Perez v. SETERUS, INC. et al

Filing 20

OPINION. Signed by Chief Judge Jose L. Linares on 11/16/17. (cm, )

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT Of NEW JERSEY

Civil Action No.: 17-5862 (JLL)
EDUVIGIS PEREZ,
OPINION

Plaintiff,
V.

SETERUS, INC., eta!.,
Defendants.

LINARES, Chief District Judge.

This matter comes before the Court by way of Defendants Federal National Mortgage
Association (“Fannie Mae”) and Seterus, Inc.’s (“Seterus”) (collectively, “Defendants”) Motion
to Dismiss Plaintiff Eduvigis Perez’s (“Plaintiff’) Complaint pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure. (ECF No. 14). Plaintiff has submitted Opposition. (ECF No.
19). For the reasons stated herein, the Court grants Defendants’ Motion to Dismiss Counts I, II,
III, and IV with prejudice. Furthermore, the Court grants Defendants’ Motion to Dismiss Count
V without prejudice to allow Plaintiff leave to amend her Complaint.
BACKGROUND’

In May 2007, Plaintiff executed a mortgage in favor of American financial Resources,
Inc., for $304,000. (ECF No. 1 (“Cornpl.”)

¶ 9).

The mortgage loan was subsequently sold and

This background is derived from Plaintiffs Complaint, which the Court must accept as true at this stage of the
proceedings. SeeAlston v. Countiywide fin. Corp., 585 f.3d 753, 758 (3d Cir. 2009).

has been owned by Fannie Mae since January 2010. (Id.
of the mortgage was transferred to Seterus. (Id.

¶

¶

10—1 1). In April 2015, the servicing

26—27). Plaintiff alleges that she made 46

consecutive monthly payments since October 2012. (Id.

¶ 24).

Plaintiff further asserts that, despite

these payments, Seterus wrongftilly claimed that Plaintiff was delinquent on the mortgage loan.
(Id.

¶ 32).

In April 2016, Setenis sent a letter to Plaintiff declaring that she was in default on her

mortgage loan and began rejecting some of Plaintiffs attempted payments. (Id.
subsequently filed a foreclosure action in Bergen County, New Jersey. (Id.

¶ 36—37).

¶ 39).

Seterus

Plaintiff did not

file a response or otherwise contest the foreclosure action, but instead attempted to communicate
with Seterus in order to correct the alleged billing error. (Id.

¶ 40).

On february 22, 2017, the

Bergen County Court entered a final judgment against Plaintiff in the foreclosure action. (Id.

¶

43).
Plaintiff then brought an action in this Court seeking damages and restitution for
Defendants’ alleged failure to account for her prior payments and its declaration that Plaintiff was
in default. Plaintiff alleges Counts I (breach of contract) and II (breach of good faith and fair
dealing) against Seterus and Fannie Mae, and Counts III (violation of the Fair Debt Collection
Practices Act (“FDCPA”)), IV (violations of the Real Estate Settlement Procedures Act
(“RESPA”)), and V (violation of the Fair Credit Reporting Act (“FCRA”)) against Setems. (Id.

¶J 49—117).

Accordingly, Defendants move to dismiss Plaintiffs Complaint.
LEGAL STANDARD

I.

Federal Rule of Civil Procedure 12(b)(1)
Under Rule 12(b)(1) of the federal Rules of Civil Procedure, a defendant may move to

dismiss a complaint for lack of subject-matterjurisdiction. fed. R. Civ. P. 12(b)(1). The plaintiff,
as the party asserting jurisdiction, bears the burden to establishing the federal court’s authority to
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hear the matter. Packard v. Provident Nat’! Bank, 994 F.2d 1039, 1045 (3d Cir. 1993). An attack
under Fed. R. Civ. P. 12(b)(1) may either assert a factual or facial challenge to the court’s
jurisdiction. See Tatiafet-ro
Flees. Inc.

i’.

1’.

Dat-by Twp. Zoning 3d., 458 F.3d 181, 188 (3d Cir. 2006); Gould

United Stcttes, 220 F.3d 169, 176 (3d Cir. 2000). When a defendant facially attacks

the Court’s jurisdiction under Rule 12(b)(1), this type of challenge contests the adequacy of the
language used in the pleading; the trial court must therefore construe the pleadings in a light most
favorable to the plaintiff and presume all well-pleaded factual allegations in the complaint as true.
Gould, 2201 F.3d at 176. Alternatively, when bringing a factual attack, the defendant contends
that the facts on which the plaintiffs allegations rely are not true. Id. Therefore, the plaintiffs
allegations do not benefit from a presumption of truthfulness. Id. The court, instead, must weigh
the evidence in its discretion by taking into account affidavits, documents, and even limited
evidentiary hearings. Id. Here, Defendants are bringing Motions under 12(b)(l) because it is the
proper mechanism for raising the issue of whether immunity bars federal subject matter
jurisdiction. Blanciak v. Allegheny Lutdhtm Coip., 77 F.3d 690, 694 n.2 (3d Cir. 1996) (citing

Pennhutrst State Sc/i. & Hosp.
II.

V.

Halderman, 465 U.S. $9, 98—100 (1984)).

Federal Rule of Civil Procedure 12(b)(6)

To withstand a motion to dismiss for failure to state a claim, “a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim of relief that is plausible on its face.”
Ashcroft v. Iqba!, 556 U.S. 662, 678 (2009) (quoting Bell At!. Cot-p. v. Twomblv, 550 U.S. 544,
570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”

Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to

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a ‘probability requirement.’ but it asks for more than a sheer possibility that a defendant has acted
unlawfully.” Id. (quoting Tiiomblv, 550 U.s. at 556).
To determine the sufficiency of a complaint under Twomblv and Iqbal in the Third Circuit,
the court must take three steps: first, the court must take note of the elements a plaintiff must plead
to state a claim; second, the court should identify allegations that, because they are no more than
conclusions, are not entitled to the assumption of truth; finally, where there are well-pleaded
factual allegations, a court should assume their veracity and then determine whether they plausibly
give rise to an entitlement for relief Connelly v. Lane Const. Corp., 809 F.3d 780, 787 (3d Cir.
2016) (citations omitted). “In deciding a Rule 12(b)(6) motion, a court must consider only the
complaint, exhibits attached to the complaint, matters of the public record, as well as undisputedly
authentic documents if the complainant’s claims are based upon these documents.” Mayer v.
Betichick, 605 F.3d 223, 230 (3d Cir. 2010).
DISCUSSION
I.

Rooker-fetdman

Defendant moves to dismiss Counts I and II on the grounds that they are barred by the
Rook-er-feldman doctrine. (ECF No. 14-3, at 6). Under the Rook-er-feldman doctrine, federal

district courts are barred from hearing cases “that are essentially appeals from state-court
judgments.” Great W. Mining & Mineral Co. v. fox Rothschild LLP, 615 F.3d 159, 165 (3d Cir.

2010). Put another way, a suit is barred under the

Rook-er-feldman

doctrine where “a favorable

decision in federal court would require negating or reversing the state-court decision.” Id. at 170
n.4 (citations omitted). The Third Circuit has explicitly held that federal courts are barred by the
Rook-er-Feldman doctrine from providing relief that would overturn a state court foreclosure

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decision. See, e.g., Gage v. Wells Fargo Ban/c NA AS, 521 F. App’x 49, 51 (3d Cir. 2013); Maini
v. Nat’/ C’itrBankoflnd., 471 F. App’x 101, 105 (3d Cir. 2012).
In order for the Rooker-Felthnan doctrine to apply, four requirements must be met: “(1)
the federal plaintiff lost in state court; (2) the plaintiff ‘cornplain[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.” Great IV.
Mining & Mineral Co, 615 F.3d at 166 (quoting Exxon Mobil Corp. v. Saudi Basic Indtts. 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” and these requirements are
“closely related.” Id. at 166, 168.
Here, Plaintiff concedes that both the first and third prongs have been met. (ECF No. 19
at 23). Specifically, Plaintiff lost the foreclosure action in Bergen County State Court on February
22, 2017. (Compl.

¶ 43).

Plaintiff filed this case on August 8, 2017, after she lost the foreclosure

action. (Id.). Therefore, the first and third prongs have clearly been met.
The second and fourth prongs are also satisfied. The Third Circuit has assessed similar
cases and held that the second and fourth prongs of the Rooker-feldrnan test were met and that the
doctrine barred jurisdiction. In Gage v. Wells Fargo Bank, the plaintiff, Gage, “defaulted on his
mortgage, and Wells Fargo subsequently filed a foreclosure complaint in state court” which ruled
in Wells Fargo’s favor. 521 F. App’x at 50. Gage filed a subsequent complaint in federal court
challenging the foreclosure judgment. Id. The district court granted Wells Fargo’s motion to
dismiss and held that the claims were barred under the Rooker-Feldman doctrine. Id. In affirming
the decision, the Third Circuit held that all four prongs of the Rooker-Feidman test were satisfied
and stated that:
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Gage cannot evade Rook-er-feldman by arguing on appeal that he was not injured
by the foreclosure judgment, but rather by Wells Fargo’s purportedly fraudulent
actions. The complaint reveals the nature of Gage’s claims against Wells Fargo:
that the bank had no right to foreclose on the property and therefore committed
“criminal acts” by enforcing the foreclosure judgment (Counts I and IV). These
claims are in essence an attack on the state court judgment of foreclosure.
Accordingly, the claims against Wells Fargo were properly dismissed under the
Rook-er-feldman doctrine.
Id. at 51.
For similar reasons, the Court finds that the second and fourth requirements are met here
and that Counts I and II are barred by Rook-er-feldman. Even though Plaintiff frames her injuries
as caused by Seterus’ conduct, Counts I and II effectively complain of injuries caused by the
Bergen County State Court’s final judgment. (See, e.g., Compi. ¶J60—62, 76 (alleging that Setenis
had no standing to collect on the debt because Seterus failed to apply Plaintiffs monthly
payments):

¶J 63—66,

77 (arguing that Seterus’ foreclosing on Plaintiffs home was inappropriate

because Seterus improperly declared that Plaintiff was in default on the mortgage loan);

¶ 67—69,

$2 (arguing that Seterus’ foreclosure action constituted a breach of contract and that Fannie Mae
is liable for the conduct of its agent Seterus)).

It is thus “abundantly clear” that Plaintiffs

Complaint is “in essence an attack on the state court judgment of foreclosure.” Gage, 521 F. App’x
at 51.
Adjudicating Plaintiffs claims would require this Court to impermissibly engage in
appellate review of the foreclosure action. In particular, an adjudication of Plaintiffs breach of
contract claims would challenge the validity of the foreclosure action itself. See Ogbebor v. IF.
Morgan Chase, N.A., No. 16-3400 (FLW). 2017 U.S. Dist. LEXIS 14790, at *30 (D.N.J. Feb. 2,

2017) (stating that, while Plaintiff characterized their harm as relating to Defendant’s conduct, the
breach of contract claim implicitly challenges the validity of the mortgage and Defendant’s right
to foreclose, and thus seeks to attack the state court foreclosure judgment) (citing to Siljee v. At!.
6

Stewardship Bank, No. 15-1762, 2016 U.S. Dist. LEXIS 63257, at *12 (D.N.J. May 12, 2016)).
“This type of action is exactly what Booker-f elthncm is meant to prevent: an attempt to invalidate
the final judgment of foreclosure.., from a state court action in a separate federal court action.”
Witlottghbv v. Zucket, Goldberg & Ackerman, LLC, No. 13-7062 (FSH), 2014 U.S. Dist. LEXIS
81976, at *10 (D.N.J. June 16, 2014). For these reasons, the Court finds that it does not have
jurisdiction over Plaintiffs breach of contract and breach of good faith and fair dealing claims.
Therefore, Counts I and II against Seterus and Fannie Mae are hereby dismissed.
II.

fair Debt Collection Practices Act

To state a claim under the FDCPA, a plaintiff must allege that “(1) [she] is a consumer, (2)
the defendant is a debt collector, (3) the defendant’s challenged practice involves an attempt to
collect a ‘debt’ as the Act defines it, and (4) the defendant has violated a provision of the FDCPA
in attempting to collect the debt.” Douglass v. Convergent Otttsottrcing, 765 F.3d 299, 303 (3d
Cir. 2014). An action under the FDCPA must be brought within one year from the date on which
the alleged violation occurred. 15 U.S.C.

§

1692k(d); see also Destefano v. Udren Law Offices,

P.C., No. 16-7559 (FLW), 2017 U.S. Dist. LEXIS 101081, at *21 (D.N.J. June 29, 2017). In this
case, Seterus attempted to collect the debt by way of its April 19, 2016 letter declaring that Plaintiff
was in default on the mortgage loan. (Cornpl.

¶ 37).

Additionally, Plaintiffs Complaint was not

filed until August 8, 2017. (See Id.). As this record makes clear, Plaintiffs Complaint was filed
more than a year after Seterus’ letter, which was the source of the alleged violation. Therefore,
Plaintiffs FDCPA claim is time barred and the Court hereby grants Defendants’ Motion to
Dismiss Count III.

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III.

Real Estate Settlement Procedures Act

Under RESPA, a mortgage loan servicer who receives a qualified written request (“QWR”)
regarding a mortgage loan is obligated to both conduct a reasonable investigation and respond to
the request. 12 C.F.R.

§

1024.35(e). Under New Jersey law, a mortgage loan is extinguished once

ajudgrnent of foreclosure is entered. Genidv. Fannie Mae, No. 15-06787 (PGS), 2016 U.S. Dist.
LEXIS 100896, at *10 (D.N.J. Aug. 2, 2016) (dismissing RESPA claim because the QWR and
related communications occurred post-foreclosure) (citing Va. Beach Fed. v. Bank of N. Y/Nat ‘1
C’rnty. Div., 299 N.J. Super. 181, 188 (App. Div. 1998)). Here, Plaintiff sent her QWR letter to
Seterus in May 2017. (Compl.

48). This letter was sent afier the foreclosure judgment, which

was decided in February 2017. (Id.

¶ 43).

Therefore, Seterus had no obligation to respond, because

the mortgage loan was extinguished before Plaintiff sent the QWR letter. See Genid, 2016 U.S.
Dist. Lexis at *10. for these reasons, the Court detenriines that Plaintiff has failed to state a claim
under RESPA and dismisses Count IV.
IV.

Fair Credit Reporting Act

The Court need not analyze Count V, as Plaintiff has acknowledged that her FCRA claim is
insufficient. (ECF No. 19 at 32). Plaintiff instead requests leave to amend Count V in order to
correct this defect. (Id.). Rule 15(a)(2) provides that leave to amend should be freely given when
justice so requires. Fed. R. Civ. P. 15(a)(2). “Leave shall be freely given in the absence of undue
delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies
in previous amendments, undue prejudice or futility of the amendment.” hi

i-c

caterpillar Inc., 67

F. Supp. 3d 663, 668 (D.N.J. 2014) (citing Fornan v. Davis, 371 U.S. 178, 182 (1962)). The Court
does not find any evidence of “bad faith” or “undue delay” as this is Plaintiffs first request to

amend, and she has not had many opportunities to litigate her claims up until this point. See Glen
8

Ridge Surgi center, LLC

1’.

Horizon Blue Cross & Blue Shield of N.J., No. 08-6 160 (JLL). 2011

U.S. Dist. LEXIS 138449, at *15 (D.N.J. Sep. 16, 2011). Accordingly, the Court shall dismiss
Count V without prejudice to allow Plaintiff leave to amend her Complaint as to Count V in a
manner that is consistent with and not otherwise precluded by the findings and conclusions reached
by this Court in this opinion.
CONCLUSION
For the aforementioned reasons, the Court grants Defendants’ Motion to Dismiss Counts
I, II, III, and IV with prejudice. Furthermore, the Court grants Defendants’ Motion to Dismiss
Count V without prejudice to allow Plaintiff leave to amend her Complaint. An appropriate order
follows this opinion.

Dated: November #‘‘2O17

J$E L. LINARES
,.l1ief Judge, United States District Court

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