Richter v. Nationstar Mortg., LLC

• Decision Date: 19 September 2017
• Docket Number: CIVIL ACTION NO. H-17-2021
• Citation: Richter v. Nationstar Mortg., LLC, CIVIL ACTION NO. H-17-2021 (S.D. Tex. Sep 19, 2017)
• Parties: RONALD E. RICHTER AND THE ESTATE OF MARY T. RICHTER, Plaintiffs, v. NATIONSTAR MORTGAGE, LLC, Defendant.
• Court: U.S. District Court — Southern District of Texas

RONALD E. RICHTER AND THE ESTATEOF MARY T. RICHTER, Plaintiffs, v. NATIONSTAR MORTGAGE, LLC, Defendant.

CIVIL ACTION NO. H-17-2021

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

September 19, 2017

MEMORANDUM AND OPINION

Ronald E. Richter and the Estate of Mary T. Richter sued Nationstar Mortgage, LLC in Texas state court.(Docket EntryNo. 1, Ex. 3).The petition alleged that after Mary and Herbert Richter died, their son, Ronald Richter, became the executor of their estate and continued to pay the mortgage loans they had taken in 2005 to buy their home.Richter defaulted on the loan payments, and Nationstar, the loan servicer, accelerated and began foreclosure proceedings.Richter sued in state court, seeking to enjoin the foreclosure.Nationstar timely removed on the basis of federal-question jurisdiction, (Docket EntryNo. 1), and filed a Rule 12(c)motion for judgment on the pleadings, (Docket EntryNo. 3).FED. R. CIV. P. 12(c).Richter did not respond.

Based on the petition, the motion to dismiss, the record, and the applicable law, this court grants Nationstar's motion and dismisses this case, with prejudice, because further amendment would be futile.An order of final judgment is separately entered.The reasons are explained below.

I.Background

In 2012, Ronald Richter faced difficulties making the mortgage payments on the home his parents had purchased, financed by a $184,000 loan and a $46,000 loan.Bank of America, N.A. was the mortgage servicer at that time.Richter offered to purchase the property at a short-sale to lower the mortgage payments, but according to his petition, Bank of America initiated foreclosure proceedings rather than responding to the short-sale offer.Nationstar, which had become the mortgage servicer, denied Richter's short-sale offer and proceeded to foreclose.Richter filed for bankruptcy.Nationstar filed a proof of claim in the bankruptcy and accepted payments from the trustee, reinstating the loan.The bankruptcy was dismissed on April 28, 2016.Following the dismissal, Richter, again in default, tried to get a loan modification from Nationstar, but it initiated foreclosure.This lawsuit followed.

Richter asserts a variety of claims under statute statutory and common law and under the Federal Real Estate Settlement Procedures Act, 12 C.F.R. § 1024.Each claim is examined under the applicable legal standards.

II.The Legal Standards

"A motion brought pursuant to Fed. R. Civ. P. 12(c) is designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts."Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312(5th Cir.2002)(quotation marks and citation omitted).The Rule 12(c)andRule 12(b)(6) standards are the same.Gentilello v. Rege, 627 F.3d 540, 543-44(5th Cir.2010).Rule 12(b)(6) allows dismissal if a plaintiff fails "to state a claim upon which relief can be granted."FED. R. CIV. P. 12(b)(6).In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555(2007), andAshcroft v. Iqbal, 556 U.S. 662(2009), the Supreme Court confirmed that Rule 12(b)(6) must be read in conjunction with Rule 8(a), which requires "a short and plain statement of the claim showing that the pleader is entitled to relief."FED. R. CIV. P. 8(a)(2).To withstand a Rule 12(b)(6) motion, a complaint must contain "enough facts to state a claim to relief that is plausibleon its face."Twombly, 550 U.S. at 570;see alsoElsensohn v. St. Tammany Parish Sheriff's Office, 530 F.3d 368, 372(5th Cir.2008).The Supreme Court explained that "the pleading standard Rule 8 announces does not require 'detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation."Iqbal, 556 U.S. at 677.

A court considers only the pleadings in deciding a motion for judgment on the pleadings, seeBrittan Commc'ns Int'l Corp. v. Sw. Bell Tel. Co., 313 F.3d 899, 904(5th Cir.2002), but "[d]ocuments that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to her claim."See, e.g., Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288(5th Cir.2004);In re Katrina Canal Breaches Litig., 495 F.3d 191, 205(5th Cir.2007);see also5B CHARLES ALAN WRIGHT & ARTHURR. MILLER, FEDERAL PRACTICE ANDPROCEDURE § 1357, at 509-10 (3d ed. 2004)(stating that "matters incorporated by reference or integral to the claim [and] items appearing in the record of the case . . . may be considered by the district judge without converting the [Rule 12(b)(6)]motion into one for summary judgment").Exhibits attached to a complaint are part of the complaint "for all purposes."FED. R. CIV. P. 10(c);U.S. ex rel. Riley v. St. Luke's Episcopal Hosp., 355 F.3d 370, 375(5th Cir.2004)("[I]t is not error to consider the exhibits to be part of the complaint for purposes of a Rule 12(b)(6) motion.").Because the standards for Rule 12(c)andRule 12(b)(6) are the same, a court may consider the same kinds of documents in a Rule 12(c) motion that it could consider in a Rule 12(b)(6) motion.

Under Federal Rule of Civil Procedure 9(b), "a party must state with particularity the circumstances constituting fraud or mistake."FED.R.CIV.P. 9(b).Rule 9(b) applies to all fraud allegations, including those in which fraud is not an element of the claim.Lone Star Ladies Inv. Club v. Schlotzky's, Inc., 238 F.3d 363, 368(5th Cir.2001).

III.Analysis

A.The Allegations in the Complaint

Richter asserts the following causes of action:

• Nationstar engaged in unfair debt collection practices under the Texas Debt Collection Act, Tex. Fin. Code Ann. §§ 392.301-392.304, by filing an inaccurate proof of claim and using "false representation or deceptive means to collect a debt";

• Nationstar was unjustly enriched by taking advantage of Richter and engaging in unscrupulous behavior, misfeasance, and nonfeasance;

• Nationstar was negligent for failing to properly account for payments and charges, notify Richter of assignments, send required notices, or properly review his loan modification applications;

• Nationstar made unreasonable-collection efforts, including imposing illegal or unnecessary fees, refusing to accept partial payments, and refusing to provide a history of payments and allocations;

• Nationstar violated the Texas Deceptive Trade Practices Act, Tex. Bus. & Com. Code Ann. § 17.50(a)(1), by taking advantage of Richter's "lack of knowledge, ability, experience, or capacity . . . to a grossly unfair degree";

• Nationstar breached the contract by failing to send required notices and failing to accept Richter's short-sale offer or other alternative cure; and

• Nationstar violated the Real Estate Settlement Procedures Act, 12 C.F.R. § 1024, by denying Richter's loan modification on the ground that he had more than five homes.

i. The Debt Collection Practices Claim

The Texas Debt Collection Act"prohibits debt collectors from engaging in various practices, including threatening to take actions prohibited by law and making fraudulent, deceptive, or misleading representations."Lopez v. Sovereign Bank, N.A., 2015 WL 1802910, at *2(S.D. Tex.Apr. 17, 2015).Richter alleges that Nationstar "misrepresent[ed] the character, extent, or amount of a consumer debt," and "[u]sed . . . false representation or deceptive means to collect a debt."The only fact alleged is that the proof of claim Nationstar filed in the bankruptcy proceeding contained erroneous information.Nationstar asserts that federal law preempts Richter's claim."A state law is preempted by federal law where '(1)Congress expressly preempts state law; (2) Congressional intent to preempt is inferred from the existence of a pervasive regulatory scheme; or (3) state law conflicts with federal law or interferes with the achievement of federal objectives.'"Vargas v. Kiewit Louisiana Co., 2012 WL 2952171, at *2(S.D. Tex.July 18, 2012) (citing Hodges v. Delta Airlines, Inc., 44 F.3d 334, 336 n.1(5th Cir.1995).

Nationstar is right;Richter's Texas-Debt-Collection-Act-proof-of-claim argument is preempted."Congress has enacted a comprehensive regulatory scheme to regulate bankruptcy proceedings and state law remedies for abuse of bankruptcy provisions are preempted."In re Trevino, 535 B.R. 110, 142(Bankr. S.D. Tex.2015).Federal courts have exclusive jurisdiction over bankruptcy and Congress has established a comprehensive system of federal remedies for debtors challenging inaccurate proofs of claim.Id. at 142-43.To allow a bankruptcy proof of claim to be the basis for a Texas Debt Collection Act violation would produce inconsistent results and interfere with bankruptcy administration uniformity.Id.

Because Richter does not allege any other facts showing fraud or mistake, and because amendment would be futile, the unfair debt collection act claim is dismissed with prejudice and without leave to amend.FED. R. CIV. P. 9(b).

ii.The Unjust Enrichment Claim

"In Texas, unjust enrichment is based on quasi-contract and is unavailable when a valid, express contract governing the subject matter of the dispute exists."Coghlan v. Wellcraft Marine Corp., 240 F.3d 449, 454(5th Cir.2001).The deed of trust governs the subject matter of this dispute, providing express terms on payment, default, acceleration, charges, and more.(Docket EntryNo. 1, Ex. 3-B).Unjust enrichment is not an available claim.Even if the express contract did not govern, Richter has not alleged facts that would show that Nationstar "obtained a benefit . . . by fraud, duress, or the taking of an undue advantage."Costello v. U.S. Bank Tr., N.A. for LSF9 Master Participation Tr., 689 F. App'x 253, 256(5th Cir.2017).Instead, he conclusorily alleges that Nationstar engaged in "unscrupulous behavior,""misfeasance," an...