Lackie v. PHH Mortgage Corporation

Filing 19

Memorandum Opinion and Order. Before the Court is Defendant PHH Mortgage Corporation's Motion for Judgment on the Pleadings (ECF No. 11). Defendant's Motion for Judgment on the Pleadings (ECF No. 11) is GRANTED, and Plaintiff's claims and causes of action are DISMISSED with prejudice. (see order) (Ordered by Magistrate Judge Rebecca Rutherford on 9/17/2018) (mcrd)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
JAMES K. LACKIE
Plaintiff,
v.
PHH MORTGAGE CORPORATION,
Defendant.

§
§
§
§
§ No. 3:17-CV-377-BT
§
§
§
§

MEMORANDUM OPINION AND ORDER
Before the Court is Defendant PHH Mortgage Corporation’s Motion for
Judgment on the Pleadings (ECF No. 11). For the reasons stated, the Motion is
GRANTED.
Background
This removed civil action arises out of foreclosure proceedings initiated
against real property located in Dallas, Texas (the “Property”). Pl.’s Original Pet.
¶¶ 6-16 (ECF No. 1-1). In his Original Petition filed in the 95th Judicial District
Court, Dallas County, Texas, Plaintiff James K. Lackie states that he is the owner
the Property. Id. ¶ 6. Plaintiff alleges that on January 11, 2008, Andrew W.
Primm (“Primm”) signed a Texas Home Equity Note (the “Note”) in favor of
MetLife Bank, N.A. (“MetLife”), and that the Note is secured by a Texas Home
Equity Security Instrument (the “Security Instrument”) covering the Property, for
MetLife’s benefit. Id. ¶¶ 7, 8; see also Def.’s Mot., Ex. A at 1-5. Plaintiff further
alleges that both he and Primm executed the Security Instrument. Id. ¶ 9.
-1-

At some point after Primm signed the Note, he died. See Id. ¶ 11. Plaintiff
allegedly informed Defendant of Primm’s death and of Plaintiff’s interest in the
Property and requested a loan modification, but Defendant failed to approve or
deny his application. Id. ¶¶ 12, 13. Plaintiff further alleges that Defendant refuses
to acknowledge Plaintiff has any ownership interest in the Property. Id. ¶ 14.
Plaintiff claims he has expended time trying to confirm the status of the loan
modification application and estimates he has lost income and incurred expenses
totaling approximately $1,000.00. Id. ¶ 15. Plaintiff claims that Defendant posted
the Property for a foreclosure sale that was to occur on February 17, 2017. Id. ¶ 17.
Plaintiff contends that Defendant’s foreclosure posting was improper because
Defendant failed to communicate with Plaintiff, as the borrower’s successor in
interest. Id. ¶ 20. Plaintiff further contends that Defendant failed to properly
respond to Plaintiff’s loan modification application. Id. ¶ 25.
Based on these allegations, Plaintiff filed a lawsuit asserting claims against
Defendant for violations of 12 C.F.R. §§ 1024.38 and 1024.41. In addition,
Plaintiff seeks a judicial declaration that (1) Plaintiff has an ownership interest in
the Property and therefore has the right to make payments on the Note and to
communicate with any valid mortgagee or mortgage servicer, and (2) Defendant
did not provide Plaintiff with proper notice and an opportunity to cure any
default under the Note.

-2-

After removal, Defendant filed its Motion for Judgment on the Pleadings
under Fed. R. Civ. P. 12(c). Plaintiff failed to file a response to the Motion. The
Court therefore considers Defendant’s Motion without the benefit of a response.
Legal Standard
“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) (citing In re Katrina Canal Breaches Litig., 495 F.3d 191, 205
(5th Cir. 2007)). To survive a Rule 12(b)(6) challenge, “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 Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The factual allegations must
“‘raise [the plaintiff’s] right to relief above the speculative level,’” but they do not
need to be detailed. Lee v. Verizon Commc’ns, Inc., 837 F.3d 523, 533 (5th Cir.
2016) (citing Rosenblatt v. United Way of Greater Hous., 607 F.3d 413, 417 (5th
Cir. 2010). When evaluating a Rule 12(b)(6) motion, the court’s review is limited
to the live complaint, any documents attached to that complaint, and any
documents attached to the motion to dismiss that are “central to the claim and
referenced by the complaint.” Lone Star Fund V (U.S.), L.P. v. Barclays Bank
PLC, 594 F.3d 383, 387 (5th Cir. 2010) (citing Collins v. Morgan Stanley Dean
Witter, 224 F.3d 496, 498–99 (5th Cir. 2000)).
Analysis
Plaintiff asserts claims against Defendant for violations of 12 C.F.R.
-3-

§§ 1024.38 and 1024.41—regulations promulgated under the Real Estate
Settlement Practices Act (“RESPA”), 12 U.S.C. § 2605(f). Defendant moves to
dismiss arguing Plaintiff has failed to plead fact to show he has standing to assert
a claim for civil liability under RESPA. Def.’s Mot. 3.
RESPA is a consumer protection statute that aims to promote transparency
and communication between borrowers and lenders. Among other things, the
statute sets out specific notice and disclosure requirements with which servicers
of federally-related mortgage loans must comply. 12 U.S.C. § 2605. Servicers who
fail to comply with these requirements are liable to borrowers for any actual
damages incurred by the borrowers because of such failure. 12 U.S.C.
§ 2605(f)(1)(A).
Plaintiff alleges that Defendant violated 12 C.F.R. § 1024.38 by failing to
communicate with Plaintiff about the Note and his request for a loan
modification, despite Plaintiff submitting proof of Primm’s death and of
Plaintiff’s legal interest in the Property. 1 Pl.’s Original Pet. ¶ 20. Even accepting
Plaintiff’s allegations as true, Plaintiff has failed to state a claim for relief because
RESPA does not create a private right of action to enforce § 1024.38. Longmire v.
Wells Fargo Bank, N.A., 2017 WL 4075187, at *3 (N.D. Tex. Aug. 16, 2017), rec.
adopted, 2017 WL 4022888 (Sept. 13, 2017); Smith v. Nationstar Mortg., 2015
WL 7180473, at *3-*4 (E.D. Mich. Nov. 11, 2015) (finding that violations of

1

Section 1024.38 sets forth servicing policies, procedures, and requirements, including
requirements for “[p]roperly evaluating loss mitigation applications.” 12 C.F.R. § 1024.38(b)(2).
-4-

Section 1024.38 do not create a private cause of action); Sharp v. Deutsche Bank
Nat’l Tr. Co., 2015 WL 4771291, at *6-*7 (D.N.H. Aug. 11, 2015) (same). Indeed,
the Consumer Financial Protection Bureau purposefully restructured the final
rule to eliminate private liability for violations of § 1024.38:
allowing a private right of action for the provisions that
set forth general servicing policies, procedures, and
requirements would create significant litigation risk ...
[S]upervision and enforcement by the Bureau and other
Federal regulators for compliance with and violations of
§ 1024.38 respectively, would provide robust consumer
protection without subjecting servicers to the same
litigation risk and concomitant compliance costs as civil
liability for asserted violations of § 1024.38.
Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act
(Regulation X), 78 Fed. Reg. 10696, 10778–79 (Feb. 14, 2013). In the absence of a
private right of action, Plaintiff cannot plead a claim under § 1024.38. Therefore,
Plaintiff’s claims under that section are dismissed with prejudice.
Plaintiff also alleges Defendant violated 12 C.F.R. § 1024.41 by failing to
timely and properly review his loan modification application before it initiated
foreclosure proceedings. 2 Pl.’s Original Pet. ¶¶ 22-26. Unlike § 1024.38, § 1024.41
does provide for a private right of action. Specifically, the regulation provides “[a]
borrower may enforce the provisions of this section pursuant to section 6(f) of
RESPA (12 U.S.C. 2605(f)).” 12 U.S.C. § 1024.41(a). Pursuant to the express

2

Section 1024.41 specifies procedures and timing for reviewing loss mitigation applications,
including, among other things, requiring the servicer to promptly review a loss mitigation
application received in advance of a foreclosure sale, and to notify the borrower in writing which
loss mitigation options, if any, it will offer the borrower, or the specific reasons for denying the
loss mitigation application. See 12 C.F.R. § 1024.41(b), (c), (d).
-5-

language of the regulation, however, a defendant’s liability is limited to
“borrowers.” Correa v. BAC Home Loans Servicing LP, 853 F. Supp. 2d 1203,
1207 (M.D. Fla. 2012); see also Leblow v. BAC Home Loans Servicing LP, 2013
WL 2317726 at *7 (W.D.N.C. May 28, 2013). While RESPA does not define the
term “borrower,” courts have held that the term applies only to a borrower on the
loan—that is a person who signed the promissory note or assumed the loan. See,
e.g., Leblow, 2013 WL 2317726 at *7. An individual who does not sign a
promissory note does not qualify as a borrower for purposes of the statute. See,
e.g., Dionne v. Fed. Nat’l Mortg. Ass’n, 2016 WL 6892465, at *5 (D.N.H. Nov. 21,
2016) (holding that a plaintiff named as a borrower in the mortgage but who did
not sign the note lacks standing to pursue a RESPA violation); Sharp, 2015 WL
4771291, at *5-6 (same); Leblow, 2013 WL 2317726, at *7 (same). Not even a
successor in interest to a deceased borrower has standing to bring RESPA claims
where the successor in interest did not sign a promissory note. Nelson v.
Nationstar Mortg. LLC, 2017 WL 1167230, at *3 (E.D.N.C. March 28, 2017)
(finding that plaintiff, who obtained property subject to mortgage as a result of
her parents’ death, did not become a borrower under RESPA simply upon
obtaining title to the property); Green v. Cent. Mort. Co., 2015 WL 5157479, at *5
(N.D. Cal. Sept. 2, 2015) (same).
Here, Plaintiff failed to plead he is a borrower or that he signed the Note.
See Pl.’s Original Pet. ¶¶ 6-18. Plaintiff admits that only Primm executed the
Note, and the Note—a copy of which is attached to Defendant’s Motion—contains
-6-

only Primm’s signature. Id. ¶ 7; Def.’s Mot., Ex. A at 5. Thus, even taking as true
Plaintiff’s allegations that he owned the Property and co-signed the Security
Instrument securing the Note, Plaintiff is not a borrower under RESPA. See, e.g.,
Dionne, 2016 WL 6892465, at *5 (holding that a plaintiff named as a borrower in
the mortgage but who did not sign the note lacks standing to pursue a RESPA
violation). Accordingly, Plaintiff has failed to plead a claim under 12 C.F.R. §
1024.41, and his claim under that regulation must be dismissed with prejudice.
The resolution of these threshold matters in Defendant’s favor pretermits
the Court’s consideration of Defendant’s other grounds for arguing that Plaintiff
has failed to state a claim for relief.
Declaratory Relief
Defendant also asks the Court to deny Plaintiff’s request for declaratory
relief. Def.’s Mot. 9. “[F]ederal law require[s] the existence of a justiciable case or
controversy in order to grant declaratory relief.” Val-Com Acquisitions Tr. v.
CitiMortgage, Inc., 2011 WL 1332039, at *2 (5th Cir. Apr. 7, 2011) (citing Bauer
v. Texas, 341 F.3d 352, 357-58 (5th Cir. 2003)). In an action where declaratory
relief is sought, “the parties litigate the underlying claim, and the declaratory
judgment is merely a form of relief that the court may grant.” Id. Accordingly,
when a district court dismisses a plaintiff’s RESPA claims for failure to state a
claim and that plaintiff has no remaining claims, there are no other underlying
claims for which the court can grant declaratory relief. See id.

-7-

The Court has determined that Plaintiff’s RESPA claims should be
dismissed with prejudice. Thus, there are no longer underlying claims upon
which the Court can grant Plaintiff declaratory relief. The Court therefore
dismisses Plaintiff’s claim for declaratory relief.
Conclusion
Defendant’s Motion for Judgment on the Pleadings (ECF No. 11) is
GRANTED, and Plaintiff’s claims and causes of action are DISMISSED with
prejudice.
September 17, 2018.
____________________________
REBECCA RUTHERFORD
UNITED STATES MAGISTRATE JUDGE

-8-