SHIBLES v. BANK OF AMERICA, N.A. et al

Filing 23

OPINION FILED. Signed by Judge Renee Marie Bumb on 6/5/17. (js)

[ECF No. 13]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
KIMBERLY SHIBLES,
Plaintiff,

Civil No. 16-4357 (RMB/KMW)
OPINION

v.
BANK OF AMERICA, N.A.,
Defendant.

BUMB, United States District Judge:
Currently before the Court is a Motion to Dismiss by
Defendant Bank of America, N.A. (“BANA”) with regard to the
Amended Complaint filed in this Court by Plaintiff Kimberly
Shibles (“Plaintiff”).

Mot. Dismiss [ECF No. 13].

The Court

previously conducted a pre-motion conference on November 2, 2016
with regard to this motion.

Minute Entry [ECF No. 11].

At that

hearing, the Court made clear to the parties that it sought to
resolve the procedural hurdles to the case prior to reaching the
merits and, as such, ordered bifurcation of the motion to
dismiss briefing, intending to first address BANA’s threshold
arguments.

Text Order [ECF No. 12].

On May 31, 2017, the Court

heard oral argument from the parties on the Motion to Dismiss
the Amended Complaint.

Having considered the parties’

contentions, the Court hereby GRANTS BANA’s Motion to Dismiss in
accordance with the analysis below.
I.

FACTUAL BACKGROUND
This case arises from the purchase of a property located at

910 Carol Avenue in Erma, New Jersey.
5].

Am. Compl. ¶ 36 [ECF NO.

Plaintiff, who entered into a refinance mortgage loan

agreement on the property, Id. ¶ 37, began having financial
trouble in 2009 and called BANA to tell it she might default if
she couldn’t obtain loss mitigation assistance.

Id. ¶ 39.

Despite the hardship, Plaintiff did not default in 2009 and
managed to make monthly payments on the property.

Id. ¶ 39.

In

response to her request for assistance, Plaintiff was sent a
Home Affordable Modification Program (“HAMP”) Trial Modification
Contract (the “TMC”).

Id. ¶ 41 & Ex. 2.

Pursuant to the cover letter to that contract, Plaintiff,
“[i]nstead of making [her] existing mortgage payment,” was
instructed to “make the new three-month trial period mortgage
payment of $1,414.83,” which was about $1100 less than her prior
payment.

Id. ¶ 39, 42.

The TMC noted that if Plaintiff was in

compliance with it, she would be entitled to a Home Affordable
Modification Agreement that would amend and supplement the
mortgage on her property due to her inability to make payments.
Id. ¶ 43.

Plaintiff signed the TMC and returned it to BANA.

Id. ¶ 44.

With an eye toward attaining such a permanent
2

modification, Plaintiff made three payments in April, May, and
June of 2010 in the TMC’s reduced amount.

Id. ¶ 52 & Ex. 4.

After she did not receive a permanent modification contract at
the end of that period, she continued to make the same reduced
payment in July, August, September, October, November and
December 2010, all the while awaiting a permanent modification
contract’s arrival.

Id. ¶ 42 & Ex. 5.

All told, Plaintiff made

nine payments to BANA in the total amount of $12,733.47.
However, while Plaintiff did not receive the permanent
modification contract during the period she was making these
reduced payments, in the middle of that period, on August 25,
2010, BANA sent Plaintiff a letter titled Notice of Intention to
Foreclose.

Id. ¶ 54.

As noted above, despite the letter,

Plaintiff continued to make the above-described payments until
December 2010.

In December 2010, Plaintiff received a letter

stating that she had been denied permanent modification under
HAMP because she “had not documented a financial hardship that
ha[d] reduced [her] income or increased [her] expenses, thereby
impacting your ability to pay your mortgage as agreed.”
61.

Id. ¶

In applying for the permanent modification, however,

Plaintiff alleges that she did, in fact, document her financial

3

hardships, Id. ¶ 49, and therefore Plaintiff contends that
BANA’s denial was based on false assertions.

Id. ¶ 62.1

On October 3, 2013, BANA commenced a foreclosure action in
New Jersey state court under Docket F-035282-13.

Id. ¶ 63.

Plaintiff did not appear at the action and BANA thus obtained a
default judgment on March 5, 2014.

Id. ¶ 64.

Ultimately, in

March 2016, after foreclosure and Sherriff’s sale, Plaintiff was
evicted from the property.

Id. ¶ 66.

As part of her claims in this case, Plaintiff contends that
BANA failed to apply the $12,733.47 in the manner required under
the contract and pursuant to the Real Estate Settlement
Procedures Act, and in so doing, BANA profited.

Id. ¶ 67.

Plaintiff additionally alleges that “[b]y avoiding a good faith
review and consideration of Plaintiff’s modification
application, BANA avoided associated administrative costs and
since BANA was the servicer, it collected penalties and fees and
therefore disproportionally benefitted from foreclosure on
Plaintiff’s property.”

Id. ¶ 68.

Ultimately, Plaintiff asserts

claims for common law fraud, breach of contract and violation of
the New Jersey Consumer Fraud Act.

Am. Compl. ¶¶ 69-113.

The Amended Complaint is commenced with many far-ranging
allegations concerning BANA’s improper use and abuse of the
modification process for its own benefit, to the detriment of
distressed homeowners. Am. Compl. ¶¶ 5-35. These allegations
are fleshed out using declarations of former BANA employees
concerning BANA’s allegedly fraudulent modification programing.
1

4

Defendant moves to dismiss pursuant to Federal Rules of
Civil Procedure 12(b)(1) and 12(b)(6).

BANA Br. at 6 [ECF No.

13-1].
II.

LEGAL STANDARD
Rule 12(b)(1) motions may challenge subject-matter

jurisdiction based upon the complaint's face or its underlying
facts. Pittman v. Metuchen Police Dept., No. 08–2373, 2009 WL
3207854, *1 (D.N.J. Sept. 29, 2009) (citing James Wm. Moore, 2
Moore's Federal Practice § 12.30[4] (3d ed. 2007)). “A facial
attack questions the sufficiency of the pleading, and in
reviewing a facial attack, a trial court accepts the allegations
in the complaint as true.”

Id.

To withstand a motion to dismiss under Federal Rule of
Civil Procedure 12(b)(6), “a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.’”

Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 570 (2007)).

“A claim has facial plausibility when

the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for
the misconduct alleged.”

Id. at 662.

“[A]n unadorned, the

defendant-unlawfully-harmed-me accusation” does not suffice to
survive a motion to dismiss.

Id. at 678.

“[A] plaintiff’s

obligation to provide the ‘grounds’ of his ‘entitle[ment] to
5

relief’ requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will
not do.”

Twombly, 550 U.S. at 555 (quoting Papasan v. Allain,

478 U.S. 265, 286 (1986)).
In reviewing a plaintiff’s allegations, the district court
“must accept as true all well-pled factual allegations as well
as all reasonable inferences that can be drawn from them, and
construe those allegations in the light most favorable to the
plaintiff.”
2012).

Bistrian v. Levi, 696 F.3d 352, 358 n.1 (3d Cir.

Only the allegations in the complaint, and “matters of

public record, orders, exhibits attached to the complaint and
items appearing in the record of the case” are taken into
consideration.

Oshiver v. Levin, Fishbein, Sedran & Berman, 38

F.3d 1380, 1384 n.2 (3d Cir. 1994) (citing Chester Cnty.
Intermediate Unit v. Penn. Blue Shield, 896 F.2d 808, 812 (3d
Cir. 1990)).
III. ANALYSIS
BANA raises three procedural hurdles to proceeding with the
case in its Motion to Dismiss.

First, BANA contends that the

case is barred by the Rooker-Feldman Doctrine.

Second, BANA

contends that the Entire Controversy Doctrine prevents
proceeding with the case.

Third, BANA asserts that the case

should be dismissed on Res Judicata grounds.

The Court agrees

with BANA as to the application of the Rooker-Feldman Doctrine
6

and Entire Controversy Doctrine, and therefore, GRANTS BANA’s
Motion to Dismiss.2
A. Rooker-Feldman Doctrine
Here, BANA’s allegations concerning the Rooker-Feldman
Doctrine amount to a facial attack to Plaintiff’s claims.3

Under

the Rooker-Feldman Doctrine, United States District Courts lack
subject matter jurisdiction to act as appellate courts from
state court decisions.

Exxon Mobil Corp. v. Saudi Basic Indus.

Corp., 544 U.S. 280, 284 (2005).

Ordinarily, to prevail under

the Doctrine: (1) the plaintiff in the federal action lost in
state court; (2) the plaintiff complains of injuries caused by
the state court judgment; (3) the judgment was entered before
the federal action was filed; and (4) the plaintiff seeks
federal review and rejection of the state judgment.

Great

Western Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d
159, 166 (3d Cir. 2010).

As the Third Circuit has held, “[t]he

second and fourth requirements are key to determining whether a
federal suit presents an independent, non-barred claim.”

Id.

In light of this holding, the Court does not address BANA’s Res
Judicata argument.
3 Plaintiff objected to certain documents being considered by the
Court at the motion to dismiss stage, Pl.’s Br. 11, but seems to
have conceded this Court’s ability to consider them at oral
argument. These documents are the underlying note, mortgage,
and assignment documents. BANA Br. Exs. A-C. Regardless of
Plaintiff’s consent, the Court finds that the instant motion to
dismiss can be resolved without consideration of these documents
and does not reach the issue.
2

7

Here, with regard to the first requirement, BANA argues
that Plaintiff lost in the state court by default.
Amended Complaint clearly alleges this.

Indeed, the

Am. Compl. ¶ 64.

BANA

argues that the second requirement of the Rooker-Feldman
doctrine is met because Plaintiff is functionally challenging
the amount that was awarded to BANA.

It argues that while

Plaintiff carefully crafts her arguments to avoid impugning the
final judgment of the foreclosure court, the reality of seeking
the $12,733 – or any other relief Plaintiff might seek – is that
it would require a determination by this Court that the state
court was wrong to permit foreclosure.

Third, BANA argues and

Plaintiff does not dispute, that the foreclosure action resulted
in a default judgment in March 2014, over two years before this
action was filed.

Fourth, allowing this Court to pursue the

instant action would act as a review of the state court action
in BANA’s eyes because there would be no way to afford relief
without undercutting the state court by ruling that the
foreclosure was improper.
Plaintiff does not dispute these factors head on, but
instead argues that because this issue wasn’t litigated before
the foreclosure court, the relevant question is whether the
“federal claim is inextricably intertwined with the state
adjudication, meaning that federal relief can only be predicated
upon a conviction that the state court was wrong.”
8

In re

Knapper, 407 F.3d 573, 580 (3d Cir. 2005) (quotation omitted);
but see Great Western Mining & Mineral Co., 615 F.3d at 170 n.4
(noting that the four-factor test governs and the phrase
“inextricably intertwined” is a descriptor with no independent
meaning).

According to Plaintiff, “State and federal claims are

inextricably intertwined (1) when in order to grant the federal
plaintiff the relief sought, the federal court must determine
that the state court judgment was erroneously entered or (2)
when the federal court must take action that would render the
state court’s judgment ineffectual.”

ITT Corp. v. Intelnet

Intern., 366 F.3d 205, 211 (3d Cir. 2004).

Plaintiff argues

that holding in a manner that is inconsistent with the state
court is not the same as invalidating its ruling.

Although the

Court is persuaded by BANA’s analysis of the Rooker-Feldman
Doctrine, regardless which of the above considerations that must
apply, the Court concludes that the Court does not possess
subject matter jurisdiction to proceed.
In reaching its ruling, this Court is guided by three
recent decisions in the arena of federal court actions
predicated on bank conduct prior to state court foreclosure
proceedings.

See Monclova v. U.S. Bank NA, No. 16-3677, 2017 WL

118015 (3d Cir. Feb. 2, 2017) (per curiam)4; Gordon v. Bank of

The Court is mindful of the fact that Monclova was not a
disposition on the full Third Circuit.
4

9

America, Civ. No. 3:16-03093, 2017 WL 1377673 (D.N.J. Apr. 12,
2017)5; Ogbebor v. J.P. Morgan Chase, N.A., Civ. No. 163400(FLW)(DEA), 2017 WL 449596, at *11 (D.N.J. Feb. 2, 2017).
All three of these decisions have determined that Rooker-Feldman
or a preclusion doctrine applied in some material respect.
With regard to the Plaintiff’s fraud claims, the Court
finds that rendering a determination in this case would require
this Court to review (and, if proven, ultimately invalidate) a
state court determination as to foreclosure on issues that
Plaintiff conceded at oral argument could have been raised and
adjudicated as claims in the foreclosure proceeding.6

In Gordon,

which confronted a near-identical trial loan modification
program also operated by BANA,7 the court observed that “[t]o
rule in Plaintiff’s favor on her fraud claims, this Court would
necessarily have to hold that [the trial modification agreement]

Gordon is currently on appeal to the Third Circuit. Gordon v.
Bank of America NA, et al., No. 17-2028 (May 10, 2017).
Although the Court is persuaded by the legal outcome, it does
note that Plaintiff contended at oral argument that Gordon and
the instant case are factually distinct.
6 In this regard, the Court is mindful that to the extent that
Rooker-Feldman could conceivably not apply to the claims at
issue because the Amended Complaint contains claims concerning
harm caused by BANA and not the state-court judgment itself,
these claims would be barred “by New Jersey’s preclusion
doctrines” because they could have been raised in the
foreclosure proceedings. See infra (Entire Controversy Doctrine
analysis)
7 Indeed, the parties in Gordon were represented by the same
counsel appearing before the Court in this action.
5

10

was invalid due to BANA’s fraudulent inducement and that BANA
lacked standing to foreclose on Plaintiff’s property, thereby
impermissibly negating the Superior Court’s judgment.”
2017 WL 1377673, at *4.
the same result.

Gordon,

Likewise, the court in Ogbebor reached

2017 WL 449596, at *11.

There, the court

noted, “Plaintiffs allege that they entered into an agreement
with [the defendant] modifying the terms and conditions of their
mortgage on the Residential Property to restructure the mortgage
so that Plaintiffs could afford to make payments; but, Chase
proceeded to file a foreclosure action.”

Id.

While the

plaintiffs’ claims in that case went “to great lengths to point
out that the Complaint does not expressly seek an invalidation
of the state court foreclosure proceedings,” and related only to
the defendants’ conduct, the court held:
[T]he gravamen of Counts One (breach of contract), Two
(violation
of
the
NJCFA)
and
Four
(fraudulent
misrepresentation) seek to attack the state court
foreclosure judgment, since Plaintiffs are impliedly
challenging the validity of the mortgage and right to
foreclose on the Residential property.
Id. at *11.
The facts at issue in Gordon and Ogbebor are strikingly
similar to those presented in this case.

Plaintiff here alleges

that BANA made a series of misrepresentations designed to lure
Plaintiff into a loan modification program, while all the while
planning (and succeeding in) a foreclosure action against her.

11

Like the Court in Ogbebor, this Court believes that – though
Plaintiff has articulated her claims in a way suggestive of the
fact that she is challenging BANA’s misrepresentations or breach
of contract – in reality, the Court is confronting an attack on
the foreclosure on Plaintiff’s property.

This Court can

conceptualize no way in which relief might be afforded in this
case without review and rejection of the state court foreclosure
action.

At oral argument, this Court pressed counsel for

Plaintiff as to the relief she was seeking: specifically, the
question the Court posed was whether, in order for Plaintiff to
prevail on her claims, there would have to be an ultimate
finding that the foreclosure should never have happened.

The

Court was unpersuaded by Plaintiff’s attempt to suggest anything
but that result would follow in this litigation’s wake if
Plaintiff prevailed.
Accordingly, as remarked in Ogbebor, “Plaintiff[] ask[s]
this Court to find that [the defendant] should not have been
entitled to the foreclosure judgment in state court, because
[the defendant] engaged in a pattern of fraud prior to that
judgment.”

2017 WL 449596, at *11.

Likewise, with respect to

Plaintiff’s breach of contract action, “the breach of action
claim presumes that the state court should not have entered a
judgment of foreclosure, because Plaintiffs complain that the
terms and conditions of the underlying mortgage were altered by
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a subsequent loan modification agreement that occurred prior to
the institution of the foreclosure complaint and entry of
foreclosure judgment.”

Id.

That request, both with regard to

the NJCFA and common law fraud causes of action Plaintiff now
brings, should be and is barred by Rooker-Feldman.

The same is

true for the breach of contract cause of action.
B. Entire Controversy Doctrine
The Entire Controversy Doctrine in New Jersey “embodies the
principle that the adjudication of a legal controversy should
occur in one litigation in only one court; accordingly, all
parties involved in a litigation should at the very least
present in that proceeding all of their claims and defenses that
are related to the underlying controversy.”
Mfrs. Ins. Co., 220 N.J. 591, 605 (2015).

Wadeer v. N.J.
In the foreclosure

context, the Entire Controversy Doctrine applies only to
“germane” claims, which are “claims arising out of the mortgage
transaction which is the subject matter of the foreclosure
action.”

In re Mullarkey, 536 F.3d 215, 229-230 (3d Cir. 2008);

see also Martinez v. Bank of America, N.A., 664 F. App’x 250,
254 (3d Cir. 2016) (per curiam) (holding that ECD precluded
raising claims that were based on allegations “identical to that
presented in support of his counterclaims and cross-claims in
the foreclosure case.”).

13

In the context of the Entire Controversy Doctrine and
foreclosure actions, BANA notes that “the Appellate Division has
been ‘clear that any conduct of a mortgagee known to the
mortgagor prior to the institution of a foreclosure that could
be the basis of an independent action for damages by reason of
the mortgagee having brought the foreclosure could be raised as
an equitable defense in the foreclosure.”

Zebrowski v. Wells

Fargo Bank, N.A., No. 1:07-cv-05236, 2010 WL 2595237, at *6-7
(D.N.J. June 21, 2010) (citation omitted).
Plaintiff retorts that this issue was resolved by Genid v.
J.P. Morgan Chase, A-2570-14T2 (N.J. App. Div. Dec. 12, 2016),
in which the New Jersey Appellate Division ruled that “[T]he
parties do not cite any reported cases in which the entire
controversy doctrine and Rule 4:64-5 were used to preclude a
foreclosure defendant from bringing an arguably germane
counterclaim in a separate suit at a later time . . . .

Nothing

in Rule 4:64-5 mandates that all germane counterclaims must be
brought in the foreclosure action.”

Id. at *4.

The Court is

not persuaded by the analysis in Genid, which is not binding
upon this Court and stands in direct opposition to the more
persuasively reasoned Ogbebor, 2017 WL 449596, at *10 (D.N.J.
Feb. 2, 2017) (“Nevertheless, this Court need not weigh in on
that issue because, even if Counts One, Two and Four are not
barred by the Rooker-Feldman doctrine, they are barred by the
14

entire controversy doctrine, “New Jersey's preclusion
doctrine[.]”).8
Accordingly, to the extent that Rooker-Feldman does not bar
this action, the Court also rules that this action is barred on
the independent grounding of the New Jersey Entire Controversy
Doctrine.
IV.

CONCLUSION
Having considered the parties’ contentions, both as set

forth in their papers and at oral argument, the Court rules that
BANA’s Motion to Dismiss is GRANTED as to Plaintiff’s Amended
Complaint.

DATED: June 5, 2017

s/Renée Marie Bumb
RENÉE MARIE BUMB
UNITED STATES DISTRICT JUDGE

Plaintiff additionally relies upon Sarlo v. Wells Fargo, N.A.,
Civ. No. 12-5522 (JBS/KMW), 175 F. Supp. 3d 412 (D.N.J. 2015),
which ruled that certain breach of contract claims and fraud
claims were not germane to foreclosure proceedings. Id. at 421.
The Court is unpersuaded by the applicability of that case to
this one, where “Plaintiffs’ claims in th[at] suit—and the
asserted damages arising out of the failure to provide a loan
modification—have little to do with the enforceability of the
2003 mortgage contract.” Id. Here, the Court determines, based
upon the allegations presented in the Amended Complaint, that
the Plaintiff’s claims have much to do with the enforceability
of the underlying mortgage contract.
8

15