United States District Court, D. New Jersey
MEMORANDUM AND ORDER
G. SHERIDAN, U.S.D.J.
matter is before the Court on a motion to dismiss
Plaintiffs' Amended Complaint pursuant to Fed.R.Civ.P.
12(b)(1) and 12(b)(6), filed by Defendant Wells Fargo. [ECF
AND PROCEDURAL HISTORY
March 26, 2007, Anthony Damiani ("Mr. Damiani")
entered into a $420, 000.00 fixed rate mortgage mote with
World Saving Bank, FSB. (ECF No. 14-4, Bender Cert., Ex. 2).
On that same date, Mr. Damiani, Dawnmarie Damiani and Peter
Damiani entered into a mortgage with World Savings Bank, FSB,
its successors and assigns, against Plaintiffs' property
located in Jackson, New Jersey (the Property). (ECF No. 14-5,
Bender Cert., Ex. 3). Wells Fargo Bank, NA is the successor
by merger with Wachovia Mortgage, FSB, which had previously
merged with World Savings Bank, FSB. (ECF No. 14-10, Bender
Cert., Ex. 8). Plaintiffs modified their loan in 2009.
2011, Mr. Damiani was laid off from work, and as a result,
Plaintiffs endured financial difficulties. (ECF No. 12,
Amend. Compl. ¶ 10). Additionally, at about the same
time, Mrs. Damiani was diagnosed with a medical condition
similar to Parkinson's disease, and their son developed a
heart condition. (Id., ¶ 11).
allege that they proactively contacted Wells Fargo to
determine if some relief was available because the loss of
the job together with the additional health care costs made
timely future payments unlikely. Wells Fargo advised that it
does not provide such assistance to mortgagors who are
presently current on their mortgage payments. (Id.,
¶ 12). Plaintiffs eventually stopped payments and
defaulted on the note and mortgage on April 1, 2011. (ECF No.
7, 2011, Plaintiffs contacted Kevin Quinn at Claremont
Funding Loan Modification Service in order to modify their
loan to a more manageable amount. Quinn allegedly
fraudulently advised the Damianis that the loan modification
process had been initiated after the Plaintiffs paid a $2,
000.00 fee to Claremont, and submitted paperwork including
pay stubs, bank statements, and tax returns among other
items. (Id. ¶ 14- ¶ 16). In September
2011, Quinn fraudulently informed Plaintiffs that they had
been approved for the loan modification. (Id. ¶
17). However, in October, 2011, Quinn again requested
Plaintiffs' 2009 tax returns, and when Mrs. Damiani asked
why, he stated that some documents had been lost.
(Id. ¶ 18). After October 2011, there was
little communication between Claremont and Plaintiffs.
(Id. ¶ 19). The loan modification never
October 10, 2012, Defendant Wells Fargo, initiated a
foreclosure action against Plaintiffs because the note and
mortgage were in default. (Id. ¶ 20).
Plaintiffs allege that they were told by Quinn, who was
allegedly acting as their attorney, not to file any documents
in the foreclosure action; however, neither Quinn nor any
other party at Claremont ever filed a response. (Id.
¶ 21). On July 15, 2013, a Final Judgment was entered
against Plaintiff for failure to answer or otherwise appear
in the action. (Id. ¶ 22, ECF No. 14-8, Final
Judgment Dkt. No. F 02266112, Ex. 6).
the foreclosure action, in September 2013, the sheriffs
office posted a sign on Plaintiffs' door announcing a
sheriffs sale of the property on October 22, 2013.
(Id. ¶ 23). Around September 14, 2013, the
Damianis advised Quinn about the sheriffs sale notice.
(Id. ¶ 26). In response, Quinn told the
Damianis that they "needed to relax and that they will
not lose their home." (Id. ¶ 27). Quinn
also informed them that their file was being reassigned to a
new company named the "Templeton Firm".
(Id. ¶ 28). The Templeton Firm never took any
action. (Id. ¶¶ 29-30).
October, 2013, Plaintiffs contacted the Keaveney Legal Group
for representation in the foreclosure matter. (Id.
¶ 33). Counsel entered their appearance and filed a
motion to vacate the final judgment on November 1, 2013.
(Id. ¶ 34). The motion to vacate was never
heard and eventually withdrawn. (ECF No. 1, Compl. ¶
37). The Keaveney Legal Group attempted to negotiate a loan
modification with Wells Fargo, but it was denied due to the
pending sheriffs sale. (Id. ¶ 35). Plaintiffs
then filed a series of Chapter 13 bankruptcy petitions - the
first on November 25, 2013, then again on April 28, 2014, a
third on April 8, 2015 and a final petition was filed on May
10, 2016 - none of the petitions resulted in a discharge.
(ECF 11-10, Bender Cert., Ex. 8 at 3, 7). In the 2015
bankruptcy proceeding, Plaintiffs sought loss mitigation on
the mortgage, which was opposed by Wells Fargo and the motion
was denied by the court. (ECF No. 14-1, Def. Memo at 3).
Throughout the bankruptcy proceedings, the sheriffs sales
were stayed each time a new bankruptcy petition was filed and
then rescheduled when those petitions were dismissed. (ECF
No. 14-10, Bender Cert., Ex. 8 at 3, 7).
January 2016, Keaveney Legal Group substituted out of the
case and the attorney who now represents the Damianis began
his representation. (Id. ¶ 39). On January 11,
2016, negotiations were initiated again by Plaintiff for a
potential forbearance agreement and/or a loan modification
with Wells Fargo. (Id. ¶ 42; ECF No. 14-10, Ex.
8). Wells Fargo refused to negotiate. (Id. ¶
about March 1, 2016, Plaintiffs reached out to Wells Fargo
independently of Defendant's counsel. Through this
effort, Wells Fargo employees sent a reinstatement amount to
Plaintiffs (Id. ¶¶ 49-50). A reinstatement
amount had to be paid within about two weeks. (Id.
¶ 51, Exhibit A).
March 14, 2016, the state Court heard an Order to Show Cause
why the Sheriffs sale should not be enjoined. (ECF No. 11-10,
Ex. 8). Thereafter a stay was granted until May 10, 2016. In
the interim period, negotiations between Plaintiffs and Wells
Fargo continued; but on April 13, 2016, Defendant's
counsel advised Plaintiffs' attorney that Plaintiffs
"were ineligible for any loan modification because their
loan had been delinquent for more than a year." (ECF No.
14-1, Def. Memo, at 24-25). The property was sold to a third party
on September 13, 2016 subject to approval of the state Court.
(Certif. of Bender Ex. 7).
allege in the Complaint that they made payments to Wells
Fargo throughout the foreclosure and bankruptcy process in
order to qualify for a forbearance agreement to which the
bank allegedly agreed during a telephone conversation on May
17, 2016. (Id. ¶ 70). A written copy of the
agreement was never received by the Plaintiffs from Wells
Fargo as promised, however, Mr. and Mrs. Damiani continued to
make payments. (Id. ¶ 71). Wells Fargo sent
receipt of payment, but the letters received by Plaintiffs
allegedly misapplied the amounts. (Id. ¶ 72).
On July 21, 2016, Plaintiffs received their check back from
Wells Fargo stating it could not accept a payment less than
the full restatement amount, however, Plaintiffs allege that
Wells Fargo still withdrew the funds out of an account for a
following payment. (Id. ¶ 77). Plaintiffs last
received communication from Defendant Wells Fargo when they
received an offer to modify their payments on September 22,
2016, though the notice was dated September 9, 2016.
(Id. ¶ 80; Exhibit E).
October 10, 2012, Defendant filed an action for foreclosure
in Superior Court of New Jersey, Chancery Division. (Def Br.
Ex. 6). During the course of the litigation, on January 4,
2017, Plaintiffs filed a motion to set aside the foreclosure
sale. In the motion, Plaintiffs raised the following issues:
• The court should set aside the Sheriff sale because
Plaintiffs were actively negotiating a loan modification in
accordance with Regulation X of RESPA, and Regulation X
prevents such foreclosure sales .
• The Court should overturn the Foreclosure sale because
Wells Fargo had an obligation under RESPA to negotiate loan
modifications, and a foreclosure sale stayed during that time
• Wells Fargo lacked proper standing therefore the court
should vacate the sale
January 20, 2017, the judge in the state foreclosure action
denied Plaintiffs' January 4, 2017motion to set
aside the Sheriffs sale on its merit, placing its reasons on
the record. (Def. Br. Ex. 15). On November 13, 2016, Plaintiffs
initiated this lawsuit alleging the following claims [ECF No.
• COUNT ONE : WELLS FARGO VIOLATED
RESPA RE: LOAN MODIFICATION Under Regulation X 12 CFR
• COUNT TWO : WELLS FARGO VIOLATED
RESPA RE: FORECLOSURE SALE
• COUNT THREE : WELLS FARGO UNJUST
• COUNT FOUR: KEVIN QUINN AND CLAREMONT
FUNDING LOAN MODIFICATION SERVICES A/K/A TEMPLETON FIRM
named three Defendants in the original complaint: Wells
Fargo, Kevin Quinn, and Claremont a/k/a Templeton Firm. On
October 10, 2017 Defendant Wells Fargo filed a motion to
dismiss. [ECF No. 11]. Before the motion could be heard,
Plaintiffs filed an Amended Complaint, without seeking leave
of court. [ECF No. 12]. Plaintiff raised additional claims:
• COUNT FIVE: STRATEGIC EQUITY
• COUNT SIX: WELLS FARGO VIOLATION OF