Hegedus v. Nationstar Mortg., LLC, Civil Action No. 5:17-cv-00053

JAMES A. HEGEDUS, et al., Plaintiffs, v. NATIONSTAR MORTGAGE, LLC, et al. Defendants.

Civil Action No. 5:17-cv-00053

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF VIRGINIA HARRISONBURG DIVISION

March 23, 2018

By: Michael F. Urbanski Chief United States District Judge

MEMORANDUM OPINION

Pro se plaintiffs James and Virginia Hegedus ("Plaintiffs") allege defendants Nationstar Mortgage, LLC ("Nationstar") and Daniel T. Conway ("Conway") violated various laws during the servicing and foreclosure of a mortgage on a residence that they owned in Delaware. This is the second action Plaintiffs have brought against Nationstar for servicing activities relating to this Delaware residence. Plaintiffs allege conversion, breach of contract, tortious interference, falsification of business records, and intentional infliction of emotional distress against Nationstar; Plaintiffs claim defamation and professional misconduct against Conway. The complaint also includes claims of elder abuse, abuse of process, malicious prosecution, and "manufacturing a default leading to an illegal foreclosure action." R&R, ECF No. 30, at 8-10; see generally Compl., ECF No. 1. Both defendants moved to dismiss the complaint for failure to state a claim. See Nationstar's Mot. to Dismiss for Failure to State a Claim, ECF No. 6; Conway's Mot. to Dismiss for Failure to State a Claim, ECF No. 10. This matter was referred to United States Magistrate Judge Joel C. Hoppe for report and recommendation, pursuant to 28 U.S.C. § 636(b)(1)(B).

In a report and recommendation issued on February 1, 2018, the magistrate judge recommended granting Conway's motion to dismiss and granting in part Nationstar's motion to dismiss. R&R, ECF No. 30, at 25. Specific to Nationstar's motion, the magistrate judge recommended denying the motion as to Plaintiffs' conversion claim, granting the motion to dismiss the breach of contract claim without prejudice but with leave to amend, and granting the motion to dismiss all other claims with prejudice. R&R, ECF No. 30, at 25. The report gave notice to the parties that they had fourteen days within which to file any objections. On February 5, 2018, Plaintiffs filed a motion for extension of time to respond to the report and recommendation. Pls.' Mot. for Extension of Time, ECF No. 32. The magistrate judge extended the time for objections until February 22, 2018. Order Granting in Part and Denying in Part Mot. for Extension of Time, ECF No. 29. Plaintiffs thereafter timely filed objections to the report, ECF No. 36, and Nationstar responded on February 22, 2018, ECF No. 40.

For the reasons stated below, the court will OVERRULE Plaintiffs' objections, ADOPT the report and recommendation in its entirety, GRANT Conway's motion to dismiss, GRANT in part and DENY in part Nationstar's motion to dismiss, DISMISS without prejudice Plaintiffs' breach of contract claim and provide LEAVE TO AMEND, and DISMISS with prejudice all other claims except for Plaintiffs' conversion claim.

I.

Rule 72(b) of the Federal Rules of Civil Procedure permits a party to "serve and file specific, written objections" to a magistrate judge's proposed findings and recommendations within fourteen days of being served with a copy of the report. See also 28 U.S.C. § 636(b)(1). The Fourth Circuit has held that an objecting party must do so "with sufficient specificity so as reasonably to alert the district court of the true ground for the objection." United States v. Midgette, 478 F.3d 616, 622 (4th Cir. 2007), cert denied, 127 S. Ct. 3032 (2007).

To conclude otherwise would defeat the purpose of requiring objections. We would be permitting a party to appeal any issue that was before the magistrate judge, regardless of the nature and scope of objections made to the magistrate judge's report. Either the district court would then have to review every issue in the magistrate judge's proposed findings and recommendations or courts of appeals would be required to review issues that the district court never considered. In either case, judicial resources would be wasted and the district court's effectiveness based on help from magistrate judges would be undermined.

Id. The district court must determine de novo any portion of the magistrate judge's report and recommendation to which a proper objection has been made. "The district court may accept, reject, or modify the recommended disposition; receive further evidence; or return the matter to the magistrate judge with instructions." Fed. R. Civ. P. 72(b)(3); accord 28 U.S.C. § 636(b)(1). "General objections that merely reiterate arguments presented to the magistrate judge lack the specificity required under Rule 72, and have the same effect as a failure to object, or as a waiver of such objection." Moon v. BWX Techs., Inc., 742 F. Supp. 2d 827, 829 (W.D. Va. 2010) (citing Veney v. Astrue, 539 F. Supp. 2d 841, 845 (W.D. Va.2008)), aff'd, 498 F. App'x 268 (4th Cir. 2012); see also Thomas v. Arn, 474 U.S. 140, 154 (1985(3)) ("[T]he statute does not require the judge to review an issue de novo if no objections are filed.").

Further, objections that only repeat arguments raised before the magistrate judge are considered general objections to the entirety of the report and recommendation. See Veney, 539 F. Supp. 2d at 845. As the court noted in Veney:

Allowing a litigant to obtain denovo review of her entire case by merely reformatting an earlier brief as an objection "mak[es] the initial reference to the magistrate useless. The functions of the district court are effectively duplicated as both the magistrate and the district court perform identical tasks. This duplication of time and effort wastes judicial resources rather than saving them, and runs contrary to the purposes of the Magistrates Act." Howard [v. Sec'y of Health & Human Servs.], 932 F.2d [505], 509 [(6th Cir. 1991)].

539 F. Supp. 2d at 846. A plaintiff who reiterates his previously raised arguments will not be given "the second bite at the apple []he seeks." Id. Instead, his re-filed brief will be treated as a general objection, which has the same effect as a failure to object. Id.

II.

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must contain sufficient factual matter which, if accepted as true, "state[s] a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The court must "accept the well-pled allegations of the complaint as true" and "construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff." Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997). The same is not true for legal conclusions. "Threadbarerecitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678; see also Wag More Dogs, LLC v. Cozart, 680 F.3d 359, 365 (4th Cir. 2012).

A plaintiff proceeding pro se is held to "less stringent standards" than counseled plaintiffs, and the court must construe his or her claims liberally. See Erickson v. Pardus, 551 U.S. 89, 94 (2007). However, the court need not ignore a clear failure to allege facts that set forth a cognizable claim. See Weller v. Dep't of Soc. Services for City of Baltimore, 901 F.2d 387, 391 (4th Cir. 1990). In light of Plaintiffs' status as pro se, the court will "consider both the complaint and the factual allegations in [Plaintiffs'] response to the motion to dismiss in determining whether [their] claims can survive dismissal." Shomo v. Apple, Inc., No. 7:14cv40, 2015 WL 777620, at *2 (W.D. Va. Feb. 24, 2015); see also Christmas v. The Arc of the Piedmont, Inc., No. 3:12cv00008, 2012 WL 2905584, at *2 (W.D. Va. July 16, 2012).

III.

The court has reviewed Plaintiffs' objections to the magistrate judge's report and recommendation and finds their objections to be entirely without merit. Plaintiffs primarily advance two objections¹: (1) the application of res judicata to this action was in error, and (2) the tortious interference claim should not be dismissed. Both of these objections reiterate arguments previously made to the magistrate judge. See, e.g., Pls.' Mem. in Opp. to Def. Nationstar's Mot. to Dismiss, ECF No. 15, at 2-5 (arguing failure to identify same transaction or series of transactions and availability of new evidence from default specialist'stestimony in Delaware Superior Court); id. at 9-11 (arguing interference with insurance policy). These objections fail to identify specific errors in the report and recommendation, and are properly construed as general objections that do not warrant de novo review. See Veney, 539 F. Supp. 2d at 844-46. However, as Plaintiffs are pro se and receive the benefit of proceeding under less stringent standards, the court will address these objections.

A.

Plaintiffs appear to challenge the applicability of both claim preclusion and issue preclusion to their complaint. Regarding claim preclusion, Plaintiffs contend "that although their claims meet most of the requirements of preclusion, they cannot constitute a single claim." ECF No. 36, at 1-2. While it is unclear what Plaintiffs specifically object to in the report and recommendation, the objection is unnecessary because the magistrate judge ruled in their favor regarding claim preclusion. The magistrate judge recommended that claim preclusion not apply because the first action was not conclusively resolved in its entirety. R&R, ECF No. 30, at 18. The magistrate judge explained, "Plaintiffs are pro se litigants, and the Court in Hegedus I did not expressly provide for outright dismissal with prejudice of the entire action if Plaintiffs failed to take further action or seek to file an amended complaint." Id. The court finds no merit to Plaintiffs' objection, if any, to the magistrate judge's recommendation regarding claim preclusion.

Plaintiffs objected more specifically to the...