Baumann et al v. Bank of America, N.A et al
Filing
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ORDER granting in part and denying in part 16 Defendant Marinosci Law Group, PC's Amended Motion to Dismiss; granting in part and denying in part 28 Defendant Bank of America, N.A.'s Motion to Dismiss Plaintiffs' [Amended] Compl aint; granting in part and denying in part 29 Defendant Quarles & Brady, LLP's Motion to Dismiss the Verified First Amended Complaint. Plaintiffs have until and including September 16, 2016 to file a Second Amended Complaint. Signed by Judge Paul G. Byron on 9/1/2016. (SEN)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
JAMES E. BAUMANN and DEBORA K.
BAUMANN,
Plaintiffs,
v.
Case No: 6:15-cv-1951-Orl-40GJK
BANK OF AMERICA, N.A, QUARLES &
BRADY, LLP, PROBER & RAPHAEL,
and MARINOSCI LAW GROUP, PC,
Defendants.
ORDER
This cause comes before the Court on the following:
1. Defendant Marinosci Law Group, PC’s Amended Motion to Dismiss
(Doc. 16), filed January 18, 2016;
2. Plaintiffs’ Response and Objection to Defendant Marinosci Law Group,
PC’s Amended Motion to Dismiss (Doc. 23), filed January 28, 2016;
3. Defendant Bank of America, N.A.’s Motion to Dismiss Plaintiffs’ [Amended]
Complaint (Doc. 28), filed February 8, 2016;
4. Quarles & Brady, LLP’s Motion to Dismiss the Verified First Amended
Complaint (Doc. 29), filed February 8, 2016;
5. Plaintiffs’ Response and Objection to Defendant Quarles & Brady’s Motion
to Dismiss (Doc. 31), filed February 22, 2016; and
6. Plaintiffs’ Response and Objection to Defendant Bank of America, N.A.’s
Motion to Dismiss (Doc. 32), filed February 22, 2016.
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I.
BACKGROUND 1
Pro se Plaintiffs, James E. Baumann and Debora K. Baumann, initiated this lawsuit
on November 17, 2015 against Defendants, Bank of America, N.A. (“BANA”), Quarles &
Brady, LLP (“Q&B”), Prober & Raphael, and Marinosci Law Group, PC (“Marinosci”).
Plaintiffs state that they own two pieces of real property located in Florida, which the Court
will refer to as the “Alexander Property” and the “Executive Property” for ease of
reference. On July 26, 2005, Plaintiffs executed a mortgage obligation with BANA which
was secured by the Alexander Property. (Doc. 11-1, pp. 27–36). That mortgage was
later satisfied on August 19, 2013. (Doc. 11-1, p. 42). On December 29, 2005, Plaintiffs
executed a mortgage obligation with Countrywide Home Loans, Inc. which was secured
by the Executive Property.
(Doc. 11-3, pp. 9–21). Countrywide Home Loans, Inc.
thereafter assigned this mortgage obligation to BANA. (Id. at p. 33). On December 7,
2012, Plaintiffs notified BANA by mail that they were rescinding the mortgage obligations
on the Alexander and Executive Properties pursuant to the Truth in Lending Act (“TILA”),
15 U.S.C. §§ 1601–1667f. (Doc. 11, ¶¶ 13, 33, 71; Doc. 11-1, p. 19; Doc. 11-2, p. 31).
Much litigation has ensued since.
In their Amended Complaint, Plaintiffs seek to vindicate their rights under TILA, the
Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692–1692p, the Florida
Consumer Collection Practices Act (“FCCPA”), Fla. Stat. §§ 559.55–559.785, and a
settlement agreement they executed with BANA. Plaintiffs essentially allege that they
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This account of the facts is taken from Plaintiffs’ Verified First Amended Complaint
and the documents attached thereto (Doc. 11), the allegations of which the Court
accepts as true in considering Defendants’ motions to dismiss. See Linder v.
Portocarrero, 963 F.2d 332, 334 (11th Cir. 1992).
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properly rescinded their mortgage obligations pursuant to TILA, but that Defendants
continue to collect or attempt to collect on those mortgage obligations despite Plaintiffs’
rescissions. BANA, Q&B, and Marinosci have appeared in this case and now move to
dismiss Plaintiffs’ Amended Complaint for a variety of reasons. 2
II.
STANDARD OF REVIEW
A motion to dismiss made pursuant to Federal Rule of Civil Procedure 12(b)(6)
tests the legal sufficiency of a plaintiff’s complaint. In order to survive a motion to dismiss
made under Rule 12(b)(6), a complaint must “state a claim to relief that is plausible on its
face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its
face when the plaintiff alleges enough facts that “allow[] the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). The mere recitation of the elements of a claim is not enough
and the district court need not give any credence to legal conclusions that are not
supported by sufficient factual material. Id. District courts must accept all well-pleaded
allegations within the complaint and any documents attached thereto as true and read the
complaint in the light most favorable to the plaintiff. Hunnings v. Texaco, Inc., 29 F.3d
1480, 1484 (11th Cir. 1994) (per curiam).
The Court additionally has a duty to liberally construe a pro se plaintiff’s complaint
and to afford greater leeway in alleging a claim than what is given to licensed attorneys.
Tennyson v. ASCAP, 477 F. App’x 608, 609–10 (11th Cir. 2012) (per curiam).
Nevertheless, “a pro se party must follow the rules of procedure and evidence, and the
2
Prober & Raphael has not appeared in this case despite what appears to be proof of
service. (See Doc. 33).
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district court has no duty to act as [a pro se party’s] lawyer.” Id. at 610 (internal quotation
marks omitted); see also Porter v. Duval Cty. Sch. Bd., 406 F. App’x 460, 462 (11th Cir.
2010) (per curiam). Further, a district court may not “rewrite an otherwise deficient
pleading in order to sustain an action.” GJR Invs., Inc. v. Cty. of Escambia, 132 F.3d
1359, 1369 (11th Cir. 1998), overruled on other grounds by Iqbal, 556 U.S. 662 (2009).
III.
DISCUSSION
Plaintiffs organize their Amended Complaint based on the property in dispute, with
four claims asserted relative to the Alexander Property, and five claims asserted relative
to the Executive Property. The Court examines Plaintiffs’ claims in the most logical order.
A.
Alexander Property Counts I and II
In Counts I and II as to the Alexander Property, Plaintiffs ask the Court to declare
that they rescinded their mortgage obligation under TILA and to disgorge BANA of all
monies it has unlawfully retained. BANA moves to dismiss these claims on the grounds
that Plaintiffs’ alleged rescission was ineffective as a matter of law due to TILA’s statute
of repose.
“Under TILA, a debtor may rescind a mortgage ‘until midnight of the third business
day following the consummation of the transaction or the delivery of the information and
rescission forms . . . , whichever is later . . . .” Smith v. Highland Bank, 108 F.3d 1325,
1326 (11th Cir. 1997) (per curiam) (quoting 15 U.S.C. § 1635(a)). In the event that the
debtor never receives the information and disclosures required by TILA, the “right of
rescission shall expire three years after the date of consummation of the transaction,”
15 U.S.C. § 1635(f), which TILA defines as “the time that a consumer becomes
contractually obligated on a credit transaction,” 12 C.F.R. § 1026.2(a)(13). As discussed
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in Beach v. Ocwen Federal Bank, section 1635(f) is not a statute of limitations which
mandates when a cause of action must be initiated, but rather a statute of repose which
provides when a person’s right of rescission expires. 523 U.S. 410, 417 (1998). As a
result, TILA “permits no federal right to rescind, defensively or otherwise, after the 3-year
period of § 1635(f) has run.” Id. at 419.
Here, although Plaintiffs contend that the mortgage obligation as to the Alexander
Property was never consummated within the meaning of TILA, the extensive documents
they attached to their Amended Complaint reveal otherwise. Plaintiffs executed the
mortgage on July 26, 2005, and the mortgage was thereafter recorded in the county’s
property records. (Doc. 11-1, pp. 27–37). Plaintiffs therefore became contractually
obligated to BANA on that date.
Indeed, Plaintiffs have supplied their Account
Transaction History with BANA showing that they recognized their obligation to pay and
in fact paid on the mortgage for years.
(Id. at pp. 23–26).
Because Plaintiffs
consummated their mortgage obligation with BANA on July 26, 2005, their right to rescind
under TILA expired at the latest on July 26, 2008. Plaintiffs’ December 7, 2012 rescission
letter is more than four years too late and, as a result, is ineffective as a matter of law.
Plaintiffs’ TILA claim will therefore be dismissed. Plaintiffs’ disgorgement claim must
likewise be dismissed, as it necessarily depends on Plaintiffs having properly rescinded
their mortgage obligation.
B.
Executive Property Count I and Second Count II (Disgorgement)
Like the Alexander Property, Plaintiffs also ask the Court to declare that they
rescinded their mortgage obligation under TILA as to the Executive Property and to
disgorge BANA of all monies it has unlawfully retained. As explained above, the right to
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rescind under TILA expires at the latest three years after the consummation of the credit
transaction. See 15 U.S.C. § 1635(f); 12 C.F.R. § 1026.2(a)(13). Plaintiffs executed the
Executive Property mortgage on December 29, 2005, and the mortgage was thereafter
recorded in the county’s property records. Plaintiffs thus became contractually obligated
on the mortgage obligation on that date, permitting their right to rescind until
December 29, 2008 at the latest. Plaintiffs’ December 7, 2012 rescission letter is again
too late and, as a result, is ineffective as a matter of law. Plaintiffs’ TILA claim regarding
the Executive Property will therefore be dismissed. Plaintiffs’ disgorgement claim will
likewise be dismissed, as it necessarily depends on Plaintiffs’ having properly rescinded
their mortgage obligation on the Executive Property.
C.
Alexander Property Counts III and IV
In Counts III and IV as to the Alexander Property, Plaintiffs seek damages against
BANA and Q&B for allegedly violating the FDCPA and FCCPA. Both BANA and Q&B
move to dismiss these counts for failing to state claims for relief.
Part of stating a claim under either the FDCPA or the FCCPA requires the plaintiff
to allege that he or she was the subject of an unlawful debt collection practice. See Read
v. MFP, Inc., 85 So. 3d 1151, 1153 (Fla. Dist. Ct. App. 2012) (“[A] consumer seeking to
recover damages under either the FDCPA or the FCCPA must allege . . . a violation of
the provisions of the act actually sued upon.”). Moreover, the FDCPA and FCCPA have
one- and two-year statutes of limitations, respectively. See 15 U.S.C. § 1692k(d); Fla.
Stat. § 559.77(2). Accordingly, any violation alleged by Plaintiffs must have occurred on
or after December 17, 2013. Upon review of the Amended Complaint, Plaintiffs fail to
describe any way in which Q&B collected or attempted to collect a debt in violation of the
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statutes and within the relevant statutory time periods. The only allegation pertaining to
Q&B states that Q&B represented in court filings that the satisfied mortgage on the
Alexander Property remained valid and subject to collection.
(Doc. 11, ¶¶ 36–37).
However, absent allegations of an overt attempt to collect on the satisfied mortgage, there
is no violation of the FDCPA or FCCPA for Q&B’s mere belief that the mortgage could be
collectable. See Burdick v. Bank of Am., 140 F. Supp. 3d 1325, 1329 (S.D. Fla. 2015)
(holding that a plaintiff must show that “the defendant has engaged in an act or omission
prohibited by the FDCPA”). Plaintiffs’ FDCPA and FCCPA claims against Q&B must
therefore be dismissed.
As to BANA, BANA reads Plaintiffs’ claims as requesting the Court to sanction
BANA for violating the automatic stay and other prior orders issued by the court in
Plaintiffs’ bankruptcy case.
However, it is clear from the Amended Complaint that
Plaintiffs are suing BANA for allegedly filing an improper proof of claim in that bankruptcy
and for misrepresenting the legal status of the mortgage obligation, not for violating any
order of the bankruptcy court. (See Doc. 11, ¶¶ 38–49, 56–59, 63–68). Specifically,
Plaintiffs show that they satisfied their mortgage with BANA on the Alexander Property,
but that BANA has been collecting or attempting to collect on that mortgage despite the
fact that no money is due. (See id. ¶¶ 14, 17, 39, 67). In fact, Plaintiffs have attached to
their Amended Complaint a satisfaction of the mortgage executed by BANA. (Doc. 11-1,
p. 42). If valid, BANA’s continued collection efforts on the satisfied mortgage in Plaintiffs’
bankruptcy case plausibly violate the FDCPA and FCCPA. See Crawford v. LVNV
Funding, LLC, 758 F.3d 1254, 1259–61 (11th Cir. 2014) (holding that the filing of an
unenforceable proof of claim in a bankruptcy proceeding constitutes an unlawful debt
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collection practice), cert. denied, 135 S. Ct. 1844 (2015). Plaintiffs therefore state claims
against BANA under the FDCPA and FCCPA.
D.
Executive Property Counts III and IV
In Counts III and IV as to the Executive Property, Plaintiffs seek damages against
BANA and Marinosci for allegedly violating the FDCPA and FCCPA. Plaintiffs essentially
allege that BANA and Marinosci violated these statutes by collecting or attempting to
collect on a mortgage obligation which was rescinded under TILA. However, as explained
previously, Plaintiffs’ rescission of the mortgage on the Executive Property was ineffective
as a matter of law. As a result, BANA’s and Marinosci’s continued collection efforts are
not unlawful and cannot form the basis of a claim under either the FDCPA or FCCPA.
E.
Executive Property First Count II (Breach of Settlement Agreement)
In their first Count II as to the Executive Property, Plaintiffs allege that they entered
into a settlement agreement with BANA regarding the mortgage of the Executive
Property, but that BANA breached this agreement by filing a proof of claim in Plaintiffs’
bankruptcy. BANA moves to dismiss this claim on the grounds that the settlement
agreement yielded once Plaintiffs filed bankruptcy and that any payments which were
supposed to be made under the agreement were required to be made to the bankruptcy
Trustee. This is not a reason for dismissal under Rule 12(b)(6), however, as it requires
the Court to delve into the merits of Plaintiffs’ claim. BANA’s motion to dismiss will
therefore be denied as to Plaintiffs’ first Count II on the Executive Property.
F.
Leave to Amend
As a final matter, the Court must discuss whether it is appropriate to grant Plaintiffs
leave to amend. It is well-settled that a court should not dismiss a plaintiff’s complaint for
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failing to state a claim without first granting leave to amend. Thomas v. Farmville Mfg.
Co., 705 F.2d 1307, 1307 (11th Cir. 1983) (per curiam). Nevertheless, a court may
dismiss a claim without affording an opportunity to amend where amendment would be
futile. Bryant v. Dupree, 252 F.3d 1161, 1163 (11th Cir. 2001) (per curiam) (citing Foman
v. Davis, 371 U.S. 178, 182 (1962)). Amendment is futile when the plaintiff “provide[s] no
reason for the district court to believe that he [or she] could offer sufficient allegations to
make a claim for relief plausible on its face.” Patel v. Ga. Dep’t BHDD, 485 F. App’x 982,
983 (11th Cir. 2012) (per curiam).
Regarding Plaintiffs’ TILA and TILA-related disgorgement claims, it is not possible
for Plaintiffs to offer sufficient allegations to overcome the fact that their rights of rescission
as to both the Alexander and Executive Properties have been extinguished as a matter
of law. Those claims are therefore futile and will be dismissed with prejudice. Plaintiffs’
FDCPA and FCCPA claims are similarly futile and will be dismissed with prejudice to the
extent Plaintiffs base their claims on TILA-related conduct. Regarding Plaintiffs’ nonTILA-related FDCPA and FCCPA claims against Q&B, those claims will be dismissed
without prejudice, and Plaintiffs will be permitted an opportunity to amend. In doing so,
Plaintiffs should be mindful of the statutes’ respective limitations periods and should
identify what overt conduct Q&B engaged in which violated the FDCPA and FCCPA.
IV.
CONCLUSION
For the aforementioned reasons, it is ORDERED AND ADJUDGED that
Defendants’ motions to dismiss (Docs. 16, 28, 29) are GRANTED IN PART and DENIED
IN PART as follows:
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1. Counts I and II as to the Alexander Property are DISMISSED WITH
PREJUDICE.
2. Counts III and IV as to the Alexander Property are DISMISSED WITHOUT
PREJUDICE as to Quarles & Brady, LLP.
3. Counts I, III, IV, and the second Count II (Disgorgement) as to the Executive
Property are DISMISSED WITH PREJUDICE.
4. Plaintiffs have until and including September 16, 2016 to file a Second
Amended Complaint if they wish to re-allege their FDCPA and FCCPA
claims against Q&B.
If Plaintiffs choose to file a Second Amended
Complaint, Plaintiffs shall not allege any claim which has been dismissed
with prejudice.
5. If Plaintiffs do not file a Second Amended Complaint by the date provided,
BANA has until and including September 23, 2016 to answer Counts III and
IV as to the Alexander Property and the first Count II as to the Executive
Property.
DONE AND ORDERED in Orlando, Florida on September 1, 2016.
Copies furnished to:
Counsel of Record
Unrepresented Parties
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