Hosler v. Nationstar Mortgage, L.L.C. et al

Filing 22

MEMORANDUM AND ORDER granting 10] Motion to Dismiss for Failure to State a Claim. Plaintiff's request for leave to file an amended complaint is denied. See order for details. Signed by U.S. District Senior Judge Sam A. Crow on 1/9/15. (msb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
THURMAN HOSLER,
Plaintiff,
vs.

Case No. 14-1347-SAC

NATIONSTAR MORTGAGE, L.L.C.,
and BANK OF AMERICA, N.A.,
Defendants.
MEMORANDUM AND ORDER
The defendant Bank of America, N.A. (“Bank”) moves to dismiss
the plaintiff’s actions for violations of the Truth in Lending Act (“TILA”) and
for breach of the implied covenant of good faith and fair dealing pursuant to
Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be
granted. (Dk. 10). The plaintiff Thurman Hosler’s claims arise out of
allegations that the Bank caused “force-placed insurance” to be issued
against his residential property without making the required disclosures and
charged him unreasonable and inflated premiums for the insurance. The
Bank argues the TILA action is untimely and otherwise fails, as does the
implied covenant action, to state an actionable claim for relief. The plaintiff
defends its TILA action as timely and viable, but conceding his implied
covenant action needs to be amended, he summarily asks for leave to
amend.

As alleged in the complaint, the plaintiff and his mother obtained
a note and mortgage for the purchase of their Wichita home in 2005. The
Bank was servicing the loan when the foreclosure action was filed in 2010,
when the default judgment was obtained, when the judgment was later set
aside in January of 2012, and when the plaintiff was allowed to resume
payments to the Bank. On March 6, 2012, which was after the plaintiff had
resumed making payments, the Bank “caused force placed insurance to be
issued against the Hosler home through Balboa Insurance Company now
owed by QBE.” (Dk. 1, ¶ 61). The plaintiff received notice in August of 2014
of a federal class action settlement against the Bank by homeowners who
had “lender-placed hazard insurance” issued on their residential property
between from 2008 through early 2014. “According to the notice, a lender
placed policy was applied to Hosler’s property in March 6, 2012 when Bank
of America, N.A., was the servicer of the loan.” Id. at ¶ 68. The plaintiff
opted out of the class action settlement.
On the TILA action, the plaintiff alleges the Bank violated 12
C.F.R. § 226.17(c) “when it added force placed insurance to Hosler’s
mortgage obligations and failed to provide new disclosures; failed to disclose
the amount and nature of any kickback, reinsurance or other profiteering
involving Bank of America or their affiliates based on the purchase of the
force-placed insurance.” (Dk. 1, ¶ 81). Specifically, Hosler alleges the
forced-place insurance “increased the principal amount due under the
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mortgage and create [sic] a new debt obligation subject to disclosures under
TILA.” Id. at ¶ 82. Hosler also alleges the Bank failed to disclose
commissions and unearned profits paid to any affiliate. Id. at ¶ 83. Finally,
in ¶ 84, the plaintiff alleges, “[a]cts constituting violations of TILA are
subject to equitable tolling because Bank of America’s kickback or other
revenue-generating scheme was concealed from Hosler.” (Dk. 1).
Dismiss for Failure to State a Claim
In deciding a Rule 12(b)(6) motion, a court accepts as true “all
well-pleaded factual allegations in a complaint and view[s] these allegations
in the light most favorable to the plaintiff.” Smith v. United States, 561 F.3d
1090, 1098 (10th Cir.2009), cert. denied, 130 S.Ct. 1148 (2010). This duty
to accept a complaint's allegations as true is tempered by the principle that
“mere ‘labels and conclusions,' and ‘a formulaic recitation of the elements of
a cause of action’ will not suffice; a plaintiff must offer specific factual
allegations to support each claim.” Kansas Penn Gaming, LLC v. Collins, 656
F.3d 1210, 1214 (10th Cir. 2011) (quoting Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 555 (2007)). As recently clarified by the Supreme Court, the
standard under 12(b)(6) is that to withstand a motion to dismiss, “’a
complaint must contain enough allegations of fact, taken as true, to state a
claim to relief that is plausible on its face.'” Al–Owhali v. Holder, 687 F.3d
1236, 1239 (10th Cir. 2012) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009)). Thus, “a plaintiff must offer sufficient factual allegations to ‘raise a
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right to relief above the speculative level.’” Kansas Penn Gaming, 656 F.3d
at 1214 (quoting Twombly, 550 U.S. at 555). “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.” Iqbal, 556 U.S. at 678
(quoting Twombly, 550 U.S. at 556). It follows then that if the “complaint
pleads facts that are ‘merely consistent with’ a defendant's liability it ‘stops
short of the line between possibility and plausibility of ‘entitlement to relief.’”
Id. “‘A claim has facial plausibility when the [pleaded] factual content . . .
allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.’” Rosenfield v. HSBC Bank, USA, 681 F.3d 1172,
1178 (10th Cir. 2012). “Thus, in ruling on a motion to dismiss, a court
should disregard all conclusory statements of law and consider whether the
remaining specific factual allegations, if assumed to be true, plausibly
suggest the defendant is liable.” Kansas Penn Gaming, 656 F.3d at 1214.
“While the statute of limitations is an affirmative defense, when the dates
given in the complaint make clear that the right sued upon has been
extinguished, the plaintiff has the burden of establishing a factual basis for
tolling the statute.” Aldrich v. McCulloch Props., Inc., 627 F.2d 1036, 1041
n.4 (10th Cir. 1980). Thus, a statute of limitations issue may be resolved on
a Rule 12(b)(6) motion to dismiss. See Glaser v. City and County of Denver,
Colo., 557 Fed. Appx. 689, 698 (10th Cir.), cert. denied, 135 S. Ct. 87
(2014).
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A TILA action “may be brought in an United States district court,
. . . , within one year from the date of the occurrence of the violation.” 15
U.S.C. § 1640(e). “Violation of the TILA ‘occurs at a specific time from which
the statute will then run.’” Heil v. Wells Fargo Bank, N.A., 298 Fed. Appx.
703, 706 (10th Cir. 2008) (quoting Stevens v. Rock Springs Nat'l Bank, 497
F.2d 307, 309 (10th Cir.1974)). On the issue of equitable tolling of a TILA
action, the Tenth Circuit has indicated:
“‘Equitable tolling’ is the doctrine under which plaintiffs may sue after
the statutory time period has expired if they have been prevented
from doing so due to inequitable circumstances.” Id. [Ellis v. Gen.
Motors Acceptance Corp., 160 F.3d 703] at 706 [(11th Cir. 1998)]; see
Moor v. Travelers Ins. Co., 784 F.2d 632, 633 (5th Cir.1986)
(requiring plaintiff asserting equitable tolling to “show that the
defendants concealed the reprobated conduct and despite the exercise
of due diligence,he was unable to discover that conduct”); see also
Marsh v. Soares, 223 F.3d 1217, 1220 (10th Cir.2000) ( “[E]quitable
tolling ... is only available when [litigants] diligently pursue [ their]
claims and demonstrate[ ] that the failure to timely file was caused by
extraordinary circumstances beyond [their] control.”) (habeas corpus
action). The Heils bear the burden of proving that the limitations
period should be equitably tolled. See Olson v. Fed. Mine Safety &
Health Review Comm'n, 381 F.3d 1007, 1014 (10th Cir.2004).
Heil, 298 Fed. Appx. at 706-707. Applying the doctrine of equitable tolling
has been “limited to ‘rare and exceptional circumstances.’” Dalton v.
Countrywide Home Loans, Inc., 828 F. Supp. 2d 1242, 1248 (D. Colo. 2011)
(quoting Garcia v. Shanks, 351 F.3d 468, 473 n.2 (10th Cir. 2003)). “For
example, the equitable tolling of a statute of limitations may be triggered
where a plaintiff has actively pursued his judicial remedies by filing a
defective pleading during the statutory period or where a plaintiff has been
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induced or tricked by his adversary’s misconduct into allowing the filing
deadline to pass.” Dalton, 828 F. Supp. 2d at 2349 (citing Irwin v. Dep’t of
Veterans Affairs, 498 U.S. 89, 96 (1990)).
The plaintiff’s complaint fails to allege a sufficient factual basis
for equitable tolling. Alleging no more than that the Bank concealed a
“kickback or other revenue-generating scheme,” Hosler fails to allege how
this prevented him from suing within the statutory period for failing to
disclose “force-placed insurance” or failing to disclose a connection between
the Bank and the insurer. There is nothing in the complaint showing the
plaintiff diligently pursued his claims but extraordinary circumstances
beyond his control kept him from timely filing the action. In opposing
dismissal, the plaintiff alleges that, “he believed that the renewed payments
were being used to pay taxes and insurance as well as covering his
mortgage” and that the Bank’s failure to advise him “that his payments did
not cover taxes and insurance would be the basis for a claim of fraudulent
concealment of the facts.” (Dk. 20, p. 4). This allegation fares no better.
Nondislosure is not an allegation of inequitable circumstances, for “[b]y
definition, nondisclosure happens every time there is a TILA nondisclosure
violation, and mere violation of the statute cannot serve as extraordinary
circumstances that merit tolling.” Sampson v. Washington Mut. Bank, 453
Fed. Appx. 863, 865 (11th Cir. 2011); see Mather v. First Hawaiian Bank,
2014 WL 2865851 at *5 (D. Haw. 2014). There are no allegations here that
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show the plaintiff could not have discovered the alleged violations upon
exercising due diligence. Accordingly, Hosler’s TILA claim against the Bank is
time-barred, and the Bank’s motion to dismiss this claim is granted.
The Bank also seeks to dismiss the implied covenant claim as the
plaintiff has failed to allege what contractual term was breached by the
defendant allegedly “artificially inflating premiums” and “otherwise
disproportionately benefiting from the force placed insurance.” (Dk. 1, ¶ 78).
The Bank further challenges that it has not breached any implied good faith
duty under the Kansas law governing lender relationships. The plaintiff only
responds “with agreeing that he needs to amend the claim on the breach of
the implied covenant of good faith and fair dealing and seeks leave of court
to do following the court’s ruling” on the Bank’s motion. (Dk. 20, p. 6). In
reply, the Bank argues an amendment would be futile as the plaintiff cannot
point to any contractual provision which would be implicated for such a
claim.
The plaintiff essentially concedes he has failed to state an
implied covenant claim upon which relief can be granted. The plaintiff’s
response of asking for leave in this response is procedurally inappropriate:
Under Rule 15, courts “should freely give leave [to amend] when
justice so requires.” Fed.R.Civ.P. 15(a)(2). “The liberal granting of
motions for leave to amend reflects the basic policy that pleadings
should enable a claim to be heard on its merits.” Calderon v. Kan.
Dept. of Soc. & Rehab. Servs., 181 F.3d 1180, 1186 (10th Cir. 1999).
But this liberal policy is not without limits. Rule 7 requires a request
for relief to be made by a motion that (1) is in writing, (2) “states with
particularity the grounds for seeking the order,” and (3) specifies the
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relief sought. Fed.R.Civ.P. 7(b)(1). “We have recognized the
importance of Fed.R.Civ.P. 7(b) and have held that normally a court
need not grant leave to amend when a party fails to file a formal
motion.” Calderon, 181 F.3d at 1186. For example, a bare request to
amend in response to a motion to dismiss is insufficient to place the
court and opposing parties on notice of the plaintiff's request to amend
and the particular grounds upon which such a request would be based.
Glenn v. First Nat'l Bank in Grand Junction, 868 F.2d 368, 371 (10th
Cir. 1989); Calderon, 181 F.3d at 1185–87.
Albers v. Board of County Com'rs of Jefferson County, Colo., 771 F.3d 697,
706 (10th Cir. 2014). The plaintiff does not submit arguments or a proposed
complaint that “notify the court and opposing counsel of the grounds for
amendment.” Id; see D. Kan. Rule 15.1. Without having any arguments or
allegations on which to determine the plaintiff’s request, the court denies the
plaintiff leave to amend.
IT IS THEREFORE ORDERED that the defendant Bank’s motion to
dismiss (Dk. 10) is granted on the grounds stated above;
IT IS FURTHER ORDERED that the plaintiff’s request for leave to
file an amended complaint is denied.
Dated this 9th day of January, 2015, Topeka, Kansas.

s/Sam A. Crow
Sam A. Crow, U.S. District Senior Judge

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