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Rivera v. Washington Mutual Bank

July 10, 2009

DAVID AND MARIANNE RIVERA, INDIVIDUALLY AND ON BEHALF OF ALL THOSE SIMILARLY SITUATED, PLAINTIFFS,
v.
WASHINGTON MUTUAL BANK; COUNTRYWIDE HOME LOANS; AND SHAPIRO & DIAZ, DEFENDANTS.



The opinion of the court was delivered by: Irenas , Senior District Judge

HONORABLE JOSEPH E. IRENAS

OPINION

In this case, the Court is presented with a hopelessly muddled, mistated and mangled Amended Complaint, which, in addition to barely pleading sufficient facts, also presents complicated jurisdictional issues. This much seems to be clear: this is a proposed class action suit seeking to recover various fees and costs collected in connection with home foreclosure actions. Plaintiffs assert that Defendants charged and collected "various fees not authorized by the [mortgage] loan documents or applicable law" and "overcharged defaulting borrowers of residential mortgages," (Amend. Compl. ¶ 24), although as will be discussed at length, identifying the specific fees and costs at issue has proven to be a herculean task.

Defendants Countrywide Home Loans ("Countrywide") and Shapiro & Diaz separately move to dismiss the Amended Complaint in its entirety.*fn1

I.

As already noted, the Court has had particular difficulty ascertaining the alleged facts of this case. No doubt this difficulty stems from the obvious fact that Plaintiffs' counsel has drafted one generic complaint for at least ten other cases--all filed in this district by the same attorneys, all proposing the same class, seven of which were filed on the same day as this case.*fn2 The Amended Complaint in this case covers twenty-one pages, with over 100 numbered paragraphs, yet the allegations of "Defendants" wrongful conduct-- with no meaningful attempt to identify which Defendant took what actions-- consumes all of one paragraph. (See Amend. Compl. ¶ 24) Similarly, the Amended Complaint's recitation of the "background" facts of the case is paltry to say the least, omitting particularly relevant facts which the Court has only learned from scrutinizing the public documents Countrywide filed in support of its present Motion to Dismiss.*fn3 While the Court questions whether such a unmanageable pleading truly meets even the lenient pleading standards established by the Federal Rules of Civil Procedure and caselaw, the Court has endeavored to construct the facts of this case as set forth below, rather than dismiss the Amended Complaint outright for failure to plead sufficient facts.

Washington Mutual Home Loans, Inc.,*fn4 instituted a foreclosure action against Plaintiffs in the Superior Court of New Jersey, Chancery Division, on December 11, 2001. (Amend. Compl. ¶ 15; Amend. Compl. Ex. A) Defendant Shapiro & Diaz represented Washington Mutual in the foreclosure action. (Amend. Compl. Ex. A) On June 4, 2002, the Chancery Division, after noting the entry of the Riveras' default, entered a final judgment for foreclosure in favor of Washington Mutual in the amount of $144,742.42, plus interest, plus the costs of the foreclosure action. (Amend. Compl. Ex. A) The total "costs" amounted to $2189.42 (Amend. Compl. ¶ 17), broken down as follows:

Attorney's Allowance by Statute$50.00 Filing Fees Paid to Clerk$175.00 Counsel Fee Allowed Under R.4:42-9$1597.42 Search Costs Allowed Under R.4:42-10$345.00 Cost of Filing Lis Pendens$3.00 Other$12.00

(Amend. Compl. Ex. B)

Before the sheriff's sale of their home, which was scheduled for August 2, 2002 (Murphy Cert. Ex. F), Plaintiffs embarked down a long and winding road through the bankruptcy court process which would ultimately span more than five and a half years.

Plaintiffs, represented by counsel, filed their first (of two) voluntary chapter 13 bankruptcy petitions on July 2, 2002. (Murphy Cert. Ex. C, Bankr. D.N.J. Docket Report, Case No. 02-16637)*fn5 They included no claim against Washington Mutual or Shapiro & Diaz in the schedule of personal property filed with their petition. (Murphy Cert. Ex. D-- Schedule B)

After the petition date but before confirmation of the chapter 13 Plan, Plaintiffs made at least two mortgage payments of $1,402.82. (Murphy Cert. Ex. F) Also during this span of time, Washington Mutual filed its first proof of claim, and then amended it. (Id. Ex. E) The amended proof of claim sought "total pre-petition arrearages and attorney fees and costs" in the amount of $21,457.49. (Id.) Plaintiffs filed no objection to either proof of claim.

On November 21, 2002, the bankruptcy court approved Plaintiffs' chapter 13 plan, which provided for 56 monthly payments of $953. (Murphy Cert. Ex. C) Apparently the plan provided for pre-petition arrears to be paid through the plan, while post-petition payments would be made outside the plan. (Id. Ex. F)

By March, 2003, Plaintiffs had already fallen five months behind on their post-petition payments to Washington Mutual. (Murphy Cert. Ex. F) Accordingly, Shapiro & Diaz, on behalf of Washington Mutual, filed a Motion to Vacate the Automatic Stay so as to recover the late payments. (Id.) The motion was resolved by the parties' consent order which provided that Plaintiffs would make an immediate lump sum payment of $7,100.00; pay an additional $559.14 on top of their regular mortgage payment for the months of April, May and June 2003; and begin making regular monthly mortgage payments in July 2003. (Id. Ex. G) The Court cannot determine whether Plaintiffs complied with any of their obligations under the consent order, although the absence of any motion to vacate the stay by Washington Mutual in the months immediately following the entry of the consent order suggests that at least some payments were made.*fn6

It appears that Plaintiffs also made some monthly payments to the Trustee as provided by the chapter 13 plan, although an exact amount cannot be ascertained on the present record. (Murphy Cert. Ex. H) Ultimately though, Plaintiffs fell behind on these payments as well (Id.), and on March 19, 2004, upon the Trustee's application, the bankruptcy court entered an Ex-Parte Order Dismissing the Case. (Id. Ex. C)

Less than a month later, Plaintiffs, represented by new counsel, filed a second chapter 13 petition. (Murphy Cert. Ex. J; Amend. Compl. ¶¶ 18-21) This second petition also identified no claim against Washington Mutual, nor Shapiro & Diaz. (Murphy Cert. Ex. K-- Schedule B)

Washington Mutual filed a proof of claim seeking "total pre-petition arrearages and attorney fees and costs" in the amount of $24,652.96. (Amend Compl. Ex. C) Plaintiffs did not object to the proof of claim.

Plaintiffs made eight post-petition payments to Washington Mutual prior to the confirmation of their chapter 13 plan on November 11, 2004. (Murphy Cert. Ex. L) Like their first bankruptcy, Plaintiffs' second chapter 13 plan required them to make pre-petition arrears payments through the plan while maintaining post-petition payments outside the plan. (Id.) The second chapter 13 plan required Plaintiffs to make 53 monthly payments of $1,000. (Murphy Cert. Ex. J)

Like before, Plaintiffs eventually fell behind on their post-petition payments to Washington Mutual, and in April, 2005, Washington Mutual moved to vacate the stay so as to recover past due payments.*fn7 (Murphy Cert. Ex. L) The bankruptcy court resolved the motion on May 31, 2005 with an order directing Plaintiffs to make an additional payment of $284.27 on top of their regular mortgage payment for the months of June 2005 through November 2005. (Id. Ex. M)

Again, presumably Plaintiffs made some payments pursuant to the bankruptcy court's May 31 st order because the order allowed Washington Mutual to seek an Ex Parte Order Vacating the Stay after Plaintiffs were more than 30 days late with a payment; yet Washington Mutual did not seek such an order until October, 2005. (Murphy Cert. Ex. J) The bankruptcy court entered the Ex Parte Order on October 25, 2005. (Id.) However, not long thereafter, Plaintiffs moved to reinstate the stay, and the motion was granted on February 8, 2006. (Id.)

Thereafter Plaintiffs continued to miss payments, and over the course of the following months, the bankruptcy court entered two more orders vacating the stay (upon Washington Mutual's application), but each time the court ultimately give Plaintiffs another chance to cure their defaults. (Murphy Cert. Ex. J -- docket entries 47 & 50; 63 & 76)

While Plaintiffs were falling behind on their post-petition payments to Washington Mutual, it appears that they were also falling behind on their payments to the Trustee. On October 28, 2005, Plaintiffs submitted a modified chapter 13 plan, which was confirmed on February 23, 2006. (Murphy Cert. Ex. J) Even under the modified plan, however, Plaintiffs missed payments, and upon the Trustee's application, the bankruptcy court entered an Ex Parte Order Dismissing the Case. (Id.) Less than three weeks later, however, Plaintiffs moved to reinstate the case, and on November 22, 2006, the bankruptcy court granted the motion. (Id.)

Approximately a month later, Washington Mutual again applied for an order to vacate the automatic stay, which the court granted, but then once again reinstated the stay upon Plaintiffs' motion. (Murphy Cert. Ex. J) While Plaintiffs' motion was pending, the Trustee again moved to have the case dismissed. (Id.) The court dismissed the chapter 13 case in August, 2007, but in November, 2007, Plaintiffs filed a Notice of Voluntary Conversion to chapter 7. (Id.)

According to the Amended Complaint, "Plaintiff[s] paid the sums demanded in full on or about July 2007." (Amend. Compl. ¶ 22) As will be discussed further infra , it is not clear what "sums" the Amended Complaint refers to. In any event, sometime after Plaintiffs' payment, the foreclosure action was dismissed with prejudice and the mortgage and lis pendens were discharged. (Amend. Compl. ¶ 23)

Defendant Countrywide's role in this case is not clear from the Amended Complaint. The Amended Complaint treats Countrywide and Washington Mutual the same, merely asserting that "Defendant [Washington Mutual] as servicer of the Plaintiffs' loan is for all relevant times an agent of Defendant Countrywide." (Amend. Compl. ¶ 44) Countrywide, which has been served with process (as opposed to Washington Mutual), states in its brief that it "succeeded Washington Mutual as the loan servicer." (Countrywide's Moving Brief at p. 4) The docket report for Plaintiffs' second bankruptcy case reflects that Washington Mutual transferred its claim to Countrywide on March 5, 2007. (Murphy Cert. Ex. J)

The Amended Complaint asserts nine claims against Washington Mutual and Countrywide, all arising out of the alleged unauthorized fees they charged and various other overcharges: (1) breach of contract; (2) negligent servicing of the loan; (3) breach of the duty of good faith and fair dealing; (4) unjust enrichment; (5) "deceptive collection of fees"; (6) violation of the Fair Foreclosure Act, N.J.S.A. 2A:50-57(b)(3); (7) violation of New Jersey Court Rules 4:42-9(a)(4) and 4:42-10(a); (8) violation of New Jersey's Consumer Fraud Act, N.J.S.A. 56:8-2 et seq.; and (9) violation of New Jersey's Truth In Consumer Contracts, Warranty and Notice Act, N.J.S.A. 56:12-14. Shapiro & Diaz is a Defendant to claims 2 through 4 only.

Plaintiffs propose a statewide class and a nationwide class. The proposed statewide class is:

(1) individuals who have had home loans held or serviced by the Defendant, COUNTRYWIDE in the State of New Jersey from sixteen years prior to the filing of the complaint through the date of class certification; and (2) who received a payoff or reinstatement statement from the Defendant whose home loan was in default; (3) and who were charged attorneys fees and/or other costs which were in excess of the amount actually incurred and/or in excess of the amount allowed by law.

a) A subclass exists for claims from six years prior to the filing of the complaint through the date of class certification which includes claims under the New Jersey Consumer Fraud Act and New Jersey Truth-in Consumer Contracts, Warranty and Notice Act.

The Plaintiff[s] propose[s] a class as (1) individuals who have had home loans which [sic] turned over to Shapiro for foreclosure proceedings in the State of New Jersey from sixteen years prior to the filing of the complaint through the date of class certification; and

(2) who received a payoff or reinstatement statement from the Defendant whose home loan was in default; (3) and who were charged attorneys fees and/or other costs which were in excess of the amount actually incurred and/or in excess of the amount allowed by law.

a) A subclass exists for claims from six years prior to the filing of the complaint through the date of class certification which includes claims under the New Jersey Consumer Fraud Act and New Jersey Truth-in Consumer Contracts, Warranty and Notice Act.

(Amend. Compl. ΒΆ 31-32) (caps ...


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