Miller et al v. The Bank of New York Mellon

Filing 26

OPINION AND ORDER granting 14 Motion to Dismiss; dismissing plaintiffs' 5 Amended Complaint without prejudice to filing a Second Amended Complaint within 21 days of this Opinion and Order. Signed by Judge John E. Steele on 1/10/2017. (RKR)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
VICTOR L. MILLER and VILMA
M. MILLER,
Plaintiffs,
v.

Case No: 2:16-cv-493-FtM-99MRM

THE BANK OF NEW YORK MELLON,
Defendant.
OPINION AND ORDER
This matter comes before the Court on defendant’s Motion to
Dismiss Plaintiffs’ First Amended Complaint (Doc. #14) filed on
October 25, 2016.

Plaintiffs Victor L. Miller and Vilma M. Miller

filed a response in opposition (Doc. #22) on November 30, 2016.
For the reasons set forth below, the motion is granted with leave
to amend.
I.
On August 11, 2016, plaintiffs, proceeding pro se, filed an
Amended Complaint (Doc. #5) against the Bank of New York Mellon
(BONY) alleging violations of the Dodd Frank Act and the Real
Estate Settlement Procedures Act of 1974 (RESPA), 12 U.S.C. § 2601
et seq., and its implementing regulation, Regulation X. 1

1

(Doc.

Upon review of plaintiffs’ request to proceed in forma
pauperis, this Court directed plaintiffs to file an amended
complaint and provided guidance on the pleading requirements of
the Federal Rules of Civil Procedure. (Doc. #4.)

#5.)

Plaintiffs allege that BONY failed to offer them loss

mitigation options prior to commencing foreclosure on their home
as required by Regulation X at 12 C.F.R. § 1024.41.
According to the Amended Complaint, in June 2008 plaintiffs
obtained a mortgage and signed a promissory note from BONY to
purchase a home in Lehigh Acres, Florida.

(Id. at 2.)

Plaintiffs

state that they had difficulties paying their mortgage in 2010 and
foreclosure proceedings were instituted, which were voluntarily
dismissed on December 29, 2010. 2
seek

$2,000,000

in

damages

for

(Id.; Doc. #14.)
the

loss

compensation for their pain and suffering.

of

Plaintiffs

their

home

and

(Doc. #5 at 3.)

Defendant moves to dismiss for failure to state a claim
pursuant to Fed. R. Civ. P. 12(b)(6), claiming various basis for
dismissal.
rely

on

Because the loss mitigation provisions that plaintiffs
became

effective

after

the

underlying

foreclosure

proceedings were concluded, the Court will first examine whether
12 C.F.R. § 1024.41 should apply retroactively to this case.

2

Although plaintiffs do not state the date that the
underlying foreclosure proceeding was dismissed, defendant
attaches the Notice of Dismissal from the state court to their
motion to dismiss.
(Doc. #14, Exh. A.)
A court may consider
documents attached to a motion to dismiss without converting the
motion into one for summary judgment if the attached documents are
central to the plaintiff’s claims and undisputed in terms of
authority. See Horsley v. Feldt, 304 F.3d 1125, 1134 (11th Cir.
2002).

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II.
Under Federal Rule of Civil Procedure 8(a)(2), a complaint
must contain a “short and plain statement of the claim showing
that the pleader is entitled to relief.”

Fed. R. Civ. P. 8(a)(2).

This obligation “requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not
do.”

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)

(citation omitted).

To survive dismissal, the factual allegations

must be “plausible” and “must be enough to raise a right to relief
above the speculative level.”

Id. at 555, 127 S. Ct. 1955.

See

also Edwards v. Prime Inc., 602 F.3d 1276, 1291 (11th Cir. 2010).
This requires “more than an unadorned, the-defendant-unlawfullyharmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citations omitted).
In deciding a Rule 12(b)(6) motion to dismiss, the Court must
accept all factual allegations in a complaint as true and take
them in the light most favorable to plaintiff, Erickson v. Pardus,
551 U.S. 89 (2007), but “[l]egal conclusions without adequate
factual support are entitled to no assumption of truth”, Mamani v.
Berzain, 654 F.3d 1148, 1153 (11th Cir. 2011) (citations omitted).
“Threadbare

recitals

of

the

elements

of

a

cause

of

supported by mere conclusory statements, do not suffice.”
556 U.S. at 678.
with

a

action,
Iqbal,

“Factual allegations that are merely consistent

defendant's

liability

fall

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short

of

being

facially

plausible.” Chaparro v. Carnival Corp., 693 F.3d 1333, 1337 (11th
Cir.

2012)

(internal

quotation

marks

and

citations

omitted).

Thus, the Court engages in a two-step approach: “When there are
well-pleaded factual allegations, a court should assume their
veracity and then determine whether they plausibly give rise to an
entitlement to relief.”

Iqbal, 556 U.S. at 679.

A pleading drafted by a party proceeding pro se, like the
Amended Complaint at issue here, is held to a less stringent
standard than one drafted by an attorney, and the Court will
construe the allegations contained therein liberally.
Fla.

Parole

Comm’n,

787

F.3d

1105,

1107

(11th

Jones v.

Cir.

2015).

Nevertheless, “a pro se pleading must suggest (even if inartfully)
that there is at least some factual support for a claim; it is not
enough just to invoke a legal theory devoid of any factual basis.”
Id.

In other words, pro se status will not salvage a complaint

devoid of facts supporting the plaintiffs’ claims.
III.
Enacted as a consumer protection statute, “RESPA prescribes
certain actions to be followed by entities or persons responsible
for

servicing

federally

related

responding to borrower inquires.”

mortgage

loans,

including

McLean v. GMAC Mortg. Corp.,

398 F. App’x 467, 471 (11th Cir. 2010) (per curiam) (citing 12
U.S.C. § 2605).

The Dodd Frank Act granted rule-making authority

under RESPA to the Consumer Financial Protection Bureau (the

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“CFPB”).

See

regulation,

12

U.S.C.

Regulation

§

X,

2617(a).
in

One

relevant

such

part

implementing

places

various

obligations on mortgage servicers when a borrower submits a loss
mitigation

application.

Regulation

X

prohibits,

among

other

things, a loan servicer from foreclosing on a property in certain
circumstances if the borrower has submitted a completed loan
modification, or loss mitigation, application.

See generally 12

C.F.R. § 1024.41. 3
On January 17, 2013, the CFPB issued the final rule to amend
Regulation X, effective as of January 10, 2014 (the “Effective
Date”).

See

Mortgage

Servicing

Rules

Under

the

Real

Estate

Settlement Procedures Act (Regulation X), 78 Fed. Reg. 10696-01,
10696 (Feb. 14, 2013) (codified at 12 C.F.R. pt. 1024).

The

regulation did not expressly direct retroactive application, but

3

Regulation X, Subpart C – Mortgage Servicing, provides at Section
1024.41, subsection (a), Loss Mitigation Procedures, as follows:
(a)

Enforcement and limitation. A borrower may enforce
the provisions of this section pursuant to section
7(f) of RESPA (12 U.S.C. 2605(f)).
Nothing in §
1024.41 imposes a duty on a servicer to provide any
borrower with any specific loss mitigation option.
Nothing in § 1024.41 should be construed to create a
right for a borrower to enforce the terms of any
agreement between a servicer and the owner or assignee
of a mortgage loan, including with respect to the
evaluation for, or offer of, any loss mitigation
option or to eliminate any such right that may exist
pursuant to applicable law.

12 C.F.R. § 1024.41.

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generally “[r]etroactivity is not favored in the law . . . [and]
congressional enactments and administrative rules will not be
construed

to

have

retroactive

requires this result.”

effect

unless

their

language

Landgraf v. USI Film Prods., 511 U.S. 244,

265 (1994).
The Supreme Court has adopted a two-part test for determining
whether a statute or regulation should retroactively apply to
conduct which preceded the law’s enactment:
We first look to whether Congress has expressly
prescribed the statute’s proper reach, and in the
absence of language as helpful as that we try to draw a
comparably firm conclusion about the temporal reach
specifically intended by applying our normal rules of
construction.
If that effort fails, we ask whether
applying the statute to the person objecting would have
a retroactive consequence in the disfavored sense of
affecting substantive rights, liabilities, or duties [on
the basis of] conduct arising before [its] enactment.
If the answer is yes, we then apply the presumption
against retroactivity by construing the statute as
inapplicable to the event or act in question owing to
the absen[ce of] a clear indication from Congress that
it intended such a result.
Fernandez–Vargas v. Gonzales, 548 U.S. 30, 37–38 (2006) (citations
omitted).
With regard to the first part of the test, although the rule
was promulgated on February 14, 2013, the CFPB recognized that the
amendments to Regulation X imposed “significant implementation
burdens for the industry” and therefore established an effective
date of January 10, 2014 in order to “afford creditors sufficient
time to implement the more complex or resource-intensive new

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requirements.”
the

CFPB

78 Fed. Reg. 10708.

intended

to

Thus, it seeks unlikely that

retroactively

apply

the

rule

after

establishing a later effective date based upon these concerns.
For a thorough discussion of why the CFPB chose the Effective Date
which supports the conclusion that 12 C.F.R. § 1024.41 does not
apply retroactively, see Campbell v. Nationstar Mortg., 611 F.
App’x 288 (6th Cir. 2015).

See also Lage v. Ocwen Loan Servicing

LLC, 145 F. Supp. 3d 1172, 1184 (S.D. Fla. 2015) (finding that in
order

for

a

borrower

to

avail

himself

of

Regulation

X’s

protections, the borrower’s application must be received by the
servicer after the effective date of the regulation).
Here, plaintiffs have failed to allege that they submitted an
application for loss mitigation pursuant to 12 C.F.R. § 1024.41
that would have triggered BONY’s obligations under the regulation.
But

even

assuming

that

such

procedures

were

instituted,

plaintiffs’ claim still fails because any such application would
have been submitted before the Effective Date.

The foreclosure

proceedings were concluded on or about December 19, 2010, well
before the Effective Date of the loss mitigation procedures they
rely on.
Furthermore, the second step of the Fernandez-Vargas analysis
supports the conclusion that 12 C.F.R. § 1204.41 should not apply
retroactively.

The Effective Date – January 10, 2014 – is three

years after the foreclosure proceedings were complete.

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If 12

C.F.R.

§

1204.41

were

retroactively

applied,

it

would

both

“increase a party’s liability for past conduct, [and] impose new
duties with respect to transactions already completed.” Landgraf,
511 U.S. at 280.

Plaintiffs cannot now claim the protections of

12 C.F.R. § 1024.41; thus, plaintiffs have failed to state a claim
for violation of RESPA.
IV.
“[A] district court must grant a plaintiff at least one
opportunity to amend [his] claims before dismissing them if it
appears a more carefully drafted complaint might state a claim
upon which relief can be granted even if the plaintiff never seeks
leave to amend.”
2003).

Silva v. Bieluch, 351 F.3d 1045, 1048 (11th Cir.

A district court need not grant such leave if an amendment

would be futile.
Cir. 2007).

Cockrell v. Sparks, 510 F.3d 1307, 1310 (11th

“Leave to amend a complaint is futile when the

complaint as amended would still be properly dismissed.”

Id.

While it appears that any amendment to plaintiffs’ complaint
would be futile, the Court will allow an opportunity to state a
cause of action if plaintiffs can do so.
Accordingly, it is hereby
ORDERED AND ADJUDGED:
Defendant’s

Motion

to

Dismiss

Complaint (Doc. #14) is GRANTED.

Plaintiffs’

First

Amended

Plaintiffs’ Amended Complaint

(Doc. #5) is dismissed without prejudice to filing a Second Amended

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Complaint within TWENTY-ONE (21) DAYS of this Opinion and Order.
If no Second Amended Complaint is filed, the file will be closed
without further notice.
DONE and ORDERED at Fort Myers, Florida, this
of January, 2017.

Copies:
Plaintiffs
Counsel of Record

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10th

day