KEVIN McNULTY, District Judge.
Defendant JPMorgan Chase Bank, N.A. (the "Bank") holds a mortgage on the properties of two of the plaintiffs, Unita Peri-Okonny and Ellen Heine. The Bank is named only in Count 7 of the Seventh Amended Complaint ("7AC", ECF no. 81). Now before the Court is the Bank's motion (ECF no. 109) to dismiss the Seventh Amended Complaint for lack of jurisdiction and failure to state a claim. See Fed. R. Civ. P. 12(b)(1), 12(b)(6). For the reasons stated herein, the Bank's motion to dismiss will be granted.
The Bank's motion seeks, in part, to dismiss the complaint for lack of jurisdiction under Fed. R. Civ. P. 12(b)(1). Rule 12(b)(1) challenges may be either facial or factual attacks. Lincoln Ben. Life Co. v. AEI Life, LLC, 800 F.3d 99, 105 (3d Cir. 2015) (citing Common Cause of Penn. v. Pennsylvania, 558 F.3d 249, 257 (3d Cir. 2009)). "In reviewing a facial attack, the court must only consider the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff." Id. (citing Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000)). It "review[s] only whether the allegations on the face of the complaint, taken as true, allege facts sufficient to invoke the jurisdiction of the district court." Common Cause of Penn. v. Pennsylvania, 558 P.3d 249, 257 (3d Cir. 2009) (quoting Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181, 188 (3d Cir. 2006)).
A factual attack, on the other hand, permits the Court to consider and weigh evidence extrinsic to the pleadings. Gould Elecs. Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 2000), holding modified on other grounds by Simon v. United States, 341 F.3d 193 (3d Cir. 2003). Such a factual attack "does not provide plaintiffs the procedural safeguards of Rule 12(b)(6), such as assuming the truth of the plaintiff's allegations." CNA v. United States, 535 F.3d 132, 144 (3d Cir. 2008).
The Rule 12(b)(1) component of the Bank's motion, as filed, relies only on the Complaint and documents properly considered on a Rule 12(b)(6) motion to dismiss. It would therefore be treated as a facial challenge.
The plaintiffs' response, however, makes factual assertions extrinsic to the allegations of the Complaint. The Bank's reply suggests that those facts suggest a lack of Article III standing. I consider this as an alternative basis for dismissal, and to that limited extent, I will treat the Rule 12(b)(1) motion as a factual challenge.
Rule 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if it fails to state a claim upon which relief can be granted. The defendant, as the moving party, bears the burden of showing that no claim has been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a Rule 12(b)(6) motion, a court must take the allegations of the complaint as true and draw reasonable inferences in the light most favorable to the plaintiff. Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008).
Federal Rule of Civil Procedure 8(a) does not require that a complaint contain detailed factual allegations. Nevertheless, "a plaintiff's obligation to provide the `grounds' of his `entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the complaint's factual allegations must be sufficient to raise a plaintiff's right to relief above a speculative level, so that a claim is "plausible on its face." Id. at 570; see also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). That facial-plausibility standard is met "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). While "[t]he plausibility standard is not akin to a `probability requirement' . . . it asks for more than a sheer possibility." Iqbal, 556 U.S. at 678.
Where the plaintiff's are proceeding pro se, the complaint is "to be liberally construed," and, "however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers." Erickson v. Pardus, 551 U.S. 89, 93-94 (2007). Nevertheless, "pro se litigants still must allege sufficient facts in their complaints to support a claim." Mala v. Crown Bay Marina, Inc., 704 F.3d 239, 245 (3d Cir. 2013). "While a litigant's pro se status requires a court to construe the allegations in the complaint liberally, a litigant is not absolved from complying with Twombly and the federal pleading requirements merely because s/he proceeds pro se." Thakar v. Tan, 372 F. App'x 325, 328 (3d Cir. 2010) (citation omitted).
Plaintiffs claim, inter alia, that the DCA improperly enforced fire codes, leading to, inter alia, condemnation of properties and the impairment of the plaintiffs' ability to make their mortgage payments. This complaint is now in its seventh iteration, and I have written more than one opinion in this case. Thus I will not review the facts and allegations at length. I assume familiarity with my prior Opinion ("Op.", ECF no. 97) and Order (ECF no. 98) granting the most recent motion to dismiss filed by the Department of Community Affairs of the State of New Jersey (the "DCA"), by its Commissioner. Briefly, that Opinion (in conjunction with earlier rulings) resulted in dismissal of all claims against DCA except a claim for injunctive relief under 42 U.S.C. § 1983 and the Fair Housing Act ("FHA").
This, however, is the first motion brought by defendant JP Morgan Chase Bank, N.A., which had not appeared in the case previously.
The Bank is named only in Count 7, and is the sole defendant in that Count. The substantive allegations of Count 7 are as follows:
(7AC pp. 16-17)
Count 7 seeks the following relief, all of it injunctive:
(a) an injunction to stay all proceedings or future proceedings in foreclosure;
(b) to prevent a sheriffs sale of Peri-Okonny's property pending resolution of this action;
(c) to restrain the Bank from "negative credit reporting" based on the missed mortgage payments or foreclosure;
(d) such other and further relief as the Court sees fit.
I am obligated to first consider whether this Court possesses subject matter jurisdiction. I then proceed to the substantive grounds for dismissal.
The Rooker-Feldman doctrine, which is of jurisdictional stature, bars any attempt to use the federal trial courts as a court of appeal from state court judgments. See District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 482 (1983); Rooker v. Fidelity Trust Co., 263 U.S. 413, 416 (1923). Rooker-Feldman thus operates to prevent a disgruntled party in state court litigation from collaterally attacking the results of that litigation in federal court, claiming constitutional or other error. See B.S. v. Somerset County, 704 F.3d 250 (3d Cir. 2013). To put it another way, Rooker-Feldman bars "cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments." Exxon Mobil Corp. v. Saudi Basic Indus., Inc., 544 U.S. 280, 284 (2005).
Rooker-Feldman has four essential prerequisites:
Great Western Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159, 166 (3d Cir. 2010).
The complaint on its face recites that there is a prior State-court judgment of foreclosure against Peri-Okonny. (7AC Count 7 ¶ 3) And she, in particular, seeks to negate that state court judgment by enjoining a sheriff's sale in the hope of renegotiating with the Bank what has already been adjudicated by the State court.
Still, it appears that other aspects of Peri-Okonny's claim in Count 7 (involving credit reporting, for example) might be regarded as independent. As for Heine, it does not appear that there is a prior judgment of foreclosure at all; she seeks an injunction against a future foreclosure. I conclude, therefore, that Rooker-Feldman does not wholly bar this Court's jurisdiction, and go on to consider the Bank's further arguments for dismissal.
The Bank argues that Peri-Okonny and Heine lack Article III standing to pursue some or all of their claims. As to Peri-Okonny only, I agree.
The essential requirement of standing is that the plaintiff has suffered or is suffering "an `injury in fact'—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 (1992). Related to standing is the doctrine of mootness—the idea that if the plaintiff ever possessed a concrete injury, he or she possesses it no longer. It is axiomatic that Article III of the Constitution limits the jurisdiction of federal courts to live "cases" and "controversies," requiring "an actual controversy . . . be extant at all stages of review, not merely at the time the complaint is filed." Arizonans for Official English v. Arizona, 520 U.S. 43, 67, 117 S.Ct. 1055 (1997). "If an intervening circumstance deprives the plaintiff of a `personal stake in the outcome of the lawsuit,' at any point during litigation, the action can no longer proceed and must be dismissed as moot." Genesis Healthcare Corp. v. Symczyk, ___ U.S. ___, 133 S.Ct. 1523, 1528 (2013) (quoting Lewis v. Continental Bank Corp., 494 U.S. 472, 477-78, 110 S.Ct. 1249 (1990)). In order for a claim to be moot, however, it must be "impossible for a court to grant any effectual relief." Knox v. Serv. Employees, 567 U.S. 298, 132 S.Ct. 2277, 2287, 183 L. Ed. 2d 281 (2012); see also Blanciak v. Allegheny Ludlum Corp., 77 F.3d 690, 698-699 (3d Cir. 1996) ("If developments occur during the course of adjudication that . . . prevent a court from being able to grant the requested relief, the case must be dismissed as moot.").
As to Peri-Okonny, a fundamental standing/mootness objection has emerged. In her brief, plaintiff stated that "Chase wrote-off the mortgage of Peri-Okonny and vacated the foreclosure. Therefore this defendant's arguments that the foreclosure was first filed in state court and issues of lack of federal jurisdiction over certain credit matter is a moot point." (Pl. Brf. 5) Citing this statement, the Bank argued in its reply that standing was lacking.
I would not ordinarily base a dismissal on an unsupported statement in a plaintiff's brief. But the Bank, as it turns out, agrees. In a letter filed yesterday, October 9, 2017 (ECF no. 126), counsel for the Bank acknowledged that
(Letter, ECF no. 126 at 1)
Peri-Okonny's "requested relief in Count 7 is an injunction stopping a sheriffs sale of Peri-Okonny's property, pursuant to the judgment of foreclosure.
As to Heine's property, the Bank has a different standing argument. The original mortgagor, it says, was a Dr. Gilbert. A number of machinations followed. Suffice it to say that there is a State court order awarding Heine title to the property provided that she satisfied the $46,000 mortgage, and granting her the option either to assume and discharge the mortgage or else to sell the property. When she failed to do either, the court entered an order compelling her to sell the property, which she has not done. (Bank Reply 4 (citing Gilbert v. Heine, No. A-0145-14T4, 2017 WL 370904 (N.J. Super. Ct. App. Div. Jan. 25, 2017)). Thus, says Chase, it is not clear how any action by itself could prejudice Heine any further.
I disagree. As to Heine, Count 7 seeks an injunction against any future foreclosure. A judgment of foreclosure could lead, not just to a court order saddling Heine with the mortgage obligation, but to a forced sheriff's sale of the property. Assuming that Heine has a valid claim, an injunction would thus be of some value to her. Her claim was not entirely mooted by the State court's order.
I turn my attention to the res judicata effect of a prior federal-court judgment. This requires dismissal of the claims of Heine, and is an alternative basis for dismissal of the claims of Peri-Okonny.
Plaintiffs Peri-Okonny, Heine, and a shifting array of co-plaintiffs have filed multiple lawsuits asserting similar claims. I focus on one, in which the Bank is named as a defendant. On November 20, 2015 (five months prior to the filing of the Seventh Amended Complaint), a group of plaintiffs, including Peri-Okonny and Heine, filed suit in federal court against a group of defendants, including the Bank and DCA. Heine, et al. v. Director of Codes and Standards, et al, No. 15-cv-8210 (ES/MAH) (the "2015 Action"). The final judgment in that 2015 Action—which itself gave preclusive effect to judgments in prior State court actions—bars the claims against the Bank here.
As to a prior federal judgment, standards of claim preclusion and issue preclusion are well established. A res judicata defense may be adjudicated on a motion to dismiss, where the pleadings and documents properly considered on a Rule 12(b)(6) motion suffice. See M & M Stone Co. v. Pennsylvania, 388 F. App'x 156, 162 (3d Cir. 2010); see also Rycoline Products, Inc. v. C & W Unlimited, 109 F.3d 883, 886 (3d Cir. 1997). Federal claim preclusion requires (a) a final judgment on the merits in a prior suit involving (b) the same parties or their privies and (c) a subsequent suit based on the same causes of action. United States v. Athlone Indus., Inc., 746 F.2d 977, 983 (3d Cir. 1984) (citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n. 5, 99 S.Ct. 645, 649 n. 5 (1979)). Federal issue preclusion requires (a) that the issue be identical to an issue previously adjudicated; (b) that the issue have been actually litigated; (c) that the determination of the issue was necessary to the prior judgment; and (d) that the party against whom preclusion is now asserted had a full and fair opportunity to litigate the issue. Henglein v. Colt Indus., 260 F.3d 201, 209 (3d Cir. 2001). As to a prior state judgment, res judicata standards are similar. See n.6, supra.
The 2015 Action, filed in the United States District Court for the District of New Jersey, was assigned to the Hon. Esther Salas, U.S.D.J. In an Order and Opinion ("Salas Op.") filed on September 11, 2017, Judge Salas dismissed the complaint with prejudice.
Judge Salas first focused on the allegations against defendants other than the Bank. Those other defendants are all entities, including the DCA, responsible for the enforcement of state and municipal fire and building codes.
Judge Salas related a history of prior actions involving some of the same plaintiffs and defendants, in which similar claims were asserted. (Id. 6-9 (summarizing Schildknecht v. Twp. Of Montclair, No. 13-7228 (D.N.J.) (the "7228 Action"); Fabics v. City of New Brunswick, No. 13-6025 (D.N.J.) (the "6025 Action"); Fabics v. City of New Brunswick, No. 14-2202 (D.N.J.) (the "2202 Action").
Judge Salas first held that principles of res judicata barred the claims in the 2015 Action that were asserted against the municipalities of New Brunswick and Montclair. (Op. 12-18)
More pertinently, Judge Salas held that re judicata barred the claims of Heine and Peri-Okonny, et al., against DCA. (Op. 18-22) The claims against DCA, as Judge Salas described them, were (a) that it exercised inadequate oversight as to the municipalities' code enforcement activities; and (b) that it violated the constitution by the manner in which it enforced, or promulgated regulations under, the Rooming and Boarding House Act of 1979, the Uniform Construction Code, and the Uniform Fire Code. Those claims, held Judge Salas, had already been decided between the same parties (including Heine and Peri-Okonny) by final judgments entered in the prior State court actions.
More pertinently still, Judge Salas dismissed the claims of the 2015 Action as against the Bank. The allegations in the 2015 Action involving the Bank are contained in two paragraphs:
(Op. 22, quoting 2015 Action Compl. Count I ¶ 6; Count IV ¶ 4).
Judge Salas held that these allegations did not state a claim against the Bank. As to the Bank, the complaint alleged that there was a mortgage, a default, and a foreclosure. The circumstances leading to the default are alleged to involve DCA's overstepping the bounds of proper code enforcement. The Bank, however, is explicitly alleged to have had no knowledge of or involvement in the actions of DCA and the other authorities. As to the Bank, then, the complaint failed to meet the minimal pleading standards of Fed. R. Civ. P. 8. Indeed, Judge Salas was uncertain whether a cause of action against the Bank was even intended; the Bank, she wrote, might merely have been named as a party necessary for full relief should plaintiff prevail on its other claims. (Op. 23-24)
Judge Salas also stated alternative grounds to dismiss the Complaint as against, inter alia, DCA, including lack of standing and improper joinder of the independent claims of multiple plaintiffs. (Op. 24-29) Particularly in light of the multiple opportunities to amend the complaints in the prior actions, Judge Salas found that amendment would be futile, and dismissed the complaint in the 2015 Action in its entirety, with prejudice.
The judgment in the 2015 Action precludes the claims against Chase in this action.
First, the judgment in the 2015 was final, on the merits, and expressly entered with prejudice.
Second, the causes of action are essentially the same. The claim against the Bank in Count 7 of the Seventh Amended Complaint is that the mortgage defaults (and, in Peri-Okonny's case, foreclosure) were somehow the result of the code enforcement efforts of DCA and others. The judgment in the 2015 Action disposes of the underlying claim against DCA that the authorities' fire code enforcement was illegitimate, on which any claim against the Bank depends. More to the point here, it directly disposes of the claims against Chase itself. In neither case is the Complaint very clear about exactly what cause of action is being asserted against the Bank. Vagueness, however, provides no refuge against claim preclusion. The same "cause of action" does not require identity of legal theories, but turns on the essential similarity of the underlying events giving rise to the various legal claims. Atholone, 746 F.2d at 983 (citing Davis v. U.S. Steel Supply, 688 F.2d 166, 171 (3d Cir. 1982)).
The claims against the Bank in the 2015 Action are shorter than, but essentially identical in substance to, Count 7 of the Seventh Amended Complaint in this action. Here, as before, the plaintiffs allege that their buildings are one or two family residences that should not have been subject to the Rooming and Boarding House Act of 1979, and that they were exempt from the statewide uniform fire code. The 2015 Action, like this one, alleges that Heine and Peri-Okonny have lost the use and profit of their properties as a result of improper code enforcement; that they have nevertheless been required to pay property taxes; that Peri-Okonny has been subjected to a final judgment of foreclosure; that the Bank has mortgages on the properties; that the actions of the State (and local) officials somehow contravene the 1-4 family riders contained in the mortgages; and that this all resulted in plaintiffs' default and foreclosure by the Bank, which is not equipped to help the distressed owner.
Third, the parties, for these purposes, are identical. Heine and Peri-Okonny appear as plaintiffs, and DCA and the Bank as defendants, in both cases.
Judge Salas's dismissal of the claims against the Bank, which was Final and explicitly entered with prejudice, precludes the claims against the Bank in Count 7 of the Seventh Amended Complaint in this action.
Finally, I consider in the alternative whether—assuming there is jurisdiction, and setting aside res judicata—the allegations of Count 7 of the Seventh Amended Complaint state a claim upon which relief may be granted. The allegations against the Bank, which are quoted in full at Section II, supra, do not state any intelligible, identifiable claim. They certainly do not do so with the specificity required by Twombly and Iqbal, supra.
To begin with, no cause of action is specified. The reader is left to guess what statutory violation, tort, or other wrong is being alleged.
As to Peri-Okonny, Count 7 alleges that there is a foreclosure judgment against her and that, if there is a sheriffs sale, she "will have lost her investment." That of course may be true; it is probably true of a majority of mortgage foreclosures. No wrongful act by the Bank or recognized cause of action is suggested by those facts.
Peri-Okonny and Heine imply that their properties would never have gone into default but for the code enforcement activities of DCA and the local authorities. Once again, that does not amount to a cause of action against the Bank. The holder of a mortgage is not required to forgive the debt because the actions of third parties put the mortgagor in a financial fix.
Indeed, Peri-Okonny acknowledges that the Bank had no knowledge of those enforcement activities, and even continued to pay property taxes after the building had been damaged by fire and demolished. Once again, no cause of action against the Bank is suggested by these facts.
Plaintiffs allege that the DCA's position is in violation of the 1-4 family rider in their mortgages. The sense seems to be that the DCA is erroneously treating the buildings as rooming houses—i.e., that these are in reality one or two family, owner-occupied homes that are not subject to statewide fire code standards. Even if this allegation is accepted, it does not suggest any fault on the part of the Bank.
Finally, the Bank at some point allegedly expressed willingness to work with Peri-Okonny, who wished to rebuild. It is implied that this never occurred. Once again, there is no claim suggested.
Heine, too, alleges that she is unable to use her property or collect rents as a result of the DCA's improper code enforcement.
In short, no cause of action is stated. The complaint does not identify any wrongdoing by the Bank at all.
Nor do the factual allegations support the injunctive relief sought. Nothing in Count 7 supports a claim that either plaintiff has a legal right to halt foreclosure or a sheriffs sale. Peri-Okonny's property is already subject to a final judgment of foreclosure. Neither plaintiff denies that her mortgage is in default.
The demand to restrain the Bank from "negative credit reporting" is supported by no facts. To the extent a claim under the Fair Credit Reporting Act might have been intended, see 15 U.S.C. § 1681, there are no supporting facts. There is no clear allegation, for example, that any reporting of missed payments or the fact of foreclosure would be inaccurate.
For these alternative reasons, too, the Complaint of Peri-Okonny and Heine will be dismissed as against the Bank.
Accordingly, for the reasons stated in the foregoing Memorandum Opinion, the motion (ECF no. 109) of defendant JPMorgan Chase Bank, N.A., to dismiss the Seventh Amended Complaint is GRANTED, and the Seventh Amended Complaint is dismissed in its entirety as against defendant JPMorgan Chase Bank, N.A., only.
To the extent this dismissal is jurisdictional, it is final, but without prejudice. To the extent this dismissal rests on res judicata and substantive grounds, it is with prejudice.
(Op. at 6)
A copy of the judgment of foreclosure is attached to the Bank's papers. (ECF no. 109-2 at 19) I may properly consider it on a motion to dismiss without converting a facial challenge into a factual challenge or a summary judgment motion. See In re Asbestos Products Liability Litigation (No. VI), 822 F.3d 125, 134 n.7 (3d Cir. 2016); S. Cross Overseas Agencies, Inc. v. Wah Kwong Shipping Grp. Ltd., 181 F.3d 410, 426-27 (3d Cir. 1999); see generally Fed. R. Evid. 201 (judicial notice).
New Jersey has an additional, somewhat broader res judicata doctrine known as the entire controversy rule. The entire controversy rule emphasizes, not just claims within the scope of the prior judgment, but all claims and parties that a party could have joined in a prior case based on the same transaction or occurrence. The entire controversy doctrine thus "requires a party to bring in one action `all affirmative claims that [it] might have against another party, including counterclaims and cross-claims,' and to join in that action `all parties with a material interest in the controversy,' or be forever barred from bringing a subsequent action involving the same underlying facts." Rycoline Prods., Inc. v. C & W Unlimited, 109 F.3d 883, 885 (3d Cir. 1997) (quoting Circle Chevrolet Co. v. Giordano, Halleran & Ciesla, 142 N.J. 280, 662 A.2d 509, 513 (1995)).
The Bank asserts in the alternative that the final judgment of foreclosure bars most or all of the claims of Peri-Okonny under doctrines of res judicata. For reasons similar to those stated in the Rooker-Feldman Section, III.A, supra, I agree. In this action, Peri-Okonny here seeks to assert claims that were or could have been asserted against the Bank, whether as issues in defense or as counterclaims, in the foreclosure action. That particular res judicata analysis, however, would add little to the Rooker-Feldman analysis.
