Daniels et al v. JP Morgan Chase & Co. et al
Filing
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MEMORANDUM OPINION AND ORDER granting defendants' 21 MOTION to Dismiss Count II of the Amended Complaint. Signed by Judge Joseph R. Goodwin on 6/21/2011. (cc: attys; any unrepresented party) (taq)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION
DONALD DANIELS, et al.,
Plaintiffs,
v.
CIVIL ACTION NO. 2:11-cv-00045
JP MORGAN CHASE & CO., et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the court is the defendants’ Motion to Dismiss Count II of the Amended
Complaint [Docket 21]. For the reasons explained below, the Motion is GRANTED.
I.
Background
The present suit arises from allegations by the plaintiffs, Donald and Annetta Daniels, that
the defendants violated the West Virginia Consumer Credit and Protection Act (“WVCCPA”), and
negligently serviced their mortgage. The plaintiffs filed their Complaint on December 20, 2010 in
the Circuit Court of Boone County, West Virginia. On January 20, 2011, the defendants timely
removed the action to this Court on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332.
The plaintiffs refinanced their mortgage through the defendants in September 2008. In June
2009, the plaintiffs became delinquent in their mortgage payments, and gave the defendants actual
notice that they were represented by counsel in regard to their mortgage debt. The defendants
subsequently foreclosed on the mortgaged property. The plaintiffs allege that, even after foreclosure,
the defendants continued to contact the plaintiffs directly by mail in an attempt to collect the
plaintiffs’ debt, even though the defendants knew that the plaintiffs were represented by counsel.
The plaintiffs allege that on October 14, 2009, the defendants sent them a “Notice of
Placement of Hazard Insurance,” which stated that the defendants had purchased hazard insurance
on the foreclosed property at the expense of the plaintiffs. (Am. Compl. [Docket 16], at ¶ 19.) The
plaintiffs allege that on November 10, 2009, the defendants mailed the plaintiffs notice of the
expiration of the “Making Home Affordable Modification Trial Plan Offer.” (Id., at ¶ 20.) The
plaintiffs allege that on May 21, 2010, the defendants mailed a document entitled “Act Now to Avoid
Foreclosure” which requested, “mortgage payment(s) totaling $10,395.32 for 14 months(s), plus late
charges of $180.00 are past due,” and warned that if “payment is not received by 05/31/2010, you
could lose your home.” (Id., at ¶ 21.) The plaintiffs allege that on June 8, 2010, the defendants
mailed a notice of default which stated that failure to cure the default within thirty-two days would
result in acceleration of the loan. (Id., at ¶ 22.) The plaintiffs allege that on July 18, 2010, the
defendants mailed an additional “Notice of Placement of Insurance.” (Id., at ¶ 23.)
On January 27, 2011, the defendants filed a Motion to Dismiss Count II of the Complaint
[Docket 6]. The defendants filed an Amended Motion to Dismiss Count II [Docket 9] on February
7, 2011. On February 28, 2011, the plaintiffs responded, and requested leave to amend their
Complaint to include necessary factual allegations in support of Count II [Docket 13]. On April 7,
2011 this Court granted the plaintiffs leave to amend their Complaint and denied as moot the
defendants’ motions to dismiss Count II. (Ord. [Docket 14]) On May 10, 2011, the defendants filed
a Motion to Dismiss Count II of the Plaintiffs’ Amended Complaint, asserting that Count II fails to
state a claim for which relief may be granted, and in the alternative, that Count II is barred by the
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WVCCPA. (Defs.’ Mot. Dismiss Count II Plfs.’ Am. Compl. [Docket], at 5.) The plaintiffs respond
that the common law claims in Count II are distinct from the WVCCPA claims in Count I and thus
not barred by the statutory provisions of the WVCCPA.
Count I of the Amended Complaint contains allegations that the defendants violated several
provisions of the WVCCPA. (Am. Compl. [Docket 16], at ¶ 19.) The plaintiffs allege that the
defendants made false representations as to the character and amount of the plaintiffs’ debt in
violation of W. Va. Code § 46A-2-124; represented that the plaintiffs’ existing obligation may be
increased by attorney’s fees and other costs in violation of W. Va. Code § 46A-2-127; sent letters
with the intent to annoy and harass the plaintiffs in violation of W. Va. Code § 46A-2-128; and
contacted the plaintiffs directly rather than through counsel in violation of W. Va. Code § 46A-2128. (Id., at ¶¶ 33-36.)
Count II of the Amended Complaint asserts that the defendants acted in a reckless, willful
and wanton manner, in breach of the defendants’ duty to the plaintiffs. (Am. Compl. [Docket 16],
at ¶ 19.) The plaintiffs allege that the defendants negligently and recklessly managed the plaintiffs’
loan account, attempted to collect on a past liability by placing insurance on the nonexistent debt,
and made materially false statements regarding the debt to third parties, including, but not limited
to, credit reporting agencies. (Id., at ¶ 40.)
II.
Motion to Dismiss Standard
A motion to dismiss filed under Rule 12(b)(6) tests the legal sufficiency of a complaint or
pleading. Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008). Rule 8 of the Federal Rules
of Civil Procedure requires that a pleading contain a “short and plain statement of the claim showing
that the pleader is entitled to relief.” Fed. R. Civ. P. 8. As the Supreme Court recently reiterated in
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Ashcroft v. Iqbal, that standard “does not require ‘detailed factual allegations’ but ‘it demands more
than an unadorned, the-defendant-unlawfully-harmed-me accusation.’” 129 S. Ct. 1937, 1949 (2009)
(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “[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.” Twombly, 550 U.S. at 555
(citing Papasan v. Allain, 478 U.S. 265, 286 (1986) for the proposition that “on a motion to dismiss,
courts ‘are not bound to accept as true a legal conclusion couched as a factual allegation’”). A court
cannot accept as true legal conclusions in a complaint that merely recite the elements of a cause of
action supported by conclusory statements. Iqbal, 129 S. Ct. at 1949-50. “To 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.’” Id. at 1949 (quoting Twombly, 550 U.S. at 570).
To achieve facial plausibility, the plaintiff must plead facts that allow the court to draw the
reasonable inference that the defendant is liable, and those facts must be more than merely consistent
with the defendant’s liability to raise the claim from merely possible to probable. Id. In determining
whether a plausible claim exists, the court must undertake a context-specific inquiry, “[b]ut where
the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct,
the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled to relief.’” Id. at
1950 (quoting Fed. R. Civ. P. 8(a)(2)). A complaint must contain enough facts to “nudge[] [a] claim
across the line from conceivable to plausible.” Twombly, 550 U.S. at 570.
III.
Analysis
The defendants argue that Count II must be dismissed because the claims therein are
duplicative of those in Count I, and, therefore, the sole remedies available to the plaintiffs exist under
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the WVCCPA. (Defs.’ Mot. Dismiss Pls.’ Am. Compl. [Docket 21], at 1.) Further, the defendants
argue that the plaintiffs cannot maintain a common law action for negligence based on the facts
alleged in the Amended Complaint.
The defendants argue that the plaintiffs’ common law negligence claim is precluded by the
WVCCPA. The WVCCPA does not preclude common law claims against a lender so long as the
claims exist separate from the provisions of the statute. See Casillas v. Tuscarora Land Co., 412
S.E.2d 792, 795 (W. Va. 1991). Therefore, to survive a Rule 12(b)(6) motion to dismiss, the
plaintiffs’ common law action for negligence must be actionable apart from the WVCCPA. To
maintain a negligence claim against the servicer arising out of the acts that form the basis for the
WVCCPA claims in Count I, “the plaintiff must prove by a preponderance of the evidence that the
defendant owed a legal duty to the plaintiff and that by breaching that duty the defendant proximately
caused the injuries of the plaintiff.” Strahin v. Cleavenger, 603 S.E.2d 197, 205 (W. Va. 2004). The
legal duty necessary to maintain an action for negligence may arise because of a special relationship
between the parties, and in the context of a lender-borrower relationship, courts may determine that
a special relationship exists when a lender has performed services not normally provided by a lender
to a borrower. Glascock v. City Nat’l Bank of W. Va., 576 S.E.2d 540, 545–56 (W. Va. 2002). None
of the allegations in the Amended Complaint suggest the existence of the special relationship
necessary to support recovery in tort actionable apart from the WVCCPA.
The factual allegations in Count II are actionable under the WVCCPA, which provides the
sole remedy for the plaintiffs. The plaintiffs allege that the defendants “made materially false
statements about the plaintiffs to third parties, including but not limited to credit reporting agencies,
inaccurately indicating that the plaintiffs were delinquent in tendering required installment payments
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on their loan account.” (Am. Compl.[Docket 16], ¶ 40.) The WVCCPA provides consumers with
a remedy against debt collectors who have published information concerning a consumer’s debt to
parties other than Credit Reporting Agencies. W. Va. Code § 46A-2-126(c). Further, the WVCCPA
prohibits debt collectors from making false accusations to third parties or credit reporting agencies
in order to threaten or coerce an alleged debtor. W. Va. Code § 46A-2-124(c). The plaintiffs further
allege that the defendants’ attempt to collect the alleged debt by purchasing an insurance policy in
the plaintiffs’ name on the foreclosed property constitutes a common law action in tort. (Am.
Compl., [Docket 16] at ¶ 40.) Even taking these allegations as true, the plaintiffs’ remedy exists
solely under § 46A-2-124(c). The WVCCPA also prohibits a lender from making “any false
representation or implication of the character, extent or amount of a claim against a consumer.” W.
Va. Code § 46A-2-127(d). The plaintiffs have failed to plead any claims in Count II that are
actionable independent of the WVCCPA. Accordingly, the defendants’ Motion to Dismiss Count
II of the Amended Complaint is hereby GRANTED.
The court DIRECTS the Clerk to send a copy of this Order to counsel of record and any
unrepresented party.
ENTER:
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June 21, 2011
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