Hutchens et al v. Bank of America N.A. et al (TV2)

Filing 30

MEMORANDUM AND OPINION as set forth in following order.Signed by District Judge Thomas A Varlan on 5/9/12. (c/m to pro se plaintiffs)(ABF)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
RICHARD CARLOS HUTCHENS and
TAMI MARTIN HUTCHENS,

)
)
)
Plaintiffs,
)
)
v.
)
)
BANK OF AMERICA N.A.,
)
MORTGAGE ELECTRONIC
)
REGISTRATION SYSTEM, and
)
RUBIN LUBLIN SUAREZ SERRANO, LLC, )
)
Defendants.
)

No.:

3:11-CV-624
(VARLAN/SHIRLEY)

MEMORANDUM OPINION
This civil action is before the Court on the Motion to Dismiss by defendant Rubin
Lublin Suarez Serrano, LLC (“RLSS”) [Doc. 5] and the Motion to Dismiss Plaintiffs’
Complaint by defendants Bank of America, N.A. (“BANA”) and Mortgage Electronic
Registration Systems, Inc. (“MERS”) [Doc. 9], pursuant to Federal Rules of Civil Procedure
8 and 12(b)(6). In the motions, defendants move the Court to dismiss all claims of plaintiffs,
Richard and Tami Hutchens, for failure to state a claim upon which relief may be granted and
because the claims fail as a matter of law. Plaintiffs have not responded to the motions to
dismiss and the time for doing so has passed. See E.D. Tenn. L.R. 7.1(a), 7.2.
After careful consideration and for the reasons stated herein, the motions to dismiss
[Docs. 5, 9] will be GRANTED, plaintiffs’ claims will be DISMISSED, and this case will
be CLOSED.

I.

Relevant Facts
The following facts are taken from the complaint and the exhibits attached thereto

[Doc. 1] and will be assumed as true for purposes of the motions to dismiss.1 See, e.g.,
Directv, Inc. v. Treesch, 487 F.3d 471, 476 (6th Cir. 2007) (noting that in ruling upon
motions to dismiss under Rule 12(b)(6), a court must “construe the complaint in the light
most favorable to the plaintiff, accept its allegations as true, and draw all reasonable
inferences in favor of the plaintiff”).
According to the complaint, around March 28, 2008, plaintiffs obtained a $168,000.00
loan (the “Loan”) and executed a promissory note (the “Note”) and deed of trust (the “DOT”)
secured by real property located at 205 Candora Road, Maryville, Tennessee (the “Property”)
[Doc. 1, ¶ 6; Doc. 1-2, p. 30]. The DOT lists Sidus Financial, LLC (“Sidus”) as the lender,
PBRE, Inc. (“PBRE”) as the trustee, and MERS as the nominee and beneficiary of the lender
[Doc. 1, ¶ 6; Doc. 1-2, pp. 48-68]. The DOT requires the borrower to pay principal, interest,
and funds for escrow items, including “Mortgage Insurance Premiums” [Doc. 1-2]. The
DOT also provides that “[a]ny waiver [of an escrow item] must be in writing” and if the

1

The Court may consider exhibits attached to an original complaint without converting a
motion to dismiss into one for summary judgment. See Bassett v. Nat’l Collegiate Athletic Ass’n,
528 F.3d 426, 430 (6th Cir. 2008) (stating that when a court is presented with a Rule 12(b)(6)
motion, “it may consider the [c]omplaint and any exhibits attached thereto . . . and exhibits attached
to defendant’s motion to dismiss so long as they are referred to in the [c]omplaint and are central
to the claims contained therein”).
The complaint in this case consists of more than 150 pages of exhibits relating to plaintiffs’
loan and deed of trust securing real property owned by plaintiffs, including the deed of rust,
documents pertaining to the note, and copies of written communication between the parties.
2

borrower sends payment or partial payment to the lender, the lender “may hold such
unapplied funds until Borrower makes payment to bring the Loan current. If Borrower does
not do so within a reasonable period of time, Lender shall either apply such funds or return
them to Borrower.” [Doc. 1-2]. According to the complaint, around May 9, 2008, Sidus
informed plaintiffs that the Loan had been sold to Countrywide Home Loans Servicing, LP
(“Countrywide”) and, that as of June 1, 2008, all future mortgage payments were to be made
to Countrywide [Doc. 1, ¶ 7]. Plaintiffs allege that “at some point” thereafter, BANA
“acquired” Countrywide and assumed being the servicing agent for Countrywide’s home loan
mortgages, including plaintiffs’ [Id., ¶ 8].2
In October 2010, plaintiffs started having difficulty making the $1,252.41 monthly
mortgage payment, including $58.80 for mortgage insurance [Id., ¶¶ 9, 10]. Plaintiffs allege
that on November 18, 2010, they inquired of BANA how much of a payment would be
needed to bring down the principal balance. On November 29, 2010, plaintiffs allege that
a BANA representative advised them that BANA would cancel plaintiffs’ monthly mortgage
insurance requirement in return for an additional $2,300.00 principal payment paid prior to
plaintiffs’ December mortgage payment [Id., ¶¶ 10, 11]. On December 1, 2010, plaintiffs
sent BANA a $2,300.00 check to be applied to the principal balance and a $1,193.61 check

2

Countrywide changed its name to BAC Home Loans Servicing, LP and BAC Home Loans
Servicing, LP (“BAC”) [See Doc. 10, p. 3 n.3]. On July 1, 2011, BAC merged into and became part
of BANA [See id.]. BANA has appeared and filed its motion to dismiss as successor by merger to
BAC, f/k/a Countrywide [See id.].
3

to be applied to the December 2010 mortgage payment [Id., ¶ 12; Doc. 1-2, p. 6].3 According
to the complaint, BANA failed to honor its representative’s promise to cancel the mortgage
insurance requirement [Id., ¶ 13].
In January 2011, plaintiffs allege that they mailed to BANA and Sidus several letters
of inquiry outlining their problems with making their mortgage payments [Id., ¶¶ 13-18].
Sidus again informed plaintiffs that the mortgage had been sold to Countrywide and that
Sidus no longer had a financial interest in plaintiffs’ home or the Loan [Id., ¶¶ 18-19].
Plaintiffs did not make their February 2011 mortgage payment [Id., ¶¶ 20, 21]. On February
22, 2011, plaintiffs received a notice of intent to accelerate from BANA due to plaintiffs’
failure to cure a $1,360.90 default on their Loan [Id., ¶ 22; Doc. 1-2, p. 15]. Plaintiffs allege
that they gave notice to BANA about its failure to take responsibility for the BANA
representative’s incorrect advice to them regarding the cancellation of the mortgage
insurance [Doc. 1, ¶¶ 24-28].
On March 4, 2011, BANA notified plaintiffs that it had no record of any
communication with plaintiffs regarding the cancellation of the mortgage insurance; that a
property appraisal was needed before BANA could waive the requirement that borrowers
have mortgage insurance; and that BANA was unable to return the $2,300.00 payment
because the Loan was in default given plaintiffs’ failure to make the February 2011 mortgage
payment [Id., ¶ 20; Doc. 1-2, pp. 19-20].

3

Presumably, this amount represents plaintiffs’ $1,252.41 monthly mortgage payment, less
$58.80, the monthly insurance payment.
4

On April 20, 2011, plaintiffs mailed a “qualified written request” letter to BANA. The
letter contained a list of questions pertaining to the Loan, the transaction history of the Loan,
loan insurance, and a request that BANA send to plaintiffs a copy of the loan transaction
history statement [Doc. 1, ¶ 34; Doc. 1-2, pp. 25-28]. On March 4, 2011, BANA responded
to plaintiffs’ April 20, 2011 letter by mailing “all available loan documents” to plaintiffs,
including a loan transaction history statement [Doc. 1, ¶ 38; Doc. 1-2, pp. 29, 69]. On May
10, 2011, BANA sent plaintiffs a letter stating that BANA “has carefully reviewed the
information you provided [in the April 20, 2011 letter] and has determined that your inquiry
does not appear to be specifically related to a servicing concern related to your loan. Your
loan remains in full force and effect, and we will continue to service your loan in accordance
with the valid, binding loan documents that you signed.” [Doc. 1 ¶¶ 41-42; Doc. 1-2, p. 77].
On June 6, 2011, MERS recorded an assignment of DOT to BANA [Doc. 1, ¶ 45;
Doc. 1-2, p. 80]. On July 1, 2011, RLSS, acting as BANA’s foreclosure counsel, notified
plaintiffs that BANA intended to foreclose on the Property [Doc. 1, ¶¶ 63-66; Doc. 1-2, p.
83]. On July 12, 2011, RLSS prepared a transfer and assignment of DOT for the purpose of
MERS acting as nominee for the lender [Doc. 1, ¶ 71; Doc. 1-2, p. 92]. On August 26, 2011,
RLSS notified plaintiffs that BANA was the current holder of the Note, that the total amount
due under the Loan was $167,072.01, and that $9,019.45 was needed to cure the default
[Doc. 1, ¶¶ 93-95; Doc. 1-2, p. 94]. On August 23, 2011, MERS recorded a transfer and
assignment of DOT to BANA [Id., p. 92]. These documents were recorded and, according
to plaintiffs, improperly notarized [See generally Doc. 1].
5

On September 20, 2011, RLSS sent plaintiffs notice that unless they paid the amount
due under the Loan, the Property would be sold at a public foreclosure sale on October 20,
2011 [Doc. 1, ¶¶ 95-101; Doc. 1-2, p. 96]. Plaintiffs did not make the payment. On October
31, 2011, RLSS notified plaintiffs that the foreclosure sale had taken place and that Freddie
Mac had purchased the Property [Doc. 1, ¶¶ 95-101; Doc. 1-2, p. 107]. In December 2011,
RLSS, as duly appointed trustee, recorded a substitute trustee’s deed transferring the DOT
to Freddie Mac [Doc. 1, ¶ 109; Doc. 1, p. 115]. Thereafter, on November 23, 2011, plaintiffs
sent BANA another letter designated a “qualified written request.”

This letter lists

essentially the same questions plaintiffs put to BANA in the April 20, 2011 letter [Doc. 1,
¶¶ 117-18; Doc. 1-2, p. 120].
On November 28, 2011, Freddie Mac filed suit against plaintiffs in state court for a
detainer summons for failing to vacate the Property [Doc. 1, ¶ 119; Doc. 1-2, p. 125]. In
December 2011, plaintiffs filed a response and motion to dismiss the state court action on
grounds that Freddie Mac lacked standing to foreclose [Doc. 1, ¶ 128; Doc. 1-2, p. 127]. On
December 29, 2011, with the state action pending, plaintiffs filed this action against BANA,
MERS, and RLSS, and a motion to compel defendants to show clear unbroken chain of title
of the Note and DOT [See generally Doc. 1; Doc. 1-2, p. 146].
In one short paragraph in the complaint, plaintiffs claim that defendants violated the
Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601, et seq., the Truth in
Lending Act (“TILA”), 15 U.S.C. §§ 1601, et seq., the Fair Debt Collection Practices Act
(“FDCPA”), 15 U.S.C. §§ 1692, et seq., and the National Housing Act (“NHA”), 12 U.S.C.
6

§ 1701x(c)(5) [Doc. 1, ¶ 4]. The complaint alleges “possible” or “potential” violations of
these various statutes. Plaintiffs do not allege which defendants violated which statutes, do
not allege how each defendant violated the statutes, and do not allege which provisions of
the statutes were violated. Liberally construing the complaint, it appears that plaintiffs also
attempt to assert allegations of wrongful foreclosure and fraudulent assignment of the DOT.
In the prayer for relief, plaintiffs refer generally to “defendants,” request that defendants be
ordered to pay $1,000.000.00 as punitive damages, and request that the Court order Freddie
Mac, a non-party, to provide evidence of a clear unbroken chain of title for the Note and the
DOT [Doc. 1, pp. 20-21].
II.

Standard of Review
Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must contain

“a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.
R. Civ. P. 8(a)(2). In 2007, the United States Supreme Court modified the pleading standard
in the context of antitrust cases. Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Notably,
the Supreme Court held that in order to survive a 12(b)(6) motion to dismiss—which attacks
the sufficiency of a complaint—the plaintiff must state a claim for relief that is plausible on
its face. Id. In 2009, the Supreme Court extended the Twombly (or plausibility) standard to
all federal civil cases. Ashcroft v. Iqbal, 556 U.S. 662, —, 129 S.Ct. 1937, 1953 (2009).
In order to survive a Rule 12(b)(6) motion to dismiss for failure to state a claim, a
complaint must contain allegations supporting all material elements of the claims. Bishop
v. Lucent Techs., Inc., 520 F.3d 516, 519 (6th Cir. 2008). In determining whether to grant a
7

motion to dismiss, all well-pleaded allegations must be taken as true and must be construed
most favorably toward the non-movant. Trzebuckowski v. City of Cleveland, 319 F.3d 853,
855 (6th Cir. 2003). Detailed factual allegations are not required, but a party’s “obligation
to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and
conclusions.” Twombly, 550 U.S. at 555. A formulaic recitation of the elements of a cause
of action will not do. Id. Nor will an “unadorned, the-defendant-unlawfully harmed-me
accusation.” Iqbal, 129 S. Ct. at 1937. A pleading must instead “contain either direct or
inferential allegations respecting all the material elements to sustain a recovery under some
viable legal theory.” Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436-37 (6th
Cir. 1988) (quoting Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir.
1984)).
Plaintiffs are proceeding pro se. The Court is “ever mindful that pro se complaints
are liberally construed and are held to less stringent standards than the formal pleadings
prepared by attorneys.” Williams v. Curtin, 631 F.3d 380, 383 (6th Cir. 2011). However,
the “lenient treatment generally accorded to pro se litigants has limits.” Pilgrim v. Littlefield,
92 F.3d 413, 416 (6th Cir. 1996). “Neither this Court nor other courts . . . have been willing
to abrogate basic pleading essentials in pro se suits.” Wells v. Brown, 891 F.2d 591, 594 (6th
Cir. 1989) (citing cases). Liberal federal pleading standards do not permit litigants, even
those acting pro se, to proceed on pleadings that are not readily comprehensible. Cf. Becker
v. Ohio State Legal Servs. Ass’n, 19 F. App’x 321, 322 (6th Cir. 2001) (upholding district
court’s dismissal of pro se complaint containing “vague and conclusory allegations
8

unsupported by material facts”); Janita Theresa Corp. v. United States Attorney, No. 961706, 1997 WL 211247, at *1 (6th Cir. Apr. 28, 1997) (upholding district court’s dismissal
of pro se complaint whose allegations were “far too muddled to serve as a basis for a proper
suit”).
III.

Analysis
Plaintiffs have failed to respond to either of the motions to dismiss and the time period

for responding to the motions has expired. E.D. Tenn. L.R. 7.1(a), 7.2. Failure to respond
to a motion may be treated as acquiescence to the relief sought. E.D. Tenn. L.R. 7.2
(“[f]ailure to respond to a motion may be deemed a waiver of any opposition to the relief
sought”). See also Campbell v. McMinn Cnty, Tenn., No. 1:10-CV-278, 2012 WL 369090,
at *2 (E.D. Tenn. Feb. 3, 2012) (“Plaintiff’s failure to respond effectively waives any
objections that he may have had on this matter.”). Thus, while defendants’ motions to
dismiss may be granted based solely upon plaintiffs’ failure to respond, the Court will discuss
the additional grounds upon which it finds that plaintiffs’ claims cannot withstand
defendants’ motions to dismiss.
A.

RESPA

Taking the allegations in the complaint as true and construed in the light most
favorable to plaintiffs, it appears that plaintiffs have attempted to assert a claim for a
violation of RESPA under to § 2605. A borrower can sue a servicer under § 2605 for failure

9

to disclose whether loan servicing rights may be transferred. 12 U.S.C. § 2605.4 Section
2605 requires that a borrower be notified of certain loan servicing transfers and receive
certain information upon request. Id. Subsection (e) of § 2605 specifically requires “any
servicer of a federally related mortgage loan” to respond to a “qualified written request” (a
“QWR”) from the borrower that seeks “information relating to the servicing” of the loan.
Id. § 2605(e)(1)(A). Section 2605(e)(1)(B) defines a QWR as a written request that:
(i) includes, or otherwise enables the servicer to identify, the name and
account of the borrower; and
(ii) 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.
Id. § 2605(e)(1)(B). Upon receiving a QWR, a servicer is required to acknowledge receipt
of the request within twenty (20) days and required to provide a response to the borrower
within sixty (60) days. Id. § 2605(e)(1)(A), (e)(2). The servicer must then either correct the
error pointed out by the borrower, or conduct an investigation and provide a written
explanation containing either “a statement of the reasons for which the servicer believes the
account of the borrower is correct as determined by the servicer” or “[the] information
requested by the borrower or an explanation of why the information requested is
unavailable.” Id. § 2605(e)(2)(A)-(C).
4

In addition to a cause of action under § 2605, RESPA contains two other provisions
allowing private causes of action. Section 2607 provides a cause of action for improper referral
kickbacks. 12 U.S.C. § 2607. Section 2608 prohibits a seller from requiring certain title insurance
purchases. Id. § 2608. Plaintiffs’ complaint contains no allegations relating to improper kickbacks
or title insurance.
10

Only “services” of a federally related mortgage loan are duty-bound by RESPA to
respond to QWRs. Id. § 2505(e). Failure to plead that a defendant is in fact a loan servicer
will defeat a plaintiff’s cause of action under RESPA, as it has not been established that the
defendant’s liability is plausible under the Iqbal/Twombly standard. See, e.g., Gibson v.
Mortg. Elec. Registration Sys., No. 11-2173-STA, 2011 WL 3608538, at *4 (W.D. Tenn.
Aug. 16, 2011) (finding that the failure to plead that a defendant law firm is a servicer defeats
a plaintiff’s RESPA claim for liability based on the law firm’s failure to respond to a QWR).
Here, plaintiffs have not alleged that RLSS or MERS are “servicers” of a federally related
mortgage loan under RESPA. Accordingly, neither RLSS or MERS had a duty to respond
to plaintiffs’ QWR and plaintiffs’ RESPA claim against these defendants cannot be
sustained.
Plaintiffs have alleged facts sufficient to state that BANA was a servicer of a federally
related mortgage loan to whom plaintiffs sent two QWRs, one on April 20, 2011, and one
on November 23, 2011. Plaintiffs have not alleged, however, that BANA failed to timely
acknowledge receipt and respond to the QWRs as required by § 2605. See, e.g., Mekani v.
Homecomings Fin. LLC, 752 F. Supp. 2d 785, 795 (E.D. Mich. 2010) (holding that when a
servicer responds to a QWR and the plaintiff argues that the response is inadequate, the
plaintiff must offer factual content or cite some authority to suggest why the response was
inadequate). As shown by the documents attached to plaintiffs’ complaint, in response to
plaintiffs’ April 20, 2011 letter, BANA provided plaintiffs a loan history statement which
gives a history of payments, servicing expenses to third parties, tax and insurance payments,
11

and late charges assessed and paid [Doc. 1-2, pp. 29, 69-77; Doc. 1, ¶¶ 38, 39]. BANA also
indicated in its response to the April 20, 2011 letter that plaintiffs had requested additional
information not specifically related to a servicing concern related to the Loan and BANA’s
obligations under RESPA [Doc. 1-2, p. 77]. The Court has also reviewed the substance of
plaintiffs’ QWRs and finds that while the substance of plaintiffs’ letters may have enabled
BANA to identify plaintiffs’ names and account information, the letters do not include “a
statement of the reasons for the belief of the borrower, to the extent applicable, that the
account is in error or provide[] sufficient detail to the servicer regarding other information
sought by the borrower.” 12 U.S.C. § 2605(e)(1)(B). Finally, as to the November 23, 2011
letter, the sixty (60) day period under RESPA for a servicer to respond to a QWR would not
have expired until after December 29, 2011, the date plaintiffs filed their complaint. See,
e.g., Kilesch v. Fifth Third Mortg. Co., 3:10-0600, 2010 U.S. Dist. LEXIS 125686, at *7-*8
(M.D. Tenn. Nov. 29, 2010) (“Because Plaintiff filed this lawsuit before Defendant’s time
for providing the requested information had passed, Plaintiff’s claim that Defendant failed
to furnish him the requested information is premature.”).
Last, plaintiffs have not alleged any damages as a result of the alleged violation of
RESPA. District courts within the United States Court of Appeals for the Sixth Circuit and
other circuits have held that a plaintiff must allege actual damages to obtain relief under
RESPA. See, e.g., Lee v. EquiFirst Corp., No. 3:10-cv-809, 2010 WL 4320714 (M.D. Tenn.
Oct. 26, 2010) (“Courts have repeatedly held that alleging a breach of RESPA duties alone
does not state a claim under RESPA . . . Plaintiffs must, at a minimum, also allege that the
12

breach resulted in actual damages”) (internal citations and quotations omitted); Allen v.
United Fin. Mortg. Corp., 660 F. Supp. 2d 1089, 1097 (N.D. Cal. 2009) (collecting cases).
Here, plaintiffs request that the Court issue a cease and desist order as to the foreclosure,
order defendants to release all invalid lien claims on the Property, order that all negative
information be removed from plaintiffs’ credit report, and that the Court order payment of
punitive damages and miscellaneous expenses incurred by plaintiffs in their pursuit of this
action [Doc. 1, pp. 20-21]. There are no allegations or requests for actual damages.
According, and for the reasons given above, the Court finds that plaintiffs have failed
to state a claim under RESPA against RLSS, MERS, and BANA, and plaintiffs’ RESPA
claim will be DISMISSED as to all defendants.
B.

The TILA

The TILA “‘was enacted to promote the informed use of credit by consumers by
requiring meaningful disclosure of credit terms.’” Barrett v. JP Morgan Chase Bank, N.A.,
445 F.3d 874, 875 (6th Cir. 2006) (quoting Begala v. PNC Bank, Ohio, N.A., 163 F.3d 948,
950 (6th Cir. 1998)). The TILA’s dual purpose is to “to facilitate the consumer’s acquisition
of the best credit terms available; and to protect the consumer from divergent and at times
fraudulent practices stemming from the uniformed use of credit.” Jones v. TransOhio Sav.
Ass’n, 747 F.2d 1037, 1040 (6th Cir. 1984) (citation omitted). Section 1638(a) of the TILA
requires a creditor to make certain disclosures, 15 U.S.C. § 1638(a), and “‘[t]he only parties
who can be liable for . . . violations [of the TILA] are the original creditor, 15 U.S.C. § 1640,
and assignees of that creditor, 15 U.S.C. § 1641.” Sherrell v. Bank of Am., N.A., No. CV F
13

11-1785 LJO JLT, 2011 U.S. Dist. LEXIS 147427, at *31 (E.D. Cal. Dec. 22, 2011). In
addition, the “TILA expressly disclaims liability for servicers ‘unless the servicer is or was
the owner of the obligation.’ 15 U.S.C. § 1641(f)(1).” Stewart v. BAC Home Loans
Servicing, LP, No. 10 C 2033, 2011 U.S. Dist. LEXIS 24715, at *9 (N.D. Ill. Mar. 10, 2011).
The TILA allows an action for damages, including “actual damages,” statutory damages in
the amount of “not less than $400 or greater than $4,000[,]” and costs and attorney’s fees.
15 U.S.C. § 1640(a)(1)-(3). Under § 1640(e) “any action under this section may be brought
in any United States district court . . . within one year from the date of the occurrence of the
violation[.]” Id. § 1640(e).
Plaintiffs have not explicitly alleged that RLSS, BANA, or MERS are creditors,
assignees of a creditor, or servicers that are the owners of the obligation. However, assuming
one or all defendants fall within one of these categories, plaintiffs have also not alleged what,
if any, provision of the TILA was violated by any defendant or how any defendant violated
that provision. Rather, plaintiffs make only the conclusory assertion that defendants violated
the TILA. See, e.g., Elsman v. Std. Fed. Bank, 46 F. App’x 792, 799-80 (6th Cir. 2002)
(holding that conclusory assertions that the defendants’ actions violated the TILA fail to
adequately plead actionable claims); Yaldu v. Bank of Am. Corp., 700 F. Supp. 2d 832, 842
(E.D. Mich. 2010) (dismissing the plaintiff’s claim because “[t]here are no allegations that
[the defendant] owns the obligation. Therefore, [the defendant] cannot be held liable under
the TILA”).

14

Additionally, given the facts alleged in the complaint, a claim under the TILA would
be barred by the TILA’s one-year statute of limitations. 15 U.S.C. § 1640(e). Plaintiffs
allege that they executed the DOT on March 28, 2008 [Doc. 1, ¶ 6]. Thus, the latest date
upon which plaintiffs could have brought their claim for a violation of the TILA was one
year later, on March 28, 2009. Plaintiffs filed the complaint initiating this action on
December 29, 2011, over two and a half years after the consummation of the loan
transaction.
In sum, plaintiffs’ claim under the TILA will be DISMISSED as to all defendants for
the reasons stated above.
C.

The FDCPA

In the complaint, plaintiffs cite to the FDCPA without listing a specific provision that
was violated and without alleging sufficient facts to suggest how the alleged violation
occurred. Under the FDCPA, a plaintiff may bring a civil action against a debt collector who
engages in “abusive debt collection practices,” 15 U.S.C. §§ 1692(e), 1692k. Liability under
the FDCPA attaches only to a defendant that qualifies as a “debt collector,” a statutorily
defined term. See Kristner v. Law Offices of Michael P. Margelefsky, LLC, 518 F.3d 433,
435-36 (6th Cir. 2008). The FDCPA definition of “debt collector” provides, in relevant part:
[A]ny person who uses any instrumentality of interstate commerce or
the mails in any business the principal purpose of which is the
collection of any debts, or who regularly collects or attempts to collect,
directly or indirectly, debts owed or due or asserted to be owed or due
another[.] [T]he term includes any creditor who, in the process of
collecting his own debts, uses any name other than his own which

15

would indicate that a third person is collecting or attempting to collect
such debts.
15 U.S.C. § 1692a(6). This definition of debt collector “does not include . . . any person
collecting or attempting to collect any debt owed or due or asserted to be owed or due
another to the extent such activity . . . concerns a debt which was not in default at the time
it was obtained by such person.” 15 U.S.C. § 1692a(6)(F)(iii); Montgomery v. Huntington
Bank, 346 F.3d 693, 698 (6th Cir. 2003) (stating that the statutory definition of debt collector
“does not include the consumer’s creditors” ) (internal quotation marks omitted); see also 15
U.S.C. § 1692a(4) (defining a “creditor” as “any person who offers or extends credit creating
a debt or to whom a debt is owed”).
Plaintiffs have not alleged that RLSS, BANA, or MERS were debt collectors or that
these entities engaged in abusive debt collection practices in violation of the FDCPA. See,
e.g., Romberger v. Wells Fargo Bank, N.A., No. 07-13210, 2008 WL 3838026, at *4 (E.D.
Mich. Aug. 14, 2008) (stating that because there are no allegations that MERS transmitted
correspondence to the plaintiff to collect on debts other than those it was directly owed,
MERS, as the original mortgagee in the position of a creditor, does not “satisfy the statutory
definition of a ‘debt collector’ under the FDCPA”); Stamper v. Wilson & Associates, PLLC,
No. 3:09-cv-270, 2010 U.S. Dist. LEXIS 31770, at *12 (E.D. Tenn. Mar. 31, 2010)
(collecting and discussing cases and noting that the majority of courts have held that law
firms conducting non-judicial foreclosures are not liable under the general provisions of the

16

FDCPA because they are merely enforcing a security interest as opposed to collecting a
debt).
Furthermore, in the portion of the complaint that refers to the FDCPA, there are no
alleged facts regarding what actions were taken by RLSS, BANA, or MERS that were in
violation of the FDCPA. Rather, beginning at paragraph 64 of the complaint, plaintiffs set
forth a history of correspondence between plaintiffs, BANA, RLSS, and Sidus, but do not
identify, as to any defendant, conduct that violated the FDCPA. Instead, plaintiffs set forth
allegations of indicators of fraud and of “anomalies” in various documents, including in the
transfer and assignment of DOT. As noted above, the FDCPA prohibits a wide-range of
conduct associated with debt collection activities. While plaintiffs’ complaint refers to letters
sent by BANA and RLSS to plaintiffs regarding the foreclosure and default, including a
notice of acceleration of the Loan, there are no factual allegations describing these letters as
harassing or abusive and no allegations identifying other abusive debt collections practices
such as harassing phone calls or attempts to collect from individuals not obligated on the
Loan.
Furthermore, although the time-line of events is somewhat unclear from the
complaint, it appears to the Court that defendants would not fall into the statutory definition
of “debt collectors.” Countrywide, later BAC, merged with BANA and acquired the Loan
from Sidus sometime after March 2008, but before October 2010 [Doc. 1, ¶¶ 6-10]. Plaintiffs
allege that they contacted BANA in November 2010 regarding the Loan and that in February
2011, BANA notified plaintiffs that the Loan was in default, followed by various
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communications between BANA and plaintiff [Id., ¶¶ 13-22]. Taking these allegations as
true, BANA does not meet the statutory definition of a debt collector under § 1692a(6)(F)(iii)
because BANA acquired the Loan prior to default and thus, BANA is not a “non-originating
debt holder that either acquired a debt in default or . . . treated the debt as if it were in default
at the time of acquisition.” Bridge v. Ocwen Fed. Bank, FSB, — F.3d —, —, 2012 WL
1470146, at *6 (6th Cir. Apr. 30, 2012); see 15 U.S.C. § 1692a(6)(F)(iii).
In sum, having no factual allegations to support an FDCPA claim as to any defendant,
plaintiffs’ claim under the FDCPA will be DISMISSED.
D.

The NHA

Plaintiffs also allege that defendants violated 12 U.S.C. § 1701x(c)(5) because “a
clause in the mortgage contract proposes that by signing the contract the mortgagor waives
rights to contest foreclosure actions” while plaintiffs, in fact, “can not waive their right to due
process guaranteed by the Constitution.” [Doc. 1, ¶ 4]. Section 1701x(c)(5) requires lenders
to provide notice of home ownership counseling to certain qualifying low and moderate
income homeowners. See 12 U.S.C. § 1701x(c)(5). Based on the Court’s review of this
statute and the allegations in the complaint, the Court can discern no legal or factual grounds
for plaintiffs’ allegation that defendants committed a violation of § 1701x(c)(5).
Accordingly, this claim will also be DISMISSED as to all defendants.
E.

Claim of Wrongful Foreclosure

Plaintiffs assert that defendants wrongfully foreclosed on the Property and that they
are “uncertain whether RLSS actually held a public auction for the Plaintiff’s [sic] property
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on the front entrance steps of the Blount County Court house[.]” [Doc. 1, ¶ 101]. However,
according to the DOT executed by plaintiffs and attached to the complaint, MERS is a
beneficiary with authority to act on behalf of the lender [Doc. 1; Doc. 1-2, pp. 48-60]. The
DOT also gives the lender the right to foreclose on the Property in the event of default [Doc.
1-2, pp. 48-60]. Plaintiffs also acknowledge in the complaint that they did not make the
required monthly mortgage payments on the Loan and that MERS, in its capacity as nominee
for the lender, assigned the DOT to BANA, which initiated foreclosure proceedings as a
result of plaintiffs’ default [Doc. 1, ¶ 20]. According to the complaint, following the
foreclosure sale of the Property on October 20, 2011 to Freddie Mac, RLSS recorded a
substitute trustee’s assignment of DOT [Doc. 1-2, pp. 98, 117]. The substitute trustee’s deed,
attached to plaintiffs’ complaint, transfers the DOT to Freddie Mac and certifies that a public
auction occurred and that it was held in accordance with Tennessee law [Id.]. Thus, given
these allegations and the exhibits attached to the complaint, the DOT is in accordance with
the applicable law, BANA was authorized to foreclose on the Property, and Freddie Mac
rightfully took possession of the Property. See, e.g., Ferguson v. Booth, 160 S.W. 67, 69
(Tenn. 1913) (stating that recitals in a deed are prima facie evidence of the facts within the
document).
Plaintiffs’ challenge to the role of MERS in the foreclosure of the Property is unclear,
but the Court notes that it has long been well-settled that under Tennessee law, any
assignment of a note automatically transfers beneficial ownership of the accompanying deed
of trust. See W.C. Early Co. v. Williams, 186 S.W. 102, 103 (Tenn. 1916) (“It is a
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well-settled rule with us that the lien of a mortgage or trust deed passes, without a special
assignment thereof, to the endorsee of a note or transferee of the debt secured by the
instrument.”); Clark v. Jones, 27 S.W. 1009, 641 (1894) (“The transfer of the note, without
more, carried with it the lien created by the deed of trust.”). The role of MERS in the
mortgage process has also been validated by courts, including those within the Sixth Circuit.
See, e.g., Golliday v. Chase Home Fin., LLC., No. 1:10-cv-532, 2011 WL 4352554, at *7
(W.D. Mich. August 23, 2011) (stating that courts have uniformly approved of the role of
MERS in mortgage transactions); see also, e.g., In re Mortg. Elec. Registration Sys. (MERS)
Litig., MDL No. 09-2119-JAT, 2011 WL 4550189, at *3-*4 (D. Ariz. Oct. 3, 2011); Ciardi
v. Lending Co., Inc., No. CV 10-0275-PHX-JAT, 2010 WL 2079735, at *3-*4 (D. Ariz. May
24, 2010) (dismissing the argument that the mere listing of MERS as the beneficiary renders
the deed of trust invalid). Plaintiffs also acknowledge in the complaint that per the DOT,
MERS may act as nominee for the lender and its successor and assigns. Several courts have
noted that this language explicitly grants MERS the power to act as the agent of any valid
note holder, including assigning a deed of trust and enforcing a note. See e.g. Golliday, 2011
WL 4352554, at *7; Ciardi, 2010 WL 2079735, at *3. Plaintiffs have also offered no legal
or factual allegation or basis for disregarding the DOT executed by plaintiffs. As noted
supra, the lender, or any party that succeeds the lender as the holder of the Note, is the
beneficial owner of the DOT, with MERS serving as the nominee. Accordingly, any claim
for wrongful foreclosure plaintiffs have attempted to assert based on the role of MERS in the
foreclosure of the Property will be DISMISSED.
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Plaintiffs’ allegations that the assignment of the DOT is invalid because the
assignment was fraudulent, “robo-signed,” and improperly notarized also fails to state a
claim for wrongful foreclosure. A claim for fraud is subject to the heightened pleading
standard of Federal Rule of Civil Procedure 9(b), which provides that “[i]n alleging fraud or
mistake, a party must state with particularity the circumstances constituting fraud or
mistake.” Fed. R. Civ. P. 9(b). To satisfy Rule 9(b), “a plaintiff must, at a minimum, allege
the time, place and content of the alleged misrepresentation upon which he or she relied; the
fraudulent intent of the defendants and the injury resulting from the fraud.” Gebhardt v.
GMAC Mortg., LLC, No. 3:09-CV-425, 2010 WL 2901823, at *4 (E.D. Tenn. July 21, 2010)
(citing Calipari v. Powertel, Inc., 231 F. Supp. 2d 734, 735-36 (W.D. Tenn. 2002) (citations
omitted)). Plaintiffs’ allegation that the assignment of DOT was fraudulent does not satisfy
this heightened pleading standard. Additionally, under Tennessee law, assignments are not
required, see supra W.C. Early Co., 186 S.W. at 103, and further, the assignment of DOT,
attached to the complaint, is stamped with a notary seal, which “provides prima facie proof
of a notary’s official character . . . [and] authenticates the instrument.” In re Marsh v. Fleet
Mortg. Grp., 12 S.W.3d 449, 453 (Tenn. 2000). Finally, the Court notes that a litigant who
is not a party to an assignment lacks standing to challenge that assignment. See, e.g., Livonia
Properties Holdings, LLC v. 12840-12976 Farmington Road Holdings, LLC, 399 F. App’x
97, 102-03 (6th Cir. 2010) (finding a lack of standing under Michigan law).

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IV.

Conclusion
For the reasons stated above, the motions to dismiss [Docs. 5, 9] will be GRANTED,

plaintiffs’ claims against RLSS, BANA, and MERS will be DISMISSED, and the Clerk will
be DIRECTED to CLOSE this case. An appropriate order will be entered.
ORDER ACCORDINGLY.

s/ Thomas A. Varlan
UNITED STATES DISTRICT JUDGE

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