Herzig et al v. Suntrust Mortgage, Inc. et al
Filing
17
MEMORANDUM AND OPINION signed by Senior Judge Charles R. Simpson, III on 3/31/2014, re 4 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM filed by Suntrust Banks, Inc., Suntrust Mortgage, Inc., and Suntrust Bank; 11 MOTION to Str ike 9 Response to Motion, filed by Suntrust Banks, Inc., Suntrust Mortgage, Inc., and Suntrust Bank, and 13 MOTION for Hearing or Leave to Amend Complaint filed by Belinda S. Herzig, and David J. Herzig. An Order will be entered in accordance with this Opinion. cc:counsel (RLK)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE
DAVID HERZIG, et al.
PLAINTIFFS
v.
CIVIL ACTION NO. 3:13CV-299-S
SUNTRUST MORTGAGE, INC., et al.
DEFENDANTS
MEMORANDUM OPINION
This matter is before the court for consideration of the following motions:
(1) Motion of the defendants, SunTrust Mortgage, Inc., SunTrust Bank, and
SunTrust Banks, Inc., (collectively herein, “SunTrust”), to dismiss the Complaint for
failure to state a claim upon which relief can be granted, pursuant to Fed.R.Civ.P. 8,
9, and 12(b)(6). DN 4.
(2) Motion of the defendants, SunTrust, to strike as untimely the plaintiffs’
response to SunTrust’s motion to dismiss. DN 11.
(3) Motion of the plaintiffs, David and Belinda Herzig (collectively herein,
“Herzig”), for oral argument on the defendants’ motion to dismiss, or, alternatively,
for leave to amend the Complaint. DN 13.1
In this action, the plaintiffs, David and Belinda Herzig, take issue with the handling of their
mortgage obligations with respect to a home that they purchased in Miami Beach, Florida in 1998.
The problems appear to have begun after SunTrust purportedly determined that the Herzigs’
1
In the course of evaluating the sufficiency of the Complaint on SunTrust’s motion to dismiss, the Court has become aware
that the Complaint is unsigned by either David or Belinda Herzig, as required by Fed.R.Civ.P. 11(a). Other pleadings are signed and
filed by David Herzig purportedly on behalf of himself and Belinda Herzig. Despite the fact that David Herzig is a licensed attorney
admitted to practice before this Court, he has not entered an appearance on behalf of Belinda Herzig, nor does his signature indicate
such representation.
windstorm policy had lapsed and allegedly obtained “forced place windstorm coverage”2 on the
property, adding the alleged cost to Herzig’s mortgage payment. Herzig raises numerous issues with
regard to his dealings with SunTrust, not the least of which was the filing of a foreclosure complaint
in June, 2012 which SunTrust subsequently dismissed.
As an initial matter, the court notes that the motion of SunTrust to strike Herzig’s response
to the motion to dismiss as untimely recounts accurately that the response was filed well out of time.
Pursuant to the Joint Local Rules for the Eastern and Western Districts of Kentucky, a response to
a motion is due twenty-one days from the date of service of the motion. LR 7.1(c). Failure to timely
respond may be grounds for granting the motion. Id. Herzig filed his response brief over ninety
days after service of the motion to dismiss. He did not move for an extension of time. His response
brief was unaccompanied by a motion for leave to file out of time. The Court has thus been offered
no excuse for Herzig’s complete disregard for the rules of this court, and dismissal would be
justified.
However, it is the preference of this court to address fully briefed motions, and decide
matters on more than mere technicalities. Therefore, the Court, in its discretion, will deny the
motion to strike and will consider Herzig’s response to the motion to dismiss.
Herzig filed a motion seeking oral argument on the motion to dismiss, or, alternatively, leave
to amend the Complaint. Herzig states that “...if the court is inclined to grant the Defendant’s
Motion to Dismiss, oral arguments on the merits would be instructive and helpful.” DN 13, p. 3.
2
It appears undisputed that the mortgage required that various forms of insurance be maintained on the property, including
windstorm coverage, and that SunTrust could obtain such insurance at its option and at the borrower’s expense if it was not so
maintained. The parties refer to “forced place windstorm coverage” in their briefs.
-2-
The Court finds that oral argument is unnecessary. The issues are uncomplicated, and the motion
to dismiss has been fully briefed. Oral argument will be denied.3
Herzig’s motion alternatively seeks leave to amend the Complaint. The motion for leave to
amend the Complaint is deficient. Herzig did not tender a proposed Amended Complaint. Herzig
did not indicate what amendments he would make to the Complaint or how such amendments would
cure any deficiencies. Rather, Herzig states that “In the event the court is persuaded by the
Defendants’ Motion, the Plaintiff should be granted leave to amend the complaint in accordance
with the court’s decision.” Id., p. 4. He states that “an amended complaint would not be futile and
we are at the earliest stage of litigation. For example, if the court believed that the Fraud count was
not plead with specificity, then the Plaintiff should be granted leave to amend the complaint to plead
the court with more factual allegations.” Id. at 5. This motion for leave to amend was filed, in
conjunction with the request for oral argument, twenty-one days after its response, and three days
after SunTrust filed its reply. SunTrust filed a response in opposition to Herzig’s motion,
specifically calling to Herzig’s attention that the motion stated no basis for leave to amend, nor
referenced any tendered proposed amended pleading.
Herzig filed no reply to SunTrust’s
opposition, nor moved for leave to tender a proposed Amended Complaint.
While leave to amend should be granted “when justice so requires,” pursuant to Fed.R.Civ.P.
15(a)(2), the court simply has been provided nothing with which to make that determination. A
finding of deficiencies in the Complaint on a motion to dismiss does not establish that “justice so
3
Herzig contends that failure to grant a hearing before ruling on a motion for summary judgment is reversible error, citing
a Florida state case. First, the matter before this court is a motion to dismiss, testing the sufficiency of the Complaint, not summary
judgment. Second, Florida state cases and Florida procedural rules are inapplicable to the question of entitlement to a hearing. This
is a matter of federal procedure. See Rupert v. Daggett, 695 F.3d 417, 423 (6th Cir. 2012); Kloss v. RBS Citizens, NA, No. 13-12833,
2014 WL 495408, *10 (E.D.Mich. Feb. 6, 2014)(“there is no right under the Due Process Clause to an oral hearing on a motion to
dismiss.”).
-3-
requires” that the plaintiff be afforded a blanket opportunity to replead the Complaint; or, in the
words of the Fourth Circuit, “a “do over.” Francis v. Giacomelli, 588 F.3d 186, 197 (4th Cir. 2009).
As stated in Louisiana School Employees’ Retirement System v. Ernst & Young, LLP, 622 F.3d 471,
485-86 (6th Cir. 2010),
In their opposition to Ernst & Young’s motion to dismiss,4 plaintiff asked the district
court to allow them the opportunity to move for amendment should the court “grant
any portion” of the motion to dismiss...As stated in PR Diamonds, Inc., “a bare
request in an opposition to a motion to dismiss—without any indication of the
particular grounds on which amendment is sought...does not constitute a motion
within the contemplation of Rule 15(a).” Id...As the Belaga decision stated in
affirming the district court’s dismissal of the plaintiffs’ complaint with prejudice:
Had plaintiffs filed a motion to amend the complaint prior to th[e] Court’s
consideration of the motions to dismiss and accompanied that motion with
a memorandum identifying the proposed amendments, the Court would have
considered the motions to dismiss in light of the proposed amendments to the
complaint...Absent such a motion, however, Defendant was entitled to review
of the complaint as filed pursuant to Rule 12(b)(6). Plaintiffs were not
entitled to an advisory opinion from the Court informing them of the
deficiencies of the complaint and then an opportunity to cure those
deficiencies.
622 F.3d at 485-486 (emphasis in original), quoting Belaga v. PNC Bank, Ohio, National Assoc.,
214 F.3d 776, 783-84 (6th Cir. 2000); see also, Delfrate v. Shanner, 229 F.3d 1151, 2000 WL
1206584, *2 (6th Cir. Aug. 17, 2000)(unpubl.)(“...even if the district court should have considered
the plaintiffs’ request to amend as a formal motion...amendment would not be warranted. The
plaintiffs did not indicate how amendment would cure the deficiencies of their complaint or tender
4
In Louisiana School and in PR Diamonds to which it cites, the request for leave to amend the complaint was contained
in the motion to dismiss rather than by separate motion. Despite the fact that Herzig has filed separately a motion for oral argument
or alternatively leave to amend, it is identical to the request in the Louisiana School and PR Diamond cases in which the plaintiff
made a “bare request” for leave should the court dismiss any portion of the complaint. Herzig states specifically that he “should be
granted leave to amend the complaint in accordance with the court’s decision.” This is precisely the sort of “advisory opinion”
condemned in these cases.
-4-
a proposed amended complaint for the district court’s review.”). Thus, for the foregoing reasons,
leave to amend the complaint will be denied.
The court will address the sufficiency of the claims seriatim.
To overcome a motion to dismiss, a complaint must contain sufficient facts to state a claim
for relief that is “plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127
S.Ct. 1955, 167 L.Ed.2d 929 (2007). As explained in Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct.
1937, 1950, 173 L.Ed.2d 868 (2009),
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. [Twombly, supra.] at 556, 127 S.Ct. 1955. 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. Ibid. Where a 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.., at 557, 127
S.Ct. 1955 (bracket omitted).
This matter was filed in this court under our diversity jurisdiction. The Complaint alleges
that Herzig is a citizen of Kentucky, and SunTrust, in its various forms, is a citizen of Georgia and
Virginia. Herzig further alleges that the amount in controversy exceeds $75,000.00.
With respect to venue, Herzig alleges that “[v]enue is proper because although, the
underlying obligations are governed by Florida law, the execution of the documents were [sic] in
Florida, the loan originated in Florida, the underlying collateral is in Florida and Defendant
conducted substantial business dealings with Plaintiff in Florida, Defendant additionally had another
loan and mortgage relationship with Herzig in Kentucky.
Further, Defendant’s acts that
substantially give rise to this cause of action are that Defendant via email, mailings, and telephone
calls fraudulently induced Plaintiff to make improper payments to Defendants.” DN 1, ¶ 8.
-5-
Apparently, SunTrust concedes that this court has personal jurisdiction over it. In its motion
to dismiss, it has not disputed Herzig’s assertion that the court can exercise personal jurisdiction via
the Kentucky long-arm statute, KRS 454.210, as SunTrust allegedly conducts business in Kentucky.
DN 1, ¶ 7. See King v. Taylor, 694 F.3d 650 (6th Cir. 2012)(test for finding forfeiture of a personaljurisdiction defense through conduct: defendant given plaintiff a reasonable expectation that
defendant will defend suit or caused court to go to effort that would be wasted if personal
jurisdiction lacking).
Florida substantive law applies to the state law claims in this case. The Mortgage states that
federal law and the law of the jurisdiction in which the property is located govern. DN 4-2, p. 12,
¶ 16. The complaint alleges that the property is located in Florida, the loan originated and the
documents were executed in Florida. DN 1, ¶ 8. Herzig also alleged that the obligations are
governed by Florida law. Id. For some unknown and unstated reason, Herzig cites exclusively to
Kentucky cases in his brief. Herzig’s brief in opposition to SunTrust’s motion to dismiss is nonresponsive inasmuch as he has failed to address and distinguish any of the caselaw relied upon by
SunTrust. Despite the fact that the motion therefore stands virtually unopposed, the court will
address each claim and the applicable law relating to it. As Kentucky law does not apply, the court
will disregard those state cases.
Count I: R.E.S.P.A., 12 U.S.C. § 2605(e)
In Count I of the Complaint, Herzig alleges that “on or about June 7, 2011 and August 10,
2011, Plaintiff sent a qualified R.E.S.P.A. letter to the Defendant...That as of the date of this
Complaint, the Defendants have failed to comply with the demand...That is in violation of
-6-
R.E.S.P.A...” DN 1, ¶¶ 39-41. This constitutes the sum total of the claim, with the incorporation
of paragraphs 1 through 37.
Under the “Facts Giving Rise to this Lawsuit” section of the Complaint, paragraphs 9, 10,
21, and 22 refer to “Qualified Written Requests” which are the subject of this claim. These
paragraphs state:
9. On or about August 1998, Plaintiff purchased a home located in Miami Beach,
Florida (the “Property”). Plaintiff, through a mortgage broker, secured a loan for the
purchase of the Property. This loan was allegedly with SunTrust Mortgage. Despite
repeated requests under two different Qualified Written Requests on or about June7,
2011 and August 10, 2011, (collectively the “QWRs”)(a copy of which is attached
as Exhibit A) and multiple telephone and email requests, Defendants have failed to
provide proof of an original loan agreement or mortgage.
10. Plaintiff believed that he refinanced the home with SunTrust Mortgage. Despite
repeated requests under two different QWRs, and multiple telephone and email
requests, Defendants have failed to provide proof of an original loan agreement or
mortgage...
21. Plaintiff requested through the QWRs, telephone calls, emails and letters that
SunTrust Mortgage provide the information necessary to resolve this dispute.
22. SunTrust Mortgage has failed to respond to either QWR as required within 60
days, so Plaintiff now has the statutory right under Federal law, R.E.S.P.A. 12 U.S.C.
§ 2605(e) to file a lawsuit for damages, attorneys’ fees, and costs.
In Jensen v. Quality Loan Service Corp., 702 F.Supp.2d 1183, 1196-1197 (E.D.Cal. 2010), the court
found a claim under § 2605 deficient:
To the extent the FAC5 attempts, however inartfully, to assert a claim under § 2605,
the FAC fails to allege sufficient facts to state a claim. The FAC fails to allege that
JPMorgan was a loan servicer under RESPA. The FAC also fails to allege facts
indicating that the written correspondence served on JPMorgan concerned the
servicing of Plaintiff’s loan, which is required to qualify the correspondence as a
“qualified written request” under RESPA. A conclusory allegation that the
correspondence was a “Qualified Written Request” is insufficient. See Twombly, 550
5
First Amended Complaint.
-7-
U.S. at 555, 127 S.Ct. 1955 (mere “labels and conclusions” are insufficient to state
a claim); see also Doe I v. Wal-Mart Stores, Inc., 572 F.3d 677, 683 (9th Cir. 2009).
Here, Herzig has not alleged that SunTrust is a “loan servicer,” as defined by the statute, nor
has he alleged that his “QWRs” concerned the servicing of his loan. Rather, he stated that he
requested “proof of an original loan agreement or mortgage,” and makes no mention of the servicing
of his loan in any respect. He did not allege how or to what extent he was damaged by the purported
breach of RESPA. He merely states that SunTrust has failed to respond to his requests, and he
therefore had a statutory right to file a lawsuit for damages, attorneys’ fees, and costs. “[I]t is clear
that merely ‘alleging a breach of RESPA duties alone does not state a claim under RESPA.
Plaintiffs must, at a minimum, also allege that the breach resulted in actual damages.’” Straker v.
Deutsche Bank National Trust, No. 3:09-CV-338, 2012 WL 7829989 (M.D.Pa. April 26, 2012),
quoting Hutchinson v. Delaware Sav. Bank FSB, 410 F.Supp.2d 374, 383 (D.N.J. 2006); Saldate v.
Wilshire Credit Corp., 711 F.Supp.2d 1126, 1134 (E.D.Cal. 2010). See also, Boston v. Ocwen Loan
Servicing, LLC, No. 3:12CV451, 2013 U.S. Dist. LEXIS 3376, *13 (W.D.N.C. Jan. 9, 2013)(RESPA
allegations insufficient under Twombly where alleged in conclusory fashion, “Ocwen deliberately
failed to properly and timely respond to two (2) requests by Affiant’s qualified written requests for
information about, and corrections to her mortgage account, in violation of 12 U.S.C. § 2605(e),”
finding these allegations “too threadbare to state a claim.”).
Herzig urges that it is clear that he has presented SunTrust with QWRs because the letters
he sent are “standard in the industry,” attaching them as exhibits to his response for the Court’s
review. DN 9, p. 9. Herzig referred to these documents in the Complaint, indicating that they were
attached as exhibits, although they were, in fact, not so attached. In any event, as they were
-8-
incorporated by reference, consideration of them does not convert the motion to dismiss into one for
summary judgment.
The reference in the letters to Herzig’s loan consists of the loan number appearing at the top
and the first sentence: “I am writing to you to complain about the accounting and servicing of my
mortgage and my need for understanding and clarification of various charges, credits, debits,
transactions, actions, payments, analyses, and records related to the servicing of my loan from its
inception to the present date.” DN 9-1, p. 1. The remainder is a lengthy form letter covering a vast
array of issues and questions which are not particularized to Herzig’s loan at all. The court in
Coleman v. American Home Mortgage Servicing, Inc., No. 2:11-cv-00178-GMN-LRL, 2011 WL
6131309 (D.Nev. Dec. 8, 2011) addressed a letter containing virtually identical language to that
quoted above also purporting to constitute a QWR. In finding that the letter did not appear to meet
the definition of a QWR, as defined in 12 U.S.C. § 2605(e)(1)(B), the court stated:
Here, Plaintiff’s letter does not appear to meet this definition, since his request does
not include any statement of the reasons for his belief that the account is in error, nor
does it request corrections to the account. Instead, Plaintiff’s stated reason for the
letter is “to complain about the accounting and servicing of this mortgage and my
need for understanding and clarification of various...charges, credits,
debits...”Plaintiff demands certain documentation and audits to be done with respect
[sic] the loan servicer’s practices and procedures. Plaintiff then asks dozens of
questions that amount to a discovery request. These requests do not adhere to the
letter nor the spirit of the RESPA statute. Accordingly, the Court dismisses this
claim without leave to amend.
Coleman, supra. at *4.
The Court find the analysis and disposition in Coleman to be sound and will also conclude
that, not only does Count I not contain sufficient facts to state a claim upon which relief can be
granted, but also that the letters upon which Herzig relies do not constitute QWRs as a matter of law.
Count I will be dismissed.
-9-
Count II: Complaint for Accounting
In Count II, Herzig “requests the Defendant be ordered to provide a strict and total
explanation of the accounting of this loan.” DN 1, ¶ 46. However, SunTrust notes that, as in
Restrepo v. Wells Fargo Bank, N.A., No. 09-22436-CIV, 2010 WL 374771 (S.D.Fla. Feb. 3, 2010),
Herzig has pled accounting as a separate cause of action but has not provided any authority to
support his claim that RESPA permits such a remedy. Count II will be dismissed.
Count III: Conversion
Herzig alleges in Count III that “Defendants converted for Defendant’s own use the monies
given to it by Plaintiff, which was given to Defendants solely for the purpose of payment of an
alleged note and mortgage by not applying the amounts to principal and interest as required under
the alleged note.” DN 1, ¶ 35.
As stated in Capital Bank v. G & J Investments Corp, 468 So.2d 534, 535 (Fla.3d DCA
1985), A mere obligation to pay money may not be enforced by an action for conversion. [citations
omitted].” Accord, Zaki Kulaibee Establishment v. McFlicker, 788 F.Supp.2d 1363, 1379 (S.D.Fla.
2011)(“Neither an obligation to pay money nor a breach of contract generally give rise to a claim
of conversion in tort.” [citation omitted]. “Where damages sought in tort are the same as those for
breach of contract a plaintiff may not circumvent the contractual relationship by bringing an action
in tort.” [citation omitted].). Herzig does not controvert this authority. Count III will therefore be
dismissed.
Count IV: Fraud
In Count IV, Herzig alleges that SunTrust engaged in fraud by representing that forced place
- 10 -
insurance was placed on the Property, the representation was false, as SunTrust “never entered into
such insurance” and “had no intention of using any of the money to pay for such insurance...” DN
1, ¶¶ 39-41. He alleges that in February, 2011, SunTrust raised the amount of Herzig’s mortgage
payments purportedly to include this forced place windstorm coverage, and at that time, Herzig was
first notified of this alleged insurance. DN 1, ¶¶ 17, 18. He contends that he then obtained his own
insurance policy, but continued to make payments from February to October, 2011 of the full
amount required by SunTrust, while he attempted to obtain information from SunTrust concerning
his mortgage. DN 1, ¶¶ 19, 20.
Under Florida law, “[a]n aggrieved party proves common law fraud by establishing that: (1)
the opposing party made a misrepresentation of material fact, (2) the opposing party knew or should
have known the falsity of the statement, (3) the opposing party intended to induce the aggrieved
party to rely on the false statement and act on it, and (4) the aggrieved party relied on that statement
to his or her detriment.” Jackson v. Shakespeare Foundation, Inc., 108 So.3d 587, 595, n. 2 (Fla.
2013). In alleging fraud, the plaintiff
must comply not only with the plausibility criteria articulated in Twombly and Iqbal but also with
Fed.R.Civ.P. 9(b)’s heightened pleading standard, which requires that “[i]n alleging fraud or
mistake, a party must state with particularity the circumstances constituting fraud or mistake.” See
also Ambrosia Coal & Constr. Co. v. Pages Morales, 482 F.3d 1309, 1316 (11th Cir. 2007)...We
have held that pursuant to 9(b), a plaintiff must allege: (“1) the precise statements, documents, or
misrepresentations made; (2) the time, place, and person responsible for the statement; (3) the
content and manner in which these statements misled the Plaintiffs; and (4) what the defendants
gained by the alleged fraud.” Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1380-
- 11 -
81 (11th Cir. 1997)...The plaintiff must allege facts with respect to each defendant’s participation in
the fraud. Id. at 1381.
Herzig’s fraud claim does not meet the heightened pleading standard of Fed.R.Civ.P. 9(b).
He does alleges that SunTrust “represented” that forced place insurance was placed on the Property.
To the extent that we can read “represented” as an allegation that SunTrust made a “statement,” the
Complaint alleges that SunTrust stated that forced place insurance was placed on the property.
Herzig further alleges that force place insurance was never obtained by SunTrust and that SunTrust
never intended to use the additional amount in Herzig’s mortgage payment to pay for such
insurance. This allegation, subject as it is to Fed.R.Civ.P. 11, must be taken as true for purposes of
ruling on the motion to dismiss. However, the Complaint does not attribute this statement to any
person, nor is it clear from Herzig’s allegations (DN 1, ¶¶ 17, 18) when and how he learned that the
“raised amount included the alleged forced place windstorm coverage.” Herzig alleges that the
mortgage amount was raised without notice to him. He states that in February 2011 he contacted
SunTrust about the increase and at that point was first notified of the alleged forced place insurance.
Even if we connect the dots and assume, arguendo, that someone on the telephone or in an email
or by written correspondence or by Morse code, stated to him sometime in February 2011 that the
increased mortgage payment included forced place windstorm coverage, Herzig has not sufficiently
alleged that he was misled by any false statement. He alleges, in fact, that he immediately obtained
his own private windstorm coverage upon learning from SunTrust that it had, purportedly, placed
forced place coverage. He alleges that he made the payments demanded by SunTrust while seeking
proof of their payment for the coverage and a copy of the policy. Despite the fact that Herzig claims
that the statement that SunTrust placed forced place windstorm coverage on his property was untrue,
- 12 -
he has not alleged that he was misled by this statement.
Herzig has thus failed to plead fraud with the requisite specificity under Fed.R.Civ.P. 9(b) and
therefore Count IV must be dismissed.
Count V: Unjust Enrichment
Count V states that Herzig “transferred $32,847 (mortgage from February 2010 to October
2011) and continuing to SunTrust Mortgage, thereby conferring a benefit upon Defendant.” DN 1,
¶ 45. In this Count of the Complaint, Herzig seeks to recover under a theory of unjust enrichment.
However, he has stated in paragraph 45 that the money transferred to SunTrust was mortgage
payments. Count XII of the Complaint alleges breach of contract for failing to properly apply the
payments to the note.
As noted in Diamond “S” Development Corp. v. Mercantile Bank, 989 So.2d 696, 697
(Fla.App. 5 Dist. 2008), Herzig cannot pursue a “claim for unjust enrichment if an express contract
exists concerning the same matter. [citations omitted].” Herzig does not address Florida law on this
point, but rather simply recites the elements of an unjust enrichment claim under Kentucky law. He
does not address the existence of the express contract. This response is insufficient to withstand
dismissal. Count V will therefore be dismissed.
Count VI: Equitable Estoppel
In Count VI, Herzig titles the claim “Equitable Estoppel,” but does not assert any sort of
claim within the paragraphs Count VI. (DN 1, ¶¶ 48-52). Herzig states that “Plaintiffs relied on
Defendant’s representation that the monthly payments were necessary, and thereby, entrusted
Defendants with said deposits...As a direct and proximate result of the negligence and carelessness
- 13 -
of the Defendant as set forth above, Herzig suffered general and special damages...” ¶¶ 51-52.
As noted in Flagship Resort Development Corp. v. Interval International, Inc., 28 So.3d 915,
923 (Fla.App.3 Dist. 2010), “equitable estoppel is not a cause of action, but an affirmative
defense...Thus, as a matter of law, it is not a proper cause of action...” Id. citing Major League
Baseball v. Morsani, 790 So.2d 1071, 1076 (Fla. 2001)(equitable estoppel is a defensive doctrine);
Dep’t of Transp. v. First-Merit Bank, 711 So.2d 1217, 1218 (Fla.2d DCA 1998).
Count VI will therefore be dismissed.
Count VII: Negligent Misrepresentation
Count VII alleges that “[b]efore Defendant misappropriated the monies, Defendant
represented to Plaintiff that an increase to the monthly payment would be required because of the
forced place insurance...Defendant knew that its representation of insurance was false in that the
insurance was not necessary nor was Plaintiff given notice and that the Defendant intended to use
the money personally...Defendants intended these statements to induce Plaintiff into increasing the
monthly payment resulting in either (I) increasing the Defendant’s; [sic] accounts for its personal
use; or (ii) causing the property to go into foreclosure.” DN 1, ¶¶ 54-56.
Claims for negligent misrepresentation must be plead in conformity with the heightened
particularity standard under Fed.R.Civ.P. 9(b). Azar v. American Home Mortgage Servicing, Inc.,
No. 6:09-cv-1980-Orl-35DAB, 2010 WL 5648880(M.D.Fla. July 16, 2010), citing Sunoptic Techs.
LLC v. Integra Luxtec, Inc., No. 3:08-cv-878-J-16JRK, 2009 WL 722320, at *3 (M.D.Fla. Mar. 18,
2009). To plead negligent misrepresentation under Florida law, a plaintiff must allege: (1) the
defendant made a statement of material fact that the defendant believed was true but was actually
false; (2) the defendant was negligent because he should have know the statement was false; (3) the
- 14 -
defendant intended to induce the plaintiff to rely on the false statement; and (4) an injury resulted
to the plaintiff acting in justifiable reliance on the false statement. Azar, supra. at *4, quoting Simon
v. Celebration Co., 883 So.2d 826, 832 (Fla. 5th DCA 2004).
Count VII is insufficient inasmuch as Herzig has failed to identify a statement of material
fact that SunTrust believed to be true but was actually false. He alleges that SunTrust represented
that an increase in the monthly payment would be required because of the forced place insurance.
He does not allege that this statement was false, but rather that SunTrust knew that the insurance was
not necessary. He also alleges that SunTrust did not inform him that it intended to “use the money
personally.” Herzig has failed to allege a statement of material fact that SunTrust believed to be
true, but was actually false.
Further, nowhere does Herzig allege that he made payment as a result of his justifiable
reliance on a material misrepresentation by SunTrust. Indeed, in the “Facts Giving Rise to the
Lawsuit” section, Herzig states that “On or about February 2011, Plaintiff contacted SunTrust
Mortgage about the increased mortgage amount. At that point, Plaintiff was first notified of the
alleged forced place insurance and requested proof of payment for the insurance and a copy of the
policy. SunTrust failed to provide this substantiating documentation...Upon being notified of the
problem, the Plaintiff immediately engaged, [sic] ACE Property Services, (Exhibit C) and a new
windstorm policy was issued March 22.” DN 1, ¶¶ 18, 19. Thus the very allegations of the
Complaint contradict any assertion that Herzig was induced to rely upon or did rely upon any
representation concerning the forced place windstorm policy.
The claim for negligent misrepresentation is deficient and Count VII will therefore be
dismissed.
- 15 -
Count VIII: Intentional Interference with Contract Relations
Herzig alleges in Count VIII that SunTrust intentionally interfered with its contract with his
tenant by filing the foreclosure action. DN 1, ¶ 59. He states that “[a]s a direct and proximate result
of the negligence and carelessness of the Defendants as set forth above, Herzig suffered general and
special damages to be determined at trial. DN 1, ¶ 61.
This claim is insufficient to state a claim for intentional interference with contractual
relations under Florida law. The elements of this cause of action are (1) the existence of a business
relationship; (2) knowledge of the relationship by the defendant; and (4) damage to the plaintiff as
a result of the breach of the relationship. Swope Rodante, P.A. v. Harmon, 85 So.3d 508, 509 (Fla.2d
DCA 2012).
First, Count VIII alleges that SunTrust acted negligently and carelessly in filing the
foreclosure action, but that it intentionally interfered with his contract with his tenant. He alleges
that he and his tenant were served with a foreclosure complaint which was dismissed by SunTrust
two months later. DN 1, ¶¶ 24, 27. He alleges that SunTrust failed to follow proper procedures,
including filing a nonverified complaint, failure to submit the required bond, and failure to provide
Herzig thirty days’ written notice and an opportunity to cure (DN 1, ¶ 25), the apparent negligent
or careless conduct to which he refers. However, he does not allege that SunTrust provided notice
of the foreclosure complaint without justification. To be clear, he alleges that SunTrust filed the
foreclosure complaint improperly; that is prematurely and therefore without justification. However,
it is the interference which must be intentional and without justification.
SunTrust cites to the case of Dundee Naval Stores Co. v. McDowell, 61 So. 108 (Fla. 1913)
- 16 -
for the proposition that a foreclosure does not per se destroy a leasehold interest, and therefore the
leaseholder has a right to possession for the lease purposes as against a mortgagee. If such
leaseholder is not estopped or has not forfeited or abandoned its property right in the lease, it cannot
legally be deprived of such right except by due process of law. Thus the leaseholder is entitled to
notice and an opportunity to be heard. Id. at 113. Thus upon the filing of a foreclosure complaint,
SunTrust claims it was justified in giving notice to Herzig’s tenant. The complaint does not allege
that SunTrust lacked justification for service of the foreclosure complaint on the tenant, nor does
Herzig respond to the argument in his brief.
Count VIII will be dismissed.
Count IX: Slander of Credit
Count IX alleges that “the defendant improperly reported to the various credit agencies that
Herzig was delinquent in payments on the note, and further, filed a Foreclosure Action that was not
yet ripe...Defendant knowingly made the false statements...Defendant wrongfully and without
privilege, has published matters or caused matters to be published that the are the current owners
of the Property which is untrue and disparaging to Plaintiffs’ interest in the Property. By doing the
acts described above, the Defendant have [sic] slandered Plaintiffs’ title to the Property.” DN 1, ¶¶
63-65.
Asserting that Herzig’s claim is preempted by the Fair Credit Reporting Act, 15 U.S.C. §
1618h(e), SunTrust cites Lofton-Taylor v. Verizon Wireless, 262 Fed.Appx. 999, 1001; 2008 WL
189853 (11th Cir. Jan. 23, 2008), which held that “where a company furnished credit information
about a consumer to a credit reporting agency pursuant to the Fair Credit Reporting Act, the
- 17 -
company furnishing the information is protected from state law invasion of privacy claims unless
the information it provided was both false and also given with the malicious or willful intent to
damage the consumer. See, Hood v. Dun & Bradstreet, Inc., 486 F.2d 25, 32 (5th Cir. 1973).”
Herzig’s response is non-responsive to SunTrust’s argument. He states that “there are no
Kentucky cases that set forth the elements of a slander of credit claim as this is a fairly new tort.”
DN 9, p. 17. Citing to a Nevada case, Herzig urges that to state a claim for “slander of credit,” a
plaintiff must establish the “general elements of defamation.” Id. Herzig does not allege in the
Complaint that SunTrust’s actions were willful or malicious, nor does he urge such in his response.
Herzig has not addressed SunTrust’s argument or citation of authority that the claim for
slander of credit is preempted by the Fair Credit Reporting Act. Count IX will be dismissed.
Count X: Violation of Fair Debt Collection Act,6 15 U.S.C. § 1601, et seq.
Count X alleges violation of the Fair Debt Collection Act, 15 U.S.C. § 1601, et seq., stating
that SunTrust knowingly improperly filed a Foreclosure Action that was not yet ripe.” DN 1, ¶ 68.
However, the FDCPA governs the conduct of debt collectors, the definition of which
specifically excludes “any person collecting or attempting to collect any debt
owed...to the extend such activity...(ii) concerns a debt which was originated by such
person; [or] (iii) concerns a debt which was not in default at the time it was obtained
by such person.” 15 U.S.C. § 1692a(6)(F). “Thus, a debt collector does not include
the consumer’s creditors, a mortgage servicing company, or an assignee of a debt,
as long as the debt was not in default at the time it was assigned.” Belin v. Litton
Loan Servicing, LP, No. 8:06-cv-760-T-24EAJ, 2006 U.S. Dist. LEXIS 47953, 2006
WL 1992410, at *2 (M.D.Fla. July 14, 2006); see Warren v. Countrywide Home
Loans, Inc., 342 F.App’x 458, 460-61 (11th Cir. 2009)(noting its agreement with the
conclusion that “an enforcer of a security interest, such as a [mortgage company]
foreclosing on mortgages of real property...falls outside the ambit of the FDCPA
except for the provisions of section 1692f(6).”
6
15 U.S.C. § 1601, et seq. is the Fair Debt Collection Practices Act (“FDCPA”).
- 18 -
Foxx v. Ocwen Loan Servicing, LLC, No. 8:11-CV-1766-T-17EAK, 2012 WL 2048252, *9 (D.C.Fla.
June 6, 2012). Herzig has not controverted this authority. Not only is the claim devoid of the
requisite elements of a FDCPA claim, the “Facts Giving Rise to this Lawsuit” section of the
Complaint (¶¶ 9-37) allege that SunTrust was the originator of the mortgage, which is contrary to
the definition of a “debt collector” under the FDCPA.
Count X will be dismissed.
Count XI: Negligence
In Count XI, Herzig alleges that “the Defendant, acting as Herzig’s lender and loan servicer,
had a duty to exercise reasonable care and skill to maintain proper and accurate loan records and to
discharge and fulfill the other incidents attendant to the maintenance, accounting and servicing of
loan records, including, but not limited to, accurate crediting of payments , made by Herzig.
SunTrust contends that such allegations are insufficient, because
“[A]s a general rule, a financial institution owes no duty of care to a borrower when
the institution’s involvement in the loan transaction does not exceed the scope of its
conventional role as a mere lender of money.” [citations omitted]...In addition, “loan
servicers do not owe a duty to borrowers of the loans they service.” [citations
omitted].
Morgan v. US Bank national Association, No. C 12-03827 CRB, 2013 WL 684932 (N.D.Cal. Feb.
25, 2013); see also Zaffrullah v. Countrywide Home Loans, Inc., No. 09-61142-CIV, 2010 WL
503074 (S.D.Fla. Feb. 8, 2010)(negligence claim dismissed on ground that plaintiffs failed to plead
recognizable duty in what was arms-length creditor/debtor relationship); Collier v. Wells Fargo
Home Mortgage, No. 7:04-CV-086-K, 2006 WL 1464170 (N.D.Tex. May 26, 2006)(Texas courts
have held that there is no special relationship between a mortgagor and mortgagee).
- 19 -
Herzig has provided no caselaw in support of his negligence claim, and has not controverted
the authority offered by SunTrust. Count XI will be dismissed.
Count XII: Breach of Contract
Count XII of the Complaint alleges breach of contract. Herzig states the following:
Plaintiff’s original loan agreement set forth dates by which monthly principal and
interest payments were due, and when late fees and other charges could be assessed.
Alternatively, if the original note and deed of trust were properly assigned to
Defendant, Defendant breached the note and deed of trust that Plaintiffs executed.
The terms of the note required payments made by Plaintiffs to be applied properly
to the note. The Defendant breached the note and deed of trust by failing to apply
the payments made by Plaintiffs to Plaintiffs’ loan, the result of which led to the
Defendants attempted foreclosure on the Property...As a proximate result of
Defendant’s breaches, Plaintiffs have suffered compensatory damages in an amount
to be proven at trial.
DN 1, ¶¶ 76, 77. In the “Facts Giving Rise to this Lawsuit” section, Herzig alleges, and we take as
true for purposes of the motion to dismiss, that he secured a loan for the purchase of the Property
allegedly with Suntrust Mortgage. DN 1, ¶ 9. Herzig initially made the requisite mortgage
payments in a timely manner. DN 1, ¶ 10. In September 2009, after a roof inspection, the
windstorm policy was renewed on the property for September 2009-2010. DN 1, ¶¶ 12-15. The
policy was to renew on September 2010 for the period September 2010-2011 and Herzig had no
reason to believe that the policy was not renewed, but Suntrust allegedly placed forced place
windstorm coverage on the Property without notifying Herzig. DN 1, ¶ 16. In February 2011,
Herzig’s mortgage payment went up and he learned of the alleged forced place windstorm coverage
on the Property. DN 1, ¶¶ 17, 18. Herzig then obtained a new windstorm policy which was issued
on March 22. DN 1, ¶ 19. Herzig made the required mortgage payments from February 2011 to
- 20 -
October 2011, while attempting to obtain information necessary to resolve a dispute.7 Herzig then
received service of a foreclosure complaint in June, 2012. DN 1, ¶ 24.8 Herzig offers the conclusory
statement at ¶ 23 of the Facts that “SunTrust Mortgage [sic] continued refusal to cooperate with
Plaintiff is unjustified, wrongful, and constituted a clear breach of the SunTrust Mortgage’s
contractual duties.” DN 1, ¶ 23. This proposed conclusion of law need not be taken as true, of
course. Iqbal, 129 S.Ct. at 1950 (“pleadings that, because they are no more than conclusions, are not
entitled to the assumption of truth.”).
When evaluated for substance, the claim for breach of contract is found wanting under
Fed.R.Civ.P. 8(a)(2).
The elements of a breach of contract claim under Florida law are (1) a valid contract; (2) a
material breach; and (3) damages. Havens, D.D.S v. Coast Florida, P.A., 117 So.3d 1179 (Fla. 2d
DCA 2013), citing Rollins, Inc. v. Butland, 951 So.2d 860, 876 (Fla. 2d DCA 2006); Friedman v.
New York Life Insurance Company, 985 So.2d 56, 58 (Fla. 4th DCA 2008). However, “labels and
conclusions’ or “a formulaic recitation of the elements of a cause of action” is insufficient to satisfy
Fed.R.Civ.P. 8(a)(2) under the Iqbal/Twombly standard to state a claim that is plausible on its face.
Iqbal, 129 S.Ct. at 1949. As stated in Resnick v. AvMed, Inc., 693 F.3d 1317, 1326 (11th Cir. 2012),
“Our task is to determine whether the pleadings contain ‘sufficient factual matter, accepted as true,
7
It is unstated in the Complaint or the June and August 2011 letters (denominated by Herzig as “QWRs”) sent to SunTrust
what the “dispute” was concerning. Presumably, as Herzig has alleged that he “had no reason to believe that the [windstorm] policy
was not renewed,” that, in fact, his original windstorm policy lapsed and he “disputed” the placement of forced place windstorm
coverage on the property. However, this is mere supposition as the Complaint is devoid of facts concerning a “dispute.”
8
SunTrust contends that Herzig admits that he stopped making mortgage payments in October 2011. Herzig does not do
so directly. Rather, from the statement that Herzig continued to make mortgage payments from February 2011 to October 2011, it
can reasonably be inferred that Herzig did not continue to make mortgage payments after that date. The foreclosure complaint to
which Herzig refers in the Complaint (DN 1, ¶ 24) alleges that Herzig ceased making payments on June 1, 2011. DN 4-5, ¶ 6,
however the court takes as true for purposes of this motion that he continued to make payments to October, 2011.
- 21 -
to “state a claim to relief that is plausible on its face.”’ Iqbal, 556 U.S. at 681, 129 S.Ct. at 1949
(quoting Twombly, 550 U.S. at 570, 127 S.Ct. at 1966). A claim is facially plausible when the court
can draw ‘the reasonable inference that the defendant is liable for the misconduct alleged’ from the
pled facts. Id”. Resnick, 693 F.3d at 1326.
Herzig states, somewhat unclearly, that (1) the “original loan agreement” established dates
when principal and interest payments were due and when late fees and charges could be assessed;
(2) “alternatively,” if the “original note and deed of trust” were properly assigned to Defendant,
Defendant “breached the note and deed of trust Plaintiffs executed;” (3) The Defendant breached
“the note and deed of trust” by “failing to apply payments made by Plaintiffs to Plaintiffs’ loan.”
These allegations are not supported by facts alleged in the Complaint. The factual allegations
recited above do not assert “failing to apply payments.” Rather, Herzig contends, albeit in
conclusory fashion, that SunTrust failed to cooperate in providing him information concerning his
mortgage. The Complaint must contain sufficient facts to elevate a claim from a sheer possibility
to plausibility in order to survive a motion to dismiss. Iqbal, 129 S.Ct. at 1949.
Under the notice-pleading standard, hyper-technical pleading is abolished, and the court is
directed to “draw on judicial experience and common sense when construing the allegations in a
complaint.” Iqbal, 129 S.Ct. at 1950. The sparse claim for breach on contract is simply unsupported
by facts sufficient to permit the court to draw a reasonable inference that SunTrust is liable for the
misconduct alleged. Id. Count XII will be dismissed.
Count XIII: Breach of the Implied Covenant of Good Faith and Fair Dealing
In Count XIII Herzig alleges that SunTrust breached the implied covenant of good faith and
fair dealing when it allegedly “refused to properly apply the payments to Plaintiff’s loan and
- 22 -
thereafter attempted foreclosure on the Property even though Plaintiffs provided proof of payments
for the allegedly skipped months and Defendant thereafter refused to resolve the mistake with
Plaintiffs in a equitable fashion.” DN 1, ¶ 80.
Florida courts recognize that an implied covenant of good faith and fair dealing is a part of
every contract. Merrill Lynch Business Financial Services, Inc. v. Performance machine Systems
U.S.A., Inc., No. 04-60861, 2005 U.S.Dist. LEXIS 7309, *31 (Mar. 4, 2005). However, as noted
in Mendez-Arriola, M.D. v. White Wilson medical Center PA, No. 3:09cv495/MCR/EMT, 2010 WL
3385356 (N.D.Fla. Aug. 25, 2010),
“A breach of the implied covenant of good faith and fair dealing is not an
independent cause of action, but attaches to the performance of a specific contractual
obligation.” [Centurion Air Cargo, Inc. v. United Parcel Service, Co., 420 F.#d 1146,
1151 (11th Cir. 2005)]. A breach of the implied covenant claim may be dismissed as
redundant if the conduct violating the implied covenant is duplicative of the breach
of contract claim...Indeed, this court has determined that, “in order to state a claim
for breach of the implied covenant of good faith and fair dealing, [p]laintiffs must
identify the specific contract term(s) giving rise to the implied duty of good faith and
also allege how [d]efendants breached their implied duty, alleging facts different
from those giving rise to the breach of contract claim.” See Stallworth v. Hartford
Ins. Co., 2006 WL 2711597, at *6 (N.D.Fla. Sept. 19, 2006).
Again, Herzig cites Kentucky law, and recites generalities concerning the covenant of good faith but
completely disregards the Florida authority cited by SunTrust or the deficiencies in the Complaint.
Count XIII fails to state allege any facts other than those which form the foundation of the breach
of contract claim; ie. the failure to properly apply the payment according to the loan documents.
Count XIII fails to state a claim for breach of the implied covenant of good faith and fair dealing and
will therefore be dismissed.
Count XIV: Intentional Infliction of Emotional Distress
- 23 -
Count XIV claims that “In carry out its attempt to wrongfully foreclose upon Herzig [sic]
home, Defendants intentionally or recklessly engaged in extreme and outrageous conduct to cause
Herzig emotional distress...The emotional distress Herzig has suffered as a result of this conduct was
severe.” DN 1, ¶¶ 86, 87. Numerous Florida cases have held that notice of default and threat of
foreclosure are insufficient allegations to constitute outrageous conduct. Anguiano v. Bank of
America, No. 12-CV-1752-IEG (BLM), 2013 WL 485765 (S.D. Cal. Feb. 6. 2013); Robb v. Rahi
Real Estate Holdings, LLC, No. 10-81474-CIV, 2011 WL 2149941 (S.D.Fla. May 23, 2011), and
cases cited therein. Herzig has not provided any caselaw to controvert this Florida authority. Count
XIV will therefore be dismissed.
Count XV: Violation of Deceptive and Unfair Trade Practive [sic] Act
Herzig alleges in Count XV that SunTrust has violated the Florida Deceptive and Unfair
Trade Practices Act (“FDUTPA”), F.S.A. 501.201-.213, by “carrying out its attempt to wrongfully
foreclose upon Herzig’s home, Defendants intentionally and recklessly engaged in extreme and
outrageous conduct to cause Herzig emotional distress.” DN 1, ¶ 91. He then states that
“Defendants have engaged a [sic] systematic pattern of conduct designed and intended to induce
individuals, otherwise susceptible to Defendants tactic, (including Plaintiff), via unfair, deceptive,
or unconscionable acts or practices...” DN 1, ¶ 92.
These allegations are wholly insufficient to state a claim under FDUTPA which requires
pleading with specificity (1) a deceptive act or unfair practice, (2) causation, and (3) actual damages.
Rollins v. Butland, 951 So.2d 860, 869 (Fla.App.2 Dist. 2006); Koch v. Royal Wine Merchants, 907
F.Supp.2d 1332, 1350 (S.D.Fla. 2012); Mortensen v. Bank of America, N.A., 2011 U.S.LEXIS
132637, *23-24 (M.D.Ga. Nov. 17, 2011)(FDUTPA claim dismissed; no provision of statute
- 24 -
specified). At best, Herzig alleges that it was an unfair practice for SunTrust to attempt to foreclose
on his home. This is far from sufficient to identify an unfair or deceptive practice against which
the statute is intended to protect the public and legitimate business enterprises. Rollins, supra. at
869. Herzig does not state a claim simply by employing the turn of phrase “engaged a [sic]
systematic pattern of conduct...” The Complaint alleges no facts at all to support a FDUTPA claim.
Count XV will be dismissed.
Conclusion
For the reasons set forth herein, all counts of the Complaint will be dismissed by separate
Order for failure to state a claim upon which relief can be granted, pursuant to Fed.R.Civ.P.
12(b)(6).
IT IS SO ORDERED.
March 31, 2014
C al R Smpo I , ei J d e
h r s . i sn I Sno u g
e
I
r
U i dSae Ds i C ut
nt tt ir t o r
e
s tc
- 25 -
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?