Covino v. Wells Fargo Bank

BRIEF in Opposition

D.N.J.February 14, 2017

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY NEWARK VICINAGE ROBERT COVINO, individually and as the EXECUTOR OF THE ESTATE OF RUDOLPH COVINO, and THE ESTATE OF RUDOLPH COVINO, Plaintiffs, v. WELLS FARGO BANK, N.A., Defendants. Civil Action No.: 2:16-cv-02264-SRC-CLW PLAINTIFFS’ MEMORANDUM OF LAW IN OPPOSITION TO THE MOTION TO DISMISS LAW OFFICES OF JOSEPH A. CHANG 951 Madison Avenue Paterson, New Jersey 07501 973-925-2525 Attorneys for Plaintiffs, Robert Covino, individually and as Executor of the Estate of Rudolph Covino and the Estate of Rudolph Covino Joseph A. Chang, Esq. #034302002 Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 1 of 33 PageID: 793 2 PRELIMINARY STATEMENT Defendant Wells Fargo Bank, (“Wells Fargo” and/or “Defendant”) seeks dismissal of Plaintiffs’ Complaint for failure to state a cause of action under Rule 12(b)(6). Wells Fargo asserts that no cause of action can be gleaned from the pleadings as submitted. The Complaint, as originally filed alleges violations of the Truth in Lending Act; the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA), the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601, et seq. (RESPA), the New Jersey Consumer Fraud Act, common law fraud and violations of the Consumer Financial Protection Bureau Regulations (CFPB). Robert Covino is the son of Anna Covino and Rudolph Covino both of whom are deceased. Mr. Covino is the beneficiary of his late parents’ Estate. Anna Covino predeceased Rudolph Covino and Robert Covino is the Executor of his father’s Estate. STATEMENT OF FACTS AND RELEVANT PROCEDURAL HISTORY Plaintiffs’ Second Amended Complaint (“SAC”) contains 74 separately numbered Statements of Fact in support of claims of violations of TILA, RESPA, DFA and the CFPB Guidelines. Plaintiffs incorporate herein by reference those facts set forth in the SAC. Mr. Covino, as successor-in-interest to his parents’ Estate, was entitled to be considered for loss mitigation alternatives, in addition to Wells Fargo’s duties to simultaneously offer him an assumption of the mortgage, under HAMP, as Wells Fargo is a participating servicer. Wells Fargo’s duties to Mr. Covino, as successor-in-interest are not germane to the previous foreclosure action - despite defendant’s attempt to establish a nexus. Wells Fargo cannot deny that it: A. Properly identify plaintiff, Robert Covino, as a successor-in-interest; Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 2 of 33 PageID: 794 3 B. Properly identify Plaintiff Robert Covino’s special circumstances resulting from the death of the mortgagors, and Mr. Covino’s subsequent inheritance of his parents’ Estate; C. Determine Mr. Covino’s ability to assume with mortgage loan, with or without a simultaneous loan modification; D. Determine Mr. Covino’s eligibility for other loss mitigation options; E. Properly respond to the multiple Notices of Error and Requests for Information, as aforementioned. The response provided by defendant was grossly inadequate with defendant merely providing copies of the Notices of Error and Requests for Information, the Mortgage and Note executed by Mr. Covino’s parents, the forced place insurance policy and scant correspondence advising Mr. Covino he was denied for a loan modification; F. Provide the basis for defendant’s denial of Mr. Covino’s loss mitigation application; G. Provide the documents or information upon which defendant based their decision that Mr. Covino did not qualify for a loan modification or other loss mitigation options; and H. Provide the documents reviewed in denying the subject loan modification and those reviewed in support of their written decision. Wells Fargo systematically failed to abide by the CFPB Guidelines, and failed to properly respond to the multiple Notices of Error and Requests for Information. Plaintiffs’ action surrounds Mr. Covino’s multiple attempts, as successor-in-interest to his deceased parents’ Estate, at obtaining a loan modification or other loss mitigation relief from defendant, including assumption of the mortgage. Defendant’s failure to properly identify Mr. Covino as successor-in-interest, its failure to understand and/or implement internal policies and procedures for successors-in-interest as is required by the CFPB Guidelines and the like, resulted Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 3 of 33 PageID: 795 4 in the need for Mr. Covino to seek counsel. The home was eventually foreclosed and sold via Sheriff’s Sale - this event is a fact that merely supports plaintiffs’ allegations of defendant’s systematic failures toward Mr. Covino. Plaintiffs transmitted multiple “Notices of Error” and “Requests for Information” to Wells Fargo who failed to provide a complete response. Plaintiffs diligently attempted to obtain the information from Defendant, without success. Pursuant to Dodd Frank and Regulation X, a complete and proper response was due within ten (10) days of their receipt of Plaintiffs’ request. 12 CFR 1024.38(b)(1)(vi) states, Objectives-(1) Accessing and providing timely and accurate information. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer can: (vi) (vi) Upon notification of the death of a borrower, promptly identify and facilitate communication with the successor in interest of the deceased borrower with respect to the property secured by the deceased borrower's mortgage loan. Defendant’s egregious failures lead to Mr. Covino’s inability to either assume the mortgage of his deceased parents or modify the loan and commence regular mortgage payments on the inherited property. Defendant cannot reasonably deny its failure to properly identify Mr. Covino’s status. It is this type of conduct which was clearly spelled out in Plaintiffs’ SAC. At a minimum questions of fact exist, which Plaintiffs are entitled to have decided by a fact finder, on the merits, with a full disclosure from Wells Fargo - not on a 12(b)(6) motion. Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 4 of 33 PageID: 796 5 LEGAL ARGUMENT POINT I PLAINTIFFS’ CLAIMS ARE STATED WITH A HIGH DEGREE OF SPECIFICITY AND MEET THE REQUIREMENTS OF FEDERAL RULE OF CIVIL PROCEDURE 9(b) AND THUS ARE NOT SUBJECT TO 12(b)(6) DISMISSAL. A motion to dismiss under Fed.R.Civ.Pro. 12(b)(6) may be granted only if, accepting all well-pleaded allegations in the complaint as true, and viewing them in the light most favorable to the plaintiff, the plaintiff is not entitled to relief. Iwanowa v. Ford Motor Company, 67 F.Supp. 2d 424, 446 (D.N.J. 1999); Holder v. City of Allentown, 987 F2d 188, 194 (3d Cir. 1993). The Court may not dismiss the complaint unless the plaintiff can prove no set of facts which would entitle him to relief. Graves v. Lowery, 117 F.3d 723, 726 (3d Cir. 1997). As noted by the United States Supreme Court: The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims. Scheuer v. Rhodes, 416 U.S. 232, 236 40 L.Ed. 2d 90, 94 S.Ct. 1683 (1974). To withstand a motion to dismiss, a plaintiff is not required to provide evidence of or prove the truthfulness of his Complaint. Quinones v. Szorc, 771 F2d 289, 291, n.3 (7th Cir. 1985) In reviewing a motion to dismiss on the pleadings, courts “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir.2008). The Third Circuit has held, “[t]he Supreme Court’s Twombly formulation of the pleading standard can be summed up thus: ‘stating…a claim requires a complaint with enough factual matter (taken as true) to suggest’ the required element. This ‘does not impose a probability requirement at the pleading stage’, but Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 5 of 33 PageID: 797 6 instead ‘simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element.” Phillips, 515 F.3d at 234, quoting, Bell Atlantic Corporation v. Twombly, 550 U.S. 544 (2007). In Ashcroft v. Iqbal, 129 S. Ct. 1937, 1948-49 (2009) the court stated, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” “[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss.” Id. Respectfully, Plaintiffs’ SAC satisfies both the Twombly and Iqbal standards. Wells Fargo’s arguments that the SAC lacks sufficient specificity are completely without merit. Not only is the factual basis for Plaintiffs’ claims carefully stated in the SAC but Wells Fargo is attempting to push the specificity requirement far beyond its intended purpose. With regard to the demise of notice pleading, the Supreme Court in Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 583 (2007) writes that “[w]e have consistently reaffirmed that basic understanding of the Federal Rules” for half a century. Under the Federal Rules’ notice pleading standard, a complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.Pro. 8(a)(2). The complaint will survive a motion to dismiss if it “contain[s] 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 (2009), quoting, Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Plaintiffs’ SAC is specific and provides more than enough information to meet the requirements of the Rule. The Factual Allegations create a very thorough, methodical and clear narrative of Plaintiffs’ case. Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 6 of 33 PageID: 798 7 Wells Fargo seeks to torture the requirements of Fed.R.Civ.Pro. 8(2)(b) to achieve the desired result of dismissal - a result that would be unjust. Wells Fargo seemingly contends that this Rule requires the SAC to cite allegations and then prove each and every allegation asserted therein. That is simply not the design of the Rule. Purpose of Rule 8 is to avoid situations wherein pleading is so verbose that court cannot identify with clarity claims of pleader and adjudicate such claims understandingly on merits. Harrell v. Directors of Bureau of Narcotics & Dangerous Drugs, 70 FRD 444 (E.D. Tenn. 1975). Purpose of pleading is to give notice of what adverse party may expect to meet, rather than to frame issues. Kellogg Co. v. National Biscuit Co., 38 F.Supp 643 (D.N.J. 1941); Battin Amusement Co. v. Cocalis Amusement Co., 1 FRD 769 (D.N.J. 1941). A parochial reading of Plaintiffs’ SAC makes it clear that there are issues of fact that cannot be decided in this application and, as such, Wells Fargo’s motion should be denied. POINT II PLAINTIFFS’ CLAIMS IN NO WAY RELATE TO THE FORECLOSURE ACTION AND, THUS, JURISDICTION IS PROPERLY BEFORE THIS COURT While there is judicial authority for proposition that dismissal for lack of subject matter jurisdiction is appropriate where complaint fails to allege substantial federal claim, such dismissals should be confined to cases where complaint on its face, without resort to extraneous matter, is so plainly insubstantial as to be devoid of any merit, enabling court to conclude that claim asserted is patently frivolous or wholly insubstantial. Morabito v. Blum, 528 F.Supp 252 (S.D.N.Y. 1981). Wells Fargo is wholly mistaken - Plaintiffs do not seek the proverbial second bite at the apple in the instant matter. Plaintiffs’ claims herein directly surround and are well plead allegations of multiple violations of RESPA (12 U.S.C. §§ 2601), TILA (15 U.S.C. 1601 et seq.), Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 7 of 33 PageID: 799 8 DFA (12 U.S.C. §§5301) and the CFPB (12 CFR 1024, et seq) (collectively the “Acts/Guidelines”). Each violation of each Act/Guideline constitutes federal questions having nothing to do with the validity of the Note and Mortgage upon which Wells Fargo foreclosed. Wells Fargo is well familiar with the requirements to foreclose and the narrow defenses of a foreclosure action. None of the Acts/Guidelines plead in the SAC fall within the narrow category of a defense to a foreclosure. Additionally, and perhaps more importantly, none of the narrow defenses that could be plead in a foreclosure are applicable to the allegations contained in the SAC. Motion to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction must include inquiry by court into its own jurisdiction. Menchaca v. Chrysler Credit Corp., 613 F2d 507(5th Cir. Tex. 1980), 29 Fed R Serv 2d (Callaghan) 512, cert. denied, (U.S. 1980), 449 US 953, 101 S Ct 358, 66 L Ed 2d 217. When considering motion to dismiss pursuant to Fed.R.Civ.Pro. 12(b)(1), court must take all facts alleged in complaint as true and draw all reasonable inferences in favor of plaintiff. Raila v. United States, 355 F3d 118 (2d Cir. Conn. 2004). As has been set forth more specifically in Plaintiffs’ SAC, 12 CFR 1024.38(b)(1)(vi) states, Objectives-(1) Accessing and providing timely and accurate information. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer can: (vi) Upon notification of the death of a borrower, promptly identify and facilitate communication with the successor in interest of the deceased borrower with respect to the property secured by the deceased borrower's mortgage loan.1 1 The CFPB defines “successor-in-interest” as the spouse, child or heir of a deceased borrower or other party with an interest in the property. Mr. Covino, as the child of Anna and Rudolph Covino, is the successor-in-interest to their Estates. Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 8 of 33 PageID: 800 9 CFPB Bulletin 2013-12 (October 15, 2013) sets forth a servicer’s compliance for communicating with a successor-in-interest to advise what documents are necessary to enable the servicer to communicate with the borrower and for assumption of the mortgage loan and to advise the successor-in-interest what his or her options are relative to the mortgage loan; to ensure that the servicer’s document request is reasonable; and to develop policies and procedures for suspending a foreclosure and processing an assumption of the mortgage and a loan modification simultaneously. Robert Covino, the surviving son of the late Anna and Rudolph Covino, is such a successor-in-interest pursuant to the CFPB. The Garn-St. Germain Depository Institutions Act, 12 USC §1701j-3, et seq. (1982) provides that a lender may enforce a contract containing a due-on-sale clause with respect to real property, except when the property is transferred to a relative resulting in the death of a borrower or a transfer to a child of the borrower. Wells Fargo expressly violated this Act when it accelerated the Note and Mortgage. Wells Fargo, without citing to any foundation, alleges that Plaintiffs’ allegations of violations of RESPA are meritless because they relate to a loan modification. Wells Fargo is incorrect. Failure to “provide accurate information to a borrower regarding loss mitigation options and foreclosure” is an error pursuant to 12 CFR §1024.35(b)(7). [emphasis added]. Respectfully, it is abundantly clear that the this Honorable Court has jurisdiction over the SAC as the allegations plead therein do not relate in any way to the prior foreclosure action. The Rooker-Feldman Doctrine has No Bearing in the Instant Matter The Rooker- Feldman doctrine, we hold today, is confined to cases of the kind from which the doctrine acquired its name: cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments. Rooker-Feldman does not otherwise override or Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 9 of 33 PageID: 801 10 supplant preclusion doctrine or augment the circumscribed doctrines that allow federal courts to stay or dismiss proceedings in deference to state-court actions. Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284, 125 S. Ct. 1517, 1521-22 (2005) Plaintiffs are not “complaining of injuries” caused by the foreclosure, regardless of Wells Fargo’s broad stroke claims. Plaintiffs’ claims, as confirmed by the SAC, all surround Wells Fargo’s failures to abide by policies and procedures for a successor’s-in-interest rights to either assume the mortgage or to be reviewed for a loan modification. The deviation by Wells Fargo from the Acts/Guidelines have nothing to do with the Final Judgment or the “state-court [judgment]” issued as a result of the foreclosure proceedings. Defenses to a foreclosure action are narrow and limited. The only material issues in a foreclosure proceeding are the validity of the mortgage, the amount of the indebtedness and the right of the mortgagee to resort to the mortgaged premises. Great Falls Bank v. Pardo, 263 N.J. Super. 388, 394 (Ch. Div. 1993), aff’d 273 N.J. Super. 542 (1994). Plaintiffs are not contesting the validity of the mortgage or the amount of the indebtedness or the right of the mortgagee to resort to the mortgaged premises. The most liberal reading of the SAC could not support such an argument. Thus, the Court’s analysis relative to a Rooker-Feldman bar can conclude at this juncture. The questions before this Honorable Court are not one of improper foreclosure but are, in part, did Wells Fargo violate the Acts/Guidelines regarding Robert Covino’s successor-in-interest status and did Wells Fargo fail to acknowledge and respond to various Requests for Information and Notices of Error? Those violations do not fall within the ambit of the Rooker-Feldman Doctrine. Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 10 of 33 PageID: 802 11 Be that as it may, and in an abundance of caution, “If a federal plaintiff 'present[s] [an] independent claim,'” it is not an impediment to the exercise of federal jurisdiction that the “same or a related question” was earlier aired between the parties in state court….” Skinner v. Switzer, 562 U.S. 521, 532, 131 S. Ct. 1289, 1297 (2011). Even if Wells Fargo is able to establish a weak nexus between the SAC and the previous foreclosure, there is a colorable “independent claim” for violations of the Acts/Guidelines that has been well set forth. Wells Fargo cites Great Western Mining & Mineral Co. v. Fox Rothschild, LLP, 615 F.3d 159 (3d Cir. 2010) in support of its contention that Plaintiffs are seeking to relitigate or are somehow “complaining of injuries” caused by the prior foreclosure proceedings. Breaking down the holding of Exxon Mobil, we conclude that there are four requirements that must be met for the Rooker-Feldman doctrine to apply: (1) the federal plaintiff lost in state court; (2) the plaintiff "complain[s] of injuries caused by [the] state-court judgments"; (3) those judgments were rendered before the federal suit was filed; and (4) the plaintiff is inviting the district court to review and reject the state judgments…The second and fourth requirements are the key to determining whether a federal suit presents an independent, non-barred claim. Great W. Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159, 166 (3d Cir. 2010) As to prong (1) plaintiffs did lose in the State Court foreclosure action; as to prong (2) and contrary to Wells Fargo’s allegations, Plaintiffs are not complaining of the injuries caused by the State Court final judgment, but rather, Wells Fargo’s failures to comply with the Acts/Guidelines. That those failures resulted in the foreclosure and Sheriff’s Sale is a fact, but not something complained of as an allegation requiring remediation of the foreclosure; as to prong (3) contrary to Wells Fargo’s allegations there is no “undercurrent.” The foreclosure proceeded in its normal course and the judgment was rendered prior to the instant matter; and as to prong (4) the plaintiffs are in no way seeking this Honorable Court to review and reject the State Court judgment. Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 11 of 33 PageID: 803 12 Plaintiffs are not seeking this Court to overturn the State Court judgment. Plaintiffs are asking this Court to determine if Wells Fargo failed to comply with the Acts/Guidelines. Wells Fargo’s continued reliance upon the State Court judgment and the case law cited relative thereto are of no moment. Plaintiffs are not “inextricably intertwined” with the foreclosure action. Id. at 164-165. Plaintiff’s Claims are Not Barred by the Entire Controversy Doctrine, Res Judicata or Collateral Estoppel Wells Fargo urges the Court to dismiss the Plaintiffs’ SAC on the doctrines of res judicata and collateral estoppel, on the basis that the Plaintiffs’ claims “relate to the default on the loan and Wells Fargo’s right to foreclose. The validity of the default was already determined in the Foreclosure Action, and resulted in a final judgment and Sheriff’s Sale.” (Db17) Wells Fargo’s argument lacks merit, since Plaintiffs are not disputing the merits of the foreclosure, the validity of the default or Wells Fargo’s rights to foreclose. Wells Fargo is reading well beyond the four corners of the SAC. Rather, Wells Fargo is interpreting the SAC to avoid having to defend this litigation as a result of its egregious failures to comply with the Acts/Guidelines. As a result, neither res judicata nor the entire controversy doctrine apply to this case. Res Judicata The doctrine of res judicata is invoked to provide finality and repose for litigants, prevent needless litigation, avoid duplication, reduce unnecessary burdens of time and expense of litigation, and to maintain judicial integrity by minimizing the possibility of inconsistent decisions regarding the same matter. Velasquez v. Franz, 123 N.J. 498, 505 (1991); City of Hackensack v. Winner, 82 N.J. 1, 32-33 (1980). Res judicata, or claim preclusion, provides that a cause of action Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 12 of 33 PageID: 804 13 between parties that has been finally determined on the merits by a tribunal having jurisdiction cannot be re-litigated by those parties or their privies in a new proceeding. Velasquez, supra, 123 N.J. at 505. There are three elements to the res judicata doctrine: (1) the judgment in the prior action must be valid, final, and on the merits; (2) the parties in the prior action must be identical to or in privity with those in the prior action; and (3) the claims in the second action must arise from the same transaction or occurrence as the claims in the first action. Id. at 505-506; Watkins v. Resorts Intern. Hotel & Casino, 124 N.J. 398, 412 (1991); See also Restatement (Second) of Judgments § 27 (1982) [only judgment rendered “on the merits” will bar another action on same claim]; Central Railroad Co. v. Neeld, 26 N.J. 172, 177 (1958) [res judicata “does not come into play where the parties have not had an adjudication on the ultimate merits”]. Here, Wells Fargo’s position fails because they cannot satisfy the first element of the Velasquez test, i.e., that the claim has previously been decided on the merits by another court. The violations of the Acts/Guidelines have never been decided on the merits. This issue was not raised in foreclosure proceeding because it not a viable defense to a foreclosure. It is readily seen that a cause of action and assertion of violations of the Acts/Guidelines wholly belong to the instant case, not a New Jersey state court foreclosure action. Entire Controversy Doctrine The issues before this Honorable Court have recently been decided in the matter entitled Genid v. J.P. Morgan Chase & Co., No. A-2570-14T2, 2016 N.J. Super. Unpub. LEXIS 2636 (Super. Ct. App. Div. Dec. 12, 2016). The question before the Appellate Division is whether the Genids were precluded from bringing a CFA claim related to the 2009 foreclosure in a separate action if they failed to raise it in a counterclaim in the prior action. Genid v. JP Morgan Chase & Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 13 of 33 PageID: 805 14 Co., Id. at *4. The analysis by the Appellate Division is thorough and provides great detail relative to non-germane claims in a foreclosure vis-à-vis the Entire Controversy Doctrine. The Appellate Division opined: Finally, plaintiffs argue the motion judge erred by finding the CFA claim was "germane" to the foreclosure action, and therefore barred by the entire controversy doctrine. We conclude that regardless of the judge's finding that a CFA claim is "germane," it was error to categorically conclude the entire controversy doctrine bars the claim without further analysis. Rule 4:30A codifies the entire controversy doctrine as it applies to all types of actions but contains an exception limited to foreclosure actions. It provides: "Non-joinder of claims required to be joined by the entire controversy doctrine shall result in the preclusion of the omitted claims to the extent required by the entire controversy doctrine, except as otherwise provided by R. 4:64-5 (foreclosure actions)[.]" Thus, it is clear Rule 4:64-5 controls in foreclosure actions. The purpose of this equitable doctrine of entire controversy is "to eliminate delay, prevent harassment of a party and unnecessary clogging of the judicial system, avoid wasting the time and effort of the parties, and promote fundamental fairness."…). Rule 4:64-5 however modifies the scope of the entire controversy doctrine in foreclosure cases: Only germane counterclaims and cross-claims may be pleaded in foreclosure actions without leave of court. Non-germane claims shall include, but not be limited to, claims on the instrument of obligation evidencing the mortgage debt, assumption agreements and guarantees. A defendant who chooses to contest the validity, priority or amount of any alleged prior encumbrance shall do so by filing a cross-claim against that encumbrancer.... On its face, Rule 4:64-5 establishes two categories of counterclaims that may arise in a foreclosure action. First, the rule explains that "non-germane" claims cannot be brought as counterclaims in the foreclosure action, and thus they must be exempt from preclusion under the entire controversy doctrine. For example, because a claim for unpaid rent is non-germane to a foreclosure action, it cannot be joined as a counterclaim in that same foreclosure action; naturally, a later suit for rent would not be barred by the entire controversy doctrine…. Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 14 of 33 PageID: 806 15 Plaintiffs first argue the entire controversy doctrine does not affect the instant CFA claim because it was non-germane to the foreclosure case. Both parties acknowledge that there is no published case on point that squarely decides whether a CFA claim is germane to a foreclosure action for Rule 4:64-5 purposes. To determine which types of claims are germane, "a liberal rather than a narrow approach" should be used….Despite explicitly being a rule of limitation, Rule 4:64-5 has been interpreted broadly enough to permit foreclosure defendants to raise defenses to the foreclosure action…. We agree with the motion judge to the extent he found plaintiffs' CFA claim to be germane to the foreclosure action. However, we find his ultimate conclusions to be in error. As explained above, Rule 4:64-5 establishes two categories of counterclaims in foreclosure actions. The second category, "germane" counterclaims, are merely a species of permissive counterclaims. Rule 4:64-5 ("Only germane counterclaims . . . may be pleaded in foreclosure actions without leave of court.") (emphasis added). After determining that plaintiffs' CFA claim was germane to the foreclosure action, the trial judge made a categorical determination that the CFA claim must therefore have been brought in the foreclosure action: "Plaintiffs' claim is germane to the previous foreclosure action and was therefore properly precluded by New Jersey's Entire Controversy Doctrine. . . . Plaintiffs' desired relief must be found, if at all, in their pending appeal of the denial of their motion to vacate." The motion judge's reasoning for dismissing plaintiff's claim on a Rule 4:6-2(e) motion rested entirely on finding that a CFA claim was barred under the entire controversy doctrine because it was "germane" to the foreclosure action and therefore could have been brought as a counterclaim. [*9] We acknowledge that we have previously stated the "failure to raise the defenses and counterclaims in the foreclosure action very well [may bar] assertion of those claims and defenses in a subsequent action" in the foreclosure context….However, defendants' reliance on Joan Ryno is misplaced. Joan Ryno involved a foreclosure action followed by a Law Division action in which the foreclosure defendant alleged the plaintiff bank improperly refused to honor a mortgage commitment….In that case, the trial judge invoked the single controversy doctrine to bar the introduction of evidence of damages incurred during foreclosure…We held that by barring only some of the damage claims the trial judge defeated the purpose of the entire controversy doctrine….In so holding, we relied on Hadley v. Baxendale, 9 Ex. 341, 156 Eng.Rep. 145 (1854), and its progeny Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 15 of 33 PageID: 807 16 to bar recovery where damages are too remotely connected to the breach. Joan Ryno, supra, 208 N.J. Super. at 571. More importantly, the weight of Joan Ryno is further diminished considering the portion of Rule 4:64-5 regarding claim joinder in foreclosure actions was not adopted until September 1992, more than five years after the Joan Ryno decision. While Sasso itself was decided after this date, this case merely quotes Joan Ryno in dicta without reference to the applicable rule. Beyond this, the parties do not cite any reported cases in which the entire controversy doctrine and Rule 4:64-5 were used to preclude a foreclosure defendant from bringing an arguably germane counterclaim in a separate suit at a later time. Further, the plain language of Rule 4:64-5 unambiguously establishes counterclaims brought in foreclosures actions must be germane, but that they remain permissive. Nothing in Rule 4:64-5 mandates all germane counterclaims must be brought in the foreclosure action. The abundance of foreclosure actions has resulted in substantial delays in the resolution of these actions. We conclude that requiring every possible germane counterclaim be raised as part of foreclosure actions is not consistent with the entire controversy doctrine's purpose. In foreclosure actions some litigants may be tempted to file counterclaims only to delay the loss of a property, where they reside at no cost, because they have defaulted on their payments, sometimes for years. In addition, attorneys may feel compelled to raise every possible counterclaim in the foreclosure action to avoid malpractice claims. Requiring a party to raise all possible germane counterclaims would further bog down the foreclosure process in a manner inconsistent with both the text of Rule 4:64-5 and the entire controversy doctrine. Rule 4:64-5 limits the issues that may be litigated within the foreclosure action, and does not require that all germane claims must be raised during the foreclosure action. It was therefore error for the motion judge to categorically conclude the entire controversy doctrine barred plaintiffs' claim merely because it was a germane counterclaim. As such, we conclude the order dismissing plaintiff's complaint must be reversed. Id. *5. The Court’s holding in Genid is a very detailed analysis of those claims that could fall under the purview of the Entire Controversy Doctrine. The detailed analysis confirms that Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 16 of 33 PageID: 808 17 Plaintiffs’ claims as alleged in the SAC fall well outside of anything that could be considered germane to the prior foreclosure. Directly on point is Sarlo v. Wells Fargo Bank, N.A., No. CIV. 12-5522 JBS/KMW, 2015 WL 1334038 (D.N.J. Mar. 24, 2015). In addressing the same issue presented in the instant case, Chief Judge Simandle of the United States District Court for New Jersey held as follows: Plaintiffs' claims in this case are not germane within the meaning of Rule 4:64-5 and consequently are not barred by the entire controversy doctrine. The claims in this case-including breach of contract, negligent representation, breach of good faith and fair dealing, fraud, and slander of credit-arise entirely out of Defendant's alleged promise in 2009 to provide a loan modification. By contrast, the subject of the foreclosure action was whether Plaintiffs had fulfilled their obligations under the 2003 mortgage contract. That question is separate from whether Defendant made a new loan offer in 2009 that Plaintiffs accepted and relied upon to their detriment. Although Plaintiffs' actions, in relying upon Defendant's promise of a loan modification, contributed to the foreclosure, “[a] causal relationship between the two sets of claims is not conclusive under New Jersey Law” to bar litigation under the entire controversy doctrine. Fields v. Thompson Printing Co., Inc., 363 F.3d 259, 266 (3d Cir.2004). Plaintiffs' claims in this suit-and the asserted damages arising out of the failure to provide a loan modification-have little to do with the enforceability of the 2003 mortgage contract. Plaintiffs' claims are therefore not barred by the entire controversy doctrine. [Pa 401-402]. This reasoning, applied to essentially the same facts as here, compels a conclusion that Plaintiffs’ claims for mortgage servicing violations are separate and distinct and not subject to the provisions of the Entire Controversy Doctrine. The New Jersey entire controversy doctrine operates as an equitable preclusionary principle. Its purposes are to encourage comprehensive and conclusive litigation determinations, avoid fragmentation of litigation, and promote party fairness and judicial efficiency. The doctrine Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 17 of 33 PageID: 809 18 was conceived of as a claim-joinder mandate, requiring all parties in an action to raise in that action all transactionally related claims each had against any other whether assertable by complaint, counterclaim, or cross-claim. See, Wadeer v. New Jersey Mfrs. Ins. Co., 220 N.J. 591, 604-606 (2015); Kent Motor v. Reynolds & Reynolds, 207 N.J. 428, 442-444 (2011). In relying upon facts relevant to the violations of the Acts/Guidelines, the SAC here raises issues that are “non-germane” to the foreclosure complaint, and involves facts subsequent and separate from the negotiation and execution of the initial mortgage documents. The entire controversy doctrine is applicable in the foreclosure context. In re Mullarkey, 536 F.3d 215, 228 (3d Cir.2008), citing Leisure Technology-Northeast v. Klingbeil Holding Co., 137 N.J. Super. 353 (1975). R. 4:64-5, which governs the joinder of claims in foreclosure, narrows the scope of the doctrine, however. Id. That rule provides: Unless the court otherwise orders on notice and for good cause shown, claims for foreclosure of mortgages shall not be joined with non-germane claims against the mortgagor or other persons liable on the debt. Only germane counterclaims and cross-claims may be pleaded in foreclosure actions without leave of court. Non-germane claims shall include, but not be limited to, claims on the instrument of obligation evidencing the mortgage debt, assumption agreements and guarantees... Thus, the entire controversy doctrine applies to foreclosure proceedings, but extends only to “germane” counterclaims. In re Mullarkey, 536 F.3d at 228. As noted by a leading authority: A major purpose of the “germane” requirement in mortgage foreclosure actions was to effectuate the long-standing policy of the New Jersey judiciary-in opposition to the single controversy policy in other civil actions-to rule out extraneous claims in foreclosure actions, which only serve to delay disposition of the foreclosure cause, and not to commingle foreclosure issues with other issues between the parties. Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 18 of 33 PageID: 810 19 30A New Jersey Practice, Law of Mortgages § 30.8 (2d ed. 2014). Claims are “germane” where they “aris[e] out of the mortgage transaction which is the subject matter of the foreclosure action.” Leisure Technology, supra. at 358. The causes of action relative to violations of the Acts/Guidelines do not rely or depend upon facts arising out of the initial mortgage transaction. Rather, they involve post-judgment attempts by the Plaintiffs to obtain information with respect successors-in-interest and loss mitigation to successors. In a foreclosure suit, such events are extraneous and unrelated to whether foreclosure should be granted or not granted. In order to prevail in a foreclosure action a plaintiff must establish three elements: (1) the validity of the note and mortgage, (2) that the defendant has defaulted under the terms of the loan, and (3) plaintiff’s right to resort to the mortgaged premises in satisfaction of the debt. Great Falls Bank v. Pardo, 263 N.J. Super. 388 (Ch. Div. 1993); Somerset Trust Co. v. Stenberg, 238 N.J Super. 279, 283-84 (Ch. Div. 1989). These elements represent the only material issues in a foreclosure action. Id. Thus, a defendant seeking to successfully defend against a motion for summary judgment in foreclosure must raise a genuine issue of material fact as to one of these elements. Alternately stated, a prima facie right to foreclosure requires only execution, recordation, and non-payment of the mortgage. Thorpe v. Floremoore Corp., 20 N.J. Super. 34, 37 (App. Div. 1953). Defenses to a foreclosure action are extremely limited. The only material issues in a foreclosure proceeding are “the validity of the mortgage, the amount of the indebtedness, and the right of the mortgagee to resort to the mortgaged premises.” Sun NLF Ltd. P’ship v. Sasso, 313 N.J. Super. 546, 550 (App. Div. 1998). See also Thorpe v. Floremoore Corp., 20 N.J. Super. 34 Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 19 of 33 PageID: 811 20 (App. Div. 1952); Great Falls Bank v. Pardo, 263 N.J. Super. 388, 394 (Ch. Div. 1993), aff’d, 273 N.J. Super. 542 (App. Div. 1994). Thus, Plaintiffs’ allegations in the SAC of whether Wells Fargo violated the Acts/Guidelines do not relate the foreclosure process. Such issues are irrelevant and immaterial to the foreclosure process. Plaintiffs’ causes of action and assertion of rights with respect to Wells Fargo’s violations of the Acts/Guidelines wholly belong to the instant case, not the New Jersey state court foreclosure action. The New Jersey entire controversy doctrine thus does not act to bar the causes of action asserted in the Plaintiffs’ SAC. The Colorado River Abstention Doctrine Does not Apply Similar to the Rooker-Feldman Doctrine, and the doctrines of res judicata, collateral estoppel and the Entire Controversy Doctrine, the Colorado River Abstention Doctrine simply does not apply. Abstention from the exercise of federal jurisdiction is the exception, not the rule. "The doctrine of abstention, under which a District Court may decline to exercise or postpone the exercise of its jurisdiction, is an extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy properly before it. Abdication of the obligation to decide cases can be justified under this doctrine only in the exceptional circumstances where the order to the parties to repair to the State court would clearly serve an important countervailing interest."..."[It] was never a doctrine of equity that a federal court should exercise its judicial discretion to dismiss a suit merely because a State court could entertain it."… [internal citations omitted] Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 813-14, 96 S. Ct. 1236, 1244 (1976). Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 20 of 33 PageID: 812 21 Again, there is nothing before this Honorable Court that could have or should have been decided in the prior foreclosure action. Wells Fargo is committed to arguing the foreclosure action, not Plaintiffs. “Abstention is appropriate "in cases presenting a federal constitutional issue which might be mooted or presented in a different posture by a state court determination of pertinent state law."” Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 814, 96 S. Ct. 1236, 1244 (1976), citing, County of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 188-189 (1959); see, e.g., Lake Carriers Assn. v. MacMullan, 406 U.S. 498 (1972); United Gas Pipeline Co. v. Ideal Cement Co., 369 U.S. 134 (1962); Railroad Comm'n of Texas v. Pullman Co., 312 U.S. 496 (1941). Plaintiffs’ issues before this Honorable Court all involve Wells Fargo’s deviations from the Acts/Guidelines. Aside from a manifest error in legal analysis, an argument cannot be made that a determination by this Honorable Court will either moot, set aside or result in a conflicting decision of the State Court’s foreclosure judgment. Wells Fargo either appropriately identified Robert Covino as a successor-in-interest or they did not. Wells Fargo either appropriately responded to multiple Requests for Information/Notices of Error or they did not. Whether Wells Fargo did or did not act as aforesaid has zero bearing upon the foreclosure judgment. The present case clearly does not fall within this second category of abstention. While state claims are involved in the case, the state law to be applied appears to be settled. No questions bearing on state policy are presented for decision. Nor will decision of the state claims impair efforts to implement state policy… To be sure, the federal claims that are involved in the case go to the establishment…which may conflict with similar rights based on state law. But the mere potential for conflict in the results of adjudications, does not, without more, warrant staying exercise of federal jurisdiction….The potential conflict here, involving state claims and federal claims, would not be such as to impair impermissibly the State's effort to effect its policy….Nor would exercise of federal jurisdiction here interrupt any such efforts by Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 21 of 33 PageID: 813 22 restraining the exercise of authority vested in state officers. [internal citations omitted] Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 815-16, 96 S. Ct. 1236, 1245 (1976) The within matter, much like Colorado River, contains no questions that bear upon State law that could potentially conflict with New Jersey State judgment. Thus, similar to Colorado River, abstention is inappropriate. Wells Fargo continues lamenting that the within matter is parallel to the foreclosure and must be dismissed. Wells Fargo is mistaken and places that misguided reliance upon Nationwide Mut. Fire. Ins. Co. v. George V. Hamilton, Inc., 571 F.3d 299, 307 (3d Cir. 2009). In determining whether an action presents "extraordinary circumstances" we consider six factors: "(1) [in an in rem case,] which court first assumed jurisdiction over [the] property; (2) the inconvenience of the federal forum; (3) the desirability of avoiding piecemeal litigation; (4) the order in which jurisdiction was obtained; (5) whether federal or state law controls; and (6) whether the state court will adequately protect the interests of the parties."…"No one factor is determinative; a carefully considered judgment taking into account both the obligation to exercise jurisdiction and the combination of factors counseling against that exercise is required.”…The balancing of factors is "heavily weighted in favor of the exercise of jurisdiction.". Nationwide Mut. Fire Ins. Co. v. George V. Hamilton, Inc., 571 F.3d 299, 308 (3d Cir. 2009). In examining each factor: (1) this is an in rem case and New Jersey State Court first assumed jurisdiction over the property; (2) there is no inconvenience to either party in this federal forum and Wells Fargo cannot reasonably claim inconvenience; (3) as more particularly described above relative to the Rooker-Feldman Doctrine, the Entire Controversy Doctrine and the doctrines of res judicata and collateral estoppel, there is no danger of piecemeal litigation or inconsistent results. Plaintiffs are not seeking appellate review of the foreclosure judgment nor are they seeking an invalidation of those proceedings. Plaintiffs have plainly alleged Wells Fargo’s Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 22 of 33 PageID: 814 23 violations of the Acts/Guidelines; (4) the foreclosure complaint was first filed; however, the validity of the note and mortgage are not in question in these proceedings; (5) Plaintiffs’ allegations sound in violations of the Acts/Guidelines and federal law controls; and (6) New Jersey State law cannot protect Plaintiffs’ interests as Plaintiffs’ allegations do not challenge the validity of the note and mortgage upon which the State Court judgment entered. Contrary to Wells Fargo’s allegations, granting Plaintiffs’ relief herein could not “cause havoc with the rulings of the state court” nor would it “directly impact New Jersey’s interest in protecting the authority of its judicial system.” (Db22). Wells Fargo is a frequent plaintiff in New Jersey State Court foreclosure proceedings. It understands well the limited defenses to a foreclosure action - - none of which are present in this litigation. Plaintiffs SAC does not request an invalidation of the Note and Mortgage nor does it seek to vacate, set aside or otherwise overturn the Final Judgment. It is therefore respectfully requested that this Honorable Court deny Wells Fargo’s application to dismiss Plaintiffs’ SAC based upon the Rooker-Feldman Doctrine, the Entire Controversy Doctrine, the doctrines of res judicata, collateral estoppel and the Colorado River Abstention Doctrine. Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 23 of 33 PageID: 815 24 POINT III WELLS FARGO’S OPPOSITION TO PLAINTIFFS’ SAC’S ALLEGATIONS OF VIOLATIONS OF THE ACTS/GUIDELINES CONSTRUCTIVELY ADMIT THAT PLAINTIFFS’ SAC HAS BEEN PLED WITH THE REQUISITE AMOUNT OF SPECIFICITY. Wells Fargo’s motion to dismiss is the improper vehicle to argue the bona fides of Plaintiffs’ SAC. This matter remains at the pleading stage. To that end, (a) Claim for Relief. A pleading that states a claim for relief must contain: (1) a short and plain statement of the grounds for the court’s jurisdiction, unless the court already has jurisdiction and the claim needs no new jurisdictional support; (2) a short and plain statement of the claim showing that the pleader is entitled to relief; and (3) a demand for the relief sought, which may include relief in the alternative or different types of relief. Fed.R.Civ.Proc. 8 Plaintiffs’ SAC contains all of the essential elements required. Wells Fargo’s arguments relative to Plaintiffs’ allegations of violations of the Acts/Guidelines essentially seek to convert their current motion to one of summary judgment. While such motions may be converted by this Court, it is not an automatic conversion. “If District Court elects to convert motion to dismiss for lack of subject matter jurisdiction into motion to dismiss for failure to state claim, with resulting motion subject to summary judgment disposition, court should notify parties of this conversion so that they may file appropriate responses.” Layton v. United States, 919 F2d 1333 (8th Cir. Ark. 1990), 18 Fed R Serv 3d (Callaghan) 944. The parties herein have received no such advice from the Court. Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 24 of 33 PageID: 816 25 To that end, Plaintiffs remind Wells Fargo that “transparency and facilitation of communication is the goal of RESPA,” Bates v. JPMorgan Chase Bank, NA, 768 F.3d 1126, 1135 (11th Cir. Sept. 30, 2014), and this goal cannot be reached without good faith communication from both parties. Plaintiffs emphasize the principle expressed by the court in Hittle v. Residential Funding Corp., No. 2:13-CV-353, 2014 WL 3845802, at (S.D. Ohio Aug. 5, 2014): This Court has taken a dim view of generic form responses by servicers to QWRs in light of the statute-imposed obligations to investigate, explain, and clarify (or, if appropriate, correct the account) in response to concerns raised by a borrower. Wells Fargo complains that the SAC fails to state a viable claim for relief. In doing so, Wells Fargo completely misconstrues the nature of pleadings in federal court and also ignores well established case law respecting damages under the RESPA statute. First, under the liberal, “notice” pleading standard, the Defendants has been made sufficiently aware of the claim made by the Plaintiffs as to damages and the “pattern and practice” claim. The disclosure of further factual detail in pleadings is neither required nor encouraged under the federal rules and case law. Discovery will fill in the details as the case progresses. Dismissal is therefore highly inappropriate at this stage in the proceedings. For purposes of Rule 8(a) and 9(b), Plaintiffs have sufficiently pled an unconscionable commercial practice. Plaintiffs allege that Wells Fargo strung them along for months, letting Plaintiffs believe they would be eligible for loan modification when Wells Fargo knew or should have known that they would not be. Plaintiffs also allege Wells Fargo's delay tactics were geared toward preventing Plaintiffs from receiving a loan modification. It is possible that Plaintiff's theory lacks foundation-i.e. it is possible that Wells Fargo had nothing to gain from drawing out the application process, and that Wells Fargo's employees were simply careless or overburdened. It is also possible that Wells Fargo strung out the application process to increase the chances of an event, like the 2010 tax lien, that would allow Wells Fargo to deny Plaintiffs application. Discovery Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 25 of 33 PageID: 817 26 will reveal which theory is correct. Since the truth lies with Wells Fargo, Rule 9(b) does not permit the Court to demand more of the Plaintiffs by way of factual allegations at this stage of the case….(emphasis added) Lia v. Wells Fargo Bank, N.A., No. 2:14-0752 (WJM), 2014 U.S. Dist. LEXIS 82053, at *6-7 (D.N.J. June 17, 2014). Plaintiffs further maintain that if Wells Fargo gave the runaround to the Plaintiffs under the RESPA statute, Wells Fargo most likely did the same to other homeowners. Knowledge of other such cases detailing such a “patterns and practices” is particularly within the knowledge of Wells Fargo at this point. Discovery will provide a basis for investigating these issues. Dispositive in this respect is Bourdelais v. JPMorgan Chase Bank, N.A., No. 3:10CV670, 2012 WL 5404084 (E.D. Va. Nov. 5, 2012), where in denying the bank’s motion to dismiss for lack of damages and proof of a “pattern and practice” claim, the court declared: Furthermore, Bourdelais alleges that “Chase’s conduct appears to be a pattern and practice of misconduct with many consumers,” particularly in light of its alleged repeated violations in dealing with her. (Id. at ¶ 164.) She concludes that “Chase is thus also liable to [her] for additional [statutory] damages up to $1,000 per violation.” (Id.) Not only would it be unreasonable to expect Bourdelais to be able to make more detailed allegations before discovery has been conducted, but also it can be argued that Chase’s conduct with regard to Bourdelais establishes on its own a pattern or practice of noncompliance. See Serfass v. Cit Group/Consumer Fin., Inc., No. 8:07-90-WMC, 2008 U.S. Dist. LEXIS 68946, at *12, 2008 WL 4200356 (D.S.C. Sept. 10, 2008) (finding that “the defendant’s failure to respond to the plaintiffs’ five qualified written requests establishe[d] a ‘pattern or practice of noncompliance with requirements of this section’ of RESPA) (citing Ploog v. Homeside Lending, Inc., 209 F.Supp.2d 863, 869 (N.D.Ill.2002)). Id. at *10. Application of these principles compels a denial of Wells Fargo’s motion for failure to state a viable claim for relief. Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 26 of 33 PageID: 818 27 Wells Fargo, in its arguments surrounding 12 CFR §1024.41(g) and 12 CFR §1024.35, limit the entirety of each Regulation. Wells Fargo, once again misses the point. Robert Covino was and is the successor-in-interest to his deceased parents’ Estate. Blanketly stating that they sent the requisite notice is inherently different than stating that Wells Fargo had policies and procedures in place for successors-in-interest, Wells Fargo identified Mr. Covino as such a successor-in-interest, Wells Fargo properly considered Mr. Covino as a successor-in-interest for either an assumption of the mortgage or a loan modification and then providing proof of the foregoing. Only discovery will dictate the answers to those questions. Wells Fargo takes the position that it gets to control what it was and was not willing to produce in response to the Notices of Error and interprets the CFPB Guidelines to fit its needs. It maintains that position in its moving papers. The reason this matter is before this Honorable Court is, in part, because of Wells Fargo’s conduct and self-serving reading of the Regulations or an “attempted end-run around” compliance with the Regulations. (Db29). Plaintiffs are entitled to prosecute their claims to determine the nature and extent of Wells Fargo’s deviation from the Acts/Guidelines. Discovery is the only tool available to Plaintiffs to determine the degree of Wells Fargo’s departures from the Acts/Guidelines. Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 27 of 33 PageID: 819 28 POINT IV PLAINTIFFS HAVE PLED A VIABLE CLAIM UNDER THE NEW JERSEY CONSUMER FRAUD ACT. The Plaintiffs’ claim under the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1, et seq. (“CFA”) is detailed in paragraphs 99 through 109 of the SAC. “The Consumer Fraud Act, N.J.S.A. § 56:8-1 to-195, provides a private cause of action to consumers who are victimized by fraudulent practices in the marketplace.” Gonzalez v. Wilshire Credit Corp., 207 N.J. 557, 576 (2011). The CFA is intended to be applied broadly in order to accomplish its remedial purpose- namely, to root out consumer fraud-and therefore it is liberally construed in favor of the consumer. Id. The CFA applies to banking institutions. The language of the CFA demonstrates “a clear legislative intent that its provisions be applied broadly in order to accomplish its remedial purpose, namely, to root out consumer fraud.” Lemelledo v. Benefit Mgmt. Corp., 150 N.J. 255, 264 (1997). In order for a consumer to maintain a cause of action under the CFA, the consumer must prove (1) an unlawful practice, (2) an ascertainable loss, and (3) a causal relationship between the unlawful conduct and the ascertainable loss. N.J.S.A. 56:8-19; Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 557 (2009)). Unlawful conduct under the CPA can be defined as: * * * use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with ·the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 28 of 33 PageID: 820 29 aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby. N.J.S.A. 56:8-2. An unconscionable commercial practice “necessarily entails a lack of good faith, fair dealing, and honesty. The capacity to mislead is the prime ingredient of all types of consumer fraud. Mere customer dissatisfaction does not constitute consumer fraud.” In re Van Holt, 163 F.3d 161, 168 (3d Cir.1998). Here, the SAC provides a sufficient pleading with respect to the allegation that Wells Fargo engaged in an unlawful practice under the CFA. The Plaintiffs’ CFA claim is bottomed upon Wells Fargo’s violations of the Acts/Guidelines. Further to that end, RESPA applies not only to the actual settlement process, however, but also to the servicing of federally regulated mortgage loans. MorEquity, Inc. v. Naeem, 118 F. Supp. 2d 885, 900 (N.D. Ill. 2000). RESPA “imposes a number of duties on lenders and loan servicers,” including “that loan servicers respond promptly to borrowers’ written requests for information.” Roth v. PNC Bank, N.A., No. 15 C 4779, 2015 WL 5731892, at *2 (N.D. Ill. Sept. 30, 2015); 12 U.S.C. § 2605(e). In Count One, the Plaintiffs claim that Wells Fargo violated, among other things, RESPA, 12 U.S.C. §2605(e), by failing to respond to a qualified written request for information regarding the loan at issue. Wells Fargo failed to provide and fails to makes unavailable information relating to the programs for successors-in-interest, such as Robert Covino. Wells Fargo had a duty to ensure that when previous homeowners request information about successors-in-interest, the information is provided. The Acts/Guidelines make this clear. The deception, misrepresentations, and concealment of information by Wells Fargo is set forth by the paragraphs 101 to 106 of the SAC: Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 29 of 33 PageID: 821 30 101. Defendant permitted the property in question to be sold through Sheriff’s Sale. 102. Defendant knew and was on notice that Mr. Covino was not obligated on the Note and Mortgage. 103. Defendant knew and was on notice that Mr. Covino was a successor-in-interest in and to the property in question and encouraged Mr. Covino to apply for a loan modification. 104. Defendant continued to proceed with the foreclosure and scheduling of a Sheriff’s Sale while Mr. Covino’s modification application was pending 105. The foregoing practices of Defendants constitute an unconscionable practice as defined by the Consumer Fraud Act. 106. Plaintiffs made several attempts to obtain a loan modification to which the defendant improperly rejected. 107. Defendant set forth a Sheriff’s Sale and foreclosure suit without attempting to remedy the defaulted loan with Mr. Covino, as successor-in-interest. These allegations of conduct provide a sufficient basis for asserting an unlawful practice under the CFA. The Plaintiffs emphasize that like the CFA, RESPA is a consumer protection statute. “RESPA is a consumer protection statute that regulates the real estate settlement process, including servicing of loans and assignment of those loans.” Catalan v. GMAC Mortgage Corp., 629 F.3d 676, 680 (7th Cir.2011). RESPA was enacted to ensure that loan servicers, often with more resources and industry knowledge, provide individualized attention to the concerns of borrowers - ultimately, whose home ownership could be at jeopardy. See, e.g., Johnstone v. Bank of America, N.A., 173 F. Supp. 2d 809, 816 (N.D. Ill. 2001) (“[T]he express terms of RESPA clearly indicate that it is, in fact, a consumer protection statute.”); Rawlings v. Dovenmuehle Mortg., Inc., 64 F.Supp.2d 1156, 1166 (M.D. Ala. June 23, 1999) (“[T]he court notes that RESPA has been construed by other courts as a consumer protection statute.”) (citing Dujanovic v. Mortgage America, Inc., 185 F.R.D. 660, 669 (N.D. Ala. 1999) (stating that Congress enacted Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 30 of 33 PageID: 822 31 RESPA “to protect borrowers from brokers,” and “Congress clearly stated that RESPA was designed to protect consumers”). Thus, since the CFA claim here is grounded upon a violation of another consumer statute (RESPA), this fact further supports the Plaintiffs’ position with respect to Count Two of violations of the CFA. Wells Fargo contends that the Plaintiffs “also fail to allege an ascertainable loss” under the CFA. In assessing the existence of ascertainable loss, the court is “guided by, but not bound by strict contract principles.” Cox v. Sears Roebuck & Co., 138 N.J. 2, 21 (1994). The New Jersey Supreme Court has expressly recognized that ascertainable loss can be measured by a benefit of the bargain standard. Thiedemann v. Mercedes-Benz USA, LLC, 183 N.J. 234 (2005). Here, the benefit of the bargain is the lost equity in the home of the deceased, Anna Covino and Rudolph Covino. Robert Covino, the beneficiary and successor-in-interest in and to his parents’ Estate, lost any and all equity in his parents’ Estate. Next, the Court finds that Plaintiffs have sufficiently pled an ascertainable loss. Plaintiffs claim that they were forced to incur "costs, fees, and additional arrearages" because Wells Fargo strung out the modification application process. To survive Rule 9(b), Plaintiffs need not plead the exact dollar amount of their loss… Instead, plaintiffs must provide enough specificity to give defendants notice of their possible damages….The Court finds that Wells Fargo has sufficient notice of the costs, fees, and arrearages associated with Plaintiff's account and with preparing loan modification materials. Accordingly, the Court will DENY the motion to DISMISS Count I. [internal citations omitted] Lia v. Wells Fargo Bank, N.A., No. 2:14-0752 (WJM), 2014 U.S. Dist. LEXIS 82053, at *6-7 (D.N.J. June 17, 2014) It is improvident of Wells Fargo to demand that Plaintiffs plead their SAC with greater specificity than is required under the Rules. Plaintiffs’ SAC is pled with great specificity and provides Wells Fargo with more than ample notice of possible damages. Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 31 of 33 PageID: 823 32 Lastly, as to the third element of a CFA claim (“causal relationship”), the CFA excuses the victim of fraud from the burden of showing reliance, instead requiring “only proof of a causal nexus between the [unlawful conduct] and the loss.” Jubelt v. United N. Bankers, Ltd., No. CIV.A. 13-7150 ES, 2015 WL 3970227, at *6 (D.N.J. June 30, 2015), citing Zorba Contractors, Inc. v. Hous. Auth., City of Newark, 362 N.J.Super. 124, 827 A.2d 313, 322 (App.Div.2003). Indeed, the CFA specifically states that liability accrues “whether or not any person has in fact been misled, deceived or damaged thereby.” N.J.S.A. § 56:8-2; Jubelt v. United N. Bankers, Ltd, supra. Here, Wells Fargo’s violation of RESPA indeed has a “causal relationship” to the ascertainable damages evidenced in the lost benefit of the bargain suffered by the Plaintiffs. Accordingly, since the Plaintiffs have adequately plead a claim for relief under the CFA, Wells Fargo’s motion to dismiss Count Two should be denied. POINT V PLAINTIFFS WITHDRAW COUNT THREE OF THEIR SAC ALLEGING VIOLATION OF DUE PROCESS CONCLUSION There can be no question that the allegations contained in the SAC are not germane to the foreclosure and do not challenge the validity of the Note and the Mortgage. Plaintiffs’ SAC contains well pled allegations of Wells Fargo’s violations of the Acts/Guidelines. Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 32 of 33 PageID: 824 33 For the foregoing reasons, the Plaintiffs, Robert Covino, individually and as Executor of the Estate of Rudolph Covino and the Estate of Rudolph Covino, respectfully request the Court to deny the motion to dismiss the SAC filed by the Defendant, Wells Fargo Bank, N.A. Respectfully Submitted, LAW OFFICES OF JOSEPH A. CHANG Attorneys for Plaintiffs BY:/s/ Joseph A. Chang JOSEPH A. CHANG DATED: February 14, 2017 Case 2:16-cv-02264-CCC-MF Document 29 Filed 02/14/17 Page 33 of 33 PageID: 825