MCMULLEN et al v. OCWEN LOAN SERVICING, LLC.

Filing 22

OPINION. Signed by Judge Noel L. Hillman on 2/23/2017. (TH, )

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

BRIAN MCMULLEN and
DEMETRIOS ZERIS,
1:16-cv-04120-NLH-AMD
Plaintiffs,
OPINION
v.
OCWEN LOAN SERVICING, LLC,
Defendant.

APPEARANCES:
JEFFREY SCOTT SIMONS
MINTZER SAROWITZ ZERIS LEDVA & MEYERS LLP
2070 SPRINGDALE ROAD
SUITE 400
CHERRY HILL, NJ 08003
On behalf of Plaintiffs
BRETT L. MESSINGER
KASSIA FIALKOFF
DUANE MORRIS, LLP
30 SOUTH 17TH STREET
PHILADELPHIA, PA 19103-7396
On behalf of Defendant
HILLMAN, District Judge
This case involves allegations of unreasonable mortgage
closing costs.

Presently before the Court are two motions:

Defendant’s motion to dismiss and Plaintiffs’ motion to remand.
For the reasons expressed below, Plaintiff’s motion will be
denied, and Defendant’s motion will be granted.

BACKGROUND
The following allegations are contained in Plaintiffs’
complaint and are assumed true for purposes of this motion. 1
Plaintiff, Brian McMullen, purchased the property located at 28
Patriot Court, Sicklerville, New Jersey on an unspecified date.
At or around the time he purchased the property, McMullen took
out a mortgage on the property.
in the complaint.

The mortgagee is not identified

On or around October 7, 2010, Plaintiff,

Demetrios Zeris, obtained a second mortgage on the property in
the amount of $300,000. 2

Zeris subsequently foreclosed on the

property.
On or about October 14, 2014, Zeris sold the property to
unrelated buyers for $309,000.

At closing, Defendant, Ocwen

Loan Servicing, LLC, purported to hold the first mortgage, taken
out by plaintiff McMullen.

According to the Complaint,

Defendant has never provided any documentation proving that it
is the rightful, legal holder of the first mortgage despite

1

In keeping with the Court's duty to assume the veracity the
allegations contained in the Complaint when deciding the pending
Motion to Dismiss, Morse v. Lower Merion Sch. Dist., 132 F.3d
902, 906 (3d Cir.1997), any contradictory factual assertions on
the part of Defendants have not been credited. The Court makes
no findings with regard to the veracity of Plaintiffs’
allegations.
2

Although the Complaint is unclear, the circumstances suggest it
was McMullen who gave Zeris a mortgage on the property in
exchange for value.
2

repeated requests for that information.

At closing, Defendant

presented a list of closing costs including, but not limited to,
those pertaining to and entitled “Escrow Advance” in the amount
of $95,047.40, “Property Inspection Fee” in the amount of
$301.25, “Property Maintenance Expense” in the amount of
$2,781.75, “Title Report Fee” in the amount of $1,050.00,
“Property Valuation Expense” in the amount of $1,578.00, “FC
Thru Title Searches” in the amount of $375.00, “FC Thru
Complaint” in the amount of $1,091.25, “FC Thru Judgment” in the
amount of $1,000.00, “Civil Litigation” in the amount of
$600.00, and “Additional/Hourly/Court Appearance” in the amount
of $1,200.00.

At the time of the closing on October 14, 2014,

the title company, Connection Title Agency of NJ, LLC, paid the
closing costs listed above so Zeris would not lose the sale.
The Complaint alleges that the listed closing costs are
unreasonable, unjustified and unlawful.

At no time before, at,

or after closing did Defendant provide any support,
documentation, verification, or justification for the closing
costs.

Plaintiffs assert that they have repeatedly requested

from Defendant any support, documentation, verification, or
justification for the closing costs, but have been stonewalled
by defendant at every turn.
Plaintiffs alleges four causes of action: a) breach of
contract (Count One); b) fraud (Count Two); c) breach of
3

fiduciary duty (Count Three); and d) misallocation of funds
(Court Four).

Plaintiffs demand judgment against Defendant for

compensatory damages, interest, fees, and costs of suit.
(Docket No. 1-2 at 7-10.)
The Defendant has moved to dismiss Plaintiffs’ complaint,
arguing that Plaintiffs have failed to state any cognizable
claims.

Plaintiffs have opposed Defendant’s motion to dismiss,

and filed a motion to remand their case to state court based on
their stipulation that they will not seek damages in excess of
$75,000.

Defendant has opposed Plaintiffs’ motion to remand,

arguing that Plaintiffs’ post-removal stipulation of damages is
inconsequential to this Court’s exercise of subject matter
jurisdiction.
DISCUSSION
A.

Subject matter jurisdiction

Defendant removed this action from New Jersey state court
to this Court pursuant to 28 U.S.C. § 1441.

This Court has

jurisdiction over the matter pursuant to 28 U.S.C. § 1332
because there is complete diversity of citizenship between the
parties and the amount in controversy exceeds $75,000.

The

citizenship of the parties is as follows: Plaintiffs are
citizens of New Jersey, and Defendant is a citizen of the U.S.

4

Virgin Islands. 3
B.

Standard for Motion to Dismiss

When considering a motion to dismiss a complaint for
failure to state a claim upon which relief can be granted
pursuant to Federal Rule of Civil Procedure 12(b)(6), a court
must accept all well-pleaded allegations in the complaint as
true and view them in the light most favorable to the plaintiff.
Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005).

It is well

settled that a pleading is sufficient if it contains “a short
and plain statement of the claim showing that the pleader is
entitled to relief.”

Fed. R. Civ. P. 8(a)(2).

Under the

liberal federal pleading rules, it is not necessary to plead
evidence, and it is not necessary to plead all the facts that
serve as a basis for the claim.
F.2d 434, 446 (3d Cir. 1977).

Bogosian v. Gulf Oil Corp., 562
However, “[a]lthough the Federal

Rules of Civil Procedure do not require a claimant to set forth
an intricately detailed description of the asserted basis for
relief, they do require that the pleadings give defendant fair
notice of what the plaintiff’s claim is and the grounds upon
which it rests.”

Baldwin Cnty. Welcome Ctr. v. Brown, 466 U.S.

147, 149-50 n.3 (1984) (quotation and citation omitted).

3

Ocwen’s sole member is Ocwen Mortgage Servicing, Inc., a
corporation organized under the laws of the United States Virgin
Islands, with its principal place of business in the United
States Virgin Islands.
5

A district court, in weighing a motion to dismiss, asks
“‘not whether a plaintiff will ultimately prevail but whether
the claimant is entitled to offer evidence to support the
claim.’”

Bell Atlantic v. Twombly, 550 U.S. 544, 563 n.8 (2007)

(quoting Scheuer v. Rhoades, 416 U.S. 232, 236 (1974)); see also
Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009) (“Our decision in
Twombly expounded the pleading standard for ‘all civil actions’
. . . .”); Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.
2009) (“Iqbal . . . provides the final nail-in-the-coffin for
the ‘no set of facts’ standard that applied to federal
complaints before Twombly.”).
Following the Twombly/Iqbal standard, the Third Circuit has
instructed a two-part analysis in reviewing a complaint under
Rule 12(b)(6).

First, the factual and legal elements of a claim

should be separated; a district court must accept all of the
complaint's well-pleaded facts as true, but may disregard any
legal conclusions.
S. Ct. at 1950).

Fowler, 578 F.3d at 210 (citing Iqbal, 129
Second, a district court must then determine

whether the facts alleged in the complaint are sufficient to
show that the plaintiff has a “‘plausible claim for relief.’”
Id. (quoting Iqbal, 129 S. Ct. at 1950).

A complaint must do

more than allege the plaintiff's entitlement to relief.

Id.;

see also Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d
Cir. 2008) (stating that the “Supreme Court's Twombly
6

formulation of the pleading standard can be summed up thus:
‘stating . . . a claim requires a complaint with enough factual
matter (taken as true) to suggest’ the required element.

This

‘does not impose a probability requirement at the pleading
stage,’ but instead ‘simply calls for enough facts to raise a
reasonable expectation that discovery will reveal evidence of’
the necessary element”).

A court need not credit either “bald

assertions” or “legal conclusions” in a complaint when deciding
a motion to dismiss.

In re Burlington Coat Factory Sec. Litig.,

114 F.3d 1410, 1429-30 (3d Cir. 1997).

The defendant bears the

burden of showing that no claim has been presented.

Hedges v.

U.S., 404 F.3d 744, 750 (3d Cir. 2005) (citing Kehr Packages,
Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991)).
A court in reviewing a Rule 12(b)(6) motion must only
consider the facts alleged in the pleadings, the documents
attached thereto as exhibits, and matters of judicial notice.
S. Cross Overseas Agencies, Inc. v. Kwong Shipping Grp. Ltd.,
181 F.3d 410, 426 (3d Cir. 1999).

A court may consider,

however, “an undisputedly authentic document that a defendant
attaches as an exhibit to a motion to dismiss if the plaintiff’s
claims are based on the document.”

Pension Benefit Guar. Corp.

v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.
1993).

If any other matters outside the pleadings are presented

to the court, and the court does not exclude those matters, a
7

Rule 12(b)(6) motion will be treated as a summary judgment
motion pursuant to Rule 56.
C.

Fed. R. Civ. P. 12(b).

Analysis

As a primary matter, Plaintiffs’ attempt to cap their
damages below the jurisdictional threshold of $75,000 to defeat
subject matter jurisdiction fails.

“A district court's

determination as to the amount in controversy must be based on
the plaintiff's complaint at the time the petition for removal
was filed,” and “the amount in controversy must be calculated
based on a reasonable reading of the complaint.”

Werwinski v.

Ford Motor Co., 286 F.3d 661, 666 (3d Cir. 2002) (quotations and
citations omitted).

“[A] plaintiff's stipulation subsequent to

removal as to the amount in controversy or the types of relief
sought is of no legal significance to the court's
determination.”

Id. at 667 (quotations and citations omitted).

Plaintiffs’ complaint challenges the appropriateness of
over $100,000 in fees charged by Defendant, and Plaintiffs seek
compensatory damages, interest, fees, and other costs.

A

reasonable reading of Plaintiffs’ complaint easily demonstrates
the amount in controversy at the time Defendant removed
Plaintiffs’ complaint was in excess of $75,000.

Plaintiffs’

post-removal stipulation to limit their damages below $75,000
does not affect this Court’s subject matter jurisdiction over
the matter.
8

With regard to the substance of Plaintiffs’ claims, the
Court finds that they do not meet the requirements of Rule 8 and
Twombly/Iqbal.

The sum and substance of Plaintiffs’ complaint

is that Defendant failed to provide “any support, documentation,
verification, and/or justification for the closing costs”
Defendant charged Plaintiff Zeris at the closing, and that the
costs charged were unreasonable and unlawful, constituting a
breach of contract, fraud, breach of fiduciary duty, and a
“misallocation of funds.”
“To prevail on a breach of contract claim under New Jersey
law, a plaintiff must establish three elements: (1) the
existence of a valid contract between the parties; (2) failure
of the defendant to perform its obligations under the contract;
and (3) a causal relationship between the breach and the
plaintiff's alleged damages.”

Grande Village LLC v. CIBC Inc.,

2015 WL 1004236, at *5 (D.N.J. March 6, 2015) (quoting Sheet
Metal Workers Intern. Ass'n Local Union No. 27, AFL–CIO v. E.P.
Donnelly, Inc., 737 F.3d 879, 900 (3d Cir. 2013) (citing Coyle
v. Englander's, 488 A.2d 1083, 1088 (N.J. Super. Ct. App. Div.
1985)).
Plaintiffs’ allegations cannot support their breach of
contract claim because not only do they fail to identify the
operable contract and the provisions of the contract Defendant
allegedly violated, Plaintiffs effectively claim that there is
9

no contract – i.e., no “support, documentation, verification,
and/or justification” – that allows Defendant to impose those
fees.

Without the identification of a contract in the

complaint, Plaintiffs have failed to state a viable breach of
contract claim at the most basic level.

See, e.g., Grande

Village, 2015 WL 1004236, at *5 (finding that to the extent that
plaintiffs allege that defendants breached the loan documents
when they declared plaintiffs in technical default, plaintiffs'
claim fails because they did not identify what contract, or
contractual provision, defendants allegedly breached) (citing
Wingate Inns Intern., Inc. v. Cypress Centre Hotels, LLC, No.
11–6287, 2012 WL 6625753, at *9 (D.N.J. Dec. 19, 2012)
(determining that the Court cannot draw a reasonable inference
of liability for breach of contract without identification of
the specific agreement and related provision relied upon);
Eprotec Preservation, Inc. v. Engineered Materials, Inc., No.
10–5097, 2011 WL 867542, at *8 (D.N.J. Mar. 9, 2011) (“Under New
Jersey law, a complaint alleging breach of contract must, at a
minimum, identify the contracts and provisions breached”[;]
“Failure to allege the specific provisions of contracts breached
is grounds for dismissal.”)).
Plaintiffs’ fraud and breach of fiduciary duty claims meet

10

the same fate as their breach of contract claim. 4

“The elements

of common-law fraud are (1) a material misrepresentation of a
presently existing or past fact; (2) knowledge or belief by the
defendant of its falsity; (3) an intention that the other person
rely on it; (4) reasonable reliance thereon by the other person;
and (5) resulting damages.”

Allstate New Jersey Ins. Co. v.

Lajara, 117 A.3d 1221, 1231 (N.J. 2015) (citation omitted).

In

addition to setting forth the necessary elements, the stringent
pleading requirements of Fed. R. Civ. P. 9(b) apply to a claim
of common law fraud.

Frederico v. Home Depot, 507 F.3d 188, 200

(3d Cir. 2007).
In order to state a claim for breach of fiduciary duty, a
plaintiff must allege: (1) the existence of a fiduciary
relationship, (2) a breach of the duty imposed by that
relationship, and (3) harm to the plaintiff.

Canon Financial

Services, Inc. v. Bray, 2015 WL 851816, at *4 (D.N.J. 2015)
(citing F.G. v. MacDonell, 150 N.J. 550, 561–64, 696 A.2d 697
(1997)).
Other than stating in a conclusory fashion that the closing
costs imposed by Defendant were “unreasonable, unjustified,

4

Plaintiffs also assert a count for “misallocation of funds,”
but no common law claim for “misallocation of funds” exists
under New Jersey law. Such an allegation is more properly
subsumed in Plaintiffs’ other claims.
11

and/or unlawful,” Plaintiffs have not pleaded any facts which,
if accepted as true, would support the elements of their fraud
and breach of fiduciary claims. 5

This pleading deficiency

warrants dismissal of those claims. 6
The Court recognizes that Plaintiffs filed their complaint
in state court under the state court pleading standards.

The

5

The Court notes that “[c]reditor-debtor relationships . . .
rarely are found to give rise to a fiduciary duty.” Patetta v.
Wells Fargo Bank, NA, 2009 WL 2905450, at *8 (D.N.J. 2009)
(citing Paradise Hotel Corp. v. Bank of Nova Scotia, 842 F.2d
47, 53 (3d Cir. 1988); United Jersey Bank v. Kensey, 306 N.J.
Super. 540, 552, 704 A.2d 38 (App. Div. 1997) (finding virtual
unanimity among state jurisdictions that no fiduciary
relationship exists between a bank and its customers)). “To
that end, the presumption that there is no fiduciary duty
between a borrower and a lender has been universally embraced by
New Jersey courts.” Id.
6

Because of Plaintiffs’ pleading deficiencies, the Court does
not need to consider Defendant’s arguments regarding standing or
the application of the economic loss rule, other than to note
that in order to assert a claim, a plaintiff must show “(1) an
‘injury in fact,’ (2) a sufficient ‘causal connection between
the injury and the conduct complained of,’ and (3) a
‘likel[ihood]’ that the injury ‘will be redressed by a favorable
decision,’” Susan B. Anthony List v. Driehaus, ––– U.S. ––––,
134 S. Ct. 2334, 2341, 189 L. Ed. 2d 246 (2014) (alterations in
original) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555,
560–61 (1992)), and the economic loss doctrine “prohibits
plaintiffs from recovering in tort economic losses to which
their entitlement only flows from a contract,” Marte v. Deutsche
Bank National Trust Company, 2016 WL 6403082, at *4 (D.N.J.
2016) (citing Werwinksi v. Ford Motor Co., 286 F.3d 661, 671 (3d
Cir. 2002); Coleman v. Deutsche Bank Nat. Trust Co., No. CIV. A.
15-1080 JLL, 2015 WL 2226022, at *4 (D.N.J. May 12, 2015)
(dismissing the plaintiff's claims for negligence per se, breach
of the covenant of good faith and fair dealing, breach of
fiduciary duty, and slander of title where those claims were
based on a contract for a mortgage loan)).
12

Court does not opine as to whether Plaintiffs’ complaint would
survive a motion to dismiss in state court, but the complaint
clearly fails to meet federal pleading standards.

Consequently,

Plaintiffs’ complaint must be dismissed. 7
An appropriate Order will be entered.

Date: February 23, 2017
At Camden, New Jersey

s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.

7

Plaintiffs have not asked for leave to file an amended
complaint, but the dismissal of their complaint is without
prejudice to their right to refile their complaint in the
appropriate forum abiding by the relevant pleading standards.
See Hunter Roberts Const. Group, LLC v. J. Rihl, Inc., 2013 WL
3445331, at *4 n.4 (D.N.J. 2013) (citing Fletcher–Harlee Corp.
v. Pote Concrete Contractors, Inc., 482 F.3d 247, 251 (3d Cir.
2007)) (“Except in civil rights cases . . . a court is not
obligated to afford a plaintiff the opportunity to amend his
complaint, either sua sponte or following the dismissal of the
complaint pursuant to a motion to dismiss.”); cf. Biaggi-Pacheco
v. City of Plainfield, 2017 WL 401946, at *5 (D.N.J. Jan. 30,
2017) (dismissing plaintiff’s claims against several, but not
all, defendants for failure to plead with the specificity
required by Twombly and Iqbal, but noting that plaintiff filed
his complaint in state court under state pleading standards, and
granting plaintiff’s “very reasonable request that he be granted
leave to file an amended complaint in accordance with federal
standards”).
13