Swink v. Fed. Nat'l Mortg. Ass'n (In re Swink)

• Decision Date: 12 October 2021
• Docket Number: 19-51012,Ad. Proc. 20-06193
• Court: United States Bankruptcy Courts. Fourth Circuit. U.S. Bankruptcy Court — Middle District of North Carolina
• Parties: In re Tamara Lynn Swink, Debtor. v. Federal National Mortgage Association, Seterus, Inc., and Nationstar Mortgage LLC d/b/a Mr. Cooper, Defendants. Tamara Lynn Swink, Plaintiff,

In re Tamara Lynn Swink, Debtor.

Tamara Lynn Swink, Plaintiff, v. Federal National Mortgage Association, Seterus, Inc., and Nationstar Mortgage LLC d/b/a Mr. Cooper, Defendants.

No. 19-51012

Ad. Proc. No. 20-06193

United States Bankruptcy Court, M.D. North Carolina, Winston-Salem Division

October 12, 2021

ORDER AND OPINION GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS COMPLAINT

LENA MANSORI JAMES JUDGE

THIS ADVERSARY PROCEEDING comes before the Court upon the amended motion to dismiss and supporting brief filed by defendants Federal National Mortgage Association ("Fannie Mae"), Nationstar Mortgage LLC d/b/a Mr. Cooper ("Mr. Cooper"), and Seterus, Inc. (collectively the "Defendants"), seeking to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), as made applicable to this proceeding by Federal Rule of Bankruptcy Procedure 7012, for failure to state a claim upon which relief can be granted. After consideration of the record and for the reasons stated herein, the Court will grant in part and deny in part the Defendants' amended motion to dismiss.

Procedural History

On December 22, 2020, Tamara Swink (the "Plaintiff") initiated this adversary proceeding by filing a complaint against the Defendants (Docket No. 1, the "Complaint").^[1] In addition to objecting to the proof of claim filed by Mr. Cooper in the underlying bankruptcy case, the Plaintiff also seeks damages for violations of (1) the discharge injunction, (2) the automatic stay, (3) the Fair Debt Collection Practices Act ("FDCPA"), (4) the Real Estate Settlement Procedures Act ("RESPA"), and (5) N.C. Gen. Stat. § 45, as well as damages stemming from (6) breach of contract and (7) tortious interference with contract.

After a Court-provided extension of time, the Defendants filed a motion to dismiss, followed by the instant amended motion to dismiss on April 13, 2021 (Docket No. 31, 32, the "Motion"). The Plaintiff filed a brief in opposition to the Motion (Docket No. 39) and the Defendants filed a reply brief (Docket No. 40). Following an unsuccessful attempt at mediation (Docket No. 44), the Court scheduled a hearing on September 1, 2021, at which Kristen Nardone appeared on behalf of the Plaintiff, and Joseph Vonnegut and Claire Dickerhoff appeared on behalf of the Defendants. Kathryn Bringle also appeared in her capacity as chapter 13 trustee for the Plaintiff's underlying bankruptcy case. After hearing arguments from each side as to the merits of the Motion, the Court took the matter under advisement.

Standard of Review

Rule 12(b)(6) of the Federal Rules of Civil Procedure requires dismissal of a complaint if it "fail[s] to state a claim upon which relief can be granted." Fed.R.Civ.P 12(b)(6). In evaluating a motion to dismiss, a court must "test the sufficiency of the complaint to see if it alleges a claim for which relief can be granted." Dolgaleva v. Va. Beach City Pub. Sch., 364 Fed.Appx 820, 825 (4th Cir. 2010). A motion under Rule 12(b)(6) should be granted if the complaint does not allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Accordingly, the factual allegations must "be enough to raise a right to relief above the speculative level" and advance the plaintiff's claim "across the line from conceivable to plausible." Id. at 555, 570. As explained in Ashcroft v. Iqbal,

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. The plausibility standard is not akin to probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. 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.

556 U.S. 662, 678 (2009) (cleaned up).

To determine plausibility, all well-pleaded facts set forth in the complaint are taken as true and viewed in a light most favorable to the plaintiff; however, "legal conclusions, elements of a cause of action, and bare assertions devoid of further factual enhancement" will not constitute well-pleaded facts necessary to withstand a motion to dismiss. Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009). In other words, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678. Assuming the complaint meets the plausibility standard, the plaintiff is not required "to also rebut other possible explanations for the conduct alleged." 2 Moore's Federal Practice § 12.34(1)(b) (2019); accord Houck v. Substitute Trustee Servs., 791 F.3d 473, 484 (4th Cir. 2015) (holding that "a plaintiff need not demonstrate … that alternative explanations are less likely" to survive a motion to dismiss) (quoting Twombly, 550 U.S. at 570)). On the other hand, dismissal is proper under Rule 12(b)(6) "if the complaint lacks an allegation regarding an element necessary to obtain relief." 2 Moore's Federal Practice § 12.34(4)(a) (2019); see also EEOC v. PBM Graphics Inc., 877 F.Supp.2d 334, 343 (M.D. N.C. 2012) (finding a plaintiff must allege facts sufficient to state each element of his claim) (citing Bass v. E.I. DuPont de Nemours & Co., 324 F.3d 761, 764-65 (4th Cir. 2003)).

The Court also takes judicial notice of pertinent docket entries and papers within this adversary proceeding and the underlying bankruptcy case. See Anderson v. Fed. Deposit Ins. Corp., 918 F.2d 1139, 1141 n.1 (4th Cir. 1990) (holding that a bankruptcy court may "properly take judicial notice of its own records"); see also Brown v. Ocwen Loan Servicing, LLC, No. 14-3454, 2015 WL 5008763, at *1 n.3 (D. Md. Aug. 20, 2015), aff'd, 639 F. App'x. 200 (4th Cir. 2016) (taking judicial notice of docket entries in other cases for purposes of evaluating a Rule 12(b)(6) motion to dismiss).

Factual Background and Allegations

The dispute between the Plaintiff and her mortgage servicers spans several years and two bankruptcy cases. On November 14 2013, the Plaintiff filed a voluntary petition for relief under chapter 13 of the Bankruptcy Code (Case No. 13-51412, the "Prior Bankruptcy Case"). The Plaintiff was the owner of record on real property located at 124 North Cotton Avenue, Albemarle, North Carolina (the "Property"). In connection with the purchase of the Property, the Plaintiff executed a promissory note in the original amount of $59, 000.00 with First Franklin Financial (Docket No. 1, Ex. B, the "Note"), which was secured by a deed of trust on the Property (Docket No. 1, Ex. C, the "Deed of Trust"). On January 24, 2007, the Plaintiff transferred an undivided half interest in the Property to her mother, Lois Elaine McLeod, while retaining the other half interest (Docket No. 1, ¶ 21). On August 13, 2009, the Plaintiff and First Franklin entered into a loan modification agreement in the amount of $65, 082.23 with a term of 480 months (Docket No. 1, Ex. G, the "Loan Modification").

The Deed of Trust, Note, and Loan Modification set the conditions under which the lender may apply fees and charges related to the Plaintiff's late or incomplete mortgage payments. The Deed of Trust allows the lender to return any payment or partial payment if it is insufficient to bring the loan current and permits the lender to charge fees for services in connection with the borrower's default, such as attorney's fees, property inspection, and valuation fees (Docket No. 1, ¶ 72). Among its listed provisions, paragraph 6 of the Note^[2] provides that the lender can assess late charges if mortgage payments are not received within 15 days of the due date or if the Plaintiff does not pay the full amount of each monthly payment (Docket No. 1, ¶ 69). The Deed of Trust also provides that, if the borrower fails to maintain required insurance, the lender may obtain insurance coverage at its option and at the borrower's expense (Docket No. 1, ¶ 72).

The Plaintiff's chapter 13 plan in the Prior Bankruptcy Case, which was confirmed on March 11, 2016, provided that creditors holding liens on the Property would continue to receive ongoing mortgage payments directly from Lois McLeod (Case No. 13-51412, Docket No. 14, the "Confirmed Plan"). The Confirmed Plan also incorporated the terms and provisions of the Standing Order dated February 24, 2012, which provided that, "[u]nless the court orders otherwise, an order granting a discharge in the case shall be a determination that all prepetition and postpetition defaults have been cured and the account is current and reinstated on the original payment schedule under the note and security statement as if no default had ever occurred." Standing Order Regarding Terms and Provisions Available for Incorporation into Chapter 13 Confirmation Orders, at ¶ (B)(7) (Bankr. M.D. N.C. Feb. 24, 2012) (the "2012 Standing Order").

Several months after plan confirmation, on November 7, 2016, Fannie Mae filed proof of claim # 10-1, asserting a secured mortgage debt of $59, 533.95 and listing Seterus as the servicer of its mortgage. The proof of claim did not indicate any default or arrears in connection with the mortgage.

Over the course of the Prior Bankruptcy Case, Fannie Mae filed two separate motions for relief from stay asserting, in both instances, that the Debtor was in default on her post-petition mortgage payments (Case No. 13-51412, Docket No. 43, 54). On both occasions, Fannie Mae's attorney later withdrew the motions after...