United States District Court, N.D. Alabama, Southern Division
OWEN BOWDRE CHIEF UNITED STATES DISTRICT JUDGE.
convoluted case involves a reverse mortgage, a death, an
inheritance, a fire, a foreclosure, and an insurance payout,
after which Plaintiffs Jeanette Bennett and Maggie Bell
contend their money ended up in the wrong hands.
allege that, among other Defendants, CIT Bank, N.A., CIT
Group, Inc., and Federal National Mortgage Association
(“Fannie Mae”) wrongfully took insurance proceeds
that belonged to Plaintiffs or their mother's estate
through a series of misrepresentations; the setting arises
out of an insurance claim on real property that Fannie Mae
bought at a foreclosure sale. In their amended complaint,
Plaintiffs seek to recover the insurance proceeds from
Defendants by bringing claims for declaratory judgment,
conversion, fraud, and wantonness. CIT and Fannie Mae filed
substantively identical motions to dismiss. (Doc. 4, Doc. 6,
court will DENY the motions to dismiss as to Plaintiffs'
claims for declaratory judgment and conversion. Plaintiffs
have alleged a plausible interest in the insurance proceeds
because they owned the realty covered by the insurance policy
at the time they filed the insurance claim, the insurance
company listed Plaintiffs' mother's estate as a payee
on the insurance proceeds check, and Plaintiffs owed no debt
to Defendants after foreclosure. Because Plaintiffs allege
that Defendants took the insurance proceeds to the exclusion
of Plaintiffs' rights, Plaintiffs have sufficiently
alleged an actual controversy to bring a cause of action for
declaratory judgment and conversion.
court will GRANT the motions to dismiss as to Plaintiffs'
claims for fraud and wantonness. Plaintiffs have not pled
facts showing (1) reliance by them on any misrepresentation
to support their fraud claim, or (2) any non-economic harm to
support a standalone claim for wantonness.
STANDARD OF REVIEW
motion to dismiss challenges the legal sufficiency of a
complaint. Under Rule 12(b)(6) of the Federal Rules of Civil
Procedure, a defendant can move to dismiss a complaint for
“failure to state a claim upon which relief can be
granted.” The complaint will survive the motion to
dismiss if it “allege[s] ‘enough facts to state a
claim to relief that is plausible on its face.'”
Adinolfe v. United Tech. Corp., 768 F.3d 1161, 1169
(11th Cir. 2014) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)).
complaint to be “plausible on its face, ” it must
contain enough “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). And the court accepts
as true the factual allegations in the complaint.
all allegations can defeat a motion to dismiss.
“[L]abels and conclusions” and speculation
“will not do.” Twombly, 550 U.S. at 555.
So, the court will look only at well-pled facts, and
if those facts, accepted as true, state a plausible claim for
relief, then the complaint will survive the motion to
dismiss. Iqbal, 556 U.S. at 678.
Plaintiffs are heirs of Catherine Getaw and the personal
representatives of her estate. In November 2005, Ms. Getaw
executed a promissory note that was secured by a reverse
mortgage that encumbered her home in Birmingham, Alabama.
Financial Heritage held the reverse mortgage and CIT acted as
agent and servicer of the reverse mortgage. (Doc. 3 at
Getaw died in April 2015. Her will devised her home to the
Plaintiffs without limitations; so, under Ala. Code §
43-2-830(c), the Plaintiffs took the home subject to the
reverse mortgage. (Doc. 3 at ¶¶ 3, 14).
then sent a letter to the Plaintiffs that included the
following option for paying off the reverse mortgage loan:
[T]he mortgage will be released and no deficiency
judgment will be taken if the property has no junior
liens and is sold for at least 95 percent of the appraised
value with the net proceeds paid to the investor, even if the
debt is greater than the appraised value.
(Doc. 3 at ¶ 17) (emphasis in original).
October 2015, CIT initiated foreclosure proceedings on the
home. Then, on October 28, 2015, a fire burned the home. At
the time of the fire, Defendant Foremost Insurance Company
insured the home. The Foremost insurance policy is not in the
record and Plaintiffs do not allege any specific terms of the
policy. Plaintiffs promptly notified CIT of the fire and
filed an insurance claim for fire damage with Foremost. (Doc.
3 at ¶¶ 19-21).
November 2, 2015, CIT sold the property to Fannie Mae at a
foreclosure sale. According to Plaintiffs, the foreclosure
sale completely satisfied the repayment of the reverse
mortgage loan pursuant to the foreclosure deed and the terms
of the reverse mortgage. Though the foreclosure deed and the
reverse mortgage contract itself are not in the record,
Plaintiffs allege that the reverse mortgage contract stated:
Lender may enforce the debt only through sale of the
Property. Lender shall not be permitted to obtain a
deficiency judgment against Borrower if the Security
Instrument is foreclosed.
(Doc. 3 at ¶ 18). And Plaintiffs allege that CIT
“elected to accept the foreclosure proceeds in lieu of
any other repayment options or terms.” (Id. at
the sale, Fannie Mae, through its attorney, contacted CIT
regarding insurance information for the home. Then, on
February 11, 2016, Fannie Mae filed an insurance claim with
Foremost for the fire damage to the home. Foremost responded
by requesting evidence from Fannie Mae related to any lien
holder's interest in the home, the insurance claim, and
any resulting proceeds. Fannie Mae then requested the same
information from ...