FORCELLATI v. PHH MORTGAGE CORPORATION et al
Filing
17
OPINION. Signed by Judge Claire C. Cecchi on 11/26/2018. (JB, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
RITA FORCELLATI,
Civil Action No.: 18- 1118 (CCC)
Plaintiff,
OPINION
v.
PHH MORTGAGE CORPORATION, et al.,
Defendants
CECCHI, District Judge.
I.
INTRODUCTION
This matter comes before the Court by way of Defendant PHH Mortgage Corporation’s
(“PHH”) motion to dismiss Plaintiff’s Complaint 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 12(b)(6). (ECF No. 7). Plaintiff filed an
opposition to this motion (ECF No. 10 (“Pl.’s Opp’n”)) to which Defendant PHH has replied (ECF
No. 11 (“Def.’s Reply”). This motion has been decided without oral argument pursuant to Federal
Rule of Civil Procedure 78. For the reasons discussed below, Defendant PHH’s motion to dismiss
Plaintiffs Complaint is granted and Plaintiffs Complaint is dismissed.’
1
Plaintiffs Motion for Default Judgment as to Gino Ramundo is presently pending before the
Court. (ECF No. 13). As discussed in detail below, Plaintiff’s Complaint is being dismissed.
Accordingly, Plaintiff’s Motion for Default Judgment as to Gino Ramundo is hereby denied as
moot.
1
II.
BACKGROUND
The following facts are accepted as true for purposes of the instant motion. Plaintiff Rita
Forcellati, formerly known as Rita Ramundo, and Defendant Gino Ramundo obtained a loan and
purchased real property located at 57 Old Crown Road, Old Tappan, New Jersey 07675
(“Property”). (ECF No. 2 (“Reiley Cert”), Ex. A).2 On May 14, 2010, Defendant Ramundo took
out a mortgage with Defendant PHH to refinance the existing mortgage on the Property. (ECF
No. 1 (“Compi.”) ¶ 8). The loan from Defendant PHH was in the principal amount of $615,000.00
(“Loan”) and was memorialized by a note (“Note”) executed by Defendant Ramundo on the same
day and secured by the Property. (Reiley Cert., Ex. B). Upon refinancing, $602,850.18 was used
to satisfy the prior mortgage from Plaintiff and Defendant Ramundo on the Property to Valley
National Bank (“Valley Mortgage”). (Reiley Cert., Ex. C). Accordingly, the Valley Mortgage
was cancelled on June 10, 2010. (Id.).
To secure repayment of the Loan, Plaintiff and Defendant Ramundo also signed and
delivered to PHH a mortgage (“Mortgage”), granting to Mortgage Electronic Registration
Systems, Inc. (“MERS”), as nominee for PHH and its successors and assigns, a perfected first
priority lien on the Property. (Reiley Cert., Ex. E). The Mortgage provided that in the event of a
default, the mortgagee may accelerate all sums due and owning under the Note and Mortgage.
(Id.). The Mortgage was later assigned to PHH on February 4, 2015 (“Assignment of Mortgage”).
2
Plaintiff does not include copies of the Deed, Mortgage, Valley Mortgage, Note, and Assignment
of Mortgage as attachments to her Complaint, however, Defendant PHH has provided copies of
these documents as attachments to its motion to dismiss. (Reiley Cert., Exs. A-C, E, F). The Court
may consider the face of a complaint, and documents relied upon in the complaint. See Pension
Ben. Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3” Cir. 1993) (“a court may
consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to
dismiss”). Here, Plaintiffs Complaint explicitly relies on the existence of these documents. (ECF
No. 1 ¶ 8-9, 13-14 and 20). As such, the Court will properly consider the documents with
Defendant’s motion to dismiss.
2
(Reiley Cert., Ex. F). Plaintiff and Defendant Ramundo defaulted under the terms of the Mortgage
and PHH elected to accelerate all sums due and owing under the Note and Mortgage.
Subsequently, in early 2016, Defendant PHH brought a foreclosure action against Plaintiff
and Defendant Ramundo in the New Jersey Superior Court, Chancery Division, Bergen County.
(Compi.,
¶ 20).
Plaintiff filed a contesting answer with affirmative defenses and counterclaims,
claiming that she did not sign the Mortgage.3 (Reiley Cert., Ex. I). At the close of discovery and
following depositions, PHH filed a Motion for Summary Judgment. (Reiley Cert., Ex. I). Plaintiff
opposed the motion arguing that she was not present at the closing and did not consent to the new
Mortgage, and further amended her answer. (Reiley Cert., Exs. K, I). Notably, she did not contest
that the Loan was in default or that she had not cured the default. (Id.). The court ultimately
ordered that Plaintiffs amended answer with affirmative defenses and counterclaims be stricken
with prejudice and issued a final judgement of foreclosure on December 18, 2017 for the amount
In connection with the motions, Defendant PHH has attached records of the state court
foreclosure proceeding. These are cited, not for the facts contained therein, but only in order to
establish the nature and scope of prior proceedings between the parties, and the rulings of the state
court. Such records are subject to judicial notice:
[O]n a motion to dismiss, we may take judicial notice of another
court’s opinion—not for the truth of the facts recited therein, but for
the existence of the opinion, which is not subject to reasonable
dispute over its authenticity. See Kramer v. Time Warner Inc., 937
F.2d 767, 774 (2d Cir. 1991); United States v. Wood, 925 f.2d 1580,
1582 (7th Cir. 1991); see also funky. Commissioner, 163 f.2d 796,
800-01 (3d Cir. 1947) (whether a court may judicially notice other
proceedings depends on what the court is asked to notice and on the
circumstances of the instant case).
Silfee v. Ati. Stewardship Bank, No. 15-CV-1762, 2016 WL 2770806, at *3 (D.N.J. May 12,2016)
(citing S. Cross Overseas Agencies, Inc. v. Wah Kwong Shipping Grp. Ltd., 181 F.3d 410, 426-27
(3d Cir. 1999)); see generally Fed. R. Evid. 201.
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of $611,722.52. (Reiley Cert., Ex. D). Plaintiffs motion for reconsideration of the court’s order
striking Plaintiffs answer was subsequently denied. (Reiley Cert., Ex. 0).
On March 29, 201$, Plaintiff filed her Complaint in the instant action alleging the
following: (1) Violation of Fair Debt Collection Practices Act (15 U.S.C.
of the Truth-in-Lending Act (15 U.S.C.
Act (N.J.S.A.
§ 1692); (2) Violation
§ § 1601); (3) Violation ofthe New Jersey Consumer Fraud
§ 56:8-1); (4) Negligence; (5) Legal Fraud; and (6) Breach of Contract—Failure to
Observe Duty of Good Faith & Fair Dealing. (Compi. at 5, 7, 8, 11, 13, 15). On April 19, 2012,
Defendant PHH filed the instant motion to dismiss.
III.
LEGAL STANDARD
Rule 12(b)(1) allows a court to dismiss a complaint for lack of subject matter jurisdiction.
When jurisdiction is challenged, the burden of proof rests on the party asserting it. See Tobin v.
United States, 170 F.Supp.2d 472, 476 (D.N.J.2001). The court must first determine whether the
motion is a facial attack on the complaint or an attack on the facts. See Carpet Group Int’l v.
Oriental Rug Imp. Ass ‘11, 227 F.3d 62, 69 (3d Cir.2000). When a court addresses a facial attack
on a complaint it must, as with a 12(b)(6) motion, accept all allegations as true and then only
answer the legal question. See Snyder v. Lipuma, No. 05-3819, 2006 WL 1044217, at *1 (D.N.J.
Apr. 17, 2006).
However, when a complaint is attacked on the existence of subject matter
jurisdiction in fact, the court is not obligated to only look at the face of the complaint, but, instead,
may consider matters outside the pleadings. See Mortensen v. First federal Savings & Loan
Association, 549 F.2d 884, 891 (3d Cir.1977).
Additionally, for a complaint to survive dismissal pursuant to Federal Rule of Civil
Procedure 1 2(b)(6), it “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 Bell Atl.
4
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). 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. See Phillips v. Cnty. ofAllegheny, 515
f.3d 224, 234 (3d Cir. 200$). “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 (3dCir. 1994).
IV.
DISCUSSION
The Court concludes that it lacks subject matter jurisdiction over Plaintiffs Complaint
pursuant to the Rooker-feidman doctrine. To the extent that Plaintiffs claims are not barred by
Rooker-feidman, the Court fmds that Plaintiffs claims are barred by the entire controversy
doctrine. Thus, for the following reasons, the Court dismisses Plaintiffs Complaint.
A.
This Court Lacks Subject Matter Jurisdiction Pursuant to the Rooker
Feldman Doctrine
Defendant contends that Plaintiffs Complaint is an “attempt to circumvent the final
judgment awarded to PHH against Plaintiff in a New Jersey state foreclosure action entitled PHH
Mortgage Corporation v. Gino Ramundo and Rita Ramundo, His Wife, in the Superior Court of
New Jersey, Chancery Division of Bergen County, bearing docket number F-007944-16.” (ECF
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No. 7-1 (“Defs Br.”) at 1).
The Rooker-Feldman doctrine divests federal courts of subject matter jurisdiction where
the requested relief would reverse a prior state court decision or void its ruling. See Rooker v.
Fidelity Trust Co., 263 U.S. 413 (1923); District of Columbia Court ofAppeals v. feldman, 460
U.S. 462 (1983); see also 28 U.S.C.
§ 1257. There are four factors used to determine whether the
Rooker-Feidman Doctrine applies: “(1) the federal plaintiff lost in state court; (2) the plaintiff
complains 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 Western Mining & Mineral Co. v. fox Rothschild LLP, 615
F.3d 159, 166 (3d Cir. 2010).
Here, all four factors are met. The first and third prongs are clearly met in the instant
action: Plaintiff lost in the foreclosure action and judgment was rendered prior to Plaintiffs filing
of the instant action in this Court. (Reiley Cert., Ex D). The second and fourth prongs are also
satisfied as discussed below. Based upon similar factual circumstances, the Third Circuit held in
Gage v. Wells Fargo Bank, NA AS, 521 F. App’x. 49 (3d Cir. 2013) that Rooker—feldman barred
jurisdiction.
Similar to Plaintiff here, “Gage defaulted on his mortgage, and Wells Fargo
subsequently filed a foreclosure complaint in state court” which ultimately ruled in Wells Fargo’s
favor. Id. at 50. Gage filed a complaint in federal court challenging the foreclosure judgment and
sheriffs sale. Id. The district court subsequently granted Wells Fargo’s motion to dismiss and
held that the claims were barred under the Rooker—feldman doctrine. Id. In affirming, the Third
Circuit held that all four prongs of the Rooker—fetdman test were satisfied and stated that:
Gage cannot evade Rooker—fetdrnan 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
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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. Furthermore, an aspect of the relief
that Gage requests—to have the deed to the property restored to
him—makes it abundantly clear that he seeks to overturn the
foreclosure judgment. Accordingly, the claims against Wells Fargo
were properly dismissed under the Rooker—Fetdman doctrine.
Id. at 51 (emphasis added).
For the same reasons, the Court finds that the second and fourth requirements are met here
and that Rooker—Feidman strips this Court ofjurisdiction to the extent that Plaintiff asks this Court
to overturn the foreclosure action judgment.
The gravamen of Plaintiffs Complaint is that
Defendant PHH, through its notary, failed to verify the person purporting to be Plaintiff when the
Mortgage was being signed resulting in a forgery. (Compl., ECF No. 1
¶J 22-23).
Plaintiff further
alleges that she lost her equity in the property and requests, in part, that the Court grant her
compensation for damages totaling the entire value of the Property upon loss of the Property due
to the foreclosure action and compensation for damages totaling the entire amount Plaintiff has
suffered in arrears including interest.
The Court finds that the essence of Plaintiffs Complaint is that the Mortgage is invalid.
Any such contention is closed off by the final judgment of foreclosure. To the extent that Plaintiff
is asking this Court to overturn the foreclosure action judgment, adjudicating Plaintiffs claims
would require this Court to impennissibly engage in appellate review of the foreclosure action.
“This type of action is exactly what Rooker—Feldman is meant to prevent: an attempt to invalidate
the final judgment of foreclosure and various other orders from a state court action in a separate
federal court action.” Willoughby v. Zucker, Goldberg & Ackerman, LLC, No. 13-7062, 2014 WL
2711177, at *4 (D.N.J. June 16, 2014) (applying Rooker-feidman doctrine where borrower was
“seeking to litigate the validity of the foreclosure sale.
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.
.
and is relitigating the redemption value
of her home”). As such, Plaintiffs Complaint must be dismissed.
B.
Plaintiffs Claims are Barred by Res Judicata
Defendant PHH argues that Plaintiffs claims were previously brought in the state
foreclosure action and thus are barred by resfudicata in the instant action. (Def. ‘s Br. at 20). Res
judicata applies where (1) judgment in the prior action is valid, final, and on the merits, (2) the
parties in the later action are identical to or in privity with those in the prior action, and (3) the
claim in the later action grows out of the same transaction or occurrence as the claim in the earlier
one. See United States v. Athlone Indus., Inc., 746 F.2d 977, 983 (3d Cir. 1984).
Plaintiff concedes that the second two elements are met. (Pl.’s Opp’n at 11). However,
Plaintiff argues that while Plaintiff brought certain affirmative defenses and counterclaims,
including but not limited to, violations of the FDCPA, common law fraud, and claims against
Defendant Ramundo for forgery or for wrongful impersonation, the state court did not address
these claims on the merits. (Pl.’s Opp’n at 3).
Whether a state court judgment should have a preclusive effect in a subsequent federal
action depends on the law of the state that adjudicated the original action. See Greenteaf v.
Garlock, Inc., 174 F.3d 352, 357 (3d Cir. 1999) (“To determine the preclusive effect of [plaintiffs]
prior state action we must look to the law of the adjudicating state.”); see also Allen v. licCurry,
449 U.S. 90, 96 (1980) (“Congress has specifically required all federal courts to give preclusive
effect to state-court judgments whenever the courts of the State from which the judgments emerged
would do so.”). New Jersey claim preclusion law, like federal law, has the three essential elements
mentioned above. See Watkins v. Resorts Int’l Hotel and Casino, Inc., 591 A.2d 592, 599 (N.J.
1991). If those three requirements are met, then the doctrine bars “the parties or their privies from
relitigating issues that were or could have been raised in that action.” Allen v. McCurty, 449 U.S.
8
90, 94; Watkins, 591 A.2d at 599 (“Claim preclusion applies not only to matters actually
determined in an earlier action, but to all relevant matters that could have been so determined.”)
A review of the record indicates that the court granted Defendant PHH’s Motion to Strike
Plaintiffs answer with affirmative defenses and counterclaims with prejudice. (Reiley Cert., Ex.
D). There is no question that the state foreclosure action was a valid and final judgment on the
merits. Moreover, Plaintiff does not contest that the parties in the instant action are identical to or
in privity with those in the state foreclosure action, and that the claims in the instant action grew
out of the same transaction or occurrence as the claim in the earlier foreclosure action. Because
the court dismissed Plaintiffs claims with prejudice, such claims were decided on the merits, and
thus Plaintiffs argument fails. See Gambocz v. Yelencsics, 468 F.2d 837 (3d Cir. 1972) (dismissal
with prejudice constitutes an adjudication on the merits “as fully and completely as if the order
had been entered after trial”); Lawlor v. Nat’l Screen Serv. Corp., 349 U.S. 322, 327 (1955)
(dismissal of claims with prejudice bars subsequent suit on the same issue, where operative facts
of subsequent suit were identical). Accordingly, the Court finds that to the extent Plaintiffs claims
are not barred by Rooker-feldman, Plaintiffs claims are barred by resjudicata.
C.
Plaintiffs Remaining Claims are Barred by the Entire Controversy Doctrine4
To the extent Plaintiffraises independent claims regarding Defendant’s alleged misconduct
The Court notes that, unlike the Rooker—feidman doctrine, the entire controversy doctrine “does
not defeat subject matter jurisdiction” and is therefore applied under Rule 12(b)(6), but only where
its application is “apparent on the face of the complaint[.J” See Brody v. Hankin, 145 Fed.Appx.
768, 771 (3d Cir. 2005). The Court finds to the extent that it has jurisdiction over Plaintiffs claims,
it is apparent that the entire controversy doctrine applies based on the face of the Complaint. Cf
Mayer v. Belichick, 605 f.3d 223, 230 (3d Cir. 2010) (“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.”); see also Toscano v. Conn. Gen. Life Ins. Co., 288 Fed.Appx. 36, 38 (3d Cir. 2008)
(concluding that Court can review the record of prior actions between the parties and take judicial
notice of same in considering a motion to dismiss).
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preceding and allegedly resulting in the state-court judgment, such claims are barred by the entire
controversy doctrine. Like traditional res judicata, the entire controversy doctrine is intended to
prevent piecemeal litigation by requiring the assertion of all claims arising from a single
controversy in one action. See Prevratit v. Mo/zr, 678 A.2d 243, 248 (N.J. 1996). Its “purposes
are to encourage comprehensive and conclusive litigation determinations, to avoid fragmentation
of litigation, and to promote party fairness and judicial economy and efficiency
....“
K-Land Corp.
No. 28 v. Landis Sewerage Auth., 800 A.2d 861, 868 (N.J. 2002). “Generally speaking, the entire
controversy doctrine requires whenever possible all phases of a legal dispute to be adjudicated in
one action. At a minimum, all parties to a suit should assert all affirmative claims and defenses
arising out of the underlying controversy.” Prevratit, 678 A.2d at 246. In other words, “a party
cannot withhold part of a controversy for later litigation even when the withheld component is a
separate and independently cognizable cause of action.” In re Mullarkey, 536 F.3d 215, 229 (3d
Cir. 2008) (citing Paramount Aviation Corp. v. Agitsta, 178 F.3d 132, 137 (3d Cir. 1999)). In
applying the doctrine, “the central consideration is whether the claims
...
arise from related facts
or the same transaction or series of transactions.” DiTrilio v. Antiles, 662 A.2d 494, 502 (N.J.
1995). The doctrine is an “equitable principle under which the Court may exercise its judicial
discretion based on the particular circumstances inherent in a given case.” In re Mullarkey, 536
F.3d at 230 (citing Mystic Isle Dev. Corp. v. Perside & Nehmad, 662 A.2d 523, 529—30 (N.J.
1995)).
The entire controversy doctrine applies to foreclosure proceedings, but extends only to
“germane” counterclaims. See In re Mullarkey, 536 F.3 d at 228 (citing Leisure Tech. -Ne. v.
Klingbeil Holding Co., 349 A.2d 96, 97 (N.J. 1975)); N.J. Ct. R. 4:64-5. In the foreclosure context,
germane claims are those “arising out of the mortgage transaction which is the subject matter of
10
the foreclosure action,” Leisure Tech.-Ne., 349 A.2d at 98; see also Coleman v. Chase Home Fin.,
LLC ex rel. Chase Manhattan Mortgage Corp., 446 F ed.Appx. 469 (3d Cir. 2011) (applying entire
controversy doctrine to mortgage transaction). A claim challenging the validity of the underlying
loan in a foreclosure action is considered gennane and is thus subject to the entire controversy
doctrine—i.e., it must be brought as a counterclaim in the foreclosure action. See Bank ofN.Y v.
Ukpe, No. 17 10-09, 2009 WL 4895253 at *7 (D.N.J. Dec. 9, 2009).
Here, although the foreclosure action is largely the genesis of Plaintiffs Complaint, the
allegations and causes of actions are couched in terms of Defendant PHH’s failure to follow
procedure and verify that Plaintiff was in fact the person signing the Mortgage, which then allowed
Defendant Ramundo to successfully obtain the Mortgage without Plaintiffs consent. (Compl.
¶
25). However, notwithstanding that Plaintiff appears to raise claims that were previously raised
in the state court, to the extent such claims are independent, and are not barred by Rooker—
Feldman, they are barred under the entire controversy doctrine.
Plaintiffs claims are germane because they clearly “aris[e] out of the mortgage transaction
which is the subject matter of the foreclosure action.” Leisure Tech., 349 A.2d at 98. Plaintiff
here is essentially arguing that the mortgage transaction, which is the subject of the foreclosure
action in state court, is invalid and that Defendant acted illegally in pursuing collection under this
allegedly invalid loan. (See generally Compl.). All of these claims arise from the existence of the
Mortgage and Loan and Defendant PHH’s rights thereunder. See DiTrilio, 662 A.2d at 502. In
other words, the validity of the Mortgage ties in directly with the causes of action asserted in
Plaintiffs Complaint here. Lewis v. Fennymac Corp., No. 16-1514, 2016 WL 2901707, at *4
(D.N.J. May 18, 2016), aff’d sub nom. Lewis v. O’Donnell, 674 F. App’x 234 (3d Cir. 2017).
Moreover, Plaintiffs claims here were undoubtedly known to Plaintiff and had accrued
11
prior to the time of the underlying action. According to Plaintiff, she learned of Defendant
Ramundo’s forgery in 2014. (P1’s. Opp’n at 2; Compi.
¶
14). Thus, Plaintiff had “immediate
recourse with the chancery judge in the foreclosure action” for issues concerning Defendant
Ramundo’s forgery and Defendant PHH’s collection efforts related to the mortgage, yet Plaintiff
“failed to take that route as [she was] required to.” Sherk v. Countrywide Home Loans, Inc., No.
08-5969, 2009 WI 2412750, at *6 (E.D. Pa. Aug. 5, 2009) (“The time and the place to challenge
standing [related to the mortgage] was during the pendency of the foreclosure action or afierwards
in the state court where the [plaintiff] could have raised the issue.”). Consequently, Plaintiffs
claims here must be dismissed pursuant to the entire controversy doctrine, to the extent they are
not barred by Rooker—Fetdman.
V.
CONCLUSION
For the reasons set forth above, Defendant PHH’s motion to dismiss Plaintiffs Complaint
is hereby GRANTED, but without prejudice as to Plaintiffs right to seek any further relief in New
Jersey’s state courts. An appropriate Order accompanies this Opinion.
Dated
‘JQJ —oe-r
ç,
20
CLAIRE C. CECCHI, U.S.D.J.
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