Blackstone v. Chase Manhattan Mortgage Corporation et al

Filing 38

ORDER: for the reasons stated, the Court GRANTS pla's 34 Motion for Leave to File Supplemental Memorandum in Opposition to Dfts' Motion to Dismiss and GRANTS dft's Motion to dismiss with leave to amend the complaint within 20 days of entry of this order. Signed by Chief Judge Sarah S. Vance on 7/19/2011. (rll, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
TAMEKA BLACKSTONE

CIVIL ACTION

VERSUS

NO: 10-4604

CHASE MANHATTAN MORTGAGE
CORPORATION, CHASE HOME FINANCE,
LLC, JPMORGAN CHASE BANK, N.A.,
NOVASTAR HOME MORTGAGE, INC., and
LIBERTY MUTUAL FIRE INSURANCE
COMPANY

SECTION: R(3)

ORDER AND REASONS
Before the Court is plaintiff Tameka Blackstone’s motion for
leave to file a supplemental memorandum,1 and Chase Manhattan
Mortgage Corporation, Chase Home Finance, LLC, and JP Morgan
Chase Bank, N.A’s (collectively “Chase”) motion to dismiss.2

The

Court grants plaintiff’s motion for leave to file a supplemental
memorandum but will not convert defendants’ motion to dismiss to
one for summary judgment.

The Court further grants defendants’

motion to dismiss because plaintiff has failed to allege any
contractual promise that Chase breached and any representation by
Chase on which plaintiff may have relied, but gives plaintiff
leave to amend her complaint.
I.

BACKGROUND
On October 2, 2003, Tameka Blackstone entered into a

mortgage with defendant Novastar Home Mortgage, Inc. in
1

R. Doc. 34.

2

R. Doc. 23.

connection with her purchase of property located at 4618 Coronado
Drive, New Orleans, Louisiana.3

The mortgage was later

transferred from Novastar to Chase.

Blackstone claims that under

the mortgage agreement, she was required to pay funds for escrow
items.4

Blackstone contends that the escrow items included

“premiums for any and all insurance required by Lender under
Section 5" of the mortgage agreement.5
Blackstone contends that “it was determined that her
property was in a flood zone and would require flood insurance.”6
Plaintiff says she then began making escrow payments for flood
insurance.7

According to plaintiff, she believed she had flood

insurance and received notices advising her of the amount of the
premium to be paid by the mortgagee.8
Blackstone claims that as a result of Hurricane Katrina, her
home was flooded.9

She thereafter made a claim under her flood

insurance policy but was advised that her flood insurance had

3

R. Doc. 1-2 at 2.

4

Id.

5

Id.

6

Id.

7

Id.

8

Id.

9

Id. at 3.
2

been cancelled.10

Plaintiff asserts that Chase informed her that

because her home was not located in a Special Flood Hazard Area,
it did not require flood insurance.11

Chase sent plaintiff a

form dated September 24, 2003 indicating that her property was
not in a Special Flood Hazard Area.12

Blackstone alleges that at

no time before Hurricane Katrina was she advised or otherwise
aware that her home was not in a flood zone, or that the mortgage
companies were not making payments on her flood insurance.13
Instead, plaintiff contends that she had continued to make
payments for escrow items and that her payments never
decreased.14
On November 23, 2010, plaintiff sued Chase in state court
asserting claims for breach of contract and detrimental
reliance.15

On December 22, 2010, Chase removed the action to

this Court based on diversity jurisdiction.16
dismiss the claims asserted against it.17
10

Id.

11

Id.

12

Id.

13

Id.

14

Id.

15

Id. at 3-4.

16

R. Doc. 1.

17

R. Doc. 23.
3

Chase now moves to

Blackstone opposes the

motion18 and has filed a motion for leave to file a supplemental
memorandum on the grounds that Chase’s motion to dismiss should
be treated as a motion for summary judgment.19
II.

LEGAL STANDARD
To survive a Rule 12(b)(6) motion to dismiss, the plaintiff

must plead enough facts "to state a claim to relief that is
plausible on its face.”

Ashcroft v. Iqbal, 129 S.Ct. 1937, 1960

(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)).

A claim is facially plausible when the plaintiff pleads

facts that allow the court to "draw the reasonable inference that
the defendant is liable for the misconduct alleged."
1949.

Id. at

A court must accept all well-pleaded facts as true and

must draw all reasonable inferences in favor of the plaintiff.
Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 239 (5th Cir. 2009);
Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996).

But the Court

is not bound to accept as true legal conclusions couched as
factual allegations.

Iqbal, 129 S.Ct. at 1949.

A legally sufficient complaint must establish more than a
"sheer possibility" that plaintiff's claim is true.

Id.

It need

not contain detailed factual allegations, but it must go beyond
labels, legal conclusions, or formulaic recitations of the
elements of a cause of action.
18

R. Doc. 25.

19

Id.

R. Doc. 34.
4

In other words, the face of

the complaint must contain enough factual matter to raise a
reasonable expectation that discovery will reveal evidence of
each element of the plaintiff’s claim.

Lormand, 565 F.3d at 257.

If there are insufficient factual allegations to raise a right to
relief above the speculative level, or if it is apparent from the
face of the complaint that there is an insuperable bar to relief,
the claim must be dismissed.

Twombly, 550 U.S. at 555; Jones v.

Bock, 549 U.S. 199, 215 (2007); Carbe v. Lappin, 492 F.3d 325,
328 & n.9 (5th Cir. 2007).
III. DISCUSSION
A)

Plaintiff’s Motion for Leave to File Supplemental

Memorandum
In considering a motion to dismiss for failure to state a
claim, a court must typically limit itself to the contents of the
pleadings, including their attachments.

Collins v. Morgan

Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000).

“If, on

a motion under 12(b)(6) or 12(c), matters outside the pleadings
are presented to and not excluded by the court, the motion must
be treated as one for summary judgment under Rule 56.”
Civ. P. 12(d).

Fed. R.

But uncontested documents referred to in the

pleadings may be considered by the Court without converting the
motion to one for summary judgment even when the documents are
not physically attached to the complaint.

See Great Plains Trust

Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 313 (5th
5

Cir. 2002) (stating the district court properly considered
documents not attached to the complaint in ruling on Rule 12(c)
motion).

The Court also may consider documents attached to a

motion to dismiss without converting the motion into one for
summary judgment if the documents are referred to in the
complaint and are central to the plaintiff’s claim.

Causey v.

Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir.
2004) (citation omitted).
Here, plaintiff moves for leave to file a supplemental
memorandum asserting that Chase’s motion to dismiss should be
treated as a motion for summary judgment.

Plaintiff attaches

four exhibits to her supplemental memorandum: (1) excerpts of the
mortgage agreement;20 (2) a Standard Flood Hazard Determination;21
(3) a flood policy declaration from Prudential Financial;22 and
(4) a flood insurance renewal invoice from Liberty Mutual.23

The

Court finds that these documents are referred to in the complaint
and are central to plaintiff’s claims against Chase.

The Court,

therefore, grants plaintiff’s motion for leave to file a
supplemental memorandum and will consider the attached documents
without converting Chase’s motion into one for summary judgment.

20

R. Doc. 34-3, Ex. 1.

21

R. Doc. 34-4, Ex. 2

22

R. Doc. 34-5, Ex. 3.

23

R. Doc. 34-6, Ex. 4.
6

See Gen. Retail Servs. Inc. v. Wireless Toyz Franchise, LLC, 255
F. App’x 775, 786 (5th Cir. 2007) (holding plaintiff’s reference
to and attachment of franchise agreement excerpts in opposition
to defendant’s motion did not convert motion to dismiss to motion
for summary judgment because plaintiff did not introduce support
for arguments beyond the allegations in the complaint); Shamrock
Associated Indus., L.L.C. v. Fid. Nat’l Prop. & Cas. Ins. Co.,
No. 06-4093, 2006 U.S. Dist. LEXIS 96000, at *5 (E.D. La. Nov. 2,
2006) (holding court could consider a mortgage agreement not
attached to the complaint in ruling on motion to dismiss because
the complaint “refers to the mortgage numerous times[,] [t]he
mortgage is attached to this motion, and is central to
plaintiff’s claims”).
B)

Motion to Dismiss

(i) National Flood Insurance Act (“NFIA”)
Any federally regulated lender making a loan secured by real
property in a designated flood zone must require the purchase of
insurance as a condition of making the loan.
4012a(b)(1).

42 U.S.C. §

The NFIA requires the lender to perform a flood

zone determination, notify the borrower whether the property is
located in a flood zone and require flood insurance before
making, increasing, extending or renewing any loan.
U.S.C. § 4104a.

Id.; 42

Courts consistently have held that the NFIA does

not provide a private cause of action against a lender for
7

failure to make a proper flood zone determination.

See Wentwood

Woodside I, LP v. GMAC Commercial Mortg. Corp., 419 F.3d 310, 323
(5th Cir. 2005) (“Every single federal court to consider whether
a federal private right of action arises under section 4012a has
concluded that the federal treasury, not individual mortgagors
. . . is the class the statute intends to protect.”);

Till v.

Unifirst Fed. Sav. & Loan Ass’n, 653 F.2d 152, 158, 161 (5th Cir.
1981) (holding there is no federal private right of action for
borrowers under the NFIA).

Although the Fifth Circuit in Till

held that the lack of a federal cause of action does not per se
eliminate the possibility of a state law claim against the
lender, courts applying Louisiana law have held that any duty to
make a correct flood zone determination arises from the NFIA and
not state law.

See Duong v. Allstate Ins. Co., 499 F. Supp. 2d

700, 702-04 (E.D. La. 2007) (holding plaintiff’s negligence
claims were preempted by the NFIA because any alleged duty to
provide a correct flood zone determination arises out of the NFIA
and not “from any other place in Louisiana law”).
Defendant contends that plaintiff’s claims relate to a flood
zone determination and therefore arise out of the NFIA.

The

Court recognizes that it is not necessary for a plaintiff to
specifically refer to the NFIA for a claim to be construed as
arising under the NFIA.

See id. at 703 (“The fact that the

plaintiff did not plead a violation of the NFIA . . . is of no

8

moment in this Court.”); Callahan v. Countrywide Home Loans,
Inc., No. 06-105, 2006 WL 2993178, at *1-2 (N.D. Fla. Oct. 20,
2006) (granting defendant’s motion to dismiss even after
plaintiff deleted all references to the NFIA from the complaint).
But the allegations in plaintiff’s complaint do not dispute the
accuracy of the flood zone determination presented in the
September 24, 2003 letter declaring that plaintiff’s property was
not in a flood zone.

Instead, Blackstone claims that Chase

breached the mortgage agreement by failing to make flood
insurance payments and that she detrimentally relied on the
mortgage agreement and on the fact that her payments for escrow
items never decreased.

The Court finds that plaintiff alleges

that Chase’s duty to make flood insurance payments arises from
the mortgage agreement.

The Court, therefore, rejects Chase’s

argument that plaintiff’s claims arise out of and are preempted
by the NFIA.

See Rentrop v. Nationwide Mut. Fire Ins. Co., No.

07-384, 2008 WL 2465288, at *3 (S.D. Miss. June 12, 2008) (“In my
opinion, [mortgagee]’s duty to make these payments, if any, does
not arise under the NFIA [,] [but] would arise, if at all, from
the terms of the contracts that govern the business relationship
between [mortgagee] and the plaintiffs or from the course of
dealings concerning these premium payments.”); Bennen v. Allstate
Ins. Co., No. 06-5742, 2006 WL 3240786, at *1-2 (E.D. La. Nov. 6,
2006) (holding that because plaintiff’s claims did not challenge

9

“the handling, administration, or payment of his flood claim or
compliance with the Act or the regulations[,] [t]he state law
claims for breach of contract and tort are not preempted [by the
NFIA]”).
(ii) Breach of Contract
Plaintiff asserts breach of contract claims against Chase
for failing to pay flood insurance premiums and for failing to
notify plaintiff that her flood insurance was cancelled.24

The

only contract alleged between Chase and Blackstone is the
mortgage.

The parties’ relationship, therefore, is governed by

the mortgage contract.

See Whitfield v. Countrywide Home Loans

Inc., 252 F. App’x 654, 656 (5th Cir. 2007) (noting that in flood
coverage dispute the relationship between the borrower and lender
was governed by the mortgage contract).
The common intent of the parties is used to interpret a
contract.

La. Civ. Code art. 2045.

Under Louisiana law, when

the words of a contract are clear, explicit and do not lead to
absurd consequences, the Court makes no further search into the
parties’ intent.

Id. art. 2046.

To state a claim for breach of

contract under Louisiana law, a plaintiff must allege a breach of
a specific provision of the contract.

See Louque v. Allstate

Ins. Co., 314 F.3d 776, 782 (5th Cir. 2003) (“To state a claim

24

R. Doc. 1-2 at 3.
10

for breach of an insurance contract under Louisiana law, a
plaintiff must allege a breach of a specific policy provision.”).
The only contractual provision referred to in plaintiff’s
complaint states:
Borrower shall pay to Lender on the day Periodic
Payments are due under the Note, until the Note is paid
in full, a sum (the “Funds”) to provide for payment of
amounts due for . . . c) premiums for any and all
insurance required by Lender under Section 5.25
This provision, however, does not place any obligation on Chase
to pay flood insurance premiums or to notify Blackstone if her
flood insurance is cancelled.

Plaintiff does not quote “Section

5" in her complaint or provide “Section 5" as part of the
mortgage excerpts.26

Further, the additional allegations in the

complaint do not suggest that Chase undertook a contractual duty
to pay flood insurance premiums or to notify plaintiff if she did
not have flood insurance.

Compare Whitfield, 252 F. App’x at 656

(affirming district court’s grant of summary judgment because the
terms of the mortgage contract did not require the mortgagee to
maintain additional flood insurance on plaintiff’s home), and

25

R. Doc. 1-2 at 2; R. Doc. 34-3, Ex. 1 at 4.

26

In her supplemental memorandum, plaintiff states that
“Section 5 provides that the Borrower shall keep the property
insured against, among other things, ‘hazards, including but not
limited to, earthquakes and floods.’” R. Doc. 34-2 at 2. The
Court does not consider this statement in finding plaintiff’s
breach of contract claims should be dismissed because Section 5
is not included in plaintiff’s complaint or in the mortgage
agreement excerpts.
11

Morris v. Countrywide Home Loans, No. 06-5472, 2008 WL 638615, at
*3-4 (E.D. La. Mar. 5, 2008) (holding the plain terms of the
mortgage did not demonstrate any contractual duty on the
mortgagee to procure coverage on plaintiff’s property or to
notify plaintiff of lapse in coverage), with Rentrop v.
Nationwide Mut. Fire Ins. Co., No. 07-384, 2008 WL 2465288, at *4
(S.D. Miss. June 12, 2008) (“In light of the allegations in
Trustmark’s third-party complaint, it appears to me that
Trustmark agrees that it undertook a contractual duty to pay the
premiums on this flood insurance policy and that Trustmark claims
to have done just that.”).

Because the allegations in the

complaint do not identify any contractual promise that Chase
breached, the Court holds that plaintiff has not stated a claim
for breach of contract.

Accordingly, the Court grants Chase’s

motion to dismiss Blackstone’s breach of contract claims.
(iii) Detrimental Reliance
Chase also moves to dismiss plaintiff’s detrimental reliance
claim.

Chase asserts that plaintiff’s claim sounds in tort and

therefore has prescribed under the one-year prescriptive period.
In addition, Chase argues that plaintiff has not alleged
sufficient facts to maintain a claim for detrimental reliance.
The Court finds that the applicable prescriptive period is
ten years.

That Chase raised the prescription argument for the

first time in its reply brief is grounds alone to reject this

12

argument.

See Benefit Recovery, Inc. v. Donelon, 521 F.3d 326,

329 (5th Cir. 2008) (“[A]rguments cannot be raised for the first
time in a reply brief.”).
substantively fails.

Chase’s prescription argument also

The Court recognizes that the applicable

prescriptive period is not determined by the label of a cause of
action, but “by the nature of the transaction and the underlying
basis of the claim.”

Copeland v. Wasserstein, Perella & Co., 278

F.3d 472, 479 (5th Cir. 2002) (citation omitted).

In determining

the applicable prescriptive period, the Fifth Circuit explained
that “although non feasance in the performance of an obligation
creates a cause of action that prescribes in ten years, mis
feasance in the performance of a contract for professional
services . . . gives rise to a claim in tort, which prescribes in
one year.”

Id. (emphasis in original).

Here, the claim is based

on Chase’s failure to pay flood insurance premiums from the
escrow account.

Further, plaintiff alleges that defendant

breached a duty that was owed to her specifically, not a general
duty owed to the public.

See Harrison v. Gore, 27,254 (La. App.

2 Cir. 8/23/95); 660 So. 2d 563, 568 (“The classical distinction
between ‘damages ex contractu’ and ‘damages ex delicto’ is that
the former flow from the breach of a special obligation
contractually assumed by the obligor, whereas the latter flow
from the violation of a general duty owed to all persons.”).
Court, therefore, finds that plaintiff’s detrimental reliance

13

The

claim sounds in contract and is subject to a ten-year
prescriptive period.

See Stokes v. Georgia-Pac. Corp., 894 F.2d

764, 770 (5th Cir. 1990) (holding detrimental reliance claim was
subject to ten-year prescriptive period).

Accordingly,

plaintiff’s claim has not prescribed.
Defendant also argues that plaintiff has not sufficiently
pleaded a claim for detrimental reliance.

Under article 1967 of

the Louisiana Civil Code, “[a] party may be obligated by a
promise when he knew or should have known that the promise would
induce the other party to rely on it to his detriment and the
other party was reasonable in so relying.”
1967.

La. Civ. Code. art.

To state a claim for detrimental reliance, a party must

allege: “(1) a representation by conduct or word; (2) justifiable
reliance; and (3) a change in position to one’s detriment because
of the reliance.”

Suire v. Lafayette City-Parish Consol. Gov’t,

2004-1459 (La. 4/12/05); 907 So. 2d 37, 59.

The doctrine is

“designed to prevent injustice by barring a party from taking a
position contrary to his prior acts, admissions, representations,
or silence.”

Id.

But claims of detrimental reliance are “not

favored in Louisiana [and] [d]etrimental reliance claims must be
examined carefully and strictly.”

In re Ark- La-Tex Timber Co.,

482 F.3d 319, 334 (5th Cir. 2007).
The Court finds that plaintiff has failed to plead
sufficient facts to state a detrimental reliance claim that is

14

plausible on its face.

Neither the allegations in the complaint

nor the documents attached to plaintiff’s supplemental memorandum
state any representation by Chase on which plaintiff may have
relied.

See Oliver v. Cent. Bank, 26,932 (La. App. 2 Cir.

5/10/95); 658 So. 2d 1316, 1323 (“A condition precedent to
proving a claim for detrimental reliance is demonstrating the
existence of a promise upon which the injured party could
reasonably rely.”).

Plaintiff asserts in her complaint that “it

was determined that the property was in a flood zone and would
require flood insurance.”27

The complaint does not state,

however, who represented that the property was in a flood zone.
Further, the Prudential Financial flood policy declaration
provided by plaintiff states to the contrary.

The policy

declaration designates plaintiff’s property in Zone B, a NonSpecial Flood Hazard Area.28

In addition, plaintiff does not

allege any specific provision in the mortgage requiring
plaintiff, as a matter of contract, to maintain flood insurance
on the property, or requiring Chase to pay premiums for flood
insurance from the escrow account.

Because plaintiff has failed

to allege any representation by Chase upon which she relied, the
Court holds that plaintiff has failed to plead sufficient factual
content to allege a claim for detrimental reliance.

27

R. Doc. 1-2 at 2.

28

R. Doc. 34-5, Ex. 3.
15

In so

holding, the Court does not consider statements made in
plaintiff’s supplemental memorandum that were neither alleged in
her complaint or in any document cognizable on this motion to
dismiss.
IV.

CONCLUSION
For the foregoing reasons, the Court GRANTS Blackstone’s

motion to file a supplemental memorandum, and GRANTS Chase’s
motion to dismiss with leave to amend the complaint within TWENTY
DAYS of the entry of this order.

New Orleans, Louisiana, this 19th day of July, 2011.
___

______________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

16