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US Bank N.A. v. HLC Escrow Inc.

United States District Court, D. Maine

December 29, 2016

US BANK N.A. AS LEGAL TITLE TRUSTEE FOR TRUMAN 2013 SC3 TITLE TRUST, Plaintiff,
v.
HLC ESCROW INC., and FIRST AMERICAN TITLE INSURANCE COMPANY, Defendants.

          ORDER ON DEFENDANTS' MOTIONS TO DISMISS

          George Z. Singal United States District Judge

         Before the Court are Defendants' Motions to Dismiss (ECF Nos. 13 & 24) and Defendant HLC Escrow's Motion to Strike (ECF No. 23). As briefly explained herein, the Court determines that Plaintiff's claims are time barred and therefore GRANTS Defendants' Motions and DENIES AS MOOT the Motion to Strike.[1]

         I. LEGAL STANDARD

         The Federal Rules of Civil Procedure require only that a complaint contain “a short and plain statement of the grounds for the court's jurisdiction . . . a short and plain statement of the claim showing that the pleader is entitled to relief; and a demand for the relief sought[.]” Fed.R.Civ.P. 8(a)(1)-(3). A viable complaint need not proffer “heightened fact pleading of specifics, ” but in order to survive a motion to dismiss it must contain “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).

         Pursuant to Federal Rule of Civil Procedure Rule 12(b)(6), a defendant may present a statute of limitations defense when the passage of time prevents a plaintiff from stating “a claim upon which relief can be granted.” However, the facts supporting the defense must be apparent on the face of the pleadings. Santana-Castro v. Toledo-Dávila, 579 F.3d 109, 113-14 (1st Cir. 2009). Generally, the Court “may consider only facts and documents that are part of or incorporated into the complaint” when resolving any motion brought pursuant to Rule 12(b)(6). United Auto., Aerospace, Agric. Implement Workers of Am. Int'l Union v. Fortuño, 633 F.3d 37, 39 (1st Cir. 2011) (quotation marks omitted).

         With this standard in mind, the Court lays out the well-pled factual allegations as they relate to Defendants' statute of limitations arguments.

         II. FACTUAL BACKGROUND

         On April 16, 2007, Douglas and Sara Trask executed a promissory note with original lender Home Loan Center Inc. d/b/a LendingTree Loans (“Lending Tree”). The Note was secured by a mortgage granted to Mortgage Electronic Registration Systems, Inc. (“MERS”), solely as nominee for Lending Tree and its successors and assigns, on real property located at Stream Road in Winterport, Maine (the “2007 Mortgage”).[2] HLC Escrow Inc. (“HLC”) was the closing agent on the mortgage loan and First American Title Insurance Company (“FATIC”) was the title insurer for MERS as nominee for Lending Tree and its successors and assigns.

         According to Plaintiff U.S. Bank N.A. as Legal Title Trustee for Truman 2013 SC3 Title Trust (“US Bank”), the 2007 Mortgage accidentally described “an unimproved parcel that was vacant land, ” as opposed to an “improved parcel with [a] residential structure” on the property. (Compl. (ECF No. 1-2) ¶¶ 7-8.) The 2007 loan refinanced a previous loan to the Trasks that was secured by a mortgage describing the improved parcel. U.S. Bank alleges the value of the property encumbered by the 2005 Mortgage was $230, 000, while the value of the property encumbered by the 2007 Mortgage was merely $40, 000.

         In 2010, as part of the Trasks' personal bankruptcy proceedings, an adversary proceeding was brought to determine what property was covered by the 2007 Mortgage. This proceeding resulted in a June 10, 2011 Judgment finding the mortgage covered only the Trasks' unimproved parcel.[3]

         US Bank received an interest in the 2007 Mortgage via Quitclaim Assignment on November 7, 2014.[4] In light of the Trasks' default under the Note and 2007 Mortgage, U.S. Bank filed a foreclosure action and judgment entered in its favor. However, the foreclosure was limited to the unimproved parcel described in the 2007 Mortgage documents. U.S. Bank foreclosed on the property via public sale on April 14, 2015, and was the highest bidder, taking title to the property.

         Previously, BAC Home Loans Servicing, L.P., U.S. Bank's predecessor in interest, had filed an insurance claim with FATIC on April 8, 2010, which was denied on May 20, 2010, via email.[5] In its denial, FATIC stated, in part:

From the documents provided, it appears that you are not alleging any title defect as to [a] parcel which is insured. As the Polic[y] insures the same land described in the insured mortgage, and as the mortgagor owned the land on which he granted th[e] mortgage, your assertion that an additional or different parcel was to be encumbered does not give rise to a claim under th[e] Policy.

(Ex. C to FATIC'S Motion to Dismiss (ECF No. 24-3), Page ID # 311.) The same claim was filed and again denied, for the same reasons, in 2011. In a third denial on ...


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