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Martino v. Everhome Mortgage

639 F.Supp.2d 484 (D. N.J. 2009)

MORTGAGES; FORECLOSURE; DAMAGES —A borrower does not have a tort remedy against its mortgage lender if the claim being made arises from a contractual relationship and there is no independent duty imposed on the lender by law.

Homeowners defaulted on a note and mortgage. Although a final judgment of foreclosure was entered, the homeowners subsequently paid off the loan in full. The homeowners then claimed the lender overcharged them by collecting various fees not authorized by the loan documents or by applicable law. Specifically, the homeowners alleged: (a) breach of contract; (b) intentional misrepresentation; (c) negligent servicing of the loan; (d) breach of the duty of good faith and fair dealing by the lender’s attorney; (e) unjust enrichment against the lender’s attorney; (f) “deceptive collection of fees” in violation of the Federal Trade Commission Act (FTCA); (g) violation of New Jersey’s Fair Foreclosure Act; (h) violation of New Jersey Court Rules; (i) violation of New Jersey’s Consumer Fraud Act (CFA); and (j) violation of New Jersey’s Truth in Consumer Contracts, Warranty and Notice Act.

The United States District Court granted the lender’s motion to dismiss, but granted leave to the borrower to amend its complaint to assert claims not considered in its opinion and not barred by its holdings. It determined that, pursuant to the applicable New Jersey Court Rule, the lender’s calculation of fees for the foreclosure judgment was correct. Because it was correct, the Court ruled that there could be no Fair Foreclosure Act claim. Alternatively, it ruled that the Fair Foreclosure Act claim must be dismissed because the Act created no private right of action. It also held that, as there was no violation of New Jersey Court Rules or the Fair Foreclosure Act, there could be no CFA claim based on any such violations. As to the FTCA and unjust enrichment claims, since the fee assessed was correct, the Court stated that: (a) there was nothing unfair or deceptive about the fee as a matter of law; and (b) the unjust enrichment claim was without merit. The Court also dismissed the Warranty and Notice Act complaint because the borrowers failed to identify those provisions in either the mortgage or the note that violated a clearly established right of the borrowers or were a responsibility of the lender to which it was non-compliant. In addition, the Court found that there was no breach of contract. It mentioned that the borrowers did not (and could not) identify which contract provisions were breached and that the borrower had merely asserted that the lender’s overcharge amounted to a contract breach. The Court agreed with the lender that the negligence claim was barred by the “economic loss doctrine.” Under New Jersey law, a tort remedy does not arise from a contractual relationship unless the breaching party owed an independent duty imposed by law. This was not the case here as neither the lender nor its attorney owed a duty to the borrowers. With respect to the good faith and fair dealing claim, the Court opined that the borrowers did not allege that they had a contractual relationship with the lender’s attorney. Without a contract, there was no duty of good faith and fair dealing.

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