Barrows v. Chase Manhattan Mortg. Corp., Civil Action No. 05-3880(NLH).

Decision Date08 December 2006
Docket NumberCivil Action No. 05-3880(NLH).
Citation465 F.Supp.2d 347
PartiesWendy BARROWS, Plaintiff, v. CHASE MANHATTAN MORTGAGE CORPORATION, et al., Defendants.
CourtU.S. District Court — District of New Jersey

Donald M. Doherty, Esquire, Sander D. Friedman, Esquire, Friedman Doherty, LLC, West Berlin, NJ, for Plaintiff.

Marguerite Mary Schaffer, Esquire, Shain, Schaffer & Rafanello, PC, Bernardsville, NJ, for Defendants, Chase Manhattan Mortgage Corp., Chase Home Finance, LLC, and Mortgage Electronic Registration Systems, Inc.

Lance J. Kalik, Esquire, Riker Danzig Scherer Hyland & Perretti, LLP, Morristown, NJ, for Defendants, Hubschman &amp Roman, PC and John J. Roman, Jr., Esquire.

OPINION

HILLMAN, District Judge.

This matter has come before the Court; on Plaintiffs motion to remand and Defendants' motions to dismiss Plaintiffs Complaint pursuant to Federal Civil Procedure Rule 12(b)(1), or, in the alternative, Rule 12(b)(6). For the reasons expressed below, Defendants' motions will be granted in part and denied in part, and Plaintiffs motion will be denied.

I. BACKGROUND AND PROCEDUAL HISTORY

Plaintiff, Wendy Barrows, fell behind on her mortgage in late 2004, which ultimately resulted in Defendant Mortgage Electronic Registration Systems, Inc. ("MERS") filing a foreclosure action against her on March 29, 2005 in the Superior Court of New Jersey, Chancery Division, Burlington County. On June 28, 2005, Plaintiff then filed "a class action companion suit" in the same court. Defendant Chase Manhattan Mortgage Corporation removed Plaintiffs class action complaint to this Court on August 3, 2005. The foreclosure action remained pending in the New Jersey Superior Court until August 24, 2006, when the foreclosure complaint was dismissed after Plaintiff sold her home and satisfied her mortgage.

Plaintiff's class action complaint seeks to certify three classes of plaintiffs for claims arising out of improper collection practices of Defendants MERS, Chase Manhattan Mortgage Corp., Chase Home Finance, LLC (collectively referred to as "Chase"), Hubschman & Roman, PC, and John J. Roman, Jr., Esquire (collectively referred to as "Hubschman").1 Specifically, Plaintiff claims that when Defendants instituted foreclosure proceedings against her and other similarly-situated individuals, they imposed charges for legal fees and costs in excess of what is permitted by law. Against the MERS and Chase Defendants, Plaintiff has asserted claims for "Accounting and Refund" (Count I), consumer fraud pursuant to New Jersey Statute Ann. 56:8-1 et seq. ("Consumer Fraud Act") (Count II), violation of the Truthin-Consumer Contract, Notice and Warranty Act, New Jersey Statute Ann. 56:12-14 et seq. (Count III), breach of implied covenant of good faith and fair dealing under New Jersey state law (Count IV), and breach of implied statutory cause of action under the Fair Foreclosure Act, New Jersey Statute Ann. 2A:50-53 (Count V). Against the Hubschman Defendants, Plaintiff has asserted claims for fraud under New Jersey state law (Count VI), negligent misrepresentation under state law (Count VII), accounting and refund (Count VIII), consumer fraud under the Consumer Fraud Act (Count IX), violation of the Truth-in-Consumer Contract, Notice and Warranty Act (Count X), tortious interference with contract (Count XI), breach of implied statutory cause of action under the Fair Foreclosure Act (Count XII), and violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1962, et seq. (Count XIII). Against all Defendants, Plaintiff has asserted claims for civil offenses involving organized crime and organized crime activities (Racketeering) pursuant to New Jersey Statute Ann. 2C:41 (Count XIV). Plaintiff has also requested injunctive relief (Count XV). Removal was pursuant to 28 U.S.C. § 1331 based on Plaintiffs federal FDCPA claim against the Hubschman Defendants.

Pending before the Court are Plaintiffs motion to remand pursuant to 28 U.S.C. § 1441(c), the Chase, MERS and Hubschman Defendants' motions to dismiss pursuant to Federal Civil Procedure Rule 12(b)(1), and the MERS and Hubschman Defendants' alternative relief pursuant to Rule 12(b)(6).2

II. DEFENDANTS' MOTIONS TO DISMISS

The Defendants' motions to dismiss pursuant to Federal Civil Procedure Rule 12(b)(1) must be addressed first because Defendants are contending that Plaintiff lacks standing to assert her claims, and disputes over constitutional standing for purposes of Article III, Section 2 of the United States Constitution must be addressed before proceeding to the merits of a plaintiffs claims. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 93-102, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).

Defendants contend that Plaintiff lacks standing to pursue her claims because she has not suffered an "injury in fact" as required by the "case and controversy" requirement of Article III. Defendants argue that because Plaintiff never paid the attorneys' fees and costs that she claims are in excess of what is permitted by law, she has not suffered an injury in fact. Without any injury, Defendants argue that all of Plaintiffs claims must be dismissed.

In order to establish an injury in fact, a plaintiff must have suffered an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (citations omitted). Additionally, there must be a causal connection between the injury and the conduct complained of; that is, the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court. Id. (citations omitted). It must also be "likely," as opposed to merely "speculative," that the injury will be redressed by a favorable decision. Id, at 561, 112 S.Ct. 2130. (citations omitted).

These general principles of standing are applicable to all of Plaintiffs claims, but her statutory claims may contain particular standing requirements. For each claim asserted by Plaintiff, it must be determined whether she has standing to assert the claim, and then, if so, whether the claim survives the Defendants' Rule 12(b)(6) motions to dismiss. Each claim will be addressed in turn, starting with Plaintiffs FDCPA claim against the Hubschman Defendants because that claim is the basis for jurisdiction in this Court and the viability of that claim directly relates to the remand issue.

A. FDCPA (Count XIII against Hubschman Defendants)

In relevant part, the FDCPA provides that a "debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt." 15 U.S.C. § 1692f. It is a violation of the Act to collect "any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law." Id. If a debt collector fails to comply with this provision, a plaintiff may receive actual damages or "such additional damages as the court may allow, but not exceeding $1,000."3 Id. § 1692k (a)(2)(A).

Plaintiff alleges in her Complaint that the Hubschman Defendants violated the FDCPA because Defendants, as debt collectors, demanded collection of sums in excess of what is permitted by law when it sent Plaintiff a letter containing a "breakdown of the monies required in order to reinstate" her loan, including a charge for "Legal Fees and Costs due lender" in the amount of $2,500. (PL's Ex. 6, Def.'s Ex. A.) Defendants argue that Plaintiffs claim under the FDCPA must be dismissed because she lacks standing because she never paid any fees. In the alternative, Defendants argue that Plaintiffs claim should be dismissed for her failure to state a claim because they are not debt collectors and their request was lawful.

Despite the fact that Plaintiff never paid the attorneys' fees and costs requested by Defendants, Plaintiff has suffered an injury in fact for the purposes of standing. The FDCPA prohibits "unfair or unconscionable means to collect or attempt to collect any debt" not permitted by law. Id. at § 1692f (emphasis added). Thus, a debt collector can violate the FDCPA even if he does not actually receive the illegal debt he tried to collect. Additionally, a plaintiff may be entitled to statutory damages for a debt collector's violation even if she has not suffered any actual damages. See id. § 1692k(a)(2)(A). These provisions of the FDCPA defeat Defendants' argument that Plaintiff needed to have paid the attorneys' fees and costs in order to have standing to bring her FDCPA claim against them. See Robey v. Shapiro, Marianos & Cejda, L.L.C, 434 F.3d 1208, 1212 (10th Cir.2006) (holding that the plaintiff satisfied the "injury in fact" requirement of constitutional standing, and that the plaintiff had been injured under the terms of the FDCPA and could seek legal redress of his claim under the Act, because he claimed that the defendant law firm violated the FDCPA by attempting to collect attorneys' fees that were not permitted under state law); Miller v. Wolpoff & Abramson, L.L.P., 321 F.3d 292, 307 (2d Cir.2003) (holding that the fact that the plaintiff did not ever pay any attorneys' fees does not necessarily suggest that he was not injured for purposes of his FDCPA claim, if he can show that the law firm attempted to collect money in violation of the FDCPA); Keele v. Wexler, 149 F.3d 589, 594 (7th Cir.1998) (same); Baker v. G.C Servs. Corp., 677 F.2d 775, 777 (9th Cir.1982) (same).

Now that it has been established that Plaintiff has standing to assert her FDCPA claim, Defendants' arguments regarding why Plaintiffs claim fails must be addressed. Defendants make five arguments: 1) Defendants' request for attorneys' fees was...

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