Danise v. Saxon Mortgage Services, Inc. et al

REPLY BRIEF to Opposition to Motion

D.N.J.December 5, 2016

DB1/ 89874801.5 MORGAN, LEWIS & BOCKIUS LLP (A Pennsylvania Limited Liability Partnership) Drew Cleary Jordan 502 Carnegie Center Princeton, NJ 08540 Tel: (609) 919-6676 Fax: (609) 919-6701 Jason R. Scherr (admitted pro hac vice) Patrick A. Harvey (admitted pro hac vice) 2020 K Street NW Washington, DC 20006 Tel: (202) 373-6000 Fax: (202) 373-6001 Attorneys for Defendant Saxon Mortgage Services, Inc. IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY Tammy Rizzolo Danise, Plaintiff, v. Saxon Mortgage Services, Inc., Ocwen Loan Servicing, LLC, and John Does 1–10. Defendants. Case No: 2:15-cv-06062-JLL-JAD District Judge Jose L. Linares Magistrate Judge Joseph A. Dickson DEFENDANT SAXON MORTGAGE SERVICES, INC.’S REPLY IN FURTHER SUPPORT OF ITS MOTION TO DISMISS Motion Day: December 5, 2016 Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 1 of 20 PageID: 975 i TABLE OF CONTENTS Page TABLE OF AUTHORITIES..................................................................................... ii INTRODUCTION .....................................................................................................1 ARGUMENT .............................................................................................................2 I. PLAINTIFF’S PRIOR CONDUCT IN HER BANKRUPTCY PROCEEDING BARS HER CLAIMS AGAINST SAXON................2 A. Application Of Judicial Estoppel Is Appropriate Here ...............2 B. Plaintiff Misunderstands The Preclusion Doctrines ...................6 II. THE DISCOVERY RULE DOES NOT APPLY TO PLAINTIFF’S CLAIMS .......................................................................9 III. PLAINTIFF FAILS TO STATE A CONTRACT CLAIM AGAINST SAXON.............................................................................11 A. Plaintiff’s Claims Are Based On The TPP................................11 B. Plaintiff’s Allegations Demonstrate That Saxon Had No Duty Under The TPP To Modify Plaintiff’s Loan ....................13 CONCLUSION........................................................................................................15 Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 2 of 20 PageID: 976 ii TABLE OF AUTHORITIES Page(s) CASES African Bio-Botanica, Inc. v. Leiner, 624 A.2d 1003 (N.J. App. Div. 1993) ................................................................13 Arias v. Elite Mortg. Grp., 108 A.3d 21 (N.J. App. Div. 2014) ....................................................................12 Bayer AG v. Schein Pharm., 129 F. Supp. 2d 705 (D.N.J. 2001).....................................................................10 Bullard v. Blue Hills Bank, 135 S. Ct. 1686 (2015)..........................................................................................7 Carlyle Inv. Mgmt. v. Moonmouth Co., 779 F.3d 214 (3d Cir. 2015) .................................................................................4 Castle Cheese, Inc. v. MS Produce, No. 04-078, 2008 U.S. Dist. LEXIS 71053 (W.D. Pa. Sept. 19, 2008) .............15 Cnty. of Morris v. Fauver, 707 A.2d 958 (N.J. 1998) ...............................................................................9, 10 CoreStates Bank v. Huls Am., Inc., 176 F.3d 187 (3d Cir. 1999) .........................................................................6, 7, 8 DePasquale v. Morgan Stanley Smith Barney LLC, No. 10-6828, 2011 WL 3703110 (D.N.J. Aug. 23, 2011)....................................5 Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394 (1981)..............................................................................................6 Hoffman v. Nordic Naturals, Inc., 837 F.3d 272 (3d Cir. 2016) .................................................................................3 In re Goldstein, 526 B.R. 13 (B.A.P. 9th Cir. 2015) ..............................................................10, 11 In re Olick, 630 Fed. App’x 140 (3d Cir. 2016) ......................................................................7 Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 3 of 20 PageID: 977 iii In re Szostek, 886 F.2d 1405 (3d Cir. 1989) ...........................................................................7, 8 Klein v. Just Energy Grp., No. 14-1050, 2016 U.S. Dist. LEXIS 84447 (W.D. Pa. June 29, 2016) ............15 Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. GM Corp., 337 F.3d 314 (3d Cir. 2003) .............................................................................3, 5 Montrose Med. Grp. Participating Savs. Plan v. Bulger, 243 F.3d 773 (3d Cir. 2001) .................................................................................2 Network Commodities, LLC v. Golondrinas Trading Co., No. 11-3119, 2013 WL 1352234 (D.N.J. Apr. 1, 2013) ....................................15 Oneida Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414 (3d Cir. 1988) .................................................................................6 Siegel v. Freddie Mac, 143 F.3d 525 (9th Cir. 1998) ................................................................................8 U.S. Aid Funds, Inc. v. Espinosa, 559 U.S. 260 (2010)..............................................................................................7 Wigod v. Wells Fargo Bank, 673 F.3d 547 (7th Cir. 2012) ........................................................................12, 13 STATUTES 11 U.S.C. § 502(a) .....................................................................................................8 11 U.S.C. § 1327(a) ...................................................................................................8 N.J. STAT. § 2A:14-1..................................................................................................9 OTHER AUTHORITY Local Civ. R. 7.1(d)(6).............................................................................................10 Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 4 of 20 PageID: 978 1 INTRODUCTION In its opening brief, Saxon showed that the First Amended Complaint is fatally defective for multiple, independently sufficient reasons. Among others: (1) Plaintiff knowingly concealed her claims throughout nearly five years of bankruptcy proceedings, barring her from asserting those claims now as a matter of judicial estoppel and preclusion; (2) the TPP’s plain language is incompatible with Plaintiff’s attempt to invoke the discovery rule, and her class claims are therefore time-barred; and (3) Plaintiff’s allegations show that Saxon was not a party to the TPP in its own name, but only the agent for a disclosed principal (the lender), requiring dismissal of her breach of contract claims. Plaintiff does not take any of these issues head-on. Instead, Plaintiff muddies the waters with conflicting inferences about what she intended, but failed, to allege. Plaintiff misstates controlling law, rather than argue within its confines. And Plaintiff tries to distract from her prior disqualifying conduct—insisting that any defendant accused of wrongdoing cannot invoke equitable doctrines when its accuser has acted inequitably—rather than rebut the inference of bad faith that arises from her failure to disclose her claims against Saxon. None of these arguments transforms Plaintiff’s allegations into a claim for which relief may be granted. The First Amended Complaint should be dismissed in its entirety. Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 5 of 20 PageID: 979 2 ARGUMENT I. PLAINTIFF’S PRIOR CONDUCT IN HER BANKRUPTCY PROCEEDING BARS HER CLAIMS AGAINST SAXON. A. Application Of Judicial Estoppel Is Appropriate Here. Of the three predicates to judicial estoppel—irreconcilable positions, bad faith, and an absence of other remedies, see Montrose Med. Grp. Participating Savs. Plan v. Bulger, 243 F.3d 773, 778 (3d Cir. 2001)—Plaintiff disputes only that she took conflicting positions (and the inference of bad faith that necessarily follows). In Plaintiff’s view, failure to disclose her pre-petition claims against Saxon in bankruptcy is entirely consistent with her later pursuit of those claims in this Court. Dkt. No. 44 (“Pl. Br.”) at 5–7. Plaintiff’s allegations and other statements, then and now, preclude that conclusion. Plaintiff rests on the unreasonable inference that she first learned of her claims against Saxon between April 13, 2015 (when her bankruptcy case closed) and May 29, 2015 (when she filed the initial complaint in this case). Id. at 6–7. Plaintiff does not allege as much in any pleading, and she does not identify any new information first arising after the bankruptcy—where she was represented by the same counsel who filed the complaint. Rather, Plaintiff asks the Court to infer from her silence that she must have lacked knowledge of her claims throughout the whole period. That inference is not only precluded by Plaintiff’s positions in this case; it is irrelevant to her duty to disclose potential claims in bankruptcy. Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 6 of 20 PageID: 980 3 “If the debtor has enough information prior to confirmation to suggest that it may have a possible cause of action, then it is a ‘known’ claim that must be disclosed in the bankruptcy petition.” Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. GM Corp., 337 F.3d 314, 321 (3d Cir. 2003). When last before the Court, Plaintiff conceded that by April 2010, she “discovered, or by the exercise of reasonable diligence and intelligence could have discovered, that she may have a basis for an actual claim” against Saxon. Dkt. No. 27 at 5. Thus, even without considering that Plaintiff had actual knowledge months earlier,1 it is undisputed that Plaintiff had enough information no later than April 2010—five years prior to confirmation—to know that she had a potential claim. Plaintiff does not allege that she in fact lacked knowledge of her claim during bankruptcy. Rather, she says the Court must ignore her concession of knowledge as not properly before it. See Pl. Br. at 10. But on a motion to dismiss, courts are free to consider a plaintiff’s statements in prior filings because such statements “are matters of public record.” Hoffman v. Nordic Naturals, Inc., 837 F.3d 272, 280 (3d Cir. 2016). And Plaintiff made her concession to successfully persuade the Court to grant leave to amend. Having prevailed in one phase of the case (motion for leave) based on an argument that Plaintiff objectively 1 In the same filing, Plaintiff admitted that she had actual knowledge of her claims against Saxon by April 2010. Dkt. No. 27 at 1 (Plaintiff “received her first notice of Saxon’s breach of her TPP agreement in April 2010”). Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 7 of 20 PageID: 981 4 had knowledge of her claim in April 2010, she cannot argue in this later phase that she lacked the same knowledge. See Carlyle Inv. Mgmt. v. Moonmouth Co., 779 F.3d 214, 222 (3d Cir. 2015). In all events, even were it not conceded, the only reasonable inference from Plaintiff’s allegations is that she did, in fact, have knowledge of a potential claim against Saxon no later than April 2010:  “Plaintiff submitted all the required documentation and timely made all payments required by the TPP. The agreement required three trial period payments commencing in June 2009 and continuing in July and August 2009. . . . Saxon did not contact Plaintiff when she completed her third trial period payment in August 2009. Nonetheless, Plaintiff continued to make trial period payments.” FAC ¶¶ 66–67.  “Saxon breached its obligations under the TPP Contract when it failed to provide Plaintiff with a permanent loan modification at the conclusion of her trial period payments [i.e., on September 1, 2009].” Id. ¶ 69.  “Saxon sent Plaintiff a letter denying her a permanent loan modification on April 6, 2010 – eight months after the conclusion of the trial period under the TPP Contract.” Id. ¶ 68.  “Saxon’s [non-HAMP] loan modification solicitation in April 2010 and rejection the following month was a transparent ruse undertaken to mislead Plaintiff by creating facially plausible grounds to deny her a permanent loan modification under the TPP Contract.” Id. ¶ 71. Plaintiff does not even attempt to counter her admissions. Rather, she criticizes Saxon for conflating her allegations of claim accrual with “the allegations concerning her discovery of the breach in April 2010.” Pl. Br. at 27 (emphasis added). For a Plaintiff who asserts that her “bankruptcy case [was] precipitated by the very actions for which Plaintiff seeks redress in this lawsuit,” id. at 2, the only Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 8 of 20 PageID: 982 5 permissible inference is that Plaintiff had (at least) objective knowledge of her claims against Saxon during that bankruptcy. Because knowledge of such claims is irreconcilably inconsistent with her failure to schedule them, and with her pursuit of them here, Plaintiff’s sole rationale for avoiding judicial estoppel fails. The other predicates to judicial estoppel reinforce this conclusion. “[N]ondisclosure in a prior bankruptcy schedule” is considered “an inconsistent position where the nondisclosure is coupled with facts showing an inference of bad faith.” DePasquale v. Morgan Stanley Smith Barney LLC, No. 10-6828, 2011 WL 3703110, at *4 (D.N.J. Aug. 23, 2011). If “the pleadings demonstrate both knowledge of a claim and a motive to conceal that claim in the face of an affirmative duty to disclose,” then a “rebuttable inference of bad faith arises.” Krystal, 337 F.3d at 321. Plaintiff had every incentive to conceal and delay filing the present claims until after her discharge in bankruptcy. Plaintiff’s confirmed plan discharged over $230,000 of debts without objection from unsecured creditors. Exs. J, T. 2 Plaintiff also avoided her second mortgage lien— $147,636.14—in full, without Plaintiff paying a cent on the balance. Exs. L, M. At bottom, Plaintiff significantly benefitted by failing to disclose her supposed claims against Saxon. Plaintiff offers nothing to rebut the inference of bad faith. 2 References to exhibits A–S refer to the exhibits filed with Saxon’s opening brief. Exhibit T, a public record, is the sole exhibit filed with this brief. Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 9 of 20 PageID: 983 6 Judicial estoppel is, of course, an extraordinary equitable remedy. In close cases—like where there is some indicia of good faith behind the borrower’s failure to disclose, or where a borrower might still amend her schedules to avoid harm to other creditors—application of judicial estoppel may not be required. But this is not a close case. The broad reach of bankruptcy protection is built on stringent requirements for comprehensive disclosure. See Oneida Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414, 417 (3d Cir. 1988) (“[W]e cannot overemphasize the debtor's obligation to provide sufficient data to satisfy the Code standard of ‘adequate information.’”). Where Plaintiff has obtained hundreds of thousands of dollars of benefit with no stated ability or intention of reopening the bankruptcy case, dismissal is the only remedy available. B. Plaintiff Misunderstands The Preclusion Doctrines. It is well-settled that “claim preclusion . . . gives dispositive effect to a prior judgment if a particular issue, although not litigated, could have been raised in the earlier proceeding.” CoreStates Bank v. Huls Am., Inc., 176 F.3d 187, 194 (3d Cir. 1999). Plaintiff’s belief that she can avoid the claim preclusion doctrine—even though she could have pursued her claims against Saxon during bankruptcy—is premised on a fundamental misstatement of law. See Pl. Br. at 13. “A final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action.” Federated Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 10 of 20 PageID: 984 7 Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981); accord In re Olick, 630 Fed. App’x 140, 142 (3d Cir. 2016).3 A confirmation order in a Chapter 13 proceeding forecloses relitigation of “any issue necessarily determined by the confirmation order.” Bullard v. Blue Hills Bank, 135 S. Ct. 1686, 1693 (2015); see In re Szostek, 886 F.2d 1405, 1408 (3d Cir. 1989) (“[A] confirmation order is res judicata as to all issues decided or which could have been decided at the hearing on confirmation.”). Plaintiff grossly distorts the holding of CoreStates to argue that a confirmation order can have preclusive effect only as to claims “raised in the bankruptcy proceeding.” Pl. Br. at 13. The question in CoreStates was whether one creditor “raised a claim” against another when it objected to the debtor’s reorganization plan. CoreStates, 176 F.3d at 191 (“[C]laim preclusion applies only if the party to be precluded raised a claim, such as an objection to a reorganization plan, in a prior proceeding.”). Once a litigant participates in the bankruptcy proceeding to resolve any claims, the participant/claimant is precluded from subsequently litigating any claim that “was or could have been raised” in the bankruptcy with an “essential similarity of the underlying events giving rise to the various legal claims.” Id. at 194. Indeed, because the objection in CoreStates 3 Plaintiff wrongly contends that there was no “final judgment with respect to Plaintiff’s claims stemming from her bankruptcy case.” Pl. Br. at 15. An order confirming a bankruptcy plan is a “final judgment.” U.S. Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 269 (2010). Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 11 of 20 PageID: 985 8 “raised a claim” related to the amount due each creditor, it “put into controversy the entire amount that [other creditor] was to receive in full satisfaction of its claims against [debtor].” Id. at 191. Here, Plaintiff participated in the bankruptcy proceeding—i.e., “raised a claim”—for the purpose of determining, inter alia, the amount of the debt owed by Plaintiff on the mortgage loan serviced by Saxon. Accordingly, Plaintiff’s extended discussion about compulsory counterclaims4 and other exceptions to the rule requiring prior participation in bankruptcy is a non-sequitur. Pl. Br. at 14 (citing CoreStates, 176 F.3d at 200 n.13, regarding alternative grounds for preclusion of “a party who has not actively raised a claim” in a prior bankruptcy proceeding). As part of her bankruptcy, Plaintiff argued that her complete debt on the mortgage loan serviced by Saxon was valid. Plaintiff did not assert, as she necessarily does here, that she owes less than the full amount due under her original note. See Dkt. No. 40-1 (“Saxon Br.”) at 17–18. By concurring with Saxon about the extent of her mortgage obligations, Plaintiff invited the preclusion bar. See 11 U.S.C. § 1327(a) (confirmed plan is binding on the debtor and her creditors); In re Szostek, 886 F.2d at 1408. 4 Plaintiff was required to object to avoid the automatic allowance of Saxon’s claim. See 11 U.S.C. § 502(a) (“A claim or interest, proof of which is filed . . . is deemed allowed, unless a party in interest . . . objects.”). That implicit allowance may itself “be treated as a final judgment for res judicata purposes,” even without plan confirmation. Siegel v. Freddie Mac, 143 F.3d 525, 530 (9th Cir. 1998). Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 12 of 20 PageID: 986 9 II. THE DISCOVERY RULE DOES NOT APPLY TO PLAINTIFF’S CLAIMS. Plaintiff’s class claims must be commenced within six years of accrual. See N.J. STAT. § 2A:14-1. Plaintiff concedes that her “cause of action accrued on the date that Saxon promised to deliver the permanent modification—September 1, 2009.” Pl. Br. at 28. That concession bars her class claims, which were first proposed more than six years later, in January 2016. Plaintiff does not meaningfully defend her resort to the discovery rule to toll the limitations period. She says nothing about the presumption against the discovery rule in contract cases. See, e.g., Cnty. of Morris v. Fauver, 707 A.2d 958, 972 (N.J. 1998) (“[M]ost contract actions presume that the parties to a contract know the terms of their agreement and breach is generally obvious and detectable with any reasonable diligence.”). And she fails to articulate any basis for the Court to conclude that her alleged failure to discover her claims against Saxon was objectively reasonable. See Saxon Br. at 22. Instead, Plaintiff asks the Court to ignore the limitations bar, on the theory that it was litigated and resolved with Plaintiff’s motion for leave to amend. Pl. Br. at 26. The issue was neither litigated nor resolved. Plaintiff first invoked the discovery rule in her reply (Dkt. No. 27), and Saxon therefore had no opportunity Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 13 of 20 PageID: 987 10 to respond.5 And the Court noted that it was “not making a definitive ruling” on limitations. Dkt. No. 33 at 16. The Court merely accepted Plaintiff’s allegation that she presumed her loan was modified in September 2009. Id. at 15. But the language of the TPP precludes a finding that Plaintiff’s subjective belief was reasonable. See Saxon Br. at 22–23. The discovery rule cannot apply here. Plaintiff’s effort to distinguish In re Goldstein, 526 B.R. 13 (B.A.P. 9th Cir. 2015), based on the technical distinction between accrual and commencement of the limitations period, misses the point. As Saxon explained, the Goldstein court determined that, under the debtors’ theory of breach, the TPP required the servicer to take one of two actions at the end of the three-month trial period: provide a permanent modification (if the debtor qualified) or provide written notice of denial (if the debtor did not qualify). Id. at 21. Plaintiff embraces the identical theory of breach as the Goldstein debtors— that Saxon owed her a HAMP Modification Agreement at the conclusion of her trial period in August 2009, but did not provide one. On Goldstein’s common- sense logic, “with any reasonable diligence” Plaintiff would have known at that time that she had a claim for Saxon’s alleged breach. See Fauver, 707 A.2d at 972. 5 See Bayer AG v. Schein Pharm., 129 F. Supp. 2d 705, 716 (D.N.J. 2001) (a party “has no opportunity to respond to newly minted arguments contained in reply briefs” because “the local rules do not permit sur-reply briefs”); Local Civ. R. 7.1(d)(6). Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 14 of 20 PageID: 988 11 Even accepting that a borrower may not have noticed the absence of a modification agreement or denial notice for a few days or weeks after September 1, 2009, there is no basis for the Court to conclude that Plaintiff’s failure to discover the alleged breach for more than eight months was in any way reasonable. Plaintiff does not address this aspect of Goldstein, but focuses entirely on the difference between accrual of a claim and the running of the limitations period. That difference is only manifest when the discovery rule or some other form of tolling properly applies; it says nothing about why the discovery rule ought to apply in the first instance. Plaintiff’s opposition omits any explanation why this might be the rare contract case in which the discovery rule should apply. This is not such a case, and Plaintiff’s class claims are therefore time-barred. III. PLAINTIFF FAILS TO STATE A CONTRACT CLAIM AGAINST SAXON. A. Plaintiff’s Claims Are Based On The TPP. The parties agree that HAMP does not provide a private right of action. Pl. Br. at 19. Where the duty allegedly violated arises from HAMP directives, rather than from a contract, such a claim would not be viable. The parties also agree that qualified immunity is limited to claims in which the violated duty arises from compliance with—rather than departure from—the government’s instructions. Id. at 29. Thus, where Plaintiff seeks to bring a claim founded on breach of a duty other than those mandated by government contract, immunity does not apply. Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 15 of 20 PageID: 989 12 Saxon argued that if the breach of duty for which Plaintiff seeks compensation was Saxon’s compliance or lack of compliance with HAMP program requirements, then such a claim would not be actionable. See Saxon Br. at 24–26.6 If Plaintiff is to state a claim for breach of the TPP, then the duties allegedly breached must be those that arise from the language of that document. This is the approach embraced by Wigod v. Wells Fargo Bank, 673 F.3d 547 (7th Cir. 2012)—if the duty allegedly breached arises from HAMP itself, the claim is barred; but the lack of private right of action is no bar to a claim based on breach of a duty arising from the TPP. Plaintiff now makes clear that her claim is based solely on the TPP. Plaintiff relies on Arias v. Elite Mortgage Group, 108 A.3d 21 (N.J. App. Div. 2014), to say that “even though there is no private cause of action under HAMP, a mortgagor may nonetheless assert common law contract claims based on a bank’s failure to honor promises made in a HAMP Trial Period Plan Agreement.” Pl. Br. at 22; accord id. at 18 (“Plaintiff’s claims are based on the TPP.”); id. at 22 (“Saxon was contractually bound to modify Plaintiff’s loan.”); id. at 23 (“[T]he contract at issue is the TPP.”). “Plaintiff alleges that Saxon failed to fulfill its obligations to modify 6 Claims of liability for complying with HAMP amount to challenges to the whole regulatory scheme, and claims of liability for not complying with HAMP are directly barred by the absence of a right of action. Saxon Br. at 26–29. Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 16 of 20 PageID: 990 13 her mortgage loan as set forth in the TPP.” Id. at 24. Plaintiff’s ability to state a claim thus turns on the language of the contract alleged—the TPP.7 B. Plaintiff’s Allegations Demonstrate That Saxon Had No Duty Under The TPP To Modify Plaintiff’s Loan. The TPP is between the “Lender” (LaSalle Bank N.A., as trustee), and the “Borrower” (Plaintiff). Pl. Ex. C at 1. Saxon was not a party to the TPP in any sense other than the way an agent of a disclosed principal is ever a party to a contract on behalf of that principal. Plaintiff thus cannot state a claim against Saxon for breach of duties alleged to rest with the Lender under the TPP. To survive a motion to dismiss, Plaintiff must allege facts showing “that the defendant has made a promise, the form of which does not indicate that it was given as agent.” African Bio-Botanica, Inc. v. Leiner, 624 A.2d 1003, 1007 (N.J. App. Div. 1993) (citing RESTATEMENT (SECOND) OF AGENCY § 320 cmt. b (1958)). But the form of Saxon’s alleged promise in this case, the TPP, unambiguously 7 Plaintiff cannot salvage her contract claim by alleging failure by Saxon to discharge “obligations it accepted under the SPA [Servicer Participation Agreement].” Pl. Br. at 23. Plaintiff is neither a party to nor a beneficiary of the SPA, so Plaintiff lacks standing to bring that claim. As plaintiff concedes (id. at 20), essentially every court to consider the question has held that borrower- plaintiffs lack standing to sue for breach of duties arising under the SPA. See Wigod, 673 F.3d at 559 n.4 (collecting cases). Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 17 of 20 PageID: 991 14 shows that Saxon was acting as an agent for a disclosed principal, the lender.8 Even beyond the text of the agreement, there is no genuine dispute that Saxon was an agent acting on behalf of the lender. Plaintiff repeatedly alleges that servicers like Saxon act on behalf of an investor or lender. See, e.g., FAC ¶ 43 (“[T]he servicer’s Trial Period Plan must be a three month trial period, although it can be extended if required by a servicer’s contractual obligations to a lender.”) (emphasis added); id. ¶ 49 (“[E]ntering into permanent modification with borrowers may delay a servicer’s ability to recover advances it has made to investors of the unpaid principal and interest payment of a non-performing loan.”) (emphasis added). Plaintiff also concedes in her opposition that Saxon was required to undertake certain conduct by virtue of its “delegated authority to act on behalf of its lenders,” Pl. Br. at 239—the touchstone of any agency relationship. In light of the text of the TPP and Plaintiff’s own allegations, Plaintiff’s claim that discovery is needed to determine “the existence and nature of the 8 See, e.g., Pl. Ex. C at 1 (defining the Lender as “LaSalle Bank National Association, as Trustee for Morgan Stanley Mortgage Loan Trust 2006-16AX”); id. at 4 (indicting that Saxon signed on behalf of the Lender as its “attorney-in-fact”). 9 The SPA shows that Saxon’s authority to modify mortgage loans under HAMP was limited as determined by delegating lenders. See Pl. Ex. A § 2.B. Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 18 of 20 PageID: 992 15 relationship between Saxon and the lender” rings hollow. Id.10 In the absence of any alleged facts that Saxon acted as anything but an agent on behalf of the Lender, Plaintiff’s breach of contract claim should be dismissed. See Network Commodities, LLC v. Golondrinas Trading Co., No. 11-3119, 2013 WL 1352234, at *6 (D.N.J. Apr. 1, 2013) (granting Rule 12(b)(6) motion to dismiss against a defendant who was “the agent for a disclosed principal [that] cannot be held personally liable on the contracts”). CONCLUSION For the foregoing reasons, and for those included in Saxon’s memorandum of law in support of its motion to dismiss, the First Amended Complaint should be dismissed with prejudice. 10 The two Pennsylvania-law cases Plaintiff cites, Klein v. Just Energy Group, No. 14-1050, 2016 U.S. Dist. LEXIS 84447 (W.D. Pa. June 29, 2016), and Castle Cheese, Inc. v. MS Produce, No. 04-078, 2008 U.S. Dist. LEXIS 71053 (W.D. Pa. Sept. 19, 2008), do not address whether discovery is needed to determine agency of a disclosed principal in a breach of contract case. Klein did not involve a contract claim at all, and the defendant in Castle Cheese never disclosed it was acting on behalf of a principal. Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 19 of 20 PageID: 993 16 Dated: December 5, 2016 Respectfully submitted, MORGAN, LEWIS & BOCKIUS LLP By: s/ Drew Cleary Jordan Drew Cleary Jordan 502 Carnegie Center Princeton, NJ 08540 Tel: (609) 919-6676 Fax: (609) 919-6701 -and- Jason R. Scherr (admitted pro hac vice) Patrick A. Harvey (admitted pro hac vice) 2020 K Street NW Washington, DC 20006 Tel: (202) 373-6000 Fax: (202) 373-6001 Attorneys for Defendant Saxon Mortgage Services, Inc. Case 2:15-cv-06062-JLL-JAD Document 47 Filed 12/05/16 Page 20 of 20 PageID: 994 Case 2:15-cv-06062-JLL-JAD Document 47-1 Filed 12/05/16 Page 1 of 2 PageID: 995 Case 2:15-cv-06062-JLL-JAD Document 47-1 Filed 12/05/16 Page 2 of 2 PageID: 996 EXHIBIT T Case 2:15-cv-06062-JLL-JAD Document 47-2 Filed 12/05/16 Page 1 of 4 PageID: 997 UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY In re: TAMMY RIZZOLO DANISE Debtor(s) Case No. 10-41224 CHAPTER 13 STANDING TRUSTEE’S FINAL REPORT AND ACCOUNT Marie-Ann Greenberg, Chapter 13 Trustee, submits the following Final Report and Account of the administration of the estate pursuant to 11 U.S.C. § 1302(b)(1). The trustee declares as follows: 1) The case was filed on 10/07/2010. 2) The plan was confirmed on 06/03/2011. 3) The plan was modified by order after confirmation pursuant to 11 U.S.C. § 1329 on NA . 4) The trustee filed action to remedy default by the debtor in performance under the plan on NA . 5) The case was completed on 12/03/2014. 6) Number of months from filing to last payment: 50. 7) Number of months case was pending: 53. 8) Total value of assets abandoned by court order: NA . 9) Total value of assets exempted: $5,100.00. 10) Amount of unsecured claims discharged without payment: $230,946.20. 11) All checks distributed by the trustee relating to this case have cleared the bank . UST Form 101-13-FR-S (9/1/2009) Case 10-41224-VFP Doc 58 Filed 03/10/15 Entered 03/10/15 07:57:21 Desc Page 1 of 3 Case 2: 5 cv-06062-JLL-JAD Document 47-2 Filed 12/05/16 Page 2 of 4 PageID: 998 Receipts: Total paid by or on behalf of the debtor $50,000.00 Less amount refunded to debtor $0.00 NET RECEIPTS: $50,000.00 Expenses of Administration: Attorney’s Fees Paid Through the Plan $1,000.00 Court Costs $0.00 Trustee Expenses & Compensation $2,857.66 Other $0.00 TOTAL EXPENSES OF ADMINISTRATION: $3,857.66 Attorney fees paid and disclosed by debtor: $2,500.00 Scheduled Creditors: Creditor Name Class Claim Scheduled Claim Asserted Claim Allowed Int. Paid Principal Paid Unsecured 6,223.87 180.97 0.00 6,223.87 6,223.87AMERICAN EXPRESS CENTURION B Unsecured 4,569.06 132.87 0.00 4,569.06 4,569.06AMERICAN INFOSOURCE LP Unsecured NA 0.00 0.00 0.00 NACHRYSLER FINANCIAL Unsecured NA 0.00 0.00 147,634.00 NACITIMORTGAGE Unsecured 22,912.29 666.30 0.00NA 22,912.29DCFS TRUST Unsecured 6,050.72 175.93 0.00 5,970.76 6,050.72DISCOVER BANK Unsecured 8,328.45 242.19 0.00 8,142.35 8,328.45ECAST SETTLEMENT CORPORATIO Unsecured 7,158.71 208.18 0.00 7,015.50 7,158.71ECAST SETTLEMENT CORPORATIO Unsecured NA 0.00 0.00 9,289.00 NAGMAC Secured NA 0.00 0.00 0.00 NALASALLE BANK NATIONAL ASSOC. Unsecured 11,893.70 345.87 0.00 11,702.17 11,893.70PORTFOLIO RECOVERY ASSOCIATE Unsecured 8,817.12 256.41 0.00 8,817.12 8,817.12TARGET NATIONAL BANK Unsecured NA 0.00 0.00 278.00 NATHE CHILDREN'S PLACE Secured 43,933.62 43,933.62 0.00 44,353.20 43,933.62US BANK NATIONAL ASSOCIATION UST Form 101-13-FR-S (9/1/2009) Case 10-41224-VFP Doc 58 Filed 03/10/15 Entered 03/10/15 07:57:21 Desc Page 2 of 3 Case 2: 5 cv-06062-JLL-JAD Document 47-2 Filed 12/05/16 Page 3 of 4 PageID: 999 Summary of Disbursements to Creditors: Secured Payments: Mortgage Ongoing Mortgage Arrearage Debt Secured by Vehicle All Other Secured TOTAL SECURED: Priority Unsecured Payments : Domestic Support Arrearage Domestic Support Ongoing All Other Priority TOTAL PRIORITY: GENERAL UNSECURED PAYMENTS: Claim Allowed $0.00 $43,933.62 $0.00 $0.00 $43,933.62 $0.00 $0.00 $0.00 $0.00 $75,953.92 Principal Paid $0.00 $43,933.62 $0.00 $0.00 $43,933.62 $0.00 $0.00 $0.00 $0.00 $2,208.72 Interest Paid $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Disbursements: Expenses of Administration $3,857.66 Disbursements to Creditors $46,142.34 TOTAL DISBURSEMENTS : $50,000.00 12) The trustee certifies that, pursuant to Federal Rule of Bankruptcy Procedure 5009, the estate has been fully administered, the foregoing summary is true and complete, and all administrative matters for which the trustee is responsible have been completed. The trustee requests a final decree be entered that discharges the trustee and grants such other relief as may be just and proper. Dated: 03/09/2015 STATEMENT: This Unified Form is associated with an open bankruptcy case, therefore, Paperwork Reduction Act exemption 5 C.F.R. § 1320.4(a)(2) applies. By: /s/ Marie-Ann Greenberg Trustee UST Form 101-13-FR-S (9/1/2009) Case 10-41224-VFP Doc 58 Filed 03/10/15 Entered 03/10/15 07:57:21 Desc Page 3 of 3 Case 2:15-cv-06062-JLL-JAD Document 47-2 Filed 12/05/16 Page 4 of 4 PageID: 1000 MORGAN, LEWIS & BOCKIUS LLP (A Pennsylvania Limited Liability Partnership) Drew Cleary Jordan 502 Carnegie Center Princeton, NJ 08540 Tel: (609) 919-6676 Fax: (609) 919-6701 Jason R. Scherr (admitted pro hac vice) Patrick A. Harvey (admitted pro hac vice) 2020 K Street NW Washington, DC 20006 Tel: (202) 373-6000 Fax: (202) 373-6001 Attorneys for Defendant Saxon Mortgage Services, Inc. IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY Tammy Rizzolo Danise, Plaintiff, v. Saxon Mortgage Services, Inc., Ocwen Loan Servicing, LLC, and John Does 1–10. Defendants. Case No: 2:15-cv-06062-JLL-JAD District Judge Jose L. Linares Magistrate Judge Joseph A. Dickson CERTIFICATE OF SERVICE CERTIFICATE OF SERVICE I, Drew Cleary Jordan, do hereby certify that on December 5, 2016 I caused a true and correct copy of the foregoing and all supporting papers to be served on Case 2:15-cv-06062-JLL-JAD Document 47-3 Filed 12/05/16 Page 1 of 2 PageID: 1001 counsel of record via CM/ECF. Dated: December 5, 2016 /s/ Drew Cleary Jordan Case 2:15-cv-06062-JLL-JAD Document 47-3 Filed 12/05/16 Page 2 of 2 PageID: 1002