Humphrey, et al vs. U.S. Bank, N.A., et al

Filing 33

OPINION AND ORDER by Chief Judge Gregory K Frizzell ; granting in part and denying in part 30 Motion to Dismiss Party (hbo, Dpty Clk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA

JULYA O. HUMPHREY, an individual,
and RICHARD D. HUMPHREY,
an individual,
Plaintiffs,
v.
U.S. BANK, N.A., d/b/a
U.S. BANK HOME MORTGAGE,
a foreign corporation doing business in
the State of Oklahoma, and
CAPITAL ONE SERVICES, LLC,
a foreign limited liability company doing
business in the State of Oklahoma,
Defendants.

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Case No. 11-CV-272-GKF-PJC

OPINION AND ORDER
Before the court is the Motion to Dismiss Plaintiffs’ Amended Complaint [Dkt. #30] filed
by defendant Capital One Services, LLC (“Capital One”). Capital One seeks dismissal of
plaintiffs’ third, fourth and fifth counts against it.
This lawsuit arises from efforts by plaintiffs, Julya O. Humphrey and Richard D.
Humphrey, to refinance their home with defendant U.S. Bank, N.A., d/b/a U.S. Bank Home
Mortgage (“U.S. Bank”). Capital One is named as a defendant based on its alleged mishandling
of a $415 appraisal fee charge U.S. Bank made to plaintiffs’ Capital One credit card.

The court dismissed plaintiffs’ original Petition pursuant to Fed.R.Civ.P. 12(b)(6), based
on plaintiffs’ failure to satisfy the pleading requirements of Fed.R.Civ.P. 8. [Dkt. #27]. Plaintiffs
were given leave to file an amended complaint. [Id.].
In their Amended Complaint, plaintiffs asserted claims of fraud, breach of contract and
negligence against U.S. Bank (Counts I, II and VI) and claims of violation of the Fair Credit
Billing Act, intrusion upon seclusion and negligence (Counts III, IV and V) against Capital One.
Capital One once again seeks dismissal of all claims against it.
I. Allegations of the Amended Complaint
The Amended Complaint alleges that in November 2009, plaintiffs applied online to
refinance their existing home mortgage with U.S. Bank. [Dkt. #28, ¶¶4-6]. U.S. Bank provided a
Good Faith Estimate of Settlement Costs dated November 18, 2009 (“GFE 1”), which disclosed
estimated good faith closing costs totaling $2,020.63. [Id., ¶10]. Plaintiffs allege that
subsequently, U.S. Bank prepared a second Good Faith Estimate (“GFE 2”) in which closing
costs of $4,500 were estimated. [Id., ¶¶22-23]. Thereafter, U.S. Bank prepared and sent a third
Good Faith Estimate (“GFE 3”) which disclosed closing costs of $4,134.95. [Id., ¶26]. Plaintiffs
allege the closing costs were inflated and were not justified or based on any good faith reason or
change in circumstances requiring additional costs. [Id., ¶27]. When U.S. Bank refused to close
the loan for costs disclosed in GFE 1, plaintiffs applied for and obtained a refinance loan with
RCB Bank. [Id., ¶¶31-37].
During the refinance process with U.S. Bank, plaintiffs entered into an agreement with
U.S. Bank for a real estate appraisal. [Id., ¶42]. As a part of plaintiffs’ agreement to pay for the
appraisal, U.S. Bank represented it would provide a copy of the appraisal to plaintiffs. [Id., ¶44].
In return for the performance of the appraisal and for delivery of a copy of the appraisal,

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plaintiffs agreed to allow the cost for the appraisal to be charged to their Capital One credit card.
[Id., ¶45]. Plaintiffs allege that no appraiser contacted them to arrange for performance of the
appraisal or entered their home to perform an appraisal. [Id., ¶¶46-47]. Plaintiffs allege “upon
information and belief,” no appraisal was actually performed. [Id., ¶48]. No appraisal was ever
delivered to plaintiff. [Id., ¶49].
Plaintiffs allege that, nevertheless, on February 22, 2010, U.S. Bank charged $415.00 to
their Capital One account. [Id., ¶57]. Plaintiffs learned of the charge on-line and “promptly
initiated an electronic dispute of the charge with Capital One but Capital One’s electronic dispute
process limited Humphrey’s ability to provide details about the dispute.” [Id., ¶58.]. Plaintiffs
allege, “Upon information and belief, Humphrey1 initiated this dispute during the January 28 to
February 27, 2010 billing cycle.” [Id., ¶59]. Shortly after initiating the dispute, plaintiffs
received a phone call from Capital One regarding the dispute in which plaintiffs answered
several Capital One questions. [Id., ¶60]. Capital One acknowledged receipt of the billing error
dispute in a letter dated March 22, 2010, in which it advised the account had been credited in the
amount of $415.00 and stated “[u]nless the merchant resubmits the charge within 45 days of the
date of this letter, we consider your case closed. If this occurs, we’ll notify you and re-bill your
account for the amount of the credit.” [Id., ¶61].
Plaintiffs contend, “Capital One did not inform Humphrey that the charge had been
resubmitted within 45 days and Humphrey believed their case had been closed.” [Id., ¶62].
Plaintiffs allege Regulation Z, 12 CFR § 226.13(c) allows creditors “2 complete billing cycles
(but in no event later than 90 days) after receiving a billing error notice” to comply with
appropriate resolution procedures. [Id., ¶63]. “Upon information and belief, Capital One uses a

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Plaintiffs’ Amended Complaint refers to Julya O. Humphrey and Richard D. Humphrey collectively as
“Humphrey.”[Dkt. #28, ¶1].

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monthly billing cycle with between 28 and 31 days per cycle” and “two full billing cycles from
the date of the electronic dispute would have expired on or about April 27, 2010.” [Id., ¶¶6465]. “After the time for doing so had expired, in a letter dated May 17, 2010, Capital One
informed Humphrey of the reinstatement of the U.S. Bank charge and demanded additional
information from Humphrey.” [Id., ¶66]. “Upon information and belief, the May 17, 2010 letter
was outside of the two billing cycles allowed Capital One to fully comply with the resolution
procedures in violation of regulation Z and 15 U.S.C. § 1666.” [Id., ¶67].
Plaintiffs complain that although Capital One informed them that U.S. Bank had 45 days
to resubmit the charges, it did not notify them U.S. Bank had resubmitted the charge until its
letter dated May 17, 2010, some 56 days after the date of the March 22, 2010 letter. [Id., ¶68].
Plaintiffs contend, “Upon information and belief, U.S. Bank failed to resubmit the charge within
45 days and the case should have been considered closed.” [Id., ¶69]. Plaintiffs allege pursuant
to Regulation Z § 226.13 and 15 U.S.C. § 1666, Capital One was required to perform a
reasonable investigation of their billing dispute. [Id., ¶70]. They contend Capital One’s
investigation was not reasonable “as it made unreasonable and untimely demands upon the
Plaintiffs, failed to investigate whether the appraisal was actually received as promised, and
focused its investigation instead upon the quality, description, and effects of non-existent
merchandise.” [Id., ¶71]. The May 17, 2010 letter gave plaintiffs until May 24, 2010 to provide
the demanded documentation or Capital One would consider the case closed. [Id., ¶73].
Plaintiffs’ receipt of the letter could not have occurred prior to May 19, 2010, and Capital One’s
demand for information to be returned to it within five days or less was not a reasonable
investigation, nor was its demand requiring a signed “second opinion from a merchant in the
same field.” [Id. ¶¶75-76]. Plaintiffs contend a reasonable investigation into whether U.S. Bank

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was authorized to make the disputed charge or whether U.S. Bank ever performed the appraisal
and/or delivered a copy of the appraisal to the plaintiffs would neither require documentation
regarding or inquiry into “how the merchandise you received is defective” or “how the
merchandise ordered differs from the merchandise received.” [Id., ¶77]. Plaintiffs allege the
letter was intended as “an overly burdensome series of obstacles designed to prevent resolving
the dispute in the Humphrey’s favor,” as evidenced by “the time constraints placed upon
Humphrey by this letter which required all of this documentation within an extremely narrow
window, including information form a third party and not within the control of Humphrey.”
[Id., ¶78]. Plaintiffs allege, “Upon information and belief, Capital One engaged in a pattern and
practice of sending form letters to consumers demanding irrelevant information in an
unreasonably short period of time and then closing consumers’ disputes by a default resolution in
favor of the merchant for failure to provide the information demanded.” [Id., ¶79]. Plaintiffs
contend “[t]his is further evidenced by Capital One’s allowance to U.S. Bank of 45 days to
provide documentation and to resubmit the charge, compared to the consumers nearly impossible
task of responding back within 7 days of the original mailing.” [Id., ¶80]. Plaintiffs allege
Capital One attached documents and a letter received from U.S. Bank concerning the charge to
the letter dated May 17, 2010, and those documents did not address or provide evidence
regarding completion of the appraisal or delivery of the completed appraisal to them. [Id., ¶¶8182]. Plaintiffs contend Capital One failed to conduct any investigation into whether the appraisal
was actually performed or if a completed appraisal was delivered to the plaintiffs. [Id., ¶83]. “In
the alternative, on May 17, 2010 Capital One informed Humphrey of its decision to ‘re-bill the
charge to your account. This adjustment will appear on your next monthly statement.” [Id.,
¶84]. Plaintiffs allege, “Upon information and belief, the actual charge appeared on a monthly

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statement for the period of April 28, 2010 to May 27, 2010 and was available after May 28,
2010.” [Id., ¶85]. Plaintiffs contend they sent an additional dispute of this charge in a letter
dated June 27, 2010, informing Capital One, “as part of the appraisal agreement, the bank was to
provide us a copy of the appraisal within 3 days. We never received a copy, even though we
informed the bank by phone that we had not received the appraisal.” [Id., ¶¶86-87]. Plaintiffs
allege the dispute letter “clearly and expressly raised an issue not addressed in the documentation
attached to the May 17, 2010 letter from Capital One and apparently not addressed by Capital
One’s investigation of the initial dispute.” [Id., ¶88]. Plaintiffs contend Capital One either failed
to conduct a reasonable investigation of this issue despite notice of this portion of the dispute in
its investigation of the original dispute or the Humphreys raised a new issue in the June 27, 2011
letter, thereby initiating a dispute substantially different from the original dispute. [Id., ¶89].
Plaintiffs allege they reasserted the billing error within a reasonable time after receipt of the May
17, 2010 letter, and Capital One violated Regulation Z § 226.13 and 15 U.S.C. § 1666 by failing
to perform a reasonable investigation of the June 27, 2010 dispute that was substantially different
from the electronic dispute. [Id., ¶¶90-92]. They contend Capital One never investigated or
resolved their June 27, 2010 billing dispute. [Id., ¶93]. Plaintiffs allege Capital One’s violations
of Regulation Z § 226.13 and 15 U.S.C. § 1666 caused them emotional distress, damage to their
credit scores and other non-pecuniary damages and entitle them to statutory damages. [Id., ¶94].
Plaintiffs also contend “Capital One has repeatedly demanded Humphrey pay the
fraudulent charge and has unleashed its debt collectors, who have made countless calls invading
Humphrey’s privacy,” despite knowing that consent had been obtained by fraud and being put on
notice that authorization for the charge had been revoked, the appraisal was never delivered, and
having failed to perform a reasonable investigation, and Capital One’s conduct was reckless or

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malicious. [Id., ¶¶97-98]. Plaintiffs allege Capital One and its collectors caused calls to be made
8-10 times per day to each of plaintiffs’ three phone lines for a total of 24-30 calls per day, and
the calls began in either late September or early October of 2010 and continued until suit was
filed in March of 2011. [Id., ¶¶99-100]. Plaintiffs assert Capital One’s conduct caused them
emotional distress.
Plaintiffs allege Capital One failed to perform any investigation of their June 27, 2010
dispute, or any investigation into the claim the appraisal was not delivered, and withheld from
plaintiffs information it received from U.S. Bank regarding the dispute until it was impossible for
plaintiffs to respond within the time allowed. [Id., ¶106]. Plaintiffs contend Capital One’s
“breach of its duty to perform a reasonable investigation” caused them emotional distress.” [Id.,
¶107].
Plaintiffs assert claims of violation of Regulation Z and 15 U.S.C. § 1666; intrusion upon
seclusion/invasion of privacy; and negligence. They seek actual, statutory and punitive damages.
II. Applicable Standard
Federal Rule of Civil Procedure 8(a)(2) provides that a complaint must contain “a short
and plain statement of the claim showing that the pleader is entitled to relief.” The United States
Supreme Court clarified this standard in Bell Atlantic Corp. v. Twombly, ruling that to withstand
a motion to dismiss a complaint must contain enough allegations of fact “to state a claim to relief
that is plausible on its face.” 550 U.S. 544, 570 (2007). “While a complaint attacked by a Rule
12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to
provide the grounds of his entitle[ment] to relief requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do.” Id. at 555 (internal

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quotations omitted). On a motion to dismiss, courts “are not bound to accept as true a legal
conclusion couched as a factual allegation.” Id.
Under the Twombly standard, “the complaint must give the court reason to believe that
this plaintiff has a reasonable likelihood of mustering factual support for these claims.” Robbins
v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008), quoting Ridge at Red Hawk, L.L.C. v.
Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007) (emphasis in original). “The burden is on the
plaintiff to frame a complaint with enough factual matter (taken as true) to suggest that he or she
is entitled to relief.” Robbins, 519 F.3d at 1247, citing Twombly, 127 S.Ct. at 1965 (internal
quotations omitted). “Factual allegations must be enough to raise a right to relief above the
speculative level.” Id.
Although the new Twombly standard is “less than pellucid,” the Tenth Circuit Court of
Appeals has interpreted it as a middle ground between “heightened fact pleading,” which is
expressly rejected, and complaints that are no more than “labels and conclusions,” which courts
should not allow. Robbins, 519 F.3d at 1247, citing Twombly, 127 S.Ct. at 1964, 1965, 1974.
Accepting the allegations as true, they must establish that the plaintiff plausibly, and not just
speculatively, has a claim for relief. Robbins, 519 F.3d at 1247. “This requirement of
plausibility serves not only to weed out claims that do not (in the absence of additional
allegations) have a reasonable prospect of success, but also to inform the defendants of the actual
grounds of the claim against them.” Id. at 1248. The Tenth Circuit Court of Appeals instructed
in Robbins that “the degree of specificity necessary to establish plausibility and fair notice, and
therefore the need to include sufficient factual allegations, depends on context. . . .[and] the type
of case.” Id. (citing Phillips v. County of Allegheny, 515 F.3d 224, 231-32 (3d Cir. 2008)). A
simple negligence action may require significantly less allegations to state a claim under Rule 8

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than a case alleging anti-trust violations (as in Twombly) or constitutional violations (as in
Robbins). Id.
III. Analysis
A. Fair Credit Billing Act Claim
The Fair Credit Billing Act (“FCBA”), 15 U.S.C. § 1666, and its implementing
regulation, 12 C.F.R. §2213 (“Regulation Z”), provide a process for consumers to dispute credit
card charges based on billing errors. Under that statute, if a creditor, within 60 days after having
transmitted to an obligor a statement, receives a written notice indicating the obligor’s belief that
the statement contains a billing error, the amount of the billing error, and the reasons for the
obligor’s belief that the statement contains a billing error, then the creditor must, within 30 days,
send a written acknowledgment of the notice. In addition, not later than two complete billing
cycles after receipt of the notice, the creditor must make appropriate corrections or send a written
explanation of the reasons why the creditor believes the account of the obligor was correctly
shown. 15 U.S.C. § 1666(a). Under Regulation Z, the creditor is required to comply with
resolution procedures (also set out in Regulation Z) within two complete billing cycles (but in no
event later than 90 days) after receiving a billing error notice. 12 C.F.R. § 2213(c). If a creditor
determines that a billing error occurred, it is required, within the time limits, to correct the billing
error, credit the consumer’s account with any disputed amount and related finance or other
charges, as applicable, and mail or deliver a correction notice to the consumer. 12 C.F.R. §
2213(e). If, after conducting a “reasonable investigation,” the creditor determines no billing
error occurred, the creditor is required, within the time limits, to mail or deliver to the consumer
an explanation that sets forth the reasons for the creditor’s belief that the billing error alleged by
the consumer is incorrect in whole or part. 12 C.F.R. § 2213(f).

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The Amended Complaint alleges Capital One violated the FCBA’s time limit for dispute
resolution and its requirement to conduct a reasonable investigation. Capital One contends,
though, that plaintiffs’ Amended Complaint fails to allege facts which support these claims.
Taking as true the facts alleged in the Amended Complaint, it is clear that Capital One’s
handling of plaintiffs’ original bill dispute complied with the FCBA and Regulation Z.
According to the complaint, plaintiffs reported the billing error during the January 28 to
February 27, 2010 billing cycle. [Dkt. #28, ¶59]. After an investigation, Capital One sent
plaintiffs a letter dated March 22, 2010, informing them the account had been credited in the
amount of $415.00, and stating, “[u]nless the merchant resubmits the charge within 45 days of
the date of this letter, we consider your case closed. If this occurs, we’ll notify you and will rebill your account for the amount of the credit.” [Id., ¶¶60-61]. Thus, the investigation was
completed within two billing cycles and was reasonable, as required by the statute and
regulation. Plaintiffs’ allegations regarding subsequent events must be viewed in light of 12
C.F.R. § 2213(h), which states:
(h) Reassertion of billing error. A creditor that has fully complied with the requirements
of this section has no further responsibilities under this section…if a consumer reasserts
substantially the same billing error.
12 C.F.R. § 2213(h). The Amended Complaint states in a conclusory manner that U.S. Bank’s
resubmission of the charge initiated a dispute that “was substantially different from the original
dispute.” [Dkt. #28, ¶89]. However, the facts alleged in the Amended Complaint establish
otherwise. The charge was by the same vendor, for the same amount, for the same service—a
real estate appraisal in connection with plaintiffs’ refinancing application. Under 12 C.F.R. §
2213(h), the manner in which Capital One handled the rebilling is not subject to the requirements
of the FCBA or Regulation Z.
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Therefore, Count III of the Amended Complaint must be dismissed.
B. Negligence Claim
Plaintiffs assert Capital One was negligent in the manner it handled the U.S. Bank billing
dispute. “The threshold question in any negligence action is whether the defendant owed a duty
of care to the plaintiff.” Morales v. City of Oklahoma City, 230 P.3d 869, 878 (Okla. 2010).
Plaintiffs argue that the FCBA and Regulation Z impose duties to perform a timely and
reasonable investigation of billing disputes, and Capital One’s alleged violation of those laws
constitutes negligence per se. [Dkt. #31 at 23]. Because the court has dismissed plaintiffs’
FCBA claim, the negligence claim, too, must be dismissed.
C. Intrusion upon Seclusion Claim
Oklahoma recognizes the common-law tort of invasion of privacy upon one’s seclusion
and has adopted the definition of intrusion upon seclusion set forth in the Restatement (Second)
of Torts, § 652B. Gilmore v. Enogex, Inc., 878 P.2d 360, 366 (Okla. 1966).2 In order to prevail
upon such a claim, plaintiffs must prove (1) a nonconsensual intrusion (2) which was highly
offensive to the reasonable person. Id.
Capital One asserts plaintiffs have failed to state facts supporting the second element of
their claim, i.e., that the conduct was highly offensive to a reasonable person.
Comment d. to the Restatement (Second of Torts), § 652B, states:
d. There is…no liability unless the interference with the plaintiff’s seclusion is a
substantial one, of a kind that would be highly offensive to the ordinary reasonable man,
as the result of conduct to which the reasonable man would strongly object. Thus there is
no liability for knocking at the plaintiff’s door, or calling him to the telephone on one
occasion or even two or three, to demand payment of a debt. It is only when the
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The Restatement (Second) of Torts, § 652B, states that “one who intentionally intrudes
physically or otherwise, upon the solitude or seclusion of another or his private affairs or
concerns, is subject to liability to the other for invasion of his privacy, if the intrusion would be
highly offensive to a reasonable person.”
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telephone calls are repeated with such persistence and frequency as to amount to a course
of hounding the plaintiff, that becomes a substantial burden to his existence, that his
privacy is invaded.
Restatement (Second) of Torts, § 652B. Here, plaintiffs have alleged Capital One knew or
should have known the U.S. Bank charge was not owed, yet caused calls to be made 8-10 times
per day to each of plaintiffs’ three telephone lines for a total of 24-30 calls per day, for a period
starting in late September or early October of 2010 and continuing until plaintiffs filed suit in
March 2011. [Dkt. #28, ¶¶99-100]. These factual allegations—taken as true—could amount to a
“course of hounding” that was “a substantial burden to [plaintiffs’] existence,” and thus state a
claim for intrusion of seclusion/invasion of privacy under Oklahoma law.
Therefore, Capital One’s Motion to Dismiss Count IV must be denied.
IV. Conclusion
For the foregoing reasons, defendant Capital One’s Motion to Dismiss [Dkt. #30] is
granted in part and denied in part. Counts III and V are dismissed. Count IV survives
defendant’s Motion to Dismiss.
ENTERED this 24th day of August, 2012.

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