Kulovic v. Servicing

• Decision Date: 19 April 2011
• Docket Number: No. 4:10-CV-2058 CAS,4:10-CV-2058 CAS
• Parties: BAHRUDIN KULOVIC, et al., Plaintiffs, v. BAC HOME LOANS SERVICING, L.P., et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

BAHRUDIN KULOVIC, et al., Plaintiffs,
v.
BAC HOME LOANS SERVICING, L.P., et al., Defendants.

No. 4:10-CV-2058 CAS

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION

Dated: April 19, 2011

MEMORANDUM AND ORDER

On September 13, 2010, plaintiffs Bahrudin and Rasema Kulovic filed a petition in the Circuit Court of St. Louis County, Missouri. Plaintiffs allege claims of wrongful foreclosure, quiet title, violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq., negligence, fraud, and willful, wanton, and malicious conduct against defendants BAC Home Loans Servicing, LP ("BAC"), Federal Home Loan Mortgage Corporation d/b/a Freddie Mac ("Freddie Mac"), Millsap & Singer, P.C. ("Millsap"), and Martin, Leigh, Laws & Fritzlen, P.C. ("Martin").¹On October 29, 2010, defendants BAC and Freddie Mac filed a notice of removal, in which they state that the action is removable to this Court pursuant to 28 U.S.C. § 1441(b) because a federal question (under the FDCPA) is present, and that the Court has supplemental jurisdiction over plaintiffs' state-law claims of wrongful foreclosure, quiet title, negligence, fraud, and willful, wanton, and malicious conduct.

Page 2

Now before the Court are defendants BAC and Freddie Mac's motion to dismiss [Doc #7], defendant Martin's motion to dismiss [Doc. #11], and defendant Millsap's motion to dismiss [Doc. #21]. Plaintiffs oppose defendants BAC and Freddie Mac's motion to dismiss and defendant Millsap's motion to dismiss; plaintiffs have filed no memorandum in opposition to defendant Martin's motion to dismiss. Defendants BAC and Freddie Mac have filed a reply memorandum; defendant Millsap has not filed a reply memorandum. With regard to all three motions, the time in which to file briefs has expired, and therefore all three motions are ready for disposition.

I. Standard of Review

Under Federal Rule of Civil Procedure 8(a)(2), a pleading 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). The pleading standard Rule 8 announces does not require "detailed factual allegations," Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007), but "it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation," Ashcroft v. Iqbal, _____U.S._______, 129 S. Ct. 1937, 1949 (2009). A pleading that offers labels, conclusions, a formulaic recitation of elements, or naked assertions devoid of factual enhancement does not suffice. Iqbal, 129 S. Ct. at 1949.

Rule 9(b) requires that an allegation of fraud "state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). "Under Rule 9(b), a plaintiff must plead 'such matters as the time, place and contents of false representations, as well as the identity of the person making the misrepresentation and what was obtained or given up thereby.'" BJC Health Sys. v. Columbia Cas. Co., 478 F.3d 908, 917 (8th Cir. 2007) (quoting Abels v. Farmers Commodities Corp., 259 F.3d 910, 920 (8th Cir. 2001)). "The level of particularity required depends on, inter alia,

Page 3

the nature of the case and the relationship between the parties." Id (citing Payne v. United States, 247 F.2d 481, 486 (8th Cir. 1957)).

To survive a motion to dismiss under Rule 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." Iqbal, 129 S. Ct. at 1949. A claim has facial plausibility when the alleged facts allow a court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. "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." Id. When a complaint contains well-pleaded factual allegations, a court should assume the well-pleaded facts are true and then determine whether they plausibly entitle the plaintiff to relief. Id. at 1949-50. Only well-pleaded facts are accepted as true, while "[t]hreadbare recitals of the elements of a cause of action" and legal conclusions are not. Id. at 1949. "[L]egal conclusions can provide the framework of a complaint, [but] they must be supported by factual allegations." Id. at 1950. When a complaint contains well-pleaded factual allegations, a court should determine whether they plausibly entitle the plaintiff to relief. Id. If the well-pleaded facts do not plausibly entitle the plaintiff to relief, the claim should be dismissed. Id.

Generally, the Court must ignore materials that are outside of the pleadings; however, the Court may "consider some public records, materials that do not contradict the complaint, or materials that are 'necessarily embraced by the pleadings.'" Noble Sys. Corp. v. Alorica Cent., LLC, 543 F.3d 978, 982 (8th Cir. 2008) (quoting Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999)); see also 5B Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure: Civil 3d § 1357, at 376 (2004) (opining that a trial court may consider "matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint").

Page 4

"The district court may take judicial notice of public records and may thus consider them on a motion to dismiss." Stahl v. U.S. Dept. of Agriculture, 327 F.3d 697, 700 (8th Cir. 2003) (citing Faibisch v. Univ. of Minn., 304 F.3d 797, 802-03 (8th Cir. 2002)).

11. Plaintiffs' Petition

In their petition, plaintiffs allege that on May 21, 2007, they entered into a promissory note with Gorman & Gorman Residential Mortgage Services, Inc., which is secured by a deed of trust on property located in St. Louis County, Missouri. Doc. #5, ¶¶ 6-8. Plaintiffs allege that "[u]pon information and belief, no [a]ssignment of [the] [d]eed of [t]rust, or any similar document has been filed with the St. Louis County Recorder of Deeds office purporting to assign any rights, title or interest in the [d]eed of [t]rust to any of the" defendants. Id. ¶ 10. Plaintiffs also allege that, "[u]pon information and belief, no instrument has been recorded in the St. Louis County Recorder of Deeds office appointing any successor trustee, including" defendant Millsap. Id. ¶ 15. Plaintiffs allege that defendant BAC is not the original lender, the holder of the note, a nonholder in possession of the note who has the rights of the holder, or a person in possession of the note "who is entitled to enforce the instrument pursuant to Section 400.3-309 or 400.30418(d), [sic] of the [n]ote."²Id. ¶

12. Additionally, plaintiffs allege that defendant Millsap knew, or should have known, that BAC was not the lender or the holder of the note and had no authority to appoint defendant Millsap as successor trustee. Id. ¶ 38. Plaintiffs allege that defendant Millsap is not the trustee of the deed of trust, and had no right or authority, legal or otherwise, to conduct a trustee's sale of the property. Id. ¶¶ 15-16.

Page 5

Plaintiffs allege that on May 18, 2010, defendant BAC, through defendant Millsap, contacted plaintiffs by correspondences sent by the United States Postal Service which indicated or implied that: (1) defendant BAC was the holder of the note; (2) nonpayment of the debt would result in a trustee foreclosure sale of plaintiffs' property; (3) defendant Millsap was foreclosing on the note, which would result in the sale of plaintiffs' property; and (4) plaintiffs owed attorney's fees, collection costs, and other charges to defendant Millsap. Id. ¶¶ 34-35. Plaintiffs allege that on or about July 29, 2010, defendant Millsap purported to conduct a trustee's sale of the property, and executed a trustee's deed transferring title of the property to defendant Freddie Mac. Id. ¶ 17.

Plaintiffs allege that defendants "BAC and/or Millsap had no interest in the property, and no standing to foreclose on the [p]roperty, as they were never assigned any interest through a valid [a]ssignment from the original [l]ender under the [d]eed of [t]rust." Id. ¶ 13. Plaintiffs allege that "[t]he foreclosure of the [p]roperty...was and is wrongful and absolutely void, as Millsap had no authority to conduct such sale, or to execute such deed, as they were not properly appointed as successor trustee of the [d]eed of [t]rust, and BAC was not the original lender, nor the holder, in due course or otherwise, of the [n]ote." Id. ¶ 18. Plaintiffs further allege that the sale was not lawful and that the sale and filing of the trustee deed was a nonjudicial action to effect disposition or disablement of the property from plaintiffs when there was no present right to possession of the property. Id.¶¶37, 39.

Plaintiffs allege that based on the trustee's deed and sale, defendant Freddie Mac is claiming an interest in the property, and defendant BAC is or was claiming an interest in the property. Id. ¶¶ 20-21. Plaintiffs allege that, because defendants BAC and Freddie Mac have no right or claim to

Page 6

the property, plaintiffs' rights and interest in the property supersede that of defendants BAC and Freddie Mac. Id.¶ 22.

Plaintiffs allege that defendant BAC is a loan "servicer" and has no right or interest in the note, or the proceeds from payment thereof. Id. ¶ 24. Plaintiffs also allege that defendants BAC, Millsap, and Martin are "debt collectors" as that term is defined in 15 U.S.C. § 1692a(6)(F). Id. ¶ 25. Additionally, plaintiffs allege that defendant...