The opinion of the court was delivered by: SPATT, District Judge.
MEMORANDUM OF DECISION AND ORDER
On July 9, 2001, Golden First Mortgage Corp., f/k/a Golden National
Mortgage Banking Corp. ("Golden First" or the "plaintiff") commenced this
diversity action by filing a complaint alleging fraud and breach of
contract in regard to certain loans and the sale of certain properties.
Presently before the Court is (1) a motion to dismiss the amended
complaint by Stewart Dahan, Edward Dahan, Dahan & Associates Credit
Repair Corp. ("Dahan & Associates"), Sholom "SOL" Moskowitz
("Moskowitz") and 21st Century Mortgage, Inc. ("21st Century")
(collectively, the "Dahan defendants") pursuant to Rules 9(b) and 12(b)(6)
of the Federal Rules of Civil Procedure ("Fed.R.Civ.P."); and (2) a
motion to dismiss the amended complaint by Mitchell H. Berger, Esq.
("Berger") pursuant to Fed.R.Civ.P. 9(b) and 12(b)(6) or, in the
alternative, to transfer venue to New Jersey.
The following facts are taken from the amended complaint dated February
22, 2002, which the Court takes to be true. Golden First is a mortgage
banking corporation located in Melville, New York and licensed to
transact business in New Jersey. Golden First provides first mortgages
for home buyers.
In or about 2000, Golden First began noticing that a number of
properties in and around the area of Elizabeth/Newark/West Orange were in
default. After reviewing the files for these properties, the plaintiff
discovered facts common to all of the non-performing mortgages. The files
showed that Edward Dahan of Dahan & Associates was the contact person
on most of the non-performing mortgage loans. A review of the files also
showed that most of the non-performing loans were originally signed by
Moskowitz who operated and was the president of 21st Century. Edward
Dahan acted as 21st Century's agent and processed the mortgage loans on
behalf of 21st Century. Dahan & Associates and 21st Century shared an
office at 443 Northfield Avenue, Suite 300, in West Orange, New Jersey
and also shared the same phone and fax numbers. The letterhead and forms
for 21st Century indicated as such. Indeed, Moskowitz had his attorney
Berger amend 21st Century's Certificate of Incorporation to change its
initial registered office to the business offices of Dahan &
The amended complaint identifies four transactions that give rise to
the alleged fraud. In all of the transactions, Dahan & Associates
introduced Berger to the home buyers. As both closing agent for the title
company and as attorney for the buyers, Berger conducted all of the
closings on the non-performing mortgages at his office. None of the
property sales involved a real estate broker or a sales commission. In
addition, the sales contracts did not require a down payment, money
deposit, or set forth any consideration for the sales contracts. Most
importantly, after purportedly paying thousands of dollars in
out-of-pocket closing costs and equity payments at and before the
closings, the home buyers immediately abandoned the properties and
defaulted on their monthly payments. None of the buyers ever occupied
their properties, which was required under the terms of the mortgage
A. The Park Street Property
On or about February 8, 2000, defendant Zakiyah S. Islam ("Islam")
entered into a sales contract with defendant Selective Realty, Inc.
("Selective Realty"), the seller, to purchase property located at 555
South Park Street, in Elizabeth, New Jersey (the "Park Street Property")
for a price of $160,000. Both Edward Dahan and Moskowitz interviewed her
and provided her with the loan application. Golden First claims that
Dahan & Associates and 21st Century never signed the disclosure
statements on her loan application, in violation of the New Jersey State
Banking Department regulations. The mortgage loan was provided by 21st
According to the HUD-1 Closing Statement prepared by Berger, under the
"Cash From Borrower," Islam was required to pay a sum of $27,521.83 at
the time of the closing. At or prior to the closing, 21st Century sold
the mortgage loan to the plaintiff. On or about April 25, 2000, Berger
conducted the closing at his office. Golden First alleges that Berger's
office notarized the signatures of Islam and Selective Realty either with
false identification or in their absence. Although the HUD-1 Closing
Statement required Islam to pay a sum of $27,521.83 at the time of the
closing, Islam never paid the amount at that time. Furthermore, at the
closing, Islam signed an occupancy agreement certifying to Golden First
that she would occupy the Park Street Property as her primary residence.
However, Islam never moved in or occupied the property.
The following month, Islam defaulted on her loan and failed to make her
first monthly payment of $1,533.94. At about the time of her default,
Islam had another closing in Berger's office for property located at 25
Mountain Drive, in West Orange, New Jersey (the "Mountain Drive
Property"). The purchase price for this property was in the amount of
After Islam defaulted on her Park Street Property mortgage loan, Golden
First could not locate Selective Realty or Islam. The plaintiff contacted
Edward Dahan to inquire whether he had any information concerning Islam
or her whereabouts. Edward Dahan responded that he had no further
information and could not help Golden First locate her. However, at this
time, Dahan & Associates was involved in securing a mortgage for a
prospective purchaser for Islam's Mountain Drive Property.
Within four months, Islam was again in Berger's office closing a third
deal and selling the Mountain Drive Property. According to the
plaintiff, the signature for Islam for the various closings at Berger's
office were completely different. Furthermore, while the spelling of her
name for the closing of the South Park Street Property was "Zakiyah S.
Islam," the spelling of her name for the closing of the Mountain Drive
Property was "Zakiyya Islam." Berger's office notarized both signatures.
B. The Dewey Street Property
On or about February 8, 2000, the same day the sale contract for the
South Park Avenue Property was executed, defendant Terri Cooper
("Cooper") entered into a sales contract with Selective Realty to
purchase property identified in the complaint as the "Dewey Street
Property" for a price of $115,000. The plaintiff claims that Dahan &
Associates and 21st Century never signed the disclosure statements on her
loan application, in violation of the New Jersey State Banking Department
regulations. The mortgage loan was provided by 21st Century, and Edward
Dahan acted as its representative. At or prior to the closing,
21st Century sold the mortgage loan to the plaintiff.
At the closing, Cooper signed an occupancy agreement certifying to
Golden First that she would occupy the Dewey Street Property as her
primary residence. Cooper never moved into or occupied the property.
Cooper never made the first payment due on the mortgage loan to Golden
First, thereby defaulting on the loan.
C. The Ridge Avenue Property
On or about December 1, 1999, defendant Michael D. Towns ("Towns")
entered into a sales contract with Cornelius Whitaker ("Whitaker"), the
seller, to purchase property located on 88 Ridge Avenue, in West Orange,
New Jersey (the "Ridge Avenue Property"). Whitaker had taken title to the
property from Selective Realty. The mortgage loan was provided by 21st
Century, and Edward Dahan was the contact person. Edward Dahan and 21st
Century never signed the disclosure statements on his loan application,
in violation of the New Jersey State Banking Department regulations.
At or prior to the closing, 21st Century sold the mortgage loan to
Golden First. Before the closing, the plaintiff discovered that Towns
owned property located on 93 Alexander Street, in Newark, New Jersey (the
"Alexander Street Property") and still had an outstanding mortgage loan
on it. As a condition to closing on the Ridge Avenue Property, Golden
First required Towns to close on the sale of the Alexander Property and
to satisfy his existing mortgage.
Berger prepared and signed a HUD-1 Settlement Statement on the
Alexander Street Property, indicating that a closing had taken place on
December 14, 1999 and that Towns had sold it to Brenda Sandiford. The
HUD-1 Settlement Statement on the Alexander Street Property listed
Community Home Mortgage Corp. as the lender. According to the plaintiff,
no sale or closing on the Alexander Street Property actually ever took
place. On December 20, 1999, Berger sent Edward Dahan and Moskowitz a
facsimile containing the HUD-1 on the Alexander Street Property. The next
day, Edward Dahan and Moskowitz then faxed the HUD-1 to Golden First.
On or about December 27, 1999, Berger conducted the closing on the
Ridge Avenue Property. The plaintiff believes that Berger notarized the
signature of Towns and Whitaker either with fraudulent identification or
in their absence. At the closing, Towns signed an occupancy agreement
certifying to Golden First that he would occupy the Ridge Avenue Property
as his primary residence. ...