Vitale v. Nationstar Mortg. LLC, 7:19-CV-9-D

CourtUnited States District Courts. 4th Circuit. Eastern District of North Carolina
Decision Date09 September 2019
Docket NumberNo. 7:19-CV-9-D,7:19-CV-9-D
PartiesJASON R. VITALE, and JOAN VITALE, Plaintiffs, v. NATIONSTAR MORTGAGE LLC d/b/a Mr. Cooper, and FEDERAL NATIONAL MORTGAGE ASSOCIATION a/k/a Fannie Mae, Defendants.


No. 7:19-CV-9-D


September 9, 2019


On November 21, 2018, Jason R. Vitale and Joan Vitale (collectively, the "Vitales" or "plaintiffs") filed a complaint in Brunswick County Superior Court against Nationstar Mortgage LLC, d/b/a Mr. Cooper ("Nationstar"), and Federal National Mortgage Association, a/k/a Fannie Mae ("Fannie Mae"; collectively "defendants") [D.E. 1-1]. Plaintiffs allege breach of contract, violations of the North Carolina Debt Collection Act ("NCDCA"), N.C. Gen. Stat. § 75-50 et seq., the North Carolina Unfair and Deceptive Trade Practices Act ("UDTPA"), N.C. Gen. Stat. § 75-1.1 et seq., the North Carolina Mortgage Debt Collection and Servicing Act ("MDCSA"), N.C. Gen. Stat. § 45-90 et seq., the Real Estate Settlement Procedures Act ("RESPA"), 12 C.F.R. §§ 1024.35, 1024.36, the Truth in Lending Act ("TILA"), 12 C.F.R. §§ 1026.41, 1026.36, and the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, defamation, and negligence. See id. Plaintiffs seek damages, a restraining order, and preliminary and permanent injunctions. See id.

On January 14, 2019, defendants removed the action to this court [D.E. 1]. On February 5, 2019, defendants moved to dismiss plaintiffs' complaint [D.E. 15] and filed a memorandum in

Page 2

support [D.E. 16]. See Fed. R. Civ. P. 12(b)(6). On March 26, 2019, plaintiffs responded in opposition [D.E. 21]. On April 17, 2019, defendants replied [D.E. 23]. As explained below, the court grants in part and denies in part defendants' motion to dismiss and dismisses Fannie Mae as a defendant.


The Vitales reside at 9481 Seany Drive NE in Leland, North Carolina (the "Property"), which they acquired on April 27, 2007 with a loan from National Bank of Kansas City ("National Bank"). See id. ¶¶ 7, 23-24. To purchase the Property, the Vitales executed a 30-year note (the "Note") with National Bank in the original principal amount of $182,700.00 with a 6% rate of interest. See id. ¶ 24; Ex. A [D.E. 1-1] 96-97. The Vitales secured the Note with a Deed of Trust, which granted National Bank a lien on the Property. See Compl. [D.E. 1-1] ¶ 25; Ex. B [D.E. 1-1] 97-104.

On November 21, 2012, the Vitales filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of North Carolina(the "Bankruptcy Court"). See Compl. [D.E. 1-1] ¶¶ 3, 21, 28. In their petition, the Vitales listed Bank of America, N.A. ("BANA")—Nationstar's predecessor-in-interest—as a secured creditor holding a secured claim to the Property. See id. ¶¶ 29, 31. On January 9, 2013, BANA filed a proof of claim asserting that the amount due under the loan, as of November 21, 2012, was $176,583.13. See id. ¶ 33; Ex. D [D.E. 1-1] 106-21. On February 11, 2013, the Bankruptcy Court confirmed the Chapter 13 plan. See Compl. [D.E. 1-1] ¶ 36; Ex. F [D.E. 1-1] 126. Under the order, BANA's claim would be paid outside of the Chapter 13 plan directly to BANA. See Compl. [D.E. 1-1] ¶ 34; Ex. E [D.E. 1-1] 122-25.

On April 17, 2013, BANA transferred its claim to Nationstar effective April 1, 2013. See Compl. [D.E. 1-1] ¶ 38; Ex. H [D.E. 1-1] 128. On September 4, 2014, Nationstar moved for

Page 3

"relief from the automatic stay for lack of adequate protection" under 11 U.S.C. § 362(e). See Compl. [D.E. 1-1] ¶¶ 39-40. Nationstar asserted that the Vitales owed at least $21,229.23, consisting of nineteen missed monthly installments of $1,146.57. See id. ¶ 41.1 On September 3, 2015, Nationstar notified the Vitales that they were eligible for a loan modification. See id. ¶ 43; Ex. J [D.E. 1-1] 129. On September 14, 2015, the Vitales executed a loan modification agreement with Nationstar, which the Bankruptcy Court approved on June 20, 2016. See Compl. [D.E. 1-1] ¶¶ 45-49; Ex. K [D.E. 1-1] 130-33; Ex. L [D.E. 1-1] 134-39; Ex. M [D.E. 1-1] 139. As part of the modification, the parties agreed that the Vitales would owe monthly installment payments of $832.26 for principal and interest. See Compl. [D.E. 1-1] ¶ 47; Ex. K [D.E. 1-1] 131. The agreement also contained a provision concerning the payment of other outstanding obligations, including escrow items. See Ex. K [D.E. 1-1] 131. When the Vitales moved to approve the loan modification agreement, however, the Vitales stated that they would owe a monthly payment of $832.26 for "principal, interest, and escrow." Ex. L [D.E. 1-1] 134 (emphasis added). Nationstar neither objected to nor moved to amend the order. Cf. Compl. [D.E. 1-1] ¶¶ 45-49.

On August 9, 2016, the Bankruptcy Court entered an order of discharge, which granted the Vitales a discharge under section 1328(a). See Compl. [D.E. 1-1] ¶ 50; Ex. N [D.E. 1-1] 140. On October 21, 2016, the Vitales' Chapter 13 trustee filed a final report and account. See Compl. [D.E. 1-1] ¶ 53. On November 22, 2016, the Bankruptcy Court entered the final decree in the Vitales' bankruptcy case, which discharged the trustee and closed the case. See id.

On September 28, 2016, Nationstar notified the Vitales that they were in default See id. ¶ 54; Ex. P [D.E. 1-1] 143. Nationstar asserted that the Vitales' monthly payment was $1,052.63 and

Page 4

that Nationstar was holding $686.00 as an "unapplied balance." See Compl. [D.E. 1-1] ¶¶ 55-56; Ex. P [D.E. 1-1] 143. In response, the Vitales argued to Nationstar that they were not in default under the loan modification agreement See Compl. [D.E. 1-1] ¶¶ 59-60. The parties continued to communicate about the loan modification agreement. See id. ¶¶ 61-66.

Beginning in February 2017, Nationstar rejected the Vitales' monthly installment payments. See id. ¶¶ 67-68. On March 22, 2017, Nationstar terminated the Vitales' online account See id. ¶¶ 71, 99-100. On March 31, 2017, Nationstar appointed a substitute trustee and initiated a special foreclosure proceeding with the Brunswick County Clerk of Superior Court. See id. ¶¶ 72-77. In April 2017, the Vitales received multiple notices of the foreclosure proceeding, some of which were affixed to the Property. See id. ¶¶ 78-81; Ex. Y [D.E. 1-1] 158; Ex. Z [D.E. 1-1] 158; Ex. AA [D.E. 1-1] 159. Nationstar also called the Vitales numerous times in April and May 2017 and instructed them to contact Nationstar about their alleged defaults. See Compl. [D.E. 1-1] ¶¶ 84-94.2

On September 21, 2017, the Vitales through counsel sent Nationstar a qualified written request ("QWR") to request more information about the loan. See id. ¶¶ 96-97; Ex. CC [D.E. 1-1] 160-65. On October 16, 2017, the Vitales' lawyer received Nationstar's response to the QWR. See Compl. [D.E. 1-1] ¶¶ 103-11. According to the Vitales, Nationstar's response omitted several items that the QWR had requested. See id. ¶ 109. The Vitales also sent two notices of error ("NOE") to Nationstar. See id. ¶¶ 101-02, 114-16.

The Vitales allege several sources of damages. First, the Vitales contend that Nationstar has "continuously furnished inaccurate, derogatory, false, misleading, and incorrect information to

Page 5

consumer reporting agencies ("CRAs")." Id. ¶¶ 125-28, 131. Second, the Vitales allege that, because Nationstar sent monthly mortgage statements to the Vitales that contained 'false, incorrect, misleading, and inaccurate statements, information, and representations," they suffered mental and emotional distress, lost wages, degradation of credit scores, damage to character and reputation, and loss of ability to refinance the Property. See id. ¶¶ 129-30, 132-65. Finally, the Vitales allege that Nationstar's collection efforts have negatively affected the Vitales' quality of life, including by causing harm to the Vitales' martial relationship and emotional distress to the Vitales' youngest child, who has special needs. See id. ¶¶ 166-72.


The parties dispute whether the loan modification agreement binds the Vitales and Nationstar. Debtors in bankruptcy cases under Chapter 13 of the United States Bankruptcy Code must file a plan. See 11 U.S.C. § 1321. The debtor's plan may "modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor's principal residence, or of holders of unsecured claims, or leave unaffected the rights of holders of any class of claims." Id. § 1322(b)(2); see Till v. SCS Credit Corp., 541 U.S. 465, 475 & n.11 (2004); Nobelman v. Am. Sav. Bank, 508 U.S. 324, 327 (1993); Hurlburt v. Black, 925 F.3d 154, 159-60 (4th Cir. 2019) (en banc); Burkhart v. Grigsby, 886 F.3d 434, 437-38 (4th Cir. 2018); Anderson v. Hancock, 820 F.3d 670, 673 (4th Cir. 2016). Section 1322(b(2) prohibits "any fundamental alteration in a debtor's obligations, e.g., lowering monthly payments, converting a variable interest rate to a fixed interest rate, or extending the repayment term of a note." Anderson, 820 F.3d at 673-74 (quotation omitted); see Hurlburt, 925 F.3d at 160; In re Litton, 330 F.3d 636, 643-44 (4th Cir. 2003). "Claims secured by security interests in the debtor's principal residence may be modified only if the last payment on the original payment schedule is due before the due date of

Page 6

the last payment under the plan . . . ." Anderson, 820 F.3d at 673 (quotation omitted); see 11 U.S.C. § 1322(c)(2); Hurlburt, 925 F.3d at 160.

A party may waive statutory protections, including the anti-modification provision of section 1322(b)(2), by consenting to an otherwise impermissible modification. See In re Hurlburt, 572 B.R. 160, 170 (Bankr. E.D.N.C. 2017), rev'd on other grounds, Hurlburt, 925 F.3d at 167; In re Smiley, 559 B.R. 215, 217 (Bankr. N.D. Ind. 2016); In re Daniels, 91 B.R. 51, 52 (Bankr. N.D. Ill. 1988). Although Nationstar actively participated in the bankruptcy proceeding, it did not object to the...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT