ROBERT C. CHAMBERS, Chief Judge.
Pending is Plaintiff`s Motion to Amend Complaint [for the Third Time], ECF No. 34, and Plaintiff`s Amended Motion to Amend Complaint [for the Third Time], ECF No. 42. For the reasons explained below, the first Motion, ECF No. 34, is
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On August 16, 2013, Plaintiff filed the instant action in the Circuit Court of Putnam County, West Virginia. See Compl., ECF No. 1-1 at 13-23. On September 19, 2013, Defendant removed the case to this Court, and on October 9, 2013, Plaintiff filed a Second Amended Complaint,
In the Second Amended Complaint, Count I alleged breaches of contract by Defendant for 1) force-placing insurance in excess of what was required under the Deed of Trust and charging the cost of such insurance to Plaintiff, and 2) charging Plaintiff a monthly $30 servicing fee which was not clearly disclosed to her. 2nd Am. Compl. at 7-8. Count II alleged fraud and intentional misrepresentation by Defendant for 1) demanding that Plaintiff obtain excessive additional flood insurance and force-placing such insurance, 2) informing Plaintiff that her flood insurance was inadequate and that she had an obligation to carry flood insurance in excess of the loan balance, 3) failing to adequately explain the monthly $30 servicing fee to Plaintiff, and 4) threatening to foreclose on Plaintiff`s property for a vague "property charge" of $1,369.70. Id. at 8-9. Count III alleged violations of the WVCCPA by Defendant for 1) misleading Plaintiff in multiple letters by stating that her flood insurance was inadequate, 2) implying to Plaintiff that she was required under company regulations and federal law to purchase additional flood insurance, 3) failing to adequately disclose to Plaintiff the reasoning for and amount of the monthly servicing fee and how it would be charged to her account, 4) twice threatening to foreclose on Plaintiff`s property if she did not pay the "property charge" of $1,369.70, 5) charging Plaintiff for flood insurance which was of no practical value to her, 6) requiring flood insurance which was not reasonably related to the existing hazard or risk of loss or to the terms of credit provided to Plaintiff by Defendant, and 7) not allowing Plaintiff to choose her flood insurance provider. Id. at 9-11. Count IV alleged intentional infliction of emotional distress by Defendant for 1) misleading Plaintiff regarding the amount of flood insurance she needed, 2) force-placing excessive flood insurance on Plaintiff`s residence, costing her thousands of dollars in equity, 3) implying that federal law required Defendant to force-place such excessive insurance, and 4) twice threatening to foreclose on Plaintiff`s property if she did not pay the vague "property charge" of $1,369.70. Id. at 11-12. Finally, Count V alleged negligence or reckless or negligent misrepresentation by Defendant for 1) failing to train, supervise, monitor, or otherwise control its employees a) to ensure that they did not violate the WVCCPA and b) to ensure that their flood insurance policies were in compliance with the terms of the Deed of Trust and federal law, 2) representing to Plaintiff that she was not in compliance with federal regulations and her contractual agreement with Defendant because of her flood insurance policy, and 3) twice threatening Plaintiff with foreclosure for undefined property charges. Id. at 12-13.
Defendant filed a Motion to Dismiss on November 8, 2013. ECF No. 12. In its March 14, 2014, Memorandum Opinion and Order, this Court granted in part Defendant`s Motion to Dismiss, ordering that all claims other than three surviving claims be dismissed as preempted under the Home Owners' Loan Act ("HOLA"), 12 U.S.C. §§ 1461 et seq., and its implementing regulation, 12 C.F.R. § 560.2, or, more generally, for failing to state a claim upon which relief could be granted. See ECF No. 32. The three surviving claims are: 1) Plaintiff`s breach of contract claim that Defendant required Plaintiff to get flood insurance in excess of what was required under the Deed of Trust, force-placed such insurance, and charged the cost to Plaintiff; and Plaintiff`s WVCCPA claims that Defendant violated West Virginia Code §§ 46A-6-104 and -102(L) by 2) implying to Plaintiff that she was required under company regulations and federal law to purchase additional flood insurance and 3) twice threatening to foreclose on Plaintiff`s property if she did not pay a "property charge" of $1,369.70. Id.
Plaintiff filed the instant Motion to Amend Complaint on March 17, 2014, before the March 20, 2014, deadline to file amended pleadings as dictated in the Scheduling Order which was in effect on that date. ECF No. 15. Next, on May 27, 2014, Plaintiff filed the instant Amended Motion to Amend Complaint, before the more recent Scheduling Order`s June 2, 2014, deadline to file amended pleadings. ECF No. 41. It is apparent from Plaintiff`s arguments in her Amended Motion and its accompanying memorandum that she intends the Amended Motion to merely supplement—not to replace—the original Motion.
Together, the Motions purport to seek to amend the Second Amended Complaint in only the following ways: 1) to add facts, showing reliance, to her already-dismissed fraud "claim"
Defendant timely filed its Response in Opposition to the original Motion, ECF No. 39, and Plaintiff timely filed a largely unresponsive Reply, ECF No. 40. In response to the Amended Motion, Defendant timely filed another Response, ECF No. 49, which was almost word-for-word the same Response it filed to the original Motion. Plaintiff`s Reply to this Response was likewise almost entirely a duplication of her prior Reply. See ECF No. 50. These Motions are ripe for resolution.
Federal Rule of Civil Procedure 15(a)(2) provides that, after the time for amendment as a matter of course has passed, leave of court must be obtained to amend a pleading. The rule specifies that a court should "freely give leave [to amend a pleading] when justice so requires." Fed. R. Civ. P. 15(a)(2). "The law is well settled that leave to amend a pleading should be denied only when the amendment would be prejudicial to the opposing party, there has been bad faith on the part of the moving party, or the amendment would be futile." Edwards v. City of Goldsboro, 178 F.3d 231, 242 (4th Cir. 1999) (emphasis omitted) (internal quotation marks omitted). An amendment is futile if it would fail to survive a motion to dismiss. See Perkins v. United States, 55 F.3d 910, 916-17 (4th Cir. 1995).
When considering a motion to dismiss, 1) a court should "begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth," and then 2) "[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).
For the first step, the complaint must provide the plaintiff`s "grounds of . . . entitlement to relief" in more factual detail than mere "labels and conclusions." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation marks omitted). "[A] formulaic recitation of the elements of a cause of action will not do." Id. at 555. "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Iqbal, 556 U.S. at 679.
For the second step, a court must take the factual allegations in the complaint as true, and the complaint must be viewed in the light most favorable to the plaintiff. See Twombly, 550 U.S. at 555-56. The complaint must contain "enough facts to state a claim to relief that is plausible on its face." Id. at 555, 570 (internal quotation marks omitted). Plausibility is established "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. "The plausibility standard. . . asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant`s liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. (internal quotation marks omitted).
The Court will now analyze, in turn, each of the four changes which Plaintiff directly requests to add to the Second Amended Complaint through the filing of her proposed Amended Third Amended Complaint.
As explained earlier, Plaintiff`s first reason for requesting to amend the complaint for a third time is to add factual support—by showing her justifiable reliance upon Defendant`s alleged misrepresentations—to her already-dismissed claim that Defendant committed fraud by informing Plaintiff that her flood insurance was inadequate and that she had an obligation to carry flood insurance in excess of the loan balance.
In its March 14, 2014, Memorandum Opinion and Order, this Court noted that it was unable to find any assertion of reliance by Plaintiff upon any representation made by Defendant in support of Plaintiff`s two other fraud claims—not the claim in support of which Plaintiff here requests to add facts showing reliance. See Mem. Op. Order at 33, Mar. 14. 2014. More importantly, in that same Order, the Court explicitly stated that all three fraud claims were "simply breach of contract claims masquerading as fraud claims" and, thus, had to be dismissed under the "gist of the action" doctrine. Id. at 33-34. Given that the reason for the dismissal of this fraud claim remains entirely intact even if Plaintiff`s proposed Amended Third Amended Complaint is filed, Plaintiff`s requested amendments to the Second Amended Complaint to add factual support to this claim are, by definition, futile.
In her Reply, Plaintiff circuitously argues that the gist of the action doctrine should not apply to this fraud claim because the impetus for Defendant`s informing Plaintiff that her flood insurance was inadequate and that she had an obligation to carry flood insurance in excess of the loan balance was Defendant`s desire to receive kickbacks from placing excessive flood insurance on Plaintiff`s property. See Pl.`s Reply at 3, 6-7. According to Plaintiff, this means that the contract between Plaintiff and Defendant should not be the focus of the Court`s inquiry into this fraud claim; instead, the key contract involved in this claim is the kickback contract between Defendant and the insurance company—a contract to which Plaintiff is not a party. Id. Thus, the success of Plaintiff`s fraud claim does not depend upon the success of Plaintiff`s contract claim. See id.
Plaintiff misunderstands the issue. At its heart, this fraud claim requires that Defendant`s representations to Plaintiff—that her flood insurance was inadequate and that she had an obligation to carry flood insurance in excess of the loan balance—were false. Plaintiff`s contract with Defendant—and not Defendant`s contract with the flood insurance provider—determines whether these representations were false or not. Thus, Plaintiff`s requested amendments to the Second Amended Complaint to add factual support for her already-dismissed fraud claim remain futile despite Plaintiff`s argument to the contrary.
Plaintiff`s second reason for requesting to amend the complaint for a third time is to add a further claim based upon alleged recent "abusive telephone collection practices" by Defendant. In support of this claim, the proposed Amended Third Amended Complaint alleges that, every morning between 8:39 a.m. and 9:56 a.m., from March 5 to March 10, 2014, Defendant called Plaintiff. Am. 3d Am. Compl. 2nd ¶ 23(a)(i), (b)(i). During each call, Plaintiff told Defendant that it needed to call her attorney and provided her attorney`s contact information. Id. 2nd ¶ 23(a)(iii), (b)(ii). However, Defendant nevertheless asked Plaintiff when she would be making a payment to Defendant and requested Plaintiff`s personal information, including her social security number and date of birth, both of which she did not provide. See id. 2nd ¶ 23(a)(iv) & (v), (b)(iii) & (iv). Plaintiff avers that, because her loan is a reverse mortgage, no payments to Defendant should be due. See id. 2nd ¶ 23(a)(vi), (b)(v). Further, she avers that, due to the pendency of this action, Defendant had clear notice of the contact information of Plaintiff`s counsel. See id. 2nd ¶ 23(a)(vii), (b)(vi).
Plaintiff seeks to bring this claim under the WVCCPA—specifically, West Virginia Code §§ 46A-2-125(d) and 46A-2-128(e). Section 46A-2-125(d) states:
Section 46A-2-128(e) states:
Defendant argues that this new claim is futile because 1) the facts alleged in support of Plaintiff`s claim fail as a matter of law to qualify as oppressive or abusive, as is required to bring a claim under § 46A-2-125(d), and 2) § 46A-2-128(e) is preempted by HOLA and its implementing regulation.
The section of the proposed Amended Third Amended Complaint which alleges a violation under § 46A-2-125(d) specifically states that the unreasonably oppressive or abusive debt collection behavior under this section which Plaintiff alleges Defendant committed by calling her five times, once per morning for five out of six days in a row,
Defendant argues that the facts alleged in support of Plaintiff`s claim fail as a matter of law to qualify as oppressive or abusive, as is required to bring a claim under § 46A-2-125(d); however, the cases Defendant cites in support of this proposition are either decisions upon motions for summary judgment (which place a higher burden on the plaintiff than that required under a motion to dismiss) or otherwise distinguishable from the instant case. See, e.g., Bourne v. Mapother & Mapother, P.S.C., No. CIV.A. 1:12-04086, 2014 WL 555130, at *3-5 (S.D. W. Va. Feb. 12, 2014) (granting summary judgment in favor of the defendant regarding the plaintiff`s § 46A-2-125 claim); Dudley v. Powell Law Office, P.C., No. C11-5409RBL, 2011 WL 4544632 (W.D. Wash. Sept. 29, 2011) (granting the defendant`s motion to dismiss plaintiff`s analogous federal Fair Debt Collection Practices Act claim where she had not filed bankruptcy—though she claimed on the phone that she was in the process of doing so—, did not request that the defendant stop calling her, and did not refer the calls to an attorney).
This case is more difficult than most at the motion to dismiss stage in that so few calls over such a short period of time—with no more than one call per day—are alleged to have occurred. Additionally, the time of the calls, around 8:30 a.m. to 10 a.m., when much of society is either at work, getting ready for work, or at least awake and going about their day, simply does not strike this Court as "unusual" or "inconvenient" in any meaningful way, and it is unclear whether Defendant`s representatives had any intent to annoy, abuse or oppress Plaintiff. See also Bourne, 2014 WL 555130, at *3 ("The earliest time in the day that [the defendant] called plaintiff`s number was 8:19 a.m., and the latest was 10:13 a.m.—hardly unusual times of the day. . . . The volume and nature of these communications[, twenty-seven phone calls over the course of eight months,] do not evince an intent to annoy, abuse, oppress or threaten.") No more than one call occurred per day, and despite the detailed call log exhibit attached to and incorporated into the proposed Amended Third Amended Complaint, there is no alleged abusive language by the representative(s) who called Plaintiff. See ECF No. 42-21. In fact, it is clear from the limited facts alleged by Plaintiff that Defendant stopped calling Plaintiff after the sixth day, on which, according to the call log, the representative who called Plaintiff asked her to not call him names. See id. However, the call log also reveals that, from the very first call, Plaintiff informed Defendant`s representative that she had an attorney to which the representative should be speaking and, as early as the third call, Plaintiff asked the representative to stop calling. See id. Viewing the allegations in the proposed Amended Third Amended Complaint in the light most favorable to Plaintiff, Plaintiff alleges enough facts to state a claim to relief that is plausible on its face. Thus, the proposed amendments to the Second Amended Complaint which allege a violation under § 46A-2-125(d) are not futile. Further, such amendments are not prejudicial to Defendant, and there is no indication of bad faith on the part of Plaintiff in requesting these amendments. Accordingly, the Court gives leave to Plaintiff to amend the Second Amended Complaint as proposed to allege a violation under § 46A-2-125(d).
Defendant argues that Plaintiff`s attempted use here of § 46A-2-128(e)—which mandates that no debt collector may use unfair or unconscionable means to attempt to collect any claim, including by communicating with a consumer when it appears that the consumer is represented by an attorney and the attorney`s name and address are known or could be easily ascertained—is preempted by HOLA and its implementing regulation.
HOLA granted the Office of Thrift Supervision ("OTS") the authority to regulate federal savings associations,
The implementing regulation, 12 C.F.R. § 560.2, states that "federal savings associations may extend credit . . . without regard to state laws purporting to regulate or otherwise affect their credit activities, except to the extent provided in paragraph (c) of this section." § 560.2(a). Paragraph (b) of the regulation then specifies that the types of state laws preempted by HOLA include, "without limitation," state laws
§ 560.2(b). Finally, paragraph (c) states that certain types of state law—including contract and commercial law, real property law, and tort law—"are not preempted to the extent that they only incidentally affect the lending operations of Federal savings associations or are otherwise consistent with the purposes of paragraph (a) of this section."
OTS has also specified the analysis a court should undergo to determine whether preemption applies:
Id. at 50966-67. The Fourth Circuit has clarified that, "[i]n considering § 560.2(b), . . . [a court] must look to all the acts alleged in the complaint. . . . [This] requires an examination of each component of [a] claim to determine if it purports to regulate those aspects of loans enumerated in § 560.2(b)." McCauley, 710 F.3d at 556 (citation omitted) (internal quotation marks omitted).
Section 46A-2-128(e) would prevent a federal savings association from initiating "[a]ny communication with a consumer whenever it appears that the consumer is represented by an attorney and the attorney`s name and address are known, or could be easily ascertained." Defendant argues that Plaintiff`s proposed amendment to the Second Amended Complaint to add a further claim under § 46A-2-128(e) based upon five calls from Defendant`s representative, once per morning for five out of six days in a row—despite Plaintiff`s repeated statements that Defendant should call her attorney and not her—implicates the servicing of mortgages under § 560.2(b)(10) and is therefore preempted by HOLA. This Court disagrees.
The law out of which this claim arises is not one of the types of law listed under § 560.2(b); instead, it falls within the confines of "contract and commercial law" under § 560.2(c). In arriving at this conclusion, the Court agrees with the reasoning outlined in Lenhart v. EverBank, No. 2:12-CV-4184, 2013 WL 5745602, at *9 (S.D. W. Va. Oct. 23, 2013):
See also OTS Op. Letter, Preemption of State Laws Applicable to Credit Card Transactions, 1996 WL 767462, at *5 (Dec. 24, 1996) ("State laws prohibiting deceptive acts and practices in the course of commerce are not included in the illustrative list of preempted laws in § 560.2(b)."). Though a commercial law claim such as this affects the lending operations of federal savings associations, it does so only incidentally, and the bringing of such a claim under state law remains consistent with the purposes of § 560.2(a). See also Lenhart, 2013 WL 5745602, at *9. Thus, Plaintiff`s new claim under § 46A-2-128(e) based upon alleged recent "abusive telephone collection practices" by Defendant is not preempted under HOLA.
Therefore, the proposed amendments to the Second Amended Complaint which allege a violation under § 46A-2-128(e) are not futile. Further, such amendments, are not prejudicial to Defendant, and there is no indication of bad faith on the part of Plaintiff in requesting these amendments. Accordingly, the Court gives leave to Plaintiff to amend the Second Amended Complaint as proposed to allege a violation under § 46A-2-128(e).
Plaintiff`s third reason for requesting to amend the complaint for a third time is to add a claim based upon the alleged receipt by Defendant of "kickbacks" from the insurance company through which Defendant force-placed insurance on Plaintiff`s property. In support of this "new claim," the proposed Amended Third Amended Complaint alleges that Defendant force-placed insurance on Plaintiff`s home in an excessively high amount in order to obtain kickbacks from the insurance company through which the insurance was issued, that Defendant withheld its relationship with the insurance company from Plaintiff, and that Plaintiff relied to her detriment upon Defendant`s authoritative letters stating that such an excessively high amount of flood insurance was required of her.
At its heart, this "new claim" is actually two claims: 1) that Defendant withheld information from Plaintiff, to her detriment, and 2) that Defendant force-placed excessively high amounts of insurance on Plaintiff`s home after authoritatively telling Plaintiff that such was required, upon which authoritative statements Plaintiff relied, to her detriment. The first claim is one of nondisclosure and, as such, is preempted by HOLA under § 560.2(b)(9) as arising out of state law which purports to impose requirements regarding disclosure. Additionally, "[a] copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes," and "in the event of conflict between the bare allegations of the complaint and any exhibit attached [to it] pursuant to Rule 10(c), the exhibit prevails." Fed. R. Civ. P. 10(c); Fayetteville Investors v. Commercial Builders, Inc., 936 F.2d 1462, 1465 (4th Cir. 1991) (citation omitted). Plaintiff attaches 24 exhibits to her proposed Amended Third Amended Complaint. The core of Plaintiff`s first claim—that Defendant withheld its relationship with the insurance company from Plaintiff—is undermined by Plaintiff`s own exhibits. For instance, in a letter from Defendant to Plaintiff—Exhibit 5—, after Defendant explains that it will force-place flood insurance on Plaintiff`s property if she does not take certain actions within a set timeframe, Defendant expressly states, "We and/or our affiliates may receive compensation in connection with the insurance policy described in this letter." See ECF No. 42-6; see also Ex. 8, ECF No. 42-9. This exhibit, incorporated into the proposed Amended Third Amended Complaint, is in direct conflict with Plaintiff`s claim. See Am. 3d Am. Compl. 2nd ¶¶ 9(c), (d). Thus, even if HOLA preemption did not apply, this claim would fail under a motion to dismiss.
The second claim—that Defendant force-placed excessively high amounts of insurance on Plaintiff`s home after authoritatively telling Plaintiff that such was required—was already dismissed by this Court in its March 14, 2014, Memorandum Opinion and Order under the gist of the action doctrine. See Mem. Op. Order at 32-24, Mar. 14. 2014 (dismissing Plaintiff`s fraud claims that Defendant "1) demanded that Plaintiff obtain excessive additional flood insurance and then force-placed such insurance[ and] 2) informed Plaintiff on multiple occasions that her flood insurance was for an inadequate amount, implying that she had an obligation to carry flood insurance in excess of the loan balance—which assertions Plaintiff relied upon to her detriment"). Rewording a claim does not make it a new claim. Adding the alleged motive behind a claim—here, in order to receive kickbacks from the insurance company—does not make it a new claim. Thus, Plaintiff`s requested amendments to the Second Amended Complaint to add a "new claim" based upon the alleged receipt by Defendant of "kickbacks" from the insurance company through which Defendant force-placed insurance on Plaintiff`s property are futile.
Plaintiff`s fourth reason for requesting to amend the complaint for a third time is to add a new count for conversion. In support of this new legal theory, the proposed Amended Third Amended Complaint alleges that, without Plaintiff`s permission, Defendant converted Plaintiff`s equity in her home by force-placing excessive amounts of flood insurance on her home and charging the premiums to her equity. See Am. 3d Am. Compl. ¶¶ 36-40. Plaintiff further alleges that these charges prevented her from accessing her equity, thus she had to dip into her own finances to pay for flood insurance. See id. ¶¶ 39, 41. Additionally, the premiums charged to Plaintiff`s equity resulted in the loan on the home becoming overdrawn, and as a result, Defendant began threatening foreclosure. See id. ¶¶ 42-43.
This proposed amendment would clearly fail under a motion to dismiss pursuant to the gist of the action doctrine. As already explained in this Court`s prior Memorandum Opinion and Order and as the West Virginia Supreme Court of Appeals recently clarified,
Gaddy Eng'g Co. v. Bowles Rice McDavid Graff & Love, LLP, 746 S.E.2d 568, 577 (W. Va. 2013) (emphasis added).
"[C]onversion . . . is essentially the exercise of dominion over the personal property of another by a person who has no legal right to do so." Rodgers v. Rodgers, 399 S.E.2d 664, 677 (W. Va. 1990) (emphasis added). As with the fraud claims dismissed pursuant to this Court`s prior Memorandum Opinion and Order, if Defendant prevails on Plaintiff`s contract claim, then this new conversion count must necessarily fail as well because Defendant would have had a legal right—under its Home Equity Conversion Loan Agreement with Plaintiff—to assess the flood insurance premiums against Plaintiff`s equity in her home. Thus, factor four of the gist of the action doctrine would bar this claim. Accordingly, Plaintiff`s requested amendments to the Second Amended Complaint to add a new count for conversion are futile.
For the reasons explained above, Plaintiff`s Motion to Amend Complaint [for the Third Time], ECF No. 34, is
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