Dawoudi v. Nationstar Mortg. LLC

• Decision Date: 23 March 2020
• Docket Number: Case No. 1:19 CV 3783
• Citation: 448 F.Supp.3d 918
• Parties: Ansarullah DAWOUDI, ON BEHALF OF PLAINTIFF and the class members described herein, Plaintiff, v. NATIONSTAR MORTGAGE LLC, doing business as Mr. Cooper and Tiaa FSB, Defendants.
• Court: U.S. District Court — Northern District of Illinois

448 F.Supp.3d 918

Ansarullah DAWOUDI, ON BEHALF OF PLAINTIFF and the class members described herein, Plaintiff,

v.NATIONSTAR MORTGAGE LLC, doing business as Mr. Cooper and Tiaa FSB, Defendants.

Case No. 1:19 CV 3783

United States District Court, N.D. Illinois, Eastern Division.

Signed March 23, 2020

Daniel A. Edelman, Cathleen M. Combs, Mary Frances Charlton, Tara Leigh Goodwin, Daniel S. Miller, Edelman, Combs, Latturner and Goodwin, LLC, Chicago, IL, for Plaintiff.

John Curtis Lynch, Troutman Sanders LLP, Virginia Beach, VA, Mary S. DiRago, Troutman Sanders LLP, Chicago, IL, Mary Kate Kamka, Pro Hac Vice, Troutman Sanders LLP, San Francisco, CA, for Defendants.

MEMORANDUM OPINION AND ORDER

John Robert Blakey, United States District Judge

Plaintiff Ansarullah Dawoudi defaulted on his mortgage payments and now sues his loan servicer, Defendant Nationstar Mortgage LLC (Nationstar), and the owner of the loan, Defendant TIAA FSB (TIAA), for allegedly engaging in illegal credit and collection practices. Plaintiff brings a four-count complaint under the Fair Debt Collection Practices Act (FDCPA), the Real Estate Settlement Procedures Act (RESPA), and the Truth in Lending Act (TILA). Defendants move to dismiss. [19]. For the reasons explained below, this Court grants in part and denies in Defendants' motion.

I. Background

A. The Complaint's Allegations

In December 2012, Plaintiff obtained a residential mortgage (the Mortgage). [1] ¶ 28. Plaintiff's Mortgage Agreement provides, in pertinent part:

5. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan Application; Leaseholds. ... Lender may inspect the Property if the Property is vacant or abandoned or the loan is in default.

* * *

7. Charges to Borrower and Protection of Lender's Rights in the Property. ... If Borrower fails to make these payments [governmental or municipal charges, fines and impositions] or the payments required by Paragraph 2 [monthly payments of taxes, insurance and other charges], or fails to perform any other covenants or agreements contained in this Security Instrument, or there is a legal proceeding that may significantly affect Lender's rights in the Property (such as a proceeding in bankruptcy, for condemnation or to enforce laws or regulations), then Lender may do and pay 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 mentioned in Paragraph 2.

Any amounts disbursed by Lender under this paragraph shall become an additional debt of Borrower and be secured by this Security Instrument. These amounts shall bear interest from the date of the disbursement, at the Note rate, and at the option of Lender, shall be immediately due and payable.

[19-2] at 7, 8.

Defendant Nationstar has serviced the Mortgage since November 2014. [1] ¶¶ 30, 33. At the time Nationstar acquired the Mortgage, Plaintiff had already defaulted. Id. ¶ 31. Nationstar services the loan for Defendant TIAA Bank, which currently owns the loan. Id. ¶ 33. Plaintiff asserts that the loan "was accelerated" on or before November 16, 2015. Id. ¶ 32.

As detailed below, Plaintiff claims that Defendants engaged in various illegal practices concerning his mortgage.

Refusal to justify charges . In November 2018, Plaintiff submitted to Nationstar a "qualified written request" (QWR) seeking various information, including third-party invoices, related to certain charges on Plaintiff's loan. Id. ¶ 34; [1-1] at 2–3. Nationstar replied in a letter dated February 12, 2019 (the February 2019 Letter) that it had no obligation to provide third-party invoices, claiming such materials constituted "confidential, proprietary, or privileged information." [1] ¶ 35; [1-2] at 2. Plaintiff alleges that such materials are not, in fact, confidential, proprietary, or privileged information. Id. ¶ 36.

Late charges . On February 12, 2019, Nationstar sent Plaintiff an amended payoff statement (Payoff Statement). Id. ¶ 38. The Payoff Statement provided an "estimated payoff amount required to prepay" the mortgage in full. [1-3] at 2. It also warned that because the mortgage "is presently in default," Nationstar could bring a foreclosure action if Plaintiff failed to make payments. Id. The Payoff Statement further stated that if "any scheduled payment is received after the Late Charge grace period as set forth in the applicable Note, a Late Charge of $26.20 will be assessed." [1] ¶ 38; [1-3] at 2. Plaintiff claims that, by threatening late charges on an accelerated loan, Nationstar engaged in illegal debt collection practices. Id. ¶ 40.

Inspection fees . Next, while Plaintiff's mortgage remained in default, Nationstar inspected Plaintiff's home and charged Plaintiff $265 in inspection fees. Id. ¶ 46. Plaintiff alleges Nationstar improperly charged these fees when it knew that Plaintiff continued to occupy the property. Id. ¶¶ 46–47.

Payoff request . On March 28, 2019, Plaintiff sent Nationstar a request for a mortgage payoff statement. Id. ¶ 51. Nationstar responded not by providing the requested payoff statement, but instead by directing Plaintiff to contact a Nationstar employee for further information. Id. ¶ 53. Plaintiff alleges that Nationstar has yet to provide the requested mortgage payoff statement, id. ¶ 54, and asserts that both Nationstar and TIAA violated the law by failing to provide it, id. ¶¶ 104–05.

B. Plaintiff's Claims

Plaintiff brings a four-count complaint to redress the injuries from Defendants' alleged illegal practices. Count I alleges that Nationstar violated the FDCPA, 15 U.S.C. §§ 1692e, 1692e(2), 1692e(5), 1692e(10), 1692f, and 1692f(1) by charging Plaintiff for unauthorized property inspection fees and representing that it possessed a right to collect those fees. [1] ¶ 57. Count II alleges that Nationstar violated the FDCPA, 15 U.S.C. §§ 1692e, 1692e(2), 1692e(5), 1692e(10), 1692f, and 1692f(1) by stating that it had the right to charge late charges on a loan that had been accelerated. [1] ¶ 76. Count III alleges that Nationstar violated RESPA, 12 U.S.C. § 2605(e) by refusing to provide evidence—in the form of third-party invoices—that justified its fees and charges. [1] ¶ 93. And finally, Count IV alleges that both Nationstar and TIAA Bank violated TILA, 15 U.S.C. 1639g by failing to provide an accurate payoff balance within a reasonable time after the receipt of a written request for such balance. [1] ¶ 105.

II. Legal Standard

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must provide a "short and plain statement of the claim" showing that the pleader merits relief, Fed. R. Civ. P. 8(a)(2), so the defendant has "fair notice" of the claim "and the grounds upon which it rests," Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson , 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) ). A complaint must also contain "sufficient factual matter" to state a facially plausible claim to relief—one that "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). This plausibility standard "asks for more than a sheer possibility" that a defendant acted unlawfully. Sevugan v. Direct Energy Servs., LLC , 931 F.3d 610, 614 (7th Cir. 2019) (quoting W. Bend Mut. Ins. Co. v. Schumacher , 844 F.3d 670, 675 (7th Cir. 2016) ). Thus, "threadbare recitals of the elements of a cause of action" and mere conclusory statements "do not suffice." United States ex rel. Berkowitz v. Automation Aids, Inc. , 896 F.3d 834, 839 (7th Cir. 2018) (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ).

In evaluating a complaint under Rule 12(b)(6), this Court accepts all well-pleaded allegations as true and draws all reasonable inferences in the plaintiff's favor. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. This Court does not, however, accept a complaint's legal conclusions as true. Cornielsen v. Infinium Capital Mgmt., LLC , 916 F.3d 589, 603 (7th Cir. 2019).

III. Analysis

Defendants move to dismiss Plaintiff's complaint in its entirety. [19]. This Court considers each claim in order below.

A. Count I: Inspection Fees

In Count I, Plaintiff alleges that Nationstar violated numerous provisions of the FDCPA by charging Plaintiff for property inspection fees and representing it had the right to collect a balance including those fees. [1] ¶ 57. Nationstar moves to dismiss, arguing that the Mortgage Agreement authorized its actions. [19-1] at 10. Specifically, Nationstar cites Sections 5 and 7 of the Mortgage Agreement, which provide in relevant part:

5. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan Application; Leaseholds. ... Lender may inspect the Property if the Property is vacant or abandoned or the loan is in default.

* * *

7. Charges to Borrower and Protection of Lender's Rights in the Property. ... If Borrower fails to make these payments or the payments required by Paragraph 2, ... then Lender may do and pay 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 mentioned in Paragraph 2. Any amounts disbursed by Lender under this paragraph shall become an additional debt of Borrower and be secured by this Security Instrument.

[19-2] at 7, 8 (emphasis added).

No FDCPA liability lies where a servicer charges fees expressly authorized by a note or mortgage.

Singer v. Pierce & Assocs., P.C. , 383 F.3d 596, 598 (7th Cir. 2004) ; Rizzo v. Pierce & Assocs. , 351 F.3d 791, 794 (7th Cir. 2003). And here, Section 5 of the Mortgage explicitly provides authorization for Nationstar to conduct an inspection in the event Plaintiff defaults. And Plaintiff himself alleges that he did, in fact, default. [1] ¶ 31...