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Thomas v. Deutsche Bank Trust Co. Americas

United States District Court, N.D. Texas, Dallas Division

June 24, 2019

SUSAN LYNN WILSON THOMAS, et al., Plaintiffs,
v.
DEUTSCHE BANK TRUST COMPANY AMERICAS, AS TRUSTEE FOR RESIDENTIAL ACCREDIT LOANS, INC., MORTGAGE ASSET-BACKED PASSTHROUGH CERTIFICATES, SERIES 2006-QS5, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          SIDNEY A. FITZWATER SENIOR JUDGE

         In Wilson v. Deutsche Bank Trust Co. Americas, 2019 WL 175078 (N.D. Tex. Jan. 0, 2019) (Fitzwater, J.) (“Wilson I”), the court granted the Fed.R.Civ.P. 12(b)(6) motion to dismiss of defendants Deutsche Bank Trust Company Americas, as Trustee for Residential Accredit Loans, Inc., Mortgage Asset-backed Passthrough Certificates, Series 2006-QS5 (“Deutsche Bank”) and Ocwen Loan Servicing, LLC (“Ocwen”), dismissed all claims of pro se plaintiffs Susan Lynn Wilson (Thomas) and Tommy Thomas, and granted the Thomases leave to replead some, but not all, of their claims. Id. at *8. The Thomases have amended their complaint, and Deutsche Bank and Ocwen move anew to dismiss under Rule 12(b)(6). For the reasons set out below, the court grants the motion and also grants plaintiffs one last opportunity to amend in order to state a claim on which relief can be granted.

         I

         This case is the latest in a series of lawsuits related to the attempted foreclosure of plaintiffs' residential property, located on Berkshire Lane in Dallas.[1] Because the relevant background facts are set out in Wilson I, see Id. at *1, the court will limit its discussion to what is necessary to understand today's decision.

         In 2006 the Thomases obtained a home equity loan from Wachovia Bank, secured by their residence on Berkshire Lane. In 2009 Homecomings Financial (“Homecomings”), the Thomases' loan servicer, sent them a letter offering a loan modification that would allegedly become permanent after the Thomases made three on-time payments. According to the second amended complaint, the “application for loss mitigation in 2009, which was initiated by the Thomases, as the result of a letter sent on May 28, 2009, by [Homecomings], resulted in an acceptance for a loan modification with a reduced monthly payment which the Thomases paid via a coupon statement they received from [GMAC Mortgage, LLC (“GMAC”)] in June, 2009.” 2d Am. Compl. 9. The Thomases maintain that they made three payments that were on time and in the agreed-upon reduced amount, but that GMAC, the Thomases' new servicer, returned the third payment, canceled the agreement, and, along with Deutsche Bank, instituted foreclosure proceedings. In 2013 Deutsche Bank voluntarily nonsuited the foreclosure action. A new foreclosure action was initiated in 2015.

         On March 28, 2017 the Thomases submitted a loss mitigation application (“Application”) to Ocwen. They contend that Ocwen told them in 2016 that it had no record of any Homecomings or GMAC loan modification application, no record of any loan modification, and no record of a payment coupon sent by GMAC. On March 29, 2017, while the Thomases' Application was pending for review, Ocwen and Deutsche Bank, by its substitute trustee, moved for expedited foreclosure. On April 26, 2017 the Thomases received notification that their Application was fully “receipted.” When the Thomases contacted Ocwen to determine why the foreclosure was proceeding despite their Application, Ocwen's representative informed them that the substitute trustee's law firm had been notified that the Application was complete and that evidence of the notification was in the computer. The Thomases contend that, as a result of defendants' filing for expedited foreclosure, they lost the opportunity to sell their home at a fair market value of $995, 000.

         On March 9, 2018 the Thomases sued Deutsche Bank and Ocwen in state court, and the case was removed to this court. In their second amended complaint, [2] the Thomases allege that defendants violated the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605(f) and 12 C.F.R. § 1024.41, by “dual tracking” the Application. They also assert that defendants violated the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), 15 U.S.C. §§ 1639h, 1640h, and 1640(a), by violating the requirements for an appraisal of the Thomases' property to establish value for a sales price; that Deutsche Bank [and Trust Americas as a successor or assignee of Wachovia] violated the Truth-in-Lending Act (“TILA”), 15 U.S.C. § 1639c, by “granting a sub prime mortgage to Borrowers who clearly did not have sufficient income after the house payment to meet other obligations or catastrophic or unplanned events, ” 2d Am. Compl. 13; that Ocwen violated 12 C.F.R. 1024.37 and 15 U.S.C. § 1463 by placing forced-placed insurance without a reasonable basis and failing to send notice of impending coverage; and that Deutsche Bank and Ocwen lack the authority to foreclose.

         Defendants move to dismiss the second amended complaint under Rule 12(b)(6). The Thomases oppose the motion.

         II

         Under Rule 12(b)(6), the court evaluates the pleadings by “accept[ing] ‘all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff[s].'” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (quoting Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004)). To survive a motion to dismiss, the Thomases must allege enough facts “to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff[s] plead[] factual content that allows the court to draw the reasonable inference that the defendant[s] [are] liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.; see also Twombly, 550 U.S. at 555 (“Factual allegations must be enough to raise a right to relief above the speculative level[.]”). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” Iqbal, 556 U.S. at 679 (quoting Rule 8(a)(2)). Furthermore, under Rule 8(a)(2), a pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Although “the pleading standard Rule 8 announces does not require ‘detailed factual allegations, '” it demands more than “labels and conclusions.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). And “a formulaic recitation of the elements of a cause of action will not do.” Id. (quoting Twombly, 550 U.S. at 555).

         III

         The court begins with defendants' motion to dismiss the Thomases' claim that Ocwen violated 12 U.S.C. § 2605(f) and 12 C.F.R. § 1024.41(c)(1)(ii), (d), and (g) by “dual tracking” the Thomases' first and only “receipted and completed” loss mitigation application with Ocwen.

         A

         “Dual tracking is the term given to situations in which the lender actively pursues foreclosure while simultaneously considering the borrower for loss mitigation options.” Gresham v. Wells Fargo Bank, N.A., 642 Fed.Appx. 355, 359 (5th Cir. 2016) (per curiam). Under 12 C.F.R. § 1024.41(g), which is privately enforceable via § 6(f) of RESPA, dual tracking is prohibited when the borrower submits a complete loss mitigation application more than 37 days before a foreclosure sale, unless certain specified conditions-not applicable here-are satisfied. Gresham, 642 Fed.Appx. at 359; see also 12 C.F.R. § 1024.41(a), (g).[3]Prior to the 2016 amendments, [4] which became effective October 19, 2017, a servicer was “only required to comply with the requirements of this section for a single complete loss mitigation application for a borrower's mortgage loan account.” 12 C.F.R. § 1024.41(i) (2016). In other words, the restrictions in § 1024.41(g) “apply only to a borrower's first loss mitigation application.” Wentzell v. JPMorgan Chase Bank, Nat'l Ass'n, 627 Fed.Appx. 314, 318 n.4 (5th Cir. 2015) (per curiam). Accordingly, plaintiffs bringing a claim for violation of 12 C.F.R. § 1024.41(g) must allege facts that demonstrate that the loan modification application at issue is their first complete loss mitigation application. See, e.g., Ruiz v. PennyMac Loan Servs., LLC, 2018 WL 4772410, at *2 (N.D. Tex. Oct. 3, 2018) (Fitzwater, J.) (dismissing § 1024.41 claim where plaintiff did “not allege any facts that enable the court to draw the reasonable inference that the loan modification application he submitted to PennyMac was his first complete loss mitigation application.”); see also Solis v. U.S. Bank, N.A., 726 Fed.Appx. 221, 223 (5th Cir. 2018) (per curiam) (“The district court did not err when it held that the [plaintiffs] failed to allege that this application was their first complete loss mitigation application. . . . Thus, [plaintiffs] again failed to plead the prerequisites of a plausible claim.”);[5] see also Rachal v. Select Portfolio Servicing, Inc., 2018 WL 3193835, at *5 (E.D. Tex. June 5, 2018), rec. adopted, 2018 WL 3156145, at *1 (E.D. Tex. June 28, 2018); Higginbotham v. IndyMac Bank, F.S.B., 2017 WL 2701939, at *4 (E.D. Tex. June 1, 2017), rec. adopted, 2017 WL 2691241, at *1 (E.D. Tex. June 22, 2017).

         To state a claim under § 6(f), a plaintiff must also show that he or she suffered actual damages as a result of the defendant's violation. See Law v. Ocwen Loan Servicing, L.L.C., 587 Fed.Appx. 790, 795 (5th Cir. 2014) (per curiam). A prevailing plaintiff is entitled to recover actual damages and reasonable attorney's fees and costs. See 12 U.S.C. § 2605(f)(1)(A), (f)(3). A plaintiff who proves a “pattern or practice of noncompliance” with RESPA may recover statutory damages of up to $2, 000. Id. § 2605(f)(1)(B). The plaintiff must allege such a pattern or practice of misconduct for his or her statutory damages claim to survive a motion to dismiss. See Allen v. Wells Fargo Bank, Nat'l Ass'n, 2017 WL 3421067, at *4 (N.D. Tex. Aug. 9, 2017) (Fitzwater, J.).

         B

         Defendants move to dismiss the Thomases' § 1024.41 claim, contending, inter alia, that they do not allege that the loss mitigation application they submitted in 2017 was their first loss mitigation application; that the Thomases admit that they submitted a complete application in 2009, Homecomings approved the loan modification, and they were required to make payments to GMAC in June 2009; that, in October 2012, Ocwen purchased GMAC ResCap, Inc.'s mortgage servicing and origination assets at a ...


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