Starkey et al v. JP Morgan Chase Bank N.A.

Filing 9

ORDER granting 6 Motion to Dismiss. Plaintiffs' complaint is dismissed with prejudice. Signed by Judge Sandra S Beckwith on 12/18/13. (mb)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
Joseph and Barbara Starkey,
Plaintiffs,
vs.
JP Morgan Chase Bank, N.A.,
Defendant.

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Case No. 1:13-cv-694

ORDER
Before the Court is Defendant’s motion to dismiss Plaintiffs’ complaint pursuant
to Fed. R. Civ. Proc. 12(b)(6). (Doc. 6) Plaintiffs oppose the motion (Doc. 7), and
Defendant has filed a reply. (Doc. 8) For the following reasons, the Court will grant
Defendant’s motion.
FACTUAL BACKGROUND
Joseph and Barbara Starkey filed a complaint in this Court on September 26,
2013, alleging several federal and state claims against JP Morgan Chase Bank, N.A.
(“Chase”). According to their complaint, the Starkeys obtained a mortgage from Bank
One, N.A., in 1999 for their property at 7970 Pippin Road in Cincinnati. Sometime
thereafter, Chase bought Bank One, and in 2008 the two banks merged.
Plaintiffs filed a Chapter 13 bankruptcy petition on September 5, 2001, and they
were discharged from that proceeding on February 27, 2004. During the bankruptcy
proceeding, their lawyer discovered that the Bank One mortgage had never been
recorded in Hamilton County. They disclosed this fact to the bankruptcy court, and their
Chapter 13 confirmed plan included payments to Bank One as a general unsecured

creditor. They believe and allege that Bank One was paid $45,000 between 2001 and
2004 through their Trustee’s disbursements.
After their Chapter 13 discharge, Plaintiffs sought and received a new mortgage
and promissory note covering the Pippin Road property with Integrity Funding
Corporation. This mortgage in the amount of $91,000 was executed in August 2004,
and was recorded in Hamilton County’s records. Chase filed a notice of assignment of
that mortgage in September 2004, and Plaintiffs aver that Chase has held the interest in
that mortgage from that date to the present. Plaintiffs filed another Chapter 13
bankruptcy petition in June 2007, and were discharged from that case in June 2012.
The Chase mortgage was disclosed on Schedule D of their petition and no arrearage on
that mortgage was scheduled in their plan. They believe and allege that Chase did not
file a proof of claim in their case in order to assert any arrearage.
Chase sent a letter to Plaintiffs dated September 13, 2012, which stated at the
top (in bold letters): “WE ARE CANCELLING THE REMAINING AMOUNT YOU OWE
CHASE!” (Doc. 1, Ex. C) The letter said that Chase was cancelling the balance due
on the Plaintiffs’ mortgage (account number ending in 2037) “as a result of a recent
mortgage servicing settlement reached with the states and federal government. This
means you will owe nothing more on the loan and your debt will be cancelled.
You don’t need to sign or return anything for this to happen.” (Id; emphasis in
original) Plaintiffs called Chase about the letter; they allege “upon information and
belief” that they were told it pertained to their 2004 mortgage, originally entered into with
Integrity Funding and then assigned to Chase. They stopped making payments on that

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mortgage as a result of the letter. Sometime in early 2013, Plaintiffs began receiving
delinquent payment notices from Chase. They allege that one of these notices is
attached as Exhibit D to the complaint. Exhibit D is an Annual Escrow Account
Disclosure statement dated August 6, 2013 that pertained to the Starkeys’ loan number
ending in 5399 (a different number than the number on the September 2012 letter). The
statement informed Plaintiffs that their escrow balance for that account was insufficient,
and offered them three options to satisfy the escrow shortage (pay all of it in one lump
sum; pay part now and divide the rest among subsequent mortgage payments; or pay
nothing now and divide the arrearage among the next 12 mortgage payments).
Plaintiffs then began researching the National Mortgage Settlement. They sent
an email to the Ohio Attorney General’s Office and a letter to Chase in April 2013 “in
response to the inconsistencies with the mortgage release and the account statements.”
(Compl. ¶ 20) According to the complaint, Chase responded in a letter on April 17,
2013 that (1) Chase had released the 1999 mortgage; (2) Chase asserted its right to
continue to collect payments on the 2004 mortgage; and (3) Chase sent Plaintiffs the
account history for the 1999 mortgage. (Id., ¶21) That account history is attached to
the complaint as Exhibit E, and its last entry is in 2005. Not satisfied with Chase’s
response, Plaintiffs filed an online complaint with the federal Consumer Financial
Protection Bureau on or about May 22, 2013. They allege that Chase responded to the
CFPB inquiry on or about June 17, 2013 in a manner substantially similar to Chase’s
April 17, 2013 letter to Plaintiffs. Chase also provided a copy of the 2004 note and
mortgage.
Plaintiffs allege that they continued to dispute Chase’s assertion because the
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1999 loan was never recorded and Bank One was treated as an unsecured creditor.
They allege that the only loan they had with Chase in 2012 was the 2004 mortgage.
They further allege that they are concerned that they are going to lose their home
because they do not know what Chase is trying to collect, and because they sincerely
believe that Chase intended to release the 2004 mortgage. (Compl. ¶¶ 24-26)
Plaintiffs allege five claims against Chase arising from these allegations. Count
One is a claim under the Real Estate Settlement Procedures Act (“RESPA”), alleging a
dispute about the validity of Chase’s responses to their inquiries concerning the
mortgage. Their second claim for relief asserts that Chase violated the Making Home
Affordable Program (“HAMP”) and the National Mortgage Settlement. Their third claim
alleges common law fraud, and the fourth claim alleges conversion and unjust
enrichment. Their fifth claim is an action to quiet title to their property, pursuant to Ohio
Rev. Code 5303.01.
Chase moves to dismiss all of Plaintiffs’ claims, contending that the allegations of
the complaint fail to state a plausible claim for relief on any of the grounds raised.
ANALYSIS
Standard of Review
In reviewing a motion to dismiss under Rule 12(b)(6), the Court accepts the
complaint’s well-pleaded factual allegations. A claim will survive if those allegations are
“enough to raise a right to relief above the speculative level on the assumption that all of
the complaint's allegations are true.” Jones v. City of Cincinnati, 521 F.3d 555, 559 (6th
Cir. 2008), citing Bell Atlantic Corp. v. Twombly, 550 U.S.544 (2007). Twombly
essentially retired Rule 8's permissive “no-set-of-facts” pleading standard set forth in
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Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The Twombly court found that literal
application of that standard impermissibly permits wholly conclusory claims to survive
Rule 12 challenges. And in Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Supreme Court
expressly held that a complaint will survive a Rule 12 challenge only if its well-pleaded
factual allegations are sufficient to state a claim for relief that is plausible on its face.
Facial plausibility requires pleading facts that permit a reasonable inference that the
defendant is liable for the alleged misconduct. If a complaint pleads facts that are
“merely consistent with” a defendant’s liability, it “stops short of the line between
possibility and plausibility of ‘entitlement to relief.’” Id. at 678 (quoting Twombly, 550
U.S. at 557).
Federal Statutory Claims
RESPA: The Sixth Circuit has noted that Congressional intent in adopting
RESPA was “to insure that consumers throughout the nation are provided with greater
and more timely information on the nature and costs of the settlement process and are
protected from unnecessarily high settlement charges caused by certain abusive
practices that have developed in some areas of the country.” Marais v. Chase Home
Finance LLC, — F.3d —, 2013 Fed. App. 0332P (6th Cir., Nov. 26, 2013)(internal
citations omitted). As pertinent here, RESPA requires a mortgage servicer to promptly
respond to a borrower’s “qualified written request” for information about the borrower’s
account and any charges thereto. 12 U.S.C. § 2605(e)(1)(B) defines a “qualified written
request” as “... a written correspondence, other than notice on a payment coupon or
other payment medium supplied by the servicer, that (I) includes, or otherwise enables
the servicer to identify, the name and account of the borrower; and (ii) includes a
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statement of the reasons for the belief of the borrower, to the extent applicable, that the
account is in error or provides sufficient detail to the servicer regarding other information
sought by the borrower.” Prior to recent statutory amendments, the lender/servicer
must acknowledge receipt of a QWR within ten days, and must specifically respond
within 60 days, pursuant to Section 2605(e)(2). A failure to comply with the statute’s
requirements renders the servicer liable for actual damages to the borrower; if there is a
pattern or practice of noncompliance, additional damages may be awarded up to
$1,000.1
Chase contends that Plaintiffs’ complaint fails to establish that they sent a
“qualified written request” to Chase. It cites several cases finding that a plaintiff must
affirmatively plead facts showing that the written request satisfied the statutory
requirements. See, e.g., Hurd v. BAC Home Loans Servicing, LP, 800 F.Supp.2d 747
(N.D. Texas 2012), where the plaintiff alleged that she sent a letter “... requesting
documents, disputing the amount of the alleged debt, and requesting confirmation that
Defendant was a holder in due course of a wet ink original promissory note and deed of
trust ...”. The district court found that her allegations did not plausibly show that her
letter was a “qualified written request” to her lender.
Here, Plaintiffs’ complaint alleges that they sent “a letter to [Chase] on or about
April 7, 2013 in response to the inconsistencies with the mortgage release and the
account statements.” And they allege that Chase responded to them on April 17, 2013,

1

The amendments shorten the acknowledgment time to five days from ten, the
response time from 60 days to 30 days, and the additional damages limit increases from
$1,000 to $2,000.
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providing information about their account history and how it treated their 1999 and 2004
mortgages. (Compl. ¶¶ 20-21) While the complaint does not explicitly allege that
Plaintiffs sent a “written communication” that “explained their belief” that their account
was in error, their allegations that they sent a letter questioning their account, and that
Chase responded with specific information about their account, is sufficient to satisfy
those statutory requirements.
Chase further argues that even if Plaintiffs sent a proper QWR, Chase did not
violate RESPA when it explained its position regarding Plaintiffs’ account. Plaintiffs
allege that they were “not satisfied” with Chase’s response because they disagree with
Chase’s substantive position regarding the mortgage release letter. RESPA section
2605(e)(2)(B)(i) requires servicers to timely respond to borrowers’ inquiries, and to
provide “a statement of the reasons for which the servicer believes the account of the
borrower is correct.” It does not impose any other substantive duties. Chase cites
Vassalotti v. Wells Fargo Bank, N.A., 732 F.Supp.2d 503, 509 (E.D. Pa. 2010), where
the district court dismissed a RESPA claim because the servicer had responded to the
borrower’s QWR and explained the reasons for its treatment of her loan. The district
court noted: “A reasonable explanation of the servicer’s belief is sufficient, even if it is
later determined that the belief is erroneous.” Id. at 509.
Plaintiffs expressly concede that Chase responded to their written requests for
information, but they “dispute the validity of these responses.” (Compl. ¶ 28) RESPA
does not impose a substantive duty on the servicer to correct Plaintiffs’ account when
the servicer has explained its reasonable belief that its position is correct. Plaintiffs’
allegations simply do not plausibly allege a claim arising under RESPA. Plaintiffs’ first
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claim for relief is therefore dismissed.
HAMP: In their second claim for relief, Plaintiffs allege that Chase violated
HAMP and the National Mortgage Settlement. Chase argues that there is no private
right of action under HAMP. The National Mortgage Settlement was a consent decree
entered into between the United States and five mortgage servicers; see United States
v. Bank of America, N.A., et al, Case No. 12-CV-0361 (D.D.C., April 5, 2012). Plaintiffs
were not a party to the decree, and cannot bring a claim to enforce it much less to
collect any damages as a result of any alleged breach.
Plaintiffs concede that case law almost uniformly holds that there is no private
right of action under HAMP. They urge this Court to consider Wigod v. Wells Fargo
Bank, N.A., 673 F.3d 547 (7th Cir. 2012), and Corvello v. Wells Fargo Bank, N.A., 728
F.3d 878 (9th Cir. 2013). The Court has reviewed both cases, and neither of them find
that HAMP gives rise to a private cause of action, as Plaintiffs suggest. In Wigod, the
Seventh Circuit specifically stated that “HAMP and its enabling statute do not contain a
federal right of action.” Id. at 555. The issue was whether plaintiff’s state law claims for
breach of contract and promissory estoppel arising out of a loan modification offered to
her by Wells Fargo pursuant to the HAMP program were preempted by federal law; the
court of appeals found they were not. Similarly, in Corvello, plaintiff alleged state law
claims arising from a HAMP loan modification, and not a free-standing claim under
HAMP.
Plaintiffs suggest in their response brief that there “could be a plausible” claim
under the National Mortgage Settlement, although they cite no authority for such
speculation. Chase cites Habib v. Bank of America, N.A., 2013 U.S. Dist LEXIS 98168
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(E.D. Mich., July 15, 2013), where the district court dismissed plaintiffs’ claim for specific
performance of the National Mortgage Settlement, because they were not parties to that
decree and could not bring an enforcement action as a third-party beneficiary. This
Court concurs with the district court’s cogent analysis in that case. Plaintiffs’ claims
under HAMP and the National Mortgage Settlement are dismissed.
Common Law Fraud
In their third claim for relief, Plaintiffs allege that Chase knowingly defrauded
them by failing to properly respond to their QWRs, by providing a false account history
for the 1999 mortgage, by sending the September 2012 mortgage release letter
concerning the “wrong obligation,” by failing to properly respond to the CFPB, and by
“engaging in a pattern in misstating and misrepresenting the status of the 2004
mortgage.” (Compl. ¶ 42)
The elements of a common law fraud claim in Ohio are: (1) a representation of
fact, or concealment when a duty to disclose exists, (2) that is material, (3) that is false
and made with knowledge of its falsity, or made with such disregard for its truth that
knowledge of the falsity is inferred, (4) that is made with intent to mislead, (5) that
induces justifiable reliance on the representation, and (6) that proximately causes
damages. See, e.g., Gaines v. Preterm-Cleveland, Inc., 33 Ohio St.3d 54, 55, 514
N.E.2d 709 (1987). Fed. R. Civ. Proc. 9(b) requires plaintiffs to plead the circumstances
of the fraud with particularity; at a minimum they must plead the time, place and content
of the alleged misrepresentation, the defendant’s fraudulent intent, and the resulting
injury.
Chase first argues that Plaintiffs have not alleged an actionable
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misrepresentation of fact. At best, Plaintiffs allege that Chase failed to respond to their
complaints or improperly characterized the status of their 2004 mortgage. Plaintiffs
respond that the factual misrepresentations are contained in “the CFPB letters, account
histories, and September 2012 letters.” It is not enough to cite a document or a letter;
Plaintiffs do not identify any facts that they allege were misrepresented. Plaintiffs
clearly disagree with Chase’s position about which mortgage loan the September 2012
mortgage release letter pertained to, but that is not sufficient to allege a factual
misrepresentation.
Chase further contends that Plaintiffs have not plausibly alleged detrimental
reliance on any fraudulent misrepresentation. Plaintiffs allege that they relied on
Chase’s September 13, 2013 letter and stopped making payments on their 2004
mortgage, but ceasing loan payments is not a detriment. Plaintiffs suggest in their
response brief that they have pled detrimental reliance because they may have paid
twice on their mortgage, or because they believed that Chase released their 2004 loan.
Plaintiffs clearly disagree with Chase’s explanation that its 2012 letter released the 1999
mortgage; but that disagreement does not amount to a plausible allegation of
detrimental reliance for purposes of pleading fraud. See, e.g., Evans v. Pearson
Enters., 434 F.3d 839 (6th Cir. 2006), affirming the dismissal of plaintiff’s fraud claim
and noting: “Conclusory statements of reliance are not sufficient to explain with
particularity how [plaintiff] detrimentally relied on the alleged fraud ...”. Id. at 852-853
(internal citation omitted).
Plaintiffs’ allegations fail to satisfy the particularity requirements of Rule 9(b). At
best, they have pled a disagreement with Chase’s position concerning the mortgage
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release letter. The well-pled factual allegations do not support a plausible claim that
Chase engaged in a scheme of intentional fraud. Plaintiff’s common law fraud claim is
therefore dismissed.
Conversion and Unjust Enrichment
Plaintiffs’ fourth claim alleges that they made payments to Bank One as a
general unsecured creditor from 1999 through 2005. In 2012, Chase provided them an
account history of that 1999 mortgage in response to their QWR. Plaintiffs allege that
by accepting the payments on a discharged debt, “Bank One converted Plaintiffs’ funds.
By admitting the existence of this mortgage note in September 2012 through the
mortgage release, Chase is also admitting the existence of the collection of a
discharged debt and the misappropriation of Plaintiffs’ funds.” (Compl. ¶¶ 47-48) They
also allege that Chase was unjustly enriched because it “applied funds and failed to
provide a full and accurate account history.” (Id. at 49)
Ohio law provides a four-year statute of limitations for actions not arising from
contract, including conversion and unjust enrichment. An action for “wrongful taking of
personal property” does not accrue “until the wrongdoer is discovered[.]” Ohio Rev.
Code 2305.09(B). The discovery rule applies to the discovery of facts or of injury.
Lynch v. Dial Finance Co., 101 Ohio App.3d 742, 747 (Ohio App. 1995). Plaintiffs
specifically allege that they knew the Bank One mortgage was not recorded, and that
they made payments to Bank One until 2005. All of those facts must have been
known to them at least by 2005, and their allegation that they first discovered the
payments in 2012 is simply nonsensical. Any claim for conversion of these funds is
clearly time-barred. The same is true with respect to any unjust enrichment claim
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against Chase that arises from Plaintiffs’ payments to Bank One.
Moreover, as Chase’s motion argues, conversion is the “wrongful exercise of
dominion over property in exclusion of the right of the owner, or withholding it from his
possession under a claim inconsistent with his rights. ... In this state, an action for
conversion of money will only lie if identification is possible and there is an obligation to
deliver the specific money in question ...” Haul Transp. v. Morgan, 1995 Ohio App.
LEXIS 2240, *9 (Ohio App. 2d Dist. 1995)(internal citations omitted). Even if these
common law claims were not clearly time-barred, Plaintiffs’ allegations are an
insufficient basis upon which they might be entitled to relief. The fourth claim for relief is
therefore dismissed.
Quiet Title Action
Plaintiffs allege for the fifth cause of action a claim under Ohio Revised Code
5303.01, to “quiet title” to their property. They seek an order from this Court releasing
Chase’s mortgage lien, based upon what they allege is Chase’s “pattern” of “misstating”
their accounts. (Compl. ¶¶ 53-55) Chase contends that a quiet title action cannot be
brought in order to challenge mortgage liens absent a plausible basis to believe that the
mortgage itself is legally invalid. See, e.g., Bank of N.Y. Mellon Trust Co., N.A. v.
Unger, 2012-Ohio-1950 (Ohio 8th Dist. App. 2012), where plaintiff was assigned a
mortgage and subsequently filed a foreclosure suit against the defendants. Defendants
counterclaimed that the mortgage assignment was invalid, and brought a quiet title
action seeking to declare the mortgage itself invalid. Plaintiff’s foreclosure suit was
dismissed, and the court of appeals affirmed the trial court’s summary judgment against
the defendants on the counterclaim. The court held that the defendant-borrowers
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lacked standing to challenge the assignment, as they were not parties to it and the
assignment did not affect their obligations under their mortgage. The court affirmed
dismissal of their quiet title claim because the mortgage itself was simply a lien on the
property, and put other lienholders on notice of that interest. The mortgage was not a
“cloud” on the borrowers’ title, and they were not entitled to an order to “quiet title” on
the property with respect to the mortgage.
In response to these arguments, Plaintiffs accuse Chase of attempting to distort
the facts alleged in their complaint. They assert that their claim arises in equity, based
on the improper collection of the 1999 debt and their own belief that Chase intended to
release their 2004 mortgage. This response does not suggest in any way that the 2004
mortgage and note, which Plaintiffs admit they sought and freely executed (see Compl.
¶ 12), is legally invalid. Chase also notes that Plaintiffs are not entitled to discharge of
that mortgage simply because Plaintiffs believed that Chase’s 2012 letter applied to that
mortgage. Plaintiffs’ fifth claim for relief is therefore dismissed.
CONCLUSION
For all of the foregoing reasons, Defendant’s motion to dismiss Plaintiffs’
complaint and each cause of action contained therein, is GRANTED. Plaintiffs’
complaint is dismissed with prejudice.
SO ORDERED.
THIS CASE IS CLOSED.
DATED: December 18, 2013

s/Sandra S. Beckwith
Sandra S. Beckwith, Senior Judge
United States District Court

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