Hewitt v. SunTrust Mortgage, Inc.

Filing 16

ORDER denying 3 motion to dismiss. On or before April 23, 2013, each party is ORDERED to show cause why this case should not be stayed pending resolution of the state court proceedings. Signed by Judge Roy B. Dalton, Jr. on 4/16/2013. (VMF)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
DEREK HEWITT and DONNA HEWITT,
Plaintiffs,
v.

Case No. 6:13-cv-300-Orl-37KRS

SUNTRUST MORTGAGE, INC.,
Defendant.
ORDER
This cause is before the Court on the following:
1.

Defendant’s Motion to Dismiss and for Award of Attorney’s Fees (Doc. 3),
filed February 20, 2013; and

2.

Plaintiffs’ Response to Defendant’s Motion to Dismiss Complaint (Doc. 7),
filed March 1, 2013.

Upon consideration, the Court hereby denies Defendant’s motion and orders the parties
to show cause why this case should not be stayed, as set forth below.
BACKGROUND1
Plaintiffs owned a residential property in Altamonte Springs, Florida. (Doc. 2,
¶ 4.) Plaintiff Derek Hewitt quitclaimed the property as part of a business venture to
Justin D. Yunag, who altered the deed and then quitclaimed the property to Alicia
Yunag. (Id. ¶¶ 6–9.) Alicia Yunag obtained a loan on the property from Defendant. (Id. ¶
10.) This loan was sold to Fannie Mae, though Defendant remained the servicer. (Id.

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These factual allegations, taken from the Complaint (Doc. 2), are considered
true for the purposes of the instant motion. See Hill v. White, 321 F.3d 1334, 1335 (11th
Cir. 2003). The Court does not make findings of fact at this time.

¶ 11.) Plaintiffs advised both Defendant and Fannie Mae that the loan to Yunag had
been procured through fraud. (Id. ¶¶ 12, 14.) Fannie Mae subsequently required
Defendant to repurchase the loan. (Id. ¶ 15.)
Defendant “continuously” told Plaintiffs that if payments were not timely made on
the loan, Defendant would foreclose on the property. (Id. ¶ 16.) Between February 2008
and February 2011, Plaintiffs made payments to Defendant totaling $101,357.80 “out of
fear” that Defendant would foreclose if they did not do so. (Id. ¶ 17.)
Plaintiffs eventually stopped making payments and Defendant commenced a
foreclosure action in state court. (Id. ¶¶ 20–21.) The state court ruled that the mortgage
was void and unenforceable. (Id. ¶ 22.)
Plaintiffs requested that Defendant return the payments they made, but
Defendant refused to do so. (Id. at ¶ 23–24.) Plaintiffs then brought this suit for civil theft
and conversion. (Doc. 2.) Defendant moved to dismiss. (Doc. 3.) Plaintiffs opposed.
(Doc. 7.)
STANDARDS
Federal Rule of Civil Procedure 8(a)(2) provides that a complaint must contain “a
short and plain statement of the claim showing that the pleader is entitled to relief.” The
pleader must allege “enough facts to state a claim to relief that is plausible on its face.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “[D]etailed factual allegations” are
not required, but mere “labels and conclusions” or “a formulaic recitation of the elements
of a cause of action” are not enough. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citations and internal quotation marks omitted). On a motion to dismiss under Federal
Rule of Civil Procedure 12(b)(6), a court “accept[s] the allegations in the complaint as
true and constru[es] them in the light most favorable to the plaintiff.” Hill v. White, 321

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F.3d 1334, 1335 (11th Cir. 2003).
DISCUSSION
1. Failure to State a Claim
To state a claim for civil theft, Plaintiffs must allege that Defendant knowingly
obtained Plaintiffs’ property with felonious intent to deprive Plaintiffs, either temporarily
or permanently, of their right to the property. United Techs. Corp. v. Mazer, 556 F.3d
1260, 1270 (11th Cir. 2009). To state a claim for conversion, Plaintiffs must allege that
they possessed or had an immediate right to possess specific and identifiable money
which was subject to an unauthorized deprivation, and that Plaintiffs demanded that
Defendant return the money but Defendant refused. United States v. Bailey, 288 F.
Supp. 1261, 1264 (M.D. Fla. 2003).
Defendant argues that Plaintiffs’ pleading is deficient for three reasons:
(1) Plaintiffs made payments to Defendant voluntarily and thus did not have an
immediate right to possess the money, as required for both claims; (2) the money at
issue is not specifically identifiable, as required for both claims; and (3) Plaintiffs fail to
allege criminal intent, as required for the civil theft claim. (Doc. 3.)
a. Voluntariness
“Under Florida law, a plaintiff in an action for conversion or civil theft must
establish possession or an immediate right to possession of the converted property at
the time of the conversion.” United States v. Bailey, 419 F.3d 1208, 1212 (11th Cir.
2005). Defendant argues that because Plaintiffs made the payments voluntarily, they
had no right to possess the money. (Doc. 3, pp. 5–9.)
“It is a well-recognized rule that money voluntarily paid under a claim of right to
the payment, and with knowledge of the facts by the person making the payment,

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cannot be recovered back . . . .” Sanchez v. Time Warner, Inc., No. 98-211-CIV-T-26A,
1998 WL 834345, at *2 (M.D. Fla. Nov. 4, 1998) (quoting McMullen v. Inland Realty
Corp., 152 So. 749, 742 (Fla. 1933)) (internal quotation marks omitted). However, if
Plaintiffs made the payments under duress, then they cannot be said to have made the
payments voluntarily. See City of Miami v. Kory, 394 So. 2d 494, 497 (Fla. 3d DCA
1981). One acts under duress when one does not exercise one’s free will as a result of
the opposing party’s coercive conduct. Id.
Here, Plaintiffs allege that Defendant “continuously advised” them that the
property would be foreclosed upon if payments were not made, and that they made the
payments “out of fear that the Defendant would foreclose if they did not do so.” (Doc. 2,
¶¶ 16–17.) If Defendant had no right to foreclose upon the property as Plaintiffs allege
(id. ¶ 22), then Plaintiffs’ allegation that they made the payments out of fear is enough to
plead duress. See Spillers v. Five Points Guar. Bank, 335 So. 2d 851, 852 (Fla. 1st
DCA 1976) (“While it is true that threats to enforce legal rights may constitute duress
under certain circumstances, they do not constitute duress when the threat is to enforce
existent legal rights. Duress would only occur when the threatened enforcement is to
enforce rights which in fact are nonexistent.”); see also, e.g., Leeper v. Beltrami, 53 Cal.
2d 195, 203–05 (Cal. 1959) (finding that plaintiffs alleged sufficient facts to show duress
where the party threatening to foreclose a mortgage knew that the claim for foreclosure
was false).2 As such, Plaintiffs’ claims are not due to be dismissed on voluntariness
grounds.
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Defendant also argues that Plaintiffs did not make the payments under protest.
(Doc. 3, pp. 8–9.) This argument is not well-taken as Plaintiffs allege that they told
Defendant “on numerous occasions” that the mortgage was invalid because it was
procured through fraud. (Doc. 2, ¶ 12.)

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b. Specifically Identifiable Money
Both the civil theft and conversion claims require that the funds sought by
Plaintiffs be specifically identifiable. Mazza v. Rose Media Grp., Inc., 937 So. 2d 307,
310 (Fla. 4th DCA 2006); United States v. Bailey, 288 F. Supp. 1261, 1264 (M.D. Fla.
2003). Defendant argues that Plaintiffs “are not seeking damages for conversion of
specific, identifiable money” and that the claims must therefore fail. (Doc. 3, pp. 9–10.)
“To be a proper subject of conversion each coin or bill need not be earmarked, but there
must be an obligation to keep intact or deliver the specific money in question, so that
such money can be identified.” Bedford Trucking Co. v. Zagar, 243 So. 2d 646, 648
(Fla. 4th DCA 1970) (citation omitted).
Here, Plaintiffs allege that they made monthly payments of $2739.40 on the loan
for three years. (Doc. 2, ¶ 17.) Construed in the light most favorable to Plaintiffs, the
Court is satisfied that Plaintiffs sufficiently allege that the money they seek is specific
and identifiable. See Eagle v. Benefield-Chappell, Inc., 476 So. 2d 716, 718 (Fla. 4th
DCA 1985) (concluding that deposits were capable of identification when they were
delivered to be used for an express and specific purpose); In re Energy Smart, Inc., 381
B.R. 359, 378 (Bankr. M.D. Fla. 2007) (stating that payments of particular amounts for
invoices were specific and identifiable funds); Zinn v. Zinn, 549 So. 2d 1141, 1142 (Fla.
3d DCA 1989) (determining that misused investment funds constituted identifiable
property); Republic of Haiti v. Crown Charter, Inc., 667 F. Supp. 839 845–46 (S.D. Fla.
1987) (stating that checks and wire transfers could be identifiable). As such, the claims
are not due to be dismissed on this ground. If upon later discovery the facts show that
the money is not specific and identifiable, Defendant may raise that issue at the
summary judgment stage.

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c. Criminal Intent
Defendant argues that Plaintiffs “fail to allege any facts supporting any criminal
intent to steal, which is an element for a civil theft claim.” (Doc. 3, p. 10.) Allegations that
a defendant “made willful false representations with the intent to deprive [the plaintiffs]
of their property, that [the defendant] had no legal right to the property, and that these
actions were done in violation of [Florida’s criminal theft statute]” are sufficient to allege
felonious intent. Gordon v. Omni Equities, Inc., 605 So. 2d 538, 541 (Fla. 1st DCA
1992).
Construed in the light most favorable to Plaintiffs, the Court finds that Plaintiffs
allege that Defendant knew that the mortgage was invalid because Plaintiffs told
Defendant about the fraud and because Fannie Mae required Defendant to repurchase
the loan based on evidence of fraud. (Doc. 2, ¶¶ 12, 15.) Despite this alleged
knowledge that the mortgage was invalid, Defendant allegedly represented that if loan
payments were not made it would foreclose on the property (id. ¶ 16), as if the
mortgage were valid. Plaintiffs also allege that Defendant “willfully and wantonly refused
to return the monies.” (Id. ¶ 24.) The Court finds these allegations sufficient to move the
civil theft claim across the plausibility threshold required by Twombly and Iqbal. As
such, the civil theft claim is not due to be dismissed. Whether Defendant in fact acted
with felonious intent remains to be tested at the summary judgment stage.3

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The identifiableness of the money and whether Defendant acted with criminal
intent are not elements of a cause of action for “money had and received,” which might
be more congruent with the facts of this case. See Deco Purchasing & Distrib. Co. v.
Panzirer, 450 So. 2d 1274, 1275 (Fla. 5th DCA 1984) (“[A]n action may, in general, be
maintained whenever one has money in his hands belonging to another which in equity
and good conscience, he ought to pay over to that other.”). However, Plaintiffs have not
asserted that claim.

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2. Attorney’s Fees
Defendant also moves for attorney’s fees (Doc. 3, p. 11) pursuant to Florida’s
civil theft statute, which provides, “The defendant is entitled to recover reasonable
attorney’s fees and court costs in the trial and appellate courts upon a finding that the
claimant raised a claim that was without substantial fact or legal support.” Fla. Stat.
§ 772.11. Whether Plaintiffs’ claim lacks legal and factual support cannot be determined
at this time. As such, Defendant’s request for attorney’s fees is hereby denied without
prejudice.
3. Appropriateness of a Stay
Defendant represents that the state court’s order finding the mortgage invalid is
currently on appeal. (Doc. 3, p. 3 & n.3.) The validity or invalidity of the mortgage may
affect the claims presented in this case. Therefore, on or before April 22, 2013, each
party is hereby ordered to show cause why this case should not be stayed pending
resolution of the state court proceedings via a response of no more than five (5) pages.
CONCLUSION
Accordingly, it is hereby ORDERED AND ADJUDGED:
1.

Defendant’s Motion to Dismiss and for Award of Attorney’s Fees (Doc. 3)
is DENIED.

2.

On or before April 23, 2013, each party is ORDERED to show cause why
this case should not be stayed pending resolution of the state court
proceedings via a response of no more than five (5) pages.

DONE AND ORDERED in Chambers in Orlando, Florida, on April 16, 2013.

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Copies:
Counsel of Record

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