Loraso et al v. JP Morgan Chase Bank, National Association et al

Filing 22

ORDER & REASONS: ORDERED that Chase's Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) (Rec. Doc. 8 ) is GRANTED. FURTHER ORDERED that Plaintiffs' claims for breach of contract, bad faith breach of contract, breach o f the obligation of good faith performance, negligence, negligent & intentional misrepresentation, detrimental reliance, breach of fiduciary duty, wrongful disclosure, intentional interference with a contract or business relationship, violations of T ILA/Regulation Z, & any accompanying vicarious liability theories are DISMISSED WITH PREJUDICE. FURTHER ORDERED that Plaintiffs' RESPA claim is DISMISSED WITHOUT PREJUDICE. Plaintiffs shall file an amended complaint within twenty-one (21) days, lest Plaintiffs' RESPA claim be dismissed with prejudice. Signed by Judge Carl Barbier on 10/23/13. (sek, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
VICTOR LORASO AND JANE LORASO

CIVIL ACTION

VERSUS

NO: 13-4734

JP MORGAN CHASE BANK, N.A.,
ET AL

SECTION: J

ORDER AND REASONS
Before the Court is a Motion to Dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(6) (Rec. Doc. 8) brought by Defendant
JP Morgan Chase Bank ("Chase"), as well as Plaintiffs' Opposition
(Rec. Doc. 11) and Chase's Reply (Rec. Doc. 16). Chase's motion was
submitted for hearing on the briefs on July 3, 2013.
Having considered the motion, the parties’ submissions, the
record, and the applicable law, the Court finds, for reasons
expressed below, that Chase's Motion to Dismiss should be GRANTED.
PROCEDURAL AND FACTUAL BACKGROUND
For purposes of this 12(b)(6) motion, Plaintiffs' rendition of
the

facts

is

as

follows.

Plaintiff

Victor

Loraso

signed

a

promissory note in 2008 in favor of Axion Mortgage Group, and the
loan was secured by a mortgage on Plaintiffs' home. (Pls.' Compl.,
Rec. Doc. 1-1, p. 2). Axion assigned, transferred, or sold the loan
and the mortgage to Chase, and Chase has acted as the loan
servicer.

(Pls.'

Compl.,

Rec.

Doc.

1

1-1,

p.

2).

Since

2008,

Plaintiffs have repeatedly attempted to refinance the loan, obtain
an equity loan with a second mortgage, obtain a forbearance, or
obtain a loan modification. (Pls.' Compl., Rec. Doc. 1-1, p. 2).
Plaintiff sent several qualified written requests ("QWRs") to
Chase,

requesting

information

on

the

loan

and

requesting

a

modification of the loan, but Chase failed to timely respond to
those QWRs. (Pls.' Compl., Rec. Doc. 1-1, p. 2-3). Plaintiffs claim
that Chase, in bad faith, refused to grant them a loan modification
or refinance, an equity loan, a forbearance, or a line of credit.
(Pls.' Compl., Rec. Doc. 1-1, p. 3). Plaintiffs also alleged that
Chase

"engaged

in

delaying

tactics,

repeatedly

requesting

information that had already been sent while Plaintiffs continued
to struggle to pay the full monthly mortgage note." (Pls.' Compl.,
Rec. Doc. 1-1, p. 3). Plaintiffs contacted Chase several times to
determine the amount of the total outstanding balance on the loan,
but Chase failed to provide an accurate statement and continually
increased the amount that Plaintiffs owed. (Pls.' Compl., Rec. Doc.
1-1, p. 3-4).
In 2010, Plaintiffs contacted Chase again to request a loan
modification,

but

Chase

told

Plaintiffs

that

they

were

not

qualified for a modification because the loan was not in default.
(Pls.'

Compl.,

Rec.

Doc.

1-1,

p.

4).

As

a

result

of

that

conversation, Plaintiffs allowed the loan to go into default in
order to qualify for a loan modification and subsequently applied

2

for such a modification. (Pls.' Compl., Rec. Doc. 1-1, p. 4). Chase
then refused to modify the loan and refused to accept partial
payments of the loan balance due. (Pls.' Compl., Rec. Doc. 1-1, p.
4).
In

October

2011,

Plaintiffs

applied

for

a

mortgage

modification, and Chase denied the application without offering
Plaintiffs any of the reasonable options that were available,
including the option of deferring only a certain percentage of the
loan. (Pls.' Compl., Rec. Doc. 1-1, p. 4-5). In November 2011,
Plaintiffs renewed their modification application in writing, and
on December 12, 2011, Chase required Plaintiffs to resend financial
information that Plaintiffs had already provided, which Plaintiffs
claim was a "delaying tactic aimed at stalling the work-out process
to give Chase the opportunity to foreclose." (Pls.' Compl., Rec.
Doc. 1-1, p. 5). On that same date, December 12, 2011, Chase filed
a Petition for Executory Process to foreclose on Plaintiffs' home.
(Pls.'

Compl.,

Rec.

Doc.

1-1,

p.

5).

On

December

13,

2011,

Plaintiffs then requested in writing that Chase modify the loan and
offered Chase an immediate payment of $40,000, but Chase did not
respond to the request. (Pls.' Compl., Rec. Doc. 1-1, p. 5).
On February 2012, Plaintiffs began the process of providing
additional information and documents that Chase had requested, and
Plaintiffs again applied for a mortgage modification, but Chase
continued to request additional documentation and to deny receiving

3

any of the documents that Plaintiffs had sent. (Pls.' Compl., Rec.
Doc. 1-1, p. 6). In June 2012, Chase demanded $173,466.26 in cash
to reinstate Plaintiff's loan, as well as six months of payments at
double the rate of the original note, without an effort to reduce
the interest rate based on Plaintiffs' requests for modification.
(Pls.' Compl., Rec. Doc. 1-1, p. 6). Plaintiffs replied to Chase's
demand by email, but Chase did not respond to their email and
continued to claim that Plaintiffs had failed to send required
financial information. (Pls.' Compl., Rec. Doc. 1-1, p. 7).
The Louisiana Attorney General sent a letter to Chase on
Plaintiffs' behalf on January 7, 2013, seeking assistance with
Plaintiffs' mortgage loan, but Chase denied receiving that letter
until January 24, 2013. (Pls.' Compl., Rec. Doc. 1-1, p. 7). On
February

14,

2013,

Chase

informed

Plaintiffs

that

it

needed

"additional research time" to resolve Plaintiffs' requests. (Pls.'
Compl., Rec. Doc. 1-1, p. 7). On February 20, 2013, Chase denied
Plaintiffs' modification requests based on Plaintiffs' alleged
failure to comply with Chase's requests to produce documents.
(Pls.' Compl., Rec. Doc. 1-1, p. 7). Plaintiffs continued to
provide additional information, and Chase then informed Plaintiffs
that a refinancing or modification would not be available to them
because the loan was in default, despite the fact that two years
earlier, Chase had told Plaintiffs that their loan could only
become eligible for a refinancing or modification if the loan was

4

in default. (Pls.' Compl., Rec. Doc. 1-1, p. 7-8). Plaintiffs claim
that Chase "incited Plaintiffs to allow the mortgage to go into
default" and then "refus[ed] to negotiate the loan modification it
had

enticed

Plaintiffs

to

seek,"

all

the

while

deliberately

misleading Plaintiffs into believing that their loan qualified for
a modification and using "delay tactics" to create an opportunity
to foreclose. (Pls.' Compl., Rec. Doc. 1-1, p. 8-9).
As a result of these alleged occurrences, Plaintiffs have
asserted the following theories of recovery against Chase: (1)
breach of contract, bad faith breach of contract, and/or breach of
the obligation of good faith performance under a contract, (2)
negligence, (3) negligent or intentional misrepresentation and
detrimental reliance, (4) breach of fiduciary duty, (5) wrongful
foreclosure,

(6)

intentional

interference

with

a

contract

or

business relationship, (7) violations of the Real Estate Settlement
Procedures Act (RESPA), and (8) violations of the Truth in Lending
Act (TILA)/Regulation Z.1 (Pls.' Compl., Rec. Doc. 1-1, p. 4, 911).
PARTIES' ARGUMENTS
A.

BREACH OF CONTRACT, BAD FAITH BREACH OF CONTRACT, BREACH OF

THE OBLIGATION OF GOOD FAITH PERFORMANCE, NEGLIGENCE, INTENTIONAL
AND NEGLIGENT MISREPRESENTATION, DETRIMENTAL RELIANCE, AND

1

Plaintiffs also allege that Chase is vicariously liable for the acts
and omissions of its employees. (Pls.' Compl., Rec. Doc. 1-1, p. 11).

5

WRONGFUL DISCLOSURE
Chase argues that each of these claims should be dismissed
because they are barred by the Louisiana Credit Agreement Statute
(LCAS). (Def.'s Mtn., Rec. Doc. 8-1, p. 5). Specifically, Chase
contends that Plaintiffs have failed to meet their burden to allege
that the parties ever entered into a written loan modification
agreement. (Def.'s Mtn., Rec. Doc. 8-1, p. 5). According to Chase,
"[t]he Louisiana Supreme Court has interpreted the Credit Agreement
Statute to bar all claims against creditors that are not based on
written credit agreements, regardless of the legal theory the
debtor purports to assign to those claims." (Def.'s Mtn., Rec. Doc.
8-1, p. 6) (citing Jesco Constr. Corp. v. NationsBank Corp., 20020057 (La. 10/25/02); 830 So. 2d 989, 990-92). Chase argues that
Plaintiffs' suit is based on an allegation that Chase failed to
grant Plaintiffs a loan modification, forbearance, or refinancing
loan,

and

that

definition of

"[s]uch

an

alleged

agreement

satisfies

the

'credit agreement' because it is an agreement to

make a 'financial accommodation.'" (Def.'s Mtn., Rec. Doc. 8-1, p.
6-7). Chase further avers that this Court's decision in Bass v.
Chase Home Finance supports its argument. (Def.'s Mtn., Rec. Doc.
8-1, p. 7).
Plaintiffs argue that the Louisiana Credit Agreement Statute
only applies to oral agreements or representations made prior to
the execution of a written loan document, and not to those made
6

after loan documents are executed, and Plaintiffs note that Chase's
allegedly wrongful conduct occurred after the mortgage agreement
was executed. (Pls.' Opp., Rec. Doc. 11, p. 9). Plaintiffs point
out that the most recent decision regarding whether the LCAS
precludes all actions against banks not based on written loan
documents is St. Landry Homestead v. Vidrine, a Louisiana Third
Circuit case, which Plaintiffs contend supports their argument.
(Pls.' Opp., Rec. Doc. 11, p. 10-11). Plaintiffs also argue that
the Louisiana Fourth Circuit has issued a similar ruling in
BizCapital Business v. Union Planters. (Pls.' Opp., Rec. Doc. 11,
p. 12-13). Chase counters that the Vidrine case actually weighs in
its favor. (Def.'s Reply, Rec. Doc. 16, p. 6).
B.

BREACH OF FIDUCIARY DUTY

With regard to the breach of fiduciary duty claim, Chase and
Plaintiffs make the same arguments regarding the LCAS discussed
above. Additionally, Chase argues that Plaintiffs have failed to
assert a claim for breach of fiduciary duty because their compliant
fails

to

allege:

(1)

a

special

relationship

of

trust

and

confidence, and (2) an advantage that Chase had over them. (Def.'s
Mtn., Rec. Doc. 8-1, p. 8). Chase further contends that under La.
R.S. § 6:1124, financial institutions do not have a fiduciary duty
to their customers unless there is a written agreement stating that
the financial institution will act as a fiduciary. (Def.'s Mtn.,
Rec. Doc. 8-1, p. 8). Chase also points out that the Courts in the
7

Eastern District of Louisiana have routinely dismissed breach of
fiduciary claims against financial institutions where the plaintiff
fails to allege the existence of a written fiduciary agreement.
(Def.'s Mtn., Rec. Doc. 8-1, p. 8).
Plaintiffs' Opposition does not appear to address Chase's
argument

that

Plaintiffs

have

failed

to

allege

a

special

relationship and an advantage that Chase had over them. With
respect to Chase's argument regarding written fiduciary agreements,
Plaintiffs argue that, despite the absence of a written fiduciary
agreement, "[i]n agreeing to service the loan, to receive payments
and

to

act

as

a

liaison

with

Plaintiffs

as

borrowers,

on

information and belief, Chase agreed with the mortgage holders to
act in the capacity of a fiduciary." (Pls.' Opp., Rec. Doc. 11, p.
13).
C.

INTENTIONAL INTERFERENCE WITH A CONTRACT OR BUSINESS
RELATIONSHIP

With regard to the claim for intentional interference with a
contract or business relationship, the parties make the same
arguments regarding the LCAS discussed above. Additionally, Chase
argues that Plaintiffs have failed to state a claim upon which
relief can be granted because, under the case law, such a claim
applies only to the narrow circumstances where a corporate officer
interferes

with

his

employer's

corporate

contract

with

third

persons. (Def.'s Mtn., Rec. Doc. 8-1, p. 9-12). Chase claims that
8

because Plaintiffs have not alleged facts that fit into those
narrow circumstances, Plaintiffs have failed to state a claim for
intentional interference with contract or a business relationship.
(Def.'s Mtn., Rec. Doc. 8-1, p. 12). Plaintiffs aver that this
cause

of

action

has

been

expanded

beyond

those

narrow

circumstances, and that this cause of action has been recognized in
the area of lender-borrower relations. (Pls.' Opp., Rec. Doc. 11,
p. 16-17). Additionally, Plaintiffs argue that the Vidrine court
"recognized the Vidrines' cause of action for tortious interference
with a business relationship," and thus that this Court should
recognize Plaintiffs' claim. (Pls.' Opp., Rec. Doc. 11, p. 11).
Chase counters that the Vidrine facts are distinguishable from the
facts of the instant case. (Def.'s Reply, Rec. Doc. 16, p. 6,
n.23).
D.

TRUTH IN LENDING ACT (TILA) CLAIM

Chase argues that any potential TILA claim is time barred
because it has not been brought within one year of the date of the
alleged violation. (Def.'s Mtn., Rec. Doc. 8-1, p. 13). Chase
points out that the alleged TILA violations occurred in 2009 and
2010, and Plaintiffs did not file suit until 2013. (Def.'s Mtn.,
Rec. Doc. 8-1, p. 13). Plaintiffs' Opposition states: "Plaintiffs
withdraw their TILA claim." (Pls.' Opp., Rec. Doc. 11, p. 17).
Chase contends that any arguments not raised in an opposition to a
motion to dismiss are waived, and so Plaintiffs' TILA claim should

9

be dismissed with prejudice. (Def.'s Reply, Rec. Doc. 16, p. 1-2).
E.

REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) CLAIM

Chase argues that Plaintiffs have not alleged that their
mortgage is a federally related mortgage, and thus that Plaintiffs
have failed to trigger a RESPA claim. (Def.'s Mtn., Rec. Doc. 8-1,
p. 15). Plaintiffs point out that Chase has not argued that the
mortgage is not, in fact, a federally related mortgage, but only
that Plaintiffs have not alleged that it is. (Pls.' Opp., Rec. Doc.
11, p. 17). Plaintiffs claim that the mortgage is indeed federally
related, that federal pleadings are notice pleadings, and that
Chase has been adequately put on notice of the claims made against
it. (Pls.' Opp., Rec. Doc. 11, p. 17-19).
Additionally, Chase contends that Plaintiffs have failed to
state a claim for relief under RESPA because Plaintiffs have failed
to allege any facts showing that Chase failed to respond to a
qualified written request ("QWR"). (Def.'s Mtn., Rec. Doc. 8-1, p.
15).

According

to

Chase,

correspondence

relating

to

a

loan

modification is not a QWR. (Def.'s Mtn., Rec. Doc. 8-1, p. 15).
Plaintiff counters that its correspondence with Chase involved not
only

the

option

of

a

loan

modification,

but

also

a

loan

reinstatement and other options. (Pls.' Opp., Rec. Doc. 11, p. 1920). Additionally, Plaintiffs argue that a request for a loan
modification actually does constitute a QWR. (Pls.' Opp., Rec. Doc.
11, p. 20).

10

Chase also avers that Plaintiffs must allege actual damages as
a result of Chase's failure to respond to purported QWRs in order
to adequately assert a cause of action under RESPA, and that
Plaintiffs have failed to allege these actual damages. (Def.'s
Mtn., Rec. Doc. 8-1, p. 16). Plaintiffs argue that their complaint
clearly states that their credit score was damaged and that they
suffered loss of business income as a result of Chase's actions,
which

prevented

them

from

securing

financing

from

Chase

or

elsewhere. (Pls.' Opp., Rec. Doc. 11, p. 21). Chase counters that
Plaintiffs are required to allege "that they incurred actual
damages as a direct result of a failure to respond to a QWR" and
that Plaintiffs' citation to their general list of damages is
insufficient to meet this requirement. (Def.'s Reply, Rec. Doc. 16,
p. 4). Chase claims:

In fact, a review of ¶ XXVIII of the [complaint] shows
that the Plaintiffs are seeking damages because they were
not

given

allegedly

a

loan

failed

to

modification,
respond

to

not

because

purported

Chase

QWRs.

...

Indeed, it is hard to fathom how the Plaintiffs could
have incurred actual damage under RESPA for Chase's
alleged failure to respond to purported QWRs issued after
the denial of a loan modification, after the default on
the mortgage, and after the December 12, 2011 filing of

11

Chase's petition for executory process.

(Def.'s Reply, Rec. Doc. 16, p. 4-5, n.19).
LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal
where a plaintiff fails “to state a claim upon which relief can be
granted.”

FED. R. CIV. P. 12(b)(6).

When considering a motion to

dismiss pursuant to Rule 12(b)(6), a court must accept all wellpled facts as true and must draw all reasonable inferences in favor
of the plaintiff.

Lormand v. U.S. Unwired, Inc., 565 F.3d 228,

232-33 (5th Cir. 2009); Baker v. Putnal, 75 F.3d 190, 196 (5th Cir.
1996).

The Court is not bound, however, to accept as true legal

conclusions couched as factual allegations.

Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555 (2007).
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.”

Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (citing Twombly, 550 U.S. at 570).

A claim is facially

plausible when the plaintiff pleads facts that allow the court to
“draw the reasonable inference that the defendant is liable for the
misconduct alleged.”

Id. (citing Twombly, 550 U.S. at 556).

In order to be deemed legally sufficient, a complaint must
establish more than a “sheer possibility” that the plaintiff's
claims are true.

Id.

The complaint must contain enough factual
12

allegations to raise a reasonable expectation that discovery will
reveal evidence of each element of the plaintiff's claim. Lormand,
565 F.3d at 255-57.

If there are insufficient factual allegations

to raise a right to relief above the speculative level, or if it is
apparent

from

the

face

of

the

complaint

that

there

is

an

insuperable bar to relief, however, the claim must be dismissed.
Jones v. Bock, 549 U.S. 199, 215 (2007); Twombly, 550 U.S. at 555;
Carbe v. Lappin, 492 F.3d 325, 328 n.9 (5th Cir. 2007).
DISCUSSION
A.

BREACH OF CONTRACT, BAD FAITH BREACH OF CONTRACT, BREACH OF

THE OBLIGATION OF GOOD FAITH PERFORMANCE, NEGLIGENCE, INTENTIONAL
AND NEGLIGENT MISREPRESENTATION, DETRIMENTAL RELIANCE, WRONGFUL
DISCLOSURE, BREACH OF FIDUCIARY DUTY, AND INTENTIONAL
INTERFERENCE WITH A CONTRACT OR BUSINESS RELATIONSHIP

1.

DOES CHASE'S ALLEGED FAILURE TO GRANT A LOAN MODIFICATION,

FORBEARANCE, OR REFINANCING LOAN CONSTITUTE A CREDIT AGREEMENT
UNDER THE LOUISIANA CREDIT AGREEMENT STATUTE?2
2

The LCAS states, in pertinent part: "A debtor shall not maintain an
action on a credit agreement unless the agreement is in writing, expresses
consideration, sets forth the relevant terms and conditions, and is signed by
the creditor and the debtor." LA. REV. STAT. ANN. § 6:1122 (2012). The statute
also provides:
A. The following actions shall not give
credit agreement is created, unless the
requirements of R.S. 6:1122:
(1) The rendering of financial or other
debtor.
(2) The consultation by a creditor with

13

rise to a claim that a new
agreement satisfies the
advice by a creditor to a
a debtor.

Under the LCAS, a credit agreement is defined as "an agreement
to lend or forbear repayment of money or goods or to otherwise
extend credit, or make any other financial accommodation." LA. REV.
STAT. ANN. § 6:1121 (2012). Chase claims that Plaintiffs' suit is
based on an allegation that Chase failed to grant Plaintiffs a loan
modification, forbearance, or refinancing loan, and that "[s]uch an
alleged agreement satisfies the definition of

'credit agreement'

because it is an agreement to make a 'financial accommodation.'"
(Def.'s Mtn., Rec. Doc. 8-1, p. 6-7). In King, the plaintiff
alleged that an officer of the bank "assured him that the loan
consolidation and restructuring would not impair or jeopardize
[his] financial and personal welfare as long as he remained current
in all his obligations with the bank." King v. Parish Nat'l Bank,
2004-0337, p. 2-3 (La. 10/19/04); 885 So. 2d 540, 534. The Supreme
Court of Louisiana found that the bank officer's oral promise was
an agreement to make a financial accommodation, and thus was a
credit

agreement

that

would

have

to

be

in

writing

to

be

enforceable. Id. at 548. This Court agrees with Chase that the
instant case involves a similar alleged oral promise, though this
promise

was

to

modify,

forbear,

or

refinance

a

loan,

(3) The agreement of a creditor to take or not to take certain
actions, such as entering into a new credit agreement, forbearing
from exercising remedies under a prior credit agreement, or
extending installments due under a prior credit agreement.
B. A credit agreement shall not be implied from the relationship,
fiduciary, or otherwise, of the creditor and the debtor.
LA. REV. STAT. ANN. § 6:1123 (2012).

14

which

constitutes a credit agreement that would have to be in writing to
be enforceable under the LCAS.
2.

DOES THE LOUISIANA CREDIT AGREEMENT STATUTE BAR ALL OF
PLAINTIFFS' CLAIMS, OR ONLY THOSE CLAIMS BASED ON ORAL

REPRESENTATIONS MADE BEFORE OR ALONG WITH WRITTEN AGREEMENTS?
In 2002, the United States Fifth Circuit certified a question
to the Supreme Court of Louisiana, and the Supreme Court answered
that

"[t]he

Louisiana

Credit

Agreement

Statute

precludes

all

actions for damages arising from oral credit agreements, regardless
of the legal theory of recovery asserted." Jesco Constr. Corp. v.
Nationsbank Corp., 830 So. 2d at 992.3 The Supreme Court of
Louisiana has also found that the LCAS "precludes all claims,
including bad faith breach and bad faith acts, when predicated on
the existence and enforceability of oral credit agreements and
implied agreements based on the creditor's and debtor's previous
relationship." King, 885 So. 2d at 542 (emphasis added).4
In BizCapital, the Louisiana Fourth Circuit stated that "the
3

The Jesco plaintiff's claims, based on the bank's failure to grant his
loan application, were all dismissed, including his claims for breach of
contract, detrimental reliance, negligent misrepresentation, unfair trade
practices, breach of duty of good faith and fair dealing, promissory and
equitable estoppel, and breach of fiduciary duty. Jesco Constr. Corp. v.
Nationsbank Corp., 107 F. Supp. 2d 715, 725 (E.D. La. 2000) (Porteous, J.);
Jesco Constr. Corp. v. Nationsbank Corp., 321 F.3d 501, 502-03 (5th Cir.
2003).
4

The King court also found that the Louisiana Credit Agreement Statute
bars claims based on oral credit agreements against the employees of a
creditor when those employees are acting within the course and scope of their
employment. King, 885 So. 2d at 542. Therefore, Plaintiffs cannot succeed in
their claim that Chase is vicariously liable for the acts and omissions of its
employees will must fail.

15

legislature did not intend to totally immunize banks from all legal
duties in their relationship with customers and third parties," and
found that the LCAS does not bar negligent misrepresentation and
detrimental reliance claims brought by one lender against another
lender. BizCapital Bus. & Indus. Dev. Corp. v. Union Planters
Corp., 2003-2208, p. 5-6 (La. App. 4 Cir. 9/8/04); 884 So. 2d 623,
627. Although Plaintiffs argue that BizCapital weighs in their
favor, this Court has pointed out, in Bass v. Chase Home Finance,
that BizCapital involved a claim between two financial institutions
and thus that BizCapital has no application to cases such as the
instant case, where debtors sue banks on oral agreements to modify
loans. See Bass v. Chase Home Fin., L.L.C., No. 09-3339, 2010 WL
3922709, at *4-5 (E.D. La. Oct. 1, 2010) (Vance, J.). This Court
will

apply

the

law

as

interpreted

by

the

Supreme

Court

of

Louisiana, which has clearly stated that the LCAS precludes all
actions for damages arising from oral credit agreements, including
claims based on bad faith breach and bad faith acts, regardless of
the particular legal theory the plaintiff chooses to assert. The
exception potentially supplied by BizCapital is narrow and has no
application here, where Plaintiffs are debtors who have sued Chase
based on Chase's alleged oral agreement to modify their loan.
Plaintiffs also argue that Vidrine, a June 2013 decision by
the Louisiana Third Circuit, weighs in their favor because the
Vidrine court did "not interpret the supreme court's decisions in
16

... Jesco and King to establish a rule of law that the Louisiana
Credit Agreement Act renders a financial institution immune from
any

and

all

liability

arising

from

its

business

operations,

including business operations that occur outside of the parameters
of a credit agreement as defined in La. R.S. 6:1121(1)." (Pls.'
Opp., Rec. Doc. 11, p. 9) (citing St. Landry Homestead Fed. Sav.
Bank v. Vidrine, p. 21 (La. App. 3 Cir. 6/12/13); 118 So.3d 470,
486). Here, however, Plaintiffs' argument fails because Plaintiffs
have not alleged that Chase's conduct occurred

outside of the

parameters of a credit agreement. As explained above, any alleged
oral agreement by Chase to engage in a modification, forbearance,
or refinancing of Plaintiffs' loan was a credit agreement. For
these reasons, Plaintiffs' claims for breach of contract, bad faith
breach

of

contract,

performance,

breach

of

negligence,

misrepresentation,

detrimental

the

obligation

intentional
reliance,

of

good

faith

and

negligent

wrongful

foreclosure,

breach of fiduciary duty,5 and intentional interference with a
5

Plaintiffs' claim for breach of fiduciary duty is barred under the
LCAS, but it also fails for additional reasons. LA. REV. STAT. ANN. § 6:1124
states:
No financial institution or officer or employee thereof shall be
deemed or implied to be acting as a fiduciary ... unless there is
a written agency or trust agreement under which the financial
institution specifically agrees to act and perform in the capacity
of a fiduciary.
LA. REV. STAT. ANN. § 6:1124 (2012). This Court has frequently held that where a
plaintiff fails to allege the existence of a written fiduciary agreement in an
action for breach of fiduciary duty against a financial institution, the
plaintiff's claim must be dismissed in accordance with LA. REV. STAT. ANN. §
6:1124. Crumes v. Gen. Ins. Co. of Am., No. 06-6890, 2007 WL 4257067, at *3
(E.D. La. Nov. 30, 2007) (Barbier, J.); Obioha v. Proctor Fin. Ins. Co., No.

17

contract or business relationship6 must be all be dismissed with
prejudice.7
B.

TRUTH IN LENDING ACT (TILA) CLAIM

A TILA claim must be brought "within one year from the date of
the occurrence of the violation ... ." 15 U.S.C. § 1640 (2010).
Plaintiffs' complaint alleges that the TILA violations occurred in
2009 and 2010, and Plaintiff did not file suit until May 3, 2013.
Plaintiffs' TILA claim is thus time barred and must be dismissed
with prejudice.
C.

REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) CLAIM
1.

IS THE MORTGAGE FEDERALLY RELATED?

According to the Southern District of Mississippi in 2010:

The Fifth Circuit has not yet addressed this issue, but
courts in other jurisdictions have held that a plaintiff

06-9231, 2007 WL 2903227, at *3 (E.D. La. Oct. 2, 2007) (Vance, J.); Clarkston
v. Allstate Ins. Co., No. 06-4474, 2007 WL 128806, at *2 (E.D. La. Jan. 16,
2007) (Feldman, J.).
Here, in addition to the fact that Plaintiffs' claim for breach of
fiduciary duty is barred under the LCAS, Plaintiffs merely argue that Chase
had some sort of implied agreement to act as a fiduciary, despite the absence
of a written fiduciary agreement. (Pls.' Opp., Rec. Doc. 11, p. 13-15).
Plaintiffs' failure to allege a written fiduciary agreement is fatal to their
claim for breach of fiduciary duty.
6

Because Plaintiffs' claim for intentional interference with a contract
or business relationship is barred under the LCAS, it is unnecessary for the
Court to discuss the parties' additional arguments pertaining to this claim.
7

Any claim by Plaintiffs that Chase is vicariously liable for the acts
and omissions of its employees with respect to any of these causes of action
must also be dismissed.

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who does not specifically allege that his mortgage loan
was a 'federally related mortgage loan' in his complaint
does not have standing to assert a RESPA claim, and thus
such claims must be dismissed.

Middleton v. Ameriquest Mortg. Co., No. 10-146, 2010 WL 2653293, at
*4 (S.D. Miss. June 24, 2010) (citing Gardner v. First Amer. Title
Ins. Co., 294 F.3d 991, 993 (8th Cir. 2002)). In Middleton, the
plaintiff failed to allege a federally related mortgage, but the
court granted the plaintiff leave to file an amended complaint to
allege the existence of such a mortgage. Id.
Chase

is

correct

that

Plaintiffs'

complaint

does

not

specifically allege that the mortgage in question is federallyrelated. However, the Court will grant Plaintiffs leave to amend
their complaint to specifically allege that the mortgage is a
federally-related mortgage.
2.

HAVE PLAINTIFFS ALLEGED A FAILURE TO RESPOND TO A QUALIFIED
WRITTEN REQUEST (QWR)?
Chase argues that Plaintiffs have failed to state a claim

under RESPA

because they have not sufficiently alleged that their

communications, to which Chase allegedly failed to respond, were
QWRs.8 (Def.'s Mtn., Rec. Doc. 8-1, p. 15). For a communication to

8

If Plaintiffs sufficiently allege the existence of a QWR, Chase would
have certain statutory duties under Section 2605(e) of RESPA, which provides,
in pertinent part:

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qualify as a QWR, it must relate to the servicing of a loan.9 There
is support among the courts in the Fifth Circuit for Chase's
contention that a loan modification request does not constitute a
QWR because it does not dispute or request information about how a
loan is being serviced. See Shatteen v. JP Morgan Chase Bank, N.A.,
No. 10-107, 2010 WL 4342073, at *8 (E.D. Tex. Sept. 10, 2010); Hill
v. Wells Fargo Bank, N.A., No. 12-11, 2012 WL 2065377, at *5-6
(S.D. Tex. June 6, 2012); Fashina v. Fed. Home Loan Mortg. Corp.,
No. 12-822, 2012 WL 6772058, at *4 (N.D. Tex. Dec. 11, 2012).

If any servicer of a federally related mortgage loan receives a
qualified written request from the borrower (or an agent of the
borrower) for information relating to the servicing of such loan,
the servicer shall provide a written response acknowledging
receipt of the correspondence within 5 days ... unless the action
requested is taken within such period. ... For purposes of this
subsection, a qualified written request shall be a written
correspondence, other than notice on a payment coupon or other
payment medium supplied by the servicer, that: (I) includes, or
otherwise enables the servicer to identify, the name and account
of the borrower; and (ii) includes a statement of the reasons for
the belief of the borrower, to the extent applicable, that the
account is in error or provides sufficient detail to the servicer
regarding other information sought by the borrower.
12 U.S.C.A. § 2605(e) (2013) (emphasis added).
Additionally, not later than thirty days after receipt of a qualified written
request, the servicer must make any appropriate corrections on the account,
conduct an investigation, and provide a written explanation or clarification
to the borrower. Id.
9

The term "servicing" refers to:

receiving any scheduled periodic payments from a borrower pursuant
to the terms of any mortgage loan ... and making the payments to
the owner of the loan or other third parties of principal and
interest and such other payments with respect to the amounts
received from the borrower as may be required pursuant to the
terms of the mortgage servicing loan documents or servicing
contract.
24 C.F.R. § 3500.2 (2013).

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However,
Plaintiffs

Plaintiffs'
sent

complaint

requests

for

does
loan

not

merely

modifications;

allege

that

Plaintiffs'

complaint also alleges that Plaintiffs offered to pay Chase an
immediate payment of $40,000 but that Chase did not timely respond.
(Pls.' Compl., Rec. Doc. 1-1, p. 5, ¶ XXVI). Plaintiffs further
allege that they contacted Chase several times to determine the
amount of the total outstanding balance on the loan, but Chase
either failed to respond or failed to provide an accurate statement
and continually increased the amount that Plaintiffs owed. (Pls.'
Compl., Rec. Doc. 1-1, p. 3-4). Additionally, Plaintiffs' complaint
alleges that Plaintiffs emailed Chase to contest Chase's demand for
certain periodic monthly payments that Plaintiffs believed to be
excessive and incorrect, and that Chase did not timely respond.
(Pls.' Compl., Rec. Doc. 1-1, p.6-7, ¶ XXX-XXXV). These alleged
requests may not have pertained to loan modifications but may
instead have pertained to the disputed amount of the scheduled
periodic payments and the total outstanding balance. Therefore, the
Court will grant Plaintiffs leave to amend their complaint to
allege that these written requests were, in fact, related to the
servicing of the loan, as defined by 12 U.S.C.A. § 2605(e) and 24
C.F.R. § 3500.2, and thus that they were QWRs.
3.

HAVE PLAINTIFFS ALLEGED ACTUAL DAMAGES AS A RESULT OF CHASE'S
ALLEGED RESPA VIOLATIONS?
Damages under RESPA include "... any actual damages to the
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borrower as a result of the failure" to comply with RESPA. 12
U.S.C. § 2605(f)(1) (2013). Chase claims that Plaintiffs have
failed to specifically allege that their damages were caused by
Chase's failure to respond to their alleged QWRs and have instead
alleged that their damages were caused by Chase's refusal to grant
them a loan modification. (Def.'s Reply, Rec. Doc. 16, p. 4-5,
n.19). In Plaintiffs' Opposition, they argue that their complaint
alleges that their credit score was damaged, which prevented them
from securing financing at Chase or elsewhere, as a result of
Chase's failure to respond to their QWRs. (Pls.' Opp., Rec. Doc.
11, p. 21). It is unclear from Plaintiffs' complaint whether those
alleged damages resulted from Chase's failure to modify the loan or
from Chase's failure to timely respond to QWRs. Therefore, this
Court will grant Plaintiffs leave to amend their complaint to
specifically allege which damages resulted from Chase's failure to
respond to QWRs. In sum, to state a cause of action for a violation
of RESPA, Plaintiffs must amend their complaint to specifically
allege: (1) that the mortgage in question is federally-related, (2)
that Plaintiffs' written requests were related to the servicing of
the loan and were thus QWRs, and (3) that Plaintiffs' damages
resulted from Chase's alleged failure to respond to the QWRs.
CONCLUSION
Accordingly,
IT IS ORDERED that Chase's Motion to Dismiss pursuant to

22

Federal Rule of Civil Procedure 12(b)(6) (Rec. Doc. 8) is GRANTED.
IT IS FURTHER ORDERED that Plaintiffs' claims for breach of
contract, bad faith breach of contract, breach of the obligation of
good faith performance, negligence, negligent and intentional
misrepresentation, detrimental reliance, breach of fiduciary duty,
wrongful disclosure, intentional interference with a contract or
business relationship, violations of TILA/Regulation Z, and any
accompanying

vicarious

liability

theories

are

DISMISSED

WITH

PREJUDICE.
IT

IS

FURTHER

ORDERED

that

Plaintiffs'

RESPA

claim

is

DISMISSED WITHOUT PREJUDICE. Plaintiffs shall file an amended
complaint within twenty-one (21) days, lest Plaintiffs' RESPA claim
be dismissed with prejudice.
New Orleans, Louisiana this 23rd day of October, 2013.

____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

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