Kareem v. PHH Mortg. Corp.
| Decision Date | 24 May 2021 |
| Docket Number | Civil No. 20-7846 (RBK/MJS) |
| Parties | HUSSAIN KAREEM., Plaintiff, v. PHH MORTGAGE CORPORATION, et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
Presently before the Court is Defendant's Motion to Dismiss (Doc. No. 10) the Complaint pursuant to Rule 12(b)(6) and Plaintiff's Motion to Amend the Complaint (Doc. No. 17) Pursuant to Rule 15(a)(2). For the reasons set forth below, Defendant's Motion to Dismiss is DENIED as moot and Plaintiff's Motion is GRANTED in part.
In what truly amounts to a kitchen sink approach, Plaintiff asserts at least ten claims against Defendants PHH Mortgage Corp and NewRez arising out of a notice of servicing transfer letter and a mortgage loan delinquency notice. Although difficult to follow, this Court has attempted to distill Plaintiff's allegations into a coherent narrative.
In July of 2006, Plaintiff Hussain Kareem, a resident of Georgia, executed an adjustable rate note with American Brokers Conduit in the amount of $159,200 in order to refinance his home. (Doc. No. 17-2, Second Am. Compl. at 2);2 (Doc. No. 10-2, Exhibit A). To secure this loan, Mr. Kareem executed a security deed for his property in favor of Mortgage Electronic Registration Systems, Inc. ("MERS"). (Doc. No. 10-2, Exhibit B). Over two years later, in September of 2008, Mr. Kareem attempted to rescind his loan under an alleged Truth in Lending Act rescission procedure and halted all payments on his mortgage until he was informed of the outcome. (Doc. No. 17-2, Second Am. Compl. at 2). He presumed his mortgage debt was cancelled by the rescission. (Id.). In October of 2014, MERS assigned the security deed to CitiBank. (Doc. No. 10-2, Exhibit C).
Ocwen Loan Servicing, LLC ("Ocwen") serviced Mr. Kareem's loan until its merger with PHH Mortgage Corporation ("PHH") on June 1, 2019. (See Doc. No. 17-3, Exhibit A). PHH is now the servicer of the loan. (Id.). On June 4, 2019, Mr. Kareem received a letter from PHH informing him of his new mortgage servicer:
the servicing of this mortgage has been transferred, effective 6/1/2019. This means that on or after this date, PHH will be collecting the mortgage payments. The transfer of servicing does not affect any term or condition of the mortgage other than terms directly related to the servicing of the account. Ocwen Loan Servicing, LLC ("Ocwen") was collecting the payments. Ocwen stopped accepting payments received after 5/31/2019. PHH Mortgage Services ("PHH") will collect the payments going forward. PHH started accepting payments received on 6/1/2019.
(Doc. No. 17-3, Exhibit A). Included with this letter was an addendum which restated the current status and terms of the loan. (Doc. No. 17-3, Exhibit B). It indicated that the escrow account balance at the time of servicing transfer was -$17,050.57, and that a monthly payment of $580.51 was due on July 1, 2019. (Id.).
Thereafter, Mr. Kareem submitted payments in the amount of $581.00 for the months of July, August, and September. (Doc. No. 17-3, Exhibit C, D, E, and F; Doc. No. 21, Exhibit G). In July of 2019, Mr. Kareem retained an attorney to advise him of his rights. (Doc. No. 21-1, Exhibit L). In August and September of 2019, PHH returned all payments to Mr. Kareem except for his July payment and informed him that his payments were "returned as [they were] insufficient to bring [his] account current." (Id. at Exhibit F and G); (Doc. No. 21, Exhibit H). At some point in late October or early November of 2019, Mr. Kareem also received a delinquency notice from Defendants. (See id. at Exhibit I). It indicated that he was delinquent on his mortgage loan by over 3000 days and needed to tender $108,243.69 in order to bring his account current. (Id.).
On November 6, 2019, Plaintiff received another letter from Defendants informing him again that his payments had been returned because they were insufficient to cure the default on the account and that his account "was assessed with Lender Placed Insurance by Ocwen." (Doc. No. 21, Exhibit H). This letter further provided that (Id.). Around this same time, Mr. Kareem also employed the use of a HUD counselor to research and advise him of his rights. (Id. at Exhibit M).
In February of 2020, Mr. Kareem was sent a letter informing him that PHH Mortgage had retained a law firm—Aldridge Pite, LLP—in connection with his loan. (Id. at Exhibit J). This same law firm sent another letter to Mr. Kareem, dated May 22, 2020, indicating that his mortgage loan debt was immediately due and payable in full. (Id.). It also indicated that aforeclosure sale for his property was scheduled to take place on July 7, 2020. (Id.). On May 27, 2020, Plaintiff sent a letter to Defendants, entitled "Qualified Written Request," claiming they erred by failing to accept his payments and credit them to his mortgage loan account. (Id. at Exhibit K). The letter included Plaintiff's name and loan account number. (Id.). Defendants eventually responded to Plaintiffs letter but allegedly failed to disclose the current owner of the mortgage.
On June 26, 2020, Plaintiff filed a complaint in this Court asserting claims against Defendant PHH Mortgage Corp for breach of contract, violation of the Fair Debt Collection Practices Act, violation of the Real Estate Settlement Procedures Act and Regulation X, and violations of the Georgia Residential Mortgage Act. (Doc. No. 1). On July 22, Plaintiff amended his complaint to add Defendant NewRez LLC. (Doc. No. 2). The amended complaint was not served on Defendants until July 27, 2020. (Doc. No. 5). Less than a month later, Defendants moved for an extension of time to respond to the amended complaint, which was granted on August 24, 2020. (Doc. No. 8, 9).
On September 30, 2020, Defendants moved to dismiss the amended complaint. (Doc. No. 10). In response, Plaintiff moved for an extension of time to respond to Defendants' motion to dismiss on three separate occasions. (Doc. No. 13, 15, 16). Finally, on December 1, 2020, Plaintiff filed a motion for leave to file a second amended complaint in response to the motion to dismiss. (Doc. No. 17). Defendants' oppose Plaintiff's motion for leave to amend as being futile. (Doc. No. 20).
A. Motion to Amend the Complaint Pursuant to Rule 15(a)(2) Motions to amend a complaint are governed by Federal Rule of Civil Procedure 15(a). That rule provides that once a party has amended its pleading once as a matter of course, as Plaintiff has done here, "a party may amend its pleadings only with the opposing party's written consent or the court's leave." Fed. R. Civ. P. 15(a)(2). Although "[t]he decision to grant or deny leave to amend under Rule 15(a) is 'committed to the sound discretion of the court,'" Arab African Int'l Bank v. Epstein, 10 F.3d 168, 174 (3d Cir. 1993), the federal rules mandate that the Court "should freely give leave when justice so requires." Fed. R. Civ. P. 15(a)(2).
"An amendment must be permitted in the absence of undue delay, bad faith, dilatory motive, unfair prejudice, or futility of amendment." Van Duyne v. Stockton University, No. 1:19-cv-21091-NLH-KMW, 2020 WL 6144769, at *2 (D.N.J. Oct. 20, 2020) (quoting Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002)). The futility of a proposed amended pleading is evaluated under the same standard of legal sufficiency as a motion to dismiss under Rule 12(b)(6). Travelers Indent. Co. v. Dammann & Co., 594 F.3d 238, 243 (3d Cir. 2010). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.
However, "[g]iven the liberal standard for the amendment of pleadings, 'courts place a heavy burden on opponents who wish to declare a proposed amendment futile.'" Brainbuilders, LLC v. Optum, Inc., No. 18-638, 2019 WL 2315389, at *5 (quoting High 5 Games, LLC v. Marks, No. 13-7161, 2017 WL 349375, at *5 (D.N.J. Jan. 24, 2017)).Therefore, "[i]f a proposed amendment is not clearly futile, then denial of leave to amend is improper." High 5 Games, LLC, 2017 WL 349375, at *5 (emphasis in original) (quoting Harrison Beverage Co. v. Dribeck Importers, Inc., 133 F.R.D. 463, 468 (D.N.J. 1990)); see also 6 Wright, Miller & Kane, Federal Practice and Procedure § 1487 (3d ed. 2012).
There are two pending motions before this Court: a motion to dismiss the complaint under Rule 12(b)(6), and in response, a motion to amend the Complaint under Rule 15(a)(2). Since this Court's determination regarding Plaintiff's motion to amend may well resolve the pending motion to dismiss as well, the Court will first address whether Plaintiff shall be granted leave to file his proposed amended complaint. Marina District Development Co., v. AC Ocean Walk, LLC., No. 120CV15719NLHKMW, 2021 WL 1526552, at *3 (D.N.J. Apr. 19, 2021) ().
Plaintiff's proposed second amended complaint is substantially similar to his first amended complaint and asserts claims for breach of contract, violation of the Fair Debt Collection...
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