Watkins v. Regions Mortgage Inc et al
MEMORANDUM OPINION AND ORDER: As further set out in order, 52 , Motion for Extension of Time to Pay the Required Bond, is DENIED. The Preliminary Injunction bond is DISSOLVED. 39 , Defendant Federal Home Loan Mortgage Corporation's Motion to Dismiss, is GRANTED IN PART AND DENIED IN PART. The court DENIES Freddie Mac's motion to dismiss the TILA claim, but GRANTS the motion in all other respects. Accordingly, Watkins's FDCPA and wrongful foreclosure claims against Freddie Mac are DISMISSED. Signed by Judge Abdul K Kallon on 02/11/13. (CVA)
2013 Feb-11 PM 01:08
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
TRINAE D WATKINS,
REGIONS MORTGAGE INC,
FEDERAL HOME LOAN
MORTGAGE CORP, and
SIROTE & PERMUTT PC,
Civil Action Number
MEMORANDUM OPINION AND ORDER
Plaintiff Trinae D. Watkins brings this action against Regions Mortgage Inc.
(“Regions”), Federal Home Loan Mortgage Corp. (“Freddie Mac”), and Sirote &
Permutt PC (“Sirote”), alleging violations of the Fair Debt Collection Practices
Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and the Truth in Lending Act (“TILA”),
15 U.S.C. § 1641(g), and seeking to quiet title to her home. See doc. 44.
Presently before this court is Freddie Mac’s motion to dismiss, doc. 39, and
Watkins’s motion to extend the deadline for her injunctive relief bond, doc. 52.
The court stated in its January 28, 2013 order granting Watkins a prior extension
of time that it would not grant any further extensions. See doc. 48. Therefore,
Watkins’s motion is DENIED and, for failure to pay the required bond, the
preliminary injunction is DISSOLVED. Additionally, for the reasons stated
below, Freddie Mac’s motion to dismiss is due to be granted in part.1
I. STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain “a
short and plain statement of the claim showing that the pleader is entitled to
relief.” “[T]he pleading standard Rule 8 announces does not require ‘detailed
factual allegations,’ but it demands more than an unadorned, the-defendantunlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Mere “labels and
conclusions” or “a formulaic recitation of the elements of a cause of action” are
insufficient. Iqbal, 556 U.S. at 678 (citations and internal quotation marks
omitted). “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of
‘further factual enhancement.’” Id. (citing Bell Atl. Corp., 550 U.S. at 557).
Federal Rule of Civil Procedure 12(b)(6) permits dismissal when a
complaint fails to state a claim upon which relief can be granted. “To survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as
Additionally, Regions Motion to Strike, doc. 33, is MOOT since the court did not rely
upon the mentioned exhibits when it previously decided Regions’s motion to dismiss, doc. 28.
true, to state a claim to relief that is plausible on its face.” Iqbal,556 U.S. at 678
(citations and internal quotation marks omitted). A complaint states a facially
plausible claim for relief “when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (citation omitted). The complaint must establish “more
than a sheer possibility that a defendant has acted unlawfully.” Id.; see also Bell
Atl. Corp., 550 U.S. at 555 (“Factual allegations must be enough to raise a right to
relief above the speculative level.”). Ultimately, this inquiry is a “context-specific
task that requires the reviewing court to draw on its judicial experience and
common sense.” Iqbal, 556 U.S. at 679.
Watkins seeks damages from Freddie Mac under the FDCPA and TILA, and
also alleges wrongful foreclosure under Alabama law. Doc. 44. Freddie Mac
contends that these claims fail as a matter of law because Watkins failed to allege
specific conduct attributable to it and because Freddie Mac is not a “debt
collector.” Doc. 39. The court discusses each contention below.
Watkins alleges in Count 1 that Regions and Freddie Mac “have
Since the facts alleged in Watkins’s amended complaint, doc. 44, are identical to those
alleged in her original complaint, doc.1, the court refers the parties to the Procedural and Factual
Background outlined in the court’s January 7, 2013 opinion, doc. 28 at 3-6.
misrepresented themselves, lack standing because of improper assignments, a
broken chain of title, and as such wrongfully commenced to foreclose” on
Watkins’s property. Doc. 1 at ¶ 66. However, Watkins failed to allege any facts
suggesting that Freddie Mac, rather than Regions, instituted foreclosure
proceedings. See generally doc. 44. In fact, Watkins admits that every foreclosure
notice Sirote sent identified Regions as the foreclosing party. See id. at ¶¶ 15, 20,
24, 26, 28. Moreover, although wrongful foreclosure actions are properly
instituted against the entity holding the mortgage, see Reeves Cedarhurst Dev.
Corp. v. First Amer. Fed. Sav. and Loan Ass’n, 607 So. 2d 180, 182 (Ala. 1992),
Watkins asserts that Freddie Mac is not the mortgagee, doc.44 at ¶¶ 32-41. Based
on Watkins’s failure to allege any conduct attributable to Freddie Mac and her
contention that Freddie Mac is not a mortgagee on her loan, Watkins’s wrongful
foreclosure claim fails as a matter of law. Accordingly, Freddie Mac’s motion to
dismiss the wrongful foreclosure claim is GRANTED.
The Truth in Lending Act
In Count 2, Watkins alleges that Freddie Mac violated the TILA by failing
to notify her of the transfer of ownership of her property within 30 days of the
sale. Doc. 44 at ¶ 68. Under the TILA, “not later than 30 days after the date on
which a mortgage loan is sold or otherwise transferred or assigned to a third party,
the creditor that is the new owner of or assignee of the debt shall notify the
borrower in writing of such transfer[.]” 15 U.S.C. § 1641(g)(1). Freddie Mac
correctly asserts that Watkins’s amended complaint reflects that Regions never
assigned the subject mortgage to Freddie Mac. However, the plain language of the
statute includes transfers of ownership beyond mere assignments. Indeed, the
statute states “the new owner,” which Freddie Mac admittedly is, has a duty to
notify the borrower of its ownership interest. Id. While it appears that Watkins
suffered no damage under the Act because her payments were still due to the loan
servicer (Regions), the court cannot dismiss the claim at this juncture based on the
plain language of the statute. Accordingly, Freddie Mac’s motion to dismiss the
TILA claim is DENIED.
The Fair Debt Collection Practices Act
Watkins alleges also in Count 2 that Freddie Mac violated the FDCPA “by
misrepresenting [itself] as the secured creditor of Subject property when [it] made
an attempt to foreclose” on Watkins’s property, which amounts to the use of a
“false, deceptive or misleading representation or means in connection with the
collection of a debt.” Doc. 44 at ¶ 69. However, this claim fails also because
Watkins failed to allege that Freddie Mac in fact “made an attempt to foreclose.”
See section A, supra. Indeed, Watkins alleges that Sirote sent several foreclosure
notices identifying only Regions as the foreclosing party. In light of Watkins’s
failure to attribute any conduct related to the foreclosure proceedings to Freddie
Mac, her claim fails.
Additionally, the claim fails also because Freddie Mac is not a “debt
collector” as that term is defined by the FDCPA:
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.
Notwithstanding the exceptions provided by clause (F) of the last
sentence of this paragraph, the term includes any creditor who, in the
process of collecting his own debts uses any name other than his own
which would indicate a third person is collecting or attempting to collect
such debts. . . . The term does not include –
(F) any person collecting or attempting to collect any debt owed or due
or asserted to be owed or due another to the extent such activity (i) is
incidental to a bona fide fiduciary obligation or a bona fide escrow
arrangement; (ii) concerns a debt which was originated by such person;
(iii) concerns a debt which was not in default at the time it was obtained
by such person; or (iv) concerns a debt obtained by such person as a
secured party in a commercial credit transaction involving the creditor.
15 U.S.C. § 1692a(6) (emphasis added). Here, Watkins failed to allege that
Freddie Mac ever engaged in any debt collection activity with respect to her
mortgage and instead alleges that Regions was the sole party attempting to collect
on her debt. See doc. 44. Moreover, Watkins’s amended complaint makes clear
that Freddie Mac became the beneficial holder of the note, if at all, before she
stopped making mortgage payments to Regions. See id. at ¶¶ 11-13 (alleging that
she stopped making payments only after learning that Regions may not properly
own the mortgage note). Accordingly, Freddie Mac obtained the mortgage prior
to Watkins’s default and cannot be considered a “debt collector.” As such,
Freddie Mac’s motion to dismiss the FDCPA claim is GRANTED.
Based on the foregoing, the court DENIES Freddie Mac’s motion to
dismiss the TILA claim, but GRANTS the motion in all other respects.
Accordingly, Watkins’s FDCPA and wrongful foreclosure claims against Freddie
Mac are DISMISSED.
DONE this 11th day of February, 2013.
ABDUL K. KALLON
UNITED STATES DISTRICT JUDGE
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