Crockett v. Nationstar Mortg., LLC (In re Crockett)
| Decision Date | 27 January 2020 |
| Docket Number | Case No. 19-00101,Adversary Proceeding No. 19-10030 |
| Parties | In re ANDRENA D. CROCKETT, Debtor. ANDRENA D. CROCKETT, Plaintiff, v. NATIONSTAR MORTGAGE, LLC, dba MR. COOPER, Defendant. |
| Court | United States Bankruptcy Courts. District of Columbia Circuit |
Not for Publication in West's Bankruptcy Reporter
In a civil action commenced in 2015 in the Superior Court of the District of Columbia, Case No. 2015 CA 003640 R (RP), Nationstar Mortgage, LLC was granted permission in October 2017 to proceed with a foreclosure sale of the home of Andrena D. Crockett, the debtor in the above-indicated bankruptcy case, Case No. 19-00101, in this court. The civil action is still pending because of a pending appeal pursued by Crockett and because any foreclosure sale would have to be ratified by the Superior Court. In addition, under 11 U.S.C. § 362(a), the bankruptcy case stays any foreclosure sale. Crockett's Complaint in this adversary proceeding asserts various claims against Nationstar for monetary damages and injunctive relief, with some of those claims relating to Nationstar's conduct in the civil action.
As held in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), to avoid dismissal under Fed. R. Civ. P. 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). For the most part, the Complaint's allegations, even if accepted as true, do not establish a plausible claim for relief as a matter of law. Moreover, the allegations are conclusory allegations that ought not be accepted as true, for a court is not required to accept as true legal conclusions "couched" as factual allegations, and "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice" to state a claim upon which relief can be granted. Iqbal, 556 U.S. 678, citing Twombly, 550 U.S. at 555. Accordingly, I will dismiss the Complaint.
I first address Crockett's claim ("Claim I") that Nationstar violated the automatic stay. The facts pertinent to that claim,next discussed, also bear on Crockett's claims, discussed later, that Nationstar committed fraud by allegedly misleading the Superior Court as to who was the proper plaintiff in the Superior Court. The docket in the Superior Court reflects some confusion as to who was the plaintiff at various times in the foreclosure action, and Crockett relies on that confusion in asserting that Nationstar violated the automatic stay and committed fraud.
The docket in the Superior Court and the dockets for the two bankruptcy cases establish these facts.1 Nationstar commenced the civil action on May 19, 2015. On September 22, 2017, the Superior Court substituted MTGLQ Investors, L.P. as the plaintiff. On October 25, 2017, the Superior Court issued an Order that, despite MTGLQ having been substituted as the plaintiff, listed Nationstar as the party. The Order upheld Nationstar's claims as the plaintiff, granted Nationstar's motion for summary judgment, and dismissed all remaining counterclaims asserted by Crockett. On October 25, 2017, the Superior Court also entered an Order and Decree of Sale, again listingNationstar as the plaintiff, and authorizing Nationstar to proceed with a foreclosure sale on the terms specified in the Order and Decree of Sale, which specified that the sale was subject to ratification by the Superior Court. The Superior Court set status hearings from time to time.
On March 19, 2018, MTGLQ filed a motion to substitute Nationstar as the plaintiff. The docket sheet includes this entry dated April 20, 2018:
The Superior Court did not file a written order granting that motion, but all of the Superior Court's subsequent orders have listed Nationstar as the plaintiff.
The debtor filed a notice of appeal to the District of Columbia Court of Appeals from the Order and the Order and Decree of Sale that were entered on October 25, 2017. Nationstar did not proceed immediately to a foreclosure sale, and initially requested that status hearings be continued pending the outcome of the appeal. On November 2, 2018, the Superior Court set a status hearing for May 10, 2019. Towards the end of 2018, Nationstar decided to proceed with a foreclosure sale to be held on January 8, 2019. On January 4, 2019, the debtor filed an emergency motion for a temporary restraining order to stop theforeclosure sale. The Superior Court denied that motion on January 7, 2019, and on that date the debtor commenced Case No. 19-00019 in this Bankruptcy Court, thus giving rise to an automatic stay under 11 U.S.C. § 362(a) staying the foreclosure sale.
On January 10, 2019, even though the Superior Court had orally ruled on April 20, 2018, that Nationstar would be substituted as the plaintiff, MTGLQ (represented by the same attorneys as those representing Nationstar) filed a Suggestion of Bankruptcy Filing in the Superior Court listing itself in the caption as the plaintiff and noting the bankruptcy case the debtor filed on January 7, 2019 (Case No. 19-00019). That bankruptcy case was dismissed on February 8, 2019, followed by the debtor's current bankruptcy case (Case No. 19-00101) commenced on February 15, 2019. That new bankruptcy case once again gave rise to an automatic stay under 11 U.S.C. § 362(a), and that automatic stay remains in place. Failing to comply with Local Bankruptcy Rule 2072-1, Crockett did not send notice of the filing of her petition commencing Case No. 19-00101 to the Clerk of the Superior Court and to the Clerk of the District of Columbia Court of Appeals. Apparently unaware that Crockett's earlier bankruptcy case, Case No. 19-00019, had been dismissed, the Superior Court continued until May 2019 to treat the civil action as still stayed by the automatic stay in that earlierbankruptcy case.2
On May 10, 2019, the Superior Court continued the status hearing set for that date to May 31, 2019. At the status hearing of May 31, 2019, or beforehand, the Superior Court determined that Case No. 19-00019 had been closed. A docket entry of May 31, 2019, in the Superior Court action for the May 31, 2019 status hearing reflects this outcome: Indeed, Case No. 19-00019 in this court had been closed on May 24, 2019.3 However, Case No. 19-00101, in which the automatic stay of 11 U.S.C. § 362(a) remained in place, was still pending, but the debtor had not notified the Superior Court of the pendency of the later bankruptcy case, Case No. 19-00101.
An attorney for Nationstar appeared at the status hearing on May 31, 2019, and entered his appearance on behalf of Nationstar on that date. There is nothing in the debtor's Complaint to suggest that this new attorney necessarily would have been aware that the debtor had filed Case No. 19-00101 in the BankruptcyCourt. The debtor nevertheless asserts that at the status hearing of May 31, 2019, this new attorney was aware of Case No. 19-00101 but failed to inform the Superior Court judge that the debtor had an active bankruptcy case pending, and that this "allowed the Judge to believe that Plaintiff had no active bankruptcy." However, other than the Superior Court's setting a further status hearing (which has not been held), nothing happened in the civil action as a result of the status hearing of May 31, 2019.
On July 9, 2019, MTGLQ (represented by the same attorneys as Nationstar and even though the Superior Court had orally ruled on April 20, 2018, that Nationstar would be substituted as the plaintiff), filed a motion to continue the status hearing set for August 2, 2019, based on the pendency of Case No. 19-00101 in the Bankruptcy Court. On July 30, 2019, the Superior Court canceled the August 2, 2019 status hearing.
In the Complaint's Claim I the debtor contends that Nationstar violated the automatic stay when its attorney at the status hearing of May 31, 2019, failed to inform the Superior Court judge that the debtor had an active bankruptcy case pending, and thus "allowed the Judge to believe that Plaintiff had no active bankruptcy."
Although 11 U.S.C. § 362(a)(1) stays any act to continue a civil action (meaning continuing to litigate the civil action), Nationstar did not act to continue litigating the civil action, as is evident from its attorneys' filings of January 9, 2019, and July 9, 2019 (filings for which the caption listed MTGLQ as the plaintff). The Superior Court needed to be kept apprised whether the automatic stay was in place and set status hearings for that apparent purpose during the time it understood that Case No. 19-00019 was pending and during the pendency of Case No. 19-00101 once it learned of that case. The status hearings have only served informational purposes, and do not entail a resumption of the litigation in the Superior Court. In any event, it was not Nationstar that requested the setting of a status hearing. There has been no act by Nationstar to resume litigating the civil action and thus no violation of the automatic stay. Nor has the debtor pointed to any damage arising from the Superior Court's setting further status hearings.
The debtor also complains that the Superior Court's erroneously acting as if there were no automatic stay in place resulted in the District of Columbia Court of Appeals issuing a decision in the debtor's pending appeal. However, Crockett had not notified the Court of Appeals as required by Local Bankruptcy Rule 2072-1 that Case No. 19-00101 had been commenced in the Bankruptcy...
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