Pennington et al v. EquiFirst Corporation et al
Filing
61
MEMORANDUM AND ORDER granting 59 Motion to Dismiss for Failure to State a Claim. Signed by District Judge Richard D. Rogers on 6/10/2011. (Mailed to pro se party Billy and Barbara J. Pennington by certified mail; Certified Tracking Number: 70101060000094206987) (bt)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
BILLY PENNINGTON, et al.,
Plaintiffs,
vs.
Case No. 10-1344-RDR
EQUIFIRST CORPORATION,
Defendant.
MEMORANDUM AND ORDER
This
case
Corporation’s
complaint
is
before
motion
pursuant
to
to
the
court
dismiss
FED.R.CIV.P.
upon
defendant
plaintiffs’
12(b)(6).
second
Doc.
EquiFirst
amended
No.
59.
Plaintiffs, pro se, have not filed a timely response to the motion.
Plaintiffs have previously been warned in this litigation that,
under Local Rule 7.4, the failure to file a timely response to a
motion may cause the court to consider the motion uncontested.
Doc. No. 31.
This case is proceeding upon a second amended complaint which
was filed in response to motions to dismiss filed by several
defendants.
The court granted the motions to dismiss in large
part, but allowed the complaint to continue upon a claim that
defendant EquiFirst Corporation (“EquiFirst”) violated the Real
Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et
seq.
Doc. No. 56 at pp. 9, 12-13.
The court shall begin this opinion by repeating a discussion
from a prior opinion regarding standards applied to this kind of
motion in this kind of case.
I.
PRO SE STANDARDS
A pro se litigant’s pleadings “are to be construed liberally
and held to a less stringent standard than formal pleadings drafted
by lawyers.” Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991).
If plaintiffs’ pleadings can be reasonably read to state a valid
claim on which they could prevail, the court should do so despite
a failure to cite proper legal authority or follow normal pleading
requirements.
Id.
But, the court may not provide additional
factual allegations “to round out a plaintiff’s complaint or
construct a legal theory on a plaintiff’s behalf.”
Whitney v. New
Mexico, 113 F.3d 1170, 1173-74 (10th Cir. 1997).
II.
STANDARDS GOVERNING MOTIONS TO DISMISS
In deciding a motion to dismiss pursuant to FED.R.CIV.P.
12(b)(6), the court must accept the factual allegations set forth
in the complaint as true and draw all reasonable inferences in
favor of the plaintiff.
Ridge at Red Hawk, L.L.C. v. Schneider,
493 F.3d 1174, 1177 (10th Cir. 2007).
To survive such a motion, a
complaint must allege a plausible set of facts sufficient “to raise
a right to relief above the speculative level.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007).
This standard does not require
“heightened fact pleading of specifics, but only enough facts to
state a claim to relief that is plausible on its face.”
2
Id. at
570.
This court should first “identify[] pleadings that because
they
are
no
more
than
assumption of truth.”
(2009).
conclusions,
are
not
entitled
to
the
Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950
Though “legal conclusions can provide the framework of a
complaint, they must be supported by factual allegations.”
Id.
Second, if a complaint contains “well-pleaded factual allegations,
a court should assume their veracity and then determine whether
they plausibly give rise to an entitlement to relief.”
Id.
“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.
The
plausibility standard is not akin to a ‘probability requirement,’
but it asks for more than a sheer possibility that a defendant has
acted unlawfully.
Where a complaint pleads facts that are ‘merely
consistent with’ a defendant’s liability, it ‘stops short of the
line
between
relief.’”
possibility
and
plausibility
of
entitlement
to
Id. at 1949 (quoting and citing Twombly, 550 U.S. at
556-57) (internal citations omitted).
Dismissal pursuant to Rule 12(b)(6) is proper when the face of
the complaint “indicates the existence of an affirmative defense
such as noncompliance with the limitations period.”
Armour
Swift-Eckrich,
118
F.Supp.2d
1155,
1158
Pedro v.
(D.Kan.
2000)
(quoting Bullington v. United Air Lines, Inc., 186 F.3d 1301, 1311
3
n. 3 (10th Cir. 1999)).
III.
ALLEGATIONS IN THE SECOND AMENDED COMPLAINT
The second amended complaint alleges that plaintiffs met with
EquiFirst’s agents on or about March 23, 2007.
Doc. No. 53, ¶ 11.
At the meeting, plaintiffs executed documents for a real estate
loan, including a promissory note and a mortgage which identified
EquiFirst as the lender.
Id. at ¶¶ 12-13.
The second amended
complaint asserts that EquiFirst was a “fictitious lender” that
“merely transferred or deposited” plaintiffs’ promissory note “to
or with an unknown recipient.”
Id. at ¶ 17.
The complaint also
refers to EquiFirst as a “loan ‘originator’” which “is not loaning
the borrower a dime . . . [and] is doing nothing more than earning
a commission on the money someone else is lending the borrower.”
Id. at ¶ 38.
It further claims that EquiFirst pooled plaintiffs’
mortgage with other mortgages and sold it to an underwriter.
at ¶ 18.
Id.
At this point, according to plaintiffs, defendant
EquiFirst “could never be more than [a] servicing agent[].” Id. at
¶ 19.
Plaintiffs allege that they first became aware that their
rights to certain real estate settlement procedures may have been
violated in May 2009.
Id. at ¶ 20.
Plaintiffs further assert that
in August 2009, plaintiffs received a letter from Homeq Servicing
Corporation stating that Homeq was the servicing agent for the
current owner of plaintiffs’ loan, although plaintiffs have seen
4
other documents showing Sutton Funding LLC as the servicer. Id. at
¶ 26.
Plaintiffs allege that EquiFirst failed to provide a “Good
Faith Estimate disclosure” in advance of closing, “which is a
violation of RESPA.”
Id. at ¶ 46.
Plaintiffs also allege that
“EquiFirst failed to inform the plaintiff[s] when the note [was]
transferred or assigned within 15 days prior and the notice failed
to
contain
all
information
2605(b)(1), (2)(A) & (3).”
IV.
per
[RESPA
section]
12
U.S.C.
§
Id. at ¶ 49.
ARGUMENTS FOR DISMISSAL
Plaintiffs appear to bring two RESPA claims against EquiFirst:
1) that EquiFirst failed to provide a “good faith estimate”
disclosure; and 2) that EquiFirst failed to inform plaintiffs of
the transfer of plaintiffs’ loan in violation of 12 U.S.C. §
2605(b).
A.
EquiFirst contends that both claims must be dismissed.
Good faith estimate disclosure
EquiFirst
argues
initially
that
plaintiffs’
claim
that
EquiFirst violated RESPA by failing to provide a “good faith
estimate disclosure” must be dismissed because:
1) there is no
private right of action for such a claim under RESPA; and 2) if
there was such a private right of action, plaintiffs’ claim would
be untimely.
These arguments appear valid.
The requirement that “[e]ach lender shall include . . . a good
faith estimate of the amount or range of charges for specific
5
settlement services the borrower is likely to incur in connection
with the settlement . . .” is found at 12 U.S.C. § 2604(c).
The
great majority of courts that have considered the issue, including
one decision from this district, have held that there is no private
right of action for violations of § 2604.
E.g., Collins v. FMHA-
USDA, 105 F.3d 1366, 1367-68 (11th Cir.) cert. denied, 521 U.S. 1127
(1997); Santiago v. Bismark Mortgage Co., LLC, 2011 WL 839762 at
*5-6 (D.Haw. 3/4/2011); Delino v. Platinum Community Bank, 628
F.Supp.2d 1226, 1232-33 (S.D.Cal. 2009); Mayhew v. Cherry Creek
Mortgage Co., Inc., 2010 WL 935674 at *7 (D.Colo. 2010); Nelson v.
JPMorgan Chase Bank, N.A., 707 F.Supp.2d 309, 317 (E.D.N.Y. 2009);
Carr v. Home Tech Co., Inc., 476 F.Supp.2d 859, 869 (W.D.Tenn.
2007); Reese v. 1st Metropolitan Mortg. Co., 2003 WL 22454658 at *4
(D.Kan. 10/28/2003).
The longest limitations period for actions under RESPA is
three years “from the date of the occurrence of the violation.” 12
U.S.C. § 2614.
Plaintiffs brought this action in October 2010,
more than three years after the occurrence of the disclosure
violation alleged by plaintiffs.
Therefore, it appears that
plaintiffs’ claim under § 2604(c), assuming that a private action
could be brought, is untimely.
See Weingartner v. Chase Home
Finance, LLC, 702 F.Supp.2d 1276, 1286-87 (D.Nev. 2010).
B.
Notice of transfer of loan servicing
Section 2605(b)(1) requires that:
6
“Each servicer of any
federally related mortgage loan shall notify the borrower in
writing of any assignment, sale, or transfer of the servicing of
the loan to any other person.”
(emphasis added).
Plaintiffs
appear to allege that this section of RESPA was violated because:
“EquiFirst failed to inform the plaintiff[s] when the note [was]
transferred or assigned within 15 days prior and the notice failed
to
contain
all
information
2605(b)(1),(2)(A) & (3).”
per
[RESPA
section]
12
U.S.C.
§
Doc. No. 53 at ¶ 49.
EquiFirst contends that plaintiffs’ claim should be dismissed
because:
1) plaintiffs do not allege a transfer of the servicing
of the loan; 2) plaintiffs do not allege that EquiFirst was a
servicer of the loan (although the complaint does allege that
EquiFirst “could never be more than a servicing agent”); and 3)
plaintiffs do not allege any damages from the alleged violation.
Plaintiffs have not attempted to rebut any of these arguments.
For the purposes of this opinion, the court shall focus upon the
third argument.
Section 2605(f) states that:
Whoever fails to comply with any provision of this
section shall be liable to the borrower for each such
failure in the following amounts:
(1) Individuals
In the case of any action by an individual, an
amount equal to the sum of - - (A) any actual
damages to the borrower as a result of the
failure; and (B) any additional damages, as
the court may allow, in the case of a pattern
or
practice
of
noncompliance
with
the
requirements of this section, in an amount not
to exceed $1,000.
Numerous courts have dismissed claims alleging a violation of §
7
2605 because of a failure to allege actual damages to the borrower
as a result of the claimed violation or a pattern or practice of
noncompliance with RESPA requirements.
Financial,
LLC,
752
F.Supp.2d
785,
Mekani v. Homecomings
795-96
(E.D.Mich.
2010);
McWilliams v. Chase Home Finance, LLC, 2010 WL 1817783 at *4
(E.D.Mo. 5/4/2010); Reese v. JPMorgan Chase & Co., 686 F.Supp.2d
1291, 1305 (S.D.Fla. 2009); Jones v. ABN AMRO Mortgage Group, Inc.,
551 F.Supp.2d 400, 409 n. 9 (E.D.Pa. 2008) Ricotta v. Ocwen Loan
Servicing, LLC, 2008 WL 516674 at *5-6 (D.Colo. 2/22/2008); Byrd v.
Homecomings Financial Network, 407 F.Supp.2d 937, 945-46 (N.D.Ill.
2005).
These cases support EquiFirst’s argument for dismissal of
plaintiffs’ § 2605 claim because, from the court’s inspection of
the second amended complaint, plaintiffs have not alleged actual
damages from the EquiFirst’s claimed failure to comply with RESPA.
V.
CONCLUSION
EquiFirst’s motion to dismiss (Doc. No. 59) offers good
grounds for the dismissal of plaintiffs’ remaining claims in this
case.
Plaintiffs have not filed a timely response to the motion.
So, the motion appears uncontested.
For the reasons stated within
the motion, the court shall dismiss the remaining claims against
EquiFirst.
IT IS SO ORDERED.
Dated this 10th day of June, 2011 at Topeka, Kansas.
s/Richard D. Rogers
8
United States District Judge
9
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?