TRACEY T. WILSON v. DEUTSCHE BANK NATIONAL TRUST COMPANY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

TRACEY T. WILSON and

WILLIS J. WILSON,

Plaintiffs-Appellants,

v.

DEUTSCHE BANK NATIONAL

TRUST COMPANY, as Trustee

for WaMu Series 2007-HE1

Trust, and JIMMY DING,

Defendants-Respondents.

______________________________________________________

May 2, 2014

Argued February 11, 2014 Decided

Before Judges Hayden and Rothstadt.

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-6495-11.

Tracey T. Wilson and Willis J. Wilson, appellants, argued the cause pro se.

John M. Falzone argued the cause for respondent Deutsche Bank National Trust Company (Parker, Ibrahim & Berg, L.L.C., attorneys; Scott W. Parker, Sanjay P. Ibrahim, and Michael W. O'Hara, on the brief).

Kasia Walch argued the cause for respondent Jimmy Ding (Finestein & Malloy, L.L.C., attorneys; Ms. Walch and Russell M. Finestein, on the brief).

PER CURIAM

Plaintiffs Tracey and Willis Wilson1 appeal from the February 6, 2013 Law Division order granting defendant Deutsche Bank National Trust Company's (Deutsche Bank) motion for summary judgment. The Wilsons also appeal the May 30, 2012 Law Division order granting defendant Jimmy Ding's motion to dismiss their complaint with prejudice. After a review of the record and applicable legal principles, we affirm.

I.

We glean the following facts from the record. The Wilsons purchased a home with a $389,500 loan secured by a note and mortgage from Washington Mutual Bank, FA (WaMu) in December 2006. WaMu allegedly assigned the Wilsons' mortgage to Deutsche Bank shortly thereafter. The Wilsons became unable to make their mortgage payments and defaulted on their mortgage in April 2007. On October 18, 2007, Deutsche Bank filed a foreclosure action.

On August 29, 2008, the chancery court entered a default judgment against the Wilsons. In September 2008, the Wilsons moved for reconsideration, which the court denied. On November 4, 2009, the court entered a final judgment of foreclosure and ordered the property be sold.

On November 19, 2009, the Wilsons appealed, but failed to request a stay or post a supersedeas bond pending appeal. While their appeal was pending, the property proceeded to sheriff's sale. On February 17, 2010, Deutsche Bank bought the property and subsequently sold the property to Ding in June 2010.

On January 19, 2011, we reversed and remanded the foreclosure judgment because Deutsche Bank had provided inadequate evidence of its assignment from WaMu. In particular, we questioned whether the person making the affidavit concerning the assignment had sufficient first-hand knowledge of the records being relied on and disapproved of the failure to provide a printout of the computer business records referenced in the affidavit. We also expressed concern that the Wilsons did not have an opportunity to obtain discovery on this issue. We remanded to the trial court "to resolve the issue of the bona fides of the assignment."

Upon remand, the Wilsons filed a motion to dismiss the foreclosure action with prejudice, arguing that the Chancery Division no longer had jurisdiction as the property had been sold at the sheriff's sale. They informed the court they planned to seek monetary remedies in the Law Division. On April 15, 2011, the court granted the Wilsons' motion, finding that the case was moot as the property had already been sold.

On September 9, 2011, the Wilsons filed the instant action pro se.2 The complaint contained five counts, namely, separate violations of the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20; the New Jersey Fair Foreclosure Act (FFA), N.J.S.A. 2A:50-53 to -73; the New Jersey Racketeer Influenced and Corrupt Organizations Act (RICO), N.J.S.A. 2C:41-1 to -6.2; and the Federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C.A. 1692-1692o, as well as unjust enrichment. The complaint sought, inter alia, $2,000,000 in compensatory damages and $2,000,000 in punitive damages.

On November 1, 2011, Ding filed an answer as well as a counterclaim seeking a declaration that he was a bona fide purchaser for value with good and marketable title and the Wilsons had no title or interest in the property. He also brought a cross-claim against Deutsche Bank for indemnity and contribution. Before the end of discovery, Ding moved to dismiss the complaint pursuant to Rule 4:6-2(e).

After hearing argument, the motion judge granted Ding's motion to dismiss for failure to state a cause of action on May 30, 2012. The judge found that the complaint contained no legally competent facts showing that Wilsons' claims of violations of the CFA, the FFA, RICO, and the FDCPA applied to Ding. The judge also held that the complaint did not contain sufficient allegations to support a claim against Ding for unjust enrichment. The Wilsons did not allege that they had any relationship with Ding, conferred a benefit on Ding, or that they expected remuneration from Ding when the property was transferred to him. Finally, the judge found that Ding was a bona fide purchaser of the property, which he purchased after a sheriff's sale3 that legally proceeded in the absence of a stay or a supersedeas bond.

After the remaining discovery was completed, the Wilsons and Deutsche Bank filed cross-motions for summary judgment. A different motion judge issued a written decision on February 6, 2013, granting Deutsche Bank's motion.

Addressing the allegation of a CFA violation, the judge found that the Wilsons "failed to put forth evidence that the assignment was, in fact, fraudulent." The judge noted that the appellate court "did not hold that the assignment was fraudulent, but merely reversed and remanded so that the Chancery Division could more thoroughly evaluate whether or not the assignment was fraudulent."

The judge dismissed the count alleging a violation of the FFA because the FFA did not provide a private cause of action, and dismissed the allegation of a RICO violation,4 because the Wilsons failed to provide facts showing a pattern of racketeering activity as required under the statute. The judge noted that "merely alleging that thousands of fraudulent lawsuits have been filed by Deutsche Bank [was] not sufficient."

The judge also dismissed the FDCPA count, finding that the Wilsons failed to prove that Deutsche Bank was a debt collector. The judge determined that Deutsche Bank claimed ownership of the Wilsons' mortgage beginning on January 1, 2007, by assignment of mortgage from WaMu. The Wilsons admittedly defaulted on the mortgage in April 2007. Thus, the judge held that Deutsche Bank was a creditor seeking to collect its own debt, bringing it outside the purview of the FDCPA.

Finally, the judge held that the Wilsons failed to establish that Deutsche Bank was unjustly enriched. The judge determined that the Wilsons owed in excess of $507,346.71 at the time of the foreclosure, and Deutsche Bank later sold the property to Ding for $262,500, considerably less than the amount owed on the mortgage. The Wilsons had presented no evidence that Deutsche Bank did not own the mortgage and should not have received the funds at all.

II.

On appeal, the Wilsons argue that Deutsche Bank was not entitled to summary judgment because it failed to present evidence that it had standing to foreclose and never demonstrated that it possessed a valid assignment. The Wilsons assert that our reversal of the final judgment of foreclosure, and the subsequent dismissal of Deutsche Bank's foreclosure complaint conclusively demonstrates Deutsche Bank's fraud. The Wilsons also contend that Deutsche Bank violated the FFA by sending a deficient notice of intention to foreclose (NOI), which constituted a violation of the CFA.5 We disagree.

"The CFA imposes liability on any person who uses: 'any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission.'" Int'l Union of Operating Eng'rs Local No. 68 Welfare Fund v. Merck & Co., 192 N.J. 372, 389 (2007) (quoting N.J.S.A. 56:8-2). In order to establish a claim under the CFA, the party alleging the fraud must prove three elements: "1) unlawful conduct by defendant; 2) an ascertainable loss by plaintiff; and 3) a causal relationship between the unlawful conduct and the ascertainable loss." Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 557 (2009).

When deciding a motion for summary judgment, the court must take all reasonable inferences in the light most favorable to the non-moving party and only grant the motion where "no genuine issue as to any material fact" exists and "the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). On review of the grant of summary judgment, we utilize "'the same standard [of review] that governs the trial court.'" Mem'l Props., LLC v. Zurich Am. Ins. Co., 210 N.J. 512, 524 (2012) (alteration in original) (quoting Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010)).

In this litigation the Wilsons, as plaintiffs, have the burden of proving that Deutsche Bank committed the wrongs alleged in their complaint. Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 393-94 (2009). To survive summary judgment, the plaintiff must show that he has presented a prima facie showing of the counts alleged in the complaint. See Mangual v. Berezinsky, 428 N.J. Super. 299, 313-14 (App. Div. 2012). The Wilsons proffer no proof that Deutsche Bank's assignment was fraudulent. The issue of the bank's standing was never decided in the foreclosure appeal. In a complete misreading of our decision, they rely on the remand, which did not make any finding of fraud or even mention the word. Rather, we reversed for an additional inquiry concerning the direct knowledge of the affiant and the production of the computer records on which she relied.

On remand, the ordered investigation did not occur since the Wilsons moved to dismiss the complaint because the property had already been sold. Nonetheless, the Wilsons had an opportunity during the instant litigation to obtain discovery on the assignment and their claim that it was fraudulent. As the party suing for a violation of the CFA must prove that the defendant was engaged in some fraudulent action, N.J.S.A. 56:8-2, the Wilsons' failure to present any evidence of Deutsche Bank's alleged fraud is fatal to this claim.

The Wilsons also fail to offer any proof that the sheriff's sale of the property while their appeal was pending was in any way fraudulent or illegal. The appeal of the foreclosure action did not stay the judgment. R. 2:9-5(a). To prevent the sale of the property, the Wilsons had to make a motion for a stay and post a supersedeas bond6 or other form of security. Ibid.; R. 2:9-6(c). Thus, nothing prevented Deutsche Bank from executing on the final order of foreclosure through a sheriff's sale. N.J.S.A. 2A:50-19.

Further, the Wilsons failed to present any evidence of an ascertainable loss, as required by the CFA. N.J.S.A. 56:8-19. They simply assert that Deutsche Bank's "illegal foreclosure" clearly caused a loss. The Wilsons admit that they defaulted on their mortgage; it is undisputed that the property was subject to foreclosure. They do not deny owing $507,346.71 on the note and mortgage and do not quantify their claimed loss due to Deutsche Bank's actions. Since "merely theoretical" losses are insufficient under the CFA, the trial judge properly granted summary judgment. See Bosland, supra, 197 N.J. at 558.

As to the FFA violation count, the Wilsons do not address the trial judge's correct holding that there is no private right of action under the FFA, which we are convinced prevents this claim from proceeding. See N.J.S.A. 2A:50-53 to -73; DeHart v. US Bank, N.A. ND, 811 F. Supp. 2d 1038, 1049 (D.N.J. 2011). Additionally, the Wilsons contend that by providing a defective NOI, the bank committed fraud under the CFA. First, the Wilsons fail to provide us with the allegedly deficient NOI, which prevents us from determining if it was defective. Even if it was defective, such a defect would not generally rise to the level of fraud or illegality required by the CFA. Nor would a defect in the NOI cause ascertainable harm since Deutsche Bank would have an opportunity to cure such a defect. See US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 458 (2012).

III.

The Wilsons next argue that the judge's holding that the FDCPA did not apply to their case was erroneous because Deutsche Bank was a debt collector. We are not persuaded.

The FDCPA defines a "debt collector" as "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C.A. 1692a(6).

"Creditors--as opposed to 'debt collectors'--generally are not subject to the FDCPA." Pollice v. Nat'l Tax Funding, L.P., 225 F.3d 379, 403 (3d Cir. 2000). "[O]ne cannot be both a 'creditor' and a 'debt collector,' as defined in the FDCPA, because those terms are mutually exclusive." FTC v. Check Investors, Inc., 502 F.3d 159, 173 (3d Cir. 2007), cert. denied, 555 U.S. 1011, 129 S. Ct. 569, 172 L. Ed. 2d 429 (2008). If the entity acquired the debt before default, and the entity continues to service the debt, the entity is a creditor not subject to the FDCPA. Ibid.

Here, the Wilsons point to no evidence in the record that Deutsche Bank was a debt collector as defined by the FDCPA. Indeed, the evidence in the record demonstrates that Deutsche Bank acquired the assignment of the Wilsons' mortgage prior to their default. The Wilsons have failed to present any evidence to the contrary. They simply present unsubstantiated allegations of fraud, which are not enough to overcome Deutsche Bank's summary judgment motion. See Alfano v. Schaud, 429 N.J. Super. 469, 474-75 (App. Div.), certif. denied, 214 N.J. 119 (2013). Therefore, the trial judge properly determined that Deutsche Bank was not a debt collector under 15 U.S.C.A. 1692a(6)(F)(iii), and therefore not subject to the FDCPA. See FTC, supra, 502 F.3d at 173; Pollice, supra, 225 F.3d at 403.

Moreover, even if Deutsche Bank were a debt collector, there is no evidence in the record that the foreclosure action it instituted violated the FDCPA. Nothing in the record suggests that Deutsche Bank harassed, oppressed, or abused the Wilsons, 15 U.S.C.A. 1692d; used false, deceptive, or misleading representations to collect their debt, 15 U.S.C.A. 1692e; or used unfair or unconscionable means to collect their debt, 15 U.S.C.A. 1692f. On the contrary, the evidence demonstrates that Deutsche Bank merely instituted a foreclosure action to collect on a claimed debt, which does not violate the FDCPA. See Harvey v. Great Seneca Fin. Corp., 453 F.3d 324, 330 (6th Cir. 2006) (employing the court system cannot be said to be an abusive tactic under the FDCPA); Turner v. Lerner, Sampson & Rothfuss, 776 F. Supp. 2d 498, 505-06 (N.D. Ohio 2011) ("Simple inability to prove present debt ownership at the time a collection action is filed does not constitute a FDCPA violation."). The Wilsons fail to show any "false and misleading representations made" by Deutsche Bank in its attempt to collect their debt.

Finally, the statute of limitations bars the Wilsons' claim under the FDCPA even if Deutsche Bank could be considered a debt collector. "[T]he FDCPA imposes a one-year statute of limitations from the date of the alleged violation[.]" Glover v. FDIC, 698 F.3d 139, 145 (3d Cir. 2012). The property at issue was sold at the sheriff's sale on February 17, 2010, which would have terminated any collection action by Deutsche Bank, well over a year prior to the filing of the instant action. No evidence has been presented that Deutsche Bank tried to collect any deficiency. Thus, the Wilsons' claim would be time barred even if they had presented competent evidence of a FDCPA violation.

IV.

The Wilsons further contend that Deutsche Bank's receipt of money from Ding from the sale of the property, as well as the payment it received as trustee compensation, constitutes unjust enrichment because the bank profited from an illegal foreclosure. We reject this claim, which evinces a fundamental misunderstanding of the doctrine of unjust enrichment.

"The doctrine of unjust enrichment rests on the equitable principle that a person shall not be allowed to enrich himself unjustly at the expense of another." Goldsmith v. Camden Cnty. Surrogate's Office, 408 N.J. Super. 376, 382 (App. Div.) (internal quotation marks and citations omitted), certif. denied, 200 N.J. 502 (2009). "The unjust enrichment doctrine requires that plaintiff show that it expected remuneration from the defendant at the time it performed or conferred a benefit on defendant and that the failure of remuneration enriched defendant beyond its contractual rights." VRG Corp. v. GKN Realty Corp., 135 N.J. 539, 554 (1994). In other words, the plaintiff must demonstrate that the "defendant[s] received a benefit and that retention of that benefit without payment would be unjust." Goldsmith, supra, 408 N.J. Super. at 382 (alteration in original) (internal quotation marks and citations omitted). The Wilsons do not present any evidence in the record addressing any of the elements necessary to prove unjust enrichment.

The Wilsons had the opportunity to obtain discovery to prove all their causes of action here. After completion of discovery, they identify no legally competent evidence in the record that (1) Deutsche Bank did not own the Wilsons' mortgage; (2) any other entity has claimed ownership of the mortgage since the filing of the foreclosure action; or (3) the Wilsons made any payments on the loan since 2007. Hence, there is no legally competent evidence that Deutsche Bank obtained a windfall here or was in any way unjustly enriched by the foreclosure. Thus, the court correctly granted summary judgment on this issue.

V.

The Wilsons also argue that the motion judge should not have granted Ding's motion to dismiss or his cross claim that he was a bona fide purchase of the property. They contend that Ding was not a bona fide purchaser because he had advanced notice of their ownership of the property from Deutsche Bank, which was also not a bona fide purchaser. We have carefully considered all arguments made by the Wilsons concerning Ding and find them to be without sufficient merit to warrant discussion in a written opinion. R. 2:3-11(e)(1)(E). We add only the following brief discussion.

The Wilsons maintain that records obtained during discovery show that Ding did a title search before purchasing the property, which determined that the bank had clear title to the property because it was purchased at the sheriff's sale.7 The Wilsons also point out that the title search revealed the Wilsons' prior ownership of the property. The Wilsons' argument that the presence of their recorded deed in the chain of title should have noticed Ding that they still owned the property is unpersuasive. Rather, we agree with the motion judge that the undisputed material facts show that Ding purchased the property for value from the owner who obtained the property after a legally authorized sheriff's sale.

"[W]here it is made to appear that one has acquired title to property and has paid a valuable consideration therefor, the purchaser is presumed to be a bona fide purchaser for value without notice until the contrary appears, and the burden of showing the contrary rests upon the party alleging that title was acquired by the purchaser with notice of an outstanding equity or claim."

[Reaves v. Egg Harbor Twp., 277 N.J. Super. 360, (Ch. Div. 1994) (alteration in original) (quoting Venetsky v. W. Essex Bldg. Supply Co., 28 N.J. Super. 178, 187 (App. Div. 1953)).]

Again, the Wilsons identify no legally competent evidence in the record to show that Ding was not a bona fide purchaser for value without notice of any defects in title. The Wilsons make no claim and provide no proof that Ding did not purchase the property for value. But, they do contend that, although there was no stay, Ding should have had known that they were disputing the foreclosure on appeal.8 The Wilsons appear to contend that Deutsche Bank's knowledge of the pending appeal should be imputed to Ding but provide not competent evidence supporting this claim. Certainly, a title search would not have revealed an underlying appeal. See Sonderman v. Remington Constr. Co., 127 N.J. 96, 109-10 (1992).

While Deutsche Bank had notice of the pending appeal of the foreclosure action, there is no evidence that this fact was conveyed to Ding, who was only required to perform a reasonable title search. See Island Venture Assocs. v. N.J. Dep't of Envtl. Prot., 179 N.J.485, 493 (2004); Sonderman, supra, 127 N.J.at 110. Moreover, even though Deutsche Bank had notice of the appeal, without a stay, the final judgment of foreclosure was enforceable and actionable. See Courvoisier, supra, 162 N.J. at 158. The Wilsons remedy after the legal sheriff's sale was to sue Deutsche Bank for damages due to any "illegal" foreclosure. See Myron C. Weinstein & Brian Kerins, N.J. Mortg. Foreclosure Practice 10.30 (2013) ("The reversal of a foreclosurejudgment operates only against the plaintiff-mortgagee to compel compensation to the party aggrieved for the full value of property, but will not affect the title of a bona fide purchaser of the foreclosed property while an appeal is pending and before the reversal.").

Affirmed.

1 We will refer to plaintiffs jointly as the Wilsons to avoid confusion as they were defendants in a preceding foreclosure case. When we refer to either plaintiff individually, we will use their first names for clarity, meaning no disrespect.

2 The complaint was originally only made in Tracey's name. On February 29, 2012, Tracey filed an amended complaint, solely to add Willis as a named plaintiff.

3 The judge incorrectly stated that Ding purchased the property at the sheriff's sale, when he purchased it from Deutsche Bank after the bank purchased it at the sheriff's sale.

4 The Wilsons do not appeal the dismissal of the RICO claim.

5 Specifically, the Wilsons contend that the NOI set forth the name and address of the loan servicer and not the name and address of the note holder as required by N.J.S.A. 2A:50-56(c)(11).

6 "A supersedeas bond is a 'device to protect a party who has been successful at trial but has been forestalled from proceeding during an appeal.'" Courvoisier v. Harley Davidson of Trenton, Inc., 162 N.J. 153, 158 (1999) (quoting Hudson City Sav. Bank v. Hampton Gardens, Ltd., 88 N.J. 16, 20 (1981)).

7 The record is devoid of any documents supporting this claim.

8 The Wilsons base this claim on information not in the record, including that Ding has previously purchased foreclosed property at sheriff's sales. Even if this information was part of the record, it does not support the Wilsons' claim.