Opinion
C/A No. 2:20-cv-2424-BHH-MHC
10-07-2020
Christopher James France In Propia Persona, Plaintiff, v. James G. Mackey, acting as CFO for Freddie Mac, and Joseph P. Sheridan, Jr., acting as COO for HomeBridge Financial Services, Inc., Defendants.
REPORT AND RECOMMENDATION
Plaintiff, proceeding pro se, filed this action in the Court of Common Pleas of Charleston County, South Carolina, alleging various causes of action purportedly related to a mortgage on his property. ECF No. 1-1. Defendants removed the case to this Court on July 10, 2020. ECF No. 1.
Before the Court are four motions: (1) a Motion to Remand to State Court ("Motion to Remand"), filed by Plaintiff on July 6, 2020, ECF No. 19; (2) a Motion to Dismiss Plaintiff's Complaint ("Motion to Dismiss"), filed by Defendants on July 10, 2020, ECF No. 17; (3) a Motion to Enforce, filed by Plaintiff on August 7, 2020, ECF No. 24; and (4) a Motion for Judicial Notice, filed by Plaintiff on August 7, 2020, ECF No. 25. All pretrial proceedings in this case were referred to the undersigned United States Magistrate Judge pursuant to the provisions of 28 U.S.C. § 636(b)(1)(A) and (B) and Local Rule 73.02(B)(2)(e), D.S.C. This Report and Recommendation is entered for review by the District Judge.
I. MOTION TO REMAND
Plaintiff moves to remand this case to state court, arguing that removal was inappropriate because he did not consent to removing the case to federal court, this action falls within South Carolina's jurisdiction, the federal court does not have exclusive jurisdiction over the action, and there is no diversity because Defendants do business in South Carolina. ECF No. 19. The undersigned concludes that the Court has original jurisdiction over this action.
Federal courts are courts of limited jurisdiction, see Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994), and a district court is charged with ensuring that all cases before it are properly subject to such jurisdiction, In re Bulldog Trucking, Inc., 147 F.3d 347, 352 (4th Cir. 1998). "The burden of establishing federal jurisdiction is placed upon the party seeking removal." Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994).
"[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant . . . to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." Id. § 1447(c). The court is "obliged to construe removal jurisdiction strictly because of the 'significant federalism concerns' implicated." Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 816 (4th Cir. 2004) (en banc) (quoting Mulcahey, 29 F.3d at 151). "Therefore, if federal jurisdiction is doubtful, a remand to state court is necessary." Id. (internal quotation marks omitted); see also Hartley v. CSX Transp., Inc., 187 F.3d 422, 425 (4th Cir. 1999) ("[C]ourts should resolve all doubts about the propriety of removal in favor of retained state court jurisdiction." (internal quotation marks omitted)).
Defendant Freddie Mac is a U.S. corporation chartered by an Act of Congress and existing under the Federal Home Loan Mortgage Corporation Act, 12 U.S.C. § 1451 et seq. Defendants aver that removal was proper in this instance because the Court has original jurisdiction over this action pursuant to 12 U.S.C. § 1452(f)(2). The Court agrees.
Section 1452(f)(2) provides that "all civil actions to which the Corporation [Freddie Mac] is a party shall be deemed to arise under the laws of the United States, and the district courts of the United States shall have original jurisdiction of all such actions, without regard to amount or value." 12 U.S.C. § 1452(f)(2); see also 12 U.S.C. § 1452(f)(3) ("any civil or other action, case or controversy in a court of a State, or in any court other than a district court of the United States, to which the Corporation is a party may at any time before the trial thereof be removed by the Corporation, without the giving of any bond or security, to the district court of the United States for the district and division embracing the place where the same is pending"). Thus, federal district courts have original jurisdiction over all civil actions to which Freddie Mac is a party, and defendants can remove such cases to federal court. See Turner v. US Bank, No. 1:18-CV-3272-LMM-LTW, 2019 WL 2344148, at *1 (N.D. Ga. Mar. 11, 2019) (finding that defendants had the right to remove to federal court an action in which Freddie Mac was a defendant); Matter of Trusts Established under the Pooling & Serv. Agreements, 241 F. Supp. 3d 905, 924 (D. Minn. 2017) (finding removal by Freddie Mac under § 1452(f) to be proper in case where Freddie Mac was not a named party but was a "party in interest" to a trust that was a named party); Fed. Home Loan Mortg. Corp. v. Matassino, 909 F. Supp. 2d 1377, 1378 (N.D. Ga. 2012) (concluding that defendants could remove action brought by Freddie Mac in state court because "the unambiguous language of the statute gives this court original and removal jurisdiction over a civil action to which Freddie Mac is a party").
Plaintiff brought this action against Freddie Mac, and his Complaint "demands judgement for money damages against . . . FREDDIE MAC/JAMES G MACKEY." ECF No. 1-1 at 50. Because Freddie Mac is a party to this action, the Court has original jurisdiction over this case, which was properly removed to federal court by Defendants. See 12 U.S.C. § 1452(f).
Defendants also aver that removal was proper in this instance because the Court has original jurisdiction to hear Plaintiff's case pursuant to 28 U.S.C. § 1332. Under § 1332, federal district courts have original jurisdiction over a case if the action involves citizens of different states and the amount in controversy exceeds $75,000, exclusive of interest and costs. 28 U.S.C. § 1332(a). The complete diversity rule of § 1332 requires that the citizenship of each plaintiff be different from the citizenship of each defendant. See Cent. W. Va. Energy Co. v. Mountain State Carbon, LLC, 636 F.3d 101, 103 (4th Cir. 2011); see also 28 U.S.C. § 1441(b)(2) ("A civil action otherwise removable solely on the basis of the jurisdiction under section 1332(a) of this title may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.").
Contrary to Plaintiff's argument, whether a corporation merely conducts business in a state or has a registered agent in the state is not a factor in determining the citizenship of a corporation for purposes of diversity jurisdiction. Rather, a corporation is a citizen of the state where it is incorporated and has its principal place of business. 28 U.S.C. § 1332(c)(1) (emphasis added). A corporation's "principal place of business" refers to "the place where a corporation's officers direct, control, and coordinate the corporation's activities . . . [or] the corporation's nerve center," which in practice "should normally be the place where the corporation maintains its headquarters." Hertz Corp. v. Friend, 559 U.S. 77, 92-93 (2010). "In determining whether jurisdiction exists, the district court is to regard the pleadings' allegations as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment." Richmond, Fredericksburg & Potomac R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991).
According to the Complaint, Plaintiff resides in Mount Pleasant, South Carolina. ECF No. 1-1 at 6. Thus, for there to be complete diversity, both Defendants must not be citizens of South Carolina. Defendant HomeBridge Financial Services, Inc. ("HomeBridge") is a New Jersey corporation with its principal place of business in New Jersey. See ECF No. 1 at 2; ECF No. 1-1 at 1 (listing address of HomeBridge's headquarters in caption of Complaint); ECF No. 1-2. Defendant Freddie Mac is a U.S. corporation with its principal place of business in Virginia. See ECF No. 1 at 2-3; ECF No. 1-1 (listing address of Freddie Mac's headquarters in caption of Complaint). Therefore, there is complete diversity of the parties.
Although the caption of the Complaint lists the Defendants as "James G Mackey acting as CFO for Freddie Mac" and "Joseph P Sheridan Jr acting as COO for HomeBridge Financial Services, Inc.," it appears from the Complaint that Plaintiff alleges claims against and seeks relief from the corporations rather than the individuals. See ECF No. 1-1 at 50 (demanding judgment against "HOMEBRIDGE FINANCIAL SERVICES, INC./JOSEPH P SHERIDAN JR and FREDDIE MAC/JAMES G MACKEY"); see also infra, II.C (explaining that no factual allegations were made against individual defendants). Moreover, Plaintiff does not dispute Defendants' contention that only the corporations were served, not the individual defendants personally. See ECF No. 1 at 1 n.2.
Moreover, in his Complaint, Plaintiff seeks, among other relief, full discharge of a $450,000 mortgage note and cancellation of the mortgage lien. ECF No. 1-1 at 8-10. Thus, the undersigned finds that the amount in controversy exceeds $75,000 and that the Court has diversity jurisdiction over this matter.
For the foregoing reasons, the Court concludes that removal was proper, and Plaintiff's Motion to Remand should be denied.
In their Notice of Removal, Defendants also assert that federal jurisdiction is proper pursuant to 28 U.S.C. § 1331, which grants district courts "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Although Plaintiff's Final Cause of Action for Financial Discrimination asserts that Defendants violated multiple federal laws, including "FCRA; FDCPA; CIVIL RIGHTS ACT, RICO, Title 12 U.S. Code 24 Paragraph 7, [and] RESPA," ECF No. 1-1 at 38, the Court finds that a "mere allegation that a federal statute has been violated is not sufficient" to invoke federal jurisdiction. Scott v. Wells Fargo Home Mortgage, Inc., 326 F. Supp. 2d 709, 719 (E.D. Va. 2003) (citing Mulcahey, 29 F.3d 148); see Lopes v. Vieira, 488 F. Supp. 2d 1000, 1025 (E.D. Cal. 2007); Republic Finance v. Cauthen, 343 F. Supp. 2d 529, 532 (N.D. Miss. 2004) (federal jurisdiction is not invoked by merely citing a federal statute).
II. MOTION TO DISMISS
Defendants move to dismiss Plaintiff's Complaint in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing that Plaintiff has failed to state a claim upon which relief can be granted. ECF No. 17. The Court agrees and finds that the Complaint should be dismissed.
A. Legal Standard
"The purpose of a Rule 12(b)(6) motion is to test the sufficiency of a complaint." Williams v. Preiss-Wal Pat III, LLC, 17 F. Supp. 3d 528, 531 (D.S.C. 2014); see Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) ("A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint; importantly, it does not resolve contests surrounding the facts, the merits of a claim, or the applicability of [affirmative] defenses."). Pursuant to Rule 8 of the Federal Rules of Civil Procedure, a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), such that the defendant will have "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) (internal quotation marks omitted). "[T]he facts alleged 'must be enough to raise a right to relief above the speculative level' and must provide 'enough facts to state a claim to relief that is plausible on its face.'" Robinson v. Am. Honda Motor Co., 551 F.3d 218, 222 (4th Cir. 2009) (quoting Twombly, 550 U.S. at 555, 570). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
When considering a Rule 12(b)(6) motion, the court is required to accept the allegations in the pleading as true and draw all reasonable factual inferences in favor of the party opposing the motion. E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011). Moreover, the court must evaluate "the complaint in its entirety, as well as documents attached or incorporated into the complaint." Id. at 448. The court may consider a document not attached to the complaint, so long as the document "was integral to and explicitly relied on in the complaint," and there is no authenticity challenge. Id. (quoting Phillips v. LCI Int'l, Inc., 190 F.3d 609, 618 (4th Cir. 1999)). "A complaint should not be dismissed as long as it provides sufficient detail about the claim to show that the plaintiff has a more-than-conceivable chance of success on the merits." Goldfarb v. Mayor & City Council of Balt., 791 F.3d 500, 511 (4th Cir. 2015) (internal quotation marks and brackets omitted).
Pro se pleadings are given liberal construction and are held to a less stringent standard than formal pleadings drafted by attorneys. Erickson v. Pardus, 551 U.S. 89, 94 (2007). However, principles requiring generous construction of pro se complaints do "not require courts to conjure up questions never squarely presented to them." Beaudett v. City of Hampton, 775 F.2d 1274, 1278 (4th Cir. 1985). Giving liberal construction does not mean that the court can ignore a pro se plaintiff's clear failure to allege facts that set forth a cognizable claim. See Weller v. Dept. of Soc. Servs., City of Baltimore, 901 F.2d 387, 391 (4th Cir. 1990) ("Only those questions which are squarely presented to a court may properly be addressed."). Thus, even under this less stringent standard, a pro se complaint is still subject to summary dismissal. Estelle, 429 U.S. at 106-07.
The facts, and all inferences therefrom, are construed in the light most favorable to Plaintiff for purposes of ruling on Defendants' Motion to Dismiss. See Kolon Indus., Inc., 637 F.3d at 440.
On July 13, 2018, as part of a mortgage loan transaction, Plaintiff executed a Note in the amount of $450,000 in favor of HomeBridge (the "Note"). ECF No. 1-1 at 2-3 ¶ 3; see ECF No. 23-1 at 9-13. That same day, Plaintiff and non-party Lisa A. France also executed a mortgage on Plaintiff's property at 1248 Logbook Lane, Mount Pleasant, South Carolina, in favor of Mortgage Electronic Registration Systems, Inc. ("MERS"), as nominee of HomeBridge, which mortgage was recorded in Book 0733, Page 530, of the Charleston County Register of Deeds (the "Mortgage"). ECF No. 1-1 at 2-3 ¶ 3; see ECF No. 17-3.
For purposes of this Motion, the Court may consider the Note and Mortgage, which were referenced in, and integral to, the Complaint. Kolon Indus., Inc., 637 F.3d at 448. Moreover, the Court can take judicial notice of the Mortgage, which is a matter of public record. See Charleston County Register of Deeds Online Services, https://imgweb.charlestoncounty.org/CMSOBView/Service1.asmx/StreamDocIDAsPDF?DocID =40895533 (last visited Oct. 1, 2020); see also Philips v. Pitt Cnty. Mem. Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (courts "may properly take judicial notice of matters of public record").
On or around December 4, 2019, Plaintiff created and executed a document labeled "NEGOTIABLE SECURITY No.: 000016878," which purported to be a "legally processed Debt or Assessed Tax Payoff Security Instrument" and "legal tender at face value for all debts public and private" (the "Credit Agreement Payoff Security"). ECF No. 1-1 at 64, Exh. B to Compl. The document states, "I, Christopher James Francis, Registered Private Banker . . . hereby obligated to Pay to the Order of FREDDIE MAC, U.S. TREASURY, OR HOMEBRIDGE FINANCIAL SERVICES, INC . . . the full amount specified by this CREDIT AGREEMENT PAYOFF SECURITY INSTRUMENT," and it lists an amount of $460,000. Id. The document further states,
This legal security Instrument credit agreement property, payoff, counter offer, release, satisfaction, set off, note, legal tender, shall be full acquittance, discharge, and debt account closure and constitutes a valid credit agreement, payoff, and
discharge between the parties via U.S. Treasury Property Custodian; shall nullify and void original debt agreement with payment or credit issued to claimant's agent via U.S. Treasury assignment upon communication. Failure to follow these terms and conditions, assignee, claimant, investor, bearer, IRS, or holder has accepted this Legal Credit Agreement Debt Payoff as a legal UCC1 Commercially Registered Security Instrument under SEC Rules . . . . To obtain full credit, only process via the TREASURY DEPARTMENT Alien Property Custodian for the account and obligation of the United States.Id. The top of the document contains a listing of various U.C.C. articles and refers to the United Nations UNCITRAL Convention Treaty. Id.
According to an affidavit attached to the Complaint, a person named Sarah Jane Schrodetzki delivered the Credit Agreement Payoff Security, among other documents, to a HomeBridge sales manager named Zach located in Charleston, South Carolina, on January 10, 2020. ECF No. 1-1 at 90.
The other documents included a "certified processing memorandum," a "certified without prejudice lien release," and copies of a UCC financing statement and its amendments that may have been filed in Texas. ECF No. 1-1 at 60-90.
On May 8, 2020, Plaintiff filed this action in state court alleging six causes of action: (1) Default and Breach of Credit Agreement Security Instrument Payoff, Relief/Satisfaction of Mortgage Debt Lien Security Contract Property; (2) Fraud in the Factum upon the Court; (3) RICO Conspiracy and Racketeering; (4) Lack of Jurisdiction to Collect on the Alleged Debt as Owner or Holder in Due Course; (5) Failure to Produce the Original Promissory Note; and (6) Financial Discrimination. ECF No. 1-1.
In his Complaint, Plaintiff demands judgment awarding the following remedies: (a) full discharge with prejudice of the Note; (b) full release with prejudice of the Mortgage lien; (c) "$450,000 - Promissory Note given to HOMEBRIDGE FINANCIAL SERVICES, INC. for free on July 13, 2018"; and (d) "$11,816.84 - the return of (4) $2,954.21 monthly payments that were made after CAP security paid off alleged loan on January 10, 2020[.]" Id. at 8-10.
C. Discussion
Defendants move to dismiss Plaintiff's Complaint in its entirety for failure to state a claim upon which relief can be granted. Upon review of the Complaint, the attachments thereto, and the Note (attached to Plaintiff's Memorandum Opposing Motion to Dismiss ("Opposition Memo"), ECF No. 23-1) and the Mortgage filed with Charleston County Register of Deeds, the Court agrees that the Complaint should be dismissed under Rule 12(b)(6).
As an initial matter, Plaintiff's Complaint is difficult to follow and has many hallmarks of the "sovereign citizen" redemption theory. See Parker v. Spencer, No. 4:13-CV-00430-RBH, 2015 WL 3870277, at *3 (D.S.C. June 23, 2015) (quoting United States v. Ulloa, 511 F. App'x 105, 106 n.1 (2d Cir. 2013)) ("sovereign citizens are a loosely affiliated group who believe that the state and federal governments lack constitutional legitimacy and therefore have no authority to regulate their behavior"); Presley v. Prodan, No. CA 3:12-3511-CMC-JDA, 2013 WL 1342465, at *2 (D.S.C. Mar. 11, 2013), adopted by, 2013 WL 1342539 (D.S.C. Apr. 2, 2013) (collecting cases describing the "sovereign citizen" movement and its common features); see also U.S. Dep't of Justice, F.B.I., Counterterrorism Analysis Section, Sovereign Citizens: A Growing Domestic Threat to Law Enforcement, (Sept. 2011), https://leb.fbi.gov/articles/featured-articles/sovereign- citizens-a-growing-domestic-threat-to-law-enforcement (last visited Oct. 2, 2020) (explaining hallmarks of the sovereign-citizen redemption theory and redemption scheme used "to defraud banks, credit institutions, and the U.S. government" by filing purported U.C.C. forms "for illegitimate purposes, believing that doing so correctly will compel the U.S. Treasury to fulfill its debts, such as credit card debts, taxes, and mortgages").
The gist of Plaintiff's Complaint appears to be that after he created and signed the Credit Agreement Payoff Security and had it delivered to a local HomeBridge sales representative, he was no longer responsible for paying back the Note, arguing instead that the Credit Agreement Payoff Security should be considered legal tender sufficient to discharge his debt. He further alleges that Defendants somehow violated the law following the delivery of the Credit Agreement Payoff Security by continuing to accept his monthly mortgage payments, and he seeks repayment of all mortgage loan payments made following delivery of the Credit Agreement Payoff Security, as well as full discharge of the Note, release of the Mortgage lien, and a payment of $450,000 for the amount of the Note.
Plaintiff contends in his Opposition Memo that the "issue for the court is whether a jury could conclude from evidence adduced that [Plaintiff] lawfully presented negotiable security No. 000016878 to discharge mortgage note." ECF No. 23 at 3.
Courts around the nation have rejected similar claims, concluding that promissory notes like Plaintiff's Credit Agreement Payoff Security are not legal tender and cannot be used to discharge mortgage or other debts. See Marvin v. Capital One, No. 1:15-CV-1310, 2016 WL 4548382, at *4 (W.D. Mich. Aug. 16, 2016), adopted by, No. 1:15-CV-1310, 2016 WL 4541997 (W.D. Mich. Aug. 31, 2016), aff'd, No. 16-2307, 2017 WL 4317143 (6th Cir. June 6, 2017) ("Plaintiff cannot pay his debt owed to Capital One by use of a purported 'international promissory note' authorized under the UNCITRAL convention because such a note is not legal tender."); Chopin v. Green Tree Servicing, LLC, No. CV 15-1918, 2016 WL 1244515 at *2 (E.D. La. March 30, 2016) (courts throughout the country have held that international promissory notes are not legal tender, "rejecting conspiracy theories that similarly argue [international promissory notes] and bills of exchange may discharge a mortgage or other debts"); In re Walters, No. 14-10119 (SMB), 2015 WL 3935237 at *3 (Bankr. S.D.N.Y. June 25, 2015) ("The Notes Walters issued did not discharge the underlying indebtedness because the Notes were not legal tender."); Bryant v. Washington Mut. Bank, 524 F. Supp. 2d 753, 760 (W.D. Va. 2007), aff'd, 282 F. App'x 260 (4th Cir. 2008) (describing the "redemption" theory, granting motion to dismiss, and finding that "the legal authorities Plaintiff cites and the facts she alleges suggest that she did not tender payment, but rather a worthless piece of paper"). As explained more fully below, the undersigned concludes that, even taking Plaintiff's pro se status into account, the Complaint is frivolous, lacks any discernable legal foundation, and should be dismissed.
1. Plaintiff Failed to State Any Claim Against Freddie Mac or Any Individual Defendant
Although Plaintiff captions his action as against "James G. Mackey acting as CFO for Freddie Mac" and "Joseph P Sheridan Jr acting as COO for HomeBridge Financial Services Inc.," the only factual allegation in the Complaint related to either individual appears in paragraph 1 and alleges merely that Plaintiff believes that
James G. Mackey acting as CFO for Freddie Mac and Joseph P Sheridan Jr acting as COO for HomeBridge Financial Services Inc. "are doing business in Charleston County[,] South Carolina and placed a lien on claimant/petitioner property for $450,000. Property is located in Charleston County[,] South Carolina, within the Court of Common Pleas jurisdiction, and is properly filed in Charleston County.ECF No. 1-1 at 8 ¶ 1. Similarly, although Plaintiff refers to HomeBridge repeatedly throughout the Complaint, see, e.g., ECF No. 1-1 at 8, 10, 12, 22, 24, 28, Plaintiff does not make any factual allegations about Freddie Mac in the Complaint other than in paragraph 1. As such, the Court finds that Plaintiff has failed to state any claim against the named individuals or Freddie Mac.
2. First Cause of Action - Breach of Contract
With respect to the first claim for "Default and Breach of Credit Agreement Security Instrument Payoff, Release/Satisfaction of Mortgage Debt Lien Security Contract Property," Plaintiff has failed to allege facts to state a claim for breach of any contract. To establish a cause of action for breach of contract under South Carolina law, a plaintiff must demonstrate the following elements: (1) the existence of a contract; (2) its breach; and (3) damages caused by such breach. Hotel & Motel Holdings, LLC v. BJC Enterprises, LLC, 780 S.E.2d 263, 272 (S.C. Ct. App. 2015). To the extent that Plaintiff is trying to allege that Defendants breached or are in default of the "Credit Agreement Security Instrument" that Plaintiff apparently created and executed in December 2019, Plaintiff has failed to plead facts showing that this instrument is a contract. "The necessary elements of a contract are an offer, acceptance, and valuable consideration." Sauner v. Pub. Serv. Auth. of S.C., 581 S.E.2d 161, 166 (S.C. 2003). At best, this document purports to be just another promise of payment by Plaintiff, and there are no allegations of acceptance or valuable consideration, much less a breach by Defendants of any agreement or damages flowing therefrom. Accordingly, Plaintiff's first cause of action should be dismissed.
To the extent that Plaintiff is trying to allege that Defendants breached the Note or Mortgage, Plaintiff has not alleged any facts plausibly alleging that either Defendant breached the mortgage loan contract or any other contract. Moreover, Freddie Mac was not a party to either the Note or Mortgage, and Plaintiff has not otherwise shown that a contract existed between Plaintiff and Freddie Mac.
3. Second Cause of Action - Fraud in the Factum
Plaintiff's second cause of action purports to be a claim of "Fraud in the Factum upon the Court." ECF No. 1-1 at 30-32. Fraud in the factum is rare and occurs "when a legal instrument as actually executed differs from the one intended for execution by the person who executes it, or when the instrument may have had no legal existence," such as "when a blind person signs a mortgage when misleadingly told that the paper is just a letter." Fraud in the Factum, Black's Law Dictionary (11th ed. 2019); see Gomillion v. Forsythe, 62 S.E.2d 297, 301 (S.C. 1950) (explaining that fraud in the factum "relates to the matter of the manual signing of the paper, and if the plaintiff at the time she signed it had sufficient mental capacity to understand what she was doing, then there was no fraud in the factum"); see also Revak v. SEC Realty Corp., 18 F.3d 81, 91 (2d Cir. 1994) ("Fraud in the factum occurs when the maker of the note is tricked into believing that which he is signing is something other than a promissory or obligatory note." (internal quotation marks omitted)).
Plaintiff does not allege that he never signed the Note or that he did not know what he was signing. Indeed, in his Opposition Memo, Plaintiff acknowledges that he signed the Note, was sent a copy of the final signed document by the closing attorney in July 2018, and possesses a copy of the Note. ECF No. 23 at 7; ECF No. 23-1 at 9-13 (Plaintiff's copy of executed Note). Rather, Plaintiff alleges that only the original copy of the Note signed in blue ink can stand as proof of any debt and that Defendants "had a counterfeit copy of the original Mortgage Debt Lien Contract Security filed into county records through REDACTION and Claimant now requests that the original full legal sized documents be provided to prove fraud in the factum." ECF No. 1-1 at 30-32. Plaintiff also alleges that Defendants are "avoiding the TERMS and CONDITIONS of [Plaintiff's] issued credit agreement payoff security instrument contract property money dated December 4, 2019 with commercially registered pursuant to SEC RULES serial Number 000016878." Id. These allegations are insufficient to state a claim for fraud in the factum, and this cause of action should be dismissed. See Provident Bank v. Cmty. Home Mortg. Corp., 498 F. Supp. 2d 558, 574 (E.D.N.Y. 2007) ("Where, as here, there is no evidence that the mortgagors were unaware that they were signing mortgage notes, or were falsely informed as to the nature of the notes, fraud in the factum cannot be asserted.")
4. Third Cause of Action - RICO Conspiracy and Racketeering
Plaintiff's third cause of action purportedly sounds under the Racketeering Influenced and Corrupt Organization Act ("RICO"). To state a claim under RICO, Plaintiff must adequately plead at least two predicate acts of racketeering activity that are related and that amount to or pose a threat of continued criminal activity. GE Inv. Placement Partners II v. Parker, 247 F.3d 543, 549 (4th Cir. 2001); see 18 U.S.C. § 1961(1) (listing racketeering activities). However, Plaintiff has not alleged any predicate acts, and his general and conclusory allegations of wrongdoing—securitization of mortgages and "foreclosing on thousands of homes and real estate property without risking a penny"—are insufficient to establish "a pattern of racketeering activity" for purposes of his RICO claim. See Parker, 247 F.3d at 548. Thus, the claim should be dismissed.
5. Fourth and Fifth Causes of Action
In the Fourth Cause of Action, Plaintiff alleges that Defendants have no standing to enforce the mortgage loan documents because of "[s]ecuritization" and because Defendants "refused to collect the awaiting funds" with regard to the "Credit Agreement Payoff Security Instrument" created by Plaintiff. He further asserts that the "original pretender Lender/Creditor bank, servicer, and Investor Trust gave up jurisdiction and the debt has been paid under United States; STATES; and Local Statutes pursuant to Government Policy, legal definition, and the 1933 Bankruptcy which continues today under the WAR POWERS ACT and TRADING WITH THE ENEMY ACT." ECF No. 1-1 at 34. In his Fifth Cause of Action, Plaintiff appears to assert that Defendant must produce the "Legal Original Blue Inked Signed NOTE" or else owe him money damages and all interest they have received on his property. Id. at 36. Plaintiff's mere assertions of legal conclusions, several of which are contrary to established law, are insufficient to establish a viable claim. See Iqbal, 556 U.S. at 678 (explaining that courts "are not bound to accept as true a legal conclusion couched as a factual allegation"); see also In re Walker, 466 B R. 271, 285 (Bankr. E.D. Pa. 2012) ("It appears that a judicial consensus has developed holding that a borrower lacks standing to . . . challenge the validity of a mortgage securitization[.]"); Bryant, 524 F. Supp. 2d at 760 (dismissing complaint and finding that "the legal authorities Plaintiff cites and the facts she alleges suggest that she did not tender payment, but rather a worthless piece of paper").
6. Sixth Cause of Action - Financial Discrimination
Plaintiff's final cause of action is a vague claim for "Financial Discrimination" in which he seems to assert that Defendants are discriminating against him by requiring him to repay his debt using U.S. currency rather than accept as legal tender the "Credit Agreement Payoff Security Instrument" that he created. He further alleges that this refusal violates the Tender Act, Security Act, FCRA, FDCPA, Civil Rights Act, RICO, 12 U.S.C. § 24, RESPA, and "other Banking Laws." ECF No. 1-1 at 38. However, Plaintiff does not cite any part of these statutes that Defendants allegedly violated or otherwise explain how Defendants violated the statutes. Although the Court must liberally construe a pro se complaint, the U.S. Supreme Court has made it clear that a plaintiff must do more than make conclusory statements to state a claim. See Iqbal, 556 U.S. at 677-78; Twombly, 550 U.S. at 555. Rather, the complaint must contain sufficient factual matter, accepted as true, to state a claim that is plausible on its face, and the reviewing court need only accept as true the complaint's factual allegations, not its legal conclusions. Iqbal, 556 U.S. at 678-79. Because Plaintiff fails to meet this standard, the undersigned recommends that Plaintiff's "Financial Discrimination" claim be dismissed for failure to state a claim.
III. PLAINTIFF'S REMAINING MOTIONS SHOULD BE DENIED
The Court concludes that Plaintiff's two remaining motions, ECF Nos. 24 and 25, should be denied. In his "Motion for Judicial Notice [of] Uniform Commercial Code of Banking and Contract Laws," Plaintiff requests that the Court take judicial notice of various laws and legal propositions set forth in thirty-eight separately numbered paragraphs. However, "[o]nly indisputable facts are susceptible to judicial notice," and judicial notice of legal conclusions would be inappropriate. Nolte v. Capital One Fin. Corp., 390 F.3d 311, 317 (4th Cir. 2004) (citing Fed. R. Evid. 201(b)); United States v. Daley, 378 F. Supp. 3d 539, 546 (W.D. Va. 2019), aff'd sub nom., United States v. Miselis, 972 F.3d 518 (4th Cir. 2020). Thus, the Motion for Judicial Notice, ECF No. 25, should be denied.
Finally, Plaintiff's Motion to Enforce the Credit Agreement Payoff Security, ECF No. 24, should be denied. First, it is premature, as Plaintiff's Complaint fails to state a claim and should be dismissed. Moreover, as explained above, Plaintiff failed to plead facts showing that the Credit Agreement Payoff Security is a contract, and it is not legal tender subject to enforcement. Accordingly, the undersigned recommends denying Plaintiff's Motions and dismissing this action in its entirety.
IV. CONCLUSION
For the reasons set forth above, it is RECOMMENDED that Plaintiff's Motion to Remand (ECF No. 19), Motion to Enforce (ECF No. 24), and Motion for Judicial Notice (ECF No. 25), be DENIED. It is further RECOMMENDED that Defendants' Motion to Dismiss, ECF No. 17-1, be GRANTED, and that Plaintiff's Complaint be DISMISSED.
The parties are referred to the Notice Page attached hereto. October 7, 2020
Charleston, South Carolina
/s/_________
Molly H. Cherry
United States Magistrate Judge
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. "[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must 'only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'" Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed. R. Civ. P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); see Fed. R. Civ. P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
Post Office Box 835
Charleston, South Carolina 29402
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).