BOUNASISSI et al v. NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

Filing 16

MEMORANDUM OPINION FILED. Signed by Chief Judge Jerome B. Simandle on 9/6/16. (js)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

FREDERICK BOUNASISSI and STACEY
BOUNASISSI,
Plaintiffs,

HONORABLE JEROME B. SIMANDLE

Civil Action
No. 15-7585 (JBS/JS)

v.
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION,

MEMORANDUM OPINION

Defendant.

SIMANDLE, Chief Judge:
This case arises from a foreclosure action against
Plaintiffs Frederick and Stacey Bounasissi in the Superior Court
of New Jersey, Burlington County, Chancery Division. In this
action, Plaintiffs assert that Defendant, New York Life
Insurance and Annuity Corporation (“New York Life”), violated
the Real Estate Settlement Procedures Act (“RESPA” or “the Act”)
and RESPA’s Regulation X when it proceeded with a foreclosure
sale on Plaintiffs’ home, despite the fact that Plaintiffs were
engaged in a loan modification process at the time. Before the
Court is Defendant’s motion to dismiss the Amended Complaint.
[Docket Item 10.] For the reasons that follow, the Court will
grant Defendant’s motion and dismiss Plaintiffs’ Amended
Complaint with prejudice. The Court finds as follows:

1.

The following recitation of the facts of this case are

taken from this Court’s March 4, 2016 Memorandum Opinion on
Plaintiffs’ Motion for a Temporary Restraining Order. Bounasissi
v. New York Life Ins. And Annuity Corp., Case No. 15-7585, 2016
WL 852483 (D.N.J. March 4, 2016). Plaintiffs Frederick and
Stacey Bounasissi allege that they executed and delivered to
Merrill Lynch Credit Corporation a $655,000 Note and a mortgage
against real property in Mount Laurel, New Jersey to Mortgage
Electronic Registration Systems, Inc. on January 18, 2006.
Defendant contends that it is now the owner and holder of
Plaintiffs’ Note and Mortgage. Defendant filed a Complaint for
Foreclosure against Plaintiffs in the Superior Court of New
Jersey, Burlington County, Chancery Division on January 25,
2013, alleging that Plaintiffs defaulted on their obligations
under the Note and Mortgage. Defendant obtained a Final Judgment
for Foreclosure against Plaintiffs on May 7, 2014 and a Sheriff
Sale was scheduled on July 3, 2014.
2.

During the pendency of the underlying state

foreclosure action, Plaintiffs allege that they applied for a
loan modification, which request was denied in writing by a
representative of Defendant on March 18, 2014. On July 14, 2014
–- after Defendant obtained a foreclosure judgment on the
property –- another representative of Defendant agreed to
“restart” the loan modification process. Plaintiffs and
2 

Defendant exchanged documentation for the renewed loan
modification application through the fall of 2014.
3.

Defendant sold the property at a foreclosure sale on

December 4, 2014. Nonetheless, loan modification negotiations
continued between Defendant’s mortgage servicer and Plaintiffs
through April, 2015. Plaintiffs submitted further documentation
at the servicers’ request until ultimately a representative of
Defendant told Plaintiffs she could not help them “because they
had been foreclosed on.” Plaintiffs allege that this was the
first time “a representative of Defendants had may [sic] mention
of the sale taking place to the Plaintiffs.” A new deed was
recorded on April 28, 2015, and on October 20, 2015, a writ of
possession was sent to the Plaintiffs.
4.

On October 20, 2015, Plaintiffs filed a two-count

Complaint [Docket Item 1] against Defendant alleging violations
of the Real Estate Settlement Procedures Act (“RESPA”) and
RESPA’s Regulation X. After Defendant filed a motion to dismiss
[Docket Item 4], Plaintiffs filed a three-count First Amended
Complaint [Docket Item 6] as a matter of course (see Fed. R.
Civ. P. 15(a)(1)) and a Motion for a Temporary Restraining Order
to stay Plaintiffs’ imminent eviction from their home. [Docket
Item 8.] Plaintiffs’ motion for emergency relief was denied
without prejudice for failure to comply with numerous procedural
prerequisites, including a failure to verify their complaint
3 

pursuant to L. Civ. R. 65.1(a), a failure to submit a brief
pursuant to L. Civ. R. 7.1(d), and a failure to explain why this
Court is the proper forum to hear their case rather than an
appeal to the state court which issued the final judgment of
foreclosure against them. [Docket Item 9.] Defendants renewed
their motion to dismiss Plaintiffs’ complaint for failure to
state a claim upon which relief can be granted. [Docket Item
10.] Plaintiffs then filed a Second Amended Complaint [Docket
Item 11] without seeking leave from the Court and without
indicating Defendant’s consent and it will be disregarded. (See
Fed. R. Civ. P. 15(a)(1) & (2).)1 Plaintiffs contemporaneously
filed an Amended Motion for Temporary Restraining Order,
Emergency Injunctive and Declaratory Relief and Order to Show
Cause, [Docket Item 13], which was denied again on March 4,
2016, for failing to set forth grounds entitling Plaintiffs to

1

The Court will strike Plaintiffs’ Second Amended Complaint
because Plaintiffs filed the amendment without leave of Court,
as required by Fed. R. Civ. P. 15(a)(2), and will treat
Defendant’s motion to dismiss as unopposed. The rules permitted
Plaintiffs to make only one amendment to their complaint as a
matter of course, pursuant to Fed. R. Civ. P. 15(a)(1), which
Plaintiffs did previously, as noted above, in response to
Defendant’s first motion to dismiss by filing the First Amended
Complaint, which became the operative pleading. To substitute a
Second Amended Complaint requires consent of the adversary or
leave of court, neither of which Plaintiff obtained. The filing
of an unauthorized amendment in the face of a motion to dismiss
does not relieve a party from the obligation to submit
opposition to the dismissal motion.
4 

emergency temporary or permanent relief. [Docket Items 14 & 15.]2
The Court will now decide Defendant’s motion to dismiss the
Amended Complaint [Docket Item 10] without holding oral argument
pursuant to Fed. R. Civ. P. 78.
5.

Pursuant to Rule 8(a)(2), Fed. R. Civ. P., a complaint

need only contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.” Specific facts
are not required, and “the statement need only ‘give the
defendant fair notice of what the . . . claim is and the grounds
upon which it rests.’” Erickson v. Pardus, 551 U.S. 89, 93
(2007) (citations omitted). While a complaint is not required to
contain detailed factual allegations, the plaintiff must provide
the “grounds” of his “entitle[ment] to relief”, which requires
more than mere labels and conclusions. Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007).
6.

A motion to dismiss under Rule 12(b)(6), Fed. R. Civ.

P., may be granted only if, accepting all well-pleaded
allegations in the complaint as true and viewing them in the
light most favorable to the plaintiff, a court concludes that

2

The Court explicitly brought Plaintiffs’ pleading deficiency to
the parties’ attention in the March 4, 2016 Memorandum Opinion
[Docket Item 14 at 2], yet Plaintiffs’ counsel, Joshua Thomas,
Esq., failed to even attempt to cure the deficiency. This is the
third time Mr. Thomas has ignored his basic obligations under
the Federal Rules of Civil Procedure in this case. (Id. at 4, n.
1.)
5 

the plaintiff failed to set forth fair notice of what the claim
is and the grounds upon which it rests. Id. A complaint will
survive a motion to dismiss if it contains sufficient factual
matter to “state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). Although a
court must accept as true all factual allegations in a
complaint, that tenet is “inapplicable to legal conclusions,”
and “[a] pleading that offers labels and conclusions or a
formulaic recitation of the elements of a cause of action will
not do.” Id. at 678.
7.

Defendant contends that Plaintiffs’ Amended Complaint

must be dismissed for failure to state a claim for three
reasons: because Plaintiffs have failed to state a claim under
RESPA and Regulation X because 12 C.F.R. § 1024.41 is
inapplicable to Defendant; because Plaintiffs have not alleged
actual damages; and because Plaintiffs have not stated a claim
for unjust enrichment. The Court will address each point in
turn.
8.

Counts One and Two of the Amended Complaint allege

violations of RESPA for failing to properly review Plaintiffs’
loan modification submissions and for proceeding with a
foreclosure sale while a loan modification was pending. RESPA,
12 U.S.C. § 2601, et seq., is an Act of Congress intended to
protect borrowers from abusive loan servicing by, inter alia,
6 

proscribing certain aspects of the real estate settlement
process. Regulation X, 12 C.F.R. § 1024.41, sets the process by
which a borrower and lender may modify a mortgage and avoid a
foreclosure sale without requiring the lender to provide any
specific loss mitigation option. Relevant to this case,
according to Plaintiffs, is § 1024.41(g) of Regulation X, which
states that a servicer must not move forward with a foreclosure
sale where “a plaintiff submits a complete loss mitigation
application . . . more than 37 days before a foreclosure sale”
unless the servicer has notified the borrower that he is not
eligible for any loss mitigation option, the borrower rejects
all loss mitigation options offered by the servicer, or the
borrower fails to perform under a loss mitigation agreement.
Section 1024.41(i) further provides that a “servicer is only
required to comply with the requirements of this section for a
single complete loss mitigation application for a borrower’s
mortgage loan account.”
9.

By its own terms, Regulation X applies only to a loan

servicer, or “a person responsible for the servicing of a
federally related mortgage loan (including the person who makes
or holds such loan if such person also services the loan).” 12
C.F.R. § 1024.2. “Servicing means receiving any scheduled
periodic payments from a borrower pursuant to the terms of any
federally related mortgage loan . . . and making the payments to
7 

the owner of the loan or other third parties of principal and
interest and such other payments with respect to the amounts
received from the borrower as may be required . . . .” Id.
Plaintiffs allege in the Amended Complaint that Defendant is
“the owner and holder of the Note and Mortgage” and that another
company, PHH Mortgage, was Defendant’s loan servicer. (Am.
Compl. ¶¶ 10 & 26.) Accordingly, Plaintiffs cannot maintain
Counts One and Two of the Amended Complaint against this
Defendant, and these counts will be dismissed.3
10.

Count Three of the Amended Complaint alleges that

Defendant has been unjustly enriched at Plaintiffs’ expense
because Defendant “gained possession of Plaintiffs’ house
through a Sheriff Sale that took place.” (Am. Compl. ¶ 4.)
Defendant argues that this claim must be dismissed because
Plaintiffs cannot maintain an unjust enrichment claim against
Defendant as a matter of law, because the parties’ relationship
is governed by an express contract. The Court agrees.

3

Because Regulation X is inapplicable to Defendant as the owner
and holder of Plaintiffs’ mortgage, and not as their loan
servicer, the Court will not address Defendant’s alternative
arguments regarding Counts One and Two of the Complaint: that
Regulation X is inapplicable because Plaintiffs had submitted at
least two loss mitigation applications before their July 2014
application which was allegedly never reviewed by Defendant;
that Regulation X is inapplicable because Plaintiffs did not
submit their loss mitigation application until 10 days before
the foreclosure sale; and that Plaintiffs have not alleged
actual damages.
8 

11.

To state a claim for unjust enrichment, a plaintiff

must allege “(1) that the defendant has received a benefit from
the plaintiff, and (2) that the retention of that benefit by the
defendant is inequitable.” Wanaque Borough Sewerage Auth. v.
Twp. of West Milford, 677 A.2d 747, 753 (N.J. 1996). “A party
cannot satisfy this second prong, however, unless it can
establish that the ‘failure of remuneration enriched defendant
beyond its contractual rights.’” Hassler v. Sovereign Bank, 644
F. Supp. 2d 509, 519 (D.N.J. 2009) (citing VRG Corp. v. GKN
Realty Corp., 641 A.2d 519, 526 (N.J. 1994)). “As this
requirement makes clear, the ‘enrichment of one party at the
expense of the other is not unjust where it is permissible under
the terms of an express contract.’” Id. (citing Dovale v.
Marketsource, Inc., No. 05-2872, 2006 WL 2385099, at *8 (D.N.J.
Aug. 17, 2006)). The existence of a valid Note and Mortgage,
setting forth the rights and obligations of each party, thus
prevents Plaintiffs’ unjust enrichment claim in this case. The
conduct underlying Plaintiffs’ allegations was “permissible
under the terms of [the] express contract,” Hassler, 644 F.
Supp. 2d at 519-20: in case of the borrowers’ default on their
obligations under the contract, the Mortgage expressly allows
the lender to “require immediate payment in full of all sums
secured by this Security Instrument without further demand and
may foreclose this Security Instrument by judicial proceeding.”
9 

(See Mortgage [Tomlin Dec. Ex. 2, Docket Item 10-4] at ¶ 22.)
Accordingly, Count Three will be dismissed.
12.

The dismissal of the Amended Complaint in its entirety

will operate with prejudice. A court may deny leave to amend a
complaint where it is apparent that “(1) the moving party has
demonstrated undue delay, bad faith or dilatory motives, (2) the
amendment would be futile, or (3) the amendment would prejudice
the other party.” U.S. ex rel. Schumann v. Astrazeneca Pharma.
L.P., 769 F.3d 837, 849 (3d Cir. 2014). In this case, because
Plaintiffs’ claims are legally insufficient, and not merely
factually insufficient, any amendment would be futile.
13.

The accompanying Order will be entered granting

Defendant’s motion and dismissing this case.

September 6, 2016
Date

s/ Jerome B. Simandle
JEROME B. SIMANDLE
Chief U.S. District Judge

10