The opinion
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
BLYTHE and SEAN MCDONNELL, )
)
Plaintiffs/Counter-claim Defendants, )
)
v. )
)
NATIONSTAR MORTGAGE LLC, and ) Case No. 4:17-cv-00146-DGK
)
Defendant/Counter-claim Plaintiff, )
)
FIELD ASSET SERVICES, LLC a/k/a )
ASSURANT FIELD ASSET SERVICES, )
SOLUTIONSTAR FIELD SERVICES, LLC, )
SPECTRUM FIELD SERVICES, INC., and )
SOUND MIND REAL ESTATE, LLC, )
)
Defendants. )
ORDER GRANTING MOTION TO DISMISS
This lawsuit alleges Defendant Nationstar Mortage LLC (“Nationstar”), the assignee on
Plaintiff Blythe McDonnell’s home mortgage deed of trust, and the other Defendants unlawfully
entered her home and caused damage to it. Nationstar has filed a counterclaim alleging breach of
the mortgage note and deed of trust.
Now before the Court is Defendant Sound Mind Real Estate, LLC’s (“Sound Mind”)
Motion to Dismiss Count I of Plaintiffs’ First Amended Complaint (Doc. 65). Because Count I of
the First Amended Complaint (Doc. 54) fails to plead a viable Missouri Merchandising Practices
Act (“MMPA”) claim against Sound Mind, the motion is GRANTED.
Standard of Review
A complaint may be dismissed if it fails “to state a claim upon which relief can be granted.”
Fed. R. Civ. P. 12(b)(6). To avoid dismissal, a complaint must include “enough facts to state a
claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007). This requires more than pleading “labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do.” Id. at 555. “A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The
plaintiff need not demonstrate the claim is probable, only that it is more than just possible. Id.
In reviewing the complaint, the court construes it liberally and draws all reasonable
inferences from the facts in the plaintiff’s favor. Monson v. Drug Enforcement Admin., 589 F.3d
952, 961 (8th Cir. 2009). The court generally ignores materials outside the pleadings but may
consider materials that are part of the public record or materials that are necessarily embraced by
the pleadings. Miller v. Toxicology Lab. Inc., 688 F.3d 928, 931 (8th Cir. 2012). However,
because the motion presents matters outside the pleadings, namely, a work order from Field Asset
Services hiring Sound Mind to provide property preservation services, “the motion must be treated
as one for summary judgment under Rule 56.” See Fed. R. Civ. P. 12(d).
Factual Background
Count I of Plaintiffs’ First Amended Complaint is brought under the MMPA, Mo. Rev.
Stat. § 407.020-.025. The allegations relevant to that count and the pending motion are as follows:
Plaintiff Blythe McDonnell1 granted a deed of trust secured by a house, in Kansas City,
Missouri. On February 7, 2013, the deed of trust was assigned to Nationstar, apparently so it could
service the loan. At some point, it is unclear when, Nationstar hired Defendant Spectrum Field
Services, Inc., (“Spectrum”) to inspect the premises.
1 It appears Ms. McDonnell took out the mortgage. The Petition alleges Mr. McDonnell also has an ownership interest
in the Property that Defendants harmed.
Spectrum inspected the property on September 18, 2016. Based on a comment from a
neighbor, Spectrum reported the house was vacate. On September 20, 2106, Specturm left a notice
on the door of the house stating that it had inspected the property and found it vacant. The notice
advised Plaintiffs to call a specific telephone number in the event it was not vacant.
On September 21, 2016, Plaintiffs were at the house and saw the notice on the door.
Plaintiff Sean McDonnell called the number the next day and advised that the house was not
vacant, and that he did not permit anyone to enter the house.
Around this time, Defendant Field Asset Services, LLC, (“FAS”) hired Sound Mind to
perform property preservation services at the house. On September 24, 2016, Sound Mind—acting
on behalf of Nationstar, FAS, and Defendant Solutionstar Field Services, LLC—entered the
property by climbing over a locked fence and mowed the grass, trimmed the trees, and removed
personal items from the yard. Later that same day, Mr. McDonnell called the phone number again
and reiterated that Defendants were not allowed or permitted to return to the property.
On September 25, 2016, Sound Mind entered the house, changed the lock on the back door,
and winterized the house. As part of winterizing the house, its employees turned off power at the
breaker box, which rendered the home’s sump pump inoperable. A rainstorm subsequently caused
water to enter the partially finished basement; it could not be pumped out, and standing water
caused significant damage in the basement.
Nationstar, though other Defendants, retained Sound Mind pursuant to Section 9 of the
Deed of Trust, which governs how the lender protects its interest in the Property. In relevant part,
Section 9 states:
If . . . (c) Borrower has abandoned the Property, then Lender may
do and pay for whatever is reasonable or appropriate to protect
Lender’s interest in the Property and rights under this Security
Instrument, including . . . securing and/or repairing the Property. .
. . Securing the Property includes, but is not limited to, entering the
Property to make repairs, change locks, replace or board up doors
and windows, drain water from pipes, eliminate building or other
code violations or dangerous conditions, and have utilities turned
on or off. Although Lender may take action under this Section 9,
Lender does not have to do so and is not under any duty or
obligation to do so.
Deed of Trust (Doc. 5-1, Ex. 2) (emphasis added).
Discussion
In relevant part, the MMPA prohibits
[t]he act, use or employment by any person of any deception, fraud,
false pretense, false promise, misrepresentation, unfair practice or
the concealment, suppression, or omission of any material fact in
connection with the sale or advertisement of any merchandise in
trade or commerce.
Mo. Rev. Stat. 407.020.1. Plaintiffs reason the Petition states a viable MMPA claim against Sound
Mind because Sound Mind was acting on Nationstar’s behalf and Nationstar was performing loan
services, thus Sound Mind was performing services pursuant to and in connection with the original
loan agreement.
The Missouri Supreme Court has held that the MMPA applies to downstream purchasers
of a loan note as well as companies that service mortgage loans. See Conway v. Citimortgage,
Inc., 438 S.W.3d 410, 414 (Mo. 2014). In another decision handed down the same day as Conway,
however, it held a service is not in connection with the sale of a loan if “that was not a service the
lender agreed to sell or the borrower agreed to buy when the parties agreed to the loan.” Watson
v. Wells Fargo Home Mortg., Inc., 438 S.W.3d 404, 408 (Mo. 2014).
The Eighth Circuit analyzed these decisions in the context of determining whether a trustee
under a deed of trust can be sued under the MMPA for carrying out its duties as a trustee. In
deciding whether such services are made “in connection with the sale” of a loan, it held:
the Conway court made clear that its rationale turned on the
continuing nature of the lender-borrower relationship. As the court
explained, “[b]ecause [the lender and the borrower] must continue
to perform ... duties for the life of the loan, the sale continues
throughout the time the parties perform their duties.” Consequently,
an action taken while performing these continuing duties is “in
connection with” the sale of a loan. Unlike the defendants in
Conway and Watson, [the trustee] did not assume a continuing duty
to service the Wivells’ loan. Instead, the deed of trust established a
narrow, contingent role for [the trustee] in the event that the Wivells
defaulted. Because [the trustee] did not “continue to perform” these
duties “for the life of the loan,” the rule established by Conway and
Watson does not apply to a trustee.
Wivell v. Wells Fargo Bank, N.A., 773 F.3d 887, 895 (8th Cir. 2014) (quoting Conway, 438 S.W.3d
at 415).
The question here is whether Sound Mind’s alleged role is more analogous to a loan
servicer or to a trustee exercising power pursuant to some provision in a deed of trust. Unlike a
loan servicer, Sound Mind did not play a continuous role in this loan transaction. Like the trustee
in Wivell, it played a brief, limited role which was triggered by a contingent event, namely a
purported default on the loan. Although Plaintiffs attempt to characterize Sound Mind as a loan
servicer by arguing it provided services “in connection with” the original loan transaction, Sound
Mind is not analogous to a loan servicer. It provides property preservation services, and property
preservation services are not a service that was sold to, or purchased by, Ms. McDonnell in
connection with her mortgage. Sound Mind is simply a third-party that was hired by a third-party
that was hired by Nationstar to perform certain work purportedly authorized by Section 9 of the
deed of trust. To hold otherwise stretches the meaning of “loan services” beyond the caselaw and
common sense.
Consequently, Plaintiffs cannot maintain an MMPA claim against Sound Mind in this case.
Additionally, because by operation of Rule 12(d) the motion is transformed into one for summary
judgment, Sound Mind is entitled not just to dismissal of Count One, but to summary judgment on
Count One.
Conclusion
For the reasons discussed above, the Court enters summary judgment for Sound Mind on
Count I.
IT IS SO ORDERED.
Date: May 22, 2018 /s/ Greg Kays
GREG KAYS, CHIEF JUDGE
UNITED STATES DISTRICT COURT