Horrell v. JP Morgan Chase Bank, N.A.
Filing
31
ORDER AND REASONS granting 17 Motion for judgment on the pleadings, or, in the alternative, summary judgment. Signed by Judge Martin L.C. Feldman on 10/3/2012. (caa, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CELIA HORRELL
CIVIL ACTION
VERSUS
NO. 11-2885
JP MORGAN CHASE BANK, N.A.
SECTION “F”
ORDER AND REASONS
Before the Court is the defendant’s motion for judgment on
the pleadings, or, in the alternative, summary judgment.
For the
reasons that follow, the motion is GRANTED.
Background
This case arises from a bank’s use of the set-off mechanism,
in which funds from an account held by the bank are used to
satisfy an obligation owed to the bank.
Celia Horrell, a Louisiana resident and long-time customer
of JPMorgan Chase Bank, N.A., listed her daughter, Kimberly
Horrell Lemoine, as a “signor” on her Chase deposit account.1
As
a signor on the deposit account, Ms. Lemoine was designated as a
joint account holder, which provided her access to all account
funds, the power to sign on the account, and the ability to
withdraw funds on the account.
There is no record that Ms.
Horrell provided written notice to Chase that she was the sole
1
The deposit account at issue is Chase Account No. *****7126.
1
owner of the funds in the deposit account, and it is disputed as
to whether Ms. Horrell orally communicated something to that
effect.
Ms. Lemoine and her husband Weston John Lemoine, residents
of Georgia, obtained a mortgage on their home from a predecessor
institution to Washington Mutual; Chase subsequently became
holder of the mortgage.
When Ms. Lemoine became unable to make
her mortgage payments, Chase debited Ms. Horrell’s account, on or
about November 23, 2010, in the amount of $157,754.15 to off set
the outstanding balance owed on Ms. Lemoine’s mortgage loan with
Chase.
At the time of this set-off, Ms. Horrell’s account was
governed by the Chase Account Rules and Regulations effective
December 31, 2008.
Ms. Horrell sued JPMorgan Chase Bank, N.A. in this Court on
November 19, 2011, invoking the Court’s diversity jurisdiction.
Plaintiff is a resident of Louisiana and defendant is a national
banking association with its main office located in Chicago,
Illinois.
Ms. Horrell alleges claims of conversion and
intentional infliction of emotional distress under Louisiana law,
and seeks damages and attorney’s fees.
Chase now moves for
judgment on the pleadings, or, in the alternate, for summary
judgment.
2
I. Legal Standards
A.
The standard for deciding a motion under Rule 12(c) of the
Federal Rules of Civil Procedure is the same as the one for
deciding a motion under Rule 12(b)(6).
Great Plains Trust Co. v.
Morgan Stanley Dean Witter & Co., 313 F.3d 305, 313 n.8 (5th Cir.
2002). “A motion brought pursuant to [Rule 12(c)] is designed to
dispose of cases where the material facts are not in dispute and
a judgment on the merits can be rendered by looking to the
substance of the pleadings and any judicially noticed facts.” Id.
at 312 (quoting Herbert Abstract Co. v. Touchstone Props. Ltd.,
914 F.2d 74, 76 (5th Cir. 1990)).
In considering a Rule 12(b)(6), or a Rule 12(c), motion the
Court “accepts ‘all well-pleaded facts as true, viewing them in
the light most favorable to the plaintiff.’”
See Martin K. Eby
Constr. Co. v. Dall. Area Rapid Transit, 369 F.3d 464 (5th Cir.
2004) (quoting Jones v. Greninger, 188 F.3d 322, 324 (5th Cir.
1999)).
To survive a Rule 12(b)(6) motion to dismiss, the
plaintiff must plead “enough facts to state a claim to relief
that is plausible on its face.”
In re Katrina Canal Breaches
Litig., 495 F.3d 191, 205 (5th Cir. 2007) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 569 (2007)).
“Factual
allegations must be enough to raise a right to relief above the
speculative level, on the assumption that all the allegations in
3
the complaint are true (even if doubtful in fact).”
Twombly, 550
U.S. at 555 (quotation marks, citations, and footnote omitted).
With some exceptions, the Court’s review on a motion to
dismiss is limited to the complaint and any attachments.
See
Fin. Acquisition Partners LP v. Blackwell, 440 F.3d 278, 286 (5th
Cir. 2006).
Documents attached to a motion to dismiss are
considered part of the pleadings if they are referred to in the
plaintiff’s complaint and are central to the claim.
Causey v.
Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir.
2004) (citing Collins v. Morgan Stanley Dean Witter, 224 F.3d
496, 498-99 (5th Cir. 2000)).
B.
Federal Rule of Civil Procedure 56 instructs that summary
judgment is proper if the record discloses no genuine issue as to
any material fact such that the moving party is entitled to
judgment as a matter of law.
No genuine issue of fact exists if
the record taken as a whole could not lead a rational trier of
fact to find for the non-moving party.
See Matsushita Elec.
Indus. Co. v. Zenith Radio., 475 U.S. 574, 586 (1986).
A genuine
issue of fact exists only "if the evidence is such that a
reasonable jury could return a verdict for the non-moving party."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The Court emphasizes that the mere argued existence of a
factual dispute does not defeat an otherwise properly supported
4
motion.
See id.
Therefore, "[i]f the evidence is merely
colorable, or is not significantly probative," summary judgment
is appropriate.
Id. at 249-50 (citations omitted).
Summary
judgment is also proper if the party opposing the motion fails to
establish an essential element of his case.
Catrett, 477 U.S. 317, 322-23 (1986).
See Celotex Corp. v.
In this regard, the non-
moving party must do more than simply deny the allegations raised
by the moving party.
See Donaghey v. Ocean Drilling &
Exploration Co., 974 F.2d 646, 649 (5th Cir. 1992).
Rather, he
must come forward with competent evidence, such as affidavits or
depositions, to buttress his claims.
Id.
Hearsay evidence and
unsworn documents do not qualify as competent opposing evidence.
Martin v. John W. Stone Oil Distrib., Inc., 819 F.2d 547, 549
(5th Cir. 1987).
Finally, in evaluating the summary judgment
motion, the Court must read the facts in the light most favorable
to the non-moving party.
Anderson, 477 U.S. at 255.
II. Discussion
A.
Ms. Horrell alleges a claim of conversion, which is “any
wrongful exercise or assumption of authority over another’s
goods, depriving him of the possession, permanently or for a
definite period of time.”
46 (La. App. 3 Cir. 1993).
Labbe v. Premier Bank, 618 So. 2d 45,
At issue here is whether the
defendant’s action of debiting Ms. Horrell’s account was
5
wrongful, which requires examining Chase’s statutory right of
set-off.1
The Court finds summary judgment in favor of the
defendant appropriate here.
Because the record, taken as a
whole, could not lead a rational trier of fact to find for the
plaintiff, no genuine dispute exists as to the material facts
that (1) Ms. Lemoine was a signor on Ms. Horrell’s account, (2)
Ms. Lemoine and her husband obtained a mortgage, (3) Chase was
the holder of the mortgage loan, (4) the Lemoines were unable to
pay the mortgage, and (5) Chase set off funds in Ms. Horrell’s
account to apply toward the mortgage loan.
The only facts
potentially in dispute are whether Ms. Lemoine had an ownership
interest in the account as a signor, and whether Chase was the
holder of the mortgage at the time of the set-off.
1
The Court,
The Court finds that based on the pleadings alone, the
plaintiff alleges enough facts to sustain a claim and, therefore,
survive a Rule 12(c) motion. Defendant asserts that Ms.
Horrell’s complaint establishes that (1) Ms. Lemoine was a signor
on the deposit account at issue here, (2) Ms. Lemoine and her
husband obtained a mortgage, (3) Chase was the holder of that
mortgage, (4) the Lemoines became unable to service their
mortgage loan, and (5) Chase set off the funds in the deposit
account to apply toward the Lemoines’ mortgage.
Contrary to what the defendant contends, the complaint does
not allege that Chase was the holder of the mortgage at the time
of the set-off, which would have entitled Chase to a judgment on
the pleadings. Rather, the complaint alleges that the mortgage
loan was obtained from a predecessor institution to Washington
Mutual, then assigned to Washington Mutual, and eventually
assigned to the defendant. Because the Court must look solely at
the face of the pleadings, and in a light most favorable to the
plaintiff, Ms. Horrell alleges enough facts, albeit barely, to
state a claim that is plausible on its face. When examining
material outside the pleading, as the Court does in its summary
judgment analysis, Ms. Horrell’s conversion claim runs into
trouble.
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however, finds that the defendant has met its burden on summary
judgment because the record establishes that Ms. Lemoine had an
ownership interest in the account, and Chase was the holder of
the mortgage at the time of the set-off.2
Section 6:316(C) of the Louisiana Revised Statutes confers
upon a bank the right of set-off.
That is, upon a depositor’s
default on an obligation owed to the bank, the bank has the right
to apply any funds on deposit toward payment of the obligation.
The statute provides:
C. In the event that the depositor should default under
any loan, extension of credit or other direct or indirect
obligation of any nature and kind whatsoever in favor of
the depository bank, the bank shall have the right to
apply any and all funds that the depositor then has on
deposit . . . towards the payment of the depositor's
indebtedness or obligations, whether such payment
satisfies the indebtedness or obligations in whole or in
part.
D. The bank shall notify the depositor in writing within
two business days following the exercise of the bank’s
remedies under Subsection C of this Section [the set-off
provision].
Such notice should be forwarded by
registered or certified mail to the depositor’s most
current address reflected in the bank’s records. In the
event that the bank mails such a notice to the depositor
within the above time period, the bank shall have no
liability to the depositor or to any other person as a
result of the bank’s dishonor of checks or drafts drawn
on the depositor’s accounts with the bank.
LA. REV. STAT. ANN. § 6:316(C)-(D)(2011).
Louisiana courts have held that the only requirement to
2
Because the Court finds that the defendant properly exercised
its statutory right of set-off, it does not address the
defendant’s contractual right of set-off.
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trigger La. R.S. 6:316(C) is default by the depositor.
See A&B
Bolt and Supply Inc. v. Standard Offshore Servs., Inc., 20021823, p. 5 (La. App. 1 Cir. 6/27/2003); 858 So. 2d 509, 512
(“[A]ll that is required to trigger the provisions of this
statute [La. R.S. 6:316] is that the depositor should default
under any loan . . . in favor of the depository bank.” (internal
quotation marks omitted)).
contrary, however.
There have been hints to the
It has been held that a bank must comply with
the notice requirement of La. R.S. 6:316(D) to avail itself of
the statutory right of set-off provided in La. R.S. 6:315(C).
See John Deere Co. v. Slidell Tractor Co., No. 89-1953, 1992 WL
245609, at *13 (E.D. La. Sept. 15, 1992); Chrysler Credit Corp.
v. Whitney Nat’l Bank, 798 F. Supp. 1234, 1238 (E.D. La. July 1,
1992).
In both cases, the court did not say why La. R.S.
6:316(D) commands notice before a bank can utilize the statutory
right of set-off, and this Court declines to follow these cases
here.
See John Deere Co., 1992 WL 245609, at *13; Chrysler
Credit Corp., 798 F. Supp. at 1238.
The statutory text commands,
however, that the only requirement is the fact of default.
La.
R.S. 6:316(C) merely instructs that “[i]n the event that the
depositor should default under any loan . . . in favor of the
depository bank, the bank shall have the right to apply any and
all funds that the depositor then has on deposit with the bank.”
LA. REV. STAT. ANN. § 6:316(C)(emphasis added).
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Moreover, the Court finds that this substantive right is not
undermined by the notice provision in La. R.S. 6:316(D), because
subsection D limits the effects of providing notice.
Subsection
D states that
[t]he bank shall notify the depositor in writing within
two business days following the exercise of [the setoff] . . . . In the event that the bank mails such a
notice . . . the bank shall have no liability to the
depositor or to any other person as a result of the
bank’s dishonor of checks or drafts drawn on the
depositor’s accounts with the bank.
LA. REV. STAT. ANN. § 6:316(D)(emphasis added).
The Court concludes that the notice requirement of La. R.S.
6:316(D) merely absolves the bank from liability for dishonored
checks that may result after the set-off; it does not “operate to
nullify the depository bank’s right to the statutory setoff
remedy.”
A&B Bolt and Supply, 858 So. 2d. at 512.
Accordingly,
the fact that Chase did not provide the plaintiff notice pursuant
to La. R.S. 6:316(D) in this case is not dispositive.3
The Court also finds no genuine issue exists as to Ms.
Lemoine’s ownership interest in Ms. Horrell’s account.
The
record indicates that Ms. Lemoine was a signor on Ms. Horrell’s
Chase account, which made Ms. Lemoine a joint account holder.
3
As
Plaintiff alleges that notice of default is also required
before set-off can occur. However, notice that the depositor is
in default is not required by the statute and the law on this
issue is clear. See A&B Bolt and Supply, 858 So. 2d. at 512
(holding that a bank does not have to place the depositor into
default or provide the depositor with such notice in order to
statutorily set off funds).
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such, Ms. Lemoine had full access to all account funds, the power
to sign on the account, and the ability to withdraw funds on the
account.
Ms. Horrell does not contest her daughter’s status as a
signor on the account; rather, she contends that she provided
notice to Chase that altered her daughter’s ownership interest in
the account.
Plaintiff alleges that she orally communicated to
Chase that Ms. Lemoine was added to the account so that her
daughter would have access to the funds if she later became
disabled. Courts have uniformly held that oral notice is
insufficient to rebut the presumption of ownership when
depositors are named on the account.
See, e.g., Singleton v. Am.
Sec. Bank of Ville Platte, Inc., 02-1109, p. 10 (La. App. 3 Cir.
4/20/2003); 849 So. 2d 72, 78; Guillot v. Union Bank, 617 So. 2d
1343, 1346 (La. App. 3 Cir. 1993).
Therefore, Ms. Horrell’s oral
communication does not negate her daughter’s ownership interest
in the account.
Presumably in an attempt to advance an argument for
constructive notice, the plaintiff points to the long-standing
history between Ms. Horrell and Chase as reason that the
defendant should have known that the funds belonged solely to the
plaintiff.
Plaintiff’s reliance on Maxwell v. Wampler to support
this point is misplaced.
604 So. 2d 628 (La. App. 3 Cir. 1992).
In Maxwell, the attorney held funds on behalf of a client in a
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client escrow account.
Id. at 630.
The bank subsequently used a
portion of the funds in escrow to satisfy a personal obligation
of the attorney.
Id.
The court in Maxwell held that the bank
should have known that the funds were not the attorney’s because
the account at issue was a client escrow account.
See id.
Ms.
Horrell’s account here is a standard deposit account, which is
vastly different from an escrow account.
The Maxwell decision is
unhelpful.
Moreover, taking into consideration the entire record, a
genuine issue as to material fact does not exist regarding the
holder of the Lemoines’ mortgage.
In her complaint, plaintiff
alleges that the mortgage was first obtained from the predecessor
institution to Washington Mutual and eventually assigned to the
defendant.
The defendant, through affidavits of record by Chase
bank officials, has met its burden in establishing no genuine
issues exists as to whether Chase was the holder of the mortgage.
The affidavit of Kevin Johnson, an Operations Unit Manager
employed by the defendant, states, “As of May 27, 2010, JPMorgan
Chase Bank, N.A. was the holder of the Mortgage Loan.”
The set-
off in this case occurred around November 23, 2010.
It is important to note that “the mere argued existence of a
factual dispute does not defeat an otherwise properly supported
motion.”
See Anderson, 477 at 248.
Plaintiff alleges, in a
conclusory fashion, that Chase Home Finance LLC (and not the
11
defendant) was the actual holder of the mortgage loan during the
period in which the set-off occurred.
Although plaintiff claims
to have come forward with competent evidence, the affidavits
submitted by Ms. Horrell merely establish that Ms. Horrell and
Ms. Lemoine did not know the mortgage was assigned.
Knowledge of
the assignment, however, is irrelevant: a bank’s statutory right
of set-off does not hinge on it.
Finally, the plaintiff submits
a computer screen print-out of the Real Estate Index from the
Georgia Superior Court Clerks’ Cooperative Authority Web site.
This print-out, however, provides no information as to which
entity owned the mortgage at the time of the set-off.
At best,
the print-out supports plaintiff’s assertion that she did not
know about any assignments.
Therefore, the plaintiff’s evidence
falls far short of supporting her rank speculation that defendant
was not the actual holder of the mortgage.
B.
Under Louisiana law, to sustain a cause of action for
intentional infliction of emotional distress, a plaintiff must
allege that (1) the conduct of the defendant was extreme and
outrageous, (2) the emotional distress suffered by the plaintiff
was severe, and (3) the defendant desired to inflict severe
emotional distress or knew that severe emotional distress would
be certain or substantially certain to result from his conduct.
See White v. Monsanto Co., 585 So. 2d 1205, 1209 (La. 1991).
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In
her complaint, Ms. Horrell asserts that “as a result of
defendant’s unauthorized debiting of plaintiff’s account,
plaintiff has sustained . . . damages for intentional infliction
of emotional distress.”
This is the only reference to emotional
distress in the entire complaint.
Therefore, plaintiff fails to
allege the essential elements of her emotional distress claim.
She makes no allegation that she suffered emotional distress or
that defendant intended to inflict emotional distress, or knew
that its actions were certain to cause emotional distress.4
See
Molette v. City of Alexandria, No. 040501A, 2005 WL 2445432, at
*8 (W.D. La. Sept. 30, 2005) (noting that even if the court were
to infer from the complaint that the defendant’s conduct was
extreme and outrageous, the plaintiff’s claim still fails because
she did not allege facts showing that she suffered emotional
distress and that the defendant intended to cause emotional
distress); see also Vandenweghe v. Jefferson Parish, No. 11-2128,
2012 WL 1825300, at *11 (E.D. La. May 18, 2012).
The defendant’s motion is GRANTED and the plaintiff’s claims
are dismissed.
New Orleans, Louisiana, October 3, 2012
________________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE
4
The plaintiff apparently concedes the issue: she failed to
provide any argument or evidence in support of her intentional
infliction of emotional distress claim.
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