Wallace et al v. Wells Fargo Bank, N.A. et al
Filing
17
OPINION and ORDER adopting 13 Final Report and Recommendation. Granting 4 , 7 Motions to Dismiss for Failure to State a Claim. Granting nunc pro tunc 15 Motion for Extension of Time to File Objections to the R&R. Signed by Judge William S. Duffey, Jr. on 1/27/2016. (bdb)
from Bank of North Georgia (“North Georgia” or “Lender”) and executed a
promissory note (“Note”) in favor of North Georgia. (Compl. ¶¶ 9-10 & Ex. B).
The Note provides, in relevant part:
6.
BORROWER’S FAILURE TO PAY
...
(B) Default
If Borrower defaults by failing to pay in full any monthly
payments, then Lender may, except as limited by regulations of the
Secretary [of Housing and Urban Development (“HUD”)] in the case
of payment defaults, require immediate payment in full of the
principal balance remaining due and all accrued interest. . . . In many
circumstances regulations issued by the Secretary will limit Lender’s
rights to require immediate payment in full in the case of payment
default. This Note does not authorize acceleration when not permitted
by HUD regulations.
(Note [1.1] at 8-9).
Repayment of the loan was also secured by a deed (“Security Deed”) to real
property located at 2358 Broad Creek Drive, Stone Mountain, Georgia (the
“Property”). (Compl. ¶ 16 & Ex. A). Plaintiffs executed the Security Deed in
favor of Mortgage Electronic Registration Systems, Inc. (“MERS”), as nominee for
North Georgia and North Georgia’s successors and assigns. (Id.). Under the terms
of the Security Deed, Plaintiffs “grant[ed] and convey[ed] to MERS (solely as
nominee for [North Georgia] and [North Georgia’s] successors and assigns), and
the successors and assigns of MERS, with power of sale, the [Property].”
(Security Deed at 2). The Security Deed also provides, in pertinent part:
2
9. Grounds for Acceleration of Debt.
(a) Default. Lender may, except as limited by regulations issued
by the Secretary [of HUD] in the case of payment defaults, require
immediate payment in full of all sums secured by this Security
[Deed] if:
(i) Borrower defaults by failing to pay in full any monthly
payment required by this Security [Deed] prior to or on the due
date of the next monthly payment . . . .
...
(d) Regulations of HUD Secretary. In many circumstances
regulations issued by the Secretary will limit Lender’s rights, in the
case of payment defaults, to require immediate payment in full and
foreclose if not paid. This Security [Deed] does not authorize
acceleration or foreclosure if not permitted by regulations of the
Secretary.
(Id. at 3-4).
At some point, Plaintiffs defaulted on their loan payments. (Compl. ¶ 13).
Plaintiffs “alleges [sic] that a default was induced by failure to properly credit
Plaintiffs’ loan account for payments they had made.” (Id.).
On September 2, 2010, MERS assigned the Security Deed to Wells Fargo.
Plaintiffs’ Note was also assigned to Wells Fargo. (Id. & Ex. B [1.1 at 7-8]; see
also [7.4]).2
2
Wells Fargo attached to its Motions to Dismiss a copy of the Assignment,
which was filed and recorded by the Clerk of Court for the Superior Court of
Gwinnett County. This document is a matter of public record and the Court may
consider it. See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 355
(2007) (on a motion to dismiss, court must consider the complaint and matters of
which it may take judicial notice); Bryant v. Avado Brands, Inc., 187 F.3d 1271,
1276-1278 (11th Cir. 1999) (court may take judicial notice of official public
3
Plaintiffs allege that “[a]fter multiple attempts to contact Defendant Wells
Fargo in the hope of securing an affordable loan modification . . . including
extensive correspondence and conversation with various Wells Fargo personnel,
Plaintiffs’ requests for an affordable loan modification or other reasonable workout
options were denied.” (Id. ¶ 14).
On September 13, 2014, Plaintiffs sent Wells Fargo a letter (“Letter”), by
certified mail, entitled “R.E.S.P.A. Qualified Written Request” (“QWR”). ([1.1 at
10-13]). In the Letter, Plaintiffs make vague requests for documents and
information related, and unrelated, to the servicing of their loan. Plaintiffs assert
that Wells Fargo “did not respond to Plaintiffs’ QWR Letter, took no responsive
action and undertook no investigation into the issue [sic] raised by Plaintiffs [sic]
QWR.” (Compl. ¶ 73).
“[O]n or about February or March 2015, Defendants Wells Fargo and
[Aldridge] Connors initiated foreclosure proceedings against the Plaintiffs.” (Id.
¶ 15).
On April 29, 2015, Plaintiffs, proceeding pro se, filed their Complaint [1].
Plaintiffs assert claims against Defendants for declaratory relief (Count 1), breach
of contract (Count 2), negligence (Count 3), gross negligence (Count 4),
records and may base its decision on a motion to dismiss on the information in
those records).
4
negligence per se (Count 5), attempted wrongful foreclosure (Count 9), and breach
of the duty of good faith and fair dealing (Count 10). The crux of these claims is
that Defendants failed to comply with certain HUD regulations, incorporated by
reference into Plaintiffs’ Note and Security Deed and which are prerequisites to
foreclosure. Specifically, Plaintiffs assert that Defendants failed to comply with 24
C.F.R. § 203.604(b), because “Wells Fargo and [Aldridge] Connors did not have a
face-to-face interview with Plaintiff[s] or make any reasonable effort to arrange
such a meeting” before initiating foreclosure proceedings. (Compl. ¶¶ 32, 35, 40,
& 49-50).3
Plaintiffs also assert claims against Defendants for violation of the Fair
Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. (Count 6), and
the Georgia Racketeer Influenced and Corrupt Organizations Act (“Georgia
RICO”) (Count 11). Last, Plaintiffs claim that Wells Fargo violated the Truth in
Lending Act (“TILA”), 15 U.S.C. § 1601 et seq. (Count 7) and the Real Estate
Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq. (Count 8), by
failing to respond to Plaintiffs’ Letter. Plaintiffs seek declaratory relief,
compensatory and punitive damages, attorney’s fees and litigation costs.
3
Section 203.604(b) provides that “[t]he mortgagee must have a face-to-face
interview with the mortgagor, or make a reasonable effort to arrange such a
meeting, before three full monthly installments due on the mortgage are unpaid.”
24 C.F.R. § 203.604(b).
5
On May 18 and 21, 2015, Aldridge Connors and Wells Fargo, respectively,
moved to dismiss Plaintiffs’ Complaint for failure to state a claim.
On August 20, 2015, Magistrate Judge Johnson issued his R&R, which
recommends granting Defendants’ Motions to Dismiss on all of Plaintiffs’ claims.
On September 22, 2015, Plaintiffs filed their Objections to the R&R.
II.
DISCUSSION
A.
Legal Standards
1.
Review of a Magistrate Judge’s R&R
After conducting a careful and complete review of the findings and
recommendations, a district judge may accept, reject, or modify a magistrate
judge’s report and recommendation. 28 U.S.C. § 636(b)(1); Williams
v. Wainwright, 681 F.2d 732 (11th Cir. 1982), cert. denied, 459 U.S. 1112 (1983).
A district judge “shall make a de novo determination of those portions of the report
or specified proposed findings or recommendations to which objection is made.”
28 U.S.C. § 636(b)(1). This requires that the district judge “give fresh
consideration to those issues to which specific objection has been made by a
party.” Jeffrey S. v. State Bd. of Educ. of Ga., 896 F.2d 507, 512 (11th Cir. 1990)
(internal quotation marks omitted). With respect to those findings and
recommendations to which objections have not been asserted, the Court must
6
conduct a plain error review of the record. United States v. Slay, 714 F.2d 1093,
1095 (11th Cir. 1983), cert. denied, 464 U.S. 1050 (1984).
Plaintiffs object to the Magistrate Judge’s conclusion that they fail to state a
claim for relief in Counts 1-6, and 8, and the Court reviews these claims de novo.
The Court conducts a plain error review of the unobjected-to portions of the R&R.
2.
Motion to Dismiss for Failure to State a Claim
On a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of
Civil Procedure, the Court must “assume that the factual allegations in the
complaint are true and give the plaintiff[] the benefit of reasonable factual
inferences.” Wooten v. Quicken Loans, Inc., 626 F.3d 1187, 1196 (11th Cir.
2010). Although reasonable inferences are made in the plaintiff’s favor,
“‘unwarranted deductions of fact’ are not admitted as true.” Aldana v. Del Monte
Fresh Produce, N.A., 416 F.3d 1242, 1248 (11th Cir. 2005) (quoting S. Fla. Water
Mgmt. Dist. v. Montalvo, 84 F.3d 402, 408 n.10 (1996)). Similarly, the Court is
not required to accept conclusory allegations and legal conclusions as true. See
Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir. 2010)
(construing Ashcroft v. Iqbal, 556 U.S. 662 (2009); Bell Atl. Corp. v. Twombly,
550 U.S. 544 (2007)); see also White v. Bank of America, NA, 597 F. App’x 1015,
1018 (11th Cir. 2014) (“[C]onclusory allegations, unwarranted deductions of facts
7
or legal conclusions masquerading as facts will not prevent dismissal.”) (quoting
Oxford Asset Mgmt., Ltd. V. Jaharis, 297 F.3d 1182, 1188 (11th Cir. 2002)).
“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.’”
Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570)). Mere “labels and
conclusions” are insufficient. Twombly, 550 U.S. at 555. “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). This requires more than
the “mere possibility of misconduct.” Am. Dental, 605 F.3d at 1290 (quoting
Iqbal, 556 U.S. at 679). The well-pled allegations must “nudge[] their claims
across the line from conceivable to plausible.” Id. at 1289 (quoting Twombly, 550
U.S. at 570).4
Complaints filed pro se are to be liberally construed and are “held to less
stringent standards than formal pleadings drafted by lawyers.” Erickson v. Pardus,
551 U.S. 89, 94 (2007) (citations and internal quotation marks omitted).
4
Federal Rule of Civil Procedure 8(a)(2) requires the plaintiff to state “a short
and plain statement of the claim showing that the pleader is entitled to relief.”
Fed. R. Civ. P. 8(a)(2). In Twombly, the Supreme Court recognized the liberal
minimal standards imposed by Federal Rule 8(a)(2) but also acknowledged that
“[f]actual allegations must be enough to raise a right to relief above the speculative
level . . . .” Twombly, 550 U.S. at 555.
8
Nevertheless, a pro se plaintiff must comply with the threshold requirements of the
Federal Rules of Civil Procedure. “Even though a pro se complaint should be
construed liberally, a pro se complaint still must state a claim upon which the
Court can grant relief.” Grigsby v. Thomas, 506 F. Supp. 2d 26, 28 (D.D.C. 2007).
“[A] district court does not have license to rewrite a deficient pleading.”
Osahar v. U.S. Postal Serv., 297 F. App’x 863, 864 (11th Cir. 2008).
B.
Plaintiffs’ Objections
1.
Violation of the FDCPA (Count 6)
The FDCPA prohibits debt collectors from, among other things, using “false,
deceptive, or misleading representation or means in connection with the collection
of any debt.” 15 U.S.C. § 1692e. To state a claim for relief under Section 1692e, a
plaintiff must allege that: (1) the defendant is a “debt collector;” (2) the challenged
conduct is related to debt collection activity; and (3) the defendant engaged in an
act or omission prohibited by the FDCPA. Gardner v. TBO Capital LLC,
986 F. Supp. 2d 1324, 1332 (N.D. Ga. 2013) (citing Reese v. Ellis, Painter,
Ratteree & Adams, LLP, 678 F.3d 1211, 1216 (11th Cir. 2012)); Frazier
v. Absolute Collection Serv., Inc., 767 F. Supp. 2d 1354, 1363 (N.D. Ga. 2011)).
Here, Plaintiffs fail to specify any provision of the FDCPA that Defendants
allegedly violated. Plaintiffs assert that Defendants “falsely threatened legal action
9
and failed to inform Plaintiffs that Plaintiffs had a right to a face-to-face meeting
and/or failed to arrange such a meeting.” (Compl. ¶ 56). Plaintiffs do not describe
the “legal action” threatened, when the alleged “threat” was made, or the substance
of the threats claimed.5
To the extent Plaintiffs argue that Defendants made misleading
representations because they did not disclose that they were required under 24
C.F.R. § 203.604(b) to conduct a face-to-face meeting with Plaintiffs before
foreclosure, this “misrepresentation” invention is illogical. It is not a
misrepresentation to not disclose a requirement imposed upon a lender, especially
where, as here, the absence of notice of the lender’s obligation did not impact or
prejudice Plaintiffs in any way.
5
Plaintiffs, for the first time in their Response, state generally that the
FDCPA prohibits “harassing, oppressive or abusive conduct (15 U.S.C. § 1692(d)),
the ‘use of false, deceptive or misleading representations or means in connection
with the collection of any debt’ (15 U.S.C. § 1692(e)), the use of ‘unfair or
unconscionable means’ to collect a debt (15 U.S.C. § 1692(f)) and failure to
validate a debt (15 U.S.C. § 1692(g))—conduct in which Plaintiff[s] contend[]
Defendants Wells Fargo and [Aldridge] Connors has [sic] engaged.” ([11] at 10).
This argument is not properly before the Court and the Court will not consider it.
Cf. Huls v. Liabona, 437 F. App’x 830, 832 n.4 (11th Cir. 2011) (per curium)
(argument not properly raised where plaintiff asserted it for the first time in
response to defendant’s motion to dismiss, instead of seeking leave to file an
amended complaint). Even it was properly before the Court, Plaintiffs fail to
allege any facts to support that Defendants violated these sections of the FDCPA,
and Plaintiffs’ general assertions are wholly insufficient to state a plausible claim
for relief. See Twombly, 550 U.S. at 555.
10
Plaintiffs failed to show that Defendants have engaged in an act or omission
prohibited by the FDCPA, and this claim is required to be dismissed. See, e.g.,
15 U.S.C. §§ 1692e, 1692g; Gardner, 986 F. Supp. 2d at 1332. Plaintiffs’
objection to the R&R on this ground is overruled.
2.
Violation of RESPA (Count 8)
To state a claim for relief under RESPA, a plaintiff must allege that: “(1) the
defendant is a loan servicer, (2) the plaintiff sent the defendant a valid QWR,
(3) the defendant failed to adequately respond within the statutory period of 20
days or 60 days, and (4) the plaintiff is entitled to actual or statutory damages.”
Arroyo v. Bank of America, N.A., No. 1:13-cv-1767-RWS, 2013 WL 3785623, at
*3 (N.D. Ga. July 18, 2013) (quotation omitted). RESPA defines a QWR as “a
written correspondence, other than notice on a payment coupon or other payment
medium supplied by the servicer,” that requests information relating to the
servicing of a loan. 12 U.S.C. § 2605(e)(1)(B). “Servicing” is defined as
“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). To be valid, a QWR must:
11
(i) include[], or otherwise enable[] the servicer to identify, the name
and account of the borrower; and
(ii) include[] a statement of the reasons for the belief of the borrower
. . . that the account is in error or provide[] sufficient detail to the
servicer regarding other information sought by the borrower.
12 U.S.C. § 2605(e)(1)(B). A loan servicer has a duty to respond to a borrower’s
QWR or inquiries related to the servicing of a borrower’s loan. 12 U.S.C.
§ 2605(e); Mallaly v. BAC Loan Serv., LLC, No. 3:10-cv-0074, 2010 WL
5140626, at *7 (N.D. Ga. Oct. 6, 2010) (King, M.J.) adopted at 2010 WL 5140031
(N.D. Ga. Dec. 13, 2010) (Hunt, J.) (citing 12 § U.S.C. 2605(e)). “If the servicer
does not comply with RESPA’s deadlines, the borrower can recover actual
damages from the failure to communicate, but the borrower is limited to actual
damages unless there is a ‘pattern or practice of noncompliance.’” Marks v. PHH
Mortg. Corp., No. 5:11-cv-167 (CAR), 2011 WL 5439164, at *3 (M.D. Ga.
Nov. 9, 2011) (citing 12 U.S.C. §§ 2605(f)). To show actual damages, a plaintiff
must “demonstrate that [d]efendant’s breach proximately caused the alleged
damages.” Russell v. Nationstar Mortg., LLC, No. 14-61977-CIV, 2015 WL
5029346, at *6 (S.D. Fla. Aug. 26, 2015).
Here, assuming their Letter constitutes a valid QWR under RESPA,6
6
The Magistrate Judge found that Plaintiffs’ Letter was not a valid QWR
under RESPA because it “contains a long list of unsupported demands for
12
Plaintiffs fail to allege facts to support that Wells Fargo’s failure to respond caused
their claimed damages. Plaintiffs assert that “they have been damaged by not
having all monies [sic] properly credited to their mortgage loan account” and that
“they would not have been in default if they had received all credits for the money
they have paid on their mortgage loan account.” (Compl. ¶¶ 72-73). That
Plaintiffs admit that they defaulted on their loan payments in 2010—and before
their loan was assigned to Wells Fargo—undercuts their assertion that Wells
Fargo’s failure to respond to their September 13, 2014, Letter caused their alleged
damages. (See id. ¶ 13); see also Thepvongsa v. Reg’l Tr. Servs. Corp., 972
documents and information regarding issues unrelated to the servicing of the loan,”
“does not identify the alleged error or the reasons [Plaintiffs] believed their
account was in error and was too broad to provide Wells Fargo with the
information necessary to investigate their claims.” (R&R at 25). Although
Plaintiffs make vague requests for numerous documents, the Court observes that
some of their requests relate to the servicing their loan. For example, Plaintiffs
state that they dispute the accuracy of their mortgage loan balance because they
believe that payments were not properly applied to their account, and they request
an itemized payoff statement and a statement of the escrow for their account.
Because some of Plaintiffs’ requests in their QWR are for information related to
the servicing of their loan, including their payment history, the Magistrate Judge’s
finding that Plaintiffs’ Letter does not constitute a valid QWR under RESPA, is not
adopted. See 12 U.S.C. § 2605(e)(1)(B); Patton v. Ocwen Loan Serv., LLC,
No. 6:11-cv-445-Orl-19DAB, 2011 WL 3236026, at *3 (M.D. Fla. July 28, 2011)
(plaintiffs’ letter was a “QWR in part” because he stated that he believed that
“payments have not been properly credited to the balance due” which “constituted
a request that [the loan servicer] provide information regarding the payments
applied to [p]laintiff’s mortgage loan [it] serviced”); Goldman v. Aurora Loan
Serv., LLC, No. 1:09-cv-3337-RWS, 2011 WL 3845498 (N.D. Ga. Aug. 29, 2011)
(plaintiff’s request to loan servicer for her payment history was valid QWR).
13
F. Supp. 2d 1221, 1229 (W.D. Wash. Sept. 25, 2013) (“[p]laintiff has not identified
actual damages suffered as a result of [servicer’s] failure to respond adequately to
the QWR” because “[t]he lack of information did not cause plaintiff to send his
payments to the wrong entity, for example, or result in the accrual of late fees or
penalties that could have been avoided had defendants timely responded [because]
plaintiff was already in default when the QWR was sent”) (emphasis added);
Brothers v. Bank of Am., N.A., No. 5:12-cv-3121-EJD, 2012 WL 4471590, at *3
(N.D. Cal. Sept. 26, 2012) (claim that plaintiff was “damaged in the amount of
ongoing penalties, fees and interest charged by [d]efendants” not sufficient to state
a RESPA claim for failure to respond to QWR because “[t]hese damages do not
flow from any lack of response to the QWR; to the contrary, these ‘damages’ are a
result of [p]laintiff’s failure to make loan payments”); Russell, 2015 WL 5029346,
at *6 (“Conclusory and speculative allegations about the effects of failure to
respond to a QWR’s ‘laundry list’ of request for information are insufficient in the
absence of showing how the failure to respond to the QWR[] caused any of these
things.”).
Plaintiffs fail to allege facts to support that Wells Fargo’s failure to respond
to their Letter caused their claimed damages, and they do not otherwise assert that
Wells Fargo engaged in a pattern or practice of violating RESPA such that they
14
could recover statutory damages. See 12 U.S.C. §§ 2605(f)(1)(A)-(f)(1)(B);
Marks, 2011 WL 5439164 at *3. Plaintiffs fail to state a claim for violation of
RESPA, and this claim is required to be dismissed. See Frazile v. EMC Mortg.
Corp., 382 F. App’x 833, 836 (11th Cir. 2010) (allegation of damages is a
necessary element of any claim under Section 2605). Plaintiffs’ objection on this
ground is overruled.
3.
Breach of Contract (Counts 2 and 10)
To assert a claim for breach of contract under Georgia law, a plaintiff must
show (1) a valid contract; (2) material breach of its terms; and (3) damages arising
from that breach. See Budget Rent-A-Car of Atlanta, Inc. v. Webb, 469 S.E.2d
712, 713 (Ga. Ct. App. 1996); see also Bates v. JPMorgan Chase Bank, NA,
768 F.3d 1126, 1130 (11th Cir. 2014). Here, Plaintiffs allege that Defendants
breached the Note and Security Deed by failing to conduct a face-to-face meeting
with Plaintiffs before initiating foreclosure proceedings, and, as a result,
“Plaintiff[s] [have] suffered mental anguish, emotional pain and suffering and
damage to [their] credit and reputation . . . .” (Compl. ¶ 38).
In their objections, Plaintiffs reiterate that Defendants’ alleged breach in
failing to conduct a face-to-face meeting with Plaintiffs resulted in their claimed
damages. It is undisputed that Plaintiffs had already defaulted on their loan
15
obligations when the alleged breach occurred, and Plaintiffs do not allege any facts
to show that a face-to-face meeting would have prevented foreclosure. Plaintiffs
allege that they made “multiple attempts to Contact Defendant Wells Fargo in the
hope of securing an affordable loan modification” but their “request for an
affordable loan modification . . . were [sic] denied.” (Compl. ¶ 14). That
Defendants reported Plaintiffs’ default to credit bureaus and advertised the
Property for foreclosure sale was the result of Plaintiffs’ failure to make their loan
payments, not the result of Defendants’ alleged breach. See Bates, 768 F.3d at
1132-33 (Mortgagor “must show that the premature or improper exercise of some
power under the deed . . . resulted in damages that would not have occurred but for
the breach.”); Rourk v. Bank of Am., N.A., 587 F. App’x 597 (11th Cir. 2014)
(mortgagor’s failure to make loan payments “is fatal to her claim for breach of
contract and wrongful foreclosure, as her ‘alleged injury was solely attributable to
her own acts or omissions.’”) (quoting Heritage Creek Dev. Corp. v. Colonial
Bank, 601 S.E.2d 842, 845 (Ga. Ct. App. 2004)).7 Plaintiffs fail to state a claim for
7
The Court agrees with the Magistrate Judge’s conclusion that damages for
mental anguish and emotional pain and suffering cannot be recovered in a breach
of contract claim, and this claim is required to be dismissed for this additional
reason. See Cummings v. Prudential Ins. Co. of Am., 542 F. Supp. 838, 841
(S.D. Ga. 1982) (under Georgia law, damages for mental suffering arising out of
breach of contract, absent breach of a duty independent of contract, are not
recoverable).
16
breach of contract, and this claim is required to be dismissed.8 Plaintiffs’ objection
on this ground is overruled.
4.
Negligence (Counts 3, 4 and 5)
A plaintiff asserting a cause of action for negligence under Georgia law must
establish (1) the existence of a duty on the part of the defendant, (2) a breach of
that duty, (3) causation, and (4) damages. Rasnick v. Krishna Hospitality, Inc.,
713 S.E.2d 835, 837 (Ga. 2011) (citing John Crane, Inc. v. Jones, 604 S.E.2d 822,
825 (Ga. 2004)).
Plaintiffs assert that Defendants failed to comply with 24 C.F.R.
§ 203.604(b) and that “[s]uch conduct constitutes negligence per se.” (Compl.
¶ 51). There is no private right of action for violation of HUD regulations or the
National Housing Act, see Bates, 768 F.3d at 1130 (citing Roberts
v. Cameron-Brown, 556 F.2d 356, 360 (5th Cir. 1977)), and the negligent acts
8
As noted by the Magistrate Judge, Plaintiffs’ allegations in Counts 2 and 10
must be considered together as a single breach of contract claim. See Stuart
Enters. Int’l, Inc. v. Peykan, Inc., 555 S.E.2d 881, 884 (Ga. Ct. App. 2001) (“The
implied covenant of good faith modifies, and becomes part of, the provisions of the
contract itself.”); see also Smith v. Orthalliance, Inc., 1:01-cv-2778-BBM, 2004
WL 5512959, at *5 (N.D. Ga. Jan. 9, 2004) (“[A]lthough the plaintiffs plead for
relief for breach of an ‘implied covenant of good faith and fair dealing’ in a
separate count of the Amended Complaint, such plea for relief may only be
considered as part of their count alleging breach of contract.”). Having found that
Plaintiffs fail to show that they suffered damages as a result of Defendants’ alleged
breach of contract, Plaintiffs’ claim in Count 10 for breach of the duty of good
faith and fair dealing is also dismissed.
17
alleged by Plaintiffs against Defendants all arise from the duties created by the
Note and Security Deed. Georgia law is clear that “[a]bsent a legal duty beyond
the contract, no action in tort may lie upon an alleged breach of [a] contractual
duty.” Wallace v. State Farm Fire & Cas. Co., 539 S.E.2d 509 (512 (Ga. Ct. App.
2000). Because Plaintiffs fail to show that Defendants breached a duty they owed
to Plaintiffs independent of the Note and Security Deed, Plaintiffs cannot state a
claim for negligence against Defendants. See id.; see also Fielbon Dev. Co.
v. Colony Bank of Houston Cnty., 660 S.E.2d 801, 808 (Ga. Ct. App. 2008) (“A
defendant’s mere negligent performance of a contractual duty does not create a tort
cause of action; rather, a defendant’s breach of a contract may give rise to a tort
cause of action only if the defendant has also breached an independent duty created
by statute or common law.”).
To the extent Plaintiffs appear to argue, for the first time in their Response,
that O.C.G.A. § 51-1-69 provides a mechanism for them to assert a claim based on
violation of HUD regulations and the National Housing Act, this argument was not
raised in Plaintiffs’ Complaint and the Court will not consider it. See Huls
v. Liabona, 437 F. App’x at 832 n.4. Even if properly before the Court, Plaintiffs
9
O.C.G.A. § 51-1-6 provides: “When the law requires a person to perform an
act for the benefit of another or to refrain from doing an act which may injure
another, although no cause of action is given in express terms, the injured party
may recover for the breach of such legal duty if he suffers damage thereby.”
18
cannot assert a claim for violation of HUD regulations and the National Housing
Act under O.C.G.A. § 51-1-6 because a cause of action—breach of contract—
already exists to remedy the violations alleged, and, because is well-settled that
“the National Housing Act and the regulations promulgated thereunder 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,” the Court
declines to create one. See Roberts, 556 F.2d at 360; Miller v. Gen. Wholesale
Co., Inc., 101 F. Supp. 2d 1374 (N.D. Ga. 2000) (“It seems clear from the language
of [O.C.G.A. § 51-1-6] that no cause of action is created where, as here, an express
cause of action already exists.”); cf. Moses v. Banco Mortg. Co., 778 F.2d 267,
272 n.2 (5th Cir. 1985) (collecting cases holding that National Housing Act and
regulations do not provide private cause of action and refusing to create one).
Plaintiffs fail to state a claim for negligence and these claims are required to be
dismissed.10 Plaintiffs’ objection on this ground is overruled.
5.
Declaratory Judgment (Count 1)
“[T]o pursue properly a declaratory judgment under Georgia law ‘a party
10
Plaintiffs also fail to show that Wells Fargo’s alleged failure to conduct a
face-to-face meeting with Plaintiffs, or to inform them of the availability of
homeownership counseling, resulted in Plaintiffs’ damages. Plaintiffs’ negligence
claims are required to be dismissed for this additional reason. See Bradley Ctr.,
296 S.E.2d at 695.
19
must establish that a declaratory judgment is necessary to relieve himself of the
risk of taking some future action that, without direction, would jeopardize his
interests.’” Milani v. One West Bank FSB, 491 F. App’x 977, 979
(11th Cir. 2012) (quoting Porter v. Houghton, 542 S.E.2d 491, 492 (Ga. 2001)).
Plaintiffs seek a declaration that Defendants did not have a face-to-face
interview with Plaintiff before foreclosure, that as a result, Defendants did not
comply with HUD requirements or the Security Deed, and foreclosure is therefore
premature. (Compl. ¶¶ 32-33). It appears that Plaintiffs have already defaulted on
their loan obligations, and it is undisputed that Defendants already allegedly
breached the Security Deed and initiated foreclosure proceedings.11 No
uncertainty exists about any future action by Plaintiffs which might affect their
interests. A declaratory judgment is unavailable because “all material rights have
accrued based on past events.” See Milani, 491 F. App’x at 979. In their
Complaint, Plaintiffs seek, in effect, “an advisory opinion as to whether, based
11
To the extent Plaintiffs sought to enjoin foreclosure until Defendants comply
with HUD regulations, Plaintiffs assert in their Objections that “Defendants have
foreclosed plaintiffs [sic] home since the filing of this complaint,” and Plaintiffs’
request is now moot. Having found that Plaintiffs’ breach of contract claim is
required to be dismissed, the Court agrees with the Magistrate Judge’s conclusion
that Plaintiffs’ claim in Count 1 is redundant and declaratory relief is not available
for this additional reason. See Einsberg v. Standard Ins. Co., No. 09-80199-CIV,
2009 WL 3667086, at *2 (S.D. Fla. Oct. 26, 2009) (“[A] decision on the merits of
the breach of contract claim would render the defendant’s request for declaratory
judgment moot or redundant.”).
20
upon past events, [they] would prevail on the merits if [they] file[d] an action at
law or equity to establish” that foreclosure was wrongful. See Logan Paving Co. v.
Peoples Bank & Trust, 395 S.E.2d 287, 288 (Ga. Ct. App. 1990). Plaintiffs’ claim
for declaratory relief is required to be dismissed, and Plaintiffs’ objection on this
ground is overruled.
C.
Unobjected-to Recommendations
1.
Violation of TILA (Count 7)
Plaintiffs allege that Wells Fargo violated TILA, specifically 15 U.S.C.
§ 1641(f), by failing to respond to Plaintiffs’ request for the “true identity of the
owner of Plaintiffs’ loan.” (Compl. ¶¶ 62-64). 15 U.S.C. § 1641(f)(2) provides
that, “[u]pon written request by the obligor, the servicer shall provide the obligor,
to the best knowledge of the servicer, with the name, address, and telephone
number of the owner of the obligation or the master servicer of the obligation.”
15 U.S.C. § 1641(f)(2).
The Magistrate Judge found that, because Plaintiffs’ September 13, 2014,
Letter was intended as a QWR under RESPA, including because it sought
information “pursuant to 12 U.S.C. Section 2605(e)(1)(A) and Reg. [sic] X Section
3500.21(e)(1),” the Letter does not constitute a request under Section 1671(f)(2) of
21
TILA.12 The Magistrate Judge found further that Plaintiffs failed to show that they
suffered actual damages resulting from Wells Fargo’s alleged failure to respond to
their Letter. The Magistrate Judge recommended that this claim be dismissed
pursuant to Rule 12(b)(6), and the Court finds no plain error in this
recommendation. See Turner v. Beneficial Corp., 242 F.3d 1023, 1028 (11th Cir.
2001) (“[D]etrimental reliance is an element of a TILA claim for actual
damages . . . a plaintiff must present evidence to establish a causal link between the
financing institution’s noncompliance and his damages.”); see also Che v. Aurora
Loan Serv., 847 F. Supp. 2d 1205, 1209 (C.D. Cal. 2012) (dismissing claim for
failure to plead actual damages resulting from alleged TILA violation because
damages resulted from plaintiff “allow[ing] her loan to go into default”).13
Plaintiffs’ claim for violation of TILA is dismissed.
12
Although Plaintiffs state in their Complaint that they requested information
regarding the “owner of Plaintiffs’ loan,” in their Letter, Plaintiffs request,
“pursuant to Section 1641(f)(2) of TILA,” “the “[f]ull name, address, and
telephone number of the custodian of [their] original Promissory Note” and “the
custodian of [their] original Security Instrument,” not information regarding the
owner of the obligation. (Compare Letter [1.1¶¶ 5-6] with 15 U.S.C. § 1641(f)(2))
(“Upon written request by the obligor, the servicer shall provide the obligor, to the
best knowledge of the servicer, with the name, address, and telephone number of
the owner of the obligation or the master servicer of the obligation.”) (emphasis
added). Plaintiffs’ TILA request is doubtfully sufficient to trigger the disclosure
obligations under TILA.
13
Plaintiffs’ assertion that they made “multiple attempts to Contact Defendant
Wells Fargo in the hope of securing an affordable loan modification . . . including
22
6.
Attempted Wrongful Foreclosure (Count 9)
Plaintiffs did not object to the Magistrate Judge’s conclusion that Plaintiffs
fail to allege facts to support that Defendants published untrue and derogatory
statements regarding Plaintiffs’ financial condition. The Magistrate Judge
recommended that Plaintiffs’ attempted wrongful foreclosure claim be dismissed
pursuant to Rule 12(b)(6), and the Court finds no plain error in this
recommendation. See, e.g., Jenkins v. McCalla Raymer, LLC, 492 F. App’x 968,
972 (11th Cir. 2012) (To state a claim for attempted wrongful foreclosure under
Georgia law, “a plaintiff must allege ‘a knowing and intentional publication of
untrue and derogatory information concerning the debtor’s financial condition, and
that damages were sustained as a direct result of this publication.’”) (quotation
omitted). Plaintiffs’ attempted wrongful foreclosure claim is dismissed.14
extensive correspondence and conversations with various Wells Fargo personnel,”
but their “request for an affordable loan modification . . . were [sic] denied,”
undercuts their claim that they “have been damaged because they were unable to
negotiate a settlement with the true owner of their obligation.” (Compl. ¶¶ 14, 66).
The facts are that, as of September 2, 2010, Wells Fargo was the holder of their
Security Deed and the Note, and was thus the “owner of their obligation.” (Id.).
14
The Court notes that Plaintiffs do not allege, and it does not appear, that they
are current on their loan obligations. Failure to make the proper loan payments or
tender the amount due defeats any wrongful foreclosure or attempted wrongful
foreclosure claims. See White v. Bank of America, N.A., No. 1:12-cv-3834-WSD,
2013 WL 1963786, *3 at n. 11 (N.D. Ga. May 10, 2013), aff’d, 597 F. App’x 1015
(11th Cir. 2014) (per curiam) (collecting cases). Plaintiffs’ attempted wrongful
foreclosure claim is dismissed for this additional reason.
23
7.
Georgia RICO (Count 11)
Plaintiffs did not object to the Magistrate Judge’s conclusion that Plaintiffs’
conclusory, vague allegations that Defendants engaged in theft, deception, and
fraud are insufficient to satisfy the special pleading requirement under Rule 9(b) of
the Federal Rules of Civil Procedure for pleading fraud claims with specificity, and
they otherwise fail to allege the required elements of a Georgia RICO claim.15 The
Magistrate Judge found that Plaintiffs fail to show that Defendants engaged in a
pattern of racketeering activity or how the claimed taking of their Property is
directly related to Defendants’ alleged predicate acts of theft by deception. The
Magistrate Judge recommended that Plaintiffs’ Georgia RICO claim be dismissed
pursuant to Rules 9(b) and 12(b)(6), and the Court finds no plain error in this
recommendation. See Fed. R. Civ. P. 9(b), 12(b)(6); see also Brown v. Moe’s Sw.
Grill, LLC, No. 1:07-cv-0741-RWS, 2009 WL 5175280, at *1 (N.D. Ga. Dec. 21,
15
The Eleventh Circuit has consistently held: “To comply with Rule 9(b), a
complaint must 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.” Thomas v. Pentagon Federal Credit Union, 393
Fed. App’x 635, 638 (11th Cir. 2010). The particularity requirement for fraud in
Federal Rule of Civil Procedure 9(b) applies to such fraud-based Georgia RICO
claims brought in federal court. See Curtis Inv. Co., LLC v. Bayerische Hypo-Und
Vereinsbank, AG, 341 F. App’x 487, 493 (11th Cir. 2009) (per curiam).
24
2009) (citing O.C.G.A. §§ 16-14-4 and 16-14-3(2)) (“A claim under Georgia Civil
RICO requires a demonstration of a ‘pattern of racketeering activity’ along with a
‘direct causal connection between [the] injury and the commission of the predicate
acts.”); Joseph v. Fed. Home Loan Mortg. Corp., No. 1:12-cv-1022-RWS, 2012
WL 5429639, at *4-5 (N.D. Ga. Nov. 6, 2012) (allegation that defendants “made
and used false and fraudulent documents, knowingly, in matters concerning real
property,” and general assertions that defendants material misrepresentations and
omissions in connection with plaintiff’s promissory note, security deed, and
foreclosure, were insufficient to support a claim under Georgia RICO statute).
Plaintiffs’ Georgia RICO claim is dismissed.16
III.
CONCLUSION
For the foregoing reasons,
16
In their objections, Plaintiffs “request that if this Court should disagree with
their stated position . . . then the Court should allow Plaintiffs to amend their
complaint.” (Obj. 17-18). Plaintiffs do not attach a proposed amendment and they
fail to describe its substance. To the extent Plaintiffs seek to amend their
Complaint to add allegations “concerning [their] breach of contract claim, FDCPA
claim, declaratory relief claim and others,” Plaintiffs fail to state a claim for relief
supported by any viable legal theory. (Obj. at 17). Based on the allegations in the
Complaint, the Court concludes that a more carefully drafted complaint would not
state a claim and that it would be futile to grant Plaintiffs leave to amend their
Complaint. See Langlois v. Traveler’s Ins. Co., 401 F. App’x 425, 427 (11th Cir.
2010) (where a more carefully drafted complaint might state a claim, pro se
plaintiff should be given opportunity to amend).
25
IT IS HEREBY ORDERED that Plaintiffs’ Motion for Extension of Time
[15] to file objections to the R&R is GRANTED NUNC PRO TUNC.
IT IS FURTHER ORDERED that Plaintiffs’ Objections [16] are
OVERRULED.
IT IS FURTHER ORDERED that Magistrate Judge Walter E. Johnson’s
Final Report and Recommendation [13] is ADOPTED.
IT IS FURTHER ORDERED that Defendants Wells Fargo Bank, N.A.’s
and Aldridge Connors, LLP’s Motions to Dismiss [4, 7] are GRANTED.
SO ORDERED this 27th day of January, 2016.
_______________________________
WILLIAM S. DUFFEY, JR.
UNITED STATES DISTRICT JUDGE
26
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