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Long v. Nationstar Mortgage LLC

United States District Court, S.D. West Virginia, Charleston Division

March 9, 2018

ANTHONY D. LONG, Plaintiff,



         Pending before the Court are the parties' cross-motions for partial summary judgment.[1](ECF No. 75; ECF No. 80.) Also pending before the Court is Plaintiff's motion for class certification.[2] (ECF No. 78.) For the reasons discussed more fully below, the Court GRANTS IN PART and DENIES IN PART Defendant's motion for partial summary judgment. (ECF No. 75.) The Court also DENIES IN PART Plaintiff's motion for partial summary judgment. (ECF No. 80.) The Court further DENIES Plaintiff's motion for class certification. (ECF No. 78.)

         I. BACKGROUND

         This action arises from a dispute between Plaintiff Anthony Long (“Long”) and his loan servicer, Defendant Nationstar Mortgage, LLC (“Nationstar”), regarding allegations of illegal debt collection.

         In 2007, Long purchased a home and financed it with a loan from Flagstar Bank. (See ECF No. 76 at ¶ 1.) On October 1, 2009, Flagstar Bank transferred the servicing of Long's mortgage to Nationstar. (Id. at ¶ 4.) In December of 2009, because Long was struggling to make his payments, Nationstar agreed to a loan modification that would reduce the interest rate on Long's loan. (Id. at ¶¶ 4-5.) The Loan Modification Agreement was executed on January 5, 2010. (Id.)

         After the loan modification, Long continued to struggle to make regular mortgage payments and his home was scheduled for foreclosure on at least four separate occasions between 2011 and 2014. (See ECF No. 82 at 2-6.) Long alleges that on several occasions during this time period, Nationstar refused to accept Long's payments to reinstate the loan and attempted to collect attorneys' fees from him. (See ECF No. 20 at ¶¶ 55-56, 59-60, 63, 66-67.)

         On February 15, 2011, David Triplett (“Triplett”) filed an action on behalf of himself and a class of similarly situated individuals against Nationstar alleging that Nationstar charged excessive late fees, failed and refused to credit loan payments, and collected or threatened to collect improper expenses, including attorneys' fees. (See Triplett v. Nationstar Mortgage, LLC, Case No. 3:11-cv-238 at ECF No. 1-1.) Triplett sought to certify five subclasses of West Virginia citizens whose loans were serviced by Nationstar sometime after February 15, 2010, including citizens whom Nationstar had charged attorneys' fees. (See Id. at ECF No. 43.)

         Before certification of any class, Triplett and Nationstar reached a class-wide settlement. (See ECF No. 5 at ¶ 11.) The Settlement Agreement sought to certify a class that included individuals who were sent form debt collection letters seeking payment for the “expenses of collection” and individuals who had made partial loan payments that were returned prior to the acceleration of their loan. (Case No. 3:11-cv-238 at ECF No. 70-2 at 3 (Settlement Agreement).) This class included Long. (See ECF No. 75-1 at 266 (Redacted Class Roster).) United States District Judge Robert C. Chambers conditionally certified the settlement class and preliminarily approved the Settlement Agreement. (Case No. 3:11-cv-238 at ECF No. 73.)

         Pursuant to the Settlement Agreement, Nationstar sent a Notice of Proposed Class Settlement (“Notice”) to all members of the settlement class, including Long. (See Id. at ECF No. 70-2.) The Notice included information on class members' right to opt out of the settlement class or to object to the settlement. (See id.) It also advised class members that they had the right to make a claim for reimbursement of any default expenses, such as attorneys' fees, that were charged to their account. (See id.) The Notice also informed class members that they would not be able to “sue or continue to sue Nationstar about any legal claims they have or may have up until the Effective Date of the Settlement, arising out of, related to, or in any manner concerning or involving claims for charging excessive late fees, issuing demand letters demanding payment of ‘expenses of collection, ' returning partial loan payments prior to the date of acceleration, or default-related expenses.” (See Id. at ECF No. 70-2 at 3.) The Effective Date was defined as 31 days after entry of the Final Approval Order. (Id. at ECF No 78.) The Notice directed the class members to the Settlement Agreement for more information. (Id. at ECF No. 70-2 at 3.)

         The Notice was sent by first class mail to Long's address. (See ECF No. 91-1 at ¶ 8.) Long was not among the ten class members who had “known bad addresses” nor did the class administrator receive a notification that the Notice sent to Long was not delivered or received. (Id. at ¶¶ 10-11.) None of the class members, including Long, opted out of the class. (Id. at ¶ 12.)

         On October 16, 2012, the Court entered the Final Approval Order. (Case No. 3:11-cv-238 at ECF No. 78.) On December 14, 2012, the class administrator remitted payment of $704.69 to Long. (ECF No. 76 at ¶ 22.) Long cashed the payout check a month later. (Id.) Thus, pursuant to the terms of the Settlement Agreement, Long released all claims against Nationstar relating to late fees, returned payments, and default-related fees, including attorneys' fees, arising on or before November 16, 2012. (See Case No. 3:11-cv-238 at ECF No. 70-2.)

         Following the class settlement, Long continued to struggle to make payments on his mortgage and Nationstar once again brought foreclosure proceedings. Long alleges that in the time period following the settlement, Nationstar continued to demand legal fees and returned payments that Long submitted to cure the default on his mortgage. (See ECF No. 20 at ¶¶ 75- 93.) Long's home was most recently scheduled for a foreclosure sale on October 7, 2014. (See Id. at ¶ 90.) Before this date, Long attempted to make payments to cure the default, but Nationstar remitted these payments stating that they were insufficient. (See ECF No. 76 at ¶¶ 27-30.) However, the foreclosure sale was halted after Long appeared at the sale and paid the trustee. (See ECF No. 20 at ¶¶ 91-92.)

         On December 10, 2014, Long filed the present action against Nationstar in the Circuit Court of Nicholas County, West Virginia, alleging multiple claims of illegal debt collection and violations of law through the servicing of his mortgage. (See ECF No. 1-1.) On January 28, 2015, Nationstar timely removed this action to this Court. (See ECF No. 1.) Long subsequently moved the Court to amend his Complaint to convert one of his claims into three class claims. (ECF No. 7.) The Court granted the motion and Long's Amended Complaint was filed on May 7, 2015. (See ECF No. 16; ECF No. 20.)

         The Amended Complaint alleges three class claims and seven individual claims for relief. The class claims are premised on the allegation that Nationstar routinely assesses and collects illegal fees from West Virginia borrowers in violation of the West Virginia Consumer Credit and Protection Act (“WVCCPA”). (See ECF No. 20 at ¶¶ 95-115.) The seven individual claims allege violations of the WVCCPA (claims one through three); breach of contract (claim four); a violation of West Virginia Code § 38-1-15 (claim five); fraudulent inducement (claim six); and inducement by unconscionable conduct in violation of the WVCCPA (claim seven). (See Id. at ¶¶ 116-145.)

         On May 28, 2015, Nationstar filed a partial motion to dismiss the Amended Complaint. (ECF No. 17.) The Court granted in part and denied in part Nationstar's motion. (ECF No. 48.) Specifically, the Court dismissed Long's fifth claim in its entirety and dismissed Long's sixth and seventh claims in part to the extent that they were premised on the alleged illegality of Nationstar's capitalization of past-due interest as part of Long's loan modification. (Id. at 15.)

         Nationstar filed the present motion for partial summary judgment on October 19, 2017, as to Long's first, third, fourth, sixth, and seventh individual claims, and, in part, on Long's second individual claim insofar as they are the based on allegations that were the subject of the class settlement. (ECF No. 76 at 2.) Nationstar also requests summary judgment on Long's class claims, contending that Long cannot represent a class of individuals who were charged attorneys' fees because Long was never charged attorneys' fees. (Id. at 3.) Long subsequently filed a partial motion for summary judgment as to his class claims. (ECF No. 80.) Timely responses and replies were filed in both motions. (ECF No. 83; ECF No. 86; ECF No. 90; ECF No. 95.) Accordingly, both motions are fully briefed and ripe for review.

         On October 27, 2017, Long filed a motion for class certification under Federal Rules of Civil Procedure 23(a), 23(b)(2)-(b)(3) seeking to certify a class composed of individuals who suffered the injuries alleged in his class claims. (ECF No. 78.) Nationstar filed a timely response in opposition to Long's motion, (ECF No. 89), and Long filed a timely reply. (ECF No. 94.) As such, that motion is also fully briefed and ripe for review.


         Rule 56 of the Federal Rules of Civil Procedure governs motions for summary judgment. That rule provides, in relevant part, that summary judgment should be granted if “there is no genuine issue as to any material fact.” Summary judgment is inappropriate, however, if there exist factual issues that reasonably may be resolved in favor of either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). “Facts are ‘material' when they might affect the outcome of the case, and a ‘genuine issue' exists when the evidence would allow a reasonable jury to return a verdict for the nonmoving party.” News & Observer Publ. Co. v. Raleigh-Durham Airport Auth., 597 F.3d 570, 576 (4th Cir. 2010). When construing such factual issues, the Court must view the evidence “in the light most favorable to the [party opposing summary judgment].” Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970).

         The moving party may meet its burden of showing that no genuine issue of fact exists by use of “depositions, answers to interrogatories, answers to requests for admission, and various documents submitted under request for production.” Barwick v. Celotex Corp., 736 F.2d 946, 958 (4th Cir. 1984). Once the moving party has met its burden, the burden shifts to the nonmoving party to “make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). If a party fails to make a sufficient showing on one element of that party's case, the failure of proof “necessarily renders all other facts immaterial.” Id. at 323.

         “[A] party opposing a properly supported motion for summary judgment may not rest upon mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial.” Liberty Lobby, 477 U.S. at 256. “The mere existence of a scintilla of evidence” in support of the nonmoving party is not enough to withstand summary judgment; the judge must ask whether “the jury could reasonably find for the plaintiff.” Id. at 252.

         III. ANALYSIS

         Federal Rule of Civil Procedure 23(c)(1) “affords a district court discretion to rule on a summary judgment motion before ruling on a class certification motion.” Rhodes v. E.I. du Pont de Nemours & Co., 657 F.Supp.2d 751, 756 (S.D. W.Va. 2011); see Fed. R. Civ. P. 23(c)(1) (Adv. Comm. Note (2003)). Accordingly, the Court will address the cross-motions for summary judgment prior to the motion for class certification because a decision on the merits necessarily affects the decision on class certification. See Delebreau v. Bayview Loan Serv., LLC., 770 F.Supp.2d 813, 818-19 (S.D. W.Va. 2011); Rhodes, 657 F.Supp.2d at 756.

         Cross-motions for summary judgment are reviewed separately if material facts are in dispute. Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003). Here, because material facts are in dispute, the Court will address each motion separately. Nationstar's partial motion for summary judgment seeks judgment as a matter of law on Long's individual and class claims while Long's partial motion for summary judgment only seeks judgment as a matter of law as to his class claims. As such, the Court will address Nationstar's motion before turning to Long's motion.

         A. Nationstar's Partial Motion for Summary Judgment

         In his Amended Complaint, Long alleges seven individual claims against Nationstar. (See ECF No. 20.) As stated above, claims one through four and, in part, six and seven of Long's Amended Complaint survived Nationstar's motion to dismiss. In its partial motion for summary judgment Nationstar seeks judgment as a matter of law on Long's individual and class claims. The court will address Nationstar's arguments as to Long's individual claims first.

         1. Long's Individual Claims

         Nationstar contends that Long's first, fourth, sixth, seventh, and, in part, second and third individual claims are barred by res judicata due to the Triplett Settlement discussed above. Nationstar further offers arguments pertaining to specific claims as to why it is entitled to judgment as a matter of law. The Court will address the res judicata argument first before turning to Nationstar's other, claim specific arguments.

         a. Res Judicata

         Under the doctrine of res judicata, or claim preclusion, “a judgment on the merits in a prior lawsuit bars a second lawsuit involving the same parties or their privies based on the same cause of action.” Parklane Hosiery Co., Inc., v. Shore, 439 U.S. 322, 326 n.5 (1979). Res judicata is an affirmative defense. See Fed. R. Civ. P. 8(c)(1). Under West Virginia law, in order to assert res judicata, the following three elements must be present:

First, there must have been a final adjudication on the merits in the prior action by a court having jurisdiction of the proceedings. Second, the two actions must involve either the same parties or persons in privity with those same parties. Third, the cause of action identified for resolution in the subsequent proceeding either must be identical to the cause of action determined in the prior action or must be such that it could have been resolved, had it been presented, in the prior action.

Blake v. Charleston Area Med. Ctr., Inc., 498 S.E.2d 41, 44 ( W.Va. 1997). In reviewing these factors, the Fourth Circuit noted that “[t]he preclusive affect of a prior judgment extends beyond claims or defenses actually presented in previous litigation.” Meekins v. United Transp. Union, 946 F.2d 1054, 1057 (4th Cir. 1991). Furthermore, “[t]he doctrine of res judicata bars claims that were ‘raised and fully litigated' as well as claims that could have been litigated in the prior proceeding, ‘regardless of whether they were asserted or determined.'” Fugate v. Frontier W.Va., Inc., No. 2:17-cv-00559, 2017 WL 3065216, at *3 (S.D. W.Va. 2017) (quoting Peugeot Motors of Am., Inc. v. E. Auto Distribs., Inc., 892 F.2d 355, 359 (4th Cir. 1989)).

         Res judicata may be applied against class members if “invocation of the bar is consonant with due process.” Id. (citing Johnson v. Gen. Motors Corp., 598 F.2d 432, 436 (5th Cir. 1979)); see also Matsushita Elec. Indus. Co. v. Epstein, 516 U.S. 367, 379 (“[U]nder Federal Rule of Civil Procedure 23, all members of the class, whether of a plaintiff or a defendant class, are bound by the judgment entered in the action unless, in a Rule 23(b)(3) action, they make a timely election for exclusion.”). This includes class actions where the preclusive action was resolved by a class settlement. See In re MI Windows and Doors, Inc., Prods. Liab. Litig., 860 F.3d 218, 225 (4th Cir. 2017) (upholding district court decision enjoining plaintiff's claims where plaintiff claims were “covered by the final judgment and released by the settlement in the MDL”). The “mandatory notice pursuant to subdivision (c)(2), together with any discretionary notice which the court may find it ...

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