Fed. Nat'l Mortg. Ass'n v. Dubois
| Decision Date | 30 October 2018 |
| Docket Number | Civil Action No. 15-3787 (JMV) (MF) |
| Parties | FEDERAL NATIONAL MORTGAGE ASSOCIATION, a federally chartered banking corporation, & MTGLQ INVESTORS, L.P., Plaintiffs, v. NICHOLAS J. DUBOIS & MRS. NICHOLAS J. DUBOIS, his wife, Defendants. NICHOLAS J. DUBOIS, Third-Party Plaintiff, v. FEDERAL HOUSING FINANCE AGENCY, NEW PENN FINANCIAL, LLC d/b/a SHELLPOINT MORTGAGE SERVICES; XYZ Title Co. (fictitious); XYZ CORPS. 2-10 (fictitious); JOHN/JANE DOES 1-10 (fictitious), Third-Party Defendants. |
| Court | U.S. District Court — District of New Jersey |
Not for Publication
Currently pending are two motions to dismiss Defendant Nicholas DuBois' ("DuBois") Counterclaim and Third-Party Complaint. The first was filed by MTGLQ Investors, L.P. ("MTGLQ") and Shellpoint Mortgage Services. ("Shellpoint"), D.E. 85; and the second was brought by Federal National Mortgage Association ("Fannie Mae") and the Federal Housing Finance Agency ("FHFA"), D.E. 87. Shortly before filing their Motion to Dismiss, Fannie Mae and the FHFA filed a motion for leave to file an overlength brief nunc pro tunc. D.E. 86. DuBois asked that the motions be denied and filed a cross-motion to, among other things, strike the Amended Complaint and enter judgment on the pleadings. D.E. 90. The Court reviewed the parties' submissions,1 and decided the motions without oral argument pursuant to Fed. R. Civ. P. 78(b) and L. Civ. R. 78.1(b). For the reasons set forth below, Fannie Mae and the FHFA's motion to file an overlength brief is GRANTED, both motions to dismiss are GRANTED, and DuBois' cross-motion is DENIED.
The dispute stems from DuBois' execution of a note and mortgage in 2001 (the "Mortgage"), financed by non-party HomeSide Lending, Inc. HomeSide was then acquired by nonparty Washington Mutual Bank, N.A. ("WaMu") the following year.2 TPC ¶ 11. In November of 2002, Fannie Mae filed a foreclosure action against DuBois in the Superior Court of New Jersey. Fannie Mae allegedly undertook this action while not yet being the assignee of the Mortgage. Id. ¶ 13. However, on January 30, 2003, WaMu assigned the Mortgage to Defendant Fannie Mae but continued to service the transaction. Id. ¶ 12.
DuBois removed the foreclosure action to the District of New Jersey on February 12, 2003,3 and asserted counterclaims against Fannie Mae and third-party claims against WaMu and Fannie Mae's former attorneys, Shapiro & Diaz, LLP ("S&D"). Id. ¶ 15. After the case was removed, Fannie Mae allegedly dismissed its claims against DuBois, leaving only DuBois' counterclaims and the thirty-party claims against WaMu and S&D. Id. ¶ 16.
In 2003, WaMu filed another foreclosure action in New Jersey state court. DuBois' counterclaims and third-party claims from the first foreclosure matter were still pending in this Court, the United States District Court for the District of New Jersey. Id. ¶ 17. The parties then reached a settlement agreement which was memorialized in an August 9, 2004 Final Settlement Order ("Settlement"). Id. ¶¶ 21-27, Exhibit B to TPC. DuBois alleges that he made the required payments under the Settlement but that the payments were not processed or deposited by non-party FMLLC4 or WaMu—instead, they were "held to create a false appearance of default." Id. ¶¶ 28-29.
DuBois claims that Fannie Mae and WaMu failed to comply with the Settlement in a number of ways, including by not dismissing the state action with prejudice and by inappropriately applying one of DuBois' payments to back fees and penalties. Id. ¶¶ 30-33. DuBois alleges that Fannie Mae, through its counsel, told DuBois not to make his mortgage payments in October and November 2004. DuBois states that he did make the payments, but that instead of properly crediting him, WaMu "converted" the funds in violation of the Settlement. Id. ¶ 34-40. Later thatyear, FMLLC proposed a loan modification agreement which allegedly displayed incorrect numbers as to the unpaid balance of the Mortgage and the escrow account. Id. ¶ 41. In February 2005, FMLLC "demanded" an almost 40% increase in DuBois' monthly escrow payment. FMLLC stated that WaMu and Fannie Mae would "delete all fees and so-called 'recoverable balance'" on the [M]ortgage, and clear DuBois' derogatory credit reports if DuBois executed the proposed loan modification. Id. ¶¶ 51-52. DuBois signed the modification agreement, effective March 21, 2005. Id. ¶ 53.
DuBois, however, alleges that WaMu and Fannie Mae violated the modification agreement in several ways. Id. ¶ 58. For example, WaMu never "zeroed out" DuBois' late fees, penalties, and recoverable balance. Id. In June 2005, WaMu and Fannie Mae applied all of DuBois' payments to "arrears." Id. ¶ 60. In July 2005, DuBois attempted to pay $1,836.92, but WaMu refused to accept it, claiming the correct amount was $2,455.72. Id. ¶ 61. On August 5, 2005, WaMu mailed DuBois a notice of default. Id. ¶ 65. Shortly after, WaMu sent DuBois a notice of intention to accelerate and foreclose on August 19, 2005. Id. ¶ 66.
In October of 2005, WaMu returned DuBois' payments for July, August, and September, and informed DuBois that he needed to replace the checks because WaMu could not "negotiate" checks made payable to FMLLC's trust account. Id. ¶ 71. DuBois alleges that WaMu's return of the checks was part of a fraud by WaMu and Fannie Mae, whose goal was to "double dip" by "capitalizing interest and disbursements without crediting" his payments, and to inflate alleged "arrears" on the account. Id. ¶¶ 72-73. DuBois refused to send new checks and sent the returned checks back to FMLLC. Id. ¶ 74. FMLLC attempted to mail the checks back to DuBois again, but DuBois' counsel at the time refused to accept them. Id. ¶ 77. By November 2005, DuBois alleges that his credit report displayed that he was two years behind in his mortgage payments,despite making the correct payments under the Settlement and the 2005 modification agreement. Id. ¶ 82. As a result, DuBois stopped making mortgage payments. Id. ¶ 83.
In December 2005, DuBois was contacted by WaMu's new counsel, Norris, McLaughlin & Marcus, PA ("NMM"), in an attempt to settle the matter. In March 2006, NMM offered to waive certain late fees in exchange for a payment of $15,621.90. Id. ¶¶ 86, 90. DuBois refused, and attempted to pay his own "T&I" to the "municipal tax authority and insurance carrier," both of which were rejected. Id. ¶¶ 94-95. DuBois also informed NMM that he was lawfully excused from paying his mortgage because of WaMu and Fannie Mae's defaults. Id. ¶ 92.
On September 25, 2008, the Federal Deposit Insurance Corporation ("FDIC") was appointed as the receiver for WaMu. The FDIC sold substantially all of WaMu's assets to JP Morgan Chase Bank, NA ("JPMCB"). Id. ¶ 99. On September 26, 2008, JPMCB began to service DuBois' account, still under the name WaMu. Id. ¶ 100. On April 9, 2009, DuBois filed a proof of claim, pursuant to 12 U.S.C. § 1821(d), against the receivership. Id. ¶ 101-102. The FDIC denied DuBois' claim on September 18, 2009. Id. ¶ 103.
DuBois then filed a lawsuit in the United States District Court for the District of Columbia on November 19, 2009, naming WaMu; JPMCB; Chase Home Finance, LLC; Fannie Mae; the FDIC; the FHFA; FMLLC; and Tait O. Norton as defendants. DuBois also asserted twenty-two claims for relief (the "D.C. Litigation"). Compl., D.E. 1, DuBois v. Wash. Mut. Bank, No. 09-2176 (D.D.C. Nov. 17, 2009). DuBois voluntarily dismissed the FHFA from the D.C. action "pursuant to a tolling agreement." ATPC ¶ 30. The remaining defendants filed motions to dismiss, and the District Court dismissed the complaint in its entirety. TPC ¶ 105, see also DuBois v. Wash. Mut. Bank, No. 09-2176, 2010 WL 3463368, at *7 (D.D.C. Sept. 3, 2010). The court determined that DuBois' common law, New Jersey Consumer Fraud Act ("NJCFA"), Real Estate SettlementProcedures Act ("RESPA"), and Fair Credit Reporting Act ("FCRA") claims were time-barred; his New Jersey Fair Credit Reporting Act ("NJFCRA") claim was preempted; he had no cognizable claim under the Fair Debt Collection Practices Act ("FDCPA"); and that DuBois failed to state a claim for his Federal Deposit Insurance ("FDI") Act claim. See Sept. 2, 2010 Opinion, D.E. 87-3. DuBois appealed, and the United States Court of Appeals for the District of Columbia Circuit affirmed the district court's dismissal. TPC at ¶ 105; see also DuBois v. Wash. Mut. Bank, 492 F. App'x 117 (D.C. Cir. 2012).
In August 2013, Fannie Mae assigned the note and mortgage to JPMCB. ATPC ¶¶ 35-36. JPMBC executed a complaint for foreclosure against DuBois on February 6, 2014. Id. ¶ 37. DuBois asserts that he was not served with the complaint and was not aware of the foreclosure action. As a result, DuBois argues, default and a default judgment were wrongly entered against him. Id. ¶ 37. In December 2014, Fannie Mae "re-acquired" the note and mortgage. Id. at ¶ 38. DuBois alleges that these transfers were contemplated by Fannie Mae in advance, to avoid statute of limitations and claim preclusion arguments. Id. ¶ 35.
On April 14, 2016, the FHFA announced its principal reduction modification program (the "Program"), which was a one-time offering for borrowers that met specific eligibility criteria and whose loans were owned by the FHFA. Id. ¶ 40. DuBois claims his mortgage qualified for the Program, but the FHFA and Fannie Mae did not inform him that he was eligible, nor did MTGLQ or Shellpoint. Id. ¶¶ 41-43. Instead, on February 10, 2016, Fannie Mae sold DuBois' mortgage to MTGLQ, along with $418 million worth of "nonperforming loans." Id. ¶ 45. Then, on February 19, 2016, Fannie Mae offered a modification and settlement to DuBois via email. DuBois did not receive notice of this proposed settlement until March 4, 2016. Id. ¶ 44. DuBois alleges that thetiming of the settlement offer was purposeful and done to preclude DuBois from participating in the Program. Id. ¶ 47.
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