Carnegie v. Nationstar Mortg., LLC (In re Carnegie)

• Decision Date: 29 September 2020
• Docket Number: Case No. 14-80536,Ad. Proc. No. 20-09001
• Citation: 621 B.R. 392
• Parties: IN RE Clorie CARNEGIE, Debtor. Clorie Carnegie, Plaintiff, v. Nationstar Mortgage, LLC d/b/a Mr. Cooper, Defendant.
• Court: U.S. Bankruptcy Court — Middle District of North Carolina

621 B.R. 392

IN RE Clorie CARNEGIE, Debtor.

Clorie Carnegie, Plaintiff,

v.Nationstar Mortgage, LLC d/b/a Mr. Cooper, Defendant.

Case No. 14-80536

Ad. Proc. No. 20-09001

United States Bankruptcy Court, M.D. North Carolina, Durham Division.

Signed September 29, 2020

Craig M. Shapiro, for Plaintiff Clorie Carnegie.

Brian A. Calub, for Defendant Nationstar Mortgage LLC.

MEMORANDUM OF OPINION

Lena Mansori James, United States Bankruptcy Judge This adversary proceeding comes before the Court upon the motion to dismiss and supporting brief filed by Nationstar Mortgage, LLC d/b/a Mr. Cooper, pursuant to Federal Rule of Civil Procedure 12(b)(6), as made applicable to this proceeding by Federal Rule of Bankruptcy Procedure 7012, for failure to state a claim upon which relief can be granted.

PROCEDURAL HISTORY

On November 22, 2019, Clorie Carnegie (the "Plaintiff") filed a motion to reopen her underlying bankruptcy case to file an adversary proceeding against Nationstar Mortgage, LLC d/b/a Mr. Cooper (the "Defendant"), for violations of the discharge injunction, confirmation order, and other Bankruptcy Code provisions. After a hearing on the matter, the Court granted the motion and reopened the bankruptcy case on December 13, 2019.

The Plaintiff filed the complaint to commence this adversary proceeding on January 15, 2020 (Docket No. 1, the "Complaint").¹ The Complaint asserts two claims for relief: (1) violations of the discharge injunction, and (2) violations of the automatic stay. The Plaintiff seeks actual damages, including emotional distress damages as well as reasonable attorneys' fees, costs, and expenses incurred in connection with filing the Complaint. The Plaintiff also requests the imposition of punitive sanctions against the Defendant, in an amount "sufficient to prevent [the Defendant] from continuing to engage in this conduct ... and otherwise to deter such future conduct" from other parties (Docket No. 1, ¶ 114).

After a Court-provided extension of time, the Defendant filed an Answer on March 20, 2020, which included a motion to dismiss the Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, made applicable to this adversary proceeding pursuant to Federal Rule of Bankruptcy Procedure 7012(b). On April 6, 2020, the Defendant filed a brief in support of its motion to dismiss (Docket No. 12, 13, collectively, the "Motion"). The Plaintiff filed a response to the Motion on May 25, 2020 (Docket No. 19, the "Response"), and the Court took the matter under advisement on July 16, 2020.

STANDARD OF REVIEW

Rule 12(b)(6) of the Federal Rules of Civil Procedure requires dismissal of a complaint if it "fail[s] to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). In evaluating a motion to dismiss, a court must "test the sufficiency of the complaint to see if it alleges a claim for which relief can be granted." Dolgaleva v. Va. Beach City Pub. Sch., 364 F. App'x 820, 825 (4th Cir. 2010). A motion under Rule 12(b)(6) should be granted if the complaint does not allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Accordingly, the factual allegations must "be enough to raise a right to relief above the speculative level" and advance the plaintiff's claim "across the line from conceivable to plausible." Id. at 555, 570, 127 S.Ct. 1955. As explained in Ashcroft v. Iqbal,

A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.

556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotations and citations omitted).

To determine plausibility, all well-pleaded facts set forth in the complaint are taken as true and viewed in a light most favorable to the plaintiff; however, "legal conclusions, elements of a cause of action, and bare assertions devoid of further factual enhancement" will not constitute well-pleaded facts necessary to withstand a motion to dismiss. Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc. , 591 F.3d 250, 255 (4th Cir. 2009). In other words, the "tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Assuming the complaint meets the plausibility standard, the plaintiff is not required "to also rebut other possible explanations for the conduct alleged." 2 MOORE'S FEDERAL PRACTICE § 12.34(1)(b) (2019). See Houck v. Substitute Tr. Servs., Inc. , 791 F.3d 473, 484 (4th Cir. 2015) (holding that "a plaintiff need not demonstrate ... that alternative explanations are less likely" to survive a motion to dismiss) (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). On the other hand, dismissal is proper under Rule 12(b)(6) "if the complaint lacks an allegation regarding an element necessary to obtain relief." 2 MOORE'S FEDERAL PRACTICE § 12.34(4)(a) (2019); see also EEOC v. PBM Graphics , 877 F. Supp. 2d 334, 343 (M.D.N.C. 2012) (finding a plaintiff must allege facts sufficient to state each element of his claim) (citing Bass v. E.I. DuPont de Nemours & Co. , 324 F.3d 761, 764–65 (4th Cir. 2003) ).

FACTUAL BACKGROUND AND ALLEGATIONS

For purposes of assessing the Defendant's Rule 12(b)(6) Motion, facts within the Complaint are accepted as true and construed in the light most favorable to the Plaintiff. See Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc. , 591 F.3d 250, 255 (4th Cir. 2009). The Court also takes judicial notice of pertinent docket entries and papers within this adversary proceeding and the underlying bankruptcy case. See Anderson v. Fed. Deposit Ins. Corp. , 918 F.2d 1139, 1141 n. 1 (4th Cir. 1990) (holding that a bankruptcy court may "properly take judicial notice of its own records"); see also Brown v. Ocwen Loan Servicing, LLC , No. 14-3454, 2015 WL 5008763, at *1 n. 3 (D. Md. Aug. 20, 2015), aff'd , 639 Fed. App'x. 200 (4th Cir. 2016) (taking judicial notice of docket entries in other cases for purposes of evaluating a Rule 12(b)(6) motion to dismiss).

On May 19, 2014, the Plaintiff filed a voluntary petition for relief under chapter 13 of the Bankruptcy Code. At all relevant times, the Plaintiff was and remains the owner of record on real property located at 1104 Hazel Street, Durham, North Carolina (the "Property"). The Plaintiff listed the Property in Schedule A, with a purported fair market value of $34,408.00. When the Plaintiff filed her bankruptcy case, the Property was encumbered by a mortgage held by the Defendant, which the Plaintiff listed in Schedule D in the amount of $44,891.00 (Docket No. 1, ¶¶ 18, 19).

On May 22, 2014, the Plaintiff proposed a chapter 13 plan, in which the Defendant's claim was treated under 11 U.S.C. § 1322(b)(2) as secured only to the extent of the value of the Property with any remaining balance treated as unsecured (Case No. 14-80536, Docket No. 10, the "Plan"). The Defendant's claim was listed in the section of the Plan labeled as "STD – Secured Debts @ FMV," which the Plan reserves for "creditors [that] have partially secured and partially unsecured claims[,]" with "[t]he secured part of the claim [to] be paid in full over the life of the plan on a pro-rata basis with other secured claims." Pursuant to that proposed treatment, the chapter 13 trustee (the "Trustee") would distribute approximate monthly payments of $809.57 to the Defendant on its secured claim. The Plan projected a 0% dividend to general unsecured, non-priority creditors, which would include the remaining unsecured balance of the Defendant's claim.² The Plaintiff served the proposed plan on the Defendant at an address the Defendant later listed within its proof of claim as the address for directing all payments.³

On July 16, 2014, the Trustee filed a Notice of Proposed Plan alerting creditors to the filing of the Plan and the deadline by which to file any objection, as well as providing a summary of the Plan through an attached proposed confirmation order (Case No. 14-80536, Docket No. 24). In the proposed confirmation order, the Defendant's claim was listed in Section D(2), labeled as "Partially Secured Claims – Real Property and Personal Property." The proposed confirmation order reflected that the Defendant had yet to file its proof of claim and, consequently, the Defendant's total claim amount was "unknown." The Trustee did, however, list the proposed amount of the Defendant's secured claim as $34,408.00, in accordance with the proposed treatment described in the Plan. The Court served the Trustee's notice on the Defendant at the preferred noticing address listed within the Defendant's proof of claim (Case No. 14-80536, Docket No. 25).

On the same day the Trustee filed the notice, July 16, 2014, the Defendant filed its proof of claim, asserting a claim of $47,336.50, secured by a mortgage on the Property, which the Defendant valued at $44,891.94. The Defendant did not, however, file any objection to the Debtor's Plan. Consequently, the Court entered an order on August 19, 2014, confirming the Plaintiff's Plan (Case No. 14-80536, Docket No. 26, the "Confirmation Order"). The Confirmation Order mirrored the Trustee's language regarding the treatment of the Defendant's claim, including the admonition that "[a]ny objection to value is required to be filed as a formal objection to valuation not later than 60 days from the date of the entry of this [Co...