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

Filing 33

OPINION. Signed by Judge Robert B. Kugler on 7/20/2017. (dmr)

NOT FOR PUBLICATION

(Doc. Nos. 10, 21, 23, 24)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
_________________________________________
:
DAVID RODRIGUEZ,
:
:
Plaintiff,
:
:
Civil No. 16-8197 (RBK/AMD)
:
v.
:
:
OPINION
BANK OF AMERICA, N.A, et al
:
:
Defendants.
:
:
_________________________________________ :
KUGLER, United States District Judge:
This matter comes before the Court on Defendants Bank of America, N.A. (“BANA”),
Countrywide Home Loans, Inc. (“CHLI”), ReconTrust Company, N.A. (“ReconTrust”), and
Mortgage Electronic Registration Systems, Inc. (“MERS”)’s Motion to Dismiss (Doc. No. 10),
Defendant Stern, Lavinthal & Frankenberg, LLC (“SLF”)’s Motion to Dismiss (Doc. No. 21),
Plaintiff David Rodriguez (“Plaintiff” or “Rodriguez”)’s Motion for Summary Judgment (Doc.
No. 23), and Defendants the United States Department of Housing and Urban Development
(“HUD”), Federal Housing Administration (“FHA”), the Office of Inspector General (“OIG”)
and the Board of Governors of the Federal Reserve System (“FRB”) (collectively “Federal
Defendants”)’s Motion to Dismiss (Doc. No. 24). For the reasons stated herein, Defendants’
Motions to Dismiss are GRANTED. Plaintiff’s Motion for Summary Judgment is DENIED.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY1
This suit concerns the foreclosure on Plaintiff’s home. Plaintiff and his wife executed a
mortgage and note to secure a $230,455 loan from CHLI on April 3, 2016 to purchase his home
at 5 Fairview Drive, Egg Harbor Township 08234. Compl., Ex. A (Doc. No. 1-2). Plaintiff’s
mortgage was recorded on April 20, 2006 and the mortgage was granted in favor of MERS as a
nominee for CHLI. Id. Plaintiff executed a secondary mortgage and note for $30,000 on August
22, 2007 which was recorded on September 5, 2007. Compl., Ex. B. Plaintiff states that this
Mortgage was discharged by BANA on January 5, 2016. Second Amended Complaint (“SAC”)
¶ 2. MERS assigned the original mortgage to BAC Home Loans Servicing on March 30, 2010;
the assignment to BAC was recorded on September 2, 2010. Compl., Ex. F.
Plaintiff and his wife filed a Chapter 7 voluntary petition for bankruptcy on September
30, 2009. Lipkin Decl., Ex. D (Doc. No. 10-5). The Bankruptcy Court discharged Plaintiff and
Marta Rodriguez of their personal debts on January 15, 2010 pursuant to 11 U.S.C. section 727.
Lipkin Decl., Ex. E (Doc. No. 10-6). The Bankruptcy Court’s Discharge does not mention the
Mortgage on Plaintiff’s home. Id.
Plaintiff recounts that Defendant Phelan, Halinan & Schmieg, P.C. executed a Lis
Pendens against his home on May 17, 2010 (which was later discharged), and filed a foreclosure
action on April 1, 2010 (which was voluntarily dismissed when Plaintiff entered negotiations
with the lender). SAC ¶¶ 4-5. Plaintiff executed a Federal Housing Administration-Home
Affordable Modification Program Loan Modification Agreement with BOA on February 25,

1. On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court must
“accept all factual allegations as true and construe the complaint in the light most favorable to
the Plaintiff.” Phillips v. Cty. Of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008). Accordingly, for
purposes of this motion, the Court adopts and accepts as true the facts as pled in the Complaint.
2

2013. Compl., Ex. L (Doc. No. 1-3). This Loan Modification was executed along with a partial
payment of the amount Plaintiff owed (in back payments and principal) from insurance. Compl.,
Ex. G. As a result, Plaintiff and his wife executed a subordinate mortgage on their home to HUD,
which was recorded on March 13, 2012. Id. Plaintiff’s complaint contends that his “discharged
loan note cannot be revived after a discharge.” SAC ¶ 16.
Plaintiff explains that he soon realized that his modified FHA Mortgage was unaffordable
due to high payments, high interest rates, and hidden fees/charges which all led to him
accumulating more debt. Id. ¶ 17.2 Plaintiff allegedly failed to make his monthly mortgage
payment due on March 1, 2014 and all other monthly payments thereafter. See Compl., Ex. P at
12 (“Foreclosure Complaint”). Plaintiff corresponded with BANA between 2013 and 2016 to
further modify his mortgage. See Compl., Exs. M1-M6 (Doc. Nos. 1-3, 1-4). Plaintiff did not
accept further modifications because the payments would have been more than his payment
before defaulting on his mortgage and he believed his original “predatory defective loan” entitled
him to lower payments in any modification. Compl., Ex. N2.
BANA filed a Lis Pendens and a Foreclosure Complaint against Plaintiff’s home in the
Chancery Division of the New Jersey Superior Court of Atlantic County on September 7, 2016.
Compl., Exs. O, P. Plaintiff removed the Foreclosure Complaint to this Court on September 28,
2016. Notice of Removal, Bank of Am., N. Am. v. Rodriguez No. 16-6020 (D.N.J. Sep. 7, 2016)
(Doc. No. 1). Plaintiff subsequently filed the Complaint in the instant action on November 3,
2016. Compl. The Court directed Plaintiff to file an amended complaint properly alleging the

2. Plaintiff now contends that his 2013 Loan Modification “was illegal, arbitrary, and in violation
of several laws (IRS) or at least not equitable.” SAC ¶ 17. Plaintiff takes issue with HUD, OIG,
and the FRB for failing to “properly overseen [sic] the Lender/Banks for their arbitrary illegal
Servicing Actions with Borrowers.” Id. ¶ 11.
3

citizenship of each party or an alternative basis for jurisdiction on November 7, 2016. Nov. 7,
2016 Order (Doc. No. 3). Plaintiff filed the First Amended Complaint on November 16, 2016
along with a motion to consolidate the instant case with his foreclosure action. The Court
remanded the Foreclosure Complaint to Superior Court on November 28, 2016. Order Granting
Pl.’s Mot. to Remand, Bank of Am., N. Am. v. Rodriguez No. 16-6020 (D.N.J. Nov. 28, 2016)
(Doc. No. 6). The Court also denied Plaintiff’s motion to consolidate cases as moot and ordered
Plaintiff to file an amended complaint properly alleging the citizenship of each party or an
alternative basis for jurisdiction on November 28, 2016. Nov. 28 2016 Order (Doc. No. 6).
Plaintiff filed his Second Amended Complaint on December 12, 2016.
Defendants BANA, CHLI, ReconTrust, and MERS filed their instant motion to dismiss
on December 27, 2010. Defendant SLF filed its instant motion to dismiss on March 24, 2017.
Plaintiff filed his instant motion for summary judgment on April 6, 2017. Defendants HUD,
FHA, OIG, and FRB filed their instant motion to dismiss on April 7, 2017.
II. LEGAL STANDARD
Where a defendant moves to dismiss under Rule 12(b)(1) for lack of subject-matter
jurisdiction, the plaintiff generally bears the burden of proving by a preponderance of the
evidence that the Court has subject-matter jurisdiction. See Gould Elecs. Inc. v. United States,
220 F.3d 169, 178 (3d Cir. 2000). A district court has subject-matter jurisdiction based on
diversity of citizenship under 28 U.S.C. § 1332; “federal question” jurisdiction under 28 U.S.C.
§ 1331; or jurisdiction supplemental to the original claim under 28 U.S.C. § 1367.
Federal Rule of Civil Procedure 12(b)(6) allows a court to dismiss an action for failure to
state a claim upon which relief can be granted. When evaluating a motion to dismiss, “courts
accept all factual allegations as true, construe the complaint in the light most favorable to the

4

plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff
may be entitled to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009)
(quoting Phillips, 515 F.3d at 233)). In other words, a complaint is sufficient if it contains
enough 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); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007). It is not for courts to decide at this point whether the moving party will succeed on the
merits, but “whether they should be afforded an opportunity to offer evidence in support of their
claims.” In re Rockefeller Ctr. Props., Inc., 311 F.3d 198, 215 (3d Cir. 2002). Yet, while
“detailed factual allegations” are unnecessary, a “plaintiff’s obligation to provide the ‘grounds’
of his ‘entitle[ment] to 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 (alteration
in original) (citations omitted).
To make this determination, a court conducts a three-part analysis. Santiago v.
Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010). First, the court must “tak[e] note of the
elements a plaintiff must plead to state a claim.” Id. (quoting Iqbal, 556 U.S. at 675). Second, the
court should identify allegations that, “because they are no more than conclusions, are not
entitled to the assumption of truth.” Id. (quoting Iqbal, 556 U.S. at 680). Finally, “where there
are well-pleaded factual allegations, a court should assume their veracity and then determine
whether they plausibly give rise to an entitlement for relief.” Id. (quoting Iqbal, 556 U.S. at 680).
This plausibility determination is a “context-specific task that requires the reviewing court to
draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679. A complaint cannot
survive where a court can infer only that a claim is merely possible rather than plausible. Id.

5

III. DISCUSSION
A. BANA, CHLI, ReconTrust, and MERS’s Motion to Dismiss
Defendants BANA, CHLI, ReconTrust, and MERS move to dismiss Plaintiff’s complaint
for both lack of subject matter jurisdiction and for failure to state a claim. The Court will address
subject matter jurisdiction first as a threshold matter.
1. Subject Matter Jurisdiction (12(b)(1))
Defendants argue that Plaintiff has failed to establish that the Court has subject matter
jurisdiction over the instant action. Defendants correctly note that Plaintiff has not properly plead
the citizenship of all Defendants to establish diversity jurisdiction under 28 U.S.C. section 1332.
BANA Defs.’ Br. at 7-8 (Doc. No. 10-9). Therefore, Plaintiff must demonstrate that this Court
has federal question jurisdiction under 28 U.S.C. section 1331.
The Court notes that Plaintiff makes reference to Article 9 of the Uniform Commercial
Code, the Dodd-Frank Act, and Regulation X of the Real Estate Settlement Procedures Act
(“RESPA”) as bases for federal question jurisdiction. SAC at 2. As an initial matter, the Court
notes that the Uniform Commercial Code has been adopted in New Jersey as a matter of state
law. See N.J. Rev. Stat. §§ 12A:4A-101 to -507. Accordingly, the Uniform Commercial Code as
adopted by New Jersey is not a basis for federal question jurisdiction under 28 U.S.C. section
1331.
Turning now to Plaintiff’s invocation of the Dodd-Frank Act. This Court has recognized
on many occasions that the Dodd-Frank Act does not create a private right of action against
lenders outside of very narrow situations. See Zuniga v. Am. Home Mortg., 14-2973, 2016 WL
6647932 (D.N.J. Nov. 8, 2016) (“[A]s a general rule, the Dodd-Frank Act does not provide for a
private right of action by borrowers against lending institutions.”) (citing Angino v. Wells Fargo

6

Bank, N. Am., 15-418, 2016 WL 787652, *9 (M.D. Pa. Feb. 19, 2016)); Diena v. Certified Credit
& Collection Bureau, Inc., 14-769, 2015 WL 570247, at *2 (D.N.J. Feb. 11, 2015) (“Plaintiff
offers no statutory basis for the existence of a private right of action under the Dodd-Frank
Act . . . .”). The instant case does not represent one such situation. Therefore, Plaintiff cannot, as
a matter of law, state a claim for relief against defendants for violations of the Dodd-Frank Act.
Accordingly, the Dodd-Frank Act does not provide a basis for federal question jurisdiction in the
instant case.
Plaintiff’s final hook for federal question jurisdiction is RESPA’s Regulation X.
Regulation X is the designation used for the bevy of rules implementing RESPA. The Court
observes that very few causes of action provided pursuant to RESPA could potentially apply to
Plaintiff’s allegations: section 2605(a), section 2605(b), and section 2607. Section 2605(a)
requires that lenders disclose to loan applicants whether “the loan may be assigned, sold, or
transferred to any other person at any time while the loan is outstanding.” Section 2605(b) lays
out requirements for notice that a lender must give a borrower before assigning, selling, or
transferring the servicing of their loan to another person. Section 2607 forbids business referrals,
splitting of charges, and paying of kickbacks in conjunction with federally-related mortgage
loans. The Court does not observe any allegations in Plaintiff’s Second Amended Complaint that
the lenders failed to make adequate disclosures or provide adequate notice with regard to section
2605(a) and (b). Plaintiff makes a conclusory allegation that “[e]very Defendant had a gain,
weather [sic] is for Insurance Payouts, Kickbacks or payouts after Sheriff Foreclosure sale” in
the “Conclusion” portion of his Second Amended Complaint. SAC at 13. Plaintiff’s conclusory
allegation that all Defendants received payouts or kickbacks is insufficient to claim any violation

7

of section 2607. Therefore, the Court finds that Plaintiff has failed to state a claim for violations
of RESPA. Accordingly, Plaintiff’s claims for RESPA violations are dismissed.
2. State Law Claims
The remainder of Plaintiff’s claims (to the extent he has stated additional claims) arise
under state law. The Third Circuit has held that “where the claim over which the district court
has original jurisdiction is dismissed before trial, the district court must decline to decide the
pendent state claims unless considerations of judicial economy, convenience, and fairness to the
parties provide an affirmative justification for doing so.” Hedges v. Musco, 204 F.3d 109, 123
(3d Cir. 2000) (quoting Borough of West Mifflin v. Lancaster, 45 F.3d 780, 788 (3d Cir. 1995)).
Plaintiff’s sole claim under federal law has been dismissed, and there is no affirmative
justification for this Court to retain supplemental jurisdiction over the state law claims this early
in the litigation. As such, the Court declines to exercise supplemental jurisdiction pursuant to 28
U.S.C. § 1367(c)(3). Accordingly, Plaintiff’s claims for predatory lending and unjust enrichment
are dismissed without prejudice as to Defendants BANA, CHLI, ReconTrust, and MERS.
B. SLF’s Motion to Dismiss
Defendant SLF moves to dismiss Plaintiff’s complaint and adopts the reasoning of
Defendants BANA, CHLI, ReconTrust, and MERS’s motion to dismiss. For the reasons
discussed above, Plaintiff has failed to plead federal jurisdiction for any potential claims against
SLF and the Court declines to exercise supplemental jurisdiction over any predatory lending and
unjust enrichment claims against SLF. In light of the analysis above, the Court will also dismiss
Plaintiff’s claims against the non-moving private defendants, Phelan Halinan & Schmieg P.C.
and Judith T. Romano.

8

C. HUD, FHA, OIG, and FRB’s Motion to Dismiss
Defendants HUD, FHA, OIG, and FRB (collectively “Government Defendants”) also
move to dismiss Plaintiff’s complaint. The Court will conduct a separate analysis for these
defendants due to the specific subject matter jurisdiction issues that arise when the government
or its arms are named defendants. Government Defendants argue that the government has not
waived sovereign immunity for a number of Plaintiff’s claims. The Court will address these
claims in turn.
Predatory Lending and Failure to Investigate and Enforce
Government Defendants note that the Federal Tort Claims Act (“FTCA”) provides the
only waiver of sovereign immunity by which a Plaintiff can assert tort claims against the United
States and its arms. Gov. Defs.’ Br. at 9 (citing United States v. Acorn Tech. Fund, L.P., 429
F.2d 438, 445 (3d Cir. 2005)) (Doc. No. 24-1). Government Defendants then correctly note that
the United States (rather than the number of federal agencies named in the complaint) is the only
proper defendant in an FTCA claim and the FTCA does not permit punitive damages (to the
extent that Plaintiff is referring to punitive damages when he requests “putative damages”). Id. at
10-11.
Government Defendants then argue that all of Plaintiff’s tort claims against Government
Defendants must be dismissed for failure to comply with the exhaustion requirements of the
FTCA. Id. at 11. They note that “[t]he United States retains sovereign immunity for all tort
claims ‘unless the claimant shall have first presented the claim to the appropriate Federal agency
and his claim shall have been finally denied by the agency in writing.’” Id. (citing 28 U.S.C.
§ 2675(a)). The Court notes that Plaintiff has not alleged that he has filed an administrative claim
with any of the federal agency defendants. Therefore, Plaintiff has not exhausted his

9

administrative remedies with respect to his tort claims against the Government Defendants and
his claims will be dismissed for lack of subject matter jurisdiction.
Government Defendants further argue that certain claims are barred against specific
agency defendants notwithstanding Plaintiff’s failure to exhaust his administrative remedies.
They note that the FTCA does not waive sovereign immunity for “torts arising out of
misrepresentation, deceit, or nondisclosure.” Id. at 12 (citing 28 U.S.C. § 2680(h)). Therefore
they argue that Plaintiff’s allegation that HUD concealed its involvement in a scheme involving
the other defendants to create predatory loans for profit is barred by the FTCA. Id. at 13. The
Court agrees. Accordingly, Plaintiff’s claim against HUD for predatory lending shall be
dismissed with prejudice.
Government Defendants then note that FTCA does not waive sovereign immunity for
“suits based upon the exercise or performance or the failure to exercise or perform a
discretionary function or duty on the part of a federal agency or an employee of the Government,
whether or not the discretion involved be abused.” Id. (citing 28 U.S.C. § 2680(a)). Plaintiff
complains that the Government Defendants “failed to properly overseen [sic] the Lender/Banks
for their arbitrary illegal Servicing Actions.” SAC ¶ 11. Plaintiff also responds that the Board of
Governors, or “Federal Reserve Bank,” is a private entity that is not entitled to sovereign
immunity. Pl.’s Federal Opp’n Br. at 1-2 (Doc. No. 29). Government Defendants correctly
respond that the Board of Governors is, in fact, covered by sovereign immunity. Gov. Defs.’
Reply at 2 (Doc. No. 32).
The Court observes that enforcement/non-enforcement and/or failure to investigate the
actions of the private defendants is clearly a discretionary function or duty of the Government
Defendants. Therefore, Plaintiff’s allegations that the Government Defendants failed to

10

investigate/enforce are barred by the FTCA. Accordingly, Plaintiff’s claims against HUD, FHA,
OIG, and FRB for failure to investigate and enforce shall be dismissed with prejudice.
Quiet Title
Government Defendants next argue that Plaintiff’s allegations regarding improper
modifications to his FHA Mortgage are barred by sovereign immunity to the extent that they
might constitute an action to quiet title on his home. Plaintiff makes several references to his
FHA Mortgage and loan modification in the Second Amended Complaint. See SAC at 5, ¶¶ 3,
19, 23. Plaintiff’s allegations suggest that he mistakenly believes that his mortgage, note, and any
liens associated with his mortgage should have been extinguished when his debts were
discharged under Chapter 7. The Government Defendants concede that the United States has
waived “sovereign immunity for actions to quiet title to property against which the United States
holds a mortgage or other lien under 28 U.S.C. § 2410(a). Gov. Defs.’ Br. at 16 (citing United
States v. Schiaffino, 317 F. App’x 105, 106-07 (3d Cir. 2009)). However, Government
Defendants correctly note that it is well established law that section 2410 does not waive
sovereign immunity in suits for monetary damages. Id.; see also Snyder v. United States, 260 F.
App’x 488, 491 (3d Cir. 2008) (citing Kulawy v. United States, 917 F.2d 729, 736 (2d Cir.
1990)). Plaintiff’s Second Amended Complaint exclusively requests monetary relief in the
amount of $1,200,000. SAC at 14. Therefore, the Court lacks subject matter jurisdiction over
Plaintiff’s potential claim to quiet title against HUD or other government defendants.
Accordingly, Plaintiff’s quiet title claim against Government Defendants is dismissed without
prejudice.

11

RESPA/Dodd-Frank/Regulation X
The Court has already addressed the deficiency of Plaintiff’s attempted claims under
RESPA, the Dodd-Frank Act, and Regulation X above. Government Defendants make an
additional argument that RESPA and Regulation X thereunder does provide a waiver of
sovereign immunity against HUD. Gov. Defs.’ Br. at 16. They state that the applicable RESPA
provisions only provide a cause of action against “persons” and that the definition of “persons”
“implicitly exclud[es] government entities.” Id. at 17. Therefore, the Court lacks subject matter
jurisdiction over Plaintiff’s RESPA/Regulation X claims against HUD. Accordingly, Plaintiff’s
RESPA/Regulation X claims against HUD are dismissed with prejudice.
Government Defendants also present arguments as to why Plaintiff has failed to state
claims against them. The Court need not address the 12(b)(6) arguments in light of the above
rulings regarding subject matter jurisdiction and sovereign immunity. Furthermore, Plaintiff’s
Motion for Summary Judgment is denied as moot in light of the holdings above.
IV. CONCLUSION
For the reasons stated herein, Defendants’ Motions to Dismiss are GRANTED.
Plaintiff’s Motion for Summary Judgment is DENIED. An appropriate order shall issue.

Dated: 07/20/2017

s/ Robert B. Kugler
ROBERT B. KUGLER
United States District Judge

12