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Swango v. Nationstar Sub1, LLC

United States District Court, D. Oregon, Portland Division

August 27, 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 W. MOSMAN CHIEF UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on the following Motions: the Motion to Dismiss [54] Plaintiff's Second Amended Complaint [47] pursuant to Federal Rule of Civil Procedure 12(b)(6) filed by Defendants Zieve, Brodnax, and Steele, LLP, and Benjamin Petiprin (collectively, “the Zieve Defendants”); the Motion to Dismiss [55] filed by Defendants Nationstar Mortgage LLC d/b/a Champion Mortgage Company, MetLife Home Loans LLC, and MetLife Bank, N.A. (“Nationstar” or “MetLife, ” respectively); and the Request for Judicial Notice [56] filed by MetLife and Nationstar.

         For the reasons that follow, the Court GRANTS the Zieve Defendants' Motion to Dismiss [54]; GRANTS in part and DENIES in part MetLife and Nationstar's Motion to Dismiss [55]; and GRANTS MetLife and Nationstar's Request for Judicial Notice [56]. The Court declines to exercise supplemental jurisdiction over Plaintiff's state-law claims and DISMISSES this action, without prejudice for Plaintiff to pursue her claims in state court.

         BACKGROUND

         The following facts are taken from Plaintiff's Second Amended Complaint [47], the Line of Credit Deed of Trust attached as Exhibit 1 [57-1] to the Declaration of James P. Laurick [56], the Assignment of Trust Deed [57-2] attached as Exhibit 2 thereto, [1] and the Fixed Rate Note attached as Exhibit 3 thereto [57-3], and are taken as true at this stage of the proceedings:

         Plaintiff obtained a line of credit from MetLife secured by a Deed of Trust on Plaintiff's real property (“the Property”). 2d Am. Compl. [47] ¶ 38; see also Laurick Decl. [57] Exh. 1 [57-1]. Plaintiff alleges that MetLife, as part of its advertising for reverse mortgage products, represented to prospective borrowers that a borrower could “stay in your home until you die.” 2d Am. Compl. [47] ¶ 96. The Deed of Trust was recorded on June 22, 2009, and identified the “maximum principal amount” as $938, 250.00. Id. ¶¶ 38, 151. 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. [56] Exh. 1 [57-1], 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 Deed of Trust provides that the Lender may accelerate the debt and require immediate payment in full if “[a]n obligation of the Borrower under this Security Instrument is not performed.” Id., at 3-4. It also states that, in the event of acceleration, the “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 Deed of Trust. Laurick Decl. [56] Exh. 2 [57-2], at 1. Champion is an entity related to Nationstar. 2d Am. Compl. [47] ¶¶ 10-11. 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. Id. ¶ 106. At an unspecified time, Nationstar accelerated the debt and moved to foreclose on the Property on the basis that Plaintiff had failed to pay property taxes. Id. ¶ 110. Plaintiff alleges that, in the event that she did not pay property taxes, Nationstar was required to pay them under the terms of the loan. Id. ¶¶ 102-05.

         Plaintiff, proceeding pro se, brings nine causes of action. In Claim One, she brings a breach of contract claim against MetLife and Nationstar on the basis that they failed to fulfill their contractual obligation to pay property taxes, and did not advance Plaintiff the full amount of funds called for under the line of credit contract. Id. ¶¶ 94-112. In Claim Two, Plaintiff brings a claim to quiet title in the Property as to MetLife and Nationstar. Id. ¶¶ 113-41. 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 the Property. Id. ¶¶ 142-69. In Claim Four, Plaintiff brings two counts against Nationstar under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692-1692p. 2d Am. Compl. [47] ¶¶ 170-88. In Claim Five, Plaintiff brings a claim against Nationstar under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq. 2d Am. Compl. [47] ¶¶ 189-214. In Claim Six, Plaintiff brings five counts under the Oregon Unlawful Trade Practices Act (“UTPA”), Or. Rev. Stat. §§ 646.607, 646.638, and 646.639, against MetLife and Nationstar. 2d Am. Compl. [47] ¶¶ 215-32. In Claim Seven, Plaintiff brings two counts under Or. Rev. Stat. §§ 124.100 and 124.110 against MetLife, Nationstar, and Fidelity for financial abuse of a protected person. 2d Am. Compl. [47] ¶¶ 233-52. In Claim Eight, Plaintiff brings a claim for fraud against MetLife and Fidelity on the basis that MetLife made the loan to Plaintiff, and Fidelity insured the loan, with the intention of foreclosing on the Property. Id. ¶¶ 253-69. Lastly, Plaintiff brings a declaratory judgment claim against all Defendants regarding whether Plaintiff is required to allege that she has tendered the amount due on the loan in order to bring a quiet title claim. Id. ¶¶ 270-84.

         Plaintiff's earlier First Amended Complaint [8] contained largely the same allegations and claims as the Second Amended Complaint. Defendants filed Motions to Dismiss [18, 24] the First Amended Complaint, which the Court addressed in its Opinion and Order [37] of February 5, 2018. The Court denied in part, granted in part with leave to amend, and granted in part without leave to amend the Motions to Dismiss. The Court stated: “The Court advises Plaintiff that failure to address the pleading deficiencies outlined in this Opinion and Order in her next amended complaint may result in the Court finding that dismissal of such claims with prejudice is necessary because further leave to amend would be futile.” Op. & Order [37], at 27.

         Plaintiff filed her Second Amended Complaint [47] on March 23, 2018.

         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 v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). 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).

         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-Well 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. AMVAC 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. Pliler, 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.” Ivey v. Bd. of Regents of Univ. of Alaska, 673 F.2d 266, 268 (9th Cir. 1982).

         DISCUSSION

         Nationstar and MetLife move to dismiss each of Plaintiff's causes of action. The Zieve Defendants move to dismiss the civil conspiracy and declaratory judgment claims.

         I. Claim One - Breach of Contract

         In Claim One, Plaintiff brings a breach of contract claim against MetLife and Nationstar[2]on the basis that they failed to pay property taxes and to add those payments to the loan principal. Plaintiff appears to suggest 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 previously moved to dismiss this allegation as to the First Amended Complaint, arguing that Plaintiff's allegation that they had a duty to pay property taxes was contradicted by the terms of the Deed of Trust, and, therefore, should not be credited as true. MetLife and Nationstar argued that Plaintiff's breach of contract claim should be dismissed because the Deed of Trust provides that Plaintiff - and not MetLife or Nationstar - was responsible for paying the property taxes. In its earlier Opinion and Order, the Court rejected these arguments, denied the Motions to Dismiss as to that claim, and held:

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 Plaintiffs 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, Plaintiff's 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.

Op. & Order [37], at 7-8.

         Plaintiff's allegations under Claim One, for breach of contract, in her Second Amended Complaint are nearly identical to those in the First Amended Complaint. In their Motion to Dismiss, MetLife and Nationstar bring largely the same arguments they did in their earlier Motion, arguing that they had the discretion, but not the obligation, to pay property taxes on the Property. The Court has already rejected these arguments. Defendants have provided no grounds for the Court to depart from its earlier holding, or to grant a Motion to Dismiss as to a claim on which the Court already denied such a Motion.

         In Claim One, Plaintiff also alleges that her contract with MetLife required it to lend or advance funds up to a maximum of $938, 250.00, but that MetLife would only advance funds of $664, 125.08, thus “fail[ing] to lend or advance funds to Plaintiff as called for by the Contract.” 2d Am. Compl. [47] ¶¶ 98-99, 106-08, 112. Defendants argue that Plaintiff misunderstands the nature of the loan and of reverse mortgages, and that in such instruments, the loan principal of $938, 250.00 is not the amount of cash advances available to the borrower. Instead, they argue, that principal amount represents 150% of the maximum claim amount on the loan. This allows for a deed of trust “to provide sufficient security for the loan over its projected lifetime.” Nationstar Mot. Dismiss [55], at 7.[3] MetLife cites HUD guidelines that allegedly instruct lenders to set the principal at 150% of the maximum claim amount. Id., at 7-8 (citing HUD HECM Handbook, Directive 4235.1, Section 6-6). However, by its terms, the HUD guidelines apply “[w]here state law requires the mortgage reflect a maximum mortgage amount, ” id., and MetLife has not established that any such state law applies here. MetLife does not support its interpretation of the loan contract and calculation of finances by citation to the contract or otherwise; at best, at this stage of the proceedings, it is merely MetLife's own assertion that the principal and claim maximum should be interpreted in this way. As with the breach of contract claim with regard to payment of the property taxes, and as the Court explained in its prior Opinion and Order, without contradictory language from the loan documents, the Court must view these allegations in the light most favorable to Plaintiff and accept them as true. MetLife's arguments about the principal amount and cash advances are unavailing at this stage.

         The Court denies the Motion to Dismiss Claim One, for breach of contract.

         II. Claim Two - Quiet Title

         In Claim Two, Plaintiff brings a quiet title claim against MetLife and Nationstar.

         Plaintiff makes assorted allegations against Defendants in her quiet title claim. She claims that MetLife is not a mortgagee because the Deed of Trust is “tainted by fraud” and is an “unlawful contract, ” that Nationstar has clouded Plaintiff's title by recording an unauthorized Assignment with a forged signature that falsely claims a right to enforce a promissory note, and that no Defendant has a right to enforce any promissory note encumbering the Property. 2d. Am. Compl. [47] ¶ 115-16, 128, 137. Plaintiff alleges that all valid loans on the Property have been discharged and there are no valid ...


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