WILLIAM S. DUFFEY, Jr., District Judge.
This matter is before the Court on Plaintiff Jeffrey Phillips's ("Plaintiff" or "Phillips") Objections [49] to Magistrate Judge Justin S. Anand's Non-Final Report and Recommendation ("R&R") [47]. The R&R recommends that Bank of America, National Association, as Successor by Merger to LaSalle Bank National Association, as Trustee for the Registered Holders of Credit Suisse Seasoned Loan Trust 2006-1, Home Equity Pass-Through Certificates, Series 2006-1 (the "Trustee") and Ocwen Financial Corporation's ("OFC") Motion to Dismiss [12] Plaintiff's First Amended Complaint ("FAC") [4] be granted, and that Ocwen Loan Servicing, LLC's ("OLS") Motion to Dismiss [13] Plaintiff's FAC be granted in part and denied in part.
On December 7, 1998, Plaintiff obtained a loan from HomeAmerican Credit, Inc., d/b/a/ Upland Mortgage ("Upland") and executed in favor of Upland a promissory note in the amount of $86,400 (the "Note"). Repayment of Plaintiff's loan obligations was secured by a deed (the "Security Deed") to real property located at 728 Kennolia Drive, Atlanta, Georgia (the "Property"). The Security Deed was executed in favor of Upland. (FAC ¶¶ 16-19 & Exs. A, B).
Plaintiff alleges that he experienced problems during Upland's servicing of his loan and that Upland, without Plaintiff's consent, converted his loan into a "Simple Interest Loan." (Id. ¶¶ 27-28).
In April 2005, OLS
On March 10, 2010, Upland assigned its rights under the Note and Security Deed to the Trustee. (Id. ¶ 25 & Ex. D).
On November 16, 2010, Plaintiff, proceeding pro se, filed his original complaint [1.1 at 2-7] against OLS in the Superior Court of Fulton County, Georgia.
On January 12, 2011, the United States District Court for the Northern District of Illinois approved a settlement of sixteen class actions and numerous individual actions involving OLS in
On October 5, 2012, after retaining counsel, Plaintiff filed his FAC, asserting new claims and adding OFC and the Trustee as defendants in this action. Plaintiff seeks to bring a putative class action and asserts claims for: fraud and deceit (Count 1); negligence (Count 2); mutual departure (Count 3); equitable accounting (Count 4); breach of fiduciary duty (Count 5); violation of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692
On November 2, 2012, OLS removed the Fulton County action to this Court based on federal question jurisdiction and the Class Action Fairness Act. (Notice of Removal [1]).
On December 12, 2012, OLS moved to dismiss Plaintiff's FAC for failure to state a claim [13]. Also on December 12, 2012, OFC and the Trustee filed their Motion to Dismiss [12].
On August 1, 2013, Magistrate Judge Anand issued his R&R. The R&R recommends dismissal of all of Plaintiff's claims against OFC and the Trustee because Plaintiff fails to allege any facts regarding conduct by OFC or the Trustee. The R&R also recommends that Plaintiff's claims against OLS in Counts 1-7 and Count 11 be dismissed, but that his claims for wrongful attempted foreclosure (Count 8), libel to title of land (Count 9), and false light invasion of privacy (Count 10), be allowed to proceed. The R&R also recommends that Plaintiff's claims for punitive damages (Count 12), attorney's fees and costs (Count 13), and injunctive relief (Count 14), to the extent Plaintiff seeks these remedies in connection with Counts 8-10, be allowed to proceed.
On August 19, 2013, Plaintiff filed his Objections to the R&R. Plaintiff objects to the Magistrate Judge's conclusion that he fails to state a claim against OLS in Counts 1-5, 7 and 11. Plaintiff does not object to the Magistrate Judge's recommendation that his claims against OFC and the Trustee be dismissed and that his FDCPA claim be dismissed.
After conducting a careful and complete review of the findings and recommendations, a district judge may accept, reject, or modify a magistrate judge's report and recommendation. 28 U.S.C. § 636(b)(1) (Supp. V 2011);
On a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court must "assume that the factual allegations in the complaint are true and give the plaintiff[] the benefit of reasonable factual inferences."
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'"
Plaintiff does not object to the Magistrate Judge's recommendation that Plaintiff's claims against OFC and the Trustee be dismissed. The Magistrate Judge found that Plaintiff fails to allege any conduct by OFC or the Trustee, and the Court notes that the only facts Plaintiff alleges against them is that OLS is a "corporate subsidiary" of OFC, and that the Trustee is the "owner of the `loan'" by assignment from Upland. (FAC. ¶¶ 3-4, 25). The Court does not find any error in the Magistrate Judge's conclusion that Plaintiff fails to allege facts sufficient to state any claim for relief against OFC or the Trustee, and Plaintiff's claims against them are required to be dismissed.
Plaintiff objects to the Magistrate Judge's conclusion that he fails to state a claim against OLS in Counts 1-5, 7 and 11. The Court conducts a de novo review of these claims and reviews for plain error the Magistrate Judge's recommendations on Plaintiff's remaining claims in Counts 6, 8-10, and 12-14.
The Magistrate Judge found that Plaintiff failed to allege the elements of fraud with sufficient particularity, including because Plaintiff did not assert that OLS knew the statements were false at the time they were made, that he believed the statements were true, or that he relied to his detriment on an allegedly false statement. In his objection, Plaintiff reiterates the conclusory statements asserted in his FAC.
In Georgia, plaintiffs alleging fraud must establish five (5) elements: "a false representation by a defendant, scienter, intention to induce the plaintiff to act or refrain from acting, justifiable reliance by plaintiff, and damage to plaintiff."
Rule 9(b) of the Federal Rules of Civil Procedure further requires plaintiffs alleging fraud to "state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). The Eleventh Circuit has consistently held:
Plaintiff asserts that OLS: (a) "implicitly represented to Plaintiff . . . that it would maintain true and correct records and accounts of the Loan;" (b) "represented to Plaintiff . . . that it would abide by the terms of the Loan when, in fact, [it] had no such intent;" (c) "represented to Plaintiff . . . that it would correct errors made by Ocwen in the processing and administration of the Loan and would apply payments in the manner required by the terms of the Loan;" and (d) "made the `errors' in the Plaintiff's Loan account . . . as part of a systemic national effort to defraud its customers, such effort being, since June 10, 2010, in violation of the commitments made by Ocwen in M.D.L. 1604." (FAC. ¶ 66).
Plaintiff does not allege any false statement made by OLS, when this statement was made or who made it. Plaintiff fails also to allege what OLS gained by allegedly making a false statement. Plaintiff's vague allegations are insufficient to satisfy the special pleading requirement under Rule 9(b) of the Federal Rules of Civil Procedure for pleading fraud claims with specificity and otherwise fails to allege the required elements of a claim of fraud.
Plaintiff further fails to allege facts sufficient to support a claim of fraud under Georgia law. Plaintiff does not allege any action he took, or refrained from taking, in response to an allegedly false representation by OLS. Plaintiff also does not allege that he relied upon a false representation, or that such reliance was justifiable. Plaintiff fails to allege facts sufficient to support his fraud claim. Plaintiff's objection is overruled, and this claim is required to be dismissed.
The Magistrate Judge found that Plaintiff failed to state a claim for negligence because he did not assert that OLS owed him a legal duty beyond the terms of the Note. Plaintiff asserts that OLS "owed duties of reasonable care to Plaintiff . . . in the servicing of mortgage loans" and that it breached that duty "by the imposition of fictitious and false mortgage loan account charges." (FAC ¶¶ 72-73). Plaintiff argues that OLS was required, under O.C.G.A. § 11-4-103, to exercise ordinary care in managing Plaintiff's account. (Obj. at 12-13).
To support a claim for negligence in Georgia, a plaintiff must allege:
Plaintiff asserts that OLS "owed duties of reasonable care to Plaintiff . . . in the servicing of mortgage loans" and that it breached that duty "by the imposition of fictitious and false mortgage loan account charges." (FAC ¶¶ 72-73). Plaintiff relies on
Here, the duties OLS owed to Plaintiff in the servicing of his loan are duties that arise from the Note and Security Deed Plaintiff entered into with Upland, and which duties OLS assumed when OLS became Plaintiff's loan servicer.
The Magistrate Judge found that Plaintiff failed to state a claim for mutual departure, pursuant to O.C.G.A. § 13-4-4, because Plaintiff failed to allege facts sufficient to support that he and OLS made a "mutual and intended" departure from the terms of his loan. Plaintiff asserts that he and OLS formed a quasi-new agreement departing from the terms of the original loan and that he should be given the opportunity to present additional facts, "including documentation of acceptance of payments less than the full amount due . . . through discovery," to support this claim. (Obj. at 10).
Under Georgia law,
O.C.G.A. § 13-4-4. The creation of a quasi-new agreement requires more than breach on the part of one of the parties; there must be a mutual departure from the terms of the contract.
Plaintiff fails to allege any facts to support his conclusory assertion that there was a mutual departure from the terms of the Note or Security Deed.
The Magistrate Judge found that Plaintiff is not entitled to an equitable accounting because he fails to allege facts sufficient to show that he lacks an adequate remedy at law to ascertain the amount due on his Loan. Plaintiff asserts that OLS "is in sole possession of the amortization schedules, insurance premium documents, and the escrow account statements required [to] analyze [OLS's] sophisticated scheme to defraud." (Obj. at 13).
Under Georgia law, a party may seek an equitable accounting in "[c]ases where accounts are complicated and intricate." O.C.G.A. § 23-2-70. An accounting is generally unnecessary in a breach of contract action where a party may utilize the discovery process and, where necessary, orders of the court to enforce compliance with discovery obligations to determine the full amounts owed under the contract.
Here, Plaintiff alleges that OLS incorrectly calculated amounts due under the terms of Plaintiff's loan and misapplied his mortgage payments, resulting in an allegedly incorrect determination that Plaintiff had defaulted on his loan obligations. While Plaintiff does not assert a claim for breach of contract, Plaintiff's claims arise from contracts commonly used by homeowners and which do not present the type of "complicated and intricate" issue which can only be ascertained with an accounting. Plaintiff may utilize the discovery process to determine the correct amount owed under his loan. Plaintiff fails to show that he is entitled to an equitable accounting. Plaintiff's objection is overruled and this claim is required to be dismissed.
The Magistrate Judge found that Plaintiff failed to state a claim for breach of fiduciary duty because there is no fiduciary relationship between a borrower and a lender or its agent. Plaintiff argues, without citation, that "mortgage loan servicers, such as [OLS], have, by virtue of their activities in the national mortgage servicing market, fiduciary duties and special duties of trust and fidelity to their customers." (Obj. at 14).
It is well-settled under Georgia law that no fiduciary relationship exists between a borrower and a lender or its agent.
In his Response, Plaintiff "concede[d] that its [sic] Fair Debt Collection Practices Act [] claim should be dismissed." (Pl's Resp. [40] at 21). The Court agrees with the Magistrate Judge's conclusion that Plaintiff has abandoned his claim for violation of the FDCPA, and this claim is required to be dismissed.
The Magistrate Judge found that Plaintiff did not state a claim for promissory estoppel because Plaintiff failed to allege facts to support that OLS made any promises to Plaintiff beyond the promises made in the Note and Security Deed, when the alleged promise was made or who made it, or that Plaintiff relied on the alleged promise to his detriment. Plaintiff argues that OLS made certain promises to Plaintiff pursuant to the MDL 1604 Settlement, and that the existence of a written contract does not preclude a claim for promissory estoppel based on such promises. (Obj. at 18).
Under Georgia law, a claim for promissory estoppel "requires a showing that (1) the defendant made certain promises, (2) the defendant should have expected that the plaintiffs would rely on such promises, and (3) the plaintiff did in fact rely on such promises to their detriment."
Plaintiff asserts that OLS made promises to Plaintiff "that were clear and definite, including, but not limited to, the promise that it would abide by the terms of the Loan, that it would maintain true and accurate records of his mortgage loan account, and that it would not foreclose on the [Property], so long as Plaintiff complied with the terms of the Loan." (FAC ¶ 92). Plaintiff asserts also that OLS made additional promises to Plaintiff pursuant to the MDL 1604 Settlement. (Obj. at 18). It is clear that the "promises" which Plaintiff seeks to enforce arise from the underlying contracts—the Note, Security Deed and the MDL 1604 settlement agreement. Promissory estoppel simply does not apply here.
The parties did not object to the Magistrate Judge's conclusion that Plaintiff alleged facts sufficient to support a claim for wrongful attempted foreclosure against OLS. After careful review, the Court finds no plain error in the Magistrate Judge's recommendation that this claim be allowed to proceed. Plaintiff alleges that, in March 2010, OLS "knowingly and intentionally published untrue and derogatory information concerning Plaintiff's financial condition, to wit, that Plaintiff was in default under the Loan," and that Plaintiff suffered damages as a result the false statements. (FAC ¶¶ 98-99). Plaintiff has alleged sufficient—albeit scant—facts to support a viable claim for wrongful attempted foreclosure.
The parties did not object to the Magistrate Judge's finding that Plaintiff stated a claim for libel of title based on his assertions that, in May 2010, OLS "published false and derogatory information concerning Plaintiff's financial condition, to wit, that Plaintiff was in default under the Loan," and that these "false statements" caused him "injury and damages." (FAC at ¶¶ 101-102). The Court reviews this finding for plain error.
Under Georgia law, "[t]he owner of any estate in lands may bring an action for libelous or slanderous words which falsely and maliciously impugn his title if any damage accrues to him therefrom." O.C.G.A. § 51-9-11. To support an action for slander of title, a plaintiff must allege "the uttering and publishing of the slanderous words; that they were false; that they were malicious; that he sustained special damage thereby; and that he possessed an estate in the property slandered."
The Court finds plain error in the Magistrate Judge's finding and recommendation on this claim. Plaintiff has not asserted that he suffered special damages as a result of OLS's publication of allegedly false statement that Plaintiff had defaulted on his loan obligations. Failure to adequately plead special damages defeats a claim for slander or libel of title to land.
The parties did not object to the Magistrate Judge's conclusion that Plaintiff alleged facts sufficient to support a claim for false light invasion of privacy against OLS. After careful review, the Court does not find plain error in the Magistrate Judge's recommendation that this claim be allowed to proceed. Plaintiff asserts that "during March 2010, [OLS] knowingly and intentionally published, by means of the written advertisements of its intent to exercise its alleged power of sale under the Security Deed, false and derogatory information concerning Plaintiff's financial condition, to wit, that Plaintiff was in default under the Loan," and that these statements "placed Plaintiff in a false light" and caused him "injury and damages." (FAC ¶¶ 105-106). Plaintiff has alleged facts sufficient to support a viable claim for false light invasion of privacy.
The Magistrate Judge found that Plaintiff failed to state a claim for intentional IIED because Plaintiff has not alleged the kind of "extreme and outrageous" conduct that goes "beyond all possible bounds of decency" and would be "utterly intolerable in a civilized community." (R&R at 46-47). Plaintiff argues that
(Obj. at 21).
Under Georgia law,
Plaintiff alleges that "[a]s a result of [OLS's] wrongful actions and wanton disregard for the consequences of its actions . . . [OLS] has caused Plaintiff . . . substantial and irreparable financial, physical, and emotional distress, anxiety, and mental anguish." (FAC at ¶ 108). The crux of Plaintiff's FAC is that OLS misapplied his mortgage payments, resulting in an allegedly incorrect determination that Plaintiff had defaulted on his loan obligations and publication of an allegedly untrue statement that Plaintiff was in default. This simply is not the kind of action that rises to the level of extreme, outrageous, atrocious or intolerable conduct as required to support a claim for intentional infliction of emotional distress.
Plaintiff asserts claims for punitive damages (Count 12), litigation expenses (Count 13), and injunctive relief (Count 14). The parties did not object to, and the Court does not find any plain error in, the Magistrate Judge's conclusion that to the extent Plaintiff seeks punitive damages, litigation expenses and injunctive relief on his claims for wrongful attempted foreclosure and false light invasion of privacy, Plaintiff's claims in Counts 12-14 may proceed against OLS. Because the Court finds that Plaintiff has failed to state a claim for libel of title, the Court finds, on de novo review, that Plaintiff's claims for punitive damages, litigation expenses and injunctive relief not be allowed to proceed in respect to the libel of title claim.
For the foregoing reasons,
O.C.G.A. § 11-4-103. Section 103 prohibits parties from agreeing that a bank will not be responsible for actions not taken in good faith or for not exercising ordinary care. Section 103, standing alone, does not impose on OLS an independent duty to act or refrain from acting.
Even if properly before the Court, Plaintiff's new allegation is precluded by the plain language of the Security Deed and Note. The Security Deed and Note expressly state that "[i]f Plaintiff do[es] not pay the full amount of each monthly payment on the date it is due, [Plaintiff] will be in default," that "Lender shall not be required to . . . modify amortization of the sums secured by the Security Instrument by reason of any demand made by [Plaintiff]," and that "[a]ny forbearance by Lender in exercising any right or remedy shall not be a waiver of or preclude the exercise of any right or remedy." (Note at 1; Security Deed at 3).
