Rosendale v. Mr. Cooper Grp.
| Decision Date | 07 September 2021 |
| Docket Number | 19-cv-9263 (NSR) |
| Parties | DONALD P. ROSENDALE, Plaintiff, v. MR. COOPER GROUP INC. d/b/a Nationstar Mortgage; NATIONSTAR MORTGAGE LLC, directly and as loan servicer for an unspecified Nationstar HECM Acquisition Trust; CHAMPION MORTGAGE; DR. BEN CARSON, in his capacity as Secretary of the U.S. Department of Housing and Urban Development, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Plaintiff Donald Rosendale (“Plaintiff” or “Rosendale”), a pro se litigant and elderly reverse mortgagor, commenced this action by filing a Complaint on October 7, 2019, asserting various claims against Mr. Cooper Group Inc. (“Mr. Cooper”) arising chiefly from alleged misconduct in the servicing of his reverse mortgage. More recently, on February 26, 2020 Plaintiff filed a nine-count Second Amended Complaint (“SAC”) (ECF No. 25) asserting claims against Mr Cooper, Nationstar Mortgage LLC (“Nationstar”) (collectively with Mr. Cooper, “Defendants”) Champion Mortgage (“Champion”)[1], and Dr. Ben Carson[2] in his former official capacity as the Secretary of the United States Department of Housing and Urban Development. In sum, Plaintiff asserts the following claims: (1) violation of the Real Estate Settlement Procedures Act (“RESPA”) § 2605(e) (“Section 2605”); (2) violation of the Truth in Lending Act (“TILA”), 15 U.S.C. § 1641(g) (“Section 1641”); (3) common law conversion; (4) common law gross negligence; (5) breach of the implied covenant of good faith and fair dealing; (6) violation of N.Y. Gen. Bus. Law (“GBL”) § 349 (“Section 349”); (7) intentional infliction of emotional distress; and (8) statutory invalidation of a recorded instrument pursuant to N.Y. Real Property Law § 329 (“Section 329”). Presently before the Court is Defendants' motion to dismiss the SAC pursuant to Federal Rules of Civil Procedure 12(b)(6). (See Defendants' Notice of Motion and Memorandum in Support of their Motion to Dismiss (“Defs' Mem.”) (ECF No. 32.).) Plaintiff opposed the motion. (See Plaintiff's Memorandum in Opposition to Defendants' Motion to Dismiss (“Pl's Opp.”) (ECF No 34).) Defendants subsequently replied in further support of their motion. (See Defendants' Memorandum in Further Support of their Motion to Dismiss (“Defs' Reply”) (ECF No. 35).)
For the following reasons, Defendants' motion is GRANTED in part, and DENIED in part:(1) the Court dismisses Plaintiff's RESPA, TILA, breach of the implied covenant of good faith and fair dealing, and intentional infliction of emotion distress claims without prejudice; and (2) Defendants' motion is denied with respect to Plaintiff's conversion, gross negligence, Section 329 claim, and one of the Section 349 claims.
The following facts are derived from the SAC, exhibits attached to the SAC, and exhibits attached by Plaintiff in opposing Defendants' motion to dismiss, and are accepted as true for the purposes of this motion.
On or around June 4, 2009, Mr. Rosendale entered into a Home Equity Conversion Loan with MetLife Home Loans (“MetLife”) and the Secretary of the Department of Housing and Urban Development (“HUD”), wherein Plaintiff was given access to a credit line up to a maximum principal amount of $862, 500. (ECF No. 33-1 (the “Note”).) The loan was secured through an Adjustable Rate Reverse Mortgage also executed on or around June 4, 2009. Pursuant to the terms of the Reverse Mortgage, Plaintiff Rosendale is the mortgagor or borrower, the mortgages were executed in favor of MetLife and HUD, and the mortgaged property was Plaintiff's residence at 4848 Route 44, Amenia, New York 12501. (Id.)
Plaintiff alleges that during the negotiation of the Reverse Mortgage, he objected to an inaccurate property description proposed by counsel for MetLife and that, subsequently, the Reverse Mortgage was signed without a property description. (SAC ¶ 28.) He objected to the inclusion of several acres of land (called “the abandoned road”) within the property description because he did not own the abandoned road at that time. However, on June 13, 2009-almost ten-days after he signed the Reverse Mortgage and Note on June 4, 2009-the incorrect property description was allegedly added back into the operative documents, his signature was improperly notarized by Maria Greco, and the notary reflected on the recorded mortgage was actually not present when he signed the Note and Reverse Mortgage. (Id. ¶¶ 66; 118.)
Plaintiff alleges that MetLife sold its reverse mortgage business and assigned its interest in the Reverse Mortgage to “Nationstar” in or around April 2012. (SAC ¶ 26.) Plaintiff also acknowledges that “as assignment of mortgage was recorded with the Dutchess County Clerk from the original lender, MetLife to a Champion Mortgage Co” in or around September 2012. (Id. ¶ 30.) Public records, subject to judicial notice, confirm that the MetLife assigned the Reverse Mortgage to Champion on September 7, 2012, as recorded on October 1, 2012. (ECF No. 33-5.)
On the face of the SAC there is some uncertainty as to the particular roles of individual entities named as defendants.[3] Mr. Cooper is referred to as a distinct entity related to several codefendants, and allegedly does business under the name “Nationstar Mortgage” (whether Mr. Cooper independently holds any mortgages, provides servicing to mortgagors, or is simply a passive parent company remains unclear to the Court). (SAC ¶ 1 n.1.) Codefendant Nationstar is a separately incorporated entity that is a subsidiary of Mr. Cooper. (ECF No. 12.) Champion Mortgage is apparently a trade name under which “Nationstar acts as a servicer of reverse mortgages.” (SAC ¶ 13.) A review of documents attached and incorporated into the SAC indicates the following: (1) Nationstar is performing business under the name Champion Mortgage. (See SAC Ex. G ( “Nationstar Mortgage LLC d/b/a Champion Mortgage is licensed by the New York City Department of Consumer Affairs License Number 1392003.”) (2) Mr. Cooper is a publicly traded company that indirectly became the parent company to Nationstar when it acquired Nationstar Mortgage Holding Inc. (a parent company of entities including Nationstar) in or around July 31, 2018. (See SAC ¶ 80 (describing, referencing, and citing the Mr. Cooper Form 10Q for the quarterly period ended June 30, 2019 which details the transactional history leading to the merger between WMIH Corp. (a predecessor of Mr. Cooper) and Nationstar Mortgage Holdings, Inc.). So, read liberally, Plaintiff alleges that Nationstar is his servicer and possibly also the holder of the Reverse Mortgage.
Plaintiff also alleges that some interest in his mortgage, or the mortgage itself, was transferred from Nationstar to another related defendant, referred to throughout the SAC as the “Unspecified Nationstar HECM Acquisition Trust.” Plaintiff does not allege when the transfer occurred, what interest was transferred, or the identify of the Unspecified HECM Acquisition Trust that acquired the unspecified interest, though he speculates that it is one of the following trusts: (1) Nationstar HECM Trust 2015-1, (2) Nationstar HECM Trust 2016-1, or (3) Nationstar HECM Trust 2016-3. (SAC ¶ 27.) Despite the alleged transfer of the Reverse Mortgage (or some interest thereto) to the unspecified Nationstar HECM Trust, Plaintiff claims he never received notice of the assignment. (SAC ¶ 32.) There is also no public recording of an assignment from Champion to any other party.
Plaintiff began to have issues with Nationstar's servicing of his loan in or around September 2018. At that time, Nationstar withdrew $2, 789 from his line of credit and used those funds towards acquiring a hazard insurance policy even though Plaintiff already had similar insurance. (SAC ¶ 33.) After Plaintiff advised Nationstar that he already had hazard insurance, Plaintiff was eventually credited $2, 789 towards his line of credit in apparent recognition that he had not been deficient in acquiring hazard insurance. (Id.)
Subsequently, in January 2019, Plaintiff received several communications indicating that his failure to imminently pay taxes prior to certain delinquency dates would constitute a default on the Reverse Mortgage. (SAC ¶ 34.) The letters allegedly advised him that he was to pay within 10 or 15 days. (Id.) Even though Plaintiff paid $7, 226 in taxes in a timely manner, Nationstar later withdrew $7, 265.95 from his line of credit to pay the taxes Plaintiff already paid, and he received another notice in March 2019 that he was delinquent on the same taxes. (SAC ¶¶ 27-35.)
This pattern of issues relating to taxes, withdrawals, and miscommunications continued. In May 2019, without warning, Nationstar took $7, 196 from Plaintiff's line of credit to satisfy additional tax liabilities against the property. (SAC ¶ 38.) This created another dilemma for Plaintiff as he, for unstated reasons, assumed that the withdrawal of funds would be used to pay for a bill he had received in May 31, 2019, the funds were not used towards that bill, Plaintiff did not separately pay the bill, and he ultimately incurred a $278 penalty. (Id.)
Likewise, on September 2, 2019, Plaintiff received a letter dated August 23, 2019 stating, in part:
We previously sent you notice that we have not received proof that your property taxes and/or property insurance . . . were current.... Because we did not receive proof that the property taxes and/or insurance were current, we...
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