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Jackson v. Nationstar Mortgage LLC

Court of Appeals of Arkansas, Division I

October 19, 2016



          David A. Hodges, for appellant.

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

          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 agreement[1] with Nationstar concerning her house in Little Rock. The insurance contract provided as follows:

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]

         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 ...

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