BRECKER et al v 1ST REPUBLIC MORTGAGE BANKERS, INC. et al

Filing 144

MEMORANDUM ORDER Dismissing as moot 107 Motion to Dismiss, 115 Motion to Dismiss and 137 Motion to Dismiss; this matter is REMANDED to the Superior Court of New Jersey, Law Division, Camden County. Signed by Judge Joseph H. Rodriguez on 10/21/13. (js)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
_____________________________
John and Laura Brecker, et al.,
:
Hon. Joseph H. Rodriguez
Plaintiffs,

:
:

v.
1st Republic Mortgage Bankers, Inc., et al.,

Civil Action No. 13-5646
Memorandum Order
Remanding Case to
N.J. Superior Court,
Law Division,
Camden County

:

Defendants.
:
________________________________

This matter comes before the Court sua sponte, after Defendant Bank of
America, N.A. filed a Notice of Removal from the New Jersey Superior Court,
Law Division, Camden County on September 30, 2013. The Notice of Removal
asserts federal question jurisdiction pursuant to 28 U.S.C. § 1331 “based on
allegations that Defendants violated two federal programs created by federal
statute: (i) the ‘Troubled Asset Relief Program,’ commonly known as ‘TARP’ and
(ii) the ‘Home Affordable Modification Program,’ also known as ‘HAMP.’”
(Notice of Removal, ¶ 5 (citing Compl., ¶¶ 239-45, Count VII for Breach of
Contract/Constructive Fraud).)
Federal question jurisdiction applies to “all civil actions arising under the
Constitution, laws, or treatises of the United States.” 28 U.S.C. § 1331. A claim
“arises under” federal law if “a well-pleaded complaint establishes either that
federal law creates the cause of action or that the plaintiff's right to relief
necessarily depends on resolution of a substantial question of federal law.”
Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern
Cal., 463 U.S. 1, 27-28 (1983). That is, “in certain cases federal-question
jurisdiction will lie over state-law claims that implicate significant federal issues”
1

or “turn on substantial questions of federal law.” Grable & Sons Metal Prods.,
Inc. v. Darue Eng'g & Manufacturing, 545 U.S. 308, 312 (2005). Because the
Court finds that the breach of contact/constructive fraud claim in Count VII of
the Complaint does not arise under federal law, this Court could not have had
original jurisdiction over the action as contemplated by 28 U.S.C. § 1441, and the
matter will be remanded to State court pursuant to 28 U.S.C. § 1447 for lack of
subject matter jurisdiction.
Plaintiffs, approximately 98 in number, brought this action against about
64 Defendants, asserting various forms of mortgage fraud. Included among
claims of State statutory violations, intentional and negligent misrepresentation,
negligence, slander, civil conspiracy, and unjust enrichment is a claim for Breach
of Contract/Constructive Fraud, Count VII. This claim includes the following
allegations:
242. . . . Defendants’ acceptance of TARP money created an obligation to
modify loans outstanding on Plaintiffs’ real estate and to otherwise use the TARP
funds for the benefit of, among others, the Plaintiffs herein.
243. As discussed below, certain Plaintiffs pursued and/or entered, in
good faith, into contracts with certain Defendants to modify their loans by
participating in the taxpayer subsidized Home Affordable Modification Program
(HAMP).
244. Upon information and belief, with respect to certain Plaintiffs,
Defendants failed to act in good faith in accepting these applications for loan
modifications and acting upon them.
245. As a direct result of the acts and/or omissions of the Defendants,
jointly and severally, or others with whom they acted in concert, the Plaintiffs
were severely damaged financially.
The Court finds that the allegations within this claim are insufficient to give rise
to federal question jurisdiction.
2

Neither TARP nor HAMP provides for a private right of action, express or
implied. Without explicit legislative authority, a court can only find an implied
private cause of action when it can confidently conclude that Congress intended
such a right. Am. Trucking Ass'ns v. Delaware River Joint Toll Bridge Comm'n,
458 F.3d 291, 303 (3d Cir. 2006). In doing so, the court must determine that
Congress intended to create both a personal right and a private remedy for that
right. Spencer Bank, S.L.A. v. Siedman, 309 F. App’x 546, 548 (3d Cir. 2009).
TARP authorizes the Secretary of the Treasury to purchase troubled assets
from any financial institution on such terms and conditions as are determined by
the Secretary. 12 U.S.C. § 5211(a)(1). “The statute provides for judicial review of
the Secretary’s decision, but does not mention a private right of action against
private entities. Thus, it appears Congress did not intend to allow such actions.”
Thomas v. Pentagon Fed. Credit Union, 393 F. App'x 635, 638 (11th Cir. 2010).
As the Supreme Court has explained, “[t]he express [legislative] provision of one
method of enforcing a substantive rule suggests that Congress intended to
preclude others.” Alexander v. Sandoval, 532 U.S. 275, 290 (2001). Finding
“nothing about the statute evinces congressional intent to create a private right of
action against TARP fund recipients,” Ruotolo v. Fannie Mae, 933 F. Supp. 2d
512 (S.D.N.Y. 2013), courts across the country have held that TARP does not
contain such a private cause of action. See id. See also, e.g., 393 F. App'x at 638;
Gudzelak v. PNC Bank, Civ. No. 12-1230-LPS, 2013 WL 3949526, at *2 (D. Del.
July 29, 2013); Citron v. Wachovia Mortg. Corp., 922 F. Supp. 2d 1309,
1325 (M.D. Fla. 2013) (finding no provision of TARP that confers a private right
of action); Robinson v. Wells Fargo Bank, N.A., No. CV 09–2066, 2010 WL
3

2534192, at *8 (D. Ariz. June 18, 2010) (TARP does not create a private right of
action, express or implied); Logan v. U.S. Bank Nat'l Ass'n, No. CV 09-8950,
2010 WL 1444878, at *9-10 (C.D. Cal. Apr. 12, 2010) (same); Pantoja v.
Countrywide Home Loans, Inc., 640 F. Supp. 2d 1177, 1185 (N.D. Cal.
2009) (same); Bank v. Homes By Williamscraft, Inc., No. 09–CV–91, 2009 WL
3753585, at *2 (N.D. Ga. Nov. 6, 2009) (same).
Similarly, HAMP was “designed to prevent avoidable home foreclosures by
incentivizing loan servicers to reduce the required monthly mortgage payments
for certain struggling homeowners.” Miller v. Chase Home Fin., LLC, 677 F.3d
1113, 1116 (11th Cir. 2012). Its provisions empower the Secretary of the Treasury
to restore liquidity and stability to the financial system. Id. (citing 12 U.S.C. §
5201 (1)). The legislature gave the Secretary of the Treasury the right to initiate a
cause of action, and did not expressly provide any cause of action for any private
citizens. Id. Indeed, to provide a private cause of action would be counterproductive to the goal of increasing lender participation in loan modification,
rather than being consistent with the intent of HAMP. Id.
As such, federal courts across the country have held that HAMP does not
create a private right of action for borrowers. See id. See also, e.g., Nelson v.
Bank of America, N.A., 446 Fed. App’x 158, 159 (11th Cir. 2011) (citing Mosley v.
Wells Fargo Bank, N.A., 802 F. Supp. 2d 695 (E.D. Va. 2011); Cox v. Mortg. Elec.
Registration Sys., Inc., 794 F. Supp. 2d 1060 (D. Minn. 2011); Melton v. Suntrust
Bank, 780 F. Supp. 2d 458, 459-60 (E.D. Va. 2011); Hart v. Countrywide Home
Loans, Inc., 735 F. Supp. 2d 741, 748 (E.D. Mich. 2010); Pantoja v. Countrywide
Home Loans, Inc., 640 F. Supp. 2d 1177, 1185 (N.D. Cal. 2009)); Bourdelais v.
4

J.P. Morgan Chase Bank, N.A., Civil No. 3:10CV670-HEH, 2011 WL 1306311, at
*3 (E.D. Va. Apr. 1, 2011) (noting that courts across the country have “universally
rejected” claims by homeowners that they were entitled to modifications under
HAMP because “HAMP does not create a private right of action for borrowers
against lenders and servicers”); Dugger v. Bank of Am., No. 1:10CV00076 SNLJ,
2010 WL 3258383, at *2 (E.D. Mo. Aug. 16, 2010); Simon v. Bank of America,
N.A., No. 10-cv-00300-GMN-LRL, 2010 WL 2609436, at *10 (D. Nev. June 23,
2010) (“district courts have consistently held that the Home Affordable
Modification Program does not provide borrowers with a private cause of action
against lenders for failing to consider their application for loan modification, or
even to modify an eligible loan” (citing Lucero v. Countrywide Bank N.A., NO.
09–CV–1742, 2010 WL 1880649, at *3–4 (S.D. Cal. May 10, 2010); Villa v. Wells
Fargo Bank, N.A., NO. 10–CV–0081, 2010 WL 935680, at *3 (S.D. Cal. March
15, 2010); Aleem v. Bank of America, 09–CV–01812, 2010 WL 532330, at *4
(C.D. Cal. Feb. 09, 2010); Escobedo v. Countrywide Home Loans, Inc., 09–CV–
1557, 2009 WL 4981618, at *2–3 (S.D. Cal. Dec. 15, 2009))). Indeed, the United
States Court of Appeals for the Third Circuit also has held recently that “HAMP
does not provide a private right of action” for borrowers. Sinclair v. Citi Mortg.,
Inc., 519 Fed. App’x. 737, 739 (3d Cir. 2013) (citing Wigod v. Wells Fargo Bank,
N.A.. 673 F.3d 547, 559 n.4 (7th Cir. 2012)). Accord Dente v. Saxon Mortg., Civil
No. 11–6933, 2012 WL 1664127, at *4 (D.N.J. May 11, 2012); O’Connor v. First
Alliance Home Mortg., Civ. Action No. 12-111, 2012 WL 762351, *3 (D.N.J. March
6, 2012); Keosseian v. Bank of America, Civil Action No. 11-3478, 2012 WL
458470, at *2 (D.N.J. Feb. 10, 2012); Wallace v. Bank of America, Civil No. 115

0038, 2011 WL 3859745, at *2 n.3 (D.N.J. Aug. 30, 2011); Stolba v. Wells Fargo
& Co., Civil Action No. 10-cv-6014, 2011 WL 3444078, at *3 (D.N.J. Aug. 8, 2011).
Because this Court also finds that there is no private right of action under
TARP or HAMP, removal based on federal question jurisdiction was improper.
“If at any time . . . it appears that the district court lacks subject matter
jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447. Accordingly, the case
must be remanded for lack of federal subject matter jurisdiction.
For these reasons,
IT IS ORDERED this 21st day of October, 2013 that this matter be and
hereby is REMANDED to the Superior Court of New Jersey, Law Division,
Camden County.
IT IS FURTHER ORDERED that all motions to dismiss the case pending
before this Court are hereby DISMISSED AS MOOT.

/s/ Joseph H. Rodriguez_
JOSEPH H. RODRIGUEZ
U.S.D.J.

6