Alhassid v. Bank of Am., N.A.

• Decision Date: 17 November 2014
• Docket Number: Case No. 14–CIV–20484.
• Citation: 60 F.Supp.3d 1302
• Parties: Sarah ALHASSID and Sarah Drennan, on their own behalf and on behalf of all others similar situated, Plaintiff, v. BANK OF AMERICA, N.A., Nationstar Mortgage, LLC (d/b/a Champion Mortgage), Defendants.
• Court: U.S. District Court — Southern District of Florida

60 F.Supp.3d 1302

Sarah ALHASSID and Sarah Drennan, on their own behalf and on behalf of all others similar situated, Plaintiff

v.BANK OF AMERICA, N.A., Nationstar Mortgage, LLC (d/b/a Champion Mortgage), Defendants.

Case No. 14–CIV–20484.

United States District Court, S.D. Florida.

Signed Nov. 17, 2014.

Iris Joy Herssein, Wolfson & Grossman, Jeffrey Louis Goodman, Law Offices of Herssein and Herssein P.A., Reuven T. Herssein, Herssein Law Group, North Miami, FL, Maury Lorne Udell, Beighley, Myrick & Udell, P.A., Maxwell Miller Nelson, Herssein Law Group, Miami, FL, Geoff Hirshberg, Herssein Law Group, Dania Beach, FL, for Plaintiff.

Christopher Stephen Carver, Brendan I. Herbert, Akerman Senterfitt, Alan Graham Greer, Nathaniel Mark Edenfield, Richman Greer, P.A., Miami, FL, David S. Kantrowitz, Matthew G. Lindenbaum, Goodwin Procter, LLP, Boston, MA, David L. Permut, Goodwin Procter, LLP, Washington, DC, Erik Kemp, John B. Sullivan, Jonah S. Van Zandt, Mark Douglas Lonergan, San Francisco, CA, for Defendants.

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS TO DISMISS AND MOTION TO SEVER

BETH BLOOM, District Judge.

THIS CAUSE is before the Court on the Motions to Dismiss Plaintiffs Sarah Alhassid and Sarah Drennan's (“Plaintiffs”) Second Amended Class Action Complaint, ECF No. [73] (“SAC”), filed by Defendant Nationstar Mortgage, LLC (“Nationstar” and Nationstar's “Motion to Dismiss”, ECF No. [87] ) and Defendant Bank of America, N.A. (“Bank of America” and Bank of America's “Motion to Dismiss”, ECF No. [91] ), and Nationstar's Motion to Sever, ECF No. [88]. The Court has reviewed the Motions, all supporting and opposing filings, and the record in this case, and is otherwise fully advised as to the premises. For the reasons set forth below, the Court in part grants and in part denies the Motions.

I. BACKGROUND

This case involves allegations that Defendants manufactured, imposed and inflated unauthorized and improper fees in connection with mortgage loans they owned and/or serviced, first by improperly placing the loans in some form of default status and then, using the default status as a pretext, assessing excessive fees designed to obtain windfall profits at their borrowers' expense. Plaintiff Alhassid initially instituted this putative class action several weeks following the filing of a foreclosure action by Nationstar against her in Florida state court. Arguing that the state court foreclosure action was first-filed, Bank of America requested that this Court abstain from exercising jurisdiction over Alhassid's claims. Prior to the Court's ruling on that motion, Plaintiff Alhassid filed her First Amended Class Action Complaint. Bank of America renewed its request to abstain, and in the alternative, argued that the complaint should be dismissed for failure to state a claim. Nationstar then voluntarily dismissed the state court action. Bank of America dropped its request to abstain but reiterated its motion to dismiss. The Court subsequently granted Alhassid leave to amend. Plaintiffs—now including Drennan—filed the operative complaint.

Plaintiffs allege that both Alhassid and Drennan had obtained mortgages owned and/or serviced by Bank of America, which were later sold to Nationstar. SAC ¶ ¶ 40–41, 53. Alhassid, a resident and citizen of Florida, entered into a reverse mortgage for her condominium in February, 2007. SAC ¶ 17. Bank of America later acquired Alhassid's reverse mortgage. SAC ¶ 40. Under the terms of her reverse mortgage agreement, Alhassid was responsible for paying property taxes and flood and hazard insurance for the property. SAC ¶ 18. However, the agreement excused Alhassid from the personal obligation to pay for property insurance so long as her condominium association maintained a satisfactory blanket insurance policy. SAC ¶ 19. The agreement further provided that, if Alhassid failed to fulfill her tax and insurance obligations, the lender could request that Alhassid furnish receipts of payment, and “may do whatever is necessary to protect the value of the Property and Lender's rights in the Property, including payment of taxes, hazard insurance and other items [previously] mentioned.” SAC ¶¶ 20, 24.

During the relevant period, Alhassid never missed a tax payment, and satisfied her property insurance coverage obligations through timely condominium fee payments to her condominium association, which maintained the requisite property insurance. SAC ¶¶ 22–23. Nevertheless, in 2009, Bank of America notified Alhassid by letter that she had missed “one or more of these tax or insurance payments” and unilaterally sought and purchased force-placed flood insurance for Alhassid's property. SAC ¶¶ 25–26. Bank of America placed the reverse mortgage loan in default, and charged Alhassid with $6,467.31 “for the full amount of the tax and/or insurance payment.” SAC ¶ 27. Nationstar acquired the underlying note and became servicer of Alhassid's reverse mortgage sometime in 2012 or 2013. SAC ¶ 41. Plaintiffs allege that, without performing any separate diligence on the loan's status, Nationstar began systematically and consistently adding various unnecessary and unauthorized charges to Alhassid's loan balance, including for services never performed. SAC ¶¶ 42, 44. Alhassid, personally and through her condominium association, contacted Bank of America and Nationstar numerous times between 2009 and 2013 to “clear up any misunderstanding.” SAC ¶ 46. Defendants never responded to Alhassid's proof of property insurance, and never articulated the basis for her mortgage's default and the subsequent fees and charges. SAC ¶¶ 46–48. In December, 2013, a third party prematurely paid Alhassid's property taxes; Nationstar then charged Alhassid for “delinquent taxes.” SAC ¶¶ 49–50. Alhassid alleges that Bank of America and Nationstar used the unnecessary force-placed insurance as a catalyst to place the loan in default, to then assess unauthorized and exorbitant fees, and finally to accelerate the loan and foreclose on the property. SAC ¶¶ 30, 34. On January 15, 2014, Nationstar served Alhassid with a foreclosure lawsuit. SAC ¶ 51.

Drennan maintained a traditional mortgage loan on her residential property. SAC ¶ 54. Her loan and servicing rights were sold by Bank of America to Nationstar in June, 2013. SAC ¶ 53. In January, 2014, Drennan undertook to modify her mortgage loan; the modification was completed in April, 2014. SAC ¶ 54. After modification, Nationstar notified Drennan that there was a shortage in escrow. SAC ¶ 55. Her monthly payments then rose to a level much higher than they been pre-modification. SAC ¶ 55. Without formally notifying Drennan that her loan was in default, Nationstar then began to charge Drennan with several hundred dollars per month for various unauthorized and excessive fees. SAC ¶¶ 56–58. Plaintiffs allege that Nationstar engaged in this process in order to strip its borrowers of their homes through eventual foreclosure actions. SAC ¶ 61.

Plaintiffs assert their claims on behalf of a purported nationwide class of Bank of America and Nationstar's traditional and reverse mortgage borrowers who had their loans placed in default for any reason and on that basis, or without having their loans placed in default, were charged for unauthorized and excessive fees of any type. SAC ¶ 63. Plaintiffs seek to certify six classes, including subclasses of the foregoing who were parties to foreclosure actions, and borrowers specifically located in Florida and Nevada. Id.

Plaintiffs' SAC asserts nine causes of action: (I) breach of contract regarding unnecessary and excessive servicing fees and charges; (II) breach of contract regarding unauthorized foreclosure proceedings; (III) breach of contract regarding unauthorized charges of attorneys' fees and costs; (IV) breach of the covenant of good faith and fair dealing regarding Bank of America's assignment or sale to Nationstar and the resulting imposition of unnecessary and excessive fees and charges; (V) unjust enrichment; (VI) violation of Florida's Deceptive and Unfair Trade Practices Act, Fla. Stat. § 501.201 et seq. (“FDUTPA”); (VII) violation of Nevada's Deceptive Trade Practices Act, Nev. Rev. Stats. § 598.0903 et seq. (“NDTPA”); (VIII) violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”); and (IX) civil conspiracy.

II. DISCUSSION

In its Motion to Dismiss, Bank of America maintains that Alhassid's claims are subject to, enjoined by and released through a nationwide class settlement resolving lender force-placed property insurance claims. Bank of America argues further that neither Alhassid nor Drennan allege any actionable conduct by Bank of America other than the placement of flood insurance on Alhassid's property. It further asserts that Plaintiffs allege no facts to support an allegation that Bank of America charged additional improper fees, failing to state a claim against Bank of America, thereby mandating dismissal pursuant to Rule 12(b)(6). Nationstar argues that Plaintiffs' non-contract claims—counts five through nine—are non-viable, and requests dismissal of what it characterizes as Plaintiffs' attempt to pursue their contract-based allegations of improper fee assessment outside the terms of those contracts. Nationstar further seeks to sever Drennan and her claims from this suit for misjoinder under Rules 21 and 20(a)(1).

A. Standard for Dismissal for Failure to State a Claim

A pleading in a civil action must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). To satisfy the Rule 8 pleading requirements, a complaint must provide the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002). While a complaint “does not need detailed factual allegations,” it must provide “more than labels and...