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Patrick Cooney & Carleen v. Bac Home Loans Servicing

June 22, 2011


The opinion of the court was delivered by: Hon. Jerome B. Simandle



This putative class action involving allegedly improper fees charged for mortgage reinstatement is before the Court on two motions of the Defendants to dismiss the Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. [Docket Items 6 & 7.] The principal issue is whether the Complaint alleges a basis upon which any of the identified fees is improper. Because it does not, as explained below, the Complaint will be dismissed.


Like many American families in recent years, Plaintiffs Patrick and Carleen Cooney fell behind on their mortgage payments. (Compl. ¶ 2.) Under New Jersey law, homeowners must be given the opportunity to reinstate their delinquent mortgage before a foreclosure order is entered. See N.J. Stat. Ann. § 2A:50-57(b)(3). On January 22, 2010, Defendant BAC Home Loans Servicing, LP sent Plaintiffs a reinstatement quote letter at Plaintiffs' request, which stated that the Plaintiffs owed an estimated $13,136.62 in order to bring their loan current if they paid in full on January 25, 2010. (Id. ¶ 14; Compl. Ex. A.) The letter itemized various fees and past due payments, including $1,050 in legal fees and costs through January 22, 2010, and $578 in anticipated additional legal fees and costs through January 25, 2010. (Id.) The letter gave Plaintiffs explicit notice that the $578 in additional fees was based on anticipated steps that may occur in the foreclosure process before January 25, 2010. (Id.)

Plaintiffs eventually paid $13,136.62 to reinstate their loan, including $1,638 in attorneys' fees and costs ($1,050 $578). (Compl. ¶¶ 17-18; Ex. B.)*fn1 Plaintiffs allege that the mortgage and note were recorded in the name of Defendant Mortgage Electronic Registration Systems, Inc. (MERS) and that the reinstatement process was performed by BAC for MERS because "[t]he loan was serviced by BAC for MERS." (Compl. ¶¶ 10, 12.)

The Complaint gets one critical and publicly available fact wrong: it alleges that no foreclosure complaint was filed by BAC - thus calling into question what legal fees could have been properly charged to Plaintiffs - but the public record shows that on January 14, 2010, Defendant BAC Home Loan Servicing filed a foreclosure action, which Plaintiffs now do not dispute. See BAC Home Loan Servicing LP v. Patrick and Carleen Cooney, No. L-1080-10, (N.J. Sup. Ct. Chancery D).*fn2 When Plaintiffs paid their reinstatement fees, BAC dismissed the foreclosure action.

The Complaint brings eight claims for relief. Count I is a breach of contract claim, in which Plaintiffs argue that BAC and MERS breached an unspecified part of the mortgage agreement because the reinstatement letter charged fees not due and owing. Count II is a claim that charging these fees breached the duty of good faith and fair dealing. Count III claims that the Fair Foreclosure Act, N.J. Stat. Ann. § 2A:50-57(b)(3) prohibits the charging of these fees and costs to the extent they exceed that allowed by statute and court rules, which is either directly actionable or an unconscionable business practice in violation of New Jersey's Consumer Fraud Act, N.J. Stat. Ann. § 56:8-2. Count IV claims that the costs and fees were in excess of the amount allowed pursuant to New Jersey Court Rule 4:42-9(a)(4) and 4:42-10(a). This Count also includes a paragraph stating that this violation, if not directly actionable, is actionable under the Fair Foreclosure Act or the Consumer Fraud Act. Count V contends that the fees and costs were in excess of what is allowed under provisions of three state statutes, N.J. Stat. Ann. §§ 22A:2-10, 22A:2-8, and 2A:15-13, either directly providing for a claim or substantiating a claim under the Consumer Fraud Act. Count VI brings a claim under the Consumer Fraud Act based on the allegations in the other counts. Count VII brings a claim under the Truth-in-Consumer Contract, Warranty and Notice Act, N.J. Stat. Ann. § 56:12-1 alleging that including excessive fees in the reinstatement letter violates the Act. And, finally, Count VIII brings a claim under the Uniform Commercial Code for providing an inaccurate statement of account in violate of N.J. Stat. Ann. § 12A:9-210.

BAC brings a motion to dismiss, contending that it was permitted by the mortgage contract and applicable law to charge for legal fees and costs, and that, to the extent Plaintiffs intended to challenge the propriety of particular constituent parts of the "legal costs," these claims should be dismissed as too vaguely pleaded to provide adequate notice. MERS joins this motion and separately moves to dismiss contending that no actionable conduct has been alleged with respect to MERS.*fn3


A. Standard of Review

In order to give Defendant fair notice, and to permit early dismissal if the complained-of conduct does not provide adequate grounds for the cause of action alleged, a complaint must allege, in more than legal boilerplate, those facts about the conduct of each defendant giving rise to liability. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007); Fed. R. Civ. P. 11(b)(3). These factual allegations must present a plausible basis for relief (i.e., something more than the mere possibility of legal misconduct). See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1951 (2009).

In its review of a motion to dismiss pursuant to Rule 12(b)(6), Fed. R. Civ. P., the Court must "accept all factual allegations as true and construe the complaint in the light most favorable to the plaintiff." Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (quoting Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)).

The Third Circuit Court of Appeals instructs district courts to conduct a two-part analysis when presented with a motion to dismiss for failure to state a claim upon which relief may be granted. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-211 (3d Cir. 2009) (citations omitted). The analysis should be conducted as follows: (1) the Court should separate the factual and legal elements of a claim, and the Court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions; and (2) the Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a plausible claim ...

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