Echeverria et al v. BAC Home Loans Servicing, LP et al
Filing
43
ORDER granting 33 Motion to Dismiss; dismissing Counts Two and Four of the 31 Second Amended Complaint with prejudice; dismissing the other counts without prejudice; and setting deadline of April 13, 2012, for the filing of a third amended complaint. Signed by Judge John Antoon II on 3/30/2012. (EK)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
ABDIEL ECHEVERRIA and ISABEL
SANTAMARIA,
Plaintiffs,
-vs-
Case No. 6:10-cv-1933-Orl-28DAB
BAC HOME LOANS SERVICING, LP, and
BANK OF AMERICA, N.A.,
Defendants.
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ORDER
In this case, Plaintiffs, Abdiel Echeverria (“Mr. Echeverria”) and Isabel Santamaria
(“Ms. Santamaria”), have filed a five-count pro se Second Amended Verified Complaint
(“SAC”) (Doc. 31) against Defendants, BAC Home Loans Service, LP (“BAC”) and Bank of
America, N.A. (“BOA”) stemming from actions taken by BAC while servicing Plaintiffs’ home
loan. This case is now before the Court on Defendants’ Motion to Dismiss (Doc. 33) and
Plaintiffs’ Response thereto (Doc. 37). As discussed below, Defendants’ motion shall be
granted, but Plaintiffs will be granted leave to amend some of their claims.
I. Motion to Dismiss Standard
“A pleading that states a claim for relief 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). “‘[D]etailed
factual allegations’” are not required, but “[a] pleading that offers ‘labels and conclusions’ or
‘a formulaic recitation of the elements of a cause of action will not do.’” Ashcroft v. Iqbal, 129
S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “To
survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting Twombly, 550 U.S.
at 570). In considering a motion to dismiss brought under Federal Rule of Civil Procedure
12(b)(6), a court limits its “consideration to the well-pleaded factual allegations, documents
central to or referenced in the complaint, and matters judicially noticed.” LaGrasta v. First
Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004).
II. Background
Plaintiffs purchased their current residence at 499 Cellini Avenue NE, Palm Bay,
Florida on February 29, 2008, with loan assistance from the Federal Housing Administration.
(SAC ¶¶ 1, 18). On the same day, Plaintiffs executed a promissory note in favor of the
original lender, Taylor, Bean & Whitaker Mortgage Corporation (“TBW”). (SAC ¶¶ 18, 85).
Due to financial troubles that began in 2008, Plaintiffs requested a loan modification from
TBW in May or June of 2009, but TBW did not provide Plaintiffs with any information
regarding loan modification. (Id. ¶¶ 19-20). Thereafter, in September 2009, Plaintiffs were
informed by a third party not affiliated with TBW or Defendants that their loan had been sold
to BAC. Plaintiffs immediately requested a loan modification from BAC but were told that
they did not qualify. (Id. ¶ 21). Over the following year, Plaintiffs’ financial situation further
deteriorated, causing them to fall behind on their payments. (Id. ¶¶ 23, 40-42). There were
discrepancies, however, between Plaintiffs and BAC as to how far behind Plaintiffs were on
their payments and how much Plaintiffs owed BAC, (id. ¶¶ 21-22, 25-39); during this time
period, Plaintiffs continued to request a loan modification but were denied such assistance,
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(id. ¶¶ 24, 26).
III. Analysis
Plaintiffs allege five counts against Defendants–violations of the Real Estate
Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq. (Count One); Breach of
Contract (Count Two); “Intentional Misrepresentation” (Count Three); violations of the Fair
Debt Collection Practices Act (“FDCPA”) 15 U.S.C. § 1692 et seq. (Count Four); and
violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C.
§ 1961 et seq. (Count Five). Defendants move to dismiss all five counts.
A. Count One–RESPA
“RESPA provides for certain disclosure requirements to be followed by the entities or
persons responsible for servicing a federally related mortgage loan, including disclosures of
any assignment, sale, or transfer of the loan.” McCarley v. KPMG Int’l, 293 F. App’x 719,
722 (11th Cir. 2008). Plaintiffs allege that Defendants violated § 2605(e) by failing to
respond in a “proper and timely way” to Plaintiffs’ “qualified written requests” and that
Defendants violated § 2605(c) by failing to send Plaintiffs a notice that the loan had been
transferred to BAC within the statutorily required time period.
I. Section 2605(e)
To state a claim under § 2605(e), Plaintiff must allege: (1) that Defendants are
servicers; (2) that they received a qualified written request (“QWR”) from the borrower; (3)
that the QWR related to the servicing of the loan; (4) that Defendants failed to adequately
respond; and (5) that Plaintiffs are entitled to actual or statutory damages. 12 U.S.C. §
2605(e); Frazile v. EMC Mortg. Corp., 382 F. App’x 833, 836 (11th Cir. 2010) (holding that
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a damages allegation “is a necessary element of any claim under § 2605”). Defendants
assert that none of Plaintiffs’ communications were QWRs and that Plaintiffs’
communications regarding loan modification were not related to the servicing of the loan.
Defendants’ arguments are well-taken.
“The term ‘servicing’ means receiving any scheduled periodic payments from a
borrower pursuant to the terms of any loan, including amounts for escrow accounts . . . and
making the payments of principal and interest and such other payments with respect to the
amounts received from the borrower as may be required pursuant to the terms of the loan.”
12 U.S.C. § 2605(i)(3). Thus, requests for information about a loan modification are not
related to “servicing” of the loan as defined in RESPA because loan modifications do not
involve receiving and making scheduled periodic payments from the borrower as required
pursuant to the terms of the loan; rather, loan modification requests involve changing the
terms of the loan. In re Salvador, 456 B.R. 610, 623 (Bankr. M.D. Ga. 2011).
Moreover, none of Plaintiffs’ other alleged communications with Defendants amount
to a QWR. A QWR is defined as:
[A] written correspondence, other than notice on a payment coupon or other
payment medium supplied by the servicer, that–
(i) includes, or otherwise enables the servicer to identify, the name and
account of the borrower; and
(ii) includes a statement of the reasons for the belief of the borrower, to
the extent applicable, that the account is in error or provides sufficient detail
to the servicer regarding other information sought by the borrower.
12 U.S.C. § 2605(e)(1)(B). In other words, under subsection (ii) a QWR must (1) give a
statement of the reasons that the account was in error, or (2) seek other information
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regarding the servicing of the loan. Plaintiffs have not alleged any written communications
with Defendants that relate to the servicing of their loan and either give a statement of
reasons that the account was in error or seek other information. Accordingly, Plaintiffs fail
to state a claim under § 2605(e).
ii. Section 2605(c)
Pursuant to § 2605(c), “[e]ach transferee servicer to whom the servicing of any
federally related mortgage loan is assigned, sold, or transferred shall notify the borrower of
any such assignment, sale, or transfer . . . not more than 15 days after the effective date of
transfer” unless certain exceptions apply. Although Plaintiffs have adequately alleged that
Defendants failed to make the required disclosures, the SAC fails to state a claim under §
2605(c) because Plaintiffs fail to adequately allege damages.
Plaintiffs do not qualify for statutory damages pursuant to § 2605(f)(1)(B) because
they have not sufficiently alleged a “pattern or practice” of RESPA violations by Defendants.
Accordingly, Plaintiffs must allege “actual damages.” McLean v. GMAC Mortg. Corp., 398
F. App’x 467, 471 (11th Cir. 2010). Plaintiffs assert that they “suffered damages including
but not limited to loss of credit, emotional harm, additional medical expenses,
embarrassment and humiliation” and that they “incurred health issues due to Defendants[’]
malicious practices.” (SAC ¶ 81). While “actual damages” may include non-pecuniary
damages, Plaintiffs must adequately plead a causal link between such damages and the
financing institution’s violations of RESPA. McLean, 398 F. App’x at 471. Plaintiffs fail to
allege any causal connection between Defendants’ failure to disclose that they were the new
servicer of Plaintiffs’ loan and Plaintiffs’ alleged damages. Accordingly, Plaintiffs’ § 2605(c)
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claim will be dismissed but they will be allowed leave to amend Count I.
B. Count Two–Breach of Contract
Plaintiffs’ claim for breach of contract concerns the Promissory Note they “signed . .
. to create and secure the indebtedness on their home.” (SAC ¶ 85). Plaintiffs assert that
BAC failed to comply with the provisions in the Note requiring compliance with Housing and
Urban Development (“HUD”) regulations as a precondition to foreclosure (Id. ¶¶ 85, 87).
Plaintiffs, however, do not allege that Defendants have undertaken foreclosure proceedings,
and therefore they have not adequately pleaded a breach of the Promissory Note. Rather,
Plaintiffs appear to want this Court to rule that “foreclosure is not an available remedy at this
time” due to the HUD regulations. (Id. ¶ 85). HUD regulations, however, “deal only with the
relations between the mortgagee and the government, and give the mortgagor no claim to
duty owed nor remedy for failure to follow.” Roberts v. Cameron-Brown Co., 556 F.2d 356,
360 (5th Cir. 1977). Furthermore, even if HUD regulations provided a private cause of
action, such a claim would not be for breach of contract. Accordingly, Plaintiffs’ Breach of
Contract claim shall be dismissed with prejudice.
C. Count Three–“Intentional Misrepresentation”
Although Count Three is labeled as “Intentional Misrepresentation,” Plaintiffs are
apparently trying to allege fraudulent misrepresentation. “In the state of Florida, relief for a
fraudulent misrepresentation may only be granted only when the following elements are
present: “(1) a false statement concerning a material fact; (2) the representor’s knowledge
that the representation is false; (3) an intention that the representation induce another to act
on it; and, (4) consequent injury by the party acting in reliance on the representation.”
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Johnson v. Davis, 480 So. 2d 625, 627 (Fla. 1985).
Allegations of fraud must satisfy a heightened pleading standard under Federal Rule
of Civil Procedure 9(b). Such allegations must state with particularity the circumstances
constituting the fraud. Fed. R. Civ. P. 9(b). This rule serves an important function “by
alerting defendants to the precise misconduct with which they are charged and protecting
defendants against spurious charges.” Ziemba v. Cascade Int’l, Inc., 256 F.3d 1194, 1202
(11th Cir. 1997) (internal quotation and citations omitted). Rule 9(b) is satisfied if Plaintiffs
set forth “(1) precisely what statements were made in what documents or oral
representations or what omissions were made, and (2) the time and place of each such
statement and the person responsible for making (or, in the case of omissions, not making)
same, and (3) the content of such statements and the manner in which they misled the
plaintiff, and (4) what the defendants obtained as a consequence of the fraud.” Id. In a case
which involves multiple defendants, as this one does, “‘the complaint should inform each
defendant of the nature of his alleged participation in the fraud.’” Ambrosia Coal & Constr.
Co. v. Pages Morales, 482 F.3d 1309, 1317 (11th Cir. 2007) (quoting Brooks v. Blue Cross
& Blue Shields of Fla., Inc., 116 F.3d 1364, 1381 (11th Cir. 1997)).
Plaintiffs have not included any specific factual allegations in the SAC that would
satisfy the heightened pleading standards for fraud under Rule 9(b). Plaintiffs fail to set forth
the precise statements made, the time and place of each statement, the person responsible
for making the statement, the content of each statement, or what Defendants gained as a
consequence of any statements to Plaintiffs.
Plaintiffs’ broad assertions regarding
Defendants’ customers other than Plaintiffs are wholly unsupported. Moreover, Plaintiffs’
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attempts to claim they relied on Defendants’ false statements as to their account status are
belied by their assertions that they knew the account statements to be false. (See, e.g., SAC
¶¶ 25 & 28). Similarly, Plaintiffs’ claims that Defendants made misrepresentations regarding
the loan modification are also belied by their assertions that they were “always kept in the
dark about their loan modification process.” (Id. ¶ 68). Accordingly, Plaintiffs have failed to
state a claim with sufficient particularity under Rule 9 and Count Three shall be dismissed
without prejudice and with leave to amend.
D. Count Four–FDCPA
The FDCPA protects consumers from “abusive debt collection practices by debt
collectors.” 15 U.S.C. § 1692(e). As such, in order to be liable under the FDCPA,
Defendants must qualify as “debt collectors.” The FDCPA defines “debt collector” as “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). Additionally, “[u]nder the FDCPA, consumer's creditors, a mortgage
servicing company, or an assignee of a debt are not considered ‘debt collectors,’ as long as
the debt was not in default at the time it was assigned.” Reese v. JPMorgan Chase & Co.,
686 F. Supp. 2d 1291, 1307 (S.D. Fla. 2009). According to Plaintiffs’ allegations, Plaintiffs’
debt was not in default at the time it was assigned. (See SAC ¶ 19 (“[Plaintiffs] continued
to pay their mortgage and continued to have perfect credit with [TBW]”), ¶ 22 (alleging that
Plaintiffs had an account overage)).
Thus, according to Plaintiffs’ own allegations,
Defendants cannot qualify as “debt collectors” within the meaning of the FDCPA, and Count
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Four will be dismissed with prejudice.
E. Count Five–RICO
Plaintiffs allege that Defendants violated § 1962(c) by engaging in the “racketeering
activities” of “fraud, embezzlement, theft and obstruction of justice.” (Id. ¶¶ 110, 120). To
state a claim for violations of § 1962(c), Plaintiffs must allege “a ‘person,’ an ‘enterprise,’ and
a ‘pattern of racketeering activity,’ and such elements must be pled separately in the
complaint.” Dudley Enters., Inc. v. Palmer Corp., 822 F. Supp. 496, 501 (N.D. Ill. 1993).
Plaintiffs allege that BAC is both the “person” and the “enterprise” within its claim, and
therefore Plaintiffs fail to state a RICO claim. See id. (noting that a “corporation cannot be
an enterprise and also be liable as a person” under § 1962(c)).
Additionally, Plaintiffs “must show at least two racketeering predicates that are related,
and that they amount to or pose a threat of continued criminal activity.” Am. Dental Ass’n
v. Cigna Corp., 605 F.3d 1283, 1290-91 (11th Cir. 2010) (citing H.J. Inc. v. Nw. Bell Tel. Co.,
492 U.S. 229, 240 (1989)). Plaintiffs have not done so. Although Plaintiffs claim fraud,
embezzlement, theft, and obstruction of justice, they wholly fail to set forth the specifics of
any such claimed predicate act to pass the plausibility test. There is nothing in the SAC to
show that any of these acts took place; instead, there are only general allegations,
unsubstantiated by the facts.
Plaintiffs have also failed to allege economic injury arising from Defendants’ actions
under § 1962(c). Plaintiffs allege only that they “were injured as a result of Defendant’s [sic]
wrongful acts,” (SAC ¶ 122), and they “request actual, statutory, and punitive damages,” (id.
¶ 123). The only injuries that Plaintiffs claim in the SAC relate to physical injuries such as
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“severe anxiety, stress, and depression.” (See, e.g., id. ¶ 43). RICO provides for recovery
only for “[a]ny person injured in his business or property.” 18 U.S.C. § 1964(c). “[T]he
Supreme Court has declared that Congress’ limitation of recovery to business or property
injury ‘retains restrictive significance.
It would for example exclude personal injuries
suffered.’” Genty v. Resolution Trust Corp., 937 F.2d 900, 918 (3d Cir. 1991) (citing Reiter
v. Sonotone Corp., 442 U.S. 330, 339 (1979)). As Plaintiffs only allege physical damages
as a result of Defendants’ actions, Plaintiffs have also failed to plead this essential element
of a RICO action. Accordingly, Count Five will be dismissed, though Plaintiffs will be
afforded an opportunity to replead this claim.
IV. Conclusion
In accordance with the foregoing, Defendants’ Motion to Dismiss (Doc. 33) is
GRANTED and Plaintiffs’ Second Amended Complaint is DISMISSED. Counts Two and
Four are DISMISSED with prejudice; all other Counts are DISMISSED without prejudice.
Because Plaintiffs are proceeding pro se, they are granted leave to file a Third Amended
Complaint on or before Friday April 13, 2012, as to Counts One, Three, and Five if they
can, in good faith, state a claim for relief.
DONE and ORDERED in Orlando, Florida this 30th day of March, 2012.
Copies furnished to:
Counsel of Record
Unrepresented Party
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