Purifoy et al v. Walter Investment Management Corporation et al
Filing
55
OPINION AND ORDER. For the reasons set forth above, IT IS HEREBY ORDERED THAT Defendants' motion to dismiss is DENIED with respect to Plaintiffs' breach of contract claim against GTS for allegedly improperly purchasing and collecting commis sions on force-placed insurance. IT IS FURTHER ORDERED THAT Defendants' motion to dismiss is GRANTED in all other respects. Because there are no remaining claims against Defendants WIMC and GTIA, the Clerk of the Court is respectfully directed t o terminate them from this action. Because discovery is now completed (Doc. No. 52), the parties shall appear for a post-discovery conference on January 26, 2016 at 10:00 a.m. If any party wishes to file a motion for summary judgment, it shall submit a pre-motion letter to the Court in accordance with Rule 2.A of the Court's Individual Practices no later than January 11, 2016. SO ORDERED. (As further set forth in this Order.) (Post-discovery Conference set for 1/26/2016 at 10:00 AM before Judge Richard J. Sullivan.), Green Tree Insurance Agency, Inc. and Walter Investment Management Corporation terminated. (Signed by Judge Richard J. Sullivan on 12/21/2015) (adc)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
_____________________
No. 13-cv-937 (RJS)
_____________________
DARRELL A. PURIFOY, et al.,
Plaintiffs,
VERSUS
WALTER INVESTMENT MANAGEMENT CORP., et al.,
Defendants.
___________________
OPINION AND ORDER
December 21, 2015
___________________
RICHARD J. SULLIVAN, District Judge:
Plaintiffs Darrell Purifoy and Lynda
Purifoy, owners of mortgages on residential
property located in Florida, bring this class
action on behalf of themselves and all others
who are similarly situated against mortgage
loan servicer Green Tree Servicing, LLC
(“GTS”), its parent corporation Walter
Investment
Management
Corporation
(“WIMC”), and WIMC’s other wholly
owned subsidiary Green Tree Insurance
Agency, Inc. (“GTIA”) (collectively, with
WIMC and GTS, the “Defendants”) for
Defendants’ role in purchasing, backdating,
and charging Plaintiffs for expensive hazard
insurance that allegedly included improper
commissions
and
illegal
kickbacks.
Specifically, Plaintiffs assert claims for
breach of the mortgage contract, unjust
enrichment, and conversion. Now before
the Court is Defendants’ motion to dismiss
this action. For the reasons set forth below,
the motion is granted in part and denied in
part.
I. BACKGROUND
In November 2006, Plaintiffs and
Gateway Business Bank executed a
mortgage secured by Plaintiffs’ residential
property in Hillsborough County, Florida. 1
1
The facts are taken from Plaintiffs’ First Amended
Complaint, filed on May 24, 2013 (Doc. No. 39
(“FAC”)), and the exhibits attached thereto. In ruling
on Defendants’ motion, the Court has also considered
Defendants’ Memorandum of Law (Doc. No. 43 Ex.1
(“Mem.”)), Plaintiffs’ Opposition (Doc. No. 45
(“Opp’n”)), and Defendants’ Reply (Doc. No. 46
(“Reply”)).
The Court notes that Plaintiffs
improperly exceeded the page limit set forth in Rule
2.B of the Court’s Individual Practices by
supplementing their 25-page Opposition with seven
pages of “exhibits” that merely assert additional legal
After the mortgage was executed in
2006, it appears to have been sold to one or
more successor banks, and, on or around
September 1, 2011, Bank of America, N.A.
assigned the loan servicing rights of
Plaintiffs’ mortgage to GTS. (FAC ¶ 26.)
Subsequently, on September 16, 2011, GTS
mailed a letter to Plaintiffs informing them
that they did not have sufficient property
insurance on their home and that if GTS did
not receive evidence that Plaintiffs had
purchased acceptable insurance within 45
days, GTS, through “an affiliated insurance
agency,” would purchase insurance at
Plaintiffs’ expense. (Id. ¶ 27, Ex. 4.) GTS
further noted that, if it purchased insurance
on behalf of Plaintiffs, it might earn a
commission from the transaction. (Id.) On
October 17, 2011, GTS mailed a second
letter to Plaintiffs including similar language
and indicating that Plaintiffs now had only
15 days to provide GTS with “proof of
sufficient insurance” on their home. (Id.
¶ 28, Ex. 5.) In response, Plaintiffs mailed a
letter to GTS on October 25, 2011,
requesting an additional 15 days “to secure
insurance and clarify the role [GTS] played
in servicing their loan.” (Id. ¶¶ 28–29.)
GTS never responded to this letter. (Id.)
(FAC ¶¶ 1, 9–10, 23; id. Ex. 3 (the “Purifoy
Mortgage”).)
The mortgage required
Plaintiffs to maintain hazard insurance on
their home “for the periods that Lender
requires.” (Purifoy Mortgage § 5.) If
Plaintiffs, as the Borrower, failed to acquire
or maintain insurance on their home that
protected against “loss by fire” and “other
hazards including, but not limited to,
earthquakes and floods,” the Lender was
authorized to “obtain insurance coverage, at
Lender’s option and Borrower’s expense.”
(Purifoy Mortgage § 5.) The mortgage
further provided that:
Lender is under no obligation to
purchase any particular type or
amount of coverage. . . . Borrower
acknowledges that the cost of the
insurance coverage so obtained
might significantly exceed the cost
that Borrower could have obtained.
Any amounts disbursed by Lender
under this Section 5 shall become
additional debt of Borrower secured
by this Security Instrument.
(Id.) In addition, the mortgage provided that
if Plaintiffs failed “to perform the covenants
and agreements contained” in the mortgage,
the Lender was permitted to “do and pay for
whatever is reasonable or appropriate to
protect Lender’s interest in the Property and
rights under this Security Instrument.” (Id.
§ 9.) The mortgage further provided that
“[a]ny amounts disbursed by Lender under
this Section 9 shall become additional debt
of Borrower secured by this Security
Instrument.” (Id.)
Instead, on November 2, 2011, GTS,
through GTIA, purchased insurance on
Plaintiffs’ property from Assurant, Inc.
(“Assurant”), whom Plaintiffs allege paid a
commission to GTIA for the referral, thus
artificially inflating the cost of the
insurance. (Id. ¶¶ 30, 65.) The amount of
coverage purchased was $140,155, which
was “nearly twice the estimated fair market
value” of Plaintiffs’ home at the time, and,
even though Plaintiffs allege that they had
suffered “no risk of loss” between
September 1, 2011 and November 2, 2011,
the effective date of the policy was
backdated to September 1, 2011. (Id. ¶ 31.)
On November 2, 2011 – the same day that
GTS purchased the policy – GTS mailed a
arguments and attempt to distinguish the cases upon
which Defendants rely. The Court declines to
consider these additional legal arguments and warns
Plaintiffs that repeating such conduct in future filings
may result in sanctions.
2
the grounds upon which [the] claim rests.”
ATSI Commc’ns, Inc. v. Shaar Fund, Ltd.,
493 F.3d 87, 98 (2d Cir. 2007); see also Fed.
R. Civ. P. 8(a)(2) (“A pleading that states a
claim for relief must contain . . . a short and
plain statement of the claim showing that the
pleader is entitled to relief . . . .”). To meet
this standard, plaintiffs must allege “enough
facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). “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 alleged.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). In reviewing a Rule
12(b)(6) motion to dismiss, a court must
accept as true all factual allegations in the
complaint and draw all reasonable
inferences in favor of the plaintiff. See ATSI
Commc’ns, 493 F.3d at 98. However, a
pleading that offers only “labels and
conclusions” or “a formulaic recitation of
the elements of a cause of action will not
do.” Twombly, 550 U.S. at 555. If the
plaintiff “ha[s] not nudged [its] claims
across the line from conceivable to
plausible, [its] complaint must be
dismissed.” Id. at 570.
letter to Plaintiffs informing them of the
insurance purchase and alerting them that a
premium would be charged to their
mortgage escrow account. (Id. ¶ 29.) The
premium on the policy was $3,943.13. (Id.
¶ 31.) Once Plaintiffs provided GTS with
proof of insurance on November 16, 2011,
GTS cancelled the insurance and notified
Plaintiffs that they owed GTS $1,237.90 for
the backdated insurance policy. (Id. ¶ 32,
Ex. 8.) GTS “continues to attempt to
collect” this fee for the period between
September 1, 2011 and November 16, 2011.
(Id. ¶ 32.)
On February 7, 2013, Plaintiffs filed this
action, asserting claims for breach of
contract, unjust enrichment, and conversion
against
Defendants,
Assurant,
and
Assurant’s wholly owned subsidiary,
American Reliable Insurance Company
(“ARIC”), on the theory that all Defendants
were part of a scheme in which they
purchased and improperly backdated
expensive force-placed insurance 2 without
disclosing that illegal kickbacks and
commissions had contributed to the high
cost of the insurance policy. (Doc. No. 1.)
On April 30, 2013, Plaintiffs voluntary
dismissed Assurant and ARIC from this
action. (Doc. No. 25.) On May 24, 2013,
Plaintiffs filed the First Amended Complaint
in this action. (Doc. No. 39.) Now before
the Court is Defendants’ motion to dismiss.
III. DISCUSSION
A. Breach of Contract
Because the mortgage at issue in this
action contained a choice-of-law clause
stating that it “shall be governed by federal
law and the law of the jurisdiction in which
the property is located” (Purifoy Mortgage
§ 16) and because federal courts follow state
law when applying contract law, Florida law
governs this action. See Katz v. Berisford
Int’l PLC, No. 96-cv-8695 (JGK), 2000 WL
959721, at *8 (S.D.N.Y. July 10, 2000)
(noting that a federal court sitting in
diversity
applies
the
choice-of-law
II. LEGAL STANDARD
To survive a motion to dismiss pursuant
to Rule 12(b)(6) of the Federal Rules of
Civil Procedure, a complaint must “provide
2
“Force-placed” or “lender-placed” insurance refers
to a lender’s purchase of insurance on secured
property, at the homeowner’s expense, when a
homeowner fails to maintain adequate insurance as
required by the lender and homeowner’s mortgage
contract. (FAC ¶ 34.).
3
Here, the parties to the mortgage
contract were GTS and Plaintiffs. (FAC
¶ 26.)
Neither WIMC nor GTIA
participated in the negotiation or execution
of the contract. Nevertheless, Plaintiffs
argue that the Court should pierce the
corporate veil and hold WIMC and GTIA
liable for the actions of GTS because (i)
WIMC “exercised complete domination and
control” over GTS and GTIA, and (ii) GTS
and
GTIA
“operated
as
mere
instrumentalities of WIMC.” (Opp’n at 5–
6.) 3
principles of the forum state and that New
York courts “generally honor the parties’
choice of law so long as the selected
jurisdiction has significant contacts to the
transaction”); Farkar Co. v. R.A. Hanson
DISC., Ltd., 441 F. Supp. 841, 845
(S.D.N.Y. 1977) (“For general principles of
contract law, federal courts rely on state
law.”), modified on other grounds, sub nom.,
583 F.2d 68 (2d Cir. 1978).
Here, Defendants move to dismiss
Plaintiffs’ breach of contract claim on the
grounds that: (i) WIMC and GTIA were not
parties to the mortgage contract; (ii)
Plaintiffs breached the contract prior to
Defendants’ alleged breach by failing to
maintain hazard insurance on their property;
(iii) GTS’s purchase of backdated insurance
and receipt of a commission for procuring
the insurance did not constitute breaches of
the contract; and (iv) Plaintiffs’ claim that
Defendants breached the implied covenant
of good faith and fair dealing is duplicative
of the breach of contract claim. The Court
considers each argument in turn.
Under Florida law, a court may pierce
the corporate veil among parents and
subsidiaries such that the parent and one of
the parent’s subsidiaries may be held liable
for the actions of a second subsidiary. See,
e.g., Dania Jai-Alai Palace, Inc. v. Sykes,
450 So. 2d 1114, 1117–21 (Fla. 1984); see
also John Daly Enters., LLC v. Hippo Golf
Co., 646 F. Supp. 2d 1347, 1353 (S.D. Fla.
2009).
However, Florida courts “are
reluctant to pierce the corporate veil and
only in exceptional cases will they do so.”
Johnson Enters. of Jacksonville, Inc. v. FPL
Grp., Inc., 162 F.3d 1290, 1320 (11th Cir.
1998) (internal quotation marks omitted). In
order to pierce the corporate veil, a party
must assert “(1) that the subsidiary was a
‘mere instrumentality’ of the parent, and (2)
that the parent engaged in ‘improper
conduct’ through its organization or use of
the subsidiary.” Id. (quoting Dania Jai-Alai
Palace, 450 So. 2d at 1117–21).
1. WIMC and GTIA Were Not Parties to
the Mortgage Contract and Plaintiffs Have
Failed to Plead Facts to Justify Piercing the
Corporate Veil
Under Florida law, “a third-party cannot
be bound by a contract to which it was not a
party.” Miles v. Naval Aviation Museum
Found., Inc., 289 F.3d 715, 720 (11th Cir.
2002). As a result, a plaintiff may not assert
a breach of contract claim against a third
party. See Oginsky v. Paragon Props. of
Costa Rica LLC, 784 F. Supp. 2d 1353,
1372 (S.D. Fla. 2011) (“Any actions taken
by nonparties, even if inconsistent with the
contracts, cannot give rise to a cause of
action for breach of contract against [an
actual contracting party].”).
3
Despite Plaintiffs’ argument to the contrary, the law
is clear that a Court may consider a claim for piercing
the corporate veil on a motion to dismiss. See, e.g.,
Oginsky, 784 F. Supp. 2d at 1373–74 (dismissing a
claim to pierce corporate veil on a motion to
dismiss); 1021018 Alberta Ltd. v. Netpaying, Inc.,
10-cv-568, 2011 WL 1103635, at *7 (M.D. Fla. Mar.
24, 2011) (same).
4
996 F.2d 1107 (11th Cir. 1993). In addition,
to demonstrate that a parent engaged in
improper conduct, a plaintiff must allege
that the parent used the subsidiary “to evade
some statute or to accomplish some fraud or
illegal purpose,” such as by avoiding
liability in a particular transaction. Johnson
Enters. of Jacksonville, 162 F.3d at 1320
(internal quotation marks and alterations
omitted); see also Intercoastal Realty, Inc. v.
Tracy, No. 09-cv-62035, 2010 WL 2541876,
at *4 (S.D. Fla. June 22, 2010) (finding that
a parent used an “LLC for an unjust
purpose” because it used the LLC to
“circumvent a contractual obligation” of the
parent).
To show that a subsidiary was a “mere
instrumentality,”
a
plaintiff
must
demonstrate that the subsidiary “manifests
no separate corporate interests of its own
and functions solely to achieve the purposes
of the dominant corporation.” Lobegeiger v.
Celebrity Cruises, Inc., 869 F. Supp. 2d
1350, 1354 (S.D. Fla. 2012) (internal
quotation marks omitted). Florida courts
typically consider a variety of factors when
determining whether a subsidiary was a
mere instrumentality of a parent, including
whether:
(1) the parent and the subsidiary
have common stock ownership; (2)
the parent and the subsidiary have
common directors or officers; (3) the
parent and the subsidiary have
common business departments; (4)
the parent and subsidiary file
consolidated financial statements and
tax returns; (5) the parent finances
the subsidiary; (6) the parent caused
the incorporation of the subsidiary;
(7) the subsidiary operates with
grossly inadequate capital; (8) the
parent pays the salaries and other
expenses of the subsidiary; (9) the
subsidiary receives no business
except that given to it by the parent;
(10) the parent uses the subsidiary’s
property as its own; (11) the daily
operations of the two corporations
are not kept separate; and, (12) the
subsidiary does not observe the basic
corporation formalities, such as
keeping separate books and records
and holding shareholder and board
meetings.
To support their claim that GTS and
GTIA were mere instrumentalities of WIMC
and that WIMC abused the corporate form
of GTS and GTIA to engage in improper
conduct, Plaintiffs allege that, “at all
relevant times, WIMC actively participated
in and controlled the operations” of GTS
and GTIA and that WIMC “is and was
responsible for the acts” of GTS and GTIA.
(FAC ¶¶ 11–12.) However, the Court finds
that Plaintiffs’ allegations related to the
mere instrumentality element are wholly
conclusory and, therefore, insufficient to
justify the piercing of the corporate veil.
Plaintiffs’ mere assertion that WIMC
exercises control over GTS and GTIA –
without more – fails to address any of the
factors listed above and is insufficient to
establish a plausible claim that GTS and
GTIA were “mere instrumentalities” of
WIMC. See Lobegeiger, 869 F. Supp. 2d at
1355 (declining to pierce the corporate veil
where the record was “so sparse” that the
court could not determine whether any of
the relevant factors had been established).
Florida courts have reached similar
conclusions when plaintiffs merely allege
that a parent controlled a subsidiary. See,
e.g., Christie v. Bank of Am., N.A., No. 13-
United Steelworkers of Am., AFL-CIO-CLC
v. Connors Steel Co., 855 F.2d 1499, 1505
(11th Cir. 1988); Jacksonville Elec. Auth. v.
Eppinger & Russell Co., 776 F. Supp. 1542,
1545 (M.D. Fla. 1991), aff’d sub nom.,
Jacksonville Elec. Auth. v. Bernuth Corp.,
5
So. 2d 845, 848 (Fla. Dist. Ct. App. 1990)
(same).
cv-1371, 2014 WL 5285987, at *6 (M.D.
Fla. Oct. 15, 2014) (evaluating a similar
force-placed insurance scheme and holding
that the plaintiff’s allegations that the
defendant-parent “conducted, managed, and
controlled [the defendant-subsidiary’s]
affairs” were insufficient to pierce the
corporate veil); Oginsky, 784 F. Supp. 2d at
1373 (declining to pierce the corporate veil
where the plaintiffs alleged only that the
defendants were “nothing more than shell
corporations”); see also see also Federated
Title Insurers, Inc. v. Ward, 538 So. 2d 890,
891 (Fla. Dist. Ct. App. 1989) (“A mere
instrumentality finding is rare.”).
Here, GTS argues that Plaintiffs cannot
assert a breach of contract claim against it
because Plaintiffs themselves breached the
mortgage contract in the first instance by
failing to maintain hazard insurance on their
property. (See Purifoy Mortgage § 5 (noting
that “Borrower shall keep” property insured
against hazard loss (emphasis added)).)
However, while it is undisputed that
Plaintiffs failed to provide evidence of
hazard insurance on their property from at
least September 16, 2011 to November 16,
2011, as required by the express terms of the
mortgage contract (see FAC ¶¶ 27, 32, Ex.
8), it can hardly be argued that Plaintiffs’
failure to buy hazard insurance was a
material breach that went to “the essence of
the mortgage,” since the contract itself
contemplated and provided remedies in the
event of such an occurrence. See MDS
(Canada) Inc. v. Rad Source Techs., Inc.,
720 F.3d 833, 849 (11th Cir. 2013) (“To
constitute a vital or material breach, a
party’s nonperformance must go to the
essence of the contract. A party’s failure to
perform some minor part of his contractual
duty cannot be classified as a material or
vital breach.” (citation and internal quotation
marks omitted)). Indeed, courts that have
addressed this very issue in the mortgage
context have found that “a mortgagor’s
failure to maintain insurance does not
amount to a material breach of the
mortgage” because the failure to maintain
hazard insurance does not “defeat[] the
object of the parties in making the contract.”
Miller v. Wells Fargo Bank, N.A., 994 F.
Supp. 2d 542, 552–53 (S.D.N.Y. 2014)
(internal quotation marks omitted); see also
Smith v. SunTrust Mortg. Inc., No. 13-cv0739, 2013 WL 5305651, at *6 (C.D. Cal.
Sept. 16, 2013). The Court agrees.
Accordingly, because Plaintiffs allege
only a few conclusory allegations to
demonstrate that GTS and GTIA were “mere
instrumentalities” of WIMC, and because
Florida courts are reluctant to pierce the
corporate veil, the Court denies Plaintiffs’
request to pierce the corporate veil and
dismisses Plaintiffs’ breach of contract
claims against WIMC and GTIA.
Nevertheless, the Court must still evaluate
the remaining breach of contract allegations
against GTS.
2. Plaintiffs Did Not Materially Breach the
Mortgage Contract
To assert a breach of contract claim
under Florida law, a plaintiff must plead “(1)
the existence of a contract; (2) a material
breach of that contract; and (3) damages
resulting from the breach.” Vega v. TMobile USA, Inc., 564 F.3d 1256, 1272
(11th Cir. 2009). In addition, “in order to
maintain an action for breach of contract, a
claimant must also prove performance of its
obligations under the contract or a legal
excuse for its nonperformance.” Rollins,
Inc. v. Butland, 951 So. 2d 860, 876 (Fla.
Dist. Ct. App. 2006); Marshall Const., Ltd.
v. Coastal Sheet Metal & Roofing, Inc., 569
6
select a force-placed insurance policy on
Plaintiffs’ property, and (ii) receive a
commission for purchasing the policy. The
Court addresses each of these arguments in
turn.
In any event, even if it could be argued
that Plaintiffs’ failure to provide hazard
insurance constituted a breach of the
mortgage, GTS’s argument would still fail
because GTS waived this defense once it
continued to perform under the contract
following Plaintiffs’ alleged breach. See
Hamilton v. Suntrust Mortg. Inc., 6 F. Supp.
3d 1300, 1309 (S.D. Fla. 2014) (“There are
few principles of contract law better
established,
or
more
uniformly
acknowledged, than the rule that when a
contract not fully performed on either side is
continued in spite of a known excuse . . . the
defense based on the excuse is lost and the
party who would otherwise have been
excused is liable if he or she subsequently
fails to perform.” (quoting 13 Williston on
Contracts § 39.31 (4th ed. 2000))). “[O]nce
[GTS] chose to continue the mortgage by
forceplacing insurance after Plaintiffs’
coverage lapsed, [GTS] waived the right to
rely upon Plaintiffs’ failure to maintain
insurance as a defense to their contract
claims.” Mahdavieh v. Suntrust Mortg.,
Inc., No. 13-cv-62801, 2014 WL 1365425,
at *3 (S.D. Fla. Apr. 7, 2014); see also
Persaud v. Bank of Am., N.A., No. 14-cv21819, 2014 WL 4260853, at *8 (S.D. Fla.
Aug. 28, 2014) (same). Accordingly, the
Court finds that Plaintiffs’ failure to procure
hazard insurance under the terms of the
mortgage contract does not warrant
dismissal of their breach of contract claim
against GTS.
a. Backdating
In order to evaluate whether GTS was
permitted to backdate the force-placed
insurance, the Court must first examine the
terms of the mortgage contract and
determine
whether
the
contract
unambiguously permitted, or proscribed,
such conduct. See Managed Care Solutions,
Inc. v. Cmty. Health Sys., Inc., No. 10-cv60170, 2011 WL 6024572, at *6 (S.D. Fla.
Dec. 2, 2011) (“Whether a contract is or is
not ambiguous is a question of law to be
determined by the trial court.” (internal
quotation marks omitted)).
A contract is “ambiguous if it is
susceptible to two or more reasonable
interpretations that can fairly be made.”
Dahl-Eimers v. Mut. of Omaha Life Ins. Co.,
986 F.2d 1379, 1381 (11th Cir. 1993). If a
contract is unambiguous, “it is well settled”
under Florida law that “the contracting
parties are bound by those terms, and a court
is powerless to rewrite the contract to make
it more reasonable or advantageous for one
of the contracting parties.” Ernie Haire
Ford, Inc. v. Ford Motor Co., 260 F.3d
1285, 1290 (11th Cir. 2001) (internal
quotation marks omitted). However, when
“a contract is reasonably or fairly
susceptible of different constructions, it is
ambiguous, and because interpretation of
ambiguous contracts potentially involves
questions of fact, dismissal under Rule
12(b)(6) is inappropriate.” Ventana Hotels
& Resorts, LLC v. Habana Libre Hotel,
LLC, No. 06-cv-22993, 2007 WL 2021940,
at *2 (S.D. Fla. July 11, 2007) (citations
omitted); see also Alhassid v. Bank of Am.,
N.A., 60 F. Supp. 3d 1302, 1312 (S.D. Fla.
3. The Mortgage Contract Permitted
Backdating, but Is Ambiguous as to
Whether It Permitted GTS’s Collection of
Commissions
GTS next argues that Plaintiffs’ breach
of contract claim must be dismissed because
Plaintiffs have failed to allege conduct that
violated the terms of the mortgage contract.
Specifically, GTS argues that the mortgage
contract permitted GTS to (i) backdate and
7
coverage on the property,” regardless of
whether there had been damage to the
property in the interim, since the lender
could not know whether “property loss had
occurred during the lapse period.” Cohen v.
Am. Sec. Ins. Co., 735 F.3d 601, 613 (7th
Cir. 2013). But see Persaud, 2014 WL
4260853, at *9 (finding that backdating
coverage would “not protect Defendants’
interest in the property, particularly in the
absence of any claim or damage to the
property during the period of the lapse”
(internal quotation marks omitted)).
2014) (“Contract interpretation [of an
ambiguous
contract]
is
typically
inappropriate at the motion to dismiss
stage.”).
Here, GTS argues that its backdating of
the force-placed insurance does not
constitute a breach of the mortgage contract
because the mortgage permitted GTS to
“obtain coverage that would protect the
property during the entire period of
[Plaintiffs’] lapse.” (Mem. at 8.) To
support this argument, GTS highlights that
the mortgage required Plaintiffs to have
insurance “for the periods that Lender
requires.” (Purifoy Mortgage § 5.) The
mortgage also provided that “Lender may do
and pay for whatever is reasonable or
appropriate to protect Lender’s interest in
the Property.” (Id. § 9.)
The Court agrees that the broad language
of the mortgage allowed for GTS’s
procurement of backdated insurance and that
such insurance was “reasonable” and
“appropriate” to protect GTS’s interest in
the property. Plaintiffs’ assertion that there
was “no risk of loss” during the lapse in
coverage (FAC ¶ 31) and, therefore, no need
to backdate the force-placed insurance
because “the purpose of insurance is to
protect against future risks” (Opp’n at 9),
misconstrues the nature of hazard insurance
and the risks that accompany lapses in
insurance coverage. For the reasons stated
by the Seventh Circuit in Cohen and other
courts in similar force-placed insurance
cases, the Court finds that Plaintiffs cannot
plausibly allege that no loss occurred during
the lapse period since some problems can
take several weeks or months to emerge – a
risk that a lender would be loath to take. See
Cohen, 735 F.3d at 613 (noting that
plaintiff’s allegation that defendants “knew
full well that no loss” occurred during the
lapse in coverage “is conclusory and
unaccompanied by any factual content to
make it plausible”); id. (“How could
[defendants] know . . . whether or not a
property loss had occurred during the lapse
period?”).
Indeed, the fact that GTS
backdated the force-placed insurance for
only two months to cover Plaintiffs’ gap in
insurance (FAC ¶ 31) supports the inference
In evaluating similar contract provisions,
several courts have held that backdating
coverage is “entirely necessary to protect [a
lender’s] full interest in the property.”
Edwards v. Green Tree Servicing, LLC, No.
15-cv-148, 2015 WL 6777463, at *4 (N.D.
Fla. Oct. 22, 2015); see also Cannon v.
Wells Fargo Bank N.A., No. 12-cv-1376,
2013 WL 3388222, at *4–5 (N.D. Cal. July
5, 2013); Webb v. Chase Manhattan Mortg,
Corp., No. 05-cv-0548, 2008 WL 2230696,
at *19 (S.D. Ohio May 28, 2008). In
reaching this conclusion, courts have
recognized that, even though a borrower
may have alleged that its property suffered
no loss during the backdated time period, it
was nevertheless reasonable and appropriate
for a lender to procure backdated insurance
since “some damage may not be readily
apparent (such as mold).” Cannon, 2013
WL 3388222, at *4–5. Similarly, courts
have held that the “broad language”
permitting a lender to do “whatever it deems
reasonable or appropriate to protect [its]
rights in the property provides the lender
with a contractual right to have continuous
8
highlights, once again, that Plaintiffs’ failure
“to perform the covenants” in the mortgage
authorized GTS to “do and pay for whatever
is reasonable or appropriate to protect” its
interest in Plaintiffs’ property. (Id. § 9.)
that GTS acted “prudently [to] ensure[] it
will be covered if it later” became aware of
a loss. Rapp v. Green Tree Servicing, LLC,
No. 12-cv-2496, 2013 WL 3992442, at *6
(D. Minn. Aug. 5, 2013); see also Miller,
994 F. Supp. 2d at 554 (granting lender’s
motion to dismiss borrower’s breach of
contract claim based on allegedly
improperly
backdating
force-placed
insurance because borrower failed to
plausibly allege that “lender knew that no
loss had occurred” during the lapse in
coverage). Accordingly, because backdating
was permitted by the mortgage contract and
because Plaintiffs do not state a plausible
claim that Defendants’ backdating of the
force-placed insurance constituted a breach
of the mortgage, the Court grants GTS’s
motion to dismiss Plaintiffs’ breach of
contract claim with respect to the alleged
backdating.
However, while the Court agrees that the
mortgage granted GTS broad discretion in
purchasing force-placed insurance, the
mortgage contract is at best ambiguous as to
whether it was “reasonable or appropriate”
for GTS, through GTIA, to take
commissions from the placement, thereby
inflating the price of the insurance.
Similarly, while the mortgage contract
provided that Lender was “under no
obligation to purchase any particular type or
amount of coverage” and warned Plaintiffs
that the force-placed insurance might be
more expensive than what they would have
obtained themselves, it is by no means clear
that the purchase of insurance for “nearly
twice the estimated fair market value” of
Plaintiffs’ home was “reasonable or
appropriate” or otherwise consistent with
GTS’s obligation under the mortgage. (FAC
¶ 31.)
b. Commission Payments in the Purchase
of Force-Placed Insurance
GTS next argues that its purchase of
force-placed insurance that included
commissions did not breach the mortgage
contract
because
the
mortgage
unambiguously permitted GTS to purchase
force-placed insurance and charge Plaintiffs
for the “actual cost” of the insurance.
(Mem. at 9–10.)
GTS notes that the
mortgage authorized the Lender to “obtain
insurance, at Lender’s option and
Borrower’s expense,” in the event of
Borrower’s failure to maintain insurance,
and that the Lender was “under no
obligation to purchase any particular type or
amount of coverage.” (Purifoy Mortgage
§ 5.) The mortgage further provided that
“Borrower acknowledges that the cost of
insurance . . . might significantly exceed the
cost of insurance that Borrower could have
obtained” and that “[a]ny amounts disbursed
under this Section 5 shall become additional
debt of Borrower.” (Id.) Finally, GTS
Significantly, several courts that have
considered
nearly identical
contract
provisions have reached the same
conclusion. For example, in Leghorn v.
Wells Fargo Bank, N.A., the court evaluated
a mortgage contract with similar language
and held that the borrower stated a breach of
contract claim based on a kickback theory
because the mortgage contract “did not
unambiguously authorize kickbacks.” 950
F. Supp. 2d 1093, 1117–18 (N.D. Cal.
2013). The court further found that the
language that permitted the lender to “do
whatever is reasonable or appropriate to
protect Lender’s interest in the Property”
was ambiguous and “could be interpreted as
explicitly restricting the lender’s discretion
in force-placing insurance.” Id. (internal
quotation marks omitted); see also, e.g.,
9
those cases, Plaintiffs here plausibly allege
that GTS’s purchase of force-placed
insurance was excessively priced and that
GTS profited from this scheme. First,
Plaintiffs allege GTS purchased force-placed
insurance for coverage that was “nearly
twice the estimated fair market value” of
their home. (FAC ¶ 31.) Second, Plaintiffs
allege that GTS entered into a contract with
Assurant “pursuant to which [GTS, through
GTIA,] receive[d] payments for the referral
of business.” (Id. ¶¶ 30, 47.) As a result,
Plaintiffs have plausibly alleged that GTS
had “no incentive to select a competitively
priced product” and, therefore, “artificially
inflated” Plaintiffs’ insurance premiums to
fund these commissions. (Id. ¶¶ 45, 65, 74–
75.) While Plaintiffs do not allege a specific
monetary amount that GTS received from
this scheme, the Court finds that the facts
alleged plausibly support the inference that
GTS collected and profited from improper
commissions through this scheme. 4
Persaud, 2014 WL 4260853, at *9
(“Plaintiff
has
sufficiently
alleged
Defendants’
illegitimate
premiums,
including kickbacks . . . , are not ‘reasonable
or appropriate’ and constitute a breach of the
Mortgage.”);
Mahdavieh,
2014
WL
1365425, at *3 (“While Plaintiffs’ mortgage
gave [defendant] discretion to force-place
insurance, it did not necessarily permit
[defendant] to do so in the manner alleged
by Plaintiffs.”); Gordon v. Chase Home
Fin., LLC, No. 11-cv-2001, 2013 WL
256743, at *4 (M.D. Fla. Jan. 23, 2013);
Ellsworth v. U.S. Bank, N.A., 908 F. Supp.
2d 1063, 1085 (N.D. Cal. 2012) (denying
defendant’s motion to dismiss plaintiff’s
breach of contract claim because “the court
could not say that the contracts’ terms
unambiguously
authorize
Defendants’
alleged behavior” of purchasing high-priced
insurance and collecting a commission
(internal quotation marks omitted)).
Moreover, GTS’s reliance on McKenzie
v. Wells Fargo Home Mortgage, Inc. and
LaCroix v. U.S. Bank, N.A. is misplaced, as
those cases are readily distinguishable. In
McKenzie, the court held that the plaintiffs
failed to plausibly allege that the defendants
were involved in a scheme to collect highpriced insurance, including kickbacks,
because the complaint “include[d] no facts
supporting the conclusion” that the forceplaced insurance was “excessively priced.”
No. 11-cv-04965, 2012 WL 5372120, at *20
(N.D. Cal. Oct. 30, 2012) (emphasis added).
Similarly, in LaCroix, the court held that the
plaintiff’s allegation that the defendant
received kickbacks or commissions from its
purchase of force-placed insurance failed to
state a breach of contract claim because the
complaint contained “no factual support
underlying the allegation that [the
defendant] profited from the force-placed
policy.”
No. 11-cv-3236, 2012 WL
2357602, at *6 (D. Minn. June 20, 2012
(emphasis added). However, contrary to
Finally, GTS contends that it did not
breach the mortgage because it notified
Plaintiffs twice through letters that, if
Plaintiffs failed to secure insurance, it might
purchase force-placed insurance and earn a
commission on such purchase. (See FAC
Exs. 4–5 (“Please note that if we do buy
insurance coverage on the collateral, we will
do so through an affiliated insurance
agency . . . and may earn a commission on
the insurance policy.”).) However, the fact
4
In addition, notwithstanding GTS’s claim to the
contrary, the fact that some of these allegations are
based on information and belief is of no moment.
See Arista Records, LLC v. Doe 3, 604 F.3d 110, 120
(2d Cir. 2010) (noting that a plaintiff may plead such
facts alleged “upon information and belief” as long as
those “facts are peculiarly within the possession and
control of the defendant” or “where the belief is
based on factual information that makes the inference
of culpability plausible”); Dubyk v. RLF Pizza, Inc.,
No. 13-cv-81028, 2014 WL 1153044, at *2 (S.D. Fla.
Mar. 17, 2014) (same).
10
Here, Plaintiffs allege that GTS breached
the mortgage’s implied duty of good faith
and fair dealing when it chose “an insurance
policy in bad faith and in contravention of
the parties’ reasonable expectations, by
purposefully selecting high-priced forceplaced insurance” and charging Plaintiffs for
the inflated price and commission payments.
(FAC ¶ 99(a).) In essence, these allegations
are identical to the allegations that form the
basis of Plaintiffs’ breach of contract claim
– namely, that it was not reasonable or
appropriate to purchase expensive forceplaced insurance that included commission
payments. (Compare id. ¶ 93(a)–(f), with id.
¶ 99(a)–(e), (g).) Accordingly, since the
conduct that serves as the basis of these two
theories is the same, the Court dismisses the
implied covenant of good faith and fair
dealing allegations as duplicative of the
breach of contract allegations. See Shibata
v. Lim, 133 F. Supp. 2d 1311, 1319 (M.D.
Fla. 2000) (“If the allegations do not go
beyond the statement of a mere contract
breach and, relying on the same alleged acts,
simply seek the same damages or other
relief already claimed in a companion
contract cause of action, they may be
disregarded as superfluous as no additional
claim is actually stated.”).
that GTS sent letters warning Plaintiffs that
they might purchase force-placed insurance
through an affiliate and earn a commission
does not mean that the practice was
permitted – i.e., “reasonable” and
“appropriate” – under the mortgage
contract.
Accordingly, the Court denies GTS’s
motion to dismiss the breach of contract
allegations related to the reasonableness or
appropriateness
of
the
force-placed
insurance policies and payments of
commissions to GTS.
4. Plaintiffs’ Claim Based on the Breach of
the Implied Covenant of Good Faith and
Fair Dealing Is Duplicative of Their Breach
of Contract Claim
GTS argues that Plaintiffs’ breach of
contract allegations based on the implied
covenant of good faith and fair dealing must
be dismissed because they are “superfluous”
and mirror Plaintiffs’ other breach of
contract allegations. (Mem. at 12.) “Under
Florida law, every contract contains an
implied covenant of good faith and fair
dealing, requiring that the parties follow
standards of good faith and fair dealing
designed to protect the parties’ reasonable
contractual expectations.” Centurion Air
Cargo, Inc. v. United Parcel Serv. Co., 420
F.3d 1146, 1151 (11th Cir. 2005). “A
breach of the implied covenant of good faith
and fair dealing is not an independent cause
of action, but attaches to the performance of
a specific contractual obligation.”
Id.
However, an argument based on the “breach
of the implied covenant of good faith and
fair dealing may be dismissed as redundant
where it is based on the same allegations as
those underlying the breach of contract
claim.”
Alvarez v. Royal Caribbean
Cruises, Ltd., 905 F. Supp. 2d 1334, 1341
(S.D. Fla. 2012) (internal quotation marks
omitted).
Plaintiffs contend that these allegations
are not redundant because “it is well-settled
law that when a contract gives a party
discretion to act under the contract, that
party must exercise its discretion in good
faith.” (Opp’n at 14.) However, under
Florida law, an alleged breach of the implied
covenant of good faith and fair dealing that
is based on a party’s failure to exercise its
discretion under a contract in good faith may
not be asserted as an independent basis for a
breach of contract unless “one party has the
power to make a discretionary decision
without defined standards,” meaning
without some limiting principle. Saxon Fin.
Grp., Inc. v. Rath, No. 11-cv-80646, 2012
11
WL 3278662, at *7 (S.D. Fla. Aug. 9, 2012)
(emphasis added) (internal quotation marks
omitted). Put another way, Florida law
makes clear that the implied covenant of
good faith and fair dealing may not vary the
terms of an express contract. See QBE Ins.
Corp. v. Chalfonte Condo. Apartment Ass’n,
Inc., 94 So. 3d 541, 548 (Fla. 2012) (noting
that the implied covenant of good faith and
fair dealing is inapplicable “where
application of the covenant would
contravene the express terms of the
agreement”);
see
also
Speedway
SuperAmerica, LLC v. Tropic Enters., Inc.,
966 So. 2d 1, 3 (Fla. Dist. Ct. App. 2007)
(“Despite broad characterizations of the
implied covenant of good faith, we have
recognized that it is a gap-filling default
rule, which comes into play when a question
is not resolved by the terms of the contract
or when one party has the power to make a
discretionary decision without defined
standards.” (internal quotation marks
omitted)).
mortgage in the present action. See, e.g.,
Kunzelmann v. Wells Fargo Bank, N.A., No.
11-CV-81373, 2012 WL 2003337, at *5
(S.D. Fla. June 4, 2012) (denying dismissal
of claims based on the breach of the implied
covenant of good faith and fair dealing, but
recognizing that such a claim is permissible
only when “a question is not resolved by the
terms of the contract or when one party has
the power to make a discretionary decision
without defined standards” (internal
quotation marks omitted)); Abels v.
JPMorgan Chase Bank, N.A., 678 F. Supp.
2d 1273, 1278–79 (S.D. Fla. 2009) (denying
dismissal of a breach of the implied
covenant of good faith claim where it is not
alleged that the lender may do whatever is
reasonable or appropriate to protect its
interest in borrower’s property).
Here, GTS’s discretion in determining
what type of force-placed insurance it may
purchase in the event that Plaintiffs failed to
purchase insurance was governed by the
express terms of the mortgage, which stated
that if Plaintiffs failed “to perform the
covenants and agreements” contained in the
mortgage, including the covenant to
maintain hazard insurance as required under
Section 5, GTS was free to “do and pay for
whatever was reasonable or appropriate” to
protect its interest in Plaintiffs’ property.
(Purifoy Mortgage §§ 5, 9.) As a result,
Plaintiffs cannot vary these express terms of
the mortgage contract by asserting a separate
claim based on the implied covenant of good
faith and fair dealing. Indeed, the Florida
cases cited by Plaintiffs to support their
implied covenant of good faith and fair
dealing claim are inapposite, since the
contracts in those cases did not contain the
same express standards as Plaintiffs’
B. Unjust Enrichment
Accordingly, the Court grants GTS’s
motion to dismiss Plaintiffs’ claim regarding
the implied covenant of good faith and fair
dealing.
Defendants next argue that Plaintiffs’
unjust enrichment claim should be dismissed
because such claims may not be asserted
when the parties’ rights are governed by a
mortgage contract.
Defendants further
contend that, in any event, Plaintiffs have
failed to plausibly allege all of the elements
of an unjust enrichment claim. The Court
agrees.
To assert an unjust enrichment claim
under Florida law, a plaintiff must plausibly
allege that “(1) the plaintiff has conferred a
benefit on the defendant; (2) the defendant
voluntarily accepted and retained that
benefit; and (3) the circumstances are such
that it would be inequitable for the
defendants to retain it without paying the
value thereof.” Virgilio v. Ryland Grp., Inc.,
680 F.3d 1329, 1337 (11th Cir. 2012).
12
enrichment.”); Gordon, 2012 WL 750608, at
*4 (“Here, the parties do not dispute the
existence of an express contract governing
their transaction, the mortgage, and,
accordingly, the equitable remedy of unjust
enrichment is not available.”). While the
Court acknowledges that some Florida
courts have reached the opposite result on
the grounds that, at the motion to dismiss
stage, there has not been a “showing that an
express contract exists,” see, e.g.,
Martorella, 931 F. Supp. 2d at 1227–28
(emphasis added), the Court nevertheless
finds these cases to be distinguishable from
the present case, in which there is no dispute
as to the validity of the mortgage contract.
See Cent. Magnetic Imaging Open MRI of
Plantation, Ltd. v. State Farm Mut. Auto.
Ins. Co., 789 F. Supp. 2d 1311, 1317 (S.D.
Fla. 2011) (“As there is a valid express
contract that no party challenges, Plaintiff
may not recover[] under unjust enrichment,
and may not assert it as an alternative
claim.”).
However, “a plaintiff cannot pursue a quasicontract claim for unjust enrichment if an
express contract exists concerning the same
subject matter.” Martorella v. Deutsche
Bank Nat’l Trust Co., 931 F. Supp. 2d 1218,
1227 (S.D. Fla. 2013) (internal quotation
marks omitted). And, while, as a general
matter, Rule 8(d) of the Federal Rules of
Civil Procedure permits a plaintiff to plead
causes of action in the alternative, “unjust
enrichment may only be pleaded in the
alternative where one of the parties asserts
that the contract governing the dispute is
invalid.” Id.; see also US Airways, Inc. v.
McCutchen, 133 S. Ct. 1537, 1546–47
(2013) (citing Restatement (Third) of
Restitution and Unjust Enrichment § 2(2)
(2010) for the proposition that a “valid
contract defines the obligations of the parties
as to matters within its scope, displacing to
that extent any inquiry into unjust
enrichment”).
Here, Plaintiffs do not dispute the
validity of the mortgage contract between
themselves and GTS, and neither party
disputes that the contract governs the terms
under which the force-placed insurance
clause is to be executed. Accordingly,
Plaintiffs’ unjust enrichment claim against
GTS must be dismissed as duplicative.
Several district courts in Florida have
reached similar results. For example, in
Degutis v. Financial Freedom, LLC, the
court dismissed an alternative unjust
enrichment claim because the plaintiff did
“not contest that there was a valid mortgage
contract between the Parties.” 978 F. Supp.
2d 1243, 1266 (M.D. Fla. 2013); see also,
e.g., Gibson v. Chase Home Fin., LLC, No.
11-cv-1302, 2012 WL 1094323, at *2 (M.D.
Fla. Apr. 2, 2012) (“Gibson never questions
the validity of the mortgage.
Chase’s
alleged wrong arises from Chase’s alleged
abuse of the contractual privilege to forceplace insurance. In consequence, this action
permits no equitable claim for unjust
Of course, Plaintiffs are not barred from
asserting a claim for unjust enrichment
against WIMC nor GTIA, since neither was
a party to the mortgage contract. See
Persaud, 2014 WL 4260853, at *14
(declining to dismiss plaintiff’s unjust
enrichment claim against defendants who
were not parties to the contract); Walton
Const. Co., LLC v. Corus Bank, No. 10-cv137, 2011 WL 2938366, at *4 (N.D. Fla.
July 21, 2011). However, Plaintiffs’ unjust
enrichment claims against WIMC and GTIA
must be dismissed for the simple reason that
Plaintiffs allege no facts to suggest that
either defendant received or retained a
benefit from Plaintiffs.
For instance,
Plaintiffs allege that GTIA merely served as
“conduit for Assurant to return kickbacks
and commissions” to GTS (FAC ¶ 13), but
they fail to allege that GTIA ever retained a
benefit from this force-placed insurance
scheme. Similarly, Plaintiffs’ conclusory
13
amount equal to $1,237.90” for the
backdated force-placed insurance. (FAC
¶ 32 (emphasis added).)
As a result,
Plaintiffs have failed to allege that
Defendants “deprive[d]” Plaintiffs of money
or other property, and, therefore, the
conversion claim must be dismissed.
allegations that the commissions collected
by GTS “ultimately” benefited WIMC (id.
¶¶ 103–04) fail to plausibly allege that
WIMC either received or retained a benefit.
Contrary to Plaintiffs’ assertions, this case is
not like Hamilton v. Suntrust Mortgage Inc.,
in which the court upheld an unjust
enrichment claim against the intermediary in
a forced-placed insurance scheme where the
plaintiff alleged that the intermediary
received and retained benefits “in the form
of payments for the exorbitant force-placed
insurance premiums.” 6 F. Supp. 3d at
1318.
Moreover, even if Plaintiffs alleged that
Defendants had converted Plaintiffs’ money,
their conversion claim would still be
dismissed against GTS for the additional
reason that, under Florida law, a breach of
contract cannot form the basis of a tort claim
for conversion. See Kee v. Nat’l Reserve
Life Ins. Co., 918 F.2d 1538, 1541 (11th Cir.
1990); Fla. Coll. of Osteopathic Med., Inc.
v. Dean Witter Reynolds Inc., 982 F. Supp.
862, 866 (M.D. Fla. 1997) (“[W]here the
facts surrounding a breach of contract action
are indistinguishable from an alleged tort,
and where the alleged tort does not cause
harm distinct from that caused by the breach
of contract, a plaintiff is barred from
bringing a separate tort action.”). This
limitation is based on the concept that
“contract principles are more appropriate
than tort principles to resolve purely
economic claims.” Eye Care Int’l, Inc. v.
Underhill, 92 F. Supp. 2d 1310, 1314 (M.D.
Fla. 2000). As a result, in order to assert a
claim for conversion where a contractual
relationship exists, the “conversion must go
beyond, and be independent from, a failure
to comply with the terms of a contract.”
Gasparini v. Pordomingo, 972 So. 2d 1053,
1055 (Fla. Dist. Ct. App. 2008).
Accordingly,
the
Court
grants
Defendants’ motion to dismiss the unjust
enrichment claim against all Defendants.
C. Conversion
In their final cause of action, Plaintiffs
allege that Defendants converted money
from Plaintiffs’ mortgage escrow accounts
by “charg[ing] the premium for the forceplaced insurance policy to the [Plaintiffs’]
escrow account.” (FAC ¶¶ 29, 111–13.)5
Under Florida law, conversion is “an
unauthorized act which deprives another of
his property permanently or for an indefinite
time.” Tambourine Comercio Internacional
SA v. Solowsky, 312 F. App’x 263, 271 (11th
Cir. 2009) (internal quotation marks
omitted).
Here, the Court finds that
Plaintiffs’ conversion claim must also be
dismissed.
As an initial matter, Plaintiffs fail to
allege that Defendants converted Plaintiffs’
property. Instead, Plaintiffs merely allege
that GTS “continues to attempt to collect an
Here, it is clear that Plaintiffs’ claim for
conversion relies on the same conduct that
serves as the basis of their breach of contract
claim – namely, that GTS improperly
charged Plaintiffs for the purchase of highpriced force-placed insurance. (See FAC
¶ 113 (alleging that Defendants wrongfully
withdrew funds from borrowers’ mortgage
escrow accounts “in order to fund [their]
5
The Purifoy Mortgage permitted Defendants to
place Plaintiffs’ payments for taxes and assessments,
leasehold payments, and premiums on all insurance
required under Section 5 in an escrow account.
(Purifoy Mortgage § 3.)
14
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