Tidmore v. Bank of New York Mellon Corporation et al

Filing 35

MEMORANDUM OPINION. Signed by Magistrate Judge John E Ott on 2/3/2017. (KAM, )

FILED
2017 Feb-03 PM 02:58
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
MIDDLE DIVISION
KIMBERLY TIDMORE,
Plaintiff,
v.
BANK OF AMERICA, N.A.,
Defendant.

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Civil Action Number:
4:15-cv-2210-JEO

MEMORANDUM OPINION
In her remaining claims in this action, Plaintiff Kimberly Tidmore asserts
that Defendant Bank of America, N.A. (“BANA”) is liable under Alabama law for
alleged malfeasance in connection with BANA’s servicing of her mortgage loan
and handling her applications for a loan modification. (See Doc.1 1-1 at 9-22
(“Complaint” or “Compl.”)). Originally filed in Alabama state court, the action
was removed to this court based on diversity (Doc. 1) and assigned to the
undersigned United States Magistrate Judge pursuant to the court’s general order
of reference dated January 1, 2015. The parties thereafter consented to an exercise
of plenary jurisdiction by a magistrate judge pursuant to 28 U.S.C. § 636(c). (Doc.

1

References herein to “Doc(s). ___” are to the document number(s) of the pleadings,
motions, and other materials in the court file, as compiled and enumerated on the docket sheet by
the Clerk of the Court. Pinpoint citations are to the page of the electronically-filed document in
the court’s CM/ECF system, which may not correspond to pagination on the original “hard copy”
of the document presented for filing.

23). The cause now comes to be heard on BANA’s motion to dismiss, pursuant to
FED. R. CIV. P. 12(b)(6). (Doc. 13). The parties have fully briefed the motion
(Docs. 13, 25, 26), which is now ripe for decision. Upon consideration, the court
concludes that BANA’s motion to dismiss is due to be granted.
I.

REVIEW STANDARDS
The FEDERAL RULES OF CIVIL PROCEDURE apply to an action after removal.

FED. R. CIV. P. 81(c); Willy v. Coastal Corp., 503 U.S. 131, 134 (1992); Duncan v.
CitiMortgage, Inc., 617 F. App’x 958, 960 (11th Cir. 2015). Rule 12(b)(6) of
those rules authorizes a motion to dismiss on the ground that the complaint fails to
state a claim upon which relief can be granted. On such a motion, the “‘issue is
not whether a plaintiff will ultimately prevail but whether the claimant is entitled
to offer evidence to support the claims.’” Little v. City of North Miami, 805 F.2d
962, 965 (11th Cir. 1986) (quoting Scheur v. Rhodes, 416 U.S. 232, 236 (1974)).
The court assumes the factual allegations of 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).
In diversity cases, federal courts apply state substantive law and federal
procedural law. See Palm Beach Golf Ctr.-Boca, Inc. v. John G. Sarris, D.D.S.,
P.A., 781 F.3d 1245, 1259-60 (11th Cir. 2015). In such cases, the sufficiency of a
2

complaint challenged by a motion to dismiss is reviewed under federal, rather than
state, pleading standards, but considering the substantive elements of the claims
under state law. Id. at 1260-61. Rule 12(b)(6) is read in light of Rule 8(a)(2),
FED. R. CIV. P., which 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.’” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47
(1957)). “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.
(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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citations
omitted).

3

II.

BACKGROUND2
In 2003, Plaintiff took out a loan to purchase a home in Hokes Bluff,

Alabama, in Etowah County, executing a 30-year note and granting a mortgage on
the property. (Compl. ¶¶ 1, 6). “In or about late 2009, Plaintiff began the process
of applying for a loan modification” with BANA, which was then servicing her
mortgage loan. (Id. ¶ 7). She says that, on or about December 25, 2009, she
received a phone call from a BANA representative approving her for a Temporary
Payment Plan (“TPP”) for three to five months that would reduce her monthly
payment from $1,010.16 to $967.20. (Id. ¶¶ 6, 8). Plaintiff says she made timely
payments pursuant to the TPP from January 2010 until June 2010. (Id. ¶ 9).
Despite doing so, she says she continued to receive “almost daily calls” between
January and June 2010, in which BANA told her it had no record of her having
received a TPP and that her account was seriously delinquent. (Id.)
After failing to receive news regarding the status of her loan modification
application, Plaintiff requested information from BANA with respect to where her
loan payments were being applied, but she was not given an explanation. (Compl.

2

The background summary in this section is based on the Complaint and is stated in the
light most favorable to Plaintiff as the non-moving party, consistent with the standard of review
on a motion to dismiss under Rule 12(b)(6). Accordingly, they are the “facts” for purposes of the
instant motion only and may not be the actual facts.

4

¶ 10). Plaintiff told BANA that she would cease payments until she was given
transcripts of her payment history and was allowed to speak with a supervisor.
(Id.) On or about October 10, 2010, BANA contacted Plaintiff and notified her
that if she did not make a payment immediately her loan would be accelerated.
(Id. ¶ 11). Plaintiff made the demanded payment. (Id.)
On or about February 7, 2011, Plaintiff supplied BANA with another loan
modification application, at BANA’s request. (Id.) BANA confirmed receipt of
that application and allegedly told Plaintiff that it would not accepted payments
while her new application was under review. (Id.) In or around April 2012,
BANA told Plaintiff that her latest loan modification application had been denied.
(Id. ¶ 14). Plaintiff says that in or around September 2012, she received another
TPP from BANA, covering October to December 2012. (Id. ¶ 15). BANA told
Plaintiff that if she made those three payments that her loan would be brought up
to date. (Id.) Plaintiff says she then paid the new TPP through January 2013. (Id.
¶ 16). Plaintiff states that although she attempted thereafter “to reach out
numerous times to check the status of her most recent modification application,
[she] was not able to get any information” on it. (Id. ¶ 16).
On or about December 26, 2013, Plaintiff received a notice that the
servicing of her mortgage loan had been transferred from BANA to Nationstar
5

Mortgage, LLC (“Nationstar”). (Id. ¶ 17). In her Complaint, Plaintiff alleges that
“on or about January 23, 2013, Nationstar informed Plaintiff [inaccurately]... that
no payment [had] been made [on her account] since June 8, 2010.” (Id. ¶ 18
(emphasis added)). In her opposition brief, however, Plaintiff seeks to clarify that
she actually received such notice from Nationstar “on January 23, 2014,”
characterizing the earlier date in the Complaint as a “clerical error.” (Doc. 25 at 2,
¶ 4 & n. 1 (emphasis added)).
Similarly, Plaintiff pleads that Nationstar eventually approved her for a loan
modification “in March 2014” (id. ¶ 22 (emphasis added)), but she now says in her
brief that such actually occurred “in March 2015.” (Doc. 25 at 2, ¶ 5 & n. 2
(emphasis added)). In any event, Plaintiff alleges that, under that offered
modification, her new principal balance would have been over $50,000.00 more
than on her initial mortgage loan from 2003 and included $62,958.74 in “new
money” because it did not take into consideration payments she had made on the
loan from 2003 to 2010 or the “numerous TPP agreements” between Plaintiff and
BANA. (Compl. ¶¶ 22-23). It also extended the maturity date on Plaintiff’s loan
from 2033 to 2055. (Id. ¶¶ 6, 22). Because Plaintiff found such terms
unsatisfactory, she declined to execute the loan modification. (Id. ¶ 25).
In early September 2015, Nationstar sent Plaintiff a statement that she had
6

overdue payments of $87,658.07. (Id. ¶ 27). On or about September 18, 2015,
Plaintiff received a foreclosure notice stating that the owner of the note, The Bank
of New York Mellon Corporation, as trustee for CWABS, Inc. asset-backed
certificates, Series 2003-BC3 (“Mellon”), would be conducting a foreclosure sale
of her home on October 26, 2015. (Id. ¶ 29).
On October 23, 2015, Plaintiff initiated this action by filing her Complaint
in the Circuit Court of Etowah County, Alabama, asserting claims against BANA,
Nationstar, Mellon (hereinafter collectively “Defendants”) and fictitiously
identified defendants. (Compl. at 1). She has pled her claims in eight counts,
which she has captioned as follows: “Temporary Restraining Order” (Count I);
“Preliminary and Permanent Injunction” (Count II): “Negligent, Reckless and/or
Wanton Conduct” (Count III); “Negligent Undertaking” (Count IV); “Negligent,
Reckless and/or Wanton Training and/or Supervision” (Count V); “Breach of the
Implied Covenant of Good Faith and Fair Dealing” (Count VI), “Promissory
Estoppel” (Count VII), and “Invasion of Privacy” (Count VIII). On December 2,
2015, Defendants removed the action to this court, based on diversity.3 (Doc. 1).
3

Under 28 U.S.C. § 1441, defendants may remove an action originally filed in state court
to federal district court where the latter would possess jurisdiction. Under 28 U.S.C. §
1332(a)(1), federal district courts have jurisdiction over civil actions that (1) are between citizens
of different states and (2) the amount in controversy exceeds $75,000, exclusive of interest and
costs. To that end record sufficiently supports that, at all times, there has been complete diversity
between the parties (see Doc. 1 ¶¶ 7-10), and that the amount-in-controversy requirement is met.

7

Subsequently, Plaintiff voluntarily dismissed all claims against Nationstar and
Mellon (Docs. 15, 16), leaving BANA as the sole remaining defendant. BANA
has now filed a motion to dismiss all claims against it. (Doc. 13). Plaintiff has
filed a brief in opposition (Doc. 25), to which BANA has filed a reply. (Doc. 26).
III.

DISCUSSION
A.

Counts I, II, III, VI, and VII

BANA raises assorted arguments in support of dismissing all claims in
Counts I, II, III, VI, and VII of the Complaint. Plaintiff now expressly concedes
that all of those claims are indeed due to be dismissed. (Doc. 25 at 13).
Accordingly, those claims will be dismissed with prejudice. As a result, Plaintiff’s
only remaining claims at issue in the case are those against BANA for “negligent
undertaking” in Count IV; for “negligent, reckless and/or wanton training and/or
supervision” in Count V; and for “invasion of privacy” in Count VIII. BANA
motion seeks the dismissal of those claims as well, but Plaintiff opposes such
action. Thus, the court now turns to consider the parties’ respective arguments
relating to the claims in Counts IV, V, and VIII.

(Id. ¶¶ 12-15).

8

B.

Counts IV (“Negligent Undertaking”) and V (“Negligent,
Reckless and/or Wanton Training and/or Supervision”)

In Count IV, captioned “Negligent Undertaking,” Plaintiff alleges that
“Defendants ... voluntarily undertook to assist Plaintiff in resolving mortgage
difficulties, mitigation of her mortgage and/or avoiding foreclosure action on the
Property in writing, in the form of various letters and emails sent to Plaintiff.”
(Compl. ¶ 69). “By so undertaking,” Plaintiff asserts, “Defendants owed Plaintiff
the duty to do so with reasonable care” and that “Defendants breached that duty.”
(Id. ¶ 68). In particular, she claims that, “[i]n the process of undertaking to assist
Plaintiff from suffering a foreclosure and avoiding increasing delinquency,
Defendants negligently, recklessly and/or wantonly serviced the loan by, including
but not limited to, failing to timely and properly process the modification
applications, failing to properly identify where payments had been applied and
how figures had been derived.” (Id. ¶ 69). In Count V, Plaintiff raises associated
claims alleging that “Defendants” were negligent “and/or” wanton in the training
“and/or” supervision of their agents and employees. (Id. ¶¶ 72-74).
BANA moves to dismiss these claims, arguing that Alabama law does not
recognize a negligence or wantonness cause of action with regard to servicing or
handling a loan or mortgage once it has been executed. See U.S. Bank, N.A. v.

9

Shepherd, 202 So. 3d 302, 315 (Ala. 2015) (citing James v. Nationstar Mortg,
LLC, 92 F. Supp. 3d 1190, 1198-1200 (S.D. Ala. 2015)). Indeed, as the Alabama
Supreme Court has explained, “mortgage servicing obligations are a creature of
contract, not of tort, and stem from the underlying mortgage and promissory note
executed by the parties, rather than a duty of reasonable care generally owed to the
public.” Id. at 315 (quoting James, 92 F. Supp. 3d at 1200). Thus, an alleged
breach of obligations created by the parties’ agreement may give rise only to a
claim for breach of contract, not a tort claim for negligence or wantonness. See
id.; see also Blake v. Bank of Am., N.A., 845 F. Supp. 2d 1206, 1210 (M.D. Ala.
2012) (“Alabama does not recognize a tort-like cause of action for the breach of a
duty created by contract. Indeed, ‘a negligent failure to perform a contract ... is
but a breach of the contract.’” (quoting Vines v. Crescent Transit Co., 85 So.2d
436, 440 (Ala. 1956)); Bush v. J.P. Morgan Chase Bank, N.A., 2016 WL 324993,
at *8 (N.D. Ala. Jan. 27, 2016). That principle also extends to bar claims of
negligent and wanton training and supervision of agents or employees that
purportedly resulted in the loan servicer’s negligent or wanton performance of
duties deemed contractual in nature. See James, 92 F. Supp. 3d at 1201; Costine v.
BAC Home Loans, 946 F. Supp. 2d 1224, 1235 (N.D. Ala. 2013).
Plaintiff acknowledges the above legal principles, conceding that “lenders
10

and/or servicers do not owe borrowers a generalized duty of care and are only
required to perform their contractual obligations according to the mortgage.”
(Doc. 25 at 5). Nevertheless, she insists that her tort claims in Counts IV and V
are viable because they “relate to BANA’s alleged negligence, misconduct, and/or
inaction, during the modification process, which spanned from 2009 through
December 2013.” (Id.) More particularly, she maintains that “BANA’s decision
to solicit, request, and or offer to review Plaintiff for a loan modification was not a
contractual obligation contained in the mortgage.” (Id.) Rather, she says that
“[b]y offering to review Plaintiff’s loan modification applications, and guiding her
through the modification process, BANA [voluntarily] ‘undertook’ a duty outside
the conventional role as servicer and outside the contractual confines of the
mortgage.” (Id.) As a result, Plaintiff insists, “BANA was then obligated to
review the applications and handle the modification process with reasonable care.”
(Id.) And Plaintiff asserts that she has sufficiently pled that BANA breached that
duty by,
consistently provid[ing] conflicting and confusing communications,
correspondence, and statements, if any[;] approv[ing] and accept[ing]
trial period payments which Plaintiff avers were never applied to her
loan[;] [losing] modification paperwork[;] provid[ing] no feedback
and or status updates[; refusing to] accept and/or retun[ing] payments
without an explanation[;] lull[ing] Plaintiff into a sense of calm and
trust that BANA was working to modify her loan[;] and forc[ing]
11

Plaintiff into an insurmountable delinquency.
(Doc. 25 at 6 (citing Compl. ¶¶ 9-16, 18, 23, 29-33, 68, 69)). In turn, Plaintiff
conceives such tort claims in Count IV to authorize associated claims in Count V
for negligent and wanton training and supervision. (Id. at 8).
Plaintiff is correct that “Alabama law does recognize certain circumstances
under which a duty to undertake with due care can attach to a lender’s voluntary
actions that ‘create[s] a “special relationship” with respect to a borrower,
Williamson [v. Realty Champion, 551 So. 2d 1000, 1002 (Ala. 1989)], that is
‘independent of their contractual obligations.’” Ogletree v. Bank of Am., N.A.,
2012 WL 4340024, at *6 (N.D. Ala. Sept. 17, 2012). For instance, the Alabama
Supreme Court has recognized that a lender may incur a duty of care to the
borrower in connection with its voluntary performance of a property inspection for
the borrower’s benefit. Williamson v. Realty Champion, 551 So. 2d 1000, 1002
(Ala. 1989); Rudolph v. First S. Fed. Sav. & Loan Ass’n, 414 So. 2d 64, 71 (Ala.
1982). That Court has also held that a defendant lender who agreed to assist
plaintiff prospective borrowers in applying to a federal agency for a government
subsidized loan could be liable for negligently misrepresenting to them that the
agency had approved the loan, which prompted the plaintiffs to commence
construction. First Fed. Sav. & Loan Ass’n of Hamilton v. Caudle, 425 So. 2d
12

1050, 1052 (Ala. 1982); see also Southland Bank v. A & A Drywall Supply Co., 21
So. 3d 1196, 1219 (Ala. 2008) (stating in dicta that the defendant bank “arguably
undertook a duty” of care with respect to processing loan application materials
submitted on the plaintiff’s behalf to the United States Small Business
Administration); Lambert v. First Fed. Mortg., 47 F. Supp. 3d 1310, 1319-20
(N.D. Ala. 2014) (finding that bank might be liable in negligence for failing to
timely send loan application on the plaintiff’s behalf to the United States
Department of Agriculture).
However, to the extent that Plaintiff’s claims of “negligent undertaking” are
founded upon BANA’s purported failure to apply monthly installment payments,
to keep accurate records of Plaintiff’s account, and to provide Plaintiff with
information on her account, those alleged duties are still fundamentally contractual
in nature, associated with the servicing of the loan. That is, any such legal duties
would arise from the initial mortgage agreement and promissory note and, to the
extent they exist, any subsequent temporary payment plans or other modifications
of the loan agreement, not from the fact that Plaintiff asked BANA to modify the
loan agreement. See Blake, 845 F. Supp. 2d at 1209-10; Prickett v. BAC Home
Loans, 946 F. Supp. 2d 1236, 1244-45 (N.D. Ala. 2013); Costine v. BAC Home
Loans, 946 F. Supp. 2d 1224, 1234 (N.D. Ala. 2013). Therefore, such allegations
13

do not state a viable negligence claim under Alabama law, nor can they support
subsidiary claims of negligent and wanton training and supervision. See id.
But even insofar as Plaintiff’s negligence claims are founded in part on acts
or omissions related strictly to BANA’s allegedly inept handling of Plaintiff’s loan
modification requests, the circumstances pled by Plaintiff do not support the
existence of a tort duty under Alabama state law. It is assumed that BANA’s acts
and omissions dealing narrowly with processing her loan modification requests do
not fall within the scope of BANA’s contract-based duties in “servicing” the
mortgage loan itself. See Alverson v. PNC Bank, 2014 WL 7146995, at *3 (S.D.
Ala. Dec. 15, 2014) (“While servicing a mortgage account involves duties created
by contract, the same cannot be said for processing a request for a loan
modification.”). However, as explained below, the fact that a financial institution
has indicated a willingness to consider a borrower’s request for a loan
modification does not mean that the law implies a duty of reasonable care as it
relates to the processing, handling, or consideration of that application.
“In general, parties are free to contract as they see fit, on any terms
regarding a subject matter in which they have an interest, provided that the
contract does not impose obligations that are contrary to statute, public policy, or
an established rule of the common law.” 174 Am. Jur. 2d Contracts § 222. Thus,
14

outside the confines of an agreement, a financial institution typically does not owe
a duty to lend money at all, nor to help extricate a borrower from its financial
difficulties by modifying the terms of an existing loan agreement. See Southland
Bank, 21 So. 3d at 1218; Cahaba Seafood, Inc. v. Central Bank of the South, 567
So. 2d 1304, 1306 (Ala. 1990); Tharp v. Union State Bank, 364 So. 2d 335, 337
(Ala. Civ. App. 1978); cf. George v. Federal Land Bank of Jackson, 501 So. 2d
432, 436 (Ala. 1986) (holding that a mortgagee “was under no duty to insure that
it retain[ed] enough property under its mortgage to insure that at any point during
the term of the mortgage defendants could restructure their loan”). Moreover, the
Alabama Supreme Court has indicated that a financial institution generally owes
no duty of care to a prospective borrower in connection with its consideration and
processing of a loan application, at least insofar as the institution is acting within
its conventional role as a lender of money. See Armstrong Business Services, Inc.
v. AmSouth Bank, 817 So. 3d 665, 680 (Ala. 2001) (affirming summary judgment
for bank on negligence claim alleging that bank breached a duty “to properly
process the [plaintiff’s] loan request,” noting that the “the record shows only that
[the bank] indicated that it would consider [the plaintiff’s] offer to borrow money
and then failed to consider that offer to the extent that [the plaintiff] contends
would have been appropriate.”); Flying J Fish Farm v. Peoples Bank of
15

Greensboro, 12 So. 3d 1185, 1193-94 (Ala. 2008) (holding bank owed to
borrower no fiduciary or other tort-based duty to use reasonable care to determine
that borrower would have the means to repay the loan); accord Lueras v. BAC
Home Loans Servicing, LP, 221 Cal. App. 4th 49, 163 Cal. Rptr. 3d 804, 820
(2013) (“[A]s a general rule, a financial institution owes no duty of care to a
borrower when the institution’s involvement in the loan transaction does not
exceed the scope of its conventional role as a mere lender of money.” (quoting
Nymark v. Heart Fed. Sav. & Loan Assn., 231 Cal. App. 3d 1089, 1096, 283 Cal.
Rptr. 53 (1991)). And given that lenders are no more legally mandated to modify
the terms of an existing loan agreement than they are to lend money in the first
place, there is likewise no reason that the law should impose a duty of care as it
relates to processing a request for a loan modification. See Alverson, 2014 WL
7146995, at *4 (“The facts in the Complaint describe inept handling of Plaintiffs’
loan modification request, but they do not support a claim for negligence or
wantonness under Alabama law.”); see also Curry v. Bank of Amer. Home Loans
Servicing, 802 F. Supp. 2d 105, 108 (D.D.C. 2011); Badame v. J.P. Morgan Chase
Bank, N.A., 641 F. App’x 707, 709 (9th Cir. 2016); Spaulding v. Wells Fargo
Bank, N.A., 714 F.3d 769, 779 (4th Cir. 2013). And in that vein, Plaintiff’s
allegations regarding BANA processing of her applications for a loan modification
16

do not support that BANA was acting on the Plaintiff’s behalf in relation to a third
party or otherwise outside the scope of a conventional lender-borrower
relationship. As such, this case is distinguishable from Williamson, Rudolph, and
Caudle, the Alabama state decisions primarily relied upon by Plaintiff. (See Doc.
25 at 8). Rather, this case is more analogous to Armstrong and Alverson, which
held that financial institutions acting in a mere lending capacity owed no duty of
reasonable care in connection with processing or considering a request to make or
modify a loan agreement, respectively.
The court notes, however, that the case upon which Plaintiff actually relies
most heavily is Ogletree, a decision of this court by Judge Hopkins. (See Doc. 25
at 7-8). In Ogletree, plaintiff mortgagors asserted negligence claims against their
mortgagee (which happened to be BANA) and the loan servicer on the theory that
such defendants had voluntarily undertaken a duty to use reasonable care in
connection with their consideration and processing of a request by the plaintiffs to
be allowed to conduct a short sale of the property in an effort to avoid foreclosure.
2012 WL 4340024 at *4. The plaintiffs appear to have claimed that the
defendants breached that duty (1) by failing to advise the plaintiffs until four
months into the short-sale review process that any such transaction would have to

17

be an arm’s length one4 and (2) presumably also by ultimately denying the
plaintiffs’ short-sale request itself. See id. at *2-5, 7. The defendants sought
summary judgment on multiple grounds, including that they owed no tort duty in
connection with the failed short sale of the property. Id. at *4. Acknowledging
that the plaintiffs’ claim rested on Alabama’s “undertake a duty” doctrine, Judge
Hopkins observed that neither the parties nor her own research had disclosed a
controlling case in which that principle had “played a role in the relationship
between a borrower and a lender and/or a mortgage servicing company in a short
sale situation.” Id. at *5. However, relying upon Rudolph, Williamson, and
Caudle, Judge Hopkins found that, “contrary to Defendants’ stance, Alabama law
does recognize certain circumstances under which a duty to undertake with due
care can attach to a lender’s voluntary actions that creates a special relationship
with respect to a borrower that is independent of their contractual obligations.”
Ogletree, 2012 WL 4340024 at *6 (internal quotation marks, brackets, and
citations omitted). She further concluded that the negligence claim based on the
“Defendants’ voluntary offer to assist Plaintiffs with the short sale process,” id. at
*7, was “unrelated to loan servicing” and was thus not governed by the only

4

The plaintiffs’ contemplated short sale of the property in Ogletree was going to be to the
mother of one of the plaintiffs, at a price $57,833.73 less than the plaintiffs owed on their
mortgage loan. See Ogletree at *2.

18

relevant caselaw cited by the defendants, holding that Alabama law does not
recognize a cause of action for “negligent loan servicing.” Id. at *6. Judge
Hopkins continued stating that, the defendants’ “lack of legal development
material to the merits of Plaintiff’s negligence claim ... fails to meet their burden
as the movants.” Id. And being “guided by Rudolph, Caudle, and Williamson,”
Judge Hopkins concluded that the plaintiffs “negligent undertaking claim is
potentially viable under Alabama law,” and that the defendants were not entitled
to summary judgment on the basis that they necessarily owed no duty “to assist
Plaintiffs with due care in their efforts to procure a short sale.” Id. at *7.
Nevertheless, Judge Hopkins then went on to grant summary judgment on the
claims (as well as subsidiary negligent training and supervision claims) on the
alternative grounds that the evidence did not support either that the defendants
acted unreasonably or that any of their conduct complained of had proximately
resulted in damage to the plaintiffs. Ogletree, 2012 WL 4340024 at *7-9.
To the extent that Plaintiffs interpret Ogletree as affirmatively holding that
the defendants assumed a duty of due care by “voluntarily” considering or
processing the plaintiffs request for a short sale, Plaintiffs read the case too
broadly. For starters, Judge Hopkins’s discussion regarding the existence of a
duty was dicta insofar as she ultimately granted summary judgment on other
19

grounds. See generally Powell v. Thomas, 643 F.3d 1300, 1304-05 (11th Cir.
2011) (“[D]icta is defined as those portions of an opinion that are not necessary to
deciding the case then before us” (internal quotation marks and citation omitted)).
Further, her decision not to grant summary judgment in Ogletree based on
the defendants’ duty-based argument also appears to have rested on a matter of
summary judgment procedure, rather than any affirmation that a duty actually
existed under Alabama substantive law. Judge Hopkins correctly recognized,
based on Rudolph, Williamson, and Caudle, that there are some circumstances in
which a lender may be deemed to have voluntarily assumed a duty of care relative
to a borrower. She also found that the defendants’ arguments and citations to
authority failed to confront the basic premise of plaintiffs’ argument, which she
had accepted, that the administration of their requests for a short sale was not part
of the defendants’ contract-based loan-servicing obligations. And by that gap in
the defendants’ argument, Judge Hopkins ruled, they had failed to satisfy their
burden as the movants for summary judgment, because they had not affirmatively
shown that no duty of care existed as a matter of Alabama law. See generally Rule
56(a), FED. R. CIV. P. (“The court shall grant summary judgment if the movant
shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.”). And while Judge Hopkins did
20

pronounce the “negligent undertaking claim” to remain at least “potentially
viable,” she notably did not purport to make any definitive ruling that a duty of
care affirmatively did exist. Indeed, it was not necessary to do so. Rather, it was
enough at the summary judgment stage merely to say that the defendants, as the
movants, had failed to establish that no duty existed.
Of course, even if Ogletree actually unambiguously held that, under
Alabama law, a mortgagee or loan servicer assumes a duty of due care by agreeing
to process or otherwise consider a borrower’s request to alter the borrower’s
obligations under an existing loan agreement, the undersigned would not be bound
by that decision. See Fox v. Acadia State Bank, 937 F.2d 1566, 1570 (11th Cir.
1991). Moreover, to the extent Ogletree could be read to suggest that such a tort
duty would exist under those conditions, the undersigned would disagree with it.
Ultimately, asking a lender to allow a short sale, as in Ogletree, amounts in
substance to a request by the borrower to modify his obligations under an existing
loan agreement. It is therefore not materially different for present purposes than a
borrower asking his lender to allow a change in the terms of repayment under an
existing loan agreement. In either scenario, the lender is under no common-law
duty to agree to an alteration and may instead simply insist, indeed, for good
reason, bad reason, or no reason at all, that the borrower comply with the existing
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contract. Accordingly, under the principles of Armstrong (which is not cited in
Ogletree), Flying J Fish Farm, and Alverson, so long as the financial institution
acts only in a conventional lending capacity, it should incur no duty of care to the
borrower with respect to its consideration and processing of a request to modify a
loan agreement, including to allow a short sale of the property.
Based on the foregoing, BANA’s motion to dismiss the “negligent
undertaking” claims in Count IV of the Complaint is due to be granted. That
motion is also due to be granted as it relates to any subsidiary claims of negligent
and wanton training and supervision in Count V to the extent they are predicated
on the claims in Count IV.
C.

Count VIII (“Invasion of Privacy”)

Finally, BANA also moves to dismiss Count VIII, in which Plaintiff asserts
that “Defendants,” a designation that includes not only BANA but also Nationstar
and Mellon, are liable for “invasion of privacy,” in particular, the “false-light”
variant of that broader cause of action. See generally S.B. v. Saint James Sch., 959
So. 2d 72, 90 (Ala. 2006) (addressing the tort of invasion of privacy as consisting
of “four limited and distinct wrongs,” including “putting the plaintiff in a false, but
not necessarily defamatory position in the public eye”). To that end, after
generally incorporating by reference all preceding allegations of the Complaint,
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Plaintiff pleads in Counts VII as follows:
86. As a result of the actions and conduct of Defendants, both named
and fictitious, Plaintiff was placed in a false light by having her home
published for foreclosure sale multiple times.
87. Defendants’ conduct was highly offensive to Plaintiff and to any
reasonable person, and was willful, reckless, wanton and/or made
with malice, resulting in Plaintiff being unreasonably placed in a false
light by insinuating that she was not credit worthy and majorly
delinquent on her mortgage, when in actuality it was through no fault
of her own.
88. As a proximate result of Defendants’ unreasonable placing of
Plaintiff in a false light, Plaintiff has suffered the damages set out in
Paragraph 66 above.
(Compl. ¶¶ 86-88). BANA moves to dismiss this claim, arguing, inter alia, that
Plaintiff’s allegations with respect to BANA’s conduct do not establish the
elements of a false-light claim under Alabama law.
Regarding the elements of a false-light claim, the Alabama Supreme Court
has explained:
“ ‘ “One who gives publicity to a matter concerning another that
places the other before the public in a false light is subject to liability
to the other for invasion of his privacy, if
“ ‘ “(a) the false light in which the other was placed
would be highly offensive to a reasonable person, and
“ ‘ “(b) the actor had knowledge of or acted in reckless
disregard as to the falsity of the publicized matter and the
false light in which the other would be placed.” ’ ”
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Butler v. Town of Argo, 871 So. 2d at 12 (quoting Schifano v. Greene
County Greyhound Park, Inc., 624 So. 2d 178, 180 (Ala.1993),
quoting in turn Restatement (Second) of Torts § 652E (1977)).
“A false-light claim does not require that the information made
public be private,” but it does require that “the information ... be
false.” 871 So. 2d at 12. See Restatement (Second) of Torts § 652E,
cmt. a. (1977). Thus, falsity is the sine qua non of a false-light claim.
Moreover, unlike defamation, truth is not an affirmative defense to a
false-light claim; rather, “falsity” is an element of the plaintiff's claim,
on which the plaintiff bears the burden of proof. [Nathan E. Ray,
Note, Let There Be False Light: Resisting the Growing Trend Against
an Important Tort, 84 Minn. L.Rev. 713, 736 (2000)] (“false light
plaintiffs therefore bear [a] heavier burden [than defamation
plaintiffs] because they must make an affirmative showing of falsity
rather than leaving it to defendants to justify the offensive
statement”).
Regions Bank v. Plott, 897 So. 2d 239, 244 (Ala. 2004).
In moving to dismiss this claim, BANA understands it to be framed by the
theory that Plaintiff was placed in a false light by publication of notices that her
home was to be sold at a foreclosure sale. However, BANA observes that the only
foreclosure sale referenced in the Complaint is one that was to be held on October
26, 2015, for which Plaintiff says she received a notice on or about September 18,
2015. (See Compl. ¶¶ 2, 28). BANA further notes that Plaintiff expressly
acknowledges that the servicing of her mortgage loan was transferred from BANA
to Nationstar in December 2013. (Id. ¶ 17). Therefore, BANA posits, Plaintiff’s
allegations do not plausibly support that BANA published any foreclosure sale
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notice, defeating her false-light claim.
The court agrees with BANA that, given Plaintiff’s admission that BANA
was not servicing her loan after December 2013, her allegations fail to plausibly
establish that BANA published a foreclosure sale notice for, or had anything else
to do with the administration of, the foreclosure sale in October 2015. Indeed,
Plaintiff does not argue to the contrary in her opposition brief. (See Doc. 25 at 1112). Therefore, Plaintiff’s cause of action against BANA fails insofar as it is
premised upon the theory that BANA published a foreclosure sale notice that put
her in a false light. Accordingly, Plaintiff’s false-light cause of action will be
dismissed as it relates to any foreclosure sale notice putatively published by
BANA.
Plaintiff maintains, however, that she has stated a viable false-light claim in
Count VIII, even if not based on BANA’s alleged publication of a foreclosure sale
notice. Rather, Plaintiff theorizes the Complaint states a claim to the effect that
BANA placed her in a false light by communicating false information to
Nationstar when, in December 2013, it assumed BANA’s duties in connection
with the servicing Plaintiff’s loan. In particular, Plaintiff contends that BANA
communicated to Nationstar at that time that she was “majorly delinquent on her
mortgage,” including that “no payments had been made since June 2010, an untrue
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assertion.” (Doc. 25 at 12).
BANA first replies that Plaintiff’s argument “ignores the actual allegations
pled in the Complaint and attempts to recast her claim.” (Doc. 26 at 7). BANA
suggests that, as pled, Plaintiff’s false-light cause of action is based solely upon
publication of foreclosure sale notices, not BANA’s alleged communications to
Nationstar regarding the status of Plaintiff’s loan account. The court agrees. The
allegations in Count VIII do not give BANA fair notice that Plaintiff sought to
impose liability based on BANA’s communications to Nationstar. Indeed, that
Count makes no reference to communications between those parties. To be sure,
Plaintiff pleads broadly that Defendants “insinuat[ed] that she was not credit
worthy and majorly delinquent on her mortgage.” (Id. ¶ 87). But fairly read, that
allegation is still reasonably understood as arising from and expounding upon
Plaintiff’s immediately preceding claim that she “was placed in a false light by
having her home published for foreclosure sale.” (Id. ¶ 86). Therefore, the
Complaint fails to state a false-light claim as it relates to ostensible
communications between BANA and Nationstar regarding the status of Plaintiff’s
loan account.
Moreover, even assuming the Complaint encompasses a theory of liability
arising from BANA’s communications to Nationstar, the court agrees with BANA
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Count VIII remains subject to dismissal because such allegations would not
plausibly establish the “publicity” element of a false-light claim. In Plott, the
Alabama Supreme Court explicated that element as follows:
In the context of a false-light claim, “giving publicity” is “making a
‘matter ... public, by communicating it to the public at large, or to so
many persons that the matter must be regarded as substantially
certain to become one of public knowledge.’ ” Ex parte Birmingham
News, Inc., 778 So. 2d 814, 818 (Ala. 2000) (quoting Restatement
(Second) of Torts § 652D, cmt. a. (1977) (emphasis added)).
“Publicity is a concept more difficult to prove than [mere]
publication,” which is an element of a defamation claim. Gary v.
Crouch, 867 So. 2d 310, 318 n. 6 (Ala. 2003). The “publicity”
element is not satisfied by the “ ‘communicat[ion of] a fact ... to a
single person or even to a small group of persons.’ ” Birmingham
News, 778 So. 2d at 818 (quoting Restatement (Second) of Torts §
652D, cmt. a. (1977) (emphasis added in Birmingham News; some
emphasis omitted)).
897 So. 2d at 245 (emphasis and parentheticals in original). And then applying
those principles, the Plott Court held that “the return by a payor bank of one check
stamped ‘insufficient funds’ to two presenting banks and two merchants does not
‘giv[e] publicity to a matter concerning another’ within the meaning of the
‘publicity’ element of a false-light claim.” Id.
Similarly here, even assuming BANA conveyed false information about the
status of Plaintiff’s account to Nationstar, BANA’s successor as servicer of the
loan, that would not itself rise to the level of giving “publicity” to that information

27

so as to make it “public knowledge.” Accordingly, Plaintiff’s false-light claim in
Count VIII is due to be dismissed on this ground as well, as is any negligent and
wanton training and supervision claims in Count V that might be predicated on the
false-light claim.
IV.

CONCLUSION
BANA’s Rule 12(b)(6) motion to dismiss (Doc. 13) is due to be

GRANTED. A separate final order will be entered.
DONE, this 3rd day of February, 2017.

___________________________
JOHN E. OTT
Chief United States Magistrate Judge

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