Williams v. Wells Fargo Bank NA et al

Filing 22

ORDER AND REASONS re 17 Motion to Dismiss for Failure to State a Claim. It is ORDERED that Wells Fargo's Motion to Dismiss is DENIED. Signed by Judge Carl Barbier. (gec)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

DONNA WILLIAMS

CIVIL ACTION

VERSUS

NO: 16-15226

WELLS FARGO BANK, N.A., ET
AL.

SECTION: “J” (3)

ORDER AND REASONS
Before the Court is a Motion to Dismiss (Rec. Doc. 17) filed
by Defendant Wells Fargo Bank, N.A., (“Wells Fargo”), an opposition
thereto

(Rec.

Doc.

18)

filed

by

Plaintiff

Donna

Williams

(“Plaintiff”), and a reply by Wells Fargo (Rec. Doc. 19). Having
considered the motion and legal memoranda, the record, and the
applicable law, the Court finds that the motion should be DENIED.
FACTS AND PROCEDURAL BACKGROUND
This

litigation

derives

from

a

2009

fire

Plaintiff’s residence in New Orleans, Louisiana.

that

damaged

(Rec. Doc. 1 at

2.) At the time of the fire, Plaintiff was married to her now exhusband, Freddie Williams.

Plaintiff and Freddie Williams were

the mortgagors of the property and Wells Fargo was the mortgagee.
(Rec. Doc. 17-1 at 2.)

Plaintiff alleges that following the fire,

she submitted a claim to American Security Insurance Company
(“American Security”), which paid $165,000 to settle the claim.

1

(Rec. Doc. 1 at 2.)

Plaintiff contends that American Security

sent the settlement funds to Wells Fargo, whereupon a portion of
the funds were disbursed to Plaintiff and her then-husband to make
repairs.

Id.

Plaintiff states that she and Freddie Williams

divorced in 2010, with no partition of any community property to
date.

Id.

Plaintiff alleges that in 2012, Wells Fargo applied

the remainder of the undistributed settlement funds, $100,000, to
the balance due on the mortgage. Id. at 3.
Plaintiff alleges that in 2015 she discovered the property
was in foreclosure status, and was informed by Wells Fargo that
the $100,000 credit applied to the mortgage balance had been
reversed and disbursed to Plaintiff’s ex-husband.

(Rec. Doc. 1 at

3.) Plaintiff alleges that on August 14, 2015, she mailed a letter
to Wells Fargo requesting information regarding the mortgage on
the property and further alleges that on October 20, 2015, she
received

a

reply

from

Wells

Fargo

information regarding the loan.

denying

Id. at 4.

her

request

for

On July 18, 2016,

Plaintiff filed a state court petition in the Civil District Court
for the Parish of Orleans, naming Wells Fargo and ABC Insurance
Company as defendants.

(Rec. Doc. 17-2 at 1.)

Plaintiff claims

that Wells Fargo was negligent in its disbursement of the remaining
settlement funds and that she suffered financial losses as a
result.

Id. at 3.

2

On October 4, 2016, Plaintiff filed a lawsuit in this Court,
alleging that Wells Fargo violated the Real Estate Settlement
Procedures Act, 12 U.S.C. § 2601, et seq. (“RESPA”), which requires
servicers of federally related mortgage loans to respond to a
borrower’s request for information.

On February 6, 2017, Wells

Fargo filed the instant Motion to Dismiss, alleging that Plaintiff
is engaging in improper claim splitting.

(Rec. Doc. 17-1 at 2.)

PARTIES’ ARGUMENTS
Wells Fargo argues that Plaintiff’s federal lawsuit should be
dismissed

under

Rule

12(b)(6)

of

the

Federal

Rules

of

Civil

Procedure because it is duplicative of her state suit, resulting
in improper claim splitting.

Wells Fargo asserts that the factual

basis for the suits is identical, since both are premised on
allegedly
husband.

improper

disbursements

of

money

to

Plaintiff’s

ex-

Wells Fargo also claims that Plaintiff is attempting to

improperly expand upon the procedural rights granted in Louisiana
state court.

In particular, Wells Fargo argues that because

Plaintiff omitted her RESPA claim from her state court petition,
Louisiana Code of Civil Procedure Article 1151 would require her
to obtain leave of court before amending her pleadings to include
the RESPA claims advanced here.

As a result, Wells Fargo argues

that Plaintiff should not be given the opportunity to circumvent
that requirement by filing the RESPA claim in federal court.
Finally, Wells Fargo asserts that Plaintiff has filed the federal
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suit to gain otherwise unavailable procedural advantages and to
harass Wells Fargo.
In opposition, Plaintiff asserts that the federal RESPA and
state

law

claims

operative facts.

are

separate

and

distinct,

with

differing

Plaintiff avers that the state law suit concerns

the handling of fire insurance proceeds, while the federal suit
only requests relief on the RESPA claim.

Plaintiff argues that

her filing of separate suits does not constitute claim splitting
and that there is no danger of inconsistent judgments or res
judicata if both suits are allowed to proceed.
LEGAL STANDARD
Federal Courts have a “virtually unflagging obligation” to
exercise the jurisdiction given them. Black Sea Investment, Ltd.
v. United Heritage Corp., 204 F.3d 647, 650 (5th Cir. 2000)
(quoting Colorado River Conservation Dist. v. United States, 424
U.S. at 800, 817 (1976)). Therefore, “the pendency of an action in
the state court is no bar to proceedings concerning the same matter
in the Federal court having jurisdiction.”
U.S. at 817.

Colorado River, 424

A district court may only abstain from exercising

its jurisdiction under “extraordinary and narrow” circumstances.
Superior Diving Co. v. Cortigene, 372 F. App’x. 496, 498 (5th Cir.
2010) (quoting Allegheny Cty. v. Frank Mashuda Co., 360 U.S. 185,
188 (1959)). Thus, “[a]bstention from the exercise of federal

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jurisdiction is the exception, not the rule.” Colorado River, 424
U.S. at 813.
The threshold question under the Colorado River abstention
doctrine is whether the federal and the state actions are parallel,
meaning that the actions involve “the same parties and the same
issues.”

Stewart v. W. Heritage Ins. Co., 438 F.3d 488, 491 (5th

Cir. 2006).

If the Court determines that the federal and state

actions are parallel, it applies the following six factors to
determine whether “exceptional” circumstances exist:
(1) assumption by either court of jurisdiction over a
res; (2) the relative inconvenience of the forums; (3)
the avoidance of piecemeal litigation; (4) the order in
which jurisdiction was obtained by the concurrent
forums; (5) whether and to what extent federal law
provides the rules of decision on the merits; and (6)
the adequacy of the state proceedings in protecting the
rights of the party invoking federal jurisdiction.
Black Sea Inv., Ltd. v. United Heritage Corp., 204 F.3d 647, 650
(5th Cir. 2000).
measured

“with

No single factor is determinative as all must be
the

balance

heavily

weighted

in

exercise of jurisdiction” by the federal court.

favor

of

the

Moses H. Cone

Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16 (1983).
DISCUSSION
The
parallel

federal
under

and

the

state

actions

Colorado

River

brought

by

abstention

Plaintiff
doctrine.

are
Both

actions involve the same parties and stem from the same alleged
mishandling

of

insurance

proceeds

5

by

Wells

Fargo.

While

the

specific claims of the actions differ, the factual basis is nearly
identical.

It is not necessary to apply “a mincing insistence” on

identical parties and issues in all cases to conclude that cases
are parallel.

RepublicBank Dallas Nat. Ass'n v. McIntosh, 828

F.2d 1120, 1121 (5th Cir. 1987); Kenner Acquisitions, LLC v.
BellSouth Telecommunications, Inc., No. 06-3927, 2007 WL 625833,
at *2 (E.D. La. Feb. 26, 2007) (finding proceedings to be parallel
when they were “not absolutely symmetrical,” but “consist[ed] of
substantially the same parties litigating substantially the same
issues”).

Thus, the actions here are sufficiently symmetrical to

satisfy the definition of parallel cases under the Colorado River
doctrine.
The next step is to apply the Colorado River factors to
determine

if

exceptional

circumstances

exist

here

to

justify

abstention. As discussed above, the first factor is the assumption
by either court of jurisdiction over a res. A “res” is defined as
an “object, interest, or status, as opposed to a person.”
Law Dictionary (9th. ed. 2009).

Black's

Plaintiff’s state action alleges

negligence for an alleged mishandling of settlement funds, and the
federal action seeks statutory damages under RESPA. Neither action
involve a res over which a court has exercised its jurisdiction.
The absence of this factor weighs against abstention. Trujillo v.
Shivers, No. 12-1532, 2012 WL 4892929, at *2 (E.D. La. Oct. 15,

6

2012) (quoting Murphy v. Uncle Ben’s, Inc., 168 F.3d 734, 738 (5th
Cir. 1999).
The second factor is the relative inconvenience of the forums.
When the courts are in the same geographic location, this factor
weighs against abstention. See Stewart, 438 F.3d at 492.

Here,

both forums are located in New Orleans. Accordingly, this factor
weighs against abstention.
The third factor is the avoidance of piecemeal litigation.
Importantly, the “pendency of an action in state court does not
bar a federal court from considering the same matter.”

York Risk

v. Preferred Reports, No. 6:16-CV-00063, 2016 WL 3648263, at *3
(W.D. La. May 24, 2016) (citing Bank One, N.A. v. Boyd, 288 F.3d
181, 185 (5th Cir. 2002)).

As the Fifth Circuit has stated:

Duplicative litigation, wasteful though it may be, is a
necessary cost of our nation's maintenance of two
separate and distinct judicial systems possessed of
frequently overlapping jurisdiction. The real concern at
the heart of the third Colorado River factor is the
avoidance of piecemeal litigation, and the concomitant
danger of inconsistent rulings with respect to a piece
of property. When, as here, no court has assumed
jurisdiction over a disputed res, there is no such
danger.
Black Sea, 204 F.3d at 650-51 (emphasis in original); See also
Evanston Ins. Co. v. Jimco, Inc., 844 F.2d 1185, 1192 (5th Cir.
1988).

There is no danger of inconsistent rulings with respect to

a piece of property in this case because, as mentioned above,

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neither proceeding has exercised jurisdiction over a res.

This

factor weighs against abstention.
The fourth factor is the order in which jurisdiction was
obtained.

This factor should not be measured exclusively by which

action was filed first, but rather by “how much progress has been
made in the two actions.”
Murphy, 168 F.3d at 738).

Stewart, 438 F.3d at 492 (quoting
Because Plaintiff’s federal action was

filed less than three months after the state court action, this
factor is neutral. Additionally, the fifth factor, whether federal
law

governs

the

case,

weighs

against

abstention

because

Plaintiff’s federal claim is governed by the Real Estate Settlement
Practices Act, 12 U.S.C. § 2601, et seq.
Finally,
abstention.

the

sixth

factor

does

not

weigh

in

favor

of

Although there is no reason to believe Plaintiff’s

interests would not be adequately protected in state court, “this
factor can only be a neutral factor or one that weighs against,
not for, abstention.”

Black Sea, 204 F.3d at 651 (internal

citations omitted). Thus, this factor is neutral.

8

CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Wells Fargo’s Motion to Dismiss
(Rec. Doc. 17) is DENIED.
New Orleans, Louisiana this 5th day of April, 2017.

____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

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