Valandingham v. Springleaf Financial Services et al
Filing
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ORDER GRANTING DEFENDANT BENEFICIAL FINANCIAL'S MOTION TO DISMISS (Doc. 8 ). Beneficial Financial I, Inc. is TERMINATED as a party to this litigation. Signed by Judge Timothy S. Black on 10/31/2016. (mr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
JAMES VALANDINGHAM,
Plaintiff,
Case No. 1:16-cv-649
Judge Timothy S. Black
vs.
SPRINGLEAF FINANCIAL SERVICES, et al.,
Defendants.
ORDER GRANTING
DEFENDANT BENEFICIAL FINANCIAL’S MOTION TO DISMISS (Doc. 8)
This civil action is before the Court on Defendant Beneficial Financial’s 1 motion
to dismiss (Doc. 8) and the parties’ responsive memoranda (Docs. 9, 10).
I.
FACTS AS ALLEGED BY THE PLAINTIFF
For purposes of this motion to dismiss, the Court must: (1) view the complaint in
the light most favorable to the Plaintiff; and (2) take all well-pleaded factual allegations
as true. Tackett v. M&G Polymers, 561 F.3d 478, 488 (6th Cir. 2009).
In 1998 or 1999, Plaintiff James Valandingham and his wife, Kathleen
Valandingham, entered into a home equity loan secured against real property located at
919 Greenwood Lane, Trenton, OH 45067 (the “Loan”). (Doc. 1 at ¶ 2; Ex. 10). The
Loan was originated by Beneficial Mortgage Co. of Ohio. (Id., Ex. 10). Beneficial sold
the Loan to Defendant Springleaf Finance, Inc. on or around April 1, 2013. (Id., Ex. 11).
Springleaf began servicing the loan on or around September 1, 2013. (Id., Ex. 10). On
July 29, 2014, the Loan was discharged under Section 1328(a) of Title 11 of the United
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Plaintiff also sued Defendant Springleaf Financial Services. (See Doc. 1).
States Bankruptcy Code, pursuant to an order issued by the United States Bankruptcy
Court for the Southern District of Ohio. (Id. at ¶ 4; Ex. 1).
More than one year later, on July 31, 2015, Plaintiff sent a Qualified Written
Request (“QWR”) to Beneficial pursuant to RESPA. (Doc. 1, Ex. 3). The QWR
requested certain information regarding Plaintiff’s account. (Id.) Beneficial did not
respond. Plaintiff sent another QWR (through counsel) to Beneficial by letter dated
February 25, 2016. (Id., Ex. 5). Beneficial responded by letters dated December 1, 2015
and January 8, 2016. (Id., Exs. 9, 11). In its response, Beneficial confirmed that it had
sold Plaintiff’s loan to Springleaf in 2013 and provided Springleaf’s contact information.
(Id., Exs. 4, 11).
Plaintiff alleges that the lack of a substantive response left him without answers
about his loan. Plaintiff asserts three claims against Beneficial: (1) violations of RESPA
(Count One); (2) violations of TILA (Count Three); and (3) breach of contract (Count
Four).
II.
STANDARD OF REVIEW
A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) operates to test the
sufficiency of the complaint and permits dismissal of a complaint for “failure to state a
claim upon which relief can be granted.” To show grounds for relief, Fed. R. Civ. P. 8(a)
requires that the complaint contain a “short and plain statement of the claim showing that
the pleader is entitled to relief.”
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While Fed. R. Civ. P. 8 “does not require ‘detailed factual allegations,’ . . . it
demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S.
544 (2007)). Pleadings offering mere “‘labels and conclusions’ or ‘a formulaic recitation
of the elements of a cause of action will not do.’” Id. (citing Twombly, 550 U.S. at 555).
In fact, in determining a motion to dismiss, “courts ‘are not bound to accept as true a
legal conclusion couched as a factual allegation[.]’” Twombly, 550 U.S. at 555 (citing
Papasan v. Allain, 478 U.S. 265 (1986)). Further, “[f]actual allegations must be enough
to raise a right to relief above the speculative level[.]” Id.
Accordingly, “[t]o survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
face.’” Iqbal, 556 U.S. at 678. A claim is plausible where “plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. Plausibility “is not akin to a ‘probability requirement,’
but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.
“[W]here the well-pleaded facts do not permit the court to infer more than the mere
possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the
pleader is entitled to relief,’” and the case shall be dismissed. Id. (citing Fed. Rule Civ.
P. 8(a)(2)).
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III.
ANALYSIS
A. RESPA Claim
A QWR is a correspondence that “identifies a borrower’s account and ‘includes a
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.’” Both v. CitiMortgage Inc., 756 F.3d 178, 181 (2d Cir. 2014)
(quoting 12 U.S.C. § 2605(e)(1)(B)(ii)). “Under RESPA, a servicer of a federally related
mortgage loan may be liable for damages to a borrower if it fails to adequately respond to
a qualified written request[.]” Berneike v. CitiMortgage, Inc., 708 F.3d 1141, 1145 (10th
Cir. 2013). A “servicer” is defined as “the person responsible for servicing of a loan,”
and “servicing” means “receiving any scheduled periodic payments from a borrower
pursuant to the terms of any loan[.]” 12 U.S.C. § 2605(i)(2), (i)(3).
A QWR is “untimely” if it is “delivered to a servicer more than one year after
servicing for the mortgage loan that is the subject of the information request was
transferred from the servicer receiving the request for information to a transferee
servicer.” 12 C.F.R. § 1024.36(f)(1)(v)(A). Here, Plaintiff sent his first QWR to
Beneficial on July 31, 2015. (Doc. 1 at ¶ 4). However, Beneficial transferred the
servicing rights to the Loan to Springleaf no later than September 1, 2013. (Id., Ex. 11).
Therefore, Plaintiff’s QWRs were untimely and Beneficial cannot be held liable for
violations of RESPA. See, e.g., Jones v. Wells Fargo Home Mortg. Inc., No. 10-c-0008,
2014 U.S. Dist. LEXIS 110838, at *12 (N.D. Ill. Aug. 12, 2014) (“[A]t the time ASC
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received Ms. Jones’s letter, ASC had ceased servicing Ms. Jones’s Mortgage Loan and
ASC was no longer bound by RESPA requirements to furnish Ms. Jones information.”);
Kassem v. Ocwen Loan Servicing, LLC, No. 1:14cv11143, 2015 U.S. Dist. LEXIS
124883, at *24-25 (Sept. 18, 2015) (E.D. Mich. Sept. 18, 2015) (RESPA claim “not
plausible” where QWR was sent on October 28, 2013, but defendant transferred servicing
rights more than one year before).
Plaintiff argues that there is no provision in RESPA that permits a servicer to
ignore or not respond to a QWR. However, since Beneficial was not the servicer when it
received the QWRs, it had no duty to furnish Plaintiff information. Furthermore, “a
servicer is not required to comply with the requirements [of RESPA] if…the information
request is delivered to a servicer more than one year after…the mortgage loan is
discharged.” 12 C.F.R. § 1024.36(f)(1)(v)(B). Here, Plaintiff’s Loan was discharged on
July 29, 2014. (Doc. 1 at ¶ 3). Plaintiff’s first QWR to Beneficial was not sent until July
31, 2015, more than one year later. For this separate and independent reason, Plaintiff’s
QWRs were also untimely and insufficient to give rise to liability under RESPA.
Accordingly, Plaintiff’s claim for violations of RESPA fail as a matter of law.
B.
Breach of Contract
One of the terms of the mortgage contract between Plaintiff and Beneficial was
that the mortgagee shall abide by federal law and regulations, including RESPA.
Accordingly, Plaintiff claims that Beneficial breached the contract when it failed to
properly respond to Plaintiff’s QWRs. However, since Beneficial was not the “servicer”
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and the QWRs were untimely, Beneficial could not have breached any contractual
clauses requiring compliance with RESPA.
Therefore, Plaintiff’s breach of contract claim fails as a matter of law.
C. TILA Claim
Finally, Plaintiff asserts a claim against Beneficial under the Truth in Lending Act
(“TILA”). (Doc. 1 at ¶¶ 84-86). TILA requires a servicer to respond to a written request
“to the best knowledge of the servicer, with the name, address, and telephone number of
the owner of the obligation or the master servicer of the obligation.” 15 U.S.C.
§ 1641(f)(2). Plaintiff alleges that Beneficial violated the TILA by failing to provide him
with Springleaf’s contact information (to whom Beneficial sold the Loan and transferred
the servicing rights).
“Upon written request by the obligor, the servicer shall provide the obligor, to the
best knowledge of the servicer, with the name, address, and telephone number of the
owner of the obligation or the master servicer of the obligation.” 15 U.S.C. § 1641(f)(2).
“[A]ny creditor who fails to comply with any requirement imposed [by
TILA]…including any requirement under…subsection (f) or (g) of section 1641…is
liable[.]” 15 U.S.C. § 1640(a). “Although the Act does not contain a time limit for
providing the information, courts have concluded that a violation occurs either after a
reasonable time has passed since the obligor sent a request without the servicer having
sent any response, or…when the servicer sends an inadequate response to that request.”
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Marais v. Chase Home Fin., LLC, No. 2:11cv314, 2012 U.S. Dist. LEXIS 137893, at *9
(S.D. Ohio), rev’d in part on other grounds, 736 F.3d 711 (6th Cir. 2013).
As the Court discussed supra at Section III.A, since Beneficial was not the
“servicer” when it received Plaintiff’s QWR requests, it cannot be held liable under
TILA. Accordingly, Plaintiff’s TILA claims fail as a matter of law.
IV.
CONCLUSION
For these reasons, Defendant Beneficial’s motion to dismiss (Doc. 8) is
GRANTED and Beneficial Financial I, Inc. is TERMINATED as a party to this
litigation.
IT IS SO ORDERED.
10/31/16
Date: ___________
________________________
Timothy S. Black
United States District Judge
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