UNITED STATES OF AMERICA et al v. Homeward Residential Inc et al
MEMORANDUM OPINION AND ORDER - DENYING 63 Motion to Dismiss. Signed by Judge Amos L. Mazzant, III on 6/17/2015. (baf, )
United States District Court
EASTERN DISTRICT OF TEXAS
UNITED STATES OF AMERICA
Ex rel., Michael J. Fisher, and Michael Fisher
Individually, and Brian Bullock, and Brian
HOMEWARD RESIDENTIAL, INC. f/k/a
AMERICAN HOME MORTGAGE
CIVIL ACTION NO 4:12-CV-461
MEMORANDUM OPINION AND ORDER
Pending before the Court is Homeward Residential Inc.’s Rule 12(b)(6) and Rule 9(b)
Motion to Dismiss (Dkt. #63). After reviewing the relevant pleadings, the Court finds that the
motion should be denied.
On July 25, 2012, Relator Michael J. Fisher (“Fisher” or “Relator”) filed his original
complaint under seal (Dkt. #1).
In his original complaint, Fisher alleged that Homeward
Residential, Inc. (“Homeward”) did not provide disclosures required by the Truth in Lending Act
(“TILA”) and Regulation Z with any of its Home Affordable Modification Program (“HAMP”)
or non-HAMP modifications (Dkt. #1).
On June 4, 2014, the Court ordered that the original complaint be unsealed and served on
Defendant, after the United States declined to intervene (Dkt. #27). On October 9, 2014,
Defendant filed its Rule 12(b)(6) and Rule 9(b) Motion to Dismiss (Dkt. #33) and its Rule
12(b)(1) Motion to Dismiss and Rule 56 Motion for Summary Judgment (Dkt. #34).
On October 16, 2014, Relators filed their Sealed Motion to Seal Qui Tam Relators’ First
Amended Complaint (Dkt. #38) and Qui Tam Relators’ First Amended Complaint (Dkt. #39).
The first amended complaint incorporated new allegations including: (1) Federal Housing
Administration (“FHA”) violations, (2) Dodd-Frank Act violations, (3) Real Estate Settlement
Procedures Act (“RESPA”) violations, and (4) Texas, New York, and Massachusetts state law
violations (Dkt. #39). It also added a new relator, Brian Bullock (“Bullock” or “Relator”) (Dkt.
#39). On October 31, 2014, the Court denied Relators’ Sealed Motion to Seal Qui Tam Relators’
First Amended Complaint (Dkt. #54). On November 3, 2014, the Court denied Defendant’s
motions to dismiss as moot (Dkt. #60).
On November 14, 2014, Defendant filed its Rule 12(b)(6) and Rule 9(b) Motion to
Dismiss (Dkt. #63). On December 1, 2014, Relators filed their Response in Opposition to
Defendant’s Rule 12(b)(6) and Rule 9(b) Motion to Dismiss (Dkt. #66). Defendant filed its reply
on December 11, 2014 (Dkt. #68). Relators filed their sur-reply on December 22, 2014 (Dkt.
Defendant moves to dismiss under Federal Rule of Civil Procedure 12(b)(6). A Rule
12(b)(6) motion to dismiss argues that, irrespective of jurisdiction, the complaint fails to assert
facts that give rise to legal liability of the defendant. The Federal Rules of Civil Procedure
require that each claim in a complaint include “a short and plain statement…showing that the
pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2). The claim must include enough factual
allegations “to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007). Thus, “[t]o survive a motion to dismiss, a 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).
Rule 12(b)(6) provides that a party may move for dismissal of an action for failure to
state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). The court must accept
as true all well-pleaded facts contained in the plaintiff’s complaint and view them in the light
most favorable to the plaintiff. Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). In deciding a
Rule 12(b)(6) motion, “[f]actual allegations must be enough to raise a right to relief above the
speculative level.” Twombly, 550 U.S. at 555; Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir.
“The Supreme Court expounded upon the Twombly standard, explaining that ‘[t]o
survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true,
to state a claim to relief that is plausible on its face.’” Gonzalez, 577 F.3d at 603 (quoting Iqbal,
556 U.S. at 678). “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.” Id. Therefore, “where the well-pleaded facts do not permit the court to infer more than
a mere possibility of misconduct, the complaint has alleged – but it has not ‘shown’ – ‘that the
pleader is entitled to relief.’” Id.
In Iqbal, the Supreme Court established a two-step approach for assessing the sufficiency
of a complaint in the context of a Rule 12(b)(6) motion. First, the court should identify and
disregard conclusory allegations, for they are “not entitled to the assumption of truth.” Iqbal,
556 U.S. at 664. Second, the court “consider[s] the factual allegations in [the complaint] to
determine if they plausibly suggest an entitlement to relief.” Id. “This standard ‘simply calls for
enough facts to raise a reasonable expectation that discovery will reveal evidence of the
necessary claims or elements.’” Morgan v. Hubert, 335 F. App’x 466, 470 (5th Cir. 2009). This
evaluation will “be a context-specific task that requires the reviewing court to draw on its
judicial experience and common sense.” Iqbal, 556 U.S. at 679.
In determining whether to grant a motion to dismiss, a district court may generally not
“go outside the complaint.” Scanlan v. Tex. A&M Univ., 343 F.3d 533, 536 (5th Cir. 2003).
However, a district court may consider documents attached to a motion to dismiss if they are
referred to in the plaintiff’s complaint and are central to the plaintiff’s claim. Id.
Defendant also moves to dismiss under Federal Rule of Civil Procedure 9(b). Rule 9(b)
“prevents nuisance suits and the filing of baseless claims as a pretext to gain access to a ‘fishing
expedition.’” United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 191 (5th Cir. 2009). It
is a heightened pleading standard that requires parties to “state with particularity the
circumstances constituting fraud or mistake.” FED. R. CIV. P. 9(b); see United States ex rel.
Steury v. Cardinal Health, Inc., 625 F.3d 262, 266 (5th Cir. 2010).
However, this requirement “does not ‘reflect a subscription to fact pleading.’” Grubbs,
565 F.3d at 186. Pleadings alleging fraud must contain “simple, concise, and direct allegations
of the circumstances constituting the fraud which…must make relief plausible, not merely
conceivable, when taken as true.” Id. (internal quotations omitted). The Fifth Circuit requires
plaintiffs to “specify the statements intended to be fraudulent, identify the speaker, state when
and where the statements were made, and explain why the statements were fraudulent.” Flaherty
& Crumrine Preferred Income Fund, Inc. v. TXU Corp., 565 F.3d 200, 207 (5th Cir. 2009)
(quoting Williams v. WMX Techs., Inc., 112 F.3d 175, 177 (5th Cir. 1997); Nathenson v.
Zonagen, Inc., 267 F.3d 400, 412 (5th Cir. 2001)). Therefore, Rule 9(b) requires the complaint
to set forth “the who, what, when where, and how of the alleged fraud.” United States ex rel.
Stephenson v. Archer W. Contractors, L.L.C., 548 F. App’x. 135, 139 (5th Cir. 2013) (citing
United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir.
Rule 9(b) “is context specific and flexible and must remain so to achieve the remedial
purpose of the False Claim[s] Act.” Grubbs, 565 F.3d at 190. Therefore, “a plaintiff may
sufficiently ‘state with particularity the circumstances constituting fraud or mistake’ without
including all the details of any single court-articulated standard…” Id. at 188. However,
“[f]ailure to comply with Rule 9(b)’s requirements authorizes the Court to dismiss the pleadings
as it would for failure to state a claim under Rule 12(b)(6). United States ex rel. Williams v.
McKesson Corp., No. 12-0371, 2014 WL 3353247, at *3 (N.D. Tex. July 9, 2014) (citing
Lovelace v. Software Spectrum, Inc., 78 F.3d 1015, 1017 (5th Cir. 1996)).
After reviewing the current complaint, the motion to dismiss, the response, the reply, and
the sur-reply, the Court finds that Relators have stated plausible claims for purposes of defeating
a Rule 12(b)(6) and a Rule 9(b) motion to dismiss.
Based on the foregoing, Homeward Residential, Inc.’s Rule 12(b)(6) and Rule 9(b)
Motion to Dismiss (Dkt. #63) is hereby DENIED.
SIGNED this 17th day of June, 2015.
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE
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