that they reasonably relied on the alleged fraud. The
purportedly fraudulent assignments were executed in 2008 and 2009, well after Ofra Levin
executed the mortgage in 2006. The Levins advance no argument on appeal that they properly
pleaded their reliance—reasonable or otherwise—on the relevant misrepresentations.
As for their IIED claim, the Levins alleged that the defendants’ fraudulent conduct was
“extreme and outrageous,” and that their fear of imminent foreclosure caused them emotional
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distress. To state a claim for IIED under New York law, a plaintiff must plausibly allege “(1)
extreme and outrageous conduct, (2) intent to cause severe emotional distress, (3) a causal
connection between the conduct and the injury, and (4) severe emotional distress.” Bender v. City
of New York, 78 F.3d 787, 790 (2d Cir. 1996). “Extreme and outrageous” conduct is “so
outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency,
and to be regarded as atrocious, and utterly intolerable in civilized society.” Id. at 790–91
(internal quotation marks and brackets omitted). New York courts have expressed doubt that the
“frustrations” and “stress” that arise from the attempted collection of a disputed debt, including
through “threats of foreclosure,” suffice to establish “severe emotional distress.” Assocs. First
Capital v. Crabill, 51 A.D.3d 1186, 1188-89, 857 N.Y.S.2d 799 (N.Y. App. Div. 3d Dep’t 2008).
The requirements of an IIED claim are “rigorous, and difficult to satisfy.” Howell v. N.Y. Post
Co., 81 N.Y.2d 115, 122 (1993) (internal quotation marks omitted).
The Levins failed to meet this standard. First, absent the pleading of more specific and
severe emotional harm, their alleged emotional injury—fear of a pending foreclosure—is likely
not sufficiently severe to trigger liability. Even if it were, however, the defendants’ alleged
conduct—fraudulently assigning the Levins’ debt, while subjecting the Levins to no additional
debt than that they initially undertook—was not “extreme” or “outrageous.” See Bender, 78 F.3d
at 790.
III. Denial of Leave to Amend
We review de novo the district court’s denial of leave to amend based on futility. Gorman
v. Consol. Edison Corp., 488 F.3d 586, 592 (2d Cir. 2007). For the reasons discussed above, the
district court did not err in denying, based on futility, the Levins’ request to file an amended
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complaint. With respect to their claim for declaratory relief, under Rajamin the Levins lacked
both Article III and prudential standing to assert any claims regarding the assignments of their
mortgage. The Levins’ fraudulent misrepresentation claims also could not be revived by
amendment because, in light of the facts they have already pleaded, the Levins could not plausibly
allege that they relied in some material way on the assignments of their mortgage. And even if
the Levins could support their IIED claim by alleging more severe emotional harm, their pleading
in this regard still is inadequate because the defendants’ alleged conduct (working together to effect
a fraudulent assignment of a defaulted mortgage without subjecting the Levins to additional debt)
falls well short of “extreme and outrageous” conduct under New York law. See Bender, 78 F.3d
at 790. Accordingly, amendment would be futile.
We have reviewed the Levins’ remaining arguments and conclude that they have no merit.
For the foregoing reasons, we AFFIRM the judgment of the district court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
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