Renois v. WVMF Funding, LLC

Background

Marianne Renois sued as administrator, fiduciary, and beneficiary of the Estate of Ellis DeAngelo, and sought to represent a proposed class. The defendants were WVMF Funding, LLC and Compu-Link Corporation doing business as Celink. The complaint asserted claims under the Real Estate Settlement Procedures Act (RESPA), New York Real Property Law § 280-b, New York General Business Law § 349, contract theories, other states’ consumer-protection laws, and unjust enrichment.

Jean and Ellis DeAngelo obtained a federally insured reverse mortgage in 2010. After Ellis DeAngelo died in 2017, the loan and the property became part of the estate. Celink serviced the loan for WVMF. Celink sent notices stating that the property’s hazard insurance had expired, bought force-placed insurance in 2018 and 2019, and added the premiums and other charges to the loan balance. Renois alleged that she had repeatedly provided notice and proof that hazard insurance was in place. Celink later acknowledged that insurance had existed and refunded the premiums, but Renois alleged that the refund was late and that related charges, interest, and mortgage-insurance amounts remained on the loan.

Motions and standing

The defendants moved to dismiss for lack of standing and abstention, challenged venue and sought transfer to the Eastern District of New York, and moved to dismiss for failure to state a claim.

The court held that Renois had standing to sue as the estate’s administrator because the estate could enforce the decedent’s contractual and related rights. But she had no independent right to sue as the estate’s beneficiary. The court therefore granted the jurisdictional motion to the extent the claims were brought in her beneficiary capacity and dismissed the claims to that extent. The jurisdictional motion was denied in all other respects.

The court also rejected abstention based on the pending state foreclosure case. The federal case included Celink and concerned whether the defendants’ loan-servicing conduct violated federal and state law, while the opinion found no indication that the state foreclosure case had considered those issues. The court further declined to dismiss based on issue preclusion or claim preclusion. The state case had resulted in a default judgment, so the issues had not been actually litigated for issue-preclusion purposes, and the court found no evidence that a final foreclosure judgment had been entered.

Venue

The venue motion was denied in its entirety. The defendants had filed two earlier motions under Federal Rule of Civil Procedure 12 without raising improper venue. The court held that Rule 12 required them to raise the venue objection in their first such motion, and that a scheduling order did not override that waiver.

Rule 12(b)(6) rulings

Count One: RESPA. The court denied dismissal of the RESPA claim. Renois plausibly alleged that the defendants obtained force-placed insurance despite receiving written proof of existing coverage, failed to terminate the force-placed insurance within 15 days, and failed to refund related interest and mortgage-insurance charges. The court also held that the estate could be treated as standing in the borrower’s position for purposes of bringing the claim. The court did not decide whether RESPA Regulation X independently provides a private cause of action because the complaint did not plead that regulation as a separate cause of action.

Count Two: New York Real Property Law § 280-b. The court granted dismissal of this claim but granted Renois leave to amend. The allegations did not appear to show a violation of the provision concerning payments of insurance premiums or taxes that were in arrears. The court also questioned whether the statute was in effect when the alleged conduct occurred in 2018 and 2019, and found that Renois had not pleaded an injury from the required notice. Any amended complaint had to address those deficiencies. The order stated that failure to amend by April 17, 2024, would result in dismissal of Count Two with prejudice and without further advance notice.

Counts Three and Four: Contract claims based on alleged statutory violations. The court granted dismissal of both claims with prejudice. The loan documents’ governing-law provisions identified the law governing the agreement but did not incorporate all relevant federal and state statutes into the contract. The court therefore rejected the theory that alleged violations of those statutes automatically breached the loan agreement.

Count Five: Breach of contract. The court denied dismissal. Renois adequately alleged a binding loan agreement, performance of the obligation to maintain hazard insurance, a breach based on unauthorized force-placed-insurance charges, and damages. The court also rejected the defendants’ arguments that Renois lacked standing because she was not a signatory and that she had not identified a specific contractual provision. The alleged force-placed-insurance provisions were sufficient at the pleading stage.

Count Six: New York General Business Law § 349. The court denied dismissal. Renois plausibly alleged a consumer-oriented scheme involving force-placed insurance premiums and related charges imposed on borrowers who maintained hazard insurance. The court found that the allegations plausibly addressed consumer orientation, misleading conduct, and injury, while leaving the ultimate success of the claim for a later stage.

Count Seven: Other states’ consumer-protection laws. The court denied dismissal based on standing. Applying Second Circuit precedent, the court held that whether the proposed class could properly include claims under different states’ laws was a class-certification issue, including whether common issues predominate, rather than a defect in Renois’s standing. The court did not decide whether those claims would ultimately succeed on their merits.

Count Eight: Unjust enrichment. The court granted dismissal with prejudice. Because the subject matter was governed by a valid and enforceable loan contract, the unjust-enrichment claim was duplicative of the contract claim.

Disposition

The jurisdictional motion was granted in part and denied in part: it was granted only as to Renois’s attempt to sue as the estate’s beneficiary and denied in all other respects. The venue motion was denied in its entirety. The Rule 12(b)(6) motion was granted as to Counts Two, Three, Four, and Eight, and denied as to Counts One, Five, Six, and Seven. Renois received leave to amend Count Two. Counts Three, Four, and Eight were dismissed with prejudice.