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Ray v. Nationstar Mortgage LLC of Delaware

United States District Court, M.D. Alabama, Northern Division

February 9, 2018

HAROLD RAY, on behalf of himself and all others similarly situated, Plaintiff,
NATIONSTAR MORTGAGE LLC OF DELAWARE, d/b/a Champion Mortgage Company, Defendant.



         Pursuant to 28 U.S.C. § 636(b)(1), this case was referred to the undersigned United States Magistrate Judge for review and submission of a report with recommended findings of fact and conclusions of law. Doc. 13. Now pending before the court is the Motion to Stay in Favor of First-Filed Case (Doc. 29) filed by Defendant Nationstar Mortgage LLC of Delaware, d/b/a Champion Mortgage Company (“Nationstar”). The parties have fully briefed the issues presented (Docs. 30, 32 & 34), and convened for oral argument before the undersigned on January 10, 2018 regarding the motion. After careful consideration of the parties' submissions and arguments and the applicable law, the undersigned recommends that the motion to stay be GRANTED.


         Ray filed this action, on behalf of himself and putative nationwide and Alabama classes, on February 17, 2017. Nationstar is the only defendant. Doc. 1 at 1. The claims relate to home inspections for Nationstar's reverse mortgage customers and include breach of contract, unjust enrichment, and negligence. Doc. 1.

         Two months before Ray filed this action, however, a man named Glendale Hoggard filed a similar action against Nationstar on behalf of himself and putative nationwide and District of Columbia classes. He initially brought suit in the Superior Court of the District of Columbia on December 9, 2016, but Nationstar removed the case to United States District Court for the District of Columbia on January 13, 2017, where it is styled as Hoggard, et al., v. Nationstar Mortgage LLC of Delaware, d/b/a Champion Mortgage Company, 1:17-cv-99-TK. The Hoggard case also relates to reverse mortgage home inspections and includes claims for breach of contract, breach of the covenants of good faith and fair dealing, state-law statutory violations, and unjust enrichment. Doc. 30-1.

         On June 16, 2017, the court issued a uniform scheduling order in the instant case, and the parties commenced the discovery process. Doc. 26. On October 19, 2017, Nationstar filed the pending motion to stay these proceedings.


         Nationstar invokes the first-filed rule in arguing that this matter should be stayed so as not to interfere with the administration of the Hoggard case. “The first-filed rule provides that when parties have instituted competing or parallel litigation in separate courts, the court initially seized of the controversy should hear the case.” Collegiate Licensing Co. v. Am. Cas. Co. of Reading, Pa., 713 F.3d 71, 78 (11th Cir. 2013) (citing Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Haydu, 675 F.2d 1169, 1174 (11th Cir. 1982)). The primary purposes of the rule, of course, are to promote judicial economy and to avoid the potential for inconsistent obligations and verdicts inherent in simultaneous parallel litigation. Supreme Int'l Corp. v. Anheuser-Busch, Inc., 972 F.Supp. 604, 606 (S.D. Fla. 1997).

         Under the first-filed rule, “[w]here two actions involving overlapping issues and parties are pending in two federal courts, there is a strong presumption across the federal circuits that favors the forum of the first-filed suit.” Manuel v. Convergys Corp., 430 F.3d 1132, 1135 (11th Cir. 2005) (citations omitted). In applying this rule, the district courts of this circuit generally employ a three-factor test based on (1) the chronology of the cases, (2) the similarity of the parties, and (3) the similarity of the issues. See Rudolph & Me, Inc. v. Ornament Cent., LLC., 2011 WL 3919711, at *2 (M.D. Fla. Sept. 7, 2011); Goldsby v. Ash, 2010 WL 1658703, at *2 (M.D. Ala. Apr. 22, 2010). Even if the test is met, forum shopping, bad-faith litigation tactics, or other equitable considerations may override the presumption in favor of the first-filed forum. See, e.g., Alltrade, Inc. v. Uniweld Prod., Inc., 946 F.2d 622, 628 (9th Cir. 1991). Applying these factors here, the undersigned finds that the instant matter substantially overlaps with the first-filed Hoggard case and that there are no significant countervailing equitable considerations. This case must be stayed as a result.

         A. Chronology

         The chronology is straightforward. The Hoggard case was filed on December 9, 2016 and removed to federal court on January 13, 2017. The instant case followed on February 17, 2017. Ray does not dispute this chronology or the fact that it makes Hoggard, strictly speaking, the “first-filed” case. Instead, he invites the court to weigh the relative progress of the litigation in the two forums, offering that the discovery process is more advanced in this case than in Hoggard. See Doc. 32 at 5-6. Nationstar disputes the facts underlying Ray's contention that the Hoggard case is farther along, but the court need not resolve this factual dispute. Ray has not offered any authority for the proposition that the court may look behind the absolute time of filing in its consideration of the first-filed rule, and the court finds ample authority to the contrary. See, e.g., Strother v. Hylas Yachts, Inc., 2012 WL 4531357, at *2 (S.D. Fla. Oct. 1, 2012) (determining the first-filed suit based solely on the timing of the complaints); Catanese v. Unilever, 774 F.Supp.2d 684, 688 (D.N.J. 2011) (holding that the order in which the competing cases were filed “is all that matters for purposes of the rule”). Hoggard is thus the first-filed case and the United States District Court for the District of Columbia is entitled to a strong presumption in its favor.

         B. Similarity of Parties

         The court finds that the parties are substantially similar. The first-filed rule does not demand complete unity of parties. E.g., GeorgiaCarry.Org, Inc. v. U.S. Army Corps of Engineers, 2015 WL 196018, at *2 (S.D. Ga. Jan. 14, 2015). Instead, the law requires merely that “some [of] the parties in one matter are also in the other matter, regardless of whether there are additional unmatched parties in one or both matters.” Intersearch Worldwide, Ltd. v. Intersearch Grp., Inc., 544 F.Supp.2d 949, 959 n.6 (N.D. Cal. 2008) (citations omitted); see also Strother, 2012 WL 4531357, at *2 (finding substantial overlap in cases that “feature some different causes of action and different parties”).

         Nationstar is the defendant in both actions. And the putative nationwide classes may not be identical, but they do overlap. Ray largely concedes this point in his brief, arguing only that the classes are “defined differently.” Doc. 32 at 6. This is true. See Doc. 32 at 6 (setting out the respective putative class definitions). But the variance in class definitions does not foreclose a finding that the parties are substantially similar. Both class definitions cover homeowners who had reverse mortgages serviced by Nationstar and who were assessed allegedly improper fees for property inspections. In the Hoggard class, the inspections must have been triggered by the homeowner's failure to return an annual occupancy certification form to Nationstar. Doc. 30-1 at 17. The Ray inspections may have been triggered by any number of events as long as the homeowner received no prior notice of the inspections. Doc. 1 at 12. Viewed side by side, the class definitions are broad enough to encompass many of the same plaintiffs since the classes of homeowners who failed to return an occupancy form and who did not receive prior notification of their inspections are not mutually exclusive. See Fuller v. Abercrombie & Fitch Stores, Inc., 370 ...

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