Bush v. JP Morgan Chase Bank et al
MEMORANDUM OPINION. Signed by Magistrate Judge John E Ott on 1/27/2016. (KAM, )
2016 Jan-27 PM 02:04
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
WILLIAM R. BUSH,
J.P. MORGAN CHASE
BANK, N.A., et al.,
Case No. 2:15-cv-00769-JEO
In this action, plaintiff William R. Bush has alleged a variety of federal and
state law claims against defendants J.P. Morgan Chase Bank, N.A. (“Chase”) and
U.S. Bank National Association as Trustee for ABN AMRO Mortgage
Corporation, Mortgage Pass-Through Certificates, Series 2003-4 (“U.S. Bank”)
(collectively, the “Defendants”). (Doc. 12). The claims are based on allegations
that the Defendants falsely reported that Bush was in default on a mortgage loan
and wrongfully initiated foreclosure proceedings on his property. The Defendants
have moved to dismiss all of the claims except for Bush’s claim for breach of
contract. (Doc. 15). For the reasons discussed below, the Defendants’ motion is
due to be granted in part and denied in part.
I. PROCEDURAL HISTORY
Bush filed this action in the Circuit Court of Jefferson County, Alabama,
asserting fourteen separate claims against the Defendants: negligence, wantonness,
unjust enrichment, wrongful foreclosure, slander of title, breach of contract, fraud,
false light, defamation/libel/slander, violation of the Truth in Lending Act,
violation of the Real Estate Settlement Procedures Act, violation of the Fair Credit
Reporting Act, violation of the Fair Debt Collection Practices Act, and a claim for
(Doc. 1-1). The Defendants removed the action to this court
and then moved to dismiss all of the claims except for the breach of contract claim.
(Doc. 7). Bush filed a motion for an extension of time to respond to the motion to
dismiss, representing in the motion that he “intend[ed] to file an amended
complaint [that would] address most, if not all, of the issues raised in the motion to
dismiss and render the motion moot.” (Doc. 10). The court granted Bush’s
motion, which was unopposed.
Bush then filed an amended complaint. (Doc. 12). His amended complaint
contains a more detailed set of factual allegations than his original complaint, but
otherwise the differences between the two complaints are minimal. In particular,
the amended complaint contains the same fourteen claims as the original
complaint. As before, the Defendants have moved to dismiss all of the claims in
the amended complaint except for the breach of contract claim. 1 (Doc. 15). The
motion has been fully briefed and is now ripe for decision.
II. STANDARD OF REVIEW
The Defendants have moved for dismissal pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure, which authorizes the dismissal of all or some of
the claims in a complaint if the allegations fail to state a claim upon which relief
can be granted. Federal Rule of Civil Procedure 8(a)(2) requires only “a short and
plain statement of the claim showing that the pleader is entitled to relief,” in order
to “give the defendant fair notice of what the ... claim is and the grounds upon
which it rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957). The court assumes the
factual allegations in the complaint are true and gives the plaintiff the benefit of all
reasonable factual inferences. Hazewood v. Foundation Financial Group, LLC,
551 F.3d 1223, 1224 (11th Cir. 2008) (per curiam). However, “courts ‘are not
bound to accept as true a legal conclusion couched as a factual allegation.’” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Papasan v. Allain,
478 U.S. 265, 286 (1986)); see also Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009)
(“Rule 8 marks a notable and generous departure from the hyper-technical, codepleading regime of a prior era, but it does not unlock the doors of discovery for a
plaintiff armed with nothing more than conclusions.”). Nor is it proper to assume
In light of the filing of the amended complaint, the court denied the Defendants’ initial motion
to dismiss as moot.
that the plaintiff can prove facts he has not alleged or that the defendants have
violated the law in ways that have not been alleged. Twombly, 550 U.S. at 563 n.8
(citing Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U.S. 519, 526
“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 labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.” Id., 550 U.S. at 555
(citations, brackets, and internal quotation marks omitted). “Factual allegations
must be enough to raise a right to relief above the speculative level ....” Id. Thus,
“a complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face,’” i.e., its “factual content ... allows the
court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678 (citations omitted).
The Defendants have also moved for a dismissal of Bush’s fraud claim
pursuant to Rule 9(b). Rule 9(b) requires that “in all averments of fraud or
mistake, the circumstances constituting fraud or mistake shall be stated with
particularity.” FED. R. CIV. P. 9(b). The “particularity” requirement “serves an
important purpose in fraud actions by alerting defendants to the ‘precise
misconduct with which they are charged’ and protecting defendants ‘against
spurious charges of immoral and fraudulent behavior.’ ” Ziemba v. Cascade Int’l,
Inc., 256 F.3d 1194, 1202 (11th Cir. 2001) (citation omitted).
III. FACTUAL ALLEGATIONS
Bush alleges that he received a loan from ABN AMRO Mortgage Group,
Inc. on November 15, 2002, to purchase the property located at 2013 Country
Ridge Place in Birmingham, Alabama. (Doc. 12 at ¶5). The loan was evidenced
by a promissory note and secured by a mortgage on the property. 2 (Id.) The note
and mortgage were subsequently assigned to U.S. Bank, and Chase became the
servicer of the loan. (Id. at ¶ 2). Bush alleges that the assignment of the note and
mortgage to U.S. Bank was defective, but provides no factual basis for his
allegation and did not attach a copy of the allegedly defective assignment to the
amended complaint. (Id. at ¶ 11).
In March 2013 the Defendants initiated foreclosure proceedings on Bush’s
property and scheduled a foreclosure sale for May 7, 2013. According to Bush, he
was not in default on his loan at that time. He sent a letter disputing the debt to the
foreclosing attorney and a qualified written request (“QWR”) to both the
Bush did not attach copies of the note and mortgage to his amended complaint (or to his
original complaint), but copies were attached as exhibits to the defendants’ notice of removal.
(Doc. 1-1 at 35-47). Because the note and mortgage are referenced in the amended complaint,
the court may consider the documents in ruling on the defendants’ motion to dismiss. See La
Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004) (“In analyzing the
sufficiency of the complaint, we limit our consideration to the well-pleaded factual allegations,
documents central to or referenced in the complaint, and matters judicially noticed.”).
foreclosing attorney and Chase.3 The foreclosure sale was postponed as a result.
(Id. at ¶ 7).
The Defendants scheduled several other foreclosure sales in 2013, all of
which were either cancelled or postponed.
After a period of inactivity, the
Defendants resumed foreclosure proceedings in October 2014. Bush sent another
QWR to Chase, but Chase never responded to the QWR. Another foreclosure sale
was set for March 31, 2015. Bush alleges that the sale was cancelled due to the
filing of this action. (Id.)
Bush alleges that each time a foreclosure sale was scheduled, the Defendants
published notice of the sale in The Alabama Messenger and included false
information regarding his alleged default on his mortgage loan. (Id. at ¶ 10). He
further alleges that the false information regarding his alleged default was
published on the internet and reported to the national credit bureaus, which
damaged his reputation and his credit. (Id.) He asserts that he was not in default
on his mortgage payments and that the attempted foreclosure proceedings were
wrongful. (Id. at ¶ 12).
A “qualified written request” is written correspondence to the servicer of a federally related
mortgage loan that “(i) includes, or otherwise enables the servicer to identify, the name and
account of the borrower; and (ii) 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).
Bush’s Federal Claims
In his amended complaint, Bush alleges that Chase violated four federal
statutes: the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601 et seq. (Count
Ten); the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601 et
seq. (Count Eleven); the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681
et seq. (Count Twelve); and the Fair Debt Collection Practices Act (“FDCPA”), 15
U.S.C. §§ 1692 et seq. (Count Thirteen). His federal claims are asserted only
against Chase and not against Bank One. The Defendants have moved to dismiss
all four claims.
TILA is a remedial consumer protection statute designed to “assure a
meaningful disclosure of credit terms so that the consumer will be able to compare
more readily the various credit terms available to him and avoid the uninformed
use of credit, and to protect the consumer against inaccurate and unfair credit
billing and credit card practices.” 15 U.S.C. § 1601(a); see Beach v. Ocwen Fed.
Bank, 523 U.S. 410, 412 (1998). TILA requires creditors to provide consumers
with “clear and accurate disclosures of terms dealing with things like finance
charges, annual percentage rates of interest, and the borrower's rights.” Id. at 412.
Under TILA, a consumer has a private right of action against “any creditor who
fails to comply with any requirement imposed under this part ….” 15 U.S.C. §
In Count Ten, Bush alleges that Chase committed “multiple violations” of
TILA and Regulation Z. 4 (Doc. 12 at ¶ 81). He alleges that Chase failed to
provide required disclosures “prior to consummation” of his loan transaction,
failed to make required disclosures “conspicuously and in writing,” and failed to
advise him of certain charges “incident to the extension of credit,” including
attorney fees and late charges. (Id. at ¶ 84).
He also alleges that Chase
“understated the disclosed annual percentage rate.” (Id. at ¶ 87).
By its plain language, TILA’s private right of action applies only to actions
against “creditors.” 15 U.S.C. § 1604(a). TILA defines the term “creditor” as
The term “creditor” refers only to a person who both (1) regularly
extends, whether in connection with loans, sales of property or
services, or otherwise, consumer credit which is payable by agreement
in more than four installments or for which the payment of a finance
charge is or may be required, and (2) is the person to whom the debt
arising from the consumer credit transaction is initially payable on the
face of the evidence of indebtedness or, if there is no such evidence of
indebtedness, by agreement.
15 U.S.C. § 1602(g). “The definition given in this sentence is restrictive and
precise, referring only to a person who satisfies both requirements.” Cetto v.
Regulation Z, 12 C.F.R. §§ 226.1 et seq., consists of various rules promulgated by the Federal
Reserve Board to further the purposes of TILA. Hendley v. Cameron-Brown Co., 840 F.2d 831,
833 (11th Cir. 2000).
LaSalle Bank Nat’l Ass’n, 518 F.3d 263, 270 (4th Cir. 2008) (emphasis in
original); see also Parker v. Potter, 232 F. App’x 861, 864 (11th Cir. 2007) (noting
that a person must satisfy both prongs of the definition in order to be considered a
creditor under TILA).
In its motion to dismiss, Chase argues that, even assuming that it satisfies
the first prong of the statutory definition of “creditor,” it does not satisfy the
second prong and therefore is not a creditor for purposes of Bush’s TILA claim.
The court agrees. The court notes that Bush has alleged in conclusory fashion that
Chase “regularly extended or offered to extend consumer credit for which a
finance charge is or may be imposed or which, by written agreement, is payable in
more than four installments, and is the person to whom [the debt arising from] the
transaction which is the subject of this action is initially payable.” (Doc. 12 at ¶
83). However, this allegation is nothing more than a condensed recital of the two
prongs of the statutory definition and is not entitled to a presumption of truth for
purposes of a Rule 12(b)(6) motion to dismiss. See Franklin v. Curry, 738 F.3d
Moreover, Bush’s factual allegations
1246, 1248 n. 1 (11th Cir. 2013).
demonstrate that Chase is not, in fact, the person to whom the debt arising from his
loan transaction was initially payable. According to his amended complaint, he
received his loan from ABN AMRO Mortgage Group and, as part of the
transaction, executed a note and mortgage with that entity. (Doc. 12 at ¶ 5).
Consistent with these allegations, his note and mortgage both identify ABN
AMRO Mortgage Group as the “Lender.” (Doc. 1-1 at 36, 40). Simply put, there
are no factual allegations from which the court could infer that Bush’s mortgage
debt was “initially payable” to Chase. Accordingly, Chase is not a “creditor” for
purposes of liability under TILA and Bush’s TILA claim is due to be dismissed.5
In Count Eleven, Bush alleges that Chase violated RESPA by “failing to
acknowledge or properly respond to [his] Qualified Written Requests (QWR).”
(Doc. 12 at ¶ 91). RESPA establishes certain actions that must be followed by
entities or persons responsible for servicing federally related mortgage loans,
including responding to borrower inquiries. See 12 U.S.C. § 2605. As previously
noted, a QWR is written correspondence to the servicer that “(i) includes, or
Bush’s response to the Defendants’ TILA arguments is off point and smacks of unedited
“cutting and pasting” from another brief. He asserts: “[The] argument propounded by Chase is
that the ‘quirky language’ of § 1640 particularly defines ‘creditor’ in such an exclusive fashion
that if forecloses assessment of statutory damages against a ‘Servicer.’ They completely rely for
authority upon the decision in Selman v. CitiMortgage, Inc., 2013 U.S. LEXIS 37017 (S.D. Mar.
5, 2013).” (Doc. 23 at 34-35). Not only is this a mischaracterization of the Defendants’
argument, the Defendants do not rely on or even cite the Selman decision as support for their
argument. Bush then devotes more than four pages of his response to arguing that the court
should adopt the reasoning espoused in Runkle v. Fed. Nat’l Mortgage Ass’n, 905 F. Supp. 2d
1326 (S.D. Fla. 2012), a case that addresses “whether an assignee [of a loan] is liable for its
servicer’s conduct.” Runkle, 905 F. Supp. 2d at 1332 (emphasis in original). As Bush does not
allege that Chase is an assignee of his mortgage loan and is not seeking to hold Chase liable as
an assignee, Runkle has no application here. Finally, Bush concludes his argument with this non
sequitur: “In the [p]resent case, Bush has alleged Chase violated TILA. Accordingly, he has met
the elements of the complaint [sic] and the motion to dismiss is due to be denied.” (Doc. 23 at
43). The mere fact that he has accused Chase of violating TILA in no way establishes that he has
adequately pleaded such a claim, which he has not.
otherwise enables the servicer to identify, the name and account of the borrower;
and (ii) 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. §
Upon receipt of a QWR, a servicer must provide a “written
response acknowledging receipt of the correspondence” within five business days
and must take action on the QWR within thirty days. 12 U.S.C. §§ 2605(e)(1)(A)
The Defendants argue that Bush’s RESPA claim should be dismissed
because he has not pleaded sufficient facts to establish either that his QWRs met
the requirements of § 2605(e)(1)(B) or that he suffered any actual damages caused
by the alleged RESPA violations. Although it is a close question, the court is
satisfied that Bush has adequately pleaded his RESPA claim and that the claim
should not be dismissed at this time. The court readily acknowledges, as the
Defendants point out in their motion, that the allegations in Bush’s RESPA claim
are confusing and perhaps even contradictory. 6 Nonetheless, Bush does allege that
The court also acknowledges that Bush’s opposition to the Defendants’ motion to dismiss fails
to address the Defendants’ RESPA argument as such. Instead of responding to the Defendants’
argument that his RESPA claim against Chase should be dismissed, Bush argues that U.S. Bank
can be held vicariously liable for its “servicer’s” RESPA violation, a curious argument given that
his RESPA claim is not asserted against U.S. Bank. (The court notes that the RESPA claim in
Bush’s original complaint was asserted against “Defendants” (doc. 1-1 at ¶¶ 91-92), while the
RESPA claim in his amended complaint is asserted only against Chase.) Even though his
argument misses the mark completely, it is clear that he has not abandoned his RESPA claim.
he sent QWRs to Chase on April 29, 2013 and October 19, 2014; that Chase never
responded to the QWRs; and that he was damaged by Chase’s failure to provide
him with the requested information about his loan because, without the requested
information, he was unable to stop the foreclosure proceedings on his own and had
to retain and pay an attorney to stop the foreclosure. (Doc. 12 at ¶ 92). The court
is satisfied that these allegations are sufficient to state a claim for violation of
RESPA that is at least plausible on its face and provides Chase with fair notice of
the basis of the claim. Accordingly, the Defendants’ motion to dismiss Bush’s
RESPA claim will be denied.
In Count Twelve, Bush seeks to hold Chase liable under the FCRA for
allegedly reporting inaccurate information regarding his mortgage loan to the
national credit bureaus and failing to properly investigate his disputes. “[T]he
FCRA places distinct obligations on three types of entities: consumer reporting
agencies, users of consumer reports, and furnishers of information to consumer
reporting agencies.” Chipka v. Bank of Am., 355 F. App’x 380, 382 (11th Cir.
It is apparent from Bush’s allegations that he is seeking to hold Chase
liable as a “furnisher” of information, and in his opposition to the Defendants’
motion to dismiss he confirms as much. (Doc. 23 at 43).
“The FCRA imposes two separate duties on furnishers. First, [15 U.S.C.] §
1681s–2(a) requires furnishers to submit accurate information to [credit reporting
agencies]. Second, § 1681s–2(b) requires furnishers to investigate and respond
promptly to notices of [consumer] disputes.” Green v. RBS Nat’l Bank, 288 F.
App’x 641, 642 (11th Cir. 2008). However, the FCRA does not provide a private
right of action to redress violations of § 1681s-2(a). Id.; see also Peart v. Shippie,
345 F. App’x 384, 386 (11th Cir. 2009) (“[T]he statute explicitly bars private suits
for violations of [§ 1681s-2(a)].”). The FCRA does provide a private right of
action for violations of § 1681s-2(b), “but only if the furnisher received notice of
the consumer’s dispute from a consumer reporting agency.” Peart, 345 F. App’x
at 386; Green, 288 F. App’x at 642.
In his opposition to the Defendants’ motion to dismiss, Bush correctly
asserts that “Chase must perform a reasonable investigation of a consumer dispute
after receiving notice from a credit bureau, such as Equifax, Experian or Trans
Union.” (Doc. 23 at 43 (emphasis added)). Nowhere in his amended complaint,
however, has Bush pleaded any facts to suggest that Chase received notice of his
dispute from a credit agency. Bush alleges that he informed Chase and the national
credit bureaus that he disputed Chase’s alleged inaccurate reporting (doc. 12 at ¶
94), but he does not allege or offer any facts to suggest that the credit bureaus then
notified Chase about the dispute. Therefore, he has failed to plead an essential
element of his FCRA claim and the claim is due to be dismissed. See Rice, 2014
WL 3889472, at *6 (dismissing the plaintiff’s FCRA claim where the plaintiff
failed to plead any facts to suggest that the credit bureaus contacted the furnisher
regarding the dispute).
Bush’s final federal claim against Chase is for violation of the FDCPA.
Bush alleges that Chase committed numerous FDCPA violations, including:
attempting to collect amounts not owed under his mortgage contract; seeking
unjustified amounts; threatening legal action that was not permitted or not actually
contemplated; revealing or discussing the nature of his debt with third parties;
failing to identify itself as a debt collector in its communications; and falsely
stating the amount of his debt. (Doc. 12 at ¶ 107). The Defendants argue that
Bush’s “conclusory” allegations do not satisfy the pleading requirements of Rule
8(a), and specifically argue that Bush has alleged no facts demonstrating that
Chase is a “debt collector” for purposes of the FDCPA.
To state a claim under the FDCPA, a plaintiff must establish, among other
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, or who regularly collects or attempts to collect, directly or indirectly, debts
owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6).
Expressly excluded from this definition are persons “collecting or attempting to
collect any debt owed or due or asserted to be owed or due another to the extent
such activity … concerns a debt which was not in default at the time it was
obtained by such persons.” 15 U.S.C. § 1692a(6)(F). Furthermore, the FDCPA’s
legislative history suggests that a mortgagee and its assignee, including mortgage
servicing companies, are not debt collectors under the FDCPA when the debt was
not in default at the time it was assigned. See Perry v. Stewart Title Co., 756 F.2d
1197, 1208 (5th Cir. 1985) (citing S. Rep. No. 95–382, at 3 (1977), 1977
U.S.C.C.A.N. 1695, 1698).
In paragraph 1 of his amended complaint, Bush alleges that Chase is a “debt
collector” for purposes of the FDCPA, but offers nothing in the way of factual
support for his allegation. (Doc. 12 at ¶ 1). Merely labeling Chase a “debt
collector” does not satisfy the requirements of Rule 8. In paragraph 106 Bush
makes the further allegation that Chase is subject to the FDCPA “because as
previously stated, it began servicing this loan while [he] was in default or past due
with his payments.” (Doc. 12 at ¶ 106). The court first notes that Bush did not
“previously state” anywhere in his amended complaint that Chase began servicing
his loan when he was in default.
To the contrary, Bush repeatedly asserts
throughout the amended complaint that he was not in default and was not behind in
his mortgage payments. (See Doc. 12 at ¶¶ 7, 9, 12, 53). Apart from this glaring
contradiction, Bush provides no factual allegations to support the conclusion that
Chase began servicing his loan when it was in default, such as the date (or even the
year) Chase became the loan servicer and the date (or even the year) the loan went
into default. In sum, Bush has failed to allege sufficient facts showing that Chase
is a debt collector within the meaning of the FDCPA, and his claim for violation of
the FDCPA is due to be dismissed. See Prickett v. BAC Home Loans, 946 F. Supp.
2d 1236, 1249 (N.D. Ala. 2013) (“Because the Complaint fails to allege facts
showing the BANA is a debt collector within the meaning of the FDCPA,
Plaintiffs’ claim for violation of the FDCPA is subject to dismissal.”).
Bush’s State Law Claims
In his amended complaint, Bush has also asserted state law tort claims based
on negligence (Count One), wantonness (Count Two), wrongful foreclosure (Count
Four), slander of title (Count Five), fraud (Count Seven), false light (Count Eight),
and defamation/libel/slander (Count Nine), along with state law claims for unjust
enrichment (Count Three) and breach of contract (Count Six) and a claim for
declaratory relief (Count Fourteen). The negligence, wantonness, fraud, and unjust
enrichment claims are asserted against Chase, while the wrongful foreclosure claim
is asserted against U.S. Bank. The other state law claims are asserted against both
Defendants. The Defendants have moved to dismiss all of the state law claims
except for the breach of contract claim.
Unjust Enrichment, False Light, Defamation/Libel/Slander, and
The court first notes that Bush has offered no opposition or other response to
the Defendants’ arguments that his claims for unjust enrichment, false light,
defamation/libel/slander, and declaratory relief fail as a matter of law and are due
to be dismissed. Consequently, he has effectively abandoned those claims and
they are all subject to dismissal.
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 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 the claim to the district court).
The Defendants argue that Bush’s negligence, wantonness, and fraud claims,
to the extent they are based on alleged inaccurate credit reporting to credit
agencies, are preempted by the FRCA.7 (Doc. 15 at 4). There are two potentially
The Defendants also argue that Bush’s false light and defamation/libel/slander claims are
preempted by the FCRA (doc. 15 at 4), but as noted above Bush has abandoned those claims.
applicable FCRA preemption provisions, 15 U.S.C. §§ 1681h(e) and
1681t(b)(1)(F). Section 1681h(e) provides:
Except as provided in sections 1681n and 1681o of this title, no
consumer may bring any action or proceeding in the nature of
defamation, invasion of privacy, or negligence with respect to the
reporting of information against any consumer reporting agency, any
user of information, or any person who furnishes information to a
consumer reporting agency, based on information disclosed pursuant
to section 1681g, 1681h, or 1681m of this title, or based on
information disclosed by a user of a consumer report to or for a
consumer against whom the user has taken adverse action, based in
whole or in part on the report2 except as to false information furnished
with malice or willful intent to injure such consumer.
Section 1681t(b)(1)(F) provides:
No requirement or prohibition may be imposed under the laws of any
State … with respect to any subject matter regulated under … section
1681s-2 of this title, relating to the responsibilities of persons who
furnish information to consumer reporting agencies ….
When dealing with a furnisher of credit information such as Chase, these two
provisions are difficult to reconcile; “§ 1681t(b)(1)(F) is an absolute bar to state
causes of action, while § 1681h(e) only bars claims [where] the information was
‘furnished with malice or willful intent to injure such consumer.’” Dial v. Midland
Funding, LLC, 2015 WL 751690, at *6 (N.D. Ala. Feb. 23, 2015).
As United States District Judge Abdul K. Kallon has observed, “FCRA
preemption of state law torts is an area of little agreement among this district’s
judges.” Hamilton v. Midland Funding, LLC, 2015 WL 5084234, at *6 (N.D. Ala.
Aug. 27, 2015); see Taylor v. Midland Funding, LLC, 2015 WL 4670314, at *9-12
(N.D. Ala. Aug. 6, 2015), and Dial, 2015 WL 751690 at *6-7, for overviews of the
various approaches to FCRA preemption taken by the judges in this district.
However, there appears to be a growing consensus, which the undersigned joins,
that tort claims based on a furnisher’s alleged reporting of inaccurate credit
information to credit agencies fall within the scope of section 1681t(b)(1)(F), not
section 1681h(e), and are preempted. As Judge Blackburn has noted, “[t]he three
[FCRA] sections covered by § 1681h(e)—1681g, 1681h, and 1681m—regulate
disclosures to consumers and duties of users of information. These duties do not
concern a furnisher’s duties of reporting and investigation. Section 1681t(b)
covers furnishers.” Schlueter v. BellSouth Tellecomms., 770 F. Supp. 2d 1204,
1209 (N.D. Ala. 2010). Section 1681t(b)(1)(F) preempts “the laws of any state”
with respect to any subject matter regulated under § 1681s-2, and § 1681s-2, in
turn, imposes duties on furnishers to provide accurate credit information to credit
agencies, to investigate credit disputes after notification, and to correct inaccurate
information. See § 1681s-2(a) and (b). Consequently, the court agrees with the
growing trend finding that §1681t(b)(1)(F) bars state law tort claims based on
inaccurate credit reporting by furnishers. See Schlueter, 770 F. Supp. 2d at 121011 (finding that § 1681t(b)(1)(F) barred the plaintiffs’ state law claims against
BellSouth, including their claims for negligent, reckless, and wanton conduct and
misrepresentation, where the claims arose out of BellSouth’s furnishing of
information to credit reporting agencies); Hamilton, 2015 WL 5084234, at *7
(finding that § 1681t(a)(1)(F) barred the plaintiff’s invasion of privacy claim based
on the defendant’s credit reporting.”); Taylor, 2015 WL 4670314, at *13 (same);
Ferrell v. Midland Funding, LLC, 2015 WL 2450615, at *6 (N.D. Ala. May 22,
2015) (same); Dial, 2015 WL 751690, at *7 (same); Williams v. Student Loan
Guarantee Found. of Arkansas, 2015 WL 241428, at *13 (N.D. Ala. Jan. 20, 2015)
(“§ 1681t(b)(1)(F) preempts Williams’s state-law claims to the extent they address
the subject matter regulated under § 1681-s2.”); Barnett v. JP Morgan Chase Bank,
Nat. Ass’n, 2013 WL 3242739, at *13 (N.D. Ala. June 26, 2013) (holding that §
1681t(b)(1)(F) preempted the plaintiff from pursuing defamation, libel, or slander
claims against Chase arising out of any false reports to credit agencies).
Here, Bush’s negligence and wantonness claims are based, in part, on the
allegation that Chase failed to ensure that the credit information it disseminated to
the national credit bureaus rose to the level of maximum accuracy and was not
false, libelous, or slanderous. (Doc. 12 at ¶¶ 26, 30). The claims are also based on
allegations that Chase failed to properly train its employees on the thorough
investigation of disputed accounts and failed to remove its adverse reporting once
Bush disputed it. (Id.) Bush’s fraud claim is based, in part, on Chase’s alleged
“dissemination of inaccurate information regarding [his] loan being in default and
dissemination of information regarding [his] credit history and credit … that was
known to be false.” (Id. at ¶ 55). In other words, Bush’s negligence, wantonness,
and fraud claims are based, at least in part, on allegations relating to Chase’s
alleged failure to fulfill its duties under 15 U.S.C. § 1681s-2 (i.e., its duties to
provide accurate credit information to credit reporting agencies, to investigate
credit disputes after notification, and to correct inaccurate information).
Accordingly, to the extent Bush’s negligence, wantonness, and fraud claims are
based on such allegations, the claims are preempted by the FRCA, 15 U.S.C. §
Negligence and Wantonness
In addition to arguing that Bush’s negligence and wantonness claims are
preempted by the FCRA, the Defendants assert that the claims are due to be
dismissed for failure to state a claim. “The elements of a negligence claim are a
duty, a breach of that duty, causation, and damage.” Armstrong Bus. Servs., Inc. v.
AmSouth Bank, 817 So.2d 665, 679 (Ala. 2001). Wantonness is not just a higher
level of negligence, but involves “the conscious doing of some act or the omission
of some duty while knowing of the existing conditions and being conscious that,
from doing or omitting to do an act, injury will likely or probably result.” Ex parte
Essary, 992 So. 2d 5, 9 (Ala. 2007) (emphasis in original).
The Defendants argue that Bush’s negligence and wantonness claims fail as
a matter of law because they are based on Chase’s alleged breach of duties and
obligations created by contract—namely, Bush’s note and mortgage. (Doc. 15 at
10). The court agrees. Alabama law “does not recognize a tort-like cause of action
for the breach of a duty created by a contract.” Blake v. Bank of America, N.A.,
845 F. Supp. 2d 1206, 1210 (M.D. Ala. 2002); see also Barber v. Bus. Prods. Ctr.,
Inc., 677 So. 2d 223, 228 (Ala.1996), overruled on other grounds by White Sands
Grp., LLC v. PRS II, LLC, 32 So. 3d 5 (Ala.2009) (“a mere failure to perform a
contractual obligation is not a tort”). Here, in addition to the allegations relating to
inaccurate credit reporting, Bush’s negligence claim includes allegations that
Chase negligently serviced his loan, attempted to collect sums he did not owe,
caused his property insurance to be cancelled, defaulted him, and attempted a
foreclosure sale on his property. (Doc. 12 at ¶ 26). Bush’s wantonness claim
includes the same allegations, except he alleges that Chase’s conduct was wanton
rather than negligent. (Id. at ¶ 30). All of these allegations are based on duties
arising out of the note and mortgage and amount to allegations that Chase
negligently or wantonly breached its contractual servicing obligations. Because
Alabama law does not permit Bush to assert a tort claim against Chase for its
purported breach of a contract, Bush’s negligence and wantonness claims are not
legally cognizable and are due to be dismissed. See, e.g., James v. Nationstar
Mortg., LLC, 92 F. Supp. 3d 1190, 1198 (S.D. Ala. 2015) (noting that “a veritable
avalanche of recent (and apparently unanimous) federal precedent has found that
no cause of action for negligent or wanton servicing of a mortgage account exists
under Alabama law”); Duke v. JPMorgan Chase Bank Nat. Ass’n, 2014 WL
5770583, *4 (N.D. Ala. Nov. 5, 2014) (holding that the plaintiffs’ negligence,
wantonness, and/or willfulness claims were due to be dismissed because all of the
duties the defendant allegedly breached arose out of a mortgage agreement, note,
and loan modification agreement); Rice v. JPMorgan Chase Bank N.A., 2014 WL
3889472, *8 (N.D. Ala. Aug. 5, 2014) (“According to the complaint, Chase
collected funds that were not owed, caused insurance to be canceled, defaulted
Rice, and attempted a foreclosure sale, among other things. While Rice may
pursue these claims under a breach of contract theory, as he has done, his
negligence and wantonness claims are due to be dismissed.”).
Although not mentioned by the Defendants in their motion to dismiss,
Bush’s negligence and wantonness claims also include the allegation that Chase
failed to properly train and/or supervise its employees with regard to the handling
of his loan account. (Doc. 12 at ¶¶ 26, 30).
Even assuming that Bush might
otherwise be able to assert a claim for negligent or wanton training/supervision, he
has not done so here.
In the context of a claim for negligent or wanton
training/supervision, “the master is held responsible for his servant’s incompetency
when notice or knowledge, either actual or presumed, of such unfitness has been
brought to him.” Thompson v. Havard, 235 So. 2d 853, 858 (Ala. 1970). Bush
has not pleaded any facts regarding how Chase employees handled his loan
account, what training and supervision they received, or what notice Chase had of
their alleged incompetency. He has offered no facts from which the court could
infer that he has a plausible claim against Chase for failure to properly train and/or
supervise its employees.
In his opposition to the Defendants’ motion to dismiss, Bush attempts to
rescue his negligence and wantonness claims by arguing that “federal law and
regulations impose a duty of affirmative care on the servicing Defendant, Chase,”
which duty he claims Chase breached. (Doc. 23 at 23). A similar argument was
soundly rejected by Judge Steele in James:
Plaintiffs attempt to circumvent these principles [that mortgage
servicing obligations are a creature of contract, not of tort] by
asserting that statutes, rather than contracts, form the basis for the
duties that plaintiffs claim were breached…. This argument is
unpersuasive for a host of reasons. First, plaintiffs’ Complaint neither
provides an inkling that Counts V [negligence] and VI [wantonness]
are proceeding under a negligence per se theory nor recites any
statutes as being the source of the duties that they claim were
breached; therefore, it does not comport with Twombly/Iqbal pleading
requirements.… Second, federal courts in Alabama have given short
shrift to similar efforts invoking the doctrine of negligence per se to
outflank the phalanx of case authorities holding that Alabama law
does not recognize a cause of action for negligent or wanton mortgage
servicing.… [T]he Jameses’ appeal to negligence per se cannot help
them because the legal duties underlying their claims against FNMA
and Nationstar arise in contract. The statutes in play in this case
regulate the contractual relationship between the Jameses and
FNMA/Nationstar, but do not eliminate or supplant that contractual
James, 92 F. Supp. 3d at 1200, n.9.
Here, similarly, Bush’s amended complaint provides no inkling that his
negligence and wantonness claims are based, even in part, on Chase’s alleged
breach of duties imposed by statute. In his opposition he asserts that Chase
“violated the duty owed to him as imposed by RESPA when it fail[ed] to respond
to a request for loss mitigation, failed to process his application for loss mitigation
and failed to postpone proceeding with a foreclosure until a decision [was] made
with regard to loss mitigation,” but those allegations are not included anywhere in
Counts One (negligence) or Two (wantonness) of his amended complaint. Indeed,
neither RESPA nor any other statute is mentioned in Counts One and Two. To the
extent he now contends that his negligence and wantonness claims are based on
Chase’s alleged breach of duties created by RESPA (or some other unidentified
statute), his amended complaint does not comport with the Iqbal/Twombly pleading
requirements because it provides no clue that he has been proceeding under such a
theory. Moreover, the fact remains that the legal duties underlying Bush’s
negligence and wantonness claims against Chase are a creature of contract; they
stem from the underlying note and mortgage.
Because Chase’s servicing
obligations to Bush are rooted in contract, any claim for breach of those
obligations must sound in breach of contract, not tort.
For all of the above reasons, Bush’s negligence and wantonness claims are
due to be dismissed.
In addition to their FCRA preemption argument, the Defendants argue that
Bush’s fraud claim is due to be dismissed for two reasons: he has not pleaded his
fraud allegations with the particularity required by Rule 9(b), and his “reliance”
assertions make no sense. (Doc. 15 at 17-18). The court agrees on both fronts.
As noted, Rule 9(b) requires that “[i]n all averments of fraud or mistake, the
circumstances constituting fraud or mistake shall be stated with particularity.” FED.
R. CIV. P. 9(b). To satisfy Rule 9(b), a complaint must set forth “(1) precisely what
statements were made in what documents or oral misrepresentations or what
omissions were made, and (2) the time and place of each such statement and the
person responsible for making (or, in the case of omissions, not making) same, and
(3) the content of such statements and the manner in which they misled the
plaintiff, and (4) what the defendants obtained as a consequence of the fraud.”
Ziemba, 256 F.3d at 1202 (quoting Brooks v. Blue Cross & Blue Shield of Florida,
Inc., 116 F.3d 1364, 1371 (11th Cir. 1997)) (quotation marks omitted).
Here, Bush’s fraud allegations are far too vague to state a claim for relief
consistent with Rule 9(b). He alleges that Chase “misrepresented” that his loan
was in default; disseminated “inaccurate information” about his credit and credit
history that was “known to be false”; and “promised” that there would be no
attempt to foreclose on his property until his application for a loan modification
under the federal HAMP program was approved. (Doc. 12 at ¶ 55). However, he
does not identify any person at Chase who was responsible for making the alleged
misrepresentations and promises, how and when the alleged misrepresentations
and promises were communicated, the manner in which the alleged
misrepresentations and promises misled him, or what Chase obtained by the
alleged fraud. Simply put, he has not pleaded the circumstances of Chase’s alleged
fraud with the particularity necessary to satisfy Rule 9(b).
Additionally, a fraud claim in Alabama requires proof of four elements: “(1)
[a] false representation (2) of a material existing fact (3) relied upon by the
plaintiff (4) who was damaged as a proximate result of the misrepresentation.”
Ala. Psychiatric Servs., P.C. v. 421 S. Court St., LLC, 81 So. 3d 1239, 1247 (Ala.
2011) (quotation marks omitted). With respect to the “reliance” element, Bush’s
amended complaint alleges in conclusory fashion that Bush “justifiably relied”
upon “said representations” by Chase in deciding to proceed with the execution of
his loan, and “detrimentally relied” on Chase’s promise that it would not attempt to
foreclose on his property until his loan modification was approved. (Doc. 12 at ¶¶
55, 57). The first allegation makes no sense; Bush received his loan from ABN
AMRO Mortgage Group, not from Chase, and there is no allegation anywhere in
the amended complaint that Chase had any involvement whatsoever in the
origination of the loan. Moreover, none of the “said representations” described in
Bush’s fraud claim have any relation to Bush’s decision to proceed with the
execution of his loan.
The second allegation—that Bush “detrimentally relied” on a promise by
Chase to defer foreclosure until his loan modification application was approved—
is inconsistent with everything else he alleges in his amended complaint. As
previously noted, Bush consistently asserts throughout his amended complaint that
he was not in default on his loan, that he was not behind on his mortgage
payments, that he made his payments every month, and that he disputed the
Defendants’ efforts to foreclose on his home. In addition, no foreclosure sale ever
occurred. If Bush remained current on his mortgage payments as he alleges, and
there was no foreclosure sale, then his naked assertion that he detrimentally relied
on Chase’s alleged promise is not plausible on its face. In this regard, the court
notes that nowhere in Bush’s amended complaint does he identify even one
specific detrimental action he took in reliance on Chase’s alleged promise to forgo
foreclosure until he had received a loan modification. See Hunt Petroleum Corp.
v. State, 901 So. 2d 1, 5 (Ala. 2004) (“[F]or a plaintiff to state a fraud claim, he
must show that a misrepresentation induced him to act in a way that he would not
otherwise have acted, that is, that he took a different course of action because of
the misrepresentation.”). Without more, Bush’s naked allegation of “detrimental
reliance” is insufficient to state a viable fraud claim.
The Defendants have also moved for dismissal of Bush’s wrongful
foreclosure claim. This aspect of the Defendants’ motion requires little discussion.
“A mortgagor has a wrongful foreclosure action whenever a mortgagee uses the
power of sale given under a mortgage for a purpose other than to secure the debt
owed by the mortgagor.” Reeves Cedarhurst Dev. Corp. v. First Am. Fed. Sav. &
Loan. Ass'n, 607 So.2d 180, 182 (Ala. 1992). “To state a wrongful foreclosure
claim, the plaintiff must plead facts suggesting there [was] an actual foreclosure
sale.” Rice, 2014 WL 3889472, at * 8; see also ECP Financial II LLC v. Ivey,
2013 WL 6330936, at *3 (N.D. Ala. Dec. 5, 2013) (“The plain reading of the terms
‘uses the power of sale’ in the wrongful foreclosure claim establishes that there
must be an actual foreclosure sale.”); Vance v. Ocwen Financial Corp., 2012 WL
2036412, at *3 (N.D. Ala. June 5, 2012) (“[I]n order to state a claim for wrongful
foreclosure, a foreclosure sale must have actually taken place.”).
Here, Bush has alleged only that Bank One “wrongfully initiated and
attempted to conduct a foreclosure proceeding against [him] in violation of law.”
(Doc. 12 at ¶ 40). He does not allege that an actual foreclosure sale ever occurred.
Accordingly, his wrongful foreclosure claim is due to be dismissed.
Slander of Title
Lastly, the court turns to Bush’s slander of title claim. Under Alabama law,
a slander of title claim has six elements: “(1) [o]wnership 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) (quoting Womack v. McDonald, 121 So. 57, 59 (Ala. 1929)). With
respect to the special damages requirement, United States District Judge L. Scott
Coogler has explained:
To satisfy the special damages pleading requirement, a plaintiff must
allege that the defendant's false publication “interrupted, or injuriously
affected, some dealing of the plaintiff with his property” or caused the
plaintiff to incur expenses “to relieve his right to the property from the
damnifying effect of such false and malicious slander.” Ebersole v.
Fields, 181 Ala. 421, 62 So. 73, 75 (1913). Special damages must be
“distinctly and particularly set out” in the complaint, and “[a]n
allegation of loss in general terms is not sufficient.” Id. (holding that
a complaint averring that the defendants falsely slandered the
plaintiff’s title followed by general allegations of monetary loss was
Prickett v. BAC Home Loans, 946 F. Supp. 2d 1236, 1244 (N. D. Ala. 2013).
Here, Bush has merely alleged that the Defendants “caused a cloud to be
placed on the title of [his] property” and that “[a]s the proximate cause of the …
slandering of [his] title, he was caused to suffer injuries and damages and claims
all damages allowable under law.” (Doc. 12 at ¶¶ 44-45). This general allegation
of damages comes nowhere close to satisfying the special damages pleading
Bush has not “distinctly and particularly set out” any special
damages, nor has he alleged that the purported slander of his title “interrupted or
injuriously affected” his dealing with the property or caused him to incur expenses
to rectify the effect of the slander. In other words, he has not alleged any special
damages that are traceable to the purported slander of his title to the property.
Consequently, his slander of title claim fails as a matter of law and is due to be
Leave to Amend
In his response in opposition to the Defendants’ motion to dismiss, Bush
requests leave to amend his (amended) complaint to correct any deficiencies in his
negligence, wantonness, fraud, TILA, and FCRA claims. (Doc. 23 at 26-27, 30,
The court declines to allow leave to amend in this instance. Bush was
placed on notice of the deficiencies in his case via the Defendants’ first motion to
dismiss. (Doc. 7). He has had one opportunity to correct the deficiencies and has
failed to do so. Coventry First, LLC v. McCarty, 605 F.3d 865, 869 (11th Cir.
2010) (“A plaintiff has a right to amend a complaint once as a matter of course so
long as no responsive pleading has been filed.”). In view of the opportunity
already afforded Bush to amend his complaint, his present allegations, and the
foregoing legal determinations by the court, there is no reason to believe that Bush
will be able to correct the deficiencies if he is given a second chance to amend his
For the foregoing reasons, the Defendants’ motion to dismiss is due to be
granted in part and denied in part as follows: Bush’s state law, TILA, FCRA, and
FDCPA claims are due to be dismissed and his RESPA claim will be allowed to
proceed along with his breach of contract claim. To the extent Bush requests
permission to file a second amended complaint, the request is due to be denied.
An order consistent with the court’s findings will be entered.
DONE, this the 27th day of January, 2016.
JOHN E. OTT
Chief United States Magistrate Judge
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