Hoy v. Aurora Loan Services, LLC
3:16-cv-00502
S.D. OhioJun 5, 2017Background
- Hoy and Clinton Dalton assumed a 2006 mortgage in 2010; Dalton died in 2012 leaving Hoy as sole obligor and owner.
- Aurora initiated foreclosure in 2011; a Foreclosure Decree entered in 2012 and multiple sheriff's sales were repeatedly delayed by Hoy's bankruptcy filings.
- Hoy pursued loan modifications while servicing transferred among Aurora, Nationstar, Carrington, and Rushmore; he alleges missed or misdirected communications and failures to honor modification offers.
- A sheriff's sale occurred around August 31, 2015, with Aurora purchasing the property.
- Hoy filed suit alleging RESPA violations and state-law breach of contract claims against the servicers; defendants moved to dismiss for failure to state a claim.
- The district court considered whether the loan was exempt from RESPA because it was secured by property exceeding 25 acres and whether to retain supplemental jurisdiction over the contract claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of RESPA/regulation claims | Hoy: RESPA and Regulation X apply despite acreage because exemption is inconsistent with RESPA's purposes | Defendants: Loan secured by >25 acres, so formerly exempt from RESPA during relevant period | Court: Loan was exempt under the pre-2015 25-acre rule; RESPA claims dismissed with prejudice |
| Validity of 25-acre exemption under Larionoff | Hoy: Larionoff requires invalidation of a regulation inconsistent with statute, so CFPB's later elimination shows exemption conflicted with RESPA | Defendants: Exemption was valid; CFPB removed it later for harmonization, not because it conflicted with RESPA | Court: Larionoff distinguishable; exemption did not conflict with RESPA purposes; not invalidated |
| Supplemental jurisdiction over breach of contract claims | Hoy: Federal dismissal shouldn't prevent adjudication here in federal court | Defendants: With federal claims dismissed, court should decline supplemental jurisdiction | Court: Declined to exercise supplemental jurisdiction; breach claims dismissed without prejudice to state-court refiling |
| Relief and disposition | Hoy: Seeks RESPA remedies and contract damages | Defendants: Move for dismissal under Rule 12(b)(6) | Court: Sustained all defendants' motions to dismiss; judgment for defendants |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a plausible claim)
- Conley v. Gibson, 355 U.S. 41 (1957) (pleading standards discussed historically)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions must be supported by factual allegations)
- Mayer v. Mylod, 988 F.2d 635 (6th Cir. 1993) (purpose of Rule 12(b)(6) motion explained)
- Handy-Clay v. City of Memphis, 695 F.3d 531 (6th Cir. 2012) (construing complaints in plaintiff's favor on motions to dismiss)
- United States v. Larionoff, 431 U.S. 864 (1977) (agency regulations invalid if inconsistent with statute)
- United Mine Workers of Am. v. Gibbs, 383 U.S. 715 (1966) (discretion to decline supplemental jurisdiction when federal claims are dismissed)