United States District Court, D. New Jersey
WILLIAM J. MARTINI, U.S.D.J.
American Modern Insurance Group, Inc., and American Modern
Home Insurance Company (collectively, “AMIG”);
Residential Credit Solutions, Inc. (“RCS”); and
Specialized Loan Servicing, LLC (“SLS”) (jointly,
“Defendants”) move to dismiss Counts I and II in
Plaintiff's Complaint for failure to plead fraud with
heightened particularity. Next, Defendants RCS and SLS
(“Loan Servicers”) seek to dismiss the remaining
contract-based causes of action-Counts III, IV, and V-for
failure to state a claim. The matter was taken on submission
without oral argument. Fed.R.Civ.P. 78(b). For the reasons
that follow, Defendants' Motions to Dismiss are
GRANTED and Plaintiff's Complaint is
DISMISSED WITHOUT PREJUDICE.
purchasing a home (“Property”) and signing a
Mortgage Agreement (“Agreement”), this dispute
began when Plaintiff filed a claim for damage or loss to the
Property. See AMIG's Notice of Removal, Ex. A,
¶¶ 6-21, ECF No. 1 [hereinafter
“Compl.”]; Samon Decl., Ex. 1, ECF No. 18-3.
AMIG's representatives then inspected the Property as to
the claimed damage and assessed “the total damages at
$53, 9433.14 [sic], ” Compl. ¶¶ 8,
14, while Plaintiff averred over $322, 000 in damages.
Id. at ¶¶ 9, 16, 17. After an inspection,
AMIG sent RCS, the then-Loan Servicer on Plaintiff's
loan, $22, 468.72, and then again sent RCS, who forwarded it
to SLS, the new Loan Servicer, $25, 750.62. Plaintiff argues
the Loan Servicers wrongfully withheld these insurance
proceeds, thereby unjustly enriching themselves. Id.
at ¶¶ 38-40. Further, along with AMIG, Plaintiff
contends the Loan Servicers conspired to offer a low dollar
figure as to the Property damage claim, all part of an
alleged unlawful kickback scheme. Id. at
¶¶ 24.e., 34.d.
dispute over a failure to forward Plaintiff the insurance
proceeds stems from a lender, in a mortgage agreement,
requiring a borrower to maintain hazard insurance on a
mortgaged property to protect the lender's interest in
said property. If the borrower fails to maintain insurance
coverage, at its option, the lender may purchase, at a
borrower's expense, a force-placed-or
“lender-placed”-insurance policy (hereinafter
failing to provide proof of hazard insurance, Plaintiff
alleges his Loan Servicers-the lenders and mortgage holders
on his Property-wrongfully force-placed the required
insurance in buying FPI at a premium that was likely more
expensive than a borrower-purchased insurance policy. Through
written warning notices, the Loan Servicers notified
Plaintiff of its actions. The two notices included the annual
premium, the effective insurance backdate, and advised that
if Plaintiff provided proof of insurance, RCS and SLS would
cancel its FPI and refund Plaintiff any premium payments
made. Both notices explained in bold typeface how FPI would
likely be more expensive than borrower-purchased coverage and
how it represented limited coverage. See Pl.'s
Decl., Exs. A-B, ECF No. 25-1. Although Plaintiff's
Agreement allowed Defendants to procure FPI absent proof of
insurance, Plaintiff contends Defendants had an exclusive
arrangement to buy and sell high-premium FPIs which were
unreasonable to protect the interest in the Property.
Defendants then collected the FPI premiums and unknown excess
amounts and redistributed the sums disguised as commissions
and other fees not attributable to insuring the Property.
Plaintiff labels the commission or fee a
“kickback.” Compl. ¶ 24.
its unlawful kickback scheme, Plaintiff alleges Defendants
committed consumer fraud and engaged in and conspired to
violate New Jersey's Civil RICO statute
(“RICO”) through its unconscionable commercial
practices in misleading unsophisticated borrowers into
purchasing or agreeing to FPI. Also, although permitted under
the Agreement to withhold the Property damage claim's
insurance proceeds, Plaintiff asserts the Loan Servicers
breached it and thereby unjustly enriched
themselves. In all, instead of purchasing hazard
insurance, Plaintiff filed suit and Defendants timely
Rule of Civil Procedure 12(b)(6) provides for the dismissal
of a complaint, in whole or in part, if the plaintiff fails
to state a claim upon which relief can be granted. 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 motion to dismiss, a court must
take all allegations in the complaint as true and view them
in the light most favorable to the plaintiff. See Warth
v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels
& Casino Resorts, Inc. v. Mirage Resorts Inc., 140
F.3d 478, 483 (3d Cir. 1998).
a complaint need not contain detailed factual allegations,
“a plaintiff's 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.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007). Thus, the factual allegations must be sufficient
to raise a plaintiff's right to relief above a
speculative level, such that it is “plausible on its
face.” See Id. at 570; see also Umland v.
PLANCO Fin. Servs., Inc., 542 F.3d 59, 64 (3d Cir.
2008). “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.” 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 (quoting
Twombly, 550 U.S. at 556). Apart from the complaint,
a court may consider an “undisputedly authentic
document” included as an exhibit in a party's
motion to dismiss. Pension Ben. Guar. Corp. v. White
Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.
Federal Rule of Civil Procedure 9(b), “a plaintiff
alleging fraud must state the circumstances of the alleged
fraud with sufficient particularity to place the defendant on
notice of the precise misconduct with which [it is]
charged.” Frederico v. Home Depot, 507 F.3d
188, 200 (3d Cir. 2007) (citation and internal quotations
omitted). That is, “the who, what, when, where, and
how: the first paragraph of any newspaper story.”
Institutional Inv'rs Grp. v. Avaya, Inc., 564
F.3d 242, 253 (3d Cir. 2009) (internal quotation marks and
Court will discuss, in turn, the state consumer fraud and
RICO claims against all Defendants and then the
contract-based claims against RCS and SLS.
The New Jersey Consumer Fraud Act (“CFA”) Claim
Against All Defendants (N.J. ...