Leadbeater v. JPMorgan Chase Bank, N.A. et al

Filing 59

OPINION. Signed by Judge John Michael Vazquez on 10/24/2017. (ld, )

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
Not for Publication

RICHARD LEADBEATER,

Plaintiff
Civil Action No. 16-7655 (JMV)
V.

JP MORGAN CHASE, N.A, ET AL.

OPINION

Defendant(s).

John Michael Vazguez, U.S.D.J.

This case arises from Plaintiffs claims that assignments of his 2003 mortgage, as well as
the 2009 foreclosure on his home, were unlawful. The present matter comes before the Court on
Defendants” motions to dismiss pro se Plaintiff Richard Leadbeater’s (“Plaintiff’) Amended
Complaint.2

Defendants Seterus, Inc. (“Defendant Seterus”) and Federal National Mortgage

Association (“Defendant fNMA”) move to dismiss pursuant for lack of subj ect-matter jurisdiction
pursuant to Federal Rule 12(b)(l), for failure to state a claim pursuant to Federal Rule 12(b)(6),

Defendants include JPMorgan Chase Bank N.A. (“Chase”), Chase Home Finance, LLC, Federal
National Mortgage Association (“FNMA”) as trustee for Fannie Mae REMIC Trust 2003-95,
Seterus, Inc. (“Setenis”), Mortgage Electronic Registration System (“MERS”), and John Does 1
through 100 inclusive, et a? (collectively, “Defendants”).
2

Plaintiffs Amended Complaint will be referred to hereinafter as “Am. Compl.” (D.E. 3$).
Defendants Setems and FNMA’s brief in support of its motion to dismiss the amended complaint
will be referred to hereinafter as “Defs. Seterus/FNMA Br.” (D.E. 45); Defendant Chase’s brief in
support of its motion to dismiss the amended complaint will be referred to hereinafter as “Def.
Chase. Br.” (D.E. 46); Plaintiffs brief in opposition will be referred to hereinafter as “P1. Opp.
Br.” (D.E. 55); Defendants Seterus and FNMA’s reply will be referred to hereinafter as “Def.
Seterus/FNMA Reply” (D.E. 57); Defendant Chase’s reply will be referred to hereinafter as “Def.
Chase Reply” (D.E. 5$).

and for an inadequate pleading pursuant to federal Rule 9(b). D.E. 45. Defendant JP Morgan
Chase Bank, N.A. (“Defendant Chase”) moves to dismiss for lack of subject-matter jurisdiction
and for failure to state a claim. D.E. 46. This motion was decided without oral argument pursuant
to federal Rule of Civil Procedure 78 and Local Civil Rule 78.1. The Court has considered the
parties’ submissions and grants Defendants’ motions to dismiss all counts without prejudice.
I.

BACKGROUND

The following facts are derived from Plaintiffs Amended Complaint (“Am. Compl.”), as
well as the exhibits attached to the Amended Complaint and the exhibits attached to Defendants’
motions to dismiss.3
Plaintiff alleges that he “was issued an Uncertified Security to execute in the capacity of
(Accommodation Party) to a Tangible Note Bill of Exchange on August 7, 2003 regarding a
purported loan to (Accommodated Party) federal National Mortgage Association for $.00.” Am.
Compl., at ¶ 31. Defendant Chase’s Exhibit A clarifies that that on August 7, 2003, Plaintiff and

The specific factual allegations in the Amended Complaint are, at times, unclear. However, a
somewhat more complete picture is made possible when considering the Amended Complaint in
conjunction with the exhibits attached to the pleading and attached to Defendants’ motions to
dismiss. When reviewing a motion to dismiss, the Court accepts as true all well-pleaded facts in
the complaint. fowler v. UPMC Shadvside, 57$ F.3d 203, 210 (3d Cir. 2009). Additionally, a
district court may consider “exhibits attached to the complaint and matters of public record” as
well as “an undisputedly authentic document that a defendant attaches as an exhibit to a motion to
dismiss if the plaintiffs claims are based on the document.” Pension Ben. Guar. Corp. v. White
Consot. Indus., Inc., 99$ f.2d 1192, 1196 (3d Cir. 1993).
When referring to the paragraph number in the Amended Complaint, this Court is referring to
the number actually delineated in Plaintiffs Amended Complaint. The Amended Complaint
skips from paragraph number 15 to paragraph number 20.
‘

2

Daisy Metzger-Rech (“Metzger-Rech”)5 executed a mortgage (the “Mortgage’) and signed a note
in the amount of :283,000.00 regarding the property (the “Property”) located at 73 Linden Avenue,
Keamey, New Jersey. Def. Chase Br., Ex. A; see also Am. Compl. at ¶ 3. On August 11, 2003,
the Mortgage was recorded in the Hudson County Clerk’s Office. Def. Chase Br., Ex. A. The
Mortgage was originally executed to Mortgage Electronic Registration Systems, Inc. (“MERS”)
as nominee for SIB Mortgage Corporation (“SIB”). Def. Chase Br., Ex. A; Defs. Setems/FNMA
Br., Ex. Two. Plaintiff alleges that the mortgage loan was subsequently assigned to “Chase Home
Finance, LLC and then to “Fannie Mae.” Am. Compl. ¶J 34-3 6. Defendants’ exhibits demonstrate
that the Mortgage was assigned by MERS to Chase in 2008, and then assigned to FNMA6 in
October 2014. Defs. $eterus/FNMA Br., Ex. Three. Plaintiff appears to allege that FNMA was
unlawfully assigned an unperfected mortgage on the Property. Am. Cornpl. at ¶J 12, 20.
A foreclosure action on Plaintiffs Property was initiated on December 17, 2008 when
Defendant Chase filed a complaint, JFliorgan Chase Bank, A’A. v. Daisy Metzger-Rech, et aL,
Case No. f-49933-08, in the Superior Court for New Jersey, Chancery Division, Hudson County
(“State Superior Court”). Def Chase Br., Ex. B. On December 16, 2009, the State Superior Court
entered a Final Judgment of Foreclosure against Plaintiff and other parties. Def. Chase. Br, Ex. C.
The State Superior Court granted an emergent motion to stay a subsequent sale of the Property on
July 29, 2010. Def. Chase. Br., Ex. E. However, Plaintiffs later motion to stop a sale was denied
on July 23, 2015. Def Chase Br., Ex. G. The Property was sold on July 23, 2015. Def. Chase.

Plaintiffs Amended Complaint indicates that Metzger-Rech is “Plaintiffs wife, twho] later left
the marriage.” Am. Compl. ¶31.
6

Plaintiffs Amended Complaint interchangeably uses “Fannie Mae” and “Federal National
Mortgage Association.”
3

Br., Ex. H. On August 19, 2016, the State Superior Court entered an order staying Plaintiffs
eviction. Def. Chase. Br, Ex. I.
II. PROCEDURAL HISTORY
On May 18, 2016 Plaintiff filed his initial complaint in United States District Court for the
Southern District of New York. D.E. 1. On October 10, 2016 the case was transferred to this
District. D.E. 23. On November 8, 2016, Defendant FNMA filed a motion to dismiss. D.E. 29.
On November 14, 2016, Defendant Chase filed a motion to dismiss. D.E. 30.
On December 16, 2016, Plaintiff sought leave to file an amended complaint or for an
extension of time to file a response in opposition to Defendants’ motions to dismiss. D.E. 33. On
January 20, 2017, Plaintiff filed the Amended Complaint.

D.E. 3$.

Defendant FMNA and

Defendant Seterns filed their motion to dismiss on February 28, 2017 (“Defs. Seterus/FNMA Br.”).
D.E. 45. Defendant Chase also filed a motion to dismiss that same day (“Def Chase Br.”). D.E.
46. On April 7, 2017, the Court granted Plaintiffs request for a 30 day extension to file a response
to Defendants’ motions to dismiss. D.E. 51. On September 11, 2017, the Court granted Plaintiff
an additional 30 days to respond to Defendants’ motions to dismiss. D.E. 53. On October 10,
2017, Plaintiff filed papers in opposition to Defendants’ motions to dismiss.7 D.E. 55. On October
20, 2017, Defendants Seterus and FNMA filed a reply, D.E. 57, and Defendant Chase also filed a
reply, D.E. 58.

‘

The Court notes that Plaintiffs opposition papers, D.E. 55, are 61 pages of handwritten
statements and attachments. Plaintiff largely fails to address Defendants’ arguments.
Defendants Seterns and FNMA, as well as Defendant Chase, argue that Plaintiffs claims should
be dismissed because he abandoned his claims. See, e.g., Duran v. Equtjirst Corp, 2010 WL
936199, at *3 (D.N.J. Mar. 12, 2010). However, because Plaintiff is proceedingpro se, the
Court will still consider the grounds for Defendants’ motions to dismiss.
4

III. STANDARD OF REVIEW

a. Rule 12(b)(l)
In deciding a Rule 12(b)(l) motion for lack of subject-matter jurisdiction, a court must first
determine whether the party presents a facial or factual attack because the distinction determines
how the pleading is reviewed.8 A facial attack “contests the sufficiency of the complaint because
of a defect on its face,” whereas a factual attack “asserts that the factual underpinnings of the basis
for jurisdiction fails to comport with the jurisdictional prerequisites.” Elbeco Inc. v. Nat ‘1 Ret.
Fund, 128 F. Supp. 3d 849, 854 (E.D. Pa. 2015) (quoting Moore v. Angie’s List, Inc., 118f. Supp.
3d $02, $06 (E.D.Pa. 2015)). When a party moves to dismiss prior to answering the complaint, as
is the case here, the motion is generally considered a facial attack. Constitution Party of Pa. v.
Aichele, 757 F.3d 347, 35$ (3d Cir. 2014).
For a facial attack, “the Court must consider the allegations of the complaint as true,” much
like a Rule 12(b)(6) motion to dismiss. 3d. of Trs. of Trucking Emps ofN. Jersey Welfare Fund,

Inc. v. CaliberAuto Transfer, Inc., No. 09-6447, 2010 WL 2521091, at

*$

(D.N.J. June 11,2010)

(quoting Petruska v. Gannon Univ., 462 F.3d 294, 302 (3d Cir. 2006)). The burden is on the
Plaintiff to prove the Court has jurisdiction. Id. (citing Petr;tska, 462 F.3d at 302).
“Article III of the Constitution limits the jurisdiction of federal courts to ‘Cases’ and
‘Controversies.” Lance v. Coffman, 549 U.S. 437, 439 (2007). One key aspect of this case-orcontroversy requirement is standing. See id. “The standing inquiry focuses on whether the party
invoking jurisdiction had the requisite stake in the outcome when the suit was filed.” Constitution

8

This Court also has an independent obligation to establish that it has subject-matter
jurisdiction. Morel v. INS, 144 F.3d 248, 251 (3d Cir. 1998) (“[A federal] court. will raise
lack of subj ect-matter jurisdiction on its own motion.”) (quoting Insurance Corp. of Ireland, Ltd.
v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982)).
.

5

.

Parry of Pa., 757 F.3d at 360. To establish standing, a plaintiff must satisfy a three-part test,

showing: “(1) an ‘injury in fact,’ i.e., an actual or imminently threatened injury that is ‘concrete
and particularized’ to the plaintiff (2) causation, i.e., traceability of the injury to the actions of the
defendant; and (3) redressability of the injury by a favorable decision by the Court.” Nat’l
Collegiate Athletic Ass’n v. Gov. ofN.i, 730 F.3d 208, 218 (3d. Cir. 2013).

b. Rule 12(b)(6)
Rule 12(b)(6) of the Federal Rules of Civil Procedure permits a defendant to move to
dismiss a count for “failure to state a claim upon which relief can be granted[.]” To withstand a
motion to dismiss under Rule 12(b)(6), a plaintiff must allege “enough facts to state a claim to
relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A
complaint is plausible on its face when there is enough factual content “that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). Although the plausibility standard “does not impose a probability

requirement, it does require a pleading to show more than a sheer possibility that a defendant has
acted unlawftilly.” Connellv v. Lane Const. Corp., 809 F.3d 780, 786 (3d Cir. 2016) (internal
quotation marks and citations omitted). As a result, a plaintiff must “allege sufficient facts to raise
a reasonable expectation that discovery will uncover proof of [his] claims.” Id. at 789.
In evaluating the sufficiency of a complaint, a district court must accept all factual
allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff.
Phillips v. Cry. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008).

A court, however, is “not

compelled to accept unwarranted inferences, unsupported conclusions or legal conclusions
disguised as factual allegations.” Baraka

V.

McGreevey, 481 F.3d 187, 211 (3d Cir. 2007). If,

after viewing the allegations in the complaint most favorable to the plaintiff, it appears that no

6

relief could be granted under any set of facts consistent with the allegations, a court may dismiss
the complaint for failure to state a claim. Defazio v. Leading Edge Recoveiy So/s., 2010 WL
5146765, at *1 (D.N.J. Dec. 13, 2010).
Because Plaintiff is proceedingpro se, the Court construes the pleadings liberally and holds
him to a less stringent standard than those filed by attorneys. Haines v. Kerner, 404 U.S. 519, 520
(1972). However, the “Court need not

.

.

.

credit apro se plaintiffs ‘bald assertions’ or ‘legal

conclusions.” D’Agostino v. CECOMRDEC, 2010 WL 3719623, at *1 (D.N.J. Sept. 10, 2010).
IV. ANALYSIS

The Amended Complaint asserts the following counts: (1) wrongful foreclosure and lack
of standing; (2) fraud in the concealment against FNMA; (3) fraud in the; (4) unconscionability in
regards to a contract with FNMA; (5) breach of contract by FNMA and MERS; (6) breach of
fiduciary duty; (7) quiet title against; (2) slander of title; (9) temporary restraining order and
injunctive relief; (10) violations of the “National Homeowner Bill of Rights”; (11) declaratory
relief’ and (12) violations of 15 U.S.C. Section 1651(g)(1), the Consumer Credit Protection Act
(“CCPA”).

The Amended Complaint additionally seeks, among other things, declaratory

judgments determining Defendants’ interests in the property located at 73 Linden Avenue, a
“refund of any wrongfully or improperly collected fees and payments to Defendants to which it
had no right[,]” and “[m]onetary relief over $100,000 but not more than $2,000,000.00.” Am.
Compl. Prayer for Relief.

In support of these allegations, Plaintiff attaches a “Property

Securitization Analysis Report” prepared on September 1, 2015 by Certified Forensic Loan
Auditors, LLC.9 Am. Compl., Ex. A. Plaintiff refers to this as a “forensic Chain of Title

Judge Madeline Cox Arleo has previously cautioned that she has “concern over the dubious
nature of such reports [prepared by Certified Forensic Loan Auditors, LLC.” Hicks v. The Bank
ofNew York, et al., Civil Action No. 15-1620, Letter Order, D.E. 22 (Feb. 22, 2016). The FTC
7

Securitization Analysis completed by qualified expect [sic] in to [sic] verify the claims of the
complaint.”

Am. Compl. at ¶ 29.

Defendant Seterus and Defendant FNMA first argue that this Court lacks subject-matter
jurisdiction over this action under Federal Rule 12(b)(1) based on the Rooker-Feidman doctrine
and resjudicata. Def. Chase Br. at 6-11. Second, Defendant Seterus and Defendant FNMA argue
that Plaintiff lacks standing to bring many of his claims. Def. Chase Br. at 11-14.

Lastly,

Defendant $eterus and Defendant FNMA argue that Plaintiffs Amended Complaint fails to state
a valid claim based on New Jersey’s entire controversy doctrine, and the pleading requirements of
Federal Rules 9(b) and 12(b)(6). Defs. $eterus and FNMA Br. at 14-30.
Defendant Chase first argues that this Court lacks subject-matter jurisdiction over this
action under Federal Rule 12(b)(l) based on the Rooker-Feidman doctrine, lack of standing, and
failure to plead a basis for federal subject-matter jurisdiction. Def. Chase Br. at 7-17. Second,
Defendant Chase argues that Plaintiffs Amended Complaint fails to state a valid claim under
Federal Rule 12(b)(6) based on New Jersey’s entire controversy doctrine, res judicata, the
economic loss doctrine, and failure to state a cognizable claim for relief. Def. Chase. Br. at 17-40.
a. 12(b)(1)
1. Rooker-Fetdrnan Doctrine
The Rooker-feidman doctrine precludes this Court from hearing Plaintiffs claims that
directly challenge the State Superior Court’s foreclosure action. Accordingly, this Court lacks
subject-matter jurisdiction to hear Count One (wrongful foreclosure and lack of standing), Count

has recently warned consumers to be wary of “forensic mortgage loan audits.” federal Trade
Commission, forensic Loan Audits, https ://www. consumer. ftc.gov/articles/0 130-forensic-loanaudits (last visited September 13, 2017) (“According to the Federal Trade Commission (FTC),
the nation’s consumer protection agency, the latest foreclosure rescue scam to exploit financially
strapped homeowners pitches forensic mortgage loan audits.”).
8

Seven (quiet title), Count Nine (temporary restraining order and injunctive relief), and Count
Eleven (declaratory relief) that aim to challenge the Superior Court of New Jersey’s final
foreclosure judgment.’0
“The Rooker—Fetdman doctrine1’ precludes lower federal courts from exercising appellate
jurisdiction over final state-court judgments because such appellate jurisdiction rests solely with
the United States Supreme Court.” In reliadera, 586 f.3d 228, 232 (3d Cir. 2009) (quoting Lance
v. Dennis, 546 U.S. 459, 463 (2006)); see also Williams v. BASF Catalysts LLC, 765 F.3d 305,

315 (3d Cir. 2014). The Third Circuit has ruled that the doctrine applies once four elements are
met: “(1) the federal plaintiff lost in state court; (2) the plaintiff ‘complain[s] of injuries caused by
[the] state-court judgments’; (3) those judgments were rendered before the federal suit was filed;
and (4) the plaintiff is inviting the district court to review and reject the state judgments.”2 Great

‘

The Rook-er-feldman doctrine limits the subject-matter jurisdiction of this Court, and therefore
it will be considered part of Defendants’ motions to dismiss for lack of subject-matter
jurisdiction under Rule 12(b)(1). See Gary v. Braddock Cemeteiy, 517 F.3d 195 (3d Cir.200$)
(affirming 12(b)(1) dismissal based on Rooker-feldman doctrine).
The Supreme Court most recently addressed the scope of the Rooker-feidman doctrine in
Lance v. Dennis, 546 U.S. 459 (2006) and before that in Exxon Mobil Corp. v. Saudi Basic
Indits. Corp., 544 U.S. 280 (2005). While the Court narrowed the scope of the doctrine in Lance
and Exxon Mobil, the Court made clear that the doctrine still applies to “cases brought by statecourt losers complaining of injuries caused by state-court judgments rendered before the district
court proceedings commenced and inviting district court review and rejection of those
judgments.” Lance, 546 U.S. at 464 (quoting Exxon Mobil, 544 U.S. at 284).
l2

The Third Circuit previously relied on a different test to determine whether the BookerFeldman doctrine applied to a subsequent federal suit. However, in light of Lance and Exxon
Mobil, the Third Circuit concluded that “caution is now appropriate in relying on our pre-E.xvon
formulation of the Rooker—feldman doctrine,’ which focused on whether the state and federal
suits were ‘inextricably intertwined.” Great W. Mining & Mineral Co. v. Fox Rothschild LLP,
615 F.3d 159, 169 (3d Cir. 2010) (quoting Gaty v. Braddock Cemetarv, 517 f.3d 195, 200 n.5
(3d Cir. 2008)). In place of the “inextricably intertwined” analysis, in Great W. Mining, the
Third Circuit concluded that a four-factor test is appropriate.
9

W. Mining & Mineral Co. v. foxRothschild LLF, 615 F.3d 159, 166 (3d Cir. 2010) (citing Exxon
Mobil Corp. v. Sattdi Basic Indus. Corp., 544 U.S. 280, 284 (2005)).

“The second and fourth requirements are the key to determining whether a federal suit
presents an independent, non-barred claim.” Great W Mining, 615 F.3d at 166. The Third Circuit
advises that “[t]he second requirement—that a plaintiff must be complaining of injuries caused by
a state-court judgment—may also be thought of as an inquiry into the source of the plaintiffs
injury.” Id. at 166 (citing Titrner v. Crawford Sqttare Apartments III, L.P., 449 F.3d 542, 547 (3d

Cir.2006). “A useful guidepost is the timing of theinjury, that is, whether the injury complained
of in federal court existed prior to the state-court proceedings and thus could not have been ‘caused
by’ those proceedings.” Id. at 167. The Third Circuit has explained that the fourth requirement is
“closely related” to the second requirement, id. at 168, but that the fourth requirement is aimed at
plaintiff asking a federal district court to engage in “appellate review of state-court decisions or a
review of the proceedings already conducted by the lower tribunal to determine whether it reached
its result in accordance with law.” Id. (internal citations and quotations omitted).
“Under New Jersey law, a mortgage foreclosure suit determines the right to foreclose and
the amount due on the mortgage.” Gage v. Wells Fargo Bank, NA. AS., 2011 WL 4073877, at *4
(D.N.J. Sept. 9, 2011), affd sub nom. Gage v. Wells Fargo Bank, NA, 450 F. App’x 121 (3d Cir.
2011), and affd sub nom. Gage v. Welts Fargo Bank, NA AS, 521 F. App’x 49 (3d Cir. 2013). The

Third Circuit has repeatedly held that the Rooker-Feidman doctrine precludes federal district
courts from granting relief that would in effect invalidate state court foreclosure proceedings. See,
e.g., Moncriefv. Chase Manhattan Mortg. Corp., 275 Fed.Appx. 149, 153 (3d Cir. 2008) (holding

that a district court correctly applied Rooker-Feidman when a plaintiff sought to “redress from the
state court’s judgment in [a] foreclosure action.”); Ayres-Foitntain v. E. Say. Bank, 153 F. App’x

10

91, 92 (3d Cir. 2005) (holding that a federal district court lacked jurisdiction to review a state
court’s judgment in a foreclosure action). However, in light of Lance and Exxon Mobil, the Third
Circuit has also cautioned that the Rook-er-feldman doctrine must not be applied “beyond the
contours of the Rooker and Feldman cases.” Tttrner v. CraMjord Sqttare Apartments III, L.P., 449

f.3d 542, 547 (3d Cir. 2006) (quoting Exxon Mobil, 544 U.S. at 283). The fact that a litigant’s
“district court complaint undoubtedly overlaps her adjudicated state-court claims, and is based on
the same operative facts, this overlap does not mean that the Rooker-Feidman doctrine is
applicable.” Turner v. Crawford Square Apartments III, L.F., 449 F.3d 542, 547 (3d Cir. 2006).

Here, on December 16, 2009, the Superior Court of New Jersey issued a final and valid
judgment foreclosing on Plaintiffs Property. The State Superior Court granted an initial emergent
motion to stay a subsequent sale of the Property, but Plaintiffs later emergent motion to stop a
sale was denied. The Property was then sold on July 23, 2015. Plaintiff thereafier filed his original
Complaint. Having found that a valid state court foreclosure judgment exists, the Court next
examines whether Plaintiffs claims will violate the Rook-er-feldman doctrine by attempting to
invalidate the State Superior Court judgment.
a. Count One Against All Defendants’3

Count One alleges, in part, that Defendants “do not have an equitable right to foreclose on
the Property” and that “Defendant MERS lacks the authority under its corporate charter to
foreclose a mortgage/deed of trust.” Am. Compl. at ¶j 43-56. This claim clearly attempts to
challenge the underlying State Superior Court judgment and all four Great W

Jvlining

factors are

met. first, it is undisputed that the Plaintiff lost in the State Superior Court foreclosure proceeding.

13

Alternatively, Count One is dismissed because wrongful foreclosure is not a cause of action
under New Jersey law. See, e.g., Vassallo v. Bank ofN. Y, 2016 WL 1394436 (D.N.J. Apr. 8,
2016) (“In New Jersey, ‘wrongful foreclosure’ is not a recognized cause of action.”).
11

Second, the foreclosure was directly caused by the State Superior Court judgment. Third, the State
Superior Court final judgment was submitted on December 16, 2009, over six years before Plaintiff
filed suit in the Southern District of New York on May 1$, 2016. finally, Count One is a clear
attempt by Plaintiff to have this Court to review and overturn the judgment of the State Superior
Court. Any judgment by this Court on Count One would be, in effect, a direct review of the State
Superior Court’s mortgage foreclosure judgment. The appropriate venue for review would be the
New Jersey Appellate Division rather than this Court. Because this Court lacks jurisdiction over
Count One based on the Rooker-Feidman doctrine, the count is dismissed without prejudice.
b. Count Seven Against All Defendants

Count Seven brings a cause of action for quiet title and alleges, in part, that Defendants’
claims to the Property “are without any legal right whatsoever” and “constitute a cloud on
Plaintiffs title to the” Property. Am. Compi. at

¶ 9$. Like Count One, Count Seven asks this

Court to overturn the final State Superior Court foreclosure judgement. The Rooker-Feidman
doctrine does not allow such review by the Court. Therefore, because this Court lacks jurisdiction
over Count Seven, the count is dismissed without prejudice.
c.

Count Nine Against All Defendants

Count Nine requests a temporary restraining order and injunctive relief stopping
Defendants “from prosecuting any continuance of a foreclosure sale.” Am. Compl. at

¶ 115. As

already discussed, the foreclosure sale took place on July 29, 2010, afier the State Superior Court’s
final foreclosure judgment on December 16, 2009. Because Count Nine would require the Court
to directly review the previous State Superior Court foreclosure proceeding, as well as the
completed foreclosure sale on the Property, the Court does not have jurisdiction over the action
under the Rooker-Feidman doctrine. Therefore, Court Nine is dismissed without prejudice.

12

a. Count Eleven Against All Defendants

Count Eleven requests declaratory relief and asks the Court to detennine the “rights,
obligations, and interest of the parties with regard to the subject property,” Am. Compi. at

¶

122,

and asserts that “Plaintiff should be the equitable owner of the Subject Property,” Id. at ¶ 123. This
claim also requires this Court to directly review the State Superior Court foreclosure decision.
Because the Court lacks jurisdiction to hear Count Eleven under the Rooker-feidman doctrine, the
count is dismissed without prejudice.
2. Standing

“Under Fed.R.Civ.P. 12(b)(1), a court must grant a motion to dismiss if it lacks subjectmatter jurisdiction to hear a claim. ‘A motion to dismiss for want of standing is

.

.

.

properly

brought pursuant to Rule 12(b)(1), because standing is a jurisdictional matter.” In re Schering
Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235, 243 (3d Cir. 2012) (quoting
Ballentine v. United States, 486 F.3d 806, $10 (3d Cir. 2007)). “In evaluating whether a complaint
adequately pleads the elements of standing, courts apply the standard of reviewing a complaint
pursuant to a Rule 12(b)(6) motion to dismiss for failure to state a claim: ‘Court[s] must accept as
true all material allegations set forth in the complaint, and must construe those facts in favor of the
nonmoving party.” In re Schering Plough Corp. Intron/Temodar Consumer Class Action, 678
f.3d at 243 (quoting Ballentine, 486 f.3d at 810).
a. Count Eight Against All Defendants

To the extent that Plaintiff argues that the assignment of his mortgage by MERS to Chase,
then from Chase to FNMA is somehow invalid, Plaintiff lacks standing to make this claim.
Constitutional standing requires a plaintiff to establish “that he or she has suffered an injury in fact
that is both concrete and particularized and actual or imminent, not conjectural or hypothetical.”

13

Bauer v. Mortg. Elec. Registration Sys., Inc., 618 F. App’x 147, 149 (3d Cir. 2015). A borrower
does not have standing to sue for an illegal assignment of his mortgage. Rajamin e. Detttsche Bank
Nat’t Trust Co., 757 F.3d 79, 86 (2d Cir. 2014) (finding that borrowers have no standing to allege

a defect in the assignment of their mortgages); Perez v. JPrnorgan Chase Bank, N.A., 2016 WL
816752, at *3 (D.N.J. Feb. 29, 2016) (“Courts in the Third Circuit have repeatedly held mortgagors
lack standing to contest the assignment of their mortgages or notes[.]”). Plaintiff lacks standing
here because there is no concrete injury to a borrower when their mortgage is assigned. See Batter,
618 F. App’x at 149 (finding that a borrower had not suffered a “concrete injury” when the
borrower did not allege that he was required to pay his loan twice); Rajamin, 757 F.3d at 85
(holding that borrowers did not suffer an injury when they did not allege that they had paid more
than they owed and were in no imminent danger in having to pay duplicate loans).
Count Eight brings an action for slander of title, and alleges, in part, that the recording of
two assignments into the “Official Records of the Hudson County Recorder’s Office is a
communication to a third party of false statement [sic] derogatory to Plaintiffs title.” Am. Compl.
at ¶11 109-110. Plaintiff essentially argues that he was harmed by the assignment of his Mortgage.
However, as described by the Third Circuit, Plaintiff cannot show a concrete injury based on the
assignment of his mortgage and therefore does not have standing to pursue any claims based on
alleged wrongful assignments of Plaintiffs Mortgage. Therefore, because Plaintiff does not have
standing to bring his claim, Count Eight is dismissed without prejudice.

14

b. 12(b)(6)
Plaintiffs remaining claims (Count Two, Count Three, Count Four, Count Five, Count Six,
Count Ten, and Count Twelve) are examined under Rule 1 2(b)(6).14
1. Failure to Meet Requirements of Federal Rule 9(b)

Count Two and Count Three bring claims based on fraud. Federal Rule of Civil Procedure
9(b) states, in part, that “[i]n alleging fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake.”

Accordingly, in a fraud claim, Rule 9(b)’s

heightened pleading standard “requires a plaintiff to plead the ‘who, what, when, where, and how’
of the conduct giving rise to the claim.” Kowaisky v. Deutsche Bank Nat’l Tr. Co., 2015 WL
5770523, at *8 (D.N.J. Sept. 30, 2015). “The purpose of Rule 9(b) is ‘to provide defendants with
notice of the precise misconduct that is alleged and to protect defendants’ reputations by
safeguarding them against spurious allegations of immoral and fraudulent behavior.” Kowaisky,
2015 WL 5770523, at *8 (quoting Naporano Iron & Metal Co. v. Am. Crane Corp., 79 F.Supp.2d
494, 511 (D.N.J.2000)). “Plaintiff need not always identify the particular time and place of the

misrepresentation, however, so long as the complaint contains some ‘alternative means ofinjecting
precision and some measure of substantiation into [the] allegations of fraud.”

Peters v.

Countrywide Home Loans, Inc., 2016 WL 2869059, at *3 (D.N.J. May 17, 2016) (quoting Seville

Defendant $eterus and Defendant FNMA argue that resjudicata bars all of Plaintiffs claims
because the claims “seek to challenge ownership of the Mortgage Loan and object to an alleged
lack of notice of assignments and transfers of the Mortgage Loan,” and that “Plaintiff had the
opportunity to litigate these claims before the state court.” Def. Seterus/FNMA Br. at 10.
Defendant Chase argues that resjudicata and the entire controversy doctrine bar Plaintiffs
claims because they “arise directly out of the validity of the loan documents and Defendants’
standing to foreclose on the Property.” Def. Chase Br. at 21. However, the Court has limited
information about the foreclosure proceeding. Thus, while Defendants may be correct, the Court
lacks sufficient information to conduct a resjudicata analysis.
15

Indits. Mach. Corp. e. Soitthrnost Mach. Corp., 742 F.2d 786, 791 (3d Cir. 1984), cert. denied, 469

U.S. 1211 (1985)).
Here, Plaintiffs fraud claims in Count Two and Count Three do not satisfy the particularity
requirement of Rule 9(b).
a. Count Two Against Defendant FNMA

Count Two brings an action for fraud in the concealment against Defendant FNMA, Am.
Compl. at ¶ 57-67. Plaintiff claims that Defendant FNMA, in part, “concealed the fact that they
were not a Federal Reserve Depository Bank,” Id. at ¶ 59, and concealed the terms of securitization
agreements, Id. at ¶ 59. Defendant FNMA responds that the Amended Complaint does not allege
the elements of fraud in the concealment with the specificity required by Rule 9(b).

Def.

Seterus/FNMA Br. at 16.
Even when construing the Amended Complaint liberally, the Court agrees that Plaintiff
fails to meet Rule 9(b)’s pleading requirements.

While the Plaintiff does specifically name

Defendant FNMA, Plaintiff fails to identify when the failure to disclose happened and what
communications or documents contained the omissions. Plaintiffs bare allegations are not enough
to meet Rule 9(b)’s requirements. Therefore, Count Two is dismissed without prejudice.
b. Count Three Against All Defendants

Count Three brings an action for fraud in the inducement against all Defendants. Plaintiff
alleges that Defendants “intentionally misrepresented to Plaintiff [that the] Defendants were
entitled to exercise the power of sale provision contained” in the Mortgage. Id. at ¶ 69. Defendants
again reply the count is not pled with sufficient specificity.
Setems/FNMA Br. at 15-16.

16

Def. Chase Br. at 30-3 1; Def.

“To sustain a claim for fraud in the inducement, [a plaintiff] must show that Defendants
perpetrated “[1] a material representation of a presently existing or past fact, [2] made with
knowledge of its falsity and [3] with the intention that the other party rely thereon, [4] resulting in
reliance by that party [5] to his detriment.” Metex Mfg. Corp. v. Manson, 2008 WL 877870, at *4
(D.N.J. Mar. 28, 2002) (quoting Jewish Ctr. of Sussex Cty. v. Whale, 86 N.J. 619, 624 (1921)).
“Where entrance into a contract has been fraudulently induced, ‘a knowing misstatement has been
made, on the basis of which the defrauded party signs the instrument.” Metex Mfg. Corp., 200$
WL 877270, at *4 (quoting Deerhurst Estates v. Meadow Homes, Inc., 64 N.J.Super. 134, 144
(App.Div. 1961)).
Again, even when construing Plaintiffs claim liberally, the Court finds that Plaintiff fails
to meet Rule 9(b)’s requirements. Plaintiff has not provided any indication of how any Defendants
fraudulently induced him into entering into his mortgage. The bare allegations in the Amended
Complaint are not enough to meet Rule 9(b)’s requirements. Therefore, Count Three is dismissed
without prejudice.
2. failure to State a Claim
a. Count four Against fNMA

Count F our brings a cause of action for “unconscionable contract” against Defendant
FNMA. Am. Compl. at ¶J 76-83. Plaintiff claims, in part, that Defendant FNMA “forced, tricked,
and mislead [Plaintiff] into parting with” the Property, Am. Compl. at ¶ 77, “concealed that they
were financially benefitting by bargaining with a third party,” Am. Compl. at

¶ $1, and took

advantage of “Plaintiffs special disadvantage” to deny Plaintiff the rights to the Property, Am.
Compl. at

¶ 82-83. Defendant FNMA argues that Plaintiffs claim fails because it “is based

entirely on allegations concerning the origination of the Mortgage Loan and the demonstrably

17

incorrect allegation that [FNMA] was the originator of the Mortgage Loan.” Def. Seterus/fNMA
Br. at22.
Under New Jersey law, “a contract is unconscionable if its terms are manifestly unfair or
oppressive and are dictated by a dominant party.” Howard v. Diolosa, 574 A.2d 995, 999 (App.
Div. 1990) (citing Kttzrniak v. Brook-chester, 111 A.2d 425 (App. Div. 1955). “To establish
unconscionability, a plaintiff must show ‘overreaching or imposition resulting from a bargaining
disparity between the parties,’ or ‘patent unfairness’ such that ‘no reasonable person not acting
under compulsion or out of necessity would accept its terms.” Cole v. Wells Fargo Bank, N.A.,
2016 WL 1242765, at *6 (D.N.J. Mar. 30, 2016) (citing Rotwein v. Gen. Accident Grp. & Cas.
Co., 247 A.2d 370 (N.J. Super. Ct. Law. Div. 1968)).
Plaintiff admits in his Amended Complaint that the Mortgage originated with SIB. Am.
Compl. at ¶ 34; see also Def Chase Br.. Ex. A; Defs. Seterus/fNMA Br., Ex. Two. Plaintiff has
not produced any allegation that he ever entered into a contract directly with FNMA. Therefore,
because Plaintiff fails to state a valid claim against Defendant FNMA, Count Four is dismissed.
b. Count Five Against FNMA

Count Five alleges a breach of contract action against Defendant FNMA and alleges that
Defendant FNMA “failed to satisfy, release and reconvey the security instrument, thus breaching
the terms found in paragraph 23 of the Mortgage/Deed of Trust.” Am. Compl. at
states that “[p]ursuant to paragraph 23

.

.

.

¶ $8.

Plaintiff

Defendant [FNMA] and specifically MERS, their

electronic agent was obligated to satisfy, release and reconvey the beneficial security interest in
Plaintiffs pledged Mortgage/Deed of Trust upon payment of all sums associated with the release
premium to [Defendant FNMA] for Accommodated Party services rendered,” Am. Compl. at

¶

86, and that Defendant FNMA “was paid in full for their Accommodated capacity to the tangible

1$

Note and Mortgage/Deed of Trtust when it sold and relinquished its interest in the Plaintiffs real
property to [Defendant fNMA],” Am. Compi. at ¶ 87.
In New Jersey, “tt]o prevail on a breach of contract claim, a party must prove a valid
contract between the parties, the opposing party’s failure to perform a defined obligation under the
contract, and the breach caused the claimant to sustained damages.” Envirofinance Grp., LLC v.
Envtt. Barrier Co., LLC, 440 N.J. Super. 325, 345 (App. Div. 2015). The Court cannot make sense
of this count. Plaintiff claims that Defendant FNMA relinquished its interest in the Property to
itself, and therefore Defendant FNMA breached the contract when it did not release the Mortgage.
However, the Mortgage document itself states that release of the Mortgage will be made “[u]pon
payment of all sums secured by [the Mortgage agreement].” Defs. Setems/FNMA Br, Ex. 2. Here,
Plaintiff fails to allege that the Mortgage was paid in full. Therefore, Plaintiffs has failed to allege
plausible facts to support his claim that Defendant FNMA breached the Mortgage. Therefore,
Count Five is dismissed without prejudice.
c. Count Six Against All Defendants
Count Six alleges that Defendant FNMA “failed to meet their fiduciary duty to satisfy,
release and reconvey the Real Property Lein Deed of Trust and the beneficial security interest
(personal property) therein after receiving payment for all sums represented as the service release
premium.” Am. Compi. at

¶ 92.

This count fails to state a claim for the same reason as Count

Five, that is, Plaintiff has not provided any facts to support his claim that the Mortgage was paid
in full. Plaintiff also fails to describe Defendant FNMA’s fiduciary duty to Plaintiff. See Donnelly
v. Option One Mortg. Corp., 2012 WL 4490642, at *8 (D.N.J. Sept. 26, 2012) (“A party cannot
generally “state a claim for breach of fiduciary duty based solely on the allegations

19

...

which reflect

nothing more than a debtor-creditor relationship.

.

.

.“

(quoting Abutkhair v. Citibank & Assocs.,

434 F. Appx 58, 63 (3d Cir.201 1)). Therefore, Count Six is dismissed without prejudice.
d. Count Ten Against All Defendants

Count Ten alleges that Defendant Seterus violated the “National Homeowner Bill of Rights
(“HBOR”)” without citing a section of the United States Code, Am. Compl. at

¶J 116-120, and

“New Jersey’s HBOR” without citing a specific section of New Jersey Civil Code, Am. Compl. at

¶ 119. This Court cannot find any current federal or state law referred to by either the “National
Homeowner Bill or Rights,” the “HBOR,” or the “New Jersey[] Homeowner’s Bill of Rights.” In
other words, the Court is not aware of any recognized causes of action based on these allegations
Therefore, because Plaintiff fails to state a claim upon which relief may be granted, Count Ten is
dismissed without prejudice.
e.

Count Twelve Against All Defendants

Count Twelve alleges that Defendants violated Section 164 1(g) of the Consumer Credit
Protection Act because there were “transfers of the mortgage loan to multiple classes of the Trust,
Am. Compl. at

¶ 125, and because Defendants “failed to record and notify Plaintiffs of the

purported Assignments 1 [sic], within the time and in the manner required by the CCPA,” Am.
Compl. at ¶ 126.
15 U.S.C.

§ 1641(g) of the Truth in Lending Act provides, in pertinent part, that

not later than 30 days after the date on which a mortgage loan is sold
or otherwise transferred or assigned to a third party, the creditor that
is the new owner or assignee of the debt shall notify the borrower in
writing of such transfer[.]
Section 1641(g) became effective on May 20, 2009. See Helping families Save Their Homes Act
of 2009, Pub.L. 111—22, Div. A,

§ 404(a), 123 Stat 1632, 165$ (2009);

Craig v. BankofNew York

Mellon C’orp., 2014 WL 1347225, at *10 (E.D.N.Y. Mar. 31, 2014) (“However, section 1641 was
20

not amended to include subsection (g) until May 2009.”). A number of district courts have found
that $ection 1641(g) does not apply retroactively. Craig, 2014 WL 1347225, at *10 (finding that
“the handful of district courts to have considered the issue appear to have uniformly held that

§

1641(g) is not retroactive.”) (citing cases). Therefore, Section 1641(g) does not applyto Plaintiffs
claim regarding the first assignment of the mortgage to Defendant Chase in 200$ or any events
before that.
While it is unclear if Plaintiff alleges a violation of Section 1641(g) based on the second
assignment of the mortgage, such a claim would fail as well because it falls outside the statute of
limitations. TILA’s statute of limitations for alleged violations of the Section 1641(g)’s disclosure
requirement is one year and runs from the date of the alleged violation. 15 U.S.C.

§ 1640(e); see,

e.g., Orman v MortgagelT, 2012 WL 1071219, at *6 (E.D. Pa. Mar. 30, 2012) (“If a notice is not

sent, a borrower must bring a claim for statutory damages within one year from the date of the
occurrence of the [alleged] violation....”) (internal quotation omitted). The second assignment of
Plaintiffs mortgage occurred on October 1, 2014.

Defs. Seterus/FNMA Br., Ex. Three.

Therefore, because Defendant Chase would have had 30 days to notify Plaintiff of the assignment
of the mortgage to Defendant FNMA, Plaintiff would have had until October 31, 2015 to file a
claim regarding the second assignment. Defendant did not file his initial Complaint until May 1$,
2016. The second assignment is apparently barred by the statute of limitaitons.
Therefore, Count 12 is dismissed without prejudice.

21

V. CONCLUSION

In sum, the Court GRANTS Defendants’ motions to dismiss all counts without prejudice.
Plaintiff has thirty (30) days to file a second amended complaint, if he so chooses, consistent with
this Opinion. If Plaintiff does not do so, this matter will be dismissed with prejudice, which means
that Plaintiff will not be able to bring another suit against Defendants based on the facts set forth
in his Amended Complaint. An appropriate Order accompanies this opinion.
Date: October 24, 2017

JohrMichael Vazqu, 11LS.D.J.

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