Alverson et al v. PNC Bank, N.A.

Filing 13

ORDER granting 6 Motion to Dismiss. Signed by Senior Judge Charles R. Butler, Jr on 12/15/2014. copies to parties. (sdb)

Download PDF
IN  THE  UNITED  STATES  DISTRICT  COURT  FOR  THE   SOUTHERN  DISTRICT  OF  ALABAMA   SOUTHERN  DIVISION     ERNEST  MICHAEL   ALVERSON  and  SADIE  B.   ALVERSON     Plaintiffs,     v.     PNC  BANK,  a  National   Banking  Association,     Defendant,         )   )   )   )   )   )   )   )   )   )   )   )           CIVIL  ACTION  NO.     14-­‐00387-­‐CB-­‐B     ORDER   This  matter  is  before  the  Court  on  Defendant’s  motion  to  dismiss  pursuant  to   Rule  12(b)(6)  of  the  Federal  Rules  of  Civil  Procedure.    (Doc.  5.)    The  motion  has  been   fully  briefed  by  the  parties.    (Docs.  6,  8  &  10.)    Upon  due  consideration  of  the  issues   raised  and  the  relevant  law,  the  Court  finds  that  the  motion  is  due  to  be  granted.   Factual  &  Procedural  Background     This  action  arises  from  attempts  by  the  Plaintiffs,  Ernest  Michael  Alverson   and  Sadie  B.  Alverson  (the  Alversons),  to  obtain  a  loan  modification  from  their   mortgagee,  Defendant  PNC  Bank.    On  March  12,  2007,  the  Alversons  “entered  into  a   mortgage  with  PNC  encumbering  property  [their  home]  owned  by  them  in  Baldwin   County,  Alabama.”    (Compl,  ¶  2,  Doc.  1-­‐1.)    The  Alversons  subsequently  “incurred   substantial  physical  and  economic  setbacks”  and,  beginning  in  November  2012,   “requested  individually  and  through  counsel  that  the  loan  be  modified  based  on   their  economic  and  physical  conditions.”  (Id.  ¶  3.)    Between  November  2012  and   January  2014,  Plaintiffs  submitted  five  loan  modification  packages  to  PNC.    “As  to   the  majority  of  the  submissions.  .  .,  Plaintiffs  received  no  communication  back   whatsoever  from  PNC  although  on  occasion  Plaintiffs,  after  retaining  counsel   received  communications  from  PNC  that  their  loan  modification  package  needed  to     be  supplemented.”  (Id.  ¶  4.)      Counsel,  after  correspondence  with  PNC,  would   supplement  the  packages  as  requested.    However,  “the  loan  modification  packages   submitted.  .  .  by  the  Plaintiffs  .  .  .  were  not  processed,”  and  no  reason  was  given  for   PNC’s  failure  to  do  so.    (Id.)    During  this  time,  PNC  communicated  with  the  Alversons   directly  “twenty  to  thirty”  times,  with  notifications  that  their  loan  was  in  default  and   threatening  foreclosure,  even  though  PNC  had  been  given  notice  that  the  Alversons   were  represented  by  counsel.    (Id.  ¶  5.)         In  December  2013,  Plaintiffs  received  “notification  that  their  loan  could  not   be  modified  as  they  had  not  submitted  loan  modification  documentation  to  support   the  application.”    (Id.  ¶  7.)    PNC  did  not  immediately  explain  how  the  loan   modification  request  was  deficient.    (Id.)    Plaintiffs  allege  that  they  “have  exhibited   to  PNC  through  Social  Security  disability  records,  income  records,  hardship   affidavits,  and  other  expenditures  and  debts,  that  they  would  be  able  to  service  the   mortgage  indebtedness  if  the  same  were  modified.”  (Id.  ¶  8.)         In  mid-­‐January  2014,  counsel  for  PNC  contacted  Plaintiffs’  counsel   “requesting  that  the  same  package  be  faxed  as  it  had  previously  been  emailed,   notwithstanding  the  fact  that  it  was  received  by  e-­‐mail,  it  had  to  be  faxed,  [and].  .  .  it   was  faxed  on  or  about  January  20,  2014.”    (Id.)    After  the  Alversons  threatened  legal   action  in  late  January  2014,  PNC’s  counsel  requested  that  the  Alversons  “refrain   from  filing  suit  so  that  the  matter  could  be  resolved.”    (Id.  ¶  10.)    Communications     2   between  counsel  for  the  parties  continued  from  February  through  June  2014.    On   June  3,  2014,  Defendant’s  counsel  represented  to  Plaintiffs’  counsel  “that  there  was   currently  no  foreclosure  sale  pending  given  the  status  of  the  negotiations.”    (Id.  ¶   11.)    However,  in  a  letter  dated  June  9,  2014,  PNC  notified  Plaintiffs’  counsel  “that  in   fact  the  foreclosure  was  scheduled  for  July  14,  2014.”    (Id.  ¶  13.)    Further   communications  between  counsel  ensued.    The  July  foreclosure  sale  was  cancelled   but  was  reset  for  August  11,  2014.    Plaintiffs  filed  this  lawsuit  on  August  8,  2011.         Plaintiffs  filed  the  underlying  Complaint  in  the  Circuit  Court  of  Baldwin   County  on  August  8,  2014  asserting  claims  against  PNC  Bank  for  negligence,   wantonness,  and  violations  of  the  Fair  Debt  Collection  Practices  Act  (FDCPA),  15   U.S.C.  §§  1692a-­‐1692p,  and  the  Fair  Credit  Reporting  Act  (FCRA),  15  U.S.C.  §§  1681a-­‐ 1681x..  The  Complaint  alleged  damages  in  the  amount  of  $1  million  and  also   requested  a  temporary  restraining  order  (TR0)  enjoining  the  scheduled  foreclosure   sale  of  their  property.    On  August  11,  2014,  the  date  of  the  scheduled  sale,  a  TRO  was   entered  by  Baldwin  County  Circuit  Judge  Lang  Floyd.    On  August  15,  2014,  PNC  filed   a  notice  of  removal  in  this  Court  based  on  both  diversity  and  federal  question   jurisdiction.    Shortly  after  removal,  PNC  filed  a  motion  to  dismiss  for  failure  to  state   a  claim  upon  which  relief  can  be  granted.   Issues  Raised     Defendant  contends  the  facts  alleged  in  the  Complaint  do  not  support  a  claim   for  relief  under  state  or  federal  law.    In  response,  Plaintiffs  argue  that  their  state  law   claims  for  negligence  and  wantonness  should  survive  the  motion  to  dismiss.     Plaintiffs,  however,  appear  to  have  abandoned  their  federal  law  claims.    They  do  not     3   address  these  claims  (both  contained  in  Count  III  of  the  Complaint)  at  all  in  their   response.    Moreover,  they  conclude  their  brief  by  “request[ing]  that  the  Motion  to   Dismiss  as  filed  by  Defendant,  PNC  Bank,  N.A.,  be  denied  as  to  Counts  I  and  II.”     Consequently,  the  Court  considers  the  motion  to  be  unopposed  as  to  Count  III  and   below  addresses  the  sufficiency  of  Plaintiffs’  negligence  and  wantonness  claims   under  Alabama  law.   Standard  of  Review     A  complaint  must  “set  forth  a  short  and  plain  statement  of  the  claim  showing   that  the  pleader  is  entitled  to  relief.”    Fed.  R.  Civ.  P.  8(a)(2).    In  Bell  Atlantic  Corp.  v.   Twombly,  550  U.S.  544  (2007),  the  Supreme  Court  set  forth  the  parameters  of  a  well-­‐ pleaded  complaint.    A  claim  for  relief  “must  set  forth  enough  factual  matter  (taken  as   true)  to  suggest  [the  required  elements  of  a  cause  of  action].”      Id.  at  556;  see  also   Watts  v.  Florida  Int’l  University,  495  F.3d  1289,  1295  (11th  Cir.  2007)  (applying   Twombly).      Furthermore,  a  complaint  must  “provide  the  defendant  with  fair  notice   of  the  factual  grounds  on  which  the  complaint  rests.”    Jackson  v.  Bellsouth   Telecommc’ns,  Inc.,  372  F.3d  1250,  1271  (11th  Cir.  2004).           In  Ashcroft  v.  Iqbal,  556  U.S.  662,  129  S.Ct.  1937  (2009),  the  Supreme  Court   further  refined  the  threshold  requirements  for  a  claim  under  Rule  8(a)(2).         Two  working  principles  underlie  our  decision  in  Twombly.  First,  the   tenet  that  a  court  must  accept  as  true  all  of  the  allegations  contained   in  a  complaint  is  inapplicable  to  legal  conclusions.  Threadbare  recitals   of  the  elements  of  a  cause  of  action,  supported  by  mere  conclusory   statements,  do  not  suffice.    Rule  8  marks  a  notable  and  generous   departure  from  the  hyper-­‐technical,  code-­‐pleading  regime  of  a  prior   era,  but  it  does  not  unlock  the  doors  of  discovery  for  a  plaintiff  armed   with  nothing  more  than  conclusions.  Second,  only  a  complaint  that   states  a  plausible  claim  for  relief  survives  a  motion  to  dismiss.   Determining  whether  a  complaint  states  a  plausible  claim  for  relief     4   will  .  .  .  be  a  context-­‐specific  task  that  requires  the  reviewing  court  to   draw  on  its  judicial  experience  and  common  sense.  But  where  the   well-­‐pleaded  facts  do  not  permit  the  court  to  infer  more  than  the  mere   possibility  of  misconduct,  the  complaint  has  alleged-­‐but  it  has  not   “show[n]”-­‐“that  the  pleader  is  entitled  to  relief.”       Iqbal,  129  S.Ct.  at  1949-­‐50  (quoting  Fed.  R.  Civ.  P.  8(a)(2))  (other  citations  omitted).         “When  considering  a  motion  to  dismiss,  all  facts  set  forth  in  the  plaintiff’s   complaint  ‘are  to  be  accepted  as  true.”    Grossman  v.  Nationsbank,  N.A.,  225  F.3d   1228,  1232  (11th  Cir.  2000)(per  curiam).    Conclusory  allegations,  however,  are  not.     “A  district  court  considering  a  motion  to  dismiss  shall  begin  by  identifying   conclusory  allegations  that  are  not  entitled  to  an  assumption  of  truth—legal   conclusions  must  be  supported  by  factual  allegations.”    Randall,  610  F.  3d  at  709-­‐10.       Next,  the  court  “should  assume,  on  a  case-­‐by-­‐case  basis,  that  well  pleaded  factual   allegations  are  true  and  then  determine  whether  they  plausibly  give  rise  to  an   entitlement  to  relief.”    Id.  at  710.    Plausibility  means  something  more  than   allegations  that  are  “merely  consistent  with”  liability.    Iqbal,  129  S.Ct.  at  1949.    The   facts  alleged  must  “allow[  ]  the  court  to  draw  the  reasonable  inference  that  the   defendant  is  liable  for  the  misconduct  alleged.”    Id.       Legal  Analysis     The  broad  issue  presented  is  whether  the  facts  asserted  in  the  Complaint   state  a  claim  for  negligence  or  wantonness.    Unfortunately,  the  parties’  briefs  are  not   particularly  helpful  in  addressing  that  question  because  they  misidentify  the  factual   basis  of  the  claims.    The  Complaint  alleges  negligence  and  wantonness  based  on  “the   conduct  of  PNC  in  failing  and  refusing  to  process  the  Plaintiffs’  loan  modification   packages.”    (Compl.  ¶¶  17  &  20,  emphasis  added.)    However,  the  issue  the  Defendant     5   and  Plaintiffs  argue  is  whether  Alabama  recognizes  a  cause  of  action  for  negligent  or   wanton  servicing  of  a  mortgage  account.1  As  Defendant  correctly  points  out,   Alabama  law  does  not  recognize  a  tort-­‐like  cause  of  action  for  breach  of  a  duty   created  by  contract,  at  least  not  between  the  parties  to  a  contract;  therefore,  a   mortgagor  cannot  maintain  a  cause  of  action  against  the  a  mortgagee  for  negligent   or  wanton  servicing  of  a  mortgage  contract.  See  Blake  v.  Bank  of  North  America,  845   F.Supp.  2d  1206,  1210  (M.D.  Ala.  2012).    While  servicing  a  mortgage  account   involves  duties  created  by  contract,  the  same  cannot  be  said  for  processing  a   request  for  a  loan  modification.  2       Therefore,  the  Court  must  look  more  closely  at  Plaintiffs’  negligence  and   wantonness  claims.    To  recover  under  a  negligence  theory,  Plaintiffs  must  allege  and   prove  Defendant  had  a  duty  to  process  their  request  for  a  loan  modification.    See   AALAR,  Ltd.  v.  Francis,  716  So.  2d  1141,  1144  (Ala.  1998)  (elements  of  negligence   claim  are  duty,  breach  of  that  duty,  causation  and  damages).    To  recover  under  a   wantonness  theory,  Plaintiffs  must  allege  and  prove  they  had  a  right  to  have  a  loan   modification  request  processed.    See  Ala.  Code  §  6-­‐11-­‐20(b)(3)  (defining                                                                                                                   1  In  the  cases  cited  by  the  Defendant,  the  negligence  and  wantonness  claims   involved  the  defendant’s  servicing  of  the  existing  loan,  not  the  handling  of  a   modification  request.  Wallace  v.  SunTrust  Mortgage,  Inc.,  974  F.  Supp.  2d  1358,  1369   (S.D.  Ala.  2013)  (complaint  alleged  defendant  negligently  and  wantonly  “handled,   serviced  and  processed  payment,  fees  and  all  aspects  of  [her]  Mortgage  loan”)     Quinn  v.  Deustche  Bank  Nat’l  Trust  Co.,  2014  WL  977632  (S.D.  Ala.  Mar.  12,  2014)   (“crux  of  [plaintiff’s]  negligence  and  wantonness  claims  is.  .  .  that  defendants  should   have  accepted,  applied  and  credited  his  mortgage  payments  in  a  timely  and  accurate   manner,  and  that  their  alleged  failure  to  do  so  breached  a  duty  of  care  owed  to  him   and  caused  him  to  incur  damages”).     2  At  the  very  least,  there  are  no  facts  alleged  from  which  the  Court  could  infer   that  the  duty  to  process  the  loan  modification  arose  from  the  parties’  contract.     6   wantonness  as  “conduct  which  is  carried  on  with  a  reckless  or  conscious  disregard   of  the  rights  or  safety  of  others”).    As  far  as  this  Court  has  been  able  to  determine,   Alabama  courts  have  not  specifically  addressed  claims  of  negligent  or  wanton   failure  to  process  a  loan  modification  request.         The  Alabama  supreme  court  has,  however,  addressed  a  similar  type  of  claim.     In  Armstrong  Bus.  Serv.,  Inc.  v.  AmSouth  Bank,  817  So.  2d  665  (Ala.  2001),  the   plaintiff,  ABS,  argued  that  AmSouth  owed  a  duty  “to  properly  process  ABS’s  loan   request.”    Id.  at  680.    The  duty,  according  to  ABS,  arose  from  AmSouth’s  internal  loan   application  policies.    The  court  rejected  this  argument,  holding  that  the  policies   were  created  for  the  bank’s  own  benefit  and  did  not  create  a  common-­‐law  duty  or   right.    Id.  at  681.    On  the  other  hand,  Alabama  has  recognized  a  duty  of  care  in  the   loan  processing  context  under  the  “doctrine  that  one  who  volunteers  to  act,  though   under  no  duty  to  do  so,  is  thereafter  charged  with  the  duty  of  acting  with  due  care.”     Southland  Bank  v.  A&A  Drywall  Supply  Co.,  Inc.  21  So.  3d  1196,  1219  (Ala.  2008).    But   those  cases  involved  special  circumstances  outside  the  typical  borrower/lender   relationship.    In  Southland  Bank,  the  bank  assisted  the  plaintiff  in  completing  and   submitting  a  loan  application  to  the  Small  Business  Administration,  and  the  court   held  that  the  bank  “arguably  undertook  a  duty  to  process  the  SBA  application;  this   was  done,  and  done  correctly.”    Id.    In  Williamson  v.  Realty  Champion,  551  So.  2d   1000  (Ala.  1989),  the  court  reversed  summary  judgment  in  favor  of  the  defendants   on  a  negligence  claim  holding  that  a  duty  of  care  arose  when  the  mortgage  company   undertook  to  help  the  plaintiffs  procure  an  F.H.A.  loan.    Id.  at  1003.           7     The  instant  case  is  more  like  Armstrong  and  is  distinguishable  from  the   “undertaken  duty”  cases.    In  both  the  latter  cases,  the  defendant  voluntarily  acted  on   behalf  of  (or  at  least  assisted)  the  plaintiff  in  submitting  a  loan  application  to  a  third   party.    Here  there  is  no  third-­‐party  lender  involved  and  no  allegation  that  Defendant   volunteered  to  act  on  Plaintiffs’  behalf  or  to  assist  Plaintiffs.    Quite  the  opposite.     Plaintiffs  allege  they  submitted  multiple  requests  for  a  loan  modification  to  the   Defendant,  their  lender,  who  did  not  act  at  all,  much  less  undertake  to  act  on   Plaintiffs’  behalf.      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.     Conclusion     For  the  foregoing  reasons,  the  motion  to  dismiss  is  GRANTED.    Judgment  will   be  entered  by  separate  order  dismissing  Plaintiff’s  claims  without  prejudice.     DONE  and  ORDERED  this  the  15th  day  of  December,  2014.                                   s/Charles  R.  Butler,  Jr.       Senior  United  States  District  Judge   8  

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?