United States District Court, M.D. Pennsylvania
WILSON P. RICHARD, Plaintiff
FINANCE OF AMERICA MORTGAGE, LLC formerly known as GATEWAY FUNDING DIVERSIFIED MORTGAGE SERVICES, LP; QBE INSURANCE CORPORATION; PROGRESSIVE SPECIALITY INSURANCE AGENCY, INC.; and GREAT AMERICAN ASSURANCE COMPANY, Defendants
REPORT AND RECOMMENDATION
C. Carlson United States Magistrate Judge.
a case about insurance and what kind of indemnification may
be owed to the plaintiff, Wilson P. Richard, for two separate
incidents of water damage that occurred at Wilson's home
in Jim Thorpe, Pennsylvania in March 2016 and February 2017.
complaint, which has been amended three times, (Docs. 1, 33,
69, 93), recites that Richard has been harmed by a course of
conduct that resulted in the cancellation of his original
homeowner's insurance and the substitution of a lender
force-placed insurance policy in 2016, which provided him with
less coverage at the time that he experienced property damage
losses in 2016 and 2017. Richard has pursued these claims in
a global, comprehensive fashion, bringing this action against
his mortgagee, a mortgage servicing company, two insurance
companies and an insurance agency, seeking damages he claims
he is owed for water damage to his home. Richard has sued
these parties collectively in an attempt to affix blame at
the foot of at least one of these companies so that he can be
indemnified against the losses he claims he incurred.
approach to this case, while perhaps understandable given the
number of actors who played a role in this mortgage servicing
and homeowner insurance, is flawed since his efforts to cast
a wide net in the hopes of recovering damages both reveals
some hard truths and sweeps up parties who cannot be held
liable for the losses allegedly suffered here. We have
previously noted this shortcoming in Richard's pleadings
when we dismissed claims lodged by the plaintiff against QBE,
the insurance company whose policy was cancelled in December
2015, months before the losses which form the gist of this
lawsuit. Richard v. Fin. of Am. Mortgages, LLC, No.
3:18-CV-559, 2019 WL 1980693, at *9 (M.D. Pa. May 3, 2019).
instant motion to dismiss, filed by Ocwen Loan Servicing, LLC
(“Ocwen”), reveals some of the same shortcomings
of this far-reaching approach to this litigation. Indeed, the
history of Ocwen's involvement in this litigation
underscores the tenuous nature of the plaintiff's claims
against this loan servicer. Richard named Ocwen as a
defendant in his original complaint, (Doc. 1), but then
voluntarily dismissed Ocwen without prejudice in June of 2018
after it appeared that Ocwen was not the loan servicer on
this mortgage at the time of the critical events in this
complaint. (Doc. 34.) Some five months later, Richard filed a
second amended complaint and third amended complaint, which
renewed his previously dismissed claims against Ocwen,
alleging that Ocwen, along with the other named defendants,
violated the Real Estate Settlement and Procedure Act
(RESPA), and breached its contract with the plaintiff. (Doc.
69 and 93.) Ocwen has now moved to dismiss the claims brought
against them in these amended complaints. (Doc.
fundamental premise behind Ocwen's motion can be
succinctly stated: The critical events that led to
Richard's alleged injuries were the lapsing of
Richard's initial homeowner's policy, which occurred
on December 12, 2015, and the decision to substitute a
significantly less comprehensive lender-placed insurance
policy for this lapsed policy in February of 2016. According
to Ocwen, both of these events took place after Ocwen had
ceased acting as the mortgage servicer since Ocwen
transferred these loan servicing responsibilities to Finance
of America on December 2, 2015. Therefore, Ocwen argues that
it cannot be held responsible to Richard for events that
occurred after it relinquished its loan servicing
motion to dismiss is fully briefed and ripe for disposition.
Upon consideration, and for the reasons discussed below, we
recommend that the motion be granted.
well-pleaded facts, which guide our determination of this
motion, are set forth in Richard's third amended
complaint, (Doc. 93), which recites as follows:
about December 12, 2014, Richard purchased the house located
at 12 Poplar Drive, Jim Thorpe, Pennsylvania. (Doc. 93,
¶ 14.) Richard financed the home purchase through a loan
issued by Gateway Funding Diversified Mortgage Services, LP
(“Gateway”), now known as Finance of America
Mortgage LLC (“Finance of America”).
(Id.) As part of his loan obligations, Richard
issued a mortgage to the lender, and the mortgage required
that he escrow real estate taxes and property insurance
premiums. (Id., ¶ 15.)
to closing on the property, Richard contacted Progressive
Specialty Insurance Agency, Inc. (“Progressive”),
and requested assistance in obtaining a homeowner's
insurance policy. (Id., ¶ 16.) Through
Progressive, Richard secured a policy of insurance from QBE
bearing policy number QHP3209975 for the policy period
beginning December 12, 2014, through December 12, 2015 (the
“QBE Policy”). (Id., Ex. B.)
after closing on Richard's loan, Gateway transferred loan
servicing responsibilities to Ocwen. (Id., ¶
19.) Richard alleges that the premiums owed on the QBE Policy
were to be paid out of his mortgage escrow account, which was
managed by Ocwen on behalf of Finance of America.
(Id., ¶ 20.) It is undisputed, however, that
Ocwen returned servicing rights on Richard's loan to
Finance of America on December 2, 2015, ten days prior to the
expiration of the QBE policy, although Richard alleges that
Ocwen erroneously represented that it had paid these
insurances premium prior to the expiration of the policy from
monies held in escrow. (Id., ¶ 21.)
to Richard, Finance of America and/or Ocwen received notice
of the non-renewal of this policy but Finance of America,
which now had responsibility for servicing this loan, failed
to make the payments necessary to avoid cancellation or
non-renewal of the QBE Policy on December 12, 2015.
(Id., ¶¶ 21-23.) After failing to make the
required payments, the QBE Policy lapsed, and Finance of
America obtained a lender force-placed insurance policy with
Great American, which commenced on February 1, 2016, as a
replacement for the QBE Policy. (Id., ¶ 23.)
According to Richard, Finance of America failed to notify him
of its intent to obtain forced placed insurance until March
1, 2016. (Id., ¶24.) There is no dispute that,
pursuant to its terms, the Great American Policy expressly
excluded Richard as the mortgagor from coverage under the
policy and provided no insurance coverage for the
mortgagor's interest or equity in the property. (Doc. 45,
six weeks after Finance of America took out this force-placed
insurance policy in February of 2016, and two weeks after
Finance of America notified Richard of its intention to take
out such insurance coverage, Richard suffered the first water
damage loss on his home on March 15, 2016. (Id.,
¶ 25.) Eleven months later, in February 2017, the
property sustained water damage for a second time as a result
of ruptures to a faucet on the second floor of the home.
(Id. ¶ 33.) Richard alleges that the losses to
the property totaled nearly $77, 000, and he filed claims
with the lender-placed insurance carrier, Great American.
(Id., ¶¶ 25-33.) Richard asserts that
Great American failed to cover some part of the damages
claimed, and he filed the instant action against Ocwen and
the other remaining defendants seeking to recoup the monies
he claims were spent or are otherwise needed to repair the
respect to Ocwen, several undisputed facts emerge from this
chronology set forth in Richard's amended complaint.
First, notwithstanding the allegation that Ocwen may have
misstated the payment status on this policy, it is evident
that Ocwen relinquished its loan servicing responsibilities
on December 2, 2015, ten days prior to the expiration of the
QBE insurance policy. Therefore, Ocwen had no contractual and
legal loan servicing responsibilities on this policy after
December 2, 2015. Consequently, Ocwen was not the loan
servicer when this policy expired, played no role in the
subsequent decision of Finance of America to acquire
force-placed insurance coverage in Richard's property in
February of 2016, and had no obligation to provide notice to
Richard of these policy changes. Finally, Ocwen played no
role in the servicing of Richard's loan at the time the
losses that form the basis of this complaint took place, on
March 15, 2016 and February of 2017.
STANDARD OF REVIEW
has moved to dismiss the plaintiff's complaint pursuant
to Rule 12(b)(6) of the Federal Rules of Civil Procedure,
arguing that the complaint fails “to state a claim upon
which relief can be granted.” With respect to this
benchmark standard for legal sufficiency of a complaint, the
United States Court of Appeals for the Third Circuit has
aptly noted the evolving standards governing pleading
practice in federal court, stating that:
Standards of pleading have been in the forefront of
jurisprudence in recent years. Beginning with the Supreme
Court's opinion in Bell Atlantic Corp. v.
Twombly, 550 U.S. 544 (2007) continuing with our opinion
in Phillips [v. County of Allegheny, 515 F.3d 224,
230 (3d Cir. 2008)]and culminating recently with the Supreme
Court's decision in Ashcroft v. Iqbal __U.S.__,
129 S.Ct. 1937 (2009) pleading standards have seemingly
shifted from simple notice pleading to a more heightened form
of pleading, requiring a plaintiff to plead more than the
possibility of relief to survive a motion to dismiss.
Fowler v. UPMC Shadyside, 578 F.3d 203, 209-10 (3d
considering whether a complaint fails to state a claim upon
which relief may be granted, the Court must accept as true
all allegations in the complaint and all reasonable
inferences that can be drawn there from are to be construed
in the light most favorable to the plaintiff. Jordan v.
Fox Rothschild, O'Brien & Frankel, Inc., 20 F.3d
1250, 1261 (3d Cir. 1994). However, a court “need not
credit a complaint's bald assertions or legal conclusions
when deciding a motion to dismiss.” Morse v. Lower
Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997).
Additionally, a court need not “assume that a ...
plaintiff can prove facts that the ... plaintiff has not
alleged.” Associated Gen. Contractors of Cal. v.
California State Council of Carpenters, 459 U.S. 519,
526 (1983). As the Supreme Court held in Bell Atlantic
Corp. v. Twombly, 550 U.S. 544 (2007), in order to state
a valid cause of action a plaintiff must provide some factual
grounds for relief, which ...