United States District Court, D. New Jersey
MCNULTY United States District Judge.
Otto entered into a $160, 000 mortgage in 2006. In 2011, she
defaulted, and ultimately a judgment of foreclosure was
entered. U.S. Bank, etc. v. Otto, No. F-026230-12 (
N.J.Super. Ct., Ch. Div. Essex Cry.). Otto, as borrower and
property owner, sues the courts, the judges, the sheriff, the
opposing attorneys, her mortgagee, and others. This is her
second federal action attempting to undo the foreclosure or
seek damages based on the mortgage default and the
proceedings surrounding the foreclosure. Before the court is
the motion of the three defendants who have been served and
have appeared to dismiss the current action. For the reasons
stated herein, the motion to dismiss will be granted.
Mortgage and State foreclosure judgment
November 13, 2012, U.S. Bank filed a foreclosure action in
the Superior Court of New Jersey, Chancery Division, Essex
County. (U.S. Bank, etc. v. Otto, No. F-026230-12.
(ECF no. 3-3) U.S. Bank was represented in the foreclosure by
Phelan Hallin & Diamond, PC, named as a defendant here.
complaint in foreclosure alleged as follows: On August 30,
2006, Denise Otto and Eugene I. Otto entered into a $160, 000
note and mortgage with BNC Mortgage, Inc., secured by their
property at 139-141 Western Parkway in Irvington. On January
16, 2009, the mortgage was assigned to U.S. Bank National
Association, as Trustee for BNC Mortgage Loan Trust 2006-2.
On September 18, 2012, it was again assigned to U.S. Bank
National Association, as Trustee for BNC Mortgage Loan Trust
2006-2, Mortgage Pass-Through Certificates, Series 2006-2.
Otto failed to make the monthly mortgage payment due on June
1, 2011, and all payments thereafter, and the mortgage went
into default. Due notice of default was given.
August 12, 2014, the court entered a final judgment of
foreclosure in the amount of $236, 762.78, plus interest and
counsel fees. A sheriffs sale was ordered.
The Prior Federal Action
action must be understood in the context of a prior,
dismissed action, Otto v. Wells Fargo, Civ. No.
15-8240 (the "Prior Federal Action"). In that
action, Ms. Otto sued the the Bank defendants and die Law
Firm defendants. (Categories (c) & (d). Seen.l, supra.)
That action was based on matters arising from the same
mortgage and the state court judgment of foreclosure upon
which this action is based.
Otto filed the complaint in the Prior Federal Action on
November 24, 2015, some 15 months after the entry of final
judgment in the state foreclosure action. It had six Counts:
Count 1: Rescission under the Truth in Lending Act
("TILA"), 15 U.S.C. § 1635
Count 2: Enforcement of rescission under 15 U.S.C. §
Count 3: Enforcement of rescission under 12 C, F.R. §
Count 4: Assertion that the three-year deadline on rescission
has not run because loan not consummated
Count 5: Violation of criminal statute, 15 U.S.C. §
1511, by Wells Fargo and the Phelan firm
Count 6: Restitution under 12 C.F.R. § 1026.23
Prior Federal Action, I filed an order and opinion
("Prior Op.") (Otto v. Wells Fargo Bank,
Civ. No. 15-8240, 2016 WL 8677313 (July 15, 2016),
affd, 693 Fed.Appx. 161 (3d Cir. May 31, 2017),
which granted motions to dismiss the complaint with
prejudice. A copy of that prior Opinion is attached to this
Opinion as an appendix.
I dismissed the action under the Rooker-Feldman
doctrine to the extent that it sought to attack the validity
of the mortgage or the other merits issues decided by the
state court judgment of foreclosure. (Prior Op. 5-8)
and relatedly, I applied res judicata, and in
particular the New Jersey entire controversy rule, to dismiss
any claims that were or could have been asserted in the state
court foreclosure action. (Prior Op. 9-14)
I held in the alternative that the complaint did not state a
claim in several particulars. The claim under die Truth in
Lending Act ("TILA") had not been brought within
the one-year statute of limitations. Any claim against
parties or their attorneys based on positions taken in the
state court were barred by the litigation privilege. A
criminal statute cited as the basis of a claim, 15 U.S.C.
§ 1611, does not give rise to a civil cause of action.
(Prior Op. 14-15)
decision dismissing the Prior Federal Action was affirmed by
the United States Court of Appeals for the Third Circuit.
(Docket No. 16-3385, 693 Fed.Appx. 161 (3d Cir. May 31, 2017)