Jackson v. Nationstar Mortgage LLC

Cite as 2016 Ark. App. 473

ARKANSAS COURT OF APPEALS
DIVISION I
No.CV-15-1006

Opinion Delivered: October 19, 2016
PATRICIA JACKSON

APPELLANT APPEAL FROM THE PULASKI
COUNTY CIRCUIT COURT,
V. SECOND DIVISION
[NO. 60CV-14-2554]
NATIONSTAR MORTGAGE LLC

APPELLEE HONORABLE CHRISTOPHER
CHARLES PIAZZA, JUDGE

AFFIRMED

RAYMOND R. ABRAMSON, Judge

Patricia Jackson appeals the Pulaski County Circuit Court order dismissing her claims

against Nationstar Mortgage LLC (“Nationstar”) with prejudice. On appeal, Jackson argues

that the circuit court erred when it (1) considered Nationstar’s motion to dismiss after she

filed an amended complaint; (2) did not afford her an opportunity to respond to the motion

to dismiss as to the new claims in her amended complaint; and (3) found that Arkansas law

does not permit recovery for her claims. We affirm.

This action arises out of Jackson’s homeowners’ insurance contract with Allstate

Insurance Company (“Allstate”) and her mortgage agreement1 with Nationstar concerning

her house in Little Rock. The insurance contract provided as follows:

1
Jackson’s ex-husband, Donald Jefferson, is a co-obligor on the mortgage note, but
he is not a party to the homeowners’ insurance contract.
Cite as 2016 Ark. App. 473

We will protect the mortgagee’s interest in a covered building structure in the event
of an increase in hazard, intentional or criminal acts of, or directed by, an insured
person, failure by any insured person to take all reasonable steps to save and preserve
property after a loss, a change in ownership, or foreclosure if the mortgagee has no
knowledge of these conditions.

The mortgage agreement provided,

In the event of loss, Borrower shall give prompt notice to the insurance carrier and
Lender. Lender may make proof of loss if not made promptly by Borrower. Unless
Lender and Borrower otherwise agree in writing, any insurance proceeds, whether
or not the underlying insurance was required by Lender, shall be applied to
restoration or repair of the Property, if the restoration or repair is economically
feasible.
....
If the restoration or repair is not economically feasible or Lender’s security would be
lessened, the insurance proceeds shall be applied to the sums secured by this Security
Instrument, whether or not then due, with the excess, if any, paid to Borrower.

On February 22, 2012, the house burned, leaving it uninhabitable. Jackson made a

claim under her homeowners’ policy, but Allstate denied it on the basis of alleged arson,

misrepresentation, and concealment by Jackson.

On February 6, 2013, Jackson filed suit against Allstate in the Pulaski County Circuit

Court alleging that Allstate had wrongfully denied her insurance claim following the house

fire. Allstate removed the case to federal district court on February 25, 2013. The case

proceeded to trial, and the jury rendered a verdict in favor of Allstate, finding that “Jackson

or someone on her behalf, either burned her home or caused it to burn.”2

2
The Eighth Circuit affirmed the jury’s verdict on May 7, 2015. See Jackson v. Allstate
Ins. Co., 785 F.3d 1193 (2015).

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Following the trial, on July 1, 2014, Jackson filed a declaratory-judgment action

against Nationstar in the Pulaski County Circuit Court.3 She alleged that Allstate’s attorney

had informed her that Allstate had made an agreement with Nationstar to satisfy her

mortgage for $203,164.41 and that Allstate had sent Nationstar a check for that amount in

March 2014; however, her mortgage balance remained $243,845.38.4 She asked the court

to (1) require Allstate to pay off the mortgage in full; (2) declare that she had no further

liability to Nationstar; (3) require Nationstar to reimburse her for the mortgage payments

she made following the fire; and (4) require Nationstar to remove a lockbox placed on the

house following the fire.

On August 20, 2015, Nationstar filed a motion to dismiss. Nationstar informed the

court that after Jackson filed the action, it applied the $203,164.41 that it received from

Allstate to the outstanding loan balance, charged off the remaining amounts owed on the

loan, and recorded a release of the mortgage in the Pulaski County real estate records.

Nationstar asserted that as a result of the release, Jackson’s requested relief was either moot

or unavailable under Arkansas law. Specifically, Nationstar contended that Jackson was not

entitled to reimbursement for mortgage payments because the insurance policy contained a

standard mortgage clause. Nationstar relied on Fireman’s Fund Insurance Co. v. Rogers, 18

Ark. App. 142, 712 S.W.2d 311 (1986), and asserted that under a standard mortgage clause,

3
Jackson also named Allstate and Jefferson as defendants, and she later joined the
City of Little Rock as a defendant. The court entered orders of dismissal against Allstate,
Jefferson, and the City of Little Rock.
4
This amount reflects the outstanding balance as of June 26, 2014.

3
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when an insured mortgagor causes the loss, the insurer has no liability to the insured

mortgagor, and the insurance proceeds need not be applied to reduce the mortgage.

On August 29, 2015, Jackson amended her complaint. She realleged the facts from

her original complaint and further alleged that Nationstar had unreasonably delayed applying

the $203,164.41 from Allstate to her mortgage balance. She asserted that Nationstar delayed

the application because she would not submit an affidavit to Nationstar concerning the

payment. She contended that the mortgage agreement did not require an affidavit and that

she suffered a loss during the delay because she had to make the mortgage payments. She

asserted additional claims for a breach of the mortgage agreement and unjust enrichment

and again requested reimbursement for the mortgage payments she had paid following the

fire.

On August 31, 2015, Jackson filed a response to Nationstar’s motion to dismiss,

asserting that the motion should be denied because she had alleged new claims in her August

29, 2015 amended complaint that Nationstar had not addressed.

On September 3, 2015, Nationstar filed a notice of adoption of its motion to dismiss.

Nationstar alleged that Jackson’s amended complaint did not include any additional facts but

only “reframed her request for reimbursement.” It reasserted its argument pursuant to

Fireman’s Fund.

The court held a hearing on Nationstar’s motion to dismiss on September 8, 2015.

At the hearing, Nationstar again asserted that the relief sought in Jackson’s original complaint

and amended complaint was either moot as a result of the mortgage release or unavailable

4
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under Arkansas law.5 In response, Jackson asked for additional time to respond to

Nationstar’s adoption to its motion to dismiss because the adoption had been filed only five

days prior to the hearing, which included Labor Day. She additionally argued that the court

should not consider Nationstar’s motion to dismiss as to the amended complaint because

the amended complaint alleged new claims. At the conclusion of the hearing, the court

orally granted Nationstar’s motion to dismiss.

On September 23, 2015, the court entered a written order dismissing with prejudice

Jackson’s claims against Nationstar. The court found that “Nationstar was under no duty to

apply the insurance proceeds to reduce Jackson’s obligation on the [n]ote and [m]ortgage”

pursuant to Fireman’s Fund. On October 16, 2015, Jackson timely filed her notice of appeal.

Our standard of review on a motion to dismiss is well established. In cases where

the appellant claims that the trial court erred in granting a motion to dismiss, we review the

trial court’s ruling using a de novo standard of review. Holliman v. Johnson, 2012 Ark. App.

354, 417 S.W.3d 354. When the issues on appeal do not involve factual questions but rather

the application of a legal doctrine, we simply determine whether the appellees were entitled

to judgment as a matter of law. Winrock Grass Farm, Inc. v. Affiliated Real Estate Appraisers of

Ark., Inc., 2010 Ark. App. 279, 373 S.W.3d 907.

Jackson first argues that the circuit court erred when it considered Nationstar’s

motion to dismiss after she had filed an amended complaint. She asserts that her amended

5
At the hearing, Nationstar informed the court that after it had applied the insurance
funds to Jackson’s mortgage, Jackson’s outstanding balance was $60,000, but it gratuitously
charged off the debt. Nationstar also informed the court that it had removed the lockbox
from the house.

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complaint alleges new claims that she did not plead in her original complaint. Nationstar

contends that Jackson’s argument is meritless because the issues identified in its motion to

dismiss the original complaint also existed in the amended complaint.

We agree with Nationstar. In her original complaint, Jackson asked the court to

require Nationstar to release her from the mortgage and to reimburse her for the mortgage

payments she made following the fire. In her amended complaint, she recognized that

Nationstar had released the mortgage but again asked for reimbursement for the mortgage

payments through new claims. Thus, Jackson merely asserts new theories to acquire the

same relief. Furthermore, the same defects Nationstar raised in the original motion apply to

the new pleading—that Arkansas law does not allow reimbursement pursuant to Fireman’s

Fund. To require Nationstar to file a new motion in these circumstances would “exalt form

over substance.” 6 Charles Alan Wright et al., Federal Practice and Procedure § 1476 (3d

ed. 2010); see also Ark. R. Civ. P. 1 (stating that the rules shall be construed “to secure the

just, speedy and inexpensive determination of every action”). Accordingly, we hold that the

circuit court did not err in considering Nationstar’s motion to dismiss.6

Jackson next argues that the circuit court erred in considering the motion to dismiss

because it did not afford her an opportunity to file a written response to the motion as to

the newly added claims. We do not agree. In Smith v. Walt Bennett Ford, Inc., 314 Ark. 591,

864 S.W.2d 817 (1993), our supreme court held that circuit court did not err in granting a

6
Jackson also claims that Nationstar’s “motion to adopt was not proper under Ark.
R. Civ. P. 10.” However, Jackson failed to raise this argument in the circuit court.
Accordingly, her argument is not preserved for our review. See Worden v. Kirchner, 2013
Ark. 509, 431 S.W.3d 243.

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motion in limine without giving the opposing party the opportunity to file a written

response within ten days:

There is no specific requirement of a written response to a written motion; ARCP
Rule 78(b) merely requires that if a written response is to be filed, it must be done
so within ten days of service of the motion. However, a trial court should either
allow a written response to the motion or hold a hearing at which a response is heard.

Id. at 612-13, 864 S.W.2d at 829. In Loveless v. Agee, 2010 Ark. 53, our supreme court

distinguished Smith and held that a circuit court committed a reversible error when it

granted a motion to dismiss because the court dismissed the appellant’s claims without a

hearing and before she had filed her written response.

In this case, we hold that the circuit court did not err in granting Nationstar’s motion

to dismiss before Jackson filed a written response as to the newly added claims. The court

held a hearing where Jackson had the opportunity to respond to Nationstar’s argument as

to the newly added claims. Moreover, Jackson filed a written response to Nationstar’s

motion to dismiss. Jackson again argues that her written response was ineffective because

she alleged new claims in her amended complaint, and Nationstar filed its motion to dismiss

before she filed the amended complaint. However, as discussed above, she sought the same

relief in both complaints, and Nationstar’s motion to dismiss alleged that Jackson was not

entitled to that relief pursuant to Fireman’s Fund.

Jackson finally argues that the circuit court erred when it found that Arkansas law

does not permit recovery for reimbursement of the mortgage payments she made following

the fire. She asserts that “Nationstar’s argument below missed the mark.” Specifically, she

recognizes the law pursuant to Fireman’s Fund but claims that this case is distinguishable

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because her mortgage agreement with Nationstar separately required it to apply the

insurance proceeds to the mortgage.

However, as Nationstar points out in its brief, Jackson did not distinguish Fireman’s

Fund to the circuit court and assert that the mortgage agreement separately required

Nationstar to apply the insurance proceeds. It is axiomatic that this court will not consider

arguments raised for the first time on appeal. Worden, 2013 Ark. 509, 431 S.W.3d 243

(declining to consider the appellants’ argument disputing the circuit court’s grant of the

appellees’ motion to dismiss because the appellants neglected to raise the issue in the circuit

court). If a particular theory was not presented at trial, the theory will not be reached on

appeal. See Ouachita Wilderness Inst., Inc. v. Mergen, 329 Ark. 405, 947 S.W.2d 780 (1997).

In her amended complaint, Jackson claimed that she was entitled to reimbursement

because Nationstar delayed applying the insurance proceeds to the mortgage while awaiting

an affidavit from her when the mortgage agreement contained no requirement for an

affidavit. At the hearing on Nationstar’s motion to dismiss, Jackson argued that the court

should not consider the motion to dismiss as to the newly added claims, asked the court for

more time to respond, and again claimed that Nationstar arbitrarily required her to submit

an affidavit. She did not distinguish Fireman’s Fund and assert that a clause in the mortgage

agreement separately required Nationstar to pay off the loan.7 The trial court was not

7
In her reply brief, Jackson acknowledges the rule that this court will not consider
arguments made for the first time on appeal. However, she cites Eighth Circuit case law for
the proposition that this court can consider arguments that are a narrow subset of a party’s
more general arguments. She alternatively argues, again citing Eighth Circuit case law, that
this court has the discretion to consider arguments raised for the first time on appeal. We
find her arguments unpersuasive.

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Cite as 2016 Ark. App. 473

afforded an opportunity to rule on this argument. Accordingly, Jackson’s argument is not

preserved for our review.

Affirmed.

HARRISON and KINARD, JJ., agree.

David A. Hodges, for appellant.

Wright, Lindsey & Jennings LLP, by: Kimberly Wood Tucker and Seth R. Jewell, for

appellee.

9