James v. Nationstar Mortgage, LLC
2015 U.S. Dist. LEXIS 28762
S.D. Ala.2015Background
- Plaintiffs Aaron and Willie Mae James obtained a mortgage in 2004; Nationstar began servicing the loan in 2009 and the loan was treated as in default then. Plaintiffs later filed Chapter 13; arrearages were claimed and paid through the bankruptcy trustee, and plaintiffs continued making regular payments.
- On Nov. 22, 2013 Nationstar sent a letter incorrectly stating plaintiffs had not made payments since Dec. 2012 and demanding nearly $12,000, threatening foreclosure; plaintiffs allege Nationstar’s own records showed payments had been made.
- Plaintiffs disputed the letter; Nationstar allegedly responded non‑responsively, failed to correct the error, refused to credit certain April 2014 payments, and reported false derogatory information to credit agencies.
- Complaint asserts claims for breach of mortgage/note (both defendants), RESPA (Nationstar), FDCPA (Nationstar), TILA (FNMA), and state negligence/wantonness (both). Defendants moved to dismiss limited parts: one FDCPA subclaim (§1692f(6)), the TILA claim, and negligence/wantonness claims.
- Court accepts plaintiffs’ well‑pleaded facts for 12(b)(6) review and addresses (1) whether §1692f(6) survives given a security interest; (2) whether FNMA is a TILA “creditor” under §1640(a) for servicer duties; and (3) whether Alabama law recognizes tort claims for negligent/wanton mortgage servicing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1692f(6) claim survives despite defendants’ security interest | James: Letter threatened nonjudicial foreclosure although loan was not in default, so no present right to possession and §1692f(6) violated | Nationstar: Existence of a security interest/ownership (FNMA) means §1692f(6) does not apply | Denied dismissal — §1692f(6) viable because complaint alleges no present right to possession when threat made |
| Whether FNMA is liable under TILA §1639f/§1640(a) for servicer’s failure to credit payments | James: Labels FNMA as creditor and seeks relief against FNMA for servicer’s failure to credit payments | FNMA: TILA’s statutory definition of “creditor” requires original lender (initial payee); FNMA is an assignee/owner, not the original creditor, so §1640(a) damages do not apply | Granted dismissal — FNMA is not a TILA “creditor” for §1640(a) and assignee liability is limited by §1641(e) |
| Whether assignee liability under TILA can be extended to reach FNMA for servicer violations | James: TILA should be construed liberally to allow liability against assignees | Defendants: Statutory text and Regulation Z restrict creditor definition and allow assignee liability only in narrow circumstances | Court refuses to rewrite statute; liberal construction does not override clear statutory scheme limiting assignee liability |
| Whether Alabama law allows negligence/wantonness claims for mortgage servicing errors | James: Alleged negligent/wanton servicing, negligent hiring/training/supervision | Defendants: Alabama law does not recognize tort claims for mortgage servicing errors; duties are contractual | Granted dismissal — negligence and wantonness claims (including negligent hiring/supervision) dismissed for failure to state a claim under Alabama law |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (plaintiff must plead facts rendering claim plausible)
- Ashcroft v. Iqbal, 556 U.S. 662 (facial plausibility standard; legal conclusions not entitled to assumption of truth)
- Fenello v. Bank of America, N.A., [citation="577 F. App'x 899"] (11th Cir.) (§1692f(6) not violated where defendants had present right to foreclose)
- Vincent v. The Money Store, 736 F.3d 88 (2d Cir.) (TILA’s definition of “creditor” is restrictive; assignee not a creditor under §1602(g))
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (courts may not rewrite clear statutory text)