United States District Court, D. New Jersey
Freda L. Wolfson United States District Judge.
John Duffy (“Mr. Duffy”) and his wife, Karen
Duffy (“Karen” or “Ms. Duffy”)
(collectively, “Plaintiffs”), filed this
Complaint against Wells Fargo Bank, N.A.
(“Defendant” or “Wells Fargo”), in
which they assert various state and federal claims arising
from an underlying state foreclosure proceeding that resulted
in a final judgment issued against Plaintiffs. In lieu of an
answer, Defendant moves for dismissal, under both Federal
Rule of Civil Procedure 12(b)(1) and 12(b)(6), arguing that
Plaintiffs' claims are precluded by, inter alia,
the Rooker-Feldman doctrine. Alternatively,
Defendant moves to dismiss the Complaint on the basis that
Plaintiffs have failed to sufficiently plead facts in support
of their claims. For the reasons set forth below,
Defendant's Motion to Dismiss is GRANTED
with respect to Counts Four through Eight, as these claims
are precluded by Rooker-Feldman; however, the Motion
is DENIED with respect to Counts One and
30, 2010, Mr. Duffy and his sister, Catherine Duffy
(collectively the “Duffys”), entered into a $309,
320.00 Note with WCS Lending, LLC (“WCS”), a
Florida Limited Liability Company. Certification of Aaron M.
Bender, Esq. (“Bender Cert.”), Ex. A. The Duffys,
on that same day, also entered into a Purchase Money Mortgage
(the “Mortgage”) with Mortgage Electronic
Registrations Systems, Inc. (“MERS”), as nominee
for WCS. Bender Cert., Ex. B. The Mortgage was secured by the
property located at 134 Waterworks Road, Freehold, New Jersey
07728 (the “Property”), which was co-owned by the
Duffys. Bender Cert., Ex. B.
March 23, 2012, MERS assigned the Mortgage to Wells Fargo,
and the transaction was recorded in the Monmouth County
Clerk's Office. Bender Cert., Ex. C. As a result of
encountering financial difficulties, the Duffys were unable
to make payments on the Mortgage, thereby causing it to enter
default. Bender Cert., Ex. D. In turn, on November 19, 2012,
Wells Fargo filed a foreclosure complaint against the Duffys
in the Monmouth County Superior Court, wherein Wells Fargo
sought to repossess and sell the Property in an attempt to
satisfy the remaining balance due on the Mortgage. Bender
Cert., Ex. D. These facts are not in dispute.
September 23, 2013, Catherine Duffy purportedly transferred
her entire interest in the Property to Mr. Duffy through a
Quitclaim Deed. Compl. ¶ 18, Ex. B. According to
Plaintiffs, Catherine Duffy became estranged from her
brother. Shortly thereafter, on October 11, 2013, Plaintiffs,
Mr. Duffy and his wife, Karen, filed a loss mitigation
application (the “Application”), in which
Plaintiffs solely provided their own personal and financial
information; however, Wells Fargo denied the Application, as
it did not include Catherine Duffy's signature. Compl.
¶¶ 19-22. On February 24, 2014, Plaintiffs appealed
the denial, on the basis that Catherine Duffy was
“estranged, unemployed, and residing in Mexico, ”
and requested that Wells Fargo approve their loss mitigation
application, despite the absence of Catherine Duffy's
signature. Compl. ¶ 23, Ex. C.
on April 1, 2014, Wells Fargo, in a letter addressed to
“JOHN DUFFY” and “CATHERINE V DUFFY,
” informed the Duffys that they were approved for a
Home Affordable Modification (“HAMP”) Trial
Period Plan (the “TPP”): “Based on our
telephone conversation and the financial information you
provided, we would like to offer you an [FHA HAMP
TPP].” Compl., ¶ 25, Ex. D. In order to
accept the terms and conditions of the TPP, the letter
instructed that the Duffys must comply with the instructions
provided therein: “To accept this offer . . . please
send in your first monthly trial period
payment. Also, please sign and return a copy of the
‘FHA HAMP Trial Plan Terms and Conditions' document
that is enclosed in this package.” Compl., ¶ 25,
Ex. D. Plaintiffs assert that they agreed to be bound by the
TPP, because they performed its terms by submitting the
monthly trial payments thereunder. Compl., ¶ 28.
August 20, 2014, Wells Fargo sent Plaintiffs a Loan
Modification Agreement (“Final Agreement 1”).
Compl., ¶ 29. The Final Agreement was intended to amend
and supplement the Mortgage, and it contained various
signature lines under which the names “John
Duffy” and “Karen Duffy” were displayed.
Compl. ¶ 29, Ex. E. The Final Agreement was signed by
Plaintiffs, and allegedly returned to Wells Fargo; however,
Wells Fargo maintains that there was an error in the
execution of Final Agreement 1. As a result, on January 12,
2015, Plaintiffs signed an identical Agreement (“Final
Agreement 2”), which, according to Wells Fargo, was
also executed incorrectly. Compl. ¶¶ 32-36.
Plaintiffs allege that they were then presented with a new
agreement requiring, for the first time, the signature of
Catherine Duffy (“Final Agreement 3”). Compl.
¶¶ 38-39. However, Plaintiffs did not return Final
Agreement 3 because it required the signature of Catherine.
28, 2015, in a letter addressed to the Duffys, Wells Fargo
denied the Loan Modification Agreement, because it was not
signed by Catherine: “At this time, you do not meet the
requirements of this program because . . . we have not
received your signed modification agreement.” Compl.
¶ 52, Ex. F. On August 17, 2015, Plaintiffs, once again,
filed an appeal of denial, wherein they maintained that
Plaintiffs performed under the TPP, and entered into a Final
Agreement with Wells Fargo. Compl., ¶¶ 53-54.
Thereafter, on May 12, 2016, Wells Fargo informed Plaintiffs
that the appeal was still under investigation. According to
Plaintiffs, Wells Fargo did not render a decision in response
to the appeal; rather, they were instructed by Wells Fargo to
file a new loss mitigation application. On May 17, 2016,
Plaintiffs resubmitted a loss mitigation application, which
Wells Fargo denied on the following day. Compl. ¶¶
58, 61, Ex. I. During the pendency of Plaintiffs' last
appeal to Wells Fargo, the State Court, on November 19, 2015,
granted Wells Fargo's application for final judgment in
the foreclosure action. Bender Cert., Ex. F. On July 25,
2016, after the initiation of this suit, Plaintiffs filed a
motion to stay the state court's final judgment of
foreclosure, in which they claimed: “Wells Fargo has
refused to honor the agreed-upon terms of a signed loan
modification agreement. [Plaintiffs] have filed a federal
lawsuit against Wells Fargo in the District Court of New
Jersey and are requesting a stay of the sale to provide an
opportunity to have the matter settled.” Supplemental
Certification of Aaron M. Bender, Esq., Ex. A.
22, 2016, Plaintiffs filed this instant eight-count
Complaint against Wells Fargo. Under the first two
Counts of the Complaint, Plaintiffs assert claims under the
Real Estate Settlement Procedure Act (“RESPA”).
Specifically, in Count One, Plaintiffs allege that Wells
Fargo acted in violation of 12 C.F.R. § 1024.41(e) by
“unilaterally and wrongfully deem[ing Plaintiffs] to
have rejected the HAMP permanent modification agreement . . .
despite the fact that [Plaintiffs] had made any necessary
payments in compliance with the terms of the TPP and properly
executed and returned [Final Agreement 1 and Final Agreement
2] . . . . ” Compl. ¶ 80-81. In Count Two,
Plaintiffs also allege that Wells Fargo acted in violation of
12 C.F.R. § 1024.41(h) by failing “to provide a
response to [Plaintiffs'] Appeal within the thirty (30)
day timeframe, ” as is required under RESPA. ¶ 98.
Count Four, Plaintiffs bring a claim under the New Jersey
Consumer Fraud Act (“NJCFA”). Specifically,
Plaintiffs allege that Wells Fargo acted in violation of the
NJCFA “by engaging in an unfair and deceptive act or
practice by using fraud, deception, and misrepresentation . .
. . ” Compl. ¶ 110. As an example of such
fraudulent behavior, Plaintiffs assert that Wells Fargo
“wrongfully denied the HAMP Final Modification to which
[Plaintiffs] were entitled and under which they had dutifully
performed so as to move towards foreclosure on
[Plaintiff's] home, or in the alternative to collect
payments under the trial plan under false pretense.”
Compl., ¶ 110.
Count Five, Plaintiffs assert a claim for breach of contract.
In that claim, Plaintiffs allege that Wells Fargo
“offered [Plaintiffs] a final HAMP loan modification by
and through the issuance of Final Agreement #1, ” which
[Plaintiffs] accepted by signing and returning the Agreement
to Wells Fargo. Compl. ¶¶ 122-123. However,
Plaintiffs claim the Agreement was breached when Wells Fargo
“sought to alter the terms of Final Agreement #1, and
#2 for that matter, by requiring [, for the first time, ]
Catherine's signature.” Compl. ¶ 124.
Relatedly, in Count Six, Plaintiffs allege a violation of the
covenant of good faith and fair dealing, because, in
breaching the terms of the Agreement, Wells Fargo
“acted in bad faith, dishonestly, and with improper
motive to injure the rights of Plaintiffs.” Compl.
Count Seven, Plaintiffs bring a claim of estoppel, alleging
that because Wells Fargo “voluntarily engaged in
conduct with the intention that it would be acted upon by
[Plaintiffs] or under such circumstances that a reasonably
prudent person would suppose that it was intended to be acted
upon as true.” Compl., ¶ 135. In support,
Plaintiffs allege that Wells Fargo “induced
[Plaintiffs] into making temporary modification payments
while [Wells Fargo] had no intention of accepting and
engaging [Plaintiffs] in long term loss mitigation plan and
without any good faith efforts to reach a permanent loan
modification.” Compl., ¶ 138.
in Count Eight, Plaintiffs assert a claim of common law fraud
against Wells Fargo. Specifically, Plaintiffs allege that
“[t]he misrepresentation knowingly made by [Wells
Fargo], namely that Catherine's signature would not be
needed on the HAMP permanent agreement, caused [Plaintiffs]
to make TPP payments to [Wells Fargo], ” and, as a
result, Plaintiffs suffered damages. Compl., ¶ 144-147.
December 11, 2016, Defendant filed the instant motion to
dismiss, in which they argue that Plaintiffs' Complaint
is barred by the Rooker-Feldman Doctrine,
Younger Abstention Doctrine, Colorado River
Abstention Doctrine, the New Jersey Entire Controversy
Doctrine, res judicata, and collateral estoppel.
According to Defendants, Plaintiffs bring this action in an
attempt to re-litigate the foreclosure action in state court,
which was already decided in favor of Defendant. In the
alternative, Defendants seek to dismiss the Complaint on the
basis that Plaintiffs have failed to allege facts in support
of their claims. In their Opposition, Plaintiffs argue that
their claims are not barred, because they are not requesting
this Court to overturn the validity of the foreclosure
action; rather, Plaintiffs seek an award of damages, which,
if granted, would not ...