205462159.6 48765/309947 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA FRANCIS VILKOFSKY, JR., Plaintiff, v. RUSHMORE LOAN MANAGEMENT SERVICES, LLC, SPECIALIZED LOAN SERVICING, LLC and U.S. BANK, N.A., Defendants. ) ) ) ) ) ) ) ) ) ) ) ) CIVIL ACTION NO. 2:16-cv-01291-NBF Hon. Nora Barry Fischer SUPPLEMENTAL BRIEF IN SUPPORT OF DEFENDANT SPECIALIZED LOAN SERVICING, LLC AND U.S. BANK, N.A.’S MOTION TO DISMISS I. INTRODUCTION After the January 31, 2016 hearing on the Motions to Dismiss filed by Specialized Loan Servicing, LLC (“SLS”) and U.S. Bank, N.A. (“U.S. Bank”) (collectively with SLS, “Defendants”) and Rushmore Loan Management Services, LLC (“Rushmore”), the Court entered an Order [Dkt. No. 47] authorizing supplemental briefs to specifically address whether TILA creates a private right of action against mortgage servicers for violations of its implementing regulation, specifically 12 C.F.R. § 1026.36. As set forth in Defendants’ principal brief, TILA only imposes civil liability on “creditors,” not servicers. Plaintiff relies solely on the implementing regulation (12 C.F.R. § 1026.36(c)) to support his claim but reliance on the regulation alone is unavailing, because it is section 1640(a) of TILA that creates a private right of action for TILA violations and section 1640(a) is clear that liability under TILA is for creditors only. Plaintiff attempts to avoid the inevitable dismissal of his TILA claims by citing three distinguishable and inapplicable cases and encouraging the Court to ignore numerous decisions determining that TILA does not apply to mortgage servicers. SLS does not dispute that Case 2:16-cv-01291-NBF Document 52 Filed 02/15/17 Page 1 of 10 2 205462159.6 48765/309947 there is an inconsistency between TILA (which imposes civil liability on creditors, only) and certain of its implementing regulations (which impose responsibilities upon servicers); however, that inconsistency is easily explained by the fact that Congress left enforcement for this particular TILA section to the attorney general instead of providing for private rights of action. Thus, Plaintiff’s TILA claim must be dismissed. A. Plaintiff’s TILA Claims Must Be Dismissed Because SLS and U.S. Bank are Not Creditors. Plaintiff alleges that SLS violated TILA based upon alleged violations of regulation 12 C.F.R. § 1026.36(c) pertaining to the crediting of payments as of the date of receipt, the assessment of late fees, and provision of a statement of the loan balance. Amended Complaint, ¶¶ 85-88. Even if Plaintiff’s factual allegations were true, Plaintiff cannot maintain a civil action against SLS or U.S. Bank because TILA itself only creates a private right of action for violations of TILA by a creditor. The section of TILA that creates a private right of action for TILA violations only applies to “creditors.” 15 U.S.C. § 1640(a). Section 1640(a) titled “Individual or class action for damages; amount of award; factors determining amount of award,” provides: “any creditor who fails to comply with any requirement imposed under this part, … with respect to any person is liable to such person . . . [.]” 15 U.S.C. § 1640(a) (emphasis added). Thus, TILA is clear that only a “creditor who fails to comply” with its requirement with respect to any person is liable. 15 U.S.C. § 1640(a). (emphasis added) The restrictive definition of “creditor” under TILA “refers only to a person who both (1) regularly extends . . . consumer credit . . . and (2) is the person to whom the debt arising from the consumer credit transaction was initially payable on the fact of the evidence of indebtedness. . . [.]” 15 U.S.C. §1602(g). Case 2:16-cv-01291-NBF Document 52 Filed 02/15/17 Page 2 of 10 3 205462159.6 48765/309947 In this case, Plaintiff’s mortgage identifies First NLC Financial Services, LLC (“First NLC”) as the lender to whom his note is initially payable. See Mortgage, Ex. 2 to Defendants’ Brief in Support, at p. 1, identifying First NLC as the Lender. Thus, for purposes of TILA, only First NLC is a creditor. SLS and U.S. Bank are not “creditors” (as that term is defined in TILA) with respect to Mr. Vilkofsky’s loan, and any TILA claims against SLS and U.S. Bank fail as a matter of law.1 B. Courts applying TILA have uniformly held that there is no servicer liability under TILA. Based upon the statutory framework explained above, “[c]ourts applying TILA uniformly hold that there is no servicer liability under TILA.” See Lucien v. Fannie Mae, 21 F. Supp. 3d 1379, 1383 (S.D. Fla. 2014) (“Green Tree, as servicer, cannot be held liable under 15 U.S.C. § 1640. The text of TILA’s civil damages provision only provides for creditor liability─not servicer liability. . . Because servicers cannot be held liable under TILA, and, by extension, regulations promulgated thereunder, Plaintiffs’ claims against Green Tree are dismissed.”); Marais v. Chase Home Fin. LLC, 736 F.3d 711, 718-719 (6th Cir. 2013) (“We conclude that the district court properly dismissed the TILA claim because [plaintiff] alleged only that [defendant] was a servicer of the loan and TILA expressly exempts servicers from liability”); Vincent v. The Money Store, 736 F.3d 88, 105-106 (2d Cir. 2013); James v. Nationstar Mortg., LLC, 92 F. Supp. 3d 1190, 1198 (S.D. Ala. 2015); Kelly v. Fairon & Assocs., 842 F. Supp. 2d 1157, 1161- 1 Plaintiff also cannot maintain an action against U.S. Bank under 15 U.S.C. § 1641(a) because “any civil action for a violation of this subchapter . . . which may be brought against a creditor may be maintained against any assignee of such creditor only if the violation for which such action or proceeding is brought is apparent on the face of the disclosure statement, except where the assignment was involuntary.” (Emphasis added). The violations of TILA that Plaintiff alleges do not pertain to the disclosure statement, and Plaintiff cannot maintain an action against U.S. Bank as an assignee. Case 2:16-cv-01291-NBF Document 52 Filed 02/15/17 Page 3 of 10 4 205462159.6 48765/309947 1162 (D. Minn. 2012) (noting that its interpretation of TILA was “consistent with a majority of courts that hold that TILA does not allow a private cause of action against servicers”). Plaintiff attempts to discredit Lucien and James by arguing that “neither case make[s] any reference whatsoever to the Federal Regulation.” Supplemental Brief, p. 2. Plaintiff also attempts to discredit Kelly, Vincent and Marais, by arguing that they were decided “before the effective date of the regulation that imposes Truth-In-Lending liability on a servicer.” Id. Neither argument is persuasive. As discussed above, TILA section 1640(a), which creates a private right of action against “creditors” for violations of TILA, does not create a private right of action against mortgage servicers. The Lucien court relied upon the plain language of the statute when it concluded that TILA does not impose liability on servicers and dismissed the asserted claims against Green Tree. Similarly, the James court determined, based upon the “clear text of §§ 1602(g) . . . , 1640(a) . . ., and 1641(e) . . . , the § 1639f requirement that servicers credit payments to a consumer’s loan account as of the date of receipt may allow vicarious liability for the original lenders (i.e., TILA ‘creditors’), but it does not create or allow a cause of action for damages against assignees” and dismissed plaintiff’s TILA claims against Fannie Mae because Fannie Mae was not a “creditor” within the meaning of TILA. James, 92 F.Supp. 3d at 1197-1198. Plaintiff also encourages the Court not to follow Kelly, Vincent, and Marais, because they were decided before 12 C.F.R. § 1026.36(c) became effective on October 3, 2015. In fact, since October 2015, Courts have consistently followed the reasoning in these cases and determined that TILA only applies to creditors, not mortgage servicers. See, e.g. Bentley v. Greensky Trade Credit, LLC, 156 F. Supp. 3d 274, 295-296 (D. Conn. Dec. 30, 2015) (determining that TILA only “applies to” and “regulates” “creditors” and dismissing claims against GreenSky, her Case 2:16-cv-01291-NBF Document 52 Filed 02/15/17 Page 4 of 10 5 205462159.6 48765/309947 mortgage servicer, for violations of TILA); Barnes v. Carrington Mortgage Services, LLC, 2016 WL 3018693, *2-*3 (D. N.J. May 24, 2016) (dismissing plaintiff’s claims alleging violation of 1639f of TILA against Carrington [mortgage servicer] because “TILA does not create a private cause of action against a loan servicer” and dismissing TILA claims against Bank of America, N.A. [assignee of note and mortgage] because it “is not the job of the courts to rewrite the language of § 1640(a),” and applying “the statutory definition of ‘creditor’”); Aliff v. Bank of America, N.A., 2017 WL 424878, *3-*4 (S.D.W.Va. Jan. 31, 2017) (dismissing plaintiff’s claim against servicer for alleged violation of TILA because servicer was not a creditor as defined by the statute); Payne v. Seterus, Inc., 2016 WL 4521659, *7 (W.D. La. Aug. 26, 2016) (dismissing TILA claims where plaintiff alleged “broadly that defendant failed to credit plaintiff’s payments promptly in violation of §§ 1024.35, 1026.36 and 15 U.S.C. § 1639f” because “courts uniformly have held that there is no servicer liability under TILA, and, by extension, the regulations promulgated thereunder . . . Furthermore, the plain language of §1639f does not create a private cause of action . . . Instead, TILA’s private cause of action is set forth in § 1640(a), which only imposes liability on a ‘creditor’”) (citations omitted); Radske v. Fed. Nat’l. Mtg. Assn., 2016 WL 3667957, *5 (E.D. Mich. July 11, 2016) (dismissing TILA claim against servicer “because ‘TILA expressly exempts servicers from liability unless the servicer was also a creditor or a creditor’s assignee’”) (citations omitted). The cases cited by SLS and U.S. Bank in its principal brief on this issue are still good law and should be followed, notwithstanding plaintiff’s arguments to the contrary. C. The section of TILA that 12 C.F.R. § 1026.36 relates to (Section 1639f) does not provide a right of action but does permit enforcement by the attorney general As noted above, Plaintiff alleges that SLS violated TILA based upon alleged violations of regulation 12 C.F.R. § 1026.36(c), which pertains to the crediting of payments as of the date of Case 2:16-cv-01291-NBF Document 52 Filed 02/15/17 Page 5 of 10 6 205462159.6 48765/309947 receipt and the assessment of late fees. Amended Complaint, ¶¶ 85-88. The regulation cited by Plaintiff interprets Section 1639f of TILA, which provides: “In connection with a consumer credit transaction secured by a consumer’s principal dwelling, no servicer shall fail to credit a payment to the consumer’s loan account as of the date of receipt” and “[i]f a servicer specifies in writing requirements for the consumer to follow in making payments, but accepts a payment that does not conform to the requirements, the servicer shall credit the payment as of 5 days after receipt.” 15 U.S.C. § 1639f(a)-(b). The regulation relied upon by Plaintiff, 12 C.F.R. § 1026.36(c) restates the text of section 1639f(a) and clarifies the meaning of periodic payment. See 12 C.F.R. § 1026.36(c)(1)(i). The remainder of the regulation, as cited by Plaintiff, also clarifies the requirements of TILA with respect to servicers. 12 C.F.R. § 1026.36(c)(1)(ii) (pertaining to servicer’s retention of partial payments); 12 C.F.R. § 1026.36(c)(2) (pertaining to servicer’s imposition of late fees); and 12 C.F.R. § 1026.36(c)(3) (pertaining to payoff statements; 15 U.S.C. 1639g). Plaintiff’s fundamental argument is that he has a private right of action for damages against SLS because the regulations clarify TILA’s requirements with respect to “servicers.” However, there is no private right of action under § 1639f; thus, Plaintiff’s argument fails. See Aliff, 2017 WL 424878 at *4 (“Section 1639f does not create a private right of action”). Instead of imposing civil liability upon servicers who fail to comply with TILA, Congress provides for enforcement through other means. As one court noted: “Although TILA does not create a private right of action against a loan servicer, it does impose consequences on a loan servicer who fails to comply with § 1639f. The statute allows for ‘[a]n action to enforce a violation of section . . . 1639f . . . of this title [to] be brought by the appropriate attorney general in any Case 2:16-cv-01291-NBF Document 52 Filed 02/15/17 Page 6 of 10 7 205462159.6 48765/309947 appropriate United States district court[.]’” Barnes, 2016 WL 3018693 at *2 (citing 15 U.S.C. § 1640(e)). D. The Cases Cited by Plaintiff Are Inapplicable Plaintiff relies upon Fridman v. NYCB Mortg. Co., 780 F.3d 773 (7th Cir. 2015), Martinez v. Shellpoint Mortg. Servicing, 2016 U.S. Dist. LEXIS 154821 (S.D. Fla. Nov. 8, 2016), and Kier v. Ocwen Loan Servicing, LLC, 122 F. Supp. 3d 786 (N.D. Ill. 2015) for the proposition that “[n]umerous Federal Courts have applied [12 C.F.R. 1026.36(c)] to mortgage servicers.” Plaintiff’s Supplemental Brief, p. 2. To the extent Plaintiff has found cases imposing TILA liability upon servicers, those cases are wrongly decided because the courts were not properly applying the statutory scheme. Further, not a single case cited by Plaintiff actually analyzes whether civil liability existed in the first place against a servicer. Instead, in each of the cases cited by Plaintiff, the courts just accepted as true that liability could exist and it does not appear that the defendant servicers in those cases raised the defense that SLS raised here (i.e., that there is no servicer liability under TILA in the first place). For example, in Fridman, the Seventh Circuit considered the sole issue of whether the district court properly dismissed plaintiff’s complaint alleging that her lender and mortgage servicer (NYCB Mortgage Company, LLC) violated TILA § 1639f when it credited online payments when it received the funds from the consumer’s external bank account. This case is factually distinguishable because in Fridman, the defendant NYCB was both the creditor and a servicer under TILA, because it serviced its own loans. Fridman, 780 F.3d at 780 (“Fridman had a mortgage loan from NYCB. .. . NYCB handles its own collections and is a ‘servicer’ under the statute.”) (J. Easterbrook, dissent). Accordingly, the question of whether TILA imposes liability upon a servicer who is not also a creditor was not raised in that case, because the defendant Case 2:16-cv-01291-NBF Document 52 Filed 02/15/17 Page 7 of 10 8 205462159.6 48765/309947 NYCB was a “creditor” as that term is defined in TILA. As such, the Seventh Circuit never even considered whether TILA creates a private right of action against mortgage servicer. Similarly, in Martinez, when the District Court for the Southern District of Florida dismissed plaintiff’s TILA claim for actual damages against the servicer of her loan, it never even considered whether a borrower can maintain an action against its mortgage servicer for violating TILA or its regulations because the servicer did not raise that issue as a basis for dismissal. See Defendant’s Motion to Dismiss, Martinez v. Shellpoint Mortgage Servicing, Case No. 16-cv-60026 [Dkt. No. 9], attached hereto as Exhibit 1. Thus, although the Fridman and Martinez courts “applied” Regulation Z to mortgage servicers, they did so without ever considering whether they should have because neither servicer challenged the claims against them on that basis. Fridman and Martinez are not persuasive on the issue before the Court and are certainly not controlling. Lastly, Plaintiff’s reliance upon Kier v. Ocwen Loan Servicing, LLC, 122 F. Supp. 3d 786 (N.D. Ill. 2015) is similarly misplaced. In Kier, the legal owner of plaintiff’s mortgage was Mortgage Electronic Registration Systems, Inc. and the beneficial owner of the mortgage was Federal National Mortgage Association a/k/a Fannie Mae (“Fannie Mae”). Kier at 787. GMAC was the original servicer of the loan, but in 2014 Ocwen Loan Servicing, LLC (“Ocwen”) replaced GMAC as the servicer. Kier alleged that Fannie Mae and MERS, as owners of the loan acting through their agent Ocwen, violated TILA (15 U.S.C. 1649f(a)) and Regulation Z (12 C.F.R. § 1026.36(c)(1)(i) when it conditioned acceptance of an online payment as timely only upon the payment of a $10 fee. Id. at 788-789. Defendants argued that Kier had no private right of action against Fannie Mae or MERS because neither is a creditor under TILA and assignee liability is inapplicable. Kier at 788. The court determined that Kier “failed to state a claim Case 2:16-cv-01291-NBF Document 52 Filed 02/15/17 Page 8 of 10 9 205462159.6 48765/309947 under TILA because neither it nor Regulation Z prohibits the assessment of ‘rush processing’ or ‘convenience’ fees during a consumer’s payment period” and did “not address Defendants’ remaining argument that Kier has no private right of action against Fannie Mae or MERS . . . [.]” Kier at 791. In Kier, the Court did not make any determinations on whether a private right of action for TILA violations can be maintained against a mortgage servicer (in that case, Ocwen) and the court expressly withheld decision on the issue of whether the owners of the mortgage loan (Fannie Mae and MERS) could be held liable under TILA because they were not creditors. The Kier case is therefore factually distinguishable from the present case because, here, Plaintiff is attempting to assert liability against his mortgage servicer (SLS) under TILA. Thus, the Fridman, Martinez, and Kier decisions do not support Plaintiff’s position that TILA creates a private right of action against mortgage servicers. Without persuasive authority upon which to rely, this Court must uphold the plain language of the statute, determine that Plaintiff cannot assert claim for TILA violations under the facts of this case, and dismiss the Amended Complaint for failure to state a claim. Respectfully submitted, /s/ Jennifer K. Green Jennifer K. Green, admitted pro hac vice 151 S. Old Woodward Ave., Suite 200 Birmingham, MI 48009 (248) 988-2315 jgreen@clarkhill.com and /s/ Lauren D. Rushak Lauren D. Rushak (PA ID #83728) One Oxford Centre 301 Grant St., 14th Floor Pittsburgh, PA 15219 (412) 394-2433 lrushak@clarkhill.com Attorneys for Defendants Case 2:16-cv-01291-NBF Document 52 Filed 02/15/17 Page 9 of 10 205462159.6 48765/309947 CERTIFICATE OF SERVICE I hereby certify that on January 26, 2017, I electronically filed the Supplemental Brief in Support of Defendant Specialized Loan Servicing, LLC and U.S. Bank, N.A.’s Motion to Dismiss with the Clerk of the Court using the CM/ECF system, which system will send notification of such filing to all attorneys of record. Respectfully submitted, CLARK HILL PLC /s/ Jennifer K. Green Jennifer K. Green, admitted pro hac vice 151 S. Old Woodward Ave., Suite 200 Birmingham, MI 48009 (248) 988-2315 jgreen@clarkhill.com Attorneys for Specialized Loan Servicing, LLC and U.S. Bank, N.A. Case 2:16-cv-01291-NBF Document 52 Filed 02/15/17 Page 10 of 10 201443557.1 34959/137209 EXHIBIT 1 Case 2:16-cv-01291-NBF Document 52-1 Filed 02/15/17 Page 1 of 9 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA FORT LAUDERDALE DIVISION Case No. 16-CV-60026 VILMA MARTINEZ Plaintiffs, v. SHELLPOINT MORTGAGE SERVICING, Defendants. ____________________________________/ DEFENDANT’S MOTION TO DISMISS COMES NOW, Defendant, Shellpoint Mortgage Servicing (herein after “Shellpoint” and/or Defendant), pursuant to Fed. R. Civ. P. 12(b)(6), hereby moves to dismiss Defendant’s First Amended Complaint, and in support thereof states: 1. Plaintiff has filed a ten-count Amended Complaint for alleged violations of 12 U.S.C. §2605 (“RESPA) and its implementing regulations, Regulation X, 12 C.F.R. § 1024 (“Regulation X”), the Truth in Lending Act, 15 U.S.C. § 1601 (“TILA”), and its implementing regulation, Regulation Z, 12 C.F.R. § 1026 (“Regulation Z”). 2. Specifically, Plaintiff alleges violations under RESPA/Regulation X (“RESPA violations”) for Defendant’s alleged failure to acknowledge requests for information (Counts I and II), failure to timely provide loan owner information (Count III and IV), failure to acknowledge notice of error (Count V), failure to respond to Notice of Error (Count VI), and failure to notify Plaintiff of Right to Appeal (Count VII). Plaintiff further alleges violations under TILA/Regulation Z for failure to provide timely payoff statement (Count VIII) and failure to provide monthly statements (Count IX). Plaintiff 1 SHP0035 Case 0:16-cv-60026-JAL Document 9 Entered on FLSD Docket 03/17/2016 Page 1 of 7Case 2:16-cv-01291-NBF Docum nt 52-1 Filed 02/15/17 Page 2 of 9 also seeks injunctive relief in the form of a stay of the associated foreclosure active (Count X). 3. Plaintiff’s fails to state a claim for which relief can be granted pursuant to both RESPA and TILA as the Amended Complaint is devoid of actual damages resulting from Defendant’s alleged failures to acknowledge or respond to Plaintiff’s various requests mentioned above. 4. Further, Plaintiff’s claim for injunctive relief should be dismissed as moot, the foreclosure action has been placed on inactive status pursuant to court order. Memorandum of Law In accordance with Federal Rule of Civil Procedure 12(b)(6), a Complaint may be dismissed for failure to state a claim for which relief can be granted. On a motion to dismiss, the Court accepts all allegations as true and “construes them in the light most favorable to the plaintiff.” Kelliher v. Target Nat. Bank, 826 F. Supp. 2d 1324, 1326 (M.D. Fla. 2011). However, conclusions in a pleadings “are not entitled to the assumption of truth.” Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009). As such, “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Smith v. Williams, 819 F. Supp. 2d 1264, 1269 (M.D. Fla. 2011), citing Iqbal, 556 U.S. at 678. To survive a motion to dismiss, “a complaint must state a claim that is plausible on its face” and include “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. Therefore, a pleading “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action” to suffice. Id. at 687; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). 2 SHP0035 Case 0:16-cv-60026-JAL Document 9 Entered on FLSD Docket 03/17/2016 Page 2 of 7Case 2:16-cv-01291-NBF Docum nt 52-1 Filed 02/15/17 Page 3 of 9 In order to state a claim for violation under RESPA and its implementing regulation, a plaintiff must allege that the violation resulted in actual damages. See Hopson v. Chase Home Finance, LLC, 14 F. Supp. 3d 774 (S.D. Miss. 2014) (emphasis added). While Plaintiff generally alleges entitlement to actual damages, the damages as alleged in the Amended Complaint are insufficient to support a claim under RESPA. Here, Plaintiff has listed the following damages pursuant to the alleged RESPA violations: “(1) costs to prepare each request for information and subsequent notices of error, (2) costs associated with the photocopying and mailing of the requests for information and notices of error, (3) costs incurred in the form of time spent, transportation costs, and other expenses incurred during the process of obtaining Defendant’s compliance with Regulation X”. See Am. Compl., ¶ 26, 31, 38, 46, 53, 59, 67 10- 12-14. Plaintiff further alleges damages related the eventual sale of her property at foreclosure sale. Id. at ¶ 67. This Court has held that expenses incurred prior to the actual alleged RESPA violation cannot serve as a basis for actual damages. See Zaychick v. Bank of Am., N.A., 2015 WL 4538813, (S.D. Fla. 2013). As stated by this Court in Zaychick, The costs incurred while preparing a qualified written request for information from a servicer cannot serve as a basis for damages because, at the time those expenses are incurred, there has been no RESPA violation. See Steele v. Quantum Serv. Corp., 12-CV-2897, 2013 WL 3196544 (N.D. Tex. June 25, 2013). To hold otherwise would mean that every RESPA claim has damages built-in to the claim. See Lal v. Amer. Home Sev., Inc., 680 F. Supp. 2d 1218, 1223) (E.D. Cal 2010). Courts have so held because the wording of the relevant RESPA regulation only provides for ‘actual damages to the borrower as a result of the failure’ to comply with RESPA. 12 U.S.C. §2605(f)(1)(A). Zaychick, 2015 WL at *3. 3 SHP0035 Case 0:16-cv-60026-JAL Document 9 Entered on FLSD Docket 03/17/2016 Page 3 of 7Case 2:16-cv-01291-NBF Docum nt 52-1 Filed 02/15/17 Page 4 of 9 Here, the only purported damages identified are those incurred in preparing and following up with the Requests for Information and Notice of Error, such as preparing and mailing the Request for Information and Notices of Error themselves, as well as other conditions precedent to the alleged violations of RESPA as set forth in this action. As such, Plaintiff’s allegations are insufficient to state a claim. While Defendant recognizes a plaintiff may seek damages for the costs incurred after a servicer’s alleged violation, Plaintiff’s Amended Complaint fails provide sufficient facts to state a claim for such damages even in that context. See Miranda v. Ocwen Loan Servicing, LLC, -- F. Supp. 3d --, 2015 WL 7767209, *4 (S.D. Fla. 2015). Moreover, to the extent that Plaintiff alleges damages relating to the eventual sale of her home, this allegation is insufficient to allege the necessary actual damages to state a claim. There is no correlation between the sale of Plaintiff’s home at foreclosure auction and the alleged RESPA violations. Any sale is a result of non-payment of her loan obligation and is independent of the claims listed here. More importantly, the property has not been sold at foreclosure auction as of the filing of this motion. Therefore, even if this Court finds the sale of the subject property constitutes actual damages, this result has not occurred and, therefore, this allegation is premature and has not actualized. Similarly, Plaintiff’s Amended Complaint is further devoid of sufficient facts to assert actual damages pursuant to a TILA violation, as Plaintiff has not alleged sufficient facts demonstrating detrimental reliance. See Santos v. Fed Nat’l Mortgage Ass’n, 889 F. Supp. 2d 1363, 1368 (S.D. Fla. 2012) (holding insufficient facts alleged in support of actual damages under TILA warranted dismissal as to claim for same); citing Turner v. Beneficial Corp., 242 F. Supp. 3d 1023, 1028. Plaintiff’s Amended Complaint is completely devoid of allegations indicating how the alleged violations, if true, resulted in detrimental reliance of any kind. As such, Plaintiff has 4 SHP0035 Case 0:16-cv-60026-JAL Document 9 Entered on FLSD Docket 03/17/2016 Page 4 of 7Case 2:16-cv-01291-NBF Docum nt 52-1 Filed 02/15/17 Page 5 of 9 failed to state a cause of action under TILA and the Amended Complaint should be dismissed accordingly. As a final matter, Count Ten of Plaintiff’s Amended Complaint, which seeks injunctive relief related to Defendant’s alleged violations of TILA and RESPA, should be dismissed as moot. See Am. Comp. ¶ 78-83. Plaintiff requests this Court stay the foreclosure action currently pending in the Circuit Court for the Eleventh Judicial Circuit In and For Miami-Dade County, Florida, Case No. 2008-CA-058648-01, to allow Plaintiff time to conclude loss mitigation efforts. Id. at ¶ 83. Defendant asserts this count should be dismissed as moot. As of the filing of this motion, the corresponding foreclosure action has been placed on inactive status pending the resolution of Plaintiff’s appeal of the Final Judgment of Foreclosure. A copy of the March 16, 2016 Order is attached hereto as Exhibit “A”. As this relief has already been afforded to the Plaintiff, the count should be dismissed as moot. III. CONCLUSION Defendant, Shellpoint Mortgage Servicing respectfully requests that this Court dismiss the First Amended Complaint, in its entirety, Plaintiff has failed to state a cause of action for the violations under RESPA and TILA. [SPACE INTENTIONALLY LEFT BLANK] 5 SHP0035 Case 0:16-cv-60026-JAL Document 9 Entered on FLSD Docket 03/17/2016 Page 5 of 7Case 2:16-cv-01291-NBF Docum nt 52-1 Filed 02/15/17 Page of 9 WHERFORE, Shellpoint Mortgage Servicing requests an Order dismissing the Plaintiff’s First Amended Complaint with prejudice, and any other relief this Court deems just and proper. Kelley Kronenberg Attorneys for Defendant 8201 Peters Road, Suite 4000 Fort Lauderdale, FL 33324 Phone: (954) 370-9970 Service email: arbservices@kelleykronenberg.com Attorney email: abarnett@kelleykronenberg.com By: __/s/ Adam R. Barnett_________________ ADAM BARNETT, ESQUIRE Florida Bar No.: 35286 6 SHP0035 Case 0:16-cv-60026-JAL Document 9 Entered on FLSD Docket 03/17/2016 Page 6 of 7Case 2:16-cv-01291-NBF Docum nt 52-1 Filed 02/15/17 Page 7 of 9 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing was emailed and/or mailed on 3/17/2016 to: Jason Bravo, Esq., The Bravo Law Firm, PLLC, Attorney for Plaintiff, 4201 SW 85th Ave., Miami, Florida 33155, jbravo@thebravolawfirm.com. Kelley Kronenberg Attorneys for Defendant 8201 Peters Road, Suite 4000 Fort Lauderdale, FL 33324 Phone: (954) 370-9970 Service email: arbservices@kelleykronenberg.com Attorney email: abarnett@kelleykronenberg.com By: __/s/ Adam R. Barnett________________ ADAM R. BARNETT, ESQUIRE Florida Bar No.: 35286 7 SHP0035 Case 0:16-cv-60026-JAL Document 9 Entered on FLSD Docket 03/17/2016 Page 7 of 7Case 2:16-cv-01291-NBF Docum nt 52-1 Filed 02/15/17 Page 8 of 9 EXHIBIT A Case 0:16-cv-60026-JAL Document 9-1 Entered on FLSD Docket 03/17/2016 Page 1 of 1Case 2:1 -cv-01291-NBF Document 52-1 Filed 02/15/17 Page 9 of 9 201443557.1 34959/137209 EXHIBIT 2 Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 1 of 27 Aliff v. Bank of America, N.A., Slip Copy (2017) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2017 WL 424878 Only the Westlaw citation is currently available. United States District Court, S.D. West Virginia, Huntington Division. Tara Aliff, Plaintiff, v. Bank of America, N.A. and Ditech Financial, LLC, Defendants. CIVIL ACTION NO. 3:16-10119 | Signed 01/31/2017 Attorneys and Law Firms J. William St. Clair, Legal Aid of West Virginia, Huntington, WV, for Plaintiff. David M. Asbury, Jonathan M. Kenney, Troutman Sanders, Virginia Beach, VA, for Defendants. MEMORANDUM OPINION AND ORDER ROBERT C. CHAMBERS, CHIEF JUDGE *1 Pending before the Court is Defendants' Bank of America's and Ditech Financial's Motion to Dismiss First Amended Complaint. ECF No. 9. Plaintiff Tara Aliff claims Defendants violated two provisions of the Truth in Lending Act (“TILA”) and committed the common law tort of conversion by not timely refunding money owed to her and not crediting satisfaction of a loan principal on the same day Aliff tendered payment. First Am. Compl. ¶¶ 11-28, ECF No. 1-2. Defendants contend that they did not violate TILA nor commit the tort of conversion because they refunded the money owed to Aliff, and Aliff did not specifically plead that exceptions to TILA did not apply in this case. For the reasons stated in this Memorandum Opinion and Order, the Court GRANTS Defendants' Motion. I. Background In 2009, Aliff refinanced her home in Huntington, West Virginia through a loan from Bank of America (“BoA”). On July 20, 2016, a fire destroyed Aliff's home and her insurer declared it a total loss. Her insurer issued her a check in the amount of $58,132.30 to cover her loss. Aliff still owed $35,261.41 on the BoA loan. Aliff contacted Ditech, the loan servicer to which she had been making payments, to discuss satisfaction of the outstanding balance of the loan. Ditech agreed to accept the check for all of the insurance proceeds, tender the outstanding funds to BoA, and refund the excess to Aliff. Ditech received the check on August 29, 2016, credited the payment on August 31, 2016, and mailed the balance of the funds, $22,870.89, to Aliff on September 19, 2016. Aliff now brings suit against Ditech and BoA alleging violations of TILA and common law conversion for not refunding the balance of the insurance proceeds in a “commercially reasonable” time, and for not crediting her account with the satisfaction of the loan on the day the payment was made. As a result, she claims that she lost the use of her funds and paid additional interest which she did not owe. II. Legal Standard When considering a motion to dismiss pursuant to Rule 12(b)(6), a court follows a two-step approach: (1) “begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth,” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009), 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.” Id. 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 remaining factual allegations in the complaint as true, and view them in the light most favorable to the plaintiff. See Twombly, 550 U.S. at 555-56. The complaint must contain Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 2 of 27 Aliff v. Bank of America, N.A., Slip Copy (2017) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 “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). III. Analysis A. Count One: Violation of 15 U.S.C. § 1666d *2 Aliff's first cause of action is for violation of 15 U.S.C. § 1666d. Section 1666d requires a creditor to return credit balances in excess of $1 to the obligor of the credit transaction. The section reads in its entirety: Whenever a credit balance in excess of $1 is created in connection with a consumer credit transaction through (1) transmittal of funds to a creditor in excess of the total balance due on an account, (2) rebates of unearned finance charges or insurance premiums, or (3) amounts otherwise owed to or held for the benefit of an obligor, the creditor shall- (A) credit the amount of the credit balance to the consumer's account; (B) refund any part of the amount of the remaining credit balance, upon request of the consumer; and (C) make a good faith effort to refund to the consumer by cash, check, or money order any part of the amount of the credit balance remaining in the account for more than six months, except that no further action is required in any case in which the consumer's current location is not known by the creditor and cannot be traced through the consumer's last known address or telephone number. § 1666d. Aliff alleges in her Complaint that BoA had a duty to refund the excess insurance proceeds within a commercially reasonable time and that as BoA's agent, Ditech was subject to the same duty. Aliff argues that twenty-one days, the time it took Ditech to mail the check, is not commercially reasonable as the term is defined in a separate statute, the Expedited Availability of Funds Act, 12 U.S.C §§ 4001-4010. Defendants argue that they did not violate 1666d because they returned the funds to Aliff and the statute does not prescribe a schedule for how quickly a refund must occur. The Court agrees with Defendants' reading of TILA. However, the Court believes an additional point of statutory interpretation must be addressed first. Although neither party treated the issue in their briefing, the Court does not read section 1666d to include loan servicers like Ditech. Section 1666d, like other sections of TILA, compels a “creditor” to refund excess credit balances- not servicers. See §§ 1666d, 1640. Aliff does not allege that Ditech is a creditor. She alleges in Count One that Ditech was the “agent” of BoA, indisputably a “creditor,” and that it is a “servicer” as defined by TILA in Count Two. First Am. Compl. ¶¶ 14, 21. TILA defines a “creditor” as: a person who both (1) regularly extends ... consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness .... § 1602(g). Aliff claims that BoA originated her mortgage and that she made her payments to Ditech. First Am. Compl. ¶¶ 2, 5. Aliff does not allege that Ditech is a “creditor” as defined by TILA and does not allege facts that would permit the Court to make such finding. No federal court has had the occasion to address this specific issue, but the Court is nonetheless guided by the plain meaning of the statute. “There is of course no more persuasive evidence of the purpose of a statute than the words by which the legislature undertook to give expression to its wishes.” Huffman v. Western Nuclear, Inc. 486 U.S. 663, 672 (1988) (quoting United States v. Am. Trucking Ass'ns, Inc., 310 U.S. 534, 543 (1940)). Section Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 3 of 27 Aliff v. Bank of America, N.A., Slip Copy (2017) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 1666d makes no mention of servicers. It only refers to creditors. Thus, assuming the facts plead in the complaint as true, as the Court must when presented with a motion to dismiss, Ditech is not a creditor but a servicer and therefore not subject to liability pursuant to section 1666d. *3 Further bolstering the Court's interpretation, federal courts that have addressed other sections of TILA that also refer to creditors as the subject of regulation have found that the use of the term does not include servicers. For instance, courts that have interpreted section 1640 of TILA, which imposes civil liability on “[a]ny creditor who fails to comply with any requirement imposed under this part ... with respect to any person....” have unanimously found that the section does not impose civil liability on servicers. § 1640(a) (emphasis added); see Payne v. Seterus Inc., No. 16-cv-0203, 2016 WL 4521659, at *7 (W.D. La. Aug. 8, 2016) (“[C]ourts uniformly have held that there is no servicer liability under TILA.”); Barnes v. Carrington Mortg. Servs., LLC, No. 15-cv-6465, 2016 WL 3018693, at *1 (D.N.J. May 24, 2016) (holding section 1640 of TILA does not create a private right of action against loan servicers, only creditors); Simmons v. Aurora Bank FSB, No. 5:13-cv-00482, 2016 WL 192571, at *9 (N.D. Cal. Jan. 15, 2016) (“The only parties who can be liable for TILA violations are the original creditor and assignees of that creditor.” (quoting Torres v. Wells Fargo Home Mortg., Inc., No. C10-cv-04761, 2011 WL 11506, at *6 (N.D. Cal. Jan. 4, 2011)); Lucien v. Fed. Nat'l Mortg. Ass'n, 21 F. Supp. 3d 1379, 1383 (S.D. Fla. 2014) (“The text of TILA's civil damages provision only provides for creditor liability -not servicer liability). Accordingly, the Court finds that section 1666d of TILA does not impose a duty on loan servicers, only creditors as they are defined by TILA. The Court will now turn to Defendants' primary argument that section 1666d only requires a refund and does not impose a specific schedule for the refund. The Court must agree with Defendants' reading of the statute. The statute's requirements are straightforward and unambiguous. Where a credit transaction results in an excess balance of $1 or more, the creditor must, among other things not relevant here, refund the money. § 1666d. Defendants in fact refunded Aliff the balance of the insurance proceeds after deducing the outstanding portion of her mortgage. The statue does not mandate a schedule for the refund. Moreover, notwithstanding Aliff's contention, section 1666d makes no mention of “commercially reasonable” as the measure of a timely refund. The Court is unwilling to import the timing standard from an unrelated statute to TILA where there is no support to do so. Had Congress wished to impose a date-certain deadline to refund excess funds, the Court believes it would have stated it explicitly, not required litigants and courts to go rummaging through other statutes to find it. It is surely the case that there is some outer limit to how long BoA could retain excess funds owed to a consumer, but the Court is confident that it is not twenty- one days. It also must be noted that section 1666d(C) appears to address this problem by requiring creditors to make a good faith effort to return excess funds that have languished with the creditor for six months. Indeed, if a creditor may allow excess funds to wallow in its account for six months before making the required effort to return them, it would be almost preposterous to assume that a twenty-one day stint in a BoA or Ditech account would violate TILA. In short, Aliff's argument attempts to graft onto the statute a wholly alien interpretation unsupported by the plain meaning of the words chosen by Congress. B. Count Two: Violation of 15 U.S.C. § 1639f Aliff's second cause of action alleges that Ditech, and notably not BoA, was required to credit the satisfaction of the loan on the day payment was received. First Am. Compl. ¶¶ 20-23. Instead, Ditech did not credit her account for two days causing her to incur additional interest charges. First Am. Compl. ¶ 9. Section 1639f states: In connection with a consumer credit transaction secured by a consumer's principal dwelling, no servicer shall fail to credit a payment to the consumer's loan account as of the date of receipt, except when a delay in crediting does not result in any charge to the consumer or in the reporting of negative information to a consumer reporting agency *4 § 1639f. Section 1639f does not create a private right of action. Section 1640(a) creates a private right of action for Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 4 of 27 Aliff v. Bank of America, N.A., Slip Copy (2017) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 violations of TILA, although only against creditors, not servicers. Section 1640(a) states in relevant part: “Any creditor who fails to comply with any requirement imposed under this part....” “The statute refers only to a creditor's liability-not a loan servicer's.” Barnes, 2016 WL 3018693, at *1. As already noted in the previous section, the courts that have treated this subject have uniformly held that section 1640(a) does not extend liability to loan servicers. See Payne, 2016 WL 4521659, at *7 (“[C]ourts uniformly have held that there is no servicer liability under TILA.”); Barnes, 2016 WL 3018693, at *1 (holding section 1640(a) of TILA does not create a private right of action against loan servicers, only creditors); Simmons, 2016 WL 192571, at *9 (“The only parties who can be liable for TILA violations are the original creditor and assignees of that creditor.”) (quoting Torres, 2011 WL 11506, at *6); Lucien, 21 F. Supp. 3d at 1383 (“The text of TILA's civil damages provision [1640] only provides for creditor liability-not servicer liability). Section 1640 does not let servicers off the hook, however. It just does not create a private cause of action. The statute permits “[a]n action to enforce a violation of section ... 1639f... [to] be brought by the appropriate State attorney general....” § 1640(e). Aliff did not allege BoA violated section 1639f. She only alleged that Ditech violated 1639f in Count Two. Ditech, as alleged by Aliff, is a servicer, not a creditor as defined by TILA. Accordingly, Aliff has failed to state a claim upon which relief can be granted in Count Two of her Complaint. C. Count Three: Conversion Aliff's final cause of action against BOA and Ditech is a state common law claim for conversion. In the preceding two sections, the Court found that Aliff's federal claims cannot proceed. Thus, only her conversion claim remains. Aliff may not rely on diversity jurisdiction for her conversion claim because although there appears to be complete diversity, she has not pled a sufficient amount in controversy to satisfy jurisdictional requirements. See 28 U.S.C. § 1332. The Court may act with discretion to exercise its supplemental jurisdiction over Aliff's state law claim. See 28 U.S.C. § 1367. The Court, however, refuses to exercise supplemental jurisdiction. The Supreme Court's opinions construing section 1367 “have established that pendant jurisdiction is a doctrine of discretion, not of plaintiff's right.” City of Chicago v. Int'l Coll. of Surgeons, 522 U.S. 156, 172 (1997) (quoting United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966)). The Court recently held “[a] district court's decision whether to exercise [supplemental jurisdiction] after dismissing every claim over which it had original jurisdiction is purely discretionary.” Carlsbad Tech, Inc. v. HIF Bio, Inc., 556 U.S. 635, 640 (2009) (citing § 1367(c)). When weighing the decision to exercise its supplemental jurisdiction, a district court should deal with the claim “in the manner that best serves the principles of economy, convenience, fairness, and comity.” Int'l Coll. of Surgeons, 522 U.S. at 172-73 (quoting Carnegi-Mellon Univ. v. Cohill, 484 U.S. 343, 357 (1988)). *5 The Court has original jurisdiction over Aliff's TILA claims. There is no independent basis for her conversion claim, however. Aliff's federal claims cannot persist and accordingly the Court believes that a state law conversion claim with no federal implications and very little amount in controversy is best litigated in state court. Should Aliff wish to pursue her claim, she may do so there. Aliff's conversion claim is therefore dismissed without prejudice. IV. Conclusion Defendants' Motion to Dismiss First Amended Complaint, ECF No. 6 is GRANTED. Plaintiff's causes of action in Count One and Count Two are DISMISSED with prejudice. Plaintiff's cause of action in Count Three is DISMISSED without prejudice. The Court DIRECTS the Clerk to send a copy of this Order and Notice to counsel of record and any unrepresented parties. All Citations Slip Copy, 2017 WL 424878 End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 5 of 27 Barnes v. Carrington Mortgage Services, LLC, Slip Copy (2016) 2016 WL 3018693 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2016 WL 3018693 Only the Westlaw citation is currently available. NOT FOR PUBLICATION United States District Court, D. New Jersey. Jerome Barnes and Sandra Barnes, Plaintiffs, v. Carrington Mortgage Services, LLC, Bank of America, N.A., and John Does I-X, Defendants. Civil Action No.: 15-6465 (CCC-MF) | Signed 05/24/2016 Attorneys and Law Firms Adam Deutsch, Denbeaux & Denbeaux, Westwood, NJ, for Plaintiffs. Sandhya M. Feltes, Kaplin, Stewart, Meloff, Reiter & Stein, PC, Blue Bell, PA, for Defendants. OPINION CECCHI, District Judge. I. INTRODUCTION *1 Before the Court is a Motion to Dismiss Count II of the Complaint filed by Defendants Carrington Mortgage Services, LLC (“Carrington”) and Bank of America, N.A. (“BANA”) (collectively, “Defendants”). (ECF No. 4.) Plaintiffs Jerome and Sandra Barnes (“Plaintiffs”) oppose the motion. The Court decides the motion without oral argument pursuant to Rule 78. Having considered the parties' submissions and for the reasons set forth below, the Court will grant Defendants' motion and dismiss Count II of Plaintiffs' Complaint. II. BACKGROUND The relevant facts are straightforward and undisputed. Plaintiffs are the owners of property located at 219 8 th Avenue, Patterson, New Jersey. (Compl. ¶ 3.) On May 16, 2008, Plaintiffs obtained a mortgage loan from SLM Financial Corporation which was secured by a Note in the amount of $251,060.00 and a Mortgage on Plaintiffs' property. (Id. ¶ 6.) In December 2011, after the Plaintiffs had defaulted on the loan (id. ¶ 8), the Note and Mortgage were sold and assigned to Defendant BANA, who remained the owner through the filing of the Complaint in this action on August 27, 2015 (Id. ¶¶ 9, 11). Defendant Carrington became the loan servicer for Plaintiffs' mortgage loan in May 2013 and continued to service the loan through the filing of the Complaint. (Id. ¶ 10.) On August 27, 2015, Plaintiffs filed the Complaint in this action. In Count II of the Complaint, Plaintiffs allege that Defendants violated § 1639f of the Truth In Lending Act (“TILA”). 15 U.S.C. § 1639f. Defendants move to dismiss Count II for failure to state a claim upon which relief can be granted. III. DISCUSSION 15 U.S.C. § 1639f(a) states: In connection with a consumer credit transaction secured by a consumer's principal dwelling, no servicer shall fail to credit a payment to the consumer's loan account as of the date of receipt .... In Count II of the Complaint, Plaintiffs allege that Defendants violated § 1639f by failing to credit Plaintiffs' loan payments as of the date of receipt. Defendants move to dismiss Count II for failure to state a claim against either Defendant. As to Defendant Carrington, Defendants contend that TILA does not create a private cause of action against the servicer of a loan for a violation of § 1639f. As to Defendant BANA, Defendants contend that TILA only creates liability for a statutorily-defined “creditor” and BANA does not fall within the definition. For the following reasons, the Court agrees with Defendants and will dismiss Count II. A. Count II is Dismissed as to Defendant Carrington The plain language of § 1639f does not create a private cause of action. See 15 U.S.C. § 1639f. Rather, the provision of TILA that creates a private cause of action is § 1640(a), which states in relevant part: Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 6 of 27 Barnes v. Carrington Mortgage Services, LLC, Slip Copy (2016) 2016 WL 3018693 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 [A]ny creditor who fails to comply with any requirement imposed under this part ... with respect to any person is liable to such person.... 15 U.S.C. § 1640(a) (emphasis added). The statute refers only to a creditor's liability-not a loan servicer's. “Courts applying TILA uniformly hold that there is no servicer liability under TILA.” Lucien v. Fed. Nat'l Mortg. Assoc., 21 F. Supp. 3d 1379, 1383 (S.D. Fla. 2014). *2 Plaintiffs respond that TILA should not be read to impose no consequences on a loan servicer for undisputedly failing to comply with § 1639f. (See ECF No. 7 at 12-13.) However, Plaintiff's argument fails. Although TILA does not create a private cause of action against a loan servicer, it does impose consequences on a loan servicer who fails to comply with § 1639f. The statute allows for “[a]n action to enforce a violation of section ... 1639f... of this title [to] be brought by the appropriate State attorney general in any appropriate United States district court....” See 15 U.S.C. § 1640(e). Because TILA does not create a private cause of action against a loan servicer, Count II fails to state a claim for relief against Defendant Carrington. Thus, Count II is dismissed as to Defendant Carrington. B. Count II is Dismissed as to Defendant BANA As discussed above, TILA creates a private cause of action against a “creditor.” 15 U.S.C. § 1640(a). The term “creditor” is explicitly defined by TILA as follows: The term “creditor” refers only to a person who both (1) regularly extends, whether in connection with loans, sales of property or services, or otherwise, consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness or, if there is no such evidence of indebtedness, by agreement .... 15 U.S.C. § 1602(g) (emphasis added). It is undisputed that BANA does not fall within a literal reading of the second condition because BANA is not the person to whom the debt arising from the consumer credit transaction was initially payable on the face of the evidence of indebtedness. That “person” was SLM Financial Corporation, the entity that originated the loan. BANA is an assignee of SLM Financial. Defendants argue that because BANA does not fall within the definition of a “creditor” it cannot be liable under TILA. Plaintiffs respond by urging this Court to read the term “creditor” in § 1640(a) as including both the loan originating creditor and any subsequent assignees. An alternative reading, Plaintiffs argue, would lead to the absurd result of the statute becoming unenforceable. As an initial matter, the issue of assignee liability under § 1640(a) has not been addressed by either the Third Circuit or the District of New Jersey. “The courts [in other districts] that have considered this issue have reached different conclusions, but all agree that the statute, as drafted, makes little sense.” Lucien, 21 F.Supp. 3d at 1387. 1 As the Second Circuit noted in Vincent v. Money Store, the plaintiffs in that case had “identified an apparent oversight in the statute.” 736 F.3d at 106. In that case, however, the Second Circuit noted that Congress was not unaware of the issue, id. at 108, and further stated: We may think it unwise to allow an assignee to escape TILA liability ... where the original creditor would otherwise be [liable] .... But such a result is not “absurd.” We will not rewrite the text of the statute .... We note this discrepancy, however, for the benefit of Congress .... Id. at 109. *3 This Court is persuaded by the reasoning in Vincent v. Money Store that it is not the job of the courts to rewrite the language of § 1640(a). 2 This Court will, therefore, apply the statutory definition of “creditor.” As BANA undisputedly does not fall within the literal definition of “creditor” provided by TILA, the Complaint fails to state a claim under TILA against Defendant BANA. IV. CONCLUSION For the reasons set forth above, Defendants' Motion to Dismiss is granted and Count II of the Complaint is dismissed without prejudice. To the extent the deficiencies Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 7 of 27 Barnes v. Carrington Mortgage Services, LLC, Slip Copy (2016) 2016 WL 3018693 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 set forth by the Court can be cured, Plaintiff will be given thirty (30) days to file an amended complaint. An appropriate order accompanies this Opinion. All Citations Slip Copy, 2016 WL 3018693 Footnotes 1 Some courts have applied the statute literally, finding that assignees are not liable under § 1640 for a servicer's failure to comply with servicing obligations. See, e.g., Vincent v. Money Store, 736 F.3d 88 (2d Cir. 2013); Taylor v. Quality Hyundai, Inc., 150 F.3d 689 (7th Cir. 1998); James v. Nationstar Mortg., LLC, 92 F. Supp. 3d 1190 (S.D. Ala. 2015); Claude v. Wells Forgo Home Mortg., 2014 U.S. Dist. LEXIS 112493, 2014 WL 4073215 (D. Conn. Aug. 14, 2014); Selman v. CitiMortgage, Inc., Civ. Action No. 12-0441, 2013 U.S. Dist. LEXIS 37017, 2013 WL 838193 (S.D. Ala. Mar. 5, 2013); Signori v. Fannie Mae, 934 F. Supp. 2d 1364 (S.D. Fla. 2013). Other courts have held that assignees can be liable for failures to comply with servicing obligations, reasoning that an assignee is identically situated to the original creditor with respect to post-origination servicing violations and should therefore be treated identically by the statute. See, e.g., Lucien, 21 F. Sup. 3d 1379; Runkle v. Fed. Nat'l Mortg. Assoc., 905 F. Supp. 2d 1326 (S.D. Fla. 2012); Rinegard-Guirma v. Bank of Am. NA, Civ. Action No. 10-1065, 2012 U.S. Dist. LEXIS 46094, 2012 WL 1110071 (D. Or. Apr. 2, 2012); Consumer Solutions REO, LLC v. Hillery, Civ. Action No. 08-4357, 2010 U.S. Dist. LEXIS 37857, 2010 WL 1222739 (N.D. Cal. Mar. 24, 2010). 2 Furthermore, TILA contains a separate statutory section that specifically identifies limited circumstances in which assignees can be liable. See 15 U.S.C. § 1641 (“Liability of assignees”). The existence of a separate statutory section governing assignees is a further indication that § 1640(a) should not be extended to include assignees. End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 8 of 27 Shannon Deeby No Shepard’s Signal™ As of: February 8, 2017 2:23 PM EST Martinez v. Shellpoint Mortg. Servicing United States District Court for the Southern District of Florida November 8, 2016, Decided; November 8, 2016, Entered on Docket CASE NO. 16-60026-CIV-LENARD/GOODMAN Reporter 2016 U.S. Dist. LEXIS 154821 * VILMA MARTINEZ, Plaintiff, v. SHELLPOINT MORTGAGE SERVICING, Defendant. Core Terms amended complaint, Regulation, actual damage, alleges, statutory damages, argues, Foreclosure, moot, servicer, mortgage, fail to state a claim, injunctive relief, motion to dismiss, detrimental, mitigation, damages, days Counsel: [*1] For Vilma Martinez, Plaintiff: Jason Bravo, The Bravo Law Firm, PLLC, MIAMI, FL. For Shellpoint Mortgage Servicing, Defendant: Adam R. Barnett, LEAD ATTORNEY, Plantation, FL; Irwin R. Gilbert, LEAD ATTORNEY, Irwin R. Gilbert, P.A., West Palm Beach, FL. Judges: Jonathan Goodman, UNITED STATES MAGISTRATE JUDGE. Opinion by: Jonathan Goodman Opinion ORDER ON DEFENDANT'S MOTION TO DISMISS Defendant Shellpoint Mortgage Servicing ("Defendant") filed a motion to dismiss ("motion") Plaintiff Vilma Martinez's ("Plaintiff") Amended Complaint, which alleges violations of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2605, its implementing regulation, Regulation X, 12 C.F.R. § 1024, the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601, and its implementing regulation, Regulation Z, 12 C.F.R. § 1026. [ECF Nos. 6; 9]. Plaintiff filed a response to the motion [ECF No. 12], but Defendant did not file an optional reply. Based on the parties' consent, United States District Judge Joan A. Lenard referred all pre-trial matters to the Undersigned. [ECF Nos. 22; 23]. Upon review of the motion, response, and the record, the Undersigned grants in part and denies in part the motion and gives Plaintiff fourteen days to file a Second Amended Complaint. I. FACTUAL BACKGROUND1 On January 27, 2006, Plaintiff, the mortgagor, executed a promissory note and mortgage in favor of Countrywide Home Loans, Inc., the mortgagee, for the purchase of property in Hollywood, Florida. [ECF No. 6, ¶¶ 12-13]. Defendant is the loan "servicer" for Plaintiff's mortgage loan. [ECF No. 6, ¶ 7]. On October 9, 2015, Plaintiff sent to Defendant a Third- Party Agent Authorization authorizing Defendant to obtain, share, release, and or discuss with her third party designated agent, New Regs Research Group, LLC ("New Regs"), any and all details regarding the loan, including specifically the submitting of any requests for information ("RFIs") and notices of error ("NOEs"). [ECF No. 6, ¶ 14]. On October 12, 2015, Plaintiff submitted three separate RFIs to Defendant and requested that Defendant provide information relating to the Loan.2 [ECF No. 6, ¶ 1 The facts in this [*2] background section are from Plaintiff's First Amended Complaint [ECF No. 6] and are deemed to be true for purposes of ruling on Defendant's motion. 2 The RFIs sought the following information: a. The name, address, telephone number, website, email address and or any other information which identifies the alleged Owner(s) and Assignee(s) for the [*3] Loan; b. Copies of any and all notices of any ownership transfer of the Loan to any other creditor, investor, or owner; c. A list of all loss mitigation options the investor or assignee participates in; Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 9 of 27 Page 2 of 5 Shannon Deeby 15]. On October 20, 2015, after Defendant's failure to acknowledge receipt of the October 12th RFIs, Plaintiff, through New Regs, submitted another RFI, again requesting information in connection with the Loan. [ECF No. 6, ¶ 16]. On October 29, 2015, having yet to receive a response from Defendant regarding any of Plaintiff's submitted requests, Plaintiff's agent, New Regs, submitted to Defendant a NOE alleging [*4] that Defendant and its foreclosure counsel had taken certain actions in violation of 12 C.F.R. § 1024.41 and engaged in dual tracking. [ECF No. 6, ¶ 17]. On November 6, 2015, Plaintiff received a response letter from Defendant, dated November 3, 2015, stating that it was responding to Plaintiff's "correspondence dated October 9, 2015, regarding" the Loan. [ECF No. 6, ¶ 18]. On November 17, 2015, Defendant provided Plaintiff with payoff figures on the Loan. [ECF No. 6, ¶ 19]. On November 25, 2015, having yet to receive an acknowledgement or response from Defendant with regard to her dual tracking NOE, Plaintiff retained legal counsel and filed a Motion to Stay and/or Cancel Sale Date in Broward County Circuit Court Case No. 2008- CA-58648 (the "Foreclosure Action"). [ECF No. 6, ¶ 20]. On November 30, 2015, Plaintiff sent to Defendant a NOE and RFI alleging that Defendant had yet to provide the owner contact information for Plaintiff's Loan. [ECF No. 6, ¶ 21]. d. A statement of any premiums and or fees assessed to the Loan account for any forced-placed insurance; e. A record of all property taxes that have been paid by the servicer; f. The alleged date of default for the Loan; g. An accurate and current statement of the total outstanding balance and/or the pay-off amount required to pay the Loan in full; h. A copy of the last periodic statement mailed in connection with the Loan; i. A list of any credit bureaus which have been notified in connection with the Loan along with any information associated with these reporting events. [ECF No. 6, ¶ 15]. On November 30, 2015, after Plaintiff's effort to cancel the sale failed, Plaintiff's Property was sold to a third- party purchaser as the high bidder in the judicial foreclosure sale. [ECF No. 6, ¶ 22]. On January 20, 2016, Plaintiff filed the ten-count [*5] Amended Complaint against Defendant, alleging violations of RESPA and its implementing Regulation X, violations of TILA and its implementing Regulation Z and seeking injunctive relief "in the form of a stay on the Foreclosure Action to allow for Plaintiff and Defendant to properly conclude their loss mitigation efforts and in order to avoid any further damages." [ECF No. 6, ¶¶ 23- 77, 83]. On March 17, 2016, Defendant filed this motion, arguing that Plaintiff failed to state a claim upon which relief can be granted under RESPA, Regulation X, TILA, and Regulation Z, and that the claim for injunctive relief should be dismissed as moot. [ECF No. 9]. II. LEGAL STANDARD Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a claim for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). Conclusory statements, assertions or labels will not survive a 12(b)(6) motion to dismiss. Id. "A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct [*6] alleged." Id. at 663 (internal citation omitted); see also Edwards v. Prime, Inc., 602 F.3d 1276, 1291 (11th Cir. 2010) (setting forth the plausibility standard). "Factual allegations must be enough to raise a right to relief above the speculative level[.]" Twombly, 550 U.S. at 546 (internal citation omitted). The Eleventh Circuit has endorsed "a 'two-pronged approach' in applying these principles: 1) eliminate any allegations in the complaint that are merely legal conclusions; and 2) where there are well-pleaded factual allegations, 'assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.'" Am. Dental Ass'n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir. 2010) (quoting Iqbal, 556 U.S. at 679). 2016 U.S. Dist. LEXIS 154821, *3 Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 10 of 27 Page 3 of 5 Shannon Deeby III. DISCUSSION Defendant argues that Plaintiff's Amended Complaint should be dismissed for failure to state a claim under RESPA/Regulation X and TILA/Regulation Z, and that the claim for injunctive relief should be dismissed as moot. Each argument will be discussed in turn. a. RESPA/Regulation X "RESPA prescribes certain actions to be followed by entities or persons responsible for servicing federally related mortgage loans, including responding to borrower inquires." McLean v. GMAC Mortg. Corp., 398 F. App'x 467, 471 (11th Cir. 2010) (internal citation omitted). For example, RESPA requires a loan servicer to provide a written response acknowledging receipt of a qualified written request ("QWR") from [*7] a borrower within five days of the qualified written request. 12 U.S.C. § 2605(e)(1)(A). RESPA imposes liability for failure to comply with its provisions in an amount equal to the sum of "any actual damages to the borrower as a result of the failure[.]" 12 U.S.C. § 2605(f)(1)(A). A borrower may also recover statutory damages in the amount of $2,000 if there is a pattern or practice of noncompliance with RESPA. 12 U.S.C. § 2605(f)(1)(B). Defendant argues that the Amended Complaint fails to state a claim under RESPA and Regulation X because it fails to allege that any violation resulted in actual damages. [ECF No. 9, p. 3]. It argues that the damages alleged in the Amended Complaint occurred before any RESPA violation and therefore are not recoverable. [ECF Nos. 6, ¶¶ 26, 31, 38, 46, 53, 59, 67; 9, p. 3]. Plaintiff argues that she suffered actual damages when she sent multiple RFIs and NOEs after her original RFIs were sent and were ignored (or inadequately responded to). [ECF No. 12, pp. 2-3.]. Plaintiff also notes that the Amended Complaint alleges statutory damages. [ECF No. 12, p. 3]. "[C]osts incurred while preparing a qualified written request for information from a servicer cannot serve as a basis for damages because, at the time those expenses are incurred, [*8] there has been no RESPA violation." Long v. Residential Credit Sols., Inc., Case No. 9:15-CV-80590-ROSENBERG, 2015 U.S. Dist. LEXIS 110793, 2015 WL 4983507, at *1 (S.D. Fla. Aug. 21, 2015) (citing Steele v. Quantum Serv. Corp., 12-CV- 2897, 2013 U.S. Dist. LEXIS 88812, 2013 WL 3196544 (N.D. Tex. June 25, 2013)); see also Miranda v. Ocwen Loan Servicing, LLC, 148 F. Supp. 3d 1349, 1355 (S.D. Fla. 2015). "However, alleged photocopying costs, postage costs, and reasonable attorney's fees incurred after an incomplete or insufficient response to a QWR are actionable under RESPA." Miranda, 148 F. Supp. 3d at 1355 (emphasis added) (citing Rodriguez v. Seterus, Inc., No. 15-61253-CIV, 2015 U.S. Dist. LEXIS 130172, 2015 WL 5677182, at *2-3 (S.D. Fla. Sept. 28, 2015); Russell v. Nationstar Mortg., LLC, No. 4-61977- CIV, 2015 U.S. Dist. LEXIS 15833, 2015 WL 541893, at *2 (S.D. Fla. Feb. 10, 2015)). Here, the Amended Complaint alleges that multiple NOEs and RFIs were sent to Defendant after Plaintiff's original RFIs were sent because the original RFIs were either ignored or improperly responded to. [ECF No. 6, ¶¶ 16-21, 26, 31, 38, 46, 51-53, 59, 67, 73, 77]. It alleges that Plaintiff is entitled to actual damages in the form of : (1) costs to prepare each request for information and subsequent notices of error; (2) costs incurred in connection with the photocopying and mailing of the requests for information and notices of error; (3) costs incurred in the form of time spent, transportation costs, and other expenses incurred during the process of obtaining the Defendant's compliance with Regulation X. [ECF No. 6, ¶¶ 26, 31, 38, 46, 53, 59]. [*9] It further alleges actual damages in Plaintiff's preparation of the NOE as to dual tracking and RFIs as to the status of her complete loss mitigation application. [ECF No. 6, ¶ 67]. Although Plaintiff is not entitled to the costs incurred in preparing and submitting the original October 12, 2015 RFIs (because no RESPA violation had occurred at that point), see Miranda, 148 F. Supp. 3d at 1355, she is entitled to seek the damages sustained after Defendant failed to timely respond to the original RFIs, see id. at 1354. She has also alleged "a pattern or practice of noncompliance with the requirements of the RESPA and Regulation X, allowing for the recovery of statutory damages pursuant to 12 U.S.C. § 2605(f)(1)(B)." [ECF No. 6, ¶ 26]. Accordingly, the Court finds that Plaintiff has adequately pled actual and statutory damages sufficient to survive Defendant's motion. b. TILA/Regulation Z Next, Defendant argues that "Plaintiff's Amended Complaint is further devoid of sufficient facts to assert actual damages pursuant to a TILA violation, as Plaintiff has not alleged sufficient facts demonstrating detrimental reliance." [ECF No. 9, p. 4]. Plaintiff 2016 U.S. Dist. LEXIS 154821, *6 Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 11 of 27 Page 4 of 5 Shannon Deeby concedes that detrimental reliance is necessary for a TILA claim for actual damages, but argues that it does [*10] not apply to a claim for statutory damages, which, she argues, she has adequately alleged. [ECF No. 12, p. 4]. Defendant is correct that under TILA, "plaintiffs must demonstrate detrimental reliance in order to be entitled to actual damages under TILA." Turner v. Beneficial Corp., 242 F.3d 1023, 1028 (11th Cir. 2001). Here, Count VIII alleges that Defendant failed to timely respond to Plaintiff's written request for payoff information, in violation of 12 C.F.R. § 1026.36(c)(3). [ECF No. 6, ¶¶ 68-73]. Count IX alleges that Defendant failed to provide a periodic statement of her mortgage loan, in violation of 12 C.F.R. § 1026.41. [ECF No. 6, ¶¶ 74-77]. However, these counts do not allege that Plaintiff detrimentally relied on any information provided. Accordingly, Counts VIII and IX fail to state a claim for actual damages under TILA. See Turner, 242 F.3d at 1026; Santos v. Fed. Nat'l Mortgage Ass'n, 889 F. Supp. 2d 1363, 1368 (S.D. Fla. 2012). However, Counts VIII and IX also allege entitlement to statutory damages. [ECF No. 6, ¶¶ 73, 77]. Specifically, they allege that Defendant violated 15 U.S.C. § 1640(a)(2) of TILA in connection with a "credit transaction not under an open end credit plan that is secured by real property or a dwelling[.]"15 U.S.C. § 1640(a)(2). Detrimental reliance is not an element of a TILA claim for statutory damages. See Brown v. SCI Funeral Servs. of Fla., Inc., 212 F.R.D. 602, 606 (S.D. Fla. 2003) ("The Turner decision clearly holds that reliance is not a necessary element for a statutory [*11] damage claim.") (citing Turner, 242 F.3d at 1028). Accordingly, the Court finds that Counts VIII and IX adequately allege statutory damages under TILA. c. Injunctive Relief Finally, Defendant argues that Count X -- which requests injunctive relief "in the form of a stay on the Foreclosure Action to allow for Plaintiff and Defendant to properly conclude their loss mitigation efforts and in order to avoid any further damages" --should be dismissed as moot because the Foreclosure Action has been placed on inactive status pending the resolution of Plaintiff's appeal of the Final Judgment of Foreclosure. [ECF Nos. 6, ¶ 83; 9, p. 5]. Plaintiff argues that Count X is not moot: "The inactive status order entered in the Foreclosure Action is a state court order tied to the Plaintiff's state appeal and is therefore not a substitute for an injunction issued by this Court, which if granted would afford the Plaintiff the opportunity to properly conclude its loss mitigation efforts." [ECF No. 12, p. 5]. Neither party cites any authority to support their positions. Adarand Constructors, Inc. v. Slater, 528 U.S. 216, 222, 120 S. Ct. 722, 145 L. Ed. 2d 650 (2000) ("[T]he 'heavy burden of persua[ding]' the court that the challenged conduct cannot reasonably be expected to start up again lies with the party asserting mootness.") (quoting [*12] Friends of Earth, Inc. v. Laidlaw Envtl. Servs (TOC), Inc., 528 U.S. 167, 189, 120 S. Ct. 693, 145 L. Ed. 2d 610 (2000) (emphasis added) (quoting United States v. Concentrated Phosphate Exp. Ass'n, Inc., 393 U.S. 199, 203, 89 S. Ct. 361, 21 L. Ed. 2d 344 (1968))). In fact, the only evidence cited by Defendant in support of the mootness argument is an order indicating that the state action was placed on inactive status pending Plaintiff's appeal. [ECF No. 9-1]. This order was not attached by Plaintiff to the Amended Complaint and is attached only to Defendant's motion. By relying on this exhibit for its mootness argument, Defendant is asking the Undersigned to consider evidence that is outside the four corners of the Amended Complaint. A court ordinarily cannot consider matters outside the pleadings when evaluating a motion to dismiss under 12(b)(6). Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir. 1997). However, "a document attached to a motion to dismiss may be considered by the court without converting the motion into one for summary judgment only if the attached document is: (1) central to the plaintiff's claim and (2) undisputed." Miranda, 148 F. Supp. 3d at 1353 (quoting Horsley v. Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002)). Although this state court order is not disputed by Plaintiff, I find that it is not central to Plaintiff's claims, and thus, I will not consider it. Based on the lack evidence, I find that Defendant has not met its burden to establish mootness. IV. CONCLUSION Accordingly, the Undersigned (1) grants in part and denies in part Defendant's [*13] motion [ECF No. 9]; (2) dismisses without prejudice Plaintiff's claims for actual damages under TILA and Regulation Z; and (3) allows Plaintiff fourteen days from the date of this Order to file a Second Amended Complaint. If Plaintiff decides to travel on the existing First Amended Complaint (minus the dismissed claims) and not file another 2016 U.S. Dist. LEXIS 154821, *9 Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 12 of 27 Page 5 of 5 Shannon Deeby amended complaint, then Defendant must file an answer to the First Amended Complaint within fourteen days from the date that Plaintiff's deadline expired or within fourteen days from learning that Plaintiff would not be filing another version of this lawsuit, whichever occurs first. DONE AND ORDERED in Chambers, in Miami, Florida, on November 8, 2016. /s/ Jonathan Goodman Jonathan Goodman UNITED STATES MAGISTRATE JUDGE End of Document 2016 U.S. Dist. LEXIS 154821, *13 Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 13 of 27 Payne v. Seterus Inc., Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2016 WL 4521659 Only the Westlaw citation is currently available. United States District Court, W.D. Louisiana, Monroe Division. Robert Charles Payne, Jr. v. Seterus Inc. CIVIL ACTION NO. 16-0203 | Signed 08/26/2016 Attorneys and Law Firms James A. Rountree, Michael G. Renneisen, Rountree Law Offices, Monroe, LA, for Robert Charles Payne, Jr. Elizabeth Riddell Penn, Bradley Arant et al., Jackson, MS, for Seterus Inc. MEMORANDUM RULING KAREN L. HAYES, UNITED STATES MAGISTRATE JUDGE *1 Before the court is a motion to dismiss for failure to state a claim upon which relief can be granted [doc. # 8] filed by defendant Seterus, Inc. 1 For reasons explained below, the motion is provisionally GRANTED. Background a) The Complaint On February 12, 2016, Robert Payne Jr., filed the instant suit against Seterus, Inc. (“Seterus”) for violations of the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601 et seq. (“RESPA”), the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq. (“TILA”), and associated regulations. (Compl.). Payne alleges that on September 15, 2014, Seterus notified him that it had become the servicer and debt collector of his mortgage loan with Fannie Mae. Id. On an unspecified date thereafter, Payne requested a monthly statement from Seterus, but received no response. Id. He then faxed correspondence to Seterus on November 16 and 24, 2015. Id. He also uploaded the correspondence to Seterus's website on November 10, 17, 24, and December 2, 2015. Id. In addition, on November 24, 2015, Payne sent Seterus a copy of the correspondence by certified mail. Id. Aside from a payoff statement, Seterus did not respond to Payne's requests for information. Id. Payne contends that all of his communications to Seterus seeking information about his mortgage loan constitute “qualified written requests” under RESPA, thus triggering a five day window for Seterus to provide a written response acknowledging receipt of the correspondence, 12 U.S.C. § 2605(e)(1)(A). He further alleges that Seterus violated 12 U.S.C. § 2605(k) (1)(C) and 12 C.F.R. § 1026.36 by failing to take timely action to respond to his requests to correct errors relating to the allocation of payments. Seterus's failure to credit Payne's payments also purportedly constitutes a violation of TILA, 15 U.S.C. § 1639f. Finally, Payne alleges that Seterus failed to provide him with an annual analysis of his escrow account as required by 12 U.S.C. § 2609(c)(2). For his troubles, Payne seeks “such damages as to which he proves himself justly entitled,” pursuant to 15 U.S.C. § 1640 and 12 U.S.C. § 2605(f). He also seeks costs and attorney's fees. b) The Motion to Dismiss Seterus filed the instant Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted on March 21, 2016. Seterus argues that it did respond to Payne's requests for information. However, rather than send the responses, including an escrow account statement, directly to Payne, Seterus opted to send them to Payne's then bankruptcy attorney, E. Orum Young. 2 In support of its motion, Seterus submitted copies of Payne's letters and Seterus's responses that it sent to Payne's attorney. Seterus contends that its evidence conclusively demonstrates compliance with its RESPA obligations. Seterus further argues that the complaint fails to allege facts to support any cognizable claim for damages as a result of the alleged RESPA and TILA violations. *2 On April 13, 2016, plaintiff filed his out-of-time opposition to the motion to dismiss. 3 [doc. # 11]. He Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 14 of 27 Payne v. Seterus Inc., Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 maintained that under 12 U.S.C. § 2605(e)(2), Seterus was required to provide the requested information directly to him as the borrower - not his bankruptcy attorney. He stressed that 12 U.S.C. § 2605(e)(2) does not exempt servicers from responding to discharged Chapter 13 debtors whose cases have yet to be closed. Plaintiff also adduced a copy of a monthly account statement dated March 16, 2016, which Seterus transmitted to plaintiff's current counsel. (Pl. Opp. Memo., Exh. A). The statement shows past due payment(s) of $2,796.53 and a suspense credit of $3,545.40. Id. Plaintiff argues that the statement supports his claims that Seterus did not promptly credit payments on his mortgage loan as required by 15 U.S.C. § 1639f and 12 C.F.R. § 1026.36. Seterus filed its reply brief on April 25, 2016. (Def. Reply [doc. # 16] ). In addition to reemphasizing its original arguments, it further noted that the March 2016 billing statement submitted by plaintiff did not establish that the statement conveyed any incorrect information. Specifically, plaintiff did not allege the date or amount of any payments that Seterus failed to credit. Briefing is complete; the matter is ripe. Analysis I. Standard of Review The Federal Rules of Civil Procedure sanction dismissal where the plaintiff fails “to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A pleading states a claim for relief when, inter alia, it contains a “short and plain statement ... showing that the pleader is entitled to relief ...” Fed.R.Civ.P. 8(a)(2). To withstand a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955 (2007)). A claim is facially plausible when it contains sufficient factual content for the court “to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Plausibility does not equate to possibility or probability; it lies somewhere in between. See Iqbal, supra. Plausibility simply calls for enough factual allegations to raise a reasonable expectation that discovery will reveal evidence to support the elements of the claim. See Twombly, 550 U.S. at 556, 127 S.Ct. at 1965. Assessing whether a complaint states a plausible claim for relief is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, supra (citation omitted). A well- pleaded complaint may proceed even if it strikes the court that actual proof of the asserted facts is improbable, and that recovery is unlikely. Twombly, *3 Although the court must accept as true all factual allegations set forth in the complaint, the same presumption does not extend to legal conclusions. Iqbal, supra. A pleading comprised of “labels and conclusions” or “a formulaic recitation of the elements of a cause of action” does not satisfy Rule 8. Id. Moreover, courts are compelled to dismiss claims grounded upon invalid legal theories even though they might otherwise be well- pleaded. Neitzke v. Williams, 490 U.S. 319, 109 S.Ct. 1827 (1989). Nevertheless, “[t]he notice pleading requirements of Federal Rule of Civil Procedure 8 and case law do not require an inordinate amount of detail or precision.” Gilbert v. Outback Steakhouse of Florida Inc., 295 Fed. Appx. 710, 713 (5 th Cir. 2008) (citations and internal quotation marks omitted). Further, “a complaint need not pin plaintiff's claim for relief to a precise legal theory. Rule 8(a)(2) of the Federal Rules of Civil Procedure generally requires only a plausible ‘short and plain’ statement of the plaintiff's claim, not an exposition of [her] legal argument.” Skinner v. Switzer, 562 U. S. 521, 131 S. Ct. 1289, 1296 (2011). Indeed, “[c]ourts must focus on the substance of the relief sought and the allegations pleaded, not on the label used.” Gearlds v. Entergy Servs., Inc., 709 F.3d 448, 452 (5 th Cir. 2013) (citations omitted). “Specific facts are not necessary; the statement need only ‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests.’ ” Erickson v. Pardus, 127 S. Ct. 2197, 2200 (2007) (quoting Bell Atl., 127 S. Ct. at 1958). When considering a motion to dismiss, courts generally are limited to the complaint and its proper attachments. Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 338 (5 th Cir. 2008) (citation omitted). However, courts may rely upon “documents incorporated into the complaint by reference, and matters of which a court may take Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 15 of 27 Payne v. Seterus Inc., Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 judicial notice” - including public records. Dorsey, supra; Norris v. Hearst Trust, 500 F.3d 454, 461 n9 (5 th Cir. 2007) (citation omitted) (proper to take judicial notice of matters of public record). Furthermore, “[d]ocuments that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to [its] claim.” Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-499 (5 th Cir. 2000) (citations and internal quotation marks omitted). II. RESPA Claim for Failure to Respond Payne alleges that Seterus violated RESPA by failing to respond to his “qualified written requests.” Pursuant to RESPA, a loan servicer is required to respond within certain deadlines to a borrower's “qualified written request” (“QWR”). See 12 U.S.C. § 2605(e); Akintunji v. Chase Home Fin., L.L.C., 2011 WL 2470709, at *2 (S.D. Tex. June 20, 2011). 4 Furthermore, “[a] servicer of a federally related mortgage shall not fail to take timely action to respond to a borrower's requests to correct errors relating to allocation of payments, final balances for purposes of paying off the loan, or avoiding foreclosure, or other standard servicer's duties.” 12 U.S.C. § 2605(k) (1)(c). *4 Upon receipt of a QWR, RESPA obliges the servicer to respond substantively, as follows, (2) Action with respect to inquiry. Not later than 30 days (excluding legal public holidays, Saturdays, and Sundays) after the receipt from any borrower of any qualified written request under paragraph (1) and, if applicable, before taking any action with respect to the inquiry of the borrower, the servicer shall- (A) make appropriate corrections in the account of the borrower, including the crediting of any late charges or penalties, and transmit to the borrower a written notification of such correction (which shall include the name and telephone number of a representative of the servicer who can provide assistance to the borrower); (B) after conducting an investigation, provide the borrower with a written explanation or clarification that includes- (i) to the extent applicable, a statement of the reasons for which the servicer believes the account of the borrower is correct as determined by the servicer; and (ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower; or (C) after conducting an investigation, provide the borrower with a written explanation or clarification that includes- (i) information requested by the borrower or an explanation of why the information requested is unavailable or cannot be obtained by the servicer; and (ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower. 12 U.S.C. § 2605(e)(2). In order to survive a motion to dismiss, a RESPA failure to respond claim must include factual allegations to plausibly show that 1) defendant is a loan servicer; 2) defendant received a QWR from plaintiff; 3) the QWR relates to servicing of a mortgage loan; 4) defendant failed to respond adequately; and 5) plaintiff is entitled to actual or statutory damages. Hudgins v. Seterus, Inc., Civ. Action No. 16-80338, 2016 WL 3636859, at *3 (S.D. Fla. June 28, 2016) (and cases cited therein). Here, Seterus challenges the fourth and fifth elements of plaintiff's claim. The court addresses each argument, in turn. a) Sufficiency of Seterus's Responses As an initial matter, Seterus's argument that it responded to plaintiff's QWRs necessarily relies upon extrinsic evidence attached to its motion to dismiss. However, plaintiff did not refer to these responses in his complaint, and defendant does not provide any other basis for the court to consider this evidence in the context of the present 12(b)(6) motion. Of course, if evidence outside the pleadings is presented to, and not excluded by the court, then the court must convert the motion into a motion for summary judgment under Rule 56. FED. R. CIV. P. 12(d). Here, the court declines to consider the extrinsic evidence. While this has the effect of undermining one of the grounds for defendant's motion, it preserves the Rule 12(b)(6) framework for disposition of the motion. See In re Thomas, No. 15-30401, 2016 WL 4199561, at *3 (Bankr. M.D. Ala. Aug. 5, 2016) (declining to consider creditor's letter to plaintiff's bankruptcy attorney that was attached Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 16 of 27 Payne v. Seterus Inc., Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 to creditor's motion to dismiss). Regardless, as discussed below, the same result obtains even if the court were to consider the evidence. *5 Seterus maintains that it timely responded to plaintiff's QWRs via correspondence transmitted to his bankruptcy counsel. Seterus acknowledged receipt of plaintiff's requests and responded on December 16, 2015: Mr. Payne and Ms. Gatewood have requested that monthly Account Statements be sent to them directly as well as update the information reported to the credit agencies, as they have received a discharge of the Chapter 13 Bankruptcy. As our records indicate the Bankruptcy has been discharged and not yet terminated, we must decline the requests of Mr. Payne and Ms. Gatewood. At this time, the loan is contractually due for the November 1 and December 1, 2015 Installments, each in the amount of $932.87. [doc. # 8-18; see also docs. # 8-7 through 8-16]. Seterus does not argue any other reason beyond the bankruptcy proceeding to justify its refusal to transmit its responses directly to Payne. Conversely, plaintiff argues that “[t]here is no exception in the statute exempting discharged Chapter 13 debtors whose cases have not yet been closed from the requirements of responding to QWRs.” 5 It is axiomatic that when a debtor files a bankruptcy petition, an automatic stay is triggered that freezes virtually all debt collection efforts. 11 U.S.C. § 362(a). Its purpose is to enjoin all creditors from taking action against the debtor and the estate so that the debtor may have some breathing room to propose and obtain confirmation of a plan of reorganization which will pay creditors. In re Chesnut, 422 F.3d 298, 301 (5th Cir. 2005). Should the automatic stay be violated, Congress has provided a debtor with a private right of action for any “willful violation.” Campbell v. Countrywide Home Loans, Inc., 545 F.3d 348, 355 (5th Cir. 2008). *6 Courts are divided as to whether RESPA is preempted by the Bankruptcy Code. See, e.g., In re Figard, 382 B.R. 695, 2008 WL 501356 (Bankr. W.D. Pa. 2008) (court finds that Bankruptcy Code does not preempt provisions of RESPA, 12 U.S.C. § 2605(e)(2)); In re Holland, 374 B.R. 409 (Bankr. D. Mass. 2007) (Bankruptcy Code does not preempt RESPA); In re Nosek, 354 B.R. 331 (D. Mass. 2006) (court finds Bankruptcy Code preempts RESPA and state statutory and common law). However, even if the Bankruptcy Code's automatic stay were to trump the response procedures under RESPA, defendant does not provide any support for the proposition that servicers may not respond to inquiries initiated by debtors. In re Henry, 266 B.R. 457, 473 (Bankr. C.D. Cal. 2001) (creditor may properly respond to communication initiated by the debtor). Seterus did not provide the information requested by Payne or otherwise explain why the monthly statements requested were either unavailable or unobtainable. See 12 U.S.C. § 2605(e)(2). Instead, Seterus cites the pending bankruptcy proceeding with no explanation as to why the proceeding would bar it from providing the requested information. Moreover, the pending bankruptcy proceeding apparently did not impede Seterus from directly notifying Payne that it had become the servicer and debt collector on his mortgage. See Compl., ¶ 2. In sum, even if the court were to consider the evidence adduced by Seterus, it does not establish that Seterus responded adequately to plaintiff's requests. Rather, plaintiff has alleged sufficient facts to support this element of his claim for violation of 12 U.S.C. § 2605(e)(2). b) Damages 1) Actual Damages Section 2605(f) imposes liability for “any actual damages to the borrower as a result of the [RESPA violation].” 12 U.S.C. § 2605(f)(1)(A). The burden is on the borrower to prove that he or she incurred actual damages in order to substantiate a RESPA claim. See Whittier v. Ocwen Loan Servicing, L.L.C., 594 Fed.Appx. 833, 836 (5th Cir. 2014) (“To recover, a claimant must show that actual damages resulted from a RESPA violation.”); see Caballero v. Wells Fargo Bank, N.A., 2011 WL 6039953, at *2 (N.D. Tex. July 25, 2011); Ricotta v. Ocwen Loan Servicing, LLC, 2008 WL 516674, at *5 (D. Colo. Feb. 22, 2008). The statute neither defines “actual damages” nor gives examples of what constitutes actual damages. Thus the court “look[s] to the plain meaning of the term.” Hernandez v. U.S. Bank, N.A., 2013 WL 6840022, Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 17 of 27 Payne v. Seterus Inc., Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 at *5 (N.D. Tex. Dec. 27, 2013) (O'Connor, J.) (citing Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 388 (1993)). “The term ‘actual damages' is synonymous with ‘compensatory damages,’ which is defined as ‘such [damages] as will compensate the injured party for the injury sustained, and nothing more [.]’ ” Hernandez, 2013 WL 6840022, at *5 (quoting Black's Law Dictionary at 390 (6th ed. 1990)). In order to establish actual damages under RESPA, a plaintiff must demonstrate that defendant's breach proximately caused the alleged damages. “While courts have interpreted this requirement liberally, the loss alleged must be related to the RESPA violation itself.” Hopson v. Chase Home Fin. LLC, 14 F. Supp. 3d 774, 788 (S.D. Miss. April 11, 2014) (quoting Hensley v. Bank of New York Mellon, 2011 WL 4084253, at *3-4 (E.D. Cal. Sept. 13, 2011)). *7 In his opposition brief, plaintiff argues that, as a result of defendant's failure to respond to his QWRs, defendant reported delinquent payments to credit bureaus that possibly damaged his credit score. (Pl. Opp. Memo., pgs. 2-3). Yet even assuming that “possible” damage to a credit score is sufficient, there is nothing in the complaint or in plaintiff's opposition that links the alleged damage to defendant's alleged violation of RESPA. See Durland v. Fieldstone Mortgage Co., 2011 WL 805924, at *3 (S.D. Cal. Mar. 1, 2011) (mere allegations of damages, including fees assessed, negative credit reporting, and emotional distress, were insufficient to establish a causal link between the alleged RESPA violations and plaintiff's claimed damages). Plaintiff fails to indicate how the inadequate response to the QWRs caused the reduction in his credit rating, and fails to allege damage caused by the alleged reduction in his credit rating. See Anokhin v. BAC Home Loan Servicing, LP, 2010 WL 3294367, at *3 (E.D. Cal. Aug. 20, 2010) (“To constitute actual damages [under RESPA for failure to adequately respond to a QWR], the negative credit rating must itself cause damage to the plaintiff as evidenced by, for example, failing to qualify for a home mortgage. Plaintiff's conclusory statement that she suffered negative credit ratings does not itself establish actual damages.”); see also Jones v. Vericrest Fin., Inc., 2011 WL 7025915, at *19 (N.D. Ga. Dec. 7, 2011) (finding that even if plaintiff had sufficiently alleged that defendant violated RESPA by failing to adequately respond to a written request, RESPA claim would still be dismissed since “the Plaintiff has not included any factual allegations explaining how [defendant's] failure to provide an adequate response to the qualified written response caused her to suffer any damages”); Phillips v. Bank of America Corp., 2011 WL 4844274, at *5 (N.D. Cal. Oct. 11, 2011) (dismissing plaintiff's RESPA claim because plaintiff failed to allege facts showing “that it is plausible, rather than merely possible,” that the claimed damages resulted from defendant's alleged violation of RESPA). In sum, plaintiff's RESPA claim for failure to adequately respond to the QWRs does not set forth sufficient facts to support the element of actual damages. 2) Statutory Damages To recover statutory damages, a plaintiff must plead a pattern or practice of noncompliance with RESPA. See 12 U.S.C. § 2605(f)(1)(b). Courts have held that RESPA pattern-or-practice damages contemplate RESPA violations with respect to other borrowers. Renfroe v. Nationstar Mortgage, LLC, 822 F.3d 1241, 1247 (11th Cir. 2016) (citations omitted). Here, however, plaintiff's complaint is devoid of such allegations. Furthermore, to the extent that plaintiff seeks statutory damages for defendant's pattern or practice of noncompliance as to his own multiple requests, the court finds that this claim fails. While plaintiff sent several QWRs, they were all sent within a very short time period. Even if defendant's response were inadequate, the essentially one time refusal to provide the requested information does not plausibly show a pattern and practice of RESPA violations by defendant. Plaintiff's complaint does not set forth a colorable claim for statutory damages as a result of defendant's alleged RESPA violation for failure to adequately respond to the QWRs. III. TILA and RESPA Claims for Failure to Timely Apply Payments Plaintiff alleges broadly that defendant failed to credit plaintiff's payments promptly in violation of 12 C.F.R. §§ 1024.35, 1026.36 and 15 U.S.C. § 1639f. Regulation Z, the Consumer Finance Protection Bureau's (“CFPB”) Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 18 of 27 Payne v. Seterus Inc., Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 implementation of TILA, normally requires a servicer to credit a periodic payment to the consumer's loan account on the date of receipt. 12 C.F.R. § 1026.36(c) (1). 6 However, courts uniformly have held that there is no servicer liability under TILA, and, by extension, the regulations promulgated thereunder. Lucien v. Fed. Nat. Mortgage Ass'n, 21 F. Supp.3d 1379, 1383 (S.D. Fla. 2014); Simmons v. Aurora Bank FSB, Civ. Action No. 13-0482, 2016 WL 192571, at *9 (N.D. Cal. Jan. 15, 2016) (only parties liable under TILA are the creditor and the creditor's assignees); Hayes v. U.S. Bank Nat. Ass'n, Civ. Action No. 13-80610, 2014 WL 2938534, at *3 (S.D. Fla. June 30, 2014), affirmed, 2016 WL 1593415 (11th Cir. Apr. 21, 2016) (TILA does not impose liability on servicers). Furthermore, the plain language of § 1639f does not create a private cause of action. Barnes v. Carrington Mortgage Servs., LLC, Civ. Action No. 15-6465, 2016 WL 3018693, at *1-2 (D. N.J. May 24, 2016). Instead, TILA's private cause of action is set forth in § 1640(a), which only imposes liability on any “creditor.” Id.;15 U.S.C. § 1640(a). *8 Under “Regulation X,” which is codified at 12 C.F.R. § 1024, a servicer must provide a timely response to a borrower's written notice of error with respect to certain enumerated issues, including, inter alia, (1) Failure to accept a payment that conforms to the servicer's written requirements for the borrower to follow in making payments, or (2) Failure to apply an accepted payment to principal, interest, escrow, or other charges under the terms of the mortgage loan and applicable law. 12 C.F.R. § 1024.35. Courts, however, are split as to whether § 1024.35 provides a private right of action for damages. Compare Miller v. HSBC Bank U.S.A., N.A., Civ. Action No. 13-7500, 2015 WL 585589, at *11 (S.D. N.Y. Feb. 11, 2015) (§ 1024.35 does not provide a private cause of action for damages); Guccione v. JPMorgan Chase Bank, N.A., Civ. Action No. 14-4587, 2015 WL 1968114, at *11 (N.D. Cal. May 1, 2015) (§ 1024.35 is enforceable under 12 U.S.C. § 2605(f)). Even so, plaintiff did not identify any written notice of error that he provided to Seterus, to which Seterus failed to respond. Moreover, although Payne attached a copy of an account statement to his opposition memorandum that he alleges is inaccurate, he does not explain how it is inaccurate, or that he provided Seterus with a written notice of error that contained all of the information required by § 1024.35. In short, plaintiff's complaint fails to state a claim for relief under § 1024.35. 7 IV. RESPA Claim for Failure to Provide Annual Escrow Account Analysis Plaintiff's final claim alleges that defendant failed to furnish an annual analysis of plaintiff's escrow account pursuant to 12 U.S.C. § 2609. RESPA requires a lender to provide an escrow account statement “not less than once for each 12-month period.” 12 U.S.C. § 2609(c)(2)(A)-(B). Courts have held, however, that RESPA § 2609 does not provide for a private cause of action. Heffron v. Green Tree Servicing, LLC, Civ. Action No. 15-0996, 2016 WL 47915, at *4 (N.D. Ill. Jan. 5, 2016) (citation omitted). In any event, plaintiff had not alleged that he incurred any damages on account of not directly receiving an annual escrow account statement. V. Amendment “District courts often afford plaintiffs at least one opportunity to cure pleading deficiencies before dismissing a case, unless it is clear that the defects are incurable ...” Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 329 (5th Cir. 2002). Here, it is conceivable that plaintiff can cure at least some of his deficient claims via amendment. Therefore, while the court will provisionally grant the motion to dismiss, entry of judgment will be deferred to accord plaintiff a 14 day period in which to seek leave to amend his complaint (if he can in good faith do so), to provide the missing factual bases for any element(s) of a claim that is not precluded as a matter of law. Defendant, of course, will have the opportunity to address the sufficiency of any proposed amendment. Conclusion *9 For the reasons provided herein, IT IS ORDERED that defendant Seterus, Inc.'s motion to dismiss for failure to state a claim upon which relief can be granted [doc. # 8] is provisionally GRANTED. IT IS FURTHER ORDERED that, within the next fourteen (14) days from the date of this ruling, plaintiff Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 19 of 27 Payne v. Seterus Inc., Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 may seek leave of court to file an amended complaint to redress his deficient allegations as detailed herein. If no motion is filed within this fourteen (14) day period, then the court will enter judgment in accordance with the ruling. In Chambers, at Monroe, Louisiana, this 26 th day of August 2016. All Citations Slip Copy, 2016 WL 4521659 Footnotes 1 With the consent of all parties, the District Court referred the above-captioned case to the undersigned magistrate judge for the conduct of all further proceedings and the entry of judgment. 28 U.S.C. § 636(c). 2 Seterus adduced a docket sheet from Payne's Chapter 13 bankruptcy petition, In Re: Robert Charles Payne, No. 09-32782 (Bankr. W.D. La.). (M/Dismiss, Exh. 1). The docket sheet shows that Payne filed the petition in 2009, that the debt was discharged on September 21, 2015, and that a final decree closing the case issued on January 22, 2016. Id. The court may take judicial notice of, and therefore consider the bankruptcy records attached to the motion to dismiss. Cargo v. Kansas City Southern Ry. Co., 408 B.R. 631, 640 (W. D. La. 2009) (citations omitted). 3 Seterus urges the court not to consider plaintiff's opposition because it was untimely. See Def. Reply Memo. Plaintiff's response was due on April 12, 2016 - 21 days after the notice of motion setting. (Notice of Motion Setting [doc. # 9] ). He filed his opposition one day late - on April 13. District courts, however, enjoy broad discretion to determine whether to consider an untimely submission. Nelson v. Star Enterprise, 220 F.3d 587, 2000 WL 960513 at *1 (5th Cir. 2000) (citing Hetzel v. Bethlehem Steel Corp., 50 F.3d 360, 367 (5th Cir. 1995) and Lowndes v. Global Marine Drilling Co., 909 F.2d 818 (5th Cir. 1990)). Moreover, Seterus has not demonstrated any cognizable prejudice as a result of the brief delay. Thus, the court will excuse the dilatory filing and give effect to plaintiff's brief. 4 For purposes of RESPA, a QWR is defined as “a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer,” that identifies, specifically or in a manner that enables the loan servicer to identify, the name and account at issue, and that “includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.” See 12 U.S.C. § 2605(e)(1)(B); Akintunji, 2011 WL 2470709 *2. 5 As other courts have noted, the issue of whether correspondence between parties and opposing counsel satisfies the requirements of 12 U.S.C. § 2605 is not well settled. See McLean v. GMAC Mortgage Corp., 2008 WL 5246149, at *5 (S.D. Fla. Dec. 16, 2008) (discussing cases concerning a debtor sending QWRs to servicer's counsel); see also In re Holland, 2008 WL 4809493 (Bkrtcy. D. Mass. Oct. 30, 2008). Assuming that Seterus's responses to plaintiff's QWRs were sent by counsel for Seterus, then plaintiff's bankruptcy attorney arguably would have been the proper recipient, and not plaintiff. The Rules of Professional Conduct promulgated by the Louisiana State Bar Association provide the rules of conduct for attorneys practicing before this court. L.R. 83.2.4. Rule 4.2 of the Rules of Professional Conduct provides, In representing a client, a lawyer shall not communicate about the subject of the representation with a party the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized by law to do so. A lawyer shall not effect the prohibited communication through a third person, including the lawyer's client. Here, however, there is no indication that Seterus's counsel responded to the QWRs rather than some other representative of Seterus, that Plaintiff was communicating with Seterus on behalf of his lawyer or about the subject of the representation, or even that Seterus was represented. In any event, the better practice would have been for Seterus to respond to plaintiff's QWRs directly, even if its response was simply to let him know that it would need to provide the information to his bankruptcy attorney. 6 Plaintiff alleges that Seterus is the servicer of his loan. (Compl., ¶ 2). 7 Plaintiff's lone assertion that the statement was “inaccurate” without explaining why it was inaccurate is conclusory, and cannot survive a motion to dismiss. Norris v. Bayview Loan Servicing, LLC, Civ. Action NO. 15-6413, 2015 WL 6745048, at *9 (C.D. Cal. Oct. 26, 2015). End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 20 of 27 Radske v. Federal National Mortgage Association, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2016 WL 3667957 Only the Westlaw citation is currently available. United States District Court, E.D. Michigan, Southern Division. Ronald G. Radske, Plaintiff, v. Federal National Mortgage Association, et al., Defendants. Case No. 15-14107 | Signed 07/11/2016 Attorneys and Law Firms David G. Lutz, David Lutz Law PC, Troy, MI, for Plaintiff. Kathleen A. Cieslik, Ari M. Charlip, Dickinson Wright PLLC, Troy, MI, for Defendants. OPINION AND ORDER GRANTING DEFENDANTS' MOTION TO DISMISS (ECF NO. 7) PAUL D. BORMAN, UNITED STATES DISTRICT JUDGE *1 Plaintiff Ronald G. Radske originally filed this action in St. Clair County Circuit Court on October 19, 2015. (ECF No. 1.) Thereafter, Defendants Federal National Mortgage Association (“Fannie Mae”) and Seterus, Inc. (collectively, “Defendants”) removed the action based on complete diversity of the parties on November 23, 2015. (Id.) Now before the Court is Defendants' Motion to Dismiss which was filed on January 22, 2016. (ECF No. 7.) On February 11, 2016, the Court entered a stipulated order granting Plaintiff an extra fourteen days to file a response to the motion to dismiss. (ECF No. 9.) Despite the stipulated order granting an extension, Plaintiff has never filed a response to Defendants' motion to dismiss. (ECF No. 9.) The hearing on Defendants' motion to dismiss was held on June 29, 2016. For the following reasons, the Court will grant Defendants' motion to dismiss and dismiss this action with prejudice. I. FACTUAL BACKGROUND A. Mortgage On April 20, 2001, Plaintiff and Shannon M. Radske obtained a mortgage loan (the “Loan”) in the amount of $93,000.00 from non-party lender Flagstar Bank. (Defs.' Ex. A, the Note.) Plaintiff and Shannon Radske also executed a promissory note payable to Flagstar Bank on the same date. (Id.) As security for the Loan, Plaintiff and Shannon Radske granted a mortgage (the “Mortgage”) to Flagstar Bank against the real property located at 1318 18th Street, Port Huron, Michigan (the “Property”). The Mortgage was duly recorded on May 4, 2001 in Liber 2173, Page 32 of St. Clair County Records. (Defs.' Ex. B, the Mortgage; Compl., at ¶ 12.) In 2008, Plaintiff and Shannon Radske divorced. (Compl., at ¶ 9, n. 1.) That same year, ostensibly as a result of the divorce, Plaintiff obtained fee simple ownership of the Property pursuant to a Quit Claim Deed recorded on January 14, 2008 in Liber 3803, Page 61 of St. Clair County Records. (Compl., at ¶ 9; Compl., Ex. 1, Real Estate Index.) The Mortgage was then assigned to non-party CitiMortgage, Inc. as evidenced by an assignment dated April 30, 2012 and recorded on June 12, 2012 in Liber 2458, Page 1025 of St. Clair County Records. (Compl., at ¶ 13; Compl., Ex. 3, 2012 Assignment; Defs.' Ex. C, Assignment.) The Mortgage was next assigned to Defendant Fannie Mae as evidenced by an assignment dated February 11, 2014 and recorded on February 19, 2014, in Liber 4482, Page 567 of St. Clair County Records. (Id., at 14; Compl. Ex. 4, 2014 Assignment; Defs.' Ex. C, Assignment.) Defendant Fannie Mae was the owner of the Loan, and the servicing rights of the Mortgage were transferred to the current servicer, Defendant Seterus, in February 2014. (Defs.' Ex. D, Transfer of Servicing to Seterus.) B. Default and Foreclosure Sale At some point in time, Plaintiff “came upon hard economic times and Plaintiff was temporarily unable Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 21 of 27 Radske v. Federal National Mortgage Association, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 to meet the payment obligations under the Note and Mortgage.” (Compl., at ¶ 18.) Plaintiff claims Defendants failed to send him a “Notice of Default” that allowed thirty days to cure the default as required by his Mortgage. (Id., at ¶ 20; Defs.' Ex. B, Mortgage.) Plaintiff further alleges that Defendants wrongfully accelerated the debt and “nullified” Plaintiff's right to cure under the Mortgage. (Compl., at ¶ 21.) *2 On or about March 18, 2015, Defendants initiated a foreclosure by advertisement. On April 16, 2015, the Property was ultimately sold at a foreclosure sale to Defendant Fannie Mae for the amount of $77,528.03. (Ex. E, Sheriff's Deed.) The statutory redemption period expired on October 19, 2015. C. Plaintiff's Complaint On October 21, 2015, Plaintiff filed the current action in 31 st Circuit Court for the County of St. Clair. (ECF No. 1, Notice of Removal.) Defendants removed the action to this Court on November 23, 2015 on the basis of diversity jurisdiction. (Id.) Defendants filed the pending motion to dismiss on January 22, 2016. (ECF No. 7.) As noted supra, this Court entered a stipulated order allowing Plaintiff more time to respond to the current motion (ECF No. 9.) Plaintiff, however, failed to file a response to the motion to dismiss and, accordingly, Defendants did not file a reply. II. STANDARD OF REVIEW FED. R. CIV. P. 12(b)(6) allows for the dismissal of a case where the complaint fails to state a claim upon which relief can be granted. When reviewing a motion to dismiss under Rule 12(b)(6), a court must “construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.” DirectTV, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007). To sufficiently state a claim, a complaint must provide a “short and plain statement of the claim showing that the pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2). “[T]he complaint ‘does not need detailed factual allegations' but should identify ‘more than labels and conclusions.’ ” Casias v. Wal-Mart Stores, Inc., 695 F.3d 428, 435 (6th Cir. 2012) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). But the court “need not accept as true legal conclusions or unwarranted factual inferences.” Treesh, 487 F.3d at 476 (quoting Gregory v. Shelby County, 220 F.3d 433, 446 (6th Cir. 2000)). “[L]egal conclusions masquerading as factual allegations will not suffice.” Eidson v. State of Term. Dep't of Children's Servs., 510 F.3d 631, 634 (6th Cir. 2007). A plaintiff must provide more than “formulaic recitation of the elements of a cause of action ... Factual allegations must be enough to raise a right to relief above the speculative level....” Twombly, 550 U.S. at 555 (internal citations omitted). The Sixth Circuit has recently reiterated that “[t]o survive a motion to dismiss, a litigant must allege enough facts to make it plausible that the defendant bears legal liability. The facts cannot make it merely possible that the defendant is liable; they must make it plausible.” Agema v. City of Allegan, ___ F.3d ____, 2016 WL 3349206, at *3 (6th Cir. 2016) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). In addition to Plaintiff's allegations in his complaint, and the documents attached to the same, the Court will also consider the documents attached to Defendants' motion and referenced in the pleadings: the Note, the Mortgage, the Assignments, Transfer of Servicing Notice from Defendant Seterus, the Sheriff's deed, Loan Modification Denial Letter, Foreclosure Notice, and Transfer Servicing Notice. (Defs.' Mot., Ex. A-H.) Although these documents are outside the pleadings, the Sixth Circuit has recognized that the “documents that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in a plaintiff's complaint and are central to her claim.” Weiner v. Klais and Co., Inc., 108 F.3d 86, 89 (6th Cir. 1997) (citation omitted). In a motion to dismiss, a court may also rely upon matters of public record. See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007); Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008) (explaining that in deciding a motion to dismiss a court may consider, “the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to defendant's motion to dismiss so long as they are referred to in the complaint and are central to the claims contained therein.”). *3 All of Defendants' exhibits are matters of public record, or referenced in Plaintiff's allegations regarding Plaintiff's default on the Mortgage and are central to his claims regarding communications with Defendants. Accordingly, these documents will be considered by the Court in evaluating Defendants' Motion to Dismiss. Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 22 of 27 Radske v. Federal National Mortgage Association, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 III. ANALYSIS A. Wrongful Foreclosure Plaintiff sets forth a claim of “Wrongful Foreclosure” against Defendants pursuant to MICH. COMP. LAWS § 600.3201, et seq. The Court notes that Plaintiff's complaint was filed three days after the six-month statutory redemption period expired, on October 21, 2015. (See Radske v. Federal National Mortgage Ass'n., et al., 31 st Cir. Court St. Clair Ctny., Case ID, 15-002547-CH.) “In Michigan, once a foreclosure is complete and the redemption period following the foreclosure has expired, a former owner loses all right, title, and interest in and to the mortgaged property.” Martini v. JPMorgan Chase Bank, N.A., 635 Fed.Appx. 159, 162 (6th Cir. 2015) (quotingMunaco v. Bank of Am., 513 Fed.Appx. 508, 510 (6th Cir. 2013)). To set aside a foreclosure by advertisement a plaintiff must make “a sufficient showing of ‘fraud or irregularity’ ” in connection with the sheriff's sale of their properties to ‘undo the divestment of [the] property.’ ” El-Seblani v. Indymac Mortg. Services, 510 Fed.Appx. 425, 429 (6th Cir. 2013) (citing Houston v. U.S. Bank Home Mortg. Wisc. Servicing, No. 11-2444, 2012 WL 5869918, at *5 (6th Cir. Nov. 20, 2012)); see also Conlin v. Mortg. Elec. Reg. Sys., Inc., 714 F.3d 355, 359 (6th Cir. 2013) (“Michigan courts have held that once the statutory redemption period lapses, they can only entertain the setting aside of a foreclosure sale where the mortgagor has made a ‘clear showing of fraud, or irregularity.’ ”) (citation omitted). Additionally, “to set aside the foreclosure sale, plaintiffs must show that they were prejudiced by defendant's failure to comply with [MICH. COMP. LAWS § 600.3204]. To demonstrate this prejudice, a plaintiff must show that he or she would have been in a better position to preserve his or her interest in the property without the defendant's noncompliance with the statute.” Spadafore v. Aurora Loan Servs. LLC, 564 Fed.Appx. 168, 170 (6th Cir. 2014) (quoting Kim v. JP Morgan Chase Bank, NA, 493 Mich. 98, 115-15 (2012)). The Sixth Circuit has recognized that this is a “high standard.” Conlin, 714 F. 3d at 359. In the present action, Plaintiff alleges in his complaint that Defendants violated a number of both state and federal statutes in the foreclosure of the Property. The Court addresses each alleged violation in turn. 1. MICH. COMP. LAWS § 600.3201, et seq. Plaintiff first alleges that Defendants violated MICH. COMP. LAWS § 600.3201, et seq. by failing to provide a proper notice of default and engaging in dual tracking. A notice of a foreclosure must be published for four successive weeks, at least once a week, in a newspaper published in the county where the premises to be sold are situated. MICH. COMP. LAWS § 600.3208. Additionally, a notice of foreclosure must be posted “in a conspicuous place upon any part of the premises described in the notice” within fifteen days of the first publication. Id. Plaintiff alleges that Defendants failed to provide the proper statutory notices because he “did not see” or “never saw” the published notices or the notice posted on the Property. (Compl., at ¶¶ 29-30.) These claims are belied by the affidavits attached to the Sheriff's Deed which provide that the notice of foreclosure was properly published for four weeks (3/18/15, 3/25/15, 4/1/15, and 4/8/15) and posted on the Property on March 27, 2015. (Defs.' Ex. E, Sheriff's Deed.) These affidavits are “presumptive evidence” that the notices were provided. MICH. COMP. LAWS § 600.3264. Thus, Plaintiff's claims that he merely did not see the notices does not create a plausible claim of wrongful foreclosure pursuant to § 600.3201. See Derbabian v. Bank of Am., N.A., 587 Fed.Appx. 949, 956 (6th Cir. 2014) (holding that the bare assertion that the defendant failed to give “required notices” did not meet the pleading standards of FED. R. CIV. P. 8, and “[m]ore importantly, the sheriff's deed reflecting the foreclosure sale shows that the [plaintiffs] were given the statutorily required notices.”). *4 Plaintiff's claim that Defendants engaged in “dual tracking” is also insufficient to support a claim of wrongful foreclosure under the Michigan statute. “Dual tracking refers to a common tactic by banks that institute foreclosure proceedings at the same time that a borrower in default seeks a loan modification.” Kloss v. RBS Citizens, N.A., 996 F.Supp.2d 574, 585 (E.D. Mich. 2014) (citing Jolley v. Chase Home Finance, LLC, 213 Cal.App.4th 872, 153 Cal. Rptr. 3d 546 (2013)). Michigan attempted to guard against this practice by providing that a lender had to wait 90 days before commencing foreclosure proceedings against a borrower who has requested a meeting with the lender, however, that statute has since been repealed effective as of June, 2014. See MICH. COMP. LAWS § 600.3205a(e) (repealed by P.A. Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 23 of 27 Radske v. Federal National Mortgage Association, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 2014, No. 125 § 1.) Thus, Plaintiff's claims do not state a plausible claim of wrongful foreclosure based upon this alleged deficiency. Accordingly, the Court finds that Plaintiff failed to set forth a plausible claim for wrongful foreclosure based upon MICH. COMP. LAWS § 600.3201, et seq. 2. Real Estate Settlement Procedures Act Violations Plaintiff also alleges that Defendant violated Real Estate Settlement Procedures Act (“RESPA”) and 12 C.F.R. § 1024.41, et seq., by: (1) failing to notify Plaintiff of the transfer of the loan (compl., at ¶¶ 82-84); (2) by dual tracking (id., at ¶ 65); (3) by filing to provide notice that Plaintiff was not eligible for a loss mitigation program (id., at ¶ 66); and (4) by failing to inform Plaintiff of his mitigation options or how to obtain assistance (id., at ¶ 72). Plaintiff also alleges that “[a]t no time did Plaintiff fail to perform under any agreement on any loss mitigation option” and Defendants “failed to fairly and adequately review all of the foreclosure alternatives that may have been available to Plaintiff.” (Id., at ¶¶ 68, 74.) The Court finds that Plaintiff has failed to allege a plausible claim of wrongful foreclosure based upon the alleged RESPA violations. All of Plaintiff's allegations are rebutted by Defendants' evidence. To wit: the loan modification efforts and the foreclosure were not in process at the same time and Plaintiff's earlier trial loan modification was denied in June 2014 due to Plaintiff's inability to make the reduced payments. (Ex. F, 6/10/2014 Denial Letter.) Plaintiff was also advised of his loss mitigation options by Defendant Seterus on February 22, 2015 in a Foreclosure Notice Letter. (Ex. G, 2/22/2015 Foreclosure Notice Letter.) Plaintiff was also advised of the transfer of the Loan in January 2015 by non-party CitiMortgage, and advised again in February, 2015 by Defendant Seterus of the same. (Ex. D, 2/10/2015 Transfer of Servicing Notice from Seterus; Ex. H, 1/15/2015 Letter from CitiMortgage noting “effective 2/1/2015 all payments” must be sent to Seterus.) Further, Plaintiff's claims regarding Defendants' RESPA violations are at most irregularities in the loan modification process that occurred contemporaneously with the foreclosure process. The Sixth Circuit has held, however, that such allegations are insufficient to plead a wrongful foreclosure claim because “[a]n alleged irregularity in the loan modification process [ ] does not constitute an irregularity in the foreclosure proceeding.” Campbell v. Nationstar Mortg., 611 Fed.Appx. 288, 294 (6th Cir. 2015) (collecting authority). 3. Truth In Lending Act Violations *5 Plaintiff's allegations regarding alleged Truth In Lending Act, 15 U.S.C. § 1601, et seq., (“TILA”) violations are also insufficient to anchor a wrongful foreclosure claim. As Defendants correctly note, any TILA claim against Defendant Seterus fails as a matter of law because “TILA expressly exempts servicers from liability unless the servicer was also a creditor or a creditor's assignee.” Marais v. Chase Home Fin. LLC, 736 F.3d 711, 719 (6th Cir. 2013). Further, Plaintiff's TILA claim against Defendant Fannie Mae is based upon the transfer of the Mortgage from non-party CitiMortgage to Defendant Fannie Mae, an event that occurred on or about February 19, 2014, the date the assignment was recorded. (Ex. C, Assignment of Mortgage.) Pursuant to 15 U.S.C. § 1641(g), within 30 days of the date a mortgage loan is sold or assigned the new owner or assignee of a mortgage loan must notify the borrower of the transfer in writing. Yet, pursuant to 15 U.S.C. § 1640(e), “[a]ny action under this section may be brought in any United States district court, or in any other court of competent jurisdiction within one year from the date of the occurrence of the violation.” Plaintiff did not file the current action until October 21, 2015, outside the statutory limitations period. Thus, Plaintiff's allegation that Defendant Fannie Mae violated TILA is barred by the statute of limitations. In summary, the Court will dismiss this claim because Plaintiff has failed to set forth a plausible claim of wrongful foreclosure based on any of the alleged state and federal statutory violations. B. Breach of Contract Plaintiff next alleges a claim of breach of contract based on Defendants' failure to properly send Plaintiff notice as required by Paragraph 22 of the Mortgage. (Compl., at ¶¶ 85-89.) Plaintiff also claims that Defendants breached the implied covenant of good faith and fair dealing. (Id., at ¶¶ 90-91.) Paragraph 22 of the Mortgage states, in relevant part: Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 24 of 27 Radske v. Federal National Mortgage Association, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 Acceleration; Remedies. Lender shall give notice to Borrower prior to acceleration following Borrower's breach of any covenant or agreement in this Security Instrument (but not prior to acceleration under Section 19 unless Applicable Law provides otherwise.) The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument and sale of the Property. (Defs.' Ex. B, Mortgage, at ¶ 22; Compl., at ¶ 87.) “To recover for breach of contract under Michigan law, a plaintiff must allege: (1) the existence of a contract; (2) the terms of the contract; (3) that the defendant breached the contract; and (4) that the breach caused the Plaintiff's injury.” Derbabian, 587 Fed.Appx. at 953 (citation omitted). In the present case, Defendants represent that Plaintiff received proper notice based on the Foreclosure Notice that was sent to Plaintiff on February 22, 2014. (Defs.' Ex. G, Foreclosure Notice.) Significantly, Plaintiff was also sent notice regarding his default and the possible acceleration of the Mortgage in 2014, and as a result of this notice, Plaintiff entered into a loan modification with Defendants. Plaintiff failed to make the required payments, and he was notified on June 10, 2014 that the modification plan was “no longer valid” and that his loan was in default at that time. (Defs.' Ex. F, 6/10/2014 Denial Letter.) The Court notes that Plaintiff did not file a response to Defendants' motion to dismiss and did not rebut or contradict any of Defendants' arguments regarding this claim with any particularity during the hearing on this motion. Given all these facts, the Court finds that Plaintiff has failed to set forth a plausible claim for breach of contract based upon Paragraph 22 of the Mortgage given the notices Plaintiff received, including the notice that he was in default on June 10, 2014 more than a year prior to the foreclosure sale. Additionally, Plaintiff's claim that Defendants violated the implied covenant of good faith and fair dealing must be dismissed as a matter of law. Quite simply, “Michigan does not recognize a claim for breach of an implied covenant of good faith and fair dealing.” Belle Isle Grill Corp. v. City of Detroit, 256 Mich. App. 463, 476 (Mich. Ct. App. 2003) (citing Ulrich v. Fed. Land Bank of St. Paul, 192 Mich. App. 194, 197 (Mich. Ct. App. 1991)). Accordingly, the Court will dismiss this claim. C. Fraudulent Misrepresentation *6 Pursuant to Federal Rule of Civil Procedure 9(b) a claim of fraud must be pled with particularity. To meet the particularity requirement, a complaint must “(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.” Frank v. Dana Corp., 547 F.3d 564, 570 (6th Cir. 2008) (internal quotation and citation omitted). Plaintiffs must, “at a minimum,... allege the time, place[,] and contents of the misrepresentation upon which they relied.” Id. They also must allege facts from which it could be concluded that their reliance was reasonable. See Novak v. Nationwide Mut. Ins. Co., 235 Mich. App. 675, 599 N.W.2d 546, 553-54 (1999). Smith v. Bank of Am. Corp., 485 Fed.Appx. 749, 752 (6th Cir. 2012). In the present case, Plaintiff's claims that Defendants made fraudulent misrepresentations to Plaintiff that “they would not begin foreclosure proceedings while the parties were actively pursuing loan modification or other financial assistance options.” (Compl., at ¶ 93.) This single, vague allegation regarding the alleged fraudulent misrepresentation does not meet the exacting pleading requirement of Rule 9(b). Plaintiff does not specify the time, the place, or exact contents of the statement, nor does Plaintiff allege any facts from which it could be concluded that his reliance was reasonable. Thus, Plaintiff has failed to plausibly allege a claim of fraudulent misrepresentation and the claim will be dismissed. See Smith, 485 Fed.Appx. at 752. Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 25 of 27 Radske v. Federal National Mortgage Association, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 D. Slander of Title “In Michigan, slander of title claims have both a common- law and statutory basis.” Derbabian, 587 Fed.Appx. at 958 (quoting B&B Inv. Grp. v. Gitler, 229 Mich. App. 1, 8 (Mich. Ct. App. 1998)). Both common law slander and MICH. COMP. LAWS § 568.108 require that a plaintiff show “falsity, malice, and special damages, i.e. that the defendant maliciously published false statements that disparaged a plaintiff's right in property, causing special damages.” Gitler, 229 Mich. App. at 8. “Malice may not be inferred merely from the filing of an invalid lien; the plaintiff must show that the defendant knowingly filed an invalid lien with the intent to cause the plaintiff injury.” Stanton v. Dachille, 186 Mich. App. 247, 262 (Mich. Ct. App. 1990). In the present case, Plaintiff failed to plead that Defendants acted with the requisite malice. Indeed, the entirety of the Plaintiff's allegations to support this claim, beyond allegations regarding the damages incurred, are: “Michigan recognizes slander of title claims both in statute (MCL 565.108) and at common law, and Plaintiff brings this cause of action under both theories. As stated above, Plaintiff took title to the subject property by Quit Claim Deed.” (Compl., at ¶¶ 100-01.) Plaintiff's threadbare allegations do not set forth a plausible claim of slander of title (at common law or pursuant to the statute) and fail to even set forth all of the required elements. Accordingly, the Court will dismiss this claim. E. Declaratory Relief Foreclosure Barred by Unclean Hands *7 Plaintiff also claims that “Defendants' above- referenced conduct constitutes multiple instances of bad faith negotiations with Plaintiff, as well as bad faith processing of his mortgage loan and/or request for modification. Although Defendants seek the equitable relief of foreclosure, Defendants cannot make the requisite showing of clean hands in order to obtain such relief.” (Compl., at ¶¶ 106-07.) A court in this district has dismissed the identical claim in a similar mortgage foreclosure action and explained: “[D]eclaratory relief is a remedy [ ], not a claim.” Mettler Walloon, L.L.C. v. Melrose Twp., 281 Mich. App. 184, 220 (Mich. Ct. App. 2008) (citations omitted). Similarly, the doctrine of unclean hands is not a claim; rather the “clean-hands doctrine closes the doors of equity to one tainted with inequitableness or bad faith to the matter in which he or she seeks relief, regardless of the improper behavior of the defendant.” Richards v. Tibaldi, 272 Mich. App. 522, 537 (Mich. Ct. App. 2006). McCann v. U.S. Bank, N.A., 873 F. Supp. 2d 823, 848 (E.D. Mich. 2012); see also Soto v. Wells Fargo Bank, N.A., No. 11-14064, 2012 WL 113534, at *5 (E.D. Mich. Jan. 12, 2012) (Cohn, J.) (dismissing the identical claim and noting “the ‘unclean hands' doctrine does not state a cause of action.”). The Court finds Plaintiff's “unclean hands” claim is not an actionable claim and will therefore dismiss the claim. F. Preliminary Injunction Plaintiff seeks a preliminary injunction staying or tolling the expiration of the redemption period and enjoining the eviction of Plaintiff from the Property. (Compl., at ¶¶ 109-19.) As the Court finds that all of those claims should be dismissed, however, Plaintiff cannot show any likelihood of success on the merits of his claims related to setting aside the foreclosure sale. Further, to the extent Plaintiff was seeking to “keep the status quo” and avoid eviction during these proceedings it appears that Plaintiff has succeeded. There has been nothing filed in this case indicating that Plaintiff has been evicted from the Property. For all these reasons, the Court will dismiss Plaintiff's claim for preliminary injunction. G. Request for Equitable Mortgage and/or Conversion to Judicial Foreclosure The last claim in Plaintiff's complaint is a “Request for Equitable Mortgage and/or for Conversion to Judicial Foreclosure under MCL § 600.3101, et seq.” (Compl., at ¶¶ 120-26.) Plaintiff's request that this Court convert the foreclosure by advertisement to a judicial foreclosure must be dismissed as a matter of law. As Plaintiff recognized in his own complaint, the statute that allowed the conversion of a pending foreclosure by advertisement into a judicial foreclosure, MICH. COMP. LAW § 600.3205(c), was repealed effective June 30, 2014. (Compl., at ¶¶ 123-24). Plaintiff further noted in his Complaint that when that statute was repealed “it extinguished the only Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 26 of 27 Radske v. Federal National Mortgage Association, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 avenue of relief by way of judicial foreclosure which a wronged borrower had...” (Id., at 124.) Thus, as pled and recognized by Plaintiff in his own complaint, any claim to convert the completed foreclosure by advertisement into a judicial foreclosure has no plausible basis in law and must be dismissed. Plaintiff's request for an equitable mortgage is similarly implausible. In the present case, Plaintiff appears to request an equitable mortgage as a remedy for an alleged wrongful foreclosure such that the Court set aside the foreclosure and impose the equitable mortgage on the Property. The Court, however, is aware of no case law to support such a request in a similar context. The Sixth Circuit has explained: *8 An equitable mortgage is generally imposed when one party intended to grant a secured interest but the instrument actually transferred the property in total to the other party. See Townsend v. Chase Manhattan Mortg. Corp., 254 Mich.App. 133, 657 N.W.2d 741, 744 n. 1 (2002) (discussing the normal uses of equitable mortgages). Michigan law is clear that equitable mortgages are appropriate in circumstances where the underlying mortgage is void, particularly when one party received the benefits of the mortgage. See Fair v. Moody, No. 278906, 2008 WL 5382648 (Mich. Ct. App. Dec. 23, 2008) (holding that an equitable mortgage can exist where there are allegations of forged mortgage instruments); In re Estate of Moukalled, 269 Mich.App. 708, 714 N.W.2d 400, 407-09 (2006) (granting an equitable mortgage where a land contract, which purported to give a security interest in real property, was invalid under the Uniform Commercial Code). In re Sutter, 665 F.3d 722, 728 (6th Cir. 2012). In the present case, Plaintiff has made no allegations that the Mortgage was invalid, void, or forged and therefore there are no allegations that could plausibly support a claim for an “equitable mortgage.” Accordingly, the Court will dismiss Plaintiff's request for an equitable mortgage. IV. CONCLUSION For all these reasons, the Court GRANTS Defendants' Motion to Dismiss (ECF No. 7) and DISMISSES this action WITH PREJUDICE. IT IS SO ORDERED. All Citations Slip Copy, 2016 WL 3667957 End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 2:16-cv-01291-NBF Document 52-2 Filed 02/15/17 Page 27 of 27
