Riggs-Degraftenreed et al v. Wells Fargo Home Mortgage Inc et al
ORDER granting 6 17 22 Motions to Dismiss, denying plaintiffs' motion to amend. Plaintiffs' federal claims against Wells Fargo and Wilson are dismissed with prejudice for failure to state a claim. Pltfs' state law claims and t he claims on behalf of the putative class are remanded to the Pulaski County Circuit Court, and the Clerk is directed to send a certified copy of this along with the file to the Circuit Clerk of Pulaski County, forthwith. Signed by Judge James M. Moody on 4/19/11. (kpr)
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
LITTLE ROCK DIVISION
and REGINALD DEGRAFTENREED
CASE NO. 4:10CV1993JMM
WELLS FARGO HOME MORTGAGE, INC.,
WELLS FARGO BANK, N.A.
and WILSON & ASSOCIATES, P.L.L.C.
Pending before the Court are Defendants Wells Fargo Home Mortgage, Inc.’s and Wells
Fargo Bank, N.A.’s (“Wells Fargo”) Motions to Dismiss (#6) and (#22), separate Defendant
Wilson & Associates, P.L.L.C.’s (“Wilson”) Motion to Dismiss (#17), and Plaintiffs’ Motion to
For the reasons stated below, the Defendants’ Motions to Dismiss are GRANTED and
Plaintiffs’ Motion to Amend is DENIED.
Defendants removed Plaintiffs’ Complaint from Pulaski County Circuit Court to this
Court on December 6, 2010, based on 28 U.S.C. §1331. Plaintiffs allege three counts in their
Complaint. Count I alleges a violation of the Fair Debt Collection Practices Act (“FDCPA”).
Count II alleges a violation of a state law claim of conversion and a federal claim of slander
under the Fair Credit Reporting Act1(“FCRA”). Count III brings claims for violation of the
FDCPA, fraud, and breach of contract on behalf of a class. In response to Plaintiffs’ Complaint,
In Count II, Plaintiffs claim a violation of the Fair Credit Reporting Act, the abbreviation
following the name of the Act is “FDCPA” which is associated with the Fair Debt Collection
Practice Act. The court will assume this is a typing error and that the claim is a violation of the
Fair Credit Reporting Act.
the Defendants have filed Motions to Dismiss under Federal Rule Civil Procedure 12(b)(6).
STANDARD OF REVIEW
To survive a 12(b)(6) motion to dismiss, a plaintiff must plead facts that give rise to some
legal relief. All that is required is “‘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, 554-56, 127 S.Ct.
1955, 1964-65, 167 L.Ed. 2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99,
2 L.Ed. 2d 80 (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.” Twombly, 550 U.S. at 555 (internal quotes and
citations are omitted).
In this case, both Motions to Dismiss challenge Plaintiffs’ Complaint for failure to plead
facts sufficient to give the Defendants fair notice of the claims against them and for pleading only
speculative facts and legal conclusion. In consideration of these challenges, the Court will look
to all documents attached to the Complaint. See M.M. Silta, Inc. v. Cleveland Cliffs, Inc., 616
F.3d 872 (8th Cir. 2010) (citing Fed. R. Civ. P. 10(c) and Blankenship v. USA Truck, Inc., 601
F.3d 852, 853 (8th Cir. 2010)).
In Count I of the Complaint, Plaintiffs allege the Defendants, collectively, violated the
FDCPA. The purpose of the FDCPA is to eliminate abusive debt collection practices by debt
collectors. See 15 U.S.C. §1692(e). A violation of the FDCPA requires, at a minimum, that the
defendant be a debt collector who is engaged in debt collection practices that are prohibited by
the Act. Plaintiffs contend that all of the Defendants are debt collectors within the meaning of
the Act, that all of the Defendants were engaged in debt collection practices, and that those
practices violated the FDCPA.
FEDERAL CLAIM AGAINST WELLS FARGO
Under the FDCPA, a debt collector is “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.” 15 U.S.C. §1692a(6). The definition of debt
collector specifically excludes persons collecting or attempting to collect a debt owed or due if
the debt was not in default when that person obtained the debt. See 15 U.S.C. §1692a(6)(F).
Although Plaintiffs allege that Well Fargo is a debt collector, there are no facts pled that support
this allegation. Plaintiffs do not allege that Wells Fargo is in business for the principal purpose
of collecting debts; rather, the Complaint states that Wilson was retained to collect the debt on
behalf of Wells Fargo. (Compl. Ex. A).
“A distinction between creditors and debt collectors is fundamental to the FDCPA, which
does not regulate creditors' activities at all.” Schmitt v. FMA Alliance, 398 F.3d 995, 998 (8th
Cir. 2005) (internal quotation and citation omitted). A creditor is defined as a person who is
owed a debt, excepting only those who are owed a debt arising out of a transfer or assignment of
the debt after default for the purpose of collecting the debt for another. 15 U.S.C. §1692a(4).
The facts alleged by the Plaintiff are that Wells Fargo is owed a debt that was assigned prior to
default. Therefore, Wells Fargo falls within the Act’s definition of creditor and cannot be held
liable under the FDCPA.
Plaintiffs have filed a copy of a Foreclosure Complaint, which was filed against Plaintiffs
in the Circuit Court of Pulaski County, as an exhibit to their Motion to Amend (Doc. #24). The
Foreclosure Complaint states that Wells Fargo is the current owner of Plaintiffs’ mortgage note,
that Wells Fargo was properly assigned the note, and that Plaintiffs defaulted on the mortgage
after the assignment. See id at Attach. #3 at 6-8. Not only do Plaintiffs fail to plead facts that
indicate that Wells Fargo is a debt collector, or in the alternative a creditor who was assigned the
debt after default, but they pled facts that substantiate the opposite conclusion.
The Court finds that Plaintiffs have failed to state sufficient facts to establish that Wells
Fargo is a debt collector under the FDCPA, or a creditor who was assigned a debt after default.
Therefore, the Complaint fails to state a FDCPA claim against Well Fargo.
FEDERAL CLAIM AGAINST WILSON
Wilson does not dispute Plaintiffs’ allegation that it is a debt collector. Therefore,
Plaintiffs’ claim must be supported by facts establishing that, in the practice of collecting debts,
Wilson violated the FDCPA.
“A debt collector may not use any false, deceptive, or misleading representation or means
in connection with the collection of any debt.” See 15 U.S.C. §1692e. The allegation against
Wilson is that they made “misrepresentations to the Plaintiffs about the nature and amount of the
debt in question...” (Compl. at 2). The crux of Plaintiffs’ argument is that Wilson charged
Plaintiffs legal fees that Wilson never earned. This allegation is based on a pay-off letter sent by
Wilson to Katrina Riggs on November 23, 2009 (the “pay-off letter”). The pay-off letter, which
is attached to Plaintiffs’ Complaint, itemizes the total amount owed to Wells Fargo. The items
include the principal indebtedness, foreclosure attorney fees, prior attorney fees, unpaid attorney
fees, and other fees and interest. Plaintiffs claim that the pay-off letter is misleading because it
charges Plaintiffs attorney’s fees that were never incurred by Wells Fargo.
A debt collector is permitted to collect only amounts authorized under the instrument
creating the debt or permitted by law; however, even if the collection is authorized by the
instrument, a debt collector must not falsely represent the character, amount, or legal status of the
debt. See 15 U.S.C. §§1692f(1) and e(2). Here, the instrument creating the debt is not attached,
or incorporated, in the pleadings. However, Plaintiffs do not allege that the attorney’s fees
charged are not authorized by the terms of the mortgage note. Further, a November 4, 2009 letter
attached to the Complaint references the debt instrument, and states that by its terms the lender is
entitled to collect all expenses of foreclosure including attorney’s fees.
Even though the collection of the fees may be valid, the amount quoted in the pay-off
letter must be an accurate representation of the amount owed by the debtor. 15 U.S.C. §1692e(2).
Plaintiffs’ allegations and the documents attached to the Complaint, do not establish a false
representation of the amount of the debt. The itemized list of charges in the pay-off letter states
the amount owed as of November 25, 2009. A plain reading of the pay-off letter indicates that
the amount listed was the current amount of the principal plus specific add-on expenses that were
incurred by Wells Fargo in the collection of the debt owed to them. As to these add-on expenses,
the pay-off letter states that if payment of the total amount as of November 25, 2009 is received
“prior to actually incurring any of the referenced fees or costs, any overage will be refunded to
[the Plaintiff] within seven business days.” (Compl. Ex. A). Further, Plaintiffs state in their Brief
in Support of their Motion to Amend (#25), that Wilson returned the overage fees as promised in
the pay-off letter. Plaintiffs have not pled facts to support their claim that Wilson misrepresented
the amount and nature of the debt in question.
The Court finds that Plaintiffs have failed to plead sufficient facts to state a FDCPA claim
In Count II, Plaintiffs allege a violation of the FCRA. However, in their Motion to
Amend, Plaintiffs have withdrawn this claim. Thus, the merits of this claim will not be addressed
by the Court.
Count II also includes state law claims for fraud, conversion, and breach of contract. The
Court declines to exercise supplemental jurisdiction over these state law claims. See 28 U.S.C.
Count III alleges, on behalf of the class, that Defendants violated the FDCPA. A
prerequisite of a class action is that a member of the class sue as representative of the class
members. See Fed. R. Civ. P. 23(a). Because Plaintiffs have failed to state a claim against Wells
Fargo and Wilson, they are no longer members of the putative class. See Telco Group, Inc. v.
Ameritrade, Inc. 552 F.3d 893, 894 (8th Cir. 2009). “Without a class representative, the
[putative] class cannot be certified.” Id. (quoting Great Rivers Co-op. v. Farmland Ind., Inc., 120
F.3d 893, 899 (8th Cir. 1997)).
AMENDMENTS TO THE PLAINTIFFS’ COMPLAINT ARE FUTILE
Leave to amend will be denied if the proposed amended pleading would be futile.
Enervations, Inc. v. Minnesota Mining & Mfg. Co., 380 F.3d 1066, 1068 (8th Cir. 2004).
Plaintiffs propose two amendments to their original Complaint. The first amendment is a claim
of fraud or deceit under a theory of respondeat superior. The second amendment adds a claim of
conspiracy based upon Defendants’ alleged conversion of the promissory note. The Court
declined to exercise supplemental jurisdiction over the state law claims in the original Complaint,
and would decline to address the additional state law claims in an amended Complaint.
Moreover, Plaintiffs do not provide additional allegations to support their claims against
Wells Fargo or Wilson resulting in the amendments not altering the conclusion that Wells Fargo
is a creditor, and therefore, not liable under the FDCPA, and that Wilson did not falsely represent
the amount of the pay-off debt.
The amendments do not remedy the deficiencies in the original Compliant, and are
therefore futile. Plaintiffs’ Motion to Amend is denied.
Plaintiffs’ federal claims against Wells Fargo and Wilson are dismissed with prejudice for
failure to state a claim. Plaintiffs’ state law claims and the claims on behalf of the putative class
are remanded to state court. See Ali v. Ramsdell, 423 F.3d 810, 812 (8th Cir. 2005) (concluding
that if the federal claims were dismissed on the merits, then the district court has discretion to
remand the pendent state law claims). The Clerk of the Court is directed to send a certified copy
of this Order along with the file to the Circuit Court of Pulaski County, Arkansas, forthwith.
Judgment will be entered accordingly.
IT IS SO ORDERED THIS
James M. Moody
United States District Court Judge
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