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Swango v. Nationstar Sub1, LLC

United States District Court, D. Oregon, Portland Division

February 5, 2018

SUSAN K. SWANGO, Plaintiff,
v.
NATIONSTAR SUB1, LLC; NATIONSTAR MORTGAGE HOLDINGS, INC.; NATIONSTAR MORTGAGE, LLC, doing business as Champion Mortgage Company; METLIFE HOME LOANS, LLC; METLIFE BANK, NATIONAL ASSOCIATION; ZIEVE, BRODNAX AND STEELE, LLP; BENJAMIN D. PETIPRIN; METLIFE, INC.; SYNCHRONY BANK; SYNCHRONY FINANCIAL; and FIDELITY NATIONAL TITLE INSURANCE COMPANY, doing Business as Lawyers Title Insurance Corporation, Defendants.

          OPINION AND ORDER

          MICHAEL WMOSMAN, JUDGE

         This matter comes before the Court on the following Motions: the Motion to Dismiss Plaintiffs Amended Complaint [18] pursuant to Federal Rule of Civil Procedure 12(b)(6) filed by Defendants Nationstar Mortgage, MetLife Home Loans, and MetLife Bank N.A. ("MetLife" or "Nationstar, " respectively); the Request for Judicial Notice [19] filed by MetLife and Nationstar; the Motion to Dismiss [24] pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6) filed by Defendants Zieve Brodnax and Steele, LLP, and Benjamin Petiprin (collectively "the Zieve Defendants"); and Plaintiffs Motion for Leave to File Surreply [29].

         For the reasons that follow, the Court GRANTS in part and DENIES in part MetLife and Nationstar's Motion to Dismiss Plaintiffs Amended Complaint [18]; GRANTS MetLife and Nationstar's Request for Judicial Notice [19]; GRANTS in part and DENIES in part the Zieve Defendants' Motion to Dismiss [24]; and GRANTS Plaintiffs Motion for Leave to File Surreply [29].

         BACKGROUND

         The following facts are taken from Plaintiffs Amended Complaint [8], the Line of Credit Deed of Trust attached as Exhibit 1 to the Declaration of James P, Laurick [20], and the Assignment of Trust Deed attached as Exhibit 2 to the Laurick Declaration, [1] and are taken as true at this stage of the proceedings:

         Plaintiff obtained a line of credit from MetLife that was secured by a Deed of Trust on Plaintiffs real property. As part of their advertising for their reverse mortgage products, Plaintiff alleges MetLife represented to prospective borrowers that a borrower could "stay in your home until you die." Am. Compl. ¶ 73, The Deed of Trust was recorded on June 22, 2009, and identified the "maximum principal amount" as $938, 250.00. Paragraph 2 of the Deed of Trust requires Plaintiff to:

pay all property charges consisting of taxes, ground rents, flood and hazard insurance premiums, and special assessments in a timely manner, and shall provide evidence of payment to Lender, unless Lender pays property charges by withholding funds from monthly payments due to the Borrower or by charging such payments to a line of credit as provided for in the Loan Agreement.

Laurick Decl. [20] Exh. 1, at 2. Paragraph 5 of the Deed of Trust provides:

If Borrower fails to make these payments or the property charges required by Paragraph 2, or fails to perform any other covenants and agreements contained in this Security Instrument, or there is a legal proceeding that may significantly affect Lender's rights in the Property (such as a proceeding in bankruptcy, for condemnation or to enforce laws or regulations), then Lender may do and pay whatever is necessary to protect the value of the Property and Lender's rights in the Property, including payment of taxes, hazard insurance and other items mentioned in Paragraph 2.

Id., at 3. The Trust Deed provides the Lender may accelerate the debt and require immediate payment in full after approval by an authorized representative of the Secretary of the Department of Housing and Urban Development if "[a]n obligation of the Borrower under this Security Instrument is not performed." Id., at 3-4. In the event that the Lender accelerated the debt, the Trust Deed states "Lender may invoke the power of sale and any other remedies permitted by applicable law." Id., at 6.

         On July 11, 2012, MetLife assigned to Champion Mortgage Company "all rights and benefits whatsoever accrued or to accrue under" the Trust Deed. Laurick Decl. [20] Exh. 2. Champion is an entity related to Nationstar. Am. Compl. ¶ 10. As of July 20, 2017, MetLife and Nationstar had lent to Plaintiff $664, 125.08 in principal with a total amount due of $742, 784.87. Pk.'s Am. Compl. ¶ 83. At an unspecified time, Nationstar accelerated the debt and moved to foreclose on Plaintiffs property on the basis that Plaintiff failed to pay property taxes. Plaintiff alleges in the event that she did not pay property taxes, Nationstar was required to do so under the terms of the loan.

         In Claim One Plaintiff, proceeding pro se, brings a breach-of-contract claim against MetLife and Nations tar on the basis that they failed to fulfill their contractual obligation to pay the property taxes. In Claim Two Plaintiff brings a claim to quiet title in her property vis-a-vis MetLife and Nationstar. In Claim Three Plaintiff brings a claim for civil conspiracy against all Defendants on the basis that they conspired to conduct an unlawful foreclosure of Plaintiff s property. In Claim Four Plaintiff brings a claim for an equitable accounting of the loan. In Claim Five Plaintiff brings two counts against all Defendants under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692-1692p. In Count Six Plaintiff brings a claim against all Defendants under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seg, and under Oregon state law, Oregon Revised Statute §§ 166.715-166.735, on the basis that the Defendants engaged in a pattern of racketeering activity. In Claim Seven Plaintiff brings five counts under the Oregon Unlawful Trade Practices Act ("UTPA"), Oregon Revised Statute §§ 646.607, 646.638, 646.639, against MetLife and Nationstar. In Claim Eight Plaintiff brings two counts under Oregon Revised Statute §§ 124.100, 124.110 against MetLife, Nationstar, and Fidelity for financial abuse of a protected person. Finally, in Claim Nine Plaintiff brings a claim for fraud against MetLife and Fidelity on the basis that MetLife made the loan and Fidelity insured the loan with the intention and basis of foreclosing on Plaintiffs property.

         STANDARDS

         When reviewing a motion to dismiss, the court must "accept all factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party." Knievel, 393 F.3d at 1072. A court need not accept legal conclusions as true because "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To survive a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. (quoting Bell Atl Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A pleading that offers only "labels and conclusions" or '"naked assertion[s]' devoid of 'further factual enhancement"' will not suffice. Id. (quoting Twombly, 550 U.S. at 555, 557). While a plaintiff does not need to make detailed factual allegations at the pleading stage, the allegations must be sufficiently specific to give the defendant "fair notice" of the claim and the grounds on which it rests. See Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (citing Twombly, 550 U.S. at 555).

         When a defendant moves to dismiss an action pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject-matter jurisdiction, the plaintiff bears the burden of establishing that the court has jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). The court will grant a defendant's motion if the Complaint fails to allege facts sufficient to establish subject-matter jurisdiction. Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n.2 (9th Cir. 2003). Alternatively, a defendant may seek dismissal under Rule 12(b)(1) by presenting evidence to refute the jurisdictional facts alleged in the complaint. Id. Once the defendant has introduced such evidence, the plaintiff "must furnish affidavits or other evidence necessary to satisfy its burden of establishing subject matter jurisdiction." Id. (citation omitted).

         Federal Rule of Civil Procedure 15 provides that a court should freely give leave to amend a complaint "when justice so requires." Fed.R.Civ.P. 15(a)(2). As such, when a court dismisses a complaint for failure to state a claim, "leave to amend should be granted 'unless the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency.'" DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Wett Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). If amendment would be futile, the court need not grant leave to amend. Id. "Leave to amend may also be denied for repeated failure to cure deficiencies by previous amendment." Abagninin v. AMY AC Chem. Corp., 545 F.3d 733, 742 (9th Cir. 2008).

         When reviewing a motion to dismiss against a. pro se plaintiff, the court construes the pro se pleadings "liberally, " affording the plaintiff the "benefit of any doubt." Hebbe v. Filler, 627 F.3d 338, 342 (9th Cir. 2010) (internal quotations omitted). This liberal interpretation may not, however, "supply essential elements of the claim that were not initially pled." See Ivey v. Bd. of Regents of Univ. of Alaska, 673 F.2d 266, 268 (9th Cir. 1982).

         DISCUSSION

         As noted, MetLife and Nationstar move to dismiss Plaintiffs complaint in its entirety as to them in pursuant to Rule 12(b)(6).

         I. Claim One - Breach of Contract

         As noted, in Claim One Plaintiff brings a claim against MetLife and Nationstar[2] for breach of contract on the basis that they failed to pay property taxes and to add those payments to the loan principal. Plaintiff appears to suggest in her First Amended Complaint that such payments should have been made because the $664, 125.08 in loan principal remained below the $938, 250.00 maximum principal amount.

         MetLife and Nationstar contend Plaintiffs allegation that they had a duty to pay property taxes is contradicted by the terms of the Trust Deed and, therefore, should not be credited as true. MetLife and Nationstar argue Plaintiffs breach of contract claim should be dismissed because the Trust Deed provides Plaintiff- and not MetLife or Nationstar - was responsible for paying the property taxes.

         As noted, Plaintiff alleges MetLife and Nationstar were obligated to pay property taxes in the event that Plaintiff did not do so. In support of that allegation Plaintiff references the following paragraph from the Trust Deed:

If Borrower fails to make these payments or the property charges required by Paragraph 2, or fails to perform any other covenants and agreements contained in this Security Instrument, or there is a legal proceeding that may significantly affect Lender's rights in the Property (such as a proceeding in bankruptcy, for condemnation or to enforce laws or regulations), then Lender may do and pay whatever is necessary to protect the value of the Property and Lender's rights in the Property, including payment of taxes, hazard insurance and other items mentioned in Paragraph 2.

Laurick Decl. [20] Exh. 1, at 3. MetLife and Nationstar, on the other hand, contend that provision establishes they did not have any duty to pay property taxes, but instead merely had discretion to do so.

The Trust Deed, however, also provides Plaintiff must pay all property charges consisting of taxes, ground rents, flood and hazard insurance premiums, and special assessments in a timely manner, and shall provide evidence of payment to Lender, unless Lender pays property charges by withholding funds from monthly payments due to the Borrower or by charging such payments to a line of credit as provided for in the Loan Agreement.

Id., at 2 (emphasis added). It is unclear without reference to the Loan Agreement (which is not in the record on MetLife and Nationstar's Motion to Dismiss) whether there is any provision therein that requires MetLife or Nationstar to pay property taxes or whether the Trust Deed merely refers to the procedure set out in the Loan Agreement by which MetLife or Nationstar could pay the property taxes at their discretion. Because there is not any unequivocal contradiction of Plaintiff s allegation that the parties' agreement created a duty in MetLife and, later, Nationstar to pay property taxes if Plaintiff did not do so, the Court must view the allegation in the light most favorable to Plaintiff and accept it as true at this stage of the proceedings.

         So construed, Plaintiffs claim for breach of contract is straightforward: MetLife and Nationstar breached their duty to pay property taxes on Plaintiffs behalf and, as a result, Plaintiff defaulted on her reverse-mortgage loan and incurred damages therefrom. Plaintiff, therefore, plausibly states a claim for breach of contract on this record.

         II, Claim Two - Quiet Title

         As noted, in Claim Two Plaintiff brings a claim against MetLife and Nationstar to quiet title in the property.

         In her Amended Complaint Plaintiff makes the following allegations regarding MetLife and/or Nationstar:

92. Defendants claim some interest or estate, adverse to Plaintiffs, in the Property.
93. Defendants have clouded Plaintiffs title by recording unauthorized documents and document [sic] with forged signatures and documents which falsely claim that some one of the Defendants has the right to enforce a promissory note signed by Plaintiff.
94. Defendants' claims are without merit and Defendants have no estate, title, claim, lien, or interest in the Property or any portion thereof.
100. No Defendant has ownership or possession of, nor the right to enforce, nor "holder in due course" status relating to, any promissory note encumbering the Property, either by itself nor through any ...

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