Phillips v. Nationstar Mortg., LLC

Decision Date17 May 2016
Docket NumberNo. 3:13-cv-01414,3:13-cv-01414
PartiesCLAYTON JAMES PHILLIPS, Plaintiff, v. NATIONSTAR MORTGAGE, LLC et al., Defendants.
CourtU.S. District Court — Middle District of Tennessee

CLAYTON JAMES PHILLIPS, Plaintiff,
v.
NATIONSTAR MORTGAGE, LLC et al., Defendants.

No. 3:13-cv-01414

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION

May 17, 2016


Judge Sharp
Magistrate Judge Holmes

MEMORANDUM

Defendants, Nationstar Mortgage, LLC ("Nationstar"), Bank of America, N.A. ("BANA"), successor by merger to BAC Home Loan Servicing L.P., f/k/a Countrywide Home Loans Servicing, LP ("BAC"),1 Mortgage Electronic Registration Systems, Inc., as nominee for Agency Mortgage Corp. and individually and MERSCORP Holdings, Inc. ("MERS") (collectively "Defendants")2 filed a Motion to Dismiss Amended Complaint (Docket Entry No. 36)3, to which Plaintiff Clayton James Phillips ("Plaintiff" or "Phillips") filed a response (Docket

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Entry No. 40)4 and Defendants filed a reply (Docket Entry No. 43). For the reasons discussed herein, the Court will grant Defendants' motion.5

RELEVANT PROCEDURAL HISTORY AND FACTUAL BACKGROUND

Plaintiff is a citizen and primary resident of Sumner County in the State of Tennessee. In 2006, Plaintiff had moved to New Jersey from Tennessee for employment.6 On March 6, 2006, Plaintiff purchased property located at 2 Poppyseed Drive, Lumberton, New Jersey 08048 (the "New Jersey property").7 He had moved there from Mount Juliet, Tennessee, to take a management position. Plaintiff's employment was a casualty of the financial crisis, and he was laid off in 2006 and was unable to sell his residence.

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After moving back to Tennessee, he rented the residence for a period of time; there was a fire and subsequent repair. Plaintiff attempted without success to sell the property. His homeowners insurance paid for the repair, and Plaintiff administered payment to repair contractors whose work was supervised and approved by Defendant Bank of America. Plaintiff claims that after the repair was completed, Bank of America wrongfully took possession of Plaintiff's residential property and has to date retained possession.

In November 2009, BANA filed suit in the New Jersey Superior Court seeking a judicial foreclosure. Plaintiff pro se timely filed an Answer to the Complaint denying its allegations. According to Plaintiff, he reasonably and in good faith timely contacted Bank of America to resolve the mortgage situation by executing a deed in lieu of foreclosure or some other resolution. In 2010, a Bank of America agent informed Plaintiff to go into default before Bank of America would consider a deed in lieu of foreclosure, and Plaintiff followed instructions from the Bank's representative. Plaintiff wrote to BAC Home Loans' attorney on January 25, 2010, and made a good-faith offer to prevent foreclosure and discuss reasonable alternatives. Defendant BAC Home Loans and its agent failed to respond to Plaintiff's written offer. Plaintiff has diligently and repeatedly contacted BAC Home Loans' attorney's office, but his repeated phone calls were not returned.

On September 16, 2010, the New Jersey Superior Court entered summary judgment against Plaintiff, allowing Defendants to proceed with foreclosure on the New Jersey property. In the meantime, the State of New Jersey placed a stay on foreclosure cases by major banks including Bank of America from December 2010 to December 2012, to allow review for improprieties. The stay was lifted in December 2012. Bank of America has apparently transferred its foreclosure cases to Defendant Nationstar and dissolved BAC. Plaintiff claims

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that Defendants obtained a summary judgment in 2010 without his knowledge - and BAC/Bank of America wrongfully took possession of the property by changing the locks and to date retains possession.

According to Plaintiff, because of improper assignments, fraudulent mortgage documentation, and wrongful foreclosure proceedings, Plaintiff claims full interest in title superior to all other claimants in the New Jersey property.

This mortgage-fraud and wrongful-foreclosure case was initially filed in Sumner County Chancery Court on November 5, 2013 (Docket Entry No.1-1)). On December 16, 2013, Defendants removed the case to this Court. (Docket Entry No. 1). Plaintiff filed a motion to remand the case to state court on January 22, 2014. The motion was subsequently denied on July 2, 2014. (Docket Entry Nos. 10 and 22). Plaintiff amended his Complaint on August 29, 2014 (Docket Entry No. 34).

On September 19, 2014, Defendants filed a Motion to Dismiss, along with a memorandum in support. (Docket Entry Nos. 36 and 37). Plaintiff filed a Response in Opposition on October 3, 2014. (Docket Entry Nos. 40 and 41). On October 17, 2014, Defendants filed a Reply. (Docket Entry No. 43).

STANDARD OF REVIEW

In considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a court must take "all well-pleaded material allegations of the pleadings" as true. Fritz v. Charter Township of Comstock, 592 F.3d 718, 722 (6th Cir. 2010). The factual allegations in the complaint "need to be sufficient to give notice to the defendant as to what claims are alleged, and the plaintiff must plead 'sufficient factual matter' to render the legal claim plausible, i.e., more than merely possible." Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949-50,

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173 L.Ed.2d 868 (2009)). " 'A legal conclusion couched as a factual allegation,' " however, "need not be accepted as true on a motion to dismiss, nor are recitations of the elements of a cause of action sufficient." Id. (quoting Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 609 (6th Cir. 2009) and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007)). Further, in determining whether a complaint sets forth a plausible claim, a court may consider not only the allegations, but "may also consider other materials that are integral to the complaint, are public records, or are otherwise appropriate for the taking of judicial notice." Ley v. Visteon Corp., 543 F.3d 801, 805 (6th Cir. 2008) (citation omitted).

A higher pleading standard applies to claims of fraud. Schmidt v. Martin, 2005 WL 2100645, *2 (W.D.Tenn. Aug.19, 2005). When alleging fraud, "a party must state with particularity the circumstances constituting fraud." Fed.R.Civ.P. 9(b). This requires allegations about "the time, place, and content of the alleged misrepresentation ...; the fraudulent intent of the defendants; and the injury resulting from the fraud." United States ex rel. SNAPP, Inc. v. Ford Motor Co., 532 F.3d 496, 504 (6th Cir. 2008) (citation omitted). Rule 9(b), however, "should be interpreted in harmony with Rule 8's statement that a complaint must only provide 'a short and plain statement of the claim' made by 'simple, concise, and direct allegations.' " Id. at 503. The key consideration is whether the complaint gives the defendant "fair notice" of the fraud claim and enables the defendant to prepare a responsive pleading. Id. at 504.

ANALYSIS

This is a civil action to quiet title to Plaintiff's residential property, based on alleged mortgage fraud and wrongful foreclosure proceedings, wherein Plaintiff seeks to recover damages caused by Defendants' violations of state and federal law and to pursue appropriate legal and equitable remedies, monetary damages, and punitive damages. According to Plaintiff,

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Defendants' misconduct resulted in premature and unauthorized foreclosure proceedings on Plaintiff's home, improper assignments of the mortgage, violations of Plaintiff's rights and protections, and the use of false and deceptive affidavits and documentation.

Defendants ask the Court to dismiss Plaintiff's Amended Complaint in its entirety. Specifically, Defendants argue,

The majority of the Complaint and the voluminous exhibits attached to it relate to various recycled arguments long ago rejected by the courts. Plaintiff claims that the designation of MERS as nominee for the original lender "split the security interest from the note." He asserts, therefore, that the assignment from MERS to BANA is void. He further challenges a subsequent assignment from BANA and Nationstar as being void, although the reasons are not clearly articulated. It appears the thrust of the following counts are related to the assignments and plaintiff's claims that the designation of MERS and assignments from it are invalid: quiet title, fraudulent conveyance, slander of title, fraud and negligence. However, this court has consistently held that the "split the security interest from the note" fails to state any basis for relief because the assignment of the note carries with it the collateral.

Plaintiff asserts claims arising from the institution of the foreclosure proceedings but most of those claims are barred by the applicable statute of limitations. He asserts violations of the TCPA and the NJ consumer protection act, but neither applies to this transaction. Plaintiff asserts violations of the NJ foreclosure act, but apparently did not review the statute and cases holding that the statute does not provide for a private cause of action. He fails to plead his fraud or misrepresentation claims with the specificity required by Rules 8 and 9, Fed.R.Civ.P. Finally, nowhere does he assert that he paid the loan, or was not in default at the time the foreclosure suit was filed.

It is respectfully submitted that the amended complaint fails to state a claim upon which relief can be granted. Accordingly, the Complaint should be dismissed with prejudice.

(Docket Entry No. 37 at 2-3).

The Court will address the statute of limitations issue as well as Plaintiff's underlying theories about securitization and assignment of the Note, before addressing Defendants' arguments to dismiss each of Plaintiff's claims.

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A. Statute of Limitations

Defendants argue that some of Plaintiff's claims are barred by the statute of limitations. (Docket Entry No. 37 at 3, No. 43 at 2). Specifically, Defendants argue,

In general, most of the claims relate to actions or activities that occurred prior
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