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Fodge v. Trustmark National Bank

United States District Court, W.D. Louisiana, Shreveport Division

March 18, 2019





         Before the Court are multiple pending Motions to Dismiss filed by Defendants Barksdale Federal Credit Union (“Barksdale”), Bank of America, N.A. (“Bank of America”), Ocwen Loan Servicing, LLC (“Ocwen”), PennyMac Loan Services, LLC (“PennyMac”), and PHH Mortgage Corporation (“PHH”) (collectively “Defendants”) pursuant to Federal Rule of Civil Procedure 12(b)(6). See Record Documents 85, 94, 95, 99, and 100. There is also pending a Motion to Strike filed by Defendant Bank of America. See Record Document 96. Plaintiffs Steven D. Fodge (“Fodge”), Joseph E. Carey (“Carey”), Jon A. Tokay (“Tokay”), Pamela R. Jeffcoat (“Jeffcoat”), Andrew J. Kaltenmark (“Kaltenmark”), Lance K. Inovejas and Deborah A. Inovejas (the “Inovejas”) (collectively “Plaintiffs”) oppose the motions. See Record Documents 116, 119, 120, 121, 122, and 125.[1]Defendants seek dismissal of all of Plaintiffs' claims. For the reasons set forth below, Defendants' Motions to Dismiss are hereby GRANTED. Additionally, Bank of America's Motion to Strike is DENIED AS MOOT.

         I. BACKGROUND

         Plaintiffs in this action are five individuals and one married couple who allege that they separately entered into mortgage agreements with six separate lenders and were later foreclosed on through Louisiana's executory process procedure in Louisiana state courts. See Record Document 84 at 2-3, 5-6. Plaintiffs allege that they were on active duty with various branches of the military at the relevant times and that the foreclosures violated provisions of the Servicemembers Civil Relief Act (“SCRA”), 50 U.S.C. §§ 3901 et seq., which provides protections against, inter alia, default judgments absent a waiver that meets certain requirements. See id.

         Plaintiffs also pray for certification of a state-wide class of servicemembers who, like themselves, obtained mortgage-secured loans, did not sign valid waivers acceptable under the SCRA, and who were foreclosed upon by Louisiana executory process while in active military service, as defined by the Act. See id. at 5-6, 24-25.[2] Plaintiffs seek damages in addition to declaratory and injunctive relief on behalf of a class that they estimate numbers in the thousands. Id. at 25, 28.

         Defendants responded to the complaint by each filing a motion to dismiss; additionally, a motion to sever and a motion to strike were filed by Ocwen and Bank of America, respectively. See Record Documents 86 and 96. Defendants make similar arguments against Plaintiffs' suit, including their assertions that the SCRA does not apply to Louisiana executory process proceedings and that the SCRA did not render invalid the confession of judgment provisions contained in Plaintiffs' mortgage agreements. See Record Document 137 at 1-2. Several defendants also raise arguments specific to certain plaintiffs, such as bankruptcy estoppel or a challenge to whether a plaintiff was on active duty within the meaning of the SCRA at the relevant time. See id.

         In addition, a Motion to Sever was filed by Ocwen, as well as several Motions to Stay that were filed by Ocwen, PennyMac, and Bank of America. See Record Documents 86, 97, and 105. Thereafter, on November 19, 2018, Magistrate Judge Hornsby, upon consideration of the motions to stay, entered an order staying the requirement of exchanging initial disclosures, discovery, and the class certification process pending the Court's ruling on the instant Motions to Dismiss and Motion to Strike. See Record Document 137 at 3.


         A. Pleading and 12(b)(6) Motion to Dismiss Standards

          Rule 8(a)(2) of the Federal Rules of Civil Procedure governs the requirements for pleadings that state a claim for relief, requiring that a pleading contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” The standard for the adequacy of complaints under Rule 8(a)(2) is now a “plausibility” standard found in Bell Atlantic Corp. v. Twombly and its progeny. 550 U.S. 544, 127 S.Ct. 1955 (2007). Under this standard, “factual allegations must be enough to raise a right to relief above the speculative level . . . on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. at 555-56, 127 S.Ct. at 1965. If a pleading only contains “labels and conclusions” and “a formulaic recitation of the elements of a cause of action, ” the pleading does not meet the standards of Rule 8(a)(2). Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949 (2009) (citation omitted).

         Federal Rule of Civil Procedure 12(b)(6) allows parties to seek dismissal of a party's pleading for failure to state a claim upon which relief may be granted. In deciding a Rule 12(b)(6) motion to dismiss, a court generally may not “go outside the pleadings.” Colle v. Brazos Cty., Tex., 981 F.2d 237, 243 (5th Cir. 1993). However, a court may rely upon “documents incorporated into the complaint by reference and matters of which a court may take judicial notice” in deciding a motion to dismiss. Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 338 (5th Cir. 2008).[3] Additionally, courts must accept all factual allegations in the complaint as true. See Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949. However, courts do not have to accept legal conclusions as facts. See id. A court does not evaluate a plaintiff's likelihood for success, but instead determines whether a plaintiff has pleaded a legally cognizable claim. See U.S. ex rel. Riley v. St. Luke's Episcopal Hosp., 355 F.3d 370, 376 (5th Cir. 2004). Courts considering a motion to dismiss under Rule 12(b)(6) are only obligated to allow those complaints that are facially plausible under the Iqbal and Twombly standard to survive such a motion. See Iqbal, 556 U.S. at 678- 79, 129 S.Ct. at 1949. If the complaint does not meet this standard, it can be dismissed for failure to state a claim upon which relief can be granted. See id. Such a dismissal ends the case “at the point of minimum expenditure of time and money by the parties and the court.” Twombly, 550 U.S. at 558, 127 S.Ct. at 1966.

         B. Applicability of SCRA Section 3931 to Louisiana Executory Process Proceedings

         Although Plaintiffs bring this action pursuant to the SCRA, their arguments in support of their claims rely primarily on two of the Act's provisions, specifically Sections 3931 and 3918. See Record Document 84 at 27. The Court first addresses their argument relating to Section 3931, which is titled “Protection of servicemembers against default judgments.” 50 U.S.C. § 3931. Plaintiffs make several assertions pursuant to this section, specifically that Defendants' use of Louisiana's executory process procedure to ...

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