Iler et al v. Wells Fargo Bank N.A.

Filing 13

REPORT AND RECOMMENDATIONS re 8 Motion to Dismiss for Failure to State a Claim filed by Wells Fargo Bank N.A. IT IS RECOMMENDED THAT Defendant's motion to dismiss 8 be GRANTED; that this case be CLOSED. Objections to R&R due by 6/12/2020. Signed by Magistrate Judge Stephanie K. Bowman on 5/29/2020. (km)

Case: 1:19-cv-00281-DRC-SKB Doc #: 13 Filed: 05/29/20 Page: 1 of 7 PAGEID #: 122

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
KEVIN ILER, et al.,

Case No. 1:19-cv-281

Plaintiffs,
Cole, J.
Bowman, M.J.

vs.
WELLS FARGO, N.A.,
Defendant.

REPORT AND RECOMENDATION

Plaintiffs brought suit for violation of the Fair Debt Collection Practices Act
(“FDCPA”), violation of the Ohio Consumer Sales Practices Act (“CSPA”), and breach of
the duty of good faith and fair dealing. This matter is before the Court upon Defendant’s
Federal Rules of Civil Procedure 12(b)(6) motion to dismiss for failure to state a claim
upon which relief can be granted. (Doc. 8). Plaintiffs filed a motion in opposition. (Doc. 9).
Defendant then filed a reply in support of its motion to dismiss as well as a notice of
supplemental authority. (Docs.10 and 11).
I. FACTUAL AND PROCEDURAL BACKGROUND
Defendant Wells Fargo Bank, N.A. (“Wells Fargo”) is a corporation doing business
in Ohio. (Doc. 1, ¶ 5. Plaintiffs Kevin and Nancy Iler (“the Ilers”) owned property in Mason,
Ohio (“Property”), which was “subject to a mortgage loan provided by Wells Fargo”. Id. at
¶¶ 6-7. In 2008, Mrs. Iler was unemployed and Mr. Iler was the Vice President of
Operations at a company that went out of business that fall. Id. at ¶¶ 9-10. As a result,
Mr. Iler contacted Wells Fargo to discuss applying for Wells Fargo’s Borrower Counseling
Program to modify their mortgage and avoid foreclosure. Id. at ¶¶ 11-17.
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For several months the Ilers remained in frequent contact with Wells Fargo to
request updates on their loan and to submit additional documents as requested by Wells
Fargo. Id. at ¶¶ 19-30. During this time period, the Ilers “refrained from pursuing
alternative means of satisfying [their] mortgage obligations.” Id. at ¶ 28. In January of
2009, Wells Fargo commenced foreclosure proceedings against the Property. Id. at ¶¶
31. The Property was eventually sold for $490,000, which caused the Ilers to lose
$107,000 equity in their home. Id. at ¶¶ 34-35.
During the foreclosure proceedings, Wells Fargo continued to seek information
from the Ilers regarding their loan modification request. Id. at ¶¶ 32-33. As of April 2019,
the Ilers had not received a final decision regarding the approval of their loan modification
request. Id. at ¶ 37.
In 2018, the Charlotte Observer published an article which reported that Wells
Fargo had experienced internal problems resulting in issues with the processing of loan
modification requests.1 Id. at ¶ 38. This alleged glitch occurred “around the same time as
the Ilers’ loan modification request.” Id. After becoming aware of this article, the Ilers’
retained counsel and sent a letter to Wells Fargo inquiring about the Ilers’ application. Id.
at ¶ 39. Despite an additional effort to contact Wells Fargo via email a few weeks later,
Wells Fargo allegedly did not respond. Id. at ¶ 42.
Thereafter, Plaintiffs filed the instant action in April 2019 for violation of the Fair
Debt Collection Practices Act (“FDCPA”), violation of the Ohio Consumer Sales Practices
Act (“CSPA”), and breach of the duty of good faith and fair dealing. Defendant now moves
to dismiss Plaintiffs’ complaint.

1

Though the complaint states that the internal error occurred at this time, the article says the error occurred
between April 2010 and October 2015.

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II. Analysis
A. Standard of Review
Although a complaint need not contain “detailed factual allegations,” it must
provide “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 555 (2007)). The Court must accept all well-pleaded factual allegations as true,
but is not required to “accept as true a legal conclusion couched as a factual allegation.”
Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)).
B. Defendant’ motion to dismiss is well-taken
Wells Fargo argues that it is not subject to the FDCPA because it is not a debt
collector. Wells Fargo also argues that it is not subject to the CSPA because it is a
financial institution. Furthermore, Wells Fargo argues that, even if the FDCPA or the
CSPA did apply to this suit, the claims would still be time-barred. Finally, Wells Fargo
argues that the submission of an application for a loan modification is not a contract.
Plaintiffs contend however, that the CSPA applies to Wells Fargo because the loan
modification process constitutes a consumer transaction, which is covered by the CSPA.
Furthermore, the Ilers argue that the claims are not time-barred because they are subject
to equitable tolling. Finally, the Ilers argue that the conduct between the parties created
a contractual relationship. Plaintiffs’ contentions are unavailing.
To state a claim under the FDCPA, a pleading must allege facts showing: (1) the
plaintiff is a consumer; (2) the debt arises out of a transaction that is primarily for personal,
family, or household purposes; (3) the defendant is a “debt collector” as defined by the
FDCPA; and (4) the defendant violated the FDCPA. Smith v. Nationstar Mortg., LLC, 756

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Fed. Appx. 532, 535-36 (6th Cir. 2018) (citing Wallace v. Wash. Mut. Bank, F.A., 683 F.3d
323, 326 (6th Cir. 2012)). “The legislative history of section 1692a(6) indicates
conclusively that a debt collector does not include the consumer’s creditors . . . or an
assignee of a debt, as long as the debt was not in default at the time it was assigned.”
See Wadlington v. Credit Acceptance Corp., 76 F.3d 103, 106 (6th Cir. 1996) (quoting
Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985)). Here, because the Ilers’
loan was not in default at the time of the alleged FDCPA violation, Wells Fargo would be
considered a creditor and, therefore, not subject to the FDCPA.
Even if Wells Fargo is subject to the FDCPA, the statute of limitations, provided by
the statute, bars this claim. The Ilers correctly note that a “motion under Rule 12(b)(6),
which considers only the allegations in the complaint, is generally an inappropriate vehicle
for dismissing a claim based upon the statute of limitations.” Cataldo v. United States
Steel Corp., 676 F.3d 542, 547 (6th Cir. 2012). “However, dismissal is warranted if the
allegations in the complaint affirmatively show that the claim is time-barred.” Lutz v.
Chesapeake Appalachia, L.L.C., 717 F.3d 459, 464 (6th Cir. 2013) (internal citations and
quotations omitted).
The FDCPA provides that plaintiffs may bring a suit “within one year from the date
on which the violation occurs.” 15 U.S.C.A. § 1692k. The United States Supreme Court
recently clarified that “the statute of limitations [for FDCPA claims] begins to run on the
date on which the alleged FDCPA violation occurs, not the date on which the violation is
discovered.” Rotkiske v. Klemm, 140 S. Ct. 355, 357 (2019).
Here, the Ilers’ complaint alleges that Wells Fargo failed to properly consider their
loan modification requests and “deliberately misled” them to gain more information

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regarding their finances. Doc. 1, ¶ 33. The Ilers were aware of these alleged violations in
2009. Therefore, the statute of limitations for this claim expired in 2010. The complaint at
bar was filed in 2019, nine years past the statute of limitations period. The allegations in
the Ilers’ complaint affirmatively show that the FDCPA claim is time-barred.
Despite the one-year statute of limitations, the Ilers claim that equitable tolling
should apply to this suit and prevent their FDCPA claim from being time-barred. “The
doctrine of fraudulent concealment allows equitable tolling of the statute of limitations
where 1) the defendant concealed the underlying conduct, 2) the plaintiff was prevented
from discovering the cause of action by that concealment, and 3) the plaintiff exercised
due diligence to discover the cause of action.” Fillinger v. Lerner Sampson & Rothfuss,
624 Fed. Appx. 338, 341 (6th Cir. 2015) (quoting Huntsman v. Perry Local Sch. Bd. of
Educ., 379 Fed. Appx. 456, 461 (6th Cir. 2010)).
The Ilers’ complaint fails the first element of this test. “A party must state with
particularity the circumstances constituting” fraud. Fed.R.Civ.P. 9(b). Here, the Ilers
merely suggest that Wells Fargo “us[ed] deceptive means to collect information about the
Ilers . . . under the pretense of a Borrower Counseling Program” and that Wells Fargo
“us[ed] unfair and unconscionable means to collect a debt . . . [by] deceiving the Ilers by
convincing them that there was a bona fide Borrower Counseling Program when there is
none.” Doc. 1, ¶¶ 45-46. The Ilers have not shown that Wells Fargo took any action to
conceal the error before the 2018 news article nor does the article itself mention any
fraudulent conduct in relation to loan requests. Rather, the Ilers have merely stated legal
conclusions framed as factual allegations.

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Notably, the 2018 news article mentions that the internal error by Wells Fargo
allegedly “affected customers in the foreclosure process between April 2010 and October
2015.” Doc. 1, Ex. 8. The Ilers’ issues with Wells Fargo occurred during 2008 and early
2009. (Doc. 1, ¶¶ 11-34). Therefore, the article, which the Ilers utilize for their fraud
suspicion and equitable tolling arguments, is not applicable to the time period related to
their claim.
For these reasons, Defendant’s motion to dismiss Plaintiff’s FDCPA claims is welltaken and should be granted.
C. State Law Claims
Upon dismissal of the Ilers’ federal claims, the Court should decline to
exercise supplemental jurisdiction over plaintiff’s state-law claims pursuant to 28 U.S.C.
§ 1367(c)(3).
III.

CONCLUSION
In light of the foregoing, IT IS RECOMMENDED THAT Defendant’s motion to

dismiss (Doc. 8) be GRANTED; that this case be CLOSED.

s/ Stephanie K. Bowman
Stephanie K. Bowman
United States Magistrate Judge

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
KEVIN ILER, et al.,

Case No. 1:19-cv-281

Plaintiff,
Cole, J.
Bowman, M.J.

vs.
WELLS FARGO, N.A.,
Defendant.
NOTICE

Pursuant to Fed. R. Civ. P. 72(b), any party may serve and file specific, written
objections to this Report and Recommendation (“R&R”) within FOURTEEN (14) DAYS of
the filing date of this R&R. That period may be extended further by the Court on timely
motion by either side for an extension of time. All objections shall specify the portion(s)
of the R&R objected to, and shall be accompanied by a memorandum of law in support
of the objections. A party shall respond to an opponent’s objections within FOURTEEN
(14) DAYS after being served with a copy of those objections. Failure to make objections
in accordance with this procedure may forfeit rights on appeal. See Thomas v. Arn, 474
U.S. 140 (1985); United States v. Walters, 638 F.2d 947 (6th Cir. 1981).

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