L. SCOTT COOGLER, District Judge.
Before the Court is a Motion to Dismiss, filed by the defendant, Bank of America, N.A. ("BANA" or "Defendant"
Mark and Robin Costine ("Plaintiffs"), along with four other unrelated couples, originally filed an action against BANA on March 14, 2012. See Doc. 1 in Prickett v. BAC Homeloans Servicing, LP, 2:12-cv-826-LSC. On June 4, 2012, BANA moved to dismiss every claim by all ten plaintiffs under Federal Rule of Civil Procedure 12(b)(6). Before ruling on BANA's motion, the Court determined, after seeking input from the parties, that the ten plaintiffs were improperly joined under Federal Rule of Civil Procedure 20(a). Accordingly,
Plaintiffs purchased their home with an FHA-insured mortgage loan in April 2007. (Doc. 9 ¶ 9.) Plaintiffs' financial situation turned bleak in the fall of 2009, when their uninsured son was involved in a serious automobile accident resulting in substantial medical expenses. (Id. ¶ 10.) As a result of their son's medical bills, Plaintiffs allege they fell behind on their mortgage payments and contacted BANA to request a loan modification. (Id. ¶ 11.)
In November 2009, Plaintiffs were informed over the phone that they had been approved for a modification and that collection activities would be suspended. (Id. ¶ 13.) However, Plaintiffs did not receive any specific information about the modification at that time, but rather allege they were told to expect a package in the mail, as well as a phone call from a workout negotiator, with details about the modification. (Id.) Not having heard from BANA in the allotted time, Plaintiffs contacted BANA on January 6, 2010, to inquire about the status of their modification. (Id. ¶ 14.) They allege that a BANA representative once again confirmed they had been approved for a modification and that they should continue to wait for BANA to provide additional details by phone and/or mail. (Id. ¶ 14-15.)
Plaintiffs allege they resumed making their "pre-modification monthly mortgage payment" at some unspecified time when they did not receive the paperwork or the phone call as promised. (Id. ¶ 16.) They claim that BANA initially accepted these payments, but posted them "erratically in large lump sums with seemingly no relationship to when they were sent." (Id. ¶ 17.) During this period, Plaintiffs claim they spent "hundreds of hours" on the phone with BANA representatives, who provided conflicting reports about the status of their modification. (Id. ¶ 18-19.) Although they were often told their modification was complete, they also were repeatedly asked to resubmit their application, which they allege to have done on six separate occasions. (Id. ¶ 19-20.) In April 2011, BANA refused to accept further mortgage payments from Plaintiffs. (Id. ¶ 22-23.) Plaintiffs' allege BANA refused to accept these payments even
A defendant may move to dismiss a complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) if the plaintiff has failed to state a claim upon which relief may be granted. "When considering a motion to dismiss, all facts set forth in the plaintiff's complaint `are to be accepted as true and the court limits its consideration to the pleadings and exhibits attached thereto.'" Grossman v. Nationsbank, N.A., 225 F.3d 1228, 1231 (11th Cir.2000) (quoting GSW, Inc. v. Long County, 999 F.2d 1508, 1510 (11th Cir.1993)). In addition, all "reasonable inferences" are drawn in favor of the plaintiff. St. George v. Pinellas County, 285 F.3d 1334, 1337 (11th Cir.2002).
To survive a 12(b)(6) motion to dismiss for failure to state a claim, the complaint "does not need detailed factual allegations;" however, the "plaintiff's obligation to provide the `grounds' of his `entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal citations omitted).
"[U]nsupported conclusions of law or of mixed fact and law have long been recognized not to prevent a Rule 12(b)(6) dismissal." Dalrymple v. Reno, 334 F.3d 991, 996 (11th Cir.2003) (quoting Marsh v. Butler County, 268 F.3d 1014, 1036 n. 16 (11th Cir.2001)). And "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but it has not `show[n]' — `that the pleader is entitled to relief.'" Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Fed.R.Civ.P. 8(a)(2)). Therefore, the U.S. Supreme Court suggested that courts adopt a "two-pronged approach" when considering motions to dismiss: "1) eliminate any allegations in the complaint that are merely legal conclusions; and 2) where there are well-pleaded factual allegations, `assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.'" American Dental Ass'n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir.2010) (quoting Iqbal, 556 U.S. at 664, 129 S.Ct. 1937). Importantly, "courts may infer from the factual allegations in the complaint `obvious alternative explanation[s],' which suggest lawful
Count One of Plaintiffs' Complaint asserts a state law claim for breach of contract. "The elements of a breach-of-contract claim under Alabama law are (1) a valid contract binding the parties; (2) the plaintiffs' performance under the contract; (3) the defendant's nonperformance; and (4) resulting damages." Shaffer v. Regions Fin. Corp., 29 So.3d 872, 880 (Ala. 2009) (quoting Reynolds Metals Co. v. Hill, 825 So.2d 100, 105 (Ala.2002)). Defendant argues Plaintiffs' breach of contract claim should be dismissed for two reasons: (1) it is insufficiently pled under Rule 8 and (2) the allegations of the Complaint demonstrate Plaintiffs' breached the contract first.
The Court's sole task at this point in the litigation is to evaluate whether Plaintiffs' claim has satisfied the pleading standards. After considering the allegations in the Complaint, the Court finds Plaintiffs have sufficiently alleged a breach of contract to survive a Rule 12(b)(6) motion to dismiss. Plaintiffs have pled sufficient factual content for the court to infer that a mortgage agreement existed and that Defendant breached it by not properly applying payments and assessing unwarranted fees. (Doc. 9 ¶ 31.) For these reasons, Defendant's motion to dismiss is due to be denied with respect to Count One.
Count Two of the Complaint asserts a state law claim for slander of title. The elements of slander of title under Alabama law are:
Merchants Nat. Bank of Mobile v. Steiner, 404 So.2d 14, 21 (Ala.1981) (citing Womack v. McDonald, 219 Ala. 75, 121 So. 57, 59 (1929)). Defendant contends that Plaintiffs failed to allege facts in the Complaint satisfying the elements of slander of title. Specifically, Defendant argues that Plaintiffs have not alleged publication to a third party, falsity of the publication, or that they suffered special damages.
While it is true that Plaintiffs' allegations with respect to their slander of title claim are lacking in detail, the Court finds the allegations are nonetheless sufficient to survive a motion to dismiss. Plaintiffs alleged that Defendant made a false publication to a third party. Specifically, they asserted that "Defendant has wrongfully reported Plaintiffs' mortgage as defaulted and in foreclosure to the credit reporting agencies as well as advertising multiple foreclosure sales." (Doc. 9 ¶ 35) (emphasis added). Additionally, Plaintiffs alleged particularized damages which resulted directly from the alleged wrongful publication. They claim that "Defendant's actions have damaged Plaintiffs' credit scores...." (Id. ¶ 36.) The Court finds that these paragraphs allege a plausible slander of title claim sufficient to survive a motion to dismiss. Accordingly, Defendant's motion to dismiss is due to be denied with respect to Count Two.
Count Three of the Complaint asserts a state law claim for unjust enrichment.
Count Four of the Complaint alleges BANA violated the FDCPA by engaging in a pattern and practice of making false representations in an attempt to collect a debt. (Doc. 9 ¶ 47.) Defendant argues that Plaintiffs' FDCPA claim should be dismissed because the allegations in the complaint demonstrate that BANA is not a "debt collector" for purposes of the FDCPA.
To state a claim under the FDCPA, a plaintiff must establish, among other things, that the defendant is a "debt collector." Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1216 (11th Cir.2012). The FDCPA defines a debt collector as "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts." 15 U.S.C. § 1692a(6). While BANA may fit this description, 15 U.S.C. § 1692a(6)(F) excludes persons collecting a debt when the collection "concerns a debt which was not in default at the time it was obtained by such persons." Furthermore, the legislative history suggests that a mortgagee and its assignee, including mortgage servicing companies, are not debt collectors under the FDCPA when the debt is not in default at the time the mortgage-holder acquires the debt. See Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir.1985) (citing S.Rep. No. 95-382, at 3-4 (1977), 1977 U.S.C.C.A.N. 1695, 1697-1699).
Defendant contends that the factual allegations in the Complaint clearly demonstrate that BANA is not a debt collector because the allegations show BANA began servicing Plaintiffs' loan before Plaintiffs first defaulted. Specifically, Defendant's point to paragraphs 9 through 11, wherein Plaintiffs state that the first time they fell behind on their loan was in the fall of 2009, and that they immediately "contacted [BANA] to request a loan modification." (Doc. 9 ¶ 11.) These allegations, even read in the light most favorable to the Plaintiffs, tend to demonstrate that BANA was the loan servicer on Plaintiffs' mortgage at the time they first defaulted. And taking these allegations as true, it necessarily follows that BANA is not a debt collector as the term is defined in the FDCPA.
Plaintiffs respond to Defendant's argument by referencing, but not attaching, a letter allegedly in their possession
Because Plaintiffs have failed to allege facts in the Complaint demonstrating that BANA is a "debt collector" within the meaning of the FDCPA, their FDCPA claim is subject to dismissal. However, rather than immediately dismissing Plaintiffs' claim, the Court will allow Plaintiffs an opportunity to amend their Complaint to allege facts satisfying the elements of the cause of action which are currently lacking, if such facts exist. Plaintiffs are reminded that by filing an amendment, the party signing the filing certifies that "to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances ... the factual contentions have evidentiary support." Fed.R.Civ.P. 11(b)(3). In other words, if the evidence does not support an amendment, none should be made. Plaintiffs have ten (10) days from the date of this Order to file their amendment. Failing to amend, the Court will enter an order dismissing Plaintiffs' FDCPA claim.
Plaintiffs allege that BANA is liable under RESPA because it failed to respond in a proper and timely way to Plaintiffs' "qualified written request" (QWR) for information related to their mortgage account. RESPA establishes certain actions which must be followed by entities or persons responsible for servicing federally related mortgage loans, including responding to borrower inquires. See 12 U.S.C. § 2605. Specifically at issue is § 2605(e), which provides that a loan servicer, upon receipt of a QWR, must provide "a written response acknowledging receipt of the correspondence" within 5 business days, id. § 2605(e)(1)(A), and must take action on the QWR within 30 days. Id. § 2605(e)(2). Defendant argues that Plaintiffs' RESPA claim is due to be dismissed because Plaintiffs never alleged that they submitted a QWR and thus have not demonstrated that RESPA required a response.
A loan servicer's obligation to provide information under § 2605(e) only applies after it "receives a qualified written request from the borrow (or agent of the borrower)." 12 U.S.C. § 2605(e)(1)(A) (emphasis added). Accordingly, to adequately state a claim that a loan servicer violated its duty to timely respond under § 2605(e), a plaintiff must first allege that a QWR meeting the statutory definition was actually submitted. In their response, Plaintiffs contend that they "allege[d] the submission of a qualified written request in paragraph 56 of the Amended Complaint and imply the existence of the QWR in their factual allegations." (Doc. 14 at 1.) Paragraph 56 provides: "Defendant violated RESPA, 12 U.S.C. § 2605(e)(2)(A), by failing to make appropriate correction to the Plaintiff's account in response to the qualified written request...." (Doc. 9 ¶ 56.)
The factual allegations cited do not adequately plead that a QWR was actually submitted. It is not enough to simply use the words "qualified written request" somewhere in the Complaint. Rather, Plaintiffs must plead facts demonstrating
The Supreme Court made clear in Twombly that "[a] formulaic recitation of the elements of a cause of action" is not enough to survive a motion to dismiss. Twombly, 550 U.S. at 555, 127 S.Ct. 1955. Rather, a plaintiff must set out "factual allegations" which are sufficient to "raise a right to relief above the speculative level." Id. Plaintiffs complaint is void of any facts establishing that a QWR was ever submitted to BANA, and accordingly, Plaintiffs have failed to adequately state a claim for relief under RESPA. However, rather than immediately dismissing Plaintiffs' claim, the Court will allow Plaintiffs an opportunity to amend their Complaint to allege facts satisfying the elements of the cause of action which are currently lacking. Specifically, if appropriate, Plaintiffs should allege facts demonstrating that a QWR was actually submitted to BANA satisfying the requirements set out in 12 U.S.C. § 2605(e)(1)(B). Plaintiffs are reminded that by filing an amendment, the party signing the filing certifies that "to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances ... the factual contentions have evidentiary support." Fed.R.Civ.P. 11(b)(3). In other words, if the evidence does not support an amendment, none should be made. Plaintiffs have ten (10) days from the date of this Order to file their amendment. Failing to amend, the Court will enter an order dismissing Plaintiffs' RESPA claim.
Count Six of the Complaint is captioned "Negligence Per Se." As an initial matter, the Court recognizes there is no Alabama tort cause of action known as negligence per se. Rather, negligence per se is merely a subsidiary doctrine of negligence whereby a party is considered negligent as a matter of law because it acted in violation of a statute which was designed to prevent the type of harm that occurred. See Parker Bldg. Servs. Co. v. Lightsey, 925 So.2d 927, 930-31 (Ala.2005). Despite captioning their relief as "negligence per se," Plaintiffs have failed to identify, either in their Complaint or their brief, any applicable statute or regulation that has been violated. For that reason, Count Six is arguably due to be dismissed.
The Court agrees with the Middle District of Alabama's recent assessment that "Alabama law does not recognize a cause of action for negligent or wanton mortgage servicing." Blake v. Bank of Am., N.A., 845 F.Supp.2d 1206, 1210-11 (M.D.Ala.2012); see also McClung v. Mortgage Elec. Registration Sys., Inc., 2:11-CV-03621-RDP, 2012 WL 1642209, at *7-8 (N.D.Ala. May 7, 2012) (following Blake); Jackson v. Countrywide Home Loans, Inc., 2:11-CV-327-MEF, 2012 WL 777180, at *6-7 (M.D.Ala. Mar. 7, 2012) (same). As explained in Blake, "Alabama does not recognize a tort-like cause of action for the breach of a duty created by contract" because "`a negligent failure to perform a contract ... is but a breach of the contract.'" Id. (quoting Vines v. Crescent Transit Co., 264 Ala. 114, 85 So.2d 436, 440 (1956)). "A plaintiff can only sue in tort when a defendant breaches the duty of reasonable care-the duty one owes to another in his day-to-day affairs — when such a breach causes personal injury or property damage." Id. (citing Vines, 85 So.2d at 440).
The court in Blake determined that the mortgage servicer's obligations arose from the mortgage and promissory note to which the parties agreed, not from the duty of reasonable care generally owed to members of the public. Blake, 845 F.Supp.2d at 1210. Accordingly, the borrower could not allege a tort claim based on negligent servicing of the mortgage. Id. Here, Plaintiffs allege that BANA "negligently handled payments and assessed improper late fees and charges" to Plaintiffs' mortgage account. Inherent in this allegation is Plaintiffs contention that BANA owed Plaintiffs a duty to act reasonably in servicing their mortgage. As in Blake, the duties and breaches alleged by Plaintiffs clearly would not exist but for the contractual relationship between the parties. Moreover, there is no duty to the general public to properly service mortgage accounts.
The Court is not holding that negligence and breach of contract claims can never coexist in the same lawsuit. However, because all the duties Plaintiffs contend BANA breached are solely based on contractual agreements between the parties, this Court follows the lead of Blake and its progeny, and holds that claims for negligent mortgage servicing are not legally cognizable under Alabama law. Accordingly, Count Six is due to be dismissed.
Although also asserting a claim sounding in negligence, Count Seven is somewhat different from Count Six. Where Count Six alleged negligence based on negligent servicing of Plaintiffs' mortgage, Count Seven alleges BANA was negligent in its hiring, training and supervision of its employees. "To establish a claim for negligent,
Defendant contends that Plaintiffs abandoned the negligent hiring/training claim by failing to argue in support of it in their responsive brief. While it is true that Plaintiffs did not devote a section of their responsive brief to defending their negligent hiring/training claim, the Court is hesitant to hold that Plaintiffs abandoned their claim given the overlap between this claim and Count Six's claim for negligent mortgage servicing, which Plaintiffs did defend. Thus, the Court will consider the merits of Defendant's arguments for dismissal.
Defendant argues that Plaintiffs' negligent hiring and training claim is due to be dismissed because they have not alleged that BANA's employees committed a cognizable tort under Alabama law, and have not alleged BANA was aware of the unfitness of its employees. It appears that Plaintiffs' negligent hiring/training claim is entirely based on Plaintiffs' contention that BANA employee negligently serviced their home loan. Plaintiffs argue that "Defendants negligently hired and/or trained its representatives to handle payments resulting in misapplied mortgage payments and improper late fees and charges assessed to Plaintiff's account." (Doc. 14 at 9.) As explained in Section IV.E, supra, Plaintiffs' claim for negligent mortgage servicing is not legally cognizable under Alabama law. As such, Plaintiffs claim for negligent hiring/training is also invalid because the non-existent negligent mortgage servicing tort is the only tort allegedly committed by BANA's employees.
Count Eight of the Complaint asserts a state law claim for breach of fiduciary duty. Defendant contends that Plaintiffs' breach of fiduciary duty claim is due to be dismissed for the simple fact that BANA did not owe Plaintiffs a fiduciary duty. Indeed, Defendant points out that "[c]ourts have traditionally viewed the relationship between a bank and its customer as a creditor-debtor relationship which does not impose a fiduciary duty of disclosure on the bank." Armstrong Bus. Servs., Inc. v. AmSouth Bank, 817 So.2d 665, 678 (Ala.2001) (citation omitted). Plaintiffs failed to offer any response to Defendant's argument, and therefore have abandoned their breach of fiduciary duty claim. See Coal. for the Abolition of Marijuana Prohibition, 219 F.3d at 1326; Evans, 2012 WL 1745610, at *10; McMaster, 177 F.3d at 940-41 (11th Cir.1999). Accordingly, Count Eight is due to be dismissed with prejudice.
Count Nine of Plaintiffs' Complaint asserts a claim for intentional infliction of emotional distress, which is better known within the state of Alabama as the tort of outrage. In order to recover on the tort of outrage, a plaintiff must demonstrate that the defendant's conduct "(1) was intentional or reckless; (2) was extreme and outrageous; and (3) caused emotional distress so severe that no reasonable person could be expected to endure it." Green Tree Acceptance, Inc. v.
The Alabama Supreme Court has "consistently held that the tort of outrage is a very limited cause of action that is available only in the most egregious circumstances. As a consequence, [the Alabama Supreme Court] has held in a large majority of the outrage cases reviewed that no jury question was presented." Thomas v. BSE Indus. Contractors, Inc., 624 So.2d 1041, 1044 (Ala.1993) (citing multiple cases). In fact, as the Alabama Supreme Court recently explained, the tort of outrage is "so limited that this Court has recognized it in regard to only three kinds of conduct: (1) wrongful conduct in the family-burial context; (2) barbaric methods employed to coerce an insurance settlement; and (3) egregious sexual harassment." Little v. Robinson, 72 So.3d 1168, 1172 (Ala.2011) (quoting Potts v. Hayes, 771 So.2d 462, 465 (Ala.2000)).
Distilling Plaintiffs' allegations down, they have effectively alleged that BANA: (1) told Plaintiffs they had been approved for a loan modification but did not provide them with the proper documentation or hold true to these statements; and (2) mishandled or improperly applied mortgage payments after Plaintiffs were already in default. These allegations are simply not comparable to the three contexts in which the Alabama Supreme Court has permitted outrage claims to go before a jury. Unsurprisingly, several federal courts have dismissed outrage claims based on similar allegations of mortgage servicing deficiencies. See, e.g., Jackson v. Countrywide Home Loans, Inc., 2012 WL 777180, at *8 (M.D.Ala. Mar. 7, 2012) ("Plaintiff's tort of outrage claim, which is related to Defendants' alleged debt collection efforts and which does not fall into one of the presently recognized contexts in which a tort of outrage claim is appropriate, is due to be dismissed."). For these reasons, Plaintiffs' outrage claim is due to be dismissed.
For the foregoing reasons, BANA's Motion to Dismiss (Doc. 10) is due to be GRANTED in part, DENIED in part, and partially DEFERRED to allow Plaintiffs an opportunity to amend their Complaint. A separate order will be entered consistent with this opinion.