United States District Court, D. New Jersey
OFFICE OF ROOSEVELT N. NESMITH, LLC By: Roosevelt N. Nesmith,
Esq. Counsel for Plaintiffs
GREENBERG TRAURIG, LLP By: Louis Smith, Esq. Aaron Van
Nostrand, Esq. Counsel for Defendants CIT Bank N.A., and
Financial Freedom Senior Funding Corporation
BUCKLEY SANDLER LLP By: Robyn C. Quattrone, Esq. Stephen M.
LeBlanc, Esq. Mary C. Flemming, Esq. And SILLS CUMMIS &
GROSS P.C. By: Charles J. Falletta, Esq. Counsel for
Defendants QBE Insurance Corporation, QBE First Insurance
Agency, Inc., and MIC General Insurance Corporation
RENÉE MARIE BUMB, UNITED STATES DISTRICT JUDGE
bring this putative class action suit alleging that
Defendants CIT Bank, N.A., a mortgage lender
(“CIT”); Financial Freedom Senior Funding
Corporation, a mortgage servicer (“Financial
Freedom”); and insurance companies QBE Insurance
Corporation, QBE First Insurance Agency, Inc., and MIC
General Insurance Corporation (collectively “the
Insurer Defendants”) conspired to: (1) overcharge
Plaintiffs in connection with forced-placed hazard insurance;
and (2) charge unnecessary property inspection fees.
move to dismiss all claims asserted in the Amended
Complaint. For the reasons stated herein, the Insurer
Defendants' motion will be granted as to the tortious
interference claim and denied in all other respects; and the
other Defendants' motion will be denied.
suit concerns a reverse mortgage on a residential property
located in Cinnaminson, New Jersey. (Amend. Compl.
¶¶ 1, 80) In 2008, Earl Gray Jr. obtained the
reverse mortgage from Defendant Freedom Financial.
(Id. ¶ 80-81) Gray failed to maintain hazard
insurance coverage on his property as required by the
mortgage documents, and so, in accordance with the loan
documents, beginning in 2011, Defendant Financial Freedom
began force-placing hazard insurance on the property.
(Id. ¶ 83) Allegedly, “Financial Freedom
imposed a charge [for the insurance premium] on Gray's
mortgage account . . . in the amount of $3, 510.00.”
Plaintiffs allege, the same pattern continued from 2012
through 2017; Freedom Financial force-placed insurance on the
subject property, then charged Gray-- and subsequently the
new property owners upon Gray's death in
2016-- for what Financial Freedom said was the
cost of the insurance premiums. (Amend. Compl. ¶ 83)
According to Plaintiffs, however, what Financial Freedom
represented what the cost of the insurance premiums was
actually the cost plus an “unearned
commission” or “kickback” that Financial
Freedom obtained through its “interlocking
agreements” with the Insurer Defendants. (Id.
¶¶ 59-64) The alleged misrepresentations as to the
cost of the insurance allegedly were contained in various
notices sent to the property. (Amend. Compl. ¶¶ 84,
also allege that Financial Freedom obtained excessive-- and
therefore, allegedly unnecessary-- insurance coverage for the
property. For example, Plaintiffs allege that in 2013,
Financial Freedom obtained insurance coverage in the amount
of $330, 000 even though “the outstanding principle
[sic] balance of Gray's loan was $235, 600, ”--
i.e., substantially less than the coverage amount.
(Amend. Compl. ¶ 84)
Plaintiffs allege that Financial Freedom charged Gray's
mortgage account for unnecessary inspections. The first of
these charges occurred on March 25, 2011. (Amend. Compl.
¶ 86) The other 15 alleged unnecessary inspection fees
were charged for inspections done after “Financial
Freedom declared Gray's loan due and payable . . . on
June 4, 2015.” (Id. ¶¶ 85-86)
Plaintiffs contend that all of the inspections were
unnecessary because the property was always
“occupied” and “Monica Gray was in regular
contact with Financial Freedom concerning the Gray
Property.” (Id. ¶ 87) Plaintiffs allege
that Financial Freedom ordered the property inspections
“without a legitimate basis solely to generate
fees.” (Id. ¶ 69)
Amended Complaint asserts nine counts: (1) Monica Gray,
Executrix v. Financial Freedom and CIT-- breach of
contract; (2) Monica Gray, Executrix v. Financial
Freedom and CIT-- breach of the duty of good faith and
fair dealing; (3) all Plaintiffs v. Financial
Freedom and CIT-- violation of the New Jersey Consumer
Fraud Act, N.J.S.A. § 56:8-2 (“NJ CFA”); (4)
all Plaintiffs v. the Insurer Defendants-- violation
of the N.J. CFA; (5) all Plaintiffs v. all
Defendants-civil conspiracy; (6) Monica Gray,
Executrix v. the Insurer Defendants-- tortious
interference; (7) all Plaintiffs v. all Defendants--
violation of RICO, 18 U.S.C. § 1962(c); (8) all
Plaintiffs v. all Defendants-- violation of RICO, 18
U.S.C. § 1962(d); and (9) Monica Gray, Executrix v.
CIT-- violation of the Truth in Lending Act, 15 U.S.C.
§ 1601 et seq. (“TILA”).
Motion to Dismiss Standard
withstand a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), “a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “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.” Id. at 663.
“[A]n unadorned, the defendant-unlawfully-harmed me
accusation” does not suffice to survive a motion to
dismiss. Id. at 678. “[A] plaintiff's
obligation to provide the ‘grounds' of his
‘entitle[ment] to relief' requires more than labels
and conclusions, and a formulaic recitation of the elements
of a cause of action will not do.” Twombly,
550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S.
265, 286 (1986)).
reviewing a plaintiff's allegations, a district should
conduct a three-part analysis:
First, the court must take note of the elements a plaintiff
must plead to state a claim. Second, the court should
identify allegations that, because they are no more than
conclusions, are not entitled to the assumption of truth.
Third, when there are well-pleaded factual allegations, a
court should assume their veracity and then determine whether
they plausibly give rise to an entitlement for relief.
Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011)
(internal citations, quotations, and modifications omitted)
(quoting Iqbal, 556 U.S. at 675, 679).
12(b)(6) requires the district court to “accept as true
all well-pled factual allegations as well as all reasonable
inferences that can be drawn from them, and construe those
allegations in the light most favorable to the
plaintiff.” Bistrian, 696 F.3d at 358 n. 1.
Only the allegations in the complaint and “matters of
public record, orders, exhibits attached to the complaint and
items appearing in the record of the case” are taken
into consideration. Oshiver v. Levin, Fishbein, Sedran
& Berman, 38 F.3d 1380, 1384 n. 2 (3d Cir. 1994)
(citing Chester Cty. Intermediate Unit. v. Pennsylvania
Blue Shield, 896 F.2d 808, 812 (3d Cir. 1990)). A court
may also “consider an undisputedly authentic document
that a defendant attaches as an exhibit to a motion to
dismiss if the plaintiff's claims are based on the
document.” Pension Ben. Guar. Corp. v. White
Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.
Fed.R.Civ.P. 9(b) requires allegations of fraud to be pled
with particularity. The rule applies to N.J. CFA claims as
well as RICO claims. Jaye v. Oak Knoll Vill. Condo.
Owners Ass'n, Inc., 2018 WL 4360901 at *2 (3d Cir.
2018); Frederico v. Home Depot, 507 F.3d 188, 200
(3d Cir. 2007).
assert that all claims asserted by Plaintiffs Justin Gray and
Jasmine Gray-Oliver should be dismissed for lack of standing
because the Amended Complaint does not allege that either
Justin or Jasmine were the recipients of any allegedly false
or misleading communications which form, in part, the basis
of the N.J. CFA, conspiracy, and RICO claims.
respond that Defendants frame the claims too narrowly.
According to Plaintiffs, the N.J. CFA and attendant
conspiracy claim are based on the harm Plaintiffs suffered in
the form of an “increased lien against their
property” resulting from the alleged “inflated
charges” associated with the force-placed insurance
(Supp. Brief, Dkt 46, p. 12), not simply the allegedly
misleading notices concerning the force-placed insurance sent
to the address of the property at issue. According to
Plaintiffs, the claims specific to them accrued in 2017--
after Earl Gray, Jr. died and Defendants CIT and Financial
Freedom allegedly continued to charge the mortgage account
for the costs associated with the force-placed insurance.
Court concludes that Justin Gray and Jasmine Gray-Oliver have
sufficiently pled that they have personally suffered injuries
for which they may pursue the N.J. CFA and conspiracy claims
for a limited time frame. The Amended Complaint alleges that
in 2017, when Justin and Jasmine were the property owners and
“responsible to satisfy Financial Freedom's
mortgage lien, ” Financial Freedom charged the mortgage
account for “‘insurance charges'” in
the amount of “$2, 357.06 for the period 11/02/2017 to
11/02/2018.” (Amend. Compl. ¶ 89-91) Accordingly,
the Motions to Dismiss Justin Gray and Jasmine
Gray-Oliver's N.J. CFA and conspiracy claims for lack of
standing will be denied.
the RICO claims, Plaintiffs contend that it is not necessary
that the allegedly misleading November 9, 2017 notice be
addressed to Justin and Jasmine, rather, it is sufficient
that the notice-- addressed to Earl Gray, who was then
deceased-- was sent to the property at issue. Plaintiffs
explain, “these Notice Letters directed to the Estate
of Earl Gray were effectively sent to Justin and Jasmine
Gray, given that they resided at the Gray Property and were
the only ones with an insurable interest in the property and
authority to obtain voluntary property insurance.”
(Supp. Brief, Dkt 46, p. 13) Additionally, the parties agree
that Monica Gray was simultaneously the Executrix of Earl
Gray's estate and Jasmine Gray-Oliver's Trustee
(Amend. Compl. ¶¶ 1-3, 88), and the Amended
Complaint alleges that Monica Gray received and read the
notice (Id. ¶ 89), effectively imputing direct
receipt of the notice at least to Jasmine.
Court holds that these alleged facts are sufficient, at the
pleadings stage, to establish the standing of Plaintiffs
Justin Gray and Jasmine Gray-Oliver. The Motions to Dismiss
for lack of standing will be denied.
Freedom and CIT assert that all of the state law claims
asserted against them (Counts 1-3, and 5) are preempted by
the Home Owners' Loan Act (“HOLA”), 12 U.S.C.
§ 1461, and its implementing regulations, specifically
in this ...