HEINE et al v. COMMISSIONER OF THE DEPARTMENT OF COMMUNITY AFFAIRS OF THE STATE OF NEW JERSEY et al
OPINION. Signed by Judge Kevin McNulty on 10/10/2017. (JB, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
ELLEN HEINE, et al.,
Civ. No. 2:11-5347 (KM)(JBC)
COMMISSIONER OF THE DEPARTMENT
OF COMMUNITY AFFAIRS OF THE
STATE OF NEW JERSEY, et aL,
Defendant JPMorgan Chase Bank, N.A. (the “Bank”) holds a mortgage on
the properties of two of the plaintiffs, Unita Peri-Okonny and Ellen Heine. The
Bank is named only in Count 7 of the Seventh Amended Complaint (“7AC”,
ECF no. 81). Now before the Court is the Bank’s motion (ECF no. 109) to
dismiss the Seventh Amended Complaint for lack of jurisdiction and failure to
state a claim. See Fed. R. Civ. P. 12(b)(l), 12(b)(6). For the reasons stated
herein, the Bank’s motion to dismiss will be granted.
The Bank’s motion seeks, in part, to dismiss the complaint for lack of
jurisdiction under Fed. R. Civ. P. 12(b)(l). Rule 12(b)(1) challenges may be
either facial or factual attacks. Lincoln Ben. Life Co. z,’. AEILzfe, LLC, 800 F.3d
99, 105 (3d Cir. 2015) (citing Common Cause of Penn. v. Pennsylvania, 558
F.3d 249, 257 (3d Cir. 2009)). “In reviewing a facial attack, the court must only
consider the allegations of the complaint and documents referenced therein
and attached thereto, in the light most favorable to the plaintiff.” Id. (citing
Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000)). It
“review[sj only whether the allegations on the face of the complaint, taken as
true, allege facts sufficient to invoke the jurisdiction of the district court.”
Common Cause of Penn. v. Pennsylvania, 558 F.3d 249, 257 (3d Cir. 2009)
(quoting Taliaferro v. Darby Twp. Zoning Dci., 458 F.3d 181, 188 (3d Cir. 2006)).
A factual attack, on the other hand, permits the Court to consider and
weigh evidence extrinsic to the pleadings. Gould Eleas. Inc. v. United States, 220
F.3d 169, 178 (3d Cir. 2000), holding modfied on other grounds by Simon z1’.
United States, 341 F.3d 193 (3d Cir. 2003). Such a factual attack “does not
provide plaintiffs the procedural safeguards of Rule 12(b)(6), such as assuming
the truth of the plaintiffs allegations.” CNA u. United States, 535 F.3d 132, 144
(3d Cir. 2008).
The Rule 12(b)(1) component of the Bank’s motion, as filed, relies only on
the Complaint and documents properly considered on a Rule 12(b)(6) motion to
dismiss. It would therefore be treated as a facial challenge.
The plaintiffs’ response, however, makes factual assertions extrinsic to
the allegations of the Complaint. The Bank’s reply suggests that those facts
suggest a lack of Article III standing. I consider this as an alternative basis for
dismissal, and to that limited extent, I will treat the Rule 12(b)(1) motion as a
Rule 12(b)(6) provides for the dismissal of a complaint, in whole or in
part, if it fails to state a claim upon which relief can be granted. The defendant,
as the moving party, bears the burden of showing that no claim has been
stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a
Rule 12(b)(6) motion, a court must take the allegations of the complaint as true
and draw reasonable inferences in the light most favorable to the plaintiff.
Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008).
Federal Rule of Civil Procedure 8(a) does not require that a complaint
contain detailed factual allegations. Nevertheless, “a plaintiffs obligation to
provide the ‘grounds’ of his ‘entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will
not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the
complaint’s factual allegations must be sufficient to raise a plaintiff’s right to
relief above a speculative level, so that a claim is “plausible on its face.” Id. at
570; see also Umland v. PLANCO Fin. Seru., Inc., 542 F.3d 59, 64 (3d Cir. 2008).
That facial-plausibility standard is met “when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (citing Twombly, 550 U.S. at 556). While “[tjhe plausibility standard
is not akin to a ‘probability requirement’
it asks for more than a sheer
possibility.” Iqbal, 556 U.S. at 678.
Where the plaintiffs are proceeding pro se, the complaint is “to be
liberally construed,” and, “however inartfully pleaded, must be held to less
stringent standards than formal pleadings drafted by lawyers.” Erickson v.
Pardus, 551 U.S. 89, 93-94 (2007). Nevertheless, “prose litigants still must
allege sufficient facts in their complaints to support a claim.” Mala
Bay Marina, Inc., 704 F.3d 239, 245 (3d Cir. 2013). “While a litigant’s pro se
status requires a court to construe the allegations in the complaint liberally, a
litigant is not absolved from complying with Twombly and the federal pleading
requirements merely because s/he proceeds pro se.” Thakar v. Tan, 372 F.
App’x 325, 328 (3d Cir. 2010) (citation omitted).
COUNT 7 OF THE SEVENTH AMENDED COMPLAINT
Plaintiffs claim, inter alia, that the DCA improperly enforced fire codes,
leading to, inter alia, condemnation of properties and the impairment of the
plaintiffs’ ability to make their mortgage payments. This complaint is now in its
seventh iteration, and I have written more than one opinion in this case. Thus I
will not review the facts and allegations at length. I assume familiarity with my
prior Opinion (“Op.”, ECF no. 97) and Order (ECF no. 98) granting the most
recent motion to dismiss filed by the Department of Community Affairs of the
State of New Jersey (the “DCA”), by its Commissioner. Briefly, that Opinion (in
conjunction with earlier rulings) resulted in dismissal of all claims against DCA
except a claim for injunctive relief under 42 U.S.C.
1983 and the Fair
Housing Act (“FHA”).
This, however, is the first motion brought by defendant JP Morgan chase
Bank, N.A., which had not appeared in the case previously.’ I therefore review
the allegations against the Bank.
The Bank is named only in Count 7, and is the sole defendant in that
Count, The substantive allegations of Count 7 are as follows:
Plaintiff repeats the allegations of the First, Second, Third
Fourth, Fifth and Sixth Counts as if they were again set forth herein.
JP Morgan Chase Bank N.A. holds a mortgage to the homes
owned by both Unita Peri-Okonny and Ellen Heine.
JP Morgan Chase Bank, NA. received a judgment against
Unita Peri-Okonny for almost $400,000 pursuant to filing a foreclosure.
If the Bank is allowed to sell the property at a sheriffs sale, Unita will
have lost her entire investment and she will receive a bill for the
deficiency. The actions by the DCA and their agents have violated the one
to four family rider on the property.
JP Morgan Chase Bank proceeded in foreclosure pursuant
to an amended notice of intent to foreclose which was approved in the
state Courts. Unita Peri-Okonny motioned in the State Court to give
notification to the JP Morgan Chase Bank, NA that the unfortunate
circumstances of her property were due to the actions of the state and
the municipality. However, the Court ruled against her and allowed the
matter to proceed to Final Judgment.
The Court’s procedures in Foreclosure are designed for
properties that are mortgaged but that are still able to be used. The
problems created by the workings of the DCA that are negative to
properties such as Unita Peri-Okonny’s are difficult to factor into the
The Banks representatives certify that they have completed
a diligent inquiry regarding the pleadings in foreclosure with reference to
As to the Bank, my prior Opinion stated only the following:
Count 7: This Count is directed only against J.P. Morgan Chase
Bank, as mortgagee of the Heine and Peri-Okonny properties. J.P.
Morgan Chase Bank has not been sen’ed and has not appeared in this
action. Count 7 is not involved in this notion, and I do not discuss it
(Op. at 6)
the property. However, the bank’s representative that spoke with Unita
had no notations in the file regarding the problems with the demolished
home on the property and the continuation of property taxes for the
Unita Peri-Okonny contacts the Chase loan office to give the
information regarding the occurrences in New Brunswick that had
caused the destruction of her home. The Bank’s office was not aware of
the information that Unita Peri-Okonny gave them. They were paying
taxes for a home that was no longer on the property. Unita expressed an
interest to rebuild the home and said that she had been unable to get the
cooperation from either the bank or the municipality to be able to
rebuild. The bank represented that they would be willing to work with
Ms. Peri-Okonny to try to create a means toward the resolution of her
problems regarding the property.
Ellen Heine’s Garfield property has a mortgage from JP
Morgan Chase Bank, N.A. She is unable to use the property and to
collect any rent for the use of the property. This is the result of the
actions of the DCA and their agents. Heine’s property could go into
foreclosure if the closure continues. The allegations of the DCA have
violated the one to four family rider that is recorded with the mortgage.2
The posting of the DCA that one and two family owner
occupied dwelling are exempted from all of the NJAC codes in 5.70-1 are
the reason why the actions of the DCA are fmancially negative and
improper with reference to the homes of Unita Peri-Okonny, Ellen Heine,
and Ann Schildknecht.
(7AC pp. 16—17)
Count 7 seeks the following relief, all of it injunctive:
(a) an injunction to stay all proceedings or future proceedings in
The meaning is obscure. A 1-4 family rider is required in a Fannie Maecompliant mortgage to ensure adequate security in regard to certain rental properties
by providing for, inter alia, assignment of rents to the mortgagee in the event of
default. See https: / /www.fanniemae .com! singlefamily/riders-addenda.
Attached to the Complaint as exhibits are a Notice of Imminent Hazard from the
New Jersey Bureau of Fire Prevention (ECF no. 81 at 20), and a copy of DCA Fire Code
Enforcement Bulletin 2010-2, stating that owner-occupied, one or two family dwellings
are exempt from certain fire code enforcement under NJAC 5:70-1.5 (ECF no. 81 at
27). The claim seems to be that enforcement would be inconsistent with the one-tofour-family rider to the mortgages.
(b) to prevent a sheriffs sale of Peri-Okonny’s property pending
resolution of this action;
(c) to restrain the Bank from “negative credit reporting” based on the
missed mortgage payments or foreclosure;
(d) such other and further relief as the Court sees fit.
I am obligated to first consider whether this Court possesses subject
matter jurisdiction. I then proceed to the substantive grounds for dismissal.
The Rooker-Feldman doctrine, which is of jurisdictional stature, bars any
attempt to use the federal trial courts as a court of appeal from state court
judgments. See District of Columbia Court of Appeals v. Feldman, 460 U.S. 462,
482 (1983); Rookery. Fidelity TmstCo., 263 U.S. 413, 416 (1923). Rooker
Feldman thus operates to prevent a disgruntled party in state court litigation
from collaterally attacking the results of that litigation in federal court,
claiming constitutional or other error. See B.S. v. Somerset County, 704 F.3d
250 (3d Cir. 2013). To put it another way, Rooker-Feldman bars “cases brought
by state-court losers complaining of injuries caused by state-court judgments
rendered before the district court proceedings commenced and inviting district
court review and rejection of those judgments.” Exxon Mobil Corp. v. Saudi
Basic Indus., Inc., 544 U.S. 280, 284 (2005).
Rooker-Feldman has four essential prerequisites:
(1) the federal plaintiff lost in state court; (2) the plaintiff
“complain[s] of injuries caused by [the] state-court judgments; (3)
those judgments were rendered before the federal suit was filed;
and (4) the plaintiff is inviting the district court to review and reject
the state judgments.
Great Western Mining & Mineral Co. u. Fox Rothschild LLF, 615 F. 3d 159, 166
(3d Cir. 2010).
The complaint on its face recites that there is a prior State-court
judgment of foreclosure against Peri-Okonny. (7AC Count 7
3) And she, in
particular, seeks to negate that state court judgment by enjoining a sheriffs
sale in the hope of renegotiating with the Bank what has already been
adjudicated by the State court.4
Still, it appears that other aspects of Peri-Okonny’s claim in Count 7
(involving credit reporting, for example) might be regarded as independent. As
for Heine, it does not appear that there is a prior judgment of foreclosure at all;
she seeks an injunction against a future foreclosure. I conclude, therefore, that
Rooker-Feidman does not wholly bar this Court’s jurisdiction, and go on to
consider the Bank’s further arguments for dismissal.5
To be clear, as to the Bank the judgment of foreclosure is indeed a prior
judgment, as alleged in Count 7. The final judgment of foreclosure is dated May 20,
2015. Although this action was filed against the DCA in 2011, the Bank was first
named as a defendant in the Seventh Amended Complaint. The Seventh Amended
Complaint was filed on April 7, 2016.
A copy of the judgment of foreclosure is attached to the Bank’s papers. (ECF no.
109-2 at 19)1 may properly consider it on a motion to dismiss without converting a
facial challenge into a factual challenge or a summary judgment motion. See In re
Asbestos Products Liability Litigation (No. VI), 822 F.3d 125, 134 n.7 (3d Cir. 2016); S.
Cross Overseas Agencies, Inc. v. WahKwong Shipping Qip. Ltd., 181 F.3d 410, 426-27
(3d Cir. 1999); see generally Fed. R. Evid. 201 Oudicial notice).
I consider an alternative argument based on res judicata. State res judicata law
governs the preclusive effect of a state judgment. See Qreenleaf v. Oarlock, Inc., 174
F.3d 352, 357 (3d Cir. 1999); see also Allen u. McCumj, 449 U.S. 90, 96, 101 S. Ct.
411, 415 (1980). New Jersey claim preclusion law, like federal law, has three essential
elements: (1) a final judgment on the merits; (2) the prior suit involved the same
parties or their privies; and (3) the subsequent suit is based on the same transaction
or occurrence. Watlcins v. Resorts Int’l Hotel and Casino, Inc., 124 N.J. 398, 412, 591
A.2d 592, 599 (1991) (state law); United States v. Athlonelndus., Inc., 746 F.2d 977,
983 (3d Cir. 1984) (federal law). New Jersey issue preclusion law, like federal law, bars
litigation of facts fully litigated and actually determined in a prior action, even one
involving a different claim or cause of action. See Tat-us v. Pine Hill, 189 N.J. 497, 520
(2007). The issue must (1) be identical to the one previously litigated; (2) have been
actually litigated; (3) have been asserted in a case that went to judgment on the
merits; and (4) have been essential to the prior judgment; (5) be asserted against the
same party, or one in privity. See Twp. Of Middletown v. Simon, 193 N.J. 228, 236
New Jersey has an additional, somewhat broader res judicata doctrine known
as the entire controversy rule. The entire controversy rule emphasizes, not just claims
within the scope of the prior judgment, but all claims and parties that a party could
have joined in a prior case based on the same transaction or occurrence. The entire
controversy doctrine thus “requires a party to bring in one action ‘all affirmative
The Bank argues that Peri-Okonny and Heine lack Article III standing to
pursue some or all of their claims. As to Peri-Okonny only, I agree.
The essential requirement of standing is that the plaintiff has suffered or
is suffering “an ‘injury in fact’—an invasion of a legally protected interest which
is (a) concrete and particularized, and (b) actual or imminent, not conjectural
or hypothetical.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S. Ct.
2130 (1992). Related to standing is the doctrine of mootness—the idea that if
the plaintiff ever possessed a concrete injury, he or she possesses it no longer.
It is axiomatic that Article III of the Constitution limits the jurisdiction of
federal courts to live “cases” and “controversies,” requiring “an actual
be extant at all stages of review, not merely at the time the
complaint is filed.” Arizonans for Official English v. Arizona, 520 U.S. 43, 67,
117 S. Ct. 1055 (1997). “If an intervening circumstance deprives the plaintiff of
a ‘personal stake in the outcome of the lawsuit,’ at any point during litigation,
the action can no longer proceed and must be dismissed as moat.” Genesis
Healthcare Corp. v. Symczyk,
133 S. Ct. 1523, 1528 (2013)
(quoting Lewis v. Continental Bank Corp., 494 U.S. 472, 477—78, 110 S. Ct.
1249 (1990)). In order for a claim to be moot, however, it must be “impossible
for a court to grant any effectual relief.” Knox v. Set-v. Employees, 567 U.S. 298,
132 S. Ct. 2277, 2287, 183 L. Ed. 2d 281 (2012); see also Blanciak v. Allegheny
claims that [it] might have against another party, including counterclaims and crossclaims,’ and to join in that action ‘all parties with a material interest in the
controversy,’ or be forever barred from bringing a subsequent action involving the
sane underlying facts.” Rycoline Prods., Inc. v. C & W Unlimited, 109 F.3d 883, 885 (3d
Cir. 1997) (quoting Circle Chevrolet Co. v. Giordano, Halleran & Ciesla, 142 N.J. 280,
662 A.2d 509, 513 (1995)).
The Bank asserts in the alternative that the final judgment of foreclosure bars
most or all of the claims of Peri-Okonny under doctrines of res judicata. For reasons
similar to those stated in the Rooker-Feldman Section, III.A, supra, I agree. In this
action, Peri-Okonny here seeks to assert claims that were or could have been asserted
against the Bank, whether as issues in defense or as counterclaims, in the foreclosure
action.That particular res judicata analysis, however, would add little to the Rooker
Ludlum Corp., 77 F.3d 690, 698—699 (3d Cir. 1996) (“If developments occur
during the course of adjudication that.
prevent a court from being able to
grant the requested relief, the case must be dismissed as moot.”).
As to Peri-Okonny, a fundamental standing/mootness objection has
emerged. In her brief, plaintiff stated that “Chase wrote-off the mortgage of
Peri-Okonny and vacated the foreclosure. Therefore this defendant’s arguments
that the foreclosure was first filed in state court and issues of lack of federal
jurisdiction over certain credit matter is a moot point.” (P1. Brf. 5) Citing this
statement, the Bank argued in its reply that standing was lacking.
I would not ordinarily base a dismissal on an unsupported statement in
a plaintiffs brief. But the Bank, as it turns out, agrees. In a letter filed
yesterday, October 9, 2017 (ECF no. 126), counsel for the Bank acknowledged
Chase charged-off the loan of Peri-Okonny, and issued a Discharge
recorded with the Middlesex County Clerk’s Office
on October 7, 2016 in Book 1385, Page 0193.
To date, the Final Judgment entered against Peri-Okonny in
[the state foreclosure] has not been vacated, although a Chase
intends to do so. Notably the Writ of Execution was returned as
“unsatisfied” by the Middlesex County Sheriffs office, so Chase has
not sought to enforce the Final Judgment.
(Letter, ECF no. 126 at 1)
Peri-Okonny’s “requested relief in Count 7 is an injunction stopping a
sheriffs sale of Peri-Okonny’s property, pursuant to the judgment of
foreclosure.5 The Bank has already discharged the mortgage, is in the process
of vacating the judgment, has not satisfied the writ of execution, and confirms
that it will not pursue its rights any further. Thus Peri-Okonny currently lacks
standing, and the matter is moot.
As to Heine’s property, the Bank has a different standing argument. The
original mortgagor, it says, was a Dr. Gilbert. A number of machinations
I set aside for a moment the third form of relief, an injunction against reporting
any negative credit information.
followed. Suffice it to say that there is a State court order awarding Heine title
to the property provided that she satisfied the $46,000 mortgage, and granting
her the option either to assume and discharge the mortgage or else to sell the
property. When she failed to do either, the court entered an order compelling
her to sell the property, which she has not done. (Bank Reply 4 (citing Gilbert v.
Heine, No. A-0145-14T4, 2017 WL 370904 (N.J. Super. Ct. App. Div. Jan. 25,
2017)). Thus, says Chase, it is not clear how any action by itself could
prejudice Heine any further.
I disagree. As to Heine, Count 7 seeks an injunction against any future
foreclosure. A judgment of foreclosure could lead, not just to a court order
saddling Heine with the mortgage obligation, but to a forced sheriffs sale of the
property. Assuming that Heine has a valid claim, an injunction would thus be
of some value to her. Her claim was not entirely mooted by the State court’s
1 turn my attention to the res judicata effect of a prior federal-court
judgment. This requires dismissal of the claims of Heine, and is an alternative
basis for dismissal of the claims of Peri-Okonny.
Plaintiffs Peri-Okonny, Heine, and a shifting array of co-plaintiffs have
filed multiple lawsuits asserting similar claims. I focus on one, in which the
Bank is named as a defendant. On November 20, 2015 (five months prior to the
filing of the Seventh Amended Complaint), a group of plaintiffs, including Pen
Okonny and Heine, filed suit in federal court against a group of defendants,
including the Bank and DCA. Heine, et a?. v. Director of Codes and Standards,
eta!., No. 15-cv-8210 (ES/MAH) (the “2015 Action”). The final judgment in that
2015 Action—which itself gave preclusive effect to judgments in prior State
court actions—bars the claims against the Bank here.7
As to the 2015 Action, the Bank asserted the related doctrines of comity and
the first-filed rule, because that action had not yet proceeded to judgment. Because
there has now been a final judgment in the 2015 Action, I apply a full resjudicata
As to a prior federal judgment, standards of claim preclusion and issue
preclusion are well established. A res judicata defense may be adjudicated on a
motion to dismiss, where the pleadings and documents properly considered on
a Rule 12(b)(6) motion suffice. See M & M Stone Co. v. Pennsylvania, 388 F.
App’x 156, 162 (3d Cir. 2010); see also Rycoline Products, Inc. a C & W
Unlimited, 109 F.3d 883, 886 (3d Cir. 1997). Federal claim preclusion requires
(a) a final judgment on the merits in a prior suit involving (b) the same parties
or their privies and (c) a subsequent suit based on the same causes of action.
United States a Athlone Indus., Inc., 746 F.2d 977, 983 (3d Cir. 1984) (citing
Parklane Hosiery Co. a Shore, 439 U.S. 322, 326 n. 5, 99 S. Ct. 645, 649 n. 5
(1979)). Federal issue preclusion requires (a) that the issue be identical to an
issue previously adjudicated; (b) that the issue have been actually litigated; (c)
that the determination of the issue was necessary to the prior judgment; and
(d) that the party against whom preclusion is now asserted had a full and fair
opportunity to litigate the issue. Henglein v. Colt Indus., 260 F.3d 201, 209 (3d
Cir. 2001). As to a prior state judgment, resjudicata standards are similar. See
Judgment in the 2015 Action
The 2015 Action, filed in the United States District Court for the District
of New Jersey, was assigned to the Hon. Esther Salas, U.S.D.J. In an Order
and Opinion (“Salas
filed on September 11, 2017, Judge Salas dismissed
the complaint with prejudice.8
Judge Salas first focused on the allegations against defendants other
than the Bank. Those other defendants are all entities, including the DCA,
responsible for the enforcement of state and municipal fire and building codes.9
(Salas Op. 3—4) The plaintiffs in the 2015 Action, including Heine and PenJudge Salas’s Opinion and Order are ECF nos. 78 and 79 on the docket of the
2015 Action. The Bank has filed a copy of that Opinion on the docket of this case.
(ECF no. 124 at 5) A copy of the complaint in the 2015 Action is attached to the
Bank’s papers on the motion to dismiss. (ECF no. 109 at 29)
I omit ancillary claims against Bergen County DYPS, which are not relevant
Okonny, asserted that their buildings were erroneously classified as rooming
houses and subjected to the standards of the New Jersey Rooming and
Boarding House Act of 1979, including code enforcement and administrative
inspections. (Id. 4) They assert that such inspections, violation notices, and
other acts have resulted in the loss of the use and profit of their properties. (Id.
Judge Salas related a history of prior actions involving some of the same
plaintiffs and defendants, in which similar claims were asserted. (Id. 6—9
(summarizing Schildknecht v. Twp. Of Montclair, No. 13-7228 (D.N.J.) (the
“7228 Action”); Fabics a City of New Brunswick, No. 13-6025 (D.N.J.) (the
“6025 Action”); Fabics v. City of New Brunswick, No. 14-2202 (D.N.J.) (the
“2202 Action”).’° Those actions resulted in final judgments in favor of the
defendants. It does not appear that the Bank was named as a defendant in
those actions, however.
Judge Salas first held that principles of res judicata barred the claims in
the 2015 Action that were asserted against the municipalities of New
Brunswick and Montclair.
More pertinently, Judge Salas held that re judicata barred the claims of
Heine and Peri-Okonny, et al., against DCA. (Op. 18—22) The claims against
DCA, as Judge Salas described them, were (a) that it exercised inadequate
oversight as to the municipalities’ code enforcement activities; and (b) that it
violated the constitution by the manner in which it enforced, or promulgated
regulations under, the Rooming and Boarding House Act of 1979, the Uniform
Construction Code, and the Uniform Fire Code. Those claims, held Judge
Salas, had already been decided between the same parties (including Heine and
Peri-Okonny) by final judgments entered in the prior State court actions.
Also pending before Judge Salas are two consolidated cases, both captioned
Heine v. City of Garfield, Civ. Nos. 11-2655 and 12-4171 (D.N.J.).
More pertinently still, Judge Salas dismissed the claims of the 2015
Action as against the Bank. The allegations in the 2015 Action involving the
Bank are contained in two paragraphs:
6. Heine, Peri-Okonny, and Schildknecht all continue to be billed for
taxes on both the home and the land even though they are not allowed to
use them. Peri-Okonny’s home was demolished by the City of New
Brunswick and she has a Final Judgment of Foreclosure from JPMorgan
Chase Bank N.A. in the amount of $400,000 which includes several
years of tax payments for the building even after the City demolished it.
Heine also pays a mortgage on her property to JP Morgan Chase Bank
N.A. The actions of the City and the State in the closures of these
buildings is a violation of the “one to four family rider” that is signed with
the mortgage and could trigger acceleration of the Mortgage with yet
another property to be foreclosed in the State of New Jersey.
4. In the case of Heine and Peri-Okonny the lender is JPMorgan Chase
Bank, N.A. The bank is not a participant in the interaction with the town
so they are not aware of the related problems until the home falls into
foreclosure. At that time the bank has lost princip[al], interest, and tax
payments. The degraded quality of the property makes financial recovery
difficult. The bank is not always equipped with programs that allow for
help to such a distressed homeowner.
22, quoting 2015 Action Compl. Count I
6; Count IV
Judge Salas held that these allegations did not state a claim against the
Bank. As to the Bank, the complaint alleged that there was a mortgage, a
default, and a foreclosure. The circumstances leading to the default are alleged
to involve DCA’s overstepping the bounds of proper code enforcement. The
Bank, however, is explicitly alleged to have had no knowledge of or involvement
in the actions of DCA and the other authorities. As to the Bank, then, the
complaint failed to meet the minimal pleading standards of Fed. R. Civ. P. 8.
Indeed, Judge Salas was uncertain whether a cause of action against the Bank
was even intended; the Bank, she wrote, might merely have been named as a
party necessary for full relief should plaintiff prevail on its other claims. (Op.
Judge Salas also held, in the alternative, that the Rocker-Feldman doctrine
barred claims arising from the judgment of foreclosure against Peri-Okonny. (Op. 23
n.24) I have reached a similar conclusion. See Section III.A, supra.
Judge Salas also stated alternative grounds to dismiss the Complaint as
against, inter alia, DCA, including lack of standing and improper joinder of the
independent claims of multiple plaintiffs.
24—29) Particularly in light of the
multiple opportunities to amend the complaints in the prior actions, Judge
Salas found that amendment would be futile, and dismissed the complaint in
the 2015 Action in its entirety, with prejudice.
Preclusive effect of the 2015 Action
The judgment in the 2015 Action precludes the claims against Chase in
First, the judgment in the 2015 was final, on the merits, and expressly
entered with prejudice.
Second, the causes of action are essentially the same. The claim against
the Bank in Count 7 of the Seventh Amended Complaint is that the mortgage
defaults (and, in Peri-Okonny’s case, foreclosure) were somehow the result of
the code enforcement efforts of DCA and others. The judgment in the 2015
Action disposes of the underlying claim against DCA that the authorities’ fire
code enforcement was illegitimate, on which any claim against the Bank
depends. More to the point here, it directly disposes of the claims against
Chase itself. In neither case is the Complaint very clear about exactly what
cause of action is being asserted against the Bank. Vagueness, however,
provides no refuge against claim preclusion. The same “cause of action” does
not require identity of legal theories, but turns on the essential similarity of the
underlying events giving rise to the various legal claims. Atholone, 746 F.2d at
983 (citing Davis u. U.S. Steel Supply, 688 F.2d 166, 171 (3d Cir. 1982)).
The claims against the Bank in the 2015 Action are shorter than, but
essentially identical in substance to, Count 7 of the Seventh Amended
Complaint in this action. Here, as before, the plaintiffs allege that their
buildings are one or two family residences that should not have been subject to
the Rooming and Boarding House Act of 1979, and that they were exempt from
the statewide uniform fire code. The 2015 Action, like this one, alleges that
Heine and Peri-Okonny have lost the use and profit of their properties as a
result of improper code enforcement; that they have nevertheless been required
to pay property taxes; that Peri-Okonny has been subjected to a final judgment
of foreclosure; that the Bank has mortgages on the properties; that the actions
of the State (and local) officials somehow contravene the 1—4 family riders
contained in the mortgages; and that this all resulted in plaintiffs’ default and
foreclosure by the Bank, which is not equipped to help the distressed owner.’2
Third, the parties, for these purposes, are identical. Heine and Pen
Okonny appear as plaintiffs, and OCA and the Bank as defendants, in both
Judge Salas’s dismissal of the claims against the Bank, which was final
and explicitly entered with prejudice, precludes the claims against the Bank in
Count 7 of the Seventh Amended Complaint in this action.
Failure to State a Claim
Finally, I consider in the alternative whether—assuming there is
jurisdiction, and setting aside resjuthcata—the allegations of Count 7 of the
Seventh Amended Complaint state a claim upon which relief may be granted.
The allegations against the Bank, which are quoted in full at Section II, supra,
do not state any intelligible, identifiable claim. They certainly do not do so with
the specificity required by Twombly and Iqbal, supra.
To begin with, no cause of action is specified. The reader is left to guess
what statutory violation, tort, or other wrong is being alleged.
As to Peri-Okonny, Count 7 alleges that there is a foreclosure judgment
against her and that, if there is a sheriffs sale, she “will have lost her
investment.” That of course may be true; it is probably true of a majority of
For the moment, I set Count 7’s prayer for relief, which aiso demands that
negative credit information not be reported.
The other plaintiffs include some of Heine’s tenants, owners of other buildings,
and so on. Of the nine plaintiffs in the Seventh Amended Complaint, five are also
named as plaintiffs in the 2015 Action. All of the defendants named in the Seventh
Amended Complaint are named in the 2015 Action.
mortgage foreclosures. No wrongful act by the Bank or recognized cause of
action is suggested by those facts.
Peri-Okonny and Heine imply that their properties would never have
gone into default but for the code enforcement activities of DCA and the local
authorities. Once again, that does not amount to a cause of action against the
Bank. The holder of a mortgage is not required to forgive the debt because the
actions of third parties put the mortgagor in a financial fix.
Indeed, Peri-Okonny acknowledges that the Bank had no knowledge of
those enforcement activities, and even continued to pay property taxes after the
building had been damaged by fire and demolished. Once again, no cause of
action against the Bank is suggested by these facts.
Plaintiffs allege that the DCA’s position is in violation of the 1-4 family
rider in their mortgages. The sense seems to be that the DCA is erroneously
treating the buildings as rooming houses—Le., that these are in reality one or
two family, owner-occupied homes that are not subject to statewide fire code
standards. Even if this allegation is accepted, it does not suggest any fault on
the part of the Bank.
Finally, the Bank at some point allegedly expressed willingness to work
with Peri-Okonny, who wished to rebuild. It is implied that this never occurred.
Once again, there is no claim suggested.
Heine, too, alleges that she is unable to use her property or collect rents
as a result of the DCA’s improper code enforcement.
In short, no cause of action is stated, The complaint does not identify
any wrongdoing by the Bank at all.
Nor do the factual allegations support the injunctive relief sought.
Nothing in Count 7 supports a claim that either plaintiff has a legal right to
halt foreclosure or a sheriff’s sale. Peri-Okonny’s property is already subject to
a final judgment of foreclosure. Neither plaintiff denies that her mortgage is in
The demand to restrain the Bank from “negative credit reporting” is
supported by no facts. To the extent a claim under the Fair Credit Reporting
Act might have been intended, see 15 U.S.C.
§ 1681, there are no supporting
facts. There is no clear allegation, for example, that any reporting of missed
payments or the fact of foreclosure would be inaccurate.
For these alternative reasons, too, the Complaint of Peri-Okonny and
Heine will be dismissed as against the Bank.
Accordingly, for the reasons stated in the foregoing Memorandum
Opinion, the motion (ECF no. 109) of defendant JPMorgan Chase Bank, N.A.,
to dismiss the Seventh Amended Complaint is GRANTED, and the Seventh
Amended Complaint is dismissed in its entirety as against defendant JPMorgan
Chase Bank, N.A., only.
To the extent this dismissal is jurisdictional, it is final, but without
prejudice. To the extent this dismissal rests on res judicata and substantive
grounds, it is with prejudice.
Dated: October 10, 2017
KEVIN M NULTY, U.S
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