Costine et al v. BAC Home Loans et al

Filing 17

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

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

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
MARK and ROBIN COSTINE,

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Plaintiffs;
vs.
BAC HOME LOANS and BANK
OF AMERICA, N.A.,
Defendants.

2:12-cv-3722-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. 10.) 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, DENIED in part, and partially DEFERRED to allow Plaintiffs
an opportunity to amend their complaint.
II.

Background

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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A.

Procedural History

Mark and Robin Costine (“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 14, 2013 (the
“Complaint”). (Doc. 9.) 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 nine separate causes of action: (1) breach
of contract; (2) slander of title; (3) unjust enrichment; (4) violation of the Fair Debt
Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692; (5) violation of the Real

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Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601, et seq.; (6)
“negligence per se”; (7) negligent hiring/training; (8) breach of fiduciary duty; and
(9) intentional infliction of emotional distress. BANA renewed its Motion to Dismiss
on February 13, 2013, asking the Court to dismiss all eleven claims for relief set out in
the Complaint. (Doc. 10.)
B.

Facts2

Plaintiffs purchased their home with an FHA-insured mortgage loan in April
2007. (Doc. 9 ¶ 9.) Plaintiffs’ financial situation turned bleak in the fall of 2009, when
their uninsured son was involved in a serious automobile accident resulting in
substantial medical expenses. (Id. ¶ 10.) As a result of their son’s medical bills,
Plaintiffs allege they fell behind on their mortgage payments and contacted BANA to
request a loan modification. (Id. ¶ 11.)
In November 2009, Plaintiffs were informed over the phone that they had been
approved for a modification and that collection activities would be suspended. (Id. ¶
13.) However, Plaintiffs did not receive any specific information about the
modification at that time, but rather allege they were told to expect a package in the

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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mail, as well as a phone call from a workout negotiator, with details about the
modification. (Id.) Not having heard from BANA in the allotted time, Plaintiffs
contacted BANA on January 6, 2010, to inquire about the status of their modification.
(Id. ¶ 14.) They allege that a BANA representative once again confirmed they had
been approved for a modification and that they should continue to wait for BANA to
provide additional details by phone and/or mail. (Id. ¶ 14–15.)
Plaintiffs allege they resumed making their “pre-modification monthly
mortgage payment” at some unspecified time when they did not receive the
paperwork or the phone call as promised. (Id. ¶ 16.) They claim that BANA initially
accepted these payments, but posted them “erratically in large lump sums with
seemingly no relationship to when they were sent.” (Id. ¶ 17.) During this period,
Plaintiffs claim they spent “hundreds of hours” on the phone with BANA
representatives, who provided conflicting reports about the status of their
modification. (Id. ¶ 18–19.) Although they were often told their modification was
complete, they also were repeatedly asked to resubmit their application, which they
allege to have done on six separate occasions. (Id. ¶ 19–20.) In April 2011, BANA
refused to accept further mortgage payments from Plaintiffs. (Id. ¶ 22–23.) Plaintiffs’
allege BANA refused to accept these payments even though the payment history for

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the account, attached as Exhibit 2 to the Complaint, shows that they paid more than
the total amounts due in calendar year 2010, and in 2011 prior to BANA’s refusal to
accept further payments. (Id. ¶ 25–28; Doc. 9-1 at 3–9.)
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
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(even if doubtful in fact).” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
(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

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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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.’” 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: Breach of Contract

Count One of Plaintiffs’ Complaint asserts a state law claim for breach of
contract. “The elements of a breach-of-contract claim under Alabama law are (1) a
valid contract binding the parties; (2) the plaintiffs’ performance under the contract;
(3) the defendant’s nonperformance; and (4) resulting damages.” Shaffer v. Regions
Fin. Corp., 29 So. 3d 872, 880 (Ala. 2009) (quoting Reynolds Metals Co. v. Hill, 825 So.
2d 100, 105 (Ala. 2002)). Defendant argues Plaintiffs’ breach of contract claim should
be dismissed for two reasons: (1) it is insufficiently pled under Rule 8 and (2) the
allegations of the Complaint demonstrate Plaintiffs’ breached the contract first.
The Court’s sole task at this point in the litigation is to evaluate whether
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Plaintiffs’ claim has satisfied the pleading standards. After considering the allegations
in the Complaint, the Court finds Plaintiffs have sufficiently alleged a breach of
contract to survive a Rule 12(b)(6) motion to dismiss. Plaintiffs have pled sufficient
factual content for the court to infer that a mortgage agreement existed and that
Defendant breached it by not properly applying payments and assessing unwarranted
fees. (Doc. 9 ¶ 31.) For these reasons, Defendant’s motion to dismiss is due to be
denied with respect to Count One.
B.

Count Two: Slander of Title

Count Two of the Complaint asserts a state law claim for slander of title. The
elements of slander of title under Alabama law are:
(1) Ownership of the property by plaintiff; (2) falsity of the words
published; (3) malice of defendant in publishing the false statements; (4)
publication to some person other than the owner; (5) the publication
must be in disparagement of plaintiff’s property or the title thereof; and
(6) that special damages were the proximate result of such publication
(setting them out in detail).
Merchants Nat. Bank of Mobile v. Steiner, 404 So. 2d 14, 21 (Ala. 1981) (citing Womack
v. McDonald, 121 So. 57, 59 (1929)). Defendant contends that Plaintiffs failed to allege
facts in the Complaint satisfying the elements of slander of title. Specifically,
Defendant argues that Plaintiffs have not alleged publication to a third party, falsity
of the publication, or that they suffered special damages.
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While it is true that Plaintiffs’ allegations with respect to their slander of title
claim are lacking in detail, the Court finds the allegations are nonetheless sufficient to
survive a motion to dismiss. Plaintiffs alleged that Defendant made a false publication
to a third party. Specifically, they asserted that “Defendant has wrongfully reported
Plaintiffs’ mortgage as defaulted and in foreclosure to the credit reporting agencies as
well as advertising multiple foreclosure sales.” (Doc. 9 ¶ 35) (emphasis added).
Additionally, Plaintiffs alleged particularized damages which resulted directly from
the alleged wrongful publication. They claim that “Defendant’s actions have damaged
Plaintiffs’ credit scores . . . .” (Id. ¶ 36.) The Court finds that these paragraphs allege
a plausible slander of title claim sufficient to survive a motion to dismiss. Accordingly,
Defendant’s motion to dismiss is due to be denied with respect to Count Two.
C.

Count Three: Unjust Enrichment

Count Three of the Complaint asserts a state law claim for unjust enrichment.
Defendant contends that Plaintiffs’ unjust enrichment claim is due to be dismissed
because such relief cannot be granted when a matter, such as this one, is governed by
contract. In Vardaman v. Bd. of Educ., 544 So. 2d 962, 965 (Ala. 1989), the Alabama
Supreme Court stated: “It has long been recognized in Alabama that the existence of
an express contract generally excludes an implied agreement relative to the same
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subject matter.” Plaintiffs failed to offer any response to Defendant’s argument, and
therefore have abandoned their unjust enrichment claim. See Coal. for the Abolition of
Marijuana Prohibition v. City of Atlanta, 219 F.3d 1301, 1326 (11th Cir.2000)
(“[F]ailure to brief and argue this issue during the proceedings before the district
court is grounds for finding that the issue has been abandoned.”); see also Evans v.
Jefferson County Comm’n, 2012 WL 1745610, at *10 (N.D. Ala. May 15, 2012);
McMaster v. United States, 177 F.3d 936, 940-41 (11th Cir.1999) (noting that a claim
may be considered abandoned when the allegation is included in the plaintiff’s
complaint, but he fails to present any argument concerning this claim to the district
court). For that reason, Defendant’s motion to dismiss is granted with respect to
Count Three.
D.

Count Four: FDCPA Claim

Count Four of the Complaint alleges BANA violated the FDCPA by engaging
in a pattern and practice of making false representations in an attempt to collect a
debt. (Doc. 9 ¶ 47.) Defendant argues that Plaintiffs’ FDCPA claim should be
dismissed because the allegations in the complaint demonstrate that BANA is not a
“debt collector” for purposes of the FDCPA.
To state a claim under the FDCPA, a plaintiff must establish, among other
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things, that the defendant is a “debt collector.” Reese v. Ellis, Painter, Ratterree &
Adams, LLP, 678 F.3d 1211, 1216 (11th Cir.2012). The FDCPA defines a debt collector
as “any person who uses any instrumentality of interstate commerce or the mails in
any business the principal purpose of which is the collection of any debts.” 15 U.S.C.
§ 1692(a)(6). While BANA may fit this description, 15 U.S.C. § 1692(a)(6)(F)
excludes persons collecting a debt when the collection “concerns a debt which was
not in default at the time it was obtained by such persons.” Furthermore, the
legislative history suggests that a mortgagee and its assignee, including mortgage
servicing companies, are not debt collectors under the FDCPA when the debt is not
in default at the time the mortgage-holder acquires the debt. See Perry v. Stewart Title
Co., 756 F.2d 1197, 1208 (5th Cir. 1985) (citing S. Rep. No. 95–382, at 3–4 (1977)).
Defendant contends that the factual allegations in the Complaint clearly
demonstrate that BANA is not a debt collector because the allegations show BANA
began servicing Plaintiffs’ loan before Plaintiffs first defaulted. Specifically,
Defendant’s point to paragraphs 9 through 11, wherein Plaintiffs state that the first
time they fell behind on their loan was in the fall of 2009, and that they immediately
“contacted [BANA] to request a loan modification.” (Doc. 9 ¶ 11.) These allegations,
even read in the light most favorable to the Plaintiffs, tend to demonstrate that BANA
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was the loan servicer on Plaintiffs’ mortgage at the time they first defaulted. And
taking these allegations as true, it necessarily follows that BANA is not a debt collector
as the term is defined in the FDCPA.
Plaintiffs respond to Defendant’s argument by referencing, but not attaching,
a letter allegedly in their possession which “inform[ed] them of the acquisition of their
loan from Countrywide dated after the default.” (Doc. 14 at 3.) As a procedural
matter, the Court must reject Plaintiffs’ argument because the supporting facts and
documents are not pleaded in the Complaint itself, and are not even attached to or
fully described in Plaintiffs’ responsive brief. While at this stage in the proceeding the
Court accepts as true all well-pleaded facts in the complaint, the Court must confine
its review to those facts contained within the four corners of plaintiff’s pleading.
Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949, 959 (11th Cir. 2009) (internal citation
omitted) (“A court’s review on a motion to dismiss is limited to the four corners of
the complaint.”).
Because Plaintiffs have failed to allege facts in the Complaint demonstrating that
BANA is a “debt collector” within the meaning of the FDCPA, their FDCPA claim
is subject to dismissal. However, rather than immediately dismissing Plaintiffs’ claim,
the Court will allow Plaintiffs an opportunity to amend their Complaint to allege facts
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satisfying the elements of the cause of action which are currently lacking, if such facts
exist. Plaintiffs are reminded that by filing an amendment, the party signing the filing
certifies that “to the best of the person’s knowledge, information, and belief, formed
after an inquiry reasonable under the circumstances . . . the factual contentions have
evidentiary support.” Fed. R. Civ. P. 11(b)(3). In other words, if the evidence does not
support an amendment, none should be made. Plaintiffs have ten (10) days from the
date of this Order to file their amendment. Failing to amend, the Court will enter an
order dismissing Plaintiffs’ FDCPA claim.
E.

Count Five: 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). Defendant argues that Plaintiffs’ RESPA
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claim is due to be dismissed because Plaintiffs never alleged that they submitted a
QWR and thus have not demonstrated that RESPA required a response.
A loan servicer’s obligation to provide information under § 2605(e) only applies
after it “receives a qualified written request from the borrow (or agent of the
borrower).” 12 U.S.C. § 2605(e)(1)(A) (emphasis added). Accordingly, to adequately
state a claim that a loan servicer violated its duty to timely respond under § 2605(e),
a plaintiff must first allege that a QWR meeting the statutory definition was actually
submitted. In their response, Plaintiffs contend that they “allege[d] the submission
of a qualified written request in paragraph 56 of the Amended Complaint and imply
the existence of the QWR in their factual allegations.” (Doc. 14 at 1.) Paragraph 56
provides: “Defendant violated RESPA, 12 U.S.C. § 2605(e)(2)(A), by failing to make
appropriate correction to the Plaintiff’s account in response to the qualified written
request . . . .” (Doc. 9 ¶ 56.)
The factual allegations cited do not adequately plead that a QWR was actually
submitted. It is not enough to simply use the words “qualified written request”
somewhere in the Complaint. Rather, Plaintiffs must plead facts demonstrating that
a written request was actually made, such as by discussing the date the request was
sent, how it was delivered, and describing its contents showing they satisfied the
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requirements enumerated in 12 U.S.C. § 2605(e)(1)(B). Indeed, plaintiffs must make
specific factual allegations showing that a written request was made, and that such
request included the detail necessary to qualify under the statute. See, e.g., Lucero v.
Diversified Inv. Inc., 2010 WL 3463607, at *4 (S.D. Cal. August 31, 2010) (“[B]ecause
[the plaintiffs] do not allege the contents of the QWR or attach it to their Complaint,
it is unclear whether Plaintiffs included enough information for the servicer to identify
them, or asked for information covered by 12 U.S.C. § 2605.”); Williams v. Am.’s
Servicing Co., 2011 WL 1060652 (M.D. Fla. Mar. 22, 2011) (dismissing complaint
because plaintiffs did not allege “when they sent the QWR . . . [or] that the QWR
contained sufficient information to enable defendant to determine the ‘name and
account of the borrower’”); Carrillo v. Bank of New York, 2009 WL 5708925, at *4
(S.D. Fla. Dec. 22, 2009) (dismissing RESPA claim because plaintiff did not “allege
to whom his request was addressed . . . [or] the subject matter of the written
correspondence”); Correa v. BAC Home Loans Servicing LP, 2012 WL 1176701, at *7
(M.D. Fla. Apr. 9, 2012) (finding that a pro se plaintiff had “barely allege[d] sufficient
facts” where she stated the date the correspondence was mailed, to whom it was
addressed, and that it was labeled as a qualified written request).
The Supreme Court made clear in Twombly that “[a] formulaic recitation of the
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elements of a cause of action” is not enough to survive a motion to dismiss. Twombly,
550 U.S. at 555. Rather, a plaintiff must set out “factual allegations” which are
sufficient to “raise a right to relief above the speculative level.” Id. Plaintiffs
complaint is void of any facts establishing that a QWR was ever submitted to BANA,
and accordingly, Plaintiffs have failed to adequately state a claim for relief under
RESPA. However, rather than immediately dismissing Plaintiffs’ claim, the Court will
allow Plaintiffs an opportunity to amend their Complaint to allege facts satisfying the
elements of the cause of action which are currently lacking. Specifically, if
appropriate, Plaintiffs should allege facts demonstrating that a QWR was actually
submitted to BANA satisfying the requirements set out in 12 U.S.C. § 2605(e)(1)(B).
Plaintiffs are reminded that by filing an amendment, the party signing the filing
certifies that “to the best of the person’s knowledge, information, and belief, formed
after an inquiry reasonable under the circumstances . . . the factual contentions have
evidentiary support.” Fed. R. Civ. P. 11(b)(3). In other words, if the evidence does not
support an amendment, none should be made. Plaintiffs have ten (10) days from the
date of this Order to file their amendment. Failing to amend, the Court will enter an
order dismissing Plaintiffs’ RESPA claim.
F.

Count Six: Negligence Per Se
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Count Six of the Complaint is captioned “Negligence Per Se.” As an initial
matter, the Court recognizes there is no Alabama tort cause of action known as
negligence per se. Rather, negligence per se is merely a subsidiary doctrine of
negligence whereby a party is considered negligent as a matter of law because it acted
in violation of a statute which was designed to prevent the type of harm that occurred.
See Parker Bldg. Servs. Co. V. Lightsey, 925 So. 2s 927, 930–31 (Ala. 2005). Despite
captioning their relief as “negligence per se,” Plaintiffs have failed to identify, either
in their Complaint or their brief, any applicable statute or regulation that has been
violated. For that reason, Count Six is arguably due to be dismissed.
That said, despite its title, Count Six could be read to be asserting a simple
common law negligence claim related to BANA’s servicing Plaintiffs’ mortgage. For
example, Plaintiffs allege that “Defendants negligently initiated a foreclosure on
Plaintiff’s home” (Doc. 9 ¶ 66) and “negligently handled payments and assessed
improper late fees and charges to Plaintiff’s account.”4 (Id. ¶ 67.) However, even if
the Court takes Plaintiffs to be alleging simple common law negligence, the Complaint
still fails to state a claim for which relief can be granted.
4

Count Six also contains an allegation that BANA negligently hired and/or trained its
representatives. (Doc. 9 ¶ 68.) However, because Count Seven explicitly states a claim for Negligent
Hiring/Training, all allegations related to negligent hiring and training will be considered along with
Count Seven.
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The Court agrees with the Middle District of Alabama’s recent assessment that
“Alabama law does not recognize a cause of action for negligent or wanton mortgage
servicing.” Blake v. Bank of Am., N.A., 845 F. Supp. 2d 1206, 1210–11 (M.D. Ala.
2012); see also McClung v. Mortgage Elec. Registration Sys., Inc., 2:11-CV-03621-RDP,
2012 WL 1642209, at *7–8 (N.D. Ala. May 7, 2012) (following Blake); Jackson v.
Countrywide Home Loans, Inc., 2:11-CV-327-MEF, 2012 WL 777180, at *6–7 (M.D.
Ala. Mar. 7, 2012) (same). As explained in Blake, “Alabama does not recognize a
tort-like cause of action for the breach of a duty created by contract” because “‘a
negligent failure to perform a contract . . . is but a breach of the contract.’” Id.
(quoting Vines v. Crescent Transit Co., 85 So. 2d 436, 440 (Ala. 1956)). “A plaintiff can
only sue in tort when a defendant breaches the duty of reasonable care—the duty one
owes to another in his day-to-day affairs—when such a breach causes personal injury
or property damage.” Id. (citing Vines, 85 So. 2d at 440).
The court in Blake determined that the mortgage servicer’s obligations arose
from the mortgage and promissory note to which the parties agreed, not from the duty
of reasonable care generally owed to members of the public. Blake, 845 F. Supp. 2d at
1210. Accordingly, the borrower could not allege a tort claim based on negligent
servicing of the mortgage. Id. Here, Plaintiffs allege that BANA “negligently handled
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payments and assessed improper late fees and charges” to Plaintiffs’ mortgage
account. Inherent in this allegation is Plaintiffs contention that BANA owed Plaintiffs
a duty to act reasonably in servicing their mortgage. As in Blake, the duties and
breaches alleged by Plaintiffs clearly would not exist but for the contractual
relationship between the parties. Moreover, there is no duty to the general public to
properly service mortgage accounts.
The Court is not holding that negligence and breach of contract claims can
never coexist in the same lawsuit. However, because all the duties Plaintiffs contend
BANA breached are solely based on contractual agreements between the parties, this
Court follows the lead of Blake and its progeny, and holds that claims for negligent
mortgage servicing are not legally cognizable under Alabama law. Accordingly, Count
Six is due to be dismissed.
F.

Count Seven: Negligent Hiring/Training

Although also asserting a claim sounding in negligence, Count Seven is
somewhat different from Count Six. Where Count Six alleged negligence based on
negligent servicing of Plaintiffs’ mortgage, Count Seven alleges BANA was negligent
in its hiring, training and supervision of its employees. “To establish a claim for
negligent, reckless or wanton supervision, a plaintiff must show that ‘(1) the employee
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committed a tort recognized under Alabama law, (2) the employer had actual notice
of this conduct or would have gained such notice if it exercised due and proper
diligence, and (3) the employer failed to respond to this notice adequately.’” Shuler
v. Ingram & Assocs., 710 F. Supp. 2d 1213, 1227–1228 (N.D. Ala. 2010) (quoting
Edwards v. Hyundai Motor Mfg. Ala., LLC, 603 F. Supp. 2d 1336, 1357 (M.D. Ala.
2009)).
Defendant contends that Plaintiffs abandoned the negligent hiring/training
claim by failing to argue in support of it in their responsive brief. While it is true that
Plaintiffs did not devote a section of their responsive brief to defending their negligent
hiring/training claim, the Court is hesitant to hold that Plaintiffs abandoned their
claim given the overlap between this claim and Count Six’s claim for negligent
mortgage servicing, which Plaintiffs did defend. Thus, the Court will consider the
merits of Defendant’s arguments for dismissal.
Defendant argues that Plaintiffs’ negligent hiring and training claim is due to
be dismissed because they have not alleged that BANA’s employees committed a
cognizable tort under Alabama law, and have not alleged BANA was aware of the
unfitness of its employees. It appears that Plaintiffs’ negligent hiring/training claim
is entirely based on Plaintiffs’ contention that BANA employee negligently serviced
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their home loan. Plaintiffs argue that “Defendants negligently hired and/or trained
its representatives to handle payments resulting in misapplied mortgage payments and
improper late fees and charges assessed to Plaintiff’s account.” (Doc. 14 at 9.) As
explained in Section IV.E, supra, Plaintiffs’ claim for negligent mortgage servicing is
not legally cognizable under Alabama law. As such, Plaintiffs claim for negligent
hiring/training is also invalid because the non-existent negligent mortgage servicing
tort is the only tort allegedly committed by BANA’s employees.
G.

Count Eight: Breach of Fiduciary Duty

Count Eight of the Complaint asserts a state law claim for breach of fiduciary
duty. Defendant contends that Plaintiffs’ breach of fiduciary duty claim is due to be
dismissed for the simple fact that BANA did not owe Plaintiffs a fiduciary duty.
Indeed, Defendant points out that “[c]ourts have traditionally viewed the relationship
between a bank and its customer as a creditor-debtor relationship which does not
impose a fiduciary duty of disclosure on the bank.” Armstrong Bus. Servs., Inc. v.
AmSouth Bank, 817 So. 2d 665, 678 (Ala. 2001) (citation omitted). Plaintiffs failed to
offer any response to Defendant’s argument, and therefore have abandoned their
breach of fiduciary duty claim. See Coal. for the Abolition of Marijuana Prohibition, 219
F.3d at 1326; Evans, 2012 WL 1745610, at *10; McMaster, 177 F.3d at 940-41 (11th
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Cir.1999). Accordingly, Count Eight is due to be dismissed with prejudice.
H.

Count Nine: Intentional Infliction of Emotional Distress (Outrage)

Count Nine of Plaintiffs’ Complaint asserts a claim for intentional infliction of
emotional distress, which is better known within the state of Alabama as the tort of
outrage. In order to recover on the tort of outrage, a plaintiff must demonstrate that
the defendant’s conduct “(1) was intentional or reckless; (2) was extreme and
outrageous; and (3) caused emotional distress so severe that no reasonable person
could be expected to endure it.” Green Tree Acceptance, Inc. v. Standridge, 565 So.2d
38, 44 (Ala. 1990) (citation omitted).
The Alabama Supreme Court has “consistently held that the tort of outrage is
a very limited cause of action that is available only in the most egregious
circumstances. As a consequence, [the Alabama Supreme Court] has held in a large
majority of the outrage cases reviewed that no jury question was presented.” Thomas
v. BSE Indus. Contractors, Inc., 624 So. 2d 1041, 1044 (Ala. 1993) (citing multiple
cases). In fact, as the Alabama Supreme Court recently explained, the tort of outrage
is “so limited that this Court has recognized it in regard to only three kinds of
conduct: (1) wrongful conduct in the family-burial context; (2) barbaric methods
employed to coerce an insurance settlement; and (3) egregious sexual harassment.”
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Little v. Robinson, 72 So. 3d 1168, 1172 (Ala. 2011) (quoting Potts v. Hayes, 771 So.2d
462, 465 (Ala.2000)).
Distilling Plaintiffs’ allegations down, they have effectively alleged that BANA:
(1) told Plaintiffs they had been approved for a loan modification but did not provide
them with the proper documentation or hold true to these statements; and (2)
mishandled or improperly applied mortgage payments after Plaintiffs were already in
default. These allegations are simply not comparable to the three contexts in which
the Alabama Supreme Court has permitted outrage claims to go before a jury.
Unsurprisingly, several federal courts have dismissed outrage claims based on similar
allegations of mortgage servicing deficiencies. See, e.g., Jackson v. Countrywide Home
Loans, Inc., 2012 WL 777180, at *8 (M.D. Ala. Mar. 7, 2012) (“Plaintiff’s tort of
outrage claim, which is related to Defendants’ alleged debt collection efforts and
which does not fall into one of the presently recognized contexts in which a tort of
outrage claim is appropriate, is due to be dismissed.”). For these reasons, Plaintiffs’
outrage claim is due to be dismissed.
V.

Conclusion
For the foregoing reasons, BANA’s Motion to Dismiss (Doc. 10) is due to be

GRANTED in part, DENIED in part, and partially DEFERRED to allow Plaintiffs an
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opportunity to amend their Complaint. 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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