HAGER v. CITIMORTGAGE, INC. et al
OPINION filed. Signed by Judge Freda L. Wolfson on 2/27/2017. (mps)
**NOT FOR PUBLICATION**
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
CITIMORTGAGE, INC., a New
York Corporation; SELENE
FINANCE, LP, a Delaware Limited :
Partnership; and DOES 1 through
DONALD HAGER, an Individual,
Civil Action No. 16-03348 (FLW) (LHG)
WOLFSON, United States District Judge:
Before the Court is the motion of Defendant Selene Finance, LP, to dismiss the
Complaint of pro se Plaintiff Donald Hager. Plaintiff contends that Defendant Selene’s failure to
honor the alleged permanent modification of Plaintiff’s mortgage loan offered by Defendant Citi
and Defendant Selene’s failure to respond to Plaintiff’s requests for certain mortgage documents
and other information violated the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et
seq. (“RESPA”), the New Jersey Consumer Fraud Act, N.J.S.A. § 56:8-1 et seq. (“NJCFA”), and
the New Jersey common law of fraud. Defendant Selene moves to dismiss on the grounds that
Plaintiff has alleged neither a qualified written request, nor actual damages sufficient to state a
claim under RESPA, and has failed to allege fraud under either the NJCFA or common law. For
the reasons that follow, Defendant Selene’s motion is granted in part and denied in part as
follows: (i) Plaintiff’s RESPA claim (Count I) is dismissed; (ii) Plaintiff’s NJCFA claim (Count
II) is dismissed to the extent based on the factual predicate of Plaintiff’s RESPA claim [Compl. ¶
41(f)], but Defendant’s motion to dismiss Count II is denied on all other bases 1; and (iii)
Defendant’s motion to dismiss Count IV is denied on the basis of Plaintiff’s claim that
Defendant Selene’s February 19, 2016 offer of a trial modification misrepresented the amount
due on Plaintiff’s loan [Compl. ¶ 58 (p)], but Count IV is dismissed on all other bases.
I. FACTUAL BACKGROUND & PROCEDURAL HISTORY
Plaintiff was approved for a $195,000 mortgage loan from Defendant Citi on May 6,
2008. Compl. ¶ 20. Plaintiff subsequently executed a mortgage note and deed of trust, securing
the loan by the property located at 57 Washington Avenue, Leonardo, New Jersey 07737 (the
“Property”). Id. At some point between May 2008 and December 2014 Plaintiff defaulted on his
loan. Id. at ¶ 21. On December 5, 2014, the Superior Court of New Jersey, Chancery Division,
Monmouth County, entered a final judgment of foreclosure against the Property. 2 On or about
July 7, 2015, Defendant Citi offered Plaintiff a trial mortgage modification at a 6.5% interest
rate, with three monthly trial payments of $2,746.43 due on August 1, 2015; September 1, 2015;
and October 1, 2015. Id. at ¶ 22. Plaintiff timely made all three trial payments. Ibid.
On September 17, 2015, Defendant Citi sent Plaintiff a billing statement indicating that
the outstanding principal balance of Plaintiff’s loan was $191,311.80. Id. at ¶ 23. On October 16,
In briefing, Defendant Selene moved to dismiss Count II only based on Defendant Selene’s
failure to respond to Plaintiff’s alleged qualified written response (Compl. ¶ 41(f)); Defendant
Selene did not address Count II based on Defendant Selene’s trial modification offer (Compl. ¶
41(e)) or the allegations in any of the other sub-paragraphs of Count II.
The Court relies on the judgment of foreclosure, which was submitted by Defendant Selene to
supplement its briefing on the motion to dismiss and in opposition to the preliminary injunction.
“[A] court may consider an undisputedly authentic document that a defendant attaches as an
exhibit to a motion to dismiss if the plaintiff's claims are based on the document.” In re Donald
J. Trump Casino Sec. Litig.-Taj Mahal Litig., 7 F.3d 357, 368 n.9 (3d Cir. 1993) (quoting
Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).
2015, Defendant Citi sent Plaintiff a letter stating that Defendant Citi intended to permanently
modify Plaintiff’s loan. Id. at ¶ 24. The permanent modification offered a 6.5% interest rate on a
$307,931.05 principal balance, with a monthly payment of $1,802.80. Ibid. The permanent
modification also recapitalized all previous past-due amounts. Ibid. At an unspecified time after
Plaintiff received Defendant Citi’s permanent modification offer, Plaintiff requested that Citi
provide an explanation for why the principal balance of Plaintiff’s loan was increased from
$191,311.80 to $307,931.05 between September and October 2015. Ibid. Defendant Citi had not
provided such an explanation as of the time the Complaint was filed.
On or about December 1, 2015, Defendant Citi transferred the loan-servicing rights on
Plaintiff’s loan to Defendant Selene. Id. at ¶ 25. Defendant Selene “refused to honor” the
permanent modification offered by Citi. Ibid.
On February 19, 2016, Defendant Selene offered Plaintiff a trial modification requiring a
$6,000 payment by February 20, 2016, and three additional trial payments of $2,885.86 on April
1, 2016; May 1, 2016; and June 1, 2016. Id. at ¶ 26. Selene’s proposed trial modification did not
take into account that previous past-due amounts had been recapitalized in Citi’s offered
permanent modification. Ibid.
On February 23, 2016, Plaintiff sent Defendant Selene a letter requesting copies of 1)
Plaintiff’s original 1003 loan application; 2) the good faith estimate; 3) the HUD-1 Settlement
Statement; 4) the truth in lending disclosures statement; 5) the current promissory note recorded
showing the current lienholder; 6) a “Bailee Letter” showing any transfer or sale of the debt and
any associated addendums to the promissory note; and 7) an Affidavit of Debt. Id. at ¶ 27. As of
the date of the filing of the Complaint, Defendant Selene failed to provide any of the requested
documents. Ibid. 3
At some time after the servicing rights to Plaintiff’s loan were assigned to Defendant
Selene, Plaintiff also requested that Defendant Selene provide a detailed accounting of how past
payments have been applied to Plaintiff’s loan balance. Id. at ¶ 28. Defendant Selene has not
provided such an accounting. Ibid.
Defendant Selene has had a force-placed insurance policy issued on the Property. Id. at ¶
29. Plaintiff maintains a separate homeowner’s insurance policy on the property, and requested
that Defendant Selene remove the force-placed policy. Id. Defendant Selene has not removed the
force-placed policy. Ibid.
On June 9, 2016, Plaintiff, proceeding pro se, filed the four-count Complaint in this case.
Count I, for violation of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605
(“RESPA”), is raised against Defendant Selene only. Counts II (violation of the New Jersey
Consumer Fraud Act, N.J.S.A. § 56:8-1 et seq.) and IV (common law fraud) are raised against
both Defendants Selene and Citi. Count III, a New Jersey state common law claim for breach of
contract, does not specify against whom it is brought, but alleges breach by Defendant Citi only.
Id. at ¶ 51 (“As an actual and proximate cause of Citi’s breach, Plaintiff was damaged.”). The
Court thus construes Count III as raised against Defendant Citi only, and, indeed, the parties
appear to have briefed Defendant Selene’s motion to dismiss as if only Counts I, II, and IV were
in issue against Selene.
On October 4, 2016, Plaintiff filed a motion for a temporary restraining order and
preliminary injunction, restraining the execution of a sheriff’s sale of the Property. The same
The Complaint does not explicitly mention whether or not the “Bailee Letter” was ever
provided, but asserts elsewhere that no documents have been received in response to Plaintiff’s
day, the Court denied Plaintiff’s motion for a temporary restraining order, but granted Plaintiff’s
request for an expedited briefing schedule on the preliminary injunction motion. The parties fully
briefed the motion, and, on October 17, 2016, the parties appeared before the Court
telephonically (Plaintiff) or in-person through counsel (Defendants) for a preliminary injunction
hearing. The sheriff’s sale was scheduled to take place in the late afternoon of October 17, 2016,
so the Court convened the hearing in the morning. In advance of the hearing, on October 14,
2016, Defendant Selene, at the Court’s request, provided the Court with a copy of the final New
Jersey state court judgment of foreclosure on the Property. At the October 17, 2016 hearing
Defendants Citi and Selene proffered that no acceptance of Citi’s offer of permanent
modification had been accepted, and that no payments under the permanent modification had
been made. Plaintiff did not offer any evidence in support of his position that a permanent
modification of his mortgage loan had been executed. Accordingly, the Court denied Plaintiff’s
motion and ruled during the hearing — later formalized its ruling in an order issued October 18,
2016 — that any preliminary injunction seeking to invalidate the state court judgment of
foreclosure was barred by the Rooker-Feldman doctrine, and any preliminary injunction seeking
to compel Defendants to honor the terms of the permanent modification lacked sufficient
likelihood of success on the merits due to the absence of evidence in support provided by
Despite the proffers made by Defendants during the preliminary injunction hearing, no
motions for summary judgment on the permanent modification issue were forthcoming.
Accordingly, the only motion before the Court is Defendant Selene’s motion to dismiss.
II. STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b)(6) provides that a court may dismiss a claim “for
failure to state a claim upon which relief can be granted.” When reviewing a motion to dismiss,
courts must first separate the factual and legal elements of the claims, and accept all of the wellpleaded facts as true. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). All
reasonable inferences must be made in the plaintiff’s favor. See In re Ins. Brokerage Antitrust
Litig., 618 F.3d 300, 314 (3d Cir. 2010). In order to survive a motion to dismiss, the plaintiff must
provide “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). This standard requires the plaintiff to show “more than a
sheer possibility that a defendant has acted unlawfully,” but does not create as high of a standard
as to be a “probability requirement.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
The Third Circuit requires a three-step analysis to meet the plausibility standard mandated
by Twombly and Iqbal. First, the court should “outline the elements a plaintiff must plead to a state
a claim for relief.” Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir. 2012). Next, the court should “peel
away” legal conclusions that are not entitled to the assumption of truth. Id.; see also Iqbal, 556
U.S. at 678-79 (“While legal conclusions can provide the framework of a complaint, they must be
supported by factual allegations.”). It is well-established that a proper complaint “requires more
than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not
do.” Twombly, 550 U.S. at 555 (internal quotations and citations omitted). Finally, the court should
assume the veracity of all well-pled factual allegations, and then “determine whether they plausibly
give rise to an entitlement to relief.” Bistrian, 696 F.3d at 365 (quoting Iqbal, 556 U.S. at 679). A
claim is facially plausible when there is sufficient factual content to draw a “reasonable inference
that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. The third step of
the analysis is “a context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.” Id. at 679.
“As a general matter, a district court ruling on a motion to dismiss may not consider matters
extraneous to the pleadings. . . . However, an exception to the general rule is that a “document
integral to or explicitly relied upon in the complaint” may be considered “without converting the
motion [to dismiss] into one for summary judgment.” In re Burlington Coat Factory Sec. Litig.,
114 F.3d 1410, 1426 (3d Cir. 1997). “[A] court may consider an undisputedly authentic document
that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff’s claims are based on
the document.” In re Donald J. Trump Casino Sec. Litig.-Taj Mahal Litig., 7 F.3d 357, 368 n.9
(3d Cir. 1993) (quoting Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196
(3d Cir. 1993)). A court may also consider “any ‘matters incorporated by reference or integral to
the claim, items subject to judicial notice, matters of public record, orders, [and] items appearing
in the record of the case.’” Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006)
(quoting 5B Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 1357 (3d ed.
Courts are required to liberally construe pleadings drafted by pro se parties. Tucker v.
Hewlett Packard, Inc., No. 14-4699 (RBK/KMW), 2015 WL 6560645, at *2 (D.N.J. Oct. 29, 2015)
(citing Haines v. Kerner, 404 U.S. 519, 520 (1972)). Such pleadings are “held to less strict
standards than formal pleadings drafted by lawyers.” Id. Nevertheless, pro se litigants must still
allege facts, which if taken as true, will suggest the required elements of any claim that is asserted.
Id. (citing Mala v. Crown Bay Marina, Inc., 704 F.3d 239, 245 (3d Cir. 2013)). To do so, [a
plaintiff] must plead enough facts, accepted as true, to plausibly suggest entitlement to relief.”
Gibney v. Fitzgibbon, 547 Fed. Appx. 111, 113 (3d Cir. 2013) (citing Bistrian v. Levi, 696 F.3d
352, 365 (3d Cir. 2012)). “Liberal construction does not, however, require the Court to credit a
pro se plaintiff’s ‘bald assertions’ or ‘legal conclusions.’ ” Id. (citing Morse v. Lower Merion Sch.
Dist., 132 F.3d 902, 906 (3d Cir. 1997)). That is, “[e]ven a pro se complaint may be dismissed for
failure to state a claim if the allegations set forth by the plaintiff cannot be construed as supplying
facts to support a claim entitling the plaintiff to relief. Id. (citing Milhouse v. Carlson, 652 F.2d
371, 373 (3d Cir. 1981)).
A. Count I - RESPA
RESPA is “a consumer protection statute that regulates the real estate settlement process.”
Jones v. ABN Amro Mortg. Grp., Inc., 606 F.3d 119, 124 (3d Cir. 2010). Congress enacted RESPA
to “insure that customers throughout the Nation are provided with greater and more timely
information on the nature and costs of the settlement process and are protected from . . . certain
abusive practices” by loan servicers. 12 U.S.C. § 2601(a). Among other obligations, RESPA
imposes a duty upon loan servicers to respond to certain inquires by customer borrowers. 12
U.S.C. § 2605(e)(1)(A). § 2605(e)(1)(A) provides that:
If any servicer of a federally related mortgage loan receives a qualified written request
from the borrower . . . for information relating to the servicing of such loan, the servicer
shall provide a written response acknowledging receipt of the correspondence within 5
days . . . unless the action requested is taken within such period.
Ibid. (emphasis added). In relevant part, the statute further defines a “qualified written request” as
For purposes of this subsection, a qualified written request shall be a written
correspondence . . . that-(i) includes, or otherwise enables the servicer to identify, the name and account of
the borrower; and
(ii) includes a statement of the reasons for the belief of the borrower, to the extent
applicable, that the account is in error or provides sufficient detail to the servicer
regarding other information sought by the borrower.
12 U.S.C. § 2605(e)(1)(B).
Furthermore, “[t]he term ‘servicing’ means receiving any scheduled periodic payments
from a borrower pursuant to the terms of any loan, including amounts for escrow accounts
described in section 2609 of this title, and making the payments of principal and interest and such
other payments with respect to the amounts received from the borrower as may be required
pursuant to the terms of the loan.” 12 U.S.C. § 2605(i)(3).
In order to bring a claim under RESPA, a plaintiff must first identify a violation of one of
the statute’s obligations and then “‘must sufficiently allege one of two types of damages: (1) actual
damages to the borrower as a result of the failure to comply with § 2605; or (2) statutory damages
in the case of a pattern or practice of noncompliance with the requirements of § 2605. Additionally,
when basing a claim on actual damages, the borrower has the responsibility to present specific
evidence to establish a causal link between the financing institution's violation and their injuries.’”
Block v. Seneca Mortg. Servicing, No.16-CV-0449 FLW/LHG, 2016 WL 6434487, at *22 (D.N.J.
Oct. 31, 2016) (quoting Giordano v. MGC Mortg., Inc, 160 F. Supp. 3d 778, 781 (D.N.J. 2016)).
See also Hutchinson v. Delaware Sav. Bank FSB, 410 F. Supp. 2d 374, 383 (D.N.J. 2006)
(“[A]lleging a breach of RESPA duties alone does not state a claim under RESPA. Plaintiffs must,
at a minimum, also allege that the breach resulted in actual damages.”).
In addition to the statutory requirements, RESPA actions are also governed by a series of
regulations under the rulemaking authority of the Consumer Financial Protection Bureau,
collectively known as “Regulation X.” One of the provisions of Regulation X, entitled “Contact
information for borrowers to request information,” provides that
[a] servicer may, by written notice provided to a borrower, establish an address that a
borrower must use to request information in accordance with the procedures in this
section. The notice shall include a statement that the borrower must use the established
address to request information. If a servicer designates a specific address for receiving
information requests, a servicer shall designate the same address for receiving notices of
error pursuant to § 1024.35(c). A servicer shall provide a written notice to a borrower
before any change in the address used for receiving an information request. A servicer that
designates an address for receipt of information requests must post the designated address
on any Web site maintained by the servicer if the Web site lists any contact address for the
12 C.F.R. § 1024.36(b) (emphasis added).
In Count I, Plaintiff alleges that Defendant Selene violated RESPA by failing to provide
the documents requested in Plaintiff’s February 23, 2016 letter. Specifically, Plaintiff alleges that
Defendant Selene has failed to provide “the Loan’s original application, good faith estimate, HUD1 settlement statement, truth in lending disclosure statement, current promissory note recorded
showing lienholder, and affidavit of debt.” Compl. ¶ 35. Plaintiff claims to have suffered damages
as a result of Defendant Selene’s failure to respond, because Plaintiff was prevented from
“obtaining the proper documentation that would inform Plaintiff of his legal rights.” Id. at ¶ 37.
Defendant Selene moves to dismiss Plaintiff’s RESPA claim, on the grounds that (i) Plaintiff’s
February 23, 2016 letter is not a “qualified written request” (“QWR”) under RESPA; (ii) Plaintiff’s
letter, even if a QWR, was never legally received under RESPA’s implementing regulations
because Plaintiff sent it to the wrong address; and (iii) even were the letter a QWR, and were it
received at the correct address by Defendant Selene, Plaintiff has failed to plead actual damages.
Defendant’s third argument is dispositive, and the Court dismisses Plaintiff’s RESPA claim for
failure to plead actual damages.
1. Qualified Written Request
As noted above, in order to trigger the RESPA obligations of a loan servicer, a qualified
written request must be written, must include information identifying the name and account of the
borrower, must either state the reasons for the belief of the borrower that the account is in error or
provide sufficient detail regarding other information sought by the borrower, and must “relat[e] to
the servicing of [the borrower’s] loan.” 12 U.S.C. § 2605(e)(1)(A)-(B). Here, Defendant Selene
contends that Plaintiff’s February 23, 2016 letter fails to meet the last statutory requirement in that
the letter requests only documents relating to the origination and validity of the loan, not its
“servicing.” Although the Third Circuit has yet to discuss the parameters of the statutory definition
of “servicing” found in § 2605(i)(3), the Courts in this district to have applied the definition have
consistently found that the term does not include documents relevant only to the origination and
validity of the loan. As Chief Judge, then Judge, Simandle observed in Wallace v. Bank of Am.,
No. 11-CV-0038 JBS/KMW, 2011 WL 3859745, at *4 (D.N.J. Aug. 30, 2011):
The question before the Court is therefore whether “relating to” [servicing] should be read
broadly, to encompass virtually any request for information that might indirectly relate to
payments, or more narrowly, to exclude requests for information that only relate to
payments because the information is about the loan generally. The clear weight of
precedent lies with [r]equiring the relationship to be direct, excluding requests that only
relate to servicing because they address the validity of the loan or amendment of its terms.
And this approach makes sense in the wider context of § 2605, which is concerned with
consumer interactions with loan servicers as distinct from loan originators or loan holders,
even if those lines have blurred somewhat in the intervening decade.
See also Cole v. Wells Fargo Bank, N.A., No. 12-CV-1932 KM/MAH, 2016 WL 1242765, at *9
(D.N.J. Mar. 30, 2016) (plaintiff “also requests ‘original instruments of indebtedness’ . . . . This is
not properly speaking a request for information about the loan; it is a ‘show me the note’ demand,
or perhaps a demand for surrender of the original bearer paper, to which [plaintiff] was not entitled.
Nor is it a request for information about the balance, the payments, or the servicing of the loan.”);
Mercado v. Bank of Am., N.A., No. 12-CV-01123 WJM, 2013 WL 2933217, at *4 (D.N.J. June
13, 2013) (“[L]etters challenging only a loan’s validity or its terms are not qualified written
requests that give rise to a duty to respond under § 2605(e).”) (internal quotation omitted).
In reaching this conclusion, the courts of this District are in accord with the well-reasoned
precedents of the appellate courts outside of this Circuit, which have considered the issue. In
Medrano v. Flagstar Bank, FSB, 704 F.3d 661 (9th Cir. 2012), the Ninth Circuit expounded:
[the] requirement—that the letter must request information relating to servicing—ensures
that the statutory duty to respond does not arise with respect to all inquiries or complaints
from borrowers to servicers. RESPA defines the term “servicing” to encompass only
“receiving any scheduled periodic payments from a borrower pursuant to the terms of any
loan, including amounts for escrow accounts ..., and making the payments of principal and
interest and such other payments.” Id. § 2605(i)(3). “Servicing,” so defined, does not
include the transactions and circumstances surrounding a loan's origination—facts that
would be relevant to a challenge to the validity of an underlying debt or the terms of a loan
agreement. Such events precede the servicer's role in receiving the borrower's payments
and making payments to the borrower's creditors. Perhaps for that reason, Congress drafted
the statute so as not to include those matters.
The statute thus distinguishes between letters that relate to borrowers’ disputes regarding
servicing, on the one hand, and those regarding the borrower’s contractual relationship with
the lender, on the other. That distinction makes sense because only servicers of loans are
subject to § 2605(e)’s duty to respond—and they are unlikely to have information regarding
those loans’ originations. In summary, we hold that letters challenging only a loan’s
validity or its terms are not qualified written requests that give rise to a duty to respond
under § 2605(e).
Id. at 666–67. Accord Perron on behalf of Jackson v. J.P. Morgan Chase Bank, N.A., 845 F.3d
852, 857 (7th Cir. 2017); Matter of Parker, 655 F. App'x 993, 998 (5th Cir. 2016); Poindexter v.
Mercedes–Benz Credit Corp., 792 F.3d 406, 413–14 (4th Cir. 2015); Martini v. JPMorgan Chase
Bank, N.A., 634 F. App'x 159, 164 (6th Cir. 2015). This Court finds the reasoning of the ninth
Circuit in Medrano and the concurring Circuit Courts persuasive, in that in order to give
“servicing” its plain meaning as defined in the statute, “servicing” cannot be so broadly read as to
encompass documents and information that are merely related to other aspects of the loan, such as
its origination, transfer, or continuing validity.
Here, reviewing the copy of Plaintiff’s February 23, 2016 letter request attached to the
Complaint, 4 and interpreting it in the light most favorable to the Plaintiff, Plaintiff requests seven
The Court relies on Plaintiff’s February 23, 2016 letter in considering the motion to dismiss, as
documents: (i) the original 1003 loan application; (ii) the good faith estimate; (iii) the HUD-1
settlement statement; (iv) the truth in lending disclosures statement; (v) the current promissory
note recorded showing lienholder; (vi) the “Bailee Letter”; and (vii) the “Affidavit of Debt.” 5 The
first four documents are clearly recognizable as documents relevant only to the origination of
Plaintiff’s loan, and therefore cannot serve as the basis for a RESPA claim. The fifth document
requested, a copy of the current recorded promissory note providing the identity of the current
lienholder, clearly goes to the validity of Plaintiff’s underlying debt, not its servicing. The identity
of the current lienholder, and whether the ownership of the promissory note was properly recorded
has nothing to do with “receiving any scheduled periodic payments from a borrower pursuant to
the terms of any loan” or “making the payments of principal and interest and such other payments
with respect to the amounts received from the borrower as may be required pursuant to the terms
of the loan.” 12 U.S.C. § 2605(i)(3). It does, however, go to the authority of the purported holder
of the loan to foreclose, which is certainly the purpose for which Plaintiff requested it.
Unfortunately for Plaintiff, requests for such documents were not contemplated by the RESPA
provision Plaintiff seeks to invoke.
Turning to the sixth document, although “Bailee Letter” appears to be a legal term of art
used in the real estate warehouse lending market, not the home mortgage market, it is clear from
the context of Plaintiff’s letter, that the information sought therein is notice of any sale or transfer
of the beneficial interest in Plaintiff’s loan to a new owner or assignee. 6 Once again, proper
a document attached to the Complaint which is explicitly incorporated by reference into and
integral to the Complaint. In re Burlington, 114 F.3d at 1426.
As noted above, the Complaint itself only complains that six of the seven documents were not
provided. No mention is made of the “Bailee Letter” specifically, although the Complaint
suggests that no response was received.
See, e.g., In re Shareholders Funding, Inc., 188 B.R. 150, 159 (Bankr. E.D. Pa. 1995) (“Evidence
at trial, for instance, established that other similarly situated lenders utilize a ‘Bailee letter’ to
documentation of any transfer in the ownership interest of the loan goes to the validity of Plaintiff’s
underlying debt, not the servicing of Plaintiff’s loan.
Finally, the term “Affidavit of Debt,” also appears to refer to a legal term of art not
frequently discussed in the context of home mortgage cases in the federal courts generally or in
RESPA cases in particular. In fact, this Court has been unable to locate a single home mortgage
case in this Circuit in which such a document was involved. According to Plaintiff’s letter,
however, an “Affidavit of Debt” is a document that the seller of a loan must provide to the buyer,
which includes an “accounting on the payment history” of the loan. Defendant Selene contends
that this document too deals with the origination of Plaintiff’s loan and therefore fails to satisfy
the requirements of a qualified written request. Defendant is clearly mistaken, as, whatever an
“Affidavit of Debt” may be, it is clear that, in Plaintiff’s letter, it purports to be a document relevant
to the transfer of a beneficial interest in a loan, not to the loan’s origination. As Plaintiff’s letter
also states, albeit in a confusing and convoluted manner, that the Affidavit of Debt includes an
accounting of the payment history of Plaintiff’s loan, this Court, bearing in mind the particularly
permissive standard afforded to the pleadings of pro se parties, finds that this document at least
may have related to the servicing of Plaintiff’s loan. See, e.g., Emerson v. Seterus, Inc., 937 F.
Supp. 2d 56, 60 (D.D.C. 2013) (denying defendant’s motion to dismiss plaintiff’s RESPA claim
where plaintiff’s letter asked for a copy of “[a]ll account servicing records ... payment records,
transaction histories, account histories, accounting records, ledgers and documents that relate to
the accounting of this Loan from the inception of this Loan to the present date.”). Accordingly, in
the absence of additional facts suggesting that an “Affidavit of Debt” does not relate to servicing,
clarify their residual interest in a loan when ostensibly transferring complete ownership thereof to
a third party. Resource's president, Beale, testified that Resource did not utilize Bailee letters
because it did not utilize a warehouse bank.”).
Plaintiff’s February 23 letter constituted a QWR with respect to at least this one document.
12 C.F.R. § 1024.36(b) empowers a loan servicer to designate an address that a borrower
must use to submit any request for information. The Third Circuit has not yet opined on whether
failure to submit a request to the designated address alone provides a sufficient basis for the
dismissal of a RESPA claim, but other Circuit Courts have so found. After considering the
purposes of RESPA and the broad rulemaking authority granted to the administrative agency in
drafting Regulation X, the Tenth Circuit concluded that “[r]eceipt [of the written request] at the
designated address is necessary to trigger RESPA duties.” Berneike v. CitiMortgage, Inc., 708 F.3d
1141, 1149 (10th Cir. 2013). The Second Circuit agreed, concluding that “Regulation X’s grant of
authority to servicers to designate an exclusive address is a permissible construction of RESPA,
and thus [f]ailure to send the [request] to the designated address . . . does not trigger the servicer’s
duties under RESPA.” Roth v. CitiMortgage Inc., 756 F.3d 178, 181–82 (2d Cir. 2014) (internal
Here, Defendant Selene contends that is has designated an address for all information
requests, and, as evidenced by the copy of Plaintiff’s February 23, 2016 letter attached to the
Complaint, Plaintiff failed to send his request to the correct address, sending it instead to Selene’s
corporate headquarters in Houston Texas. Without commenting on whether the courts of this
District should follow the precedents of the Second and Tenth Circuits, this Court observes that
the requirements of § 1024.36(b) raise additional questions of fact, which cannot be resolved on
Defendant’s motion to dismiss. Firstly, although Defendant Selene contends in briefing that the
address in Houston Texas to which Plaintiff’s letter request was submitted was not the address it
designated for the submission of QWRs, nothing in the Complaint or its attachments supports this
proposition. Secondly, § 1024.36(b) requires that, for Plaintiff to be bound to Defendant’s
designated address, Defendant Selene must have provided prior written notice to Plaintiff
including a clear statement that Plaintiff was required to use the designated address to request
information. No such statement is included in the Complaint or its attachments. Finally, the section
also places requirements on Defendant to publish the designated address on its website if certain
conditions are met. The facts necessary to find if this requirement is met are also absent for the
Complaint or its attachments. At this stage of the proceeding, Defendant Selene has also failed to
provide any supplementary documents or certifications on these points. In the absence of
additional facts, therefore, Defendant Selene’s argument that Plaintiff’s letter was not a QWR
because it was sent to the wrong address fails.
3. Actual Damages
Even presuming, however, that Plaintiff had submitted a QWR to the correct address,
Defendant Selene would still be entitled to dismissal of Count I because Plaintiff has failed to
plead actual damages arising from Defendant Selene’s failure to respond to Plaintiff’s letter. As a
threshold matter, Plaintiff does not claim a pattern of RESPA noncompliance entitling Plaintiff to
statutory damages. Giordano, 160 F.Supp.3d at 781. The only basis under which Plaintiff proceeds
is a claim for actual damages. Plaintiff claims to have suffered actual damages as a result of
Defendant Selene’s failure to respond to Plaintiff’s letter request, because Plaintiff was prevented
from “obtaining the proper documentation that would inform Plaintiff of his legal rights.” Compl.
¶ 37. As the Court has explained above, to the extent that Plaintiff is referring to the first six
documents his letter requested, which went to the origination and validity of Plaintiff’s mortgage
loan after any transfer of the beneficial interest, Plaintiff cannot have suffered actual damages as
a result of Defendant Selene’s failure to provide the documents because Defendant Selene was
under no obligation to provide such documents to Plaintiff — and Plaintiff concomitantly was not
entitled to have those documents provided to him by Defendant Selene. Without a statutory or
regulatory violation by Defendant Selene, Plaintiff cannot have suffered an actionable injury.
As Plaintiff’s allegation concerns the “Affidavit of Debt,” allegedly setting forth an
accounting of the payment history of Plaintiff’s loan, the Court also finds that Plaintiff has failed
to allege actual damages. Firstly, Plaintiff’s claimed loss of information about his legal rights
cannot itself be considered “actual damages” under RESPA. Giordano, 160 F. Supp. 3d at 781–85
(only categories of actual damages courts have considered are “pecuniary loss” and, in certain but
not all cases, “emotional distress”). To hold otherwise would read the actual damages requirement
out of a RESPA claim, because, by definition, every time a loan servicer fails to provide any
document referencing a legal right of a borrower, the borrower has been “deprived” of information
concerning his or her legal rights. Were Plaintiff’s claimed damages sufficient, RESPA would
become a strict liability statute, which, as discussed above, was clearly not the congressional intent.
Secondly, even extrapolating from Plaintiff’s sparse allegations that he suffered injury
because without the requested document he was unable to know his legal rights to defend the
foreclosure action against the Property and thereby suffered some pecuniary loss, Plaintiff’s
RESPA claim would still fail for absence of “a causal link between the financing institution’s
violation and [Plaintiff’s] injuries.’” Giordano, 160 F. Supp. 3d at 781. The logical chain from
Defendant Selene’s alleged failure to provide Plaintiff with an accounting of past mortgage
payments to Plaintiff suffering foreclosure of his property and some pecuniary loss is too
attenuated to meet the standard of proximate causation required for actual damages. See
Hutchinson, 410 F. Supp. 2d at 382. This is made particularly evident by the fact that the final
judgment of foreclosure was entered by the New Jersey state court on December 5, 2014, long
before Plaintiff sent the February 23, 2016 letter.
Finally, looking, as the parties do in briefing, to the damages claimed by Plaintiff in his
fraud counts (Counts II and IV) only, these allegations too fail to set forth actual damages sufficient
to state a claim under RESPA. Plaintiff alleges that he was damaged by Defendant Selene’s
“misrepresentations,” including Defendant Selene’s failure to respond to the QWR, by 1) having
to pay amounts towards his loan that were higher than those contractually agreed upon; 2) losing
equity in the Property; 3) paying unnecessary interest to Defendants; and 4) suffering
embarrassment, loss of reputation, and severe anxiety and emotional distress due to the foreclosure
of his home. Compl. ¶ 44. It is clear on the face of Complaint however, that these damages were
not causally linked to the failure to respond to the QWR. The alleged additional payments of
principal and interest are clearly alleged to have been caused by Defendant Selene’s alleged failure
to honor the permanent modification granted by Defendant Citi. Id. at ¶ 41(e) (“The Selene Trial
Mod attempted to bill Plaintiff for past escrow amounts when the Permanent Mod had originally
recapitalized all past amounts that were due prior to October 16, 2016”); ¶ 44 (“Defendants’ refusal
to modify the Loan payments at the contractually agreed upon amounts have caused . . .”)
(emphasis added). Moreover, the loss of equity in the Property and Plaintiff’s alleged emotional
distress are clearly alleged to have been directly caused by the foreclosure, an event which
preceded Defendant Selene’s alleged failure to respond to the QWR by over a year. Without any
allegations of actual damages, caused by Defendant Selene’s alleged noncompliance with the
obligations of RESPA, Plaintiff’s RESPA claim cannot proceed and is dismissed.
B. Count II – NJCFA
In Count II, Plaintiff alleges that Defendant Selene violated the NJCFA by making the
following “misrepresentations”: 1) attempting in its February 19, 2016 trial modification offer to
bill Plaintiff for past amounts that had already been recapitalized by Defendant Citi’s permanent
modification [Compl. ¶ 41(e)]; 2) failing to respond to Plaintiff’s February 23, 2016 letter
requesting documents [Compl. ¶ 41(f)]; 3) failing to respond to Plaintiff’s request for a detailed
accounting [Compl. ¶ 41(g)]; 4) failing to remove the force-placed insurance policy in response
to Plaintiff’s request [Compl. ¶ 41(h)]; and 5) failing to disclose the identity of the current
investor in Plaintiff’s loan in response to Plaintiff’s request [Compl. ¶ 41(i)]. As indicated above,
Plaintiff alleges that he was damaged by Defendant Selene’s “misrepresentations” by 1) having
to pay amounts towards his loan that were higher than those contractually agreed upon; 2) losing
equity in the Property; 3) paying unnecessary interest to Defendants; and 4) suffering
embarrassment, loss of reputation, and severe anxiety and emotionally distress due to the
foreclosure of his home. Compl. ¶ 44.
The CFA “provides a private cause of action to consumers who are victimized by
fraudulent practices in the marketplace.” Gonzalez v. Wilshire Credit Corp., 207 N.J. 557, 576,
(2011). To state a NJCFA claim, a consumer must plead (1) an unlawful practice; (2) an
ascertainable loss; and (3) a causal relationship between the two. Id. at 577. The Act prohibits
affirmative acts and knowing omissions that rise to the level of deceptive trade practices, as well
as violations of regulations adopted by the Division of Consumer Affairs made “in connection
with the sale or advertisement of any merchandise or real estate, or with the subsequent
performance....” N.J.S.A § 56:8–2. With respect to the second prong-“ascertainable loss”-the
plaintiff must “demonstrate a loss attributable to conduct made unlawful by the [NJ]CFA,”
which is “quantifiable or measurable,” and not merely “hypothetical” or “speculative.”
Thiedemann v. Mercedes—Benz USA, LLC, 183 N.J. 234, 246–52 (2005).
There are three different categories of CFA violations: (1) “[a]n affirmative
misrepresentation, even if unaccompanied by knowledge of its falsity or an intention to deceive”;
(2) “[a]n omission or failure to disclose a material fact, if accompanied by knowledge and
intent”; and (3) “‘violations of specific regulations promulgated under the [CFA],’” which are
reviewed under strict liability. Monogram Credit Card Bank of Ga. v. Tennesen, 390 N.J. Super.
123, 133 (App. Div. 2007) (internal citations omitted). Unlawful conduct under the CFA is
defined as: “use or employment by any person of any unconscionable commercial practice,
deception, fraud, false pretenses, false promise, misrepresentation, or the knowing, concealment,
suppression, or omission of any material fact with intent that others rely upon such concealment,
suppression or omission, in connection with the sale or advertisement of any merchandise or real
estate, or with the subsequent performance of such person as aforesaid, whether or not any
person has in fact been misled, deceived or damaged thereby.” N.J.S.A. § 56:8-2. An
unconscionable commercial practice “[n]ecessarily entails a lack of good faith, fair dealing, and
honesty,” and “[t]he capacity to mislead is the prime ingredient of all types of consumer fraud.”
Furthermore, “[m]ere consumer dissatisfaction does not constitute consumer fraud.” In re Van
Holt, 163 F.3d 161, 168 (3d Cir. 1998). In addition, “[t]he misrepresentation has to be one which
is material to the transaction ... made to induce the buyer to make the purchase.” Gennari v.
Weichert Co. Realtors, 148 N.J. 582, 607 (1997).
Furthermore, “Rule 9(b) applies with equal force to fraud actions brought under federal
statutes as to those actions that are based on state law but brought in federal court.” Slimm, 2013
WL 1867035, at *13 (citing Frederico, 507 F.3d at 200; Christidis, 717 F.2d at 99). Courts
dismiss NJCFA claims when “Plaintiff's claim for violations of the [NJCFA] does not explain
with the required specificity or otherwise, the date, place or time of the allege fraud and/or who
made the alleged representation.” Donnelly v. Option One Mortg. Corp., No. 11–CV–7019, 2013
WL 3336766 at *4 (D.N.J. July 1, 2013).
In its motion, Defendant Selene mistakenly characterizes Plaintiff’s NJCFA against
Selene claim as relying exclusively on the factual predicate of Plaintiff’s RESPA claim. See
Plaintiff’s Motion Brief at 12; Reply at 6. Accordingly, Defendant Selene contends that, just as
there are no actual damages for Plaintiff’s RESPA claim, Plaintiff has failed to plead an
“ascertainable loss” under the NJCFA. The Court agrees that Plaintiff’s NJCFA claim fails to the
extent premised on Defendant Selene’s failure to respond to the February 23, 2016 letter,
because Plaintiff has failed to allege an ascertainable loss arising from Selene’s failure to
respond. The Court is satisfied that the absence of actual damages also implies the absence of
ascertainable loss. Barows v. Chase Manhattan Mortg. Corp., 465 F. Supp. 2d 347, 361 (D.N.J.
2006) (quoting Thiedemann, 183 N.J. at 248) (“The CFA does not define what constitutes an
‘ascertainable loss,’ and there is no legislative history ‘that sheds direct light on those words.’
The New Jersey Supreme Court has instructed, ‘To give effect to the legislative language
describing the requisite loss for private standing under the CFA, ... a private plaintiff must
produce evidence from which a factfinder could find or infer that the plaintiff suffered an actual
loss.’”). Plaintiff’s RESPA claim is but one of the allegations Plaintiff offers in support of his
NJCFA claim — Compl. ¶ 41(f). Plaintiff’s NJCFA claim on the additional bases alleged in the
Complaint has gone unchallenged by Defendant Selene. See id. at ¶¶ 41(e),(g),(h),(i).
Specifically, among other allegations, Plaintiff alleged that Defendant Selene
misrepresented the amount due on Plaintiff’s loan in its February 19, 2016 trial modification
offer, which purported to bill Plaintiff for past amounts that had already been recapitalized by
Defendant Citi’s permanent modification. 7 Plaintiff has also at least alleged some ascertainable
The Court observes that the parties’ proffers during the Court’s preliminary injunction hearing
loss as result of the alleged misrepresentation in the form of having to pay amounts towards his
loan that were higher than those contractually agreed upon and paying unnecessary interest to
Defendants. See Block, 2016 WL 6434487, at *11 (collecting cases holding that paying
overbilled principal and interest payments can constitute actionable fraud damages in mortgage
modification cases). 8
C. Count IV - Fraud
Defendant Selene moves to dismiss Plaintiff’s common law fraud claim on the grounds
that the pleadings are deficient under Rule 9(b) and that Plaintiff has failed to allege any
misrepresentation by Defendant Selene or reasonable reliance thereon by Plaintiff. Unlike
Defendant’s motion on Plaintiff’s NJCFA claim, Defendant at least purports to move for
dismissal on all factual bases. See Mot. Br. at 14 (challenging the sufficiency of Compl. ¶¶
58(o)-(u)). As was the case with Plaintiff’s NJCFA claim, however, the Court finds that although
any common law fraud claim based upon the factual predicate of Plaintiff’s RESPA claim
[Compl. ¶ 58(q)] fails, Plaintiff has at least stated a claim on the basis of Defendant Selene’s
offer of a trial modification [Compl. ¶ 58(p)].
“In order to establish a claim for common law fraud under New Jersey law, one must
show: (1) a material misrepresentation of a presently existing or past fact; (2) knowledge or
strongly suggested that no permanent modification was ever entered in this case, which fact
would likely dispense with the remainder of Plaintiff’s case. Neither Defendant Citi nor
Defendant Selene, however, has moved for summary judgment on Plaintiff’s claims concerning
the permanent modification, and the Court is not permitted to rely upon the proffers of defense
counsel in ruling upon the present motion to dismiss. The Court would need a motion for
summary judgment by Defendants addressing whether a permanent modification was ever
executed by the parties and/or Plaintiff’s payment history under any permanent modification
agreement to adjudicate Plaintiff’s claims.
Again, the Court observes that the parties’ proffers during the preliminary injunction hearing
suggested that Plaintiff may never have made any payments after the alleged overbilling, casting
doubt on the existence of damages, but no motions have been forthcoming from Defendants.
belief by the defendant of its falsity; (3) an intention that the other person rely on it; (4)
reasonable reliance thereon by the other person; and (5) resulting damages.” Perry v. Gold &
Laine, P.C., 371 F. Supp. 2d 622, 627 (D.N.J. 2005). “For allegations sounding in fraud, Rule
9(b) imposes a heightened pleading standard.” Eberhart v. LG Elecs. USA, Inc., 188 F. Supp. 3d
401, 405 (D.N.J. 2016). Specifically, a party alleging fraud “must state with particularity the
circumstances constituting fraud or mistake,” but “[m]alice, intent, knowledge, and other
conditions of a person's mind may be alleged generally.” Fed. R. Civ. P. 9(b). A plaintiff must
plead fraud with sufficient particularity such that he puts the defendant on notice of the “precise
misconduct with which [he is] charged.” Lum v. Bank of Am., 361 F.3d 217, 223–24 (3d Cir.
2004), abrogated in part on other grounds by Twombly, 550 U.S. at 557. “To satisfy this
standard, the plaintiff must plead or allege the date, time, and place of the alleged fraud or
otherwise inject precision or some measure of substantiation into a fraud allegation.” Frederico
v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007).
Here, Plaintiff has alleged that Defendant Selene’s February 19, 2016 trial modification
offer misrepresented the amount due on Plaintiff’s loan by failing to take account of the
permanent modification that had been granted by Defendant Citi. Compl. ¶ 58(p). Plaintiff has
alleged that Defendants Citi and Selene acted with the requisite ill intent, in that they
intentionally made misrepresentations to Plaintiff in order to “impede foreclosure alternatives”
so as to profit from Plaintiff’s $80,000 in equity in the Property. Id. at ¶ 58(v). Plaintiff has
alleged that he relied upon Defendant Selene’s misrepresentation when he was “forced to pay
amounts towards the Loan that are higher than the contractually agreed amounts,” and that he
suffered injury when he in fact “made unnecessary payments to Defendants” in reliance on their
misrepresentation of the amount due. Id. at ¶¶ 60-61. Inter alia, Plaintiff seeks to recover in
damages the principal and interest unnecessarily paid. Id. at ¶ 61. Plaintiff’s allegations
concerning Defendant Selene’s offered trial modification are clearly sufficient to place
Defendant Selene on notice of the precise fraudulent conduct alleged, at least facially state the
elements of a common law fraud claim with the requisite specific facts, and meet the heightened
pleading standard of Rule 9(b).
The same cannot be said of Plaintiff’s other allegations of misrepresentations by
Defendant Selene. Neither the nature of the misrepresentation nor Plaintiff’s detrimental reliance
thereon are clear regarding Defendant Selene’s failure to respond to Plaintiff’s requests for a
detailed accounting [Compl. ¶ 58(s)], for the identity of the current investor [Compl. ¶ 58(u)], or
for the force-placed insurance policy to be lifted [Compl. ¶ 58(t)]. Accordingly, taken together
with the Court’s holding on Plaintiff’s RESPA claim, Count IV is dismissed with respect to all
factual bases except Defendant Selene’s offer of a trial modification [Compl. ¶ 58(p)].
Defendant Selene’s motion is granted in part and denied in part as follows: (i) Plaintiff’s
RESPA claim (Count I) is dismissed; (ii) Plaintiff’s NJCFA claim (Count II) is dismissed to the
extent based on the factual predicate of Plaintiff’s RESPA claim [Compl. ¶ 41(f)], but
Defendant’s motion to dismiss Count II is denied on all other bases; and (iii) Defendant’s motion
to dismiss Count IV is denied on the basis of Plaintiff’s claim that Defendant Selene’s February
19, 2016 offer of a trial modification misrepresented the amount due on Plaintiff’s loan [Compl.
¶ 58(p)], but Count IV is dismissed on all other bases.
/s/ Freda L. Wolfson
The Honorable Freda L. Wolfson
United States District Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?