O'Steen et al v. Wells Fargo Bank, N.A. et al
Filing
42
ORDER: Defendants Wells Fargo Bank, N.A. and Wells Fargo Home Mortgage, Inc.'s Motion to Dismiss Complaint or, in the alternative, Motion for More Definite Statement (Doc. # 35 ) is GRANTED IN PART AND DENIED IN PART. The Motion is DENIED w ith respect to Count I, but GRANTED to the extent that Count III is dismissed with leave to amend. Defendant Rushmore Loan Management Services, LLC's Motion to Dismiss Plaintiffs' Amended Complaint (Doc. # 36 ) is GRANTED IN PART AND DENIE D IN PART. The Motion is DENIED as to Counts II and VI. However, the Motion is GRANTED insofar as Count IV is dismissed with leave to amend and Count V is dismissed for lack of subject-matter jurisdiction. The O'Steens may file a second amended complaint that conforms to this Court's Order by March 15, 2017. Signed by Judge Virginia M. Hernandez Covington on 3/1/2017. (DRW)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
JULIE O’STEEN, et al.,
Plaintiffs,
v.
Case No. 8:16-cv-2993-T-33MAP
WELLS FARGO BANK, N.A., et al.,
Defendants.
_____________________________/
ORDER
This matter comes before the Court in consideration of
Defendants
Wells
Fargo
Bank,
N.A.
and
Wells
Fargo
Home
Mortgage, Inc.’s Motion to Dismiss Complaint or, in the
alternative, Motion for More Definite Statement (Doc. # 35),
filed on February 3, 2017, as well as Defendant Rushmore Loan
Management Services, LLC’s Motion to Dismiss Plaintiffs’
Amended Complaint (Doc. # 36), filed on February 10, 2017.
Plaintiffs Julie O’Steen and Christopher O’Steen filed a
response in opposition to both Motions on February 23, 2017.
(Doc. # 41). For the reasons that follow, the Motions are
granted in part and denied in part.
I.
Background
This action arises from alleged breach of contract and
violations of Regulation X, 12 C.F.R. § 1024, et seq., which
implements
the
provisions
of
The
Real
Estate
Settlement
Procedures Act, 12 U.S.C. §§ 2601, et seq. (RESPA). Wells
Fargo Bank originated a loan and securing mortgage, the funds
of which were used by the O’Steens to “purchase or refinance”
their primary residence. (Doc. # 24 at ¶¶ 14, 15). Although
it was not always clear which of the Wells Fargo Defendants
was servicing the O’Steens’ loan at any given time, “it was
clear that the two worked in concert to service the loan prior
to Rushmore’s involvement.” (Id. at ¶ 16).
During the end of 2013, the O’Steens “fell into financial
distress”
and
Wells
Fargo
Bank
instituted
foreclosure
proceedings. (Id. at ¶ 17). At the same time, the O’Steens
sought a loan modification from the Wells Fargo Defendants
and applied to Florida’s Hardest Hit Program, “a government
program
designed
to
protect
homeowners
from
temporary
financial distress and provide them with a means to reinstate
their home loans and avoid foreclosure.” (Id.). In January of
2014, the O’Steens learned that their application to the
Hardest Hit Program had been approved and they received an
amount of funds sufficient to bring the loan current from the
Program in February of 2014. (Id. at ¶ 18).
The O’Steens twice attempted to tender reinstatement
funds to the Wells Fargo Defendants; however, the Wells Fargo
2
Defendants rejected both tenders. (Id. at ¶¶ 19, 20). Then,
in October of 2014, the O’Steens submitted a complete loss
mitigation application and, in response, the Wells Fargo
Defendants offered the O’Steens a trial modification plan,
which they accepted. (Id. at ¶ 21). “The trial payment plan
indicate[d] the trial payments were to last for three months,
before converting to a permanent modification plan.” (Id. at
¶ 22). The O’Steens made fourteen payments under the trial
payment plan, but the Wells Fargo Defendants “never offered
the permanent modification as promised.” (Id.).
Presumably having received a judgment in their favor in
the foreclosure proceedings, although the Amended Complaint
is not clear on that point, the Wells Fargo Defendants
scheduled the foreclosure sale for December of 2014. (Id. at
¶ 23). After retaining counsel, the O’Steens moved to re-open
the foreclosure proceedings and filed an emergency motion to
cancel. (Id. at ¶ 25). Prior to notifying the O’Steens of a
servicing transfer of their loan to Rushmore in March of 2016,
the Wells Fargo Defendants began to reject the O’Steens
payments made pursuant to the trial payment plan “under the
pretext that they were insufficient to ‘reinstate’ the loan.”
(Id. at ¶ 26). When Rushmore became the new servicer, “[i]t
did not honor either the trial period payment plan, nor did
3
it honor Wells Fargo’s promise of a permanent modification.”
(Id. at ¶ 28). Rushmore has moved to set a new foreclosure
sale, but that motion has not been ruled on by the state
court. (Id. at ¶ 29).
The O’Steens instituted this action on October 24, 2016.
(Doc.
#
1).
Upon
Rushmore’s
motion,
the
Complaint
was
dismissed as a shotgun pleading and the O’Steens were granted
leave to amend. (Doc. # 21). The O’Steens timely filed their
Amended Complaint bringing the following claims: breach of
contract against the Wells Fargo Defendants (Count I); breach
of
contract
against
Rushmore
(Count
II);
violation
of
Regulation X against the Wells Fargo Defendants (Count III);
violation of Regulation X against Rushmore (Count IV); a
stand-alone claim for injunctive relief against Rushmore
(Count V); and declaratory judgment under 28 U.S.C. § 2201
against Rushmore. All three Defendants have filed motions to
dismiss, which are now ripe for adjudication.
II.
Legal Standard
On a motion to dismiss, this Court accepts as true all
the allegations in the complaint and construes them in the
light most favorable to the plaintiff. Jackson v. Bellsouth
Telecomms., 372 F.3d 1250, 1262 (11th Cir. 2004). Further,
this
Court
favors
the
plaintiff
4
with
all
reasonable
inferences from the allegations in the complaint. Stephens v.
Dep’t of Health & Human Servs., 901 F.2d 1571, 1573 (11th
Cir. 1990) (stating “[o]n a motion to dismiss, the facts
stated
in
[the]
complaint
and
all
reasonable
inferences
therefrom are taken as true”). However:
[w]hile a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide
the grounds of his entitlement to relief requires
more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action
will not do. Factual allegations must be enough to
raise a right to relief above the speculative
level.
Bell Atl. Corp v. Twombly, 550 U.S. 544, 555 (2007) (internal
citations omitted). Courts are not “bound to accept as true
a legal conclusion couched as a factual allegation.” Papasan
v. Allain, 478 U.S. 265, 286 (1986).
III. Analysis
A.
Counts Pertaining to the Wells Fargo Defendants
1.
Count I
The Wells Fargo Defendants seek to have the claim for
breach of contract dismissed on the grounds that it fits
within the description of a shotgun pleading; specifically,
that the allegations are too conclusory. A review of the
breach-of-contract
claim,
however,
demonstrates
that
the
facts, as alleged, are enough to raise the O’Steens’ claim
5
into the realm of plausibility. Although the Wells Fargo
Defendants
assert
the
Amended
Complaint
“provide[s]
no
details . . . as to whether a permanent modification was
actually required to be offered . . . and . . . no indication
of what the terms of any permanent modification would be,”
(Doc.
#
35
at
6),
those
types
of
arguments
are
more
appropriate for summary judgment. At this preliminary stage
of the proceedings, when the Court must accept the well-pled
allegations, Count I of the Amended Complaint asserts a
plausible
claim
to
relief.
Accordingly,
the
Wells
Fargo
Defendants’ Motion is denied as to Count I.
2.
Count III
Count III of the Amended Complaint alleges the Wells
Fargo
Defendants
1024.38(a)
and
violated
(b),
12
C.F.R.
§§
1024.40(b)(1)(iii),
1024.36(c)(1),
1024.41(d),
and
1024.41(g). (Doc. # 24 at ¶¶ 47, 48, 49, 50, 51). The Wells
Fargo Defendants seek to have Count III dismissed on the
grounds that it is of the shotgun variety and on the merits.
In their response, the O’Steens concede “paragraphs 4749 do not allege actionable claims under RESPA and therefore
withdraw the allegations in those paragraphs.” (Doc. # 41 at
5-6). Furthermore, although the O’Steens do not explicitly
withdraw
paragraph
52,
which
6
alleges
the
Wells
Fargo
Defendants
engaged
in
a
pattern
of
violations,
they
do
“acknowledge that two violations[, i.e., the remaining two
regulations
alleged
to
have
been
violated—12
C.F.R.
§§
1024.41(d) and (g),] do not suffice to allege a ‘pattern or
practice’ . . . .” (Id. at 6). Thus, it is unclear whether
the O’Steens intend to still argue that the Wells Fargo
Defendants engaged in a pattern of violations.
Accordingly, paragraphs 47 through 49 of the Amended
Complaint are dismissed. In addition, Count III constitutes
a shotgun pleading. To be sure, as noted by the Court, each
cause of action or claim for relief must be separated into
different counts. (Doc. # 21 at 5). Count III, however,
contains two claims for relief: one for a putative violation
of 12 C.F.R. § 1024.41(d) and one for an alleged violation of
12 C.F.R. § 1024.41(g). In addition, although the O’Steens
acknowledge two violations are not enough to evince a pattern,
they did not withdraw paragraph 52, which alleges a pattern
of violations. Thus, uncertainty remains as to what the
O’Steens
are
actually
alleging.
dismissed with leave to amend.
7
Count
III
is
therefore
B.
Counts Pertaining to Rushmore
1.
Count II
Relying on Senter v. JPMorgan Chase Bank, N.A., 810 F.
Supp. 2d 1339, 1351 (S.D. Fla. 2011), Rushmore seeks to have
the breach-of-contract claim brought against it dismissed for
failure to allege a valid contract. While the court in Senter
held that the trial modification agreement at issue in that
case did not constitute a valid contract, the court in Senter
had a critical piece of information that this Court does not
have before it: the language of the agreement itself.
A review of Senter shows that the court’s analysis was
based on the language of the agreement at issue in that case.
Senter, 810 F. Supp. 2d at 1351 (“[t]he plain language of the
TPP Agreements . . .”). Here, however, none of the parties
provided
the
Court
with
the
actual
trial
modification
agreement. Thus, the Court is unable to determine the terms
of the agreement and, consequently, cannot determine whether
Rushmore’s arguments regarding the validity of the contract
are correct. Accordingly, Rushmore’s Motion is denied as to
Count II.
2.
Count
IV
Count IV
of
the
Amended
Complaint
alleges
Rushmore
violated 12 C.F.R. §§ 1024.36(c)(1), 1024.38(a) and (b),
8
1024.40(b)(1)(iii), and 1024.41(g). (Doc. # 24 at ¶¶ 57, 58,
59, 60). Rushmore seeks dismissal of Count IV on the grounds
that it alleges a violation of a nonexistent regulation, §
1024.36(c)(1), and fails to state a claim upon which relief
may be granted because the allegations do not relate to
servicing a loan.
In their response, the O’Steens concede “paragraph[s]
57-59 of the Amended Complaint do not allege actionable claims
under RESPA and therefore withdraw the allegation in those
paragraphs.” (Doc. # 41 at 7). Furthermore, although the
O’Steens
do
not
explicitly
withdraw
paragraph
61,
which
alleges that Rushmore engaged in a pattern of violations,
they do “acknowledge that the allegation of a single violation
does not rise to the ‘pattern or practice’ standard required
to recover statutory damages.” (Id.). Thus, it is unclear
whether the O’Steens intend to still argue that Rushmore
engaged in a pattern of violations.
Accordingly, paragraphs 57 through 59 of the Amended
Complaint are dismissed. In addition, although the O’Steens
acknowledge a single violation is not enough to evince a
pattern, they did not withdraw paragraph 61, which alleges a
pattern of violations. Thus, uncertainty remains as to what
9
the O’Steens are actually alleging. Count IV is therefore
dismissed with leave to amend.
3.
Count V
Rushmore argues Count V, which is a stand-alone claim
for injunctive relief against Rushmore, should be dismissed
for, among other things, lack of subject-matter jurisdiction
pursuant to the Rooker-Feldman doctrine.1 “The Rooker–Feldman
doctrine
precludes
federal
courts—other
than
the
United
States Supreme Court—from reviewing final judgments of state
courts.” Figueroa v. MERSCORP, Inc., 477 Fed. Appx. 558, 560
(11th Cir. 2012) (citing Casale v. Tillman, 558 F.3d 1258,
1260 (11th Cir. 2009)). And that doctrine “‘is confined to
cases of the kind from which the doctrine acquired its name;’”
namely, where “‘the losing party in state court filed suit in
federal court after the state proceedings ended, complaining
of an injury caused by the state-court judgment and seeking
review and rejection of that judgment.’” Nicholson v. Shafe,
558 F.3d 1266, 1274-75 (11th Cir. 2009) (quoting Exxon Mobil
1
Because Rushmore asserts a factual attack on the Amended
Complaint, the Court may properly look to evidence beyond the
four-corners of the Amended Complaint. Echeverry v. Wells
Fargo Bank, N.A., No. 16-cv-61635-GAYLES, 2017 WL 733374, at
*2 (S.D. Fla. Feb. 24, 2017).
10
Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284, 291
(2005)).
The Eleventh Circuit has indicated that, “[g]enerally
speaking,” a state proceeding ends
(1) “when the highest state court in which review
is available has affirmed the judgment below and
nothing is left to be resolved,” (2) “if the state
action has reached a point where neither party
seeks further action,” and (3) “if the state court
proceedings have finally resolved all the federal
questions in the litigation, but state law or
purely factual questions (whether great or small)
remain to be litigated.”
Id. at 1275 (quoting Federacion de Maestros de Puerto Rico v.
Junta de Relaciones del Trabajo de Puerto Rico, 410 F.3d 17,
24-25 (1st Cir. 2005)). The second-prong approved of by
Nicholson means that “if a lower state court issues a judgment
and the losing party allows the time for appeal to expire,
then
the
state
proceedings
have
ended.”
Id.
(citation
omitted).
As a preliminary matter, it is the O’Steens that bear
the
burden
of
demonstrating
the
Court’s
exercise
of
jurisdiction is proper. Bishop v. Reno, 210 F.3d 1295, 1298
(11th Cir. 2000). However, they have failed to carry that
burden.
The argument asserted by the O’Steens with respect to
why the Rooker-Feldman doctrine does not bar jurisdiction is
11
premised on a misreading of Nicholson. While the O’Steens
argue the court in Nicholson “applied a three-prong test to
determine whether the state-court action had ended,” (Doc. #
41 at 8), a closer reading of Nicholson shows differently.
Rather, the court in Nicholson observed that there are three
instances—each sufficient on its own—that generally indicate
the end of a state proceeding for purposes of Rooker-Feldman.
Nicholson, 558 F.3d at 1275. And those three instances are
(1) “when the highest state court in which review
is available has affirmed the judgment below and
nothing is left to be resolved,” (2) “if the state
action has reached a point where neither party
seeks further action,” and (3) “if the state court
proceedings have finally resolved all the federal
questions in the litigation, but state law or
purely factual questions (whether great or small)
remain to be litigated.”
Id.
Although Rushmore argues the first Nicholson scenario
“clearly appl[ies],” (Doc. # 36 at 9), the Court disagrees.
From the record before the Court, it is apparent that the
O’Steens
did
foreclosure.
not
(Id.
appeal
at
the
9-10);
state
see
court’s
also
(Doc.
judgment
#
41)
of
(not
contesting that the O’Steens failed to take an appeal from
the judgment of foreclosure). By the O’Steens’ election to
forego appellate review of that judgment, no appellate court
12
could have reviewed or affirmed the judgment below. Thus, the
first scenario does not apply.
However,
because
the
O’Steens
did
not
appeal
the
judgment of foreclosure, the second Nicholson scenario does
apply. Federacion, 410 F.3d at 24 (“Second, if the state
action has reached a point where neither party seeks further
action, then the state proceedings have also ‘ended.’ For
example, if a lower state court issues a judgment and the
losing party allows the time for appeal to expire, then the
state proceedings have ended.”); cf. Nicholson, 558 F.3d at
1275 (“the second situation implies that a state proceeding
has not ended when a state court loser seeks ‘further action,’
such as an appeal.”).
Furthermore, because the Court has an independent duty
to ensure jurisdiction is properly exercised, the Court notes
that the third Nicholson scenario also applies here. The
record
before
questions
the
remain
Court
to
be
does
not
litigated
indicate
in
the
any
federal
state-court
foreclosure proceeding. Instead, only the sale of the home—a
matter purely of state law—remains. Thus, this action fits
within the second and third Nicholson factors, which means
the state-court proceeding has ended for purposes of the
Rooker-Feldman doctrine.
13
The O’Steens continue their argument by asserting they
do not seek to challenge, or have this Court review, the
validity of the state court’s foreclosure judgment. (Doc. #
41 at 9). The Court disagrees. Essentially, what the O’Steens
seek from this Court is an injunction barring Rushmore, which,
as alleged, is the servicer of their loan and the successorin-interest to the Wells Fargo Defendants (Doc. # 24 at ¶¶
27-28), from enforcing a state court judgment. The practical
effect of such an injunction would be to nullify the state
court’s judgment. As such, the Court finds that the claim for
injunctive relief is inextricably intertwined with the statecourt judgment of foreclosure.
Accordingly,
because
the
state-court
proceeding
has
ended and the claim for relief sought herein is inextricably
intertwined with the state-court judgment, Rushmore’s Motion
is granted to the extent that Count V is dismissed for lack
of subject-matter jurisdiction pursuant to the Rooker-Feldman
doctrine. Because the Court has dismissed Count V for lack of
jurisdiction,
the
Court
declines
to
opine
on
Rushmore’s
alternative argument under the Anti-Injunction Act.
4.
Count VI
Count VI seeks declaratory relief. In order
14
“[t]o proceed with a Declaratory Judgment Act
claim, there must be an actual issue in controversy
as opposed to one that is hypothetical or
contrived, the case must not be the medium for
securing an advisory opinion, the matter must be
definite and concrete, the parties’ positions must
be defined and adversarial and the issues must be
susceptible to judicial determination.”
Kingsley v. State Farm Mut. Auto. Ins. Co., 353 F. Supp. 2d
1242, 1254 (N.D. Ga. 2005) (citation omitted).
Rushmore’s argument is not so much that an issue is not
in controversy as much as it is that the Amended Complaint
fails to sufficiently plead facts showing a plausible claim
to relief. A fair reading of the Amended Complaint shows that
there is an extant controversy between the parties with
respect to whether Rushmore violated RESPA and breached a
contract. Whether Rushmore’s actions or inactions actually
violated RESPA or whether a contract actually existed remains
to be seen. But for now, at this preliminary stage, Count VI
is sufficient to survive Rushmore’s Motion.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
(1)
Defendants Wells Fargo Bank, N.A. and Wells Fargo Home
Mortgage, Inc.’s Motion to Dismiss Complaint or, in the
alternative, Motion for More Definite Statement (Doc. #
35) is GRANTED IN PART AND DENIED IN PART. The Motion is
15
DENIED with respect to Count I, but GRANTED to the extent
that Count III is dismissed with leave to amend.
(2)
Defendant
Rushmore
Loan
Management
Services,
LLC’s
Motion to Dismiss Plaintiffs’ Amended Complaint (Doc. #
36) is GRANTED IN PART AND DENIED IN PART. The Motion is
DENIED as to Counts II and VI. However, the Motion is
GRANTED insofar as Count IV is dismissed with leave to
amend and Count V is dismissed for lack of subjectmatter jurisdiction.
(3)
The O’Steens may file a second amended complaint that
conforms to this Court’s Order by March 15, 2017.
DONE and ORDERED in Chambers in Tampa, Florida, this 1st
day of March, 2017.
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