Nelson v. Nationstar Mortgage, LLC
6:23-cv-03339
W.D. Mo.Dec 5, 2024Background
- Plaintiff Betty Nelson brought a class action against Nationstar Mortgage ("Nationstar") regarding Nationstar’s alleged mishandling of a Partial Claims Mortgage payoff after COVID-19 forbearance.
- Nelson claims Nationstar failed to credit a HUD payoff payment to her mortgage, resulting in an overstated mortgage balance when she attempted to refinance.
- Nelson alleges she repeatedly notified Nationstar of the error, received no timely response, and was ultimately refunded less than the promised amount, months after acknowledgment.
- After refinancing, Nelson also discovered the HUD lien release was not timely recorded, encumbering her property until after litigation commenced.
- Nelson's complaint asserts claims under RESPA, breach of contract, quasi-contract, unjust enrichment, breach of implied covenant of good faith, conversion, and requests an accounting.
- Nationstar moved to dismiss all claims and to strike punitive damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| RESPA § 2605(k)(1)(C) | Nationstar failed to correct payoff error after multiple (oral) complaints | Qualified written request required | DENIED (oral requests suffice, claim plausible) |
| RESPA § 2605(k)(1)(E) | Violations tied to TILA regulations constitute RESPA violations | No RESPA claim can be based on TILA regulations | GRANTED (no cause of action under RESPA for TILA regs) |
| Breach of Contract | Overstated payoff, untimely refund, failed lien release breach contract | No specific contract term or contract attached | DENIED (contract & breach sufficiently alleged) |
| Quasi-contract/Unjust Enrichment | Alternative to contract, Nationstar retained funds rightfully hers | Express contract covers the dispute | DENIED (may plead alternatives at this stage) |
| Implied Covenant of Good Faith | Exercised judgment in bad faith regarding payoff, refund, lien release | No exercise of judgment under contract terms | DENIED (sufficient allegations of judgment exercised) |
| Conversion | Nationstar controlled funds for specific purpose, diverted them | No money paid by plaintiff; cannot convert money generally | DENIED (exception for funds entrusted for specific purpose) |
| Equitable Accounting | Needs a full mortgage accounting due to confusion | No fiduciary/trust relationship or lack of remedy alleged | GRANTED (no facts pled to support accounting) |
| Punitive Damages (RESPA/contracts) | Seeks punitive damages on all claims | Not available for RESPA or contract claims | GRANTED for RESPA; DENIED for tort claims if proven |
| Punitive Damages (Conversion) | Defendant acted with reckless indifference | Standard not met | DENIED (allegations sufficient if proven) |
Key Cases Cited
- Zutz v. Nelson, 601 F.3d 842 (8th Cir. 2010) (sets standard for facial plausibility at pleadings stage)
- Bell Atl. Corp v. Twombly, 550 U.S. 544 (2007) (standard of factual pleading sufficiency)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions alone do not suffice at 12(b)(6) stage)
- Lucero v. Curators of Univ. of Missouri, 400 S.W.3d 1 (Mo. Ct. App. 2013) (elements for Missouri breach of contract claim)
- Stamps v. Sw. Bell Tel., 667 S.W.2d 12 (Mo. Ct. App. 1984) (general bar on punitive damages in contract claims, exception for willful torts)
- CitiMortgage, Inc. v. Chicago Bancorp, Inc., 808 F.3d 747 (8th Cir. 2015) (scope of Missouri’s implied covenant of good faith in contracts)
- Dillard v. Payne, 615 S.W.2d 53 (Mo. banc 1981) (conversion exception for money entrusted for specific purposes)