Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Newland v. Morgan Stanley Private Bank, N.A.

United States District Court, E.D. Tennessee

April 11, 2017

STEVE AND CATHY NEWLAND, Plaintiffs,
v.
MORGAN STANLEY PRIVATE BANK, N.A., et al., Defendants.

          MEMORANDUM AND ORDER

         This case is before the undersigned pursuant to 28 U.S.C. § 636, the Rules of this Court, and Standing Order 13-02.

         Now before the Court is Plaintiffs' Motion for Joinder of Party, Morgan Stanley Mortgage Capital Holdings, LLC [Doc. 46], Motion to Strike Amended Complaint [Doc. 49], Defendants' Motion and Incorporated Memorandum of Law Seeking a More Definitive Statement [Doc. 50], and Joinder in Motion and Memorandum of Law Seeking a More Definite Statement [Doc. 51]. The Motions are now ripe for adjudication. Accordingly, for the reasons set forth below, the Court GRANTS the Plaintiffs' Motion for Joinder of Party [Doc. 46], GRANTS IN PART the Motion to Strike Amended Complaint [Doc. 49] and DENIES AS MOOT the Motions Seeking a More Definite Statement [Docs. 50, 51].

         I. BACKGROUND

         The Plaintiffs filed their original Complaint [Doc. 1-1] on June 3, 2015, in the Circuit Court for Sevier County, Tennessee. The Complaint was filed against several Defendants, including Morgan Stanley Private Bank National Association, Wells Fargo Bank, N.A., PHH Mortgage Corporation, FV-I, Inc., Shapiro and Ingle, LLP (of Memphis), Specialized Loan Servicing, LLC, Shapiro and Kirsch, LLP (of Memphis), Shapiro and Ingle, LLP (of Charlotte), Specialized Asset Management, LLC, and Skye Realty, LLC and/or Skye Realty and Rentals, Inc.

         The original Complaint alleges that in March 2002, the Plaintiffs entered into a Tennessee Open-End Deed of Trust and that Defendant Morgan Stanley Private Bank National Association (“Morgan Stanley”) falsified the Deed of Trust after the Plaintiffs had executed it. The Complaint states that Defendant Morgan Stanley failed to acknowledge or correct the falsified Deed of Trust and began foreclosure proceedings against the Plaintiffs. The Plaintiffs filed a complaint in state court and that as a result of the state complaint, Defendant Morgan Stanley reached a mediated settlement agreement wherein it admitted Plaintiffs' allegations and agreed to a monetary settlement.

         The Complaint states that subsequently, in May 2012, the Plaintiffs entered into a Home Equity Line of Credit Modification Agreement with Defendants Morgan Stanley and/or Wells Fargo Bank, N.A. (“Wells Fargo”). The Plaintiffs state that they were induced to enter this transaction because the parties agreed to a five-year extension of the mortgage security interest in certain real property. The Plaintiffs executed the Modification Agreement on May 23, 2012, and they paid $155.00 to complete the record. The Plaintiffs allege that they sent the Modification Agreement to Defendant Morgan Stanley, but it never recorded the Modification Agreement. The Plaintiffs allege that due to Defendant Morgan Stanley's or Wells Fargo's delay in preparing the Modification Agreement, the Plaintiffs paid additional money to Defendant Morgan Stanley. The Complaint states that after Plaintiffs executed and returned the Modification Agreement, they received a letter from Defendant Morgan Stanley informing the Plaintiffs “of a change in Servicers to Defendant PHH Mortgage.” [Doc. 1-1 at 13]. The Plaintiffs state that the first statement from Defendant PHH Mortgage was not in compliance with the Modification Agreement. The Plaintiffs allege that Defendant PHH Mortgage continued to send false statements and that Plaintiffs continued to object when Defendant PHH Mortgage threatened foreclosure. The Plaintiffs state that Defendants Morgan Stanley, Wells Fargo, PHH Mortgage, Shapiro and Kirsch, LLP (of Memphis), and Shapiro and Ingle claimed default and acted on the falsified documents.

         The Plaintiffs continue that on December 24, 2013, Defendant PHH Mortgage prepared a Corporate Assignment of Deed of Trust, which assigned the Deed of Trust from Defendant Morgan Stanley to Defendant Wells Fargo. The Plaintiffs contend that there was no mention of the Modification Agreement in the document. The Plaintiffs allege such actions constitute a breach of contract, violations of the Tennessee Consumer Protection Act, and fraud. Subsequently, Plaintiffs received a notice of transfer advising them of a servicer transfer from Defendant PHH Mortgage to Defendant Specialized Loan Servicing, LLC (“SLS”). The Plaintiffs state that Defendant SLS also sent them a letter advising of a “current creditor being Defendant FV-I.” [Doc. 1-1 at 17]. The Plaintiffs allege that they later received letters from Shapiro and Kirsch, LLP, (of Memphis) stating the Plaintiffs' debt and identifying Defendant FV-I as the current creditor in trust for Defendant Morgan Stanley, as serviced by Defendant SLS. Later, Defendant Shapiro and Ingle, LLP (of Charlotte), acting as if appointed Substitute Trustee, notified the Plaintiffs that the property was going to be sold by public action. Defendant Skye Realty later offered to make the transition out of the property as easy as possible for the Plaintiffs.

         Among other allegations, the Plaintiffs allege that Defendant Shapiro and Ingle failed to meet the minimal statutory foreclosure procedures, the sale was based on false information, and that the Defendants failed to record and abide by the Modification Agreement.

         The Complaint was removed [Doc. 1] to this Court on July 20, 2015.

         II. POSITIONS OF THE PARTIES

         (a) Plaintiffs' Motion for Joinder of Party

         In their instant Motion, the Plaintiffs move for an order joining Morgan Stanley Mortgage Capital Holdings, LLC (“MSMCH”). The Plaintiffs assert that on October 10, 2016, Defendant PHH Mortgage served its discovery responses, which included a document indicating that the ownership of the mortgage loan had been assigned, sold, or transferred to MSMCH. The Plaintiffs assert that based on information, knowledge and belief, MSMCH is yet another subsidiary company of Defendant Morgan Stanley, along with the other Defendants. The Plaintiffs assert that all the Defendants who had ownership of the Deed of Trust and/or Note were obligated to comply with the agreements and terms of the security instruments and law, including providing the Plaintiffs with accurate billing statements, proper processing, and accounting of payments remitted by the Plaintiffs. The Plaintiffs state that MSMCH failed to perform its obligations under the security instruments.

         Defendant Morgan Stanley [Doc. 48] filed a Response in opposition to the Motion stating that the Plaintiffs' vague and nominal claims against MSMCH would not survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b). Defendant Morgan Stanley asserts that on February 10, 2017, the Plaintiffs filed an Amended Complaint that included MSMCH despite having no authority to add it as a party. Defendant Morgan Stanley argues that the Amended Complaint barely mentions MSMCH and demonstrates that there is no reason to add it as a party. In addition, Defendant Morgan Stanley submits that motions for leave to amend should be liberally granted unless the motion would be futile. Defendant Morgan Stanley states that there are no specific facts or claims that are unique to MSMCH and that the Court should deny the Motion.

         The Plaintiffs filed a Reply [Doc. 52] stating that MSMCH was in fact the owner of record of the Deed of Trust and Note beginning on July 10, 2014. The Plaintiffs state that MSMCH failed to notify them of the assignment, sale or transfer of the security instruments as required and that MSMCH's failure to notify them resulted in the non-inclusion of MSMCH as a Defendant in the original Complaint. The Plaintiffs state that MSMCH failed to provide them with “accurate billing statements and failed to provide checks to access their obligatory credit line as required by the Note.” [Doc. 52 at 2]. Further, the Plaintiffs state that MSMCH, in concert with Defendant FV-I, both of whom are subsidiary companies of Defendant Morgan Stanley, failed to provide Plaintiffs with a breach/demand letter or 14-day notice of intent to refer the loan for foreclosure as required by law. The Plaintiffs contend that MSMCH's failure to comply with the terms of the security instrument and the law resulted in the wrongful foreclosure of Plaintiffs' property. The Plaintiffs state that MSMCH is the current owner of record of the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.