United States District Court, E.D. Missouri, Eastern Division
MEMORANDUM AND ORDER
L. WHITE UNITED STATES DISTRICT JUDGE
matter is before the Court on Defendant's Motion to
Dismiss Plaintiffs First Amended Complaint (ECF No. 31). The
motion is fully briefed and ready for disposition.
originally filed this action in the Circuit Court of St.
Louis County, Missouri on August 18, 2015. Defendant Alliant
National Title Insurance Company ("Alliant")
removed the case on September 15, 2015 based on diversity
jurisdiction. On May 24, 2016, this Court granted
Defendant's motion for more definite statement and
ordered the Plaintiff to file a First Amended Complaint. (ECF
No. 24) Plaintiff filed his First Amended Complaint on June
24, 2016, alleging claims for Declaratory Judgment (Count I);
Breach of Contract (Count II); Negligence (Count III); and
Punitive Damages (Count IV).
claims that on February 3, 2011, he purchased the property as
a homestead at 11931 Roseview Lane in St. Louis, Missouri
("Roseview property") and executed a Deed of Trust
and Security Agreement in favor of Gary Stafford of G.
Stafford Company (collectively "Stafford"). (First
Am. Compl. ("FAC") ¶ 9, ECF No. 27)
Additionally, Plaintiff asserts that he executed a Promissory
Note in favor of Stafford in the amount of $57, 000.
(Id. at ¶ 10) On that same date, Defendant
Alliant National Title Insurance Company
("Alliant") issued an ALTA Owners Policy of Title
Insurance insuring against loss or damage by reason of any
defect or lien or encumbrance on the title. (Id. at
to Plaintiff, G. Stafford Company borrowed $46, 468.96 from
Sun Security Bank ("Bank") on the Roseview property
and pledged the Deed of Trust as collateral on November 10,
2010. (Id. at ¶¶ 11-13) When G. Stafford
defaulted on the loan, the Bank initiated foreclosure
proceedings against Plaintiff. (Id. at ¶ 20)
Plaintiff asserts that Defendant knew or could reasonably
have known about the pattern and practice of G.
Stafford's pledging deeds of trust and promissory notes
of unsuspecting homeowners as collateral for a personal Gary
Stafford loan, then defaulting and subjecting homeowners to
foreclosure. (Id. at ¶¶ 22, 25) Plaintiff
further avers that Defendant was complicit in and profited
from Gary Stafford's mortgage fraud by issuing title
insurance polies to G. Stafford and to homeowners whose homes
were encumbered by G. Stafford loans. (Id. at
¶¶ 23, 26-28) Plaintiff contends that Alliant
failed to disclose prior encumbrances to Plaintiff, causing
damages. (Id. at ¶ 31)
First Amended Complaint requests declaratory judgment
declaring the rights and obligations of the parties under the
Title Insurance Policy ("Policy") issued by
Defendant (Count I). Plaintiff further presents a claim for
breach of contract for failure to take corrective action to
cure the defect in Plaintiffs title (Count II); negligence
for failing to discover and disclose the title defects and
liens (Count III); and punitive damages for being aware of
and complicit in G. Stafford's mortgage fraud by selling
homeowners title insurance policies and failing to disclose
liens (Count IV).
response, Defendant filed a Motion to Dismiss Plaintiffs
First Amended Complaint (ECF No. 31). Defendant contends that
Plaintiff has not alleged any facts establishing liability on
part of Alliant for a purported fraud perpetrated by Stafford
or for failing to disclose a lien in favor of Stafford.
Further, Defendant asserts that Plaintiff cannot establish a
duty because Alliant did not insure against the claimed fraud
of Stafford and because the Sun Security Deed of Trust was no
longer an encumbrance when Plaintiff purchased the
property. Defendant thus argues that the First
Amended Complaint fails to state a claim upon which relief
can be granted such that dismissal is appropriate.
regard to motions to dismiss for failure to state a claim
under Federal Rule of Civil Procedure 12(b)(6), a complaint
must be dismissed if it fails to plead "enough facts to
state a claim to relief that is plausible on its face."
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007) (abrogating the "no set of facts" standard
set forth in Conley v. Gibson, 355 U.S. 41, 45-46
(1957)). While the Court cautioned that the holding does not
require a heightened fact pleading of specifics, "a
plaintiffs obligation to provide the 'grounds' of his
' entitle[ment] to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do." Id. at 555. In
other words, "[f]actual allegations must be enough to
raise a right to relief above the speculative level. . .
." Id. This standard simply calls for enough
facts to raise a reasonable expectation that discovery will
reveal evidence of the claim. Id. at 556.
must liberally construe the complaint in the light most
favorable to the plaintiff and accept the factual allegations
as true. See Id. at 555; see also Schaaf v.
Residential Funding Corp., 517 F.3d 544, 549 (8th Cir.
2008) (stating that in a motion to dismiss, courts accept as
true all factual allegations in the complaint); Eckert v.
Titan Tire Corp., 514 F.3d 801, 806 (8th Cir. 2008)
(explaining that courts should liberally construe the
complaint in the light most favorable to the plaintiff).
Further a court should not dismiss the complaint simply
because the court is doubtful that the plaintiff will be able
to prove all of the necessary factual allegations.
Twombly, 550 U.S. at 556. However, "[w]here the
allegations show on the face of the complaint there is some
insuperable bar to relief, dismissal under Rule 12(b)(6) is
appropriate." Benton v. Merrill Lynch &
Co., 524 F.3d 866, 870 (8th Cir. 2008) (citation
omitted). Courts '"are not bound to accept as true a
legal conclusion couched as a factual allegation.'"
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 555). When considering a motion
to dismiss, a court can "begin by identifying pleadings
that, because they are no more than conclusions, are not
entitled to the assumption of truth." Id. at
679. Legal conclusions must be supported by factual
allegations to survive a motion to dismiss. Id.
argues that Plaintiff has failed to plead any facts which
give rise to a cause of action against Alliant. Instead,
Plaintiff raises claims of fraud allegedly committed by
nonparties Stafford against Plaintiff. In addition Defendant
contends that Plaintiff does not provide facts sufficient to
state a claim against Defendant Alliant under the Policy
purchased by Plaintiff because there was no defect in
Plaintiffs title, and Alliant did not insure against the
alleged fraud of Stafford. In response, Plaintiff contends
that he has alleged facts sufficient to state a claim because
Defendant failed to honor its contractual obligations under
the policy by failing to discover the defects in the title
and failing to indemnify Plaintiff for losses incurred while
defending title to the Roseview property.
construing Plaintiff's pro se First Amended
Complaint and accepting all facts as true, the Court finds
that dismissal is not warranted at this time. The crux of
Defendant's argument for dismissal is that there was no
defect in in Plaintiffs title because the Sun Security Deed
of Trust had been foreclosed upon and purchased by G.
Stafford Company prior to Plaintiffs purchase and
Alliant's involvement. Alliant points to its exhibits
indicating that Sun Security Bank reassigned the Deed of
Trust on the Roseview property to G. Stafford Company on June
1, 2010; G. Stafford Company defaulted on the Note; the Deed
of Trust was foreclosed upon in July 2010; and G. Stafford
Company purchased the property and sold it to Plaintiff in
2011. What Defendant does not address is the loan to G.
Stafford Company from Sun Security Bank, with the Roseview
property as collateral. The exhibits attached to Plaintiffs
First Amended Complaint shows that G. Stafford Company took
out a $47, 000 loan on November 10, 2009, and then changed
the terms of agreement in November, 2010, changing the
maturity date to January 3, 2012 and securing the agreement