Brannen v. Selene Finance LP, No. 2:2018cv00602 - Document 13 (E.D. Va. 2019)
Court Description: OPINION AND ORDER granting 6 Motion to Dismiss for Failure to State a Claim. Count I of the complaint is dismissed without prejudice; if plaintiff desires to amend such claim, plaintiff is ordered to file within 14 days a First Amended Complaint; Count II is dismissed with prejudice. Signed by District Judge Robert G. Doumar on 02/11/2019. (tamarm)
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Brannen v. Selene Finance LP Doc. 13 FILED IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA FEB I 2019 NORFOLK DIVISION clerk, U.S. DISTRICT COURT NORFOLK. VA DARIEN BRANNEN, Plaintiff, CIVIL NO.2:18-cv-602 V. SELENE FINANCE LP, Defendant. OPINION AND ORDER This lawsuit arises out of a mortgage loan dispute between Darien Brannen ("Plaintiff), the borrower, and Selene Finance LP ("Defendant" or "Selene"), his loan servicer, after Plaintiff fell behind on his mortgage payments. Plaintiffs complaint alleges that Defendant violated two federal laws in connection with Plaintiffs attempts to obtain loan modification relief from the Defendant. Defendant now moves to dismiss Plaintiffs complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim. ECF No. 6. For the reasons set forth herein. Defendant's Motion to Dismiss Plaintiffs Complaint is GRANTED,and Plaintiffs complaint is DISMISSED consistent with the directives ofthis Opinion and Order. I. FACTUAL BACKGROUND The facts recited herein are drawn from the Plaintiffs complaint and are assumed true only for purposes of deciding the motion to dismiss currently before the Court. They are not to be considered factual findings by this Court. Erickson v. Pardus. 551 U.S. 89,94(2007). On May 15, 2006, Plaintiff entered into a mortgage loan contract to purchase property in Suffolk, Virginia. Complaint, ECF No. 1-1 ("Compl."),^ 4. Plaintiffs loan was for $467,800.00, and it was evidenced by a promissory note ("Note")and secured by a deed of trust("DOT"). Id; see Note, "Ex. 1" to Compl., ECF No. 1-1, at 10-16;^ DOT, id at 17-43. The terms of 1 Dockets.Justia.com Plaintiffs Note reflect an adjustable rate mortgage, calling for an initial interest rate of 5.25% and initial monthly payments of $2,046.63 through September 2006, with variable interest rates and monthly payments thereafter. Note,"Ex. 1" to Compl., ECF No. 1-1, at 10-16. Plaintiff alleges that, sometime after securing this loan,"[he] fell behind on his payments." Compl. II 6. He ftirther alleges that, on or about August 22, 2014, he entered into a loan modification agreement with Selene, which increased Plaintiffs loan principal to $512,790.17 but reduced his interest rate to 4% and reduced his owed monthly payments to $1,532.58 per month. Id. II 7; si^ Loan Modification Agreement,"Ex. B" to Compl., ECF No. 1-1, at 44-55. PlaintifPs Attempts to Obtain Additional Loss Mitigation According to the complaint, sometime after Plaintiff obtained this loan modification in 2014, he and his wife again began experiencing financial difficulty due to a decrease in his wife's income. Comply 10. Presumably because ofthis financial difficulty. Plaintiffallegedly contacted the defendant, Selene, on five occasions over a period of approximately two years to request loan modification and/or loss mitigation relief as follows: First, on some unalleged date. Plaintiff allegedly "contacted Selene to discuss loss mitigation options." Id ^ 11. According to Plaintiff, Selene offered a repayment agreement that he allegedly could not afford, but the terms ofsuch proposal are not alleged. Id. Second, sometime in 2016, Plaintiff allegedly submitted "a loss mitigation application" to Selene, which Selene reportedly denied for being incomplete. Id H 12. Plaintiff does not allege whether he appealed this denial or tried to supplement the application. Third, sometime in 2017, Plaintiff allegedly submitted another loss mitigation application to Selene, which Selene reportedly denied "due to insufficient income." Id ^ 13. Plaintiff does not allege whether he appealed this denial. Fourth, in January 2018, Plaintiff allegedly "contacted" Selene, which reportedly offered Plaintiff another repayment agreement that he allegedly could not afford. Id. ^ 14. The terms of this proposed agreement are not alleged. Fifth, in May of 2018, Plaintiff was once again allegedly "denied for a loan modification" presumably by Selene. Id 15. Plaintiff claims that this denial was based on a calculation of his household expenses that included the expenses of his wife, who contributes to household income but is not a borrower on the loan. Id. Selene's Denial of PlaintifPs 2018 Appeal After this last denial. Plaintiff allegedly retained the legal services of Heath J. Thompson P.C. to assist him with his "ongoing mortgage issues." Id H 16. According to the complaint,"[a] representative from Selene,Tammy,was given as the single point ofcontact for [Plaintiffs] loan." Id H 17. On June 20, 2018, a representative fi'om Heath J. Thompson P.C. allegedly "faxed an appeal for the loan modification denial" to Selene. Id ^ 18. On July 3, 2018, Selene informed such representative that Plaintiffs appeal was denied. Id H 19. Plaintiff claims that, during that conversation, a representative for Selene - whose name is not alleged - stated that "she had reviewed the case many times before and did not feel the need to review it again." Id ^ 20. II. PROCEDURAL HISTORY On October 4,2018, Plaintiff filed a two-count complaint against Defendant Selene in the Circuit Court for the City of Suffolk seeking $70,000 in damages. ECF No. 1 H 1. Count I ofthe complaint alleges that Defendant violated Section 1024.41(h) of Regulation X of the Real Estate Settlement Procedures Act("RESPA") in connection with the review and subsequent appeal of Plaintiffs "loss mitigation application." Compl. 26-29. The loss mitigation application referenced here is presumably the application denied in May of 2018, since this is the only application alleged in the complaint to have an associated appeal. S^ id ^ 18. Count II of the complaint alleges that Defendant violated Section 1639c of the Truth in Lending Act("TILA"), 15 U.S.C. §§ 1601, et seq.. when reviewing Plaintiffs loss mitigation requests. Id 30-40. On November 14, 2018, Defendant removed Plaintiffs action to this Court pursuant to 28 U.S.C. §§ 1441, 1446. ECF No. 1 H 4. On December 5,2018, Defendant filed the instant Motion to Dismiss Plaintiffs Complaint("Motion to Dismiss") pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure along with a supporting memorandum ("Mem."). ECF Nos. 6 and 7. Defendant's motion was fully briefed by the parties. S^ Plaintiffs Memorandum in Opposition ("0pp."), ECF No. 11; Defendant's Reply, ECF No. 12. The Court declined to set the matter for hearing because the facts and legal arguments are adequately presented in the parties' briefs and oral argument would not aid in the Court's decisional process. Fed. R. Civ. P.78. Defendant's motion is now ripe for decision. III. LEGAL STANDARD Defendant moves to dismiss Plaintiffs complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted. A Rule 12(b)(6) motion should be granted if it appears that the plaintiff is not "entitled to relief under any legal theory which might plausibly be suggested by the facts alleged." Harrison v. United States Postal Serv.. 840 F.2d 1149, 1152 (4th Cir. 1988)(citation omitted). To survive a motion to dismiss, the complaint need not contain detailed factual allegations, but the "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twomblv. 550 U.S. 544,555 (2007). The claim must be "plausible on its face." Id. at 570. In resolving a Rule 12(b)(6) motion, the court must assume the truth of all facts alleged in the complaint and construe the factual allegations in favor of the non-moving party. Robinson v. Am. Honda Motor Co.. 551 F.3d 218, 222 (4th Cir. 2009). But the court is not bound by the complaint's legal conclusions. Ashcroft v. Iqbal 556 U.S. 662,678(2009). "Threadbare recitals ofthe elements ofa cause ofaction, supported by mere conclusory statements, do not suffice." Id. Furthermore, the court may not consider any matters outside the pleadings, but it may consider written instruments that are attached as exhibits to a pleading. Occupy Columbia v. Halev. 738 F.3d 107,116(4th Cir. 2013), as these exhibits are "part ofthe pleading for all purposes," Fed. R. Civ. P. 10(c). IV. DISCUSSION Defendant moves to dismiss both counts ofPlaintiffs complaint on the grounds that neither the RESPA claim alleged in Count I nor the TILA claim alleged in Count II apply to Plaintiffs loan modification efforts as alleged in the complaint. Defendant further argues that, even if the TILA provision alleged in Count II did apply, such claim is time-barred because it was not filed within three years of Plaintiffs 2014 loan modification agreement. Id at 9 n.3 (citing 15 U.S.C. § 1640(e)). As a threshold matter. Plaintiff concedes in his opposition brief that his TILA claim in Count II is barred by a three-year statute of limitations and thus moves to strike Count II from his complaint. 0pp., ECF No. 11, at 7. Therefore, the only remaining issue before the Court is whether Plaintiffs RESPA claim in Count I states a plausible claim for relief that should survive Defendant's Rule 12(b)(6) motion. As noted above. Count I alleges that Defendant violated Section 1024.41(h)(3)ofRESPA's loss mitigation rules when processing the appeal of Plaintiffs loan modification denial in 2018. Compl. 26-29. Section 1024.41(h)(3) provides that "[a]n appeal shall be reviewed by different personnel than those responsible for evaluating the borrower's complete loss mitigation application." 12 C.F.R. § 1024.41(h)(3).' Defendant moves to dismiss Count I on two separate grounds, which are discussed in turn below. 'For these purposes,a complete loss mitigation application means"an application in connection with which a servicer has received all the information that the servicer requires from a borrower in evaluating applications for the loss mitigation options available to the borrower." Id § 1024.41(b). 5 First, Defendant argues that Count I fails to state a claim for a violation of RESPA's loss mitigation rules as a matter of law because such rules do not apply to subsequent loss mitigation requests after a borrower has already fully availed himself of the RESPA loss mitigation process, as the Plaintiff did here. In support. Defendant cites to a prior decision of this Court, Phillips v. Wells Fargo Bank. N.A.. which dismissed a borrower's RESPA claim because the lender had already processed a complete loss mitigation application in 2013 and thus was under no obligation to comply with RESPA's loss mitigation rules with respect to a subsequent application in 2017. No.3:17cv519,2018 WL 659199, at *3(E.D. Va. Feb. 1,2018)(Gibney,J.). Relying on 12 C.F.R. § 1024.4l(i), the Court reasoned that "[a] servicer must comply with [RESPA's] loss mitigation provisions only for a single, complete loss mitigation application on a given loan."^ Id at *2. However, the Philips Court cautioned that Section 1024.4l(i) was recently amended, effective October 19, 2017, to require servicers to comply with RESPA's loss mitigation rules for subsequent loss mitigation applications if the borrower became current on the loan at some point after submitting his first complete loss mitigation application.^ Id at *2 n.3. In the instant case, the facts alleged in the complaint indicate that Plaintiff already availed himself of RESPA's loss mitigation rules in 2014 when he entered into the loan modification agreement with Defendant. Compl. ^ 7. Therefore, unless Plaintiff can show that he became current on his loan sometime after October 19, 2017, when the amendment to Section 1024.4l(i) became effective, his claim that Defendant violated Section 1024.41 of RESPA with respect to a ^ PlaintifPs claim that a completed loan modification application must be appealed by the borrower before this duplicative-review rule of 12 C.F.R.§ 1024.4l(i) applies, see ECF No. 11 at 5,is without legal support and is defied by a plain reading of that provision. ^ 12 C.F.R. § 1024.41(i), as amended, states:"A servicer must comply with the requirements ofthis section for a borrower's loss mitigation application, unless the servicer has previously complied with the requirements of this section for a complete loss mitigation application submitted by the borrower and the borrower has been delinquent at alltimessince submitting the prior complete application." Id (emphasis added). subsequent loss mitigation application fails as a matter oflaw. In his complaint, Plaintiff does not allege any facts about whether he was ever current on his loan, leaving his right to relief under RESPA a matter of pure speculation. For this reason. Count I does not set forth sufficient factual allegations to survive a Rule 12(b)(6) motion and must be dismissed."^ Defendant's second argument for dismissal is that Count I fails to allege that the same person who reviewed and denied his loan modification application in May of 2018 was the same person who reviewed and denied his appeal ofsuch application, which is necessary to state a claim that Defendant violated Section 1024.41(h)(3). The Court agrees. The only facts asserted in support of Count I are as follows: "Based on Selene representative Tammy's statements and attitude about [Plaintiffs] file, it appears she flagged [Plaintiffs] loss mitigation application for denial and upon appeal also did not properly review the denial." Id ^ 28. But the complaint does not state who denied Plaintiffs application in 2018. It merely states "Plaintiff was denied for a loan modification..." Id 15. Nor does the complaint state who reviewed and denied Plaintiffs related appeal. It merely states that Plaintiffs law firm "was informed that the appeal was denied." Id U 19. Moreover, the alleged fact that "Tammy was given as the single point of contact" at Selene, id ^ 17, does not give rise to a reasonable inference that Tammy performed any direct reviews of Plaintiffs application or appeal. The only paragraph in the complaint that even hints at Tammy's involvement is paragraph 20, which states that "Selene's representative," presumably Tammy,"expressed that she had reviewed [Plaintiffs] case many times before and did not feel the '* Regardless of this pleading deficiency, Plaintiff argues that Defendant should be estopped from "claiming the benefit" of the duplicative-review exclusion contained in Section 1024.4l(i) because Defendant engaged in active review ofPlaintiffs subsequent application. ECF No. 11 at 5("By choosing to continue their review, Selene was required to, in fact, continue their review.") Id at 6. This argument is without merit. "Elements necessary to establish equitable estoppel, absent a showing of fraud and deception, are a representation,reliance,a change ofposition,and detriment." Dominick v. Vassar.235 Va.295,298(1988) (citation omitted). Here, Plaintiffcannot show change of position or detriment because his statutory rights under RESPA are defined by statute and thus cannot be changed by the words or actions ofthe Defendant. 7 need to review it again." Id. H 20. However, using this statement or any alleged "attitude" to conclude that Tammy, or any other person, processed both Plaintiffs 2018 application and his subsequent appeal is pure speculation. To survive a motion to dismiss,"[f]actual allegations must be enough to raise a right to relief above the speculative level." Twomblv.550 U.S. at 555. For this reason, too. Count I must be dismissed. V. CONCLUSION For the reasons above. Defendant's Motion to Dismiss Plaintiffs Complaint, ECF No. 6, is GRANTED as follows: 1. Count I of Plaintiffs complaint is hereby DISMISSED WITHOUT PREJUDICE. If Plaintiff desires to amend such claim. Plaintiff is ORDERED to file within FOURTEEN (14) DAYS of the date hereof a First Amended Complaint curing the deficiencies identified in this Opinion and Order with well-pled, truthful allegations. 2. Based on Plaintiffs admission that Count II of his complaint is barred by the applicable statute of limitations. Count II is hereby DISMISSED with PREJUDICE. The Clerk is DIRECTED to forward a copy ofthis Opinion and Order to all Counsel of Record. IT IS SO ORDERED. _ S DISTRICT JUDGE Norfolk, VA February 2019
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