Shedd et al v. Barclays Capital Real Estate, Inc. et al
Filing
104
ORDER granting in part and denying in part 81 Motion to Dismiss by Barclays Capital Real Estate, Inc.. Plaintiffs' claims for breach of the duty of good faith and fair dealing (Count Two), fraudulent suppression or concealment (Count Seven), unconscionability (Count Eight), and accounting (Count Ten) are dismissed in their entirety. Signed by Senior Judge Charles R. Butler, Jr on 10/26/2015. copies to parties. (sdb)
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IN#THE#UNITED#STATES#DISTRICT#COURT#FOR#THE#
SOUTHERN#DISTRICT#OF#ALABAMA#
SOUTHERN#DIVISION#
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GEORGE!P.!SHEDD,!JR.,!et#
al.,!
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Plaintiffs.!
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v.!
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WELLS!FARGO!HOME!
MORTGAGE,!INC.,!et#al.,!
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Defendants.!
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CIVIL!ACTION!NO.!
14D00275DCBDM!
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ORDER#
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This!matter!is!before!the!Court!on!a!Motion!to!Dismiss!the!Second!Amended!
Complaint!filed!by!defendant!Barclays!Capital!Real!Estate,!Inc.!(Barclays),!Plaintiffs’!
response,!and!Defendant’s!reply.!!(Docs.!82,!92,!&!97.)!!After!due!consideration!of!all!
issues,!the!Court!finds!the!motion!is!due!to!be!granted,!in!part,!and!denied,!in!part.!
I.##Procedural#Background#
!!
In!October!and!November!2014,!the!Court!entered!an!order!(Doc.!31)!as!
amended!(Doc.!35)!granting,!in!part,!and!denying,!in!part,!this!Defendant’s!motion!to!
dismiss!the!First!Amended!Complaint!(FAC).!!Most!counts!against!Barclays!were!
dismissed!(e.g.,!fraudulent!suppression!or!concealment,!unconscionability).!!
Plaintiffs’!breach!of!contract!claim!survived!(except!insofar!as!Plaintiffs’!relied!on!a!
thirdDparty!beneficiary!theory)!as!did!their!unjust!enrichment!claim.!!Because!
Barclays’!motion!to!dismiss!misinterpreted!Plaintiffs’!claim!for!breach!of!breach!of!
the!duty!of!good!faith!and!fair!dealing,!that!claim!also!survived.!After!some!
discovery,!the!Magistrate!Judge!stayed!this!action!and!held!a!settlement!conference.!!
The!case!did!not!settle,!and!a!new!deadline!for!amending!pleadings!was!set.!!
Plaintiffs!filed!a!motion!for!leave!to!file!a!Second!Amended!Complaint!(SAC).!!(Doc.!
68.)!!The!motion!for!leave!to!amend!was!granted!without!objection.!!(Doc.!73.)!!The!
most!recent!complaint,!like!the!previous!one,!is!based!on!events!related!to!the!
servicing!of!the!Shedds’!mortgage!by!the!Defendants!and!contains!substantially!the!
same!causes!of!action,!including!those!that!were!dismissed.1!!!!
II.##The#Second#Amended#Complaint!
!
The!SAC!provides!greater!factual!detail!than!the!FAC!but!does!not!alter!the!
basic!outline!of!events!giving!rise!to!Plaintiffs’!causes!of!action,!with!one!exception.!!
The!FAC!alleged!that!both!George!Shedd!and!Pamela!Shedd!signed!the!promissory!
note!that!is!the!basis!of!this!action.!!The!SAC,!however,!alleges!that!only!Pamela!
Shedd!signed!the!promissory!note,!although!both!George!Shedd!and!Pamela!Shedd!
signed!the!mortgage!on!the!family!residence!that!secured!the!promissory!note.!!
Those!documents!were!executed!in!2001.!!
!
Defendant!Barclays!initially!serviced!the!loan!and!continued!to!do!so!after!it!
was!assigned!to!Monument!Street!Financing!II,!LLC!(Monument).!!Loan!payments!
fell!behind,!and!in!2008!the!Shedds!filed!a!Chapter!11!bankruptcy!petition!in!this!
district.!!Barclays,!the!loan!servicer,!represented!to!the!bankruptcy!court!that!it!was!
the!creditor!and!sought!a!relief!from!the!automatic!stay.!!On!April!25,!2008,!the!
bankruptcy!court!entered!an!order!finding!the!parties!had!entered!into!an!adequate!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1The!primary!distinction!between!the!two!complaints!is!length.!!The!FAC!was!
65!pages!(including!“only”!20!pages!of!facts).!!The!SAC!is!151!pages!(including!70!
pages!of!facts).!!The!problems!caused!by!this!inflated!pleading!was!discussed!with!
the!parties!in!a!conference!call,!and!the!Court!has!fashioned!a!remedy!that!will!
permit!Defendants!to!file!an!answer!without!having!to!address!each!factual!
allegation!in!the!SAC.!(Doc.!102.)!
!
2!
protection!agreement!that!required!the!Shedds!to!pay!their!regular!mortgage!
payment!plus!an!additional!$306.62!monthly!beginning!with!the!April!2008!
payment.!!Subsequently,!the!bankruptcy!court!confirmed!the!reorganization!plan,!
which!required!the!Shedds!to!pay!the!additional!$306.62!for!60!months!to!satisfy!in!
full!a!preDpetition!arrearage!of!$16,500.!
!
Barclays!used!a!software!package!from!a!third!party!vendor!that!was!not!
equipped!to!handle!bankruptcy!payments.!!As!a!result,!payments!made!by!the!
Shedds!after!April!2008!were!mishandled.!!For!example,!payments!that!should!have!
been!applied!to!the!arrearage!were!held!in!suspense!or!rejected;!payments!that!
should!have!been!applied!to!current!monthly!loan!payments!were!applied!to!past!
due!amounts,!fees!and!expenses.!!Not!surprisingly,!Barclays’!inability!to!correctly!
apply!the!payments!created!a!nightmare!for!the!SheddsDDthe!loan!was!placed!in!
default,!foreclosure!proceedings!were!initiated,!various!fees!were!added,!their!
mortgage!interest!was!misreported,!the!Shedds’!credit!suffered.!!For!more!than!two!
years,!the!Shedds!worked!with!Barclays!to!correct!the!problem,!but!it!was!never!
resolved.!!On!September!1,!2010,!Monument!transferred!servicing!to!defendant!
Wells!Fargo!Home!Mortgage,!Inc.!(Wells!Fargo).!!Plaintiffs’!problems!persisted!after!
Wells!Fargo!took!over.!
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3!
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Plaintiffs’!claims!arising!from!these!events!are!set!forth!on!the!following!
chart:!
Count#
Cause#of#Action!
Defendants#
One!
Breach!of!Contract!
All!
Two!
Breach!of!Duty!of!Good!Faith!&!Fair!
Dealing#
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All!
Three!
Breach!of!Fiduciary!Duty!
Wells!Fargo!
Four!
Wantonness!
Wells!Fargo!
Five!
Fraud!
Wells!Fargo!
Six!
Promissory!Fraud!
Wells!Fargo!
Seven!
Fraudulent!
Suppression/Concealment!
!
Wells!Fargo,!Barclays!
Eight!
Unconscionability!
All!
Nine!
Unjust!Enrichment!
Wells!Fargo,!Barclays!
Ten!
Accounting!
Wells!Fargo,!Barclays!
Eleven!
RESPA!§2605(m)!
Wells!Fargo!
Twelve!
RESPA!§!2605(e)!
Wells!Fargo!
Thirteen!
FCRA!
Wells!Fargo!
Fourteen! TILA!
Wells!Fargo,!Monument!
Fifteen!
TILA!
Wells!Fargo,!Monument!
Sixteen!
FDCPA!
Wells!Fargo,!Monument!
!
#
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#
!
4!
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III.##Legal#Analysis!
!
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Barclays!has!moved!to!dismiss!each!cause!of!action!against!it!for!failure!to!
state!a!claim!upon!which!relief!can!be!granted.2!Each!count!is!addressed!separately!
below.#
A.##Breach#of#Contract#(Count#One)!
#
Barclays!concedes!that!its!arguments!have!already!been!rejected!by!the!Court!
in!the!order!denying!the!FAC.!!!!It!reasserts!these!arguments!to!preserve!them!for!
appeal.!!For!the!reasons!stated!in!the!order!dated!October!15,!2014,!amended!
November!17,!2014,!the!motion!to!dismiss!Plaintiffs’!breach!of!contract!claim!is!
denied.!
B.##Breach#of#Contractual#Duty#of#Good#Faith#Fair#Dealing#(Count#Two)!
!
In!its!motion!to!dismiss!the!FAC,!Barclays!interpreted!this!claim!as!a!tort!
claim,!rather!than!a!contract!claim.!!For!that!reason!this!Defendant’s!motion!to!
dismiss!was!denied.!!Plaintiffs!have!reasserted!the!claim!and!argue!that!additional!
facts!alleged!in!the!SAC!support!this!cause!of!action,!which!was!dismissed!as!to!the!
other!Defendants.!!!
This!Court!previously!set!out!the!law!regarding!this!claim!as!follows:!
Alabama!recognizes!that!every!contract!carries!an!implied!obligation!
of!good!faith!and!fair!dealing,!which!has!been!defined!as!“an!implied!
covenant!that!neither!party!shall!do!anything!which!will!have!the!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
2!The!standard!for!reviewing!a!Rule!12(b)(6)!motion!to!dismiss!was!set!forth!
in!the!Court’s!October!15,!2014!order!(Doc.!31),!as!amended!(Doc.!35),!and!need!not!
be!repeated!in!detail!here.!!Suffice!it!to!say,!facts!pleaded!in!the!complaint!are!taken!
as!true!but!conclusions!are!not.!!Randall#v.#Scott,!610!F.3d!701,!709D10!(11th!Cir.!
2010).!!!A!court!must!take!the!factual!allegations!as!true!and!determine!whether!
they!plausibly!give!rise!to!a!claim!for!relief.!!!Id.!at!710!
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effect!of!destroying!or!injuring!the!rights!of!the!other!party!to!receive!
the!fruits!of!the!contract.”!!Lloyd#Noland#Found.,#Inc.#v.#City#of#Fairfield#
Healthcare#Auth.,!837!So.!2d!253,!267!(Ala.!2002)!(quoting!Seller#v.#
Head,!261!Ala.!212,!217,!73!So.2d!747,!751!(1954)).!!The!parameters!
of!this!claim!have!not!been!well!defined.!However,!it!is!clear!that!the!
obligation!is!not!actionable!unless!the!breach!of!that!duty!can!be!tied!
to!the!performance!of!a!specific!term!of!the!contract.!!Lake#
Martin/Alabama#Power#Licensee#Assoc.#v.#Alabama#Power#Co.,#Inc.,!601!
So.!2d!942,!945!(Ala.!1992).!!More!specifically,!Alabama!courts!have!
recognized!the!duty!of!good!faith!and!fair!dealing!when!“the!contract!
fails!to!specify!all!the!duties!and!obligations!intended!to!be!assumed.”!
Lloyd#Noland#Found.,!837!So.2d!at!267.#In!those!instances,!“the!law!will!
imply!an!agreement!to!do!those!things!that!according!to!reason!and!
justice!the!parties!should!do!in!order!to!carry!out!the!purpose!for!
which!the!contract!was!made.”!Id.#
#
(Order!dated!Nov.!17,!2014!at!7D8,!Doc.!34.)!
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In!response!to!Defendants’!motion!to!dismiss,!Plaintiffs!have!failed!to!point!to!
any!allegation!in!the!SAC!that!would!tie!their!claim!to!any!specific!contractual!term.!!
Instead,!they!point!to!allegations!that!the!Defendants!failed!to!comply!with!implied!
requirements!of!the!Chapter!11!Plan!that!they!bring!the!loan!current!and!that!they!
create!a!separate!arrearage!account.!!Because!Plaintiffs’!SAC!does!not!allege!a!breach!
of!duty!related!to!any!specific!contractual!term,!their!claim!for!breach!of!implied!
duty!of!good!faith!and!fair!dealing!is!due!to!be!dismissed.!
C.!!Fraudulent#Suppression#(Count#Seven)!
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Plaintiffs’!fraudulent!suppression!claim!fails!because!a!party!cannot!be!held!
liable!for!suppressing!information!it!had!no!duty!to!disclose.!
!
The!first!element!of!a!fraudulent!suppression!claim!requires!
the!showing!of!a!duty!to!disclose.!!“In!the!absence!of!special!
circumstances,!Alabama!law!considers!the!lenderDborrower!
relationship!to!be!armsDlength!and!does!not!place!a!duty!of!disclosure!
on!the!lender.”!!
#
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6!
Branch#Banking#Trust#Co.#v.#EBR#Investments#LLC,!!Civil!Action!No.!2:14DCDV01578D
WMA,!2015!WL!225457,!at!*3!(N.D.!Ala.!Jan.!16,!2015)!(quoting!Buckentin#v.#
SunTrust#Mortgage#Corp.,!928!F.Supp.2d!1273,!1285!(N.D.Ala.2013)).!!“When!both!
parties!are!intelligent!and!fully!capable!of!taking!care!of!themselves!and!dealing!at!
arm’s!length,!with!no!confidential!relationship,!no!duty!to!disclose!exists!when!
information!is!not!requested,!and!mere!silence!is!not!a!fraud.”!!Bank#of#Red#Bay#v.#
King,!482!So.!2d!274,!285D86!(1985).!!!The!relationship!of!Plaintiffs!and!Barclays!!is!
akin!to!that!of!lenderDborrower;!therefore,!Plaintiffs!must!plead!facts!from!which!a!
special!relationship!could!be!inferred.!!!!
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In!response!to!the!motion!to!dismiss,!Plaintiffs!argue!that!the!duty!to!disclose!
arose!from!Barclays’!knowledge!of!the!internal!problems!it!had!encountered!with!
Plaintiffs’!account!and!similar!accounts.!!However,!superior!knowledge!does!not!
amount!to!special!circumstances!imposing!a!duty!to!disclose.!!Surrett#v.#TIG#Premier#
Ins.#Co.,!869!F.!Supp.!919,!924D25!(M.D.!Ala!1994);!see#also##Mason#v.#Chrysler#Corp.,!
653!So.!2d!951,!954D55!(Ala.!1995)!(dealership’s!knowledge!of!recurring!defect!in!
automobile!model!purchased!by!customer!did!not!give!rise!to!duty!to!disclose).!!In!
sum,!the!factual!allegations!of!the!SAC!do!not!support!a!claim!for!fraudulent!
suppression!or!concealment.!!!
D.##Unconscionability#(Count#Eight)#
#
Plaintiffs!concede!this!cause!of!action!is!due!to!be!dismissed!as!to!Barclays.!
E.###Unjust#Enrichment#(Count#Nine)###
#
Barclays’!motion!to!dismiss!this!claim!from!the!FAC!was!denied.!!For!
appellate!purposes,!Barclays!reasserts!the!same!grounds!for!dismissal!as!previously!
!
7!
raised.!!For!reasons!stated!in!the!previous!order,!the!Court!again!denies!the!motion!
to!dismiss!this!cause!of!action.!
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F.##Accounting!(Count#Ten)!
!
Count!Ten!asserts!a!separate!claim!for!an!accounting!of!mortgage!interest!
and!amortization.!!In!general,!the!equitable!remedy!of!accounting!is!appropriate!
when!there!is!a!fiduciary!relationship!between!the!parties,!where!the!defendant!has!
engaged!in!fraud,!or!where!the!account!is!unusually!complicated!or!difficult.!!Givens#
v.#Saxon#Mortg.#Services,#Inc.,!Civil!Action!No.!13D00245DKDDN,!2014!WL!2452891!
(S.D.!Ala.!May!30,!2014).!!The!Court!finds!that!the!facts!alleged!in!the!SAC!do!not!
support!a!claim!for!accounting.3!
III.##Conclusion#
The!motion!to!dismiss!filed!by!Barclays!Capital!Real!Estate,!Inc.!granted,!in!part,!
and!denied,!in!part,!as!follows:!
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Plaintiffs’!claims!for!breach!of!the!duty!of!good!faith!and!fair!dealing!(Count!
Two),!fraudulent!suppression!or!concealment!(Count!Seven),!
unconscionability!(Count!Eight),!and!accounting!(Count!Ten)!are!dismissed!
in!their!entirety.!
Plaintiffs’!claims!for!breach!of!contract!(Count!One)!and!unjust!enrichment!
(Count!Nine)!survive.!!!
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DONE#and!ORDERED!this!the!26th!day!of!October,!2015.!
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s/Charles#R.#Butler,#Jr.#
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Senior#United#States#District#Judge!
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3!The!SAC!does!not!allege!facts!giving!rise!to!a!fiduciary!relationship!or!fraud.!!
While!the!mortgage!account!is!undoubtedly!complicated,!it!is!unlikely!that!an!
accounting!would!make!it!any!less!so!or!that!an!accounting!would!accomplish!
anything!that!could!not!be!accomplished!through!discovery.!
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