Hall et al v. BAC Home Loans et al

Filing 16

MEMORANDUM OPINION. Signed by Judge L Scott Coogler on 05/21/2013. (MSN)

FILED
2013 May-21 PM 04:00
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
SUZY and CHARLES HALL,
Plaintiffs;
vs.
BAC HOME LOANS and BANK
OF AMERICA, N.A.,
Defendants.

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2:12-cv-3720-LSC

MEMORANDUM OPINION
I.

Introduction
Before the Court is a Motion to Dismiss, filed by the defendant, Bank of

America, N.A. (“BANA” or “Defendant”1). (Doc. 9.) The issues raised in
Defendant’s motion have been fully briefed by all parties, and are now ripe for
decision. For the reasons described below, Defendant’s Motion to Dismiss is due to
be GRANTED in part and DENIED in part.
II.

Background
A.

Procedural History

1

Bank of America, N.A. is the successor by merger to BAC Home Loans Servicing, LP.
Although both entities are named as defendants, because Bank of America, N.A. and BAC Home
Loans are now a single, consolidated entity, this Court will refer only to BANA as the defendant.
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Suzy and Charles Hall (“Plaintiffs”), along with four other unrelated couples,
originally filed an action against BANA on March 14, 2012. See Doc. 1 in Prickett v.
BAC Homeloans Servicing, LP, 2:12-cv-826-LSC. On June 4, 2012, BANA moved to
dismiss every claim by all ten plaintiffs under Federal Rule of Civil Procedure
12(b)(6). Before ruling on BANA’s motion, the Court determined, after seeking input
from the parties, that the ten plaintiffs were improperly joined under Federal Rule of
Civil Procedure 20(a). Accordingly, the Court ordered the original action severed into
five independent cases, mooted BANA’s first motion to dismiss, and instructed
Plaintiffs to file an amended complaint setting out only their individualized claims for
relief in this newly created action. Pursuant to the Court’s directive, Plaintiffs filed an
amended complaint on January 13, 2013 (the “Complaint”). (Doc. 8.) In the
Complaint, Plaintiffs allege that after they defaulted or encountered difficulties
meeting obligations on their mortgage, BANA improperly serviced their loan and
defectively processed their modification application. Based on these alleged
improprieties, Plaintiffs assert eight separate causes of action: (1) declaratory and
injunctive relief; (2) violation of the Real Estate Settlement Procedures Act
(“RESPA”), 12 U.S.C. § 2601, et seq.; (3) violation of the Fair Debt Collection
Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq.; (4) negligence; (5) wantonness;

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(6) unjust enrichment; (7) wrongful foreclosure; and (8) breach of implied covenant
of good faith. BANA renewed its Motion to Dismiss on February 12, 2013, asking the
Court to dismiss all eight claims for relief set out in the Complaint. (Doc. 9.)
B.

Facts2

In September 2009, two years after taking out their mortgage, Plaintiffs
contacted their loan servicer, First Franklin Financial Corporation (“First Franklin”),
to request a loan modification. (Doc. 8 ¶ 16–17.) Plaintiffs were originally told they
were ineligible for assistance because they were not delinquent on their payments. (Id.
¶ 17.) However, Plaintiffs received notice that they were delinquent in November
2009, and once again began the process of seeking a modification. (Id. ¶ 19–20.)
Shortly after receiving their delinquency notice, Plaintiffs were evaluated over
the phone for a modification pursuant to the Home Affordable Modification Program
(“HAMP”), and later they received and completed a HAMP loan modification
packet. (Id. ¶ 21–22.) Over the next several months Plaintiffs repeatedly
supplemented their financial information with First Franklin and continually received
conflicting information about the status of their application. (Id. 23–32.) In August

2

For purposes of this opinion, the facts are accepted as alleged in Plaintiffs’ Complaint. See
Grossman v. Nationsbank, N.A., 225 F.3d 1228, 1231 (11th Cir. 2000). Recitation of the facts alleged
by Plaintiffs is not to be construed as a verification that the allegations are true.
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2010, Plaintiffs received notice that they were approved for a HAMP loan
modification and were instructed to begin making reduced payments. (Id. 33–34.)
In September 2010, Plaintiffs were informed that BANA would be their new
loan servicer. (Id. ¶ 35.) Shortly after BANA took over as loan servicer, Plaintiffs
noticed that the final documentation on the HAMP modification had several errors,
including the monthly payment amount being set higher than they felt it should have
been. (Id. ¶ 38.) Plaintiffs attempted to resolve these errors with BANA, but could not
get the help they needed. (Id. ¶ 39–40.) Unable to resolve the issue with BANA in a
timely manner, Plaintiffs corrected the loan amount on the HAMP document and
returned it to BANA. (Id. ¶ 40.) Over the following months, Plaintiffs experienced
trouble submitting payments to BANA and confirming the details of their
modification. (Id. ¶ 41–55.) In particular, Plaintiffs were informed that the installments
they were making were less than the amount due under the modification agreement.
(Id. ¶ 43.) Through counsel, Plaintiffs submitted two “qualified written request[s]”
for information on May 16, 2011, and June 13, 2011. (Id. ¶ 56.) Plaintiffs allege BANA
never responded to these requests. (Id. ¶ 80–96.) From June 2011 through the filing
of this action, Plaintiffs continued to attempt to resolve the issues with their account.
(Id. ¶ 57–68.) Plaintiffs are currently delinquent on their mortgage payments. (Id. ¶

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67.)
III.

Standard
A defendant may move to dismiss a complaint pursuant to Federal Rule of Civil

Procedure 12(b)(6) if the plaintiff has failed to state a claim upon which relief may be
granted. “When considering a motion to dismiss, all facts set forth in the plaintiff’s
complaint ‘are to be accepted as true and the court limits its consideration to the
pleadings and exhibits attached thereto.’” Grossman v. Nationsbank, N.A., 225 F.3d
1228, 1231 (11th Cir. 2000) (quoting GSW, Inc. v. Long County, 999 F.2d 1508, 1510
(11th Cir. 1993)). In addition, all “reasonable inferences” are drawn in favor of the
plaintiff. St. George v. Pinellas County, 285 F.3d 1334, 1337 (11th Cir. 2002).
To survive a 12(b)(6) motion to dismiss for failure to state a claim, the
complaint “does not need detailed factual allegations;” however, the “plaintiff’s
obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than
labels and conclusions, and a formulaic recitation of the elements of a cause of action
will not do. Factual allegations must be enough to raise a right to relief above the
speculative level, on the assumption that all the allegations in the complaint are true
(even if doubtful in fact).” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)

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(internal citations omitted).3 The plaintiff must plead “enough facts to state a claim
that is plausible on its face.” Id. at 570. Unless a plaintiff has “nudged [his] claims
across the line from conceivable to plausible,” the complaint “must be dismissed.”
Id.
“[U]nsupported conclusions of law or of mixed fact and law have long been
recognized not to prevent a Rule 12(b)(6) dismissal.” Dalrymple v. Reno, 334 F.3d 991,
996 (11th Cir. 2003) (quoting Marsh v. Butler County, 268 F.3d 1014, 1036 n.16 (11th
Cir. 2001)). And “where the well-pleaded facts do not permit the court to infer more
than the mere possibility of misconduct, the complaint has alleged—but it has not
‘show[n]’—‘that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679
(2009) (quoting Fed. R. Civ. P. 8(a)(2)). Therefore, the U.S. Supreme Court
suggested that courts adopt a “two-pronged approach” when considering motions to
dismiss: “1) eliminate any allegations in the complaint that are merely legal
conclusions; and 2) where there are well-pleaded factual allegations, ‘assume their

3

In Bell Atlantic Corp. v. Twombly, the U.S. Supreme Court abrogated the oft-cited standard
that “a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt
that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief”
set forth in Conley v. Gibson, 355 U.S. 41 (1957). Bell Atl. Corp., 550 U.S. at 560-63. The Supreme
Court stated that the “no set of facts” standard “is best forgotten as an incomplete, negative gloss
on an accepted pleading standard: once a claim has been stated adequately, it may be supported by
showing any set of facts consistent with the allegations in the complaint.” Id. at 563.
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veracity and then determine whether they plausibly give rise to an entitlement to
relief.’” American Dental Ass’n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir. 2010)
(quoting Iqbal, 556 U.S. at 664). Importantly, “courts may infer from the factual
allegations in the complaint ‘obvious alternative explanation[s],’ which suggest lawful
conduct rather than the unlawful conduct the plaintiff would ask the court to infer.”
Id. (quoting Iqbal, 556 U.S. at 682).
IV.

Discussion
A.

Count One: Declaratory and Injunctive Relief

Count One of the Complaint consists of ten paragraphs under the heading
“Declaratory and Injunctive Relief.” (Doc. 8 ¶¶ 70–79.) Throughout these
paragraphs, Plaintiffs repeatedly refer to Defendant’s alleged failure to comply with
various federal regulations. Plaintiffs begin by stating that they are “in doubt as to
their rights as it relates to the FHA insured mortgage loan in question” and that
“Defendant has failed to provide servicing of this FHA insured residential mortgage
in accordance with the federal regulations at 24 C.F.R. Part 203 . . . Subpart C.” (Id.
¶ 70, 72.) Further down, Plaintiffs assert they are also “in doubt as to their rights and
status as a borrower under the National Housing Act and federal regulations made
applicable to and incorporated in the subject mortgages” because of Defendant’s
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failure to service the loan in accordance with RESPA, HAMP, and the terms of their
mortgage agreement. (Id. ¶ 74.) Plaintiffs conclude by requesting the following relief:
Plaintiffs requests [sic] the court enter a judgment pursuant to the
National Housing Act, the Real Estate Settlement Procedures Act and
the applicable implementing regulations declaring that the Defendant is
legally obligated and must provide Plaintiffs with access to the special
servicing provided in the applicable federal regulations and enjoining the
Defendant from charging foreclosure fees and costs and from
commencing or pursuing any foreclosure arising from a default related
to the time in question . . . .
(Id. ¶ 79.)
It would appear that Plaintiffs are requesting a declaration that Defendant’s
conduct was in violation of the National Housing Act and/or RESPA, and because of
these violations, Plaintiffs request the Court to enjoin Defendant from foreclosing on
their home. For the reasons that follow, the Court finds this count should be
dismissed.
First, the National Housing Act, 12 U.S.C. § 1701, et seq., and the regulations
promulgated thereunder, 24 C.F.R. Part 203, Subpart C, pertain to relations between
the mortgagee and the government and do not give the mortgagors (i.e., Plaintiffs) a
remedy for the mortgagee’s failure to follow those regulations. Federal courts
throughout the country have repeatedly rejected similar attempts by borrowers to
bring claims under the National Housing Act and its implementing regulations. See,
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e.g., In re Miller, 124 F. App’x 152 (4th Cir.2005) (no private right of action for failure
to comply with NHA's loss mitigation requirements); Roberts v. Cameron–Brown Co.,
556 F.2d 356, 361 (5th Cir.1977) (“No evidence exists demonstrating that Congress
intended to create a private cause of action under the National Housing Act.”); Coley
v. Accredited Home Lenders. Inc., 2011 WL 1193072, at *2 (E.D. Ark. 2011) (internal
citation omitted) (“[T]he National Housing Act govern[s] relations between the
mortgagee and the government, and give[s] the mortgagor no claim for duty owed or
for the mortgagee’s failure to follow the Act or its regulations.”); Mitchell v. Chase
Home Finance LLC, 2008 WL 623395, at *3 (N.D. Tex. 2008) (under the National
Housing Act there is “no private right of action available to a mortgagor for a
mortgagee’s noncompliance”). Further, Plaintiffs have not provided any authority to
the contrary. Thus, Count One is due to be dismissed to the extent it requests relief
under that law.
Second, Count One’s vague request for relief under RESPA is superfluous with
Count Two, which plainly asserts a claim for relief under RESPA § 2605. Count Two
adequately affords Plaintiffs all the relief they seek under RESPA, including injunctive
relief, which was expressly included in the prayer for relief at the end of the
Complaint. Thus, Count One’s request for relief under RESPA is due to be dismissed
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as duplicative.
While a reasonable reading of Count One of the Complaint indicates Plaintiffs
are seeking relief pursuant to the National Housing Act and RESPA (see Doc. 8 ¶ 79),
Plaintiffs’ response appears to claim that Count One seeks a private cause of action
or some declaration of rights under HAMP. (See Doc. 13 at 3) (“Complaint should not
be dismissed on a HAMP private right cause of action . . . .”). Even if this is true,
asserting a cause of action under HAMP fairs no better. As Plaintiffs themselves
readily admit, “Courts have uniformly held that HAMP does not provide a private
cause of action . . . .” (Id. at 5.) See also, e.g., Johnson v. Bank of Am., N.A., 2012 WL
6052044, at *3 (E.D. Va. Dec. 5, 2012) (“Courts have routinely dismissed similar
HAMP claims, rebutting plaintiffs' efforts to pursue a remedy for which no private
cause of action exists.”) (citing cases). Notwithstanding their concession that there
is no private cause of action under HAMP, Plaintiffs proceed to argue that their
HAMP claim should not be dismissed because it is “plead on the same facts” as other
common law claims. (Doc. 13 at 3.) Although Plaintiffs argue that other courts have
found “pleading on the same facts” as a reason for denying a motion to dismiss, they
failed to provide the Court with any authority for this position. Nonetheless, even
assuming Plaintiffs correctly state the law on this point, and assuming it is true that the
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facts, as pled, support “other causes” (id.), that would not save Count One, which
asserts a right to relief under federal statutes that do not create a private cause of
action. If Plaintiffs’ contention is that the facts, as pled, support other common law
claims, it is their responsibility to identify those claims and to provide legal arguments
to defend them. This, they have not done. Accordingly, regardless of whether Count
One is based on HAMP, RESPA, the National Housing Act, or some combination of
the three, it is due to be dismissed for failure to state a claim for which relief can be
granted.
B.

Count Two: RESPA

Plaintiffs allege that BANA is liable under RESPA because it failed to respond
in a proper and timely way to Plaintiffs’ “qualified written request” (QWR) for
information related to their mortgage account. RESPA establishes certain actions
which must be followed by entities or persons responsible for servicing federally
related mortgage loans, including responding to borrower inquires. See 12 U.S.C. §
2605. Specifically at issue is § 2605(e), which provides that a loan servicer, upon
receipt of a QWR, must provide “a written response acknowledging receipt of the
correspondence” within 5 business days, id. § 2605(e)(1)(A), and must take action on
the QWR within 30 days. Id. § 2605(e)(2).
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Defendant makes several arguments why Plaintiffs’ RESPA claim should be
dismissed. First, Defendant argues that Plaintiffs’ failed to plead that Defendant did
not respond to any QWRs in line with RESPA’s requirements. Pursuant to §
2605(e)(2), a loan servicer is required to take one of three actions in response to a
QWR: (1) make appropriate corrections and notify the borrower of the corrections, or
(2) conduct an appropriate investigation and provide the borrower with a statement
as to why it believes the account is correct, or (3) conduct an investigation and provide
the borrower with a statement as to why the information requested is unavailable.
As an initial matter, Defendant has not provided any authority demonstrating
a plaintiff must specifically list each of these requirements and state the defendant did
not undertake such action. Rather, for purposes of Rule 8 notice pleading, it is likely
sufficient to generally allege, as Plaintiffs did, that the defendant failed to respond as
required by the statute. (Doc. 8 ¶ 86.) That said, Plaintiffs appear to have gone further
and specifically alleged that Defendant failed to undertake each of the statutory
authorized responses. (See Doc. 8 ¶¶ 88–91.)
Defendant’s second argument is that Plaintiffs did not plead how their alleged
QWR satisfied RESPA’s statutory requirements. A request only “qualifies” under
RESPA if three conditions are met: (1) it is in writing, (2) it includes or allows the
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servicer to identify “the name and account of the borrower,” and (3) it “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.” 12 U.S.C. § 2605(e)(1)(B). In the Complaint,
Plaintiffs allege that they submitted two formal QWRs on May 16, 2011, and June 13,
2011. (Doc. 8 ¶ 56.) Further, Plaintiffs acknowledge the statutory requirements
necessary to render a written request “qualified” under the statute (id. ¶ 85), and
allege that their request satisfied these requirements. (Id. ¶ 56.) Although Plaintiffs
could have been more specific in alleging how their QWR satisfied RESPA’s
requirements, the Court finds Plaintiffs have done enough to survive a motion to
dismiss on this ground.
Finally, Defendant argues Plaintiffs have failed to identify any form of damages
they suffered as a result of BANA’s alleged RESPA violation. It is true that courts
have found conclusory allegations of damages insufficient, instead requiring plaintiffs
to plead a causal link between the claimed damages and defendant’s alleged RESPA
violation. See, e.g., Jackson v. Ocwen Loan Servicing, LLC, 2012 WL 882493 (S.D. Fla.
Mar. 14, 2012) (dismissing RESPA claim with only conclusory statement that he
suffered “detriment and financial injury”). However, the Court finds Plaintiffs have
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done more than simply making conclusory allegations of damages. Instead, Plaintiffs
pled specific damages causally related to Defendant’s alleged RESPA violation,
including “costs associated with mailing voluminous loan modification packages to
Defendant numerous times” (Doc. 8 ¶ 93) and attorney fees, expenses, and costs
associated with bringing the instant action. (Id. ¶ 95.)
For these reasons stated, Count Two states a claim for relief under RESPA
sufficient to survive a Rule 12(b)(6) motion to dismiss.
B.

Counts Three through Eight: FDCPA and State Law Claims

Defendant devoted 15 pages of its 27-page brief in support of its motion to
dismiss to explain, in detail, why Plaintiffs’ FDCPA claim and each of Plaintiffs’ four
state law causes of action are due to be dismissed. Plaintiffs, in contrast, offered a
three paragraph response spanning only two pages, leading off with a heading that
reads: “The Plaintiff [sic] Should Not be Required to Defend the Merits of Their
Claims in a Motion to Dismiss.” (Doc. 13 at 10.) In these short paragraphs, Plaintiffs
maintain that pleading standards under Twombly are minimal, and that Rule 8 “does
not mandate an exhaustive recitation of plaintiff’s [sic] reasoning at this stage of the
litigation process.” (Id. at 11.) However, they do not directly respond to any of
Defendant’s substantive or procedural attacks on their claims.
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Because the authority cited by Plaintiffs does not provide as much, the Court
is unclear why Plaintiffs feel they are not required defend their claims on a motion to
dismiss. Indeed, the Eleventh Circuit has made clear that failure by a plaintiff to
respond to a motion to dismiss argument constitutes an abandonment of that claim.
See Coal. for the Abolition of Marijuana Prohibition v. City of Atlanta, 219 F.3d 1301,
1326 (11th Cir. 2000) (“The appellants’ failure to brief and argue this issue during the
proceedings before the district court is grounds for finding that the issue has been
abandoned.”).
In Kirksey v. R.J. Reynolds Tobacco Co., 168 F.3d 1039 (7th Cir. 1999), the
Seventh Circuit was confronted with a similar situation, where a plaintiff responded
to a motion to dismiss by simply asserting that she was not “required at this stage of
the litigation to specifically characterize or identify the legal basis of the claims in the
complaint” but rather was only required to “assert a colorable claim that has some
factual support.” Id. at 1041. Writing for the court, Judge Posner aptly explained why
the district court was correct to dismiss the plaintiff’s claims:
Where the plaintiff has gone astray is in supposing that a
complaint which complies with Rule 8(a)(2) is immune from a motion to
dismiss. This confuses form with substance. Rule 8(a)(2) specifies the
conditions of the formal adequacy of a pleading. It does not specify the
conditions of its substantive adequacy, that is, its legal merit. Suppose
the complaint had alleged that the defendants had violated Illinois or
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federal law by failing to obtain a license to manufacture cigarettes. The
complaint would comply with Rule 8(a)(2), but, assuming no such
license is required, it would be highly vulnerable to dismissal under Rule
12(b)(6). If the defendants filed a motion to dismiss in which they
pointed out that there was no such licensing requirement, it would not
be responsive of the plaintiff to say that she was not “required at this
stage of the litigation to specifically characterize or identify the legal basis
of the claims in the complaint.” The defendants would have given
reasons for dismissing the complaint despite its formal beauties, and she
would have to give reasons against. Our system of justice is adversarial,
and our judges are busy people. If they are given plausible reasons for
dismissing a complaint, they are not going to do the plaintiff’s research
and try to discover whether there might be something to say against the
defendants’ reasoning. An unresponsive response is no response. In
effect the plaintiff was defaulted for refusing to respond to the motion to
dismiss. And rightly so.
Id. As Judge Posner clearly explained, it is not the job of this Court to make the
arguments on Plaintiffs’ behalf, and the Court refuses to do so.
There remains one last issue to address. Plaintiffs attached a second amended
complaint to their response brief, and in the last sentence before the conclusion stated:
“Should the Court in the alternative require the Plaintiff to defend the merits of its
claims in the pleadings, the Plaintiffs respectfully ask the court for leave to Amend its
complaint as attached.” (Doc. 13 at 11.) Plaintiffs’ attached amended complaint leaves
out their FDCPA claim, and therefore if an amendment were permitted, this claim
would fall away. Moreover, even if the amendment is allowed, that does not change
the fact that Plaintiffs have failed to provide any legal (or even practical) reason in
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their brief why the attached complaint is in a form sufficient to survive a Rule 12(b)(6)
motion to dismiss. Thus, with or without the amendment, this Court’s conclusion is
the same—Plaintiffs have abandoned the claims they did not defend.
Because Plaintiffs have not offered any substantive response to BANA’s
arguments for dismissal of their FDCPA claim and the four state law claims, these
claims are deemed abandoned and Defendant’s motion to dismiss is due to be granted
with respect to Counts Three through Eight of the Complaint.
V.

Conclusion
For the reasons stated, Defendant’s Motion to Dismiss (Doc. 9) is due to be

GRANTED in part and DENIED in part as provided herein. A separate order will be
entered consistent with this opinion.
Done this 21st day of May 2013.

L. Scott Coogler
United States District Judge
[170956]

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