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Kent v. Seterus, Inc.

United States District Court, W.D. Missouri, Western Division

July 20, 2018

KELLY W. KENT, Plaintiff,
v.
SETERUS, INC., et al., Defendants.

          ORDER GRANTING DEFENDANT FANNIE MAE'S MOTION TO DISMISS

          GREG KAYS, CHIEF JUDGE UNITED STATES DISTRICT COURT

         This case arises out of unpaid real estate taxes. Plaintiff Kelly Kent (“Kent”) alleges that he made payments to his mortgage company, including amounts for real estate taxes, but that the taxes were never paid to the taxing authority. Kent is suing two lenders, a loan servicer, and a company that provided property tax reporting and monitoring services on his loan.

         Now before the Court is Defendant Federal National Mortgage Association's (“Fannie Mae”) motion to dismiss and for extension of time to respond to the breach of contract claim (Doc. 75). As explained below, the motion is GRANTED.

         Background

         The third amended complaint (Doc. 92) alleges the following:

         Kent purchased a condo in Cook County, Illinois in 2007. On July 19, 2012, he refinanced his loan and in doing so, obtained a mortgage loan (the “Loan”) through Defendant Quicken Loans Inc. (“QLI”). Kent arranged an escrow account with QLI for payment of the property taxes and insurance (“Escrow Items”) on the condo. The escrow agreement requires Kent to pay QLI for the Escrow Items and that QLI would apply those payments to the underlying obligations.

         On July 27, 2012, QLI sold or assigned its rights and interest in the Loan to Defendant Federal National Mortgage Association (“Fannie Mae”). On September 1, 2012, QLI sold or assigned the servicing rights in the Loan to Defendant Seterus, Inc. (“Seterus”). Plaintiff alleges that Seterus was outsourcing the property tax reporting and monitoring services to Defendant Lereta, LLC (“Lereta”) during this time.

         During the relevant time, Kent made timely payments on his loan and the Escrow Items. He received yearly mortgage statements reflecting the beginning and ending balance of his loan, beginning and ending balance of his escrow account, and the real estate taxes paid. Nevertheless, on November 10, 2016, Kent learned his tax year 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. Later, Kent learned that his real estate taxes for tax years 2013, 2014, and 2015 also had not been paid, despite his yearly mortgage statements indicating they had.

         Kent alleges that when QLI sold its interest in the Loan to Fannie Mae and/or sold its servicing rights in the Loan to Seterus, it provided the incorrect property account number PIN, thereby causing his real estate taxes to go unpaid. Kent also alleges this error went unnoticed for years by the other Defendants.

         In his third amended complaint, Kent alleges seven counts against Defendants for breach of contract, breach of fiduciary duty, and various common law negligence claims. Fannie Mae moved to dismiss the claims against it. After the motion was fully briefed, Kent moved to amend the complaint to 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.

         Standard

         To 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 the facts are true and draws all reasonable inferences from those facts in the plaintiff's favor. Monson v. Drug Enf't Admin., 589 F.3d 952, 961 (8th Cir. 2009).

         Discussion

         In the third amended complaint, Kent alleges five claims against Fannie Mae:[1] Count I -breach of contract; Count II - breach of fiduciary duty; Count III - negligent hiring; Count IV -negligent supervision; and Count VI - negligence. Fannie Mae argues Kent's tort claims should be dismissed because Missouri law does not recognize a ...


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