Vance v. Ocwen Financial Corporation

Filing 16

MEMORANDUM OPINION. Signed by Judge R David Proctor on 6/5/2012. (AVC)

FILED
2012 Jun-05 PM 03:08
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
DELMOUS VANCE,
Plaintiff,
v.
OCWEN FINANCIAL
CORPORATION, a/k/a OCWEN
LOAN SERVICING
Defendant.

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Case No.: 2:12-CV-00588-RDP

MEMORANDUM OPINION
This matter is before the court Defendant’s Motion for Partial Dismissal of Complaint (Doc.
# 10), filed March 26, 2012. The Motion has been fully briefed. (Docs. # 13, 14). Having carefully
considered the briefs, the court finds that Defendant’s Motion for Partial Dismissal of Complaint
(Doc. # 10) is due to be granted.
I.

BACKGROUND
Plaintiff Delmous Vance, a homeowner, initiated this lawsuit against Defendant Ocwen

Financial Corporation, a/k/a Ocwen Loan Servicing, his mortgage servicer, on February 17, 2012.
(Doc. # 1). Plaintiff asserts claims under the Fair Debt Collection Practices Act and the Real Estate
Settlement Procedures Act, as well as a state law claim for wrongful foreclosure. Because Defendant
has moved to dismiss only Plaintiff’s wrongful foreclosure claim in Count IV (Doc. # 1 ¶¶ 65-70),
this opinion will only discuss facts and law relevant to that claim.
The relevant factual allegations are as follows. Plaintiff purchased his home, located at 8961
Valley Hill Drive, Birmingham, AL 35206, in 2006. (Doc. # 1 ¶ 8). Plaintiff obtained a loan
secured by the mortgage on his real property. (Id. ¶ 9). At some point around August and September

2011, the servicing of Plaintiff’s loan was transferred to Defendant. (Id. ¶ 13). Starting in late
September 2011, Defendant began reporting that Plaintiff was delinquent on his loan. (Id. ¶ 16).
Plaintiff alleged that he never missed a loan payment and attempted in vain to stop Defendant from
reporting him as delinquent. (Id. ¶¶ 12, 17-20). Defendant refused to correct its purported erroneous
information on Plaintiff’s loan, and on November 2, 2011, Plaintiff received a Notice of Default
stating that Plaintiff’s payments were past due and demanding payment of $7,192.49 to avoid
foreclosure. (Id. ¶¶ 20-21). Once again, Plaintiff tried to no avail to demonstrate to Defendant that
he had made timely payments. (Id. ¶¶ 22-23). Defendant initiated foreclosure proceedings and set
a foreclosure sale for February 22, 2012. (Id. ¶¶ 23, 29). However, in Plaintiff’s Response to
Defendant’s Motion filed on April 2, 2012, Plaintiff admitted that the foreclosure sale has not been
completed. (Doc. # 13 at 2). Plaintiff explained that Defendant initially rescheduled the foreclosure
sale for March 23, 2012, but ultimately suspended the sale indefinitely.
Defendant has moved to dismiss Plaintiff’s claim for wrongful foreclosure under Rule
12(b)(6) of the Federal Rules of Civil Procedure, arguing that Plaintiff cannot assert a wrongful
foreclosure claim if the foreclosure sale has not been completed. Plaintiff disagrees, contending that
the initiation of foreclosure proceedings is itself sufficient for a wrongful foreclosure claim. The
parties’ dispute boils down to a question of law: in Alabama, can a party assert a wrongful
foreclosure claim if foreclosure proceedings have been initiated but not completed?
II.

STANDARD OF REVIEW
The Federal Rules of Civil Procedure require only that the complaint provide “a short and

plain statement of the claim showing that the pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2).
Having said that, the complaint must include enough facts “to raise a right to relief above the
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speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Pleadings that
contain nothing more than “a formulaic recitation of the elements of a cause of action” do not meet
Rule 8 standards, nor do pleadings suffice that are based merely upon “labels and conclusions” or
“naked assertion[s]” without supporting factual allegations. Twombly, 550 U.S. at 555, 557. In
deciding a Rule 12(b)(6) motion to dismiss, courts view the allegations in the complaint in the light
most favorable to the non-moving party. Watts v. Fla. Int’l Univ., 495 F.3d 1289, 1295 (11th Cir.
2007). To survive a motion to dismiss, a complaint must “state a claim to relief that is plausible on
its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable for
the misconduct alleged.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). Although “[t]he
plausibility standard is not akin to a ‘probability requirement,’” the complaint must demonstrate
“more than a sheer possibility that a defendant has acted unlawfully.” Id. A plausible claim for
relief requires “enough fact[s] to raise a reasonable expectation that discovery will reveal evidence”
to support the claim. Twombly, 550 U.S. at 556.
The Supreme Court has recently identified “two working principles” for a district court to
use in applying the facial plausibility standard. First, in evaluating motions to dismiss, the court
must assume the veracity of well-pleaded factual allegations; however, the court does not have to
accept as true legal conclusions when they are “couched as [] factual allegation[s].” Iqbal, 129 S.
Ct. at 1950. Second, “only a complaint that states a plausible claim for relief survives a motion to
dismiss.” Id. Application of the facial plausibility standard involves two steps. Under prong one,
the court must determine the scope and nature of the factual allegations that are well-pleaded and
assume their veracity; and under prong two, the court must proceed to determine the claim’s
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plausibility given the well-pleaded facts. That task is context specific and, to survive the motion,
the allegations must permit the court based on its “judicial experience and common sense . . . to infer
more than the mere possibility of misconduct.” Id. If the court determines that well-pleaded facts,
accepted as true, do not state a claim that is plausible, the claims are due to be dismissed. Id.
III.

DISCUSSION
Under Alabama law, a “mortgagor has a wrongful foreclosure action whenever a mortgagee

uses the power of sale given under a mortgage for a purpose other than to secure the debt owed by
the mortgagor.” Reeves Cedarhurst Dev. Corp. v. First Am. Fed. Sav. and Loan, 607 So. 2d 180,
182 (Ala. 1992). The Southern District of Alabama, faced with a wrongful foreclosure claim in the
absence of a foreclosure sale, analyzed the parameters of a wrongful foreclosure claim under
Alabama law. Hardy v. Jim Walter Homes, Inc., 2007 WL 174391, at *6 (S.D. Ala. Jan. 18, 2007).
The court held the following:
Plaintiffs have cited no Alabama authority, and the undersigned has found none,
under which the mere scheduling of a foreclosure sale, without more, has been found
to constitute a mortgagee’s exercise of the power of sale. A plain reading of [the]
legal standard [enunciated in Reeves] strongly suggests that it cannot, and that the
power of sale is exercised by selling, not merely by running a newspaper
advertisement preparatory to selling.
Id. The court therefore dismissed the claim for wrongful foreclosure under Rule 12(b)(6) for failure
to state a claim. Id. The undersigned agrees with the Southern District of Alabama’s analysis of
Alabama law. See McClung v. MERS, Inc., No. 11-3621, 2012 WL 1642209, at *4 (N.D. Ala. May
7, 2012). Accordingly, in order to state a claim for wrongful foreclosure, a foreclosure sale must

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have actually taken place. Id.; Hardy, 2007 WL 174391, at *6.1 Here, as no foreclosure sale has
occurred, Plaintiff’s wrongful foreclosure claim in Count IV must be dismissed for the failure to set
forth a plausible wrongful foreclosure claim.
IV.

CONCLUSION
For the reasons stated above, Plaintiff’s claim for wrongful foreclosure in Count IV of his

Complaint (Doc. # 1 ¶¶ 65-70) is due to be dismissed with prejudice.2 The court will issue a separate
order consistent with this Memorandum Opinion.
DONE and ORDERED this

5th

day of June, 2012.

___________________________________
R. DAVID PROCTOR
UNITED STATES DISTRICT JUDGE

1

Plaintiff contends that Reeves and Hardy do not require that a foreclosure sale actually occur for a party to
prevail on a wrongful foreclosure claim. However, Plaintiff misreads these cases. In Reeves, the property at issue was
foreclosed on prior to the property owner’s assertion of a wrongful foreclosure claim, 607 So. 2d at 181, and in Hardy,
the Southern District of Alabama specifically held, interpreting Alabama law, that when a foreclosure sale has not
actually happened, a party cannot assert a wrongful foreclosure claim, 2007 WL 174391, at *6. Further, Plaintiff also
cites Johnson v. Shirley, 539 So. 2d 165, 167 (Ala. 1988) for support, but in that case, the foreclosure sale had also been
completed prior to the assertion of a wrongful foreclosure claim.
2

To the extent Plaintiff requests leave to amend his complaint (see Doc. # 13 at 7), Plaintiff must file a proper
motion seeking leave to amend for the court to consider his request.

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