Lee v. Nationstar Mortgage LLC

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UNITED STATES BANKRUPTCY COURT

DISTRICT OF OREGON

PETER C. McKITTRICK 1050 S.W. SIXTH AVENUE, #f 700 M. CAROLINE CANTRELL

BANKRUPTCY JUDGE PORTLAND, OREGON 97204 LAW CLERK

(503) 326-1536 BEN COLEMAN-FIRE

LAW CLERK

TONIA McCOMBS

August 1, 2019 LAW CLERK

Beverlyann Lee

3457 NE Couch St.

Portland, OR 97232

James P. Laurick (via ECF)

Kilmer Voorhees & Laurick PC

732 NW 19th Ave.

Portland, OR 97209

Re: Lee v. Nationstar Mortgage LLC, Adv. No. 19-3019-pcem

Defendant’s Motion to Dismiss (Doc. 12)

Dear Ms. Lee and Mr. Laurick:

The purpose of this letter is to rule on the motion to dismiss filed in the above captioned

adversary proceeding by Nationstar Mortgage, LLC, d/b/a/ Champion Mortgage Company

(Defendant). For the reasons set forth below, I will grant the motion to dismiss.

The dispute between the parties arises from a 2009 reverse mortgage transaction

involving Plaintiff's residence. Plaintiff filed a complaint against Defendant for violation of the

automatic stay pursuant to § 362(k). Doc. 1. Plaintiff alleges that Defendant violated

§ 362(a)(3), (4) and (5), which, with certain exceptions not applicable here, provide that the filing

of a bankruptcy petition operates to stay:

(3) any act to obtain possession of property of the estate or of property from the estate or

to exercise control over property of the estate;

(4) any act to create, perfect, or enforce any lien against property of the estate;

(5) any act to create, perfect, or enforce against property of the debtor any lien to the

extent that such lien secures a claim that arose before the commencement of the case

under this title[.]

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§ 362(a)(3)-(5).1 Defendant moves to dismiss Plaintiff’s claims under Fed. R. Civ. P. 12(b)(6),

made applicable to this adversary proceeding by Fed. R. Bankr. P. 7012, for failure to allege facts

that state a claim on which relief may be granted.

Ordinarily, on a motion to dismiss, the Court will not consider matters outside the

pleadings. However, the Court may consider certain materials outside the pleadings without

converting the motion to one for summary judgment, such as “documents attached to the

complaint, documents incorporated by reference in the complaint, or matters of judicial notice[.]”

United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). Matters of public record may be

considered and doing so does not convert a motion to dismiss to one for summary judgment. In

re Carpenter, 205 B.R. 600, 604 (9th Cir. BAP 1997).

Defendant attaches to the motion to dismiss several exhibits but does not explain why it is

appropriate for the Court to consider those documents in conjunction with the motion to dismiss

or include an affidavit authenticating the exhibits. Therefore, except to the extent an exhibit

attached to the motion to dismiss is independently appropriate to consider under the standard set

forth above, I have not considered Defendant’s exhibits in deciding to grant the motion to

dismiss.

In ruling on a motion to dismiss under Rule 12(b)(6), the Court must accept all material

allegations of the complaint as true and construe them in the light most favorable to the party

opposing the motion. NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). Fed. R. Civ.

P. 8(a)(2), made applicable by Fed. R. Bankr. P. 7008, requires a pleading stating a claim for

relief to contain “a short and plain statement of the claim showing that the pleader is entitled to

relief[.]” The complaint need not contain “detailed factual allegations,” but it must contain more

than labels and conclusions, or “a formulaic recitation of the elements of a cause of action[.]”

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).

To survive a motion to dismiss, a complaint must contain sufficient factual matter,

accepted as true, to “state a claim to relief that is plausible on its face.” 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) (citations omitted). The court need not accept as true

a legal conclusion couched as a factual allegation. Id.

Plaintiff’s complaint alleging Defendant violated the stay is based on three grounds:

1 Section 362(a)(6) provides that the filing of a bankruptcy petition stays “any act to

collect, assess, or recover a claim against the debtor that arose before the commencement of the

case[.]” Although Plaintiff does not allege a violation of § 362(a)(6) in her complaint, Defendant

discusses it in the motion to dismiss, arguing that Plaintiff has failed to state a claim under

§ 362(a)(6). I am inclined to agree with Defendant, but I need not decide the question because

Debtor does not allege a violation of § 362(a)(6) in her complaint or address that provision in

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1. Defendant’s receipt of plan payment distributions from the chapter 13 trustee

Plaintiff alleges that Defendant violated the automatic stay when it accepted four

distributions of her plan payments from the chapter 13 trustee on 12/8/16, 7/8/17, 8/17/17 and

9/8/17 without having an approved claim and when it did not return those funds after being asked

to do so.

I will dismiss this claim because Defendant’s receipt of plan payment distributions from

the chapter 13 trustee did not violate the automatic stay as a matter of law. In re Zotow, 432 B.R.

252, 260-61 (9th Cir. BAP 2010)(lender’s receipt of payments from a chapter 13 trustee as part

of the chapter 13 process is not an act proscribed by the §362(a) injunction).

In her response to the motion to dismiss, Plaintiff cites In re Roman, 283 B.R. 1 (9th Cir.

BAP 2002), for the proposition that Defendant’s receipt of distributions from the chapter 13

trustee violates the stay. Plaintiff’s reliance on Roman is misplaced. In Roman, the creditor

violated the stay by filing a postpetition state court lawsuit against the debtor. Roman was a

chapter 7, not chapter 13, case and thus does not support Plaintiff’s claim that Defendant’s

receipt of chapter 13 plan payment distributions from the chapter 13 trustee violated the

automatic stay.

2. Defendant’s payment of 2016-2018 property taxes

Plaintiff alleges that Defendant violated the automatic stay when, on August 2, 2018, and

November 8, 2018, Defendant advanced funds to pay Plaintiff’s 2016, 2017, and 2018 property

taxes. Defendant argues in the motion to dismiss that this claim should be dismissed because the

Court had already lifted the stay when it made the payments and, even if it had not, “Debtor’s

claim fails to plead sufficient facts to assert a violation” of the stay. Motion to Dismiss, p. 8.

As a threshold matter, Plaintiff’s chapter 13 plan was confirmed on October 6, 2016.

Case 16-32793-pcm13, Doc. 27. Where, as here, the plan and order confirming plan do not

provide otherwise, confirmation vests all property of the estate in the debtor. § 1327(b). As a

result, any property of the estate re-vested in Plaintiff on October 6, 2016, when her chapter 13

plan was confirmed. Therefore, Plaintiff has failed to state a claim for violation of § 362(a)(3) or

(4), because Defendant’s payment of the property taxes in 2018, cannot be viewed as an act to

obtain possession of property of or from the estate, or to exercise control over property of the

estate, § 362(a)(3), or to create, perfect, or enforce a lien against property of the estate.

§ 362(a)(4).

The remaining question is whether Plaintiff has stated a claim under § 362(a)(5) based on

Defendant’s payment of the 2016-2018 property taxes listed above. I conclude she has not.

Under § 362(a)(5), Plaintiff’s filing of a chapter 13 petition stayed “any act to create,

perfect, or enforce against property of the debtor any lien to the extent that such lien secures a

claim that arose before the commencement of the case under this title[.]” The claims for 2017

and 2018 property taxes arose postpetition. Even assuming that Defendant’s payments of the

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property,2 it would not be proscribed by § 362(a)(5) because Defendant’s claim against Plaintiff

for those two tax years arose postpetition.

Plaintiff argues in her response to the motion to dismiss that the 2016 property taxes

constitute a prepetition claim. On October 20, 2017, Multnomah County filed a secured claim

for Plaintiff’s then unpaid 2016 property taxes. Claim 6. It is unclear whether all or only a

portion of that claim is, in fact, a prepetition claim, but Multnomah County has not withdrawn its

claim and Debtor has not filed an objection to it. Therefore, for purposes of ruling on the motion

to dismiss, I will assume that the 2016 property taxes qualify as a prepetition claim. Plaintiff has

nevertheless failed to state a claim that Defendant’s payment of the 2016 taxes violated

§ 362(a)(5) for two reasons.

First, a secured creditor’s payment of past-due property taxes to protect its security

interest is not an act to “create, perfect or enforce a lien.” It is “well established” that a transfer

of a claim from one creditor to another does not violate the automatic stay. In re Olick, 2011 WL

5075104, *7 (E.D. Pa. 2011)(unreported). The effect of Defendant’s payment of the 2016

property taxes was merely to transfer the secured claim for those taxes from Multnomah County

to Defendant.

Plaintiff argues that each of Defendant’s tax payments created a new lien, but cites no

authority to support that proposition, and it is incorrect. Defendant’s lien was created in 2009

when Plaintiff entered into the reverse mortgage transaction. Section 362(a)(5) proscribes acts to

“create, perfect or enforce” liens against a debtor’s property, not those that increase the amount

of the claim secured by a preexisting lien.

Second, this court had already granted Defendant relief from stay when it paid the 2016

property taxes. On June 29, 2018, the Court entered an order granting relief from stay for

Defendant to commence a judicial foreclosure proceeding in state court and obtain possession of

the property at issue to the extent allowed by applicable nonbankruptcy law. Case 16-32793-

pcm13, Doc. 135. The Court granted relief based on Plaintiff’s failure to (1) pay her 2017

property taxes and (2) amend her plan to provide for payment of the claim filed by Multnomah

County for her unpaid 2016 property taxes. Well before granting relief from stay, the Court had

already determined that Plaintiff is contractually obligated to timely pay her property taxes and

that to the extent she failed to do so prepetition, Nationstar was entitled to advance those costs

and add them to Debtor's loan balance. Adv. P. 16-3156, Docs. 55, 56. By granting relief from

stay, the court decided that Defendant was entitled to collect any claim it has by foreclosing and

repossessing Plaintiff’s property in accordance with state law. This Court has repeatedly told

Plaintiff that whether Defendant’s payment of the taxes violated the terms of the parties’ contract

or other nonbankruptcy law is a question for the state court to decide in the context of the judicial

foreclosure proceeding.

Plaintiff appears to believe that because the order granting relief from stay did not

expressly authorize Defendant to make the tax payments, doing so necessarily violated the stay.

James PF’. Laurick

August 1, 2019

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Plaintiff's reasoning is flawed. The first step in the analysis is to determine whether the acts

complained of are prohibited by the § 362(a) injunction. For the reasons stated above, Defendant

did not violate the stay when it paid the 2016-2018 property taxes.

3. Defendant’s assessment of postpetition attorney fees, costs and property charges

Plaintiff's complaint concerning this allegation is difficult to follow but the gravamen of

the complaint appears to be that Defendant violated the stay when it added certain postpetition

charges to her reverse mortgage account. Plaintiff clarifies in her response to the motion to

dismiss that the basis of this claim is that Defendant violated the stay by failing to report certain

postpetition charges using Official Form 41082, which form is associated with Fed. R. Bankr. P.

3002.1. See Doc. 13, p. 6. There are at least two problems with this claim.

First, it is, in substance, the same claim that Plaintiff asserted in an earlier adversary

proceeding. See AP No. 17-3117-pem, Doc. 1. I determined in the earlier proceeding that

Defendant’s alleged failure to comply with Rule 3002.1 by failing to use Official Form 41082

did not state a claim for violation of the automatic stay and dismissed that claim pursuant to Rule

12(b)(6). Id. at Doc. 14. Plaintiff did not appeal that decision. A dismissal for failure to state a

claim under Rule 12(b)(6) is considered an adjudication on the merits and has preclusive effect.

2 Moore’s Federal Practice, § 12.51 (Matthew Bender 3d Ed.). Therefore, this claim is

precluded.

Second, the acts Plaintiff complains of occurred postpetition and postconfirmation. For

the reasons discussed above, such acts do not violate § 362(a)(3), (4) or (5).

Plaintiff has not requested leave to file an amended complaint in response to the motion

to dismiss. Even if she had, I would deny leave to replead on the basis of futility. See 2 Moore’s

Federal Practice § 12.34[5] (Matthew Bender 3d Ed.)(futility is an appropriate basis upon which

to deny motion for leave to amend). For the reasons discussed above, the facts alleged by

Plaintiff clearly show that she has no legitimate claim that Defendant violated § 362. Plaintiff,

in the complaint and in her response to the motion to dismiss, raises several arguments pertaining

to issues previously decided by the Court in the main bankruptcy case and associated adversary

proceedings. A court need not grant leave for a plaintiff to reassert claims previously

determined. Garcia v. City of Chicago, 24 F.3d 966, 970 (7th Cir. 1994).

Conclusion

For the reasons stated above, I will enter an order dismissing the complaint filed in this

adversary proceeding. The Court will prepare the order.

Sincerely,

PETER C. MCKITTRICK

Bankruptcy Judge

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cc: Beverlyann Lee

James P. Laurick (via ECF)

Wayne Godare (via ECF)