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Damiani v. Wells Fargo

United States District Court, D. New Jersey

April 10, 2018

ANTHONY DAMIANI AND DAWNMARIE DAMIANI, Plaintiffs,
v.
WELLS FARGO, at al Defendants.

          MEMORANDUM AND ORDER

          PETER G. SHERIDAN, U.S.D.J.

         This 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 No. 14].

         FACTS AND PROCEDURAL HISTORY

         On 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. (Id.)

         In 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).

         Plaintiffs 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. 11-1).

         On July 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 occurred.

         On 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).

         Following 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)[1].

         In 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).

         In 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. ¶ 48).

         On or 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).

         On 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)[2]. The property was sold to a third party on September 13, 2016 subject to approval of the state Court. (Certif. of Bender Ex. 7).

         Plaintiffs 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).

         On 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 period.
• Wells Fargo lacked proper standing therefore the court should vacate the sale

         On January 20, 2017, the judge in the state foreclosure action denied Plaintiffs' January 4, 2017[3]motion to set aside the Sheriffs sale on its merit, placing its reasons on the record. (Def. Br. Ex. 15).[4] On November 13, 2016, Plaintiffs initiated this lawsuit alleging the following claims [ECF No. 1]:

COUNT ONE : WELLS FARGO VIOLATED RESPA RE: LOAN MODIFICATION Under Regulation X 12 CFR 1024.41(g)
COUNT TWO : WELLS FARGO VIOLATED RESPA RE: FORECLOSURE SALE
COUNT THREE : WELLS FARGO UNJUST ENRICHMENT
COUNT FOUR: KEVIN QUINN AND CLAREMONT FUNDING LOAN MODIFICATION SERVICES A/K/A TEMPLETON FIRM UNJUST ENRICHMENT

         Plaintiffs 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 SOLUTIONS FRAUD
• COUNT SIX: WELLS FARGO VIOLATION OF ...

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