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Jonathan Dehart & Denise Dehart v. Us Bank

August 18, 2011

JONATHAN DEHART & DENISE DEHART, PLAINTIFFS,
v.
US BANK, N.A. ND, ET AL. DEFENDANTS.



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

OPINION

SIMANDLE, District Judge:

I. INTRODUCTION

This putative class action involving allegedly improper fees charged for mortgage reinstatement or payoff is before the Court on three motions to dismiss the Complaint for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). [Docket Items 7, 8, & 9.] Defendants seek dismissal of Plaintiffs' numerous state and federal claims. This Opinion will address, inter alia, the New Jersey Entire Controversy Doctrine, the Colorado River abstention doctrine, the necessity of alleging damages in contractual causes of action, the New Jersey Consumer Fraud Act, the New Jersey Truth-in-Consumer Contract Warranty and Notice Act, and the Federal Debt Collection Practices Act. The Court has addressed the many arguments raised by the parties, and will grant in part and deny in part the motions of Defendant Foreclosure Management Company and U.S. Bank, N.A. ND [Docket Items 8 & 9], but will deny in its entirety the motion of Udren Law Offices, PC [Docket Item 7] because the Court finds that Plaintiffs have stated a claim for recovery under the Fair Debt Collection Practices Act.

II. BACKGROUND

Plaintiffs in this action are Jonathan and Denise DeHart ("Plaintiffs"), and Defendants are U.S. Bank, N.A. ND ("U.S. Bank"), Foreclosure Management Company ("FMC"), and Udren Law Offices, PC ("Udren"). The following facts are taken from the Complaint and the attached exhibits or from matters of public record and must be assumed true for purposes of these Rule 12(b)(6) motions.

On November 1, 2005, Plaintiffs executed a mortgage and note for the purchase of a residential property located at 188 S. Monmouth Court in Thorofare, New Jersey, originated by non-party Wilmington Finance in the amount of $260,000. Compl. ¶ 11; Compl. Ex. A. Less than four years later, Plaintiffs apparently fell behind on their mortgage payments, and the mortgage went into default on April 1, 2009. Compl. ¶ 12.

On August 19, 2009, Defendant Udren sent Plaintiffs a notice of intention to foreclose, which stated that the mortgage was in default, and explained that Plaintiffs had a right to cure the default by paying the missed payments and late fees, in the amount of $19,625.13, up to 30 days later. Compl. Ex. A. In response, Plaintiffs requested statements documenting the amount necessary to reinstate the mortgage and the amount that would be necessary to pay off the mortgage in its entirety.*fn1 On September 10, 2009,*fn2 Plaintiffs received two separate notices from Udren: a reinstatement notice and a payoff notice, both stating that the notices were regarding "U.S. Bank Consumer Finance" loans. Compl. Exs. B & C. Plaintiff alleges that these letters were sent "on behalf of USB [Defendant U.S. Bank]." Compl. ¶ 15. The Complaint also alleges that Plaintiffs' mortgage was assigned to Defendant U.S. Bank eleven days later, on September 21, 2009. Compl. ¶ 14. The September 10 payoff and reinstatement notices included the charges that Plaintiffs allege were excessive and/or misleading.

Specifically, the reinstatement and payoff notices each state an amount that, if payed after September 18, 2009, but prior to September 28, 2009, purportedly would either reinstate or pay off the mortgage and thereby prevent foreclosure. Compl. Exs. B & C at 1. The reinstatement amount was listed as $26,129.36 and the payoff amount was listed as $274,607.86. Id. at 2. Thus, the letters suggest that were Plaintiffs to attempt to reinstate or pay off their mortgage on September 19, 2009, they would have been required to pay the additional fees listed on the notices. The total amounts listed were subdivided into component charges in the form of payments or total principal owed on the mortgage as well as late charges and other fees. Id. Both the reinstatement and payoff notices include five line items marked as "anticipated" for charges related to court fees and filing fees. Id. In addition, both notices also included a line item marked "notice of intention - prepare and send" charged at $100, and "attorney foreclosure fee" charged at $500. Id. Neither of these lines were marked "anticipated."

The notices also included some caveats below the list of charges and fees. On the reinstatement notice, below the list of fees are two notations of dates. The notice states that

THIS AMOUNT IS GOOD THRU 09/28/2009 ** ** Please refer to the Notice of Intention letter for reinstatement amount prior to 9/18/2009.

Compl. Ex. B at 2. Similarly, below the list of fees on the payoff notice is the notice that

THIS AMOUNT IS GOOD THRU 9/28/2009 ** ** Please note that if this loan is to payoff prior to the Notice of Intention letter expiring on 9/18/2009, the attorney fees and costs listed on this quote will become non-recoverable.

Compl. Ex. C at 2. Additionally, immediately below the list of charges and applicable dates on both letters is the note that

"ANY ITEM MARKED ANTICIPATED, IF NOT ACTUALLY EXPENDED, WILL BE REFUNDED TO MORTGAGOR IMMEDIATELY." Compl. Exs. B & C at 2.

Plaintiffs allege that two charges included in the notices that were not marked as anticipated (for preparing the notice of intention and for the attorney foreclosure fee -- amounting to $600), were not permitted under New Jersey law, and therefore breached Plaintiff's mortgage contract and violated several state and federal statutes. Plaintiffs claim that the New Jersey Fair Foreclosure Act ("FFA") of N.J. Stat. Ann. § 2A:50-57 prohibits the mortgagee from imposing court costs or fees related to a foreclosure proceeding prior to actually filing for foreclosure, citing to Spencer Savings Bank, SLA v. Shaw, 949 A.2d 218 (N.J. Super. App. Div. 2008). Thus, because Defendants stated that fees and costs not marked "anticipated" would be charged immediately after the expiration of the 30-day notice of intent to foreclose period, and not necessarily after filing a foreclosure action, the letters were an attempt to collect fees before they were permitted to be collected under state law.

Plaintiffs allege that they never actually paid any of the allegedly illegal charges, nor were they able to cure the default. Compl. ¶ 23. On October 5, 2009, after Plaintiffs apparently took no action to reinstate or pay off the mortgage, Defendants filed a complaint for foreclosure in the Superior Court of New Jersey, Chancery Division. Compl. ¶ 22; Udren Mot. Dismiss. Ex. C. See Docket No. F-052956-09 (N.J. Super. Ct. Ch. Div.) Plaintiffs Jonathan and Denise DeHart, defendants in the state foreclosure action, have not contested the state foreclosure action, and U.S. Bank eventually requested entry of default on January 21, 2010. Udren Mot. Dismiss. Ex. C. U.S. Bank moved for entry of final judgment on June 29, 2010, though the chancery court has apparently not yet entered final judgment in the foreclosure action.*fn3 Id.

On September 9, 2010, Plaintiffs filed their Complaint in this action in the Superior Court of New Jersey, Gloucester County, seeking recovery on nine counts:

(1) (against U.S. Bank) breach of contract;

(2) (against U.S. Bank) breach of the duty of good faith and fair dealing;

(3) (against U.S. Bank) violation of the New Jersey Fair Foreclosure Act of N.J. Stat. Ann. § 2A:50-57(b)(3);

(4) (against U.S. Bank) violation of New Jersey State Court Rules 4:42-9(a)(4) and 4:42-10(a);

(5) (against U.S. Bank) violation of various New Jersey statutes regarding excessive taxed costs;

(6) (against U.S. Bank and FMC) violation of the New Jersey Consumer Fraud Act of N.J. Stat. Ann. § 56:8-2 et seq.;

(7) (against U.S. Bank) violation of the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act of N.J. Stat. Ann. § 56:12-1;

(8) (against U.S. Bank and FMC) violation of N.J. Stat. Ann. § 12A:9-210, a provision of the Uniform Commercial Code requiring that an accurate statement of account be provided upon request; and

(9) (against all three Defendants) violation of the Federal Fair Debt Collection Practices Act ("FDCPA") of 15 U.S.C. § 1692 et seq.

On November 12, 2010, Defendant Foreclosure Management Company removed the action to this Court. [Docket Item 1.] All three Defendants subsequently moved to dismiss the Complaint for failure to state a claim under Fed. R. Civ. P. 12(b)(6). [Docket Items 7, 8 & 9.] In addition to arguing that Plaintiffs' Complaint fails to state a claim in any of its nine counts, Defendants also argue that the action must be dismissed pursuant to the New Jersey Entire Controversy Doctrine, and Defendant U.S. Bank argues that the Court should abstain pursuant to the Colorado River abstention doctrine.

III. DISCUSSION

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. 8(a) and 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 for relief, so the complaint must contain allegations beyond ...


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