Lackie v. PHH Mortgage Corporation, No. 3:2017cv00377 - Document 19 (N.D. Tex. 2018)
Court Description: Memorandum Opinion and Order. Before the Court is Defendant PHH Mortgage Corporation's Motion for Judgment on the Pleadings (ECF No. 11). Defendant's Motion for Judgment on the Pleadings (ECF No. 11) is GRANTED, and Plaintiff's claims and causes of action are DISMISSED with prejudice. (see order) (Ordered by Magistrate Judge Rebecca Rutherford on 9/17/2018) (mcrd)
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Lackie v. PHH Mortgage Corporation Doc. 19 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION J AMES K. LACKIE Plaintiff, v. PHH MORTGAGE CORPORATION, Defendant. § § § § § No. 3:17-CV-377-BT § § § § MEMORAN D U M OPIN ION AN D ORD ER Before the Court is Defendant PHH Mortgage Corporation ’s Motion for J udgm ent on the Pleadings (ECF No. 11). For the reasons stated, the Motion is GRANTED. Backgro u n d This rem oved civil action arises out of foreclosure proceedings initiated against real property located in Dallas, Texas (the “Property”). Pl.’s Original Pet. ¶¶ 6-16 (ECF No. 1-1). In his Origin al Petition filed in the 95th J udicial District Court, Dallas County, Texas, Plaintiff J am es K. Lackie states that he is the owner the Property. Id. ¶ 6. Plaintiff alleges that on J an uary 11, 20 0 8, Andrew W. Prim m (“Prim m ”) signed a Texas H om e Equity Note (the “Note”) in favor of MetLife Bank, N.A. (“MetLife”), an d that the Note is secured by a Texas Hom e Equity Security Instrum en t (the “Security Instrum ent”) covering the Property, for MetLife’s benefit. Id. ¶¶ 7, 8; see also Def.’s Mot., Ex. A at 1-5. Plaintiff further alleges that both he and Prim m executed the Security Instrum ent. Id. ¶ 9. -1- Dockets.Justia.com At som e point after Prim m signed the Note, he died. See Id. ¶ 11. Plaintiff allegedly inform ed Defendant of Prim m ’s death an d of Plaintiff’s interest in the Property and requested a loan m odification, but Defendant failed to approve or deny his application. Id. ¶¶ 12, 13. Plaintiff further alleges that Defendant refuses to acknowledge Plain tiff has any ownership interest in the Property. Id. ¶ 14. Plaintiff claim s he has expended tim e trying to confirm the status of the loan m odification application and estim ates he has lost incom e and incurred expenses totaling approxim ately $ 1,0 0 0 .0 0 . Id. ¶ 15. Plaintiff claim s that Defendant posted the Property for a foreclosure sale that was to occur on February 17, 20 17. Id. ¶ 17. Plaintiff contends that Defendant’s foreclosure posting was im proper because Defendant failed to com m unicate with Plaintiff, as the borrower’s successor in interest. Id. ¶ 20 . Plaintiff further con tends that Defendan t failed to properly respond to Plaintiff’s loan m odification application. Id. ¶ 25. Based on these allegations, Plain tiff filed a lawsuit asserting claim s against Defendant for violations of 12 C.F.R. §§ 10 24.38 and 10 24.41. In addition , Plaintiff seeks a judicial declaration that (1) Plaintiff has an own ership interest in the Property and therefore has the right to m ake paym ents on the Note and to com m unicate with any valid m ortgagee or m ortgage servicer, and (2) Defendant did not provide Plain tiff with proper n otice and an opportunity to cure any default under the Note. -2- After rem oval, Defen dant filed its Motion for J udgm ent on the Pleadings under Fed. R. Civ. P. 12(c). Plaintiff failed to file a response to the Motion. The Court therefore considers Defendant’s Motion without the benefit of a response. Le ga l Stan d ard “The standard for deciding a Rule 12(c) m otion is the sam e as a Rule 12(b)(6) m otion to dism iss.” Guidry v. Am . Pub. Life Ins. Co., 512 F.3d 177, 18 0 (5th Cir. 20 0 7) (citin g In re Katrina Canal Breaches Litig., 495 F.3d 191, 20 5 (5th Cir. 20 0 7)). To survive a Rule 12(b)(6) challenge, “a com plaint m ust contain sufficient factual m atter, accepted as true, ‘to state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (20 0 9) (quoting Bell Atl. Corp. v. Tw om bly , 550 U.S. 544, 570 (20 0 7)). The factual allegations m ust “‘raise [the plaintiff’s] right to relief above the speculative level,’” but they do not need to be detailed. Lee v. Verizon Com m c’ns, Inc., 837 F.3d 523, 533 (5th Cir. 20 16) (citing Rosenblatt v. United W ay of Greater Hous., 60 7 F.3d 413, 417 (5th Cir. 20 10 ). When evaluating a Rule 12(b)(6) m otion , the court’s review is lim ited to the live com plain t, any docum en ts attached to that com plain t, an d an y docum ents attached to the m otion to dism iss that are “central to the claim and referenced by the com plaint.” Lone Star Fund V (U.S.), L.P. v. Barclay s Bank PLC, 594 F.3d 383, 387 (5th Cir. 20 10 ) (citing Collins v. Morgan Stanley Dean W itter, 224 F.3d 496, 498 – 99 (5th Cir. 20 0 0 )). An alys is Plaintiff asserts claim s against Defendan t for violations of 12 C.F.R. -3- §§ 10 24.38 and 10 24.41—regulations prom ulgated under the Real Estate Settlem en t Practices Act (“RESPA”), 12 U.S.C. § 260 5(f). Defen dant m oves to dism iss arguing Plaintiff has failed to plead fact to show he has standing to assert a claim for civil liability under RESPA. Def.’s Mot. 3. RESPA is a consum er protection statute that aim s to prom ote transparen cy and com m unication between borrowers and lenders. Am on g other things, the statute sets out specific notice and disclosure requirem en ts with which servicers of federally-related m ortgage loans m ust com ply. 12 U.S.C. § 260 5. Servicers who fail to com ply with these requirem ents are liable to borrowers for any actual dam ages incurred by the borrowers because of such failure. 12 U.S.C. § 260 5(f)(1)(A). Plaintiff alleges that Defendant violated 12 C.F.R. § 10 24.38 by failing to com m unicate with Plaintiff about the Note and his request for a loan m odification, despite Plaintiff subm itting proof of Prim m ’s death and of Plaintiff’s legal interest in the Property. 1 Pl.’s Original Pet. ¶ 20 . Even accepting Plaintiff’s allegations as true, Plaintiff has failed to state a claim for relief because RESPA does n ot create a private right of action to enforce § 10 24.38. Longm ire v. W ells Fargo Bank, N .A., 20 17 WL 40 7518 7, at *3 (N.D. Tex. Aug. 16, 20 17), rec. adopted, 20 17 WL 40 228 88 (Sept. 13, 20 17); Sm ith v. N ationstar Mortg., 20 15 WL 7180 473, at *3-*4 (E.D. Mich. Nov. 11, 20 15) (finding that violations of 1 Section 1024.38 sets forth servicing policies, procedures, and requirements, including requirements for “[p]roperly evaluating loss mitigation applications.” 12 C.F.R. § 1024.38(b)(2). -4- Section 10 24.38 do n ot create a private cause of action); Sharp v. Deutsche Bank N at’l Tr. Co., 20 15 WL 4771291, at *6-*7 (D.N.H. Aug. 11, 20 15) (sam e). Indeed, the Consum er Fin an cial Protection Bureau purposefully restructured the fin al rule to elim inate private liability for violations of § 10 24.38: allowing a private right of action for the provisions that set forth general servicing policies, procedures, an d requirem ents would create significant litigation risk ... [S]upervision and enforcem en t by the Bureau and other Federal regulators for com pliance with an d violations of § 10 24.38 respectively, would provide robust consum er protection without subjecting servicers to the sam e litigation risk and concom itant com pliance costs as civil liability for asserted violations of § 10 24.38. Mortgage Servicing Rules Under the Real Estate Settlem ent Procedures Act (Regulation X), 78 Fed. Reg. 10 696, 10 778– 79 (Feb. 14, 20 13). In the absence of a private right of action, Plaintiff cann ot plead a claim un der § 10 24.38. Therefore, Plaintiff’s claim s under that section are dism issed with prejudice. Plaintiff also alleges Defendant violated 12 C.F.R. § 10 24.41 by failing to tim ely and properly review his loan m odification application before it initiated foreclosure proceedings. 2 Pl.’s Origin al Pet. ¶¶ 22-26. Unlike § 10 24.38 , § 10 24.41 does provide for a private right of action . Specifically, the regulation provides “[a] borrower m ay enforce the provisions of this section pursuan t to section 6(f) of RESPA (12 U.S.C. 260 5(f)).” 12 U.S.C. § 10 24.41(a). Pursuant to the express 2 Section 1024.41 specifies procedures and timing for reviewing loss mitigation applications, including, among other things, requiring the servicer to promptly review a loss mitigation application received in advance of a foreclosure sale, and to notify the borrower in writing which loss mitigation options, if any, it will offer the borrower, or the specific reasons for denying the loss mitigation application. See 12 C.F.R. § 1024.41(b), (c), (d). -5- language of the regulation, however, a defendan t’s liability is lim ited to “borrowers.” Correa v. BAC Hom e Loans Servicing LP, 853 F. Supp. 2d 120 3, 120 7 (M.D. Fla. 20 12); see also Leblow v. BAC Hom e Loans Servicing LP, 20 13 WL 2317726 at *7 (W.D.N.C. May 28 , 20 13). While RESPA does not define the term “borrower,” courts have held that the term applies only to a borrower on the loan—that is a person who signed the prom issory note or assum ed the loan. See, e.g., Leblow , 20 13 WL 2317726 at *7. An individual who does n ot sign a prom issory note does not qualify as a borrower for purposes of the statute. See, e.g., Dionne v. Fed. N at’l M ortg. Ass’n, 20 16 WL 6892465, at *5 (D.N.H. Nov. 21, 20 16) (holding that a plaintiff n am ed as a borrower in the m ortgage but who did not sign the note lacks standing to pursue a RESPA violation); Sharp, 20 15 WL 4771291, at *5-6 (sam e); Leblow , 20 13 WL 2317726, at *7 (sam e). Not even a successor in interest to a deceased borrower has stan ding to bring RESPA claim s where the successor in interest did not sign a prom issory note. N elson v. N ationstar Mortg. LLC, 20 17 WL 1167230 , at *3 (E.D.N.C. March 28, 20 17) (finding that plaintiff, who obtained property subject to m ortgage as a result of her paren ts’ death, did not becom e a borrower under RESPA sim ply upon obtaining title to the property); Green v. Cent. M ort. Co., 20 15 WL 5157479, at *5 (N.D. Cal. Sept. 2, 20 15) (sam e). Here, Plain tiff failed to plead he is a borrower or that he signed the Note. See Pl.’s Original Pet. ¶¶ 6-18. Plaintiff adm its that only Prim m executed the Note, and the Note—a copy of which is attached to Defendan t’s Motion—contains -6- only Prim m ’s sign ature. Id. ¶ 7; Def.’s Mot., Ex. A at 5. Thus, even taking as true Plaintiff’s allegations that he owned the Property and co-signed the Security Instrum ent securing the Note, Plaintiff is not a borrower under RESPA. See, e.g., Dionne, 20 16 WL 68 92465, at *5 (holding that a plaintiff n am ed as a borrower in the m ortgage but who did not sign the note lacks standing to pursue a RESPA violation). Accordingly, Plaintiff has failed to plead a claim un der 12 C.F.R. § 10 24.41, and his claim under that regulation m ust be dism issed with prejudice. The resolution of these threshold m atters in Defendant’s favor preterm its the Court’s consideration of Defendan t’s other grounds for arguing that Plaintiff has failed to state a claim for relief. Declaratory Relief Defendant also asks the Court to den y Plaintiff’s request for declaratory relief. Def.’s Mot. 9. “[F]ederal law require[s] the existence of a justiciable case or controversy in order to gran t declaratory relief.” Val-Com Acquisitions Tr. v. CitiMortgage, Inc., 20 11 WL 13320 39, at *2 (5th Cir. Apr. 7, 20 11) (citing Bauer v. Texas, 341 F.3d 352, 357-58 (5th Cir. 20 0 3)). In an action where declaratory relief is sought, “the parties litigate the un derlying claim , and the declaratory judgm en t is m erely a form of relief that the court m ay grant.” Id. Accordingly, when a district court dism isses a plaintiff’s RESPA claim s for failure to state a claim and that plaintiff has no rem aining claim s, there are n o other underlying claim s for which the court can grant declaratory relief. See id. -7- The Court has determ ined that Plaintiff’s RESPA claim s should be dism issed with prejudice. Thus, there are no longer un derlying claim s upon which the Court can gran t Plain tiff declaratory relief. The Court therefore dism isses Plaintiff’s claim for declaratory relief. Co n clu s io n Defendant’s Motion for J udgm ent on the Pleadings (ECF No. 11) is GRANTED, and Plaintiff’s claim s and causes of action are DISMISSED with prejudice. Septem ber 17, 20 18 . ____________________________ REBECCA RUTHERFORD UNITED STATES MAGISTRATE J UDGE -8-
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