Bartlett et al. v. Bank of America, NA

Filing 33

MEMORANDUM AND ORDER GRANTING 26 Motion to Dismiss for Failure to State a Claim. Signed by Judge Marvin J. Garbis on 7/29/14. (hmls, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
BYRON R. BARTLETT et al.

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Plaintiffs

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vs.

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BANK OF AMERICA, NA

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Defendant
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CIVIL ACTION NO. MJG-13-975

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MEMORANDUM AND ORDER RE: MOTION TO DISMISS
The Court has before it Defendant Bank of America, N.A.'s
Motion to Dismiss Plaintiffs' Complaint [Document 26] and the
materials submitted relating thereto.

The Court finds a hearing

unnecessary.

I.

BACKGROUND1
At all times relevant hereto, Plaintiffs Byron R. Bartlett

("Byron") and Connie J. Beals-Bartlett ("Connie), (collectively,
"the Bartletts"), owned a single unit residential property in
Belcamp, Maryland ("the Property").

The Property was subject to

a mortgage for a loan from Defendant Bank of America, N.A.
("BOA") issued to Connie.

By September 2010, Connie was behind

in her loan payment obligations.

1

The "facts" herein are as alleged by Plaintiff and are not
necessarily agreed upon by Defendant.

On September 8, 2010, BOA sent the Bartletts a letter
"stating that [Connie] may be eligible for a modified closed end
loan secured by the Property."

Compl. ¶ 9.

On September 13,

2010, the Bartletts sent BOA some 47 pages of documents in
response.
On September 16, 2010, BOA sent Connie a notice of
acceleration of her loan.
"On September 27, 2010, [BOA] sent another letter stating
that [Connie] may be eligible for a modified closed end loan"
secured by the Property.

Id. ¶ 12.

In response, "[o]n October

25, 2010, the [Bartletts] sent additional documents to [BOA]."
Id. ¶ 13.
On January 11, 2011, BOA sent a letter "stating that
[Connie] was not eligible for a modified closed end loan."

Id.

¶ 16.
On April 28, 2011, BOA sent "a [third] letter stating that
[Connie] may be eligible for a modified closed end loan" secured
by the Property.2

Id. ¶ 18.

"On November 4, 2011, [BOA] sent [the Bartletts] a letter
stating that they may be eligible for a modified closed end
loan."

Id. ¶ 22.

2

On the same date, BOA sent the Bartletts a Notice of Intent
to Foreclose.
2

"On April 16, 2012, [BOA] sent a letter stating that it was
denying [the Bartletts'] application for a modified closed end
loan."

Id. ¶ 24.

As discussed herein, the Bartletts claim that BOA violated
the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681 et
seq. by failing to provide timely and adequate notice of use of
credit scores as required by 15 U.S.C. § 1681g(g).

They have

filed the instant suit on behalf of themselves and a class
consisting of "[a]ll persons who sought a closed end loan to be
secured by residential real property of no more than 4 units
within two years preceding the filing of this action and for
whom Bank of America used or considered a credit score."

Id. ¶

36.
By the instant motion, BOA seeks dismissal of all claims in
the Complaint pursuant to Federal Rule of Civil Procedure
12(b)(6).

II.

DISMISSAL STANDARD
A motion to dismiss filed pursuant to Federal Rule of Civil

Procedure 12(b)(6)3 tests the legal sufficiency of a complaint.
A complaint need only contain "'a short and plain statement of
the claim showing that the pleader is entitled to relief,' in

3

All "Rule" references herein are to the Federal Rules of
Civil Procedure.
3

order to 'give the defendant fair notice of what the . . . claim
is and the grounds upon which it rests.'"

Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555 (2007) (alteration in original)
(citations omitted).

When evaluating a 12(b)(6) motion to

dismiss, a plaintiff's well-pleaded allegations are accepted as
true and the complaint is viewed in the light most favorable to
the plaintiff.

However, conclusory statements or "a formulaic

recitation of the elements of a cause of action will not
[suffice]."

Id.

A complaint must allege sufficient facts "to

cross 'the line between possibility and plausibility of
entitlement to relief.'"

Francis v. Giacomelli, 588 F.3d 186,

193 (4th Cir. 2009) (quoting Twombly, 550 U.S. at 557).
In considering a Rule 12(b)(6) motion, the Court does not
always have to limit its review to the pleadings.

It may take

judicial notice of public records, including statutes, and "may
also 'consider documents incorporated into the complaint by
reference,' 'as well as those attached to the motion to dismiss,
so long as they are integral to the complaint and authentic.'"
United States ex rel. Oberg v. Pennsylvania Higher Educ.
Assistance Agency, 745 F.3d 131, 136 (4th Cir. 2014) (citations
omitted).
Inquiry into whether a complaint states a plausible claim
is "'a context-specific task that requires the reviewing court
to draw on its judicial experience and common sense.'"
4

Id.

(quoting Twombly, 550 U.S. at 557).

Thus, if "the well-pleaded

facts [contained within a complaint] do not permit the court to
infer more than the mere possibility of misconduct, the
complaint has alleged – but it has not 'show[n]' – 'that the
pleader is entitled to relief.'"

Id. (quoting Ashcroft v.

Iqbal, 556 U.S. 662, 679 (2009) (alteration in original)).

III. DISCUSSION
The Bartletts present a claim based upon the contention
that BOA failed to comply with certain credit score disclosures
required when a consumer applies for a closed end loan, in
violation of 15 U.S.C. § 1681g(g) of the Fair Credit Reporting
Act ("FCRA").

However, as discussed herein, § 1681g(g) does not

apply in this case because neither of the Bartletts applied for
a closed end loan.4

A.

The Statute

"Congress enacted FCRA in 1970 to ensure fair and accurate
credit reporting, promote efficiency in the banking system, and
protect consumer privacy."
U.S. 47, 52 (2007).

Safeco Ins. Co. of Am. v. Burr, 551

In FCRA, "Congress recognized both the

'vital role' of CRAs [consumer reporting agencies] and the 'need
4

Nor did the Bartletts apply for an open end loan for a
consumer purpose, which is also subject to the disclosure
requirements of 15 U.S.C. § 1681g(g).
5

to insure that consumer reporting agencies exercise their grave
responsibilities with fairness, impartiality, and a respect for
the consumer's right to privacy.'"

Ross v. F.D.I.C., 625 F.3d

808, 812 (4th Cir. 2010).
The Bartletts have brought the instant lawsuit under 18
U.S.C. § 1681g(g), which was added to FCRA as part of the Fair
and Accurate Credit Transactions Act of 2003.

Section 1681g(g)

states in relevant part:
Any person who makes or arranges loans and
who uses a consumer credit score, . . . in
connection with an application initiated or
sought by a consumer for a closed end loan
or the establishment of an open end loan[5]
for a consumer purpose that is secured by 1
to 4 units of residential real property . .
. shall provide the [requisite statutory
notice]
to
the
consumer
as
soon
as
reasonably practicable
15 U.S.C. § 1681g(g)(1) (emphasis added).
The notice required by § 1681g(g) includes:


the current credit score of the consumer
or the most recent credit score of the
consumer that was previously calculated by
the credit reporting agency for a purpose
related to the extension of credit;

5

"[A] closed-end loan, is extended for a specified length of
time, requires repayment of interest and principal in monthly
installments, and ordinarily has an interest rate fixed for the
life of the loan." Kichler v. Wells Fargo Bank, N.A., No. 121206 JRT/AJB, 2013 WL 4050204, at *2 n.2 (D. Minn. Aug. 9,
2013). A traditional home equity loan is an example of a closed
end loan. Id. An "open-end loan, is a revolving account that
permits borrowing from time to time up to the amount of the
credit line and has a more flexible repayment schedule." Id. A
line of credit is an example of an open end loan. Id.
6



the range of possible credit scores under
the model used;



all of the key factors that adversely
affected the credit score of the consumer
in the model used, the total number of
which shall not exceed 4 . . . ;



the date on which the credit score was
created;



the name of the person or entity that
provided the credit score or credit file
upon which the credit score was created;
and



A . . . notice [form], which shall include
the name, address, and telephone number of
each consumer reporting agency providing a
credit score that was used.

15 U.S.C. §§ 1681g(f)(1), (g)(1)(A)(i)-(ii).

FCRA contains a

private right of action for willful and/or negligent failures to
comply with the disclosure requirements of § 1681g(g).

See id.

§§ 1681n, 1681o.

B.

The Application at Issue
1.

Connie

There is no doubt, indeed, the Bartletts seem to concede,
that Connie did not submit an application for a closed end loan.
See Compl. ¶¶ 23-24.
For example, the letter of September 8, 2010 to Connie
states:

7

You may be eligible for the Home Affordable
Modification
Program
["HAMP"],[6]
an
initiative
sponsored
by
the
federal
government
to
help
homeowners
who
are
finding it difficult to make their mortgage
payment. Under this program, we will review
your
current
financial
situation
to
determine if we can help you modify your
mortgage to give you a new, more affordable
mortgage payment.
[Document 26-5] at 2.
The response the Bartletts sent to BOA on September 13,
2010 includes an "Acknowledgement and Agreement,"7 stating:
I [Connie] need to request a modification of
the terms of my mortgage loan, short sale or
deed-in-lieu of foreclosure.
I [Connie] understand that the servicer will
use the information in this document to
evaluate
my
eligibility
for
a
loan
modification or short sale or deed-in-lieu
of foreclosure,
I [Connie} understand that the Servicer will
collect and record personal information,
including,
. . . credit score . . . .
[Document 26-6] at 6 (emphasis added).
The April 16, 2012 denial letter states that BOA "ha[d]
reviewed [Connie's] home loan for eligibility in all
6

See Legore v. OneWest Bank, FSB, 898 F. Supp. 2d 912, 914
(D. Md. 2012) ("Faced with a rising number of home foreclosures
across the United States, the U.S. Department of the Treasury
introduced [HAMP] in February 2009. HAMP aims to stem the tide
of foreclosures by providing funding incentives to loan
servicers who agree to reduce borrowers' monthly payments in
compliance with the program guidelines." (emphasis added)).
7
This was signed by Connie as the Borrower and Byron as the
"Co-Borrower," presumably because Byron signed the Deed of Trust
for the Property securing the loan. See [Document 26-4] at 2.
8

modification programs that may have been available," and had
determined that "[Connie's] loan is not eligible for a loan
modification."

[Document 26-13] at 2 (emphasis added).

There is no doubt that Connie applied for a modification of
her pre-existing loan and not for a new, closed end loan.
Moreover, in their Response, the Bartletts have acknowledged
that Connie submitted "an application for a loan modification"
and stated that "Byron [was] a co-applicant on the modification
application."

[Document 27] at 4, 20 (emphasis added).

2.

Byron

The Bartletts present a theory that, by signing the HAMP
loan modification papers as a "Co-Borrower," Byron was an
applicant for a closed end loan.

They state that Byron was "a

non-borrower on the original loan but a co-applicant on the
modification application[, which] would [have] provide[d] him
with a closed end loan."

Id. at 4.

However, there is no

factual allegation that supports a plausible contention that
Byron was applying for a new loan to be issued to him or was
even agreeing to accept personal liability on the existing loan
issued to Connie.

Moreover, there is no factual allegation that

BOA took any action in regard to a loan to Byron, rather than
actions related to a possible modification of the pre-existing
loan to Connie.
9

C.

The Equal Credit Opportunity Act Contention

The Bartletts contend that because an application to modify
a loan qualifies as an application for "credit" under the Equal
Credit Opportunity Act ("ECOA"), see Walton v. Wells Fargo Bank,
N.A., No. AW-13-428, 2013 WL 3177888, at *6 (D. Md. June 21,
2013), then "§ 1681g(g) by its terms involves credit
applications that are in the form of loan modification
applications relating to residential mortgage loans."

[Document

27] at 16.
It is true that the FCRA incorporates ECOA's definitions of
"adverse action,"8 "credit,"9 and "creditor."10
scope and purpose of ECOA and FCRA differ.

However, the

Cf. Padin v. Oyster

Point Dodge, 397 F. Supp. 2d 712, 720 (E.D. Va. 2005) ("Although
ECOA and FCRA have related notice requirements, they serve
different purposes with different proscriptions.").
Congress enacted ECOA "to prevent discrimination against
those applying for credit" - in all of its forms, both
commercial and personal consumer credit.

Capitol Indem. Corp.

v. Aulakh, 313 F.3d 200, 202 (4th Cir. 2002).

The purpose of

FCRA is "to ensure fair and accurate credit reporting, promote

8

Compare 15 U.S.C. § 1681a(k)(1)(A), with 15 U.S.C. §
1691(d)(6).
9
Compare 15 U.S.C. § 1681a(r)(5), with 15 U.S.C. § 1691a(d).
10
Compare 15 U.S.C. § 1681a(r)(5), with 15 U.S.C. § 1691a(e).
10

efficiency in the banking system, and protect consumer privacy."
Safeco Ins. Co. of Am., 551 U.S. at 52.
Under the Bartletts' theory – unsupported by any citation
to authority - any application for credit would fall within §
1681g(g).

However, there are express limitations on the scope

of the provision.
purpose.

First, the loan must be for a consumer

Second, the loan must be secured by 1 to 4 units of

residential real property.

Third, and, most importantly for the

instant case, the application must be for a closed end loan or
an open end loan.

An application to modify a pre-existing

closed end loan is not an application for a loan covered by §
1681g(g).11

11

As BOA points out, 15 U.S.C. § 1681m, which addresses the
"[d]uties of users taking adverse actions on basis of
information contained in consumer reports," does appear to cover
the denial of an application to modify a pre-existing loan
because an adverse action includes "a denial or revocation of
credit, a change in the terms of an existing credit arrangement,
or a refusal to grant credit in substantially the amount or on
substantially the terms requested." See 15 U.S.C. §§ 1681m,
1691(d)(6). However, violations of § 1681m do not give rise to
a private cause of action under § 1681n and § 1681o. See
Putkowski v. Irwin Home Equity Corp., 423 F. Supp. 2d 1053,
1061-62 (N.D. Cal. 2006) ("While § 1681n and § 1681o of the FCRA
generally establish a private right of action for certain
violations of the FCRA, § 1681m(h)(8) (added by FACTA) now
expressly provides that there is no private right of action for
violations of § 1681m."); see also Farrow v. Capital One Auto
Fin., Inc., No. CCB-06-2324, 2007 WL 4707634, at *2 n.2 (D. Md.
Nov. 9, 2007) (citing Putkowski favorably and noting that
§ 1681m(d)(1)(A)-(E) "does not establish a private right of
action for failure to include a 'clear and conspicuous'
disclosure statement.").
11

The parties have not cited, and the Court has not found,
any decision to support the Bartletts' theory.

Moreover, the

Court finds the Bartletts' theory contrary to the plain language
of the FCRA.

D.

Willfulness and Negligence

The Court's decision that the Complaint fails to present a
plausible claim that BOA violated § 1681g(g) renders moot the
Bartletts' contention that there was a willful and/or negligent
violation of the FCRA.

IV.

CONCLUSION

For the foregoing reasons:
1.

Defendant Bank of America, N.A.'s Motion to
Dismiss Plaintiff's Complaint [Document 26] is
GRANTED.

2.

Judgment shall be issued by separate Order

SO ORDERED, on Tuesday, July 29, 2014.

/s/__________
Marvin J. Garbis
United States District Judge

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