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Schroeder v. Nationstar Mortgage LLC

United States District Court, W.D. Washington, Seattle

June 8, 2017

MICHAEL E. SCHROEDER, et al., Plaintiffs,
v.
NATIONSTAR MORTGAGE, LLC, et al., Defendants.

          ORDER

          Honorable Richard A. Jones United States District Judge.

         I. INTRODUCTION

         This matter comes before the Court on Defendants Nationstar Mortgage, LLC, Nationstar Mortgage Holdings, Inc. (collectively “Nationstar”), BCAP LLC Trust 2006-AA2 (“BCAP”), and Wells Fargo Bank, N.A.'s (“Wells Fargo”) Motion to Dismiss Plaintiffs' Complaint. For the reasons that follow, the Court GRANTS Defendants' motion.

         II. BACKGROUND

         In 2006, Plaintiffs Michael E. Schroeder and Marguerite E. Schroeder executed a promissory note and deed of trust securing a parcel of real property to with Liberty Financial Group, Inc., predecessor in interest to Defendant Guild Mortgage Company. Dkt. # (“Compl.”) ¶¶ 10, 17. Their mortgage loan was subsequently transferred, bundled with other loans, and placed in a trust managed by Defendant BCAP. Id. ¶¶ 18-20. Years later, Plaintiffs experienced a financial hardship and, despite efforts to modify their loan, defaulted. Id. ¶ 24. Plaintiffs filed this action to redress unlawful conduct by various entities and individuals involved in the loan servicing process and foreclosure proceedings. They allege claims for (1) violation of the Mortgage Lending and Homeownership Act, RCW 19.144.005, et seq.; (2) violation of the Consumer Protection Act, RCW 19.86.010, et seq.; (3) negligence; and (4) violation of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601, et seq. and its implementing regulations, 12 C.F.R. part 1024 (“Regulation X”).

         III. DISCUSSION

         Defendants move to dismiss Plaintiffs' complaint for failure to state a claim. Dkt. # 8. Plaintiffs oppose the motion. Dkt. # 10. As discussed below, the Court finds that Plaintiffs fail to state a claim under RESPA. Without a valid RESPA claim, the Court lacks federal question jurisdiction over this case under 28 U.S.C. § 1331. Although Plaintiffs assert that the Court separately has diversity jurisdiction under 28 U.S.C. § 1332, this assertion is lacking because they have not alleged the citizenship of corporate entity Defendants that are organized as LLCs. Plaintiffs may amend their complaint to address these deficiencies. Given that jurisdiction is uncertain, the Court declines at this time to consider Defendants' motion as it applies to Plaintiffs' state law claims.

         A. Motion to Dismiss

         i. Legal Standard

         Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss a complaint for failure to state a claim. The rule requires the court to assume the truth of the complaint's factual allegations and credit all reasonable inferences arising from those allegations. Sanders v. Brown, 504 F.3d 903, 910 (9th Cir. 2007). A court “need not accept as true conclusory allegations that are contradicted by documents referred to in the complaint.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). The plaintiff must point to factual allegations that “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 568 (2007). If the plaintiff succeeds, the complaint avoids dismissal if there is “any set of facts consistent with the allegations in the complaint” that would entitle the plaintiff to relief. Id. at 563; Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

         ii. RESPA Claim

         RESPA is a consumer protection statute that Congress enacted to curb abusive practices in the real estate market. Medrano v. Flagstar Bank, FSB, 704 F.3d 661, 665 (9th Cir. 2012). RESPA authorizes the Consumer Financial Protection Bureau (“CFPB”) to enact regulations that advance RESPA's purpose. 12 U.S.C. § 2617(a). The CFPB enacted Regulation X. Among other things, Regulation X obligates mortgage loan servicers to take certain steps to evaluate a borrower's candidacy to receive a loan modification when a borrower submits a “complete loss mitigation application.” 12 C.F.R. § 1024.41(b)(1).

         Plaintiffs contend that Nationstar violated RESPA by failing to sufficiently evaluate Plaintiffs for all available loss mitigation options. Defendants advance three arguments for dismissal.

         (1) Effective ...


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