Jent et al v. BAC Home Loans Servicing, LP

Filing 18

OPINION AND ORDER denying 8 Motion for Partial Judgment on the Pleadings. Signed by Judge S Arthur Spiegel on 7/21/2011. (km1)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
EVAN JENT, et al.,
Plaintiffs,
v.
BAC HOME LOANS SERVICING, LP,
Defendant.

:
:
:
:
:
:
:
:
:
:
:

NO. 1:10-CV-00783

OPINION AND ORDER

This matter is before the Court on Defendant’s Motion for
Partial Judgment on the Pleadings(doc. 8), Plaintiffs’ Response in
Opposition (doc. 13), and Defendant’s Reply (doc. 15).

For the

reasons indicated herein, the Court DENIES Defendant’s Motion for
Partial Judgment on the Pleadings.
I.

Background
Evan and Whitney Jent (“Plaintiffs”) had a mortgage on

their home serviced by Taylor Bean & Whitaker (“TBW”) (doc. 1). In
August 2009, Plaintiffs refinanced their mortgage debt with First
Residential Mortgage Network and allege that the funds from this
transaction were sent to TBW to fulfill their mortgage debt (Id.).
In their Complaint, Plaintiffs allege that TBW filed bankruptcy
around the same time, and Defendant BAC Home Loans Servicing
(“BACHLS”) then became the servicer of the debt (Id.).

Defendant

did not initially credit the refinancing money to the Jents’ TBW
mortgage, and Plaintiffs allege Defendant consequently brought a

wrongful foreclosure action in the Hamilton County, Ohio, Court of
Common Pleas on March 31, 2010 (Id.).

The foreclosure action was

withdrawn just over a week later, on April 9, 2010 (Id.).
In
alleging

November

2010,

Plaintiffs

filed

their

Complaint

seven causes of action, including: (1) violation of the

Fair Debt Collection Practices Act (“FDCPA”; 15 U.S.C. § 1692a),
(2)

violation

of

the

Real

Estate

Settlement

Procedures

Act

(“RESPA”; 12 U.S.C. § 2605), (3) negligent servicing, (4) breach of
contract and the covenant of good faith and fair dealing, (5)
violation of the Ohio Consumer Sales Practices Act (“OCSPA”; O.R.C.
§ 1345.01), (6) wrongful acceleration, and (7) wrongful foreclosure
(Id.).
On March 29, 2011, Defendant filed the instant Motion for
Partial Judgment on the Pleadings pursuant to Fed. R. Civ. P.
12(c), attacking Counts V-VII, that is, Plaintiffs’ OCSPA and tort
claims (doc. 8). Defendant contends it is not subject to the OCSPA
(Count V) for three reasons (Id.).

First, Defendant argues that

its relationship with Plaintiffs does not subject it to the OCSPA
because the transaction at issue in this case was a pure real
estate transaction and such transactions are outside the scope of
the act (Id., citing Brown v. Liberty Clubs, Inc., 45 Ohio St.3d
191, 193, 543 N.E.2d 783 (1989)). Second, Defendant argues the
exceptions to Brown created by certain 2007 amendments to the OCSPA
did not include mortgage servicers (Id.).

2

Under the amended

version, Defendant notes the statute states that to be a “supplier”
in the context of a mortgage transaction, and thus subject to the
OCSPA, a company must be a “nonbank mortgage lender.”

Defendant

contends that mortage servicers, like itself, do not fall within
such

definition.

Finally,

Defendant

argues

that

the

OCSPA

specifically excludes subsidiaries of national banks, and because
it is a subsidiary of Bank of America, it cannot be subject to the
OCSPA1

(Id.).
Plaintiffs responded that Defendant is a “supplier” under

relevant case law and consequently is subject to the OCSPA (doc.
13; citing Dowling v. Litton Loan Servicing, 2006 U.S. Dist. LEXIS
87098 (Dec. 1, 2006 S.D. Ohio)).
broadly

defines

“supplier”

as

In Plaintiffs’ view, the OCSPA
“a

seller,

lessor,

assignor,

franchisor, or other person engaged in the business of effecting or
soliciting consumer transactions,” a definition that would include
Defendant (Id. citing O.R.C. § 1345.01(C). In addition, Plaintiffs
allege

that

the

transaction

was

not

purely

a

real

estate

transaction, but instead also included a consumer transaction

1The term “mortgage broker,” according to the OCSPA, “does
not include a bank, savings bank, savings and loan association,
credit union, or credit union service . . . [or] a subsidiary of
such a bank, savings bank, savings and loan association, credit
union, or credit union service” or one that is affiliated with
such an institution and is controlled by it. O.R.C. §
1345.01(J)(2).

3

component2

(doc.

13).

According

to

Plaintiffs,

even

if

the

transaction is determined to be solely a real estate transaction,
that is a determination for a jury to make and is not appropriate
for a 12(c) motion (Id. citing Brown v. Liberty Clubs, Inc., 543
N.E.2d 783 (Ohio 1989)).

Furthermore, Plaintiffs contend the act

of attempting to collect payments should subject Defendant to
liability. (Id. citing
(1998)).

Estep v. Johnson, 123 Ohio. App. 3d 307

Additionally, Plaintiffs argue that seeking to collect a

debt not owed is a violation of the FDCPA, and violations of the
FDCPA

are

subject

to

the

OSCPA

(doc.

13,

citing

Becker

v.

Montgomery, Lynch, 2003 U.S. Dist. LEXIS 24992 (February 26, 2003,
N.D. Ohio)).
As for the remainder of its attack, on Counts VI and VII,
Defendant argues that Plaintiffs cannot bring their tort causes of
action under Ohio law (Id.).

Defendant contends such counts are

based on contract theories, and under Ohio law, Plaintiffs cannot
2

O.R.C. § 1345.01(A) defines “consumer transaction” as “a
sale, lease, assignment, award by chance, or other transfer of an
item of goods, a service, a franchise, or an intangible, to an
individual for purposes that are primarily personal, family, or
household . . . .” More significantly, a consumer transaction
includes “transactions in connection with residential mortgages
between loan officers, mortgage brokers, or nonbank mortgage
lenders and their customers.” O.R.C. § 1345.01(A). However,
O.R.C. does not include mortgage servicers explicitly into its
definitions of any of those terms. A pure real estate
transaction is not subject to the OSCPA. In a mixed transaction,
the OSCPA is applicable only to that portion of the transaction
that involves personal property or services. Childs v. Charske,
822 N.E.2d 853 (Ohio 2004); Brown v. Liberty Clubs, Inc., 543
N.E.2d 783 (Ohio 1989).
4

bring a contract case as a tort claim (Id.).

In response,

Plaintiffs assert their right to plead in the alternative according
to Federal Rule of Civil Procedure 8(d) (Id.).

Consequently,

Plaintiffs argue that their contract and tort claims can be brought
alternatively in the same action (Id.).
In Defendant’s Reply in Support of their Motion for
Partial Judgment on the Pleadings, Defendant denies Plaintiffs’
assertions and reiterates its position that Plaintiffs have failed
to state a claim under the OCSPA (doc. 15).

As a result, Defendant

contends it is entitled to judgment on the pleadings with respect
to Counts V-VII (Id.).
II.

Applicable Legal Standard
The

standard

of

review

applicable

to

a

motion

for

judgment on the pleadings under Rule 12(c) is the same de novo
standard that is applicable to a motion to dismiss under Rule
12(b)(6) (See United Food and Commercial Workers Local 1099 v. City
of Sidney, 364 F.3d 738, 745 (6th Cir. 2004) citing Ziegler v. IBP
Hog Mkt., 249 F.3d 509, 11-12 (6th Cir. 2001)). A motion to dismiss
pursuant to Federal Rule of Civil Procedure 12(b)(6) requires the
Court to determine whether a cognizable claim has been pled in the
complaint.

The basic federal pleading requirement is contained in

Fed. R. Civ. P. 8(a), which requires that a pleading "contain . .
. a short and plain statement of the claim showing that the pleader
is entitled to relief."

Westlake v. Lucas, 537 F.2d 857, 858 (6th

5

Cir. 1976); Erickson v. Pardus, 551 U.S. 89 (2007).

In its

scrutiny of the complaint, the Court must construe all well-pleaded
facts liberally in favor of the party opposing the motion. Scheuer
v. Rhodes, 416 U.S. 232, 236 (1974). A complaint survives a motion
to dismiss if it “contain[s] sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.”
Courie v. Alcoa Wheel & Forged Products, 577 F.3d 625, 629-30 (6th
Cir. 2009), quoting Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009),
citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).
A motion to dismiss is therefore a vehicle to screen out
those

cases

implausible.

that

are

impossible

as

well

as

those

that

are

Courie, 577 F.3d at 629-30, citing Robert G. Bone,

Twombly, Pleading Rules, and the Regulation of Court Access, 94
IOWA L. REV. 873, 887-90 (2009).

A claim is facially plausible

when the plaintiff pleads facts that allow the court to draw the
reasonable inference that the defendant is liable for the conduct
alleged.

Iqbal, 129 S.Ct. at 1949.

Plausibility falls somewhere

between probability and possibility. Id., citing Twombly, 550 U.S.
at 557.

As the Supreme Court explained,

“In keeping with these principles a court considering a motion
to dismiss can choose to begin by identifying pleadings that,
because they are no more than conclusions, are not entitled to
the assumption of truth. While legal conclusions can provide
the framework of a complaint, they must be supported by
factual allegations. When there are well-pleaded factual
allegations, a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement
to relief.” Id. at 1950.

6

The

admonishment

to

construe

the

plaintiff's

claim

liberally when evaluating a motion to dismiss does not relieve a
plaintiff of his obligation to satisfy federal notice pleading
requirements
conclusions.

and

allege

Wright,

more

Miller

than
&

Procedure: § 1357 at 596 (1969).

bare

Cooper,

assertions
Federal

of

legal

Practice

and

"In practice, a complaint . . .

must contain either direct or inferential allegations respecting
all of the material elements [in order] to sustain a recovery under
some viable legal theory."

Car Carriers, Inc. v. Ford Motor Co.,

745 F.2d 1101, 1106 (7th Cir. 1984), quoting In Re: Plywood
Antitrust Litigation, 655 F.2d 627, 641 (5th Cir. 1981); Wright,
Miller & Cooper, Federal Practice and Procedure, § 1216 at 121-23
(1969).

The United States Court of Appeals for the Sixth Circuit

clarified the threshold set for a Rule 12(b)(6) dismissal:
[W]e are not holding the pleader to an impossibly high
standard; we recognize the policies behind Rule 8 and the
concept of notice pleading.
A plaintiff will not be
thrown out of court for failing to plead facts in support
of every arcane element of his claim.
But when a
complaint omits facts that, if they existed, would
clearly dominate the case, it seems fair to assume that
those facts do not exist.
Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 437 (6th
Cir. 1988).

7

III. Analysis
The Court notes that the question of whether mortgage
servicers fall within the “supplier” definition of the OCSPA is an
unsettled question under Ohio law, as at least one court has found
in the affirmative, while another has recommended certification of
such question to the Ohio Supreme Court.

Dowling v. Litton Loan

Servicing, 2006 U.S. Dist. LEXIS 87098 (Dec. 1, 2006 S.D. Ohio))
(explaining that there is no clear statutory reason to not include
mortgage servicers in the purview of the OCSPA); but see

Anderson

v. Barclays Capital Real Estate, Inc., 2010 WL 2541807, (N.D. Ohio
2010) (declining to extend the Dowling holding and recommending
certification on the question of whether a mortgage servicer is a
supplier for purposes of the OCSPA to the Ohio Supreme Court).
This Court is inclined to follow Dowling and rejects
Defendant’s narrow interpretation of the OCSPA. Under the facts of
this case, it is clear that Defendant is a “person engaged in the
business of effecting. . .consumer transactions,” and is therefore
subject to the OCSPA.

O.R.C. § 1345.02(C).

The Court further

finds well-taken Plaintiffs’s contention that the transaction was
not a pure real estate transaction, and instead was a mixed
transaction because it involved a provision of servicing and
payment collection services, to which the OCSPA applies with
respect to the portion of the transaction involving services and
personal property.

Brown, 543 N.E.2d 783.
8

Finally, the Court

agrees with Plaintiffs that Defendant’s claim lacks merit that its
status as a subsidiary of a national bank excludes it from the
OSCPA’s

prohibitions.

Defendant

incorrectly

interprets

the

exclusion of subsidiaries from the definitions of “loan officer,”
mortgage broker,” and “nonbank mortgage lender,” in O.R.C. §
1345.01(H)(2), (J)(2), and (K), to somehow apply to “suppliers,”
that is, those who are engaged in the business of effecting
consumer transactions.

In conclusion, therefore, the Court finds

that Plaintiffs’ Complaint pleads facts to state a claim under the
OCSPA entitled to relief that is plausible on its face.

Twombley,

550 U.S. 544 (2007).
Defendant’s arguments as to Counts VI and VII also fail.
Though Defendant argues that Ohio law does not permit bringing a
tort claim when a contract cause of action exists, Plaintiffs
correctly state that under Rule 8(d) they may plead contract and
tort causes of action in the alternative.
or

more

statements

of

a

claim

or

“A party may set out two

defense

alternatively

or

hypothetically, either in a single count or defense or separate
ones.”

Fed. R. Civ. P. 8(d)(2).

Consequently, the Court rejects

Defendant’s attack as to Counts VI and VII.
IV.

Conclusion
Having reviewed this matter, the Court does not find

Defendant’s

motion

for

judgment

on

the

pleadings

well-taken.

Plaintiffs have sufficiently alleged their cause of action under

9

the

OCSPA

and

alternative.

their

tort

theories

may

be

pleaded

in

the

Accordingly, the Court DENIES Defendants’ Motion for

Partial Judgment on the Pleadings (doc. 8).

SO ORDERED.
Dated: July 21, 2011

s/S. Arthur Spiegel
S. Arthur Spiegel
United States Senior District Judge

10