Conquest v. Wmc Mortgage Corp. et al

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

E.D. Pa.September 1, 2016

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA -------------------------------------------------------------- X Index No. 16-03604-JHS JERRY A. CONQUEST, Plaintiff v. WMC MORTGAGE CORP. (a.k.a. WMC MORTGAGE, LLC); MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; MERSCORP HOLDINGS, INC.; VANDERBILT MORTGAGE AND FINANCE, INC.; HOMEFIRST AGENCY, INC.; SOUTHWEST BUSINESS CORPORATION; AND, AMERICAN MODERN HOME, Defendants. : : : : : : : : : : : : : : : : : : : -------------------------------------------------------------- X MOTION TO DISMISS BY DEFENDANT WMC MORTGAGE LLC Defendant WMC Mortgage LLC, by and through its counsel, Dorsey & Whitney LLP, hereby moves to dismiss the Amended Complaint (Dkt. No. 16) of Plaintiff Jerry A. Conquest (“Plaintiff”) pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth in the accompanying Memorandum of Law, which is hereby incorporated by reference, Plaintiff’s Complaint should be dismissed with prejudice. Respectfully submitted, Dated: September 1, 2016 By: /s/ Eric Lopez Schnabel_________________ Eric Lopez Schnabel Dorsey & Whitney (Delaware) LLP 300 Delaware Avenue Suite 1010 Wilmington, DE 19801 Case 2:16-cv-03604-JHS Document 28 Filed 09/01/16 Page 1 of 3 2 David A. Scheffel (application for admission pro hac vice pending) Eric B. Epstein (application for admission pro hac vice pending) Dorsey & Whitney LLP 51 West 52nd Street New York, NY 10019-6119 Attorneys for WMC Mortgage LLC Case 2:16-cv-03604-JHS Document 28 Filed 09/01/16 Page 2 of 3 3 CERTIFICATE OF SERVICE I hereby certify that on September 1, 2016, I caused copies of the foregoing Notice of WMC Mortgage LLC’s Motion to Dismiss Plaintiff’s Complaint, the supporting memorandum of law, and proposed form of order, to be electronically filed with the Clerk of the Court using the CM/ECF system. /s/ Eric Lopez Schnabel Eric Lopez Schnabel Case 2:16-cv-03604-JHS Document 28 Filed 09/01/16 Page 3 of 3 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA -------------------------------------------------------------- X Index No. 16-03604-JHS JERRY A. CONQUEST, Plaintiff v. WMC MORTGAGE CORP. (a.k.a. WMC MORTGAGE, LLC); MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; MERSCORP HOLDINGS, INC.; VANDERBILT MORTGAGE AND FINANCE, INC.; HOMEFIRST AGENCY, INC.; SOUTHWEST BUSINESS CORPORATION; AND, AMERICAN MODERN HOME, Defendants. : : : : : : : : : : : : : : : : : : : -------------------------------------------------------------- X MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS BY DEFENDANT WMC MORTGAGE LLC Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 1 of 26 i Table of Contents INTRODUCTION .............................................................................................................. 1 BACKGROUND ................................................................................................................ 1 ARGUMENT ...................................................................................................................... 4 I) Summary ..................................................................................................... 4 II) Failure to Differentiate WMC from Other Defendants ............................... 5 III) Gist of the Action Doctrine and Economic Loss Doctrine ......................... 6 IV) Breach of Fiduciary Duty Claim (Count I) ................................................. 8 V) Civil Conspiracy (Count II) ........................................................................ 9 VI) Breach of Contract (Count III) .................................................................. 11 VII) Breach of Duty of Good Faith and Fair Dealing (Count IV) .................... 12 VIII) Negligent Misrepresentation / Fraud (Count V) ....................................... 13 IX) Unjust Enrichment (Count VI) .................................................................. 14 X) Bailment Liability / Trust Liability (Count VII) ....................................... 14 XI) Diminution in Value / Waste (Count VIII) ............................................... 15 XII) Conversion, Theft & Misappropriation (Count IX) .................................. 15 XIII) Consumer Law Violations (Count X) ....................................................... 16 XIV) Negligence Per Se (Count XI) .................................................................. 19 CONCLUSION ................................................................................................................. 20 Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 2 of 26 ii TABLE OF AUTHORITIES Page(s) Cases Accurso v. Infra-Red Servs., Inc., 23 F.Supp.3d 494 (E.D. Pa. 2014) ...............................................................................10 Agresta v. City of Philadelphia, 694 F. Supp. 117 (E.D. Pa. 1988) ..................................................................................5 Allen v. Wells Fargo, N.A., No. 14-5283, 2015 WL 5137953 (E.D. Pa. Aug. 28, 2015) ..........................................8 Am. Stores Properties, Inc. v. Spotts. Stevens & McCoy, Inc., 648 F. Supp.2d 707 (E.D. Pa. 2009) ..............................................................................7 Ashcroft v. Iqbal, 556 U.S. 662 (2009) .......................................................................................................5 Baker v. Family Credit Counseling Corp., 440 F.Supp.2d 392 (E.D.Pa. 2006) ................................................................................8 Baraka v McGreevey, 481 F.3d 187 (3d Cir. 2007)...........................................................................................5 Barnard v. Verizon Communs., Inc., No. 10-1304, 2011 WL 294027 (E.D. Pa. Jan. 31, 2011) ..............................................5 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) .......................................................................................................5 Binder v. Weststar Mortg., Inc., No. 14-7073, 2016 U.S. Dist. LEXIS 90620 (E.D. Pa. July 13, 2016)..........................5 Bohler-Uddeholm America, Inc. v. Ellwood Group, Inc., 247 F.3d 79 (3d Cir. 2001).............................................................................................6 Bouriez v. Carnegie Mellon Univ., 585 F.3d 765 (3d Cir. 2009).........................................................................................13 The Brickman Group, Ltd. v. CGU Ins. Co., 865 A.2d 918 (Pa. Super. Ct.2004) ................................................................................7 Caplen v. Sec. Nat’l Serv. Corp., 514 F.Supp.2d 746 (E.D. Pa. 2007) ...............................................................................9 Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 3 of 26 iii Centolanza v. Leigh Valley Dairies, Inc., 540 Pa. 398 (1995) .......................................................................................................15 Douglass v. Convergent Outsourcing, 765 F.3d 299 (3d Cir. 2014).........................................................................................17 eToll, Inc. v. Elias/Savion Advertising, Inc., 811 A.2d 10 (Pa. Super. Ct. 2002) .................................................................................7 First Sealord Sur. v. Dunkin & Devries Ins. Agency, 918 F. Supp.2d 362 (E.D. Pa. 2013) ............................................................................13 I & S Assocs. Trust v. LaSalle Nat’l Bank, Civ. A. No. 99-4956, 2001 WL 1143319 (E.D. Pa. Sept. 27, 2001) .............................9 J.F. Walker Co., Inc. v. Excalibur Oil Group, Inc., 792 A.2d 1269 (Pa.Super. Ct. 2002) ............................................................................11 Lamer v. Trans Union, No. 11-2895, 2012 WL 706997 (E.D. Pa. Mar. 6, 2012) ............................................18 McGuckin v. Allstate Fire & Cas. Ins. Co., 118 F.Supp.3d 716 (E.D. Pa. 2015) ...............................................................................7 Morris v. Wells Fargo Bank N.A., 2:11-CV-474, 2012 WL 3929805 (W.D. Pa. Sept.7, 2012) .........................................7 Northview Motors, Inc. v. Chrysler Motors Corp., 227 F.3d 78 (3d Cir. 2000).....................................................................................12, 13 Omicron Systems, Inc. v. Weiner, 860 A.2d 554 (Pa. Sup. Ct. 2004) ..........................................................................11, 12 Papasan v. Allain, 478 U.S. 265 (1986) .......................................................................................................5 Pierro v. Pierro, 438 Pa. 119 (1970) .......................................................................................................14 Price v. Brown, 545 Pa. 216 (1996) .......................................................................................................14 Prudential Inc. Co. of Am. v. Stella, 994 F. Supp. 318 (E.D. Pa. 1998) ................................................................................16 Roth v. Cabot Oil & Gas Corp., 919 F. Supp.2d 476 (M.D. Pa. 2013) ...........................................................................19 Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 4 of 26 iv Sanders v. Beard, No. 3:09- 01384, 2010 WL 2853357 (M.D. Pa. Mar. 10, 2010) ...................................6 Sarsfield v. Citimortgage, Inc., 707 F.Supp.2d 546 (M.D. Pa.2010) ...............................................................................7 Schnell v. Bank of N.Y. Mellon, 828 F.Supp.2d 798 (E.D. Pa.2011) ................................................................................8 Schott v. Westinghouse Elec. Corp., 436 Pa. 279 (1969) .......................................................................................................14 Sorbee Int’l, Ltd. v. Chubb Custom Ins. Co., 735 A.2d 712 (Pa. Super. Ct. 1999) .............................................................................16 Tegg Corp. v. Beckstrom Elec. Corp., 650 F. Supp.2d 413 (W.D. Pa. 2008) ...........................................................................10 Temp-Way Corp. v. Continental Bank, 139 B.R. 299 (E.D. Pa. 1992) ........................................................................................9 Versatile Metals, Inc. v. Union Corp., No. 85-4085, 1985 WL 47 (E.D. Pa. Dec. 9, 1985) .....................................................15 Werwinski v. Ford Motor Co., 286 F.3d 661 (3d Cir. 2002)...........................................................................................7 Williams v. Empire Funding Corp., 227 F.R.D. 362 (E.D. Pa. 2005) ...................................................................................17 Yocca v. Pittsburgh Steelers Sports, Inc., 578 Pa. 479 (2004) .......................................................................................................16 Statutes 41 P.S. § 504 ......................................................................................................................19 73 P.S. § 201-1 ...................................................................................................................16 73 P.S. § 2270.1 .................................................................................................................17 12 Pa. Code §31.203(a) ................................................................................................18, 19 12 U.S.C.A. § 2601 ............................................................................................................18 12 U.S.C. § 2614 ................................................................................................................18 15 U.S.C. § 1681s-2(b)......................................................................................................18 Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 5 of 26 v 15 U.S.C. § 1692(k) ...........................................................................................................17 18 P.A. Cs. 1821 ................................................................................................................16 Fair Debt Collection Practices Act ....................................................................................17 Federal Fair Credit Reporting Act .....................................................................................18 Pennsylvania Fair Credit Extension Uniformity Act .........................................................17 Pennsylvania Unfair Trade Practices and Consumer Protection Act ...........................16, 17 Real Estate Settlement Procedures Act ..............................................................................18 Other Authorities Fed. R. Civ. P. 8(a) ..............................................................................................................5 Fed. R. Civ. P. 12(b)(6)........................................................................................................5 Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 6 of 26 INTRODUCTION Defendant WMC Mortgage LLC (“WMC”), by and through its counsel, Dorsey & Whitney LLP, respectfully submits this memorandum of law in support of its motion to dismiss the Amended Complaint (Dkt. No. 16) of Plaintiff Jerry A. Conquest (“Plaintiff”). For the reasons set forth in the motions to dismiss filed by certain other defendants in this action (see Dkt. Nos. 17, 18, 19 and 20), and for the additional reasons set forth below, the Court should dismiss the Amended Complaint in its entirety with respect to WMC. Moreover, the Court should not grant Plaintiff leave to further amend his pleading, because any such amendment would be futile. BACKGROUND The gravamen of the Amended Complaint is the alleged “misappropriation of fire insurance proceeds that were never directed toward the restoration and repair of Mr. Conquest’s residential home following a fire loss on April 10, 2014.” See Plaintiff’s Opposition to American Modern Home and Southwest Business Corp. Motions to Dismiss (Dkt. # 22-2) at 1. The Amended Complaint does not describe any relevant connection between WMC and this insurance dispute. In fact, Plaintiff concedes that he does not “possess any contractual recitations whereby defendant WMC agreed to any performance of any nature.” Amd. Compl. ¶ 12 n. 2. Only a few paragraphs of the Amended Complaint differentiate WMC from other defendants in this case. These paragraphs of the Amended Complaint are devoid of any allegations that WMC misappropriated insurance proceeds or played any other part in this matter. The Amended Complaint instead attempts to construct a case against WMC by arbitrarily conflating WMC with other defendants and referring to them collectively as Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 7 of 26 2 the “Mortgage Defendants.” Amd. Compl. ¶ 27. Plaintiff then makes broad, sweeping allegations against the “Mortgage Defendants” as a group. These allegations ignore the distinctions among these separate corporate entities. The few allegations that deal specifically with WMC concern events that predated, by many years, the events at issue in this case. Plaintiff alleges that WMC extended a mortgage loan to Plaintiff on or about November 10, 2006, approximately eight years before the April 10, 2014 fire. Amd. Compl. ¶ 12. The mortgage instrument, attached to the Amended Complaint as Exhibit B (the “Mortgage”), provides: “The Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to the Borrower.” Id. Plaintiff alleges that, on July 19, 2011, an assignment of the Mortgage was recorded. Id. ¶ 22. This assignment transferred ownership of the Mortgage to Vanderbilt. Id. Plaintiff further alleges that, on December 19, 2012, another assignment of the Mortgage was recorded. Id. ¶ 31. This assignment also stated that ownership of the Mortgage was being transferred to Vanderbilt. Id. Apart from generalized descriptions of acts allegedly performed by the “Mortgage Defendants” as a group, the Amended Complaint does not identify any conduct by WMC subsequent to the above-referenced assignments of the Mortgage. Plaintiff’s allegations regarding the fire and the disbursal of insurance benefits are contained in Paragraphs 39 through 85 of the Amended Complaint. Throughout this portion of the Amended Complaint, the only concrete reference to WMC appears in Paragraph 45. This paragraph states, in its entirety: “The certificates of insurance identify defendant Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 8 of 26 3 Vanderbilt as the Lender (not defendant WMC).” No other specific references to WMC appear in this portion of the Amended Complaint. To the extent that this portion of the Amended Complaint distinguishes between the various named defendants, it describes a series of events in which WMC played no role whatsoever. According to this portion of the Amended Complaint, on April 18, 2012, defendant Vanderbilt Mortgage and Finance, Inc. (“Vanderbilt”), as the assignee of the mortgage, “together with” defendant HomeFirst Agency Inc. (“HomeFirst”), obtained a forced place insurance policy with respect to the property. Amd. Compl. ¶ 39. Vanderbilt and HomeFirst allegedly obtained the insurance policy “through” defendants SouthWest Business Corporation (“SouthWest”) and American Modern Home (“American”). Id. ¶ 40. The Amended Complaint does not allege that WMC, specifically, was a party to this transaction. The certificate of insurance allegedly identifies Vanderbilt as the insured. Amd. Compl. ¶ 47. In addition, the certificate of insurance allegedly identifies Vanderbilt as Plaintiff’s mortgage lender. Id. ¶ 45. Plaintiff does not claim that the certificate of insurance contains any references to WMC. The Amended Complaint attaches several exhibits regarding the insurance policy at issue. See Amd. Compl. Exs. E, F, G, H, and N. None of these documents refer to WMC. Following the April 10, 2014 fire, Vanderbilt allegedly received insurance benefits in the form of a check. Amd. Compl. ¶ 55. Plaintiff claims that, instead of using those proceeds to repair the property, Vanderbilt used the money to pay down the mortgage on the property. Id. ¶ 59. Although the proceeds allegedly were insufficient to Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 9 of 26 4 fully pay off the mortgage, Vanderbilt allegedly forgave the remaining mortgage balance, and docketed a satisfaction of mortgage. Id. ¶ 68. Plaintiff contends that, pursuant to the terms of the mortgage, the insurance proceeds allegedly should have been used for repairs, instead of being used to pay down Plaintiff’s debt. Amd. Compl. ¶ 19. However, the Amended Complaint, insofar as it differentiates between the various defendants in this case, does not allege that WMC, specifically, either received or disbursed these funds. Plaintiff also alleges that “the unauthorized loan forgiveness” was reported to credit agencies “as a ‘charge off.’” See Amd. Compl. ¶ 69. Allegedly, this charge-off “adversely impacted Plaintiff’s credit rating to such an extent that Plaintiff could not obtain another mortgage to assist with the repair or restoration of the property himself.” Id. ¶ 69. But the Amended Complaint, insofar as it differentiates between the various defendants in this case, does not allege that WMC, specifically, submitted this charge-off report. The Amended Complaint attaches a copy of a recent credit report. See Amd. Compl. Ex. O. The report does not refer to WMC. ARGUMENT I) Summary The Amended Complaint purports to state eleven causes of action. Plaintiff brings each of these causes of action against “All Defendants,” or the “Mortgage Defendants,” collectively. None of these causes of action distinguish between WMC and other named defendants. See Amd. Compl. ¶¶ 86-132. None of these causes of action are legally viable. First, the Amended Complaint contains no relevant factual allegations that differentiate WMC from other named defendants. Second, virtually all of Plaintiff’s claims fail pursuant to the gist of the Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 10 of 26 5 action doctrine and economic loss doctrine. Third, each of Plaintiff’s claims, examined individually, is legally deficient with respect to WMC. II) Failure to Differentiate WMC from Other Defendants A complaint will survive a motion to dismiss for failure to state a claim upon which relief can be granted only if the complaint contains “sufficient factual matter, accepted as true, to ‘state a claim for relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (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.” Id. (citing Twombly, 550 U.S. at 556). In the context of a Rule 12(b)(6) motion to dismiss, while the Court must accept all factual allegations as true and construe the complaint in the light most favorable to the plaintiff, the Court need not accept a “legal conclusion couched as a factual allegation.” Baraka v McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)); see also Iqbal, 556 U.S. at 679 (“While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.”). Similarly, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. Moreover, “[e]ven under the most liberal notice pleading requirements of Rule 8(a), a plaintiff must differentiate between defendants.” Binder v. Weststar Mortg., Inc., No. 14-7073, 2016 U.S. Dist. LEXIS 90620, at *7 (E.D. Pa. July 13, 2016) (citing Agresta v. City of Philadelphia, 694 F. Supp. 117, 121 (E.D. Pa. 1988)). Accord Barnard v. Verizon Communs., Inc., No. 10-1304, 2011 WL 294027, at *7 (E.D. Pa. Jan. 31, 2011) (“Even a grand theory of wrongdoing cannot provide the basis for a securities fraud claim Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 11 of 26 6 where it is based on a general allegation that undifferentiated defendants painted a misleading financial picture, and includes virtually no information regarding any investor’s acquisition or disposal of stock.”); Sanders v. Beard, No. 3:09- 01384, 2010 WL 2853357, at *5 (M.D. Pa. Mar. 10, 2010) (“The complaint also contains numerous allegations that lump all of the defendants together without differentiating between the defendants. Such conclusory and undifferentiated allegations are not sufficient to allege personal involvement on the part of individual defendants.”). Plaintiff’s Amended Complaint does not meet this pleading standard with respect to WMC. This case is about an insurance dispute related to a fire at Plaintiff’s home on April 10, 2014. See Plaintiff’s Opposition to American Modern Home and Southwest Business Corp. Motions to Dismiss (Dkt. # 22-2) at 1. As discussed above (see Background), Plaintiff does not allege any conduct by WMC, specifically, that relates to this insurance dispute. Instead, Plaintiff refers to WMC and certain other defendants, collectively, as the “Mortgage Defendants,” and sets forth generalized allegations regarding this group. The small number of allegations that differentiate WMC from other defendants concern events that occurred years before the fire, and have no bearing on the purported misappropriation of insurance proceeds. As a result, the Court should dismiss the Amended Complaint with respect to WMC. III) Gist of the Action Doctrine and Economic Loss Doctrine The gist-of-the-action doctrine is one method Pennsylvania courts use to determine whether tort claims “should be allowed as freestanding causes of action or rejected as illegitimate attempts to procure additional damages for a breach of contract.” Bohler-Uddeholm America, Inc. v. Ellwood Group, Inc., 247 F.3d 79, 103 (3d Cir. 2001). The doctrine “is designed to maintain the conceptual distinction between breach of Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 12 of 26 7 contract claims and tort claims.” The Brickman Group, Ltd. v. CGU Ins. Co., 865 A.2d 918, 927 (Pa. Super. Ct.2004). “As a practical matter, the doctrine precludes plaintiffs from re-casting ordinary breach of contract claims into tort claims.” eToll, Inc. v. Elias/Savion Advertising, Inc., 811 A.2d 10, 14 (Pa. Super. Ct. 2002). Pursuant to the gist of the action doctrine, “a claim should be limited to a contract claim when the parties’ obligations are defined by the terms of the contracts and not by the larger social policies embodied by the law of torts.” Id. (quoting eToll, Inc., 811 A.2d at 14). See also Morris v. Wells Fargo Bank N.A., 2:11-CV-474, 2012 WL 3929805, at *12 (W.D.Pa. Sept.7, 2012) (holding that breach of fiduciary duty claim based on force- placing of insurance barred by the gist-of-the action doctrine because the parties obligations regarding the escrow account and the maintenance of flood insurance arose from the mortgage agreement); Sarsfield v. Citimortgage, Inc., 707 F.Supp.2d 546, 555 (M.D. Pa. 2010) (holding that tort claims based on the amount and servicing of a mortgage escrow account barred by gist-of-the-action doctrine). Closely related to the gist of the action doctrine, “the economic loss doctrine ‘prohibits plaintiffs from recovering in tort economic losses to which their entitlement flows only from a contract.’” Werwinski v. Ford Motor Co., 286 F.3d 661, 671 (3d Cir. 2002). Accord Am. Stores Properties, Inc. v. Spotts, Stevens & McCoy, Inc., 648 F. Supp.2d 707, 713 (E.D. Pa. 2009) (“The economic loss doctrine provides that ‘no cause of action exists for negligence that results solely in economic damages unaccompanied by physical injury or property damage.’”); McGuckin v. Allstate Fire & Cas. Ins. Co., 118 F.Supp.3d 716, 719-20 (E.D. Pa. 2015) (“The [economic loss] doctrine bars claims: (1) arising solely from a contract between the parties; (2) where the duties allegedly breached Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 13 of 26 8 were created and grounded in the contract itself; (3) where the liability stems from a contract; or (4) where the tort claim essentially duplicates a breach of contract claim or the success of which is wholly dependent on the terms of a contract.”) (quotation omitted). The gist of the action doctrine and economic loss doctrines bar all of Plaintiff’s claims against WMC, with the exception of Plaintiff’s breach of contract claim, which is legally flawed for separate and independent reasons discussed below. At the core of this case, Plaintiff contends that the manner in which certain insurance proceeds were disbursed was a breach of the Mortgage. See Amd. Compl. ¶ 19. These allegations seek to raise a straightforward question of contract interpretation. Plaintiff has brought a breach of contract claim (Count III) based on these allegations. Plaintiff’s ten other causes of action unnecessarily attempt to repurpose these allegations as tort claims and statutory claims. The Court should dismiss these claims. IV) Breach of Fiduciary Duty Claim (Count I) In Count I of the Amended Complaint, Plaintiff accuses WMC of breaching a fiduciary duty. This claim lacks legal merit. In order to bring such a claim, a plaintiff must establish, among other things, that a fiduciary relationship existed between the plaintiff and defendant. Baker v. Family Credit Counseling Corp., 440 F.Supp.2d 392, 415-16 (E.D. Pa. 2006). Plaintiff’s breach of fiduciary claim against WMC fails because WMC did not have a fiduciary relationship with Plaintiff. According to the Amended Complaint, WMC extended a mortgage loan to Plaintiff in 2006. Amd. Compl. ¶ 12. Under well-established Pennsylvania law, a lender does not owe a fiduciary duty to a borrower. Allen v. Wells Fargo, N.A., No. 14-5283, 2015 WL 5137953, at *5 (E.D. Pa. Aug. 28, 2015) (“Under Pennsylvania law, a lender Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 14 of 26 9 generally does not owe a duty to a borrower.”) (citing Schnell v. Bank of N.Y. Mellon, 828 F.Supp.2d 798, 806 (E.D. Pa. 2011) (denying plaintiff's negligent misrepresentation claim under Pennsylvania law against lender because “a lender acts in his financial interest and does not owe a fiduciary duty to the borrower”); Caplen v. Sec. Nat’l Serv. Corp., 514 F.Supp.2d 746, 752 (E.D. Pa. 2007) (no fiduciary duty owed by mortgagee to mortgagor); I & S Assocs. Trust v. LaSalle Nat’l Bank, Civ. A. No. 99-4956, 2001 WL 1143319, at *7 (E.D. Pa. Sept. 27, 2001) (“[T]he lender-borrower relationship ordinarily does not create a fiduciary duty.”)); see also Temp-Way Corp. v. Continental Bank, 139 B.R. 299, 318 (E.D. Pa. 1992) (“Pennsylvania law follows the well recognized principle that a lender is not a fiduciary of the borrower.”) (citations omitted). Plaintiff also claims that the “Mortgage Defendants,” collectively, owed a fiduciary duty to him in their capacity “as trustees of the insurance proceeds.” Amd. Compl. ¶ 87. However, this conclusory allegation against the Mortgage Defendants as a group is entirely inapplicable to WMC. As previously discussed, the Amended Complaint contains no factual allegations that WMC, specifically, served as a trustee of the insurance proceeds at issue in this case, or otherwise played any part in holding or disposing of such insurance proceeds. See Background, supra. As a result, the Amended Complaint contains no basis for inferring a fiduciary relationship between WMC and Plaintiff. Accordingly, the Court should dismiss Plaintiff’s breach of fiduciary duty claim with respect to WMC. V) Civil Conspiracy (Count II) In Count II of the Amended Complaint, Plaintiff purports to assert a civil conspiracy claim against WMC. This claim is not legally viable. Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 15 of 26 10 Under Pennsylvania law, “‘absent a civil cause of action for a particular act, there can be no cause of action for civil conspiracy to commit that act.’ . . . A plaintiff charging civil conspiracy must therefore ‘plead or develop a[ ] separate underlying intentional or criminal act that can support a civil conspiracy claim.’” Accurso v. Infra-Red Servs., Inc., 23 F.Supp.3d 494, 512 (E.D. Pa. 2014). In addition, even if a plaintiff pleads an underlying intentional or criminal act, the plaintiff also must allege “(1) a combination of two or more persons acting with a common purpose to do an unlawful act or to do a lawful act by unlawful means or for an unlawful purpose; (2) an overt act done in pursuance of the common purpose; and (3) actual legal damage.” Tegg Corp. v. Beckstrom Elec. Corp., 650 F. Supp.2d 413, 425-6 (W.D. Pa. 2008). The Amended Complaint does not contain any factual allegations that support a civil conspiracy claim against WMC. As a threshold matter, the Amended Complaint does not describe an underlying intentional or criminal act. As discussed above, this case involves, at most, a narrow issue of contract interpretation. See Section III (Gist of the Action Doctrine and Economic Loss Doctrine), supra. Furthermore, in the Amended Complaint, Plaintiff’s civil conspiracy claim is framed in the form of generalized allegations regarding the “Mortgage Defendants” as a group and the “Insurance Defendants” as a group. Amd. Compl. ¶¶ 91-93. These allegations do not distinguish WMC from other entities. Id. In fact, this portion of the Amended Complaint contains no specific references to WMC. Id. Plaintiff does not describe any steps taken by WMC, specifically, in the nature of “(1) a combination of two or more persons acting with a common purpose to do an unlawful act or to do a lawful act by unlawful means or for an unlawful purpose,” “(2) an overt act done in Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 16 of 26 11 pursuance of the common purpose,” or “(3) actual legal damage.” Tegg Corp., 650 F. Supp.2d at 425-6. The Court should dismiss this claim. VI) Breach of Contract (Count III) Under Pennsylvania law, “[t]hree elements are necessary to plead properly a cause of action for breach of contract: [(1)] the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract and (3) resultant damages.” Omicron Systems, Inc. v. Weiner, 860 A.2d 554, 564 (Pa. Sup. Ct. 2004) (quoting J.F. Walker Co., Inc. v. Excalibur Oil Group, Inc., 792 A.2d 1269, 1272 (Pa.Super. 2002)). In the Amended Complaint, Plaintiff purports to state a breach of contract claim against the “Mortgage Defendants” as a group, and against the “Insurance Defendants” as a group. Amd. Compl. ¶¶ 94-97. As detailed in the motions to dismiss filed by certain other defendants in this action (see Dkt. Nos. 17, 18, 19 and 20), the allegations of the Amended Complaint make clear that, in fact, the manner in which the insurance proceeds at issue were disbursed was consistent with any and all applicable contractual obligations. As a result, the Amended Complaint contains no factual basis for asserting a breach of contract claim against any of the defendants in this case. In addition, Plaintiffs’ breach of contract claim is inapposite with respect to WMC. The terms “Mortgage Defendants” and “Insurance Defendants” are categories of Plaintiff’s own invention. The sole basis for Plaintiff’s breach of contract claim against WMC, specifically, is Plaintiff’s arbitrary classification of WMC as a “Mortgage Defendant.” Plaintiff’s breach of contract claim against WMC is not based on any factual allegations against WMC in particular. Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 17 of 26 12 In regard to WMC, the Amended Complaint notes that Plaintiff does not “possess any contractual recitations whereby defendant WMC agreed to any performance of any nature.” Amd. Compl. ¶ 12 n. 2. This concession alone should dispose of Plaintiff’s breach of contract claim against WMC. In the absence of a contractual duty, a breach of contract claim lacks legal merit. Weiner, 860 A.2d at 565. Plaintiff alleges that the “Mortgage Defendants,” in the aggregate, “breached the mortgage contract (aka the security document) by misappropriating the restoration and repair proceeds and by not paying the taxes from escrow and by making material misrepresentations concerning the authorization to do such acts. The mortgagee defendants also breached the contract by wrongfully accelerating the loan repayment schedule and by characterizing the satisfaction as a charge off.” Id. ¶ 95. However, Plaintiff’s attempt to attribute these alleged acts to WMC has no factual basis in the Amended Complaint. The Amended Complaint does not contain any factual allegations that WMC, specifically, played any role in 2014 in connection with the alleged disposition of insurance proceeds, acceleration of the loan repayment schedule, or characterization of the mortgage satisfaction as a charge-off. Thus, the Court should dismiss Plaintiff’s breach of contract claim as to WMC. VII) Breach of Duty of Good Faith and Fair Dealing (Count IV) Plaintiff’s fourth cause of action purports to assert that all defendants, including WMC, breached the duty of good faith and fair dealing. This claim lacks any legal basis. As a matter of Pennsylvania law, the duty of good faith and fair dealing is “an interpretive tool to determine the parties’ justifiable expectations in the context of a breach of contract action.” Northview Motors, Inc. v. Chrysler Motors Corp., 227 F.3d 78, 91 (3d Cir. 2000). The duty of good faith and fair dealing “is not divorced from the Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 18 of 26 13 specific clauses of the contract and cannot be used to override an express contractual term.” Id. Plaintiff’s good faith and fair dealing claim reads as follows: “To the extent that no express contract is found between Plaintiff and any of the mortgage defendants (or their respective principles in agency), Plaintiff asserts that those defendants maintain a common law duty to act in good faith which was violated.” Amd. Compl. ¶ 99. This claim is legally meritless because, as noted, the duty of good faith and fair dealing is an interpretive tool, not a substitute for a contract. Northview, 227 F.3d at 78. Therefore, the Court should dismiss this claim with respect to WMC. VIII) Negligent Misrepresentation / Fraud (Count V) Plaintiff’s fifth cause of action is for negligent misrepresentation and fraud. However, this cause of action is legally groundless. A negligent misrepresentation claim has six elements: “(1) a representation; (2) which is material to the transaction at hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or false; (4) with the intent of misleading another into relying on it; (5) justifiable reliance on the misrepresentation; and (6) the resulting injury was proximately caused by the reliance.” Bouriez v. Carnegie Mellon Univ., 585 F.3d 765, 771 (3d Cir. 2009). In addition, “a common law negligent misrepresentation claim has four elements: ‘(1) a misrepresentation of a material fact; (2) made under circumstances in which the misrepresenter ought to have known its falsity; (3) with an intent to induce another to act on it; and (4) which results in injury to a party acting in justifiable reliance on the misrepresentation.’” First Sealord Sur. v. Dunkin & Devries Ins. Agency, 918 F. Supp.2d 362, 373 (E.D. Pa. 2013). Thus, both claims require, among other things, a representation by the defendant. Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 19 of 26 14 Plaintiff alleges that the “Mortgage Defendants,” collectively, “negligently and/or fraudulently mischaracterized the terms of the security agreement and the terms of the insurance policy to justify their illegal retention of the proceeds.” Amd. Compl. ¶ 103. But Plaintiff does not allege that WMC, specifically, made any such misrepresentations to him. In fact, the Amended Complaint does not identify any concrete representations made by WMC to Plaintiff in relation to the Mortgage or insurance policy. As a result, the Court should dismiss Plaintiff’s fifth cause of action. IX) Unjust Enrichment (Count VI) Under Pennsylvania law, the doctrine of unjust enrichment is “inapplicable when the relationship between parties is founded on a written agreement or express contract.” Schott v. Westinghouse Elec. Corp., 436 Pa. 279, 290 (1969). Plaintiff’s claims in this case relate to written contractual agreements, including the Mortgage and the insurance policy. See Section III (Gist of the Action Doctrine and Economic Loss Doctrine), supra. Consequently, Plaintiff’s unjust enrichment claim against WMC has no legal basis. The Court therefore should dismiss this claim. X) Bailment Liability / Trust Liability (Count VII) Under Pennsylvania law, “a cause of action for breach of a bailment agreement arises if the bailor can establish that personalty has been delivered to the bailee, a demand for return of the bailed goods has been made, and the bailee has failed to return the personalty.” Price v. Brown, 545 Pa. 216, 221 (1996). In addition, “[a] constructive trust arises where a person who holds title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it.” Pierro v. Pierro, 438 Pa. 119, 127 (1970). Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 20 of 26 15 Plaintiff purports to assert claims for bailment liability and trust liability against all of the “Mortgage Defendants.” Amd. Compl. ¶¶ 111-114. Plaintiff claims that the Mortgage Defendants, collectively, “received the insurance proceeds to hold for a particular. purpose (i.e. restoration & repair).” Id. ¶ 111. However, such claims are legally groundless with respect to WMC because the Amended Complaint contains no factual allegations that WMC, specifically, received the insurance proceeds at issue in this case. The Court therefore should dismiss these claims. XI) Diminution in Value / Waste (Count VIII) Plaintiff’s eighth cause of action, which Plaintiff purports to assert against all the “Mortgage Defendants,” is for “diminution in value & waste.” Under Pennsylvania law, diminution in value is not a cause of action. It is a measure of damages. Centolanza v. Leigh Valley Dairies, Inc., 540 Pa. 398, 401 (1995). The Court therefore should dismiss Plaintiff’s claim for diminution in value. In addition, under Pennsylvania law, “the elements which must be proved to establish a cause of action for waste: an act constituting waste, done by one legally in possession of the property, prejudicial to the estate or interest of another.” Versatile Metals, Inc. v. Union Corp., No. 85-4085, 1985 WL 47, at *1 (E.D. Pa. Dec. 9, 1985). Plaintiff’s claim for waste is legally deficient with respect to WMC because the Amended Complaint contains no factual allegations that WMC, specifically, at any time had possession of the insurance proceeds at issue in this case. The Court therefore should dismiss Plaintiff’s claim for waste against WMC. XII) Conversion, Theft & Misappropriation (Count IX) In his ninth cause of action, Plaintiff purports to assert claims for conversion and misappropriation against all “Mortgage Defendants.” These claims are based solely on a Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 21 of 26 16 one-sentence conclusory allegation that “[t]he mortgagee defendants misappropriated the insurance proceeds.” Amd. Compl. ¶ 120. This allegation does not differentiate WMC from the other entities that Plaintiff has classified as “Mortgage Defendants.” The Amended Complaint contains no factual allegations that WMC, specifically, was at any time in possession of the insurance proceeds at issue in this lawsuit. The Court therefore should dismiss these claims with respect to WMC. See Sorbee Int’l, Ltd. v. Chubb Custom Ins. Co., 735 A.2d 712, 716 (Pa. Super. Ct. 1999) (the elements of a misappropriation claim are that “(1) the plaintiff ‘has made a substantial investment of time, effort and money into creating the thing misappropriated such that the court can characterize that ‘thing’ as a kind of property right,’ (2) the defendant ‘has appropriated the ‘thing’ at little or no cost, such that the court can characterize defendant's actions as ‘reaping where it has not sown,’’ and (3) the defendant ‘has injured plaintiff by the misappropriation.’”); Prudential Ins. Co. of Am. v. Stella, 994 F. Supp. 318, 323 (E.D. Pa. 1998) (“[c]onversion, under Pennsylvania law, is the deprivation of another's right of property, or use or possession of a chattel, or other interference therewith without the owner's consent and without legal justification.”). Plaintiff also purports to assert a claim for “theft” under “18 P.A. Cs. 1821.” Amd. Compl. ¶ 122. However, Pennsylvania law does not contain any such statutory provision. Thus, the Court should dismiss this claim. XIII) Consumer Law Violations (Count X) Plaintiff’s tenth cause of action purports to assert various “consumer law violations” against all of the “Mortgage Defendants,” collectively. None of these statutory claims are legally viable with respect to WMC. Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 22 of 26 17 Plaintiff claims that the Mortgage Defendants violated the Pennsylvania Unfair Trade Practices and Consumer Protection Act (“UTPCPL”). The UTPCPL deals with “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” 73 PS § 201-1. “To bring a private cause of action under the UTPCPL, a plaintiff must show that he justifiably relied on the defendant’s wrongful conduct or representation and that he suffered harm as a result of that reliance.” Yocca v. Pittsburgh Steelers Sports, Inc., 578 Pa. 479, 501 (2004). The Amended Complaint does not allege any specific dealings between WMC and Plaintiff in relation to the insurance policy at issue in this case. See Background, supra. Thus, the Court should dismiss Plaintiff’s UTPCPL claim with respect to WMC. Plaintiff also claims that the Mortgage Defendants violated the Pennsylvania Fair Credit Extension Uniformity Act (“PFCEUA”), 73 PS § 2270.1. The PFCEUA “establishes what shall be considered unfair methods of competition and unfair or deceptive acts or practices with regard to the collection of debts.” Williams v. Empire Funding Corp., 227 FRD 362, 366 n. 2 (E.D. Pa. 2005). However, the Amended Complaint does not contain any factual allegations regarding actions by WMC, specifically, in relation to the collection of a debt. The Court therefore should dismiss Plaintiff’s PFCEUA claim with respect to WMC. In addition, Plaintiff claims that the Mortgage Defendants violated the Fair Debt Collection Practices Act (“FDCPA”). The FDCPA’s one-year statute of limitation bars this claim. See 15 U.S.C. § 1692(k). Furthermore, like Plaintiff’s PFCEUA claim, Plaintiff’s FDCPA claim is legally meritless because the Amended Complaint does not contain any factual allegations regarding actions by WMC, specifically, in relation to the Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 23 of 26 18 collection of a debt. See Douglass v. Convergent Outsourcing, 765 F.3d 299, 303 (3d Cir. 2014) (“To prevail on an FD CPA claim, a plaintiff must prove that (1) she is a consumer, (2) the defendant is a debt collector, (3) the defendant's challenged practice involves an attempt to collect a “debt” as the Act defines it, and (4) the defendant has violated a provision of the FDCPA in attempting to collect the debt.”). Accordingly, the Court should dismiss Plaintiff’s FDCPA claim as to WMC. Plaintiff also claims that the Mortgage Defendants violated the Federal Fair Credit Reporting Act (“FFCRA”). Plaintiff does not specify which aspect of the FFCRA is at issue. “In order to state a claim under 15 U.S.C. § 1681s-2(b), a plaintiff must allege that: (1) she sent notice of disputed information to a consumer reporting agency, (2) the consumer reporting agency then notified the defendant furnisher of the dispute, and (3) the furnisher failed to investigate and modify the inaccurate information.” Lamer v. Trans Union, No. 11-2895, 2012 WL 706997, at *4 (E.D. Pa. Mar. 6, 2012) (internal quotation omitted). The Amended Complaint does not contain any factual allegations regarding actions by WMC, specifically, in relation to the provision of information to a consumer reporting agency. The Court therefore should dismiss this claim as to WMC. Moreover, Plaintiff claims that the Mortgage Defendants violated the Real Estate Settlement Procedures Act (“RESPA”), PA, 12 U.S.C.A. § 2601. In the Amended Complaint, the only explanation for this claim is a vague reference to “illicit methods of servicing the loan.” Amd. Compl. ¶ 125. The Amended Complaint does not contain any factual allegations regarding RESPA violations by WMC, specifically. In addition, a RESPA claim, depending on which RESPA provision is at issue, is subject to a one-year Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 24 of 26 19 or three-year statute of limitation. See 12 U.S.C. § 2614. The Court therefore should dismiss Plaintiff’s RESPA claim with respect to WMC. Plaintiff contends that the Mortgage Defendants violated a Pennsylvania statute, 12 Pa. Code §31.203(a). This statute, which concerns the obligation to provide notice to a borrower before accelerating a mortgage loan, does not provide for a private right of action. In addition, the Amended Complaint does not contain any factual allegations that WMC, specifically, accelerated Plaintiff’s loan. The Court therefore should dismiss Plaintiff’s 12 Pa. Code §31.203(a) claim as to WMC. Plaintiff also claims that the Mortgage Defendants violated Pennsylvania’s usury law, 41 P.S. § 504. The usury law provides: “A person who has paid a rate of interest for the loan or use of money at a rate in excess of that provided for by this act or otherwise by law or has paid charges prohibited or in excess of those allowed by this act or otherwise by law may recover triple the amount of such excess interest or charges in a suit at law against the person who has collected such excess interest or charges:” Id. Plaintiff’s contention is that “[t]he mortgagee defendants had no entitlement to collect interest payments when they had elected to disregard their respective obligations in the security document.” Amd. Compl. ¶ 127. Plaintiff’s claim is not legally cognizable under the usury law, as Plaintiff does not assert that the rate of interest associated with his mortgage loan was in excess of the rate permitted under the statute. The Court therefore should dismiss Plaintiff’s usury law claim as to WMC. XIV) Negligence Per Se (Count XI) Plaintiff’s eleventh cause of action purports to assert a claim of negligence per se against all the Mortgage Defendants. Under Pennsylvania law, a negligence per se claim must be grounded in a violation of a statute. “Thus, in order to state a claim based on Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 25 of 26 20 negligence per se, a plaintiff must establish that: “(1) The purpose of the statute must be, at least in part, to protect the interest of a group of individuals, as opposed to the public generally; (2) The statute or regulation must clearly apply to the conduct of the defendant; (3) The defendant must violate the statute or regulation; [and] (4) The violation of the statute must be the proximate cause of the plaintiff's injuries.” Roth v. Cabot Oil & Gas Corp., 919 F. Supp.2d 476, 488 (M.D. Pa. 2013). Because Plaintiff’s statutory claims against WMC are not legally viable, Plaintiff’s negligence per se claim is also without legal merit, and should be dismissed. CONCLUSION For the reasons stated above, the Court should dismiss, with prejudice, Plaintiff’s Amended Complaint in its entirety with respect to WMC. Dated: September 1, 2016 By: /s/ Eric Lopez Schnabel_____________ Eric Lopez Schnabel Dorsey & Whitney (Delaware) LLP 300 Delaware Avenue Suite 1010 Wilmington, DE 19801 David A. Scheffel (application for admission pro hac vice pending) Eric B. Epstein (application for admission pro hac vice pending) Dorsey & Whitney LLP 51 West 52nd Street New York, NY 10019-6119 Attorneys for WMC Mortgage LLC Case 2:16-cv-03604-JHS Document 28-1 Filed 09/01/16 Page 26 of 26 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA -------------------------------------------------------------- X Index No. 16-03604-JHS JERRY A. CONQUEST, Plaintiff v. WMC MORTGAGE CORP. (a.k.a. WMC MORTGAGE, LLC); MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; MERSCORP HOLDINGS, INC.; VANDERBILT MORTGAGE AND FINANCE, INC.; HOMEFIRST AGENCY, INC.; SOUTHWEST BUSINESS CORPORATION; AND, AMERICAN MODERN HOME, Defendants. : : : : : : : : : : : : : : : : : : : -------------------------------------------------------------- X ORDER AND NOW, this __________ day of ___________________, 2016, upon consideration of Defendant WMC Mortgage LLC’s motion to dismiss the Amended Complaint (Dkt. No. 16) of Plaintiff Jerry A. Conquest, and all submissions and arguments in support thereof and in opposition thereto, it is hereby ORDERED that said Motion is GRANTED. Plaintiff’s claims against WMC Mortgage LLC in the above- captioned action are hereby DISMISSED WITH PREJUDICE. BY THE COURT: ____________________________________ JOEL H. SLOMSKY, J. Case 2:16-cv-03604-JHS Document 28-2 Filed 09/01/16 Page 1 of 1