Yocum v. Nationstar Mortgage LLC

Filing 39

MEMORANDUM OPINION AND ORDER - For the reasons discussed above, the Court ADOPTS the magistrate judges report and recommendation and overrules Mr. Yocums objections to the report and recommendation, with one exception. The Court finds that Mr. Yocums action against Renasant to quiet title states a claim upon which relief can be granted. The Court DISMISSES WITHOUT PREJUDICE the remaining claims in Mr. Yocums amended complaint. Mr. Yocum may replead those claims in accordance with the guidance pr ovided in the magistrate judges report and recommendation and this memorandum opinion and order. If Mr. Yocum chooses to replead, he shall file a second amended complaint that contains all the causes of action with which he intends to proceed (including his quiet title claim against Renasant) on or before August 15, 2016. Signed by Judge Madeline Hughes Haikala on 8/3/2016. (KEK)

FILED
2016 Aug-03 PM 03:34
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION

JAMES A. YOCUM, JR.,

}
}
Plaintiff,
}
}
v.
}
}
NATIONSTAR MORTGAGE, LLC }
and RENASANT BANK,
}
}
Defendant.
}

Case No.: 2:14-cv-00970-SGC

MEMORANDUM OPINION AND ORDER
Plaintiff James A. Yocum, Jr. filed a complaint in state court against
defendants Nationstar Mortgage, LLC and Renasant Bank. Mr. Yocum asserted
claims against the defendants for violation of the Real Estate Settlement
Procedures Act, 12 U.S.C. §§ 2601–17 (RESPA); Truth-in-Lending Act, 15 U.S.C.
§§ 1601–16 (TILA); and Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692–
1692p (FDCPA). (Doc. 1-1). Mr. Yocum also sought to quiet title to certain real
property, and he requested a declaration that he has the right to the undisturbed
possession of that property. (Doc. 1-1).

Nationstar removed the action to federal court. (Doc. 1). The magistrate
judge to whom this case is assigned issued a report in which she recommended that
the Court dismiss Mr. Yocum’s amended complaint (Doc. 5), which is now the
operative pleading, and provide Mr. Yocum with one more opportunity to amend.
(Doc. 33). Mr. Yocum objects to the report and recommendation. (Doc. 34). The
Clerk assigned this matter to the undersigned judicial officer for consideration of
the magistrate judge’s report and Mr. Yocum’s objections to it. (Doc. 35). For the
reasons discussed below, the Court sustains one of Mr. Yocum’s objections,
overrules the balance of his objections, and refers this case to the magistrate judge
for further proceedings.

I.

DISCUSSION
When a party objects to a magistrate judge’s report and recommendation, the

Court must “make a de novo determination of those portions of the report or
specified proposed findings or recommendations to which objection is made.” 28
U.S.C. § 636(b)(1). This means the Court must “give fresh consideration to those
issues to which specific objection has been made.” Jeffrey S. by Ernest S. v. State
Bd. of Educ. of State of Ga., 896 F.2d 507, 512 (11th Cir. 1990). A district court
reviews legal conclusions in a report de novo and reviews for plain error factual
findings to which no objection is made. Garvey v. Vaughn, 993 F.2d 776, 779 n.9
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(11th Cir. 1993); see also LoConte v. Dugger, 847 F.2d 745, 749 (11th Cir. 1988);
Macort v. Prem, Inc., 208 Fed. Appx. 781, 784 (11th Cir. 2006). The Court “may
accept, reject, or modify, in whole or part, the findings or recommendations made
by the magistrate judge.” 28 U.S.C. § 636(b)(1).
Mr. Yocum offers more than a dozen objections to the report and
recommendation. For ease of analysis, for each objection, the Court has quoted or
summarized the portion of the magistrate judge’s report and recommendation
(R&R) to which the objection pertains and quoted or summarized the objection.
The Court’s analysis follows each objection.
1. R&R: “The allegations contained in Yocum’s amended complaint
give rise to the reasonable inference Nationstar is the current servicer of a
loan secured by the property.” (Doc. 33, p. 4).
Objection: “[A] fraudulently obtained loan is not ‘a loan secured by the
property.’” (Doc. 34, p. 1).
The Court overrules this objection. The magistrate judge has not found
conclusively, based on the pleadings, that the loan was not fraudulently obtained.
The gist of the paragraph to which Mr. Yocum refers is that Nationstar services the
loan at issue.

Mr. Yocum’s claims under RESPA and TILA depend on

Nationstar’s status as a loan servicer. (See Doc. 34, p. 7; Doc. 5, p. 10; 12 U.S.C.
§ 2605; 15 U.S.C. § 1641(f)(2)).

Mr. Yocum may clarify his allegations
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concerning the validity of the loan if he chooses to accept the magistrate judge’s
invitation to prepare and file an amended complaint.
2. R&R: “[T]he court may consider the documents attached to Yocum’s
amended complaint because they are central to his claims and undisputed.”
(Doc. 33, p. 7).
Objection: “[T]o the extent that Yocum alleges the exhibits contain false or
fraudulent statements, those exhibits cannot properly be considered to be ‘part of’
or ‘incorporated into’ the complaint.” (Doc. 34, p. 2).
The Court overrules this objection.

As with Mr. Yocum’s previous

objection, the magistrate judge has not ignored Mr. Yocum’s contention that there
is fraud afoot.

To the contrary, the magistrate judge acknowledged that Mr.

Yocum “claims the mortgage is fraudulent because it contains false statements of
material fact.” (Doc. 34, p. 4). As binding precedent requires, the magistrate
judge accepted the well-pled allegations of the first amended complaint as true for
purposes of ruling on the defendants’ motions to dismiss. Adinolfe v. United
Techs. Corp., 768 F.3d 1161, 1169 (11th Cir. 2014).
3. R&R: Mr. Yocum’s claim to quiet title against Nationstar is due to
be dismissed because a “loan servicer does not hold any interest in the
foreclosure of property securing the loan.” (Doc. 33, p. 11).

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Objection: Nationstar claims to own at least part of a mortgage on Mr.
Yocum’s property in the notices of acceleration, notice of foreclosure sale, and
mortgage, and therefore, Nationstar is claiming ownership of Mr. Yocum’s
property because Alabama is a title theory state. (Doc. 34, p. 2).
The Court overrules this objection because it is inconsistent with the
allegations in Mr. Yocum’s first amended complaint.

In his first amended

complaint, Mr. Yocum asserts that, “Nationstar Mortgage, LLC is not the owner or
holder of any mortgage encumbering Plaintiff’s property.” (Doc. 5, p. 6). The
magistrate judge properly accepted this allegation as true and accurate. As the
magistrate judge explained, the allegations in Mr. Yocum’s amended complaint
and the attachments to his amended complaint indicate that Nationstar is a loan
servicer. The fact that Alabama is a title theory state is irrelevant.
4. R&R: “[Mr. Yocum’s] claim to quiet title against Renasant fails
because he denies Renasant has or ever has had any interest in the Danner
Circle property.” (Doc. 33, p. 11).
Objection: Renasant was named as the original mortgagee, and the county
records that reflect this fact cloud title to Mr. Yocum’s property. (Doc. 34, pp. 2–
3).
The Court sustains this objection.

Mr. Yocum alleges in the amended

complaint that Renasant Bank recorded a fraudulent mortgage and by doing so
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“made a claim upon Plaintiff’s property and clouded the title.” (Doc. 5, p. 6, ¶ 285). Under Ala. Code § 6-6-540, Mr. Yocum may bring an action to quiet title to
his property when “any other person claims . . . to hold any lien or encumbrance
thereon . . . .” Though he challenges the validity of the mortgage, Mr. Yocum
alleges that Renasant claims to hold a mortgage, and a mortgage constitutes a lien
or encumbrance. Reading Mr. Yokum’s allegations liberally, he has adequately
pled a claim to quiet title against Renasant Bank.
5. R&R: The cause of action against Renasant to quiet title should be
dismissed to the extent it relies on the split-the-note theory, which is not
recognized under Alabama law. (Doc. 33, p. 11).
Objection: A mortgage is enforceable only by the owner of the note when
the note and mortgage are split. (Doc. 34, p. 3).
The Court overrules the objection. The Court gleans from the amended
complaint that Mr. Yokum is attempting to challenge the validity of the mortgage
on the property at issue. The basis for that challenge is not entirely clear. Should
Mr. Yokum avail himself of the opportunity to amend his complaint again, Mr.
Yokum should clearly state the basis for his allegation that the mortgage on his
property is not valid. If the Court has misunderstood Mr. Yokum’s legal theory,
then he must state his legal theory clearly.

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6. R&R: “Yocum does not identify which sections of RESPA he alleges
Nationstar violated.” (Doc. 33, p. 11).
Objection: In his objection, Mr. Yokum cites regulations that he did not
include in his first amended complaint. (Doc. 34, pp. 3–4).
Mr. Yocum may not amend his complaint through his objections to the
R&R. If he wishes to allege specific claims based upon particular sections of
RESPA or specific regulations, then Mr. Yokum must do so in his second amended
complaint.
7. R&R: “To constitute a valid QWR, correspondence sent to a servicer
must include requests for information about the servicing of the loan.” (Doc.
33, p. 12).
Objection: Under 12 U.S.C. § 2603, an obligor may request “other
information” in a QWR. (Doc. 34, p. 5).
The Court overrules this objection. The objection should cite to 12 U.S.C. §
2605, not § 2603. The portion of the statute that Mr. Yocum cites must be read in
conjunction with the provision that precedes it. Subsection (A) of § 2605(e)(1)
states: “If any servicer of a federally related mortgage loan receives a qualified
written request from the borrower . . . for information relating to the servicing of
such loan” the servicer must acknowledge the request within five days.

The

statute, read as a whole, suggests that the “other information” referred to in
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subsection (B) also must be “information relating to the servicing of such loan.”
The Eleventh Circuit has not addressed the issue, but persuasive authority supports
this interpretation. See, e.g., Poindexter v. Mercedes-Benz Credit Corp., 792 F.3d
406, 413–14 (4th Cir. 2015); Medrano v. Flagstar Bank, FSB, 704 F.3d 661, 666–
67 (9th Cir. 2012).
8. R&R: “Yocum’s letter dated October 4, 2013 . . . does not request
that Nationstar identify the true owner of his loan.” (Doc. 33, p. 13).
Objection: The purpose of the letter was to provoke a response in which
Nationstar would identify the true owner of the loan. (Doc. 34, p. 5).
The Court overrules this objection. Mr. Yokum made no allegation in his
first amended complaint that corresponds to his objection (see Doc. 5, p. 9), and
any such allegation would be contradicted by the letter that Mr. Yokum sent to
Nationstar. That letter asks Nationstar “to verify that you are the Rightful owner of
the debt, Real Party In Interest, and Holder in Due Course of the Promissory Note
associated with the subject loan, and that no other party may lay claim against the
subject property.” (Doc. 5, p. 16). The magistrate judge properly found that in the
letter, Mr. Yokum did not ask Nationstar to identify the true owner of the loan.
9. R&R: Mr. Yocum’s letters dated April 1, 2014 and April 16, 2014
request information regarding the owner of the note and mortgage, and
Nationstar’s replies provided the requested information. “Yocum does not
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claim he did not receive these responses or contest their authenticity.” (Doc.
33, p. 14).
Objection: The amended complaint alleges Nationstar’s responses to the
letters are not accurate. (Doc. 34, p. 6).
The Court overrules this objection. The amended complaint does include
allegations that Nationstar’s responses were inaccurate. (See Doc. 5, ¶¶ 41-4, 419). However, the R&R accurately notes that Mr. Yocum does not allege facts that
would support this assertion. (Doc. 33, p. 14). Should he wish to pursue a RESPA
claim against Nationstar, Mr. Yocum would have to offer more than the bareboned assertion that the ownership information that Nationstar provided in the
letters is not accurate.

Mr. Yokum must plead facts that support his

characterization of the information in the letters, if he is able to plead such facts in
good faith, based on his investigation of this matter.
10. R&R: “[A] plaintiff must also allege a causal link between the
claimed damages and defendant’s alleged RESPA violation.” (Doc. 33, p. 15).
Objection: Paragraph 41 of the amended complaint states, “As a result of
Defendant Nationstar’s actions, Plaintiff has suffered damages to be determined at
trial.” (Doc. 34, p. 6).
The Court overrules the objection as moot. Because Mr. Yokum has not
alleged a RESPA violation in the operative first amended complaint, his
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allegations of causation are irrelevant. Should Mr. Yokum choose to file a second
amended complaint, the Court directs Mr. Yokum’s attention to the Supreme
Court’s decision in Ashcroft v. Iqbal, 556 U.S. 662 (2009). There, the Supreme
Court held: “the pleading standard Rule 8 announces does not require ‘detailed
factual allegations,’ but it demands more than an unadorned, the-defendantunlawfully-harmed-me accusation.” Id. at 678.
11. R&R: “Because a loan servicer that is not the current or former
owner of a loan may not be held liable for a violation of § 1641(f)(2), Yocum
fails to state a plausible claim against Nationstar for a violation of TILA.”
(Doc. 33, p. 16).
Objection: Every wrong must have a remedy. “By creating a duty owed by
services [sic] to obligors, Congress made servicers into fiduciaries.” (Doc. 34, p.
7).
Section 1641(f)(1) excludes servicers who are not owners of the obligation
from liability under § 1640(a). Mr. Yocum offers no reason to ignore § 1641(f)(1)
and imply a private right of action. The Court overrules this objection.
12. R&R: Mr. Yocum fails to allege facts that would show Nationstar is
a debt collector. (Doc. 33, p. 20).
Objection: Nationstar must be a debt collector because loan servicers collect
money owed on debts. (Doc. 34, p. 7).
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The Court overrules this objection.

Under the FDCPA, the term “debt

collector” does not include “any person collecting or attempting to collect any debt
owed or due or asserted to be owed or due another to the extent such activity . . .
concerns a debt which was not in default at the time it was obtained by such person
. . . .” 15 U.S.C. § 1692a(6)(F). Persuasive authority from the Eleventh Circuit
suggests that Nationstar should not be considered a debt collector under
§ 1692a(6)(F). See Fenello v. Bank of Am., NA, 577 Fed. Appx. 899, 902 (11th
Cir. 2014) (“In this case, the district court correctly concluded that Bank of
America was not a ‘debt collector’ for purposes of § 1692g(b) because its debt
collection activities involved a debt that was not in default at the time Bank of
America became the servicer.”) (citing 15 U.S.C. § 1692a(6)(F)).
13. R&R: The defendants’ motions to dismiss should be granted. (Doc.
33, p. 21).
Objection: The motions to dismiss should not be granted. (Doc. 34, p. 9).
This is simple contradiction; it does not raise an independent objection.
14. R&R: “. . . Yocum should be given one opportunity to file an
amended complaint that satisfactorily addresses the deficiencies discussed in
this report and recommendation . . . .” (Doc. 33, p. 21).
Objection: “[T]here is no reason to restrict the amendments to ‘one
opportunity.’” (Doc. 34, p. 9).
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The Court overrules this objection. Given Mr. Yocum’s extensive litigation
in Yocum v. BAC Home Loans Servicing LP, 2:10-cv-02574-AKK and the
bankruptcy actions, (see In re Yocum, 488 B.R. 748, 750 (Bankr. N.D. Ala 2013)),
and his previous amendment in this action, justice and Federal Rule of Civil
Procedure 15(a)(2) do not require more than one additional opportunity to amend.
The magistrate judge has not abused her discretion by limiting Mr. Yokum to one
more opportunity to amend his complaint.

II. CONCLUSION
For the reasons discussed above, the Court ADOPTS the magistrate judge’s
report and recommendation and overrules Mr. Yocum’s objections to the report
and recommendation, with one exception. The Court finds that Mr. Yocum’s
action against Renasant to quiet title states a claim upon which relief can be
granted. The Court DISMISSES WITHOUT PREJUDICE the remaining claims
in Mr. Yocum’s amended complaint. Mr. Yocum may replead those claims in
accordance with the guidance provided in the magistrate judge’s report and
recommendation and this memorandum opinion and order.1 If Mr. Yocum chooses
to replead, he shall file a second amended complaint that contains all the causes of

1

If Mr. Yocum chooses not to file a second amended complaint or fails to state a colorable
federal claim, the magistrate judge may remand Mr. Yocum’s quiet title claim and any other
state law claims to state court.
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action with which he intends to proceed (including his quiet title claim against
Renasant) on or before August 15, 2016.
DONE and ORDERED this August 3, 2016.

_________________________________
MADELINE HUGHES HAIKALA
UNITED STATES DISTRICT JUDGE

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