James v. Nationstar Mortg., LLC

• Decision Date: 09 March 2015
• Docket Number: Civil Action 14–0545–WS–N.
• Citation: James v. Nationstar Mortg., LLC, 92 F.Supp.3d 1190 (S.D. Ala. 2015)
• Parties: Aaron Lee JAMES, Sr., et al., Plaintiffs, v. NATIONSTAR MORTGAGE, LLC, et al., Defendants.
• Court: U.S. District Court — Southern District of Alabama

92 F.Supp.3d 1190

Aaron Lee JAMES, Sr., et al., Plaintiffs

v.NATIONSTAR MORTGAGE, LLC, et al., Defendants.

Civil Action 14–0545–WS–N.

United States District Court, S.D. Alabama, Southern Division.

Signed March 9, 2015.

Kenneth J. Riemer, Mobile, AL, for Plaintiffs.

Gregory C. Cook, Balch & Bingham, Birmingham, AL, Griffin Lane Knight, John Wesley Naramore, Balch & Bingham LLP, Montgomery, AL, for Defendants.

ORDER

WILLIAM H. STEELE, Chief Judge.

This matter comes before the Court on defendants' Motion to Dismiss(doc. 8).The Motion has been briefed and is now ripe.

I.Background.

Plaintiffs, Aaron Lee James, Sr. and Willie Mae James(collectively, the “Jameses”), brought this action against Nationstar Mortgage, LLC(“Nationstar”) and Federal National Mortgage Association(“FNMA”).Although the Complaint spans 17 pages, the gist of it is straightforward, to-wit: the Jameses contend that defendants failed to credit their mortgage payments properly, setting off a chain of events culminating in cascading violations of federal consumer protection statutes.

The Complaint's well-pleaded factual allegations (which are accepted as true on Rule 12(b)(6) review) reflect that the Jameses entered into a home mortgage loan (the “Loan”) with nonparty Homecomings Financial Network Inc. in September 2004, with the Loan secured by the James' longstanding residence.(Doc. 1, ¶ 6.)Servicing rights on the Loan were transferred to Nationstar in January 2009, at which time the Loan was deemed to be in default.(Id.,¶ 8.)When Mr. James filed a Chapter 13 bankruptcy petition in June 2011, Nationstar filed a proof of claim pursuant to which more than $20,000 of pre- and post-petition arrearage (i.e., unpaid loan payments and fees) were placed in his bankruptcy plan and ultimately paid through the bankruptcy trustee.(Id.,¶¶ 9–11.)The Complaint alleges that the arrearage has been paid in full, and that the Jameses simultaneously continued to make regular monthly payments on the Loan.(Id.,¶¶ 11, 13.)

The problems giving rise to this lawsuit began on November 22, 2013, when Nationstar sent a letter to Mr. James stating incorrectly, “You have not made payments on your loan since 12/01/2012.”(Doc. 1, ¶ 14.)The November 22 letter concluded with Nationstar threatening to initiate foreclosure proceedings unless the Jameses immediately paid a nearly $12,000 arrearage.(Id. )The Complaint alleges that the letter's statements alleging nonpayment and arrearage “were false and Nationstar knew they were false” because its own records confirmed that the Jameses had made 28 regular payments on the Loan since December 2012.(Id.,¶ 15.)The Complaint also alleges that Nationstar sent the November 22 letter directly to Mr. James, despite knowledge that he was represented by counsel.(Id.,¶ 16.)The letter caused the Jameses to undergo “extreme stress, worry and fear of losing their home.”(Id.,¶ 17.)

Follow-up communications by Mr. James proved ineffectual, as Nationstar persisted in its incorrect assertion that the Jameses had made no Loan payments in nearly a year.(Id.,¶¶ 18, 26.)On January 16, 2014, Mr. James wrote to Nationstar disputing the company's representations in the November 22 letter and requesting specific information concerning his account and the servicing of the Loan.(Id.,¶ 19.)Nationstar's reply was nonresponsive in multiple respects, contained formulaic and irrelevant objections, failed to provide requested information and documentation, and did not correct the servicing error that Mr. James had pointed out, even though Nationstar's own payment history information conclusively established the error of its November 22 letter.(Id.,¶¶ 21–27.)Northstar compounded these defects by refusing to credit certain April 2014 payments to the Loan, and by reporting false and derogatory information about the Jameses to consumer reporting agencies.(Id.,¶¶ 30–31.)

On the strength of these and other factual allegations, plaintiffs assert six causes of action in their Complaint, to-wit: (i) breach of mortgage and note against both defendants; (ii) multiple violations of the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601 et seq.(“RESPA”), against defendant Nationstar; (iii) multiple violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692(“FDCPA”), against defendant Nationstar; (iv) violation of the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq.(“TILA”), against defendant FNMA; and (v) negligence and wantonness against both defendants.Defendants have moved pursuant to Rule 12(b)(6), Fed.R.Civ.P., for dismissal of one subpart of the FDCPA claim, the entire TILA claim, and the state-law negligence / wantonness claims, all for failure to state a claim upon which relief can be granted.¹Plaintiffs oppose the Rule 12(b)(6) Motion.

II.Analysis.

A.Legal Standard.

Defendants' Motion asserts that portions of the Complaint fail to state claims upon which relief can be granted, and therefore is properly analyzed under Rule 12(b)(6), Fed.R.Civ.P.To withstand Rule 12(b)(6) scrutiny and comply with the minimum pleading requirements of Rule 8(a), a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face,” so as to “nudge[ ][its] claims across the line from conceivable to plausible.”

Bell Atlantic Corp. v. Twombly,550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929(2007).“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.”Ashcroft v. Iqbal,556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868(2009)(citation omitted).“This necessarily requires that a plaintiff include factual allegations for each essential element of his or her claim.”GeorgiaCarry.Org, Inc. v. Georgia,687 F.3d 1244, 1254(11th Cir.2012).Thus, minimum pleading standards “require[ ] more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”Twombly,550 U.S. at 555, 127 S.Ct. 1955.As the Eleventh Circuit has explained, Twombly /Iqbal principles require that a complaint's allegations be “enough to raise a right to relief above the speculative level.”Speaker v. U.S. Dep't of Health and Human Services Centers for Disease Control and Prevention,623 F.3d 1371, 1380(11th Cir.2010)(citations omitted).“To survive a 12(b)(6) motion to dismiss, the complaint does not need detailed factual allegations, ... but must give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.”Randall v. Scott,610 F.3d 701, 705(11th Cir.2010)(citations and internal quotation marks omitted).

For purposes of this Rule 12(b)(6) analysis, the Court accepts as true all well-pleaded factual allegations of the Complaint, and draws all reasonable inferences in the plaintiffs' favor.See, e.g., Keating v. City of Miami,598 F.3d 753, 762(11th Cir.2010)(in reviewing Rule 12(b)(6) motion, court must “accept[ ] the facts alleged in the complaint as true,”“draw[ ] all reasonable inferences in the plaintiff's favor,” and “limit[ ] our review to the four corners of the complaint”).Notwithstanding this deference to a plaintiff's pleading at the Rule 12(b)(6) stage, it is also true that “[l]egal conclusions without adequate factual support are entitled to no assumption of truth.”Mamani v. Berzain,654 F.3d 1148, 1153(11th Cir.2011).

B.Section 1692f(6) Claim(Count III).

Embedded in Count III of the Complaint is a FDCPA claim against Nationstar for violation of 15 U.S.C. § 1692f(6).(See doc. 1, ¶ 56(E).)In relevant part, that subsection prohibits debt collectors from “[t]aking or threatening to take any nonjudicial action to effect dispossession or disablement of property if ... there is no present right to possession of the property claimed as collateral through an enforceable security interest.”§ 1692f(6)(A).Defendants maintain that this claim must be dismissed because well-pleaded allegations of the Complaint reflect that FNMA, on whose behalf Nationstar was servicing the Loan, “had an enforceable security interest in Plaintiffs' property through its ownership of Plaintiffs' mortgage loan.”(Doc. 9, at 18.)Defendants rely on a strand of authority in which courts have recognized that “Section 1692f(6) only forbids threats against a consumer's property if there is no enforceable security interest in the property.”Jenkins v. BAC Home Loan Servicing, LP,822 F.Supp.2d 1369, 1375(M.D.Ga.2011).So defendants' position is that the mere existence of a security interest, without more, insulates Nationstar from § 1692f(6) liability, as a matter of law.

The trouble with this argument is that it ignores the statutory requirement of a “present right to possession of the property” by the debt collector threatening nonjudicial action.See§ 1692f(6)(A).Of course, FNMA (by and through its servicer, Nationstar) would have had a “present right to possession of the property” only if the Jameses were in default when the threat of foreclosure was made.Stated differently, it is the combination of a security interest and a present right to possession that precludes debt collector liability under § 1692f(6) for threatening nonjudicial foreclosure proceedings.Abundant case authority supports this plain reading of the statute.See, e.g., Fenello v. Bank of America, NA,577 Fed.Appx. 899, 902–03(11th Cir.2014)(affirming dismissal of § 1692f(6) claim where defendants had right to foreclose under security deed if plaintiffs defaulted, “[a]nd it is undisputed that the Fenellos have not made any payments on the promissory note since 2008,” such that “the defendants have the present right to possess the Fenellos' property”).²Here, the well-pleaded factual allegations of the Jameses' Complaint reflect that the Loan was not in default when Nationstar threatened foreclosure via letter dated November 22, 2013.Accepting those allegations as true (as ...