Herman v. The Mr/ Cooper Group Inc.

Background

Kathleen Herman, proceeding without a lawyer, sued The Mr. Cooper Group Inc. d/b/a Nationstar Mortgage. The opinion states that the actual defendant is Nationstar Mortgage LLC d/b/a Mr. Cooper, and that it was incorrectly sued as The Mr. Cooper Group Inc. d/b/a Nationstar Mortgage.

Herman alleged that a mortgage servicer began requiring her to pay $300 per month into an escrow account for taxes and insurance, even though the mortgage did not require escrow payments. She alleged that the servicer did not use the funds to pay the property taxes, did not refund the money, and provided incomplete information about the escrow account. She also alleged that she paid more than $36,000 into escrow and that the Florida property was damaged by a hurricane in 2022 and became uninhabitable.

The amended complaint asserted claims under Section 2605 of the Real Estate Settlement Procedures Act and related federal regulations, along with a common-law conversion claim. In opposing the motion, Herman said she instead intended to assert claims under Section 2609 of that statute and for breach of contract.

Venue dispute

The defendant moved to dismiss under Rule 12(b)(3), which permits dismissal for improper venue, or alternatively to transfer the case under 28 U.S.C. § 1406(a). The court explained that the Real Estate Settlement Procedures Act requires claims alleging Section 2605 violations to be brought where the property is located or where the violation occurred.

The court concluded that venue was not proper in the Southern District of New York. The property was located in Lee County, Florida, and, based on the allegations, the challenged conduct occurred in Texas rather than New York. Herman’s residence in New York and her communications and payments from New York did not make venue proper there.

The court also stated that Herman could not cure the venue problem by recharacterizing her claims in her opposition papers. It noted that courts in the circuit had generally concluded that Section 2609 and its implementing regulation did not create a private right to sue. The court did not need to resolve that issue because venue would still be improper under the general venue statute even if Section 2609 provided a private cause of action.

Transfer rather than dismissal

The court declined to dismiss the action and instead transferred it to the U.S. District Court for the Middle District of Florida. It found transfer to be in the interest of justice because dismissal would require Herman, who was representing herself, to pay additional filing costs and refile the case. The court also said it was unclear whether the three-year limitations period for Section 2605 claims could prevent her from bringing some claims again.

The court identified the Middle District of Florida as an appropriate forum because the property was there and relevant tax and property records would likely be located there. It also noted that the defendant sought transfer to Florida and therefore would not be prejudiced by the transfer. The court considered the Northern District of Texas another possible forum but found the factors did not favor that district as strongly.

Disposition

Judge Briccetti denied the motion to dismiss under Rule 12(b)(3). He granted the motion to transfer the action to the Middle District of Florida under Section 1406(a), directed the Clerk to transfer the case, and terminated the motion. The opinion decided venue only; it did not decide whether Herman’s underlying statutory, contract, or conversion claims were valid.