Stacy Coleman v. Chase Home Finance, LLC ( 2011 )


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  •                                                             NOT PRECEDENTIAL
    
                        UNITED STATES COURT OF APPEALS
                             FOR THE THIRD CIRCUIT
                                  _____________
    
                                      No. 09-4727
                                     _____________
    
                STACY COLEMAN, individually and as class representative
      On behalf of others similarly situated formally known as STACY KOVILARITCH
    
    
                                            v.
    
                 CHASE HOME FINANCE, LLC, Successor by merger to
                     CHASE MANHATTAN MORTGAGE CORP.;
                   JOHN DOE 1-100; JOHN DOE SERVICERS 1-100
    
                                     Stacy Coleman,
                                                Appellant
                                     _____________
    
                     On Appeal from the United States District Court
                              For the District of New Jersey
                                  (Civ. No. 08-cv-02215)
                       District Judge: Honorable Noel L. Hillman
                                     _____________
    
                      Submitted Under Third Circuit L.A.R. 34.1(a),
                                    May 24, 2011
    
              BEFORE: FUENTES, FISHER, and NYGAARD, Circuit Judges
    
                              (Opinion Filed: July 12, 2011)
                                    _____________
    
                              OPINION OF THE COURT
                                  _____________
    FUENTES, Circuit Judge.
    
    
    
    
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           Appellant Stacy Coleman filed a class action suit against Appellee Chase Home
    
    Finance, LLC (“Chase”), alleging thirteen separate causes of action, all stemming from
    
    allegedly excessive fees she was charged to reinstate her mortgage after a foreclosure
    
    judgment in favor of Chase. Initially, the District Court dismissed the complaint for lack
    
    of subject matter jurisdiction under 28 U.S.C. § 1332(d)(2), the Class Action Fairness Act
    
    (“CAFA”). After Coleman amended the complaint to correct jurisdictional deficiencies,
    
    Chase moved to dismiss under Rule 12(b)(6), and the District Court granted the motion,
    
    dismissing the amended complaint on the basis of New Jersey‟s entire controversy
    
    doctrine. For the reasons set forth below, we will affirm.
    
                                                 I.
    
           Because we write for the parties, we discuss the facts only to the extent necessary
    
    for the resolution of the issues raised on appeal. On October 28, 1997, Coleman secured
    
    a mortgage on her home from Eastern American Mortgage Company, and the mortgage
    
    note was then assigned to Chase. Coleman subsequently defaulted on her loan, and
    
    Chase filed a foreclosure action in the Chancery Division of the New Jersey Superior
    
    Court. The court entered judgment in favor of Chase in the amount of $90,401, and also
    
    awarded $1,600 in attorney‟s and other fees. Coleman, however, did not pay the
    
    judgment, and a foreclosure sale was stalled for approximately three and a half years
    
    while Coleman filed three bankruptcy proceedings. On November 4, 2005, after
    
    dismissal of the third bankruptcy proceeding, Chase sent Coleman a quote for reinstating
    
    the mortgage in return for a payment of $18,658. Of that total, the letter stated that $900
    
    was to be collected for foreclosure fees and $5,791 was to be collected for foreclosure
    
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    costs. On January 17, 2006, Coleman paid in full the amount quoted by Chase to
    
    reinstate her mortgage. Three days later, the Chancery Court entered a judgment of
    
    dismissal without prejudice in the foreclosure action.
    
           Two years after paying the reinstatement balance, Coleman commenced a class
    
    action suit against Chase alleging multiple claims, all related to alleged overcharges of
    
    attorney‟s costs and fees in the reinstatement quote.1 Coleman asserted that the $6,691
    
    worth of foreclosure costs and fees was not only in excess of the amount ordered by the
    
    Chancery Court, but that it was also in excess of those permitted by Fair Housing Act
    
    (“FHA”) regulations and New Jersey statute and court rules. After the initial complaint
    
    was amended due to a jurisdictional defect regarding the “home state” exception to the
    
    CAFA, Chase renewed its motion to dismiss for lack of subject matter jurisdiction under
    
    Federal Rule of Civil Procedure 12(b)(1) and also moved to dismiss for failure to state a
    
    claim under Rule 12(b)(6). Although the District Court denied the 12(b)(1) motion, it
    
    granted Chase‟s 12(b)(6) motion to dismiss based on New Jersey‟s entire controversy
    
    doctrine.
    
           Coleman filed a timely appeal. We have jurisdiction over the District Court‟s final
    
    order pursuant to 28 U.S.C. § 1291.
    
                                                 II.
    
    1
     Those claims include: (1) breach of contract; (2) intentional misrepresentation; (3)
    negligence; (4) breach of duty of good faith and fair dealing; (5) unjust enrichment; (6)
    unfair and deceptive assessment and collection of fees; (7) violation of the Fair
    Foreclosure Act (“FFA”); (8) excessive fees in violation of New Jersey Court Rule R
    4:42-9(a)(4); (9) excessive taxed costs in violation of various state statutes; (10) violation
    of New Jersey‟s Consumer Fraud Act (“CFA”); (11) forfeiture of interest; and (12)
    violation of the Truth-In Consumer Contract, Warranty and Notice Act.
                                                  3
           Rule 12(b)(6) provides that a court may dismiss a complaint “for failure to state a
    
    claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “Under Rule
    
    (12)(b)(6), a motion to dismiss may be granted only if, accepting all well-pleaded
    
    allegations in the complaint as true and viewing them in the light most favorable to the
    
    plaintiff, a court finds that plaintiff‟s claims lacks facial plausibility.” Warren Gen.
    
    Hosp. v. Amgen Inc., --- F.3d ----, 
    2011 WL 2321393
     at *5 (3d Cir. June 14, 2011) (citing
    
    Bell Atlantic Corp. v. Twombly, 
    550 U.S. 544
    , 555-56, 
    127 S. Ct. 1955
    , 
    167 L. Ed. 2d 929
    
    (2007)). We conduct plenary review of the grant of a motion to dismiss for failure to
    
    state a claim. Id. Because we find that New Jersey‟s entire controversy doctrine would
    
    bar recovery in this case, we agree with the District Court that Coleman has failed to state
    
    a claim upon which relief may be granted.
    
           The entire controversy doctrine compels the parties, when possible, to bring all
    
    claims relevant to the underlying controversy in one legal action. When the court finds
    
    that a claim not joined under the original action falls within the scope of the doctrine, that
    
    claim is barred. N.J. Ct. R. 4:30A. The doctrine “seeks to further the judicial goals of
    
    fairness and efficiency by requiring, whenever possible, „that the adjudication of a legal
    
    controversy should occur in one litigation in only one court.‟” Circle Chevrolet Co. v.
    
    Giordano, Halleran & Ciesla, 
    662 A.2d 509
    , 513 (N.J. 1995) (quoting Cogdell v.
    
    Hospital Ctr., 
    560 A.2d 1169
    , 1172 (N.J. 1989)). The doctrine is also applied to New
    
    Jersey claims in federal court. Bennun v. Rutgers State Univ., 
    941 F.2d 154
    , 163 (3d Cir.
    
    1991). However, application of the entire controversy doctrine is “equitable in nature”
    
    and based substantially on “judicial fairness,” meaning that the Court must balance
    
                                                  4
    considerations of judicial efficiency as well as fairness to the litigants. Cafferata v.
    
    Peyser, 
    597 A.2d 1101
    , 1103 (N.J. Super. Ct. App. Div. 1991)
    
           New Jersey courts have held that the primary consideration in determining if
    
    successive claims are part of the same controversy is whether the claims “arise from
    
    related facts or from the same transaction or series of transactions.” DiTrolio v. Antiles,
    
    
    662 A.2d 494
    , 502 (N.J. 1995). It is a “commonality of facts, rather than [a]
    
    commonality of issues, parties, or remedies that defines the scope of the controversy.”
    
    Id. at 504. The limits of the entire controversy doctrine with regards to foreclosure
    
    actions are necessarily somewhat narrower, as N.J. Ct. R. 4:64-5 requires that only
    
    “germane” counterclaims may be joined in a foreclosure action. See N.J. Ct. R. 4:30A.
    
           Claims are considered to be germane to a foreclosure action if they arise out of the
    
    mortgage that is the basis of the foreclosure action. Leisure Technology-Northeast, Inc.
    
    v. Klingbeil Holding Co., 
    349 A.2d 96
    , 98 (N.J. Super. Ct. App. Div. 1975). Here,
    
    Coleman‟s claims arose directly out of a reinstatement quote that was provided to her as
    
    an alternative to a foreclosure sale, and the excessive fees allegedly charged by Chase
    
    would not have been charged but for the foreclosure action. Accordingly, Coleman‟s
    
    causes of action arose out of and were germane to the original foreclosure action.
    
           However, Coleman makes three arguments why her federal claims should not fall
    
    within the doctrine despite the fact that they are otherwise “germane” to the foreclosure
    
    action. First, the doctrine is not a bar to successive claims where they have accrued after
    
    the pendency of the of the original action. McNally v. Providence Washington Ins. Co.,
    
    
    698 A.2d 543
    , 548 (N.J. Super. Ct. App. Div. 1997). Coleman argues that the foreclosure
    
                                                   5
    action was no longer pending once judgment was issued on August 1, 2002, and thus her
    
    claims are not barred by the entire controversy doctrine. We disagree. A court retains
    
    jurisdiction in a foreclosure action even after a final judgment, until delivery of the
    
    sheriff‟s deed under New Jersey Court Rule 4:65-5. Sovereign Bank, FSB v. Kuelzow,
    
    
    687 A.2d 1039
    , 1043 (N.J. Super. Ct. App. Div. 1997). “The foreclosure action, although
    
    already the subject of a judgment, is not totally concluded until the defendants‟ equity of
    
    redemption is cut off by the delivery of the sheriff‟s deed.” Id. Here, the fact that the
    
    foreclosure sale had been stalled due to the bankruptcy proceedings and the judgment had
    
    not been paid meant that the foreclosure action continued to be pending until Coleman
    
    paid the reinstatement quote and the judge vacated the judgment and dismissed the claims
    
    on January 20, 2006. Thus, the state court still had jurisdiction over the matter and
    
    Coleman could have brought her claims as a part of the original foreclosure action until
    
    January 20.
    
           Second, Coleman argues that the entire controversy doctrine does not apply to
    
    “related claims which were unknown, or had not arisen or accrued during the pendency
    
    of the original action.” Riemer v. St. Clare’s Riverside Med. Ctr., 
    691 A.2d 1384
    , 1388
    
    (N.J. Super. Ct. App. Div. 1997). New Jersey‟s discovery rule states that a cause of
    
    action has not accrued unless the plaintiff knows or should have known that “(1) she has
    
    suffered damage and (2) that the damages were caused by the fault of another.” Maertin
    
    v. Armstrong World Indus. Inc., 
    241 F. Supp. 2d 434
    , 458 n.18 (D.N.J. 2002). Therefore,
    
    if Coleman was unaware of either of these facts at the time the foreclosure action became
    
    final on January 20, 2006, her successive causes of action would not yet have accrued
    
                                                  6
    and the doctrine would be inapplicable. Yet, when Coleman received the reinstatement
    
    quote from Chase on November 4, 2005, she should have been aware that the amount
    
    differed substantially from the fee determination in the original foreclosure action. Her
    
    counsel, who had represented her since the original foreclosure action, and whom we
    
    presume reviewed the reinstatement quote, also should have been aware of these facts.
    
    Thus, her cause of action accrued on November 4 while the original foreclosure action
    
    was still pending, and she is barred by the entire controversy doctrine.
    
           We also disagree with Coleman‟s argument that she did not have a “fair and
    
    reasonable opportunity to have fully litigated that claim in the original action.”
    
    Cafferata, 597 A.2d at 1104. While it might not have been clear to Coleman that the fees
    
    charged by Chase in the reinstatement quote were allegedly in violation of state law, as
    
    explained above, it is undeniable that she was on notice, or should have been on notice,
    
    that the fees charged were substantially larger than those issued by the state court. This is
    
    especially true given that the same counsel represented Coleman from the time of the
    
    original foreclosure action up through the time that she paid the reinstatement quote.
    
           Ultimately, the entire controversy doctrine requires equitable considerations and is
    
    determinable on a case-by-case basis. Paramount Aviation Corp. v. Agusta, 
    178 F.3d 132
    , 137 (3d Cir. 1999). The “polestar for the application of the rule is judicial fairness.”
    
    Reno Auto Sales, Inc. v. Prospect Park Sav. & Loan Ass’n, 
    581 A.2d 109
    , 113 (N.J. Sup.
    
    Ct. App. Div. 1990) (citing Cogdell, 560 A.2d at 1179) (internal quotation marks
    
    omitted). We must balance the plaintiff‟s right to bring a separate action against the
    
    defendant‟s right to avoid excessive litigation. Here, we are not persuaded that Coleman
    
                                                  7
    was deprived of a fair opportunity to litigate her claims. Accordingly, the District Court
    
    properly granted Chase‟s motion to dismiss under Rule 12(b)(6).
    
                                                 III.
    
           We further conclude that the District Court did not abuse its discretion by
    
    dismissing the complaint with prejudice. Where amendment of a complaint could not
    
    possibly correct the defect that led to the original dismissal, the District Court does not
    
    abuse its discretion by denying leave to amend. In re Burlington Coat Factory Sec.
    
    Litig., 
    114 F.3d 1410
    , 1434 (3d Cir. 1997). Because any amendment to the complaint
    
    would not overcome the entire controversy deficiency, the District Court did not abuse its
    
    discretion. We have considered Coleman‟s remaining claims and find they are without
    
    merit and require no further discussion.
    
                                                 IV.
    
           For the foregoing reasons, we affirm the ruling of the District Court.
    
    
    
    
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