Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-1_16-cv-00149/USCOURTS-alsd-1_16-cv-00149-0/pdf.json

Nature of Suit Code: 371
Nature of Suit: Truth in Lending
Cause of Action: 15:1601 Truth in Lending

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IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

TRACY LYNNE BREECH 

BROUSSARD,

Plaintiff,

:

:

:

:

vs. : CIVIL ACTION 16-0149-CG-M

:

CITIMORTGAGE INC, and 

PENNYMAC CORP.,

Defendants.

:

:

:

REPORT AND RECOMMENDATION

Defendant, PennyMac Corporation’s, Motion to Dismiss 

and Incorporated Brief in Support thereof (doc. 4) under 

Federal Rules of Civil Procedure 8 and 12(b)(6) was

referred to the undersigned pursuant to 28 U.S.C. § 

636(b)(1)(B) and Local Rule 72.2(c)(4), and is now before 

the Court. Plaintiff, proceeding pro se, has filed a 

response (doc. 10) to which Defendant has replied (doc. 

11). After careful consideration of the record, it is 

recommended that the motion to dismiss be granted as to

PennyMac as to Count II (TILA violations and wire fraud) 

and denied as to Count I (wrongful foreclosure and fraud). 

It is further recommended that Plaintiff file an amended 

complaint curing the deficiencies addressed herein at 

paragraph II, not later than August 22, 2016. 

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FACTUAL AND PROCEDURAL BACKGROUND

In 2007, the Vera and Leo Dean (hereinafter “Dean”) 

mortgaged their home by executing a note and mortgage with 

First Residential for the amount of $127,000.00. (Doc. 4 at 

1; Doc. 10 at 1). As part of the mortgage process, an 

appraiser did an appraisal of the Dean residence and 

improperly described the property as “Parcel 2A of the 

Walter Sherles ‘Estate Division’ containing 12.35 acres, 

more or less, as per plat thereof dated May 29, 1996, 

prepared by Cecil Clyde Turner, Registered Land Surveyor, 

Alabama No. 9229, and recorded in Plat Book 4, at page 76 

in the Office of the Judge of Probate of Washington County, 

Alabama”		(Doc. 4-5) (hereinafter the “Sherles Estate”). 

This property description was then included in the Dean 

Mortgage. In 2008, Vera Dean died. (Doc. 10 at 2). In 

2010, First Residential transferred the Dean Mortgage to 

CitiMortgage, Inc. (hereinafter “CitiMortgage”). (Doc. 4 

at 2; Doc. 10 at 2). In December, 2010, CitiMortgage 

published a Notice of Foreclosure of the Dean Mortgage in 

the Washington County News, which Plaintiff read. (Doc. 1 

at 3). The notice included the Sherles Estate (Plaintiff’s 

property) as being part of the property being foreclosed 

upon. Id. Realizing the error, Plaintiff contacted the 

law firm handling the foreclosure sale, made a payment to 

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prevent the foreclosure, and thereafter, began her efforts 

to have the property description corrected so as to exclude 

the Sherles Property. Id. The Dean Mortage was later 

assigned to PennyMac, Inc. (hereinafter “PennyMac”). (Doc. 

4 at 2).

In 2014, Defendant, PennyMac, filed a state court 

action in Washington County, Alabama to “reform the 

Mortgage to reflect the correct legal description of the 

Property to protect its interest in the Property.” (Doc. 4 

at 2; Doc. 4-5). Plaintiff failed to answer the state 

court action and a default judgment was entered on behalf 

of PennyMac on April 14, 2015. (Doc. 4 at 3;Doc. 4-7). 

Following the entry of default, Plaintiff appeared in the 

state court action, asked the Court to reconsider its 

ruling, and, thereafter, on January 14, 2016, a modified 

default judgemnt order was entered in that action. (Doc. 4 

at 3; Doc. 4-9). On April 15, 2016, PennyMac foreclosed on 

the property at issue in the state court action. (Doc. 4 

at 7-8; Doc. 4-10.) 

Plaintiff filed her Complaint in this Court on April 

7, 2016, against Defendants, PennyMac Corp. and 

CitiMortgage Inc. (Doc. 1). Therein, Plaintiff stated that 

she was the “deed holder to Township 3 North, Range 1 West, 

Section 20 Part 24 of the Sherles Estate (the "Sherles 

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Property"), (ref. Deed Book 381 at page 284)” and that 

Defendant improperly included said property into the Dean 

Mortgage. (Id. at 2). As a result, Plaintiff has brought 

this action against Defendants for “Wrongful Foreclosure 

and Fraud (Count I), in violation of the Truth in Lending 

Act, 15 U.S.C. 551601 and Wire Fraud (Count II).” Id.

PennyMac filed the subject Motion to Dismiss on April 28, 

2016, based on res judicata and for failure to state a 

claim. (Doc. 4). 

STANDARD OF REVIEW

To survive dismissal under Rule 12(b)(6) of the 

Federal Rules of Civil Procedure, a complaint must first 

satisfy the pleading requirements of Rule 8(a)(2), which

provides that "[a] pleading that states a claim for relief 

must contain ... a short and plain statement of the claim 

showing that the pleader is entitled to relief. . . ." 

Fed. R. Civ. P. 8(a)(2). While Rule 8 establishes a regime 

of "notice pleading," Swierkiewicz v. Sorema N.A., 534 U.S. 

506, 512, 513-14, 122 S. Ct. 992, 152 L. Ed. 2d 1 (2002), 

it does not eliminate all pleading requirements.

First, the complaint must address all the elements 

that must be shown in order to support recovery under one 

or more causes of action. "At a minimum, notice pleading 

requires that a complaint contain inferential allegations 

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from which we can identify each of the material elements 

necessary to sustain a recovery under some viable legal 

theory." Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949, 960 

(11th Cir. 2009) (emphasis and internal quotes omitted).

Pleading elements is necessary, but it is not enough 

to satisfy Rule 8(a)(2). The rule "requires more than 

labels and conclusions, and a formulaic recitation of the 

elements of a cause of action will not do" to satisfy that 

rule. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 

127 S. Ct. 1955, 167 L. Ed. 2d 929 (2009). In addition, 

there must be a pleading of facts. Though they need not be 

detailed, "[f]actual allegations must be enough to raise a 

right to relief above the speculative level ...." Id. That 

is, the complaint must allege "enough facts to state a 

claim for 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, 

129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). That is, 

“[f]actual allegations must be enough to raise a right to 

relief above the speculative level” and must be a “‘plain 

statement’ possess[ing] enough heft to ‘sho[w] that the 

pleader is entitled to relief.’” Twombly, 550 U.S. at 555, 

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557, 127 S. Ct. at 1965, 1966 (second brackets in 

original). But “[t]hreadbare recitals of the elements of a 

cause of action, supported by mere conclusory statements, 

do not suffice.” Iqbal, 556 U.S. at 678, 129 S. Ct. at 

1949. 

When considering a pro se litigant’s allegations, a 

court gives them a liberal construction holding them to a 

more lenient standard than those of an attorney. Haines v. 

Kerner, 404 U.S. 519, 520, 92 S. Ct. 594, 595-596, 30 

L.Ed.2d 652 (1972). The court, however, does not have 

“license . . . to rewrite an otherwise deficient pleading 

[by a pro se litigant] in order to sustain an action.” GJR 

Investments v. County of Escambia, Fla., 132 F.3d 1359, 

1369 (11th Cir. 1998), overruled on other grounds by

Randall v. Scott, 610 F.3d 701, 710 (11th Cir. 2010) 

(relying on Iqbal, 556 U.S. 662, 129 S. Ct. 1937). 

Furthermore, the court treats as true factual allegations, 

but it does not treat as true conclusory assertions or a 

recitation of a cause of action’s elements. Iqbal, 566 

U.S. at 681, 129 S. Ct. at 1951.

When considering whether a complaint states a claim

for relief, the Court "should assume, on a case-by-case 

basis, that well pleaded factual allegations are true and 

then determine whether they plausibly give rise to an

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entitlement to relief." Randall v. Scott, 610 F.3d 701, 710 

(11th Cir. 2010). 

DISCUSSION

I. Res Judicata

"Res judicata, or claim preclusion, bars a party from 

relitigating a cause of action that was, or could have 

been, raised in a previous suit between the parties that 

resulted in a final judgment on the merits." Sherrod v. 

School Bd. of Palm Beach County, 2008 WL 926400, *1 (11th 

Cir. Apr. 7, 2008)(citing In re Piper Aircraft Corp., 244 

F.3d 1289, 1296 (11th Cir. 2001)). “In the Eleventh 

Circuit, a party seeking to invoke the doctrine must 

establish its propriety by satisfying four initial 

elements: (1) the prior decision must have been rendered by 

a court of competent jurisdiction; (2) there must have been 

a final judgment on the merits; (3) both cases must involve 

the same parties or their privies; and (4) both cases must 

involve the same causes of action.” In re Piper Aircraft 

Corp., 244 F.3d 1289, 1296 (11th Cir.2001).

Defendant contends that Plaintiff’s claims for 

violation of TILA and for wire fraud (Count II) are barred 

because she failed to raise those causes of action as 

compulsory counterclaims during the state court action. A 

compulsory counterclaim may be barred by the doctrine of 

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res judicata if the counterclaim was not brought in the 

initial action. See Daniel v. General Motors Acceptance 

Corp., 2008 WL 3876764 *6 (M.D. Ala. 2008). Alabama law 

governs whether claims were compulsory counterclaims in the 

earlier action. See Amey, Inc. v. Gulf Abstract & Title, 

Inc., 758 F.2d 1486, 1509 (11th Cir.1985). Alabama's 

compulsory counterclaim rule requires that a pleading 

“state as a counterclaim any claim which at the time of 

serving the pleading the pleader has against any opposing 

party, if it arises out of the transaction or occurrence 

that is the subject matter of the opposing party's claim.” 

Ala.R.Civ.P. 13(a). A counterclaim is barred if “the 

original claim and the counterclaim arose out of the same 

aggregate core of operative facts.” Brooks v. Peoples 

National Bank of Huntsville, 414 So.2d 917, 919 (Ala.1982).

“To determine whether the claims arise from the same core 

of operative facts, a court should ask if ‘the facts taken 

as a whole serve as the basis for both claims’ or whether 

‘the sum total of facts upon which the original claim rests 

creates legal rights in a party which would otherwise 

remain dormant.’ Daniel, 2008 WL 3876764, *6. (quoting Ex 

parte Cincinnati, 806 So.2d at 380 (Ala.2001)) (quoting Ex 

parte Canal Ins. Co., 534 So.2d 582, 584 (Ala.1988)). 

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In the present action, a court of competent 

jurisdiction entered a final decision in an action 

involving Plaintiff and Defendant in this action. Further, 

this case revolves around the same transaction that was at 

issue in the state court action, namely, the execution and 

validity of the Dean Mortgage. As a result, this Court 

finds that the present action relies on the same operative 

facts as the underlying state court action. Plaintiff 

could have and should have asserted the alleged TILA 

violation stemming from said mortgage and her claim for 

wire fraud relating to the subject mortgage in the state 

court action when PennyMac sought to reform the mortgage in 

order to solidify its interest in the mortgaged property. 

Because she did not, Plaintiff’s claims are barred by res 

judicata and due to be dismissed.1

II. Failure to State a Claim

																																																							 1 Although Pennymac did not address the wrongful foreclosure claim in its 

Motion to Dismiss, it appears, based on the facts before this Court, 

that this claim may not have arisen until after the previous state 

court action had been adjudicated and, therefore, may not be barred.

See Sherrod, 2008 WL 926400, *1 (citing Pleming v. Universal-Rundle 

Corp., 142 F.3d 1354, 1357 (11th Cir.1998)(“The preclusion of claims 

that ‘could have been brought’ does not include claims that arose after 

the original complaint was filed in the prior action, unless the 

plaintiff actually asserted the claim in an amended pleading, but res 

judicata does not bar the claim simply because the plaintiff elected 

not to amend his complaint.”). See also Selman v. CitiMortgage, 2013 WL 

838193, *7 (S.D.Ala. March 5, 2013)(a claim for wrongful foreclosure 

does not arise until a foreclosure has taken place.) This Court also 

reads Plaintiff’s Complaint to associate the fraud claim with the 

recent foreclosure and, as such, is not inclined to find that 

Plaintiff’s fraud claim is barred at this time.

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PennyMac argues that Plaintiff’s claims are 

additionally due to be dismissed because they fail to state 

a claim upon which relief could be granted. (Doc. 1 at 6-

7). First, for the reasons stated herein above, Count II 

(TILA violations and wire fraud) of Plaintiff’s Complaint 

is barred. However, assuming arguendo that these claims 

were not barred, they would still be subject to dismissal 

for failure to state a claim upon which relief could be 

granted. Other than stating in a conclusory fashion that 

Defendants were liable for the alleged causes of action, 

Plaintiff failed to state any facts setting forth the 

grounds for those causes of action and, as it is written, 

the Complaint does not meet the pleading requirements set 

forth herein above. 

Second, while PennyMac’s motion does not specifically 

make any argument for failure to state a claim with regard 

to Plaintiff’s wrongful foreclosure and fraud claims (Count 

I), in reviewing the Complaint, this Court finds it 

necessary to address Count I. In order for Plaintiff to 

state a plausible cause of action for wrongful foreclosure, 

she must assert facts that show that “a mortgagee use[d] 

the power of sale given under a mortgage for a purpose 

other than to secure the debt owed by the mortgager.” 

Wallace v. Suntrust Mortgage Inc., 974 F.Supp. 2d. 1358, 

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1363-64 (S.D. Ala. 2013)(quoting Jackson v. Wells Fargo 

Bank, N.A., 90 So.3d 168, 171 (Ala.2012). At the time 

Plaintiff’s Complaint was filed, no foreclosure sale had 

taken place. Thus, Plaintiff’s Complaint does not properly 

state a claim for wrongful foreclosure i.e., that a 

foreclosure had taken place or that said foreclosure was 

for a purpose other than to secure a debt and, in its 

current form, is subject to dismissal. This Court 

understands Plaintiff’s Complaint, however, to assert that 

the then upcoming foreclosure would be wrongful because it 

would result in the foreclosure of a Plaintiff’s property 

for which no debt was owed to PennyMac. Because there is 

no dispute that a foreclosure has now taken place, it is 

recommended that Plaintiff file an amended complaint.2 

"Where a more carefully drafted complaint might state a

claim, a plaintiff must be given at least one chance to 

amend the complaint before the district court dismisses the 

action with prejudice." Bank v. Pitt, 928 F.2d 1108, 1112 

(11th Cir. 1991)(per curiam), overruled in part by Wagner 

v. Daewoo Heavy Indus. Am Corp., 314 F.3d 541, 542 (11th 

Cir. 2002). See also Watkins v. Hudson, 560 Fed. App’x 

908, 911 n. 2 (11th Cir. 2014) (explaining that Wagner

																																																							 2 Plaintiff’s Complaint additionally requests that this Court suspend 

all foreclosure proceedings on the Dean Mortgage. (Doc. 1 at 3).

However, because it is evident that the foreclosure has already taken 

place, Plaintiff’s request is Moot. 

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overruled Hudson with respect to plaintiffs who are 

represented by counsel). Given that Plaintiff is pro se, 

it is recommended that Plaintiff file an amended complaint 

which sets forth the necessary facts to state a viable 

claim for wrongful foreclosure.

With regard to the fraud claim, “[i]t has been 

established that Rule 9(b) is satisfied if the complaint 

sets forth the following: ‘(1) precisely what statements 

were made in what documents or oral representations or what 

omissions were made, and (2) the time and place of each 

such statement and the person responsible for making (or, 

in the case of omissions, not making) same, and (3) the 

content of such statements and the manner in which they 

misled the plaintiff, and (4) what the defendants obtained 

as a consequence of the fraud.’” United States ex rel. 

Clausen v. Laboratory Corp. of America, Inc., 290 F.3d 

1301, 1310 (11th Cir.2002) (citations omitted); see also 

Hill v. Morehouse Medical Assocs., Inc., 2003 WL 22019936, 

*3 (11th Cir. Aug. 15, 2003) (“plaintiff must plead facts 

as to time, place, and substance of the defendant’s alleged 

fraud, specifically the details of the defendants’

allegedly fraudulent acts, when they occurred, and who 

engaged in them.”). In other words, “to avoid dismissal, a 

complaint alleging fraud must plead the ‘who, what, when, 

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where and how’ of the alleged fraud.” Hay v. Bank of 

America, 2013 WL 1339729, *12 (N.D.Ga.March 29, 2013). 

As it is pled, Plaintiff’s Complaint fails to set 

forth the necessary facts as to when, what, where, or how 

PennyMac committed fraud. However, it is recommended that 

Plaintiff be allowed an opportunity to file an amended 

complaint consistent with the pleading requirements for 

fraud, as set forth above.

CONCLUSION

For the reasons herein above, it is recommended that 

the motion to dismiss be granted as to PennyMac as to Count 

II (TILA violations and wire fraud) and denied as to Count 

I (wrongful foreclosure and fraud). It is further 

recommended that Plaintiff file an amended complaint curing 

the deficiencies addressed herein at paragraph II, not 

later than August 22, 2016. 

NOTICE OF RIGHT TO FILE OBJECTIONS

A copy of this report and recommendation shall be 

served on all parties in the manner provided by law. Any 

party who objects to this recommendation or anything in it 

must, within fourteen (14) days of the date of service of 

this document, file specific written objections with the 

Clerk of this Court. See 28 U.S.C. § 636(b)(1); 

FED.R.CIV.P. 72(b); S.D. ALA. L.R. 72(c). The parties should 

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note that under Eleventh Circuit Rule 3-1, “[a] party 

failing to object to a magistrate judge's findings or 

recommendations contained in a report and recommendation in 

accordance with the provisions of 28 U.S.C. § 636(b)(1) 

waives the right to challenge on appeal the district 

court's order based on unobjected-to factual and legal 

conclusions if the party was informed of the time period 

for objecting and the consequences on appeal for failing to 

object. In the absence of a proper objection, however, the 

court may review on appeal for plain error if necessary in 

the interests of justice.” 11th Cir. R. 3-1. In order to 

be specific, an objection must identify the specific 

finding or recommendation to which objection is made, state 

the basis for the objection, and specify the place in the 

Magistrate Judge’s report and recommendation where the 

disputed determination is found. An objection that merely 

incorporates by reference or refers to the briefing before 

the Magistrate Judge is not specific. 

 DONE this 8th day of August, 2016. 

s/BERT W. MILLING, JR.

UNITED STATES MAGISTRATE JUDGE

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