Riley et al v. Department of Veteran Affairs et al

Filing 36

ORDER granting 27 Motion to Dismiss for Failure to State a Claim. Signed on 09/3/15 by District Judge Stephen R. Bough. Copy of this Order mailed to Clifford Henry Riley, III and Beatrice Riley, 4338 Northern Ave, Apt. 3111, Kansas City, MO 64133 (Amos, Gloria)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
CLIFFORD H. RILEY and
BEATRICE RILEY,
Plaintiffs,
v.
DEPARTMENT OF
VETERANS AFFAIRS, et al.
Defendants.

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Case No. 4:15-cv-00200-SRB

ORDER
Before the Court is Defendants Dovenmuehle Mortgage, Inc. and Matrix Financial
Services Corporation’s Motion to Dismiss (Doc. #27). For the reasons discussed below,
Defendants’ motion is granted.
I.

Background
Plaintiffs Clifford Riley and Beatrice Riley brought this action against Defendant

Dovenmuehle Mortgage, Inc. (“DMI”), Matrix Financial Services Corporation (“Matrix”) and
three other named defendants for numerous claims stemming from the anticipated foreclosure
and eviction of Plaintiffs from the property located at 3231 Jackson Ave., Kansas City, Missouri
64128. Plaintiffs’ pro se complaint against Defendants DMI and Matrix claims that (1)
Defendants are attempting to unlawfully foreclose on their property; (2) Defendants have caused
undue hardship on Plaintiffs and their family; (3) there is a conflict between Defendants in this
action and the separate VA disability claim; (4) Defendants have withheld funds from Plaintiffs;
and (5) Defendants have not been open to Plaintiffs reasonable efforts to come to an equitable
solution.
On July 7, 2015, Defendants DMI and Matrix filed their Motion to Dismiss Plaintiffs’

Complaint pursuant to Fed. R. Civ. P. 12(b)(6). Defendants DMI and Matrix argue Plaintiffs’
claims must be dismissed because (1) the cause of action is moot; (2) Defendants DMI and
Matrix are no longer parties in interest as the property sold to a third party; (3) undue hardship is
not a recognized cause of action; and (4) the Court lacks subject-matter jurisdiction with respect
to the VA Benefits.
II.

Legal Authority
Federal Rule of Civil Procedure 12(b)(6) allows causes of action to be dismissed for

“failure to state a claim upon which relief can be granted.” In evaluating claims challenged under
this rule, courts must accept all well-plead allegations as true. Fitzgerald v. Barnstable Sch.
Comm., 555 U.S. 246, 249 (2009) (“Because this case comes to us on a motion to dismiss under
Federal Rule of Civil Procedure 12(b)(6), we assume the truth of the facts as alleged in
petitioners’ complaint.”). However, allegations representing “legal conclusions or ‘formulaic
recitation of the elements of a cause of action’ . . . may be properly set aside.” Braden v. WalMart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662,
677 (2009)). Pleadings do “not require ‘detailed factual allegations,’” but must be “more than an
unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)); see also Ritchie v. St. Louis Jewish
Light, 630 F.3d 713, 717 (holding that dismissal of an action was appropriate when the
“complaint merely alleged, but did not show, that [plaintiff] is entitled to relief” and required the
court to “infer more than the mere possibility of misconduct.”). “The pleading must contain
something more than a statement of facts that merely creates a suspicion of a legally cognizable
right of action.” Twombly, 550 U.S. at 555 (internal citations omitted).
The “evaluation of a complaint upon a motion to dismiss is a context-specific task that

requires the reviewing court to draw on its judicial experience and common sense.” Braden, 588
F.3d at 594 (internal citations omitted). A claim may not be dismissed, however, simply because
the judge disbelieves the allegations or finds the likelihood of recovery remote. Swierkiewicz v.
Sorema N.A., 534 U.S. 506, 513 (2002). “[T]he complaint should be read as a whole, not parsed
piece by piece to determine whether each allegation, in isolation, is plausible.” Braden, 588 F.3d
at 594.
III.

Discussion
Plaintiffs’ pro se complaint asserts claims against Defendants DMI and Matrix in an

effort to prevent the foreclosure of their property until the VA disability claim, pending in a
separate action, has been resolved. Defendants DMI and Matrix argue they should be dismissed
from this action because (1) the cause of action is moot because the property has been sold to a
third party; (2) Defendants DMI and Matrix are no longer parties in interest as a result of the
foreclosure sale; (3) “undue hardship” is not a recognized cause of action; and (4) the Court lacks
subject-matter jurisdiction with respect to the VA Benefits. In Plaintiffs’ response, they have
failed to respond to Defendants’ arguments set out in their Motion to Dismiss. Instead, Plaintiffs
have attempted to amend their complaint to include claims against Defendants DMI and Matrix
for wrongful foreclosure.
a. Defendants DMI and Matrix’ Motion to Dismiss
Defendants DMI and Matrix assert this cause of action is moot because the complaint
seeks to prevent the foreclosure sale of the property which has already been sold to a third party.
Defendant argues Plaintiffs failed to secure injunctive relief prior to the March 23, 2015,
foreclosure sale. Therefore, Defendants claim the Complaint no longer contains a live
controversy.

The Constitution of the United States extends the “judicial power” of the federal
government only to “Cases” or “Controversies.” U.S.Const., art. III, s 2. “A case becomes
moot—and therefore no longer a ‘Case’ or ‘Controversy’ for purposes of Article III—‘when the
issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the
outcome.’” Already, LLC v. Nike, Inc., 133 S. Ct. 721, 726-27, 184 L. Ed. 2d 553 (2013)
(internal citations omitted). Moreover, “no justiciable controversy is presented ... when the
question sought to be adjudicated has been mooted by subsequent developments....” Flast v.
Cohen, 392 U.S. 83, 95, 88 S.Ct. 1942, 1949-50 (1968) (footnote omitted).
In the present case, Plaintiffs brought this action to “stop the foreclosure until litigation
[is] complete.” (Doc. #7, p.4). But, the subject property was subsequently sold to a third party on
March 23, 2015, in a foreclosure sale. Consequently, Defendants DMI and Matrix no longer hold
title, claim or interest in the subject property, and therefore, lack a legally cognizable interest in
the outcome of this case.
The Court finds the dispute is no longer embedded in a justiciable controversy and must
be deemed moot. Therefore, Plaintiffs’ cause of action must be dismissed as to Defendants DMI
and Matrix. Because the Court finds that Plaintiffs’ Complaint fails to state a justiciable
controversy against Defendants DMI and Matrix, the Court need not address Defendants’
remaining arguments.
b. Plaintiffs’ Pro Se Motion to Amend Complaint
After reviewing Plaintiffs’ pro se response in opposition to Defendants’ Motion to
Dismiss (Doc. #33), the Court acknowledges that it appears Plaintiffs seek to amend their
Complaint to assert a new claim for wrongful foreclosure.
Under Federal Rule of Civil Procedure 15, “[t]he court should freely give leave [to

amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). However, a motion to amend should
not be granted if the amendment is futile. See Zutz v. Nelson, 601 F.3d 842, 852 (8th Cir. 2010)
(affirming the denial of a motion to amend due to futility). An amendment is futile if “‘the
amended complaint could not withstand a motion to dismiss under Rule 12(b)(6) of the Federal
Rules of Civil Procedures.’” Id. at 850 (quoting Cornelia I. Crowell GST Trust v. Possis Med.,
Inc., 519 F.3d 778, 782 (8th Cir. 2008)). Accordingly, a court must determine if a proposed
amended complaint “contain[s] sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Ashcroft v. Iqbal, 559 U.S. 662, 678 (2009) (quoting Bell
Atl. Corp v. Twombly, 550 U.S. 544, 570 (2007)).
Plaintiffs seek to assert a claim against Defendants DMI and Matrix for wrongful
foreclosure. “A wrongful foreclosure action seeking damages requires plaintiff to prove that he
was not in default and, thus, there was no right to foreclose on the property.” Lackey v. Wells
Fargo Bank, N.A., 747 F.3d 1033, 1037 (8th Cir. 2014), reh'g denied (May 13, 2014) (citing
Fields v. Millsap & Singer, P.C., 295 S.W.3d 567, 572 (Mo. Ct. App. 2009)). “A wrongful
foreclosure action seeking to quiet title or set aside a sale may proceed, however, whenever
plaintiff alleges certain wrongful acts that are sufficient to render the sale void.” Id.
In the original complaint, Plaintiffs allege that “Defendant(s) have unreasonably withheld
funds from Plaintiffs for a number of years, as so the Plaintiffs cannot afford the scheduled
payments as set forth ‘by’ the Defendant(s).” (Doc. #7, p. 2). Plaintiffs have failed to allege that
they were not in default on their mortgage loan or that Defendants committed certain wrongful
acts sufficient to render the sale of the property void.
After a review of the Complaint and the proposed amendments, the Court finds that
Plaintiffs have failed to allege sufficient factual matter to show a claim for relief that is plausible

on its face as required by Iqbal. Thus, the Court concludes that the proposed amendments would
not withstand the scrutiny of a motion to dismiss under Rule 12(b)(6) of the Federal Rules of
Civil Procedure, and are, therefore, futile. Plaintiffs’ proposed amendments are denied.
IV.

Conclusion
Accordingly, it is hereby
ORDERED that Defendants Dovenmuehle Mortgage, Inc. and Matrix Financial Services

Corporation’s Motion to Dismiss (Doc. #27) is GRANTED.
IT IS SO ORDERED.

/s/ Stephen R. Bough
STEPHEN R. BOUGH
UNITED STATES DISTRICT JUDGE
Dated: September 3, 2015