MARTINEZ v. CAPITAL ONE FINANCIAL CORP.
OPINION. Signed by Judge Jose L. Linares on 3/1/16. (DD, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
Civil Action No.: 15-266 (JLL) (JAD)
CAPITAL ONE FINANCIAL CORP.,
LINARES, District Judge.
This matter comes before the Court by way of Defendant Capital One, N .A. 1 ("Defendant"
or "Capital One")'s Motion to Dismiss Pro-Se Plaintiff Ruben Martinez's ("Plaintiff' or "Mr.
Martinez")'s Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF
The Court has jurisdiction pursuant to 28 U.S.C. § 1332. The Court has considered the
parties' submissions and decides this matter without oral argument pursuant to Rule 78 of the
Federal Rules of Civil Procedure. For the reasons set forth below, the Court grants the Motion to
Dismiss and dismisses Plaintiffs Amended Complaint without prejudice.
The Amended Complaint alleges that, on or about May 31, 2007, Plaintiff and his wife,
Leticia Leon, executed a note (the "Note") in favor of GreenPoint Mortgage Funding, Inc.
Incorrectly named as Capital One Financial Corp. in the Amended Complaint.
This background is derived from Plaintiff's Amended Complaint, which the Court must accept as true at this stage
of the proceedings. See Alston v. Countrywide Fin. Corp., 585 F.3d 753, 758 (3d Cir. 2009).
("GMF") in the amount of $300,000.00, and Plaintiffs granted a mortgage (the "Mortgage") to
GMF, secured by the property at 63 Market Street, Passaic, New Jersey (the "Property")
(collectively the "Loan"). (ECF No. 21, Amended Complaint ("AC") ifif 27-29; see also ECF No.
A (Note) and B (Mortgage) to Defendant's Brief.) 3 Plaintiff signed the Mortgage as an
"accommodation party."4 (See Mortgage.)
Plaintiff commenced this action on January 13, 2015 against U.S. Bank N.A. and Aurora
Loan Services, LLC. (ECF No. 1.) Because it was determined that neither U.S. Bank N.A. nor
Aurora Loan Services, LLC had any interest in the Property or Loan, in August 2015 the Court
dismissed Plaintiffs original Complaint without prejudice with right to refile against the
appropriate defendant. (ECF Nos. 16, 17.) On November 17, 2015, Plaintiff filed a three-count
Amended Complaint naming Capital One as Defendant. (ECF No. 21.) On January 28, 2016,
Capital One moved to dismiss. (See ECF No. 28-1 ("Mov. Br.").) Plaintiff's opposition was due
on February 22, 2016, but a review of the docket reveals that opposition was not timely filed.
document integral to or explicitly relied upon in the complaint may be considered without converting the motion
to dismiss into one for summary judgment." Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014) (quoting In re
Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (quotation marks omitted)).
Under the UCC,
An accommodation party is one who has signed the instrument as maker, drawer,
acceptor, or indorser, without receiving value therefor, and for the purpose of
lending his name to some other person. Such a person is liable on the instrument
to a holder for value, notwithstanding such holder at the time of taking the
instrument knew him to be only an accommodation party.
§ 29. Liability of Accommodation Party, ULA APPENDIX I, UNIF.COMMERCIAL CODE UNIL § 29. For
purposes of this Motion to Dismiss only, and because the Court dismisses on other grounds, the Court concludes that
Plaintiff has standing. See Harrison v. MR. A., Ltd., 278 F.2d 539, 541 (9th Cir. 1960) ("The essential feature of an
accommodation party to a negotiable instrument is a loan of credit or financial standing to an accommodated principal
party.") (citations omitted); In re Boles, 150 B.R. 733, 735 (Bankr. W.D. Mo. 1993) ("Standing under§ 523(a)(2)(B)
includes situations where an accommodation party on a loan is subrogated to the creditor's rights or has a right of
contribution against the debtor.") (citation omitted).
withstand a motion to dismiss for failure to state a claim, "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)). "A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."
Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). "The plausibility standard is not akin to
a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted
determine the sufficiency of a complaint under Twombly and Iqbal in the Third Circuit,
the court must take three steps: first, the court must take note of the elements a plaintiff must plead
to state a claim; second, the court should identify allegations that, because they are no more than
conclusions, are not entitled to the assumption of truth; 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 relie£ See Connelly v. Lane Const. Corp., 809 F.3d 780, 787 (3d
6) (citations omitted). "In deciding a Rule 12(b)(6) motion, a court must consider only
the complaint, exhibits attached to the complaint, matters of the public record, as well as
undisputedly authentic documents if the complainant's claims are based upon these documents."
Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010).
The Court also notes that pleadings submitted by pro se litigants are subject to liberal
construction. See Higgs v. Att'y Gen., 655 F.3d 333, 339 (3d Cir. 2011). The Court is required to
accept a pro se plaintiffs well-pleaded factual allegations as true while drawing reasonable
inferences in his or her favor. Capogrosso v. Sup. Ct. of NJ., 588 F .3d 180, 184 (3d Cir. 2009).
However, a pro se complaint must still contain sufficient factual matter to state a claim to relief
that is plausible on its face. See Franklin v. GMAC Mortgage, 523 F. App'x 172, 173 (3d Cir.
The Amended Complaint alleges three causes of action: breach of contract, fraud in the
concealment, and intentional infliction of emotional distress. New Jersey law applies. (See Note
30.) The Court discusses each cause of action in tum.
A. Breach of Contract
"establish a breach of contract claim, a plaintiff has the burden to show" that: (1) "the
parties entered into a valid contract"; (2) the "defendant failed to perform his obligations under the
contract"; and (3) "plaintiff sustained damages as a result." Robert Wood Johnson Univ. Hosp. at
Hamilton, Inc. v. SMX Capital, Inc., No. 12-cv-7049, 2013 WL 4510005, at *4 (D.N.J. Aug. 26,
(citing Murphy v. lmplicito, 392 N.J. Super. 245, 265 (N.J. App. Div. 2007)) (internal
quotation marks omitted).
Here, Plaintiff alleges that Capital One breached the terms of the Loan "by failing to notify
Plaintiffs of the change in ownership of the Note and Mortgage" (AC~ 60), and by failing to record
an assignment of the Mortgage.
57-68.) As a result of the alleged breach, Plaintiff seeks
$300,000.00 (the value of the Note) in compensatory damages.
The Court shall dismiss this claim. Putting aside the fact that Capital One represents that
the Note and Mortgage were never transferred and that GMF remains the holder of the Note and
Mortgage (Mov. Br. at 4 n.2), the Mortgage allows for transfer without prior notice. (See Mortgage
Note or a partial interest in the Note (together with this Instrument and the other Loan
Documents) may be sold one or more times without prior Notice to Borrower....
lf there is a
the Loan Servicer, Borrower will be given Notice of the change.") (emphasis added).)
Additionally, Plaintiff states that Capital One breached the contract by failing to record assignment
of the Mortgage, but fails to identify any relevant contractual provisions or statutes. To the extent
that Plaintiff argues that the failure to record affects the validity of the Mortgage, the Court notes
arf,rument is unavailing. See In re Kennedy Mortgage Co., 17 B.R. 957, 964 (Bankr. D.N.J.
1982) ("The fact that assignments of mortgages may be recorded does not affect the validity of an
assignment of a mortgage which has not been recorded.") (citation omitted).
Plaintiff's breach of contract claim shall be dismissed.
B. Fraud in the Concealment
establish a common-law fraud claim, a plaintiff must prove: (1) a material
misrepresentation of a presently existing or past fact; (2) knowledge or belief by the defendant of
its falsity; (3) an intention that the other person rely on it; (4) reasonable reliance thereon by the
other person; and (5) resulting damages. Gennari v. Weichert Co. Realtors, 148 N.J. 582, 610,
(1997). "Misrepresentation and reliance are the hallmarks of any fraud claim, and a fraud cause
of action fails without them." Banco Popular N Am. v. Gandi, 184 N.J. 161, 174 (2005). In
addition, the heightened pleading requirements of Federal Rule of Civil Procedure 9(b) apply:
Pursuant to Rule 9(b ), a plaintiff alleging fraud must state the
circumstances of the alleged fraud with sufficient particularity to
place the defendant on notice of the "precise misconduct with which
[it is] charged." ... To satisfy this standard, the plaintiff must plead
or allege the date, time and place of the alleged fraud or otherwise
inject precision or some measure of substantiation into a fraud
Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007) (internal citations omitted). The Third
Circuit has advised that on a fraud claim, at a minimum, a plaintiff must support his/her allegations
of fraud with all the essential factual background that would accompany "'the first paragraph of
any newspaper story'-that is, the 'who what, when, where and how' of the events at issue." In
re Supreme Specialties, Inc. Sec. Litig., 438 F.3d 256, 276-77 (3d Cir.2006) (citations omitted).
Furthermore, "[ t]o establish a claim of fraud in the concealment requires the existence of a
duty to disclose as well." Coleman v. Deutsche Bank Nat. Trust Co., No. 15-cv-1080, 2015 WL
2226022, at *7 (D.N.J. May 12, 2015) (citing Berman v. Gurwicz, 189 N.J. Super. 89, 93 (App.
Div. 1981 )). The court in Berman described the three classes of transactions for which a duty to
disclose might arise: (1) definite fiduciary relationships such as principal-agent or attorney-client;
(2) those without a special fiduciary relationship but where it appears that one of the parties
expressly reposes a trust and confidence in the other; and (3) those without a special relationship,
which the very nature of the transaction or contract itself is intrinsically fiduciary and
necessarily calls for perfect good faith and full disclosure, such as a contract for insurance.
Berman, 189 NJ. Super at 93-94.
Here, Plaintiff alleges that Capital One fraudulently concealed that the Loan was
69-83.) In addition to actual damages, Plaintiff requests punitive damages.
The Court shall dismiss this claim. First, this claim fails to meet the heightened pleading
requirements of Rule 9(b ). There are no details regarding the alleged securitization, putting aside
the fact that Capital One represents that the Note and Mortgage have not been securitized. (Mov.
Br. at 7 n.6.). More to the point, the Amended Complaint fails to establish that Capital One had a
duty to disclose securitization in the first place. Furthermore, the Amended Complaint fails to
plead facts establishing that the omitted information was material or that Plaintiff was damaged as
a result. Plaintiff states in conclusory fashion as follows: "Defendant knew or should have known
that had the truth been disclosed, Plaintiff would not have entered into the Loan and would have
rescinded it from the time of origination." (AC ii 72.) However, even assuming that the Note and
Mortgage were securitized, the terms of the Loan would have remained the same. Accordingly,
the Court dismisses Plaintiff's fraud in concealment claim.
C. Intentional Infliction of Emotional Distress
establish the tort of intentional infliction of emotional distress under New Jersey law,
"a plaintiff must show (1) that the defendant intended to cause emotional distress; (2) that the
conduct was extreme and outrageous; (3) that the actions proximately caused emotional distress;
and (4) that plaintiff's emotional distress was severe." Witherspoon v. Rent-A-Ctr., Inc., 173 F.
239, 242 (D.N.J. 2001) (citing Buckley v. Trenton Saving Fund Soc., 111 N.J. 355
"To establish extreme and outrageous conduct, a plaintiff must show conduct so
outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency,
regarded as atrocious, and utterly intolerable in a civilized community." Id. (citing
Buckley, 544 A.2d at 863) (internal citations and quotation marks omitted).
Here, Plaintiff alleges that he suffered emotional distress because Capital One
misrepresented that it was entitled to exercise the foreclosure provisions in the Mortgage. (AC iii!
84-97.) Plaintiff asserts that claiming the right to foreclose on a property when that right might
not exist is conduct "so outrageous and extreme that it exceeds all bounds which is usually tolerated
in a civilized community." (Id.
Plaintiff alleges that, as a result, he has "suffered severe
emotional distress, including but not limited to lack of sleep, anxiety, and depression." (Id.
Even if this claim were not arguably barred by the economic loss doctrine, 5 it must be
dismissed because the Supreme Court of New Jersey has explicitly held that "litigation-induced
distress" damages cannot be recovered. Picogna v. Bd. of Educ. of Twp. of Cherry Hill, 143 N.J.
391, 399 (1996) ("We hold, therefore, that plaintiff may not recover for litigation-induced distress
as a separate component of damages."). Furthermore, the Court has reviewed the Amended
Complaint and finds that, even accepting the allegations as true and in a light most favorable to
Plaintiff: they do not demonstrate the requisite "intentional and outrageous conduct," nor "severe
distress." Plaintiffs claim that he suffered emotional distress (namely, lack of sleep, anxiety, and
depression) because of the threat of a foreclosure filing therefore fails to state a claim upon which
relief may be granted. See Coleman v. Deutsche Bank Nat. Tntst Co., No. 15-cv-1080, 2015 WL
2226022 (D.N.J. May 12, 2015) (dismissing claim for intentional infliction of emotional distress
under similar circumstances).
D. Dismissal With or Without Prejudice
Rule 15(a)(2) provides that leave to amend "should be freely given when justice so
requires." Fed. R. Civ. P. 15(a)(2). However, "a court may deny leave to amend when such
amendment would be futile"-i.e., "the amended complaint would not survive a motion to dismiss
for failure to state a claim." Budhun v. Reading Hosp. & Med. Ctr., 765 F.3d 245, 259 (3d Cir.
2014) (citations omitted).
In light of the deficiencies identified by the Court in this Opinion, the Court believes that
The economic loss doctrine "prohibits plaintiffs from recovering in tort economic losses to which their entitlement
only tlows from a contract." Duquesne Light Co. v. Westinghouse Elec. Co., 66 F.3d 604, 618 (3d Cir. 1995).
amendment may well be futile. However, in the interests of justice, and given Plaintiffs pro-se
status, dismissal shall be without prejudice to give Plaintiff a final opportunity to state a claim
upon which relief may be granted.
For the reasons above, the Court grants the Motion to Dismiss. (ECF No. 9.) Given
Plaintiffs pro-se status, the Amended Complaint is dismissed without prejudice. Plaintiff shall
have until Friday, April 22, 2016 to file a Second Amended Complaint. Failure to file a Second
Amended Complaint by Friday, April 22, 2016 shall result in a dismissal with prejudice. An
appropriate Order accompanies this Opinion.
ED STATES DISTRICT JUDGE
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