Pearson v. Countrywide Home Loans, Inc. et al

Filing 16

ORDER Granting in Part 7 Defendants' Joint Motion to Dismiss. See Order for details. Signed by Judge Elizabeth A. Kovachevich on 3/12/2014.(rjm)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
JOEL T. PEARSON,
Plaintiff,
vs.

CASE NO. 8:13-CV-1075-T-17AEP

COUNTRYWIDE HOME LOANS, INC.
AND BANK OF AMERICA
CORPORATION,
Defendants.
/
ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS
This matter comes before the Court pursuant to Defendants’, COUNTRYWIDE
HOME LOANS, INC. (“Countrywide”) and BANK OF AMERICA CORPORATION (“Bank
of America”), Joint Motion to Dismiss, (Doc. # 7), filed April 29, 2013, and JOEL
PEARSON’s (“Plaintiff”) Response in Opposition, (Doc. # 9), filed May 10, 2013. For the
reasons set forth below, the Plaintiff’s Motion is GRANTED in part.
BACKGROUND AND PROCEDURAL HISTORY
In 2005, Plaintiff and his former wife, Jean Pearson, decided to purchase a
condominium in Venice, Florida. (Doc. # 2, |[7). Plaintiff and his former wife contacted
Anthony Clevenger (“Clevenger”) with Countrywide to arrange financing,

jd. at 1J8.

Plaintiff alleges Clevenger and Countrywide helped Plaintiff and his former wife structure
the financials and details of the loan application in a manner that would allow Plaintiff and
his former wife to obtain a loan for which they might otherwise not qualify, id. at ffl|8-10:
Plaintiff and his former wife had an approximated $4,000.00 monthly income, whereas
the loan application stated an approximate $21,600.00 monthly income, id. at 1J11; the

CASE NO. 8:13-CV-1075-T-17AEP
down payment for the loan was sourced from a home equity loan, but the loan application
stated the down payment was from their savings account, id; and the Plaintiff was not
employed and in the process of obtaining social security disability, while the loan
application represented he was employed, id.
On September 30, 2005, Countrywide issued a loan to Plaintiff and his former wife
in the sum of $516,000.00, and executed a mortgage to secure the note. ]d. at 1J14-16.
With the proceeds of the home equity loan Plaintiff and his former wife obtained, as well
as the $516,000.00 loan from Countrywide, Plaintiff and his former wife purchased the
condominium unit in Venice, Florida, for $645,000.00. id. at 1J17. Unable to fulfill the
obligations and payments on the loan, Plaintiff and his former wife sold the condominium
via short sale, and subsequently brought the subject action against Countrywide and its
successor-in-interest Bank of America. ]d. at H1I18, 3.
On March 15, 2013, Plaintiff brought the subject action in state court, and
Defendants timely removed the action to district court. (Doc. ## 1, 2). In his Complaint,
Plaintiff alleges the Defendants: 1) violated the Truth in Lending Act, 15 U.S.C. § 1601,
and Federal Reserve Regulation Z, 12 C.F.R. § 226.1; 2) violated the Real Estate
Settlement Procedures Act, 12 U.S.C. § 2601, and Regulation X, 24 C.F.R. § 3500;
3) breached a fiduciary duty owed to Plaintiff; 4) misrepresented the interest rate of the
loan and Plaintiff’s ability to fulfill the monthly mortgage obligation; 5) negligently
supervised Clevenger’s lending practices; and 6) violated Florida’s Deceptive and Unfair
Trade Practices Act. ]d. at ffl|19-68. On April 29, 2013, Defendants jointly moved to
dismiss Plaintiff’s Complaint in its entirety, (Doc. # 7), and Plaintiff responded in
opposition May 10, 2013. (Doc. # 9).

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CASE NO. 8:13-CV-1075-T-17AEP
LEGAL STANDARD
Under Federal Rule of Civil Procedure 8(a)(2), a plaintiff’s complaint must provide
a “short and plain statement of the claim showing that the pleader is entitled to relief.” A
defendant may move to dismiss a complaint under Federal Rule of Civil Procedure
12(b)(6) for “failure to state a claim on which relief can be granted.” To survive a Rule
12(b)(6) motion to dismiss, a plaintiff’s complaint must include “enough facts to state a
claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twomblv. 550 U.S. 544, 570
(2007). “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 grounds of his [or her]
entitlement] to relief requires more than labels and conclusions, and a formulaic recitation
of the elements of a cause of action will not do.” ]d. at 555 (second alteration in original)
(citation omitted) (internal quotation marks omitted). An exhibit to a pleading is a part of
the pleading for all purposes, and may be considered in ruling on a Rule 12(b)(6) motion
“if it is central to the plaintiff’s claims and is undisputed in terms of authenticity.” Maxcess,
Inc. v. Lucent Techs.. Inc.. 433 F.3d 1337, 1340 (11th Cir. 2005).
On a Rule 12(b)(6) motion to dismiss, a court must “accept the factual allegations
in the complaint as true and construe them in the light most favorable to the plaintiff.”
Alvarez v. Attorney Gen. for Fla.. 679 F.3d 1257, 1261 (11th Cir. 2012). Courts follow a
two-pronged approached when considering a motion to dismiss: “1) eliminate any
allegations in the complaint that are merely legal conclusions: and 2) where there are
well-pleaded factual allegations, ‘assume their veracity and then determine whether they
plausibly give rise to an entitlement to relief.’” Am. Dental Ass’n v. Cigna Corp.. 605 F.3d
1283, 1290 (11th Cir. 2010) (quoting Ashcroft v. Iqbal. 556 U.S. 662, 679 (2009)). If “the

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CASE NO. 8:13-CV-1075-T-17AEP
plaintiff pleads factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged,” then the claim meets the “plausibility
requirement,” but it requires “more than a sheer possibility” that the allegations are true.
]d.

“[T]he pleading standard Rule 8 announces does not require ‘detailed factual

allegations,’ but it demands more than an unadorned [...] accusation.” ]d. (quoting
Twomblv. 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265 (1986)).
DISCUSSION
1. Plaintiff’s TILA and RESPA Claims are Time Barred
Defendants move to dismiss Counts I and II of Plaintiff’s Complaint, arguing the
statutes of limitations expired prior to the filing of the Complaint. (Doc. # 7, pp.8-9).
Plaintiff opposes such dismissal, and admits both Counts I and II were filed outside of the
permissible respective statutes of limitations, but implores the Court to apply the doctrine
of equitable tolling to save Counts I and II from dismissal. (Doc. # 9, pp. 15-17). Rather
than allege concealment or some act that would infer malfeasance on the part of the
Defendants, Plaintiff alleges the case is in its infancy, discovery has not been undertaken,
vaguely refers to “indices of misrepresentation” without citing examples or applications
thereof to the present circumstances, and Plaintiff might discover evidence to permit
equitable tolling. ]d.
Equitable tolling is an extraordinary remedy that must be used sparingly. Hunter
v. Ferrell. 587 F.3d 1304 (11th Cir. 2009); Steed v. Head. 219 F.3d 1298, 1300 (11th Cir.
2000). Equitable tolling of a limitations period is warranted “when a movant untimely files
because of extraordinary circumstances that are both beyond his control and unavoidable
even with diligence.” Downs v. McNeil. 520 F.3d 1311, 1318 (11th Cir. 2008) (quoting

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CASE NO. 8:13-CV-1075-T-17AEP
Steed. 219 F.3d at 1300). A motion to dismiss based on the tolling of a statute of
limitations can be granted only if it appears beyond a doubt that plaintiff can prove no set
of facts that toll the statute. Summery. Land & Leisure. Inc.. 664 F.2d 965 (5th Cir. 1981).
Here, Plaintiff conceded Count I, TILA, and Count II, RESPA, were filed outside
the permissible three-year statute of limitations period. Plaintiff’s Complaint was filed
March 15, 2013, and, therefore, Plaintiff necessarily concedes the actions of Defendants
and harm suffered therefrom occurred before March 15, 2010.

Plaintiff does not,

however, provide any factual basis that would require application of equitable tolling.
While a complaint does not fail to state a claim “simply because it omits facts that would
defeat a statute of limitations defense,” Hollander v. Brown. 457 F.3d 688 (7th Cir. 2006),
the plaintiff must articulate extraordinary circumstances outside of his control and
unavoidable with diligence. Downs, 520 F.3d at 1318. Plaintiff has failed to articulate
any basis for which equitable tolling might apply, and dismissal of Counts I and II is
appropriate and hereby GRANTED.
2.

P laintiffs Complaint States a Claim for Breach of a Fiduciary Duty

Defendants move to dismiss Count III of Plaintiff’s Complaint, arguing a fiduciary
duty could not exist between Plaintiff and Defendants, due to the arms-length nature of
the transaction.

(Doc. # 7, pp.9-10).

Plaintiff contends sufficient facts plead in the

Complaint would, if proven, create a fiduciary duty between Plaintiff and the Defendants’
employees acting within the scope of their employment. (Doc. # 9, pp. 6-10).
The elements necessary to establish breach of a fiduciary duty include: 1) the
existence of a fiduciary duty; 2) the breach of that duty proximately caused damages to
plaintiff; and 3) damages flowing from the breach. Gracev v. Eaker. 837 So.2d 348 (Fla.

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CASE NO. 8:13-CV-1075-T-17AEP
2002); Miller v. Miller. 2012 WL 1365064 (Fla. 5th DCA 2012). In Florida, a fiduciary
relationship may be express or implied. Hogan v. Provident Life and Acc. Ins. Co.. 665
F.Supp.2d 1273 (M.D. Fla. 2009).

Florida has recognized a number of fiduciary

relationships, including: 1) attorney to client, Forgione v. Dennis Pirtle Agency. Inc., 701
So.2d 557 (Fla. 1997); 2) officers and directors to shareholder, Cohen v. Hattawav. 595
So.2d 105 (Fla. 5th DCA 1992); 3) guardian to ward, In re Guardianship of Lawrence. 563
So.2d 195 (Fla. 1st DCA 1990); 4) personal representative to heirs and creditors,
DeVaughn v. DeVaughn, 840 So.2d 1128 (Fla. 5th DCA 2003); 5) trustee to settlors and
beneficiaries, Brundage v. Bank of America. 996 So.2d 877 (Fla. 4th DCA 2008); 6) agent
to principal, Doyle v. Maruszczak, 834 So.2d 307 (Fla. 5th DCA 2003); and 7) bank’s
agents to customers. Capital Bank v. MVB, Inc.. 644 So.2d 515 (Fla. 3d DCA 1994)
(finding a fiduciary duty when, among other actions, bank agent urged customer’s trust
and undertook a heightened role in preparing loan documents). A fiduciary relationship
may arise when one party reposes confidence in another and there is resulting superiority
and influence on the other, and the duty need not necessarily be legal, but may be moral
or even personal. Dale v. Jennings. 107 So. 175, 179 (Fla. 1925).
Here, Plaintiff has alleged Countrywide’s employee Clevenger shepherded Plaintiff
through the loan process by undertaking a heightened role in preparing the loan
application and assisting with the ultimate closing of the transaction. Plaintiff contends
that based on these actions a fiduciary relationship formed between Plaintiff and
Countrywide, Plaintiff placed his trust in Clevenger, Countrywide and Clevenger took
advantage of this relationship, breached the duty, and Plaintiff suffered damages. At this
stage of litigation, Plaintiff has pled the necessary facts to survive dismissal; while

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CASE NO. 8:13-CV-1075-T-17AEP
Defendants claim there typically is not a fiduciary relationship between lenders and
borrowers, that is not absolute, and, as discussed above, a fiduciary relationship could
arise between Plaintiff and Countrywide. Therefore, dismissal of Count III is DENIED.
3. Plaintiff’s Complaint Fails to State a Claim for Misrepresentation
Defendants move to dismiss Count IV of Plaintiff’s Complaint, arguing the
allegations of misrepresentation with respect to Plaintiff's income cannot form a basis for
misrepresentation because it is information about which Plaintiff knew at the time of
executing the mortgage. (Doc. # 7, pp. 3-8). Plaintiff opposes, and lists additional actions
in the Complaint upon which Plaintiff relied, specifically Defendants’ and Clevenger’s
misrepresentations concerning: 1) “how to go about completing the loan application;” 2)
“that it was perfectly acceptable to state the source of the downpayment [sic] was from
savings, rather than from another loan;” 3) “that the Plaintiff and his former wife qualified
for the mortgage;” and 4) “failing to disclose in understandable terms that the loan had a
negative amortization component, with an interest rate that would increase exponentially
in a year’s time.” (Doc. # 9, p.11).

Plaintiff contends these additional actions and

statements are sufficient to survive dismissal.
To state a cause of action for misrepresentation in Florida, Plaintiff has the burden
of pleading the following, with particularity: 1) defendant made a false statement
concerning a material fact; 2) defendant knew the representation was false; 3) defendant
made the representation with the intent to induce another to act on it; and 4) the plaintiff
suffered an injury based on the reliance. Johnson v. Davis, 480 So.2d 625, 627 (Fla.
1985). Here, the Plaintiff and his former wife sought to purchase the subject property,
which is why they contacted the bank and eventually filled out the loan paperwork;

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CASE NO. 8:13-CV-1075-T-17AEP
however, Plaintiff has now made the bare claim in his misrepresentation cause of action
that “Countrywide intended that Plaintiff rely on the misrepresentations” and Plaintiff
“sustained damages” therefrom. (Doc. # 2, ffl|45-47). Courts have struggled to find a
valid cause of action for misrepresentation or fraud when the Plaintiff knew the information
was false (e.g., monthly income), the paperwork explicitly laid out the terms and
conditions of the loan with no ambiguity (e.g., interest rates, sources of other capital), or
the statements were mere opinion (e.g., the affordability of the loan). See Oqlesbee v.
IndyMac Financial Services. Inc.. 686 F.Supp.2d 1313 (S.D. Fla. 2010); Zaffrullah v.
Countrywide Home Loans. Inc.. 2010 WL 503074 (S.D. Fla. 2010); Matthvs v. Mortgage
Electronic Registration Systems. Inc.. 2009 WL 3762632 (M.D. Fla. 2009); Infante v. Bank
of America Corp.. 680 F.Supp.2d 1298 (S.D. Fla. 2009). Rather, courts consistently find
the only inducement is on the part of the plaintiff inducing the bank to secure financing for
the loan, which causes the third element of misrepresentation to fail as a matter of law,
because ultimately the plaintiff signs and attests to the veracity of the information in the
loan application, and knowledge is therefore imputed as a matter of law. jd.; see also
MCC-Marble Ceramic Center. Inc. v. Ceramica Nuova d’Agostino, S.p.A., 144 F.3d 1384,
1387 (11th Cir. 1998); Linville v. Ginn Real Estate Company. LLC, 697 F.Supp.2d 1302,
1308-1309 (M.D. Fla. 2010): Reliable Finance Co. v. Axon. 336 So.2d 1271, 1273-1274
(Fla. 2d DCA 1976).
For Plaintiffs misrepresentation cause of action to prevail against a motion to
dismiss, the Complaint must contain more than “conclusory allegations, unwarranted
factual deductions, or legal conclusions masquerading as facts." Davila v. Delta Air Lines.
Inc.. 326 F.3d 1183, 1185 (11th Cir. 2003). Here, Plaintiff’s action for misrepresentation

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CASE NO. 8:13-CV-1075-T-17AEP
fails as a matter of law: Countrywide and its employee’s statements were made before
Plaintiff completed the loan application, which laid out the terms for the loan and interest
rate; were known to Plaintiff before he and his former wife executed the loan application
with Countrywide, which plainly misstated the monthly income and source of the down
payment; or were opinion and not factual statements. To compound matters, Plaintiff has
failed as a matter of law to meet the heightened requirements of Federal Rule of Civil
Procedure 9(b), which requires statements with particularity for fraud causes of action.
See Ziemba v. Cascade Int’l. Inc., 256 F.3d 1194, 1202 (11th Cir. 2001). Therefore,
dismissal of Count IV is GRANTED.
4. Plaintiff’s Complaint Fails to State a Claim for Negligent Supervision
Defendants move to dismiss Count V of Plaintiff’s Complaint, arguing Countrywide
and banks in general do not owe a duty to Plaintiff or other loan applicants with respect
to supervising its employees.

(Doc. # 7, p. 12).

Plaintiff contends this argument is

“specious” and “untenable,” and that Countrywide and banks in general are not immune
from negligent supervision causes of action and must be held accountable for employees’
malfeasance. (Doc. # 9, pp. 5-6). Further, in his Complaint, Plaintiff alleges Countrywide
failed to train employees, negligently hired employees, and failed to discipline its
employees, (Doc. # 2, ffiJ56(a)-(d); however, Plaintiff has not connected these allegations
to Clevenger or any particular employee, and this Court finds as a matter of law the
apparent negligent hiring, training, and discipline allegations fall woefully short of stating
a claim upon which relief may be sought.
To state a valid claim for negligent supervision, a plaintiff must plead the following
elements: 1) the defendant owed a duty to protect the plaintiff from a particular injury or

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CASE NO. 8:13-CV-1075-T-17AEP
damage; 2) the defendant breached that duty; 3) the defendant’s breach was the
proximate cause of injury or damage to the plaintiff; and 4) the plaintiff suffered damages
caused by the breach. Malicki v. Doe. 814 So.2d 347, 361 (Fla. 2002). In addition to the
standard tort elements, a plaintiff must further allege and prove that during the course of
employment, the employer became aware, or should have become aware, of problems
with an employee that indicate his unfitness, and the employer fails to take further action
such as investigation, discharge, or reassignment. Watson v. The City of Hialeah. 552
So.2d 1146,1148 (Fla. 3d DCA 1989). Liability will only attach when an employer either:
1) knows or should know about the offending employee’s unfitness; and 2) fails to take
the appropriate action. Garcia v. Duffy. 492 So.2d 435, 438-439 (Fla. 2d DCA 1986).
Plaintiff has failed to allege the necessary facts to survive dismissal. Plaintiff has
not shown any basis for, which Countrywide knew or should have known about
Clevenger’s unfitness for his job, or how Countrywide failed to take appropriate action,
including investigating, discharging, or reassigning Clevenger to a different position. By
failing to allege these necessary elements, the Count V of the Plaintiff’s Complaint must
fail as a matter of law, as Plaintiff has not sufficiently pled a cause of action for negligent
supervision, and dismissal of Count V is GRANTED.
5. P laintiffs Complaint States a Claim for FDUTPA
Defendants move to dismiss Count VI of Plaintiff’s Complaint, solely arguing
FDUTPA does not apply to federally-regulated banks, and is therefore inapplicable to
Bank of America. (Doc. # 7, p. 13-14). Plaintiff asserts that while Bank of America might
be exempt from FDUTPA, Countrywide is not, and Bank of America is responsible for the
actions of Countrywide as the successor-in-interest. (Doc. # 9, pp. 12-14). Plaintiff pled

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CASE NO. 8:13-CV-1075-T-17AEP
the necessary elements for a claim of FDUTPA, and presented allegations that, when
taken in the light most favorable to the non-moving party—i.e., Plaintiff—would suffice to
survive dismissal—specifically that Countrywide does not fit the FDUTPA exemptions
under Florida Statute § 501.212(4) because it was not wholly federally regulated.
Therefore, dismissal of Count VI is DENIED.
Accordingly, it is ORDERED that:
1.

Dismissal of Counts I, II, IV, and V is GRANTED;

2.

Dismissal of Counts III and VI is DENIED;

3.

Defendants shall have ten (10) days to answer Plaintiff’s Complaint.

DONE and ORDERED in Chambers, in Tampa, Florida, t h is ^ ^ a y ^ M a r c h ,
2014.

r

CHEVICH
ICT JUDGE
Copies to:All Counsel and Parties of Record