UDDIN v. GOODSON et al
OPINION. Signed by Judge William H. Walls on 5/18/2016. (JB, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
CHRISTOPHER I. GOODSON; GOODSON LAW
OFFICE; FIVE STAR FUNDING, LLC; LUTFUR
UDDIN; FARUK SIDDIQUE; JOHN CARUSO;
PREAKNE$$ REAL ESTATE, LLC; A-i
ELEGANT TOURS; and $HELIM KHALIQUE,
Civ. No. 2:15-cv-8025 (WHW) (CLW)
Walls Senior District Judge
Plaintiff Fatema Uddin complains of an alleged scheme through which she was
convinced by Defendants “to stop paying [her] mortgage under the stated reason that it was the
only way for [her] to obtain a loan modification” and then to engage in an improper “short sale
buyback scheme” through which she ultimately lost the deed to her family home. Compi., ECF
¶J 1-5. Defendant Caruso moves to dismiss the complaint against him under the doctrine
of in pan delicto. Decided under Fed. R. Civ. Pr. 78, the motion is denied.
FACTUAL AND PROCEDURAL BACKGROUND
The following facts are drawn from the complaint, ECF No. 1, unless otherwise noted:
Plaintiff, who is described by the complaint as being an “unsophisticated factory worker Bengali
immigrant,” became involved in a series of schemes through which she and her husband
attempted to reduce the amount of principal and interest owed on their mortgage. Id.
¶ 1. These
schemes began after Plaintiff experienced financial troubles in 2011 and was referred by a family
friend, Defendant Faruk Siddique, to Defendant Lutflir Uddin for help. Id.
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Lutfur Uddin, acting as an agent of Defendant Christopher Goodson and Defendant
Goodson Law Office, charged Plaintiff $15,000 to serve as a “loan modification mortgage
¶J 2, 31.
In exchange, he “guaranteed to obtain.
for Mrs. Uddin.
significant principal reduction and low interest rate” and convinced her that she could obtain
such a modification only “if she was in default and had a ‘distressed property.” Id.
¶J 33, 37.
Plaintiff stopped paying her mortgage in April of 2012, and Wells Fargo, which held the
mortgage as a successor in interest to World Savings Bank, filed a foreclosure action against her
in October of that year. Id.
¶J 38, 48.
Lutfur Uddin promised Plaintiff that he and Goodson Law
Office attorneys would “handle everything” and “protect Mrs. Uddin’s interests.” Id.
¶ 51. No
appearance was filed in the Wells foreclosure action, but the complaint was dismissed without
prejudice on December 6, 2012. Id.
In 2013, Lutfur Uddin informed Plaintiff that Wells Fargo had denied her application for
a loan modification, although he did not provide her with documentation that any such
application had been submitted. Id.
¶J 57, 59. He then advised Plaintiff that she “could still keep
her property at a substantially reduced principal balance and monthly mortgage payment through
a short sale with Wells.” Id.
Lutffir Uddin then arranged for Faruk Siddique to acquire Plaintiffs distressed property
through a short sale, after which the Uddins would “reacquire their.
from Siddique, who would ‘“hold it temporarily,’ for a fee.” Id.
home at a reduced price”
¶ 61, 64. He advised Plaintiff
that “after Mrs. Uddin’s short sale closing her distressed property would be transferred back to
Mrs. Uddin for the sum of $100,000.” Id.
¶ 71. According to the complaint, the “Uddins,
unsophisticated in real estate matters[ and] transactions, were unaware and had no reason to
believe that Lutflir’s version of a short sale was wholly illegal.” Id.
¶ 73. Defendant Caruso
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represented Plaintiff during the transaction, but they did not meet before her execution of the
contract of sale. Id.
¶J 69-70. Plaintiff executed a deed transferring title for her property to
Siddique on March 5, 2014. Id.
Defendant Faruk Siddique was a straw buyer, and after the short sale he transferred title
through a quit claim deed to Defendant Preakness Real Estate LLC on June 6, 2014, without
informing Plaintiff. Id.
¶f 96-97. Defendant Goodson Law Offices “acted as the attorneys of
record for both Faruk and Preakness in the quit claim deed transfer” without informing Plaintiff
of the potential conflict of interest. Id.
¶J 103-106. Preakness Real Estate was wholly owned by
Defendant Shelim Khalique, and the funding for these transactions was provided by Defendant
A-i Elegant Tours, a limousine and bus company that is also wholly owned by Khalique. Id.
111-113. These funds were transferred from A-i to Goodson Law Office and then to Defendant
Five Star Funding, a company wholly owned by Defendant Goodson. Id.
After this transaction was complete, Khalique informed Plaintiff that he would not
convey the property back to her and announced his intention to evict her family from the home.
¶J 101-103. Defendants Goodson and Goodson Law Office then filed multiple complaints for
possession of the property in 2014 and 2015. Id.
¶ 110. As a result of this scheme, Plaintiff
alleges that Defendants received “upfront fees, undisclosed disbursements, real estate
commissions for both the purchase and sale of the Uddins’ property [and] several hundred
thousand dollars in the form of equity stripped from the Uddins’ home.” Id.
Plaintiff brings a RICO claim under 18 U.S.C.
1962(a) against Defendants Christopher
Goodson, Lutfiir Uddin, Shelim Khalique, and John Caruso. Id.
She also brings two RICO
claims against these defendants, as well as Defendant Faruk Siddique, under 18 U.S.C.
(c) and (d). Id.
143. She alleges violations of the Federal Real Estate Settlement
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Procedures Act, 12 U.S.C.
§ 2601, et seq., against all Defendants. Id. ¶ 149.
She alleges that
Defendants Faruk, Lutfur, and Goodson violated the New Jersey foreclosure Rescue Fraud
Prevention Act, N.J.S.A.
et seq. Id.
She brings a fraud claim against
Defendant Lutfur Uddin and requests that the Court void the respective deed conveyances. Id.
172. Plaintiff seeks damages totalling $370,940. Id.
She also moves under N.J.S.A.
2A:62-1 for a ruling “to determine Plaintiffs legal and equitable ownership of the subject
property by way of a quiet-title action.” Id.
¶J 180-193. finally, she moves for the Court to issue
a declaratory judgment voiding the deed conveyances that took place on March 5, 2014 and June
6, 2014, as well as a declaratory judgment that Defendants have no right or interest in the subject
Defendant John Caruso brings this motion to dismiss Plaintiffs claims against him,
arguing that these claims “are barred by the doctrine of in pan delicto based upon Plaintiffs
knowledge of and active participation in the purported fraudulent conveyances outlined in the
Complaint.” ECF No. 7-6 at 1. Relying on Fed. R. Civ. P. 15(a)(l)(A), Defendant Caruso filed a
second, amended brief in support of his motion to dismiss on January 4, 2016, raising additional
arguments. See ECF No. 12. Rule 15(a)(1)(A) permits a party to amend its pleadings but does
not apply to a brief in support of a motion to dismiss. Courts will only consider a party’s first
motion to dismiss when that party has filed a second motion ostensibly under Rule 15(a)(1)(A)
without first obtaining leave. Bellocchio v. New Jersey Dep ‘t. ofEnvtl. Frot., 16 F. Supp. 3d 367,
369 n. 2 (D.N.J. 2014); see also fed. R. Civ. P. 12(g)(2) (“Except as provided in Rule 12(h)(2) or
(3), a party that makes a motion under this rule must not make another motion under this rule
raising a defense or objection that was available to the party but omitted from its earlier
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motion.”). The Court will only consider the grounds raised by Caruso’s original motion to
This Court has subject matter jurisdiction over Plaintiffs federal law claims under 28
§ 1331 and has supplemental jurisdiction over Plaintiffs state law claims under 22 U.s.c.
STANDARD OF REVIEW
“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 Belt Atlantic Corp. v. Twombty, 550 U.S. 544, 570 (2007)). A
claim is plausible on its face “when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “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.” Id. (internal quotations and alterations omitted). “[W]here the wellpleaded facts do not permit the court to infer more than the mere possibility of misconduct, the
complaint has alleged—but it has not ‘shown’—that the pleader is entitled to relief.” Id. at 679.
In considering the plaintiffs claims, the Court may consider the allegations of the
complaint, as well as documents attached to or specifically referenced in the complaint. See
Sentinel Trust Co. v. Universal Bonding Ins. Co., 316 F.3 d 213, 216 (3d Cir. 2003); Charles A.
Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure
§ 1357 at 299 (3d
ed. 2014). “A ‘document integral to or explicitly relied on in the complaint’ may be considered
‘without converting the motion [to dismiss] into one for summary judgment.” Mele v. Fed.
Reserve Bank ofN. Y., 359 F.3d 251, 256 n.5 (3d Cir. 2004) (citing In re Burlington Coat Factory
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Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)). “Plaintiffs cannot prevent a court from looking
at the texts of the documents on which its claim is based by failing to attach or explicitly cite
them.” Id. at 255 n.5.
In pan delicto is an affirmative defense that can bar recovery where a plaintiff is “an
active, voluntary participant in the unlawful activity that is the subject of the suit.” McA dam v.
Dean Witter Reynolds, Inc., $96 F.2d 750, 757 (3d Cir. 1990) (emphasis removed). Although the
defense is the “legal corollary of the equitable unclean hands doctrine,” it differs from the
unclean hands doctrine in that it applies only when “the degrees of fault are essentially
indistinguishable or the plaintiffs responsibility is clearly greater.” Id. at 756; see also Stella v.
Dean Witter Reynolds, Inc., 241 N.J. Super. 55, 73 (Sup. Ct. App. Div. 1990). “foolish credulity
is not equivalent to culpability for purposes of the in pan delicto defense, and neither is simple
greed or a desire to make money.” McAdam, $96 f.2d at 758 (internal citations omitted). As an
affirmative defense, the doctrine of in pan delicto can be invoked on a motion to dismiss if it is
clearly established by the complaint. Cf Official Comm. of Unsecured Creditors of Color Title v.
Coopers & Lybrand, LLP, 322 F.3d 147, 164 (2d Cir. 2003) (“[T]his Court has affirmed the
claims on the pleadings upon findings that in pan delicto had been established in
1. Extraneous documents may not be considered by the Court on a motion to dismiss.
Initially, the Court must determine what materials it may consider at this stage of the
action. Plaintiff has attached several documents to her complaint, and Caruso has submitted other
exhibits with his motion to dismiss. Attached to the complaint are (1) a ten thousand dollar check
from Plaintiffs son to the Goodson Law Offices payable on October 7, 2012, ECF No. 1-1, (2)
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the 2013 contract of sale between Faruk Siddique and Fatema Uddin concerning the Uddin’s
home, ECF No. 1-2, (3) the March 5, 2014 deed, prepared by John Caruso, that transferred
ownership of the property from the Uddins to Faruk $iddique, ECF No. 1-3, (4) the “HUD-l”
settlement statement signed by F atema Uddin and Faruk Siddique, ECF No. 1-4, (5) the
quitclaim deed signed by Faruk Siddique on June 7, 2014, ECF No. 1-5, and (6) a cashier’s
check from Al Elegant Tours to Goodson Law Office, ECF No. 1-6. Attached to Caruso’s
motion to dismiss are (1) a letter from Wells Fargo Home Mortgage to Fatema Uddin approving
a short sale of the property, ECF No. 7-4, (2) an affidavit concerning the short sale that was
executed by Fatema Uddin on March 5, 2014, id., (3) a certification executed by John Caruso,
ECF No. 7-5, (4) an email concerning the property sent to John Caruso by a real estate associate
for Prudential NJ Properties, id. Ex. A, a deed and a seller’s residency certification prepared by
Caruso, Id. Ex. B, and a complaint and certification filed in a related state court action in the
Superior Court of New Jersey, Passaic County, captioned Uddin v. Uddin, No. PAS-L-3713-14,
Id. Exs. C and D.
For the purposes of this motion, the Court may consider each document attached to the
complaint, but it may only consider the documents submitted by Caruso if it finds that they are
matters of public record or are “integral to or explicitly relied on in the complaint.” Mete, 359
F.3d at 256 n.5; Pension Ben. Guar. Corp. v. White Consol. Indus., Inc., 99$ F.2d 1192, 1198 (3d
Cir. 1993). If evidence submitted by a Defendant as part of a motion to dismiss falls outside of
these categories, a district court has discretion to convert that motion to dismiss into a motion for
summary judgment. E.g. Kurdyla v. Pinkerton Sec., 197 F.R.D. 128, 131 (D.N.J. 2000). The
Court first considers Caruso’s submissions and whether to convert this motion into one for
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a. The Short Sale Documents
Counsel for Caruso has attached two documents related to the short sale that were not
attached to the complaint. See ECF No. 7-4 Exs. B, C. She has certified that Exhibit B is “a true
and accurate copy of January 31, 2014 correspondence from Wells Fargo Home Mortgage to
Plaintiff Fatema Uddin” and that Exhibit C is “a true and accurate copy of the Short Sale
Affidavit executed on March 5, 2014.” O’Brien Cert., ECF No. 7-2. The correspondence from
Wells Fargo notified Plaintiff that she had been approved for a short sale and contained
conditions, stating that the “short sale must be an arm’s length transaction..
This means the
seller and buyer must be unrelated to each other by family, marriage or commercial enterprise.”
ECF No. 7-4 Ex. B at 2. In the short sale affidavit, the Uddins certified under penalty of perjury
on the date of the closing that “[t]here are no agreements, understandings or contracts relating to
the sale of the Mortgage Premises that have not been disclosed to the Lender” and “[n]one of the
signatories have knowledge of any offer to purchase the Mortgages Premesis for a higher
purchase price than our purchase price.. that has not been presented to the Lender(s).” Id. Ex
Neither of these documents was attached to or specifically referenced by the complaint.
The complaint does reference “the many documents [Plaintiff] executed at the short sale closing
¶ 79. Plaintiff has attached some of the short sale documents to her
complaint, including the “contract for the sale of real estate” and the “HUD- 1” settlement
statement. ECF No. 1-2. But Exhibits B and C, which provided the terms under which the short
sale would adjust Plaintiffs mortgage, are omitted from the complaint. A plaintiff “cannot
prevent a court from looking at the texts of the documents on which its claim is based by failing
to attach or explicitly cite them.” Mele at 255 n.5; see also Selective Way Ins. Co. v. Glasstech,
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Inc., 2014 WL 6629629 at *3*4 (D.N.J. Nov. 21, 2014) (considering documents submitted by
defendant on a motion to dismiss that plaintiff “implicitly relied upon.
in its [c]omplaint”).
Here, several of Plaintiffs claims are based on the short sale transaction, she has referenced the
documents that were a part of that transaction, and she has attached some, but not all, of these
documents. The Court finds that the short sale notice and affidavit are “integral to” the complaint
and may be considered “without converting the motion [to dismiss] into one for summary
judgment.” Id. at 256.
b. Caruso’s certification and its attachments
Defendant Caruso has also submitted his own certification. ECF No. 7-5. Attached to the
certification are an email he received from a real estate agent discussing the short sale of
Plaintiffs property, Id. Ex. A, the deed that transferred title from Plaintiff to Defendant Siddique
on March 5, 2014, including a “seller’s residency certification” in which Plaintiff certified that
she was living at a property other than the one subject to the short sale, Id. Ex. B, a complaint
filed by Plaintiff and her husband in the Superior Court of New Jersey for Passaic County on
October 3, 2014 against Siddique, Khalique, Lutftir Uddin, and Preakness Real Estate, Id. Ex. C,
and an affidavit submitted by Plaintiff as part of her state court litigation, Id. Ex. D.
For the reasons already discussed, the Court considers the deed between Plaintiff and
Defendant Siddique because it was an integral part of the short sale transaction that forms the
basis of Plaintiffs claims. The Court also considers Exhibits C and D, documents that have been
filed as part of the state court action captioned Uddin v. Uddin, No. PAS-L-3713-14, as such
documents are public records. Pension Ben. Guar. Corp., 998 at 119$.
The Court does not consider Caruso’s certification or his personal correspondence with
real estate associate Lionor Carpenter. Such documents are not mentioned or attached to the
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complaint, and they qualify for none of the exceptions under which a Court may consider
extraneous documents without converting a motion to dismiss into a motion for summary
c. The Court will not convert this motion into one for summary judgment.
Although a district court has discretion to convert a motion to dismiss into a motion for
summary judgment, a “court should not convert a motion.
when little or no discovery has
occurred,” Kurdyla v. Pinkerton Sec., 197 F.R.D. 128, 131 (D.N.J. 2000), which is the case here.
Additionally, Caruso’s certification contains assertions that directly contradict those in the
complaint. As example, Caruso certifies that he “spoke with Plaintiff and her husband at the
short sale closing, and they communicated in English.” Caruso Cert.
¶ 9. In contrast, the
complaint asserts that “Plaintiff does not speak, read or write English.” ECF No. 1
¶ 7. These
contradictions magnify the importance of discovery in this case, and the Court will not convert
this motion into a motion for summary judgment before discovery has taken place.
2. Defendant has not established that he is entitled to relief on In Pan Deticto grounds.
Plaintiff does not deny the wrongfulness of the transaction that she took part in. The
complaint acknowledges that “Lutfur’s version of a short sale was wholly illegal.” Compi.
The specific nature of the wrongfulness, although not detailed in the complaint, can be discerned
from the documents submitted by Defendant Caruso. The lender agreed to a short sale for less
than the value of the mortgage on the understanding that the sale was an arm’s length
transaction, and Plaintiff certified that there were no undisclosed agreements relating to the sale,
that she had no knowledge of any offer to purchase the property for more than the short sale
price, and that she was living at a different location. ECF No. &-2 Exs. B, C; ECF No. 7-5 Ex. C.
In reality, Plaintiff short sold the property for $89,000 with the understanding that it “would be
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transferred back to Mrs. Uddin for the sum of $100,000,” and continued to reside in the property
after the sale. Id. ¶J7l-72, 83, 102.
Although the wrongfulness of the short sale is clear, two relevant issues remain unclear at
this stage. The first is Plaintiffs level of understanding and culpability. The short sale notice,
affidavit, and deed are entirely in English. Plaintiff asserts that she “does not speak, read or write
English” and that “Mr. Caruso failed to provide Plaintiff with an interpreter at the short sale
13. She claims that she was “directed to sign” documents that she did not
understand and that she did not “know or understand.
modifications[ or] short sales for mortgage loans.” Id.
the law or rules governing loan
107. According to her, Defendant
“Lutfur falsely and intentionally represented that the short sale buy back was a legitimate means
of saving Mrs. Uddin’[s] home.” Id.
At this stage, the Court must credit all well-pleaded allegations in the complaint,
including Plaintiffs allegations that she could not understand the documents she was directed to
sign and that she was guided and misled by Lutfur. “Foolish credulity is not equivalent to
culpability for purposes of the inpari delicto defense,” McAdam, 896 F.2d at 758, and when the
Court views the allegations in the complaint in the light most favorable to Plaintiff, it cannot rule
at this stage that she acted with more than foolish credulity.
The second issue that remains unclear at this stage is Caruso’s own level of culpability,
which is relevant because, unless “the degrees of fault are essentially indistinguishable or the
plaintiffs responsibility is clearly greater, the inpari delicto defense should not be allowed, and
the plaintiff should be compensated.” McA dam, 896 F.2d at 756. “[I]n cases where both parties
are [at fault], concurring in an illegal act, it does not always follow that they stand in pan delicto;
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for there may be, and often are, very different degrees in their guilt.” Id. n. 9 (quoting Bateman
Eichter, Hill Richards, Inc. v. Berner, 472 U.S. 299, 307 (1985)).
The complaint alleges that Caruso was a participant in Defendants’ scheme and that “Mr.
Caruso’s purported representation of Mrs. Uddin was absent her consent, knowledge, [or]
execution of a retainer agreement and without having met until the date of closing.” Compi.
131. It further alleges that Caruso and the other Defendants “all knew that the short sale buy back
was an illegal means of stripping equity from Mrs. Uddin’ s home and that it allowed Lutfur, Mr.
Goodson, Shelim, and Faruk to evade taxes.” Id.
¶ 134. Caruso disputes these allegations.
Relying on his own certification, he states that he “was unaware of any agreement or
understanding between Plaintiff and Siddique with respect to the Property and certainly was
unaware of any agreement to deed back the Property.” ECF No. 7-6 at 5. As discussed, at this
procedural stage the Court is unable to consider Mr. Caruso’s certification and must view the
facts alleged in the complaint in the light most favorable to Plaintiff. Until the parties’
comparative levels of culpability can be determined, the Court cannot dismiss the claims against
Caruso on inpari delicto grounds. See, e.g., CHNJ Investors, LLC v. Koger, 2013 WL 1192400
at *11 (D.N.J. Mar. 21, 2013) (declining to dismiss claims under inpari delicto where
defendants’ motion relied on documents that could not be considered on a motion to dismiss and
the court was consequently unable to “determine that Plaintiffs alleged wrongdoing was equal to
or exceeded the Defendants’ alleged wrongdoing”).
At this procedural stage, the Court must credit Plaintiffs allegations that she was actively
misled by Defendants and that she could not read or understand the documents that were given to
her at the short sale closing. The Court is unable to consider Mr. Caruso’s certification or
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otherwise determine his own level of culpability. Because the Court cannot determine that “the
degrees of fault are essentially indistinguishable or the plaintiff’s responsibility is clearly
greater,” licAdam, 896 f.2d at 756, Defendant’s motion must be denied. An appropriate order
United States S nior District Judge
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