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Crystal Murdock v. East Coast Mortgage Corp.

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY


August 17, 2011

CRYSTAL MURDOCK, PLAINTIFF,
v.
EAST COAST MORTGAGE CORP., ET AL,
DEFENDANTS.

The opinion of the court was delivered by: Hon. Joseph H. Rodriguez

NOT FOR PUBLICATION

OPINION

RODRIGUEZ, Senior District Judge

This matter comes before the Court on numerous motions filed by Defendants East Coast Mortgage Corp. ("East Coast"), OneWest Bank, FSB ("OneWest"), and McCabe, Weisberg & Conway ("McCabe") in the above captioned matter and in the associated cases also before the Court, captioned OneWest Bank, FSB v. Murdock et al., Civil No. 10-4695 (JHR/JS) ("the 4695 Case") and CitiMortgage, Inc et al. v. Murdock et al., Civil No. 10-5360 (JHR/JS) ("the 5360 Case"). Plaintiff Crystal Murdock ("Murdock") filed an amended sixteen-count complaint against all defendants on October 12, 2010, asserting causes of action sounding in violations of the Fair Housing Amendment Act ("FHAA"), 42 U.S.C. §§ 3601, et seq.; the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692, et seq.; the New Jersey Consumer Fraud Act, N.J.S.A. §§ 56:8-1, et seq.; the New Jersey Fair Foreclosure Act ("NJFFA"), N.J.S.A. 2A:50-53 to -68; the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1, et seq.; fraud, civil conspiracy, professional negligence, and various other state law theories. (Dkt. Entry No. 7, Second Amended Complaint).*fn1 East Coast filed a motion [Dkt. Entry No. 26] on December 10, 2010, seeking to dismiss only the federal claims pursuant to Fed. R. Civ. P. 12(b)(6). OneWest also filed a motion [Dkt Entry No. 28] on December 10, 2010 and McCabe filed a motion [Dkt. Entry No. 38] on January 18, 2011, seeking to dismiss all claims pursuant to Fed. R. Civ. P. 12(b)(6).*fn2

Oral argument was heard on the motions on August 4, 2011. At oral argument, East Coast's counsel conceded its argument as to the timeliness of the FHAA claims. Also Plaintiff's counsel voluntarily withdrew all claims against OneWest and McCabe, with the exception of the FDCPA claims. As such, and for the reasons expressed on the record on that day, East Coast's motion will be denied in part as to the FHAA claims, the non-FDCPA related claims asserted against OneWest and McCabe will be dismissed pursuant to Fed. R. Civ. P. 41(a)(2), and the motions filed by OneWest and McCabe will be dismissed as moot in part as pertaining to the non-FDCPA claims.

Therefore, to resolve the present motions the Court focuses solely on the propriety of the FDCPA claims against East Coast, OneWest, and McCabe. For the reasons set forth below, the motions filed by East Coast, OneWest, and McCabe will be granted as to the FDCPA claims.

I. Jurisdiction

The Court has federal question jurisdiction over this action pursuant to 28 U.S.C. § 1331, because Murdock pursues federal claims under the FDCPA and the FHAA. The Court has supplemental jurisdiction over Murdock's state law claims pursuant to 28 U.S.C. § 1367(a).

II. Background & Procedural History

The parties are familiar with the convoluted and confused evolution of the three actions currently before the Court, the identities of all parties currently or previously involved in the litigation, and the specifics of the allegations advanced. Therefore, the Court recites only on the fairly straightforward facts that are germane to the instant motions.*fn3

A. Origination of the Burlington Property Loan

In the fall of 2007, Murdock entered into two loan transaction with East Coast, a mortgage lender. On or about September 21, 2007, Murdock entered into a loan agreement with East Coast in connection with the refinancing of her home at 654 East 6th Street, Plainfield, New Jersey ("Plainfield Property"). (Id. at ¶ 3.) The following month, on or about October 24, 2007, Murdock entered into another loan agreement with East Coast in connection with the purchase of a property located at 7 Brook Drive, Burlington, New Jersey ("Burlington Property"). (Id.) She secured the promissory note ("Note") for the purchase of the Burlington Property by executing a mortgage ("Mortgage") on the subject property, naming Mortgage Electronic Registration Systems, Inc. ("MERS") as nominee for East Coast. (Id.)

On November 21, 2007 East Coast assigned the loan associated with the Plainfield Property to CitiMortgage, Inc. ("CitiMortgage"), who has been the holder and servicing agent of the Plainfield Property loan to date. (Id. at ¶ 4.) The loan associated with the purchase of the Burlington Property has seemingly taken a more arduous path, and is the subject of the present dispute before the Court.

B. Tracking the Mortgage From East Coast to IndyMac to IndyMac Federal

On July 11, 2008 IndyMac Bank, FSB ("IndyMac") was closed by the Office of Thrift Supervision ("OTS") and the FDIC was appointed as its receiver. (Second Am. Compl., Ex. A., Determination of Insufficient Assets To Satisfy Claims Against Financial Institution in Receivership, 74 Fed. Reg. 59,540 (FDIC Nov. 18, 2009)("FDIC Notice").) On the same day, OTS authorized creation of IndyMac Federal Bank, FSB ("IndyMac Federal"), a new federal savings bank for which the FDIC was appointed as conservator. (Id.) IndyMac's assets were transferred to IndyMac Federal under an agreement whereby the amount, if any, realized from the final resolution of IndyMac Federal after payment in full of IndyMac Federal's obligations was to be paid to the IndyMac receivership. (Id.) According to Murdock, on or about March 12, 2009, Mortgage Electronic Registration Systems, Inc. ("MERS"), as nominee for East Coast Mortgage, executed an assignment of the Burlington Property Mortgage, without the Note, to IndyMac Federal. (Second Am. Compl. at ¶ 116.) However, the Burlington Property Mortgage alone, without the Note, was transferred by East Coast to MERS in its capacity as nominee. (Id. at ¶ 110.)

C. IndyMac's Foreclosure Efforts and Assignment(s) to OneWest

On March 19, 2009, IndyMac Federal was placed in receivership and substantially all of its assets were sold. On that date, the FDIC Receiver-IndyMac, the FDIC Conservator-IndyMac Federal and OneWest entered into multiple loan sale agreements ("Master Purchase Agreement"), whereby OneWest assumed substantially all of the assets of the FDIC Conservator-IndyMac Federal, including the Mortgage on the Burlington Property. (Id. at ¶ 119; Ex. A, June 1, 2010 FDIC Letter regarding Burlington Foreclosure Case.)

One week later, on March 26, 2009, the law firm of Zucker, Goldberg & Ackerman ("Zucker") filed a Complaint for Foreclosure on the Burlington Property on behalf of IndyMac Federal in the Superior Court of New Jersey, Chancery Division, Burlington County, bearing docket number F-16148-09 ("Burlington Foreclosure Case"). (Id. at ¶ 120.) On January 27, 2010, McCabe replaced Zucker as counsel for IndyMac Federal. (Id. at ¶ 122.) On May 15, 2010, the law firm of Parker McCay also entered an appearance and thereafter filed a motion on June 1, 2010 to substitute OneWest as plaintiff in lieu of IndyMac Federal. (Id. at ¶¶ 123, 125.) The trial judge entered an order on June 24, 2010, substituting OneWest as plaintiff in the Burlington Foreclosure Case. (Id. at 127.)

D. The Original Third Party Complaint and Removal to Federal Court

On July 13, 2009, Murdock filed an Answer, Counterclaim, and Third Party Complaint, alleging that East Coast and various individuals associated with the origination of the Burlington Property loan and refinancing of the Plainfield Property made various fraudulent misrepresentations to induce her into entering the mortgages, knowing that she was unable to afford the combined monthly payments.*fn4 Murdock's Third Party Complaint was severed from the foreclosure proceedings and transferred to the Law Division on June 3, 2010, bearing docket number L-374-10 ("Murdock's Case in Chief"). By consent orders dated July 27, 2010 and August 6, 2010, the FDIC entered the Burlington Foreclosure Case and Murdock's Case in Chief, respectively. The FDIC removed both matters to this Court on September 13, 2010; the Burlington Foreclosure Case being herein referred to as the 4695 Case and Murdock's Case in Chief being herein referred to as the present matter.

E. The Second Amended Complaint and the Present Dispute

Murdock filed a Second Amended Complaint in this Court on October 12, 2010.*fn5

In addition to other state law claims, Murdock asserts that East Coast, MERS, FDIC (as Receiver for former foreclosure plaintiff IndyMac Federal), Zucker, McCabe, Parker, and others acted in concert and/or conspired to violate the FDCPA, based on perceived inconsistences and anomalies in the chain of ownership of the Burlington Property loan from the origination by East Coast until OneWest was substituted in as plaintiff in the foreclosure proceedings. (Id. at ¶¶ 132-36.)*fn6

Murdock contends that during the course of discovery, on or about April 15, 2010, she first became aware from answers and responses to her First Set of Requests for Admissions furnished by McCabe that IndyMac Federal was not the holder of the Note and Mortgage at the commencement of the foreclosure action. (Id. at ¶¶ 121, 129-31.) Specifically, Murdock alleges she discovered that, as of the March 19, 2009 Master Purchase Agreement, OneWest has serviced the loan which is owned by another entity, Federal National Mortgage Association ("Fannie Mae"). (Id.) Thus, Murdock argues that IndyMac Federal did not own the loan instruments at the time the initial complaint was filed and that FDIC, IndyMac Federal and Zucker knew or should have known that they had no right and/or legal authority to commence foreclosure. (Id. at ¶ 121.) Murdock also references the existence of two documents, dated May 19, 2010 and June 14, 2010, which both purport to assign the rights and interest in the Note and Mortgage from Indymac Federal to OneWest as proof of a conspiracy between the defendants to enable OneWest to continue pursuit of the allegedly illegal foreclosure began by Indymac Federal. (Id. at ¶¶ 124-126.)

Murdock explains the numerous inconsistencies and confusion in the rightful ownership of the Note and Mortgage associated with the Burlington Property as follows:

This incestuous and Kafkaesque relationship between the regulatory agencies (FDIC) and the loan entities allows fraud to be perpetrated upon the courts and mortgagors in foreclosure actions. Nowhere else would the Court sanction such a charade. One can only hazard or guess the amounts of mistakes and/or fraud that has been perpetrated in the past.

(Id. at ¶ 126.) According to Plaintiff, this pattern of inconsistency and opaque transactions supports her contention that East Coast, OneWest, and McCabe, along with the other entities who have interacted with the Burlington Property loan, conspired to violate the FDCPA in order to increase their fees, charges, and costs above what they would have been entitled to had they abided by the requirements of the statute. (Id. at ¶¶ 136-136.)*fn7

III. Rule 12(b)(6) Standard of Review

A complaint should be dismissed pursuant to Rule 12(b)(6) if the alleged facts, taken as true, fail to state a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6). Under Fed. R. Civ. P. 8(a)(2), a pleading must contain only a "short plain statement of the claim showing that the pleader is entitled to relief." A plaintiff is not required to plead evidence. Bogosian v. Gulf Oil Corp., 561 F.2d 434, 446 (3d Cir. 1977). However, although "detailed factual allegations" are not necessary, "a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted).

When reviewing a motion to dismiss, "courts accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009) (internal quotations omitted).*fn8 The question is not whether the plaintiff will ultimately prevail. Watson v. Abington Twp., 478 F.3d 144, 150 (3d Cir. 2007). Rather, to survive a motion to dismiss, "a complaint 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. - - - , 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570).

To determine the sufficiency of a complaint, the Third Circuit has held that the Court must conduct a three-step test. Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010). First, the Court must "tak[e] note of the elements a plaintiff must plead to state a claim." Iqbal, 129 S. Ct. at 1947. Next, the Court must separate the factual allegations from the legal conclusions. Id. at 1950. While the well-pleaded facts are accepted as true, legal conclusions are not entitled to the assumption of truth. Id. Last, the Court must determine whether the well-pleaded, non-conclusory factual allegations "plausibly give rise to an entitlement to relief." Id.

"A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 1949. Therefore, the complaint must do more than allege the plaintiff's entitlement to relief; it must "show" such an entitlement. Fowler, 578 F.3d at 211. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged but it has not 'show[n] that the pleader is entitled to relief.'" Iqbal, 129 S. Ct. at 1950 (quoting Fed. R. Civ. P. 8(a)(2)). Ultimately, assessing plausibility is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Fowler, 578 F.3d at 211 (quoting Iqbal, 129 S. Ct. at 1949).

IV. Discussion

East Coast, OneWest and McCabe first move to dismiss the FDCPA claims based on Murdock's failure to timely raise the alleged violation within the statute of limitations.*fn9 Murdock unpersuasively, if not disingenuously, argues that she is entitled to the extraordinary remedy of equitable tolling of the limitations period because she was actively misled by the defendants. Because Murdock did not file her FDCPA claims within one year of the alleged violation and because she has not demonstrated that she was misled nor that she exercised reasonable diligence in investigating and bringing her claims, her FDCPA claims will be dismissed as time-barred.

A. FDCPA

Congress enacted the FDCPA "to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." 15 U.S.C. § 1692e. The FDCPA prohibits, generally, the use of harassing oppressive, and abusive techniques in connection with the collection of debts, 15 U.S.C. § 1692d; the use of false, deceptive, or misleading representations in connection with the collection of debts, 15 U.S.C. § 1692e; and the use of unfair or unconscionable means in connection with the collection of debts, 15 U.S.C. § 1692f. Section 1692k provides a private right of action to any person with respect to whom a debt collector has violated the statute. 15 U.S.C. § 1692k(a). However, an action under the statute must be commenced "within one year from the date on which the violation occurs." 15 U.S.C. § 1692k(d).

B. The Doctrine of Equitable Tolling

Equitable tolling is an extraordinary remedy that can rescue a claim otherwise barred by the statute of limitations "when a plaintiff has 'been prevented from filing in a timely manner due to sufficiently inequitable circumstances.'" Santos v. United States, 559 F.3d 189, 197 (3d Cir. 2009) (quoting Seitzinger v. Reading Hosp. & Med. Ctr., 165 F.3d 236, 240 (3d Cir. 1999)). The doctrine applies in three limited circumstances: "(1) where the defendant has actively misled the plaintiff respecting the plaintiff's cause of action; (2) where the plaintiff in some extraordinary way has been prevented from asserting his or her rights; or (3) where the plaintiff has timely asserted his or her rights mistakenly in the wrong forum." Id. (citing Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1387 (3d Cir. 1994)). To be entitled to tolling on the grounds of fraudulent concealment, a plaintiff "must allege that the defendants' conduct prevented him 'from recognizing the validity of [her] claim within the limitations period.'" Kliesh v. Select Portfolio Servicing, Inc., 419 Fed. App'x 268, 271 (3d Cir. 2011) (quoting Mathews v. Kidder, Peabody & Co., 260 F.3d 239, 256 (3d Cir. 2001)) (alteration in original).

The principles of equitable tolling do not extend to "garden-variety claims of excusable neglect." Santos, 559 F.3d at 197 (quoting Irwin v. Dep't of Veterans Affairs, 498 U.S. 89, 96 (1990). Therefore, a plaintiff must also establish that she exercised due diligence in attempting to uncover the relevant facts and preserving her claim. Id.; see also Cetel v. Kirwan Financial Group, Inc., 460 F.3d 494, 509 (3d Cir. 2006). Ultimately, a plaintiff seeking to invoke the extraordinary remedy of equitable tolling bears a heavy burden and the Court should extend its application only sparingly. See Hedges v. United States, 404 F.3d 744, 751 (3d Cir. 2005).

C. Analysis

Murdock does not identify in her Second Amended Complaint which provision of the FDCPA was violated nor does she identify which defendant specifically violated the provision. However, Murdock appears to allege that Zucker and IndyMac Federal violated the FDCPA on March 26, 2009 when it filed the foreclosure complaint in the name of IndyMac Federal and that East Coast, OneWest, and McCabe conspired with Zucker, IndyMac Federal and others, to deceive Murdock as to IndyMac Federal's right to foreclose on the property.*fn10 Therefore, Murdock's FDCPA cause of action began to accrue on March 26, 2009, or shortly thereafter, when she was served with the foreclosure complaint. See Parker v. Pressler & Pressler, LLP, 650 F. Supp. 2d 326, 338 (D.N.J. 2009). Because Murdock did not file her Second Amended Complaint until October 12, 2010, nearly 19 months after the filing of the allegedly fraudulent complaint, her FDCPA claims are barred by the statute of limitations.

Murdock acknowledges that the FDCPA has a one year statute of limitations. However, she argues that the accrual of her FDCPA claims was shielded from her by the fraudulent conduct of East Coast, McCabe, OneWest and others until McCabe provided answers to her First Set of Requests for Admission on April 15, 2010, which exposed the alleged deficiencies in the foreclosure proceeding commenced in the name of IndyMac. (Opp'n to OneWest/EastCoast, p. 18, 23-24; Opp'n to McCabe, pp. 15, 19-20.)*fn11 She further argues that she acted with expediency by filing her Second Amended Complaint on October 12, 2010, six months after discovering the violation. (Opp'n to OneWest/EastCoast, p. 24; Opp'n to McCabe, pp. 20.) Therefore, Murdock argues that the accrual of her claims should be tolled. She is incorrect on both counts.

First, Murdock does not plead sufficient facts to establish that the defendants actively misled her. Murdock's FDCPA claim is predicated on the fact that when Indymac Federal filed the foreclosure complaint on March 26, 2009, it was "a defunct and non-existent entity." (Opp'n to OneWest/EastCoast, p. 4.; Opp'n to McCabe, p. 2.) She contends that the defendants actively misled her because no efforts were made by IndyMac Federal or its counsel to apprise her of IndyMac Federal's interest in the Mortgage or Note associated with the Burlington Property. (Opp'n to OneWest/EastCoast, p. 4.; Opp'n to McCabe, p. 3.) Further, Murdock supports her argument on the grounds that the Note and Mortgage have seemingly become separated, stating:

Is clearly impossible for one mortgage and one note to follow two different tracks simultaneously without the intent to deceive Crystal Murdock and this Court or any other entity and/or individual who attempts to ascertain the ownership and/or possession of the subject mortgage and note which are being litigated herein. (Opp'n to OneWest/EastCoast, p. 6.; Opp'n to McCabe, p. 4.) These are merely legal conclusions, rather than factual allegations, that are not entitled to an assumption of truthfulness when ruling on a Rule 12(b)(6) motion to dismiss. Iqbal, 129 S. Ct. at 1950.

In addition, Murdock fails to establish that she exercised due diligence in uncovering the relevant facts and preserving her claim. Murdock attempts to argue that she was unaware of the possibility that IndyMac Federal did not hold the Note until she received confirmation from McCabe in April of 2010. (Second Am. Compl., ¶¶ 129-30.) However, Murdock's unsupported contention is belied by the facts alleged and documentation relied on in her Second Amended Complaint. Murdock's First Set of Requests for Admissions filed in the Burlington Foreclosure Case repeatedly, if not exclusively, references the March 19, 2009 Master Purchase Agreement and transfer of substantially all assets from IndyMac Federal to OneWest.*fn12 These Requests for Admissions are dated November 6, 2009, indicating that Murdock was aware of the transfer of assets less than eight months after the filing of the initial foreclosure complaint. Further, the Nov. 18, 2009 FDIC Notice, attached as an exhibit to the Second Amended Complaint, placed Murdock and her counsel on notice that: "On March 19, 2009, IndyMac Federal was placed in receivership and substantially all of its assets were sold." (Second Am. Compl., Ex. A., FDIC Notice.) Thus, Murdock's assertion that "unfortunately, this fact was not readily known and/or ascertainable to Crystal Murdock until the Foreclosure Action was well underway," (Opp'n to OneWest/EastCoast, p. 4.; Opp'n to McCabe, pp. 2-3,) is contradicted by the record.

Because Murdock has failed to show that the defendants actively misled her from ascertaining the existence of her FDCPA claims, and because she has failed to show that she exercised reasonable diligence in investigating and bringing these claims, the extreme remedy of equitable tolling is inappropriate. See Santos, 559 F.3d at 197. Accordingly, Murdock's FDCPA claims are dismissed as time-barred.*fn13

V. Conclusion

For the reasons stated above, East Coast's motion will be denied in part as to the FHAA claims and granted in part as to the FDCPA claims, OneWest's motion will be dismissed in part as moot as to the non-FDCPA claims and granted as to the FDCPA claims, and McCabe's motion will be dismissed in part as moot as to the non-FDCPA claims and granted as to the FDCPA claims. The appropriate orders shall issue.

Hon. Joseph H. Rodriguez, United States District Judge


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