Ike et al v. Quantum Servicing Corporation et al

Filing 24

ORDER granting 8 Motion to Dismiss. Signed by Judge Samuel H. Mays, Jr on 08/27/2012.

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION

MIKE O. IKE and EARLENE G. IKE.
Plaintiffs,
v.
QUANTUM SERVICING CORPORATION,
WMC MORTGAGE CORPORATION, and
WILSON & ASSOCIATES, PLLC,
Defendants.

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No.

11-02914

ORDER GRANTING DEFENDANT’S MOTION TO DISMISS

Before the Court is Defendant Wilson & Associates, PLLC’s
(“Wilson”) November 1, 2011 Motion to Dismiss.
8.)

(Motion, ECF No.

Plaintiffs Mike O. Ike and Earlene G. Ike (collectively,

the “Ikes”) have not responded and the time to do so has passed.
See W.D. Tenn. Civ. R. 7.2(a)(2) (“The response to the motion
and its supporting memorandum . . . shall be filed within 14
days

after

service

of

the

motion

.

.

.

[and]

[f]ailure

to

respond timely to any motion . . . may be deemed good grounds
for granting the motion.”).

For the following reasons, Wilson’s

Motion is GRANTED.
I.

Background

The Ikes bring suit for damages and a writ of Forcible
Entry and Detainer arising from a scheduled foreclosure sale of

their properly located at 9972 Humphrey Road, Cordova, Tennessee
(the “Property”).
the

interest

(Compl. ¶ 1, ECF No. 1-2.)

rate

on

increased by 6.125%.
increase,

the

Ikes

mortgage payments.

the

Ikes’

(Id. ¶ 12.)
allege
(Id.)

On May 6, 2005,

adjustable-rate

mortgage

As a consequence of the rate

they

were

unable

to

make

their

The Ikes allegedly contacted Quantum

to restructure their mortgage so they could maintain ownership
of the Property.

(Id.)

On August 20, 2010, the Ikes allegedly received a letter
from

Dave

(Id.

¶

Morrow

13.)

(“Morrow”),

Morrow

the

offered

Asset

the

Ikes

Manager
a

for

“short

payoff”

of

(Id.)

$370,827.01 from a principal balance of $716,585.18.

The

Ikes were unable to accept Quantum’s offer.

(Id.)

2011,

“Qualified

the

Request”

Ikes
in

allegedly

compliance

sent
with

Quantum
the

Procedures Act, 12 U.S.C. § 2605.

a

Real

In September

Estate

(Id. ¶ 17.)

Quantum.

Written

Settlement

That request was

intended “to come to an understanding of what company currently
owned the promissory note . . . [and] to work out a settlement.”
Quantum responded on September 8, 2011, explaining that

(Id.)

the Qualified Written Request was invalid.

(Id.)

The Ikes

allege that Quantum has failed to respond to additional requests
for mortgage assistance.

(Id.)

The Ikes aver that they were eligible for various federal
programs,

including

the

Home

Affordable
2

Modification

Program

(“HAMP”) and Making Homes Affordable (“MHA”).
Ikes

allegedly

under

HAMP

did

and

not

receive

Tennessee

proper

law.

(Id. ¶ 14.)

notice

(Id.

¶

of

The

foreclosure

18.)

They

were

purportedly entitled to receive a certified letter to the effect
that “all possibilities for modification had been exhausted, and
that [the Ikes] did not qualify for any of the federal programs
available

to

distressed

allegedly

did

not

property

inform

federal assistance.

the

owners.”

Ikes

of

Quantum

(Id.)

their

eligibility

for

(Id. ¶ 14.)

The Ikes allege that “the foreclosure sale should never
have been pursued because the [Ikes] were never advised of the
federal

programs

alternative

such

for
as

which
a

they

forbearance

qualified
plan

nor

making

required by the forbearance plan by [Quantum].”

offered

an

payments

as

(Id. ¶ 19.)

According to the Ikes, Quantum “deliberately and intentionally
set [the Ikes] up such that the costs, the fees, and the deficit
accrued on the mortgage account . . . force[d] a foreclosure
sale.”

(Id.)

Quantum

and

foreclosure

sale

through

misleading,

and

contradictory.”

Wilson

allegedly

correspondence
(Id.)

that

was
The

forced

the

“confusing,
Ikes

allege

violations of the Tennessee Consumer Protection Act (“TCPA”),
the Due Process Clause, and the common law theory of good faith
and fair dealing.
II.

(Id. at 8-11.)

Jurisdiction and Choice of Law
3

Under

28

jurisdiction

U.S.C.
of

§

all

1332(a),

civil

this

actions

Court

where

has
the

“original
matter

in

controversy exceeds the sum or value of $75,000, exclusive of
interest and costs” between citizens of different states.
U.S.C. § 1332(a)(1).

The Ikes are Tennessee citizens.

28

Quantum

is a Delaware corporation with its principal place of business
in Florida.
is

(Notice of Removal 3-4, ECF No. 1.)

incorporated

and

has

its

Connecticut.

(Id. at 4.)

association.

(Id.)

trust

worth

more

principal

place

WMC Mortgage

of

business

in

Wilson is an Arkansas professional

The subject of the litigation is a deed of

than

$750,000.

The

parties

are

completely

diverse, and the amount-in-controversy requirement is satisfied.
In a diversity action, state substantive law governs.

See

Montgomery v. Wyeth, 580 F.3d 455, 459 (6th Cir. 2009) (citation
omitted); Brocklehurst v. PPG Indus., Inc., 123 F.3d 890, 894
(6th Cir. 1997) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64
(1938)).

A federal district court is required to apply the

“choice of law” rules of the state in which it sits.

Klaxon Co.

v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941), Max Arnold
& Sons, LLC v. W.L. Haily & Co., 452 F.3d 494, 499 n.7 (6th Cir.
2005).
would

“Otherwise
constantly

coordinate

state

the

accident

disturb

equal

and

federal

of

diversity

of

citizenship

administration

of

justice

courts

Klaxon, 313 U.S. at 496.
4

sitting

side

by

in

side.”

For tort claims, Tennessee follows the “most significant
relationship” rule, which provides that “the law of the state
where

the

injury

occurred

will

be

applied

unless

some

other

state has a more significant relationship to the litigation.”
Hicks v. Lewis, 148 S.W.3d 80, 86 (Tenn. Ct. App. 2003) (quoting
Hataway

v.

McKinley,

830

S.W.2d

53,

59

(Tenn.

1992)).

The

alleged injuries in this case occurred in Tennessee, and Wilson
assumes

that

responded.

Tennessee

law

applies.

The

Ikes

have

not

Tennessee substantive law applies.

III. Standard of Review
In addressing a motion to dismiss for failure to state a
claim under Federal Rule of Civil Procedure 12(b)(6), the court
must construe the complaint in the light most favorable to the
plaintiff and accept all well-pled factual allegations as true.
League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523,
527

(6th

Cir.

2007).

A

plaintiff

can

support

a

claim

“by

showing any set of facts consistent with the allegations in the
complaint.”
(2007).

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 563

This standard requires more than bare assertions of

legal conclusions.

Bovee v. Coopers & Lybrand C.P.A., 272 F.3d

356, 361 (6th Cir. 2001).

“[A] formulaic recitation of the

elements of a cause of action will not do.”
at 555.

Twombly, 550 U.S.

Any claim for relief must contain “a short and plain

statement of the claim showing that the pleader is entitled to
5

relief.”
curiam).

Erickson

v.

Pardus,

551

U.S.

89,

93

(2007)

(per

“Specific facts are not necessary; the statement need

only ‘give the defendant fair notice of what the . . . claim is
Id. (quoting Twombly,

and the grounds upon which it rests.’”
550 U.S. at 555).

Nonetheless, a complaint must contain sufficient facts “to
‘state a claim to relief that is plausible on its face’” to
survive a motion to dismiss.

Ashcroft v. Iqbal, 129 S. Ct.

1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570).
plausibility

standard

is

not

akin

to

a

“The

‘probability

requirement,’ but it asks for more than a sheer possibility that
Id. (citing Twombly, 550

a defendant has acted unlawfully.”
U.S. at 556).
of

action,

“Threadbare recitals of the elements of a cause

supported

by

mere

conclusory

statements,

do

not

suffice.”

Id. at 1949 (citation omitted).

A plaintiff with no

facts

“armed

conclusions”

and

with

nothing

more

cannot

Id. at 1950.

“unlock the doors of discovery.”
IV.

than

Analysis

Wilson

argues

that

the

Complaint

“specifically

allege any particular wrongful action taken by Wilson.”
Mem. 1, ECF No. 8-1.)
allegations
requirement.

do

not

to

(Wilson

According to Wilson, the Ikes’ TCPA

satisfy

(Id. at 3.)

fails

the

TCPA’s

heightened

pleading

Wilson also argues that the Ikes have

not pled a plausible claim under the common law duty of good
6

faith and fair dealing.

(Id.)

Finally, Wilson argues that the

Ikes’ Due Process allegations fail because Wilson is not a state
actor.

(Id. at 4.)
A. TCPA

The TCPA provides a private right of action for a person
who suffers financial loss as a result of another’s “unfair or
deceptive act or practice.”
establish

a

prima

facie

Tenn. Code Ann. § 47-18-109.

case,

a

plaintiff

must

allege

To

facts

showing that the “defendant engaged in an act or practice that
is unfair or deceptive as defined under the [TCPA], and that
[the] plaintiff suffered a loss of money, property, or a thing
of value as a result of the unfair or deceptive act of [the]
defendant.”

Rhodes v. Bombardier Capital Inc., No. 3:09-CV-562,

2010 U.S. Dist. LEXIS 101176, at *5-6 (E.D. Tenn. Sept. 24,
2010) (citing Tenn. Code Ann. § 47-18-109).
The TCPA does not define the terms “unfair” or “deceptive,”
but it provides a non-exclusive list of acts and practices that
See Tenn. Code Ann. § 47-18-

are per se unfair or deceptive.
104(b).

For acts or practices not on the list, courts must

determine whether they are unfair or deceptive on a case-by-case
basis.

See Wolfe v. MBNA Am. Bank, 485 F. Supp. 2d 874, 890

(W.D. Tenn. 2007) (citing Ganzevoort v. Russell, 949 S.W.2d 293,
300

(Tenn.

recognized

1997)).
that

a

“[T]he

deceptive

Tennessee
act
7

or

Supreme

practice

is

Court
a

has

material

representation,

practice

reasonable consumer.”

or

omission

likely

to

mislead

a

Cloud Nine, LLC v. Whaley, 650 F. Supp.

2d 789, 797 (E.D. Tenn. 2009) (citing Ganzevoort, 949 S.W.2d at
299).

An act or practice is unfair only if it “causes or is

likely to cause substantial injury to consumers which is not
reasonably avoidable by consumers themselves and not outweighed
by

countervailing

benefits

to

consumers

or

to

competition.”

Ward Adventures, LLC v. Buddy Gregg Motor Homes, Inc., No. 3:05CV-236, 2007 U.S. Dist. LEXIS 19890, at *12 (E.D. Tenn. Mar. 20,
2007) (quoting Tucker v. Sierra Builders, 180 S.W.3d 109, 115
(Tenn. Ct. App. 2005)).
Federal Rule of Civil Procedure 9(b)’s heightened pleading
standard applies to TCPA claims.
Co. v. Bell, No. 04-5965,

See Metro. Prop. & Cas. Ins.

2005 U.S. App. LEXIS 17825, at *15-16

(6th Cir. Aug. 17, 2005); Carbon Processing & Reclamation, LLC
v. Valero Mktg. & Supply Co., 694 F. Supp. 2d 888, 900, 915
(W.D.

Tenn.

2010)

(applying

Rule

9(b)’s

particularity

requirement and dismissing plaintiff’s TCPA claims); cf. Harvey
v. Ford Motor Credit Co., 8 S.W.3d 273, 275-276 (Tenn. Ct. App.
1999)

(noting

that

Tennessee

Rule

of

Civil

Procedure

9.02’s

requirement that plaintiffs state any averment of fraud with
particularity

applies

to

TPCA

claims).

“To

satisfy

this

requirement a complaint must set forth specific fraudulent or
deceptive acts rather than general allegations.”
8

Agfa Photo

United States Corp. v. Parham, No. 1:06-cv-216, 2007 U.S. Dist.
LEXIS

40980,

at

*31-32

(E.D.

Tenn.

June

5,

2007)

(citing

Humphries v. West End Terrace, Inc., 795 S.W.2d 128, 132 (Tenn.
Ct. App. 1990)).
The Ikes allege that:
By virtue of the actions of Defendants, Quantum [] and
their law firm, revealed that all acted in conjunction
with another, the federal guidelines designed to
assist distressed homeowners were deliberately and
maliciously violated and further patently ignored in a
manner that showed such disregard of the legal
obligations including those under the [TCPA] with
which each entity was required to comply that punitive
damages are warranted in this case in order to protect
society from irreparable harm that is fraught by the
very nature of driving decent Americans and other
hard-working
individuals
from
the
family
home
wrongfully and illegally when reasonable recourse is
not only available but mandated by federal law . . .
The [Ikes] showed a clear intent to keep their home:
yet they were not advised that they could quality for
modification or he had the ability to pay reasonably
modified note.
Yet, Quantum ignored the [Ikes’]
request and sought no financial and other information
that would have indicated that the [Ikes] met all the
criteria for repayment programs that would pay for the
residence and ultimately bring his loan current.
(Compl. ¶ 8-9.)

The

Ikes’

TCPA

allegations

are

not

well

pled.

“Courts

applying the TCPA have held that a plaintiff must plead with
particularity
conduct.”

the

circumstances

of

the

unfair

or

deceptive

Peoples v. Bank of Am., No. 11-2863-STA, 2012 U.S.

Dist. LEXIS 22208, at *36 (W.D. Tenn. Feb. 22, 2012); see also

9

Bell, 2005 U.S. App. LEXIS 17825, at *16.

Allegations that

Wilson “disregard[ed]” legal obligations and “ignored the Ikes’
request” for mortgage relief at most suggest that Wilson acted
negligently.

Bell,

2005

U.S.

App.

LEXIS

17825,

at

*16.

Negligence is not fraud, and the Ikes’ allegations, even drawing
all reasonable inferences in their favor, fail to address how
disregarding or ignoring their requests constituted fraudulent
conduct.

See

pleadings

and

completing

id.
on

her

(“But

Bell

has

appeal

that

Cantrell

application

rejected her claim.”).

and

at

most

that

suggested

acted

in

negligently

Metropolitan

her
in

wrongly

That Quantum may have “patently ignored”

the HAMP guidelines does not speak to “the specifics of any
Peoples, 2012 U.S.

representations” Quantum or Wilson made.
Dist. LEXIS 22208, at *32.

Stating a claim under the TCPA

requires more than “general allegations.”
is DISMISSED.

The Ikes’ TCPA claim

Parham, No. 1:06-cv-216, 2007 U.S. Dist. LEXIS

40980, at *31-32.
B. Breach of Common Law Good Faith and Fair Dealing
In Tennessee, parties to a contract “owe each other a duty
of good faith and fair dealing as it pertains to the performance
of a contract.”

Weese v. Wyndham Vacation Resorts, No.: 3:07-

CV-433, 2009 U.S. Dist. LEXIS 55328, at *13 (E.D. Tenn. June 30,
2009);

see

also

Barnes

&

Robinson

Co.

v.

Onesource

Facility

Servs., Inc., 195 S.W.3d 637, 642 (Tenn. Ct. App. 2006).
10

Every

contract carries with it the implied covenant of good faith and
fair dealing.

Goot v. Metro. Gov’t of Nashville and Davidson

County, No. M2003-02013-COA-R3-CV, 2005 Tenn. App. LEXIS 708, at
*22 (Tenn. Ct. App. Nov. 9, 2005).

Tennessee courts analyze the

implied

colored

policy

covenant
goals:

through

honoring

expectations

and

receive

benefits

the

a

lens

the

contracting

protecting
of

by

“the

the

overarching

parties’

rights

agreement

two

of

reasonable

the

they

parties

entered

to

into.”

Barnes & Robinson Co., 195 S.W.3d at 642 (citations omitted).
The implied covenant does not, however, “create new contractual
rights or obligations, nor can it be used to circumvent or alter
the specific terms of the parties’ agreement.”

Goot, 2005 Tenn.

App. LEXIS 708, at *7 (Tenn. Ct. App. Nov. 9, 2005).

Instead,

the implied covenant “‘may be an element or circumstance of . .
. breaches of contracts.’”

Weese, 2009 U.S. Dist. LEXIS 55328,

at *14 (quoting Solomon v. First Am. Nat'l Bank of Nashville,
774 S.W.2d 935, 945 (Tenn. Ct. App. 1989)).
The

Ikes

allege

that

the

actions

of

Quantum

and

Wilson

“reveal a void of any good faith dealing in their participation
in the filing of a Notice of foreclosure of the Ikes’ home and
even fraudulent/negligent misrepresentations regarding the Ikes’
only

have

effort

to

the

recourse

extract

foreclosure.”

more

of

foreclosure
money

(Compl. at 9.)

from

plus
the

the

last

[Ikes]

minute

prior

to

According to the Ikes, no “real
11

effort was made to comply with any of the rules and regulations
that Defendants Banks were required to comply with as a result
of both their adopting of the federal HAMP programs that were
later deliberately ignored so that the [Property] would probably
be purchased for an amount equal to approximately fifty (50%) of
its value.”

(Id. at 9-10.)

The Ikes aver that the “failure to

respect the most basic of the rules and regulations that are the
basis of the HAMP program denied Plaintiffs their legal rights
under the circumstances of their financial situation for which
programs they qualified.”
The
implied

Ikes’

claim

covenant

of

(Id. at 10.)

is

not

good

plausible.

faith

and

fair

“[A]

breach

dealing

is

of

the

not

an

independent basis for relief, but rather ‘may be an element or
circumstance

of

.

.

.

breaches

of

contracts.’”

Golf

Sci.

Consultants, Inc. v. Cheng, No. 3:07-CV-152, 2009 U.S. Dist.
LEXIS 37721, at *16 (E.D. Tenn. May 4, 2009) (quoting Solomon,
774 S.W.2d at 945).

Thus, “absent a valid claim for breach of

contract, there is no cause of action for breach of implied
covenant
Quintiles

of

good

faith

Transnat’l

and

Corp.,

fair
No.

dealing.”
3:03cv0539,

LEXIS 54429, at *8 (M.D. Tenn. July 26, 2007).

Envoy
2007

Corp.

U.S.

v.

Dist.

Because the Ikes

do not allege breach of contract, their implied covenant claim
must be DISMISSED.
C. Due Process Clause
12

The Ikes’ Due Process allegations state:
The Plaintiffs were denied their rights under due
process of law by the manner in which the Mortgage
Service Company and their attorneys sought to deprive
Plaintiffs of the title to their home. . .
It is notable that the federal guidelines provide for
an appeal whereupon there occurs a violation of the
rules, regulations, and laws that were developed by
the Federal Reserve Bank, the Treasury Department, and
HUD in order to provide assistance to the American
citizens who have been injured by the wrongful conduct
of the financial institutions of this nation.
This deprivation of property from the citizens of this
nation who are in many cases victims of a force much
more powerful than they is a denial of due process; it
is wrongfully disingenuous for the Defendants to hide
behind the legal process and to fail to provide
documents that would have informed the Plaintiffs of
the “true owner” of the debt on this property and not
respect the processes that has been put in place as an
attempt by the federal government and by state law to
ameliorate the aftermath of the rampant greed of
institutions like the banks that were allowed to
undermine the entire American economy.
(Compl. at 10-11.)
The Ikes’ claim is not plausible.

Foreclosure claims will

not sound in due process “‘in the absence of state action.’”
Peoples, 2012 U.S. Dist. LEXIS 22208, at *36 (quoting Powell v.
GMAC Mortg., No.: 3:10-CV-87, 2010 U.S. Dist. LEXIS 50869, at
*10 (E.D. Tenn. May 24, 2010)).

Because the Ikes’ allege no

state action, there can be no due process violation.
V.

Conclusion

For the foregoing reasons, Wilson’s Motion is GRANTED.
Ikes’ claims against Wilson are DISMISSED.
13

The

So ordered this 27th day of August, 2012.

s/ Samuel H. Mays, Jr._______
SAMUEL H. MAYS, JR.
UNITED STATES DISTRICT JUDGE

14