Beebe v. New Penn Financial LLC
2:15-cv-02164
D. Nev.Jul 6, 2016Background
- Plaintiffs Walter and Judith Beebe are pro se borrowers whose mortgage on residential property in Las Vegas is allegedly in default; New Penn Financial LLC d/b/a Shellpoint Mortgage Servicing is the loan servicer.
- Before Shellpoint became servicer, plaintiffs were pursuing a home-retention solution with the prior servicer and thereafter continued efforts with Shellpoint, including listing the property for a short sale.
- Plaintiffs allege Shellpoint forwarded foreclosure-related documents and made collection contacts; they also allege Shellpoint was unresponsive to certain debt-validation attempts.
- Plaintiffs sued for (1) quiet title, (2) violation of NRS 107.530 (foreclosure-prevention application protections), and (3) intentional misrepresentation; they sought injunctive relief and damages.
- Shellpoint moved to dismiss for failure to state claims; the court granted the motion and dismissed the complaint without prejudice, and denied the preliminary-injunction and other pending motions as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Quiet title — can mortgagor quiet title while loan remains outstanding? | Beebe contends they have superior rights and seeks adjudication of title. | Shellpoint argues plaintiffs failed to allege payment or discharge of the loan and cannot overcome presumption favoring record titleholder. | Dismissed — plaintiff must allege payment/discharge; complaint implies loan is unpaid/defaulted. |
| NRS 107.530 — did servicer violate moratorium on foreclosure actions while modification application pending? | Beebe alleges they applied for a short-sale (a foreclosure-prevention alternative) and Shellpoint forwarded foreclosure documentation/engaged in collection. | Shellpoint argues plaintiffs did not allege a completed application or that a judicial foreclosure, notice of default/sale, or trustee’s sale was initiated/conducted. | Dismissed — statute bars initiating/conducting foreclosure while application is pending; mere communications/foreclosure documents do not state a violation. |
| Intentional misrepresentation (fraud) — did servicer make actionable false representations? | Beebe alleges Shellpoint is attempting to obtain title/foreclose through fraud. | Shellpoint argues plaintiffs plead only conclusory allegations without identifying any false statements, knowledge, inducement, reliance, or damages. | Dismissed — fraud elements not pleaded with particularity or factual detail. |
| Remedy — should the complaint be dismissed with prejudice? | Plaintiffs sought injunctive relief and damages; requested preliminary injunction. | Shellpoint sought dismissal; argued deficiency of pleadings. | Complaint dismissed without prejudice; preliminary injunction and other motions denied as moot. |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (two-step framework for evaluating Rule 12(b)(6) pleadings)
- Starr v. Baca, 652 F.3d 1202 (9th Cir.) (post-Iqbal pleading guidance; factual allegations must give fair notice and plausibly suggest entitlement to relief)
- Bulbman, Inc. v. Nevada Bell, 825 P.2d 588 (Nev.) (elements for intentional misrepresentation/fraud)
- Breliant v. Preferred Equities Corp., 918 P.2d 314 (Nev.) (quiet title burden on party seeking to extinguish another's interest; presumption favoring record titleholder)