WILLIAM H. STEELE, District Judge.
This matter comes before the Court on defendant's Motion to Dismiss First Amended Complaint (doc. 30). The Motion has been briefed and is now ripe.
This litigation is a spin-off case from another action filed in this District Court, styled Anastasia P. Diehl v. The Money Source Inc., et al., Civil Action 17-0125-TM-B (the "Diehl Action"). In the Diehl Action, the plaintiff, Anastasia Diehl, asserted various claims against her loan servicer, The Money Source Inc. ("TMS"), relating to the misapplication of certain payments she made on her residential mortgage. In particular, Diehl alleges that TMS violated the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601 et seq., by failing to conduct a reasonable investigation when Diehl brought these errors to its attention; that TMS breached the mortgage agreement by misapplying a payment in August 2016; that TMS wrongfully invaded her privacy by threatening loss of her home, making harassing collection calls, and contacting her ex-husband about the alleged default; and that TMS violated the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq., by failing to conduct a reasonable investigation of Diehl's dispute of its reporting of false and derogatory credit information. The Diehl Action remains pending at this time, with pretrial and trial deadlines having been continued to facilitate ongoing mediation efforts.
In this related action, TMS brings various claims against Paymap, Inc., based on Paymap's role in allegedly collecting and misrouting Diehl's payments. The well-pleaded factual allegations of the First Amended Complaint include the following:
On the strength of these allegations, among others, TMS asserts causes of action against Paymap for breach of contract/third-party beneficiary (Count One), negligence (Count Two), wantonness (Count Three), money had and received (Count Four), failure to indemnify (Count Five) and unjust enrichment (Count Six). Paymap now moves for dismissal of all claims and causes of action asserted by TMS pursuant to Rule 12(b)(6), Fed.R.Civ.P., for failure to state a claim on which relief can be granted.
To withstand Rule 12(b)(6) scrutiny and satisfy the minimum pleading requirements prescribed by Rule 8(a), a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face," so as to "nudge[] [its] claims across the line from conceivable to plausible." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "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, 173 L.Ed.2d 868 (2009) (citation omitted). "This necessarily requires that a plaintiff include factual allegations for each essential element of his or her claim." GeorgiaCarry.Org, Inc. v. Georgia, 687 F.3d 1244, 1254 (11
As an initial matter, Paymap moves for dismissal of the Amended Complaint in its entirety on the ground that "TMS has sustained no damages upon which it can rely to pursue these causes of action." (Doc. 30, at 6.) Paymap's position is that the damages claimed by TMS are speculative and uncertain because they are predicated on the mere possibility that TMS will ultimately be found liable for money damages in the Diehl Action.
The threshold problem with Paymap's contention is that it is rooted in the inaccurate premise that all of TMS's claims require proof of actual damages. They do not. After all, Counts One (breach of contract) and Five (failure to provide contractual indemnification) of the Amended Complaint are contract-based claims. Applicable law provides that a plaintiff who proves a breach of contract may recover nominal damages at trial, even in the absence of actual damage to the plaintiff or proof of actual damage by the plaintiff. See, e.g., City of Westminster v. Centric-Jones Constructors, 100 P.3d 472, 481 (Colo.App. 2003) ("Nominal damages are recoverable for a breach of contract even if no actual damages resulted or if the amount of actual damages has not been proved.").
As for the tort claims set forth at Counts Two (negligence) and Three (wantonness), movant's premise that a plaintiff must show actual injury appears valid. See, e.g., Adams-Arapahoe School Dist. No. 28-J v. GAF Corp., 959 F.2d 868, 872 (10
Clearly, then, TMS's Amended Complaint alleges reputational injury in the form of "damages to its customer/servicer relationship with Diehl" caused by the wrongful conduct attributed to Paymap. In response, movant identifies no persuasive basis for concluding that such harm does not constitute an actual injury that might support an award of damages against Paymap on TMS's tort claims. Indeed, Paymap's only rejoinder to TMS's reliance on this category of damages is as follows: "other than simply saying that Plaintiff has suffered `reputation' damages, there is no proof in any form that this is damage that has occurred as opposed to pure speculation." (Doc. 37, at 3.) Of course, this action is at the Rule 12(b)(6) stage, not the summary judgment stage. The rules of civil procedure do not obligate a plaintiff to "prove" anything in its complaint; therefore, Paymap's "no-proof" argument is misguided. At this point in the proceedings, a plaintiff merely must plead sufficient facts to state a plausible claim for relief. TMS has plausibly pleaded reputational harm arising from the errors that it attributes to Paymap in the processing of Diehl's mortgage payments; indeed, it is entirely plausible that a loan servicer's relationship with its customer would be damaged by a third party's mishandling of mortgage payments by that customer, resulting in such payments never being credited to the customer's loan. Nothing more is required for TMS to plead "reputational injury" as a basis for recovery in tort in this action, and the Court rejects Paymap's contention that dismissal is necessary because plaintiff's reliance on this type of harm is "pure speculation" with "no proof." TMS has pleaded actual damages that it has already suffered by virtue of Paymap's conduct, without regard to whether TMS is ultimately found liable to Diehl in the Diehl Action or not. For all of these reasons, dismissal of the Amended Complaint is not warranted for insufficient pleading of actual injury or damages.
In addition to moving for dismissal of the First Amended Complaint in its entirety on a "no-damages" theory, Paymap advances several arguments directed at particular claims.
Paymap contends that the negligence and wantonness claims should be dismissed for two independent reasons. First, it argues that Counts Two and Three are untimely. Both sides agree that TMS's negligence and wantonness claims are subject to a two-year statute of limitations, regardless of whether Colorado or Alabama law governs.
Defendant's limitations argument cannot prevail. After all, the Amended Complaint plainly alleges negligent/wanton conduct by defendant through April 2016, which would lie within the two-year limitations period. Certainly, TMS is not time-barred from seeking relief on a negligence/wantonness theory for alleged tortious acts and omissions by Paymap within the two-year period preceding the filing of the Complaint, such as the alleged misrouting of Diehl's April 2016 mortgage payment. Moreover, TMS has invoked the concept of a continuous tort or continuous wrong, as a means of bringing all of the alleged wrongful acts by Paymap within the two-year limitations period. Neither side has submitted more than cursory briefing on this topic; however, it bears noting that both Alabama and Colorado recognize the continuing tort doctrine in some form to toll the limitations period until the date the tortious conduct ends. See, e.g., AC, Inc. v. Baker, 622 So.2d 331, 335 (Ala. 1993) ("this Court . . . has recognized, in certain situations, a `continuing tort' doctrine that operates to toll the running of the limitations period in tort cases until the date that the last injury occurred"); Sanderson v. Heath Mesa Homeowners Ass'n, 183 P.3d 679, 682 (Colo.App. 2008) ("a claim for a continuous tort . . . does not begin to accrue until the tortious conduct has ceased"). At this stage, on such barebones treatment of the issue by the parties, the Court cannot discard the possibility that principles of continuous tort might render all aspects of Counts Two and Three timely. Defendant has thus not met its burden of showing that it is entitled to dismissal of plaintiff's negligence and wantonness claims on timeliness grounds.
Alternatively, Paymap contends that Counts Two and Three should be dismissed pursuant to Colorado's economic loss rule. Under Colorado law, "a party suffering only economic loss from the breach of an express or implied contractual duty may not assert a tort claim for such a breach absent an independent duty of care under tort law," such that to survive a motion to dismiss based on the economic loss rule, a plaintiff must allege "sufficient facts, taken in the light most favorable to him, that would amount to the violation of a tort duty that is independent of the contract." Spring Creek Exploration & Production Co. v. Hess Bakken Investment, II, LLC, 887 F.3d 1003, 1020 (10
In response, TMS maintains that the Paymap/LoanCare agreement "does not specifically impose a duty of care on Paymap for its actions relating to the forwarding of monthly payments, or on its treatment of third party beneficiaries." (Doc. 36, at 9-10.) But even cursory review of that agreement reveals that it contains provisions setting forth in detail the nature and extent of Paymap's responsibilities as to payment processing.
In response, TMS argues that Paymap had a separate, extra-contractual duty to remit Diehl's mortgage payments to the proper recipient. Supporting that contention, TMS cites authority standing generally for the proposition that whether to recognize a legal duty of care is a question of fairness under contemporary standards, and concludes that it is only reasonable and fair that Paymap owed a basic duty of reasonable care to loan servicers like TMS. (Doc. 36, at 7-8.) But one of the foundational purposes of the Paymap/LoanCare agreement (as to which TMS claims third-party beneficiary status) was to impose specific responsibilities on Paymap for processing payments. Any failure by Paymap to process Diehl's payments properly breached that contractual duty. Given the existence of contractual protections for loan servicers in TMS's position, there is no apparent reason why an independent duty outside the contract could or should be imposed to require Paymap to fulfill its payment-processing responsibilities under the contract. Extrapolating from the Paymap/LoanCare agreement to create an extracontractual duty would blur the lines between contract and tort law, effectively allowing tort law to swallow contract law, which is exactly the result that the economic loss rule was designed to prevent. Plaintiff also identifies no Colorado authorities supporting the proposition that recognizing the existence of a duty independent of contractual obligations would be appropriate or even permissible here under Colorado law. By the terms of the economic loss doctrine, then, Counts Two and Three cannot proceed. TMS's sole remedy for breach of Paymap's contractual duty to process Diehl's mortgage payments properly lies in contract, not tort.
Next, Paymap takes aim at Count Four of the Amended Complaint, which is a claim for money had and received. In that claim, TMS alleges that Paymap's actions caused Diehl's payments to be sent to the wrong entity, and that "TMS was the proper party to receive" them. (Doc. 27, ¶ 56.) Defendant posits that TMS cannot properly assert a claim for money had and received because the subject funds belong to Diehl, not TMS.
Under Colorado law, "[a] plaintiff can maintain an action for money had and received whenever the defendant has received money which, in equity and good conscience, he ought to pay over." Monday v. Robert J. Anderson, P.C., 77 P.3d 855, 857 (Colo.App. 2003) (citations and internal quotation marks omitted); see also Mullens v. Hansel-Henderson, 65 P.3d 992, 999 (Colo. 2002) (under the principle of money had and received, "a party will not be allowed to keep money which in equity and good conscience should be returned to another"). Here, TMS's pleading alleges that Paymap received money which in equity and good conscience it should pay over to TMS, as the servicer of Diehl's loan and the proper party to receive such funds. Nothing more is required to state a claim for money had and received. To be sure, Paymap suggests that TMS must prove that the money belongs to it in order to assert such a claim; however, it cites no Colorado authority supporting that proposition, and the undersigned's research shows that this cause of action is available whenever the defendant received money which "in equity and good conscience" it ought to pay over. Proof that the funds somehow "belong" to the plaintiff does not appear to be an element of the claim, as long as there is an equitable basis for requiring the funds to be paid over to the plaintiff, which TMS has adequately alleged. Paymap has made no showing to the contrary.
Finally, defendant moves for dismissal of Count Five, which asserts a contractual claim for failure to indemnify. In conclusory fashion, defendant states that "there is no indemnification issue because TMS has not been deemed liable for damages to Diehl in the Money Source Action." (Doc. 30, at 10.) Defendant cites no Colorado authority for this proposition; indeed, the only authority it cites is an unpublished Alabama district court case addressing judicial discretion under the Declaratory Judgment Act. But TMS's Count Five is not a claim for declaratory judgment, is not brought under the Declaratory Judgment Act, and (apparently all parties agree) is governed by Colorado law. After certain of these defects in the Motion were pointed out by plaintiff's response (see doc. 36, at 11), defendant failed to buttress its argument in the reply. On such a negligible showing, the Court will not grant Rule 12(b)(6) relief as to Count Five.
For all of the foregoing reasons, defendant's Motion to Dismiss the First Amended Complaint (doc. 30) is
