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Cox v. Ocwen Loan Servicing LLC

United States District Court, D. Maine

March 5, 2017

PAULA J. COX, et al., Plaintiffs
v.
OCWEN LOAN SERVICING, LLC, et al., Defendants

          RECOMMENDED DECISION ON MOTION TO DISMISS

          John H. Rich III, United States Magistrate Judge

         In this action arising from water damage sustained at four ski condominium units, three of the remaining seven defendants - Ocwen Loan Servicing, LLC (“Ocwen”) and Deutsche Bank Trust Company Americas, as Trustee for Residential Accredit Loans, Inc., Mortgage Asset-Backed Pass-Through Certificates (“RALI”), Series 2007-QS1 and Series 2006-QS16 (together, “Deutsche Bank”)[1] - move pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss all claims of plaintiffs Paula J. Cox, Spurgeon M. Cox, Jr., and Brian P. Cox (“Plaintiffs”) against them. See Defendants' Motion To Dismiss Plaintiffs' Complaint (“Motion”) (ECF No. 27) at 4-7; Complaint (ECF No. 1-1) (“Complaint”), attached to Notice of Removal (ECF No. 1), ¶¶ 35-124.

         Ocwen and Deutsche Bank seek dismissal of the Complaint on the grounds that the Plaintiffs' negligence claim (Count I) is barred by the economic loss doctrine and/or is inadequately pled, thus vitiating their derivative respondeat superior claim (Count II). See Motion at 4-7. For the reasons that follow, I recommend that the court deny the Motion.

         I. Applicable Legal Standards

While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level.

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations and internal punctuation omitted). This standard requires the pleading of “only enough facts to state a claim to relief that is plausible on its face.” Id. at 570. “A claim has facial plausibility when the plaintiff pleads 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).

         In ruling on a motion to dismiss under Rule 12(b)(6), a court assumes the truth of all of the well-pleaded facts in the complaint and draws all reasonable inferences in favor of the plaintiff. Román-Oliveras v. Puerto Rico Elec. Power Auth., 655 F.3d 43, 45 (1st Cir. 2011). Ordinarily, in weighing a Rule 12(b)(6) motion, “a court may not consider any documents that are outside of the complaint, or not expressly incorporated therein, unless the motion is converted into one for summary judgment.” Alternative Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001). “There is, however, a narrow exception for documents the authenticity of which are not disputed by the parties; for official public records; for documents central to plaintiffs' claim; or for documents sufficiently referred to in the complaint.” Id. (citation and internal quotation marks omitted).

         “[T]he burden is on the moving party to prove that no legally cognizable claim for relief exists.” 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1357, at 462 (3d ed. 2004) (footnote omitted).

         II. Factual Background

         The Complaint sets forth the following relevant factual allegations.[2]

         The Plaintiffs own four condominium units (Units 5, 6, 7, and 8) at 53 Sunday River Road in Bethel, Maine. Complaint ¶ 1. Ocwen claims ownership in a mortgage from the Plaintiffs to Dynamic Capital Mortgage, Inc. (“Dynamic Capital”) by instrument dated August 30, 2006, recorded in the Oxford County Registry of Deeds at Book 4001, Page 61, for Unit 5. Id. ¶ 10; see also Exh. A (ECF No. 27-2) to Motion (“Unit 5 Mortgage”).

         Deutsche Bank, as trustee for RALI Series 2007-QS1, claims ownership in a mortgage from the Plaintiffs to Dynamic Capital by instrument dated August 30, 2006, recorded in the Oxford County Registry of Deeds at Book 4001, Page 84. Complaint ¶¶ 21-22; see also Exh. B (ECF No. 27-3) to Motion (“Unit 7 Mortgage”).

         Deutsche Bank, as trustee for RALI Series 2006-QS16, also claims ownership in a mortgage from the Plaintiffs to Dynamic Capital by instrument dated August 30, 2006, recorded in the Oxford County Registry of Deeds at Book 4001, Page 103. Complaint ¶¶ 27-28; see also Exh C (ECF No. 27-4) to Motion (“Unit 8 Mortgage”).

         Deutsche Bank hired Ocwen to service the mortgages it claims to own with respect to Units 7 and 8. Complaint ¶¶ 66, 83. Part of the servicing that Ocwen agreed to perform for Deutsche Bank was to maintain Units 7 and 8. Id. ¶¶ 67, 84. Ocwen hired Altisource Asset Management Corporation (“Altisource”) and CoreLogic, Inc. (“CoreLogic”) to lock the Plaintiffs out of Units 5, 7, and 8 and to preserve the condition of those units. Id. ¶¶ 36-37, 59-60, 76-77, 110-16, 118-21.[3]

         Altisource locked the Plaintiffs out of Units 5, 7, and 8 without notice to them or their permission. Id. ¶¶ 38-40, 61-63, 78-80. Altisource and CoreLogic failed to properly preserve the condition of Units 5, 7, and 8. Id. ¶¶ 41, 64, 81, 112, 115, 120. On or about, December 1, 2012, Units 5, 7, and 8 were damaged when pipes froze, causing water to run in each of those units. Id. ¶¶ 42, 65, 82. The Plaintiffs also sustained damage to their personal property in each of those units. Id. ΒΆΒΆ 14, 26, 34. With ...


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