United States District Court, S.D. New York
MARIANNE STIKAS, on behalf of herself and all others similarly situated, Plaintiffs,
J.P. MORGAN CHASE BANK, NATIONAL ASSOCIATION, and JOHN DOES 1-20, Defendants.
OPINION & ORDER
PAUL A. CROTTY, District Judge.
Plaintiff Marianne Stikas filed a Class Action Complaint against Defendants J.P. Morgan Chase Bank ("J.P. Morgan") and John Does 1-20, alleging breach of contract, unjust enrichment, and abuse of process, arising out of J.P. Morgan's alleged unlawful splitting of attorneys' fees with non-lawyers in a mortgage foreclosure proceeding. Plaintiff also seeks an accounting.
Defendant moves to dismiss all claims, pursuant to Fed. R. of Civ. P. 12(b)(6). For the reasons set forth below, the motion to dismiss is GRANTED in part and DENIED in part.
I. Plaintiff's Mortgage and Default
On January 21, 2004, Plaintiff obtained a mortgage loan from Washington Mutual Bank to purchase real property, located in Kent, Connecticut. Compl. ¶¶ 26-27. In connection with the mortgage loan, Plaintiff signed a promissory note for the principal amount of $277, 500, payable to Washington Mutual (the "Note"). Id. ¶ 27; Bernard Decl., Ex. A.
The Note provided that, if Plaintiff defaulted on the loan, Washington Mutual could accelerate payment of the outstanding principal balance. The Note further stated that if such an acceleration occurred, Washington Mutual would have "the right to be paid back by [Plaintiff] for all of its costs and expenses in enforcing this Note, whether or not a lawsuit is brought, to the extent not prohibited by Applicable Law." Bernard Decl., Ex. A, at § 7(E). The Note explained that "expenses include, for example, reasonable attorneys' fees." Id.
The Note was secured by an open-end mortgage deed on the Connecticut property (the "Mortgage"). Compl. ¶ 27; Bernard Decl., Ex. B. The Mortgage likewise provided that, in the event of a default, Washington Mutual could invoke, as "permitted by Applicable Law, " certain remedies, including acceleration of the principal balance and foreclosure on the property. In addition, Washington Mutual would be "entitled to collect all expenses incurred in pursuing the remedies... including, but not limited to, reasonable attorneys' fees." Bernard Decl., Ex. B, § 22. The Mortgage defined "Applicable Law" as:
[A]ll controlling applicable federal, state and local statutes, regulations, ordinances and administrative rules and orders (that have the effect of law) as well as all applicable final, non-appealable judicial opinions.
Id. at p. 2.
In 2008, J.P. Morgan purchased Washington Mutual's banking operations and in due course became Plaintiff's noteholder and mortgagee. Compl. ¶¶ 10, 28. Plaintiff defaulted on the Note in April 2009, and on August 21, 2009, J.P. Morgan accelerated the terms of the Note and commenced a foreclosure action on the Connecticut property. Id. ¶¶ 29, 31. J.P. Morgan was represented in the foreclosure action by the law firm Bendett & McHugh, P.C. Id. ¶ 32. In February 2012, a judgment of strict foreclosure was entered. Plaintiff "incurred charges identified in the foreclosure action as attorney fees in the amount of $3, 025." Id. ¶ 33. In connection with the foreclosure, J.P. Morgan submitted a "sworn statement by an attorney attesting that the attorneys' fees imposed on Plaintiff were based on legal services rendered by [Bendett & McHugh]." Id.
II. J.P. Morgan's Default and Foreclosure Practices
J.P. Morgan's agent, Fidelity National Information Services, Inc. ("Fidelity"), engaged law firms across the country to represent J.P. Morgan in foreclosure and default-related proceedings. Id. ¶ 37, 47. Pursuant to service agreements between Fidelity and J.P. Morgan, Fidelity "served as the intermediary" between J.P. Morgan and the "attorneys in Fidelity's network, " and "overs[aw] the performance" of those attorneys. Id. ¶¶ 40, 42. When J.P. Morgan referred a foreclosure matter to Fidelity, Fidelity in turn referred the matter to an attorney in its network. Id. ¶ 38.
The attorneys entered into "retainer agreements" with Fidelity. The agreements provided that the attorneys would bill J.P. Morgan for their services, and listed the fees that the attorneys could charge. Id. ¶ 47. The agreements also provided that the attorneys would ...