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Caponegro v. The United States Department of Housing

United States District Court, D. New Jersey

May 18, 2017

ARTHUR B. CAPONEGRO, Plaintiff,
v.
THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, FIRST NATIONAL BANK OF LAYTON, AND JOHN DOES 1-10, Defendants.

          MEMORANDUM OPINION

          KEVIN MCNULTY. U.S.D.J.

         I. Introduction

         The plaintiff, Arthur B. Caponegro ("Caponegro"), brought this action against the defendants, the United States Department of Housing and Urban Development ("HUD") and First National Bank of Layton ("FNBL"), in connection with a "reverse mortgage"[1] transaction that Caponegro entered into with FNBL. On August 16, 2016, Caponegro filed a four-count amended complaint (ECF no. 33, referred to hereinafter as the "Complaint" and cited as "Compl."). Only Counts 1 and 4 appear to assert claims against FNBL.[2] Count 1 is a claim for breach of contract, and Count 4 is a claim for negligence. In Count 1, the Complaint also presents allegations that sound in fraud, alleging that FNBL made misrepresentations and that it falsified documents and forged Caponegro's signature. Now before the Court is FNBL's motion, pursuant to Fed.R.Civ.P. 12(b)(6), to dismiss the Complaint for failure to state a claim.[3]

         For the reasons stated below, FNBL's motion to dismiss (ECF no. 41) is GRANTED.

         II. Standard on a Motion to Dismiss

         FNBL has moved to dismiss the Complaint for failure to state a claim, pursuant to Fed.R.Civ.P. 12(b)(6). Rule 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if it fails to state a claim upon which relief can be granted. The defendant, as the moving party, bears the burden of showing that no claim has been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a Rule 12(b)(6) motion, a court must take the allegations of the complaint as true and draw reasonable inferences in the light most favorable to the plaintiff. Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (traditional "reasonable inferences" principle not undermined by Twombly, see infra).

         Federal Rule of Civil Procedure 8(a) does not require that a complaint contain detailed factual allegations. Nevertheless, "a plaintiffs obligation to provide the 'grounds' of his 'entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." BellAtl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the complaint's factual allegations must be sufficient to raise a plaintiffs right to relief above a speculative level, so that a claim is "plausible on its face." Id. at 570; see also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). That facial-plausibility standard is met "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). While "[t]he plausibility standard is not akin to a 'probability requirement'... it asks for more than a sheer possibility." Iqbal, 556 U.S. at 678.

         However, a plaintiff alleging fraud or mistake must meet a heightened pleading standard under Federal Rule of Civil Procedure 9(b). Under Rule 9(b), "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b) (emphasis added). As the Third Circuit has explained, "[a] plaintiff alleging fraud must therefore support its allegations with all of the essential factual background that would accompany the first paragraph of any newspaper story-that is, the who, what, when, where and how of the events at issue." U.S. ex rel. Moore & Co., P.A. v. Majestic Blue Fisheries, LLC, 812 F.3d 294, 307 (3d Cir. 2016) (citing In re Rockefeller Ctr. Props., Inc. Securities Litig., 311 F.3d 198, 217 (3d Cir. 2002)) (citation and quotation marks omitted). In other words, a plaintiff may satisfy this requirement by pleading "the date, time and place" of the alleged fraud or deception, or by "otherwise inject[ing] precision or some measure of substantiation" into the allegation. Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007) (citing hum v. Bank of Am., 361 F.3d 217, 224 (3d Cir. 2004)). Additionally, to survive a motion to dismiss, plaintiffs must also allege "who made a misrepresentation to whom and the general content of the misrepresentation." Gray v. Bayer Corp., No.Civ.A.08-4716, 2010 WL 1375329, at *3 (D.N.J. Mar. 31, 2010) (citing hum, 361 F.3d at 224).

         The heightened specificity required by Rule 9(b) extends to the pleading of all claims that "sound in fraud." See Giercyk v. Nat'l Union Fire Ins. Co. of Pittsburgh, No. 13-6272, 2015 WL 7871165, at *2 (D.N.J. Dec. 4, 2015); Mladenov v. Wegmans Food Markets, Inc., 124 F.Supp.3d 360, 372 (D.N.J. 2015). This includes Caponegro's claims alleging misrepresentation and falsification of documents. See Travelers Indem. Co. v. Cephalon, Inc., 620 F.App'x 82, 85, n.3 (3d Cir. 2015) (affirming Rule 9(b) dismissal of claims for intentional misrepresentation, negligent misrepresentation, and unjust enrichment).

         Where a plaintiff is proceeding pro se, the complaint is "to be liberally construed, " and, "however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers." Erickson v. Pardus, 551 U.S. 89, 93-94 (2007). Nevertheless, "pro se litigants still must allege sufficient facts in their complaints to support a claim." Mala v. Crown Bay Marina, Inc., 704 F.3d 239, 245 (3d Cir. 2013). "While a litigant's pro se status requires a court to construe the allegations in the complaint liberally, a litigant is not absolved from complying with Twombly and the federal pleading requirements merely because s/he proceeds pro se." Thakar v. Tan, 372 F.App'x 325, 328 (3d Cir. 2010) (citation omitted). Pro se plaintiffs are also not exempt from meeting the heightened pleading requirements of Rule 9(b) when alleging claims that sound in fraud. See Kowalsky v. Deutsche Bank Nat'l Trust Co., No. 14-07856 (CCC)(JBC), 2015 WL 5770523, at *9 (D.N.J. Sept. 30, 2015).

         At the time Caponegro filed the Complaint, he was represented by counsel, Kenneth C. Marano, Esq., but by the time he filed his opposition to FNBL's motion to dismiss, he was proceeding pro se. As of May 11, 2017, Caponegro is once again represented by counsel, Toni Belford Damiano, Esq. (Notice of Appearance, ECF no. 57) Because Caponegro was represented by counsel at the time he filed the Complaint, the Complaint is not entitled to the more forgiving standards applied to pro se pleadings. However, this makes little difference in this case because, even if construed liberally, the Complaint fails to state a claim.

         III. The Complaint

         For purposes of this motion to dismiss, the allegations of the Complaint are assumed to be true. Although the allegations suffer from insufficient clarity, I have attempted to make sense of them.

         The Complaint alleges that Caponegro owns and resides at 513 Winterburn Grove, Cliff side Park, New Jersey. (Compl. ¶ 7) On or about July 23, 2012, he entered into a "reverse mortgage" transaction with FNBL in the amount of $400, 500. (See Id. ¶¶ 61-65) Caponegro never received financial counseling regarding his reverse mortgage, which he alleges was a failure to meet the requirements of 12 U.S.C. § 1715z-20.[4] As a result, "Defendants breached the contract entered into by Plaintiff." (Id. ¶ 63) Caponegro relied upon "Defendant's misrepresentation" to his detriment by not having been advised about the nature of the loan and its consequences to his home ownership. (Id. ¶ 64)

         Caponegro alleges that FNBL's sale of the ownership interest in the loan to Wells Fargo Bank, N.A., "on or before the Trust Closing Date of August 30, 2012, . . . constitute[d] a Breach-separation of the Note and Mortgage." (Id. ¶ 66) Allegedly, "Defendant breached its obligations under the contract with Plaintiff by splitting the Note and Mortgage, a condition precedent . . . thereby voiding the contract." (Id. ¶ 68)

         Caponegro further alleges that "Defendant falsified the original document, and forged Plaintiffs signature encumbering the property for the amount of $862, 500 at ¶ 2.748% interest rate." (Id. ¶ 67)[5]

         IV. Analysis

         I start with a general observation. At many points in the Complaint, references to the defendants are ambiguous. The Complaint sometimes refers to "Defendant" or "Defendant[]s, " without further identifying which of the two named defendants is intended. It is not always possible to confidently infer against which of the defendants an allegation is directed.

         A plaintiff must "specify which defendants performed which acts." Zuniga v. Am. Home Mortg., No. 14-CV-2973 (KM), 2016 WL 886214, at *2 (D.N.J. Mar. 7, 2016); see also Galicki v. New Jersey, No. 14-169 (JLL), 2015 WL 3970297, at *2 (D.N.J. June 29, 2015) (Rule 8 is not satisfied where a complaint "provide[s] only conclusory allegations against Defendants as a group"); Triple T Constr., L.L.C. v. Township of W. Milford, No. 14-2522 (JLL), 2014 WL 2624764, at *4 (D.N.J. June 11, 2014) (Rule 8 is not satisfied where a complaint "lump[ed] all Defendants together, failing to put Defendants on notice of their own alleged wrongdoing").

         If Caponegro chooses to file an amended complaint, he must identify more clearly which defendants are alleged to be responsible for each action and against which defendants each count is asserted.

         I now proceed to analyze the sufficiency of the allegations in Counts 1 and 4.

         A. Fraud/ Breach of ...


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