Toler v. PPH Mortgage et al
MEMORANDUM OPINION AND ORDER granting 83 Motion to Dismiss and Plaintiffs' Complaint is dismissed as to Frannie Mae. PHH's 83 Motion is Denied. Signed by Honorable Robert T. Dawson on March 26, 2014. (lw)
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
HOT SPRINGS DIVISION
TERRY D. TOLER, DONNA R. TOLER
MARKETPLACE DEVELOPMENT CORPORATION
and SUCCESS DYNAMICS, INC. d/b/a
ALL PRO CLASSICS
Case No. 6:12-6032
PHH MORTGAGE CORPORATION, EXPERIAN
INFORMATION SOLUTIONS, INC. and
FEDERAL NATIONAL MORTGAGE ASSOCIATION
MEMORANDUM OPINION AND ORDER
Currently before the Court are Federal National Mortgage
Association’s (“Fannie Mae”) Motion to Dismiss and PHH Mortgage
Corporation’s (“PHH”) Motion for Partial Dismissal and Brief in
(Docs. 83, 84).
Plaintiffs have responded (docs. 97-
98), and Fannie Mae and PHH have filed a Reply.
the reasons set out below, Fannie Mae’s Motion to Dismiss is
GRANTED, and Fannie Mae is DISMISSED as a defendant.
Motion for Partial Dismissal is DENIED.
The Tolers filed their original complaint on January 31,
2012, in the Circuit Court of Garland County for violations of
the Fair Credit Reporting Act “FCRA”, 15 U.S.C. § 1681, et seq;
the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601, et
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seq; defamation and negligence.
this Court on March 1, 2012.
Defendants removed the action to
Plaintiffs voluntarily dismissed
their state law claims against PHH without prejudice (doc. 22).
The Court granted PHH’s motion to dismiss the RESPA claim and
dismissed Plaintiffs’ claims against Fannie Mae (doc. 36).
On April 30, 2013, with leave from the Court, the Tolers
Plaintiffs and claims against Fannie Mae for breach of contract
and negligent supervision and against Fannie Mae and PHH for
tortious interference with contractual relationships (doc. 72).
Fannie Mae and PHH filed the instant motion to dismiss on May 24,
Standard of Review
Dismissal is proper if Plaintiffs’ complaint fails to state
The factual allegations in the complaint must be taken
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007);
Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009).
should not be dismissed for failure to state a claim unless it
appears beyond doubt that the plaintiff can prove no set of facts
in support of his claim which would entitle him to relief.@
Thomas W. Garland, Inc. v. City of St. Louis, 596 F.2d 784 (8th
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PHH moves to dismiss the Tolers’ claim pursuant to the FCRA
prospective damages, as the FCRA protects consumer interests, not
Dynamics, Inc. d/b/a All Pro Classics are not seeking any damages
under the FCRA and that the Tolers are not claiming damages under
the FCRA as “direct losses” to the corporations.
PHH’s Motion is DENIED.
The Court will have the opportunity to
damages at the trial of this matter.
damages incurred before November or December 2011.
claim this would be premature based upon the Tolers’ allegations
that they notified the credit reporting agencies prior to that
The Court finds PHH’s motion to exclude damages prior to
November or December 2011 is premature and should be DENIED.
Fannie Mae moves to dismiss Plaintiffs’ state law claims for
negligent supervision, breach of contract and tortious interence
contending they are preempted by the FCRA.
Plaintiffs make no allegations that Fannie Mae ever furnished any
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information and, therefore, an FCRA claim could not be asserted
and would not preempt any state law claims.
The FCRA was enacted, in large part, to protect consumers by
1681(a)(1). Section 1681 s–2 deals with the duties of companies
that furnish information to credit reporting agencies. Id. §
The FCRA’s preemption provisions are as follows:
No requirement or prohibition may be imposed under the
laws of any State with respect to any subject matter
regulated under section 1681s-2 of this title, relating
information to consumer reporting agencies, except that
this paragraph shall not apply to [certain inapplicable
15 U.S.C. § 1681t(b)(1)(F).
[N]o consumer may bring any action or proceeding in the
negligence with respect to the reporting of information
against...any person who furnishes information to a
information furnished with malice or willful intent to
injure such consumer.
15 U.S.C. § 1681h(e).
The case law cited by Fannie Mae concerns the
agencies that have a duty, under the FRCA, to furnish fair and
Complaint that Fannie Mae provided information to anyone.
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this reason, Plaintiffs’ state law claims against Fannie Mae are
not preempted by the FCRA.
Alternatively, Fannie Mae moves to dismiss Plaintiffs’ state
law claims for failure to state claims upon which relief can be
The Court agrees and finds Plaintiffs’ state law claims
as to Fannie Mae should be dismissed.
Plaintiffs allege Fannie Mae is liable for its negligent
supervision of PHH.
Arkansas recognizes the tort of negligent
Medical Assur. Co., Inc. v. Castro, 2009 Ark. 93
Under this theory of recovery, the employer’s liability
ordinary care, should have known that the employee’s conduct
would subject third parties to an unreasonable risk of harm.
with any other negligence claim, a plaintiff must show that the
employer's negligent supervision or negligent retention of the
employee was a proximate cause of the injury and that the harm to
third parties was foreseeable.
It is not necessary that the
employer foresee the particular injury that occurred, but only
that the employer reasonably foresee an appreciable risk of harm
to others. Saine v. Comcast Cablevision of Ark., Inc., 354 Ark.
negligent supervision of PHH by Fannie Mae for failure to state a
The Court finds nothing in Plaintiffs’ Amended Complaint
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that changes this decision.
Again, the Court remains concerned
about the manner in which Fannie Mae’s agents handled the Tolers’
loan, however, Plaintiffs have failed to sufficiently plead a
negligent supervision claim is dismissed and Fannie Mae’s motion
to dismiss is granted.
Fannie Mae contends the Tolers’ breach of contract claim
fails as Fannie Mae was not a party to the contract, a HAMP loan
modification agreement between the Tolers and PHH and that the
Merrill doctrine precludes any liability on behalf of Fannie Mae.
mortgage after purchasing it from PHH on or about October 9,
The Tolers further contend that Fannie Mae is bound to
these contracts as PHH acted as Fannie Mae’s agent when entering
into the modification agreement and that the Merrill doctrine is
relationship between Fannie Mae and PHH, the Merrill doctrine
precludes a breach of contract claim against Fannie Mae.
Merrill, the Supreme Court made it clear that “anyone entering
into an arrangement with the Government takes the risk of having
Goverment stays within the bounds of his authority.”
Crop Insurance Corp. v. Merrill, 332 U.S. 380, 383 (1947).
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decisions indicates a possibility that a situation could exist
However, the Supreme Court has reversed every finding of estoppel
it has reviewed, many summarily.
For this reason the Court finds
the Tolers’ claims for breach of contract and the Corporation
Plaintiffs’ claim for tortious interference with a contractual
relationship against Fannie Mae fail and should be DISMISSED.
contending the Tolers advised PHH that its negative reporting of
The elements of a claim of tortious interference
are (1) the existence of a valid contractual relationship or a
expectancy on the part of the interfering party; (3) intentional
interference inducing or causing a breach or termination of the
relationship or expectancy; and (4) resultant damage to the party
whose relationship or expectancy has been disrupted.
Fairfield Bay Cmty. Club, Inc., 58 S.W.3d 324, 329 (2001).
additional requirement is that the interfering party’s conduct be
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tortious interference at this stage in the proceedings, and PHH’s
motion as to this claim is DENIED.
For the foregoing reasons, Fannie Mae’s Motion to Dismiss
(doc. 83) is GRANTED and Plaintiffs’ Complaint is dismissed as to
PHH’s Motion (doc. 83) is DENIED.
IT IS SO ORDERED THIS 26th day of March, 2014.
/s/ Robert T. Dawson
Honorable Robert T. Dawson
United States District Judge
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