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Lannin v. NRT Title Agency, LLC

United States District Court, D. New Jersey

August 27, 2019

NRT Title Agency, LLC, et al.

          LETTER ORDER


         Dear Litigants:

         Before the Court are Defendants' Motions to Dismiss, ECF Nos. 20, 21, 22, Plaintiff Laura J. Lannin's (“Plaintiff”) Complaint, ECF No. 1, pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons explained below, the motions filed by the Realogy Defendants' and the Uzzolino Group Defendants, ECF Nos. 20, 21, are granted. Defendant NRT Title's motion, ECF No. 22, is granted in part and denied in part.

         I. Background

         This matter arises out of Defendants' allegedly fraudulent scheme to overcharge customers and give improper kickbacks to each other while providing real estate closing services. See Compl. ¶¶ 6-7. Plaintiff brings claims against one individual and sixteen entities. The Defendants can be grouped into three categories: (1) NRT Title; (2) the Uzzolino Group Defendants; and (3) the Realogy Defendants.[1]

         Plaintiff closed on her home in Morristown, New Jersey on January 18, 2018. Id. ¶ 30. Her mortgage lender, an affiliate of Realogy, chose NRT Title to perform her title searches. See id. ¶ 31. Plaintiff received an invoice from NRT Title dated December 17, 2017, which revealed that “markups were made to various pass-through costs.” Id. ¶ 32; see also id. ¶ 51 (“NRT Title has been hiding the true pass-through costs via various means, including . . . obtaining blank invoices or inflated/fabricated invoices from its third party vendors.”). According to Plaintiff, NRT Title also charged her “fees for services not actually performed or impermissible under New Jersey law, ” including, among others, fees for document review and a messenger service. Id. ¶ 33. She also alleges that A-Absolute Escrow Settlement (“A-Absolute”) separately charged her a “‘settlement fee' of $525 in addition to various other fees.” Id. ¶ 46.

         Plaintiff further alleges that “all Affiliated Title Insurance Agency Defendants engaged in the same practices described above, ” and that NRT LLC and Realogy “knew or should have known about the foregoing illicit practices.” Id. ¶¶ 52-53. In addition, she alleges that Uzzolino was “the mastermind behind the illicit billing practices for all Affiliated Title Insurance Agency Defendants, ” id. ¶ 54, and that the Affiliated Title Insurance Agency Defendants “were and are sham ventures carefully engineered to facilitate and disguise the payment of unlawful referral fees and other kickbacks and things of value in exchange for referrals of settlement services to and among the Defendants, ” id. ¶ 65. As a result, Plaintiff claims that she paid more for settlement services than she would have in the absence of the referrals and kickbacks. See id. ¶ 67.

         Plaintiff brought this suit on October 19, 2018 on behalf of herself and all others similarly situated. She asserts five causes of action: (1) violation of the New Jersey Consumer Fraud Act (the “NJCFA”), id. ¶¶ 86-92; (2) unjust enrichment, id. ¶¶ 93-98; (3) breach of contract, id. ¶¶ 99-105; (4) violation of Section 8(b) of the Real Estate Settlement Procedure Act (“RESPA”), 12 U.S.C. § 2607(b), ¶¶ 106-11; and (5) violation of Section 8(a) of RESPA, 12 U.S.C. § 2607(a), id. ¶¶ 112-24. Defendants now move to dismiss each of these claims on the ground that Plaintiff fails to state a claim upon which relief can be granted.

         II. Legal Standard

         In considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all of the facts in the complaint and draws all reasonable inferences in favor of the plaintiff. Phillips, 515 F.3d at 233. Dismissal is inappropriate even where “it appears unlikely that the plaintiff can prove those facts or will ultimately prevail on the merits.” Id. The facts alleged, however, must be “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). The allegations in the complaint “must be enough to raise a right to relief above the speculative level.” Id. Accordingly, a complaint will survive a motion to dismiss if it provides a sufficient factual basis such that it states a facially plausible claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         III. Discussion

         A. New Jersey Consumer Fraud Act

         To state a claim under the NJCFA, a plaintiff must allege: “(1) unlawful conduct; (2) an ascertainable loss; and (3) a casual relationship between the unlawful conduct and the ascertainable loss.” Harnish v. Widener Univ. Sch. of Law, 931 F.Supp.2d 641, 648 (D.N.J. 2013); see also Frederico v. Home Depot, 507 F.3d 188, 202 (3d Cir. 2007). “Unlawful conduct falls into three general categories: affirmative acts, knowing omissions, and violation of regulations promulgated under N.J. Stat. Ann. §§ 56:8-2, 56:8-4.” Harnish, 931 F.Supp.2d at 648 (explaining that conduct is unlawful if it is “misleading” such that it “stand[s] outside the norm of reasonable business practice”); see also Argabright v. Rheem Mfg. Co., 201 F.Supp.3d 578, 605-06 (D.N.J. 2016) (“False promises, misrepresentations, and concealment or omission of material facts all constitute deceptive practices under [the NJCFA].”).

         Claims brought under the NJCFA must also meet the heightened pleading requirement of Federal Rule of Civil Procedure 9(b). See Frederico, 507 F.3d at 200 (applying Rule 9(b)'s “stringent pleading restrictions” to plaintiff's NJCFA claim). As such, a plaintiff must plead “the who, what, when, where, and how.” In re Advanta Corp. Sec. Litig., 180 F.3d 525, 534 (3d Cir. 1999) (internal quotation marks omitted); see also Frederico, 507 F.3d at 200 (holding that Rule 9(b) requires that fraud be alleged “with sufficient particularity to place the defendant on notice of the ‘precise misconduct with which [it is] charged'”). Where NJCFA claims are asserted against multiple defendants, “[a] plaintiff must plead fraud with particularity with respect to each defendant.” Giercyk v. Nat'l Union Fire Ins. Co. of Pittsburgh, No. 13-6272, 2015 WL 7871165, at *3 (D.N.J. Dec. 4, 2015).

         1. NRT Title

         NRT Title argues that Plaintiff's claim against them is barred by the learned professional/semi-professional exemption to the NJCFA. See ECF No. 22.1 at 28. The Court disagrees that the exemption applies and finds that Plaintiff adequately states a claim against NRT Title.

         Courts in New Jersey hold that “learned professionals” are “beyond the reach of the [N]CFA] so long as they are operating in their professional capacities.” Macedo v. Della Russo, 178 N.J. 340, 342-46 (2004); see also Plemmons v. Blue Chip Ins. Services, Inc., 387 N.J. 551, 556 (App. Div. 2006) (finding an insurance broker for homeowner's insurance to be a semi-professional and thus excluded from liability under the NJCFA for the performance of brokerage services). However, the “learned professional/semi-professional exemption” only “excludes insurance brokers, acting within the scope of their professional license, from liability, not insurance companies, selling insurance.” Haskins v. First Am. Title Ins. Co., No. 10-5044, 2011 WL 5080339, at *3 (D.N.J. Oct. 25, 2011); Call v. Czaplicki, No. 09-6561, 2010 WL 3724275, at *9 (D.N.J. Sept. 16, 2010) (“The ‘learned professionals' exemption applies only to insurance brokers and not insurance companies.”). As such, NRT Title is not exempt from claims brought under the NJCFA.

         Moreover, the Court finds Plaintiff's allegations sufficient to state an NJCFA claim against NRT Title. Plaintiff alleges that in December 2017, NRT Title charged her “fees for services not actually performed or impermissible under New Jersey law, including . . . $75 for ‘Document Review' . . .; $50 for the ‘Messenger, '” $300 for ‘Closing Prep' and $25 for ‘Secondary Mortgage Market Endorsement.'” Compl. ¶¶ 32-33; see also id. ¶¶ 34-49 (detailing why certain services were believed to be duplicative or not performed). Drawing all inferences in favor of the Plaintiff, the Court finds these allegations sufficient to establish that NRT Title's conduct “stand[s] outside the norm of reasonable business practice, ” such that it would “victimize the average consumer.” See Harnish, 931 F.Supp.2d at 648. Plaintiff also alleges that NRT Title wrongfully charged her at least $545 for title insurance as a result of the misrepresentations. See Compl. ¶ 50. This is sufficient to constitute an ascertainable loss that is causally connected to NRT Title's unlawful conduct. See Dzielak v. Whirlpool Corp., 26 F.Supp.3d 304, 336 (D.N.J. 2014) (explaining that “all that is required” to establish ascertainable loss is an allegation that plaintiffs “received something less than, and different from, what they reasonably expected” (internal quotation marks omitted)). Accordingly, Plaintiff states a claim under the NJCFA against NRT Title.

         2. The Uzzolino Group Defendants

         The Uzzolino Group Defendants argue that Plaintiff's allegations are insufficient to satisfy Rule 9(b)'s heightened pleading standard. The Court agrees.

         Plaintiff fails to state with particularity the circumstances of the alleged fraud such that any of the Uzzolino Group Defendant would be put on notice of the precise misconduct with which it is charged. See In re Advanta Corp. Sec. Litig., 180 F.3d at 534. Instead, Plaintiff puts forth generalized allegations regarding all of the Uzzolino Group Defendants. See, e.g., Compl. ¶ 53 (“[A]ll Affiliated Title Insurance Agency Defendants have engaged in the same practices described above.”). Such “collectivized allegations . . . do not suffice.” Giercyk, 2015 WL 7871165, at *3; see also Eli Lilly & Co. v. Roussel Corp., 23 F.Supp.2d 460, 492 (D.N.J. 1998) (“Rule 9(b) is not satisfied where the complaint vaguely attributes the alleged fraudulent statements to ‘defendants'.”).

         Although Plaintiff also argues that certain Uzzolino Group Defendants are “directly implicated, ” see ECF No. 30 at 20-21 (referencing Pony Messenger Service, A-Absolute, and Uzzolino), Plaintiff's Defendant-specific allegations are equally insufficient. For example, Plaintiff alleges that A-Absolute separately charged her a “‘settlement fee' of $525.” Compl. ¶ 46. Without more, however, this allegation does not satisfy Rule 9(b)'s heightened pleading standard. See Zebarsky v. Bed Bath & Beyond, Inc., No. 06-1735, 2006 WL 3454993, at *4 (D.N.J. Nov. 29, 2006) (“[T]he pleadings must state what the misrepresentation was, what was purchased, when the conduct complained of occurred, by whom the misrepresentation was made, and how the conduct led plaintiff to sustain an ascertainable loss.”). Similarly, Plaintiff alleges that NRT Title charged her $50 for a messenger, “which was paid to Defendant Pony Messenger Service, LLC.” Compl. ¶ 41. Plaintiff then alleges that “[t]he same day hand delivery of a title commitment to an attorney's office is totally unnecessary in today's era of emails and cheaper commercial overnight delivery services.” Id. ¶ 42. Nevertheless, “[m]ere customer dissatisfaction does not constitute consumer fraud.” In re Van Holt, 163 F.3d 161, 168 (3d Cir. 1998) (finding the denial of insurance benefits to which the plaintiffs believed they were entitled did not constitute an unconscionable commercial practice).

         In addition, Plaintiff fails to allege facts with sufficient particularity against Uzzolino. Plaintiff alleges that “Uzzolino was the mastermind behind the illicit billing practices for all Affiliated Title Insurance Agency Defendants.” Compl. ¶ 54. Yet, the Complaint lacks any factual support for this statement. See Tremco Canada Div., RPM Canada v. Dartronics, Inc., No. 13-1641, 2013 WL 2444076, at *3 (D.N.J. June 4, 2013) (“Merely asserting that [Defendant] made ‘false promises' without giving any factual detail in support of that statement is not enough to state a viable [N]CFA] claim.”). The only other Uzzolino-specific allegations are the following: (1) NRT Title is a joint venture between Uzzolino and NRT LLC, Compl. ¶ 17; (2) Uzzolino owns or partially owns a number of the other named Defendant entities, id. ¶¶ 14-15; (3) the Uzzolino-owned entities share the same business address, id. ¶¶ 14-16; and (4) Uzzolino and all other Defendants “plotted and carried out the over-charge scheme, ” id. ¶ 54. However, Plaintiff fails to allege what Uzzolino specifically did, when he did it, or how.

         Nor has Plaintiff alleged sufficient facts to justify piercing the corporate veil of NRT Title such that Uzzolino could be held individually liable. “[A] primary reason for incorporation is the insulation of shareholders from the liabilities of the corporate enterprise.” State Capital Title & Abstract Co. v. Pappas Bus. Services, LLC, 646 F.Supp.2d 668, 679 (D.N.J. Jan 15, 2009) (internal quotation marks omitted). “Thus, in the absence of extraordinary circumstances, such as fraud or injustice, a court will generally decline to pierce the corporate veil.” Id. To pierce the corporate veil, a plaintiff must show: (1) “unity of interest and ownership” such that “the separate personalities of the corporation and the individual no longer exist”; and (2) that “adherence to the fiction of separate corporate existence would sanction a fraud or promote injustice.” Id. (internal quotation marks omitted). The Third Circuit considers various non-binding factors in determining whether unity of interest and ownership exists, including:

gross undercapitalization . . . ‘failure to observe corporate formalities, non-payment of dividends, the insolvency of the debtor corporation at the time, siphoning of funds of the corporation by the dominant stockholder, non-functioning of other officers or directors, absence of corporate records, and the fact that the corporation is ...

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