Shedd et al v. Barclays Capital Real Estate, Inc. et al

Filing 220

ORDER granting 176 Motion for Judgment on the Pleadings; granting 208 Motion for leave to file surreply. Counts Four (wantonness) and Sixteen (FDCPA violations) are dismissed with prejudice. Signed by Chief Judge William H. Steele on 6/13/2016. (tgw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
GEORGE P. SHEDD, JR., et al.,
Plaintiffs,
v.
WELLS FARGO BANK, N.A., et al.,
Defendants.

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CIVIL ACTION 14-0275-WS-M

ORDER
This matter, which was recently reassigned to the undersigned’s docket, comes before the
Court on defendant Wells Fargo Bank, N.A.’s Motion for Judgment on the Pleadings (doc. 176).
The Motion has been extensively briefed and is now ripe for disposition.1
I.

Relevant Background.
On March 1, 2016, plaintiffs, George and Pamela Shedd, filed their Third Amended and

Supplemental Complaint (doc. 152) against Wells Fargo Bank, N.A., Barclays Capital Real
Estate, Inc., and Monument Street Funding, II, LLC. On the face of the pleadings, this case is a
mortgage loan dispute, not unlike dozens of others that have traversed this District Court in the
1

Also pending is plaintiffs’ Motion for Leave to File Surreply (doc. 208), to which
Wells Fargo has filed a Response in Opposition (doc. 209). “Although sur-replies are disfavored
in this District Court, they are not forbidden.” Northstar Marine, Inc. v. Huffman, 2014 WL
6454940, *1 n.1 (S.D. Ala. Nov. 13, 2014); see also Wood v. B.C. Daniels, Inc., 2008 WL
2163921, *1 n.1 (S.D. Ala. May 21, 2008) (“the filing of sur-replies is discouraged because of
the inefficiencies inherent in an interminable thrust-and-parry debate between the parties”). In
substantial part, plaintiffs’ proposed Surreply (doc. 208-1) rehashes arguments previously made.
The Court agrees with Wells Fargo that sur-replies are not properly used to reiterate arguments
that have already been presented. That said, plaintiffs’ sur-reply would also address the
ramifications of an Order (doc. 201) entered by Senior District Judge Butler on May 16, 2016,
while briefing on the Rule 12(c) Motion was ongoing and before the case was reassigned to the
undersigned. Such a sur-reply might prove helpful, particularly as the Court tries to orient and
familiarize itself with what transpired in the two years that this case was on Judge Butler’s
docket; therefore, in the Court’s discretion, and notwithstanding its disfavored status, the Motion
for Leave to File Surreply is granted. The plaintiffs’ proposed sur-reply will be considered on
the merits in adjudicating the Motion for Judgment on the Pleadings.

wake of the financial crisis and the concomitant bursting of the so-called “housing bubble.” The
Shedds entered into a mortgage loan transaction in connection with the purchase of a home in
1991, then subsequently fell behind on their payments and filed for Chapter 11 bankruptcy
protection. The Third Amended Complaint documents various alleged infirmities in the
handling of the Shedds’ loan by defendants Wells Fargo (alleged to be servicer of the loan),
Barclays (alleged to have previously serviced the loan) and Monument (alleged to be assignee of
the mortgage). This basic fact pattern is not uncommon in the undersigned’s experience. The
difference, however, is that (1) the Shedds’ Third Amended Complaint sprawls across 128 pages,
193 paragraphs, and 16 causes of action; and (2) this case has been fiercely litigated for nearly
two years, has accrued more than 215 docket entries, with nearly six months of discovery still
ahead.2
On May 18, 2016, this case was transitioned to the undersigned’s docket.3 Review of the
docket sheet reveals a pending Motion for Judgment on the Pleadings, wherein Wells Fargo
seeks judgment on the pleadings as to two counts of the Third Amended Complaint, namely,
Count Four (which sounds in a theory of wantonness) and Count Sixteen (a statutory claim for
violation of the Fair Debt Collection Practices Act). Plaintiffs vigorously oppose entry of
judgment on the pleadings.
II.

Legal Standard for Rule 12(c) Motions.
From the outset, both the Shedds and Wells Fargo demonstrate confusion as to the legal

standard governing the Motion for Judgment on the Pleadings. Indeed, both sides incorrectly
2

These facts are highly suggestive of a case that has gone off the rails and has been
overlitigated to an extreme degree. The Court understands that Judge Butler undertook various
measures to attempt to prevent this action from spiraling out of control. The undersigned will do
the same, and will take decisive action to curb abusive litigation practices by any party where
they are found to occur.
3

It bears emphasis that this Court has not lived with this case for the last two years
like the litigants have, and therefore is not steeped in the intricacies of the extensive motion
practice that has taken place. Henceforth, when the parties believe that a prior ruling by Judge
Butler or Magistrate Judge Milling in this case may be germane to some issue presented to this
Court for adjudication, the parties are expected to notify the undersigned and not simply assume
that the Court will unilaterally sift through hundreds of pleadings in the file on the off-chance
that some aspect of that issue might have been addressed via uncited ruling prior to reassignment
to this Court’s docket.

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invoke the “no set of facts” test associated with Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2
L.Ed.2d 80 (1957). (See doc. 177, at 3-4; doc. 200, at 4.) That formulation of the standard is no
longer valid in the wake of the Supreme Court’s announcement in Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), that Conley’s “no set of
facts” language “has earned its retirement.” 550 U.S. at 563. Rather, the Twombly “plausibility”
test, and not the retired “no set of facts” formulation, governs here. See, e.g., Gentilello v. Rege,
627 F.3d 540, 543-44 (5th Cir. 2010) (“We evaluate a motion under Rule 12(c) for judgment on
the pleadings using the same standard as a motion to dismiss under Rule 12(b)(6) for failure to
state a claim. … To avoid dismissal, a plaintiff must plead sufficient facts to state a claim to
relief that is plausible on its face.”) (citations and internal quotation marks omitted).4
As a matter of well-settled law, “[j]udgment on the pleadings is appropriate where there
are no material facts in dispute and the moving party is entitled to judgment as a matter of law.”
Perez v. Wells Fargo N.A., 774 F.3d 1329, 1335 (11th Cir. 2014) (citation omitted); Mergens v.
Dreyfoos, 166 F.3d 1114, 1117 (11th Cir. 1999) (similar); Hawthorne v. Mac Adjustment, Inc.,
140 F.3d 1367, 1370 (11th Cir. 1998) (similar). “In determining whether a party is entitled to
judgment on the pleadings, we accept as true all material facts alleged in the non-moving party’s
pleading, and we view those facts in the light most favorable to the non-moving party.” Perez,
774 F.3d at 1335. “If a comparison of the averments in the competing pleadings reveals a
material dispute of fact, judgment on the pleadings must be denied.” Id. (citation omitted).

4

See also Strategic Income Fund, L.L.C. v. Spear, Leeds & Kellogg Corp., 305
F.3d 1293, 1295 n. 8 (11th Cir. 2002) (explaining that whether a complaint is reviewed under
Rule 12(b)(6) or Rule 12(c) is of no practical import because under both rules, “the question was
the same: whether the count stated a claim for relief”); HSBC Realty Credit Corp. (USA) v.
O’Neill, 745 F.3d 564, 570 (1st Cir. 2014) (“We review a Rule 12(c) dismissal like we would a
Rule 12(b)(6) dismissal: de novo, taking as true the losing party’s well-pleaded facts and seeing
if they add up to a plausible claim for relief.”); Graziano v. Pataki, 689 F.3d 110, 114 (2nd Cir.
2012) (“To survive a Rule 12(c) motion, the complaint must contain sufficient factual matter to
state a claim to relief that is plausible on its face.”) (citation and internal quotation marks
omitted); Bouboulis v. Scottsdale Ins. Co., 860 F. Supp.2d 1364, 1370 n.1 (N.D. Ga. 2012) (“As
the standard for Rule 12(b)(6) applies equally to Rule 12(c), the Iqbal/Twombly rule governs the
resolution of defendant’s motion for judgment on the pleadings.”).

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These principles, along with the Twombly “plausibility” standard, inform and guide the analysis
of Wells Fargo’s Rule 12(c) Motion.5
III.

Count Four (Wantonness).
A.

Nature of the Shedds’ Wantonness Claim.

By way of background and context, according to the Third Amended Complaint,
servicing responsibilities for the Shedds’ loan were transferred to Wells Fargo on September 1,
2010, at which time Wells Fargo became “servicing agent for Monument.” (Third Amended
Complaint (doc. 152), ¶ 39.) Plaintiffs allege that Wells Fargo “continued to breach Plaintiffs’
contract under the loan and mortgage, and further breached its contract with Monument, of
which Plaintiffs are third party beneficiaries,” thereafter. (Id.) Plaintiffs further maintain that
Wells Fargo engaged in “other unlawful acts” amounting to a “pattern and practice of
misconduct” motivated by “self-dealing and desire to increase income and profits … at the
expense of Plaintiffs.” (Id., ¶ 48.) The Third Amended Complaint details these alleged
shortcomings exhaustively. (Id. at pp. 28-60.)
In Count Four, the Shedds allege a claim of wantonness against Wells Fargo. (Id., ¶¶ 7880.) The scope of Count Four is critical to evaluation of Wells Fargo’s Rule 12(c) motion.
Rather than pegging the wantonness claim to the dozens of errors and improprieties alleged over
5

After briefing on Wells Fargo’s Rule 12(c) Motion had concluded (including
plaintiffs’ filing of a proposed sur-reply), plaintiffs filed a “Notice of Pertinent and Significant
Authority” (doc. 210). Plaintiffs are correct that Civil L.R. 7(f)(3) creates a procedure by which
a party may apprise the Court of “pertinent and significant authority” that came to the party’s
notice after briefs were filed. Nonetheless, the Shedds do not properly apply that procedure here.
The case cited in the Notice is Perez v. Wells Fargo N.A., 774 F.3d 1329 (11th Cir. 2014). The
Shedds maintain that Perez “disposes of” Wells Fargo’s Rule 12(c) Motion; however, they do
not explain why, instead citing generically to three pages of Perez and eight pages of previously
filed briefing. On this showing, the Court cannot discern the proposition(s) for which the Shedds
would rely on Perez, much less their reasoning for concluding that it “disposes of” Wells Fargo’s
Motion. At most, it appears that the Shedds point to Perez as an articulation of the legal standard
governing Rule 12(c) Motions. The Court has considered and incorporated the Perez description
of the legal standard into this Order. To the extent that the Shedds might be relying on Perez to
advance some other, different, unspoken or new argument, the Court rejects it because (i) from
the face of the Notice, it is impossible to discern what plaintiffs’ Perez argument might be; and
(ii) new arguments are forbidden by Civil L.R. 7(f)(3), in any event. Besides, Perez was a
published Eleventh Circuit opinion dating back to 2014 that was readily available to plaintiffs
throughout the briefing process on Wells Fargo’s Motion for Judgment on the Pleadings, and
they have not shown good cause for omitting it from their briefs.

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the span of more than 30 pages of their Third Amended Complaint, the Shedds focus on a subset
of those allegations. From the face of the Third Amended Complaint, the Shedds’ wantonness
claim is directed at “Wells Fargo’s failure to perform its duties outlined in its November 21,
2011 letter to plaintiffs.” (Id., ¶ 79.) Read in its entirety, however, Count Four specifically
includes the following allegations: (i) the November 21, 2011 letter stated that the “bankruptcy
workstation would remain open” so that Wells Fargo could “accept payments and stop the
collection calls;” (ii) Wells Fargo continued to report the Shedds as delinquent to consumer
reporting agencies; (iii) Wells Fargo continued to undertake collection efforts, including
telephone calls; (iv) Wells Fargo failed to keep the “bankruptcy workstation” open; (v) Wells
Fargo continued to “misallocate payments, and assess fees and other charges without any basis to
do so;” (vi) Wells Fargo “failed to properly report Form 1098 mortgage interest deductions” for
four years; (vii) Wells Fargo “wrongfully force-placed hazard insurance in 2012 and 2013 in
excessive amounts;” and (viii) Wells Fargo “caused the other damages detailed” in the Third
Amended Complaint as a result of “duties set out and promised in its November 21, 2011 letter
to Plaintiffs, and subsequent promises in its May 20, 2014 letter to Plaintiffs described herein,
which it failed to perform.” (Id., ¶ 79.)6
B.

The Shepherd / James Line of Cases.

In its Rule 12(c) Motion, Wells Fargo posits that Count Four should be dismissed
because Alabama law does not recognize a cause of action for wanton servicing of a mortgage
loan. Abundant federal authority supports this premise. See, e.g., James v. Nationstar Mortg.,
LLC, 92 F. Supp.3d 1190, 1198 (S.D. Ala. 2015) (recognizing 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”). This line of
authority proceeds in “recognition that the mortgage servicing obligations at issue here are a
creature of contract, not of tort, and stem from the underlying mortgage and promissory note

6

As to the contents of the May 20 letter, the Third Amended Complaint pleads in a
different count as follows: “Wells Fargo stated in its letter of May 20, 2014 that we are diligently
working to make updates to our system that will allow us to bring our system of record in line
with the terms of the modification.” (Id., ¶ 85.) The Shedds plead that “these statements were
false when made.” (Id., ¶ 86.)

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executed by the parties, rather than a duty of reasonable care generally owed to the public.” Id.
at 1200.
Any lingering doubts as to the state of Alabama law on this point were eradicated by the
Alabama Supreme Court last year in a case styled U.S. Bank Nat’l Ass’n v. Shepherd, --- So.3d ---, 2015 WL 7356384 (Ala. Nov. 20, 2015). The Shepherd Court indicated that the parties’
relationship “is based upon the mortgage and is therefore a contractual one; that is to say, the
duties and breaches alleged [by the plaintiffs] clearly would not exist but for the contractual
relationship between the parties.” Id. at *12 (citation and internal quotation marks omitted). The
Alabama Supreme Court observed that “the proper avenue for seeking redress when contractual
duties are breached is a breach-of-contract claim, not a wantonness claim,” and recognized that
“federal courts applying Alabama law have repeatedly rejected attempts to assert wantonness
claims based on a lender’s actions handling and servicing a mortgage once the mortgage is
executed.” Id. at *12. Shepherd then block-quoted two full paragraphs from this Court’s
opinion in James v. Nationstar, including the precise aspects of James set forth supra, and
concluded, “The James court has correctly stated Alabama law as it applies to claims alleging
that lenders have acted wantonly with regard to servicing and handling mortgages.” Shepherd,
2015 WL 7356384, at *13.
Wells Fargo’s argument for dismissal of Count Four is a straightforward application of
Shepherd and James. In particular, Wells Fargo maintains that the Shedds’ pleading
demonstrates that their wantonness claim arises from duties created by the underlying contract
documents, and is based on loan servicing functions such as allocating payments, making
telephone calls about the status of the loan, reporting the Shedds’ purported delinquency,
assessing fees, reporting mortgage interest, and managing hazard insurance for the property.
C.

Plaintiffs’ Attempt to Distinguish this Case from Shepherd / James.

In response, the Shedds argue that this case is distinguishable from the likes of Shepherd
and James because Count Four does not allege that Wells Fargo wantonly breached duties owed
under the note or mortgage, but instead hinges on Wells Fargo’s purported failure to perform
promises made in the November 21, 2011 letter. This proposed distinction fails. As an initial
matter, plaintiffs’ position does not accurately characterize their wantonness claim. Recall that
Count Four ascribes wantonness to Wells Fargo’s actions of continuing to report the Shedds as
delinquent, continuing to undertake collection efforts, failing to keep open a “bankruptcy

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workstation,” misallocating payments, assessing fees and charges improperly, failing to report
Form 1098 mortgage interest deductions, wrongfully force-placing hazard insurance, and so on.
The November 21 letter, by contrast, references precious few of these functions; instead, the
Shedds appear to be relying exclusively on a single sentence in that letter wherein Wells Fargo
wrote, “Bankruptcy workstation will now remain open until July 2013, which will allow WFHM
to accept payments and stop the collection calls.” (Doc. 74-1, at 21.) Most of Count Four has
nothing to do with the November 21 letter, but pleads that Wells Fargo wantonly performed
typical loan servicing functions stemming from the mortgage and loan documents. It is
disingenuous, then, for the Shedds to insist that their wantonness claim is grounded solely in
fresh duties assumed via the November 21 letter, as opposed to general loan-servicing
responsibilities undertaken by Wells Fargo pursuant to the underlying mortgage documents.7
More fundamentally, the Shedds’ argument misapprehends the Shepherd / James line of
authorities. Contrary to plaintiffs’ position, those decisions do not turn on the existence of an
express contract between loan servicer and borrower. After all, in numerous mortgage-loan
servicing contexts, no such express, direct contracts exist. Rather, these authorities rest on the
uncontroversial premise that the relationship between servicer and borrower is grounded in the
underlying loan transaction, inasmuch as the duties and breaches ascribed to the mortgage
servicer “clearly would not exist but for the contractual relationship between the parties.”

7

By way of elaboration, the Court understands that the Shedds construe the
November 21 letter as containing promises by Wells Fargo to keep the bankruptcy workstation
open, and to stop making collection calls. Likewise, the wantonness claim includes allegations
that Wells Fargo failed to keep the bankruptcy workstation open and continued making
collection calls. In their briefs on the Rule 12(c) Motion, plaintiffs focus almost exclusively on
the “telephone calls” aspect of Count Four. See doc. 200, at 5 (“Wells Fargo, contrary to its duty
created by the letter, did not stop the calls or keep the bankruptcy workstation open.”), 6 (“No
contract forbade Wells Fargo’s calls to the Shedds”), 7 (“Wells Fargo undertook a duty it did not
owe under the note or mortgage: to stop all telephone calls”), 8 (Wells Fargo’s conduct “caus[ed]
emotional and mental anguish to the recipients of repeated phone calls”); doc. 208-1, at 3 (Wells
Fargo “undertook a duty it did not by contract owe – to stop calling Plaintiffs”), 4 (“Wells Fargo
then proceeded to recklessly telephone the Shedds numerous times after assuming a duty not to
do so.”). Yet the Shedds’ briefs say nothing about the many other aspects of their wantonness
claim (relating to Wells Fargo’s purportedly wanton performance of classic, run-of-the-mill
mortgage servicing functions) that have no apparent connection to the November 21 letter.

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Shepherd, 2015 WL 7356384, at *12.8 Were it not for the mortgage and the promissory note,
Wells Fargo would have had no duties to the Shedds at all; indeed, the entire raison d’etre of
their interactions was the underlying mortgage documents. Wells Fargo’s obligations vis a vis
servicing the Shedds’ loan were plainly based upon the mortgage and stem from the mortgage
and promissory note, as opposed to a duty of reasonable care owed to the general public.
Plaintiffs’ Count Four complains that Wells Fargo wantonly collected payments, misallocated
payments, assessed improper fees and charges, reported the Shedds’ mortgage interest deduction
incorrectly, mishandled hazard insurance for the property, and so on. These are mortgageservicing tasks rooted in the underlying mortgage documents, not broader duties of reasonable
care owed to the public.9 As such, the Shedds’ wantonness claim falls neatly within the
paradigm exemplified by the long line of federal authorities cited in James (and embraced by the
Alabama Supreme Court in Shepherd).
8

See also James, 92 F. Supp.3d at 1200 (dismissing borrower’s wantonness claim
against loan servicer for failing to credit loan payments properly, inasmuch as “mortgage
servicing obligations here are a creature of contract, not of tort, and stem from the underlying
mortgage and promissory note,” even though loan servicer had executed neither); Costine v. BAC
Home Loans, 946 F. Supp.2d 1224, 1234 (N.D. Ala. 2013) (dismissing negligence claim against
mortgage servicer for handling payments improperly and assessing improper charges, where “the
duties and breaches alleged by Plaintiffs clearly would not exist but for the contractual
relationship” between borrower and lender); Prickett v. BAC Home Loans, 946 F. Supp.2d 1236,
1244-45 (N.D. Ala. 2013) (dismissing wantonness claim against mortgage servicer for
processing of payments, charges and fees associated with mortgage, even though servicer had no
direct contractual relationship with plaintiffs, where “the duties and breaches alleged by
Plaintiffs clearly would not exist but for the contractual relationship” and “there is no duty to the
general public to properly service mortgage accounts”); Bennett v. Nationstar Mortgage, LLC,
2015 WL 5294321, *5-6 (S.D. Ala. Sept. 8, 2015) (“The rights and obligations relating to
Bennett’s mortgage account sound in contract, not tort, and the negligence/wantonness claims
against the Defendants cannot stand,” particularly where “Bennett clearly seeks to base at least
part of his negligence and/or wantonness claims on conduct that is governed by the note and
mortgage”); Webb v. Ocwen Loan Servicing, LLC, 2012 WL 5906729, *7 (S.D. Ala. Nov. 26,
2012) (dismissing wantonness claim against mortgage servicer because “Alabama law does not
recognize a tort claim for wanton servicing of a mortgage where the obligation at issue – to
properly service the mortgage – is contractual and arises from the mortgage and note”).
9

See, e.g., Bennett, 2015 WL 5294321, at *6 (“Nationstar’s obligations with
respect to stating amounts due, collecting money from Bennett, accelerating Bennett’s debt,
initiating foreclosure proceedings, maintaining loan records, and causing forced place property
insurance to be obtained are obligations upon which Bennett seeks to state a negligence and/or
wantonness claim, but are governed by his mortgage and note.”).

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As mentioned, the heart of the Shedds’ opposition to Wells Fargo’s Rule 12(c) Motion as
it relates to Count Four is their insistence that the wantonness claim is legally viable because
“Wells Fargo created a duty it did not otherwise owe in its November 21, 2011 written promise
to stop calling the Shedds, and recklessly breached it by telephoning them numerous times after
promising not to do so.” (Doc. 200, at 6.)10 But the Shedds’ own words underscore the contractbased nature of the relationship and the contractual origins of any purported duty owed by Wells
Fargo, as plaintiffs refer to a “written promise” as the source of such duty. More broadly,
plaintiffs’ argument overlooks the fundamental point that Wells Fargo’s telephone calls about the
loan were part and parcel of its mortgage servicing responsibilities that, again, stemmed from the
underlying mortgage and promissory note. Wells Fargo’s duty properly to service the mortgage,
of which a duty to refrain from abusive collection practices may be a part, was created by – and
arises from – the mortgage documents. Any collection calls made by Wells Fargo stem from
those contractual documents, just as any other servicing responsibilities would be. To put it in
the Shepherd vernacular, the Shedds’ relationship with Wells Fargo is based upon the mortgage
and is therefore a contractual one, because the duties and breaches asserted by the Shedds
(including alleged wanton collection calls) would not exist but for the contractual relationship
and Wells Fargo’s loan-servicing obligations.

10

Plaintiffs say the fact of the November 21 letter and the “written promise” therein
constitutes a “critical distinction” between this case and state and federal decisions construing
Alabama law as not recognizing a cause of action for wanton servicing of a mortgage. But they
do not identify a single case – from the dozens that have addressed this issue – in which any
court has held, or even suggested, that an otherwise moribund claim for wanton servicing of a
mortgage might spring to life if the plaintiff accused the loan servicer of not following through
on something it said it would do or refrain from doing in correspondence while performing loan
servicing obligations pursuant to the underlying mortgage and note. Nor do the Shedds identify
any principled reason why such a distinction ought to make a difference in terms of the
developing jurisprudence in Alabama. Simply stated, plaintiffs have seized on a purported
distinction between this case and extant authorities, but they have never explained why, in either
doctrinal or analytical terms, such a distinction should make a difference or obviate the
expansive authorities holding that Alabama law does not recognize a cause of action for wanton
servicing of a mortgage.

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It is not persuasive to respond, as the Shedds do, that Judge Butler’s prior rulings on the
viability of contract claims in this action somehow vindicate the validity of Count Four.11 The
Shedds’ characterization of Judge Butler’s Order dated October 26, 2015, as a definitive holding
that no contract exists is misguided and inaccurate. In fact, that Order made no grand
pronouncements that there were no contracts between Wells Fargo and the Shedds, but simply
pointed out defects in plaintiffs’ pleading of such a contract. (See doc. 105, at 10.) Similarly, his
Order of May 16, 2016 was predicated on the legal principle that Wells Fargo’s status as owner
of Monument did not confer upon it standing to sue the Shedds (independently of Monument) to
enforce Monument’s contracts. (See doc. 201, at 2-3.) Simply put, there has been no conclusive
ruling in these proceedings that no contract exists between Wells Fargo and the Shedds.
Moreover, nothing in the line of authorities described supra suggests that a non-actionable
“wanton servicing of a mortgage claim” may somehow be resuscitated and become viable if
accompanying contract claims are dismissed for pleading defects. Stated differently, the oftrepeated principle that Alabama does not recognize a cause of action for wanton servicing of a
mortgage is not conditioned on whether the borrower ultimately prevails in his or her breach of
contract claims against the servicer; rather, the legal determination that no claim for wanton
servicing of a mortgage exists in Alabama holds true regardless of whether the plaintiff succeeds
or fails in attempting to plead contract claims against the servicer.
In sum, despite plaintiffs’ protestations that their wantonness claim is unique, Count Four
reads very much like numerous other claims for wanton servicing of a mortgage that federal and
state courts have rejected as not being cognizable under Alabama law. Try though they might,
plaintiffs cannot avoid the fundamental truth that Count Four ascribes wantonness to the manner
in which Wells Fargo performed various core loan servicing functions (i.e., allocating payments,
calling the borrower to discuss the loan’s purportedly delinquent status, assessing fees and
charges, reporting mortgage interest deductions, placing hazard insurance, and the like) on the
11

Specifically, plaintiffs posit that “this Court has already ruled that no contract
existed between Wells Fargo and the Shedds” (doc. 200, at 6), “[t]he Court has already found
that Wells Fargo owed no contractual duty to the Shedds” (id. at 7), “the Court has ruled no
contract exists” (id. at 8), “[t]he Court had previously dismissed Shedds’ contract claim against
Wells Fargo” (doc. 208-1, at 3), and that Judge Butler’s May 16, 2016 dismissal of Wells
Fargo’s contract counterclaim against Pam Shedd “demolishes Wells Fargo’s argument” for
dismissal of Count Four (id. at 2).

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Shedds’ loan. All of those core functions arise from, and are grounded in, the underlying
mortgage and promissory note.12 Accordingly, under the reasoning of James and Shepherd and
numerous other like-minded authorities, the Court concludes that the Shedds’ wantonness claim
against Wells Fargo is not actionable, as a matter of law. The Rule 12(c) Motion will be granted
as to Count Four.
IV.

Count Sixteen (FDCPA).
In Count Sixteen of the Third Amended Complaint, the Shedds assert a claim for

violation of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (“FDCPA”). That
claim alleges that Wells Fargo was a “debt collector” who violated the FDCPA by (i) making
telephone calls to the Shedds even when it knew they were represented by counsel, in violation
of 15 U.S.C. § 1692c(a)(2); (ii) falsely representing the character, amount or legal status of the
Shedds’ debt, in violation of 15 U.S.C. § 1692e(2)(A), by overstating the amounts owed; and (iii)
engaging in unfair practices by collecting amounts not expressly authorized by agreement or
permitted by law, in violation of § 1692f(1). Wells Fargo seeks dismissal of Count Sixteen on
the ground that it is not a “debt collector” within the statutory definition of the term.

12

This conclusion applies, notwithstanding the Shedds’ adamant position that Wells
Fargo made a new promise to stop making collection calls in the November 21 letter, and that
such promise was not reflected in the loan documents. That purported promise related to basic
loan servicing functions, so the connection to the underlying contractual relationship is patently
obvious and undeniable. Besides, the Court cannot embrace plaintiffs’ position that the
November 21 letter constitutes a “written promise to stop calling the Shedds.” (Doc. 200, at 6.)
The November 21 letter is attached to the Shedds’ Second Amended Complaint as an exhibit
(see doc. 74-1, at 21); therefore, it may be properly considered on a Rule 12(c) motion, even if its
contents conflict with the factual allegations of the pleading. See, e.g., Hoefling v. City of
Miami, 811 F.3d 1271, 1277 (11th Cir. 2016) (“A district court can generally consider exhibits
attached to a complaint in ruling on a motion to dismiss, and if the allegations of the complaint
about a particular exhibit conflict with the contents of the exhibit itself, the exhibit controls.”);
Perez, 774 F.3d at 1340 n.12 (noting that on a Rule 12(c) motion, even “documents that are not a
part of the pleadings may be considered, as long as they are central to the claim at issue and their
authenticity is undisputed”). In that single-page letter, Wells Fargo made no promises to stop
calling the Shedds; rather, it merely pointed out that keeping the bankruptcy workstation open
“will allow WFHM to accept payments and stop the collection calls.” (Doc. 74-1, at 21.) Thus,
Count Four fails for the additional reason that the November 21 letter on its face was not a
promise that Wells Fargo would never place another telephone call to the Shedds again (and thus
could not have created an independent duty for Wells Fargo to refrain from calling the Shedds).

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Congressional findings and the declaration of purpose accompanying the FDCPA specify
that the statute’s purpose is “to eliminate abusive debt collection practices by debt collectors.”
15 U.S.C. § 1692(e). Thus, a threshold requirement for liability in Count Sixteen is that the
Shedds must establish that Wells Fargo is a “debt collector” within the meaning of the FDCPA.
See, e.g., Davidson v. Capital One Bank (USA), N.A., 797 F.3d 1309, 1313 (11th Cir. 2015)
(“There is no dispute that § 1692e applies only to debt collectors.”); Harris v. Liberty
Community Management, Inc., 702 F.3d 1298, 1302 (11th Cir. 2012) (“The Act’s restrictions
apply only to ‘debt collectors,’” as defined in the statute). “A ‘debt collector’ is a term of art in
the FDCPA.” Ausur-El ex rel. Small, Jr. v. BAC (Bank of America) Home Loan Servicing LP,
448 Fed.Appx. 1, 2 (11th Cir. Sept. 21, 2011). Subject to certain enumerated exclusions, the
FDCPA defines the term “debt collector” to mean “any person [1] 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 [2] who regularly collects or attempts to collect … debts owed or due
or asserted to be owed or due another.” 15 U.S.C. § 1692a(6).
Wells Fargo invokes two statutory exemptions to this definition of debt collector. First,
the FDCPA expressly excludes from the ambit of the term debt collector “any officer or
employee of a creditor while, in the name of the creditor, collecting debts for such creditor.” 15
U.S.C. § 1692a(6)(A). Second, the FDCPA carves out an exemption from debt collector status
for “any person while acting as a debt collector for another person, both of whom are related by
common ownership or affiliated by corporate control, if the person acting as a debt collector does
so only for persons to whom it is so related or affiliated and if the principal business of such
person is not the collection of debts.” 15 U.S.C. § 1692a(6)(B).
With respect to § 1692a(6)(A), Wells Fargo reasons that it falls within the “creditor”
exception to the FDCPA because Wells Fargo owns Monument, which in turn owns the debt,
thereby rendering Wells Fargo a creditor covered by the § 1692a(6)(A) exemption. The factual
allegations on which this argument rests find considerable support in the Third Amended
Complaint. In that pleading, the Shedds allege that defendant Monument “claims to be the
assignee of the promissory note” executed by Pamela Shedd, and that Monument “is owned by
one member, which in turn has one member, Wells Fargo Bank, N.A.” (Doc. 152, ¶ 4.) The
Third Amended Complaint expressly states that the Shedds’ mortgage “is ultimately an asset of
defendant Wells Fargo.” (Id.) Plaintiffs plead the point in the plainest of terms by alleging that

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“Wells Fargo, through its corporate ownership of subsidiaries, is today the ultimate owner of
Monument and thus of the loan and mortgage.” (Id., ¶ 12 (emphasis added).) Finally, that same
pleading goes on to concede that “Wells Fargo and Monument are both owned by Wells Fargo
Bank, N.A., and thus the distinction between Wells Fargo as a ‘debt collector’ … and Monument
as the ‘creditor’ … is not applicable for purposes of liability under the FDCPA.” (Id., ¶ 186.)
The Complaint’s portrayal of Wells Fargo as owner of the loan and mortgage is
reinforced by the Answer filed by defendants Monument and Wells Fargo, wherein “Monument
admits that it is the owner of the subject promissory note and mortgage, and that Wells Fargo is
the owner of the subject promissory note and mortgage by virtue of its ownership of Monument.”
(Doc. 164, ¶ 4.)13 The Answer further states that “the [Shedds’] promissory note and mortgage
were … transferred and assigned to Monument, which was thereafter acquired and is now a
wholly owned subsidiary of Wells Fargo.” (Id., ¶ 6.) Finally, the Answer provides that “Wells
Fargo admits that as the owner of Monument, it is the owner of the subject loan.” (Id., ¶ 186.)
Because comparison of the averments in the competing pleadings reveals no dispute of
fact on this point, the Court accepts for purposes of the pending Motion for Judgment on the
Pleadings that defendant Monument is the owner of the Shedds’ promissory note and mortgage,
that Monument is a wholly owned subsidiary of Wells Fargo, and that Wells Fargo thus owns the
promissory note and mortgage (i.e., they are an asset of Wells Fargo).14 Based on these
13

It is appropriate to review the Answer in adjudicating the Rule 12(c) Motion, at
least insofar as it does not conflict with well-pleaded factual allegations in the Third Amended
Complaint. See, e.g., Perez, 774 F.3d at 1336 (opining that Rule 12(c) “provides a means of
disposing of cases when … a judgment on the merits can be achieved by focusing on the content
of the competing pleadings”) (citation and internal quotation marks omitted); Seneca Ins. Co. v.
Shipping Boxes I, LLC, 30 F. Supp.3d 506, 510 (E.D. Va. 2014) (on Rule 12(c) review, “[t]he
Answer’s factual allegations are taken as true to the extent they do not contradict the factual
allegations in the Complaint”); Vinson v. Credit Control Services, Inc., 908 F. Supp.2d 274, 275
(D. Mass. 2012) (on Rule 12(c) review, “the court may consider factual allegations contained in
the answer that are not contradicted by the complaint”); Alexander v. City of Greensboro, 801 F.
Supp.2d 429, 433 (M.D.N.C. 2011) (explaining that “on a Rule 12(c) motion the court may
consider the Answer” and that “factual allegations of the Answer are taken as true only where
and to the extent they have not been denied or do not conflict with the complaint”) (citations and
internal quotation marks omitted).
14

This is so, despite the Shedds’ contention in their Surreply that “[t]he Court ruled
on May 16 that Monument, not Wells Fargo, owns the loan with Pam Shedd,” and expressly
decided “that Wells Fargo does not own Pam Shedd’s debt.” (Doc. 208-1, at 5.) In the first
(Continued)
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undisputed facts, Wells Fargo’s contention that it is a creditor for FDCPA purposes and therefore
falls within the creditor exception found at § 1692a(6)(A) appears meritorious on its face. After
all, the statute defines “creditor” as including “any person … to whom a debt is owed,” at least
where such person did not receive assignment or transfer of defaulted debt “solely for the
purpose of facilitating collection of such debt for another.” 15 U.S.C. § 1692a(4). Based on the
repeated, consistent allegations in both sides’ pleadings that Wells Fargo owns the Shedds’ debt,
it cannot reasonably be disputed for Rule 12(c) purposes that Wells Fargo is a person to whom
that debt is owed, thereby rendering it a “creditor” under the FDCPA.
Plaintiffs’ only argument in opposition to Wells Fargo’s invocation of the §
1692(a)(6)(A) exemption for FDCPA coverage is that such exemption is confined to “any officer
and employee” of a creditor, and is not available to a creditor entity itself. (Doc. 200, at 1011.)15 The Shedds’ argument tracks the literal language of the statute, which provides that the
FDCPA does not apply to “any officer or employee of a creditor while, in the name of the

place, the argument that Wells Fargo does not own the mortgage is a new argument not properly
raised for the first time in a reply or sur-reply. See, e.g., Herring v. Secretary, Dep’t of
Corrections, 397 F.3d 1338, 1342 (11th Cir. 2005) (“As we repeatedly have admonished,
arguments raised for the first time in a reply brief are not properly before a reviewing court.”)
(internal quotes omitted); Brown v. CitiMortgage, Inc., 817 F. Supp.2d 1328, 1332 (S.D. Ala.
2011) (explaining that “it is improper for a litigant to present new arguments in a reply brief” and
that “[n]ew arguments presented in reply briefs are generally not considered by federal courts”).
Even if the Court were inclined to consider it, this new argument would not advance plaintiffs’
cause. As discussed supra, a Rule 12(c) Motion is evaluated based on the pleadings,
“accept[ing] as true all material facts alleged in the non-moving party’s pleading.” Perez, 774
F.3d at 1335. The Shedds having unambiguously, repeatedly pleaded in their Third Amended
Complaint that Wells Fargo owns their debt, they cannot disavow those allegations in opposing
the Motion for Judgment on the Pleadings merely because such well-pleaded facts are now
inconvenient. Besides, contrary to their repeated representations, the May 16 Order entered by
Judge Butler is devoid of any determination that “Wells Fargo does not own Pam Shedd’s debt.”
The May 16 Order did nothing more than find that “Wells Fargo’s status as owner of Monument
does not give it standing to sue for breach of contract” (doc. 201, at 3), as to contracts nominally
between Monument and Pam Shedd. Thus, plaintiffs’ Surreply misstates the holding of the May
16 Order, which cannot reasonably be read as declaring that Wells Fargo does not own the loan,
much less that it cannot be deemed a “creditor” for purposes of the FDCPA.
15

Plaintiffs concisely summarize their argument as follows: “It is curious how an
exemption solely for an officer or employee of a creditor collecting its own debts could be
misconstrued to apply to the creditor itself.” (Id. at 11.)

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creditor, collecting debts for such creditor.” 15 U.S.C. § 1692a(6)(A). However, abundant
authority has construed this exemption as reaching creditors themselves, not just their officers or
employees. See, e.g., Kimber v. Federal Financial Corp., 668 F. Supp. 1480, 1484 (M.D. Ala.
1987) (“it is apparent from the statute’s legislative history that Congress intended the creditor
exclusion to cover not only officers and employees of creditors but creditors themselves”).16
Plaintiffs’ objection, unsupported by any citations to case authorities, that the § 1692a(6)(A)
exemption is confined to officers and employees of creditors, and does not cover creditors, is
refuted by this extensive decisional authority.
In sum, then, Wells Fargo seeks dismissal of the Shedds’ FDCPA claims on the ground
that the pleadings establish that Wells Fargo lies within the “creditor” exemption found at 15
U.S.C. § 1692(a)(6)(A). Well-pleaded, undisputed factual allegations in both sides’ pleadings
confirm that Wells Fargo owns the Shedds’ loan and mortgage, such that it is a creditor under the
16

See also Winterstein v. CrossCheck, Inc., 149 F. Supp.2d 466, 469 (N.D. Ill.
2001) (“the Section 1692a(6)(A) exclusion includes both creditors themselves and their
employees”); Pelfrey v. Educational Credit Management Corp., 71 F. Supp.2d 1161, 1167 n.8
(N.D. Ala. 1999) (“Courts have generally accepted a construction of the statute that recognizes
that this exception was intended to cover creditors themselves as well as their employees.”);
Games v. Cavazos, 737 F. Supp. 1368, 1386 n.9 (D. Del. May 23, 1990) (“It appears that this
exception was intended to cover creditors themselves as well as their employees.”); Holmes v.
Telecredit Service Corp., 736 F. Supp. 1289, 1291 n.3 (D. Del. 1990) (“It seems clear from the
legislative history of the Act that Congress intended that this [§ 1692a(6)(A)] exclusion cover
creditors themselves as well as their employees.”); Johns v. Wells Fargo Bank, N.A., 2015 WL
9238957, *9 (S.D. Ala. Dec. 17, 2015) (“because Wells Fargo owned the debt and was collecting
its own debt, it is exempt as a ‘creditor’ under 15 U.S.C. § 1692a(6)(A)”); McFerrin v. Capital
One Bank (U.S.), N.A., 2015 WL 1419106, *3 (N.D. Ala. Mar. 27, 2015) (in FDCPA claim
against Capital One, where pleadings alleged that defendant’s collection actions were taken to
collect a credit card debt owed to Capital One, “[t]his factual assertion, that defendant was a
creditor, bars plaintiff’s claim for relief under the FDCPA” pursuant to § 1692a(6)(A)); Berman
v. Wells Fargo Bank, N.A., 2013 WL 145501, *3 (M.D. Fla. Jan. 14, 2013) (concluding that even
if defendant Wells Fargo otherwise qualified as a debt collector under the FDCPA, “it would be
excluded from the statutory definition as a creditor attempting to collect its own debt” pursuant
to § 1692a(6)(A)); Arnold v. Bank of America, N.A., 2012 WL 3028343, *2 (N.D. Ga. June 20,
2012) (pursuant to § 1692a(6)(A), “[t]he term ‘debt collector’ does not include creditors who are
attempting to collect their own debts”); Ingram v. Wells Fargo Bank, N.A., 2012 WL 252886, *2
(M.D. Fla. Jan. 26, 2012) (“As the plaintiffs’ creditor, Wells Fargo is not a ‘debt collector,’ and
the plaintiffs fail to state an FDCPA claim against Wells Fargo.”); Liggion v. Branch Banking
and Trust, 2011 WL 3759832, *4 n. 8 (N.D. Ga. Aug. 24, 2011) (Ҥ 1692a(6)(A) states that
creditors are not debt collectors”).

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FDCPA. Plaintiffs’ only counterargument is that the § 1692(a)(6)(A) exemption is limited to
employees and officers of a creditor, and is unavailable as a matter of law to a creditor itself;
however, numerous (and apparently unanimous) case authorities are to the contrary. Because the
pleadings establish that Wells Fargo is a creditor and therefore exempt from the FDCPA, Count
Sixteen is properly dismissed.
V.

Conclusion.
For all of the foregoing reasons, it is ordered as follows:
1.

Plaintiffs’ Motion for Leave to File Surreply (doc. 208) is granted;

2.

Wells Fargo’s Motion for Judgment on the Pleadings (doc. 176) is granted; and

3.

Counts Four (wantonness) and Sixteen (FDCPA violations) are dismissed with
prejudice because, after consideration of the pleadings, taking as true the wellpleaded facts in the Third Amended Complaint, the Shedds’ allegations do not
add up to a plausible claim for relief under either a wantonness or a FDCPA
theory.

DONE and ORDERED this 13th day of June, 2016.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE

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