Rhodes et al v. Nationstar Mortgage

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM or in the Alternative, For a More Definite Statement with Brief In Support

N.D. Ga.January 17, 2017

In the United States District Court For the Northern District of Georgia Atlanta Division Civil Action File Number: 17-cv-00091-LMM-WEJ Defendant’s Motion to Dismiss or, in the Alternative, For a More Definite Statement Pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court should dismiss Plaintiffs’ purported claim under the federal Fair Credit Reporting Act against Nationstar. In the alternative, and pursuant to Rule 12(e), the Court should order Plaintiffs to submit a more detailed statement of their claim. A memorandum of law in support of this motion has been filed contemporaneously herewith. (Signature on Following Page) Charles Kenneth Rhodes, Jr. and Teri D. Rhodes, Plaintiffs v. Nationstar Mortgage LLC, Defendant 1 Case 1:17-cv-00091-LMM-WEJ Document 3 Filed 01/17/17 Page 1 of 3 Respectfully submitted this 17th day of January, 2017. /s/ Christopher S. Anulewicz Christopher S. Anulewicz Georgia Bar Number 020914 Geremy W. Gregory Georgia Bar Number 885342 R. Maximo Galiana Georgia Bar Number 198935 Attorneys for Defendant Nationstar Mortgage LLC Balch & Bingham LLP 30 Ivan Allen Jr. Boulevard, N.W. Suite 700 Atlanta, Georgia 30308 Telephone: (404) 261-6020 Facsimile: (404) 261-3656 canulewicz@balch.com ggregory@balch.com mgaliana@balch.com 2 Case 1:17-cv-00091-LMM-WEJ Document 3 Filed 01/17/17 Page 2 of 3 Certificate of Service I hereby certify that on January 17, 2017, a true and correct copy of Defendant Nationstar Mortgage LLC’s Motion to Dismiss or, in the Alternative, For a More Definite Statement has been filed with the Court using the CM/ECF system and mailed to Plaintiffs Charles Kenneth Rhodes and Teri D. Rhodes via First Class United States Mail to 6440 Queens Court Trce. in Mableton, Georgia 30126. /s/ Christopher S. Anulewicz Christopher S. Anulewicz Georgia Bar Number 020914 Case 1:17-cv-00091-LMM-WEJ Document 3 Filed 01/17/17 Page 3 of 3 In the United States District Court For the Northern District of Georgia Atlanta Division Civil Action File Number: 17-cv-00091-LMM-WEJ Defendant’s Memorandum of Law in Support of Its Motion to Dismiss or, in the Alternative, For a More Definite Statement Plaintiffs’ Statement of Claim should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Plaintiffs’ claim fails because (1) the federal Fair Credit Reporting Act (“FCRA”) does not provide them with a private cause of action for the conduct alleged in their pleading and (2) Plaintiffs have failed to allege (or even reference) the elements of a cognizable claim under the FCRA. Alternatively, the Court should order Plaintiffs to file a more specific and detailed pleading pursuant to Rule 12(e). Relevant Background This matter began on December 7, 2016 when Plaintiffs filed their Statement Charles Kenneth Rhodes, Jr. and Teri D. Rhodes, Plaintiffs v. Nationstar Mortgage LLC, Defendant 1 Case 1:17-cv-00091-LMM-WEJ Document 3-1 Filed 01/17/17 Page 1 of 11 of Claim with the Magistrate Court of Gwinnett County, Georgia. See Doc. 1-1 (“Statement”). In the Statement, Plaintiffs claim Defendant Nationstar Mortgage LLC (“Nationstar”) violated the FCRA. Specifically, Plaintiffs allege: [Nationstar] has failed to perform its responsibilities specified under the Federal [sic] Credit Reporting Act-FCRA 623(a)(3)-Responsibilities of furnishers of information to consumer agencies {15 U.S.C. 1681s-2} in that after due notice [Nationstar] did not report Plaintiffs [sic] dispute of indebtedness to consumer agencies. See Statement, Doc. 1-1, at 3. Based on this contention, Plaintiffs seek $10,000 in damages from Nationstar. The Statement contains no other substantive allegations. Nationstar services Plaintiffs’ mortgage loan. On August 20, 2008, Plaintiffs executed a Mortgage of Real Estate which pledged their real property at 209 Silver Fox Lane in Columbia, South Carolina in exchange for a $55,684.00 loan from American General Financial Services, Inc. (“Mortgage”). 1 The Mortgage was properly recorded in the Register of Deeds for Richland County, South Carolina on August 22, 2008.2 On July 10, 2015, American General Financial Services, Inc. assigned the Mortgage to U.S. Bank National Association, as indenture trustee for 1 “The Court may take judicial notice of public records not attached to the complaint, including in this case the note, security deed, and assignment contract, when considering a motion to dismiss.” Funderburk v. Fannie Mae, No. 1:13-cv- 01362, 2014 WL 1292650, at *1 n.2 (N.D. Ga. Mar. 28, 2014) (citing Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1280 (11th Cir.1999)). 2 A true and correct copy of the Mortgage is attached hereto as Exhibit A. 2 Case 1:17-cv-00091-LMM-WEJ Document 3-1 Filed 01/17/17 Page 2 of 11 Springleaf Mortgage Loan Trust 2013-2 (“Assignment”).3 The Assignment was properly recorded in Richland County on July 13, 2015. Though Plaintiffs make no reference to the Mortgage or Assignment in the Statement, Nationstar presumes their purported claim under the FCRA targets Nationstar’s alleged conduct as servicer for the Mortgage. Argument and Citation of Authority 1. Motion to Dismiss Standard When a defendant moves to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court must “assume that the factual allegations in the complaint are true and give the plaintiffs the benefit of reasonable factual inferences.” Wooten v. Quicken Loans, Inc., 626 F.3d 1187, 1196 (11th Cir. 2010). “Although reasonable inferences are made in the plaintiff’s favor, ‘unwarranted deductions of fact’ are not admitted as true.” Enwonwu v. Fulton Cty. Marshal, 1:16-cv-797-wsd, 2016 WL 7030323, at *3 (N.D. Ga. Dec. 2, 2016) (quoting Aldana v. Del Monte Fresh Produce, N.A., 416 F.3d 1242, 1248 (11th Cir. 2005)). The Court may disregard the conclusory allegations and legal conclusions in the Statement. Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir. 2010). To withstand dismissal, Plaintiffs must allege sufficient facts which, if true, 3 A true and correct copy of the Assignment is attached hereto as Exhibit B. 3 Case 1:17-cv-00091-LMM-WEJ Document 3-1 Filed 01/17/17 Page 3 of 11 “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Mere “labels and conclusions” are insufficient. Id. at 555. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Moreover, Plaintiffs must allege more than the “mere possibility of misconduct,” and their allegations must be well-pleaded and must “nudge” their claims “across the line from conceivable to plausible.” Enwonwu, 2016 WL 7030323 at *3 (quoting Am. Dental, 605 F.3d at 1289, 1290). Here, the Statement fails to comply with these principles and should be dismissed. 2. Despite the dearth of detail in the Statement, Plaintiffs clearly cannot state a claim under the FCRA. Plaintiffs have alleged that Nationstar “failed to perform its responsibilities specified under” 15 U.S.C. § 1681s-2 because “after due notice [Nationstar] did not report Plaintiffs [sic] dispute of indebtedness to consumer agencies.” See Statement, Doc. 1-1, at 3. While it is unclear which subsection of § 1681s-2 Plaintiffs’ claims invoke, their allegations most closely relate to § 1681s-2(a)(3), which provides: “If the completeness or accuracy of any information furnished by any person to any consumer reporting agency is disputed to such person by a consumer, the person may not furnish the information to any consumer reporting 4 Case 1:17-cv-00091-LMM-WEJ Document 3-1 Filed 01/17/17 Page 4 of 11 agency without notice that such information is disputed by the consumer.” Plaintiffs’ claim under § 1681s-2(a)(3) fails because the FCRA does not provide a private cause of action for a violation of any part 15 U.S.C. § 1681s-2(a). 15 U.S.C. § 1681s-2(c)(1) (providing that the FCRA’s provisions providing private causes of action for negligence and willful noncompliance “do not apply to any violation of-subsection (a) of [15 U.S.C. § 1681s-2], including any regulations issued thereunder[.]”). Accordingly, Plaintiffs’ claim under 15 U.S.C. § 1681s-2 fails to the extent it is premised on a violation of subsection §1681s-2(a)(3)- which, based on the allegations of the Statement, appears to be the subsection most relevant to Plaintiffs’ claims. Moreover, to the extent Plaintiffs attempt to premise their claims on an alleged violation of 15 U.S.C. § 1681s-2(b), the Statement fails to state a cognizable claim. Subsection 1681s-2(b) requires a person who furnishes information to a credit reporting agency to take certain actions enumerated in subsections 1681s-2(b)(1)(A)-(D), “[a]fter receiving notice pursuant to [15 U.S.C. §1681i(a)(2)] of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency . . . .” Importantly, 15 U.S.C. § 1681i(a)(2) provides: (A) In general. Before the expiration of the 5-business-day period beginning on the date on which a consumer reporting agency receives notice of a 5 Case 1:17-cv-00091-LMM-WEJ Document 3-1 Filed 01/17/17 Page 5 of 11 dispute from any consumer or a reseller in accordance with paragraph (1), the agency shall provide notification of the dispute to any person who provided any item of information in dispute, at the address and in the manner established with the person. The notice shall include all relevant information regarding the dispute that the agency has received from the consumer or reseller. (B) Provision of other information. The consumer reporting agency shall promptly provide to the person who provided the information in dispute all relevant information regarding the dispute that is received by the agency from the consumer or the reseller after the period referred to in subparagraph (A) and before the end of the period referred to in paragraph (1)(A). (Emphasis added). Once statutory notice has been given, the furnisher is only required to conduct “a reasonable investigation” into the matter. See King v. Asset Acceptance, LLC, 452 F. Supp. 2d 1272, 1278 (N.D. Ga. 2006) (citing Westra v. Credit Control of Pinellas, 209 F.23d 825, 827 (7th Cir. 2005) and Johnson v. MBNA Am. Bank, N.A., 357 F.3d 426, 431 (4th Cir. 2004)) (emphasis added). The Statement fails to allege, or even reference, these elements of a claim under 15 U.S.C. § 1681s-2(b). First, Plaintiffs fail to allege that they contacted a consumer reporting agency to dispute information provided by Nationstar. Second, Plaintiffs fail to adequately allege that a consumer reporting agency provided statutory notice to Nationstar of any consumer dispute. See Chipka v. Bank of Am., 355 F. App’x 380, 383 (11th Cir. 2009) (providing that furnisher must verify information only “when [] notified by a consumer reporting agency of a credit- 6 Case 1:17-cv-00091-LMM-WEJ Document 3-1 Filed 01/17/17 Page 6 of 11 report dispute.”). Third, even if Plaintiffs had alleged facts showing that Nationstar received statutory notice from a consumer reporting agency, they failed to plead that Nationstar did not conduct a reasonable investigation to verify the accuracy of its information as required. See, e.g., Smith v. Bank of Am. Home Loans, 968 F. Supp. 2d 1159, 1167 (M.D. Fla. Aug. 13, 2013). See also Tamanji v. Nationstar Mortg. LLC, No. 4:14-cv-222-hlm, 2014 WL 12513893, at *2 (N.D. Ga. Dec. 12, 2014). Plaintiffs’ FCRA claim fails because they have no private cause of action for a violation of 15 U.S.C. § 1691s-2(a) and because they have failed to allege sufficient facts for a claim under 15 U.S.C. § 1691s-2(b). Accordingly, their claim should be dismissed. 3. Alternatively, the Court should order Plaintiffs to provide a more definite statement of their FCRA claim. Federal Rule of Civil Procedure 12(e) provides: A party may move for a more definite statement of a pleading to which a responsive pleading is allowed but which is so vague or ambiguous that the party cannot reasonably prepare a response. The motion must be made before filing a responsive pleading and must point out the defects complained of and the details desired. If the court orders a more definite statement and the order is not obeyed within 14 days after notice of the order or within the time the court sets, the court may strike the pleading or issue any other appropriate order. (Emphasis added). Nationstar’s motion for a more definite statement is timely 7 Case 1:17-cv-00091-LMM-WEJ Document 3-1 Filed 01/17/17 Page 7 of 11 because it has not yet filed any “responsive pleading” to the Statement. See FED. R. CIV. P. 7(a) (providing that “pleadings” allowed under the Federal Rules of Civil Procedure are complaints, counterclaims, third-party complaints, and answers). And the Statement is fundamentally defective: Plaintiffs have attempted to state a claim on a form pleading which was presumably provided by the Magistrate Court of Gwinnett County. The Statement is devoid of sufficient factual matter to state a claim under the FCRA. It fails to specify which subsection of 15 U.S.C. § 1681s-2 is relevant to Plaintiffs’ claims, and it fails to detail what alleged conduct or omissions by Nationstar give rise to their FCRA claim. To the extent Plaintiffs can allege additional facts than those already made in the Statement, any amended pleading by Plaintiffs should contain sufficient factual detail to allow the Court and Nationstar to fully ascertain the scope and nature of Plaintiffs’ FCRA claim. Nationstar contends, above, that any claim under 15 U.S.C. § 1681s-2 is barred and futile. But if the Court disagrees, it should at least order Plaintiffs to state, in plausible detail, their allegations against Nationstar under the FCRA. Conclusion Despite the dearth of detail in the Statement, it is clear Plaintiffs cannot state a claim under the FCRA against Nationstar. Nonetheless, if the Court disagrees, Plaintiffs should be ordered to submit a more detailed statement of their claim 8 Case 1:17-cv-00091-LMM-WEJ Document 3-1 Filed 01/17/17 Page 8 of 11 under the FCRA. Respectfully submitted this 17th day of January, 2017. /s/ Christopher S. Anulewicz Christopher S. Anulewicz Georgia Bar Number 020914 Geremy W. Gregory Georgia Bar Number 885342 R. Maximo Galiana Georgia Bar Number 198935 Attorneys for Defendant Nationstar Mortgage LLC Balch & Bingham LLP 30 Ivan Allen Jr. Boulevard, N.W. Suite 700 Atlanta, Georgia 30308 Telephone: (404) 261-6020 Facsimile: (404) 261-3656 canulewicz@balch.com ggregory@balch.com mgaliana@balch.com 9 Case 1:17-cv-00091-LMM-WEJ Document 3-1 Filed 01/17/17 Page 9 of 11 Local Rule 7.1(D) Certificate Pursuant to Local Rule 7.1(D), I hereby certify that Defendant Nationstar Mortgage LLC’s Memorandum of Law in Support of Its Motion to Dismiss or, in the Alternative, For a More Definite Statement has been prepared using 14-point Times New Roman font in compliance with Local Rule 5.1. /s/ Christopher S. Anulewicz Christopher S. Anulewicz Georgia Bar Number 020914 Case 1:17-cv-00091-LMM-WEJ Document 3-1 Filed 01/17/17 Page 10 of 11 Certificate of Service I hereby certify that on January 17, 2017, a true and correct copy of Defendant Nationstar Mortgage LLC’s Memorandum of Law in Support of Its Motion to Dismiss or, in the Alternative, For a More Definite Statement has been filed with the Court using the CM/ECF system and mailed to Plaintiffs Charles Kenneth Rhodes and Teri D. Rhodes via First Class United States Mail to 6440 Queens Court Trce. in Mableton, Georgia 30126. /s/ Christopher S. Anulewicz Christopher S. Anulewicz Georgia Bar Number 020914 Case 1:17-cv-00091-LMM-WEJ Document 3-1 Filed 01/17/17 Page 11 of 11 Exhibit A Case 1:17-cv-00091-LMM-WEJ Document 3-2 Filed 01/17/17 Page 1 of 4 Case 1:17-cv-00091-LMM-WEJ Document 3-2 Filed 01/17/17 Page 2 of 4 Case 1:17-cv-00091-LMM-WEJ Document 3-2 Filed 01/17/17 Page 3 of 4 Case 1:17-cv-00091-LMM-WEJ Document 3-2 Filed 01/17/17 Page 4 of 4 Exhibit B Case 1:17-cv-00091-LMM-WEJ Document 3-3 Filed 01/17/17 Page 1 of 2 Case 1:17-cv-00091-LMM-WEJ Document 3-3 Filed 01/17/17 Page 2 of 2