NEW JERSEY TITLE INSURANCE COMPANY v. CECERE
2:20-cv-01286
| D.N.J. | Dec 7, 2020Background
- Rosemarie Cecere bought 155 Highland Ave., Montclair (1999). Title was later transferred to Richard (Apr. 2009); Wells Fargo made a reverse mortgage to Richard (Apr. 24, 2009) and obtained title insurance (May 4, 2009).
- On July 7, 2009, title was recorded in the names of Richard and Rosemarie; in 2013 attorney Frank Cozzarelli recorded a mortgage in favor of Rosemarie. Wells Fargo filed (and later withdrew) a foreclosure action in 2016.
- New Jersey Title Insurance Co. sued to quiet title (Sept. 2017). The Ceceres filed counterclaims and a third‑party complaint alleging Wells Fargo, its agent Margaret Harkness, and HUD engaged in abusive lending and a conspiracy to generate fees, and that HUD funded/oversaw the loan.
- HUD was not served in accordance with Fed. R. Civ. P. 4(i). The state court entered default against HUD; HUD removed the case to federal court under 28 U.S.C. § 1442(a)(1) and moved to dismiss the Third Party Complaint under Rules 12(b)(1) and 12(b)(6).
- The district court vacated the state‑court default as improperly entered (insufficient service) and dismissed the Ceceres’ Third Party Complaint without prejudice for lack of subject‑matter jurisdiction (FTCA exhaustion, Tucker Act defects) and for failure to state claims against HUD (RESPA/TILA sovereign‑immunity issues).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether default entered against HUD should stand | Ceceres did not contest default substantively (implied they relied on state default). | HUD: service was improper under Fed. R. Civ. P. 4(i); default therefore improperly entered. | Default vacated because HUD was not properly served; entry of default improperly entered. |
| Whether tort claims against HUD under FTCA may proceed | Ceceres allege HUD had duty to protect them from predatory lending and funded the mortgage. | HUD: FTCA requires exhaustion of administrative remedies and naming the United States; no administrative claim filed. | Tort claims dismissed for lack of subject‑matter jurisdiction for failure to exhaust administrative remedies (and for not naming U.S.). |
| Whether contract/monetary claims against HUD are cognizable in district court (Tucker Act) | Ceceres treat the Wells Fargo mortgage and HUD supervision as contractual basis for money damages. | HUD: Tucker Act is jurisdictional; plaintiffs did not plead a statutory basis or a dollar amount within the Little Tucker Act limits and fail to allege any contract with HUD. | Contract/monetary claims dismissed for lack of Tucker Act jurisdiction and for failing to plead contract formation/terms; dismissal without prejudice to amend. |
| Whether RESPA or TILA claims lie against HUD | Ceceres assert RESPA and "truth in lending" violations by HUD as part of conspiracy. | HUD: RESPA/TILA do not permit monetary claims against the United States or federal agencies (HUD not a "person" under RESPA; TILA bars monetary penalties against federal agencies). | RESPA and TILA claims dismissed (jurisdictional/sovereign immunity grounds). |
Key Cases Cited
- Granny Goose Foods, Inc. v. Brotherhood of Teamsters and Auto Truck Drivers Local No. 70, 415 U.S. 423 (1974) (after removal, federal court may treat prior state‑court interlocutory orders as its own and modify or dissolve them)
- Gold Kist, Inc. v. Laurinburg Oil Co., Inc., 756 F.2d 14 (3d Cir. 1985) (default may be set aside where complaint was not properly served)
- Grand Entm’t Grp., Ltd. v. Star Media Sales, Inc., 988 F.2d 476 (3d Cir. 1993) (failure to effect proper service undermines entry of default judgment)
- McNeil v. United States, 508 U.S. 106 (1993) (FTCA bars suit in federal court until claimant exhausts administrative remedies)
- S.R.P. ex rel. Abunabba v. United States, 676 F.3d 329 (3d Cir. 2012) (FTCA permits tort suits against the United States for employee acts within scope; exhaustion required)
- Mortensen v. First Fed. Sav. & Loan Ass’n, 549 F.2d 884 (3d Cir. 1977) (distinguishing facial and factual challenges under Rule 12(b)(1))
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for pleading requires more than labels and conclusions)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard and requirement to plead factual content permitting reasonable inference of liability)
- Testan v. United States, 424 U.S. 392 (1976) (Tucker Act is jurisdictional and does not itself create substantive cause of action)
- Chabal v. Reagan, 822 F.2d 349 (3d Cir. 1987) (district courts’ jurisdiction under Little Tucker Act for non‑tort money claims up to $10,000)
- United States v. Kubrick, 444 U.S. 111 (1979) (accrual principles for claims against the United States)