Knott v. Nationstar Mortgage, LLC et al

Filing 23

ORDER granting in part and denying in part 7 Motion to Dismiss for Failure to State a Claim; granting 21 Motion to Dismiss for Failure to State a Claim. Signed by District Judge Richard Voorhees on 9/21/2016. (Pro se litigant served by US Mail.)(cbb)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
STATESVILLE DIVISION
CASE NO. 5:15-CV-00043-RLV
RAYMOND KNOTT,
Plaintiff,
v.

NATIONSTAR MORTGAGE, LLC, AND
THE FEDERAL HOME LOAN
MORTGAGE CORPORATION,
Defendants.

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ORDER

THIS MATTER IS BEFORE THE COURT on Motions to Dismiss by Defendants
Nationstar Mortgage, LLC (“Nationstar”) and The Federal Home Loan Mortgage Corporation
(“FHLMC”). (Doc. 7; Doc. 21). Having been fully briefed and considered, the Defendants’
motions are now ripe for disposition. For the reasons stated below, Nationstar’s Motion to Dismiss
(Doc. 7) is GRANTED IN PART and DENIED IN PART and FHLMC’s Motion to Dismiss
(Doc. 21) is GRANTED.

I.

BACKGROUND
This case concerns foreclosure proceedings regarding a residence at 125 Colville Road,

Mooresville, North Carolina 28117 (the “Property”). In 2007, Plaintiff mortgaged the Property by
signing a Note and a Deed of Trust that identified Countrywide KB Home Loans as the lender and
Note holder. (Doc. 1 at 3; Doc. 1, Exs. A, B). On April 29, 2010, the Superior Court for Iredell
County issued an order allowing foreclosure on the Property. (Doc. 1 at 4; Doc. 1, Ex. F). In his

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complaint, Plaintiff alleges that Nationstar is threatening to enforce the state court order allowing
foreclosure even though it does not own Plaintiff’s mortgage or possess the Note. (Doc. 1 at 3).
Relevant to what entity currently owns Plaintiff’s mortgage and possesses the Note,
Countrywide KB Home Loans ceased operating and both the Note and the servicing of Plaintiff’s
mortgage were passed to other entities. (Doc. 1 at 4; Doc. 1, Exs. D, F). The record does not
provide a complete picture of all the entities which have owned the mortgage, held the note, or
provided mortgage servicing on the mortgage. What is apparent is that the state court order
allowing foreclosure identified BAC Home Loans Servicing, LP, f/k/a Countrywide Home Loans
Servicing, L.P., as holding the Note. (Doc. 1 at 4; Doc. 1, Ex. F). At some point thereafter, Bank
of America, N.A. assumed mortgage servicing duties. (See Doc. 1 at 4; Doc. 1, Ex. D). On October
16, 2013, Nationstar assumed mortgage servicing responsibilities from Bank of America, N.A.,
providing Plaintiff notice of this change on November 1, 2013. (Doc. 1 at 4; Doc. 1, Ex. D).
Finally, in response to a Qualified Written Request (“QWR”) by Plaintiff, Nationstar represented
that FHLMC owned Plaintiff’s mortgage. (Doc. 1 at 5; Doc. 1, Ex. H).
Plaintiff’s complaint is less than a model of clarity with respect to the specific claims he
seeks to raise. The gist of Plaintiff’s complaint is an allegation of fraud against Nationstar based
on its attempt to enforce the state court order allowing foreclosure. (Doc. 1). Plaintiff contends
Nationstar lacks the authority to enforce the state court order because it neither owns his mortgage
nor possesses the Note. Id. Plaintiff’s complaint may also be liberally construed to include claims
challenging the transferability of his mortgage and of the Note and asserting that Nationstar
violated the Real Estate Settlement Procedures Act (RESPA) by failing to adequately respond to
his QWR. Cf. Erickson v. Pardus, 551 U.S. 89, 94 (2007) (requiring liberal construction of pro se
complaint). Plaintiff seeks litigation expenses, consequential and punitive damages stemming

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from Nationstar’s allegedly fraudulent threat to enforce the state court order allowing foreclosure,
and a “permanent injunction” or a “temporary restraining order” preventing Nationstar and
FHLMC from foreclosing on the Property. (Doc. 1 at 8-9).
Nationstar moves to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). Nationstar asserts that
(1) it has physical possession of the Note so as to defeat Plaintiff’s fraud allegation; (2) it
adequately responded to Plaintiff’s QWR; (3) Plaintiff failed to state his allegation of fraud with
particularity as required by Fed. R. Civ. P. 9(b); (4) Plaintiff fails to meet the standard for
injunctive relief; and (5) review of Plaintiff’s claims is barred by the Rooker-Feldman Doctrine.1
(Doc. 8). FHLMC moves to dismiss pursuant to Fed. R. Civ. P. 12(b)(1), (6). (Doc. 21) FHLMC
adopts Nationstar’s arguments for dismissal, as applicable to FHLMC, and additionally argues that
the Note and Deed of Trust specifically permit the transferring of both documents and that Plaintiff
generally fails to assert a plausible claim against FHLMC. Id.
II.

DISCUSSION
1. Standard of Review
When reviewing a motion to dismiss under Fed. R. Civ. P. 12(b), this Court must examine

the legal sufficiency of the complaint; it may not resolve factual disputes or weigh the claims and
defenses against one another. See Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir.
1999). Rather, the court must accept as true all of the well-plead factual allegations contained in
the complaint. See Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). A court may,
however, determine whether the facts alleged are sufficient, when taken at face-value, to
reasonably imply liability on the part of the defendant. In order to survive such a motion, the
complaint’s “[f]actual allegations must be enough to raise a right to relief above the speculative

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District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983); Rooker v. Fidelty Trust Co., 263 U.S. 413
(1923).

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level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Indeed, the “complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). A claim is
facially plausible when the factual content allows for the reasonable inference that the defendant
is liable for the misconduct alleged. Id.
Moreover, a pleading that offers mere “labels and conclusions” or “a formulaic recitation
of the elements of a cause of action will not do.” Iqbal, 556 U.S. at 678. In order to assert a claim
for relief, the complaint must allege facts that imply more than a “sheer possibility that a defendant
has acted unlawfully” or “facts that are ‘merely consistent with’ a defendant's liability[.]” Id. at
678 (quoting Twombly, 550 U.S. at 557). Critically, “‘[t]he presence . . . of a few conclusory legal
terms does not insulate a complaint from dismissal . . . when the facts alleged in the complaint’
cannot support the legal conclusion” alleged or the relief sought. See Migdal v. Rowe PriceFleming Int’l, 248 F.3d 321, 326 (4th Cir. 2001) (quoting Young v. City of Mount Ranier, 238 F.3d
567, 577 (4th Cir. 2001)). “Legal inferences drawn from the facts, unwarranted inferences,
unreasonable conclusions, or arguments are not part of the [court’s] consideration.” Dolgaleva v.
Va. Beach City Pub. Sch., 364 F. App’x 820, 827 (4th Cir. 2010); see also E. Shore Mkts., Inc. v.
J.D. Assocs. LLP, 213 F.3d 175, 180 (4th Cir. 2000).
In applying this standard, the Supreme Court has reiterated that “[a] document filed pro se
is to be liberally construed and a pro se complaint, however inartfully pleaded, must be held to
less stringent standards than formal pleadings drafted by lawyers.” Erickson, 551 U.S. at 94
(citation and internal quotation marks omitted); Dolgaleva, 364 F. App’x at 827. However, the
Fourth Circuit has “not read Erickson to undermine Twombly’s requirement that a pleading contain
more than labels and conclusions[.]” Giarratano v. Johnson, 521 F.3d 298, 304 n.5 (4th Cir. 2008)

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(internal quotation marks omitted) (applying Twombly standard in dismissing pro se complaint);
accord Atherton v. Dist. of Columbia Off. of Mayor, 567 F.3d 672, 681-82 (D.C. Cir. 2009) (“A
pro se complaint . . . ‘must be held to less stringent standards than formal pleadings drafted by
lawyers.’ But even a pro se complainant must plead ‘factual matter’ that permits the court to infer
‘more than the mere possibility of misconduct.’” (quoting Erickson, 551 U.S. at 94; Iqbal, 556
U.S. at 679)); accord Pickens v. JP Morgan Chase Bank, N.A., 2016 U.S. Dist. LEXIS 62911, at
*7-10 (W.D.N.C. May 12, 2016) (Voorhees, J.); Silvers v. Iredell Cty. Dep't of Soc. Servs., 2016
WL 427953, at *7 (W.D.N.C. Feb. 3, 2016) (Voorhees, J.). The rules governing the generous
construction of pro se pleadings “do[] not relieve the plaintiff of the burden of alleging sufficient
facts on which a recognized legal claim could be based.” Ashby v. City of Charlotte, 2015 U.S.
Dist. LEXIS 103286, at *4 (W.D.N.C. 2015); Godfrey v. Long, 2012 U.S. Dist. LEXIS 2671, at
*3-4 (E.D.N.C. 2012) (quoting Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991)); see also
Silvers, 2016 WL 427953, at *7.
2. Subject Matter Jurisdiction
Defendants contend that this Court lacks subject matter jurisdiction over Plaintiff’s action.
“Federal courts are courts of limited subject matter jurisdiction, and as such there is no presumption
that the court has jurisdiction.” Pinkley, Inc. v. City of Frederick, 191 F.3d 394, 399 (4th Cir.
1999). The principles of federalism serve as a limitation on a federal court’s jurisdiction over a
case touching a matter previously adjudicated by a state court. See Mulcahey v. Columbia Organic
Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994); see also New York v. United States, 505 U.S. 144,
181 (1992) (“State sovereignty is not just an end in itself: Rather, federalism secures to citizens
the liberties that derive from the diffusion of sovereign power.” (internal quotation marks
omitted)). The Rooker-Feldman Doctrine captures this limitation on the jurisdiction of federal

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courts and prevents a federal district court from hearing “challenges to state court decisions in
particular cases arising out of judicial proceedings,” thus preventing a federal district court from
essentially taking appellate jurisdiction over a state court decision. Feldman, 460 U.S. at 486; see
also Rooker, 263 U.S. at 415-16. Included amongst the claims that a federal district court lacks
jurisdiction over under the Rooker-Feldman Doctrine are claims that are “inextricably intertwined”
with the claim decided in the state court proceeding—i.e., claims the adjudication of which
requires the federal court to “determine that the state court judgment was erroneously entered” or
to “take action that would render the judgment ineffectual.” Jordahl v. Democratic Party of Va.,
122 F.3d 192, 202 (4th Cir. 1997) (brackets omitted).
Contrary to Defendants’ assertion, Plaintiff’s complaint disavows any claims clearly barred
by the Rooker-Feldman Doctrine—i.e., claims challenging the validity of the state court order
allowing foreclosure.2 (Doc. 1 at 4, ¶ 18). The claims actually raised in Plaintiff’s complaint are
not barred by the Rooker-Feldman Doctrine. First, Plaintiff’s challenge to the legality of the sale
or transfer of his mortgage after the issuance of the state court order allowing foreclosure could
not have been presented to the state court and a favorable ruling would not impair the rights of the
parties to the state court order or otherwise invalidate the order. Second, the Rooker-Feldman
Doctrine does not bar consideration of Plaintiff’s claim that Nationstar failed to comply with the
RESPA because the alleged violation occurred subsequent to the state court order and a finding

As elements of Plaintiff’s responses to the motions to dismiss could be construed as trying to raise claims challenging
the validity of the state court order allowing foreclosure, the Court, out of an abundance of caution, will discuss
application of the Rooker-Feldman Doctrine to the claims identified by Defendants. Any claim challenging the
validity of the state court order on the ground that Plaintiff did not receive notice of the state court proceeding would
be barred because to grant relief this Court would need to invalidate the state court order. See Dalenko v. Stephens,
917 F. Supp.2d 535, 546-48 (E.D.N.C. 2013) (applying Rooker-Feldman Doctrine to complaint alleging that Plaintiff
did not receive adequate notice of state court proceeding). Similarly, any claim challenging the validity of the state
court order on the ground that the pre-order transfer of the mortgage and Note was illegal would be barred by the
Rooker-Feldman Doctrine because any grant of relief on that claim would impair the rights conferred by the order to
the parties to the proceeding.
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that Nationstar failed to comply with the RESPA would not impair the validity of the state court
order. Finally, the Rooker-Feldman Doctrine does not prevent this Court from taking jurisdiction
over Plaintiff’s claim that Nationstar is fraudulently trying to enforce the state court order. This is
because Plaintiff challenges whether Nationstar is the successor in interest to the state court order
allowing foreclosure, and not, as Defendants suggest, whether a successor in interest may enforce
the state court order. Thus, if the evidence shows that Nationstar lacks the necessary interest and
authority to enforce the order, this Court could grant Plaintiff relief without impairing the state
court order.3 Accordingly, this Court has jurisdiction over, and will consider, each of the claims
actually raised in Plaintiff’s complaint.
3. Transferability of Lease
Plaintiff contends that if Nationstar or FHLMC owns his mortgage or possesses the Note
or Deed of Trust, ownership or possession was acquired via fraud because nothing permitted the
transfer of the mortgage or the security instruments. “A contract which is plain and unambiguous
on its face will be interpreted as a matter of law by the court.” Metcalf v. Black Dog Realty, LLC,
684 S.E.2d 709, 719 (N.C. Ct. App. 2009) (internal quotation marks omitted). “Contracts are
interpreted according to the intent of the parties [which] is determined by examining the plain
language of the contract.” Id. (internal quotation marks omitted).
The Note Plaintiff signed includes an acknowledgment by the borrower “that the Lender
may transfer” the Note. (Doc. 1, Ex. A). The Note goes on to define the term “Note Holder” as
“[t]he Lender or anyone who takes this Note by transfer and who is entitled to receive payments
under this Note.” Id. (emphasis added). Similarly, the Deed of Trust states that “[t]he Note, or a
partial interest in the Note (together with this Security Instrument) can be sold one or more times

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In actuality, preventing an entity that lacks authority to enforce a state court order from enforcing that order upholds,
rather than impairs, the order because it preserves the rights of the actual parties entitled to relief under the order.

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without prior notice to the Borrower.” (Doc. 1, Ex. B at 8). The Deed of Trust also advises that
the “loan servicer” may change as a result of the sale of the Note or independent of a sale of the
Note. (Doc. 1, Ex. B at 8). Based on this plain language in the Note and Deed of Trust, it is
apparent that the mortgage, Note, and Deed of Trust were subject to sale and/or transfer. Cf. N.C.
Gen. Stat. § 47-17.2 (permitting the transfer or assignment of a note or other instrument secured
by a mortgage and indicating that the transfer of the note “shall be an effective assignment of the
deed of trust, mortgage, or other security instrument”). Therefore, Plaintiff’s contention that if
Nationstar or FHLMC acquired the Note after issuance of the state court order allowing foreclosure
then the acquisition was the product of fraud because the Note was non-transferable is untenable
as a matter of law. Accordingly, Plaintiff’s claim that his mortgage and that the Note were nontransferable is dismissed with prejudice.
4. RESPA Claim
The RESPA places a duty on a mortgage servicer to respond to a Qualified Written Request
(“QWR”) from a borrower. A QWR is written correspondence from a borrower that is not on a
payment coupon or other payment medium and that:
(i) includes, or otherwise enables the servicer to identify, the name and account of
the borrower; and
(ii) includes a statement of the reasons for the belief of the borrower, to the extent
applicable, that the account is in error or provides sufficient detail to the servicer
regarding other information sought by the borrower.
12 U.S.C. § 2605(e)(1)(B) (2012). Pertinent here, where a mortgage servicer receives a QWR, the
mortgage servicer “shall provide a written response acknowledging receipt of the correspondence
within 5 days” of receipt of the QWR. 12 U.S.C. § 2605(e)(1)(A). Thereafter, the mortgage
servicer shall, no later than thirty days after receipt of the QWR, conduct an investigation into the
QWR, correct the borrower’s account when appropriate, and “provide the borrower with a written

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explanation or clarification” responding to the substance of the QWR.4 12 U.S.C. § 2605(e)(2).
The written explanation or clarification must include (1) “to the extent applicable, a statement of
the reasons for which the servicer believes the account of the borrower is correct as determined by
the servicer”; (2) “the name and telephone number of an individual employed by, or the office or
department of, the servicer who can provide assistance to the borrower”; and (3) “information
requested by the borrower or an explanation of why the information requested is unavailable or
cannot be obtained by the servicer.” 12 U.S.C. § 2605(e)(2)(B), (C).
On November 7, 2013, Plaintiff submitted his first letter to Nationstar, a letter labeled as a
QWR. (Doc. 1 at 4; Doc. 1, Ex. G). Plaintiff’s first letter sought the balance on his mortgage, the
name of the entity that owned the mortgage, a copy of the Note, the fees and charges assessed on
the mortgage, and the payment history on the mortgage. (Doc. 1 at 4; Doc. 1, Ex. G). On
November 18, 2013, Nationstar mailed Plaintiff an initial response acknowledging receipt of
Plaintiff’s QWR, stating that FHMLC owned Plaintiff’s loan, and indicating that it would provide
Plaintiff an additional response within thirty days of receiving the QWR. (Doc. 1 at 5; Doc. 1, Ex.
H). Plaintiff sent a second letter to Nationstar, which was not labeled as a QWR. (Doc. 1 at 5;
Doc. 1, Ex. I). In his second letter, Plaintiff challenged whether FHLMC owned the mortgage and
asserted that Nationstar lacked legal authority to enforce the state court order allowing foreclosure.
(Doc. 1, ex. I). On January 10, 2014, Nationstar mailed Plaintiff a second response, in which it
indicated that it planned to contact Bank of America, N.A. regarding documentation of the Note
and would forward a copy of any documentation it received from Bank of America, N.A. to
Plaintiff. (Doc. 1 at 5; Doc. 1, Ex. J). Nationstar’s second response also provided the name and

The thirty-day period for the loan servicer to respond may be extended by fifteen days “if, before the end of such
30-day period, the servicer notifies the borrower of the extension and the reasons for the delay in responding.” 12
U.S.C. § 2605(e)(4).
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contact information of a Nationstar representative and informed Plaintiff that the Property was due
for foreclosure and that Plaintiff was sixty payments behind. (Doc. 1, Ex. J). Plaintiff alleges that
he received no further communications from Nationstar regarding his QWR after Nationstar’s
response dated January 10, 2014. (Doc. 1 at 5).
First, Nationstar contends that Plaintiff cannot prevail on his RESPA claim because it
properly answered his first letter and that he has not alleged that his second letter was a QWR. In
the alternative, Nationstar contends that its two responses provided Plaintiff with the requested
information, as required by RESPA. Finding that, as a matter of law, Nationstar complied with
the requirements set out in the RESPA, the Court will only evaluate Nationstar’s alternative
argument for dismissal of Plaintiff’s RESPA claim.
Considering Nationstar’s two responses in tandem, Plaintiff’s RESPA claim amounts to a
disagreement over the accuracy of Nationstar’s answers to the QWR and not a disagreement over
whether Nationstar responded to the QWR with the information required by § 2605(e)(2).
Nationstar’s responses provided Plaintiff with basic information regarding the status of his
mortgage and of his payment history, told plaintiff who owned the mortgage, provided Plaintiff
with the contact information of a Nationstar representative, and implicitly indicated that Nationstar
was unable to produce documentation regarding the Note because Bank of America, N.A.
possessed the requested documentation. (Doc. 1, Exs. H, J). Accordingly, Nationstar complied
with the requirements of § 2605(e) and Plaintiff’s RESPA claim is dismissed with prejudice.5

Even if Nationstar failed to comply with the requirements set out in § 2605(e)(2)(B), (C), Plaintiff’s RESPA claim
would be subject to dismissal without prejudice because Plaintiff’s complaint fails to allege what, if any, damage he
suffered as a result of Nationstar’s alleged failure to provide the information required by the RESPA. See Ward v.
Sec. Atl. Mortg. Elec. Registration Sys., Inc., 858 F. Supp.2d 561, 575 (E.D.N.C. 2012) (collecting cases concluding
that plaintiff, to advance viable RESPA claim, must allege actual damage from mortgage servicer’s failure to respond
to QWR).
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5. Allegations of Fraud
Plaintiff’s complaint raises a claim of fraud against Nationstar and FHLMC. In this claim,
Plaintiff asserts that both Defendants are attempting to enforce the state court order allowing
foreclosure despite lacking the legal right to enforce the order because neither Nationstar nor
FHLMC own Plaintiff’s mortgage or possess the Note. Where a claim sounds in fraud, the claim
is subject to the heightened pleading standards of Fed. R. Civ. P. 9(b). Rule 9(b) provides that
“[i]n alleging fraud . . . a party must state with particularity the circumstances constituting fraud .
. . .” Fed. R. Civ. P. 9(b). This heightened pleading standard applies to permit the identification
and disposition of unfounded and unmeritorious fraud claims at any early stage of litigation.
Teacher's Ret. Sys. of La. v. Hunter, 477 F.3d 162, 171 (4th Cir. 2007) (citing 5A Charles A.
Wright & Hunter M. Miller, Federal Practice and Procedure § 1296 (3d ed. 2004)).
To make out a claim of fraud under North Carolina law, a plaintiff must establish that the
defendant “(1) made a false representation of material fact, (2) knew it was false (or made it with
reckless disregard of its truth or falsity), and (3) intended that the plaintiff rely upon it. In addition,
(4) the plaintiff must be injured by reasonably relying on the false representation.” Food Lion,
Inc. v. Capital Cities/ABC, Inc., 194 F.3d 505, 512 (4th Cir. 1999) (identifying elements of fraud
claim under North Carolina law); see also State v. Seelig, 738 S.E.2d 427, 431 (N.C. Ct. App.
2013) (identifying elements of offense of obtaining property by false pretenses as “(1) a false
representation of a subsisting fact or a future fulfillment or event, (2) which is calculated and
intended to deceive, (3) which does in fact deceive, and (4) by which one person obtains or
attempts to obtain value from another” (internal quotation marks omitted)). As to Nationstar,
Plaintiff has pled the essential elements of fraud with sufficient particularity. Plaintiff’s complaint
asserts that (1) Nationstar represented that FHLMC owned Plaintiff’s mortgage and that it

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possesses the Note where neither Nationstar nor FHLMC owns plaintiff’s mortgage or possesses
the Note; (2) Nationstar knows that neither it nor FHLMC owns Plaintiff’s mortgage or possesses
the Note; (3) Nationstar represented that it held the Note in an effort to deter Plaintiff from
challenging Nationstar’s attempt to enforce the state court order allowing foreclosure; and (4)
Plaintiff has sustained damages from defending against Nationstar’s threat of foreclosure and will
sustain damages if Nationstar acts on its threat to enforce the state court order allowing foreclosure.
Further, Plaintiff has alleged when, and in what context, Nationstar made the aforementioned
representations, providing documents pertaining to some of the representations.

Although

Nationstar counters, in its memorandum in support of its motion to dismiss, that it is in “physical
possession of the original Note” (Doc. 8 at 3), Nationstar has not presented any documentation
substantiating this assertion. Thus, while Nationstar may, ultimately, be able to demonstrate,
through production of the Note, that its representation was not fraudulent and that Plaintiff’s
complaint is without merit, Plaintiff’s contention that Nationstar does not possess the Note and
does not have a legal right to enforce the order allowing foreclosure is plausible at this stage of the
litigation.6

Accordingly, Nationstar’s motion to dismiss is denied as to Plaintiff’s claim that

Nationstar is fraudulently and wrongfully trying to enforce the state court order allowing
foreclosure.

In so concluding, the Court acknowledges that Plaintiff does not dispute that Nationstar is the servicer of Plaintiff’s
mortgage. A mortgage servicer is an entity that oversees “[t]he administration of a mortgage loan, including the
collection of payments, release of liens, and payment of property insurance and taxes.” Black’s Law Dictionary, pg.
1169 (Deluxe 10th ed. 2014). A mortgage servicer is typically in privity with the lender and note holder such that it
may rely on state court orders when managing a mortgage on behalf of the lender. R.G. Financial Corp. v. VergaraNunez, 446 F.3d 178, 187 (1st. Cir. 2006). However, it is not necessarily the case that a mortgage servicer will
administer the foreclosure proceedings because once foreclosure is commenced there is no longer a mortgage to
service. Cf. Travelers Indem. Co. of Ill. v. Liberty Mut. Ins. Co., 70 F. App’x 673, 677 (4th Cir. 2003). Here, nothing
in the complaint or record establishes the scope of Nationstar’s role as mortgage servicer such that dismissing
Plaintiff’s complaint based on Nationstar role as mortgage servicer would require the Court to assume facts about
Nationstar’s authority and obligations as mortgage servicer.
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As to FHLMC, Plaintiff’s complaint fails to allege, with particularity, any of the elements
of fraud. Although Plaintiff alleges, in passing, that FHLMC represented that it owned the
mortgage (Doc. 1 at 2), the complaint contains no allegations regarding when or in what context
FHLMC made this alleged representation. Cf. Birtha v. Stonemor, N.C., LLC, 727 S.E.2d 1, 9
(N.C. Ct. App. 2012) (requiring claim sounding in fraud to allege “time, place and content of
fraudulent representation [and] identity of the person making the representation” (internal
quotation marks omitted)). Instead, reading Plaintiff’s complaint and his responses to the motions
to dismiss on the whole, it appears that Plaintiff’s broad and unspecified allegation as to FHLMC
stems primarily from his correspondence with Nationstar and his own research rather than from
any representation by FHLMC. (See Doc. 22 at 1). Furthermore, unlike Nationstar, FHLMC has
not contended in filings in this proceeding that it is the holder of the Note. Therefore, unlike with
respect to Nationstar, Plaintiff’s allegation of fraud against FHLMC is speculative and each
element of the claim is not pled with the requisite particularity mandated by Fed. R. Civ. P. 9(b).
Accordingly, the claim against FHLMC will be dismissed without prejudice.
6. Preliminary Injunction
Plaintiff’s complaint seeks a preliminary injunction barring Nationstar from acting on the
state court order allowing foreclosure. A preliminary injunction is an extraordinary remedy
afforded before trial at the discretion of the district court. In re Microsoft Corp. Antitrust Litig.,
333 F.3d 517, 524-26 (4th Cir. 2003). Such a remedy is not granted to a party as a matter of right.
See Winter v. NRDC, Inc., 555 U.S. 7, 24 (2008). In each case, courts “must balance the competing
claims of injury and must consider the effect on each party of the granting or withholding of the
requested relief.” Amoco Prod. Co. v. Vill. of Gambell, 480 U.S. 531, 542 (1987). “[C]ourts of
equity should pay particular regard for the public consequences in employing the extraordinary

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remedy of injunction.” Winter, 555 U.S. at 24 (internal quotation marks omitted). To obtain a
preliminary injunction, a plaintiff must establish “[1] that he is likely to succeed on the merits, [2]
that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance
of equities tips in his favor, and [4] that an injunction is in the public interest.” Id. at 20.
Here, Plaintiff has not established the requisite likelihood of success necessary to obtain a
preliminary injunction. First, although Plaintiff alleges that Nationstar does not possess or hold
the Note, the record does not presently support the conclusion that Plaintiff can prove this
allegation by a preponderance of the evidence. Second, and as noted supra, even if Nationstar
does not possess the Note, Nationstar’s role as mortgage servicer likely places Nationstar in privity
with the owner of the mortgage and holder of the Note, if Nationstar is not that entity, and grants
Nationstar the authority to enforce the state court order allowing foreclosure. Therefore, although
it is plausible that Plaintiff may succeed on the merits of his claim, it is not sufficiently likely that
he will. Therefore, the Court declines, at this juncture, to grant Plaintiff’s requested injunctive
relief.
III.

DECRETAL

IT IS, THEREFORE, ORDERED THAT
(1)

Defendant Nationstar’s Motion to Dismiss (Doc. 7) is GRANTED IN PART and

DENIED IN PART; and
(2)

Defendant FHLMC’s Motion to Dismiss (Doc. 21) is GRANTED.

SO ORDERED.
Signed: September 21, 2016

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