HALEY et al v. AMS SERVICING, LLC et al

Filing 135

OPINION and ORDER granting 53 Motion to Sever ; denying 67 Motion to Remand; that all Plaintiffs except the named Plaintiff Patrick Haley are SEVERED and DISMISSED without prejudice; that any Plft who wishes to proceed may pay the filing fee an d file a complaint within 30 days of this Order; Defts Motion to Dismiss is Granted, etc.; that if Plaintiff Haley wishes to file an amended complaint, it shall be filed not later than 30 days from the date of this Order, and the failure to do so wil l convert the dismissal into one with prejudice; Clerk of the Court shall mark this case Closed; the parties shall appear before the Court on 9/16/14 at 10:00 a.m. regarding Pltfs' Counsel R. Geoffrey Broderick and the Resolution Law Group's Motion to Withdraw as Attorney, etc.. Signed by Judge Faith S. Hochberg on 6/11/14. (jd, )

NOT FOR PUBLICATION

CLOSED

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
__________________________________________
:
: Civil Case No. 13-5645
: (FSH) (JBC)
Plaintiffs,
:
: OPINION & ORDER
v.
:
: June 11, 2014
AMS SERVICING, LLC, et al.,
:
:
Defendants.
:
__________________________________________ :
PATRICK HALEY, et al.,

HOCHBERG, District Judge:
This matter comes before the Court upon Defendants’ Motion to Dismiss Plaintiffs’
Complaint [Docket No. 53] and Plaintiffs’ Motion to Remand [Docket No. 67] for lack of
subject matter jurisdiction. The Court has reviewed the submissions of the parties and considers
the motions pursuant to Federal Rule of Civil Procedure 78.

I. BACKGROUND
Plaintiffs are 103 individual homeowners from sixteen different states, each with a
mortgage on their property.1 Their counsel amassed this group and filed this action, jointing

1

Plaintiffs’ counsel has filed numerous virtually identical suits in this Court. See, e.g., Brecker v.
1st Republic Mortg. Bankers, Inc., 13-5646 (D.N.J. filed Sept. 20, 2013); Peralta v. ABN AMRO
Mortg. Grp., Inc., 13-5607 (D.N.J. filed Sept. 20, 2013); Blondel v. Am. Mortgage Network,
Inc., 13-5614 (D.N.J. filed Sept. 20, 2013); Apostolakos v. Accredited Home Lenders, Inc., 135619 (D.N.J. filed Sept. 20, 2013). Plaintiffs’ counsel has also filed such suits in other courts.
Defendant First Mariner Bank has sued Plaintiffs’ counsel R. Geoffrey Broderick in the District
of Maryland, asserting that Plaintiffs’ counsel engaged in false advertising by soliciting
individuals with misrepresentations about their mortgages to entice them to join a mass action
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these unconnected Plaintiffs in New Jersey Superior Court against nineteen different Defendants,
including a number of banks that service Plaintiffs’ mortgages (the “lender Defendants”) and
MERSCORP, Holdings, Inc., which operates the Mortgage Electronic Registration System
(“MERS”). MERS is a national electronic registry used by thousands of members, including
mortgage lenders. Members designate MERS as “nominee” for loans that they service, which
allows all members to track servicing rights and ownership interests in the mortgages. (Compl. ¶
138 n.2). MERS is used as an electronic and national alternative to paper records in local county
clerks’ offices and purportedly allows any member to electronically track the transfer of a
beneficial interest in the mortgage to another member or to securitize mortgages without having
to alter paper records. (Compl. ¶¶ 130, 138). When an interest is transferred among MERS
members, MERS records the transfer in its electronic system but MERS remains the nominal
mortgagee on the mortgage document.
Plaintiffs claim that “the MERS system has . . . undermined the public records and the
court systems and has created confusion and uncertainty concerning property ownership
interests, potentially creating clouds of title on the property owned by Plaintiffs,” (Compl. ¶
151), and that this “Enterprise . . . induced Plaintiffs to enter into [their] mortgages based, in
part, upon inflated appraisals,” (Compl. ¶ 155). Thus, they allege that Defendants’
“[m]embership in, subscription to, or participation in MERS constitutes participation in,
furtherance of, and ratification of The Enterprise and its wrongful acts.” (Compl. ¶ 160).
Plaintiffs claim that naming MERS as nominee of their mortgages caused them unspecified harm
against First Marnier. First Mariner Bank v. The Resolution Law Grp., Civ. No. 12-1133 (D.
Md. filed Apr. 13, 2012). On April 22, 2014, Magistrate Judge Susan Gauvey recommended
sanctions against R. Geoffrey Broderick due to “egregious discovery misconduct coupled with .
. . clear spoliation of evidence.” First Mariner Bank v. Resolution Law Grp., Civ. No. 12-1133,
2014 WL 1652550, at *18 (D. Md. Apr. 22, 2014).
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by enabling their banks to evade publicly recording mortgage transfers and paying county fees.
(Compl. ¶¶ 130, 144, 147). “Each Plaintiff” alleges that the “Enterprise and the Defendants”
generally were not authorized to transfer mortgages; “were part of a scheme by which The
Enterprise and/or Defendants misled investors by selling collateralized mortgage pools at an
inflated value”; and that “misrepresentations [were made] by The Enterprise and the Defendants
to investors,” (Compl. ¶ 172), although no such purported investors in collateralized mortgage
pools are parties to this case. Each Plaintiff contends that they “would have avoided these
doomed predatory transactions based upon inflated appraisals and lax underwriting standards” if
they had known about the purported scheme. (Compl. ¶ 190).
For sixty-nine Plaintiffs, these are the only “facts” that Plaintiffs allege.2 It is never
stated, for instance, which lender serviced each Plaintiff’s mortgage, nor has any Plaintiff alleged
a connection between any individual Plaintiff and each of the lenders. Nowhere does any
Plaintiff state how the MERS tracking system impaired his or her rights, nor has any Plaintiff
identified any specific damage or harm from any particular promissory note tracked by MERS,
nor from any particular purportedly inflated appraisal, nor a single misrepresentation of fact upon
which he or she relied upon to his or her detriment. One supposed Plaintiff, Julia Ravello, plead
no facts at all and does not even appear outside of the caption box.3
Several other Plaintiffs, however, allege that their mortgage servicer wrongfully denied
loan modifications or principal deductions; delayed in processing loan modifications; improperly

2

3

See Compl. ¶¶ 9-13, 15-18, 20, 22-26, 30, 32-34, 37, 39, 41, 44, 46-48, 50-52, 54-57, 60, 62,
64-65, 67-71, 73-81, 84-89, 91-92, 94-95, 97, 99-103. Plaintiffs Roger and Leandra Peak’s
allegations were plead together, as were Ira and Roberta Rosdeitcher.
Craig Miller appears only in the body of the Complaint and not the caption. (Compl. ¶ 61).

3

suggested payment plans with ballooning payments; wrongfully foreclosed upon their property;
or failed to perform obligations arising out of their acceptance of Government funds through the
federal Troubled Asset Relief Program.4 These Plaintiffs allege that the mortgage-lender
Defendants did not have standing to foreclose upon their property and that MERS “made it
difficult to ascertain whether a foreclosing party actually owns or holds the Note with proper
endorsements.” (Compl. ¶¶ 151, 168). Notably, only three Plaintiffs – Miri Ben-Ari, Carolyn
Green-Disler, and Gwendolyn Walton – allege that they encountered difficulty contesting a
foreclosure proceeding. (Compl. ¶¶ 14, 42, 96).
Although two-thirds of the Plaintiffs make only a single factual allegation related to the
lender Defendants – that the Defendants were associated with MERS – all nine causes of action
in the Complaint are brought “[b]y [a]ll Plaintiffs [a]gainst [a]ll Defendants.” These counts
include: (1) “Violation of the New Jersey Truth in Consumer Contract, Warranty, And Notice
Act, N.J.S.A. § 56:12-14”; (2) “Intentional Misrepresentation”; (3) “Negligent
Misrepresentation”; (4) “Negligence”; (5) “Slander Of Title”; (6) “Ejectment For Wrongful
Possession Of Claim On Land”; (7) “Breach Of Contract / Constructive Fraud”; (8) “Civil
Conspiracy / Member Liability In Joint Enterprise”; and (9) “Unjust Enrichment.” Each Plaintiff
seeks a declaration that they own the property free of the mortgage, injunctive relief, and
statutory and compensatory damages.
Defendant Bank of America, N.A., removed the action to this Court on September 20,
2013, asserting jurisdiction under the Class Action Fairness Act as a mass action where the
claims of 100 or more persons are proposed to be tried jointly. Defendants then moved to

4

No Plaintiff alleges, however, that there is a private right to sue under the Troubled Asset
Relief Program or pleads in the Complaint that they are third-party beneficiaries of any
agreement between the mortgage lenders and the Government.
4

dismiss the Complaint for failure to state a claim upon which relief can be granted, failure to set
forth a short and plain statement, and failure to plead fraud with sufficient particularity.5
[Docket No. 53]. Plaintiffs moved to remand the action to New Jersey Superior Court. [Docket
No. 67].

II. DISCUSSION
a. Jurisdiction
Defendants assert jurisdiction under the Class Action Fairness Act of 2005 (“CAFA”).
CAFA expands federal jurisdiction to include “mass actions” that meet certain requirements. 28
U.S.C. § 1332(d)(11); Mississippi ex rel. Hood v. AU Optronics Corp., 134 S. Ct. 736, 740
(2014) (“CAFA grants federal jurisdiction over class and mass actions in which the aggregate
amount in controversy exceeds $5 million.”). Class actions and mass actions may be “removed to
a district court of the United States in accordance with [the removal statute for civil actions],
without regard to whether any defendant is a citizen of the State in which the action is brought . .
. .” 28 U.S.C. § 1453(b), 28 U.S.C. § 1446.
The statute defines “mass action”:
[T]he term “mass action” means any civil action (except a [class action]) in which
monetary relief claims of 100 or more persons are proposed to be tried jointly on
the ground that the plaintiffs’ claims involve common questions of law or fact,
except that jurisdiction shall exist only over those plaintiffs whose claims in a
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Defendants Bank of America, N.A., and Countrywide Home Loans, Inc., moved to dismiss.
The Motion was joined by Defendants Bayview Loan Servicing, LLC; Select Portfolio
Servicing, Inc.; Green Tree Servicing, LLC; Homeward Residential, Inc.; Ocwen Loan
Servicing, LLC; CitiMortgage, Inc.; US Bank, N.A.; Wells Fargo Bank, N.A.; Seterus, Inc.; JP
Morgan Chase Bank, N.A.; MERSCORP Holdings, Inc.; Carrington Mortgage Services, LLC;
and Nationstar Mortgage LLC. Defendants AMS Servicing, LLC; OneWest Bank, FSB; and
First Mariner Bank have not joined the motion or appeared in this case; Plaintiffs have not
submitted proof of service upon these Defendants.
5

mass action satisfy the jurisdictional amount requirements under subsection (a)
[which is currently $75,000].
28 U.S.C. § 1332(d)(11)(B)(i).
Thus, “[a]ccording to CAFA’s plain text, a ‘mass action’ must involve monetary claims brought
by 100 or more persons who propose to try those claims jointly as named plaintiffs.” Hood, 134
S. Ct. at 739.
For federal jurisdiction to attach, a mass action must also satisfy several additional
requirements, similar to the requirements for a class action. 28 U.S.C. § 1332(d)(11)(A) (“a mass
action shall be deemed to be a class action removable under paragraphs [28 U.S.C. § 1332(d)](2)
through (10) if it otherwise meets the provisions of those paragraphs.”). Those provisions
include various caveats to the grant of jurisdiction, such as: a minimal diversity requirement,6 28
U.S.C. § 1332(d)(2); a requirement that the aggregate amount in controversy for the mass action
“exceeds the sum or value of $5,000,000, exclusive of interest and costs,” id.; a mandatory and a
discretionary exception to the exercise of jurisdiction for local controversies,7 28 U.S.C. §

6

There is minimal diversity under CAFA if “any member of a class of plaintiffs is a citizen of a
State different from any defendant.” 28 U.S.C. § 1332(d)(2)(A). Here, at least one Plaintiff –
Patrick Haley, a New Jersey citizen (Compl. ¶ 6) – is a citizen of a different state from at least
one Defendant – Bank of America, N.A., a citizen of North Carolina.

7

Plaintiffs asserted, but did not brief, that this action was “local” in nature. There is no
jurisdiction under CAFA for a “mass action” if “all of the claims in the action arise from an
event or occurrence in the State in which the action was filed, and that allegedly resulted in
injuries in that State or in States contiguous to that State.” 28 U.S.C. § 1332(d)(11)(b)(ii).
Similarly, “[a] district court shall decline to exercise jurisdiction” where “two-thirds or more of
the members of all proposed plaintiff classes in the aggregate, and the primary defendants, are
citizens of the State in which the action was originally filed.” 28 U.S.C. § 1332(d)(4)(B). First,
by failing even to brief this issue, Plaintiffs waive any right to later take a position on it. The
Court is satisfied that neither exception applies. Plaintiffs allege fraudulent lending practices
related to mortgages on their real estate, which is located in sixteen different states. Moreover,
fewer than two-thirds of Plaintiffs are residents of New Jersey.
6

1332(d)(3)-(4), (d)(11)(B)(ii); and limitations on the subject matter and permissible defendants in
a mass action.
Thus, as a threshold matter for jurisdiction under CAFA, Defendants must show that: (1)
more than 100 persons propose to try their claims jointly based on common questions of law or
fact; (2) the mass action involves monetary relief claims; (3) the aggregate amount in
controversy exceeds $5,000,000; and (4) there is minimal diversity.
To establish jurisdiction, the removing defendant bears the burden of proving threshold
jurisdictional facts by a “preponderance of the evidence.” Frederico v. Home Depot, 507 F.3d
188, 196 (3d Cir. 2007). “To evaluate whether removal is proper, we generally focus on the
allegations in the Complaint and the notice of removal.” Erie Ins. Exch. v. Erie Indem. Co., 722
F.3d 154, 158 (3d Cir. 2013). Courts may consider, however, “pleadings as well as evidence that
the parties submit to determine whether subject matter jurisdiction exists or an exception thereto
applies.” Vodenichar v. Halcon Energy Props., Inc., 733 F.3d 497, 503 n.1 (3d Cir. 2013).
Plaintiffs contend that, because Plaintiffs do not plead a specific amount of damages, the
removing Defendant bears the burden to prove that damages exceed the threshold value to a
“legal certainty.” (Pls.’ Mem. of P.&A. in Supp. of Mot. to Remand ¶ 33). The Third Circuit has
held, however, that where a Complaint does not plead an amount of damages, remand is
appropriate only where “it appears to a legal certainty that the plaintiff cannot recover the
jurisdictional amount.” Frederico, 507 F.3d at 197 (emphasis added). The Complaint is silent as
to the amount of damages; therefore, the Court applies the Frederico standard.
Plaintiffs claim that “Defendants do not allege that there are 100 Plaintiffs with claims
that meet the $75,000 jurisdictional amount . . . Defendants cannot meet their burden by pleading

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the jurisdictional amount is satisfied for any fewer than 100 Plaintiffs.”8 (Pls.’ Mem. of P.&A. in
Supp. of Mot. to Remand ¶¶ 54-55). Thus, Plaintiffs argue that CAFA jurisdiction requires that
all 100 members of the proposed mass action place $75,000 at issue.
CAFA confers jurisdiction over “any civil action” where the “claims of 100 or more
persons are proposed to be tried jointly” with an aggregate value of $5 million, “except that
jurisdiction shall exist only over those plaintiffs whose claims in a mass action satisfy the
jurisdictional amount requirements under subsection (a) [of more than $75,000].” §
1332(d)(11)(B)(i); Hood, 134 S. Ct. at 740 (“Class and mass actions filed in state court that
satisfy CAFA’s requirements may be removed to federal court, but federal jurisdiction in a mass
action, unlike a class action, shall exist only over those plaintiffs whose claims individually
satisfy the $75,000 amount in controversy requirement.”) (internal citations and quotation marks
omitted). Defendants assert that, where 100 Plaintiffs have an aggregate claim of $5 million, the
entire action is removable. They argue that any individual Plaintiffs with a claim for $75,000 or
less shall then be remanded, but that any remand shall not affect the jurisdiction of the mass
action.
Defendants cite an Eleventh Circuit case, which concluded that each Plaintiff need not
place more than $75,000 at issue for CAFA jurisdiction to attach to the entire action, holding that
“it seems clear that the $75,000 provision was not intended to bar district courts from asserting
jurisdiction over the entire case if each individual plaintiff’s claims do not exceed $75,000.”
Lowery v. Ala. Power Co., 483 F.3d 1184, 1205 (11th Cir. 2007). The Lowery Court found that
if CAFA required that 100 or more persons propose claims exceeding $75,000 each – as
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The majority of Plaintiffs’ Motion to Remand argues that there is no jurisdiction because the
Complaint presents no federal question under 28 U.S.C. § 1331. Defendants’ removal,
however, was based on CAFA jurisdiction under 28 U.S.C. § 1332 and not the existence of a
federal question. The Court, therefore, addresses only Plaintiffs’ arguments related to CAFA.
8

Plaintiffs here contend – that requirement would rewrite the statute to impose an amount in
controversy for mass actions of $7.5 million (100 claims multiplied by $75,000), rather than the
explicit textual requirement of $5 million. Lowery, 483 F.3d at 1203-07; id. at 1207 (“the
$75,000 provision does not . . . supplant the Act’s plainly expressed $5,000,000 aggregate
requirement by requiring a per-plaintiff minimum threshold requirement” for each of 100
Plaintiffs); see also Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 686 (9th Cir. 2006)
(noting, but not deciding, that it is “consistent with a logical reading of the statute” to retain
jurisdiction over a properly removed mass action even if, by remanding individual Plaintiffs’
claims that are $75,000 or below, the mass action retains less than 100 persons). These Courts
have reasoned that, if more than 100 Plaintiffs have claims with a value of over $5 million, there
is federal jurisdiction over the action itself, and the Court may proceed with the action as to the
subset of persons with claims exceeding $75,000. See Lowery, 483 F.3d at 1207; Bullard v.
Burlington N. Santa Fe Ry. Co., 535 F.3d 759, 761 (7th Cir. 2008) (“the Class Action Fairness
Act . . . creates federal jurisdiction over class litigation-including ‘mass actions’ in which
plaintiffs propose a trial involving the claims of 100 or more litigants-if at least one plaintiff
demands $75,000, the stakes of the action as a whole exceed $5 million, and minimal diversity of
citizenship exists.”); Cooper v. R.J. Reynolds Tobacco Co., 586 F. Supp. 2d 1312, 1323 n.1
(M.D. Fla. 2008) (“a trial court keeps jurisdiction over the case as a whole even if it lacks
jurisdiction over 100 individual plaintiffs due to some of those plaintiffs falling beneath the
$75,000 requirement.”). The Court finds this reasoning persuasive.
Here, Defendants have shown that at least one individual has a claim where the amount in
controversy is greater than $75,000. Plaintiffs each seek “declaratory relief voiding the notes
and mortgages of Plaintiffs held or serviced by the Defendants” and “a finding that each

9

mortgage lien alleged to exist is null and void ab initio.” (Compl. ¶ 241, Prayer for Relief).
Thus, at the very least, Plaintiffs have placed the value of their remaining mortgage payments at
issue. See McKenna v. Wells Fargo Bank, N.A., 693 F.3d 207, 212 (1st Cir. 2012) (“Numerous
district courts have held that, where a complaint seeks to invalidate a loan secured by a deed of
trust, the amount in controversy is the loan amount, although other courts have calculated the
amount in controversy by reference to . . . the unpaid principal balance on the note as of the date
of removal.”) (internal alterations, citations, and quotation marks omitted) (citing Stonebridge
Bank v. Nita Props., LLC, Civ. No. 090-5145, 2011 U.S. Dist. LEXIS 9674, at *6, 2011 WL
380759, at *3 (D.N.J. Jan. 31, 2011)).
In its notice of removal, Defendant Bank of America, N.A., submitted evidence that it
services the loans of fifteen Plaintiffs. (Notice of Removal ¶ 19, Docket No. 1). For each of
these Plaintiffs, the amount of the outstanding loan balance is greater than $75,000. (Notice of
Removal ¶ 19; Cacho Decl. ¶ 10, Docket No. 1-2). The outstanding loan balance for those
fifteen Plaintiffs in aggregate was calculated to be $7,413,317.64 at the time of removal. (Notice
of Removal ¶ 19; Cacho Decl. Ex. 1, Docket No. 1-3). Plaintiffs have not contested these
jurisdictional facts. Consequently, this Court cannot find that “it appears to a legal certainty that
the plaintiff cannot recover the jurisdictional amount.” Frederico v. Home Depot, 507 F.3d 188,
197 (3d Cir. 2007). Defendants have met their burden to show that the “claims of 100 or more
persons are proposed to be tried jointly” with an aggregate amount at issue of at least $5 million.
28 U.S.C. §1332(d). Defendants have also shown that some number of individual Plaintiffs place
greater than $75,000 at issue. Thus, there is CAFA jurisdiction over this action; Plaintiffs’
motion to remand the action is denied.

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Finally, Plaintiffs argue that, if the Court finds that CAFA jurisdiction exists, their
declaratory claims should nevertheless be remanded because CAFA purportedly grants
jurisdiction over “monetary relief claims” only. Plaintiffs each have declaratory and monetary
claims. In addition to seeking declaratory relief, Plaintiffs also seek “all actual damages,
punitive damages, reasonable attorneys’ fees, [and] costs of this action.” (Compl. ¶ 241; Prayer
for Relief). Because Plaintiffs seek damages under New Jersey statutory causes of action,
Plaintiffs have “monetary relief claims” under CAFA. See Lowery, 483 F.3d at 1202 (“This
[mass action] provision . . . does not extend to actions seeking solely equitable relief.”); Bank of
New York Mellon v. Walnut Place LLC, 819 F. Supp. 2d 354, 360 (S.D.N.Y. 2011) (“cases
seeking only non-monetary relief, such as injunctions, cannot be removed under CAFA.”) rev’d
sub nom. on other grounds BlackRock Fin. Mgmt. Inc. v. Segregated Account of Ambac Assur.
Corp., 673 F.3d 169 (2d Cir. 2012); Kitazato v. Black Diamond Hospitality Invs., LLC, Civ. No.
09-00271, 2009 WL 3824851, at *5 (D. Haw. Nov. 13, 2009) (remanding action because
Plaintiffs sought declaratory relief only). The Third Circuit has held that under “removal
practice, the entire lawsuit is removable or not removable, not merely the claims against
particular defendants.” Brown v. JEVIC, 575 F.3d 322, 329 (3d Cir. 2009) (quoting Lowery v.
Ala. Power Co., 483 F.3d 1184, 1197 (11th Cir.2007) (“we read CAFA’s jurisdictional and
procedural removal provisions to relate to the ‘class action’ and not particular claims, the
removal of the claims against all the defendants either stands or falls as a whole.”)). Thus,
because Plaintiffs assert monetary claims, the entire action is removable, including any
declaratory claims. Moreover, the purported “declaratory” claims are really an effort to void a
monetary obligation and are best viewed as monetary claims regardless of nomenclature chosen
by Plaintiffs.

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b. Severance
Defendants move to sever Plaintiffs’ claims as misjoined under Federal Rule of Civil
Procedure 21. A person may be joined in one action if “they assert any right to relief jointly,
severally, or in the alternative with respect to or arising out of the same transaction, occurrence,
or series of transactions or occurrences; and . . . any question of law or fact common to all
plaintiffs will arise in the action.” Fed. R. Civ. P. 20. “Rules 18 and 20 of the Federal Civil
Procedure . . . mandate presence of a transactional relationship between the claims.” Murakush
Caliphate of Amexem Inc. v. New Jersey, 790 F. Supp. 2d 241, 265 (D.N.J. 2011). If a common
transactional relationship does not exist “the court may at any time, on just terms, add or drop a
party. The court may also sever any claim against a party.” Fed. R. Civ. P. 21. “[P]laintiff may
join multiple defendants in a single action only if plaintiff asserts at least one claim to relief
against each of them that arises out of the same transaction or occurrence and presents questions
of law or fact common to all.” Marrakush Soc. v. N.J. State Police, Civ. No. 09-2518, 2009 WL
2366132, at *28 (D.N.J. July 30, 2009) (quoting Charles Allen Wright, Arthur R. Miller, 7
Federal Practice & Procedure Civil 3d § 1655; Neitzke v. Williams, 490 U.S. 319, 328 (1989)).
Because CAFA jurisdiction is determined at the time of removal, the subsequent
severance of claims or parties does not affect the jurisdiction of those claims. Cooper v. R.J.
Reynolds Tobacco Co., 586 F. Supp. 2d 1312, 1318 (M.D. Fla. 2008) (“Defendants’ ‘remove
then sever’ strategy has no effect on the Court’s CAFA jurisdiction”). Thus, courts finding
CAFA jurisdiction over a mass action have frequently severed all but the named plaintiff where
the action lacked a transaction or occurrence common to all plaintiffs. See, e.g., Abraham v. Am.
Home Mortg. Servicing, Inc., 947 F. Supp. 2d 222, 233-34 (E.D.N.Y. 2013); Visendi v. Bank of

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Am., N.A., 733 F.3d 863, 871 (9th Cir. 2013) (finding CAFA jurisdiction over mass action
alleging mortgage fraud and misrepresentation but severing all but the first named plaintiff as the
action lacked “common questions of law or fact”); Louisiana v. Am. Nat. Prop. Cas. Co., 746
F.3d 633, 639-40 (5th Cir. 2014) (finding that plaintiffs’ claims retained CAFA jurisdiction even
after they were severed due to misjoinder).
Here, the 103 Plaintiffs – with an aggregate 98 mortgages – are suing nineteen different
Defendant banks based on loans that were provided over a nine-year period. Together, Plaintiffs’
homes subject to these mortgages are located in sixteen different states. Each Plaintiff alleges
that their mortgage servicer committed wrongful conduct, which varies among the Plaintiffs and
includes allegations that the servicer denied loan modifications or principal deductions; delayed
in processing loan modifications; improperly suggested payment plans with ballooning
payments; wrongfully foreclosed upon their property; failed to perform obligations arising out of
their acceptance of Government funds through the federal Troubled Asset Relief Program; or
merely participated in the Mortgage Electronic Registration system, (Compl. ¶ 159).
No Plaintiff pleads any connection to any other mortgage servicer apart from their own.
Thus, each Defendant was involved in a separate mortgage, and is accused of separate conduct
unrelated to the other Defendants and Plaintiffs. Kalie v. Bank of Am. Corp., Civ. No. 12-9192,
2013 WL 4044951, at *5 (S.D.N.Y. Aug. 9, 2013) (severing Plaintiffs in a similar action by
residential homeowners against mortgage lenders because “plaintiffs have failed to plead facts
sufficient to support a finding that plaintiffs’ claims against these three defendants are ‘so
logically connected’ to dictate that they be resolved together.”).
Because the allegedly wrongful conduct was committed by different Defendants against
different Plaintiffs, there is no common transaction or occurrence or series of transactions or

13

occurrences. See Abraham v. Am. Home Mortg. Servicing, Inc., 947 F. Supp. 222, 229-34
(E.D.N.Y. 2013) (“It is well established that separate loan transactions by different lenders do
not constitute a single transaction or occurrence and claims by plaintiffs who engaged in those
separate transactions generally cannot be joined in a single action.”); Murakush Caliphate of
Amexem Inc. v. New Jersey, 790 F. Supp. 2d 241, 266 (D.N.J. 2011) (finding a violation of Rule
20 where “the Complaint. . . asserts a gamut of wholly unrelated transactions involving a
multitude of different persons designated as wrongdoers and a matching multitude of persons
designated as aggrieved.”).
Nor is this lack of commonality cured by Plaintiffs’ allegation of conspiracy. Plaintiffs
contend that Defendants “participated in a common plan and scheme involving the origination of
loans, servicing of loans and/or acquisition of loans,” (Compl. ¶127), and by using MERS,
“[e]ach of the Defendants agreed to participation in The Enterprise, with the knowledge or intent
that doing so would harm homeowners in general, and the Plaintiffs in particular,” (Compl. ¶
234). In opposition to Defendants’ motion to sever, Plaintiffs assert joint-liability among the
lenders, claiming that “Defendants were involved in a common scheme and plan in the
origination of loans, the servicing of loans and/or the acquisition of loans through their
membership in MERS.” (Pls.’ Mem. in Opp’n to Defs.’ Mot. to Dismiss 8).
As the Abraham Court observed in a similar lawsuit – which was filed by Plaintiffs’
counsel and involved hundreds of homeowners alleging fraud by MERS and various lenders –
“unsupported and speculative allegation[s] that the various Defendants conspired to defraud each
individual Plaintiff does not satisfy the requirement that Plaintiffs’ claims arise out of the same
transaction, occurrence, or series of occurrences, nor does it obviate the need for separate proof
as to each individual claim.” Abraham, 947 F. Supp. 2d at 230 (quoting Richards v. Deutsche

14

Bank Nat’l Trust Co., Civ. No. 12-4786, 2012 U.S. Dist. LEXIS 115302, at *2 (C.D. Cal. Aug.
15, 2012)). There, the Court found that “these allegations [of conspiracy] are wholly
unsupported and speculative. Plaintiffs have not provided any factual allegations supporting
these contentions, such as evidence that Plaintiffs’ individual mortgages were based on inflated
appraisals or specific omissions by particular employees responsible for issuing Plaintiffs’
mortgages.” Abraham, 947 F. Supp. 2d at 230.
So, too, here. Apart from Plaintiffs’ conclusory allegation that Defendants “participated
in a common plan and scheme,” Plaintiffs have pled no facts indicating an agreement or common
purpose between the different lender Defendants to defraud Plaintiffs. Plaintiffs assert that “at all
times material hereto, Defendants have acted as servicer or in another capacity with respect to
loan processing. All of the foregoing secured real estate loans made to Plaintiffs were wrongfully
and fraudulently handled and processed by Defendants, their agents, servants, employees, or
others with whom they acted in concert, resulting in damages.” (Compl. ¶ 104). Similarly,
Plaintiffs assert that “MERS certifying officers, including Defendant Servicers’ agents, servants,
employees, or others through whom they acted in concert, have repeatedly executed and
submitted in court mortgage assignments where MERS purports to assign a mortgage to the
foreclosing party without possessing any authority to do so.”). (Compl. ¶ 152). Yet the
Complaint never identifies any connection between the Defendants or, for that matter, any
particular wrongful acts the Defendants committed in concert. Apart from pleading that
Defendants are members of MERS, (Compl. ¶ 129), the Complaint pleads no information to
indicate the Defendants conspired for an unlawful purpose. See generally Banco Popular N. Am.
v. Gandi, 184 N.J. 161, 177 (2005) (finding that a conspiracy is “a combination of two or more
persons acting in concert to commit an unlawful act, or to commit a lawful act by unlawful

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means, the principal element of which is an agreement between the parties to inflict a wrong
against or injury upon another, and an overt act that results in damage.”). Merely alleging that
all Defendants agreed to associate by using MERS and that such association was fraudulent does
not sufficiently set forth facts indicating that each Defendant agreed to commit an unlawful act
against Plaintiffs. “[V]ague allegations of conspiracy” are insufficient. Brookhart v. Rohr, 385
F. App’x 67, 69 (3d Cir. 2010).
Moreover, as the Abraham Court noted, proof of a fraudulent conspiracy must satisfy
Rule 9’s heightened pleading requirement. Abraham, 947 F. Supp. 2d at 231. Yet Plaintiffs fail
to plead with particularity a single fraudulent representation or identify the role of any alleged
coconspirator in the conspiracy. Because the allegations are insufficient to support joint liability,
and because there is no common transaction or occurrence, the parties are misjoined.
“Misjoinder of parties is not a ground for dismissing an action. On motion or on its own,
the court may at any time, on just terms, add or drop a party. The court may also sever any claim
against a party.” Fed. R. Civ. P. 21. “The proper remedy in case of misjoinder is to grant
severance or dismissal to the improper party if it will not prejudice any substantial right.”
Sabolsky v. Budzanoski, 457 F.2d 1245, 1249 (3d Cir. 1972). “[T]he discretion to drop and
dismiss claims against misjoined defendants under Rule 21 is abated when it prejudices any
substantial right of plaintiffs, which includes loss of otherwise timely claims if new suits are
blocked by statutes of limitations.” DirecTV, Inc. v. Leto, 467 F.3d 842, 846-47 (3d Cir. 2006)
(internal citations and quotation marks omitted). Here, pursuant to CAFA, there is no prejudice
to Plaintiffs’ right to timely assert their claims because “[t]he limitations periods on any claims
asserted in a mass action that is removed to Federal court pursuant to this subsection shall be

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deemed tolled during the period that the action is pending in Federal court.” 28 U.S.C. §
1332(d)(11)(D).
“[S]everance will not prejudice Plaintiffs, as they remain free to pursue their claims
individually.” Visendi, 733 F.3d at 871. Nor have Plaintiffs asserted any other form of prejudice.
Therefore, all Plaintiffs except for the named Plaintiff, Patrick Haley, are dropped and dismissed
without prejudice as misjoined. Each may open a new case after paying the appropriate filing
fee.9 In re Diet Drugs, 325 F. Supp. 2d 540, 542 (E.D. Pa. 2004) (severing Plaintiffs’ claims as
misjoined and assessing the statutory filing fee) (citing DIRECTV v. Loussaert, 218 F.R.D. 639,
644 (S.D. Iowa 2003)).

c. Motion to Dismiss
1. Standard
Rule 8(a)(2) requires that a complaint contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8. “To survive a motion to dismiss,
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 Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)); see also Phillips v. County of Allegheny, 515 F.3d 224, 234
(3d Cir. 2008) (“[S]tating . . . 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.”) (internal quotations omitted).

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This remedy moots the argument by Defendants Ocwen Loan Servicing, LLC, and Homeward
Residential, Inc., that Plaintiffs’ lack standing for failure to show they suffered an injury in fact.
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When considering a motion to dismiss under Iqbal, the Court must conduct a two-part
analysis. “First, the factual and legal elements of a claim should be separated. The District Court
must accept all of the complaint’s well-pleaded facts as true, but may disregard any legal
conclusions. 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.” Fowler v.
UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009) (internal citations and quotations
omitted). “A pleading that offers labels and conclusions or a formulaic recitation of the elements
of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertions
devoid of further factual enhancement.” Iqbal, 129 S.Ct. at 1949 (internal quotations and
alterations omitted).
“As a general matter, a district court ruling on a motion to dismiss may not consider
matters extraneous to the pleadings. However, an exception to the general rule is that a
‘document integral to or explicitly relied upon in the complaint’ may be considered ‘without
converting the motion [to dismiss] into one for summary judgment.’” In re Burlington Coat
Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (internal citations omitted) (emphasis in
original).
2. Analysis
Plaintiff Haley asserts the following causes of action: (1) “Violation of the New Jersey
Truth in Consumer Contract, Warranty, And Notice Act, N.J.S.A § 56:12-14”; (2) “Intentional
Misrepresentation”; (3) “Negligent Misrepresentation”; (4) “Negligence”; (5) “Slander Of Title”;
(6) “Ejectment For Wrongful Possession Of Claim On Land”; (7) “Breach Of Contract /
Constructive Fraud”; (8) “Civil Conspiracy / Member Liability In Joint Enterprise”; and (9)
“Unjust Enrichment.” He makes only the following specific allegations:

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Plaintiff Patrick Haley is an individual . . . who executed a Promissory Note
secured by a Mortgage on his real estate, with MERS, Inc. designated as the
mortgagee of record. As a direct and proximate result of the deceptive and
wrongful practices of Defendants, including but not limited to the use of the
MERS system, Plaintiff has suffered financial damages and/or other injuries as
herein described.
(Compl. ¶6).
Although various paragraphs of the Complaint collectively assert that Plaintiffs’ mortgages were
appraised at an inflated rate, and that other individuals were unable to modify a loan repayment
plan or had difficulty contesting a foreclosure, no such allegations, nor any allegations even
remotely meeting the heightened pleading standard for fraud claims, are pled by Haley
specifically. Instead, Haley pleads only these vague and general allegations, without a
connection to any particular Defendant, any particular wrongdoing, or any particular harm. As
in Kalie v. Bank of Am. Corp., Civ. No. 12-9192, 2013 WL 4044951, at *2 (S.D.N.Y. Aug. 9,
2013), the “Complaint does not specify which of this alleged misconduct applies to which
plaintiff, which defendant, or which loan transaction. . . . [nor] differentiate between the 16
defendants, or state which was responsible for which type of wrongdoing. It does not state what
the roles were that were played by individual defendants.”
Here, Plaintiff Haley has not pled the identity of his mortgage servicer, nor which person
Plaintiff contends uttered a misrepresentation. Plaintiff’s general allegations of wrongdoing are
precisely the type of “naked assertions devoid of further factual enhancement” that is insufficient
to state a claim. Iqbal, 129 S.Ct. at 1949. Without knowing exactly what wrongful conduct they
are alleged to have engaged in, the individuals Defendants have not been given fair notice of the
allegations against them. See Twombly, 550 U.S. at 555 (stating that Rule 8(a)(2) requires a
complaint to “give the defendant fair notice of what the claim is and the grounds upon which it

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rests”) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Consequently, Plaintiff Haley’s
Complaint is dismissed.

d. Motion to Withdraw as Attorney
Plaintiffs’ Counsel R. Geoffrey Broderick and the Resolution Law Group filed a motion to
withdraw as attorney for all 103 Plaintiffs [Docket No. 132]. Because each Plaintiff has the
opportunity to refile a complaint, in the interests of justice, this Court will hold a hearing on the
motion to withdraw on September 16, 2014, at 10 A.M. Broderick shall appear in person with
substitution counsel. Plaintiffs’ Counsel shall serve a copy of this Opinion and Order upon each
of his clients and inform each client in writing that they have the opportunity to file a complaint
as well as attend the September 2014 hearing. Plaintiffs’ Counsel shall file a certification stating
he has informed each individual Plaintiff of these rights no later than June 30, 2014. To ensure
that there is no prejudice to the litigants or harm to the administration of justice, Plaintiffs’
Counsel shall bring records related to his fee arrangements with Plaintiffs, including records of
his accounts receivable, to the hearing.

III. CONCLUSION & ORDER
For the foregoing reasons, the Court denies Plaintiffs’ motion to remand, grants
Defendants’ motion to sever, and dismisses the Complaint without prejudice.

ACCORDINGLY IT IS, this 11th day of June, 2014, hereby
ORDERED that Plaintiffs’ Motion to Remand [Docket No. 67] is DENIED; and it is further

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ORDERED that Defendants’ Motion to Sever [Docket No. 53] is GRANTED; and it is further
ORDERED that all Plaintiffs except the named Plaintiff Patrick Haley are SEVERED and
DISMISSED without prejudice; and it is further
ORDERED that any Plaintiff who wishes to proceed may pay the filing fee and file a complaint
within 30 days of the date of this Order; and it is further
ORDERED that Defendants’ Motion to Dismiss the Complaint [Docket No. 53] is GRANTED;
and it is further
ORDERED that Plaintiff Patrick Haley’s Complaint is DISMISSED without prejudice; and it is
further
ORDERED that if Plaintiff Haley wishes to file an amended complaint, it shall be filed not later
than 30 days from the date of this Order, and the failure to do so will convert the dismissal
into one with prejudice; and it is further
ORDERED that the Clerk of the Court mark this case CLOSED; it is further
ORDERED that the parties shall appear before the Court on September 16, 2014, at 10 A.M.,
regarding Plaintiffs’ Counsel R. Geoffrey Broderick and the Resolution Law Group’s
Motion to Withdraw as Attorney; and it is further
ORDERED that Plaintiffs’ Counsel shall submit a certification with respect to each Plaintiff, no
later than June 30, 2014, stating that counsel served a copy of the Court’s Opinion & Order
upon each Plaintiff and stating that Counsel has informed each individual Plaintiff of the
right to pay a filing fee and refile a complaint.
IT IS SO ORDERED

/s/ Faith S. Hochberg__________
Hon. Faith S. Hochberg, U.S.D.J.

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