United States District Court, D. New Jersey, Camden Vicinage
FREEDOM MORTGAGE CORPORATION, Plaintiff/Counterclaim Defendant,
LOANCARE, LLC Defendant/Counterclaim Plaintiff.
LANDMAN CORSI BALLAINE & FORD, P.C. Jerry A. Cuomo, Esq.;
Alexander B. Imel, Esq.; Timothy J. Collazzi, Esq.; Mark S.
Landman, Esq. (pro hac vice) Counsel for Freedom
FRIEDMAN KAPLAN SEILER & ADELMAN LLP By: Robert J. Lack,
Esq.; Ricardo Solano Jr., Esq. Counsel for LoanCare, LLC
SCHILLER FLEXNER LLP By: Stuart H. Singer, Esq. (pro hac
vice); Sabria A. McElroy, Esq. (pro hac vice);
Pascual A. Oliu, Esq. (pro hac vice); Evan Ezray,
Esq. (pro hac vice) Counsel for LoanCare, LLC
RENÉE MARIE BUMB, UNITED STATES DISTRICT JUDGE
matter comes before the Court upon a Motion to Dismiss [Dkt.
No. 101], filed by Plaintiff/Counterclaim Defendant Freedom
Mortgage Corporation (“Freedom”) seeking
dismissal of Count One (Fraudulent Inducement), Count Two
(Conversion Before Termination), Count Three (Conversion
After Termination), and Count Five (Unjust Enrichment) from
the Second Amended Counterclaim (“SAC”)[Dkt. No.
90], filed by Defendant/Counterclaim Plaintiff LoanCare,
LLC(“LoanCare”). Because Virginia law governs the
dispute between the parties, Freedom contends that
LoanCare’s fraudulent inducement, conversion, and
unjust enrichment claims are subsumed by LoanCare’s
Breach of Contract claim (Count Four) under Virginia’s
“source of duty” rule. For the reasons stated
herein, the Motion to Dismiss will be GRANTED IN
PART, as to Count Two, but DENIED IN
PART, as to Count One, Count Three, and Count Five.
approximately 15 years, LoanCare, a mortgage subservicer,
worked with Freedom, a full-service residential mortgage
lender, to service various mortgage loans. From February 1,
2010 through June 30, 2016, the terms of the parties’
relationship were governed by the Amended and Restated
Subservicing Agreement (the “Subservicing
Agreement” or “Agreement”). In January
2016, Freedom advised LoanCare that it planned to terminate
the Subservicing Agreement on June 30, 2016.
anticipation of the termination date, Freedom instructed
LoanCare to transfer any loans that it was servicing back to
Freedom by May 3, 2016. Accordingly, in early May 2016,
Freedom allegedly told LoanCare to transfer funds from shared
custodial accounts back to Freedom. Based on these
instructions, LoanCare scheduled various wire transfers and
Automated Clearing House (“ACH”) debits, totaling
$111, 715, 004.26, to remit the funds back to Freedom from
the custodial accounts. Meanwhile, unbeknownst to LoanCare,
Freedom allegedly worked directly with the banks to seize and
block LoanCare’s access to these very same accounts.
When it came time to execute the scheduled transfers,
LoanCare was unable to access the custodial accounts and the
banks defaulted to pulling the full $111, 715, 004.26 from
LoanCare’s own cash accounts.
alleges that Freedom, effectively, collected the requested
funds twice: once from the custodial accounts and once from
LoanCare’s own accounts. LoanCare states that it
eventually recovered $89, 021, 242.09, but that Freedom
continues to unlawfully withhold funds totaling $22, 693,
762.17. See SAC, at ¶ 66. Additionally,
LoanCare contends that it was forced to borrow millions of
dollars, with interest, to cover the shortfalls caused by
Freedom’s actions. Id. at ¶ 64.
2016, Freedom commenced this suit against LoanCare, claiming,
among other things, breach of contract, unjust enrichment,
and other misconduct by LoanCare. On July 8, 2016, LoanCare
filed an Answer and Counterclaim to Freedom’s Complaint
[Dkt. No. 17]. Subsequently, LoanCare filed an Amended
Counterclaim on June 4, 2018 [Dkt. No. 68]. After Freedom
moved for Judgment on Pleadings [Dkt. No. 56], this Court
issued an Opinion and Order on November 30, 2018 [Dkt. Nos.
83, 84], dismissing LoanCare’s fraud, tort, and unjust
enrichment claims from the Amended Counterclaim. On December
31, 2018, LoanCare filed the SAC. Now, this matter comes
before the Court upon Freedom’s Motion to Dismiss [Dkt.
No. 101], once again asking the Court to dismiss
LoanCare’s fraud, tort, and unjust enrichment claims,
as repleaded in the SAC.
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.”
Iqbal, 556 U.S. at 662. “[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
reviewing the non-moving party’s allegations, the
district court “must 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 v.
Levi, 696 F.3d 352, 358 n.1 (3d Cir. 2012). When
undertaking this review, courts are limited to the
allegations found in the complaint, exhibits attached to the
complaint, matters of public record, and undisputedly
authentic documents that form the basis of a claim. See
In re Burlington Coat Factory Sec. Litig., 114 F.3d
1410, 1426 (3d Cir. 1997); Pension Benefit Guar. Corp. v.
White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.