Dorsett Properties L L C v. NewRez L L C

Filing 43

MEMORANDUM RULING re 20 MOTION for Judgment on the Pleadings and 33 MOTION to Strike. Signed by Chief Judge S Maurice Hicks, Jr on 11/16/2022. (crt,Keifer, K) (Main Document 43 replaced on 11/17/2022) (Keifer, K).

Case 5:22-cv-01148-SMH-MLH Document 43 Filed 11/16/22 Page 1 of 10 PageID #: 438

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION
DORSETT PROPERTIES, LLC

CIVIL ACTION NO. 22-1148

VERSUS

JUDGE S. MAURICE HICKS, JR.

NEWREZ, LLC DBA SHELLPOINT
MORTGAGE SERVICING

MAGISTRATE JUDGE HORNSBY

MEMORANDUM RULING
Before the Court is a Motion for Judgment on the Pleadings (Record Document
20) filed by Defendant NewRez, LLC d/b/a Shellpoint Mortgage Servicing (“Shellpoint”).
Plaintiff Dorsett Properties, LLC (“Dorsett”) has opposed the motion (Record Document
32), and filed a Motion to Strike Exhibits A through H (Record Document 33). Shellpoint
replied to Dorsett’s opposition (Record Document 35), and filed its own opposition to the
Motion to Strike (Record Document 36). Dorsett then filed a reply to Shellpoint’s
opposition to the Motion to Strike (Record Document 37). For the reasons set forth below,
the Motion to Strike is DENIED, and the Motion for Judgment on the Pleadings is
GRANTED IN PART and DENIED IN PART.
FACTUAL AND PROCEDURAL BACKGROUND
This suit arises out of a loan and mortgage covering a property located at 129 Alvin
Guidry Circle (“the Property”) in Hackberry, Louisiana. See Record Document 7 at 2. At
the time the loan and mortgage were issued, Ross Anderson (“Anderson”) owned the
Property. See id. In a subsequent transaction, Dorsett purchased the property from
Anderson. See id.

1

Case 5:22-cv-01148-SMH-MLH Document 43 Filed 11/16/22 Page 2 of 10 PageID #: 439

At all times relevant to this dispute, Shellpoint serviced the mortgage on the
Property and, as part of the contractual relationship, purchased and maintained insurance
coverage for the Property. See id. Dorsett alleges that a course of dealing was established
whereby Shellpoint would charge Dorsett for the premium payments on the insurance as
part of the monthly payment amount for the mortgage. See id. at 3. Per this alleged course
of dealing, on February 27, 2020, Shellpoint notified Dorsett that Shellpoint had
purchased hazard insurance for the Property, with a policy period of February 27, 2020
to February 27, 2021. See id. Further, on May 11, 2020, Shellpoint notified Dorsett that
Shellpoint had purchased flood insurance for the Property, with a policy period of May 11,
2020 to May 11, 2021. See id. Dorsett alleges that it paid each premium amount as
charged by Shellpoint. See id.
Thereafter, Dorsett alleges that Shellpoint “unilaterally and without any notice
whatsoever to Dorsett” cancelled the insurance policies on the Property. See id. at 4.
Then, on or about August 27, 2020, Hurricane Laura caused damage to the Property.
See id. Dorsett asserts the damage to the Property should have been covered under
either the hazard or flood insurance policy described above. See id. However, when
Dorsett contacted Shellpoint to pursue insurance claims for the damage, Shellpoint
notified Dorsett that the policies had been cancelled prior to Hurricane Laura’s landfall.
See id. The Property was therefore not insured when it was damaged, and thus, Dorsett
alleges Shellpoint is liable for the damages sustained by Dorsett. See id. at 5. As a result,
Dorsett filed suit against Shellpoint, alleging breach of contract or, in the alternative,
detrimental reliance. See id.

2

Case 5:22-cv-01148-SMH-MLH Document 43 Filed 11/16/22 Page 3 of 10 PageID #: 440

In the present Motion for Judgment on the Pleadings under Federal Rule of Civil
Procedure 12(c), Shellpoint argues: (1) Dorsett lacks standing to assert a breach of
contract claim against Shellpoint, even if such claim was properly pleaded; (2) Anderson’s
own breach of the mortgage agreement relieved Shellpoint of any contractual duties; and
(3) Dorsett’s detrimental reliance claim fails as a matter of law. See Record Document
26. In its opposition to the motion, Dorsett responds: (1) Dorsett does have standing to
bring a breach of contract claim; (2) Anderson did not need Shellpoint’s consent to allow
Dorsett to assume the loan; and (3) Dorsett has pled sufficient facts to allege a claim for
detrimental reliance. See Record Document 32.
In conjunction with its opposition to Shellpoint’s motion, Dorsett filed a Motion to
Strike Exhibits A through H, exhibits that Shellpoint attached to the Rule 12(c) motion.
See Record Document 33. In the Motion to Strike, Dorsett argues: (1) Shellpoint cannot
attach evidence to the Motion for Judgment on the Pleadings; and (2) the exhibits are not
authenticated. See id. at 2–3. In its response, Shellpoint asserts that the exhibits can be
considered by the Court in deciding a Rule 12(c) motion, and the exhibits need not be
authenticated at this stage. See Record Document 36.
LAW AND ANALYSIS
I.

Rule 12(c) Standard
“Federal Rule of Civil Procedure 12(c) permits any party to move for a judgment

on the pleadings, provided the motion is made early enough to avoid delaying trial.” NAZ,
LLC v. Philips Healthcare, a Div. of Philips Elecs. N. Am. Corp., No. CV 17-2882, 2018
WL 1202570, at *5 (E.D. La. Mar. 8, 2018). “A court may grant a Rule 12(c) motion only
if the pleadings evince no disputes of genuine material fact and questions of law alone

3

Case 5:22-cv-01148-SMH-MLH Document 43 Filed 11/16/22 Page 4 of 10 PageID #: 441

remain.” Id. “A motion brought pursuant to Fed.R.Civ.P. 12(c) is designed to dispose of
cases where the material facts are not in dispute and a judgment on the merits can be
rendered by looking to the substance of the pleadings and any judicially noticed facts.”
Hebert Abstract Co. v. Touchstone Properties, Ltd., 914 F.2d 74, 76 (5th Cir. 1990).
“The standard for deciding a Rule 12(c) motion is the same as a Rule 12(b)(6)
motion to dismiss.” Guidry v. Am. Pub. Life Ins. Co., 512 F.3d 177, 180 (5th Cir. 2007).
Rule 8(a)(2) of the Federal Rules of Civil Procedure governs the pleading standard to
state a claim for relief, requiring that a pleading contain “a short and plain statement of
the claim showing that the pleader is entitled to relief.” The standard for the adequacy of
all complaints under Rule 8(a)(2) is now a “plausibility” standard found in Bell Atlantic
Corp. v. Twombly and its progeny. See 550 U.S. 544, 127 S. Ct. 1955 (2007). Under this
standard, “[f]actual allegations must be enough to raise a right to relief above the
speculative level . . . on the assumption that all the allegations in the complaint are true
(even if doubtful in fact).” Id. at 555, 127 S. Ct. at 1965 (citations omitted). If a pleading
only contains “labels and conclusions” and “a formulaic recitation of the elements of a
cause of action,” the pleading does not meet the standards of Rule 8(a)(2). Ashcroft v.
Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949 (2009) (citation omitted).
In reviewing the adequacy of the pleadings, the court must “accept all well-pleaded
facts as true, viewing them in the light most favorable to the plaintiff.” Jones v. Greninger,
188 F.3d 322, 324 (5th Cir. 1999). “Just like when it reviews a motion to dismiss under
Rule 12(b)(6), when reviewing a Rule 12(c) motion, a district court must consider the
pleadings, any documents the pleadings incorporate by reference, and matters of which
the court may take judicial notice.” Naz, LLC, 2018 WL 1202570, at *5.

4

Case 5:22-cv-01148-SMH-MLH Document 43 Filed 11/16/22 Page 5 of 10 PageID #: 442

II.

Analysis
a. Dorsett’s breach of contract claim
Shellpoint argues that Dorsett lacks standing to bring a breach of contract claim

because there is no contract between Shellpoint and Dorsett. See Record Document 26.
Further, Shellpoint asserts that it owes no contractual obligations because Anderson
breached the mortgage contract by selling the Property to Dorsett without Shellpoint’s
written consent, as required by the contract. See id.
In support of its argument, Shellpoint attached to its motion the mortgage
agreement covering the Property as Exhibit A. See Record Document 20 (Ex. A
Mortgage). This Court finds that Exhibit A may be considered when deciding Shellpoint’s
Rule 12(c) motion. As noted above, the standard for a Rule 12(c) motion is the same as
that for a Rule 12(b)(6) motion. See Guidry, 512 F.3d at 180. Under the Rule 12(b)(6)
standard, it is well established that a court may consider documents attached to the
pleadings or those that are “referred to in the plaintiff’s complaint and are central to
[plaintiff’s] claim.” See Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498–99 (5th
Cir. 2000) (internal quotation marks omitted); Blakely v. Andrade, 360 F. Supp. 3d 453,
472 (N.D. Tex. 2019) (considering video not attached to complaint in analyzing 12(b)(6)
motion, but central to plaintiff’s claims); New Orleans City v. Ambac Assurance Corp., 815
F.3d 196, 200 (5th Cir. 2016). Here, the contract that Dorsett alleges Shellpoint breached
is the mortgage agreement (or, as Dorsett calls it, “the Loan”). See Record Document 7
at 5. Thus, Exhibit A, which is that same mortgage agreement, is properly before the
Court when deciding the Rule 12(c) motion. See Carter v. Target Corp., 541 F. App'x 413,
417 (5th Cir. 2013) (considering EEOC charges on motion to dismiss because the
documents were referenced in the complaint and were central to plaintiff’s claim). Thus,
5

Case 5:22-cv-01148-SMH-MLH Document 43 Filed 11/16/22 Page 6 of 10 PageID #: 443

to the extent Dorsett’s Motion to Strike is directed towards Exhibit A, the Motion to Strike
is DENIED.
This Court further agrees with Shellpoint that Dorsett lacks standing to assert a
breach of contract claim based on the mortgage agreement. See Record Document 26
at 5. “No right of action for breach of contract may lie in the absence of privity of contract
between the parties.” Lili Collections, LLC v. Terrebonne Par. Consol. Gov't, 175 So.3d
434, 436 (La. App. 1 Cir. 6/18/15), writ not considered, 178 So.3d 579 (La. 10/2/15). Here,
the mortgage agreement clearly does not indicate that Dorsett was a party to the contract
at its inception. See Record Document 20 (Ex. A Mortgage, p. 16 of 17). Thus, absent a
valid assumption or assignment, Dorsett lacks privity with Shellpoint.
To establish standing in its breach of contract claim, Dorsett points to the alleged
buy/sell transaction between it and Anderson whereby Dorsett assumed the loan’s rights
and obligations from Anderson. See Record Document 32 at 7. Shellpoint responds that
Dorsett could not validly assume the loan from Anderson without Shellpoint’s written
consent, by the clear terms of the contract, and no such consent was given. See Record
Document 26 at 6. This Court agrees with Shellpoint that, when read as a whole, the
mortgage agreement required Anderson to obtain written consent before assigning the
loan. See Brown v. Drillers, Inc., 630 So.2d 741, 748 (La. 1994) (stating that contracts
must be interpreted and construed as a whole); see also La. Civ. Code art. 2050 (“Each
provision in a contract must be interpreted in light of the other provisions so that each is
given the meaning suggested by the contract as a whole.”). There are three relevant
provisions in the mortgage agreement that support this conclusion. First, paragraph 13,
which discusses joint and several liability and successors-in-interest, states:

6

Case 5:22-cv-01148-SMH-MLH Document 43 Filed 11/16/22 Page 7 of 10 PageID #: 444

Subject to the provisions of Section 18, any Successor in
Interest of Borrower who assumes Borrower’s obligations
under this Security Instrument in writing, and is approved
by Lender, shall obtain all of Borrower’s rights and benefits
under this Security Instrument.
See Record Document 20 (Ex. A Mortgage, p. 10 of 17) (emphasis added). Next,
paragraph 18 contains a “due-on-sale” clause, which states:
If all or any part of the Property or any Interest in the Property
is sold or transferred…without Lender’s prior written
consent, Lender may require immediate payment in full of all
sums secured by this Security Instrument.
See id. (Ex. A Mortgage, p. 12 of 17) (emphasis added). Finally, paragraph 12 of the
mortgage agreement states:
Any forbearance by Lender in exercising any right or remedy
including, without limitation, Lender’s acceptance of
payments from third persons, entities or Successors in
Interest of Borrower or in amounts less than the amount then
due, shall not be a waiver of or preclude the exercises of any
right or remedy.
See id. (Ex. A Mortgage, p. 10 of 17) (emphasis added). Taking these three provisions
together, this Court finds that Anderson needed Shellpoint’s approval to validly assign his
rights and benefits under the mortgage agreement. Specifically, paragraph 13 explicitly
requires that “any Successor in Interest” will “obtain all of Borrower’s rights and benefits”
if such assignment is “in writing, and is approved by Lender.” See id. Although, as Dorsett
points out, the “due-on-sale” clause in paragraph 18 contains the permissive “may,” when
read in conjunction with paragraph 13, it is clear that the mortgage agreement requires
the Lender (Shellpoint) to approve any assignment by the Borrower (Anderson). Thus,
because Anderson did not obtain Shellpoint’s approval before selling the Property to

7

Case 5:22-cv-01148-SMH-MLH Document 43 Filed 11/16/22 Page 8 of 10 PageID #: 445

Anderson, Dorsett did not validly assume Anderson’s rights and obligations under the
contract.
Further, Dorsett’s argument that Shellpoint established a course of dealing by
accepting payments directly from Dorsett does not resolve the invalidity of the
assumption. As is clear from paragraph 12 of the mortgage agreement, Shellpoint, as
Lender, does not waive or preclude any exercise of rights or remedies by taking certain
actions, “including, without limitation, Lender’s acceptance of payments from third
persons.” See id. Thus, while a course of dealing of accepting payments from Dorsett
may affect the detrimental reliance claim, as discussed below, such a series of actions
cannot create privity between Shellpoint and Dorsett by the clear terms of the contract.
Thus, because Dorsett lacks standing to bring a breach of contract claim against
Shellpoint, Dorsett’s claim fails as a matter of law.
Additionally, this Court agrees with Shellpoint that Dorsett has failed to point to a
specific contract provision that Shellpoint has allegedly breached by failing to give notice
of the insurance cancellation. See Record Document 35 at 7–8. Where a plaintiff fails to
point to a provision of the contract that the opposing party breached, the breach of
contract claim fails as a matter of law. See, for e.g., Bergeron v. Pan Am. Assur. Co., 731
So.2d 1037, 1045 (La. App. 4 Cir. 4/7/99) (noting plaintiff’s failure to point to specific
provision of policy that was allegedly breached and affirming dismissal of plaintiff’s
claims). Here, Dorsett cannot point to a provision of the mortgage agreement that requires
Shellpoint to give notice when an insurance policy obtained for the Property is cancelled.
Further, La. R.S. § 9:3548, which Dorsett points to in support of its notice argument, does
not discuss any notice that must be given upon cancellation of an insurance policy. See

8

Case 5:22-cv-01148-SMH-MLH Document 43 Filed 11/16/22 Page 9 of 10 PageID #: 446

La. R.S. § 9:3548. Thus, for the above reasons, Shellpoint’s Motion for Judgment on the
Pleadings is GRANTED as to the breach of contract claim.
b. Dorsett’s detrimental reliance claim
In its Motion for Judgment on the Pleadings, Shellpoint further argues that
Dorsett’s detrimental reliance claim fails as a matter of law. See Record Document 26 at
7. However, this Court finds that a factual dispute currently exists as to the detrimental
reliance claim, making judgment on the pleadings inappropriate at this time. See Hebert
Abstract Co., 914 F.2d at 76 (stating Rule 12(c) motion is only proper where material facts
are not in dispute).
To state a claim for detrimental reliance, a party must prove “(1) a representation
by conduct or word; (2) justifiable reliance; and (3) a change in position to one's detriment
because of the reliance.” See Suire v. Lafayette City-Par. Consol. Gov't, 907 So.2d 37,
59 (La. 2005). Viewing the pleadings in the light most favorable to Dorsett, as this Court
is required to do, the Amended Complaint pleads each of the above elements on its face:
Dorsett alleges that Shellpoint made representations in various letters concerning
insurance coverage, that Dorsett reasonably relied on Shellpoint’s representations based
on a course of dealing established between the parties over four years, and that Dorsett
was harmed in the form of uninsured property that was later damaged. See Record
Document 7. Shellpoint attempts to contest these allegations and argue Dorsett’s reliance
was unreasonable by asserting additional facts and by attaching Exhibits B through H to
the Motion for Judgment on the Pleadings, including a document showing a release of
the lien on the Property as of September 2020. See Record Document 26 (Ex. F).
However, regardless of the exhibits produced by Shellpoint, factual discrepancies seem

9

Case 5:22-cv-01148-SMH-MLH Document 43 Filed 11/16/22 Page 10 of 10 PageID #: 447

to exist concerning the timing of Dorsett’s insurance payments, the occurrence of the
damage by Hurricane Laura, and the cancellation of the policies by Shellpoint. Thus,
Shellpoint is not entitled to judgment on the pleadings at this time, and the Motion for
Judgment on the Pleadings is DENIED as to the detrimental reliance claim. Further, to
the extent Exhibits B through H of Shellpoint’s Motion for Judgment on the Pleadings
relate to the detrimental reliance claim, the Motion to Strike such exhibits is DENIED AS
MOOT, as those exhibits were not considered by the Court in reaching its conclusion that
material disputes of fact remain.
CONCLUSION
For the foregoing reasons, Dorsett’s Motion to Strike (Record Document 33) is
DENIED. Shellpoint’s Motion for Judgment on the Pleadings (Record Document 20) is
GRANTED as to Dorsett’s breach of contract claim. Further, Shellpoint’s Motion for
Judgment on the Pleadings (Record Document 20) is DENIED as to Dorsett’s detrimental
reliance claim.
An order consistent with the terms of the instant Memorandum Ruling shall issue
herewith.
THUS DONE AND SIGNED, in Shreveport, Louisiana, this 16th day of November,
2022.

10