Bennett v. Bank of America, N.A.
Filing
22
ORDER: Defendant Bank of America, N.A.'s Motion to Dismiss Complaint for Damages (Doc. # 15 ) is granted in part and denied in part. See Order for details. Signed by Judge Virginia M. Hernandez Covington on 5/6/2016. (DRW)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
BEVERLY M. BENNETT,
Plaintiff,
v.
Case No. 8:16-cv-278-T-33TBM
BANK OF AMERICA, N.A.,
Defendant.
_____________________________/
ORDER
This matter comes before the Court in consideration of
Defendant Bank of America, N.A.’s Motion to Dismiss Complaint
for Damages (Doc. # 15), filed on March 21, 2016. Plaintiff
Beverly Bennett filed a response in opposition on March 31,
2016. (Doc. # 21). The Motion is ripe for review and, for the
reasons stated below, the Court grants in part and denies in
part the Motion.
I.
Background
This action arises from alleged breach of contract and
violations of Regulation X, which implements the provisions
of The Real Estate Settlement Procedures Act, 12 U.S.C. §§
2601, et seq. (RESPA). At all times relevant to this suit,
Bennett owned and resided in real property located at 301
Swallow Avenue, Sebring, FL 33870. (Doc. # 1 at ¶ 1). Bank of
1
America is the servicer of a note and mortgage on the property
(the loan). (Id. at ¶¶ 3-4).
As a result of surgery in June of 2013, Bennett fell
behind on her loan obligations. (Id. at ¶¶ 17-18). Bennett
subsequently applied for a loan modification. (Id. at ¶ 18).
On August 6, 2013, Bank of America informed Bennett she had
been approved for a trial period plan. (Id. at ¶ 19). Pursuant
to the trial period plan, Bennett was required to make monthly
payments of $449.95 for three months, with the last payment
due on November 1, 2013. (Id. at ¶ 20). Bennett remitted all
three payments. (Id. at ¶¶ 21-24).
Upon satisfaction of the trial period plan, Bank of
America
was
modification;
to
send
however,
documents
Bennett
for
did
a
permanent
not
receive
loan
those
documents. (Id. at ¶¶ 25-26). As such, Bennett called Bank of
America on November 19, 2013; she was informed to await the
documents and her December 1, 2013, payment would be $448.02.
(Id. at ¶¶ 27-29). Bennett was further informed to continue
to make all required payments, which she did. (Id. at ¶¶ 2930).
As of January 1, 2014, Bennett still had not received
the documents for the permanent loan modification. (Id. at ¶
31). Accordingly, Bennett called Bank of America the next day
2
to inquire as to when the documents would be delivered. (Id.
at ¶ 32). While waiting for the documents, Bennett continued
to make monthly payments. (Id. at ¶ 34). A Bank of America
representative delivered a copy of the documents to Bennett
on January 25, 2014. (Id. at ¶ 35). Bennett executed the loan
modification and had her signature notarized on January 27,
2014. (Id. at ¶ 37).
Unsure of where to mail the documents, Bennett called
Bank of America over the next 2 days to obtain the proper
address to which she should mail the executed documents. (Id.
at ¶ 38). On the second day, January 29, 2014, Bennett went
to her local Bank of America branch, provided a representative
her
executed
documents,
and
was
informed
the
executed
documents would be forwarded to Bank of America’s main office.
(Id. at ¶ 39).
Bennett submitted her monthly payment for February of
2014, on the first of that month. (Id. at ¶ 40). Also on
February 1, 2014, Bank of America notified Bennett that her
“loan [wa]s not eligible for a modification because after
being
offered
a
Trial
Period
Plan
or
modification,
you
notified us that you did not wish to accept the offer.” (Id.
at ¶¶ 41-42). However, Bennett “never informed [Bank of
3
America] that she did not wish to accept the Modification.”
(Id. at ¶ 43).
Even after receiving the denial, Bennett continued to
make monthly payments. Specifically, Bennett made payments in
satisfaction of her March 1, 2014, April 1, 2014, and May 1,
2014, obligations. (Id. at ¶¶ 44-48). But, Bank of America
returned the funds Bennett paid in satisfaction of her May 1,
2014,
obligation.
(Id.
at
¶
49).
Bank
of
America
then
instituted a foreclosure action on May 15, 2014, against
Bennett in the Tenth Judicial Circuit in and for Highlands
County, Florida. (Id. at ¶ 50). That foreclosure proceeding
was styled as Bank of America, N.A. v. Beverly M. Bennett, et
al., and was assigned case number 28-2014-CA-000275. (Id.).
After being served in the foreclosure action, Bennett
called Bank of America on June 12, 2014, to discuss the
foreclosure. (Id. at ¶ 51). A Bank of America representative
informed
Bennett
a
copy
of
the
executed
permanent
loan
modification was found and would be escalated to a manager
for review. (Id. at ¶ 52). Because nothing came of the June
12, 2014, escalation, Bennett submitted a loss mitigation
application in July of 2014. (Id. at ¶¶ 53-54). On July 28,
2014, Bennett called Bank of America to ensure receipt of her
application. (Id. at ¶ 55). A Bank of America representative
4
advised Bennett on July 29, 2014, she had submitted all
requested
documentation
and
Bank
of
America
would
move
forward with reviewing her application. (Id. at ¶¶ 56-57).
Thereafter, Bank of America began to request additional
and clarifying information and documentation. (Id. at ¶ 58).
Bennett replied quickly and to the best of her ability. (Id.
at ¶ 59). Bank of America sent several notices confirming
receipt of additional documentation submitted by Bennett.
(Id. at ¶¶ 61-62). Bank of America did not send a notice of
denial at any time between July 29, 2014, and November 6,
2014; however, on November 6, 2014, Bank of America filed a
motion for summary judgment in the foreclosure action. (Id.
at ¶¶ 63-64). The hearing on the motion for summary judgment
was scheduled for February 24, 2015. (Id. at ¶ 71).
Notwithstanding the filing of the motion for summary
judgment in the foreclosure action, Bennett continued to
comply with all requests from Bank of America. (Id. at ¶ 65).
On January 6 and 7, 2015, Bank of America informed Bennett
the only further information required was an executed copy of
IRS Form 4506-T. (Id. at ¶¶ 66-67). Bennett was instructed to
submit the IRS Form 4506-T by February 6, 2015. (Id. at ¶
68). Bennett submitted the requested IRS Form 4506-T on
January 7, 2015. (Id. at ¶ 69).
5
Bennett called Bank of America on February 12, 2015, to
inquire as to the status of her loss mitigation application.
(Id. at ¶ 72). Bank of America informed Bennett no decision
had been reached, and no additional information was requested
at that time. (Id. at ¶¶ 73-74). Two days later, Bank of
America notified Bennett her loss mitigation application was
“‘incomplete’ or that [Bank of America] needed ‘additional
information
(citation
not
previously
omitted).
Bank
requested.’”
of
America
(Id.
advised
at
¶
Bennett
75)
on
February 19, 2015, that her application could not be completed
until she submitted two months’ proof of receipt of food
stamps and a new Form 710 Uniform Borrower Assistance Form.
(Id. at ¶ 77). Bennett clarified her food stamp benefits do
not show on her bank account statements and she had submitted
a letter of explanation regarding the same. (Id. at ¶ 78).
Bank of America proceeded with its motion for summary
judgment in the foreclosure action and obtained a foreclosure
judgment on February 24, 2015. (Id. at ¶ 80). Bank of America
did not attempt to postpone the February 24, 2015, hearing or
otherwise avoid a ruling on the motion. (Id. at ¶ 81).
On April 27, 2015, Bennett sent a Notice of Error under
12 C.F.R. § 1024.35 to Bank of America. (Id. at ¶ 83). The
Notice of Error alleged Bank of America violated 12 C.F.R. §
6
1024.41(g) by dual-tracking Bennett’s loan. (Id. at ¶ 84).
The Notice of Error also alleged Bank of America erred by
“unilaterally repudiating” the permanent loan modification.
(Id.). Bank of America received the Notice of Error on April
30, 2015. (Id. at ¶ 87). After informing Bennett it needed
additional time to respond, Bank of America replied on June
30, 2015. (Id. at ¶ 89). Bennett alleges Bank of America’s
response did not address the errors alleged. (Id. at ¶ 90).
Bennett was subsequently approved for a trial period
plan on a new loan modification on September 2, 2015. (Id. at
¶ 91). Bennett complied with the trial period plan and was
approved for a permanent modification on December 9, 2015.
(Id. at ¶¶ 92-94). But, the terms of the new permanent loan
modification “are less favorable than the terms” of the first.
(Id. at ¶ 95).
Thereafter, Bennett filed the instant suit on February
4, 2016. (Id.). The Complaint alleges breach of contract
(Count I), violation of 12 C.F.R. § 1024.41(g) (Count II),
violation of 12 C.F.R. § 1024.41(c) (Count III), violation of
12 C.F.R. § 1024.41(b) (Count IV), and violation of 12 C.F.R.
§ 1024.35(e) (Count V). (Id. at 19, 24, 29, 34, 38). Bank of
America filed the pending Motion to Dismiss (Doc. # 15), which
is ripe for adjudication.
7
II.
Legal Standard
On a motion to dismiss, this Court accepts as true all
the allegations in the complaint and construes them in the
light most favorable to the plaintiff. Jackson v. Bellsouth
Telecomms., 372 F.3d 1250, 1262 (11th Cir. 2004). Further,
this
Court
favors
the
plaintiff
with
all
reasonable
inferences from the allegations in the complaint. Stephens v.
Dep’t of Health & Human Servs., 901 F.2d 1571, 1573 (11th
Cir. 1990) (stating “[o]n a motion to dismiss, the facts
stated
in
[the]
complaint
and
all
reasonable
inferences
therefrom are taken as true”). However:
[w]hile a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide
the grounds of his entitlement to relief requires
more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action
will not do. Factual allegations must be enough to
raise a right to relief above the speculative
level.
Bell Atl. Corp v. Twombly, 550 U.S. 544, 555 (2007) (internal
citations omitted). Courts are not “bound to accept as true
a legal conclusion couched as a factual allegation.” Papasan
v. Allain, 478 U.S. 265, 286 (1986).
Furthermore, “[t]he scope of review must be limited to
the four corners of the complaint.” St. George v. Pinellas
Cty., 285 F.3d 1334, 1337 (11th Cir. 2002). A “court may
8
consider a document attached to a motion to dismiss without
converting the motion into one for summary judgment if the
attached document is (1) central to the plaintiff’s claim and
(2) undisputed. In this context, ‘undisputed’ means that the
authenticity of the document is not challenged.” Day v.
Taylor,
400
F.3d
1272,
1276
(11th
Cir.
2005)
(internal
citation omitted).
III. Analysis
A.
Count I: Breach of Contract
“In order to properly plead a claim for breach of
contract
under
Florida
law,
a
plaintiff
must
prove
the
existence of a valid contract, a breach of such contract, and
damages resulting from such breach.” Senter v. JPMorgan Chase
Bank, N.A., 810 F. Supp. 2d 1339, 1345 (S.D. Fla. 2011)
(citing Knowles v. C.I.T. Corp., 346 So. 2d 1042, 1043 (Fla.
1st DCA 1977)).
Bank of America argues Bennett fails to state a breach
of contract claim as a matter of law by alleging she had her
local
Bank
modification
of
America
documents
branch
to
Bank
forward
of
the
America’s
initial
main
loan
office
rather than mailing the documents to a specific address.
Although the Complaint alleges Bennett had her local Bank of
America
branch
forward
the
permanent
9
loan
modification
documents to Bank of America’s main office, the Complaint
further alleges she did so after seeking confirmation that
the local branch could do so. (Doc. # 1 at ¶¶ 38-39).
Furthermore,
the
Complaint
alleges
that
Bank
of
America
actually received the executed permanent loan modification
documents. (Id. at ¶ 52). At this preliminary stage, the Court
determines Bennett has adequately alleged a cause of action.
B.
Counts II – IV: The Application
1.
Regulation X Applies
Regulation
X
became
effective
on
January
10,
2014.
Mortgage Servicing Rules Under the Real Estate Settlement
Procedures Act (Regulation X), 78 Fed. Reg. 10696-01, 10696
(Feb. 14, 2013). Regulation X prescribes what a servicer must
do on receipt of a loss mitigation application. 12 C.F.R. §
1024.41(b)-(j). A servicer “is only required to comply with
the requirements of this section for a single complete loss
mitigation
application
for
a
borrower’s
mortgage
loan
account.” 12 C.F.R. § 1024.41(i).
Bank of America argues Bennett fails to state a cause of
action because Bank of America previously considered Bennett
for a loan modification in 2013. (Doc. # 15 at 10-11). While
the Complaint alleges Bennett applied for a loan modification
in 2013, Regulation X’s requirements had not yet become
10
effective. As such, Bank of America “was still required to
comply with the requirements of section 1024.41 at least once
after the section became effective.” Bennett v. Bank of Am.,
N.A., 126 F. Supp. 3d 871, 884 (E.D. Ky. 2015); see also
Billings v. Seterus, Inc., No. 1:14-cv-1295, 2016 WL 1055753,
at *3 (W.D. Mich. Mar. 17, 2016) (same); Lage v. Ocwen Loan
Servicing LLC, No. 14-cv-81522-BLOOM/VALLE, 2015 WL 7294854,
at *9 (S.D. Fla. Nov. 19, 2015) (stating, “it is evident that
an application received by a servicer prior to the Effective
Date does not activate the requirements under Regulation X”).
Accordingly, Regulation X is applicable.
2.
Count II: Section 12 C.F.R. § 1024.41(g)
Count II alleges Bank of America violated 12 C.F.R. §
1024.41(g), which states:
[i]f a borrower submits a complete loss mitigation
application after a servicer has made the first
notice or filing required by applicable law for any
. . . foreclosure process but more than 37 days
before a foreclosure sale, a servicer shall not
move for foreclosure judgment or order of sale, or
conduct a foreclosure sale . . . .
12 C.F.R. § 1024.41(g). However, a servicer may move for a
foreclosure judgment notwithstanding a borrower’s submission
of a complete loss mitigation application if one of three
exceptions applies. Id. at § 1024.41(g)(1)-(3). Furthermore,
while Regulation X defines two types of loss mitigation
11
applications,
12
C.F.R.
§§
1024.41(b)(1),
(c)(2)(iv)
(defining complete and facially complete loss mitigation
applications),
a
application
treated
is
facially
as
complete
a
complete
loss
mitigation
loss
mitigation
application for purposes of 12 C.F.R. § 1024.41(g). Id. at §
1024.41(c)(2)(iv). And, “[i]f the borrower completes the
application within this period, the application shall be
considered complete as of the date it was facially complete,
for the purposes of paragraph[] . . . (g) . . . .” Id.
Here,
Bennett
alleges
Bank
of
America
instituted
a
foreclosure action on May 15, 2014, and she submitted a loss
mitigation application in July of 2014. (Doc. # 1 at ¶¶ 50,
54,
56).
Although
Bank
of
America
requested
additional
information, it never notified Bennett her loss mitigation
application had been denied. (Id. at ¶¶ 59-62, 64). Bank of
America filed a motion for summary judgment and the hearing
thereon was scheduled for February 24, 2015. (Id. at ¶¶ 63,
80). On January 7, 2015, Bank of America notified Bennett the
only remaining information required was an executed copy of
IRS Form 4506-T, which Bennett submitted that same day. (Id.
at ¶¶ 67-69). Bank of America proceeded with its motion for
summary judgment and obtained a judgment of foreclosure. (Id.
at ¶ 80). Remembering that a facially complete application is
12
treated as a complete application for purposes of 12 C.F.R.
§ 1024.41(g), 12 C.F.R. § 1024.41(c)(2)(iv), and accepting
the well-pled allegations as true, Bennett has stated a cause
of action under 12 C.F.R. § 1024.41(g).
3.
Count III: 12 C.F.R. § 1024.41(c)
Count III alleges Bank of America violated 12 C.F.R. §
1024.41(c). Under this Section, “[i]f a servicer receives a
complete loss mitigation application more than 37 days before
a foreclosure sale, then, within 30 days of receiving a
borrower’s complete loss mitigation application, a servicer
shall”
evaluate
options
the
available
loss
to
mitigation
the
application
borrower.
all
C.F.R.
12
for
§§
1024.41(c)(1)-(c)(1)(i). The servicer must also “[p]rovide
the borrower with a notice in writing stating the servicer’s
determination of which loss mitigation options, if any, it
will
offer
to
the
borrower
.
.
.
.”
Id.
at
§
1024.41(c)(1)(ii).
Furthermore,
additional
“[i]f
information
the
or
servicer
corrections
later
to
a
discovers
previously
submitted document are required to complete the application,
the servicer must promptly request the missing information or
corrected documents . . . .” Id. at § 1024.41(c)(2)(iv). “If
the borrower completes the application within this period,
13
the application shall be considered complete . . . as of the
date the application was actually complete for the purposes
of paragraph (c).” Id.
Here, on January 7, 2015, Bank of America notified
Bennett
the
only
remaining
information
required
was
an
executed copy of IRS Form 4506-T. (Id. at ¶ 67). Bennett
submitted the form on January 7, 2015. (Id. at ¶ 69). Thus,
under 12 C.F.R. § 1024.41(c)(2)(iv), Bennett had submitted a
complete
loss
mitigation
application.
However,
Bank
of
America did not send a written notice to Bennett detailing
their
determination
of
eligibility
within
the
timeframe
established by 12 C.F.R. § 1024.41(c)(1). (Doc. # 1 at ¶¶
188-89). Rather, 8 days after the deadline set forth in 12
C.F.R. § 1024.41(c)(1) lapsed, Bank of America requested
additional information. (Doc. # 1 at ¶ 75). Accepting these
well-pled allegations as true, Bennett has stated a cause of
action under 12 C.F.R. § 1024.41(c).
4.
Count IV: 12 C.F.R. § 1024.41(b)
Count IV alleges Bank of America violated 12 C.F.R. §
1024.41(b), which prescribes what a servicer must do when it
receives a loss mitigation application 45 days or more before
a foreclosure sale. 12 C.F.R. § 1024.41(b)(2)(i). In such
circumstances,
a
servicer
shall
14
promptly
review
a
loss
mitigation application and determine whether it is complete.
Id. at § 1024.41(b)(2)(i)(A). A servicer must also notify the
borrower in writing within 5 days of receiving the loss
mitigation application to acknowledge receipt thereof and
state the servicer’s determination regarding completeness.
Id.
at
§
application
1024.41(b)(2)(i)(B).
is
incomplete,
a
If
a
“servicer
loss
shall
mitigation
exercise
reasonable diligence in obtaining documents and information
to complete” it. Id. at § 1024.41(b)(1). Furthermore,
[t]o the extent a determination of whether
protections under this section apply to a borrower
is made on the basis of the number of days between
when a complete loss mitigation application is
received and when a foreclosure sale occurs, such
determination shall be made as of the date a
complete loss mitigation application is received.
Id. at § 1024.41(b)(3).
Count IV alleges Bank of America violated 12 C.F.R. §
1024.41(b) by failing to exercise reasonable diligence in
obtaining documents and information to complete Bennett’s
loss mitigation application, because Bank of America did not
request additional information until after the deadline for
reviewing the loss mitigation application lapsed. (Doc. # 1
at 34-37). As stated above, Bennett sufficiently alleged Bank
of America was in receipt of a complete loss mitigation
application as of January 7, 2015. As such, under 12 C.F.R.
15
§
1204.41(c),
Bank
of
America
was
required
to
evaluate
Bennett’s loss mitigation application within 30 days and
inform Bennett of its determination as to which options, if
any, would be offered. If in the course of its evaluation,
Bank
of
America
discovered
additional
documents
and
information were required, it would have been required to
promptly request such. 12 C.F.R. §§ 1024.41(b)(2)(i)(B),
(c)(2)(iv).
Rather than doing so, Bank of America allegedly waited
until after the deadline set forth by 12 C.F.R. § 1024.41(c)
lapsed
to
request
additional
information.
Accordingly,
accepting the well-pled allegations as true, Bennett has
stated a cause of action under 12 C.F.R. § 1024.41(b).
C.
Count V: The Notice of Error
Count V alleges Bank of America violated 12 C.F.R. §
1024.35(e). Section 1024.35 sets forth certain requirements
for a servicer that receives any written notice from a
borrower asserting an error. 12 C.F.R. § 1024.35(a)-(i).
Relevant to this action, 12 C.F.R. § 1024.35(e)(1)(i)(B)
requires a servicer to respond to a notice of error by
conducting an investigation and providing the borrower with
a written notification that includes a statement that the
16
servicer has determined that no error occurred and the reasons
therefor.
Included in the Complaint is Bank of America’s response
to Bennett’s Notice of Error. (Doc. # 1 at 105-06). Although
Bennett alleges Bank of America did not respond to her Notice
of Error in a substantive manner, the response included in
the
Complaint
response
demonstrates
indicates
that
otherwise.
Bank
of
To
America
be
sure,
conducted
the
an
investigation, responded to the claims of error, and provided
reasons for its determinations. (Id.). And, when attachments
to a complaint conflict with the complaint’s allegations, the
attachments control. Crenshaw v. Lister, 556 F.3d 1283, 1292
(11th Cir. 2009) (citing Simmons v. Peavy-Welsh Lumber Co.,
113 F.2d 812, 813 (5th Cir. 1940) (stating, “[w]here there is
conflict
between
allegations
in
a
pleading
and
exhibits
thereto, it is well settled that the exhibits control”)).
Accordingly, Count V fails to state a cause of action and is
dismissed.
D.
Damages
RESPA provides that a servicer may be liable for actual
damages, statutory damages not to exceed $2,000, and costs
and attorney’s fees. 12 U.S.C. § 2605(f)(1), (3). Actual
damages under RESPA include both pecuniary and non-pecuniary
17
damages, e.g., emotional distress. McLean v. GMAC Mortg.
Corp., 595 F. Supp. 2d 1360, 1366 (S.D. Fla. 2009).
To recover statutory damages, a plaintiff must show “a
pattern
or
practice
of
noncompliance.”
12
U.S.C.
§
2605(f)(1)(B). “[C]ourts have interpreted the term ‘pattern
or practice’ in accordance with the usual meaning of the
words.” McLean, 595 F. Supp. 2d at 1365 (citation omitted).
Further, “[t]he term suggests a standard or routine way of
operating.” Id. (citations omitted) (holding two violations
insufficient and noting five violations sufficient).
Although
adequately
Bank
plead
of
America
damages,
a
argues
Bennett
review
of
failed
the
to
Complaint
establishes that Bennett sufficiently alleged damages. (Doc.
# 1 at ¶¶ 96-106). For example, Bennett alleges that due to
Bank of America’s putative violations of Regulation X she
will be forced to pay more under her loan modification than
if the violations had not occurred. In addition, Bennett
alleges Bank of America’s alleged violations of Regulation X
caused her emotional distress. Furthermore, Bennett alleges
4 violations of Regulation X. At this preliminary stage, the
Court finds the Complaint’s allegations sufficient.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
18
Defendant Bank of America, N.A.’s Motion to Dismiss
Complaint for Damages (Doc. # 15) is DENIED as to Counts IIV, but Count V is DISMISSED.
DONE and ORDERED in Chambers in Tampa, Florida, this 6th
day of May, 2016.
19
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