Hegedus et al v. Nationstar Mortgage LLC et al, No. 5:2017cv00053 - Document 66 (W.D. Va. 2018)
Court Description: MEMORANDUM OPINION. Signed by Chief Judge Michael F. Urbanski on 12/11/2018. (jv)
Download PDF
<![CDATA[
IN TH E U N ITED STATE S D ISTRICT COU RT FO R TH E W E STERN D ISTRICT O F W RGIN IA HA RR ISON BU R G D IW SIO N CLERKS OFFICE t J ,S.DS ST. O URT ATROANOKE F ZVA ILED DEr jj jj JUL BK JAM ESA.H EGEDU S,eta1y / R C RK Rà( Plaintiffs, CivilAction N o.: 5:17cv53 V. N ATIO N STAR M O RT GAGE LLC, By: M ichaelF.U rbansld D efendant. ChiefUG ted StatesDistdctJudge M EM O RAN DU M O PIN IO N PlainéffsJamesandVirginiaHegedusrTlninéffs''orfftheHegeduses'),appeating p-r-q. K ,broughtthisaction againstDefendantNadonstazMortgageLLC O efendant''or tfNationstar'),allegingO sconductrelated to Naéonstar'sserdcingofamortgageand the subsequentforeclosureon atesidencepreviously owned by Plnindffsin Sussex County, D elaware.N aéonstar flled the pzesentM odon to DisnlissforFailuze to Statea Clqim on April4,2018.Puzsuantto28U.S.C.j636q$(1)7),thecourtreferredbot.hmoéonsto UrlitedStatesMagistrateJudgeJoelC.Hoppeforareportandrecommendadon.After hearingoralargumentfrom thepardesonlune26,2018,themagistratejudgerecommended granéngNadonstar'smoéonin6111.TheHegedusesflledobjecéonstothereportand recom m endation on O ctobez29,2018. Hegedus et al v. Nationstar Mortgage LLC et al Doc. 66 Forthereasonsstatedbelow,thecourtwillOVERRULE theHegeduses'objecdons, AD O PT thereportand recom m endadon to theextentconsistentwith tlaisopinion,and G T N aéonstar'sm odon to disrniss. Dockets.Justia.com Rule72$)oftheFederalRulesofCivilProcedurepet-mitsapartytoffserv'eandflle specifc,writtenobjections''toamagistratejudge'sproposedfmdingsandrecommendadons within fourteen daysofbeing servedwith acopyofthereport.Seealso 28U.S.C.j 636q$(1).TheFourt.hCizckzithasheldthatan objecéngpartymustdosoffwithsuflkient speciûcitysoasreasonablytoalerttheclisttictcourtofthettnleg' roundfottheobjecdon.'' UnitedStatesv.Mid ette,478F.3d616,622(4t.hCir.2007),certdenied,127S.Ct.3032 (2007). To conclude otherwise would de/eatthe putpose ofreqlliting objecéons.W ewolzld bepetvnitting apartyto appealanyissue thatwas before the magistrate judge,regardless ofthe natute and scopeofobjecéonsmadeto themagistratejudge'sreport. Either the district courtwould then have to review every issue in the magistrate judge's proposed fmdings and recom m endations or cout'ts of appeals w ould be required to review issues thatthe district court never considered.ln either case,judicialresourceswould bewasted and the districtcourt's effectiveness based on help from magistrate judges would be underm ined. J-d.aThedistrictcotzrtmustdetermine7.-qnovoanypordonofthemagistratejudge'sreport andrecommendationtowhichaproperobjectionhasbeenmade.fThedisttictcourtmay accept,reject,ormodifytherecommended disposiéon;receivefllttherevidence;orreturn themattertothemagistratejudgewithinstrucdons.''Fed.R.Civ.P.729$(3);accord28 U.S.C.j6369$(1).tfGenezalobjectionsthatmerelyreiterateargumentspresentedtothe magistratejudgelackthespecificityrequiredunderRule72,andhavethesameeffectasa fat 'lureto object,orasawaiverofsuch objection.''Moonv.BWX Techs.,Inc.,742 F.Supp. 2d 827,829(W.D.Va.2010)(citingVene v.Astrue,539F.Supp.2d 841,845 (W .D.Va. 2008)),aff'd,498F.App'x268(4thCit.2012);seealsoThomasv.Arn,474U.S.140,154 (198543))rtrRhestatutedoesnotreq'lirethejudgetozeview anissue. d<novoifno objecéonsareftled.>). Futther,objecùonsthatonlyrepeatargumentsraisedbeforethemagistratejudgeare considered generalobjecéonsto theentiretyofthereportandrecommendadon.SeeVene , 539F.Supp.2dat845.Asthecouttnotediny..tlkty: Allowingalitkantto obtnin 2:novo review ofherentitecase bymerelyteformattinganeatlierbriefasan objecéon ffmakgesj the iniéalreference to the m agistrate useless.The funcdons of the district cotzrt are effecdvely duplicated as 130th the m agistrate and the district court perform idenécal tasks.Tllis duplicadon oftime and effortwastesjudicialresourcesrather than saving them , and runs conttary to the purposes of the MagistratesAct.''Howatd (v.Sec' ofHea1th & Htunan Servsj, 932 F.2d (5051,509 g(6th Ciz.1991)j. 539 F.Supp.2d at846.A plaintiffwho reiterateshispreviously raised argum entswillnotbe given ffthesecond biteattheapple(jheseeks.''Id.Instead,hisre-ftled briefwillbetreated asageneralobjecéon,whichhasthesameeffectasafailuretoobject.ld. II. N ationstar'sBriefin SupportofitsM odon to DisnnissPlaintiffs'Am ended Pleading arguesthattheDelawareCourt'srulingpreèludestheHegeduses'clsimson 130thresjudicata (cllim preclusion)andcollateralestoppel(issuepreclusion)gtounds.lTheHegeduses' am ended com plaintaEegesthatN adonstarbreached itsconttactualand good faith obligationsby failing to apply theirpaym entsto the loan interestand principalpursuantto the term softheagreem ent.zTheitoriginalcom plaintincluded a claim forconversion, 1Because the courtagreeswit . h thesegrounds,there isno need to addressN adonstar'saltem adve argum ents. 2Plainéffs'origm ' alcom plaintincluded a variety ofclnim sarising from similazfacts.O fthese cbim s,allweredismissed save one cbim forconversion;however,Pbintiffsweregiven leave to am end theirbreach ofcontzactcbim .Order Adopting R.& R.,ECF N o.42,1. arising from sim ilarfacts,which sutvived N adonstar'sfststm otion to dismiss.N ationstar bringsthepenclingmoéontodisrnissbothclaimsunderRule1241$(6). A. Rule129$(6)oftheFederalRulesofCivilProcedurepev itsapartytomovefor disnaissalofa com plaintforfailure to statea clnim upon wllich teliefcan begranted. To sutviveamoéontodisnnissunderRule129$(6),theplaindffmustpleadsufhcientfactsffto raisea rightto reliefabovethespeculaévelevel'?and ffstate aclnim to teliefthatisplausible onitsface.''BellAtl.Co .v.Twombl,550U.S.544,555,570(2007).A plslindff establishesfffacialplausibilitf'bypleadingKffacttzalcontentthatallowsthecourttodraw the reasonable inference thatthe defendantisliable forthe misconductalleged.''A shcroftv. Lqbal,556U.S.662,678(2009).lntnllingona129$(6)moéon,thecourtmustacceptall w ell-pleaded allegationsin thecom plaintastrue and draw allreasonable factualinfezencesin thelightmostfavorabletotheplaintiff.Ibarrav.UnitedStates,120F.3d472,474(4thCir. 1997).However,fçgtlhreadbarerecitalsoftheelementsofacauseofaction,supported by m ereconclusory statem ents,do notsuffice.''Iqbal,556 U.S.at6789seeW a M ore D o s LLC v.Cozart,680F.3d359,365(4thCir.2012)Soldingthecourtffneednotacceptlegal conclusionscouched asfactsorunw arranted inferences,unreasonable conclusions,or argtzments'')(internalquotadonmarksonaitted). K status and the Court's obligadon to hold their In recognidon ofPlaintiffs'pzq . - pleadingsto K<lessstringentstandardsthan form alpleadingsdzafted by lawyers,''the Colxt-t willalso considerfactspresented in Plainéffs'opposition briefsand attached relevant documents.Ericksonv.Pazdus,551U.S.89,94 (2007)(percutiam)(statingthatadocument flled pzqaqmustbeliberallyconstrued);Shomov.A le lnc.,2015W L 777620,at*2 . (W.D.Va.Feb.24,2015)(consideringffboth thecomplaintand thefacttmlallegadonsin Shomo'sresponse ...in detertniningwhetherhisclnim scan surdvedismissal7).See W itthohnv.Fed.Ins.Co.,164F.App'x395,396(4thCir.2006)@ercuriam)(expbinitng thata courtm ay,withoutconveréng am otion to clisrnissinto a m otion forsum m ary judgment,Kfconsider...documentscenttalto plaindffsclnim ...solongastheautlaenécity ofthesedocumentsisnotdisputed7).Furthetmore,Tfgwjhen theplainéffattachesor incop oratesadocum entupon which hiscbim isbased,orwhen the com plaintotherwise showsthattheplainéfi-hasadopted thecontentsofthedocllment,':theCouttw. i llcreditthe contentsofthedocum entoverconttadictoryallegadonsin the com plaint.G oinesv.Valle Cmtp Servs.Bd.,822F.3d 159,167 (4th Cir.2016). B. The H egeduses'presentcbim sarise from a m ortgageagreem entforpropertythey owned in Sussex County,D elaware.Both partiesagreethatthe H egedusesenteted into a m ortgagecontract* t. 1:FirstH orizon H om eLoan Com otation on the Sussex County propertyin 2006.Com pl.,ECF N o.1,2 - 3.N adonstarentered a subserdcing agreem ent withFirstHorizon onJune21,2011,taking overforMeGifeBank,thepreviousservicer. Am .Com pl.,E CF N o.43,2.Plaintiffswerenodhed ofthe changeon A ugust25,2011 and began sending theirm onthly m ortgagepaym entsto N aéonstat.J-da The term softhe m ortgage agreem entrequired thatN ationstarapply m ortgage paym entsflzstto interest,then to principal,and finally to otherrniscellaneouscharges, incluHing esczow item s.Am .Com pl.,ECF N o.43,2.Inidally,N adonstarand Plaindffshad an escêow waiver,butafterconfusion regarcling tax paym entsto the county,theH egeduses allege thatN adonstarim pzoperlyrevoked thewaiver,setup an esczow account,and placed a poréon oftheirm onthlypaym entsinto the account,thusprevendng the paym entsfrom being applied to interestand principaland causing an eventualdefaultin 2013.1d. Foreclosure proceedingswere then initiated in the SuperiorCotutofD elawate.See BankofN.Y.Mellonv.He edus,C.A.No.515L-12-053O el.Super.Ct.Dec.18,2017). Plainéffscontested the foreclostzre;the D elaware caseBank ofN ew Y ork M ellon v. He edus(B.N.Y.Mellon)followed.5.. = idsTheDelawareCourtfound thatthemottgage agreem entbetv een FitstH orizon and theH egedusesdid initiallyincludean escrow w aiver, butthat,fto n M arch 8,2013,N ationstarsentaletlertitled TURG EN T'''to theH egeduse' s infot-mingthem that$140.17 offdsussex Countytaxes,which had been dueon September 30,2012,...had notbeen paid,''thatthedelinquentpaym entconstitm ed a defaultunderthe term softhem oztgage agreem ent,and thatN ationstarnlightfrom there on require the Hegedusesto maintain an esczow accountforfuturetaxesandinsurance.Ld.sat1- 2,9. N ationstaragain notified theH egedusesofthe delinquency fivew eekslatez,and w atned that ifthey did notprovideproofofpaym entwithin 15 days,N ationstarwould advancepaym ent and ffestablish an irrevocable escrow account''to preventfuttzre defaults.D ef.'sM em .in Supp.Ex.B,ECF No.45-3 O el.Ct.Op.),29- 30. TheH egedusesclid notrespond to N adonstar,butdid send paym entto Sussex County.D el.Ct.O p.4 - 5.TheH egedusesclid notprovideN adonstarw1t. 1:any proofofthe tax payment,and so Nationstaralso sentpaymentofthetaxesto thecounty(unawarethat thetaxeshad alzeadybeen paid)andrevoked theescrow waiver.J-l. L SussexCountyreturned theduplicatepaymentto Nadonstar.LdaTheHegedusesalsoreimbursedNadonstar;this m oneywasplaced in thenew escrow account.J-dx Beginrlingluly 16,2013,statem entssentto theHegedusesreflected anegativeescrow balance,butthe H egedusesconénued to send paym entsreflecdng the pze-escrow m onthly billam ount.D el.Ct.O p.4 - 5.Disagteem entsand contenéon conénued,asthe H egeduses continued to pay m onthly paym entsthatwereinsufhcientto cover170th the escrow paymentsandmonthlyinterestand principal.Ld. aByluly 2014,theHegeduseswetetwo monthsbelaindin mortgagepayments.J-I. L at5- 6.NadonstarsentaNodceofIntentto forecloseifthey did notbringtheamountcurrent.J-dsTheHegedusesdidnotdo so,and B.N.Y.M ellon flled forforeclostzre.I. I. L TheD elaware Courtconcluded thatB.N .Y.M ellon,through N adonstar,had acted within the rightsaccotded by them ortgage agreem ent,which pe= itted therevocadon of the escrow waiver Tfatany tim e''so long aspropernoticewasgiven,while theH egeduses had breached the agreem entby refusing to pay the escrow am ount.D el.Ct.O p.8 - 9. JudgmentwasaccordinglyenteredforB.N .Y.M ellon.LdaTheHegedusesappealed;the DelawareSupremeCourtaffitmedthettialcourt'sjudgment.He edusv.BankofNew York Mellon,190A.3d998(Del.2018),reat llmentdeniedguly25,2018). PriortotheDelawarejudgment,on May30,2017,theHegedusesftled thisacdon againstN adonstarin tlaiscourt.Com pl.,ECF N o.1.O n April18,2018,N adonstarbrought amotiontodisnaissunder129$(6),argaingtheDelawaredecisionptecludestheHegeduses' clqim sin thiscase.D ef.M em .in Supp.,ECF N o.48,1. C. To assessN aéonstar'spzeclusion argum ent,thecouttm ustdetetnainetheapplicable source oflaw .3AIIfederalcout'tsm ustgiveSTIIfaith and creditto valid statecolzrt judgments,asrequitedbyfederalstamte.InreGenessDataTechs.lnc.,204F.3d124,127 (4th Cir.2000).lnprovidingsuch fullfaithand credit,28U.S.C.j1738directsfederalcourts torefertothepreclusion1aw ofthestatewheteajudgmentwaszendeted- inthis citcum stance,D elawarelaw applies.SeeLQ Statepreclusion1aw appliesunlessan excepéon to j1738governs.SeeM arresev.Am .Acad.ofOrtho aedicSur eons,470U.S.373,380 (1985). Federalcourtsapplyat 'wo-step processto determinewhetherj1738shouldapply.11. 1 reG enes sD ataTechs.,204 F.3d at128.A federalcourtm ustflrstask ifstate law w ould giveastatecourtjudgmentpreclusiveeffect.Next,thecout'tmustaskifCongresscreated an applicableexpressorimplied exception to j1738. UnderD elaw arelaw: apartyclniming thatthedoctrineof(cl/im preclusion)barsasubsequentacdon must demonstzate the presence of ûve elements: (1) the court making the prioz adjudicadon had jurisdiction,(2)theparéesin theptesentaction areeitherthesame paréesorin privity wit. h the partiesfrom theprioradjuctication,(3)the cause of acéon m ustbe the sam ein bot. h cases orthe issues decided in the prioracéon m ust bethesameasthoseraisedin thepresentcase,(4)theissuesin theprioracdon must bedecidedadverselyto theplninéff'scontendonsin theinstantcase,and (5)thepzior adjudicaéonmustbefinal. Baileyv.CityofW ilmington,766A.2d477,481 O el.2001)(percuriam).Followingthe hearing on themodon to disrnissand in theitobjecéonstoJudgeHoppe'sReportand Recommendaéon,Plqintiffsobjected to theapplicaéon ofclsim pteclusionbyconteséng the 3Cllim pzeclusionordinatilycannotberesolvedonRule129$(6)moéons,butthecourtmayaddressthisdefense becauseallnecessary factsappeareitheron the face ofthe plearlingsorin the state coul' tdocum ents,ofwhich the cout' t maytakejudicialnodce.SeeAndrewsv.Daw,201F. 3d521,524n.1(4thCiz.2000). secondelement(theidentityand/orprivitybetween thepardesinthefrstacdon andthe currentaction),thethitdelementtthesimilatityofthecauseofacdonandissuesinthetwo cases),andthehft.helement(thefinalityofthepriorjudgment)oftheanalysis.Each objecdonwillbeaddressedinturn. First,Plninéffsobjecttotheapplicaéon ofpzeclusionduetotheidentityofthe pardes.B.N .Y .M ellon and N ationstarare plainly notthesam e party.Therefore,the cout't m ustdeterm ine ifthey arein privity.fTrivityisalegaldetetvninaéon forthettialcouttwith regard to whetherthe reladonslkip between thepartiesissuffkiently closeto support preclusion.''See1-11 insv.W alls,901A.2d 122,138 O el.Super.Ct.2005)(quoting 18 JamesW m.Mooreeta1.,M oore'sFederalPracdcej132.04(1j% (3ded.200$).Toassess whethertv o partiesare ffsufûciently close''D elawarecourtslook to the parties'interestsand askifthey are idendcalorclosely aligned Tfsuch thatthey weteacdvely and adequately representedin theflrstsuit.''AvetaInc.v.Cavallieri,23A.3d 157,180 @ el.Ch.2010). Plaintiffsarguethereisno ptivity between N aéonstarand B.N .Y .M ellon because the two arenotidentical,and furthetargue thatN ationstathasfffailed to ptovide any substantiation ofprivity.''The originalm ortgage atissue,however,wasbetween the H egedusesand FirstH orizon,and N aéonstazserdced thisloan forFirstH orizon.B.N .Y. M ellon acquited them ortgage by assignm ent,with N ationstazstillserdcing.TheH egeduses' clnim sagainstN ationstararebased on theitcontendon thattheescrow accountwas illegitim ate,and thusN ationstardefendsitselfby cllim ing authority,asB.N .Y.M ellon's m ortgageserdcer,to establish the account.In theD elaware case,B.N .Y.M ellon argued its rightto pursue foreclostzreagainstthe H egedusesbecause ofpast-due paym entsrelated to a legifim ately established escrow account.D el.Ct.O p.2.N ationstar'sinterestswerethus closely aligned with B.N .Y.M ellon'sinterests. TheH egedusesftutherclnim thattheReportand Recom m endation erred fTby changingtheword çinvestor'...to theBankofM ellon gsicj''and thusarguethatffN adonstar wasgnot)in pzivitywith Mellon gsicqatthetimeoftheestabishmentofan esczow account.'? P1s.'Objs.toR.& R.,ECF No.64,5,9.Nationstarrespondsthatchangingthelabel ffinvestor''to thenam e<CB.N .Y.M ellon''doesnotalterthelegalanalysis.N ationstaris correct- asservicerforB.N .Y .M ellon,the investorin theH egeduses'loan,N ationstaracted onbehalfofthebank.Thesimilarityoftheissuesargued (Naéonstar'srighttoestablishthe escrow accountand thebank'srightto thereafterforecloseforescrow deficiencies)leadto the conclusion thatN ationstar'sinterestsw ere activelyand adequately represented in the flzstsuit.The two partiesaze in privity,sadsfying thiselem entofthe preclusion analysis. N ext,Plaintiffsazgue thatthetwo cases'causesofacdon arenotsuffkiently sim ilar to watrantpreclusiveeffect.In deternnining tlnis,D elaware courtsfollow atransacdonal approach in which clnim preclusion m ay Ttbeinvoked to barlitigation...iftheclnim sin the laterlitigation arosefrom the sam e transacéon thatfotm ed thebasisofthe prior adjudication.''RBC Ca italMkts.LLC v.Educ.LoanTr.1V,87A.3d632,645@ el.201$. Allissuesw hich rnighthave been zaised and decided in the ftrstsuitareprecluded,notonly thoseissuesthatw ere decided.JA TheH egedusesargue thatthe D elaware case concerned paym entofam oztgage,w hile <ftheVitgt 'm'a suitaddressesthe servicing dehcienciesof Nationstat.''SeePls'ObjstoR.&.R.,ECF64,4- 5.Thesameconttactunderliesboth cases,however,and 130th casesdealwit.h N ationstar'sauthorityto establish an escrow account.Theissuesraised in thiscase could certoinly havebeen raised and argued in the D elawarecase- indeed,m any were.Tlkiselem entissadsûed. Finally,Plaindffsarguethatthe D elaware Court'sdecision isnotyetfinalasthey ffare stillputsuingthevacation''ofthejudgment.Pls'ObjstoR.&.R.,ECF 64,2.TheSupreme Coul'tofDelawazeholdsthatffgijfthelanguageofthejudgmentevidencesthejudge's intenéonthatthejudgmentbefinal,thenthejudgmentisfinal.''Pllzmmezv.R. T.Vanderbilt Co.,49A.3d1163,1167(Del.2012).WhetherthejudgmentisSnalffdependson(whether thejudgehasorhasnotclearlydeclared hisintenéon in thisrespectin hisopinion.'''Id. TheDelawateCourtgzanted judgmentin favorofB.N.Y.Mellon,entered judgment againstthe H egeduses,and awarded dam agesto B.N .Y.M ellon.See D el.Ct.Op.8- 9. Plainéffsdid appealtheD elaw are Court'sdecision,butthetaking ofan appealactazally supportsafnclingthatthejudgmentisEnal.Pla texFamil Prods.Inc.v.St.PaulS 1us LinesIns.Co.,564A.2d681,684n.2O el.Super.Ct.1989)rfrllheCourtsofthisstatehave iridicated...thatjudgmentson appealatefinalforèreclusionqpumoses.Tlnisisclearlyso, else theincentive would be forthe losing party ...to sim ultaneously appealand ftlesuitin anotherjutisclicéon,hopingforaninconsistentverdict.''(internalcitationomittedl).The DelawareCourtjudgmentwasfinalwhentheDelawareSupremeCouttacceptedPlaindffs' appeal.Addidonally,thepublicdocketreflectsthatthettialcourt'sjudgmentwasaffsrmed onJuly 25,2018.SeeBank ofN.Y.M ellon,C.A.N o.S15L-12-053.Finalityisestablished. 111. Thecaseathand isprecluded.Therefore,the courtrulesnow to OVE RRU LE the Hegeduses'objecdons,ADOPT thereportandrecommendadontotheextentconsistept with thisopinion,and GRAN T D efendant'sm odon to disrniss. An appropriate orderwillbe entered thisday. Entered:D ecem ber11,2018 /+f w'- , J . M ichael . rbanski Claie nitedStatesDistdctludge 12
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
