Payne v. Seterus Inc

Filing 22

MEMORANDUM RULING provisionally granting 8 Motion to Dismiss for Failure to State a Claim. IT IS FURTHER ORDERED that, within the next fourteen (14) days from the date of this ruling, plaintiff may seek leave of court to file an amended complaint to redress his deficient allegations as detailed herein. If no motion is filed within this fourteen (14) day period, then the court will enter judgment in accordance with the ruling. Signed by Magistrate Judge Karen L Hayes on 8/26/16. (crt,DickersonSld, D)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
MONROE DIVISION
ROBERT CHARLES PAYNE, JR.

*

CIVIL ACTION NO. 16-0203

VERSUS

*

MAG. JUDGE KAREN L. HAYES

SETERUS INC.

*
MEMORANDUM RULING

Before the court is a motion to dismiss for failure to state a claim upon which relief can
be granted [doc. # 8] filed by defendant Seterus, Inc.1 For reasons explained below, the motion
is provisionally GRANTED.
Background
a)

The Complaint
On February 12, 2016, Robert Payne Jr., filed the instant suit against Seterus, Inc.

(“Seterus”) for violations of the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601 et
seq. (“RESPA”), the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq. (“TILA”), and associated
regulations. (Compl.). Payne alleges that on September 15, 2014, Seterus notified him that it
had become the servicer and debt collector of his mortgage loan with Fannie Mae. Id. On an
unspecified date thereafter, Payne requested a monthly statement from Seterus, but received no
response. Id. He then faxed correspondence to Seterus on November 16 and 24, 2015. Id. He
also uploaded the correspondence to Seterus’s website on November 10, 17, 24, and December
2, 2015. Id. In addition, on November 24, 2015, Payne sent Seterus a copy of the
1

With the consent of all parties, the District Court referred the above-captioned case to
the undersigned magistrate judge for the conduct of all further proceedings and the entry of
judgment. 28 U.S.C. § 636(c).

correspondence by certified mail. Id. Aside from a payoff statement, Seterus did not respond to
Payne’s requests for information. Id.
Payne contends that all of his communications to Seterus seeking information about his
mortgage loan constitute “qualified written requests” under RESPA, thus triggering a five day
window for Seterus to provide a written response acknowledging receipt of the correspondence,
12 U.S.C. § 2605(e)(1)(A).
He further alleges that Seterus violated 12 U.S.C. § 2605(k)(1)(C) and 12 C.F.R. §
1026.36 by failing to take timely action to respond to his requests to correct errors relating to the
allocation of payments. Seterus’s failure to credit Payne’s payments also purportedly constitutes
a violation of TILA, 15 U.S.C. § 1639f.
Finally, Payne alleges that Seterus failed to provide him with an annual analysis of his
escrow account as required by 12 U.S.C. § 2609(c)(2).
For his troubles, Payne seeks “such damages as to which he proves himself justly
entitled,” pursuant to 15 U.S.C. § 1640 and 12 U.S.C. § 2605(f). He also seeks costs and
attorney’s fees.
b)

The Motion to Dismiss
Seterus filed the instant Rule 12(b)(6) motion to dismiss for failure to state a claim upon

which relief can be granted on March 21, 2016. Seterus argues that it did respond to Payne’s
requests for information. However, rather than send the responses, including an escrow account
statement, directly to Payne, Seterus opted to send them to Payne’s then bankruptcy attorney, E.
Orum Young.2 In support of its motion, Seterus submitted copies of Payne’s letters and

2

Seterus adduced a docket sheet from Payne’s Chapter 13 bankruptcy petition, In Re:
Robert Charles Payne, No. 09-32782 (Bankr. W.D. La.). (M/Dismiss, Exh. 1). The docket sheet
shows that Payne filed the petition in 2009, that the debt was discharged on September 21, 2015,
2

Seterus’s responses that it sent to Payne’s attorney. Seterus contends that its evidence
conclusively demonstrates compliance with its RESPA obligations. Seterus further argues that
the complaint fails to allege facts to support any cognizable claim for damages as a result of the
alleged RESPA and TILA violations.
On April 13, 2016, plaintiff filed his out-of-time opposition to the motion to dismiss.3
[doc. # 11]. He maintained that under 12 U.S.C. § 2605(e)(2), Seterus was required to provide
the requested information directly to him as the borrower – not his bankruptcy attorney. He
stressed that 12 U.S.C. § 2605(e)(2) does not exempt servicers from responding to discharged
Chapter 13 debtors whose cases have yet to be closed.
Plaintiff also adduced a copy of a monthly account statement dated March 16, 2016,
which Seterus transmitted to plaintiff’s current counsel. (Pl. Opp. Memo., Exh. A). The
statement shows past due payment(s) of $2,796.53 and a suspense credit of $3,545.40. Id.
Plaintiff argues
that the statement supports his claims that Seterus did not promptly credit payments on his
mortgage loan as required by 15 U.S.C. § 1639f and 12 C.F.R. § 1026.36.

and that a final decree closing the case issued on January 22, 2016. Id. The court may take
judicial notice of, and therefore consider the bankruptcy records attached to the motion to
dismiss. Cargo v. Kansas City Southern Ry. Co., 408 B.R. 631, 640 (W. D. La. 2009) (citations
omitted).
3

Seterus urges the court not to consider plaintiff’s opposition because it was untimely.
See Def. Reply Memo. Plaintiff’s response was due on April 12, 2016 – 21 days after the notice
of motion setting. (Notice of Motion Setting [doc. # 9]). He filed his opposition one day late –
on April 13. District courts, however, enjoy broad discretion to determine whether to consider
an untimely submission. Nelson v. Star Enterprise, 220 F.3d 587, 2000 WL 960513 at *1 (5th
Cir. 2000) (citing Hetzel v. Bethlehem Steel Corp., 50 F.3d 360, 367 (5th Cir. 1995) and
Lowndes v. Global Marine Drilling Co., 909 F.2d 818 (5th Cir. 1990)). Moreover, Seterus has
not demonstrated any cognizable prejudice as a result of the brief delay. Thus, the court will
excuse the dilatory filing and give effect to plaintiff’s brief.
3

Seterus filed its reply brief on April 25, 2016. (Def. Reply [doc. # 16]). In addition to
reemphasizing its original arguments, it further noted that the March 2016 billing statement
submitted by plaintiff did not establish that the statement conveyed any incorrect information.
Specifically, plaintiff did not allege the date or amount of any payments that Seterus failed to
credit. Briefing is complete; the matter is ripe.
Analysis
I.

Standard of Review
The Federal Rules of Civil Procedure sanction dismissal where the plaintiff fails “to state

a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A pleading states a claim for
relief when, inter alia, it contains a “short and plain statement . . . showing that the pleader is
entitled to relief . . .” Fed.R.Civ.P. 8(a)(2).
To withstand a motion to dismiss, “a complaint must contain sufficient factual matter,
accepted as true, to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 129 S.Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127
S.Ct. 1955 (2007)). A claim is facially plausible when it contains sufficient factual content for
the court “to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Id. Plausibility does not equate to possibility or probability; it lies somewhere in
between. See Iqbal, supra. Plausibility simply calls for enough factual allegations to raise a
reasonable expectation that discovery will reveal evidence to support the elements of the claim.
See Twombly, 550 U.S. at 556, 127 S.Ct. at 1965. Assessing whether a complaint states a
plausible claim for relief is a “context-specific task that requires the reviewing court to draw on
its judicial experience and common sense.” Iqbal, supra (citation omitted). A well-pleaded
complaint may proceed even if it strikes the court that actual proof of the asserted facts is

4

improbable, and that recovery is unlikely. Twombly,
Although the court must accept as true all factual allegations set forth in the complaint,
the same presumption does not extend to legal conclusions. Iqbal, supra. A pleading comprised
of “labels and conclusions” or “a formulaic recitation of the elements of a cause of action” does
not satisfy Rule 8. Id. Moreover, courts are compelled to dismiss claims grounded upon invalid
legal theories even though they might otherwise be well-pleaded. Neitzke v. Williams, 490 U.S.
319, 109 S.Ct. 1827 (1989).
Nevertheless, “[t]he notice pleading requirements of Federal Rule of Civil Procedure 8
and case law do not require an inordinate amount of detail or precision.” Gilbert v. Outback
Steakhouse of Florida Inc., 295 Fed. Appx. 710, 713 (5th Cir. 2008) (citations and internal
quotation marks omitted). Further, “a complaint need not pin plaintiff's claim for relief to a
precise legal theory. Rule 8(a)(2) of the Federal Rules of Civil Procedure generally requires only
a plausible ‘short and plain’ statement of the plaintiff's claim, not an exposition of [her] legal
argument.” Skinner v. Switzer, 562 U. S. 521, 131 S. Ct. 1289, 1296 (2011). Indeed, “[c]ourts
must focus on the substance of the relief sought and the allegations pleaded, not on the label
used.” Gearlds v. Entergy Servs., Inc., 709 F.3d 448, 452 (5th Cir. 2013) (citations omitted).
“Specific facts are not necessary; the statement need only ‘give the defendant fair notice of what
the . . . claim is and the grounds upon which it rests.’ ” Erickson v. Pardus, 127 S. Ct. 2197,
2200 (2007) (quoting Bell Atl., 127 S. Ct. at 1958).
When considering a motion to dismiss, courts generally are limited to the complaint and
its proper attachments. Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 338 (5th Cir. 2008)
(citation omitted). However, courts may rely upon “documents incorporated into the complaint
by reference, and matters of which a court may take judicial notice” – including public records.

5

Dorsey, supra; Norris v. Hearst Trust, 500 F.3d 454, 461 n9 (5th Cir. 2007) (citation omitted)
(proper to take judicial notice of matters of public record). Furthermore, “[d]ocuments that a
defendant attaches 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 [its] claim.” Collins v. Morgan Stanley Dean
Witter, 224 F.3d 496, 498-499 (5th Cir. 2000) (citations and internal quotation marks omitted).
II.

RESPA Claim for Failure to Respond
Payne alleges that Seterus violated RESPA by failing to respond to his “qualified written

requests.” Pursuant to RESPA, a loan servicer is required to respond within certain deadlines to
a borrower’s “qualified written request” (“QWR”). See 12 U.S.C. § 2605(e); Akintunji v. Chase
Home Fin., L.L.C., 2011 WL 2470709, at *2 (S.D. Tex. June 20, 2011).4 Furthermore, “[a]
servicer of a federally related mortgage shall not fail to take timely action to respond to a
borrower’s requests to correct errors relating to allocation of payments, final balances for
purposes of paying off the loan, or avoiding foreclosure, or other standard servicer’s duties.” 12
U.S.C. § 2605(k)(1)(c).
Upon receipt of a QWR, RESPA obliges the servicer to respond substantively, as
follows,
(2) Action with respect to inquiry. Not later than 30 days (excluding legal public
holidays, Saturdays, and Sundays) after the receipt from any borrower of any
qualified written request under paragraph (1) and, if applicable, before taking any
action with respect to the inquiry of the borrower, the servicer shall—

4

For purposes of RESPA, a QWR is defined as “a written correspondence, other than
notice on a payment coupon or other payment medium supplied by the servicer,” that identifies,
specifically or in a manner that enables the loan servicer to identify, the name and account at
issue, and that “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.” See 12 U.S.C. § 2605(e)(1)(B); Akintunji, 2011 WL
2470709 *2.
6

(A) make appropriate corrections in the account of the borrower, including the
crediting of any late charges or penalties, and transmit to the borrower a written
notification of such correction (which shall include the name and telephone
number of a representative of the servicer who can provide assistance to the
borrower);
(B) after conducting an investigation, provide the borrower with a written
explanation or clarification that includes—
(i) to the extent applicable, a statement of the reasons for which the servicer
believes the account of the borrower is correct as determined by the servicer; and
(ii) the name and telephone number of an individual employed by, or the office or
department of, the servicer who can provide assistance to the borrower; or
(C) after conducting an investigation, provide the borrower with a written
explanation or clarification that includes—
(i) information requested by the borrower or an explanation of why the
information requested is unavailable or cannot be obtained by the servicer; and
(ii) the name and telephone number of an individual employed by, or the office or
department of, the servicer who can provide assistance to the borrower.
12 U.S.C. § 2605(e)(2).
In order to survive a motion to dismiss, a RESPA failure to respond claim must include
factual allegations to plausibly show that 1) defendant is a loan servicer; 2) defendant received a
QWR from plaintiff; 3) the QWR relates to servicing of a mortgage loan; 4) defendant failed to
respond adequately; and 5) plaintiff is entitled to actual or statutory damages. Hudgins v.
Seterus, Inc., Civ. Action No. 16-80338, 2016 WL 3636859, at *3 (S.D. Fla. June 28, 2016) (and
cases cited therein). Here, Seterus challenges the fourth and fifth elements of plaintiff’s claim.
The court addresses each argument, in turn.
a)

Sufficiency of Seterus’s Responses

As an initial matter, Seterus’s argument that it responded to plaintiff’s QWRs necessarily
relies upon extrinsic evidence attached to its motion to dismiss. However, plaintiff did not refer
7

to these responses in his complaint, and defendant does not provide any other basis for the court
to consider this evidence in the context of the present 12(b)(6) motion. Of course, if evidence
outside the pleadings is presented to, and not excluded by the court, then the court must convert
the motion into a motion for summary judgment under Rule 56. FED. R. CIV. P. 12(d).
Here, the court declines to consider the extrinsic evidence. While this has the effect of
undermining one of the grounds for defendant’s motion, it preserves the Rule 12(b)(6)
framework for disposition of the motion. See In re Thomas, No. 15-30401, 2016 WL 4199561,
at *3 (Bankr. M.D. Ala. Aug. 5, 2016) (declining to consider creditor’s letter to plaintiff’s
bankruptcy attorney that was attached to creditor’s motion to dismiss). Regardless, as discussed
below, the same result obtains even if the court were to consider the evidence.
Seterus maintains that it timely responded to plaintiff’s QWRs via correspondence
transmitted to his bankruptcy counsel. Seterus acknowledged receipt of plaintiff’s requests and
responded on December 16, 2015:
Mr. Payne and Ms. Gatewood have requested that monthly Account Statements
be sent to them directly as well as update the information reported to the credit
agencies, as they have received a discharge of the Chapter 13 Bankruptcy.
As our records indicate the Bankruptcy has been discharged and not yet
terminated, we must decline the requests of Mr. Payne and Ms. Gatewood. At this
time, the loan is contractually due for the November 1 and December 1, 2015
Installments, each in the amount of $932.87.
[doc. # 8-18; see also docs. # 8-7 through 8-16].
Seterus does not argue any other reason beyond the bankruptcy proceeding to justify its refusal
to transmit its responses directly to Payne.
Conversely, plaintiff argues that “[t]here is no exception in the statute exempting
discharged Chapter 13 debtors whose cases have not yet been closed from the requirements of

8

responding to QWRs.”5 It is axiomatic that when a debtor files a bankruptcy petition, an
automatic stay is triggered that freezes virtually all debt collection efforts. 11 U.S.C. § 362(a).
Its purpose is to enjoin all creditors from taking action against the debtor and the estate so that
the debtor may have some breathing room to propose and obtain confirmation of a plan of
reorganization which will pay creditors. In re Chesnut, 422 F.3d 298, 301 (5th Cir. 2005).
Should the automatic stay be violated, Congress has provided a debtor with a private right of
action for any “willful violation.” Campbell v. Countrywide Home Loans, Inc., 545 F.3d 348,
355 (5th Cir. 2008).
Courts are divided as to whether RESPA is preempted by the Bankruptcy Code. See,
e.g., In re Figard, 382 B.R. 695, 2008 WL 501356 (Bankr. W.D. Pa. 2008) (court finds that
Bankruptcy Code does not preempt provisions of RESPA, 12 U.S.C. § 2605(e)(2)); In re

5

As other courts have noted, the issue of whether correspondence between parties and
opposing counsel satisfies the requirements of 12 U.S.C. § 2605 is not well settled. See McLean
v. GMAC Mortgage Corp., 2008 WL 5246149, at *5 (S.D. Fla. Dec. 16, 2008) (discussing cases
concerning a debtor sending QWRs to servicer’s counsel); see also In re Holland, 2008 WL
4809493 (Bkrtcy. D. Mass. Oct.30, 2008).
Assuming that Seterus’s responses to plaintiff’s QWRs were sent by counsel for Seterus,
then plaintiff’s bankruptcy attorney arguably would have been the proper recipient, and not
plaintiff. The Rules of Professional Conduct promulgated by the Louisiana State Bar
Association provide the rules of conduct for attorneys practicing before this court. L.R. 83.2.4.
Rule 4.2 of the Rules of Professional Conduct provides,
In representing a client, a lawyer shall not communicate about the subject of the
representation with a party the lawyer knows to be represented by another lawyer
in the matter, unless the lawyer has the consent of the other lawyer or is
authorized by law to do so. A lawyer shall not effect the prohibited
communication through a third person, including the lawyer’s client.
Here, however, there is no indication that Seterus’s counsel responded to the QWRs rather than
some other representative of Seterus, that Plaintiff was communicating with Seterus on behalf of
his lawyer or about the subject of the representation, or even that Seterus was represented. In
any event, the better practice would have been for Seterus to respond to plaintiff’s QWRs
directly, even if its response was simply to let him know that it would need to provide the
information to his bankruptcy attorney.
9

Holland, 374 B.R. 409 (Bankr. D. Mass. 2007) (Bankruptcy Code does not preempt RESPA); In
re Nosek, 354 B.R. 331 (D. Mass. 2006) (court finds Bankruptcy Code preempts RESPA and
state statutory and common law).
However, even if the Bankruptcy Code’s automatic stay were to trump the response
procedures under RESPA, defendant does not provide any support for the proposition that
servicers may not respond to inquiries initiated by debtors. In re Henry, 266 B.R. 457, 473
(Bankr. C.D. Cal. 2001) (creditor may properly respond to communication initiated by the
debtor). Seterus did not provide the information requested by Payne or otherwise explain why
the monthly statements requested were either unavailable or unobtainable. See 12 U.S.C. §
2605(e)(2). Instead, Seterus cites the pending bankruptcy proceeding with no explanation as to
why the proceeding would bar it from providing the requested information. Moreover, the
pending bankruptcy proceeding apparently did not impede Seterus from directly notifying Payne
that it had become the servicer and debt collector on his mortgage. See Compl., ¶ 2.
In sum, even if the court were to consider the evidence adduced by Seterus, it does not
establish that Seterus responded adequately to plaintiff’s requests. Rather, plaintiff has alleged
sufficient facts to support this element of his claim for violation of 12 U.S.C. § 2605(e)(2).
b)

Damages
1)

Actual Damages

Section 2605(f) imposes liability for “any actual damages to the borrower as a result of
the [RESPA violation].” 12 U.S.C. § 2605(f)(1)(A). The burden is on the borrower to prove that
he or she incurred actual damages in order to substantiate a RESPA claim. See Whittier v.
Ocwen Loan Servicing, L.L.C., 594 F. App’x 833, 836 (5th Cir. 2014) (“To recover, a claimant
must show that actual damages resulted from a RESPA violation.”); see Caballero v. Wells

10

Fargo Bank, N.A., 2011 WL 6039953, at *2 (N.D. Tex. July 25, 2011); Ricotta v. Ocwen Loan
Servicing, LLC, 2008 WL 516674, at *5 (D. Colo. Feb. 22, 2008). The statute neither defines
“actual damages” nor gives examples of what constitutes actual damages. Thus the court
“look[s] to the plain meaning of the term.” Hernandez v. U.S. Bank, N.A., 2013 WL 6840022, at
*5 (N.D. Tex. Dec. 27, 2013) (O'Connor, J.) (citing Pioneer Inv. Servs. Co. v. Brunswick Assocs.
Ltd. P'ship, 507 U.S. 380, 388 (1993)). “The term ‘actual damages’ is synonymous with
‘compensatory damages,’ which is defined as ‘such [damages] as will compensate the injured
party for the injury sustained, and nothing more[.]’” Hernandez, 2013 WL 6840022, at *5
(quoting Black's Law Dictionary at 390 (6th ed. 1990)).
In order to establish actual damages under RESPA, a plaintiff must demonstrate that
defendant’s breach proximately caused the alleged damages. “While courts have interpreted this
requirement liberally, the loss alleged must be related to the RESPA violation itself.” Hopson v.
Chase Home Fin. LLC, 14 F. Supp. 3d 774, 788 (S.D. Miss. April 11, 2014) (quoting Hensley v.
Bank of New York Mellon, 2011 WL 4084253, at *3-4 (E.D. Cal. Sept. 13, 2011).
In his opposition brief, plaintiff argues that, as a result of defendant’s failure to respond
to his QWRs, defendant reported delinquent payments to credit bureaus that possibly damaged
his credit score. (Pl. Opp. Memo., pgs. 2-3). Yet even assuming that “possible” damage to a
credit score is sufficient, there is nothing in the complaint or in plaintiff’s opposition that links
the alleged damage to defendant’s alleged violation of RESPA. See Durland v. Fieldstone
Mortgage Co., 2011 WL 805924, at *3 (S.D. Cal. Mar. 1, 2011) (mere allegations of damages,
including fees assessed, negative credit reporting, and emotional distress, were insufficient to
establish a causal link between the alleged RESPA violations and plaintiff's claimed damages).
Plaintiff fails to indicate how the inadequate response to the QWRs caused the reduction

11

in his credit rating, and fails to allege damage caused by the alleged reduction in his credit rating.
See Anokhin v. BAC Home Loan Servicing, LP, 2010 WL 3294367, at *3 (E.D. Cal. Aug.20,
2010) (“To constitute actual damages [under RESPA for failure to adequately respond to a
QWR], the negative credit rating must itself cause damage to the plaintiff as evidenced by, for
example, failing to qualify for a home mortgage. Plaintiff’s conclusory statement that she
suffered negative credit ratings does not itself establish actual damages.”); see also Jones v.
Vericrest Fin., Inc., 2011 WL 7025915, at *19 (N.D. Ga. Dec. 7, 2011) (finding that even if
plaintiff had sufficiently alleged that defendant violated RESPA by failing to adequately respond
to a written request, RESPA claim would still be dismissed since “the Plaintiff has not included
any factual allegations explaining how [defendant’s] failure to provide an adequate response to
the qualified written response caused her to suffer any damages”); Phillips v. Bank of America
Corp., 2011 WL 4844274, at *5 (N.D. Cal. Oct. 11, 2011) (dismissing plaintiff’s RESPA claim
because plaintiff failed to allege facts showing “that it is plausible, rather than merely possible,”
that the claimed damages resulted from defendant’s alleged violation of RESPA).
In sum, plaintiff’s RESPA claim for failure to adequately respond to the QWRs does not
set forth sufficient facts to support the element of actual damages.
2) Statutory Damages
To recover statutory damages, a plaintiff must plead a pattern or practice of
noncompliance with RESPA. See 12 U.S.C. § 2605(f)(1)(b). Courts have held that RESPA
pattern-or-practice damages contemplate RESPA violations with respect to other borrowers.
Renfroe v. Nationstar Mortgage, LLC, 822 F.3d 1241, 1247 (11th Cir.2016) (citations omitted).
Here, however, plaintiff’s complaint is devoid of such allegations.
Furthermore, to the extent that plaintiff seeks statutory damages for defendant’s pattern

12

or practice of noncompliance as to his own multiple requests, the court finds that this claim fails.
While plaintiff sent several QWRs, they were all sent within a very short time period. Even if
defendant’s response were inadequate, the essentially one time refusal to provide the requested
information does not plausibly show a pattern and practice of RESPA violations by defendant.
Plaintiff’s complaint does not set forth a colorable claim for statutory damages as a result
of defendant’s alleged RESPA violation for failure to adequately respond to the QWRs.
III.

TILA and RESPA Claims for Failure to Timely Apply Payments
Plaintiff alleges broadly that defendant failed to credit plaintiff’s payments promptly in

violation of 12 C.F.R. §§ 1024.35, 1026.36 and 15 U.S.C. § 1639f. Regulation Z, the Consumer
Finance Protection Bureau's (“CFPB”) implementation of TILA, normally requires a servicer to
credit a periodic payment to the consumer’s loan account on the date of receipt. 12 C.F.R. §
1026.36(c)(1).6 However, courts uniformly have held that there is no servicer liability under
TILA, and, by extension, the regulations promulgated thereunder. Lucien v. Fed. Nat. Mortgage
Ass'n, 21 F. Supp.3d 1379, 1383 (S.D. Fla.2014); Simmons v. Aurora Bank FSB, Civ. Action No.
13-0482, 2016 WL 192571, at *9 (N.D. Cal. Jan. 15, 2016) (only parties liable under TILA are
the creditor and the creditor’s assignees); Hayes v. U.S. Bank Nat. Ass'n, Civ. Action No. 1380610, 2014 WL 2938534, at *3 (S.D. Fla. June 30, 2014), affirmed, 2016 WL 1593415 (11th
Cir. Apr. 21, 2016) (TILA does not impose liability on servicers). Furthermore, the plain
language of § 1639f does not create a private cause of action. Barnes v. Carrington Mortgage
Servs., LLC, Civ. Action No. 15-6465, 2016 WL 3018693, at *1–2 (D. N.J. May 24, 2016).
Instead, TILA’s private cause of action is set forth in § 1640(a), which only imposes liability on
any “creditor.” Id.;15 U.S.C. § 1640(a).

6

Plaintiff alleges that Seterus is the servicer of his loan. (Compl., ¶ 2).
13

Under “Regulation X,” which is codified at 12 C.F.R. § 1024, a servicer must provide a
timely response to a borrower’s written notice of error with respect to certain enumerated issues,
including, inter alia,
(1)

Failure to accept a payment that conforms to the servicer's written
requirements for the borrower to follow in making payments, or

(2)

Failure to apply an accepted payment to principal, interest, escrow, or
other charges under the terms of the mortgage loan and applicable law.
12 C.F.R. § 1024.35.
Courts, however, are split as to whether § 1024.35 provides a private right of action for damages.
Compare Miller v. HSBC Bank U.S.A., N.A., Civ. Action No. 13-7500, 2015 WL 585589, at *11
(S.D. N.Y. Feb. 11, 2015) (§ 1024.35 does not provide a private cause of action for damages);
Guccione v. JPMorgan Chase Bank, N.A., Civ. Action No. 14-4587, 2015 WL 1968114, at *11
(N.D. Cal. May 1, 2015) (§ 1024.35 is enforceable under 12 U.S.C. § 2605(f)). Even so, plaintiff
did not identify any written notice of error that he provided to Seterus, to which Seterus failed to
respond. Moreover, although Payne attached a copy of an account statement to his opposition
memorandum that he alleges is inaccurate, he does not explain how it is inaccurate, or that he
provided Seterus with a written notice of error that contained all of the information required by
§ 1024.35. In short, plaintiff’s complaint fails to state a claim for relief under § 1024.35.7
IV.

RESPA Claim for Failure to Provide Annual Escrow Account Analysis
Plaintiff’s final claim alleges that defendant failed to furnish an annual analysis of

plaintiff’s escrow account pursuant to 12 U.S.C. § 2609. RESPA requires a lender to provide an
escrow account statement “not less than once for each 12–month period.” 12 U.S.C. §

7

Plaintiff's lone assertion that the statement was “inaccurate” without explaining why it
was inaccurate is conclusory, and cannot survive a motion to dismiss. Norris v. Bayview Loan
Servicing, LLC, Civ. Action NO. 15-6413, 2015 WL 6745048, at *9 (C.D. Cal. Oct. 26, 2015).
14

2609(c)(2)(A)-(B). Courts have held, however, that RESPA § 2609 does not provide for a
private cause of action. Heffron v. Green Tree Servicing, LLC, Civ. Action No. 15-0996, 2016
WL 47915, at *4 (N.D. Ill. Jan. 5, 2016) (citation omitted). In any event, plaintiff had not
alleged that he incurred any damages on account of not directly receiving an annual escrow
account statement.
V.

Amendment
“District courts often afford plaintiffs at least one opportunity to cure pleading

deficiencies before dismissing a case, unless it is clear that the defects are incurable . . . ” Great
Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 329 (5th Cir. 2002).
Here, it is conceivable that plaintiff can cure at least some of his deficient claims via amendment.
Therefore, while the court will provisionally grant the motion to dismiss, entry of judgment will
be deferred to accord plaintiff a 14 day period in which to seek leave to amend his complaint (if
he can in good faith do so), to provide the missing factual bases for any element(s) of a claim
that is not precluded as a matter of law. Defendant, of course, will have the opportunity to
address the sufficiency of any proposed amendment.
Conclusion
For the reasons provided herein,
IT IS ORDERED that defendant Seterus, Inc.’s motion to dismiss for failure to state a
claim upon which relief can be granted [doc. # 8] is provisionally GRANTED.
IT IS FURTHER ORDERED that, within the next fourteen (14) days from the date of
this ruling, plaintiff may seek leave of court to file an amended complaint to redress his deficient
allegations as detailed herein. If no motion is filed within this fourteen (14) day period, then the
court will enter judgment in accordance with the ruling.

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In Chambers, at Monroe, Louisiana, this 26th day of August 2016.

__________________________________
KAREN L. HAYES
UNITED STATES MAGISTRATE JUDGE

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