United States District Court, W.D. Missouri, Western Division
KELLY W. KENT, Plaintiff,
SETERUS, INC., LERETA, LLC and QUICKEN LOANS INC., Defendants.
ORDER GRANTING IN PART DEFENDANT SETERUS'S MOTION
KAYS, UNITED STATES DISTRICT COURT CHIEF JUDGE
case arises out of unpaid real estate taxes. Plaintiff Kelly
Kent (“Kent”) alleges Defendants collected
monthly escrow payments from him, earmarked for his real
estate taxes, but never actually paid the monies over to the
taxing authority, thereby causing his real estate taxes to
fall into arrears. Kent sued Defendants for violations of the
Real Estate Settlement Practices Act (“RESPA”),
violations of the Missouri Merchandising Practices Act
(“MMPA”), various common law negligence claims,
and breach of contract.
before the Court is Defendant Seterus, Inc.'s
(“Seterus”) motion to dismiss Kent's claims
(Doc. 10). As explained below, Kent's motion is GRANTED
amended complaint (Doc. 28) alleges the following:
October 2007, Kent purchased a condo in Chicago, Illinois,
with the proceeds from a mortgage loan with Capital Funding
Mortgage Company, LLC, (“CFMC”) and a loan with
First American Bank (“FAB”). Plaintiff lived in
the condo as his primary residence until April 2011, when he
relocated to Kansas City, Missouri. He moved for several
reasons including, a “downturn in the economy”
and to care for an ill parent. Am. Compl. (Doc. 28 ¶
64-64.2). Kent alleges he is actively seeking employment in
Chicago and intends to move back into the condo.
the time Plaintiff was in Kansas City, he decided to rent the
property to friends and family. The rate he charged was lower
than his monthly expenses on the condo. From April 2011
through March 2017, Kent rented the condo reporting the
rental income and expenses on his yearly tax return, claiming
a loss each year. From April 2011 until July 2012, the loss
was $800 per month and from August 2012 through March 2017,
the loss was $400 per month.
19, 2012, Kent refinanced the CFMC mortgage with Defendant
Quicken Loans Inc. (“QLI”). The QLI loan called
for property taxes to be held in an escrow account. It also
stated that Kent was to make periodic payments for taxes and
that QLI “shall apply the funds to pay escrow items no
later than time specified under RESPA.” Am. Compl.
¶ 15.4. The QLI loan also states that QLI shall provide
Kent an annual accounting of the escrow items. The QLI loan
included a 1-4 Family Rider excusing Kent from occupying the
home, which was otherwise required. Another section of the
QLI loan alerted Kent that another company could service his
QLI loan, meaning collecting the payments due and performing
the “other mortgage loan servicing obligations”
as defined in the document. Am. Compl. ¶ 15.6.
September 1, 2012, QLI assigned, sold, or transferred the
servicing of Plaintiff's QLI loan to Seterus. Sometime
later, QLI authorized Seterus to outsource the property tax
reporting and monitoring services on Plaintiff's loan to
Lereta, LLC (“Lereta”).
made timely payments on his loan and escrow items. Plaintiff
received yearly mortgage statements reflecting the beginning
and ending balance of his loan, beginning and end balance of
his escrow account, and real estate taxes paid.
November 10, 2016, Plaintiff learned his 2012 real estate
taxes owed to Cook County, Illinois, had been sold to ATCF II
Illinois, LLC (“ATCF”) at the county's annual
tax sale, due to non-payment. Plaintiff later learned that
his real estate taxes for years 2013, 2014, and 2015 had also
not been paid, despite his yearly mortgage statements
indicating they had. On that same day, Plaintiff contacted
Seterus and it indicated it would research the issue. On
November 16, 2016, Plaintiff contacted Seterus again and
Seterus responded that the issue would be resolved by
November 27, 2016. On November 30, 2016, Plaintiff called
Seterus a third time and Seterus stated there was an issue
with the property account number and that issue had been
December 8, 2016, Plaintiff received an escrow account
statement indicating the account had a deficiency of $4,
252.86. Then on January 3, 2017, Defendants redeemed the
delinquent real estate taxes, including those sold to ATCF,
for $9, 782.70. This redemption payment included penalties of
$1, 176.56. Kent continued to receive statements claiming the
escrow account had a shortage. Kent claims his escrow payment
increased to cover the shortfall caused at least in part by
the penalties assessed for the late payment of his taxes.
sued Seterus and Lereta for violations of RESPA, violations
of the MMPA, various common law negligence claims, and breach
of contract. Seterus moved to dismiss the claims against it.
After the motion was fully briefed, Kent moved to amend the
complaint to add QLI as a party and clarify certain facts
alleged. In granting the motion to amend his complaint, the
Court permitted the parties to file supplemental briefing on
the pending motion to dismiss.
survive a 12(b)(6) motion to dismiss, the complaint must do
more than recite the bare elements of a cause of action.
Ashcroft v. Iqbal, 556 U.S. 662, 687 (2009). Rather,
it must include “enough facts to state a claim to
relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007). Although a
complaint is not required to have detailed factual
allegations, a plaintiff must provide more than mere
“labels and conclusions” or “formulaic
recitation of the elements of a cause of action.”
Twombly, 550 U.S. at 545. In reviewing the
complaint, the court assumes ...