Wolfbauer v. Ocwen Loan Servicing, LLC et al

Filing 18

MEMORANDUM AND ORDER - The Motion to Dismiss (Filing No. 12 ) submitted by Defendant Ocwen Loan Servicing, LLC, is granted in part as follows: Plaintiff James Wolfbauer's claims based on fraud, unfair or deceptive trade practices in violation of 15 U.S.C. § 45(a), deceptive trade practices in violation of Neb. Rev. Stat. § 87-302, and equitable estoppel, are dismissed, with prejudice. Plaintiff James Wolfbauer will be given leave to file an Amended Complaint on or before April 11, 2016, with respect to his claim under the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2605(e). Ordered by Chief Judge Laurie Smith Camp. (Copy mailed to pro se party)(GJG)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
JAMES WOLFBAUER, an individual,
Plaintiff,
v.
OCWEN LOAN SERVICING, LLC, a
Delaware Limited Liability Company, and
DOES 1 THROUGH 10, Inclusive,
Defendants.

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CASE NO. 4:15CV3141

MEMORANDUM
AND ORDER

This matter is before the Court on the Motion to Dismiss (Filing No. 12) submitted
by Defendant Ocwen Loan Servicing, LLC (“Ocwen”). For the reasons discussed below,
the Motion will be granted in part, and Plaintiff James Wolfbauer (“Wolfbauer”) will be given
leave to file an Amended Complaint limited to his claim under the Real Estate Settlement
Procedures Act (“RESPA”), 12 U.S.C. § 2605(e).
FACTS
For purposes of the pending Motion, the well-pled factual allegations in Wolfbauer’s
Complaint (Filing No. 1) are accepted as true, although the Court need not accept his
conclusions of law. The following is a summary of the allegations in the Complaint.
Wolfbauer is a citizen of the state of Nebraska, having his residence (the “Subject
Property”) in Lincoln County. Ocwen is a Delaware Limited Liability Company servicing the
mortgage loan on the Subject Property.
On or about January 2013, Wolfbauer began to fall behind in his mortgage
payments and asked Ocwen for a loan modification. On or about June 27, 2013, Ocwen
denied Wolfbauer’s request, stating that the owner of the loan, RAMP 2007-RP2, did not
approve the loan modification terms. (Filing No. 1, Exhibit 1, at ECF 16.)

On July 2, 2013, Wolfbauer sent a letter that he labeled “QUALIFIED WRITTEN
REQUEST” to Ocwen, referencing RESPA. (Id., Exhibit 2, at ECF 18–19.) That letter
requested documentation, including ”ORIGINAL 1003 LOAN APPLICATION,” “GOOD
FAITH ESTIMATE,” “HUD-1 SETTLEMENT STATEMENT,” “TRUTH IN LENDING
DISCLOSURES STATEMENT,” “CURRENT PROMISSORY NOTE RECORDED
SHOWING LIENHOLDER,” “Bailee Letter . . . along with any associated addendums to the
promissory note (to include allonge),” and “Affidavit of Debt . . . for each sale or transfer
as is required by federal and state law to prove up the validity of the mortgage debt.” (Id.)
Ocwen did not respond.
On August 6, 2013, Wolfbauer’s agent wrote to Ocwen, seeking information about
the identity of the mortgage investor so the agent could contact the investor to discuss a
loan modification. (Id., Exhibit 3, at ECF 21.) On August 26, Wolfbauer’s agent wrote to
Ocwen again, alleging that Ocwen failed “to provide documentation to validate the debt”
and “falsely refus[ed] to modify the loan on the basis of an unwilling investor by providing
false information to substantiate the denial.” (Id., Exhibit 4, at ECF 23.) Ocwen did not
respond.
On November 1, 2013, Wolfbauer’s agent sent another request1 to Ocwen, seeking
“information about the accounting and servicing of the Loan, disputing the validity of the
debt associated with Mortgage and Note, and requesting a validation of the debt
associated with Mortgage and Note, among other things.” (Id. at ECF 4, ¶ 13.) Ocwen did
not respond.

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Wolfbauer attached to his Complaint copies of the correspondence dated July 2, August 6, and
August 26, 2013, but no copy of the correspondence dated November 1, 2013.

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Ocwen initiated foreclosure proceedings on the Subject Property, and scheduled a
foreclosure sale for December 8, 2015.
On November 20, 2015, Wolfbauer filed this action, pro se, presenting five theories
of recovery: (1) violation of RESPA, (2) fraud, (3) unfair or deceptive trade practices in
violation of 15 U.S.C. § 45(a), (4) deceptive trade practices in violation of Neb. Rev. Stat.
§ 87-302, and (5) equitable estoppel. Wolfbauer asks the Court to enjoin the foreclosure,
award him damages, declare the actions of Ocwen to constitute a breach of contract, and
grant him a variety of other relief.
Ocwen filed its Motion to Dismiss on January 20, 2016. Wolfbauer requested and
received an extension of time to respond to Ocwen’s Motion to Dismiss. Although
Wolfbauer’s response was not timely filed, it has been fully considered by the Court.
STANDARD OF REVIEW
A complaint must contain “a short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “[A]lthough a complaint need not
include detailed factual allegations, ‘a plaintiff's obligation to provide the grounds of his
entitlement to relief requires more than labels and conclusions, and a formulaic recitation
of the elements of a cause of action will not do.’” C.N. v. Willmar Pub. Sch., Indep. Sch.
Dist. No. 347, 591 F.3d 624, 629–30 (8th Cir. 2010) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007)). “Instead, the complaint must set forth ‘enough facts to state
a claim to relief that is plausible on its face.’” Id. at 630 (citing Twombly, 550 U.S. at 570).
“‘A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct

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alleged.’” Ritchie v. St. Louis Jewish Light, 630 F.3d 713, 716 (8th Cir. 2011) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009)). “'Courts must accept . . . specific factual
allegations as true but are not required to accept . . . legal conclusions.” Outdoor Cent.,
Inc. v. GreatLodge.com, Inc., 643 F.3d 1115, 1120 (8th Cir. 2011) (quoting Brown v.
Medtronic, Inc., 628 F.3d 451, 459 (8th Cir. 2010)). “A pleading that merely pleads ‘labels
and conclusions,’ or a ‘formulaic recitation’ of the elements of a cause of action, or ‘naked
assertions’ devoid of factual enhancement will not suffice.” Hamilton v. Palm, 621 F.3d
816, 817-18 (8th Cir. 2010) (quoting Iqbal, 556 U.S. at 678). The complaint’s factual
allegations must be “sufficient to ‘raise a right to relief above the speculative level.’”
Williams v. Hobbs, 658 F.3d 842, 848 (8th Cir. 2011) (quoting Parhurst v. Tabor, 569 F.3d
861, 865 (8th Cir. 2009)).
When ruling on a defendant's motion to dismiss, a judge must rule “on the
assumption that all the allegations in the complaint are true,” and “a well-pleaded complaint
may proceed even if it strikes a savvy judge that actual proof of those facts is improbable,
and ‘that a recovery is very remote and unlikely.’” Twombly, 550 U.S. at 555 & 556
(quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). The complaint, however, must
still “include sufficient factual allegations to provide the grounds on which the claim rests.”
Drobnak v. Andersen Corp., 561 F.3d 778, 783 (8th Cir. 2009).
“Two working principles underlie . . . Twombly. First, the tenet that a court must
accept as true all of the allegations contained in a complaint is inapplicable to legal
conclusions. Threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S.

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at 555). “Second, only a complaint that states a plausible claim for relief survives a motion
to dismiss.” Id. at 1950 (citing Twombly, 550 U.S. at 556). “Determining whether a
complaint states a plausible claim for relief will . . . be a context-specific task that requires
the reviewing court to draw on its judicial experience and common sense.” Id.
DISCUSSION
I. RESPA
Under RESPA, 12 U.S.C. § 2605(e), a loan servicer is required to respond to a
qualified written request (“QWR”) “relating to the servicing” of a loan. A QWR must
“[s]tate[] the reasons the borrower believes the account is in error; or . . . [p]rovide[]
sufficient detail to the servicer regarding information relating to the servicing of the
mortgage loan sought by the borrower.” 12 C.F.R. § 1024.31 (2014). Servicing is defined
narrowly: “receiving any scheduled periodic payments from a borrower pursuant to the
terms of any loan . . . and making the payments 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 loan.” 12 U.S.C. § 2605(i)(3); see also 12 C.F.R. § 1024.2.
An inquiry about the validity, ownership, transfer, assignment, or potential
modification of a loan is not “related to the servicing” of the loan and does not constitute
a QWR. See Sheely v. Bank of American, N.A., 36 F. Supp. 3d 1364, 1369–70 (N.D. Ga.
2014) (letter demanding audit and requesting information or documentation unrelated to
servicing of the loan is not QWR under RESPA); Hopson v. Chase Hame Finance, LLC,
14 F. Supp. 3d 774, 786–87 (S.D. Miss. 2014) (ostensible QWR demanding information
to facilitate an audit, challenging validity of debt, and seeking identity of owner of mortgage

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note was not QWR under RESPA); Flores v. EMC Mortg. Co., 997 F. Supp. 2d 1088,
1115–16 (E.D. Cal. 2014) (letter challenging foreclosure authority and not addressing
scheduled periodic payments, or the payment of principal and interest, was not QWR
under RESPA); Smith v. Bank of America Home Loans, 968 F. Supp. 2d 1159, 1170 (M.D.
Fla. 2013) (letter challenging validity of debt, alleging mortgage was void, and seeking to
block foreclosure is not a QWR under RESPA); Henson v. Bank of America, 935 F. Supp.
2d 1128, 1144–45 (D. Colo. 2012) (correspondence is not a QWR under RESPA if it does
not relate to the servicing of the loan); Ward v. Security Atlantic Mortg. Electronic
Registration Systems, Inc., 858 F. Supp. 2d 561, 574 (E.D.N.C. 2012) (request for
documentation and information regarding transactional history of loan and validity of loan
is not a QWR under RESPA); MorEquity, Inc. v. Naeem, 118 F. Supp. 2d 885, 900–01
(N.D. Ill. 2000) (letter requesting mortgage documents and information about validity of
loan, but not seeking account balance, was not QWR under RESPA).
Wolfbauer’s allegations of a RESPA violation are conclusory; they do not allow the
Court to infer that he initiated a QWR under RESPA; and they are not pled with the
particularity required to demonstrate actual harm. See Hintz v. JPMorgan Chase Bank,
N.A., 686 F.3d 505, 510–11 (8th Cir. 2012) (holding that plaintiff in a RESPA claim must
show that defendant’s failure to respond to a QWR caused plaintiff actual harm).
Accordingly, the Complaint does not state a claim upon which relief can be granted under
RESPA.
In his Complaint, Wolfbauer alleges that on November 1, 2013, his agent sent a
request to Ocwen, seeking “information about the accounting and servicing of the Loan,

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disputing the validity of the debt associated with Mortgage and Note, and requesting a
validation of the debt associated with Mortgage and Note, among other things.” (Filing No.
1 at ECF 4, ¶ 13.) Wolfbauer did not attach a copy of that communication. He will be
given an opportunity to file an Amended Complaint, including a copy of the November 1,
2013, inquiry, and stating with specificity how he suffered actual damage as a result of
Ocwen’s alleged failure to respond to the inquiry regarding an accounting and the servicing
of the loan. It will not be sufficient for Wolfbauer to allege that he was denied an
opportunity to obtain a loan modification from the real party in interest, see Lal v. American
Home Servicing, Inc., 680 F. Supp. 2d 1218, 1223–24 (E.D. Cal 2010), or that or that he
suffered a foreclosure, see Thepvongsa v. Regional Trustee Servs. Corp., 972 F. Supp.
2d 1221, 1228–30 (W.D. Wash. 2013), given that he was in default of under the mortgage
at the time of his correspondence with Ocwen.
II. Fraud
Under Fed. R. Civ. P. 9(b), “a party must state with particularity the circumstances
constituting fraud . . . .” The Nebraska Supreme Court has held that the elements of fraud
are:
(1) that a representation was made; (2) that the representation was false; (3)
that when made, the representation was known to be false or made
recklessly without knowledge of its truth and as a positive assertion; (4) that
it was made with the intention that the plaintiff should rely upon it; (5) that the
plaintiff reasonably did so rely; and (6) that he or she suffered damage as a
result.
Nebraska Nutrients v. Shepherd, 626 N.W.2d 472, 495 (Neb. 2001), abrogated on other
grounds, Sutton v. Killham, 825 N.W.2d 188 (Neb. 2013).

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Wolfbauer’s Complaint alleges that Ocwen led Wolfbauer to believe he could apply
for a modification of his loan, knowing that such a modification was not possible. It cannot
be inferred, however, that Ocwen intended that Wolfbauer rely upon any such
representation, nor that Wolfbauer did rely on the representation to his detriment.
Accordingly, the Complaint does not state a claim based on fraud.
III. 15 U.S.C. § 45(a)
The Federal Trade Commission is empowered to prevent unfair trade practices by
lending institutions under 15 U.S.C. § 45(a). Nothing in the statute creates a private right
of action. Accordingly, the Complaint does not state a claim under 15 U.S.C. § 45(a).
IV. Neb. Rev. Stat. § 87-302
In Wolfbauer’s Complaint, he refers to the language in Neb. Rev. Stat. § 87302(a)(4) (Reissue 2014), which states that “[a] person engages in a deceptive trade
practice when, in the course of his or her business, vocation, or occupation, he or
she . . . [u]ses deceptive representations or designations of geographic origin in connection
with goods or services . . . .” Wolfbauer’s factual allegations in support of his claim under
§ 87-302(a)(4) center on his contention that Ocwen led him to believe he could apply for
a loan modification, when no such modification was possible. (Complaint, Filing No. 1 at
9–10.)
Actions under the Uniform Deceptive Trade Practices Act (“UDTPA”), of which Neb.
Rev. Stat. § 87-302(a)(4) is a part, are actions in equity. See State ex rel. Stenberg v.
Consumer’s Choice Foods, 755 N.W.2d 583, 592 (Neb. 2008). Private actions under the
UDTPA may be brought by a “person likely to be damaged by a deceptive trade practice

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of another” and are for prospective relief. Neb. Rev. Stat. § 87-303 (Reissue 2014). Even
if the Court were to infer some deceptive practice by Ocwen based upon Wolfbauer’s
allegations, his claim concerns past conduct. Wolfbauer is not a “person likely to be
damaged” by the conduct, and his allegations do not give rise to a private action under the
UDTPA.
V. Equitable Estoppel
The Nebraska Supreme Court has defined the elements of equitable estoppel:
The elements of equitable estoppel are, as to the party estopped: (1)
conduct which amounts to a false representation or concealment of material
facts, or at least which is calculated to convey the impression that the facts
are otherwise than, and inconsistent with, those which the party
subsequently attempts to assert; (2) the intention, or at least the expectation,
that such conduct shall be acted upon by, or influence, the other party or
other persons; and (3) knowledge, actual or constructive, of the real facts. As
to the other party, the elements are: (1) lack of knowledge and of the means
of knowledge of the truth as to the facts in question; (2) reliance, in good
faith, upon the conduct or statements of the party to be estopped; and (3)
action or inaction based thereon of such a character as to change the
position or status of the party claiming the estoppel, to his or her injury,
detriment, or prejudice.
Omaha Police Union Local 101, IUPA, AFL–CIO, v. City of Omaha, 872 N.W.2d 765,
771–72 (Neb. 2015) (internal citations omitted).
Even assuming that Ocwen led Wolfbauer to believe he could apply for a
modification of his loan and Ocwen knew such a modification was not possible,
Wolfbauer’s allegations do not demonstrate that he relied on that misinformation to his
injury, detriment, or prejudice.

To the contrary, the allegations in the Complaint

demonstrate that Wolfbauer’s position or status was unchanged. His suggestion that
Ocwen should be “required by the doctrine of promissory estoppel to offer Plaintiff a
permanent modification” of his loan and suspend foreclosure proceedings, (Complaint,
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Filing No. 1 at ECF 13), is a leap of logic inconsistent with the doctrine of equitable
estoppel.
CONCLUSION
Wolfbauer’s Complaint fails to state claims on which relief can be granted. It
appears that any amendment would be futile with respect to his claims based on fraud,
unfair or deceptive trade practices in violation of 15 U.S.C. § 45(a), deceptive trade
practices in violation of Neb. Rev. Stat. § 87-302, and equitable estoppel. Those claims
will be dismissed, with prejudice.
Wolfbauer will be given leave to file and Amended Complaint regarding his RESPA
claim, as specified above. Accordingly,
IT IS ORDERED:
1.

The Motion to Dismiss (Filing No. 12) submitted by Defendant Ocwen Loan
Servicing, LLC, is granted in part as follows:
Plaintiff James Wolfbauer’s claims based on fraud, unfair or deceptive
trade practices in violation of 15 U.S.C. § 45(a), deceptive trade
practices in violation of Neb. Rev. Stat. § 87-302, and equitable
estoppel, are dismissed, with prejudice; and

2.

Plaintiff James Wolfbauer will be given leave to file an Amended Complaint
on or before April 11, 2016, with respect to his claim under the Real Estate
Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605(e).

DATED this 24th day of March, 2016.
BY THE COURT:

s/Laurie Smith Camp
Chief United States District Judge

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