PATEL et al v. PNC BANK et al

Filing 10

OPINION. Signed by Judge Claire C. Cecchi on 1/28/16. (cm )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

NARENDRA PATEL and NURI PATEL,

Civil Action No.: 2:15-3432 (CCC)

Plaintiffs,
OPINION
V.

PNC BANK, as Trustee; and DOES 1-10
inclusive,
Defendants.
CECCHI, District Judge.
I.

INTRODUCTION

This matter comes before the Court on the motion (ECF No. 7) of Defendant PNC Bank
(“Defendant” or “PNC”) to dismiss the Complaint of pro se Plaintiffs Narenda and Nun Patel
(collectively, “Plaintiffs”) for lack of subject matter jurisdiction pursuant to Federal Rule of Civil
Procedure 1 2(b)( 1) and for failure to state a claim upon which relief may be granted pursuant to
Federal Rule of Civil Procedure 1 2(b)(6). No oral argument was heard pursuant to Federal Rule
of Civil Procedure 78. For the reasons discussed below, Defendant’s motion to dismiss Plaintiffs’
Complaint is granted without prejudice.
II.

BACKGROUND1

This action arises out of an uncontested foreclosure proceeding before the Superior Court
of New Jersey.

The Court will accept the facts as true for purposes of the instant motion.

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Plaintiffs own a home located at 40 Meadow Bluff Road, Morris Plains, New Jersey (the
“Property”). See Complaint (“Compi.”), ECF No. 1,

¶ 1.

On June 22, 2006, Plaintiffs obtained a

home equity line of credit (“HELOC”) from PNC.
The HELOC was evidenced and governed by a Choice Home Equity Line of Credit
Agreement and Disclosure Statement (the “HELOC Note” or “HELOC Agreement”) and was
secured by an Open-End Mortgage on the Property (the “HELOC Mortgage”) in the maximum
amount of $240,000. See ii

¶J 18,

20; see also Declaration of Christopher N. Tomlin, Esq.

(“Tomlin Dec.”), ECF No. 7-2, Exs. 12.2 The HELOC Note identifies PNC as the lender, and
the HELOC Mortgage identifies PNC as the mortgagee. Tomlin Dec., Exs. 1-2. PNC is also the
loan servicer of the HELOC. Compl.

¶ 23.

On December 3, 2013, PNC initiated foreclosure proceedings against Plaintiffs in the
Superior Court ofNew Jersey, Chancery Division, Morris County (the “Foreclosure Action”). See
Id., Exs. 3-4. In the Foreclosure Action, PNC alleged that Plaintiffs defaulted under the HELOC
Agreement and HELOC Mortgage by failing to make their loan payments.

,

Ex. 4 ¶9.

On February 2, 2014, Plaintiffs, through their attorneys at the time, filed a contesting
answer3 in the Foreclosure Action. j, Ex. 5. PNC moved to strike the contesting answer, which

2

On a motion to dismiss, this Court may consider the allegations in the complaint, any
exhibits attached to the complaint, matters of public record, and documents upon which the
plaintiffs complaint is based. Pension Benefit Guar. Corp. v. White Consol. Indus., 99$ F.2d
1192, 1196 (3d Cir. 1993). The Court may consider the HELOC Agreement and Mortgage because
they are “explicitly relied upon in the complaint.” Lum v. Bank of Am., 361 F.3d 217, 222 n.3
(3d Cir. 2004).
“In a foreclosure action in New Jersey, there is a unique practice with respect to filed
answers, called the ‘uncontested answer practice.’ An answer is deemed contested if it disputes
the validity or priority of plaintiff s mortgage or lien and creates an issue with respect thereto; only
contested foreclosure answers are listed for trial and placed on the general equity calendar.
An
uncontested answer, on the other hand, does not require action by the vicinage chancery judge and
permits plaintiff to proceed, on motion, before the Office of Foreclosure for an uncontested
judgment pursuant to the rule.” 30A N.J. Prac., Law of Mortgages § 30.32.
.

2

.

contained only general denials (e.g. “Neither Denied or Admitted”). Id., Exs. 5, 6. On September
26, 2014, the Superior Court Judge granted PNC’s motion to strike Plaintiffs’ answer, ordered a
default entered against Plaintiffs, and directed that the Office of Foreclosure proceed with the
Foreclosure Action “as an uncontested matter.” Id., Ex. 7.
On May 19, 2015, Plaintiffs instituted the present action before this Court, by filing a
Complaint against PNC alleging: Breach of Contract (Count I), Violation of the Real Estate
Settlement Procedures Act (“RESPA”) (Count ii), Quiet Title (Count III), Declaratory Relief
(Count IV), Injunctive Relief (Count V), Negligence Per Se (Count VI), Accounting (Count VII),
Breach of the Covenant of Good Faith and Fair Dealing (Count VIII), Breach of Fiduciary Duty
(Count IX), and Wrongful Foreclosure (Count X). Plaintiffs allege that shortly after origination,
the HELOC was sold to a securitized trust. Compi. ¶21. They further contend that PNC should
have, but did not, prepare and record an assignment of the mortgage to effectuate the alleged sale
of the HELOC.

¶ 3 1-32,

32. Finally, Plaintiffs assert that the Mortgage was improperly

separated from the Note. Id. ¶J 46, 48-51, 105, 114. On u1y 1, 2015, PNC filed the instant Motion
to Dismiss. ECF No. 7.
III.

LEGAL STANDARD
A.

Motion to Dismiss for Failure to State a Claim

For a complaint to survive dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6),
it “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible

Plaintiffs appear to have withdrawn their RESPA claim, in that they reference a cause of
action as “REPA” as one which they seek to withdraw.
P1. Br. at p. 3, ECF 42-2. “Plaintiffs,
in a showing of good faith, shall withdraw the following causes of action: 1. HOEPA 2. lIED 3.
TILA 4. REPA[.]” Id. Other than the claim for a violation of RESPA, or “REPA,” the remaining
withdrawn claims do not appear to be at issue in this case. Notwithstanding the proposed
withdrawal, Plaintiffs’ RESPA claim is discussed further below.
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on its face.” Ashcroft v. Igbal, 556 U.S. 662 (2009) (quoting Bell Ati. Corp. v. Twombly, 550
U.S. 544, 570 (2007)). “Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain
statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant
fair notice of what the.

.

.

claim is and the grounds upon which it rests.” Twombly, 550 U.S. at

545 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).
In evaluating the sufficiency of a complaint, the Court must accept all well-pleaded factual
allegations in the complaint as true and draw all reasonable inferences in favor of the non-moving
party.

$ Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008). “Factual allegations

must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555.
“A pleading that offers labels and conclusions will not do. Nor does a complaint suffice if it
tenders naked assertion[s] devoid of further factual enhancement.” Iqbal, 556 U.S. at 678 (internal
citations omitted). However, “the tenet that a court must accept as true all of the allegations
contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements
of a cause of action, supported by mere conclusory statements, do not suffice.” Id. Additionally,
in evaluating a plaintiffs claims, generally “a court looks only to the facts alleged in the complaint
and its attachments without reference to other parts of the record.” Jordan v. Fox, Rothschild,
O’Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994).
IV.

DISCUSSION
Plaintiffs’ Complaint alleges that the state court Foreclosure Action was improper because:

(1) PNC was required to, but did not, prepare and record an assignment of the HELOC Mortgage;
and (2) the HELOC Agreement and the HELOC Mortgage allegedly have been separated.
Essentially, Plaintiffs seek to invalidate the pending foreclosure Action. Plaintiffs also allege that
Defendant violated RESPA, by failing to respond to a qualified written request (“QWR”) as

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required by the Act.

Defendant has moved to dismiss Plaintiffs’ Complaint for, among other

things, lack of subject matter jurisdiction, pursuant to the Rooker-Feldman Doctrine, and for
failure to state a claim pursuant to the Colorado River Abstention Doctrine.
The Court finds that application of the Colorado River Abstention Doctrine should result
in dismissal of all of Plaintiffs’ claims, save for the RESPA claim.

Accordingly, those claims

(Counts I, III, W, V, VI, VII, VIII, IX, and X) will be dismissed without prejudice. With regard
to Plaintiffs’ RE$PA claim (Count II), even if Plaintiffs have not withdrawn that claim, it should
nevertheless be dismissed because Plaintiffs fail to state a claim to relief that is plausible on its
face.
A.

Dismissal of Counts I, III-X Pursuant To Colorado River Abstention

Pursuant to the Colorado River Abstention Doctrine, this Court will dismiss Plaintiffs’
claims for Breach of Contract (Count I), Quiet Title (Count III), Declaratory Relief (Count IV),
Injunctive Relief (Count V), Negligence Per Se (Count VI), Accounting (Count VII), Breach of
the Covenant of Good faith and Fair Dealing (Count VIII), Breach of Fiduciary Duty (Count IX),
and Wrongful foreclosure (Count X).
The Colorado River Abstention Doctrine applies5 when there is a parallel state court
proceeding. ç Colorado River Water Conservation Dist. v. United States, 424 U.S. $00, $00
(1976). In Colorado River, the Supreme Court explained that federal district courts may abstain
from hearing cases and controversies under “exceptional circumstances where the order to the

Apart from abstention pursuant to Colorado River, Defendants also argue that this Court
lacks subject matter jurisdiction pursuant to the Rooker-Feldman Doctrine. It is unclear whether
the Rooker-Feidman Doctrine applies at this point. See Daniels v. Cynkin, 34 F. Supp. 3d 433,
439 (D.N.J. 2014) affd, 597 fed. App’x 704 (3d Cir. 2015) (“The Third Circuit has not yet ruled
on the question of when state court proceedings have ended for Rooker—Feldman purposes...
The parties are not precluded from raising the Rooker-feldman Doctrine at a later time.
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parties to repair to the State court would clearly serve an important countervailing interest.” Id. at
813. In deciding whether to apply abstention, federal courts must first decide whether the federal
proceeding and state proceeding are “parallel”—meaning, the state proceeding involves the same
parties and raises “substantially identical claims [and] nearly identical allegations and issues.”
Nationwide Mut. fire Ins. Co. v. George V. Hamilton, Inc., 571 f.3d 299, 307 (3d Cir. 2009)
(internal citation omitted). After deciding this threshold question in the affirmative, federal courts
next consider six factors to determine whether “extraordinary circumstances” merit abstention:
“(1) [in an in rem case,] which court first assumed jurisdiction over [the] property; (2) the
inconvenience of the federal forum; (3) the desirability of avoiding piecemeal litigation; (4) the
order in which jurisdiction was obtained; (5) whether federal or state law controls; and (6) whether
the state court will adequately protect the interests of the parties.” Nationwide Mut. Fire Ins. Co.
v. George V. Hamilton, Inc., 571 F.3d 299, 308 (3d Cir. 2009) (quoting Spring City Corp. v.
American Bldgs. Co., 193 F.3d 165, 171 (3d Cir. 1999).
1.

The State Court Proceeding Is Parallel To This Action

Here, in addressing the threshold question, the Court finds that the state court Foreclosure
Action is indeed parallel to the current action. First, the state court Foreclosure Action involves
the same exact parties—Plaintiffs and PNC.

The pro se Plaintiffs here, who were initially

represented by counsel during the Foreclosure Action, filed an answer to the foreclosure complaint
by PNC. See Tomlin Dec., Ex. 6, ECF. 7-7. In that answer, they had an opportunity to raise
against PNC these state claims, which are now the subject of Plaintiffs’ instant Complaint.
Moreover, because the Plaintiffs only now raise these state claims, which seek to invalidate the
state foreclosure proceeding, a decision by this Court could result in an inconsistent judgment that
conflicts with the state court foreclosure judgment.

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Accordingly, the Court finds that the

Foreclosure Action is sufficiently parallel to the instant matter.
2.

Application Of The Six-Factor Test Supports Abstention

Having found the proceedings are parallel, this Court next reviews the six Colorado River
factors to decide whether abstention should apply.
First, the state court has jurisdiction over the res (Plaintiffs’ home), which is located in
New Jersey. Second, the federal forum is not inconvenient to the parties, given that this District
Court is located in New Jersey, the Plaintiffs reside in New Jersey, and the Defendant previously
sued Plaintiffs in New Jersey state court. Thus, the second factor of the Colorado River Abstention
test does not appear significant to the analysis. However, factors three, four, five, and six are
important and dictate that extraordinary circumstances exist that merit the Court’s abstention.
Regarding the third factor—the desirability of avoiding piecemeal litigation—this Court
finds that allowing Plaintiffs’ state causes of action to proceed in federal court would create
duplicative litigation with potentially inconsistent outcomes. As mentioned above, these state
claims6—based on breach of contract and wrongful foreclosure—essentially seek to invalidate the
parallel Foreclosure Action which is currently pending in state court.7 In St. Clair v. Wertzberger,
637 F. Supp. 2d 251, 255 (D.N.J. 2009), the district court observed that:
[A] federal court ruling that defendants should not have filed the foreclosure action
because of plaintiff”s objection letter, and a contemporaneous state court judgment
allowing the foreclosure would throw into turmoil the parties’ rights and
obligations over plaintiffs home and mortgage, as well as the comity between
courts. It would also effectively constitute an injunction enjoining the state court
from ordering a foreclosure sale, which is prohibited by the Anti—Injunction Act.
28 U.S.C. § 2283 (“A court of the United States may not grant an injunction to stay
proceedings in a State Court except as expressly authorized by Act of Congress, or
6

Those claims are: Breach of Contract (Count I), Quiet Title (Count III), Declaratory Relief
(Count IV), Injunctive Relief (Count V), Negligence Per Se (Count VI), Accounting (Count VII),
Breach of the Covenant of Good Faith and Fair Dealing (Count VIII), Breach of Fiduciary Duty
(Count IX), and Wrongful Foreclosure (Count X).
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where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.”).
Here, Plaintiffs seek both declaratory and injunctive relief. Thus, a ruling which Plaintiffs request
(i.e. that the mortgage is void, that PNC does not have standing, and thus that PNC was not entitled
to bring a foreclosure proceeding against Plaintiffs) would derail the state court proceeding. g,
Ruffolo v. H$BC Bank USA, N.A., No. CIV.A. 14-638 MAS, 2014 WL 4979699, at *4 (D.N.J.
Oct. 3, 2014) (“[P]laintiffs’ Complaint requests a declaration or injunction that would nullify or
possibly contradict any ruling of the state court as to whether the transfer of title was proper. Any
relief that could be granted by this Court would directly impact New Jersey’s interest in protecting
the authority of its judicial system.”). Moreover, allowing Plaintiffs to litigate their mortgage and
foreclosure issues before this Court would result in duplicative proceedings in state and federal
court, resulting in piecemeal and potentially inconsistent decisions. See, e.g., Sheldrick v. Wells
Fargo Bank, N.A., No. CIV. 15-5332, 2015 WL 5098180, at *4 (D.N.J. Aug. 31, 2015) (abstaining
from proceeding because of duplicative litigation) (“[T]he action ‘implicate[s][an] important state
interest—foreclosure of a property in New Jersey’

.

.

.

[and] [g]rnting the relief that Plaintiffs’

Complaint requests ‘would cause havoc with the rulings of the state court[.]” (internal citations
omitted)). Thus, the third factor weighs heavily in favor of this Court’s abstention.
Similarly, the fourth factor—the order in which jurisdiction was obtained—supports
abstention too. The state court proceeding was initiated in the Superior Court of New Jersey in
December 2013. In September 2014, the Superior Court granted PNC’s motion to strike Plaintiffs’
answer and ordered a default entered against Plaintiffs. Plaintiffs’ Complaint was filed in federal
court in May 2015, long after their answer had been stricken in state court. Accordingly, because
jurisdiction over these state claims was first obtained in state court, and the state court maintains
jurisdiction over them, the fourth factor also weighs in favor of this Court’s abstention.

8

Last, the fifth and sixth factors—whether federal or state law controls, and whether the
state court will adequately protect the interests of the parties—also weigh in favor of abstention.
All of Plaintiffs’ claims, besides their RESPA claim, are controlled by state law. Because a final
judgment has not yet been entered in the foreclosure Action, plaintiffs may still have an
opportunity to contest the default and to raise these claims—either before the lower court or
through the state court appellate process. See, e.g., US Bank Nat. Ass’n v. Guillaume, 209 N.J.
449, 466-67, 38 A.3d 570, 579-80 (N.J. 2012) (“When nothing more than an entry of default
pursuant to Rule 4:43—1 has occurred, relief from that default may be granted on a showing of
good cause.”); Intek Auto Leasing, Inc. v. Zetes Microtech Corp., 26$ N.J. Super. 426, 633 A.2d
1029 (N.J. App. Div. 1993) (finding lessee who moved to vacate default judgment had meritorious
defense and was entitled to evidentiary hearing to determine authenticity of signatures on
acknowledgement documents.). Therefore, state law controls Plaintiffs’ claims, and the state court
can adequately protect the parties’ interests. Plaintiffs have not put forth a reason why the state
court would be an inadequate forum for those purposes.
Accordingly, because the foreclosure Action is parallel to this case and: (1) the state court
has jurisdiction over Plaintiffs’ home, located in New Jersey; (2) neither forum is inconvenient for
the parties; (3) a ruling by this Court on Plaintiffs’ claims could potentially undermine the
judgment in the parallel state court proceeding; (4) the state court was the first to obtain jurisdiction
in this case; (5) state law controls the vast majority of Plaintiffs’ claims; and (6) Plaintiffs’ rights
and claims may still be litigated in the state foreclosure Action, which has not yet come to final
judgment, this Court will abstain from hearing Plaintiffs’ state law claims (Counts I, III-X) and
dismiss that portion of Plaintiffs’ Complaint without prejudice.

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B.

Dismissal of Count II, Violation Of RESPA, For Failure To State A Claim

This Court finds that Plaintiffs’ remaining claim, violation of RESPA (Count II), should
be dismissed for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6).8
RESPA, 12 U.S.C.

§ 2605, contains a requirement that:

If any servicer of a federally related mortgage loan receives a qualified written
request from the borrower (or an agent of the borrower) for information relating to
the servicing of such loan, the servicer shall provide a written response
acknowledging receipt of the correspondence within 5 days (excluding legal public
holidays, Saturdays, and Sundays) unless the action requested is taken within such
period.
12 U.S.C.A.

§ 2605(e). Plaintiffs allege that they sent a QWR9 to Defendant, and that Defendant

did not respond to the QWR. Plaintiffs further allege that as a result of Defendant’s failure to
respond, “Plaintiffs had to expend money to determine the correct identity of the actual parties in
interest [which] would have been unnecessary had PNC complied with the RESPA statute.” See
Compi.

¶J 92-95.
To the extent that Plaintiffs have not withdrawn their RESPA claim, this Court finds that

Plaintiffs have not alleged “sufficient factual matter, accepted as true, to ‘state a claim to relief that

As noted previously, Plaintiffs appear to have withdrawn their RE$PA claim. $ P1. Br.
at p. 3. (“Plaintiffs, in a showing of food faith, shall withdraw the following causes of action.
4. REPA”). The Court’s reasoning in this Section proceeds to the extent that Plaintiffs have not
already withdrawn their RESPA claim.
AQWR1s:
a written correspondence, other than notice on a payment coupon or other
payment medium supplied by the servicer, that—
includes, or otherwise enables the servicer to identif’, the name and account
(i)
of the borrower; and
includes a statement of the reasons for the belief of the borrower, to the
(ii)
extent applicable, that the account is in error or provides sufficient detail to the
servicer regarding other information sought by the borrower.
12 U.S.C.

§ 2605(e)(l)(B).
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is plausible on its face.” Ashcroft, 556 U.S. at 662 (quoting Bell Ati. Corp. v. Twombly, 550 U.s.
at 570). Namely, the Complaint does not include the date when Plaintiffs allegedly made a QWR,
how they made that QWR, or what that QWR contained (i.e. whether it contained a request for
information relating to the servicing of the loan).
When examining pleadings with similar allegations, other courts in this District have
found that the RESPA claims failed to meet the applicable pleading standards and consequently
dismissed those claims. See, e.g., Tredo v. Ocwen Loan Servicing, LLC, No. CIV.A. 14-3013
ILL, 2014 WL 5092741, at *9 (D.N.J. Oct. 10, 2014) (“Moreover, Tredo’s RESPA claim should
be dismissed because Plaintiffs do not set forth any facts that support the reasonable inference that
Tredo sent a proper Qualified Written Request to Defendant.”); Franklin v. Fin. freedom
Acquisition, LLC, No. CIV. 12-7884 RBK/JS, 2014 WL 1316093, at *6 (D.N.J. Apr. 1, 2014)
(“Thus, in addition to the three-year time bar, the Court finds that the qualified written request
allegation fails because it is nothing more than a threadbare conclusion that a violation has
occurred. See Iqbal, 556 U.S. at 678.”); O’Connor v. first All. Home Mortgage, No. CIV.A. 12111 SRC, 2012 WL 762351, at *2 (D.N.J. Mar. 6, 2012) (“The Complaint does not allege that the
letter requested information relating to the servicing of the loan.

.

.

The RESPA claim, in short,

is pled in the conclusory manner Iqbal and Twombly have made clear will not pass muster under
Rule 8(a).”). Nor have the Plaintiffs responded to any of these deficiencies, which Defendant
pointed out in its moving papers. Accordingly, Plaintiffs’ claim for a violation of RESPA (Count
II) will be dismissed for failure to state a claim.
V.

CONCLUSION
F or the reasons set forth above, Defendant’s motion to dismiss Plaintiffs’ Complaint is

granted without prejudice. To the extent the deficiencies in Plaintiffs’ Complaint can be cured by

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way of amendment, Plaintiffs are granted thirty (30) days to file an Amended Complaint solely for
purposes of amending the dismissed claims.
An appropriate Order accompanies this Opinion.

Dated:

I

CLAIRE C. CECCHI, U.S.D.J.

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