Simms v. Nationstar Mortg., LLC

Decision Date03 September 2014
Docket NumberNo. 4:14–CV–243 CAS.,4:14–CV–243 CAS.
CourtU.S. District Court — Eastern District of Missouri
PartiesMichael W. SIMMS, Plaintiff, v. NATIONSTAR MORTGAGE, LLC, et al., Defendants.

Gregory P. White, White Law Office, Clayton, MO, for Plaintiff.

Matthew J. Gartner, Husch Blackwell, LLP, St. Louis, MO, Christopher Claiborne Miles, Husch Blackwell, LLP, Kansas City, MO, Jennifer O. Stoehr, Jennifer M. West, South and Associates, P.C., St. Louis, MO, for Defendants.

MEMORANDUM AND ORDER

CHARLES A. SHAW, District Judge.

This diversity matter is before the Court on defendant South & Associates, P.C.'s (“South”) Motion to Dismiss Plaintiff's First Amended Petition (“Petition”), and plaintiff Michael W. Simms' (plaintiff) Motion to File Second Amended Complaint. The motions are fully briefed and ready for decision. For the following reasons, the Court will grant in part and deny in part South's motion to dismiss the Petition, and grant in part and deny in part plaintiff's motion for leave to file a second amended complaint. Plaintiff will be granted leave to file a second amended complaint in accordance with this Memorandum and Order.

I. Background

This case arises out of a foreclosure sale that occurred on November 27, 2012, of real property owned by plaintiff and commonly known as 6175 Newton Terrace Drive, St. Louis, Missouri 63129. South, a law firm, was appointed successor trustee under a deed of trust held by defendant Nationstar Mortgage, LLC (Nationstar). South sold the property at foreclosure in its capacity as successor trustee. Count I of the Petition asserts a claim of wrongful foreclosure against Nationstar, the Federal National Mortgage Association (“Fannie Mae”) and South. The Petition alleges there is no evidence that South mailed plaintiff notice of the foreclosure sale as required by Missouri law, alleges that plaintiff did not receive written notice of the sale, and asserts that the sale is void as a result. Count I asks that the foreclosure be set aside as unlawful and also seeks actual and punitive damages. Count II asserts a claim to quiet title against the defendants.

Plaintiff originally filed this action in state court alleging wrongful foreclosure and naming as defendants Nationstar, Fannie Mae, St. Louis County and the Metropolitan St. Louis Sewer District (“MSD”). Complete diversity was lacking on the face of the petition as plaintiff, St. Louis County and MSD are citizens of the State of Missouri. Nationstar removed the case to federal court on the basis of diversity jurisdiction, 28 U.S.C. § 1332(a)(1), claiming that St. Louis County and MSD were nominal parties fraudulently joined to defeat diversity whose citizenship should be disregarded for purposes of diversity jurisdiction. Shortly after removal, plaintiff filed the Petition adding South as a defendant, and also filed a motion to remand.

In the Memorandum and Order of April 18, 2014, 2014 WL 1515881 (Doc. 31), the Court concluded that South was a nominal party whose citizenship should be disregarded for purposes of diversity jurisdiction, and that St. Louis County and MSD were fraudulently joined and plaintiff's claims against them should be dismissed. The Court further concluded that complete diversity of citizenship existed among the real parties in interest to this action, namely plaintiff, Nationstar and Fannie Mae, and denied plaintiff's motion to remand.

In the instant motion, South moves to dismiss plaintiff's claims against it for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6), Fed.R.Civ.P. Plaintiff opposes the motion to dismiss and seeks leave of Court to file a second amended complaint that provides additional factual allegations in the wrongful foreclosure and quiet title counts, and adds an abuse of process count.

II. Legal Standard–Motion to Dismiss

The purpose of a motion to dismiss for failure to state a claim is to test the legal sufficiency of the complaint. To survive a motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting 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.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. This obligation requires a plaintiff to plead “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. A complaint “must contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory.” Id. at 562, 127 S.Ct. 1955 (quoted case omitted).

On a motion to dismiss, the Court accepts as true all of the factual allegations contained in the complaint, even if it appears that “actual proof of those facts is improbable,” id. at 556, 127 S.Ct. 1955, and reviews the complaint to determine whether its allegations show that the pleader is entitled to relief. Twombly, 550 U.S. at 555–56, 127 S.Ct. 1955 ; Fed.R.Civ.P. 8(a)(2). The principle that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions, however. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (stating [t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice”). Although legal conclusions can provide the framework for a complaint, they must be supported by factual allegations. Id. Plausibility is assessed by considering only the materials that are “necessarily embraced by the pleadings and exhibits attached to the complaint [.] Whitney v. Guys, Inc., 700 F.3d 1118, 1128 (8th Cir.2012) (quoted case omitted).

III. Discussion
A. Wrongful Foreclosure Claim

In Count I, plaintiff asserts a wrongful foreclosure claim that seeks actual and punitive damages, as well as equitable relief. In moving for dismissal, South states that under applicable Missouri law, a party can either bring a “suit in equity to set aside the sale, or let the sale stand and sue at law for damages,” quoting Edwards v. Smith, 322 S.W.2d 770, 776 (Mo.1959), but that these are mutually exclusive remedies. South asserts that plaintiff's wrongful foreclosure claim, although labeled as one count, asserts two separate causes of action: a tort claim for wrongful foreclosure and a separate equitable action for wrongful foreclosure. South argues that plaintiff conflates the two causes of action and fails to state a claim as to either.

South argues that plaintiff fails to plead a tort claim for wrongful foreclosure because he does not plead the required element that he was not in default at the time of the foreclosure, citing Dobson v. Mortgage Electronic Registration Systems, Inc./GMAC Mortgage Corp., 259 S.W.3d 19, 22 (Mo.Ct.App.2008).

Without specifying what type of wrongful foreclosure claim or claims he asserts, plaintiff responds that he can bring an action for wrongful foreclosure because failure to provide notice of foreclosure sale to the owner of the foreclosed property is a substantial defect that renders the sale void and prevents transfer of the property irrespective of default, citing Williams v. Kimes, 996 S.W.2d 43, 45 (Mo.1999) (en banc) (“Williams II ”). Plaintiff also argues that he can be placed back in his home and also obtain damages associated with the foreclosure, citing Siesta Manor, Inc. v. Community Federal Savings and Loan Ass'n, 716 S.W.2d 835 (Mo.Ct.App.1986).1

South argues that plaintiff also fails to plead equitable grounds to set aside the sale, because a mortgagee's act of commencing a foreclosure cannot be wrongful when there is a valid deed of trust and a right to foreclose, citing Peterson v. Kansas City Life Insurance Co., 339 Mo. 700, 98 S.W.2d 770, 773 (1936). South asserts that a legitimate attempt to exercise the power of sale will not result in the sale being void, but rather only voidable, and that insufficiency of notice goes to voidability, citing Donovan v. Frick, 458 S.W.2d 282, 287 (Mo.1970). South contends that plaintiff's claim for equitable foreclosure fails as a matter of law because the Petition fails to allege that plaintiff was not actually aware of the foreclosure sale, citing Macon–Atlanta State Bank v. Gall, 666 S.W.2d 934, 940 (Mo.Ct.App.1984). South also contends that plaintiff's claim for equitable relief should be denied because plaintiff failed to plead his ability or willingness to redeem the property as required by Missouri law, citing Young v. Kansas City Life Insurance Co.,

329 Mo. 130, 43 S.W.2d 1046, 1048 (1931).

Plaintiff responds that where a sale is void, as here, and he has alleged that South as substitute trustee wholly ignored the requirement to provide him with notice as required by the deed of trust and § 443.325.3, Missouri law does not require that he offer to redeem, citing Axman v. Smith, 156 Mo. 286, 57 S.W. 105, 107 (1900).

1. Successor Trustee as Proper Party

South asserts a threshold argument that it should be dismissed from this case because as a successor trustee it has no interest in the property and is not alleged to have such an interest, and therefore it is not a necessary or indispensable party to this action. The Court rejects this argument. The Court previously determined that South is a nominal party to this action whose citizenship is disregarded for purposes of diversity jurisdiction. See Mem. and Order of April 18, 2014 at 8. Although South as successor trustee is not a necessary party to this suit, the trustee of a deed of trust is a proper party in an action to set aside a foreclosure...

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