Corpe, II et al v. Bank of America, N.A. et al
ORDER - Defendants BOA and BAC's Motion to Supplement the Record 30 is GRANTED. The supplemental authority attached to Defendants' Motion [30-1] shall be deemed filed. Defendants BAC Home Loans Servicing, LP, Bank of America, N.A., and Millsap & Singer, P.C.'s Motions to Dismiss 4 & 7 are GRANTED. Plaintiffs' claims are dismissed. Signed on 2/29/13 by Chief District Judge Fernando J. Gaitan, Jr. (Enss, Rhonda)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MISSOURI
ANTHONY G. CORPE, et al.,
BANK OF AMERICA, N.A., et al.,
Case No. 2:12-CV4229-FJG
Currently pending before the Court is Defendants BAC Home Loans Servicing,
LP (“BAC”), Bank of America, N.A. (“BOA”), and Millsap & Singer, P.C.’s (“Millsap”)
Motions to Dismiss (Doc. No. 4 & 7).
This action is brought under the Home Affordable Modification Program
(“HAMP”). HAMP is a loan modification program created by the U.S. Department of
Treasury designed to benefit certain homeowners who are in default or at imminent risk
of default to obtain permanent loan modifications.
There is a two step process for
doing so: First, a loan servicer determines whether it is more profitable to modify the
borrower’s loan or permit it to proceed to foreclosure. If modification appears desirable,
servicer places borrower on a three month trial period wherein if all conditions are
satisfied, then the borrower is offered a permanent loan modification. 1
On April 19, 2005, Plaintiffs Anthony Corpe and Valerie Corpe purchased
property located at 30641 McCormick Road, Sedalia, Missouri (“Property”). In order to
finance the purchase of the Property, Plaintiffs executed two promissory notes – one for
Bourdelais v. J.P. Morgan Chase, Case No. 3:10CV670‐HEH, 2011 WL 1306311, * 1 (E.D. Va. April 1, 2011).
$274,000.00 with America’s Wholesale Lender (“AWL”) and one for $40,000.00 with
Countrywide Bank, N.A. (“Countrywide”). As security for the second promissory notes,
Plaintiffs executed a second Deed of Trust, naming Countrywide as lender, MERS as
“beneficiary” and “nominee” and CTC Real Estate Services as Trustee. Both loans are
hereinafter collectively referred to as the “Loan”. On April 27, 2009 Countrywide d/b/a
AWL was purchased by BOA. (Doc. No. 1).
During 2009 and 2010, Plaintiffs’ small business experienced a significant
reduction in revenue which made it difficult for Plaintiffs to make payments on the Loan.
Plaintiffs contacted BAC, servicer of their home loan, in May 2010 to inquire about
applying for a modified or replacement loan in order to remain in their home. Plaintiffs
allege BAC told Plaintiffs to complete a loan application and to provide certain financial
records. Plaintiffs state they provided the requested information and awaited a
response. Thereafter, Plaintiffs claim they received multiple correspondences from
BAC ranging from the need for additional documentation for their loan application to
intent of accelerating the Loan to default notices and foreclosure notices. Plaintiffs also
allege that they contacted BAC by phone or electronic mail on several occasions
throughout which time they were given several conflicting responses.2 Plaintiffs were
given until April 15, 2011 to pay the total due under their Loan. However, on April 8,
2011, despite significant conflicting correspondence from previous months, Anthony
Corpe was advised by telephone by BAC that Plaintiffs needed to submit a new set of
forms and financial documents. BAC refused to put this correspondence in writing.
Plaintiffs state that despite compliance with all of BAC’s directives and all obligations
under the terms of the HAMP Program Directives, Plaintiffs have not been provided with
For a more detailed account of Plaintiff’s allegations, see Plaintiff’s First Amended Complaint (Doc. No. 1).
a modified or replacement loan. Furthermore, Plaintiffs have received several Notice of
Trustee’s Sale dated June 28, 2011 from Millsap stating that it has been appointed
Trustee of the Deed of Trust executed by Plaintiffs on August 29, 2006. Plaintiffs state
they have spent significant time and money with BAC in efforts to modify the Loan,
including, but not limited to, dozens of hours on the telephone, express mail, postage
and fax fees. Plaintiffs further state this ordeal has had a devastating impact on their
credit history. (Doc. No. 1).
Accordingly, on July 14, 2011, Plaintiffs filed a Petition in the Circuit Court of
Pettis County, Missouri against Defendants. On August 20, 2012, the action was
removed to the Western District of Missouri. Plaintiffs’ First Amended Petition asserts
claims for the following: Count I – Declaratory Judgment; Count II – Temporary
Restraining Order (“TRO”), Preliminary Injunction, and Permanent Injunction; Count III –
Breach of Contract and Breach of Duty of Good Faith & Fair Dealing; Count IV –
Fraudulent Misrepresentation; Count V- Negligent Misrepresentation; Count VI –
Violation of Missouri Merchandising Practices Act (“MMPA”); and Count VIII- Violation of
Racketeer Influenced Corrupt Organizations Act (“RICO”). (Doc. No. 1).
On August 22, 2012, Defendants BAC and BOA filed a Motion to Dismiss (Doc.
No. 3). On August 27, 2012, Defendant Millsap filed a Motion to Dismiss (Doc. No. 7).
MOTION FOR LEAVE TO SUPPLEMENT THE RECORD
On March 28, 2013, Defendants BOA and BAC filed a Motion for Leave to
Supplement the Record (Doc. No. 30). Defendants seek to supplement the record with
new authority concerning its Motion to Dismiss that was just issued on March 28, 2013.
Accordingly, Defendants’ Motion (Doc. No. 30) is hereby GRANTED. The supplemental
authority attached to Defendants’ Motion shall be deemed filed.
STANDARD OF REVIEW
In ruling on a motion to dismiss, the Court must view the allegations in the
Complaint in the light most favorable to Plaintiff. Graham Constr. Serv., Inc. v. Hammer
& Steel, Inc., No. 4:11-CV-1316 JCH, 2012 WL 685459, at *2 (E.D. Mo. Mar. 2, 2012)
(citing Eckert v. Titan Tire Corp., 514 F.3d 801,806 (8th Cir. 2008)). Additionally, the
Court must accept the allegations contained in the Complaint as true and draw all
reasonable inferences in favor of the nonmoving party. Id. (citing Coons v. Mineta, 410
F.3d 1036 (8th Cir. 2005)). A motion to dismiss must be granted, however, if the
complaint does not contain enough facts to state a claim to relief that is plausible on its
face. Id. (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). While a
Complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide the grounds of his entitlement to relief
requires more than mere labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do. Id. Stated differently, to survive a motion to
dismiss the Complaint’s factual allegations, must be enough to raise a right to relief
above the speculative level. Id.
As a threshold matter, Defendants seek to dismiss each count of Plaintiffs’
Complaint, asserting that all of Plaintiffs’ claims are based on HAMP. HAMP does not
allow a private cause of action. Thus, Plaintiffs’ Complaint should be dismissed. (Doc.
No. 4, 7, 27 & 28).
While there is no private right of action under HAMP, Plaintiffs’ claims are not all
based on an entitlement established by HAMP, but rather on common law principles
independent of HAMP. Cox v. Mortgage Electronic Registration Systems, Inc., 794
F.Supp.2d 1060, 1064 (D. Minn. 2011). Therefore, Plaintiffs’ claims, at least on this
ground, are permitted to proceed.
A.) Count I – Declaratory Judgment
Plaintiffs’ Complaint states there is no documentary evidence, recorded or
otherwise, showing that BOA or BAC is the owner and/or holder of Plaintiffs’ promissory
note to Countrywide for Loan. Furthermore, Plaintiffs have been unable to locate any
document, recorded or otherwise, giving notice or showing that Millsap is successor
trustee for either AWL, Countrywide, CTC Real Estate Services, BOA, or BAC.
Plaintiffs demand strict proof that BOA or BAC is the owner and that Millsap is the lawful
successor trustee. As such, Plaintiffs request judgment declaring that: (a) neither BOA,
BAC, nor Millsap are a real party in interest entitled to foreclose the Deeds of Trust
securing Plaintiffs’ property; and (b) Millsap has no authority to conduct a foreclosure
sale. (Doc. No. 1 & 23).
Defendants state Plaintiffs have failed to state a cause of action for declaratory
judgment. Specifically, Defendants state the foreclosure sale has been cancelled and a
new one is not scheduled. Therefore, Plaintiffs’ claim, here, is not ripe for judicial
review. Furthermore, Defendants state that Plaintiffs’ claim that they do not know who
is the holder of the Note is baseless. Plaintiffs know that BOA is the holder of the Note
because BOA attached a copy of the original Note to its Motion to Dismiss Plaintiffs’
original Petition and thus, it is entitled to receive payments or enforce the Note. (Doc.
No. 4, 7, 27, & 28).
To state a cause of action for declaratory judgment, a petition must allege: (1) a
justiciable controversy which presents a real, substantial, presently-existing dispute as
to which specific relief is sought; (2) a legally protected interest; (3) that the question
presented is ripe for judicial determination; and (4) that the pleader has no adequate
remedy at law. Michaelree v. Millsap & Singer, P.C., Case No. 10-1172-CV-W-HFS,
2011 WL 830281, * 3 (W.D. Mo. 2011). However, before deciding whether to grant
declaratory relief, courts have an independent obligation to determine whether a case
presents “a real, substantial, presently-existing controversy,” or is instead moot. Id. A
case is moot if the decision would have no practical effect upon an existent controversy.
Id. When an event occurs that makes a court’s decision unnecessary or makes it
impossible for the court to grant effectual relief, the case is moot and generally should
be dismissed. Id. Here, the foreclosure sale instituted by Defendants upon which
Plaintiffs base their claims has been cancelled and a new one has not been scheduled.
As such, any decision by this Court on this matter would be unnecessary and thus,
Count I of Plaintiffs’ Complaint is moot. Accordingly, Count I is hereby DISMISSED.
B.) Count II – Injunctive Relief
Count II of Plaintiffs’ Complaint seeks injunctive relief for a TRO enjoining Millsap
from proceeding with the Trustee’s Sale and issuance of a preliminary and permanent
injunction against all acts and activities of the Defendants’ affecting Plaintiffs’ title to and
possession of the Property (Doc. No. 1). This includes proceeding with the Trustee’s
Sale (Doc. No. 1 & 23). Defendants also seek to dismiss this count due to lack of
ripeness (Doc. No. 4, 7, 27, & 28).
Since the foreclosure sale has been canceled and a new one is not scheduled,
this claim is moot. Accordingly, Count II is hereby DISMISSED.
C.) Count III – Breach of Contract and Breach of Duty of Good Faith & Fair
Count III of Plaintiffs’ Complaint asserts breach of contract and breach of duty of
good faith and fair dealing. Plaintiffs state that if the Deed of Trust was in fact properly
assigned to BOA, the Deed of Trust constitutes a contract between Plaintiffs and BOA,
under which BOA has undertaken duties to act for the benefit of Plaintiffs. BOA
breached its implied duty of good faith and fair dealing by soliciting Plaintiffs to contact
them regarding a loan modification, repeatedly asking for documentation already
provided, repeatedly transferring Plaintiffs’ telephone calls among numerous
representatives, and ultimately failing to offer Plaintiffs, as eligible borrowers, a
temporary or permanent loan modification. Plaintiff further states BOA routinely and
regularly breaches this duty with its customers. (Doc. No. 1 & 23).
Defendants BOA and BAC state Plaintiff’s claim for breach of contract does not
relate to the Deed of Trust, but to the bank’s approach to a modification under the
HAMP provision. However, there was no HAMP contract, and thus, no breach of it. As
such, there is a disconnect between the purported contract and Plaintiffs’ claimed
breach of duty of good faith and fair dealing. Furthermore, Defendants state they are
not obligated to give a loan modification. To the extent that any contract could be
alleged, any such agreement can only be established through various phone
conversations and was not set forth in writing. Oral credit agreements are
unenforceable under Missouri law. Moreover, the Deed of Trust even states oral
agreements are not enforceable. Because no contract was entered and any oral
agreement, if alleged is ineffectual, Count III must be dismissed. (Doc. No. 4 & 27).
Review of Plaintiffs’ Complaint reveals that the claims alleged do not arise under
the Deed of Trust, but rather BOA and BAC’s approach to the loan modification process
and not timely approving Plaintiffs for a loan. HAMP creates no duty for lenders to
make loan modifications or to do so in a timely fashion. Ming’ate v. Bank of America,
N.A., Case No. 11-1787 ADM/TNL, 2011 WL 4590431, *6 (D. Minn. 2011). Accordingly,
Count III of Plaintiff’s Complaint is DISMISSED.
D.) Count IV – Fraudulent Misrepresentation
Count IV of Plaintiffs’ Complaint alleges fraudulent misrepresentation.
Specifically, Plaintiffs allege that the information provided over the telephone by BAC
that Plaintiffs were eligible for a loan modification from BOA and that their late fees and
past-due amounts would be added to the end of the loan was false. The information
provided to Plaintiffs by BAC over the telephone on March 21, 2011, specifically that
BOA had completed the underwriting on their new loan application, was also false. The
information provided to Plaintiffs over the telephone by Ms. Titus of BAC on March 30,
2011, specifically that the Corpes had applied for a different type of mortgage loan with
BOA earlier in 2010 called the “MHA program”, that BOA had completed underwriting
for the MHA application in September 2010 and determined that Plaintiffs did not
qualify, and that the Corpe’s current application with BOA was for a different type of
loan program, was also false. Plaintiffs state agents of BAC knew the information was
false at the time the statements were made, or improperly made the representations
without inquiry as to their truth or falsity. (Doc. No. 1 & 23).
Defendants BOA and BAC state Plaintiffs do not assert this claim with enough
specificity to survive a Motion to Dismiss. Specifically, Plaintiffs do not identify who
made the alleged fraudulent misrepresentations to them. Furthermore, Plaintiffs do not
identify any specifics of the purported oral agreement for loan modification – such as the
term of the loan modification, the amount of any payments, or the interest rate in
connection with it. Finally, Plaintiffs appear to be trying to enforce an oral agreement for
loan modification. This is an end run around the Credit Agreement Statute of Frauds,
which expressly prohibits the enforcement of any such oral agreements. (Doc. No. 4 &
Under Missouri law, the elements of fraudulent misrepresentation are the
following: (1) a false, material representation; (2) speaker’s knowledge of
representation falsity or his ignorance of its truth; (3) speaker’s intent that representation
should be acted upon by hearer in the manner reasonably contemplated; (4) hearer’s
ignorance of the falsity of the statement; (5) hearer’s reliance on statement’s truth, and
the right to rely thereon, and (6) proximate injury. Moses.com Sec, Inc. v.
Comprehensive Software Sys, Inc., 406 F.3d 1052, 1064 (8th Cir. 2005). To recover for
fraudulent misrepresentation, the plaintiff must establish every element. Id. In alleging
fraud, a party must state with particularity the circumstances constituting fraud.
Fed.R.Civ.P. 9(b). This means that 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. Nuss
v. Central Iowa Binding Corp., 284 F.Supp.2d 1187 (S.D. Iowa 2003). A mere broken
promise is not actionable. Id. In this case, Plaintiffs Complaint does not meet the
particularity requirement for fraudulent misrepresentation in that Plaintiff has not
identified the speaker of each misrepresentation. In certain instances, it appears as
though Plaintiff is merely relying on broken promises to assert the fraudulent
misrepresentation claim. This is not sufficient to survive a Motion to Dismiss. As such,
Count IV is DISMISSED.
E.) Count V – Negligent Misrepresentation
Count V of Plaintiffs’ Complaint asserts negligent misrepresentation. Plaintiffs
state the Deed of Trust constitutes a contract between themselves and BOA, under
which BOA and BAC had a duty to act in good faith on Plaintiffs’ loans and dealings.
This duty extends to communicating truthful information in the course of their business
relationship. BAC failed to do so by furnishing Plaintiffs with information that was false.
(Doc. No. 1 & 23).
Defendants BOA and BAC state Plaintiffs’ claims for negligent misrepresentation
fail because Plaintiffs do not allege, and cannot establish, that BOA owed a duty to
them. (Doc. No. 4 & 27).
To state a claim for negligence under Missouri law, a plaintiff must plead facts
that support each of the following elements: (1) the defendant had a duty to protect the
plaintiff from injury; (2) the defendant breached that duty; and (3) the breach was the
proximate cause of the plaintiff’s injury. Kulovic v. BAC Home Loans Servicing, L.P.,
No. 4:10-CV-2058 CAS, 2011 WL 1483374 (E.D. Mo. Apr. 9, 2011). The relationship
between a lender and a borrower is one of contractual obligation, not one of duty.
Sultan v. BAC Home Loans Servicing L.P., 2:10-CV-04271-NKL, 2011 WL 1557933, at
*3 (W.D. Mo. Apr. 25, 2011). Since BOA is Plaintiffs’ lender, there is no duty owed and
thus, a claim for negligence cannot survive. As such, Count V is hereby DISMISSED.
F.) Count VI – Missouri Merchandising Practices Act
Count VI of Plaintiffs’ Complaint asserts a claim for violation of the MMPA.
Plaintiffs argue Defendants violated the MMPA because BOA’s written and telephone
solicitations created a deliberate impression that it would grant a loan modification upon
qualification, application, and provision of requested documents. (Doc. No. 1 & 23).
Defendants BOA and BAC state Plaintiffs’ position is insufficient. The MMPA
requires that there be some type of fraud, misrepresentation, or unfair practice with
regard to the advertising and selling of new merchandise. In offering a loan modification
to Plaintiffs, BOA was not advertising or selling new merchandise to Plaintiffs. Rather,
BOA was merely modifying the repayment terms of merchandise – Plaintiffs’ home loan
– that was previously sold in trade or commerce. Under such circumstances, Plaintiffs
fail to properly allege that BOA offered “merchandise” in “trade or commerce” as defined
by MMPA. (Doc. No. 4 & 27).
The MMPA makes it unlawful for any person to engage in any deception, fraud,
false pretense, false promise, misrepresentation, unfair practice or the concealment,
suppression, or omission of any material fact in connection with the sale or
advertisement of any merchandise in trade or commerce. MO. REV. STAT. § 407.020.1.
The scope of the MMPA does not cover events and activities that occurred well after the
initial sale or advertising for the sale of the property. Strutton v. Merscorp., et. al., Case
No. 12-01149-CV-W-BP, slip op. at 10-12 (W.D. Mo. Feb. 6, 2013). Here, Plaintiffs’
claims are for a loan modification well after the initial purchase of the home and original
loan. As such, no claim for Plaintiffs exists under the MMPA. Count VI is DISMISSED.
G.) Count VII – Violation of Racketeer Influenced Corrupt Organizations Act
Count VII of Plaintiffs’ Complaint contains a claim for violation of RICO. Plaintiffs
state that they and others have been the victims of BOA and BAC’s scheme to defraud
borrowers as well as the federal government since the introduction of HAMP. Plaintiffs
state it is common knowledge that BOA has acted fraudulently on a regular basis in its
mortgage business practices and Plaintiffs intend to offer that evidence through
settlement documents with the federal government and through the testimony of other
BOA and BAC borrowers. (Doc. No. 1 & 23).
Defendants state no claim exists under RICO because Plaintiffs fail to show a
pattern of racketeering activity. Plaintiffs First Amended Petition reveals that this is a
case about one borrower – a married couple. No particular wrongdoing – aside from
the most general and conclusory of allegations – is shown as to any other borrowers.
This is simply insufficient. (Doc. No. 4 & 27).
To establish a successful claim under the civil RICO statute, a complaint must
allege (1) that each defendant violated the criminal RICO statute; (2) that the plaintiff
suffered injury to business or property; and (3) that the injury was proximately caused
by defendant’s RICO violation. Crest Constr. II Inc. v. On Time Auto, No. 07-0728-CVW-DGK, 2010 3456690, at *1 (W.D. Mo. Aug. 27, 2010). To successfully plead a
violation of a criminal RICO statute the complaint must allege: (1) that the defendant (2)
through the commissioner of two or more acts (3) constituting a pattern (4) of
racketeering activity (5) directly or indirectly invests in, or maintains an interest in, or
participates in (6) an enterprise (7) the activities of which affect interstate or foreign
commerce. Id. To establish a pattern of activity, Plaintiff must provide evidence of
multiple predicate acts occurring over a substantial period of time. Id at 3. A year or
less of misconduct rarely constitutes a substantial amount of time. Id. Therefore,
predicate acts extending over a few weeks or months and threatening no future criminal
conduct do not satisfy this requirement. H.J., Inc. v. Northwestern Bell Telephone Co.,
492 U.S. 229, 242 (1989). Here, Plaintiffs’ allegations only extend from May 2010 to
April 2011. This is less than one year. Furthermore, Plaintiffs’ allegations regarding
other customers of BOA and BAC are only vaguely asserted. As such, Plaintiffs’ RICO
claim is insufficient. Count VII is DISMISSED.
Defendants BOA and BAC’s Motion to Supplement the Record (Doc. No. 30) is
hereby GRANTED. The supplemental authority attached to Defendants’ Motion (Doc.
No. 30-1) shall be deemed filed. For the aforementioned reasons, Defendants BAC
Home Loans Servicing, LP, Bank of America, N.A., and Millsap & Singer, P.C.’s
Motions to Dismiss (Doc. No. 4 & 7) are hereby GRANTED. Plaintiffs’ claims are
IT IS SO ORDERED.
Date: March 29, 2013
Kansas City, Missouri
S/ FERNANDO J. GAITAN, JR.
Fernando J. Gaitan, Jr.
Chief United States District Judge