Jackson v. HSBC Mortgage Services Inc et al
MEMORANDUM OPINION. Signed by Judge R David Proctor on 10/10/2014. (AVC)
2014 Oct-10 PM 03:04
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
HSBC MORTGAGE SERVICES, INC., et
Case No.: 2:14-CV-1240-RDP
This matter is before the court on the Motions to Dismiss filed by Defendant HSBC
Mortgage Services Inc. (Doc. # 15) and by Defendant PHH Mortgage Corporation (Doc. # 16).
The Motions have been fully briefed. (Docs. # 22-24).
BACKGROUND AND RELEVANT FACTS
Plaintiff’s Amended Complaint contains the following allegations: In August of 2013,
Defendant HSBC Mortgage Services Inc., by and through its mortgage processing and servicing
agent, PHH Mortgage Corporation, began falsely claiming that Plaintiff’s May 29, 2013
mortgage payment had been “reversed” by her bank and was unpaid. Over the next eight
months, Defendants harassed Plaintiff through, among other things, repeated automatically
dialed telephone calls to Plaintiff’s cell phone, letters, and false credit reporting to various credit
Defendants sometimes called Plaintiff’s home and cellular telephones
multiple times in one day in their effort to collect the deficiency they falsely claimed she owed.
When Plaintiff told Defendants to stop calling her, a representative of Defendants told Plaintiff
that an auto dialer device was used to place these calls.
Defendants refused to correct their error despite conversations with her credit union and
receipt of banking records which disproved Defendants’ claim that the mortgage payment had
been reversed. Defendant HSBC even wrote to the Alabama Attorney General’s office repeating
its false assertion that Plaintiff’s August 2013 payment had been “reversed” by her bank and that
she was late on her May 2013 payment.
On or about April 18, 2014, Defendant HSBC sent a letter to Plaintiff’s attorney
acknowledging that its own records were incorrect, and that Plaintiff’s May 29, 2013 mortgage
payment had not been reversed as it had inaccurately claimed for the preceding nine (9) months.
(Doc. # 3).
Plaintiff alleges she suffered the following damages:
invasion and interference with Jackson’s right to privacy and solitude, impairment
of Jackson’s credit rating, mental anguish, lost work time, and various costs and
expenses incurred as a result of or in response to Defendants’ wrongful acts,
including the cost of hiring an attorney to respond to HSBC after they continued
to ignore the information provided by Jackson and numerous administrative
expenses incurred in responding to HSBC.
(Doc. # 3 at & 54).
Plaintiff’s Amended Complaint asserts claims for violation of the Real Estate Settlement
Procedures Act, the Telephone Consumer Protection Act, the Truth-in-Lending Act, breach of
contract, invasion of privacy, and defamation. Defendants moved to dismiss all claims.
STANDARD OF REVIEW
The Federal Rules of Civil Procedure require that a complaint provide “a short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).
Having said that, the complaint must include enough facts “to raise a right to relief above the
speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Pleadings that
contain nothing more than “a formulaic recitation of the elements of a cause of action” do not
meet Rule 8 standards, nor do pleadings suffice that are based merely upon “labels and
conclusions” or “naked assertion[s]” without supporting factual allegations. Twombly, 550 U.S.
at 555, 557. In deciding a Rule 12(b)(6) motion to dismiss, courts view the allegations in the
complaint in the light most favorable to the non-moving party. Watts v. Fla. Int’l Univ., 495
F.3d 1289, 1295 (11th Cir. 2007).
Under Twombly, a plaintiff’s complaint must present plausible theories of liability and
allege specific facts establishing each claim. To survive a motion to dismiss, a complaint must
“state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has
facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
129 S. Ct. 1937, 1949 (2009). Although “[t]he plausibility standard is not akin to a ‘probability
requirement,’” the complaint must demonstrate “more than a sheer possibility that a defendant
has acted unlawfully.” Id. A plausible claim for relief requires “enough fact[s] to raise a
reasonable expectation that discovery will reveal evidence” to support the claim. Twombly, 550
U.S. at 556.
The Supreme Court has identified “two working principles” for a district court to use in
applying the facial plausibility standard. First, in evaluating motions to dismiss, the court must
assume the veracity of well-pleaded factual allegations; however, the court does not have to
accept as true legal conclusions when they are “couched as  factual allegation[s].” Iqbal, 129
S. Ct. at 1950. Second, “only a complaint that states a plausible claim for relief survives a
motion to dismiss.” Id. Application of the facial plausibility standard involves two steps. Under
one prong, the court must determine the scope and nature of the factual allegations that are wellpleaded and assume their veracity; and under the other prong, the court must proceed to
determine the claim’s plausibility given the well-pleaded facts. That task is context specific and,
to survive the motion, the allegations must permit the court based on its “judicial experience and
common sense . . . to infer more than the mere possibility of misconduct.” Id.
Plaintiff’s Claims Against PHH Are Plausible
Defendant PHH’s Motion argues that Plaintiff’s Amended Complaint fails to plausibly
allege any action by PHH. (Doc. # 16).
Plaintiff’s Amended Complaint alleges, on information and belief, that “HSBC Mortgage
retained PHH to act as its manager, agent, and subservicer with respect to [Plaintiff’s]
mortgage.” (Doc. # 3 at ¶¶ 11-12). Plaintiff further alleges, on information and belief that “at all
times subsequent, PHH was acting as agent for HSBC Mortgage with respect to the conduct
alleged herein.” (Doc. # 3 at ¶ 13). Plaintiff bases her allegation of PHH’s involvement with her
loan on HSBC USA, Inc.’s April 2014 10-K Report submitted to the SEC. (Doc. # 3 at ¶ 12).
The following portion of that document can be read as plausible support for the factual
proposition that that Defendant HSBC Mortgage Services, Inc. is a subsidiary of HSBC USA,
Inc. and that HSBC’s mortgage servicing was handled by PHH:
During the second quarter of 2013, we completed the conversion of our mortgage
processing and servicing operations to PHH under our previously announced
strategic relationship agreement with PHH Mortgage to manage our mortgage
processing and servicing operations. Under the terms of the agreement, PHH
Mortgage provides us with mortgage origination processing as well as subservicing our portfolio of owned and serviced mortgages totaling $44.0 billion as
of December 31, 2013.
(Doc. # 16-1 at p. 167). This is clearly a sufficient basis on which to allege that Defendant PHH
was an agent of Defendant HSBC Mortgage related to the servicing of its mortgages. It may
well be the case that PHH can point to documents outside of the pleadings to show that it did not
have any involvement with Plaintiff’s loan. However, the current allegations are sufficient to
survive a motion to dismiss.1
Plaintiff has Pled Damages Recoverable under RESPA
To establish a claim for a violation of § 2605(e), Plaintiff must present evidence that (1)
the defendant was a loan servicer; (2) the defendant was sent a valid QWR; (3) the defendant
failed to adequately respond within sixty days; and (4) actual damages or an entitlement to
statutory damages. 12 U.S.C. § 2605(e)(1)(A) & (2); Frazile v. EMC Mortg. Corp., 382
Fed.Appx. 833, 836 (11th Cir. 2010).
“The Eleventh Circuit has held that to state a claim under RESPA, a plaintiff must allege
facts showing he suffered actual damages or is entitled to statutory damages.” Tallent v. BAC
Home Loans, 2013 WL 2249107 at *5 (N.D. Ala. 2013) (citing Frazile v. EMC Mortg. Corp.,
382 F. App'x 833, 836 (11th Cir. 2010). Defendants2 argue Plaintiff has not sufficiently alleged
a pecuniary loss and, therefore, has failed to state a RESPA claim. First, Defendants are wrong
that Plaintiff has not alleged any pecuniary loss. Although Plaintiff has not quantified her loss,
this argument ignores the specific allegation in the Amended Complaint that she alleged she
incurred “various costs and expenses” as a result of Defendants’ conduct, including the cost of
hiring an attorney and administrative expenses in responding to Defendants’ requests for
information. (Doc. # 3 at & 54).
Second, the Eleventh Circuit has indicated that emotional distress damages may be
available under RESPA:
1 If Defendant PHH is correct, this claim can easily be resolved on an early Rule 56 motion.
2 Having disposed of Defendant PHH’s Motion, the court assumes that Defendant PHH would also adopt
relevant arguments made by Defendant HSBC in its Motion. Therefore, the court will refer to “defendants”
collectively for ease of reference.
Construing the term “actual damages” broadly, and based on the interpretations of
“actual damages” in other consumer-protection statutes that are remedial in
nature, plaintiffs arguably may recover for non-pecuniary damages, such as
emotional distress and pain and suffering, under RESPA. See, e.g., Banai v. Sec’y
U.S. Dep’t of Hous. & Urban Dev. ex rel. Times, 102 F.3d 1203, 1207 (11th Cir.
1997) (the Fair Housing Act allowance for “actual damages” includes anger,
embarrassment, and emotional distress). Nevertheless, the McLeans must present
specific evidence to establish a causal link between the financing institution’s
violation and their injuries. See Turner v. Beneficial Corp., 242 F.3d 1023, 102728 (11th Cir. 2001) (en banc) (requiring a causal link for TILA claims). In some
circumstances, we have held that a plaintiff’s testimony alone could support an
award of compensatory damages for emotional distress. Akouri v. Fla. Dep’t of
Transp., 408 F.3d 1338, 1345 (11th Cir. 2005) (concerning constitutional
violations). However, “the testimony must establish that the plaintiff suffered
demonstrable emotional distress, which must be sufficiently articulated; neither
conclusory statements that the plaintiff suffered emotional distress nor the mere
fact that a ... violation occurred supports an award for compensatory damages.”
Id. (quotation omitted).
McLean v. GMAC Mortg. Corp., 398 Fed.Appx. 467, 471 (11th Cir. 2010) (emphasis added).
Under this standard, Plaintiff properly alleged that she suffered recoverable damages under
Failure to Specify the Telephone Number is Not Fatal to the TCPA Claim
Defendants cite one district court case from Michigan for the proposition that a failure to
specify in a complaint the telephone number called under the TCPA claim is grounds for
dismissal of this claim.
Defendants do not acknowledge, however, that the district court
opinions from our own circuit hold to the contrary. See Buslepp v. Improv Miami, Inc., 2012 WL
1560408 * 1 (S.D. Fla. 2012) (“The fact that Plaintiff does not identify the specific telephone
number called  is not fatal under Twombly and Iqbal.”); Manfred v. Bennett Law, PLLC, 2012
WL 6102071 *2 (S.D. Fla. 2012) (“Contrary to [Defendant’s] contention, Plaintiff need not
allege his specific cellular telephone number.”). Moreover, this argument places form over
substance. Even if a plaintiff were required to plead the phone number, this could be easily
resolved through repleading and does not require dismissal. Likewise, if there is a question
about the phone number at issue, it can be addressed through discovery.
Plaintiff Has Adequately Pled a TILA Claim
TILA is a remedial consumer protection statute designed to promote the flow of creditrelated information to the consumer. See Bragg v. Bill Heard Chevrolet, Inc., 374 F.3d 1060,
1065 (11th Cir. 2004) (quoting 15 U.S.C. § 1601(a)). Like other remedial statutes, “TILA must
be construed liberally in favor of the consumer.” Id. TILA requires lenders to provide an array
of “clear and accurate disclosures of terms dealing with things like finance charges, annual
percentage rates of interest, and the borrower's rights.” Beach v. Ocwen Fed. Bank, 523 U.S. 410,
412, 118 S.Ct. 1408, 140 L.Ed.2d 566 (1998); see also 15 U.S.C. § 1638.
Defendants argue that they cannot be held liable under TILA because they are not
creditors. However, “in certain instances an assignee may be liable under TILA.” Rice v.
JPMorgan Chase Bank NA, 2014 WL 3889472 *4 (N.D. Ala. 2014). Therefore, at least at the
pleading stage, this argument is without merit.
Defendants further argue that they can only be held liable where the violation is apparent
on the face of the disclosure statement at issue and, they assert, the violation was not so apparent
based upon the disclosure statements in this case. Because the mortgage statements at issue are
not in the record, the court cannot at this point say, as a matter of law, that the errors were not
apparent on the face of the documents. Therefore, Defendants’ motion to dismiss Plaintiff’s
TILA claim is due to be denied on this record.
Plaintiff Has Pled Damages Arising from the Alleged Breach of Contract
Similar to an earlier argument already addressed, Defendants argue that Plaintiff has not
properly pled damages in connection with her contract claim. As discussed above, Plaintiff
alleged that she incurred “various costs and expenses” as a result of Defendants’ conduct,
including the cost of hiring an attorney and administrative expenses in responding to Defendants’
requests for information. (Doc. # 3 at & 54). Defendants’ argument that this does not meet
applicable pleading standards is without merit.
Plaintiff Has Plausibly Pled An Invasion of Privacy Claim
Defendants argue (1) that Plaintiff has not pled the requisite publicity to establish a false
light invasion of privacy claim and (2) she has not alleged conduct sufficient to rise to the level
of a wrongful intrusion invasion of privacy claim. Plaintiff does not argue that she has pled the
requisite publicity, but she does assert that she has alleged a sufficient wrongful intrusion. The
court agrees. In this case, Plaintiff has adequately alleged that Defendants’ collection activities
went beyond the bounds of reasonableness, especially when considered in light of the fact that
the collection activities were admittedly unfounded. See Moore v. Dynamic Recovery Services,
Inc., 2014 WL 507384 *4 (N.D. Ala. 2014); Jacksonville State Bank v. Barnwell, 481 So.2d 863,
865–66 (Ala. 1985) (“Twenty-eight to thirty-five phone calls to one's home and place of
employment fall within the realm of a ‘systematic campaign of harassment,’ a tactic admonished
by this court in Norris.”).
Plaintiff’s Defamation Claim is Not Preempted
Defendants also argue that Plaintiff’s defamation claim and her invasion of privacy claim
based on Defendants’ communications to credit agencies are preempted by the Fair Credit
Reporting Act. Plaintiff’s defamation claim can be read to be based, in part, on allegations that
Defendants reported information to credit agencies that they either knew or should have known
was false. The FCRA explicitly prohibits a furnisher of information from reporting information
to a consumer reporting agency that it “knows or has reasonable cause to believe ... is
inaccurate.” 15 U.S.C. § 1681s–2(a)(1)(A). Section 1681t(b)(1)(F) preempts any state laws that
regulate the subject matter of any part of § 1681s–2, and that would include portions of § 1681s–
2(a). See Rice v. JPMorgan Chase Bank NA, 2014 WL 3889472 *4 (N.D. Ala. 2014).
However, under Section 1681h(e) of the FCRA, a furnisher of information is not
protected by the FCRA's preemption provisions if “the information it provided was both false
and also given with the malicious or willful intent to damage the consumer.” Lofton–Taylor v.
Verizon Wireless, 262 Fed.App'x 999, 1002 (11th Cir. 2008) (per curiam); see also Comer v. J.P.
Morgan Chase Bank, N.A., 2012 WL 4210426 *3 (M.D. Ga. 2012).
Complaint alleges that Defendants actions were done “maliciously, with knowledge of their
falsity, and/or with wanton and reckless disregard for the truth or falsity of their statements.”
(Doc. # 3 at & 86). The court concludes that the allegations of Plaintiff's Amended Complaint
are sufficient to withstand the FCRA’s preemption.3
For the reasons discussed above, the Motions to Dismiss filed by Defendant HSBC
Mortgage Services Inc. (Doc. # 15) and by Defendant PHH Mortgage Corporation (Doc. # 16)
are due to be denied. However, the court’s own review of Plaintiff’s Amended Complaint
reveals that it contains “shotgun” style pleading which is highly disfavored by the Eleventh
Circuit. “Shotgun pleadings are those that incorporate every antecedent allegation by reference
into each subsequent claim for relief or affirmative defense.” Wagner v. First Horizon Pharm.
Corp., 464 F.3d 1273, 1279 (11th Cir. 2006). “When confronted with a shotgun pleading, the
court is supposed to order repleading for a more definite statement of the claim.” Hickman v.
Hickman, 563 Fed.Appx. 742, 744 (11th Cir. 2014) (citing Wagner v. First Horizon Pharm.
3 Moreover, Plaintiff’s defamation claim can also be read to be based on Defendants’ communication with
the Alabama Attorney General. The communication to the Attorney General was not related to the furnishing of
information to credit reporting agency and would not be subject to the FCRA’s preemption provisions.
Corp., 464 F.3d 1273, 1280 (11th Cir. 2006)).
Therefore, the court will require Plaintiff to
replead her claims in order to eliminate the shotgun pleadings contained in the Amended
Complaint. Such an amended pleading shall be filed and served on or before November 3, 2014.
A separate order will be entered.
DONE and ORDERED this October 10, 2014.
R. DAVID PROCTOR
UNITED STATES DISTRICT JUDGE
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