Weber et al v. Bank of America NA et al
Filing
12
ORDER granting 6 Motion to Dismiss for Failure to State a Claim, dismissing all claims against Bank of America NA with prejudice and all claims against Defendant John Doe Trust without prejudice. Signed by Honorable Joseph F Anderson, Jr on 09/10/2013.(bshr, )
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
ROCK HILL DIVISION
Robin Weber and Bryan Weber,
C/A No. 0:13-cv-01999-JFA
Plaintiffs,
vs.
Bank of America NA d/b/a BAC Home Loans
Servicing LP f/k/a Countrywide Home Loans
Servicing LP; and John Doe Trust,
ORDER ON
MOTION TO DISMISS
Defendants.
I.
INTRODUCTION
This matter comes before the court on Defendant’s Motion to Dismiss for failure to state
a claim in this home loan modification dispute. ECF No. 6. Originally filed in the Court of
Common Pleas for York County, Defendant Bank of America, NA1 (“Defendant”) removed this
action to this court based on diversity jurisdiction and then filed this motion to dismiss.
Defendant moves to dismiss each and every cause of action: (1) negligence and/or negligent
misrepresentation; (2) unfair trade practices; and (3) detrimental reliance. 2
Plaintiffs Robin
Weber and Bryan Weber (“Plaintiffs”) oppose the motion and argue that, Defendant repeatedly
“ignored and rebuffed” Plaintiffs’ attempts to obtain a loan modification. Plaintiffs argue that
Defendant’s actions violated an administrative order of South Carolina Supreme Court Chief
1
Plaintiffs name an additional defendant—“John Doe Trust”—in their Complaint as the “unknown holder/owner of
the Note and Mortgage.” Plaintiffs further state “its proper name will be substituted when known.” No such
substitution has been made at this early stage of litigation. Accordingly, Defendant John Doe Trust has not made an
appearance in this action. Except where otherwise noted, “Defendant” shall refer only to Defendant Bank of
America, NA. Paragraph 38 of the Complaint alleges that “[t]he conduct of [Defendant] is imputed to John Doe
Trust on the basis that Wells Fargo is an undisclosed principal of the trust that Wells Fargo operated pursuant to a
Pooling and Servicing Agreement, or operated pursuant to direct communications from the Trust.” Wells Fargo is
not a party to this case and the court is unsure how the actions of Wells Fargo are at all relevant to the claims against
Defendant.
2
Defendant argues that this claim should be treated as promissory estoppel, not detrimental reliance.
1
Justice Jean Toal issued in May 2011, and perhaps violated other laws. For the reasons stated
below, this court grants Defendant’s motion as to all causes of action.
II.
FACTS
The following relevant facts from the Complaint are taken as true only for the purposes
of this motion. Plaintiffs executed a Note and Mortgage on their primary residence in favor of
Allen Tate Mortgage Services, Inc. and mortgagee Mortgage Electronic Registration Systems,
Inc. as nominee for Allen Tate on May 12, 2006. Compl. ¶ 5. Both the Note and Mortgage were
sold or assigned to Defendant.3 Id. at ¶¶ 6-7. “On or about [August 1, 2009], due to various
unemployment issues, Plaintiffs requested foreclosure assistance from [Defendant].” Id. at ¶ 9.
Defendant informed Plaintiffs that they could not receive assistance because Plaintiffs were
unemployed. Id. at ¶ 10. However, after filing a foreclosure action on June 16, 2011, Defendant
“informed Plaintiffs they were subject to foreclosure assistance.” Id. at ¶ 11. “It is unknown the
exact [Home Affordable Modification Program] for which Plaintiffs were eligible.” Id. at ¶ 21.
Even though Plaintiffs had “complied with all information disclosures and submissions of
documents and information for the requested mortgage foreclosure relief … Plaintiffs received
little to no acknowledgment of requested relief, and were referred to one or more representatives
of [Defendant].” Id. at ¶¶ 12, 13. Defendant repeatedly “ignored and rebuffed” Plaintiffs’
attempts to obtain a loan modification. Id. at ¶ 22. “Plaintiffs have attempted to pursue a loan
modification to no avail” and “Plaintiffs are now faced with foreclosure.” Id. at ¶¶ 17, 23.
Additionally, the foreclosing firm “was aware of the lack of response by [Defendant, and]
informed Plaintiffs that [Defendant] did not have processes in place for foreclosure
intervention.” Compl. ¶ 15. On or about May 17, 2012, the foreclosure action filed on June 16,
3
Defendant states that it is the servicer of Plaintiffs’ Loan. See ECF No. 6, at 3. Plaintiffs also dispute the
“assignment or transfer… as being in compliance with the various statutes governing assignment or transfer of
[n]otes” and mortgages. See Compl. ¶¶ 6-7.
2
2011 was dismissed for failure to prosecute. Id. at ¶ 16. “On May 20, 2013 [the foreclosing
firm] filed a letter with the Court, after the foreclosure had been dismissed, of a denial of
foreclosure relief. This is a sham statement.”4 Id. at ¶ 18. Plaintiffs further allege that “[s]imilar
suit(s) have been filed in the district courts of Massachusetts alleging [Defendant] willfully and
absent any consideration issued loan modification denials to debtors … [and] allege that loan
officers received a pecuniary benefit for denying loan mortgage modifications.” Id. at ¶ 20.
III.
LEGAL STANDARD
When considering a motion to dismiss under Rule 12(b)(6), the court must accept as true
the facts alleged in the complaint and view them in the light most favorable to the plaintiff.
Ostrzenski v. Seigel, 177 F.3d 245, 251 (4th Cir. 1999). The United States Supreme Court has
stated, however, that “[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.’” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Id. (citing Twombly, 550 U.S. at 556). Although “a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual allegations,” a pleading “will not do” if it
merely offers “labels and conclusions,” or “a formulaic recitation of the elements of a cause of
action.” Twombly, 550 U.S. at 555. Likewise, “a complaint [will not] suffice if it tenders ‘naked
assertion[s]’ devoid of ‘further factual enhancements.’” Iqbal, 556 U.S. at 678 (quoting
Twombly, 550 U.S. at 557). Accordingly, Plaintiff must put forth claims that cross “the line from
conceivable to plausible.” Id. at 680 (internal quotation omitted). The court “need not accept the
[plaintiff’s] legal conclusions drawn from the facts,” nor need it “accept as true unwarranted
4
It is unclear from these two sentences what was filed or what statement is a sham.
3
inferences, unreasonable conclusions, or arguments.” Wahi v. Charleston Area Med. Ctr., Inc.,
562 F.3d 599, 616 n.26 (4th Cir. 2009) (citation omitted).
IV.
DISCUSSION
Defendant moves to dismiss all causes of action explicitly alleged by Plaintiffs: (1)
negligence and/or negligent misrepresentation; (2) unfair trade practices; and (3) detrimental
reliance. Neither violation of the Toal Administrative Order, nor non-compliance with the Home
Affordable Modification Program (“HAMP”) or other similar program, are pled as causes of
action—rather Plaintiffs seem to argue that violation of either the Toal Administrative Order, or
non-compliance with HAMP or a similar program, forms the basis of the explicitly alleged
causes of action. After discussing both the Toal Administrative Order and HAMP or similar
programs, each cause of action is discussed separately.
A. The Toal Administrative Order and HAMP
In their Complaint, Plaintiffs argue that a “recently issued Order of the SC Supreme
Court of May 2011 mandat[es] foreclosure assistance be provided all foreclosure defendants for
owner occupied residences.” Compl. ¶ 11. Despite claiming in their response brief to this
motion that “[t]he gravamen of this suit lies in the duty imposed on Defendants pursuant to the
Administrative Order issued by the SC Supreme Court in May 2011,” Plaintiffs do not provide a
citation to the Order in any filing. See ECF No. 7; See Complaint. The court is aware of at least
six administrative orders issued by the South Carolina Supreme Court in May 2011 and cannot,
therefore, be certain to which order Plaintiffs are referring. However, the court will assume that
Plaintiffs are referring to Chief Justice Toal’s Administrative Order 2011-05-02-01 (“Toal
Administrative Order”)—the only South Carolina Supreme Court administrative order issued in
May of 2011 that appears at all relevant to Plaintiffs’ claims.
4
Plaintiffs’ main argument seems to be not that Defendant failed to provide a loan
modification in violation of either the Toal Administrative Order, or HAMP or a similar
program, but that Defendant did not properly process Plaintiffs’ requests for a loan modification,
in violation of the Toal Administrative Order. Under either scenario, the Toal Administrative
Order cannot form the basis of Plaintiffs’ claims because it provides “[t]he Court having
jurisdiction over the foreclosure action shall hear and determine any dispute concerning any
party’s compliance with this order.” Toal Administrative Order p. 4. Assuming that Plaintiffs
are referring to the Toal Administrative Order, any petition based on the Toal Administrative
Order, therefore, should have been made to the court adjudicating the foreclosure action. The
Toal Administrative Order, on its face, does not create a private cause of action.
Further, if Plaintiffs’ argument is that the Toal Administrative Order “mandat[es]
foreclosure assistance be provided all foreclosure defendants for owner occupied residences,”
Plaintiffs confuse the procedural nature of the Toal Administrative Order with a substantive
requirement that lender-servicers must provide homeowners a loan modification, or some other
form of relief. Compl. ¶ 11. The plain text of the Toal Administrative Order imposes no such
requirement: it merely provides procedures intended to insure that a lender-servicer and
mortgagor have the opportunity to pursue a loan modification or other loss mitigation “where
possible.” Toal Administrative Order p. 1. The Toal Administrative Order provides:
in order to insure that eligible homeowners and lender-servicers have been
afforded the benefits of loan modification or other loss mitigation where possible,
and to insure that the procedures for handling issues relating to such efforts are
handled uniformly throughout the State, so that mortgage foreclosure actions are
not unnecessarily dismissed, delayed or inappropriately concluded while loan
modification or other loss mitigation efforts are being pursued, it is ordered as
follows:
5
Toal Administrative Order p. 1 (emphasis added). The Toal Administrative Order then lays out
various procedural requirements—intended to allow the parties to pursue a loan modification or
other loss mitigation—to be followed in mortgage foreclosure actions related to owner-occupied
dwellings. The Toal Administrative Order simply does not “mandat[e] foreclosure assistance be
provided all foreclosure defendants for owner occupied residences.” Compl. ¶ 11.
It may also be the case that Plaintiffs argue that the Toal Administrative Order reinforced
a pre-existing obligation on Defendant to provide a loan modification or other loss mitigation
remedy to Plaintiffs. Plaintiffs’ response brief to this motion provides:
The gravamen of this suit lies in the duty imposed on these Defendants pursuant
to the Administrative Order issued by the SC Supreme Court in May 2011,
mandating that debtors such as Plaintiffs shall have the benefit of creditors’
attempts at complying with one or more loan modification programs, be it the
federal Home Affordable Modification Program (“HAMP” colloquially), loa[n]
modifications mandated by Fannie Mae or Freddie or FHA or USDA, or internal
loan modification programs.
See ECF No. 7, at p. 1. Similarly, Plaintiffs admit in their Complaint that “[i]t is unknown the
exact [loan modification] program for which Plaintiffs were eligible.” Compl. ¶ 21. Perhaps in
contradiction to the preceding arguments, Plaintiffs then argue “Plaintiffs do not allege that
noncompliance with HAMP is the gravamen of the action, but rather noncompliance with the
order of the SC Supreme Court.” See ECF No. 7,at p. 1. Aside from the fact that the Toal
Administrative Order does not require Defendant to provide Plaintiffs a loan modification—as
discussed above—and could not5 do so, the Toal Administrative Order unambiguously states that
such HAMP programs are “only applicable to such loans if the lender or servicer has agreed to
participate in the [HAMP].” Toal Administrative Order p. 1.
5
Even if the Toal Administrative Order did include such a mandate, the court is not aware of any authority
providing that the Chief Justice, sitting alone, possesses the law-making authority of the entire South Carolina
Supreme Court. The Toal Administrative Order is exactly as its title suggests. It does not, and cannot, create a
private cause of action.
6
Plaintiffs have not alleged that Defendant agreed to participate in any type of loan
modification program. Instead, Plaintiffs seem to allege that Defendant is required to provide
some form of a loan modification program, although Plaintiffs do not know which loan
modification program Defendant is required to provide. But, the “denial of a loan modification
under HAMP [or other similar program] does not create a private cause of action.” Steffens v.
Am. Home Mortgage Sevicing, Inc., CIV.A. 6:10-1788-JMC, 2011 WL 901812 (D.S.C. Jan. 5,
2011) report and recommendation adopted sub nom. Steffens v. Am. Home Mortgage Servicing,
Inc., 6:10-CV-01788-JMC, 2011 WL 901179 (D.S.C. Mar. 15, 2011) (citing See, e.g., Dugger v.
Bank of America, No. 1:10CV00076, 2010 WL 3258383, at *2 (E.D.Mo. Aug. 16, 2010)
(dismissing claims under Rule 12(b)(6) and stating that “neither EESA, TARP, nor HAMP
provides a private right of action to individual borrowers”); Zeller v. Aurora Loan Servs., LLC,
No. 310cv00044, 2010 WL 3219134, at *1 (W.D.Va. Aug.10, 2010) (stating that Congress did
not permit a private cause of action under HAMP); Marks v. Bank of Am., N.A., No. 03:10–cv–
08039–PHX–JAT, 2010 2572988, at * *5–7 (D. Ariz. June 22, 2010) (holding that the HAMP
Guidelines and EESA do not provide a private cause of action)). Accordingly, Defendant was
not obligated to provide Plaintiffs a loan modification under either the Toal Administrative
Order, or HAMP or a similar program.
B. Negligence
Plaintiffs’ claim for negligence fails because Plaintiffs have not established that
Defendant breached a duty owed to Plaintiffs.6 Rogers v. S. Carolina Dep't of Parole & Cmty.
Corr., 320 S.C. 253, 255, 464 S.E.2d 330, 332 (1995) (“An essential element in a cause of action
for negligence is the existence of a legal duty of care owed by the defendant to the plaintiff.
6
Plaintiffs’ claim for negligence may fail for other reasons as well, but the court will not address those reasons
because the court finds the absence of a duty dispositive.
7
Without such a duty, there can be no actionable negligence.”). A bank in South Carolina does
not owe a special duty of care to its customers, unless perhaps certain circumstances establish
that special duty. Regions Bank v. Schmauch, 354 S.C. 648, 671, 582 S.E.2d 432, 444 (Ct. App.
2003) (Bank did not owe a special duty of care to customer who was not in a vulnerable
position); Id. (“South Carolina holds the normal relationship between a bank and its customer is
one of creditor-debtor and not fiduciary in nature.”); Citizens & S. Nat'l Bank of South Carolina
v. Lanford, 313 S.C. 540, 443 S.E.2d 549 (1994) (“The law does not impose a duty on the bank
to explain to an individual what [she] could learn from simply reading the document”). No such
circumstances necessary to establish a special duty of care exist here. The mere fact that
Plaintiffs are no longer able to make payments—as they agreed to do—on their mortgage does
not place a heightened duty on Defendant. Importantly, “[t]he Court having jurisdiction over the
foreclosure action” is to enforce any duty imposed by the Toal Administrative Order, and any
such duty is therefore not the basis for a heightened tort duty in a separate action.
Toal
Administrative Order p. 4.
Plaintiffs argue that Defendant’s actions amount to negligence per se, because
Defendant’s failure to provide Plaintiffs a loan modification, or at least a meaningful process
through which to petition Defendant for a loan modification, violates the Toal Administrative
Order. In support of this argument, Plaintiffs baldly state that “[the Toal Administrative Order]
is tantamount to a statutory duty, for which a violation of such duty would be negligence per se.”
See ECF No. 7, at p. 1. Plaintiffs offer no law in support of this proposition. Because Plaintiffs
have not established that the Toal Administrative Order creates a private cause of action or that
the violation of such an order would amount to negligence per se, the court finds that negligence
per se is not applicable in this case.
8
Plaintiffs’ claim for negligence, therefore, fails to state a claim upon which relief can be
granted.
C. Negligent Misrepresentation
Plaintiffs’ claim for negligent misrepresentation fails because Plaintiffs have not
sufficiently pled a false representation made by the Defendant to Plaintiffs. To state a claim for
negligent misrepresentation, the plaintiff must allege: (1) the defendant made a false
representation to the plaintiff; (2) the defendant had a pecuniary interest in making the statement;
(3) the defendant owed a duty of care to see that he communicated truthful information to the
plaintiff; (4) the defendant breached that duty by failing to exercise due care; (5) the plaintiff
justifiably relied on the representation; and (6) the plaintiff suffered a pecuniary loss as the
proximate result of his reliance upon the representation. Kelly v. S. Carolina Farm Bureau Mut.
Ins. Co., 316 S.C. 319, 323-24, 450 S.E.2d 59, 62 (Ct. App. 1994). The only allegation in the
complaint that points to falsity is paragraph 18 of the Complaint:
On 5/20/13 Finkel Law Firm [the foreclosing firm] filed a letter with the Court,
after the foreclosure had been dismissed, of a denial of foreclosure relief. This is
a sham statement.
Compl. ¶ 18. As noted before, it is unclear what Plaintiffs’ allegation is in this paragraph. Such
an allegation, along with speculative assertions of a conspiracy by Defendant to deny loan
modifications in order to achieve a pecuniary benefit, is not sufficient to push Plaintiffs’ claim of
negligent misrepresentation from conceivable to plausible.
Therefore, Plaintiffs’ claim for
negligent misrepresentation fails to state a claim upon which relief can be granted.7
7
Because the court finds dispositive the failure of Plaintiffs to allege that Defendant made a false representation to
Plaintiffs, the court will not address the other requirements of stating a claim for negligent misrepresentation.
9
D. Unfair Trade Practices
Plaintiffs’ claim under the South Carolina Unfair Trade Practices Act (“SCUTPA”) fails
because Plaintiffs have not alleged an unfair or deceptive practice that affects the public interest.
As a threshold matter, Plaintiffs seem to allege that the unfair or deceptive practice is
Defendant’s failure, as “mandated by the [Toal] Administrative Order, and other federal
programs, to initiate in good faith a loan modification review program.” Compl. ¶ 30. As
discussed already, the Toal Administrative Order does not impose a duty on Defendant to
provide a loan modification, and neither the Toal Administrative Order nor the “other federal
programs” create a private cause of action for failure to provide a loan modification or
meaningful process through which to petition Defendant for a loan modification. Therefore, if
the unfair or deceptive practice is Defendant’s violation of the Toal Administrative Order and
“other federal programs,” there is no unfair or deceptive practice because there has been no
actionable violation.
Plaintiffs also fail to establish that the alleged unfair or deceptive practice has an impact
on the public interest. “To be actionable under the [SC]UTPA, therefore, the unfair or deceptive
act or practice in the conduct of trade or commerce must have an impact upon the public interest.
The act is not available to redress a private wrong where the public interest is unaffected.”
Noack Enterprises, Inc. v. Country Corner Interiors of Hilton Head Island, Inc., 290 S.C. 475,
Plaintiffs’ allegation that “[t]he conduct [of
479, 351 S.E.2d 347, 350 (Ct. App. 1986).
defendant] affects the public interest, can be and has been repeated on other members of the
borrowing public” is nothing more than “threadbare recitals of a cause of action's elements,
supported by mere conclusory statements.” Compl. ¶ 33; Ashcroft v. Iqbal, 556 U.S. 662, 663
10
(2009) (“the tenet that a court must accept a complaint's allegations as true is inapplicable to
threadbare recitals of a cause of action's elements, supported by mere conclusory statements”).
Plaintiffs’ claim pursuant to the SCUTPA, therefore, fails to state a claim upon which
relief can be granted.
E. Detrimental Reliance
Because the court can locate no South Carolina law providing for detrimental reliance as
a cause of action,8 the court understands Plaintiffs’ claim of detrimental reliance to be one of
either promissory estoppel9 or equitable estoppel.10 As to promissory estoppel, Plaintiffs do not
allege the existence of an unambiguous promise upon which Plaintiffs relied and were thereby
injured. As to equitable estoppel, Plaintiffs do not allege conduct amounting to a false
representation by Defendant—just as with Plaintiff’s negligent misrepresentation claim. Instead,
Plaintiffs seem to allege only that Defendant did not process Plaintiffs’ request for a loan
modification or provide a loan modification to Plaintiffs. Plaintiffs’ Complaint provides:
The above described conduct constitutes detrimental reliance upon various
statements and representations by [Defendant’s] employees, causing Plaintiffs to
incur greater debt and damages by their fair reliance upon the false and willful
statements of WF.11
8
Detrimental reliance is a crucial element in a claim for estoppel, not a cause of action. See Queen's Grant II
Horizontal Prop. Regime v. Greenwood Dev. Corp., 368 S.C. 342, 359, 628 S.E.2d 902, 912 (Ct.App.2006)
(indicating the lack of detrimental reliance is fatal to a claim of estoppel).
9
In order to recover under a theory of promissory estoppel, a claimant must demonstrate: (1) the presence of a
promise unambiguous in its terms; (2) reasonable reliance on the promise; (3) the reliance was expected and
foreseeable; and (4) injury in reliance on the promise. Craft v. S. Carolina Comm'n for Blind, 385 S.C. 560, 565,
685 S.E.2d 625, 627 (Ct. App. 2009)
10
“The essential elements of equitable estoppel as related to the party estopped are: (1) conduct which amounts to a
false representation or concealment of material facts, or, at least, which is calculated to convey the impression that
the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2)
intention, or at least expectation, that such conduct shall be acted upon by the other party; and (3) knowledge, actual
or constructive, of the real facts. As related to the party claiming the estoppel, they are: (1) lack of knowledge and of
the means of knowledge of the truth as to the facts in question; (2) reliance upon the conduct of the party estopped;
and (3) action based thereon of such a character as to change his position prejudicially.” Boyd v. Bellsouth Tel. Tel.
Co., Inc., 369 S.C. 410, 422, 633 S.E.2d 136, 142 (2006).
11
The court assumes that “WF” stands for “Wells Fargo.” Wells Fargo is not a party to this action, but is mentioned
in another portion of Plaintiffs’ complaint.
11
Compl. ¶ 36. Again, Plaintiffs’ “threadbare recitals of a cause of action's elements, supported by
mere conclusory statements” are insufficient to articulate a plausible claim of detrimental
reliance, promissory estoppel, or equitable estoppel.
Plaintiffs’ detrimental reliance claim,
therefore, fails to state a claim upon which relief can be granted.
V.
CONCLUSION
Based on the foregoing, the court grants Defendant Bank of America, NA’s motion to
dismiss all of Plaintiffs’ claims against Defendant Bank of America, NA with prejudice. The
court dismisses all of Plaintiffs’ claims against Defendant John Doe Trust without prejudice.12
IT IS SO ORDERED.
September 10, 2013
Columbia, South Carolina
Joseph F. Anderson, Jr.
United States District Judge
12
Because this order dismisses Bank of America, NA—the only Defendant other than unknown Defendant John Doe
Trust—further proceedings in this action are unlikely to reveal the identity of “John Doe Trust,” and this court may,
therefore, dismiss Defendant John Doe Trust without prejudice. See Chidi Njoku v. Unknown Special Unit Staff, 217
F.3d 840 (4th Cir. 2000) (“The designation of a John Doe defendant is generally not favored in the federal courts; it
is appropriate only when the identity of the alleged defendant is not known at the time the complaint is filed and the
plaintiff is likely to be able to identify the defendant after further discovery. See Roper v. Grayson, 81 F.3d 124, 126
(10th Cir.1996); Gillespie v. Civiletti, 629 F.2d 637, 642 (9th Cir.1980). “[I]f it does not appear that the true identity
of an unnamed party can be discovered through discovery or through intervention by the court, the court could
dismiss the action without prejudice.” Schiff, 691 F.2d at 198 (footnote omitted); see also Munz v. Parr, 758 F.2d
1254, 1257 (8th Cir.1985)”).
12
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