CAPONEGRO v. THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT et al

Filing 105

OPINION. Signed by Magistrate Judge Michael A. Hammer on 10/23/2019. (sms)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
____________________________________
:
ARTHUR B. CAPONEGRO,
:
:
Plaintiff,
:
:
v.
:
THE UNITED STATES DEPARMENT :
OF HOUSING AND URBAN
:
DEVELOPMENT, et al.,
:
:
Defendants.
:
____________________________________:

Civil Action No. 15-3431 (KM) (MAH)

OPINION

HAMMER, United States Magistrate Judge
This matter comes before the Court by way of Plaintiff’s motion for leave to amend his
Complaint. Mot. for Leave to Am. and Supp. Compl., May 15, 2019, D.E. 103. First National
Bank of Layton opposes the motion. Opp’n Br., July 5, 2019, D.E. 104. Pursuant to Federal
Rule of Civil Procedure 78 and Local Civil Rule 78.1, the Court has decided this motion on the
papers. For the reasons set forth below, Plaintiff’s motion to amend is denied with prejudice.
I.

BACKGROUND AND PROCEDURAL HISTORY

Arthur Caponegro, acting pro se, initiated this action on May 19, 2015, against
Defendants, First National Bank of Layton (“FNBL”) and the United States Department of
Housing and Urban Development (“HUD”), in relation to a reverse mortgage transaction he
entered into with FNBL on July 23, 2012, pursuant to HUD’s Home Equity Conversion
Mortgage program (“HECM mortgage”). Compl., May 19, 2015, D.E. 1. FNBL moved to
dismiss Plaintiff’s Complaint shortly thereafter. Mot. to Dismiss, July 6, 2015, D.E. 7.
While FNBL’s motion to dismiss the Complaint was pending, Plaintiff pro se filed an
Amended Complaint. Am. Compl., Aug. 26, 2015, D.E. 11. On April 1, 2016, counsel, Kenneth

Marano, Esq., entered a notice of appearance on Plaintiff’s behalf. Notice of Appearance, Apr.
1, 2016, D.E. 26. On August 16, 2016, after this Court granted Plaintiff’s request for leave of
Court, Plaintiff’s counsel filed a Second Amended Complaint. Am. Compl., Aug. 16, 2016, D.E.
33. The Second Amended Complaint alleged four counts, only two of which appeared to be
alleged against FNBL: breach of contract (Count 1) and negligence (Count 4). 1 Second Am.
Compl. Aug. 16, 2016, D.E. 33. The breach of contract claim also appeared to contain
allegations sounding in fraud; more specifically, that FNBL forged Plaintiff’s signature, falsified
documents, and made misrepresentations. Id. On November 21, 2016, FNBL moved to dismiss
the claims against it. Mot. to Dismiss, Nov. 21, 2016, D.E. 41.
On October 12, 2016, Plaintiff filed a letter with the Court, seeking an Order terminating
his counsel and permitting him to once again proceed pro se. D.E. 38. After a hearing on
February 1, 2017, this Court granted Plaintiff’s request. Order, D.E. 49. On May 11, 2017, new
counsel for Plaintiff, Toni Belford Damiano, Esq., entered an appearance on Plaintiff’s behalf.
Notice of Appearance, D.E. 58.
On May 18, 2017, Judge McNulty granted FNBL’s motion to dismiss, finding that the
Second Amended Complaint: (1) lacked clarity and specificity; (2) lacked precision as to which
claim was directed against which Defendant because “it [was] not always possible to confidently
infer against which of the defendants an allegation [was] directed;” and (3) failed to meet the
heightened pleading standard for forgery and fraudulent misrepresentation claims. Mem. Op.,
May 18, 2017, D.E. 61, at 1, 7-10. Additionally, Judge McNulty determined that Plaintiff
insufficiently pled negligence because there was no assertion FNBL owed any duty to him

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The other two claims were directed at HUD. Am. Compl., Aug. 16, 2016, D.E. 33. Plaintiff
never properly served HUD. See Letter, Jan. 31, 2017, D.E. 44. Additionally, Plaintiff has since
dropped all claims against HUD. See, e.g., Mot. to File Am. Compl., May 15, 2019, D.E. 103.
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independent of those arising under the contract. Id. at 12. Finally, Judge McNulty found no
feasible breach of contract claim because Plaintiff failed to state the contract or contractual
provision at issue. Id. at 10.
Between June 13, 2017, and May 15, 2019, when Plaintiff filed the motion that is the
subject of the present Opinion, Plaintiff had moved eight times for leave to amend. Three of
those motions were denied on procedural grounds. One motion was terminated as moot. The
other four motions were all addressed on their merits. Each is address herein.
On June 13, 2017, Plaintiff’s counsel filed his first motion to amend, consistent with
Judge McNulty’s Opinion and Order which permitted the filing of a motion to amend within
thirty days. Mot. to Am., June 13, 2017, D.E. 64. This motion was denied on procedural
grounds because the filing did not contain a brief, proposed order, notice of motion, certificate of
service, or the proposed amended pleading. Order, June 14, 2017, D.E. 65. Plaintiff’s counsel
filed a second motion to amend on June 15, 2017. Mot. to Am., June 15, 2017, D.E. 66. On July
7, 2017, that motion was terminated as moot because Plaintiff’s counsel had filed a third motion
to amend on July 5, 2017. Order, July 7, 2017, D.E. 70; Mot. to Am., July 5, 2017, D.E. 69.
Plaintiff’s proposed Third Amended Complaint was attached to the July 5, 2017 motion,
and asserted two claims against FNBL, breach of contract and fraudulent misrepresentation. 2
Prop. Am. Compl., Jul. 5, 2017, D.E. 69, ¶¶ 27-80. Plaintiff alleged that there were two different
HECM mortgages, the first of which disappeared from the County Recorder’s Office and was
replaced by the second. Id. at ¶¶ 17, 21, 23. Plaintiff alleges that the second HECM Mortgage
was either forged, he was coerced into signing it, or both. Id. FNBL opposed the motion on the

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The proposed Third Amended Complaint contained a third count against HUD for violation of
12 U.S.C. § 1715z-20(j).
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grounds of futility and undue prejudice. Opp’n Br., Aug. 8, 2017, D.E. 73. On January 25,
2018, in an oral Opinion placed on the record, this Court denied Plaintiff’s motion to amend
because it found that permitting the amendment would be futile. The proposed Amended
Complaint remained confusingly ambiguous, and had not cured the deficiencies outlined by
Judge McNulty in his May 18, 2017 Opinion. Order, Jan. 25, 2018, D.E. 80.
On February 15, 2018, Plaintiff filed a fourth motion to amend. Mot. to Am. Compl.,
Feb. 15, 2018, D.E. 81. On May 8, 2018, this Court again denied Plaintiff’s motion to amend,
finding this proposed Third Amended Complaint nearly identical to the July 5, 2017 proposed
amendment, and so suffered from the same infirmities. Order, May 8, 2018, D.E. 83.
Specifically, Plaintiff failed to articulate whether his signature on the “second mortgage” was
forged or whether FNBL coerced him into signing it. Id. Second, Plaintiff failed to clearly state
which contract was allegedly breached. Id.
On June 8, 2018, Plaintiff filed fifth motion to amend the Complaint, which this Court
denied on procedural grounds on July 5, 2018, because Plaintiff failed to file a brief in support of
the motion or a statement explaining why no brief was necessary. Mot. to Am. Compl., Jun. 8,
2018, D.E. 84; Order, Jul. 5, 2018 D.E. 85. On July 6, 2018, Plaintiff filed a sixth motion to
amend his Complaint. Mot. to File Am. Compl., July 6, 2018, D.E. 86. On November 1, 2018,
this Court again denied the amendment, finding that it would be futile because the proposed
Amended Complaint was confusing due to its inconsistent factual allegations. The Court further
concluded that the proposed amendment was devoid of the necessary factual support to maintain
claims for breach of contract, forgery, fraudulent misrepresentation, and fraud in the inducement.
Opinion, Nov. 1, 2018, D.E. 91; Order, Nov. 1, 2018, D.E. 92.

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On November 9, 2018, Plaintiff’s attorney moved to withdraw, and after oral argument
was heard on the matter, this Court granted the motion. Mot. to Withdraw, Nov. 9, 2018, D.E.
93; Order, Jan. 29, 2019, D.E. 96. On March 5, 2019, Plaintiff, again proceeding pro se, filed a
seventh motion to file a Third Amended Complaint. Mot. to Am. Compl., March 5, 2019, D.E.
97. This Court denied Plaintiff’s motion without prejudice on procedural grounds because it did
not contain a red-lined version of the amended pleading. Order, Apr. 10, 2019, D.E. 99.
On May 15, 2019, 3 Plaintiff filed the eighth and instant motion to amend his Complaint.
Mot. to File Am. Compl., May 15, 2019, D.E. 103. In this latest iteration, Plaintiff asserts two
causes of action against FNBL: (1) fraudulent misrepresentation; and (2) breach of contract. Id.
at 4. FNBL opposes the motion, arguing that Plaintiff again fails to advance any colorable claim
against it and if the amendment is permitted, it will suffer undue prejudice. Opp’n Br., Jun. 5,
2019, D.E. 104.
II.

DISCUSSION

Under Fed. R. Civ. P. 15, a plaintiff may amend his Complaint once as of right, and
“courts may grant subsequent amendments ‘when justice so requires.’” Fraser v. Nationwide
Mut. Ins. Co., 352 F.3d 107, 116 (3d Cir. 2003) (quoting Fed. R. Civ. P. 15(a)). The Court may
deny leave to amend the pleadings only where there is (1) undue delay, (2) bad faith or dilatory

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In so filing, Plaintiff missed the court’s deadline to file his renewed motion, which was set for
May 10, 2019. Order, Apr. 29, 2019, D.E. 102. When a party misses the filing deadline set by
the court, the Third Circuit has held that the party must show “good cause” under Fed. R. Civ. P.
16(b)(4) before the Court will proceed with an analysis of Fed. R. Civ. Pr. 15. See Assadourian
v. Harb, 430 F. App’x. 79, 81 (3d Cir. 2011). However, FNBL does not challenge Plaintiff’s
motion on this ground. In the interests of justice and because Plaintiff is proceeding pro se and
suffered some confusion as to what constituted a red-lined version of his proposed amended
Complaint, the Court will turn directly to the Rule 15 analysis.

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motive, (3) undue prejudice, (4) repeated failures to cure deficiencies, or (5) futility of
amendment. Foman v. Davis, 371 U.S. 178, 182 (1962); Long v. Wilson, 393 F.3d 390, 400 (3d
Cir. 2004) (“We have held that motions to amend pleadings [under Rule 15(a)] should be
liberally granted.”) (citations omitted).
A court will consider an amendment futile if it “is frivolous or advances a claim or
defense that is legally insufficient on its face.” Harrison Beverage Co. v. Dribeck Imps., Inc.,
133 F.R.D. 463, 468 (D.N.J. 1990) (citations omitted) (internal quotation marks omitted). To
determine whether an amendment is insufficient on its face, the Court employs the standard
applied to Rule 12(b)(6) motions to dismiss. In re Burlington Coat Factory Sec. Litig., 114 F.3d
1410, 1434 (3d Cir. 1997). Under this standard, the question before the Court is not whether the
movant will ultimately prevail, but whether the Complaint sets forth “enough facts to state a
claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; Hishon v. King &
Spalding, 467 U.S. 69, 73 (1984) (establishing that a “court may dismiss a complaint only if it is
clear that no relief could be granted under any set of facts that could be proved consistent with
the allegations”); Harrison Beverage, 133 F.R.D. at 468 (“‘Futility’ of amendment is shown
when the claim or defense is not accompanied by a showing of plausibility sufficient to present a
triable issue.”). A two-part analysis determines whether a plaintiff meets this standard. Fowler v.
UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (citing Ashcroft v. Iqbal, 556 U.S. 662, 629
(2009)).
First, a court separates the factual and legal elements of a claim. Fowler, 578 F.3d at
210. All well-pleaded facts set forth in the pleading and the contents of the documents
incorporated therein must be accepted as true, but the Court may disregard legal conclusions. Id.
at 210-11; West Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 97 n.6 (3d Cir. 2010);

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see also Iqbal, 556 U.S. at 678 (noting that a Complaint is insufficient if it offers “labels and
conclusions,” a “formulaic recitation of the elements of a cause of action,” or “naked assertions”
devoid of “further factual enhancement”) (alterations omitted) (internal quotation marks
omitted).
Second, as stated above, a court determines whether a plaintiff’s facts are sufficient “to
state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. As the United
States Supreme Court instructed in Iqbal, “[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.” 556 U.S. at 678. The plausibility standard is not a
“probability requirement,” but the well-pleaded facts must do more than demonstrate that the
conduct is “merely consistent” with liability so as to “permit the court to infer more than the
mere possibility of misconduct.” Id. at 678-79 (citations omitted) (internal quotations marks
omitted). This “context-specific task . . . requires the reviewing court to draw on its judicial
experience and common sense.” Id. at 679.
A. Breach of Contract
To bring a breach of contract claim under New Jersey law, a plaintiff is required to
allege: “(1) a contract between the parties; (2) a breach of that contract; (3) damages flowing
therefrom; and (4) that the party stating the claim performed its own contractual obligations.”
Frederico v. Home Depot, 507 F.3d 188, 203 (3d Cir. 2007). Furthermore, a breach of contract
claim must be supported with facts, such as specific dates as to when the breach occurred and the
specific provision or provisions that were breached. Id.
Plaintiff contends that FNBL breached its contract with him by selling its ownership
interest in the loan to Wells Fargo, N.A., thereby “constituting a Breach-separation of the Note

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and Mortgage.” Prop. Am. to Compl., May 15, 2019, D.E. 103, at 4. In support, Plaintiff
includes the following puzzling statement: “[p]laintiff alleges that the chain of title on the Loan
and Mortgage was breached by Defendant FNBL, its obligations under the contract with
Plaintiff by splitting the Note and Mortgage, a condition precedent, notwithstanding the obvious
fraud, thereby voiding the contract.” Id. at 5. The Court struggles to understand Plaintiff’s
logic and finds that Plaintiff fails to assert facts to adequately allege a valid breach of contract
claim.
Moreover, to assert a breach of contract claim, it is not enough for Plaintiff to simply
allege how FNBL breached the contract. Frederico, 507 F.3d at 203. Plaintiff must also state
how he met his own contractual obligations under the contract, as well as what damages flowed
as a result of the breach. Id. While there is clear evidence of a contract between the parties,
Plaintiff has failed to allege how FNBL breached the contract, the damages flowing from the
breach, or how Plaintiff performed its own contractual obligations. However, Plaintiff’s
proposed amendment is completely devoid of any facts that show Plaintiff has met his own
obligations under the contract, or what damages flowed as a result of the alleged breach. After
multiple tries, the present proposed amendment fails to establish any basis for Plaintiff’s claim
that the separation of the Note and Mortgage constituted a breach. Were this Plaintiff’s second
or even third attempt to plead the breach claim, the Court might contemplate affording Plaintiff
one more try. However, after eleven unsuccessful attempts, the Court must conclude that
permitting Plaintiff to amend his breach of contract claim would be futile. Accordingly, the
motion to amend to add the claim for breach of contract will be denied. 4

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In addition to the foregoing, a review of the language of the HECM Mortgage reveals that it
specifically contemplated FNBL’s sale and assignment of its rights to the mortgage. Mot. to
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B. Fraudulent Misrepresentation
When bringing a claim that is subject to the heightened pleading standard of Rule 9(b) of
the Federal Rules of Civil Procedure, a plaintiff must state in the Complaint the “who, what,
when, where, and why” of the allegation. U.S. ex rel. Moore & Co., P.A. v. Majestic Blue
Fisheries, LLC, 812 F.3d 294, 307 (3d Cir. 2016). Courts use a facial-plausibility standard
where plaintiff must “plead[] factual content that allows the court to draw the reasonable

Am., Exh. 1, Adjustable Rate Home Equity Conversion Mortgage, Jul. 6, 2018, D.E. 86-1, ¶ 15.
The HECM Mortgage states:
15.
Successors and Assigns Bound; Joint and Several Liability. The
covenants and agreements of this Security Instrument shall bind and benefit
the successors and assigns of the Lender.
Therefore, pursuant to the HECM Mortgage, FNBL had the right to sell or assign its interest in
the mortgage. Mot. to Am., Exh. 1, Adjustable Rate Home Equity Conversion Mortgage, Jul. 6,
2018, D.E. 86-1, ¶ 15. Use of the phrase “assigns of the Lender” is evidence that FNBL
intended, and Plaintiff assented by signing the mortgage, that the ownership of the interest could
be reassigned. Id. Plaintiff does not indicate another provision of the HECM Mortgage that
prohibited FNBL from selling or assigning its rights in the HECM Mortgage. The Court’s own
review of the HECM Mortgage also does not reveal a provision that prohibited the sale. Based
on the plain language of the mortgage, it is impossible for Plaintiff to successfully claim a breach
of contract because FNBL sold its interest in the HECM Mortgage to Wells Fargo, N.A.
The Court is mindful that it must accept as true all well pleaded allegations in the pleading.
Fowler, 578 F.3d at 210. However, here Plaintiff specifically incorporated the HECM mortgage
into his proposed amended pleading. Specifically, Plaintiff included it as Exhibit 1 to his
proposed amended pleading when he moved to amend on July 6, 2018. Prop. Am. Compl., Jul.
6, 2018, D.E. 86-4 at ¶ 20 & D.E. 86-5. The proposed amended pleading that Plaintiff now seeks
to file provides that he "had mailed the Court the original documentation without making a copy
provided by Certified Forensic Loan Auditors (CFLA) corroborating all allegations in my most
recent filing of Motion. Plaintiff therefore requests the Court to refer to the aforementioned
documentation." Prop. Am. Compl., May 15, 2019, D.E. 103, at page 4. Accordingly, Plaintiff
has incorporated contents of the HECM Mortgage into his pleading and squarely placed the
language of the HECM Mortgage before this Court. See Pension Benefit Guar. Corp. v. White
Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1999) (In evaluating whether a proposed
amendment is futile, a court may consider the proposed pleading, exhibits attached to that
pleading, matters of public record, and undisputedly authentic documents provided the claims are
based on those documents.).
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inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.
Further, when a plaintiff brings a fraudulent misrepresentation claim against a defendant,
plaintiff must allege: “(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.” Donnelly v.
Option One Mortg. Corp., No. CIV. A. 11-7019 ES, 2014 WL 1266209, at *11 (D.N.J. Mar. 26,
2014). The pleading standard of Rule 9(b) requires fraud and forgery allegations to be “pleaded
with sufficient particularity.” Fed. R. Civ. P. 9(b).
In support of his fraudulent misrepresentation claim against FNBL, Plaintiff simply
alleges the following facts: (1) that FNBL “coerced, deceived, and forced” him to sign a
“second” mortgage; (2) that this second mortgage authorized FNBL to maximize the loan
amount from $410,550 to $862,000; and (3) that FNBL materially misrepresented the amount of
the loan, was aware of the misrepresentation, and that FNBL “preyed on a senior citizen . . . the
Plaintiff – to recoup its monies.” See Prop. Am. to Second Am. Compl., D.E. 103, May 15,
2019, at 4-6. In opposition to the motion to amend, FNBL contends that Plaintiff has failed to
allege any of the elements necessary to establish a claim of fraudulent misrepresentation. Opp’n
Br., Jun. 5, 2019, D.E. 104, at 5. FNBL notes that Plaintiff’s proposed amendments again fail to
sufficiently allege how FNBL has deceived Plaintiff or misrepresented any material fact to
Plaintiff. Id. Specifically, while Plaintiff seems to allege that FNBL misrepresented or
concealed that the maximum amount of his mortgage could reach $862,500.00, FNBL points out
that the allegedly misrepresented terms were “term[s] of the written agreement, front and center
on page 1.” Id.

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Plaintiff’s allegations in support of his fraudulent misrepresentation claims, without
more, are insufficient to satisfy the heightened pleading standard for a claim of fraud pursuant to
Fed. R. Civ. P. 9(b). Like every prior iteration of Plaintiff’s proposed claims, the proposed
Amended Complaint fails to establish with sufficient plausibility how FNBL allegedly frauded
Plaintiff into signing a “second” mortgage. Prop. Am. to Second Am. Compl., May 15, 2019,
D.E. 103. Similarly, Plaintiff’s contention that the first mortgage has gone missing and has been
replaced by the second mortgage is devoid of any factual substantiation. Moreover, a simple
review of the documents that Plaintiff provided shows the loan amount was $862,500.00. See
Prop. Am. to Compl., May 15, 2019, D.E. 103, at 7. Furthermore, Plaintiff has not alleged how
the amount of the mortgage or any of the other loan terms were misrepresented to him or who
specifically made the misrepresentation and in what way. Plaintiff completely fails to allege
facts showing the “who, what, when, where, and why” of the fraudulent misrepresentation claim.
See U.S. ex rel. Moore & Co., P.A. v. Majestic Blue Fisheries, LLC, 812 F.3d at 307.
Plaintiff has had numerous attempts, both while proceeding pro se and when represented
by counsel, to set forth the facts necessary to establish a fraudulent misrepresentation claim. But
on each occasion, Plaintiff has provided only that the amount of the mortgage was
misrepresented and/or the first mortgage (with the correct amount of the mortgage) was replaced
by this second deceitful mortgage (with the incorrect loan amount). Without more, Plaintiff
simply fails to allege facts necessary for this Court to permit his amendment. Because Plaintiff’s
proposed amendment fails to set forth sufficient facts to demonstrate that FNBL made a material
misrepresentation to him, the Court must deny the amendment of Plaintiff’s claim for fraudulent
misrepresentation.

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C. Denial With Prejudice
The Court will deny Plaintiff's motion to amend with prejudice. This litigation has been
ongoing for nearly four and a half years, for most of this time without a viable Complaint.
Plaintiff has attempted numerous times, as many as eight (four of which were addressed
substantively), both through two different sets of counsel, as well as while acting pro se, to file a
proposed amended Complaint containing claims that state valid claims for relief under Fed. R.
Civ. P. 8(a). The proposed amendments before the Court this time are not much improved, and
mostly suffering from the same fatal defects the prior attempts. For those reasons, the Court
cannot conclude that allowing Plaintiff an additional attempt would result in an amended
pleading that would pass muster under Rules 8 and 15.
III.

CONCLUSION

For the foregoing reasons, Plaintiff’s motion for leave to amend his Complaint, D.E. 103,
is denied with prejudice. The Court will issue an Order consistent with this Opinion.

s/ Michael A. Hammer
UNITED STATES MAGISTRATE JUDGE

Dated: October 23, 2019

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