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May v. Nationstar Mortgage, LLC

United States District Court, E.D. Missouri, Eastern Division

November 19, 2014

JEANNIE K. MAY, Plaintiff,


THOMAS C. MUMMERT, III, Magistrate Judge.

This matter is before the Court[1] on motions filed by Nationstar Mortgage, LLC ("Defendant") to dismiss, under Federal Rule of Civil Procedure 12(b)(6), Counts II, IV, V, VI, and IX of the second amended complaint filed by Jeannie K. May ("Plaintiff") [Docs. 18 and 58]. Plaintiff concedes that the claim in Count VI is moot and otherwise opposes the motions.

Plaintiff challenges Defendant's handling of a loan Plaintiff originally obtained from a different entity in 2007 to purchase her residence. After Plaintiff filed this action in state court, Defendant removed the lawsuit to this Court on the grounds that Plaintiff alleged, in her then-pending first amended petition, violations of federal statutes, which claims fall within this Court's federal question jurisdiction, 28 U.S.C. § 1331, and pursued related state law claims, over which this Court may exercise supplemental jurisdiction under 28 U.S.C. § 1367(a). Now before the Court is Plaintiff's ten-count second amended complaint, and Defendant's motions to dismiss five of the six state law claims in that complaint. In particular, Defendant moves for dismissal of the two claims that Defendant's challenged actions violated the Missouri Merchandising Practices Act ("MMPA"), Mo. Rev. Stat. §§ 407.010 et seq. (Counts II and IX), and seeks dismissal of the claims that Defendant is liable for slander of title (Count IV), invasion of privacy (Count V), and wrongful foreclosure (Count VI). The motions to dismiss do not challenge either Plaintiff's sixth state law claim for Defendant's alleged breach of contract (Count VII) or any of Plaintiff's four claims that Defendant's challenged conduct violates several federal statutes.


Rule 12(b)(6) Standard. A motion filed under Federal Rule of Civil Procedure 12(b)(6) requests dismissal for "failure to state a claim upon which relief can be granted." When resolving such a motion, the court must take as true the alleged facts and determine whether they are sufficient to raise more than a speculative right to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007); accord Hager v. Arkansas Dep't of Health, 735 F.3d 1009, 1013 (8th Cir. 2013) (under Rule 12(b)(6), "the factual allegations in the complaint are accepted as true and viewed most favorably to the plaintiff"). The court does not, however, accept as true any allegation that is a legal conclusion. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); accord Hager, 735 F.3d at 1013 ("[c]ourts must not presume the truth of legal conclusions couched as factual allegations, " citing Papasan v. Allain, 478 U.S. 265, 286 (1986)).

A complaint must have "a short and plain statement of the claim showing that the [plaintiff] is entitled to relief, ' in order to give the defendant fair notice of what the... claim is and the grounds upon which it rests.'" Twombly, 550 U.S. at 555 (quoting Fed.R.Civ.P. 8(a)(2) and then Conley v. Gibson, 355 U.S. 41, 47 (1957), abrogated by Twombly, supra); see also Gregory v. Dillard's Inc., 565 F.3d 464, 473 (8th Cir. 2009) (en banc). While detailed factual allegations are not necessary, a complaint that contains "labels and conclusions, " and "a formulaic recitation of the elements of a cause of action" is not sufficient. Twombly, 550 U.S. at 555; accord Iqbal, 556 U.S. at 678.

The complaint must set forth "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570; accord Iqbal, 556 U.S. at 678; Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009). "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. "[T]he complaint should be read as a whole, not parsed piece by piece to determine whether each allegation, in isolation, is plausible." Braden, 588 F.3d at 594. If the claims are only conceivable, not plausible, the complaint must be dismissed under Rule 12(b)(6). Twombly, 550 U.S. at 570; accord Iqbal, 556 U.S. at 679.

With respect to Plaintiff's state claims, this Court applies Missouri law to ascertain the elements of those claims. See Walker v. Barrett, 650 F.3d 1198, 1203 (8th Cir. 2011) (Missouri law applies to state claims pursued under the federal court's supplemental jurisdiction). "When construing Missouri law, [this Court is] bound by the decisions of the Missouri Supreme Court regarding issues of substantive state law.' Bockelman v. MCI Worldcom, Inc., 403 F.3d 528, 531 (8th Cir. 2005)." Id . Absent decisions of the Missouri Supreme Court, this Court considers "opinions from the Missouri Court of Appeals as particularly relevant' and must follow them when those opinions provide the best evidence of Missouri law.' [ Bockelman, 403 F.3d at 531] (quotations and citations omitted)." Id.

Importantly, a court considering a Rule 12(b)(6) motion to dismiss "is not limited to the allegations in the complaint, but may also consider materials that do not contradict the complaint, or materials that are necessarily embraced by the pleadings.' Noble Sys. Corp. v. Alorica Cent., LLC, 543 F.3d 978, 982 (8th Cir. 2008)." Smithrud v. City of St. Paul, Minn., 746 F.3d 391, 397 (8th Cir.), cert. denied, 135 S.Ct. 361 (2014). Here, Plaintiff provided forty-one exhibits with her first amended petition, which was filed upon removal of this case from state court. The second amended complaint contains references to those exhibits.[2] Because those materials are "necessarily embraced" by the second amended complaint, the Court may consider those exhibits in resolving the pending motions to dismiss.

Defendant provided as exhibits to its second motion to dismiss a copy of the note and a copy of the deed of trust pertaining to Plaintiff's purchase of her home. While these materials were not provided as part of or with either the first amended petition or the second amended complaint, the deed of trust may be considered a public record in that it was filed with the St. Louis County Recorder of Deeds office. In Noble Sys. Corp., the United States Court of Appeals for the Eighth Circuit stated that "[w]hen ruling... a motion to dismiss under Rule[] 12(b)(6)..., a district court... may... consider some public records." Noble Sys. Corp., 543 F.3d at 982 (finding a financing statement that was "on file with the state of Minnesota" was "a public record that can be considered" in resolving a Rule 12(b)(6) motion "even if not mentioned expressly in the pleadings"). Under the circumstances, because the deed of trust is a public record and because both the note and the deed of trust are "necessarily embraced" by the allegations in the second amended complaint, the Court may consider those documents to resolve the issues presented by Defendant's motions to dismiss.

Based on the standard applicable to the consideration of Rule 12(b)(6) motions, the factual allegations in the second amended complaint, taken as true, reveal in relevant part that Jeannie K. May ("Plaintiff"), a single person, purchased her home in St. Louis County, Missouri, in May 2007, with a $100, 000 loan financed by Cornerstone Mortgage, Inc. (Pl. Second Am. Compl. ¶¶ 1, 4, 8, 9.) After the closing, the servicing of the loan was transferred to CitiMortgage and then, in November 2010, to Defendant. (Id. ¶¶ 5, 10, 19.) Plaintiff alleges that the transfer to Defendant was subject to a contract, specifically, a pooling and servicing agreement ("PSA"), that set forth Defendant's duties and responsibilities in servicing Plaintiff's note and mortgage. (Id. ¶¶ 11, 12.)

Plaintiff began having financial difficulties in 2007, fell behind in her mortgage payments, and filed on November 7, 2007, a voluntary petition for relief under Chapter 13 of the United States Bankruptcy Code ("Bankruptcy Proceeding"). (Id. ¶¶ 14, 15.) CitiMortgage filed in the Bankruptcy Proceeding a proof of claim, including a claim for $1, 709.70 in prepetition charges. (Id. ¶ 18.) The Chapter 13 Plan ("Plan"), which was confirmed by the Bankruptcy Court Judge, required in relevant part both Plaintiff's payment to the Bankruptcy Trustee of at least $395.00 per month for sixty months, as well as Plaintiff's monthly payment of $833.93 to CitiMortgage, Inc. (and then Defendant) for the loan on her home. (Id. ¶¶ 16, 17; see also Ex. B [Doc. 7-2].)

In April 2011, Defendant filed a motion for relief from the bankruptcy stay unless Plaintiff paid a total of $4, 838.38 for five post-petition mortgage payments she had reportedly not made. (Pl. Second Am. Compl. ¶ 20 [Doc. 56].) Plaintiff then tendered, and Defendant negotiated, a cashier's check in that amount; and Defendant withdrew its motion for relief from the bankruptcy stay. (Id. ¶¶ 21, 22.) Defendant did not file in Plaintiff's bankruptcy proceeding any notice or demand for payment of any other amount or fee. (Id. ¶ 23.)

On November 15, 2012, the Bankruptcy Trustee filed a notice under Bankruptcy Rule 3002.1(f) reporting that the full amount of the pre-petition default amount of $1, 709.70 claimed by Defendant and its predecessor, CitiMortgage, had been paid by the Trustee, and that all post-petition monthly payments had been made by Plaintiff. (Id. ¶ 24.) In its response to that notice, Defendant "admitted that [Plaintiff] had paid" in full the pre-petition amount due of $1, 790.70, as well as "all post-petition amounts due to Defendant... as of the date of the Trustee's... notice." (Id. ¶ 25.)

Plaintiff made timely payments of $859.38 to Defendant in December 2012, January 2013, and February 2013. (Id. ¶ 27.) During this time, customer service representatives for Defendant orally confirmed for Plaintiff that she was current on her mortgage. (Id. ¶ 28; see also ¶ 30.) On March 8, 2013, April 8, 2013, May 7, 2013, June 14, 2013, July 12, 2013, and August 13, 2013, Plaintiff tendered her mortgage payments to Defendant, in the amounts of $859.38 in March and April, and $999.45 in May, June, July, and August. (Id. ¶¶ 34, 39, 48, 52, 54, and 56.)

In a late February 2013 statement from Defendant regarding Plaintiff's March 2013 mortgage obligation, Plaintiff was advised for the first time that she owed Defendant $2, 097.20, in addition to her monthly payment of $859.38, for "unpaid late charges, and lender paid expenses which included legal fees and property inspections." (Id. ¶ 29.) She contacted Defendant's customer service department and unsuccessfully "attempted to explain that [Defendant] was mistaken." (Id. ¶ 30.) Plaintiff subsequently received other similar notices, dated March 11, 2013 and April 18, 2013, reporting that she owed Defendant amounts beyond Plaintiff's regular monthly payment amount. (Id. ¶ 36, 43.) The April 18, 2013 notice reported that she had a past due amount totaling $4, 296.90 and unpaid late charges of $919.80. (Id. ¶ 43.)

Plaintiff also received from Defendant a "Suspense Notice, " dated February 28, 2013, indicating that "unapplied funds" had been placed in a "suspense account which is used for situations where[] funds are insufficient to be applied as a full payment.'" (Id. ¶ 31.) She received five more "Suspense Notices, " dated March 29, 2013, April 1, 2013, May 9, 2013, June 18, 2013, and July 16, 2013. (Id. ¶¶ 37, 38, 50, 53, 55.)

Additionally, Plaintiff began receiving "collection calls from [Defendant's] representatives... regarding her delinquency'"; and Plaintiff responded that she did not owe a delinquency. (Id. ¶¶ 32, 42; see also ¶47.) On March 6, 2013, April 8, 2013, and April 25, 2013, Defendant called Plaintiff "at work to determine when she would be paying [the] alleged arrearage.... claim[ing]... that she was five months behind and had not made a payment since September 2012." (Id. ¶¶ 33, 40, 46.) The calls she received at work upset Plaintiff, and embarrassed her to the extent "her coworkers and manager [could] hear her trying to explain that she was not behind on her mortgage." (Id. ¶¶ 33, 40, 46.) During the April 2013 calls, Plaintiff asked Defendant not to "contact her again regarding their mistake." (Id. ¶¶ 40, 46.) Plaintiff also asked Defendant "to call her cell phone after 4:00 PM when she was at home." (Id. ¶ 46.) Defendant continued calling Plaintiff on her cell and work telephones until the end of October 2013. (Id. ¶ 48.)

Plaintiff received from Defendant an Escrow Disclosure Statement analysis, dated March 8, 2013, reporting that, beginning on May 1, 2013, her monthly payment would increase to $999.45 to cover an alleged escrow shortage and deficiency of $923.41. (Id. ¶ 35.) Plaintiff paid the increased amount after April 2013. (Id. ¶¶ 48, 52, 54, and 56.)

In her effort to correct the situation with Defendant, Plaintiff contacted Defendant on several occasions, and sent Defendant three faxes in April 2013. (Id. ¶ 41; see also ¶ 42.) During a phone conversation on April 23, 2013, Defendant's representative advised Plaintiff that she would get a written response to her fax within ten days; and, in a conversation on April 30, 2013, advised Plaintiff that "research" would provide a written response. (Id. ¶¶ 45, 47.)

By letter dated April 19, 2013, Defendant notified Plaintiff that Defendant declared her to be in default under the terms and conditions of her note and deed of trust. (Id. ¶ 44.) In that letter, Defendant advised Plaintiff that, as of that date, Defendant was seeking to collect a debt totaling $6, 284.33, "which includes the sum of payments that have come due on and after the date of default 12/01/2012, " and the amount may be greater on the date of payment. (Id.; see also Ex. Y [Doc. 7-25].)

In May and June 2013, Defendant offered Plaintiff a Trial Modification Plan for her loan, which Plaintiff did not accept. (Pl. Second Am. Compl. ¶¶ 49, 51.)

On August 21, 2013, Plaintiff sent Defendant correspondence requesting an explanation of how her account went from being current in November 2012 to being over $6, 000.00 in arrears ten months later, even though during that time period Plaintiff had made every monthly payment due. (Id. ¶ 57.) By letter, dated September 3, 2013, Defendant responded to Plaintiff's inquiry and included copies of the note, the deed of trust, and an alleged payment history.[3] (Id. ¶ 59.)

By letter, dated August 30, 2013, Defendant advised Plaintiff that Defendant declared her to be in default and she had until October 4, 2013, to pay $6, 013.28 "to bring the account out of default." (Id. ¶ 58.)

The $999.45 mortgage payments Plaintiff tendered in September 2013, October 2013, and November 2013 were rejected by Defendant and returned to her. (Id. ¶ 60.)

Plaintiff received notification in November 2013 that a law firm ("Law Firm") had been retained by Defendant "to act as Trustee to foreclose on her home." (Id. ¶ 61.) Plaintiff's attorney contacted the Law Firm in December 2013 disputing any default and asserting neither Defendant nor the Law Firm had a right to proceed with a foreclosure. (Id. ¶ 62.) The Law Firm's response, dated December 30, 2013, included a copy of the note and deed of trust, as well as "another pay history for the account."[4] (Id. ¶ 63.)

Plaintiff tendered her $999.45 monthly mortgage payments in December 2013, January 2014, and February 2014. (Id. ¶ 65.)

In January 2014, Plaintiff received notice that her home was the subject of a foreclosure sale scheduled for February 24, 2014. (Id. ¶ 66.) There is no dispute that the foreclosure sale was subsequently cancelled. (See, e.g., Id . ¶ 3.)

By letter dated March 3, 2014, Defendant returned Plaintiff's $999.45 monthly mortgage payment as "insufficient to bring the account current and alleged that [her] account was $11, 965.58 in arrears." (Id. ¶ 131.)

On March 10, 2014, Plaintiff mailed Defendant two letters in which she identified her name, address, social security number, and account number; asked Defendant to correct her account balance based on enclosed evidence that her account was "current by the completion of her bankruptcy plan"; and asked for explanations for the increase in her monthly payment amount to $1, 005.72, for Defendant's failure to apply her monthly payments to her account, for Defendant's rejection of those payments, for the information in her "escrow account disclosure statement, " and for the reported "past due balance." (Id. ¶ 132.)

By letter dated April 4, 2014, Plaintiff's bank notified her that Defendant had returned her $1, 005.72 payment, dated March 25, 2014. (Id. ¶ 135.) On April 28, 2014, Defendant "confirmed an ...

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