Reppert v. Feld et al

Filing 7

MEMORANDUM AND ORDER - Plaintiff's claims based on the alleged violation of his right to due process are dismissed without prejudice. Plaintiff's state law claims are dismissed for lack of subject matter jurisdiction without prejudice. Plai ntiff shall have 30 days from the date of this Memorandum and Order to file an amended complaint in accordance with this Memorandum and Order. Failure to file an amended complaint will result in dismissal of this matter without prejudice and without further notice. The clerk's office is directed to set a pro se case management deadline in this matter: June 17, 2017: Check for amended complaint. Ordered by Senior Judge Richard G. Kopf. (Copy mailed to pro se party) (KLF)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
KYLE REPPERT,
Plaintiff,

8:17CV102

vs.
KERRY FELD, CALIBER HOME
LOANS INC., and THEODORE E.
VASKO,

MEMORANDUM
AND ORDER

Defendants.
Plaintiff filed his Complaint in this matter on March 27, 2017 (Filing No. 1.)
The court has given Plaintiff leave to proceed in forma pauperis. (Filing No. 6.)
The court now conducts an initial review of the Complaint to determine whether
summary dismissal is appropriate under 28 U.S.C. §§ 1915(e)(2).
I. SUMMARY OF COMPLAINT
Plaintiff purchased real property located at 1705 Martha Street, Omaha,
Nebraska 68108 (“the Property”) on or about July 11, 2013. Plaintiff executed a
deed of trust naming Plaintiff as the borrower, Freedom Lending LLC as the
lender, and attorney Matt Saathoff as the trustee. The loan was guaranteed by the
Department of Veterans Affairs, as evidenced by the executed VA Guarantee and
Assumption Policy Rider executed by Plaintiff. (Filing No. 1 at CM/ECF pp 9-10.)
On November 2, 2016, Reppert’s mortgage loan was sold to EverBank. (Id. at
CM/ECF p. 7.) Caliber Home Loans was named as the servicer. (Id.) A letter dated
November 7, 2016, informed Reppert of the sale of the Mortgage. (Id.)
Caliber Home Loans substituted attorney Kerry Feld as the trustee on the
Deed of Trust on November 21, 2016. (Id. at CM/ECF p. 12.) Feld subsequently

executed a Notice of Default stating Plaintiff had failed to make debt payments as
they became due and the debt was accelerated pursuant to the terms of the Deed of
Trust. (Id. at CM/ECF p. 8.) The Trustee sold the property at a sale on March 6,
2017. It was purchased by Defendant Theodore Vasko. (Id. at CM/ECF p. 28.) On
March 13, 2017, Vasko filed a Complaint for Unlawful Detainer in the County
Court of Douglas County, Nebraska seeking to have Plaintiff vacated from the
property. (Id.) Reppert subsequently filed his Complaint in this court naming Kerry
Feld, Caliber Home Loans, Inc., and Theodore Vasko as Defendants. He seeks to
have the sale of the Property voided and returned to him and monetary damages for
“irreparable emotional harm.”
II. APPLICABLE STANDARDS OF REVIEW
The court is required to review in forma pauperis complaints to determine
whether summary dismissal is appropriate. See 28 U.S.C. § 1915(e). The court
must dismiss a complaint or any portion of it that states a frivolous or malicious
claim, that fails to state a claim upon which relief may be granted, or that seeks
monetary relief from a defendant who is immune from such relief. 28 U.S.C. §
1915(e)(2)(B).
Pro se plaintiffs must set forth enough factual allegations to “nudge[] their
claims across the line from conceivable to plausible,” or “their complaint must be
dismissed.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 569-70 (2007); see also
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.”).
“The essential function of a complaint under the Federal Rules of Civil
Procedure is to give the opposing party ‘fair notice of the nature and basis or
grounds for a claim, and a general indication of the type of litigation involved.’”
Topchian v. JPMorgan Chase Bank, N.A., 760 F.3d 843, 848 (8th Cir. 2014)
(quoting Hopkins v. Saunders, 199 F.3d 968, 973 (8th Cir. 1999)). However, “[a]
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pro se complaint must be liberally construed, and pro se litigants are held to a
lesser pleading standard than other parties.” Topchian, 760 F.3d at 849 (internal
quotation marks and citations omitted).
A. Due Process
In this case, Defendant alleges his due process rights were violated because
the government took his property without allowing adequate time to prepare his
defense. He further alleges his sale of the Property by the trustee was fraudulent
because he did not receive proper notice of the sale. Finally he asserts Caliber
Home Loans had no authority to appoint Kerry Feld as the Trustee; therefore, the
Notice of Default and subsequent sale of the Property were improper. The
Complaint asserts both federal question jurisdiction and diversity jurisdiction are
present.
Plaintiff fails to state a claim for which relief can be granted. Liberally
construed, Plaintiff is asserting a claim against the individual defendants under 42
U.S.C. § 1983 for violating his right to due process by illegally conducting a
trustee’s sale. To state a claim under 42 U.S.C. § 1983, a plaintiff must allege a
violation of rights protected by the United States Constitution or created by federal
statute, and also must show that the alleged deprivation was caused by conduct of a
person acting under color of state law. West v. Atkins, 487 U.S. 42, 48 (1988);
Buckley v. Barlow, 997 F.2d 494, 495 (8th Cir. 1993).
The complaint does not allege any state action for the purposes of section
1983. The trustee’s sale of the Property was conducted privately without
government participation. Likewise, Plaintiff is not alleging the government had
any obligation to send him notice of default and/or notice of acceleration of the
debt. Plaintiff does assert the “government” removed him from his home, but
pleads no facts supporting this claim.

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However, a determination that no state officer or employee was involved
does not end the inquiry. “To act under color of state law . . . does not require . . .
that the defendant be an officer of the state. Private acts or conduct may incur
liability under § 1983 if the individual is a ‘willful’ participant in joint action with
the State or its agents.’” Midfelt v. Circuit Court of Jackson County, Mo., 827 F.2d
343, 345-46 (8th Cir. 1987)(internal quotations omitted). Thus, even if the
defendants are not officers of the state, if there is a sufficiently close nexus
between the state and the challenged action, the action of the defendants may be
treated as that of the State. Id. at 346.
In Midfelt the plaintiffs challenged the foreclosure and sale of their property
under a trustee’s sale pursuant to Missouri law. The Midfelts challenged the sale in
federal court alleging, in part, their constitutional rights to due process were
violated because they did not receive proper notice of the sale. The Eighth Circuit
expressly held “there is no significant state involvement in the conduct of a
trustee’s sale and thus no state action.” Id. at 346.
In this case, Reppert is arguing the defendants acted in violation of
Nebraska’s statutory scheme allowing extrajudicial sale of his property in violation
of his right to due process. Like the Missouri law challenged in Midfelt, the
Nebraska law recognizes the “contractual power of sale provisions” in deeds of
trust. See Neb. Rev. Stat. § 76-1005. Plaintiff has not alleged the state of Nebraska
was directly involved in the foreclosure and sale of Reppert’s property, nor could
he. The parties privately contracted to include the power of sale provision in the
deed of trust and the state plays no part in the execution of the terms of the contract
upon default. Accordingly, Defendants were not state actors and Plaintiff’s claims
based on any alleged violation of his due process fail.

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B. Department of Veterans Affairs Guarantee
Plaintiff’s loan is guaranteed by the Department of Veterans Affairs (VA)
and VA loans are subject to federal regulation. The loan guarantee provides the
following:
Any provisions of the Security Instrument or other instruments
executed in connection with said indebtedness which are inconsistent
with said Title or Regulations, including, but not limited to, the
provision for payment of any sum in connection with prepayment of
the secured indebtedness and the provision that the Lender may
accelerate payment of the secured indebtedness pursuant to Covenant
18 of the Security Instrument, are hereby amended or negated to the
extent necessary to conform such instruments to said Title or
Regulations.
(Filing No. 1 at CM/ECF p. 9.) But Reppert makes no claim any of the provisions
of the Deed of Trust violated, or are inconsistent with, the statutes and regulations
governing VA guaranteed loans. Nor does Plaintiff assert a private right of action
would be appropriate even if he could point to some violation of the law or
provision in the Deed of Trust contrary to the controlling statutes or regulations.
The court has serious questions that any private right of action exists even if
Defendants violated any obligations they had under the statutes and regulations
controlling VA guaranteed loans. See Rank v. Nimmo, 677 F.2d 692, 697 (9th Cir.
1982); Brown v. First Tennessee Bank Nat. Ass’n, 753 F. Supp. 2d 1249, 1254-55
(N.D. Ga. 2009); Bouldin v. Wells Fargo, N.A., case no. 14cv722, 2014 WL
5317848 at *4 (W.D. Tex. October 16, 2014).
Despite the court’s finding Reppert has not properly asserted a federal claim
for which relief can be granted, Plaintiff will be allowed 30 days in which to
amend his complaint to state whether any federal law with respect to the VA loan
has been violated and whether he has any grounds on which to base a private right
of action on any such alleged violation.

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C. State Law Claims
Reppert’s Complaint also alleges his claims are appropriate to bring in
federal court because of diversity of jurisdiction. That is, even if his claims are
based entirely on an alleged violation of state law, he alleges this court has
jurisdiction. To establish diversity jurisdiction the amount in controversy must be
in excess of $75,000 and must be between citizens of different states. 28 U.S.C. §
1330(a)(1). Assuming, without deciding, Plaintiff’s claims exceed $75,000 this
court still does not have subject matter jurisdiction because one of the named
Defendants – Theodore Vasko – is a resident of the state of Nebraska. Because
Plaintiff also resides in Nebraska, complete diversity of the parties does not exist
and this court does not have jurisdiction.
IT IS THEREFORE ORDERED that:
1.
Plaintiff’s claims based on the alleged violation of his right to due
process are dismissed without prejudice.
2.
Plaintiff’s state law claims are dismissed for lack of subject matter
jurisdiction without prejudice.
3.
Plaintiff shall have 30 days from the date of this Memorandum and
Order to file an amended complaint in accordance with this Memorandum and
Order. Failure to file an amended complaint will result in dismissal of this matter
without prejudice and without further notice.
4. The clerk’s office is directed to set a pro se case management deadline in
this matter: June 17, 2017: Check for amended complaint.

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Dated this 18th day of May, 2017.
BY THE COURT:
s/ Richard G. Kopf
Senior United States District Judge

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