IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

PATRICK COONEY & CARLEEN

COONEY,

 Plaintiffs,

v.

BAC HOME LOANS SERVICING, LP &

MORTGAGE ELECTRONIC

REGISTRATION SYSTEMS, INC.,

 Defendants.

HON. JEROME B. SIMANDLE

Civil No. 10-4066 (JBS/JS)

OPINION

APPEARANCES:

Lewis G. Adler, Esq.

LAW OFFICE OF LEWIS ADLER 

26 Newton Avenue 

Woodbury, NJ 08096 

Counsel for Plaintiffs

Mariah E. Murphy, Esq. 

BALLARD SPAHR LLP 

210 Lake Drive East 

Suite 200 

Cherry Hill, NJ 08002-1163

Counsel for Defendants 

SIMANDLE, District Judge:

I. INTRODUCTION

 This putative class action involving allegedly improper

fees charged for mortgage reinstatement is before the Court on

two motions of the Defendants to dismiss the Complaint pursuant

to Rule 12(b)(6) of the Federal Rules of Civil Procedure. 

[Docket Items 6 & 7.] The principal issue is whether the

Complaint alleges a basis upon which any of the identified fees

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is improper. Because it does not, as explained below, the

Complaint will be dismissed.

II. BACKGROUND

Like many American families in recent years, Plaintiffs

Patrick and Carleen Cooney fell behind on their mortgage

payments. (Compl. ¶ 2.) Under New Jersey law, homeowners must

be given the opportunity to reinstate their delinquent mortgage

before a foreclosure order is entered. See N.J. Stat. Ann. §

2A:50-57(b)(3). On January 22, 2010, Defendant BAC Home Loans

Servicing, LP sent Plaintiffs a reinstatement quote letter at

Plaintiffs' request, which stated that the Plaintiffs owed an

estimated $13,136.62 in order to bring their loan current if they

paid in full on January 25, 2010. (Id. ¶ 14; Compl. Ex. A.) The

letter itemized various fees and past due payments, including

$1,050 in legal fees and costs through January 22, 2010, and $578

in anticipated additional legal fees and costs through January

25, 2010. (Id.) The letter gave Plaintiffs explicit notice that

the $578 in additional fees was based on anticipated steps that

may occur in the foreclosure process before January 25, 2010. 

(Id.)

Plaintiffs eventually paid $13,136.62 to reinstate their

loan, including $1,638 in attorneys' fees and costs ($1,050 +

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$578). (Compl. ¶¶ 17-18; Ex. B.) Plaintiffs allege that the 1

mortgage and note were recorded in the name of Defendant Mortgage

Electronic Registration Systems, Inc. (MERS) and that the

reinstatement process was performed by BAC for MERS because

"[t]he loan was serviced by BAC for MERS." (Compl. ¶¶ 10, 12.) 

The Complaint gets one critical and publicly available fact

wrong: it alleges that no foreclosure complaint was filed by BAC

— thus calling into question what legal fees could have been

properly charged to Plaintiffs — but the public record shows that

on January 14, 2010, Defendant BAC Home Loan Servicing filed a

foreclosure action, which Plaintiffs now do not dispute. See BAC

Home Loan Servicing LP v. Patrick and Carleen Cooney, No. L-1080-

10, (N.J. Sup. Ct. Chancery D). When Plaintiffs paid their 2

 Plaintiffs paid with a bank check issued on February 1, 1

2010, making the payment at least 6 days after the reinstatement

quote's estimated payment as of January 25, 2010. (Id.)

 This action, filed by attorney Lewis Adler, is one of a 2

several actions he has filed on behalf of New Jersey homeowners

seeking class action status to challenge an allegedly widespread

practice of charging improper fees. In each of these nearlyidentical actions, Adler drafts pleadings containing few or no

allegations explaining why the fees are improper, contradicts the

publicly available facts, and in some cases admits to not even

knowing precisely what fees were charged even though he declares

them improper. See Rivera v. Washington Mut. Bank, 637 F. Supp.

2d 256, 258 (D.N.J. 2009); Martino v. Everhome Mortg., 639 F.

Supp. 2d 484, 486 (D.N.J. 2009); Perkins v. Washington Mut., FSB,

655 F. Supp. 2d 463, 465 (D.N.J. 2009); Skypala v. Mortgage Elec.

Registration Sys., Inc., 655 F. Supp. 2d 451, 460 (D.N.J. 2009);

Ogbin v. Citifinancial Mortg. Co., Inc., Slip Copy, 2009 WL

4250036 (D.N.J. Nov. 19, 2009); Coleman v. Chase Home Finance,

LLC, Civil No. 08-2215, 2009 WL 3806417 (D.N.J. Nov. 10, 2009). 

Although each of these actions has been dismissed, the majority

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reinstatement fees, BAC dismissed the foreclosure action. 

The Complaint brings eight claims for relief. Count I is a

breach of contract claim, in which Plaintiffs argue that BAC and

MERS breached an unspecified part of the mortgage agreement

because the reinstatement letter charged fees not due and owing. 

Count II is a claim that charging these fees breached the duty of

good faith and fair dealing. Count III claims that the Fair

Foreclosure Act, N.J. Stat. Ann. § 2A:50-57(b)(3) prohibits the

charging of these fees and costs to the extent they exceed that

allowed by statute and court rules, which is either directly

actionable or an unconscionable business practice in violation of

New Jersey's Consumer Fraud Act, N.J. Stat. Ann. § 56:8-2. Count

IV claims that the costs and fees were in excess of the amount

allowed pursuant to New Jersey Court Rule 4:42-9(a)(4) and 4:42-

10(a). This Count also includes a paragraph stating that this

violation, if not directly actionable, is actionable under the

Fair Foreclosure Act or the Consumer Fraud Act. Count V contends

that the fees and costs were in excess of what is allowed under

provisions of three state statutes, N.J. Stat. Ann. §§ 22A:2-10,

22A:2-8, and 2A:15-13, either directly providing for a claim or

substantiating a claim under the Consumer Fraud Act. Count VI

based on deficiencies common to them all, Mr. Adler continues to

file nearly-identical actions in the apparent hope that each new

Judge will see the matter differently. The Court will, of

course, consider this Complaint on its own merits, but the course

of conduct is relevant as explained below. 

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brings a claim under the Consumer Fraud Act based on the

allegations in the other counts. Count VII brings a claim under

the Truth-in-Consumer Contract, Warranty and Notice Act, N.J.

Stat. Ann. § 56:12-1 alleging that including excessive fees in

the reinstatement letter violates the Act. And, finally, Count

VIII brings a claim under the Uniform Commercial Code for

providing an inaccurate statement of account in violate of N.J.

Stat. Ann. § 12A:9-210.

BAC brings a motion to dismiss, contending that it was

permitted by the mortgage contract and applicable law to charge

for legal fees and costs, and that, to the extent Plaintiffs

intended to challenge the propriety of particular constituent

parts of the "legal costs," these claims should be dismissed as

too vaguely pleaded to provide adequate notice. MERS joins this

motion and separately moves to dismiss contending that no

actionable conduct has been alleged with respect to MERS.3

III. DISCUSSION

A. Standard of Review

In order to give Defendant fair notice, and to permit early

dismissal if the complained-of conduct does not provide adequate

 Because the Court will dismiss the Complaint for failure 3

to state a claim based on the reasons provided in BAC's motion,

the Court need not yet reach the question of whether the

Complaint's allegations regarding MERS are sufficient to

implicate it as the principal whose agent, BAC, allegedly

committed the wrongful conduct at issue in this case.

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grounds for the cause of action alleged, a complaint must allege,

in more than legal boilerplate, those facts about the conduct of

each defendant giving rise to liability. Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 555 (2007); Fed. R. Civ. P. 11(b)(3). 

These factual allegations must present a plausible basis for

relief (i.e., something more than the mere possibility of legal

misconduct). See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1951 (2009).

In its review of a motion to dismiss pursuant to Rule

12(b)(6), Fed. R. Civ. P., the Court must "accept all factual

allegations as true and construe the complaint in the light most

favorable to the plaintiff." Phillips v. County of Allegheny,

515 F.3d 224, 231 (3d Cir. 2008) (quoting Pinker v. Roche

Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)). 

The Third Circuit Court of Appeals instructs district courts

to conduct a two-part analysis when presented with a motion to

dismiss for failure to state a claim upon which relief may be

granted. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-211 (3d

Cir. 2009) (citations omitted). The analysis should be conducted

as follows:

(1) the Court should separate the factual and

legal elements of a claim, and the Court must

accept all of the complaint's well-pleaded

facts as true, but may disregard any legal

conclusions; and (2) the Court must then

determine whether the facts alleged in the

complaint are sufficient to show that the

plaintiff has a plausible claim for relief, so

the complaint must contain allegations beyond

plaintiff's entitlement to relief. A

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plaintiff shows entitlement by using the facts

in his complaint. 

Id.

B. Analysis

Plaintiffs seek to invoke Rule 56(d), Fed. R. Civ. P., to

defer consideration of this motion until they conduct discovery.4

However, this rule applies to summary judgment, in order to give

a plaintiff the opportunity to adequately conduct discovery to

respond to a defendant's evidence. See Rule 56(d), Fed. R. Civ.

P. It does not apply to a motion to dismiss, because it is the 5

plaintiff's burden to plead a plausible basis for relief before

discovery.

In addition to the obvious inapplicability of Rule 56(d),

the basis for the request reveals how flawed this Complaint is. 

Plaintiffs argue that the motion to dismiss is premature because

they have not yet learned through discovery what fees they were

charged. (Pls.' Br. 3.) This is tantamount to an admission that

their Complaint should be dismissed, because they admit that

 Rule 56(d) superseded old Rule 56(f) by amendment 4

effective December 1, 2010.

 The Rule states: "If a nonmovant shows by affidavit or 5

declaration that, for specified reasons, it cannot present facts

essential to justify its opposition, the court may: (1) defer

considering the motion or deny it; (2) allow time to obtain

affidavits or declarations or to take discovery; or (3) issue any

other appropriate order." Rule 56(d), Fed. R. Civ. P.

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their allegations, which are that these fees were improper, are

without sufficient basis in known facts.

Indeed, the Complaint appears to be little more than a

generic document with a handful of allegations pasted into it

that may or may not be applicable to this specific case. The

Complaint contains numerous instances of the phrase "if

applicable" after an allegation that plainly does not apply, or

the language "including but not limited to." (E.g., Compl. ¶

20a.)6

As explained below, none of the allegations presently

pleaded in the Complaint provides a plausible basis for relief. 

1. Breach of Contract 

The contract, which is relied upon and integral to the

Complaint, empowers BAC to collect "foreclosure costs and

reasonable and customary attorney's fees and expenses properly

associated with the foreclosure proceeding" in the event of

resinstatement. (Murphy Decl. Ex. C ¶ 10.) Count I identifies

no part of the mortgage that is breached. The Count could

therefore be dismissed on this basis alone. See Skypala, 655 F.

Supp. 2d at 460 (dismissing breach of contract claim because

 The Complaint has a separate section of class 6

allegations. The generic allegations described here are

contained in the section nominally involving the named

Plaintiffs' particular allegations.

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"Plaintiff does not point to any provision of the contract

'specifically'"). Furthermore, the Complaint does not even

identify the allegedly breaching fees with enough specificity for

the Court (or Defendants) to assess whether the alleged breach

states a claim on its own review of the contract. The only

specific argument the Court can ascertain is that BAC charged for

fees not actually incurred, but there is no factual allegation

that the $578 in anticipated additional legal fees and costs

through January 25, 2010 was not actually incurred as of that

date. This claim will therefore be dismissed.

2. Derivative claims

Claims II, III, VI, VII, and VIII are not standalone claims

as the laws cited provide no substantive standard for assessing

the propriety of any fees. Count II does not contend that the

law of good faith and fair dealing itself provides a basis for

assessing when a fee is improper. Under the law cited in Count

III, costs and attorneys' fees required for reinstatement "shall

not exceed the amount permitted under the Rules Governing the

Courts of the State of New Jersey." Id. Count VI is a Consumer

Fraud Act claim assuming the charges are unlawful. Count VII

brings a claim under the Truth-in-Consumer Contract, Warranty and

Notice Act, N.J. Stat. Ann. § 56:12-1 based on the assumption

that the charges are improper. And Count VIII assumes that the

accounting of unpaid obligations was inacccurate. Thus, whether

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the Complaint states a claim or not rests on whether the

Complaint adequately alleges that these fees violate the only

substantive standards laid out in the Complaint: Counts IV and

V, which are now examined. 

3. New Jersey Court Rules

Count IV claims that the costs and fees were in excess of

the amount allowed pursuant to New Jersey Court Rule 4:42-9(a)(4)

and 4:42-10(a). New Jersey Court Rule 4:42-9(a)(4) explains how

to calculate the costs to be taxed in a foreclosure action.7

Rule 4:42-10(a) provides that the court or clerk may tax as part

of the taxable costs all legal fees and reasonable charges

necessarily incurred for title searches. 

Although these Rules do not apply by their own terms since

they limit the taxed costs at final judgment in a foreclosure

action, by operation of the Fair Foreclosure Act, the Rules

provide a cap on the amount of court costs and attorneys fees

that a mortgagee may charge for reinstatement. See N.J. Stat.

Ann. § 2A:50-57(b)(3) (permitting "costs, if any, and attorneys'

fees in an amount which shall not exceed the amount permitted

under the Rules Governing the Courts of the State of New

Jersey"). Since the context of the Fair Foreclosure Act is that

 The amount depends on the debt owed by the defendant. 7

$5,000 or less means 3.5% in fees but not less than $75; $5,000 -

$10,000 means 1.5%, with any excess over $10,000 at 1%, but not

to exceed $7,500.

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these fees will be charged prior to final judgment in a

foreclosure action, it is clear that these fees are permissible

once the costs are actually incurred, but before final judgment. 

Plaintiffs do not contend that the amounts of the fees

violated the specific provisions, and it appears to the Court

that they do not. Instead, Plaintiffs contend that since no 8

foreclosure action was filed, there can be no fees incurred in

such an action. (Compl. ¶ 39.) Since this allegation

contradicts the undisputed public record, it cannot be credited. 

Claims based on that allegation must therefore be dismissed.

4. New Jersey Statutes

Count V contends that the fees violate provisions of three

New Jersey Statutes. However, unlike the Rules Governing the

Courts of the State of New Jersey which are used by the Fair

Foreclosure Act to cap fees charged for reinstatement, these

statutes are entirely inapplicable.

N.J. Stat. Ann. § 22A:2-10 awards certain statutory costs

"upon the completion and determination of" foreclosure actions. 

It does not prohibit other mechanisms of fee-shifting. N.J.

 The loan statement attached to Plaintiffs' complaint 8

indicates an outstanding principal balance of $275,060.47 was

owing as of February 19, 2010. (Compl. Ex. C.) Therefore, even

if this was the entire sum owed in the foreclosure action, under

Rule 4:42-9(a)(4)'s calculations for fees in foreclosure cases,

the permissible fees would have been $2,900.59, far exceeding the

amount actually charged. 

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Stat. Ann. § 22A:2-8 provides for various costs that "a party to

whom costs are awarded or allowed by law or otherwise in any

action, motion or other proceeding, in the Law Division or

Chancery Division of the Superior Court is entitled to include,"

without specifying any amounts. And N.J. Stat. Ann. § 2A:15-13

provides that the fee for recording a notice of lis pendens shall

be taxable as a part of the costs in the action.

Even if these statutes applied to limit the fees and costs

that may be permissibly charged for reinstatement of a delinquent

mortgage, the Complaint offers no allegations as to how these

statutes were violated. See Martino, 639 F. Supp. 2d at 493

(dismissing almost identical count for because "[i]t is nothing

more than a laundry list of various statutory fees that may be

charged in the New Jersey State foreclosure process, along with a

generic allegation that Defendants' charges were in excess of

those allowed by law"). It is not clear to the Court how or why

any of the fees would fall afoul of these statutes, and therefore

the Complaint fails to provide adequate notice to Defendants of

the basis for the claim.

Because none of the claims in the Complaint allege a clear

substantive basis for finding the fees charged to be improper,

the Complaint must be dismissed.

5. Clarifications made in opposition brief

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The Complaint brings no count pursuant to, or citing FHA

regulations. Nevertheless, in their opposition to this motion,

Plaintiffs raise for the first time an FHA regulation regarding

fees as their basis for their conclusion that the fees were

improper. 24 C.F.R. § 203.552(b). The regulation permits the

charging of certain reasonable fees and costs, including fees for

foreclosure not completed because of a reinstatement of the

account, id. § 552(a)(9), but states that "Directors of HUD Area

and Insuring Offices are authorized to establish maximum fees and

charges which are reasonable and customary in their areas." Id.

at 552(b). Plaintiffs then assert, with no citation, that the

applicable maximum is $1,350. Plaintiffs also seek to introduce

in their opposition evidence that BAC refunded $538 of the

reinstatement payment as having been improperly charged, an

allegation nowhere made in the Complaint. And they also try to

incorporate their allegation involving the failure to credit late

charge payments into their causes of action that do not refer to

this conduct in the Complaint.

None of these constructive amendments of the Complaint are

permissible, since these bases for legal relief were not

adequately pleaded. Commonwealth of Pa. ex rel. Zimmerman v.

PepsiCo, Inc., 836 F.2d 173, 181 (3d Cir. 1988) (noting that it

is axiomatic that a plaintiff cannot amend complaint via an

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opposition to a motion to dismiss). However, these arguments do 9

convince the Court that dismissal should be without prejudice. 

See Alston v. Parker, 363 F.3d 229, 235 (3d Cir. 2004) ("We have

held that even when a plaintiff does not seek leave to amend, if

a complaint is vulnerable to 12(b)(6) dismissal, a District Court

must permit a curative amendment, unless an amendment would be

inequitable or futile."). While Defendants contend that there 10

is no private right of action conferred by the FHA regulations,

this does not mean that the violation of those regulations cannot

provide a cause of action under other statutes. The question is

not presented by the Complaint, so it is undecided. 

 If the HUD maximum is in fact $1,350, Plaintiffs should

allege this in the proposed pleadings or cite to the relevant law

in a proposed amended complaint, and state clearly under what law

or laws Plaintiffs bring claims for violation of the FHA

 Plaintiffs acknowledge that some of these facts are 9

outside the scope of the Complaint, but contend that since

Defendant BAC also raised issues outside the scope of the

Complaint, Plaintiffs are permitted to do so. But everything

Defendant relied upon is properly considered on a motion to

dismiss. See In re Burlington Factory Sec. Litig., 114 F.3d

1410, 1426 (3d Cir. 1997) (quoting Shaw v. Digital Equip. Corp.,

82 F.3d 1194, 1220 (1st Cir. 1996)).

 If Plaintiffs decide to continue to retain Mr. Adler to 10

file their amended pleadings, then Mr. Adler should take care in

drafting the proposed pleadings to avoid continuing to make the

errors he has been alerted to by this and other opinions. At

some point, such errors and disregard for the modern pleadings

standards will begin to evince bad faith on his part.

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regulation. Similarly, if Plaintiffs seek to base their claims

on the refund of $538, they should allege the fact of the refund

as their basis for believing they were overcharged, and explain

precisely in their proposed Amended Complaint which counts are

based upon that conduct of overcharging and then refunding. 

Finally, if the failure to credit the late charges is being used

as a basis for any of the Counts, Plaintiffs should explain which

Counts and how this failure to credit the late charges violates

each specific law cited.

IV. CONCLUSION

Plaintiffs' scattershot Complaint does not, as currently

pleaded, put Defendants on fair notice of the basis for its

conclusions that the fees charged to Plaintiffs are improper. 

Because it appears that Plaintiffs may have some relevant

allegations that they failed to include, the Court will permit

them to move to file an amended pleading under Rule 15(a), Fed.

R. Civ. P., within twenty-one (21) days of the entry of the

accompanying Order. 

The accompanying Order will be entered.

June 22, 2011 s/ Jerome B. Simandle 

Date JEROME B. SIMANDLE

United States District Judge

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